diff --git "a/Germany/16.Infineon_$41.66 B_Industrials/2020/results.txt" "b/Germany/16.Infineon_$41.66 B_Industrials/2020/results.txt"
new file mode 100644--- /dev/null
+++ "b/Germany/16.Infineon_$41.66 B_Industrials/2020/results.txt"
@@ -0,0 +1,131101 @@
+35.9
+Power Management & Multimarket
+1,794
+31
+1,061
+25
+69
+24
+Chip Card & Security
+11
+494
+11
+35
+Other Operating Segments
+14
+666
+0
+18
+17
+8
+55
+Revenue by Segment
+5,795
+4,320
+34
+783
+Automotive
+41
+1,965
+45
+20
+Industrial Power Control
+971
+2,351
+22
+1
+(36)
+(778)
+13.4
+(496)
+11.5
+57
+Operating income
+Selling, general and administrative expenses
+555
+6
+Income from continuing operations
+622
+488
+27
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+525
+30
+12.7
+(550)
+Corporate and Eliminations
+(1)
+0
+(5)
+0
+80
+Gross profit/Gross margin
+2,080
+In addition to the statutory audit of the Combined Management Report, KPMG AG Wirtschafts-
+prüfungsgesellschaft, Munich, has provided independent assurance ("limited assurance")
+on the sustainability performance information in the chapter "Sustainability at Infineon" in
+accordance with the "International Standard for Assurance Engagements 3000" and the
+"International Standard on Assurance Engagements 3410", which constitute the pertinent
+standards for assuring sustainability information.
+1,647
+38.1
+26
+Research and development expenses
+(717)
+12.4
+367
+10
+568
+47
+Infineon key data
+As at and for the fiscal years ended September 30 (under IFRS)'
+Fiscal year from October 1 to September 30
+Revenue by region
+Europe, Middle East, Africa
+Therein: Germany
+Infineon at a glance
+Asia-Pacific (w/o Japan)
+Japan
+Americas
+Therein: USA
+2015
+2014
+€ in
+millions
+Therein: China
+P An overview of our worldwide locations can be found on pages 124 and 125 in the chapter "Infineon worldwide".
+Source: IHS Inc., July 2015
+for microcontroller-based chip card ICs
+> Healthcare cards
+> Internet of Things
+> Mobile communications
+> Payment systems incl. mobile payment
+> Secure NFC (Near Field Communication)
+transactions
+> Ticketing, access control
+> Trusted computing
+Product range
+› Contact-based security controllers
+› Contactless security controllers
+> Dual-interface security controllers
+(contact-based and contactless)
+Key customers²
+Gemalto / Giesecke & Devrient / Google / HP/Lenovo/
+Microsoft / Oberthur Technologies / Safran Morpho/
+Samsung / US Government Publishing Office /
+Watchdata
+Market position¹
+2 with a market share of 23.9%
+in % of
+revenue
+12
+€ in
+millions
+2015/2014
+1,337
+23
+868
+20
+54
+399
+44
+7
+7
+40
+710
+12
+484
+11
+284
+43
+1,845
+46
+Change
+in %
+5,795
+4,320
+34
+2,020
+35
+1,707
+39
+18
+942
+16
+859
+20
+10
+2,666
+in % of
+revenue
+> Governmental identification documents
+47
+634
+2.9%
+607
+12.8%
+20.3%
+(37)
+35,424
+20.5%
+29,807
+1 Columns may not add due to rounding.
+2 Free cash flow: for definition G see glossary, page 287.
+3 Gross cash position: for definition G see glossary, page 288.
+4 Net cash position: for definition [G] see glossary, page 288.
+5 A dividend per share of €0.20 for the 2015 fiscal year will be proposed to the Annual General Meeting on February 18, 2016.
+6 Return on equity = net income divided by total equity.
+19
+7 Return on assets = net income divided by total assets.
+753
+38.4%
+12.9%
+5
+Return on assets?
+7.3%
+8.3%
+(12)
+4.5%
+Inventory intensity³
+Debt-to-total-capital ratio 10
+Return on Capital Employed (ROCE) 11
+Employees Infineon as of September 30
+12.9%
+11.0%
+17
+Debt-to-equity ratio⁹
+8 Inventory intensity = inventories (net) divided by total assets.
+9 Debt-to-equity ratio = long-term and short-term debt divided by total equity.
+10 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+Combined Reporting
+P see page 92 ff.
+P see page 108 ff.
+GRI G4-18, G4-23
+This combined report documents Infineon's economic, ecological and social performance
+during the 2015 fiscal year. In addition to providing a description of financial developments,
+we also wish to demonstrate how sustainability contributes to Infineon's success and how
+our activities in this area create value for all our stakeholders.
+Infineon's acquisition of 100 percent of the shares of (and related voting rights in) International
+Rectifier Corporation ("International Rectifier"), based in El Segundo, California (USA),
+announced on August 20, 2014, was closed on January 13, 2015. This report therefore includes
+the results, assets, liabilities, and cash flows pertaining to International Rectifier with effect
+from the date of acquisition. International Rectifier's various lines of business have been fully
+integrated within Infineon's existing Automotive, Industrial Power Control, and Power Manage-
+ment & Multimarket segments, whereby the largest proportion by far has been allocated to
+the Power Management & Multimarket segment. The figures presented for prior-year periods
+have not been adjusted.
+GRI G4-18, G4-23
+Whenever data relating to International Rectifier are included in the chapters "Sustainability
+at Infineon" and "Our employees", this fact is pointed out explicitly in the relevant chapters.
+The reporting period covers the 2015 fiscal year from October 1, 2014 to September 30, 2015.
+This report is published annually; the previous report was published in November 2014.
+Unless otherwise stated, the key performance figures and other disclosures contained in this
+report relate to the 2015 fiscal year.
+Notes to the Consolidated Financial Statements and Combined Management Report
+The Consolidated Financial Statements have been prepared in accordance with International
+Financial Reporting Standards ("IFRS").
+The Combined Management Report has been prepared in accordance with sections 315 and 315a
+of the German Commercial Code ("HGB") and in accordance with German Accounting Standard
+("DRS") 20. Disclosures with respect to the compensation of members of the Management
+Board are provided in accordance with DRS 17, which sets out the requirements for reporting
+on the remuneration of members of governing bodies and, in addition, based on the model
+tables recommended by the German Corporate Governance Code.
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, has audited the Consolidated Financial
+Statements prepared in accordance with IFRS and the Combined Management Report for the
+fiscal year ended September 30, 2015 and has issued an unqualified audit opinion thereon.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+ABOUT THIS REPORT
+3
+Sustainability Reporting
+In order to help readers identify and interpret trends relating to quantitative disclosures,
+the report includes data for at least the 2015 and 2014 fiscal years.
+About this report
+About this report
+2
+11 Return on Capital Employed (ROCE): for definition [G] see glossary, page 288.
+Infineon at a glance
+Far-reaching global changes lie ahead of us in the coming decades:
+> The demographic trend
+> The associated demand for resources and
+> Technological changes due to connectivity and digitalization
+These changes represent major challenges to society,
+but also offer exceptional opportunities to promote growth
+and achieve success.
+Infineon's microelectronic technologies are the key to a future.
+worth living - with products that help improve the quality of life
+and preserve natural resources.
+We are fully committed to live up to this high aspiration. The
+acquisition of International Rectifier has been an important
+step in the right direction.
+Systematic integration
+The title page shows a magnetic field sensor with two sensor
+chips in a cross section: One chip is above the substrate and
+one chip is located below. The picture on the left shows the
+sensor chips assembled on the leadframe as part of an array
+of hundreds of copies. Of the bottom sensor chip only its
+bounding wires are visible.
+These kinds of dual magnetic field sensors are used in power
+steering, for example. They measure the angle of rotation of
+the steering axle and the steering torque, or, in other words,
+what the driver wishes to do. Each of the sensor chips has
+an approximate size of 2 by 3 millimeters.
+Highly available steering systems are a basic requirement
+for partially automated driving, a preliminary stage of
+automated driving. Highly available steering systems have
+to be built with multiple redundancies.
+Read more about this sensor in the chapter "Research and
+Development" (P see page 73).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+13.6%
+√6
+Return on equity
+(17)
+12
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Net cash used in financing activities from continuing operations
+Free cash flow²
+Depreciation and amortization
+Capital expenditure
+4,158
+Gross cash position³
+988
+(3)
+(2,593)
+(272)
+(853)
+1,363
+957
+4,665
+Total equity
+36
+535
+19
+Segment Result/Segment Result Margin
+897
+15.5
+620
+14.4
+45
+Property, plant and equipment
+2,093
+1,700
+23
+Total assets
+8,741
+6,438
+(179)
+(74)
+861
+317
+0.56
+0.48
+17
+Dividend per share in €5
+0.20
+0.18
+Diluted earnings per share in €
+11
+0.60
+0.48
+25
+Equity ratio
+53.4%
+64.6%
+Adjusted earnings per share in € - diluted
+17
+0.48
+0.56
+(622)
+760
+514
+48
+785
+668
+18
+2,013
+2,418
+(17)
+Net cash position 4
+220
+2,232
+(90)
+Basic earnings per share in €
+(1,654)
+> Automotive
+> Authentication
+Applications
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+ABOUT THIS REPORT
+GRI G4-25, G4-26, G4-27
+P see GRI G4 Content Index,
+page 297 ff.
+GRI G4-19, G4-20, G4-21
+In a fourth step, these relevant topics and any potentially related risks or opportunities which
+could impact the long-term performance of the organization were discussed with our in-house
+sustainability experts.
+The results of these discussions and consequently the material topics were presented to
+and confirmed by the Management Board. These topics are described in this report.
+4
+The table below shows the areas of the value-added chain where Infineon actually sees
+key fields of activity in accordance with the guidelines on sustainability reporting set out
+in the GRI 4:
+Long-term viability of core business
+Responsible manufacturing
+Diversity and equal opportunity
+Presence in local markets
+Product sustainable value
+Business ethics
+Labor relations
+Material aspects along the value chain
+P see page 92 ff.
+@www.infineon.com/csr_reporting
+P see page 94 f.
+Key customers²
+Autoliv / Bosch / BYD / Continental / Delphi / Denso /
+Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
+Mitsubishi / Omron / Tesla / Valeo / ZF Friedrichshafen
+Market position¹
+2 with a market share of 10.5%
+Source: Strategy Analytics, April 2015
+Industrial Power Control
+Page 58
+Applications
+> Charger station for electric vehicles
+> Energy transmission and conversion
+Determining the content of the report
+Infineon engages in continuous dialog with its stakeholders. In our materiality analysis, we
+evaluate the expectations and requirements of our internal and external stakeholders with
+regard to sustainability in various topics in accordance with the guidelines on sustainability
+reporting set out in the Global Reporting Initiative GRI 4.
+Firstly, we identified Infineon's most important stakeholders, taking into account the factors
+"Responsibility", “Influence”, “Proximity", "Dependency”, and “Representation" in the
+"Stakeholder Engagement Manual" drawn up by the organization "AccountAbility" (see the
+chapter "Sustainability at Infineon").
+In a second step, consideration was given to general as well as sector- and company-specific
+sustainability standards appropriate for determining the principal factors relevant for
+assessing Infineon's sustainability performance.
+Relevant topics were then pre-selected, based on our own corporate strategy and stakeholder
+expectations.
+GRI GG4-18, G4-23
+P see GRI G4 Content Index,
+page 297 ff.
+Supply chain
+Infineon internal
+Product use
+P see page 32 ff.
+The non-financial performance figures contained in this combined report have been prepared
+on the basis of the G4 Guidelines of the Global Reporting Initiative ("GRI”), having regard to
+the GRI "Core" option, and are contained in the Combined Management Report.
+GRI G4-19, G4-20, G4-21
+P
+see pages 52 ff., 32 ff. and 106 f.
+P see page 103 f.
+G see glossary, page 294
+G see glossary, page 292
+P see page 103 f.
+P see page 52 ff.
+"Local social needs" is one of our four Corporate Citizenship focus areas and relates to the
+voluntary social commitment of our local entities towards the communities in which we
+operate. The focus areas as well as the engagement possibilities are set out in our Corporate
+Citizenship Guidelines.
+Further information is provided in the chapter "The segments” as well as in the section
+"Group strategy" in the chapter "Finances and strategy" and in the section "Corporate
+Citizenship" in the chapter "Sustainability at Infineon".
+Product sustainable value: We help to make life easier, safer and more environment-friendly -
+with technologies that do more, consume less and are available to everyone. Microelectronics
+made by Infineon are the key to attaining better living standards. Our inventiveness and
+commitment enable us to create added value for customers, staff and investors alike. We
+understand how technical systems can be made increasingly efficient through the use of
+semiconductors, with the aim of providing sustainable solutions for today's world and that
+of the future, thereby contributing to the ultimate success of our customers.
+As described in our Infineon IMPRES policy, potential environmental impacts are examined
+at the earliest possible stage and taken into account when developing both products and
+processes. This principle applies to all aspects of what we do, whether procurement, develop-
+ment, manufacturing, or the products' sale. All our activities are based on the compliance
+with applicable legislation and regulations. For more information see "Product sustainable
+value" in the chapter "Sustainability at Infineon".
+Semiconductors play a decisive role in reducing energy consumption and have achieved the
+highest energy efficiency rates to date.
+Power semiconductors are often not only crucial for the essential functioning of our customers'
+products and systems, they also have a key impact on efficiency, size, weight and costs. The
+most important energy-saving factor is the ability to boost energy efficiency and thereby mini-
+mize consumption. The several hundred million industrial motors and billions of household
+appliances in use mean enormous saving potential.
+Our products also provide solutions for societal challenges: All "things" capable of transferring
+data and functioning via the internet are covered by the catchword "Internet of Things”. They
+include machines, robots, vehicles, containers and medical equipment. Not only people but
+also a wide range of devices communicate with one another via the Internet of Things. These
+developments are opening up a whole new world of services that will ultimately change
+people's everyday lives. Secure storage and transfer of data are therefore becoming essential
+for many w of these billions of interconnected "things".
+Further information on this material topic is provided in the section "The Infineon carbon
+footprint" in the chapter "Sustainability at Infineon" and in the chapter "The segments"
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+ABOUT THIS REPORT
+> Voltage regulators
+6
+P see page 97 ff.
+Psee page 149 ff.
+P see page 27 ff.
+Long-term viability of core business: The global megatrends - energy efficiency, mobility and
+security - continue to offer Infineon enormous growth potential. The competitive race will be
+won by embracing innovation and achieving the right combination of costs and benefits.
+This insight opens up a wealth of opportunities to a global player with our innovative strength
+and technological expertise to exploit its areas of differentiation in the market. Our ability to
+make the most of these opportunities will enable us to achieve both sustainable and profit-
+able long-term growth.
+Effective risk and opportunity management is central to all of our business activities and plays
+an important role in implementing the strategic targets described in the section "Group strategy"
+in the chapter "Finances and strategy" - namely achieving sustainable, profitable growth
+and preserving our financial resources through the efficient employment of capital. Various
+coordinated risk management and control system elements are in place and enable us to
+pursue our stated risk strategy in practice, including "Risk and Opportunity Management", the
+"Internal Control System with respect to Financial Reporting Processes", the underlying
+forecasting, management and internal reporting processes, and the Compliance Management
+System. Further information on this material topic is provided in the chapters "Risk and
+opportunity report" and "Finances and strategy".
+Responsible manufacturing: Respect for human rights is essential for Infineon as a sustainable
+company. Our Business Conduct Guidelines reflect our commitment to respect all valid inter-
+national human rights.
+As a participant of the UN Global Compact Initiative, Infineon made a voluntary commitment to
+abide by the 10 principles included in it. Principles 1 and 2 deal with the topic of human rights.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+5
+ABOUT THIS REPORT
+We also demand that our supply chain uphold these principles. For this reason we have
+determined a Group-wide approach to this topic with the aim of guaranteeing the required
+transparency throughout our own supply chain. We expect our suppliers to give a commit-
+ment to uphold the values set out in our Principles of Purchasing.
+A variety of chemicals are required in the manufacturing of semiconductors, several of which
+are classified as hazardous. At Infineon we guarantee that any hazardous materials used are
+handled in a highly responsible way.
+Efficient resource management is a core component of our integrated management system
+for environmental protection, occupational health and safety, and energy. The growing
+scarcity of natural resources is one of today's greatest global challenges. Among other issues,
+our management system integrates targets and processes designed to ensure environmental
+sustainability.
+The sections "Our responsibility along the supply chain" and "Sustainable use of resources at
+our manufacturing sites" in the chapter "Sustainability at Infineon" provide additional infor-
+mation on this material topic.
+Diversity and equal opportunity: "Diversity management” provides the framework for a
+corporate culture that values the individuality of each staff member and promotes equal oppor-
+tunities. International customer relationships demand great cultural competence. Qualified
+job applicants expect an open working environment. As an international company, staff diversity
+is particularly important to us. The promotion of women to leadership positions is a key aspect
+of the Infineon's diversity management strategy. A change within the organization supporting the
+successful career development of female managers is a prerequisite for meeting our targets.
+Fostering and achieving an adequate work-life balance is of crucial importance for our employ-
+ees' professional success and part of our human resources work. As emphasized in our Business
+Conduct Guidelines, our employees are paid on the basis of work-related criteria, such as
+job requirements and performance. Men and women are paid equally at Infineon. Further
+information on this material topic is provided in the section "Encouraging diversity" within
+the chapter "Our employees".
+Presence in local markets: Every region is unique. Our global strategy requires the mainte-
+nance of research and development (R&D) locations and manufacturing sites throughout the
+world. Risks could therefore arise from adverse economic and geo-political crises in our
+regional markets, changes in legislation, and policies affecting trade and investment aimed
+at limiting free trade and varying practices of the regulatory, tax, judicial and administrative
+bodies in the jurisdictions where we operate. We are continuously expanding our presence
+in key regions in order to serve our customers better and meet their specific local require-
+ments. Our aim is to obtain an even better understanding of the factors determining customer
+success in each region.
+GRI G4-19, G4-20, G4-21
+P see page 105 ff.
+P see page 110 f.
+> Transceiver (CAN, LIN, Ethernet, FlexRay)
+The information contained in the Annual Report 2015 also serves as "Communication on
+Progress" for the United Nations Global Compact Initiative (see the section "Business Ethics"
+in the chapter "Sustainability at Infineon").
+> Power ICs
+> HiRel (high-reliability components)
+> DC motors
+> Cellular network infrastructure
+Applications
+Page 62
+Power Management & Multimarket
+IIIII
+> LED and conventional lighting systems
+2
+27.8%
+1
+☐
+2 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Jingchuan, Tomen, Weikeng and WPG Holding (SAC).
+1 All figures for 2014 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment. The figures
+provided in those sections with respect to changes in market share relate to the 2013 market share figures as calculated in 2015. Due to changes in the way the
+market is analyzed, these figures may differ from the 2013 market share figures reported in 2014.
+1 with a market share of 19.2% for discrete
+power semiconductors and modules
+Source: IHS Inc., September 2015
+Market position¹
+23.9%
+> Mobile devices
+> Power management (adapters, chargers, power supplies)
+Product range
+> Radar
+> Customized chips (ASICs)
+> Discrete low-voltage and high-voltage power transistors
+> GPS low-noise amplifier
+> Low-voltage and high-voltage driver ICs
+> MEMS and ASICS for silicon microphones
+> RF antenna switches
+> RF power transistors
+> TVS (transient voltage suppressor) diode
+Key customers²
+AAC / Airbus / Artesyn / Boeing / Cisco / Dell / Delta/
+Ericsson / Hewlett Packard Enterprise / Huawei / Lenovo/
+LG Electronics / Lite-on/ muRata / Nokia / Osram /
+Panasonic / Quanta / Samsung / ZTE
+Market position¹
+1 with a market share of 27.8%
+Source: IHS Inc., September 2015
+Chip Card & Security
+Page 66
+› Control ICs
+ABB / Alstom / Bombardier / CSR Times / Danfoss /
+Eaton/Emerson / Fronius / Goldwind / Midea /
+Rockwell / Schneider Electric / Siemens / Toshiba /
+Yaskawa/Vestas
+• Key customers²
+for standard MOSFET power transistors
+medium-power, low-power)
+19.2%
+10.5%
+1
+010C
+Automotive
+Page 54
+Applications
+> CO₂ reduction
+› Comfort electronics
+> Driver assistance systems
+•Product range
+> 32-bit automotive microcontrollers
+for powertrain, safety and driver
+assistance systems
+> Discrete power semiconductors
+> IGBT modules
+> Industrial microcontrollers
+> IGBT module solutions incl. IGBT stacks
+> Magnetic and pressure sensors
+2
+Market position¹ ○ Market share
+> Security
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2015 fiscal year (ending September 30),
+the company reported sales of about €5.8 billion with some 35,400 employees worldwide. Infineon is listed on
+the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+> Driver ICs
+Segment
+> Discrete IGBTs
+› Bare die business
+Product range
+› Traction
+> Renewable energy generation
+> Industrial vehicles
+> Industrial drives
+> Uninterruptable power supplies
+The Independent Assurance Report issued by KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich, as well as the explanatory notes to the key performance figures and other disclosures
+provided in the chapter "Sustainability at Infineon" of the Annual Report 2015 are available
+on the Infineon website.
+Systematic integration
+Infineon at a glance
+Annual Report 2015
+Infineon Technologies AG
+Infineon
+> Home appliances
+> IGBT modules (high-power,
+> To complete the integration of the
+former International Rectifier sites in
+the existing Compliance Management
+System: Infineon compliance training
+and compliance processes will be
+successively applied to all International
+Rectifier employees. The revised
+Business Conduct Guidelines will also
+apply directly to International Rectifier
+employees upon publishing.
+> Implementation of the revised Business
+Conduct Guidelines worldwide and
+the corresponding training, which
+addresses all Infineon employees.
+Targets for the 2016 fiscal year
+P see "Infineon products without DRC-conflict minerals", page 105 f.
+and "Human Resources Management, Human Rights", page 95
+Measures implemented
+> Training for all employees on Business Conduct Guidelines,
+which reflect our self-commitment to respect and uphold inter-
+national human rights. The training is supplemented with video
+sequences showing case studies from day-to-day working situa-
+tions that are descriptive and easy to grasp for employees at
+every level. The training is repeated at regular intervals and new
+hires to the company are automatically enrolled for training.
+Principle 1: Support for human rights
+Principle 2: Non-complicity in human
+rights abuses
+G37
+UN Global Compact
+Human Rights
+> Firmly defined rules in our CSR Policy as well as the Principles
+of Purchasing, which require our suppliers and service providers
+to fulfill the obligations described therein. Infineon purchases
+its components and materials from companies that respect
+human rights.
+Reports of possible compliance
+breaches
+28
+71
+66
+51
+38
+47
+24
+19
+13
+2014
+As a UN Global Compact participant, Infineon has made a commitment to abide by the stated
+principles and reports below in an exemplary manner in its Communication on Progress on
+the measures implemented:
+2015
+Infineon
+2015
+Infineon
+88
+Infineon Technologies AG and selected major subsidiaries commissioned an independent
+audit firm to confirm the appropriateness, implementation and effectiveness of their Compli-
+ance Management System in accordance with the IDW PS 980 standard. This audit (which
+focused on corruption prevention and antitrust law) was completed in the course of the 2014
+fiscal year. Afterwards the standard was transferred to the remaining Group companies during
+the 2015 fiscal year and completed by the end of that same year, with the exception of Interna-
+tional Rectifier companies. Adherence to the Compliance Management System within the
+Group's various subsidiaries will be monitored in regular internal audits.
+STOXX
+update our Business Conduct
+Guidelines, during the fiscal year we
+drew up a new worldwide rule on the
+Handling of Gifts and Invitations,
+and implemented it throughout the
+Company.
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with all relevant legal
+requirements and, of equal importance, that its internal Corporate Governance Standards
+are complied with (see the chapter "Corporate Governance").
+incl. Int.
+Rectifier
+P see page 4 ff.
+P see page 111 f.
+P see the chapter "Awards"
+on page 122 f.
+MEMBER OF
+20100%
+Dow Jones
+Sustainability Indices
+Corporate
+Responsibility
+Prime
+ated by
+CDP
+ESS LEADERS INDICES
+In Collaboration with RobecoSAM
+FTSE4Good cekom research
+DRIVING SUSTAINABLE ECONOMIES
+Business ethics
+The Infineon Business Conduct Guidelines are an important yardstick in our daily working
+lives. They are valid for all of our employees worldwide, in all of their dealings, whether among
+one another or with our customers, shareholders, business partners and the general public.
+In the 2015 fiscal year we began revising our Business Conduct Guidelines as our Code of
+Conduct for the entire Group. We intend to update both the content and the layout, with the
+aim of providing greater clarity for all readers. In preparation, we conducted a study on the
+best possible way to draw up a Code of Conduct in cooperation with a university and involving
+1,800 employees worldwide. We plan to publish the new Business Conduct Guidelines
+during the first six months of the 2016 fiscal year (see the chapter "Corporate Governance").
+P see page 174 ff.
+94
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Business Ethics
+Target achievement and summary
+of results in the 2015 fiscal year
+Targets achieved:
+> Apart from beginning to
+> The number of participants of
+the obligatory compliance training
+remained high at approximately
+16,700. As expected, the figure was
+lower than in the previous reporting
+period, as in the 2015 fiscal year we
+concentrated primarily on rolling out
+the web-based training on corruption
+prevention and antitrust law. The
+focus had previously been on Business
+Conduct Guidelines training. All
+employees were required to take part
+in this training.
+Thereof confirmed as compliance breach
+(after investigation)
+Our employees receive regular training on the Business Contact Guidelines. In addition, we
+have implemented external hotlines which our employees, suppliers, customers and business
+partners can contact, even anonymously. All reported cases are investigated by our Compli-
+ance experts (see "Business Ethics" in this chapter).
+Labor
+Our experts in the fields of occupational safety, health and fire prevention invested approxi-
+mately 56,972 hours in further training and educational measures worldwide during the
+2015 fiscal year.
+The measures taken are then monitored for effectiveness to ensure they achieve the
+desired result.
+Programs designed to improve ergonomics have also been implemented, including special
+training for preventing back injuries, the optimization of computer workstations and tips on
+the correct lifting and carrying of loads.
+Workplace-related risk assessments enable us to define measures that improve the working
+environment at Infineon. The implementation of these measures is supported by experts in
+this field. One example is the measures which have already been implemented at a number of
+Infineon sites to reduce noise levels.
+Our occupational safety and health management system has been certified in accordance
+with OHSAS 18001 at all of our main manufacturing sites as well as our corporate headquarters.
+The workplace-related risk assessment is designed to ensure that the required measures are
+taken to minimize any risks at their workplace that could endanger our employees. Work-
+place-related risk assessment is a key preventive instrument in the fields of occupational
+safety and health and is subject to continual improvement.
+One of our primary objectives is to create a safe working environment. Our approach in the
+fields of occupational safety and health protection is based on the principle of prevention.
+Apart from a range of accident prevention measures, we carry out fire prevention training and
+evacuation exercises at all of our main production sites as well as the Campeon corporate
+headquarters on an annual basis.
+Responsibility for our employees
+Target for the 2016 fiscal year
+> Our Injury Rate in the 2015 fiscal year
+was 0.46. Almost half of the accidents
+resulted in 5 or less lost days
+Target achievement and summary
+of results in the 2015 fiscal year
+Occupational safety
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+> Our target for the next fiscal year is to
+achieve an Injury Rate of 0.4 or lower.
+The recording and evaluation of work-related accident figures in the course of our data
+collection process is performed in accordance with GRI requirements on the basis of the
+standardized Injury Rate (IR) and the Lost Day Rate (LDR). All work-related accidents that have
+led to more than one lost day have been taken into account. The figures presented in this
+section include data from International Rectifier sites.
+There were no fatal work-related accidents at Infineon in the 2015 fiscal year. Our Injury Rate
+of 0.46 in the 2015 fiscal year is presented in graph 38. Almost half of the accidents resulted
+in 5 or less lost days. The Lost Day Rate of 5.65 is illustrated in graph 39 and can be explained
+by few accidents with long absence.
+G38
+2015
+Infineon
+Infineon
+2015
+2014
+2013
+2012
+2011
+||||
+0
+0.1
+0.2
+0.3
+0.4
+0.5
+Injury Rate (IR)'
+96
+Thereof confirmed as non-breach
+96
+P see page 174 ff.
+Environment
+UN Global Compact
+95
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+Thereof still under investigation
+(after investigation)
+Principle 7: Precautionary approach to
+environmental protection
+> Persons under 15 years of age are not allowed to work for Infineon.
+Exceptions apply for certain developing countries covered by
+International Labour Organization (ILO) convention 138 (minimum
+age lowered to 14 years), or for job training and vocational training
+programs that are authorized by the governments of the countries
+involved and who demonstrably promote those participating.
+> 74.5 percent of our employees (including International Rectifier)
+work at sites that have entered into collective agreements and
+where independent employee representatives are in place.
+> As described in our Business Conduct Guidelines, we do not
+tolerate discrimination and reject every form of forced labor. In
+addition to the usual in-house methods of reporting breaches –
+such as to Management, the Human Resources department or
+Compliance - employees and business partners can also contact
+an anonymous whistleblower hotline or an external ombudsman.
+Access and information are available on the Infineon website.
+During the 2015 fiscal year we recorded an increase in the number
+of incoming reports regarding possible breaches, which can be
+explained by the higher number of employees since completing
+the acquisition of International Rectifier (see chart 37).
+Principle 5: Abolition of child labor
+Principle 6: Elimination of discrimination
+Principle 4: Elimination of all forms
+of forced labor
+of association
+Principle 3: Uphold freedom
+> More than 90 percent of our employees work at production
+sites where committees are in place that also offer employers,
+employees and/or employee representatives the opportunity
+to discuss and receive advice on topics relating to environmental
+protection, occupational safety and health.
+Principle 8: Support initiatives for greater
+awareness of environmental
+responsibility
+Principle 9: Development and diffusion
+of environmentally friendly
+technologies
+Measures implemented
+P see page 105 f.
+Psee page 93
+Additional information is included in the chapters "Corporate Governance" and
+"Our Employees”.
+Even for its suppliers, Infineon requires compliance with all applicable laws, including those
+pertaining to human rights and fair business practices (see "Our responsibility along the
+supply chain" in this chapter).
+Compliance with internationally proclaimed human rights and labor standards is self-evident.
+The Infineon Business Conduct Guidelines reflect this self-commitment and define our standards
+as well as their implementation in this area for all employees worldwide. Our standards are
+in compliance with the International Bill of Human Rights and the Fundamental Principles of
+the International Labour Organization (ILO).
+Human resources management, human rights
+> Formalized risk assessment as part of the Compliance Manage-
+ment System and the definition of required measures.
+> Implementation of an Integrity Pact program with local suppliers
+in China, aimed at preventing corruption. Here we utilized a
+concept previously developed in Malaysia in cooperation with
+the organization "Transparency International".
+> Initiation of a campaign to raise awareness on the topic of com-
+pliance, including posters displayed at all of our Asian sites.
+> Completion of a specific web-based training on anti-corruption,
+in which more than 7,000 selected employees worldwide have
+participated. The training is mandatory for selected employees
+and for Management.
+Principle 10: Action against corruption
+Anti-corruption
+P see "Product sustainable value ", page 103 f.
+> Efficient use of energy, mobility and security in a connected
+world - we address some of the most critical challenges that our
+society faces while taking a conscientious approach to the use
+of natural resources. We make life easier, safer and greener -
+with technology that achieves more, consumes less and is acces-
+sible to everyone. Microelectronics from Infineon is the key to a
+better future.
+> Our IMPRES (Infineon Integrated Management Program for
+Environment, Energy, Safety and Health) is globally certified in
+accordance with ISO 14001 and OHSAS 18001 standards. IMPRES
+underscores our commitment to the efficient management of
+resources, environmental protection and ecological innovation.
+> Effective energy management is important for increasing
+energy efficiency and reducing greenhouse gas emission levels.
+All of our EU frontend sites as well as Campeon, our corporate
+headquarters, are additionally certified in accordance with the
+ISO 50001 standard.
+P see page 108 ff.
+incl. Int.
+Rectifier
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Internal management system
+1 The Injury Rate is calculated as follows: total number of injuries/total hours worked x 200,000.
+Holidays and public holidays are included in the working hours.
+Free cash flow from continuing operations enables us to measure how well operating profit-
+ability is being converted into cash inflows. This key figure also provides information on the
+efficient use of working capital and property, plant and equipment.
+Segment Result is the key figure for measuring operating performance. Expressed as a percent-
+age of revenue (Segment Result Margin), it measures profitability of revenue and shows how
+well operations are being managed. The activities of Infineon's segments are managed on the
+basis of Segment Result. Responsibility for optimizing Segment Result within the framework
+of Group strategy (as approved by the Management Board) rests with the management teams
+of the relevant segments, acting, however, in coordination with the Management Board.
+> Return on Capital Employed (ROCE) to measure capital efficiency
+> Free cash flow from continuing operations to measure the amount of cash generated
+or used excluding financing activities
+> Segment Result to measure the operating profitability of its various businesses and
+of the portfolio as a whole
+In order to measure its success in implementing its strategies, Infineon uses the following
+three overarching performance indicators:
+Principal performance indicators
+Performance indicators
+89
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Manufacturing sites
+87
+Newport
+> Power semiconductors
+(MOSFETS, IGBTs)
+> ICS
+> Epitaxy for gallium nitride
+wafers
+Warstein
+> High-power IGBT modules
+Dresden
+> Fully automated manu-
+facturing on 200mm
+and 300mm wafers for
+automotive, industrial and
+security applications
+Regensburg
+> Analog and mixed-signal
+components
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE)
+against the cost of capital, in order to ensure value creation.
+> Power semiconductors
+› Competence center for
+sensors and metallization
+The three performance indicators described above are also the cornerstones of the system
+for variable compensation within Infineon. Most variable salary components for employees
+and management are directly linked to these performance indicators. Since revenue growth
+correlates with all three performance indicators and is heavily dependent on external market
+circumstances as well as cyclical developments, it is not used as a key performance indicator
+in its own right.
+Segment Result is defined as operating income (loss) excluding the following: the net amount of
+asset impairments and reversals thereof; the impact on earnings of restructuring and closures;
+share-based compensation expense; acquisition-related depreciation/amortization and other
+expenses; gains (losses) on sales of assets, businesses, or interests in subsidiaries as well as
+other income (expense), including litigation costs (see note 32 to the Consolidated Financial
+Statements for a computation of the relevant figures). Court and legal fees arising in conjunction
+with licensing Infineon's patents are included in Segment Result, as is any related income.
+Segment Result is the indicator that Infineon uses to evaluate the operating performance of its
+segments (for an analysis of Group and individual segment performance in the 2015 fiscal year,
+see the chapter "The segments" and the section "Successful 2015 fiscal year" in the chapter
+"Finances and Strategy").
+Growth and profitability performance indicators
+The principal performance indicators described above are supplemented by others that provide
+information about growth potential, cost efficiency by functional area and liquidity.
+Other performance indicators
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets
+and net working capital. Asset intensity describes the amount of assets necessary to generate
+a certain level of revenue. For an analysis of the derivation of and change in ROCE in the 2015
+fiscal year, see the chapter "Review of financial condition".
+This key performance indicator describes how efficiently a company manages its resources.
+ROCE is also analyzed by Infineon at Group level only and not at segment level. A comparison
+of a company's RoCE and its weighted cost of capital provides information on the extent to
+which returns have been generated in excess of shareholders' and debt holders' expectations.
+Thus RoCE serves as a tool for value-based management.
+P see page 139
+Operating result after tax from continuing operations
+Capital employed
+ROCE =
+The performance indicator RoCE measures the ability of capital to provide a return and is
+defined as the operating result after tax from continuing operations divided by capital employed.
+Capital employed consists of non-current assets and net working capital. ROCE shows the
+correlation between profitability and the capital resources required to run the business.
+Return on Capital Employed (ROCE)
+Effective investment management plays a key role with regard to managing free cash flow.
+Our stated strategy of managing investments systematically and limiting them to 13 percent
+of revenue should be seen in this context. Free cash flow is considered by Infineon only at
+Group level and not at segment level.
+Infineon manages net working capital levels by focusing relentlessly on optimizing levels of
+inventories, trade receivables and trade payables.
+The main levers for generating free cash flow are profitability, the ability to manage working
+capital efficiently and the levels of investments.
+An important key performance indicator for Infineon is the free cash flow figure, defined as
+net cash provided by or used in operating activities and net cash provided by or used in invest-
+ing activities, both from continuing operations, after adjusting for cash flows related to the
+purchase and sale of financial investments. Free cash flow measures the ability to generate
+sufficient cash flows to finance day-to-day operations and fund required investments out of
+the ongoing business. It is Infineon's stated target to sustainably generate positive free cash
+flow (see the chapter "Review of financial condition" for an analysis of free cash flow in the
+2015 fiscal year).
+Free cash flow
+P see page 142
+Combined Management Report - Our Group
+90
+90
+P see page 52 ff. and page 28
+P see page 264 ff.
+Segment Result
+Revenue growth is compared continuously with the rate of growth of relevant target markets.
+This ties in directly with our strategic target of profiting continuously from the growth of
+our target markets. A further indicator for future revenue growth is the number of design wins,
+whereby we regularly measure actual outcomes against targets.
+Regensburg
+> Power semiconductors
+semiconductors
+Beijing
+> IGBT stack assembly
+Cheonan
+> IPMS (Intelligent Power
+Modules)
+Wuxi
+> Chip card modules
+> Discrete semiconductors
+88
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Internal
+management system
+P see page 32 ff.
+Psee page 92 ff. and page 108 ff.
+Psee page 174 ff.
+The internal management system at Infineon is designed to assist in implementing the Group
+strategy described in "Group strategy" in the chapter "Finances and strategy". Accordingly,
+performance indicators are used which enable profitable growth and efficient employment of
+capital to be measured. Infineon has set itself the targets of:
+> achieving a compound annual revenue growth rate of 8 percent
+> thereby achieving a 15 percent Segment Result Margin over the economic cycle and
+> limiting investments to 13 percent of revenue over the economic cycle
+Overall, attaining these financial targets yields in a sustainable increase in the value of the
+business, brought about by achieving a premium on the cost of capital in the long term.
+In this context, growth, profitability and investments are all interdependent. Profitability is the
+prerequisite for being able to finance operations internally, which, put another way, means
+opening up potential opportunities for growth. Growth, in turn, requires continual investment
+in research and development as well as in manufacturing capacities. Growing at a commen-
+surate rate allows Infineon to achieve leading market positions and to generate economies of
+scope that contribute to greater profitability. Employing financial resources efficiently is a
+critical factor in achieving these aims.
+Infineon deploys a comprehensive controlling system to manage its business with respect to
+the strategic targets it has set itself. The system involves the use of financial and operating key
+performance indicators. Information for controlling purposes is derived from annual long-term
+planning, quarterly forecasting, orders received per week and actual monthly financial results.
+This knowledge enables management to base its decisions on sound information with respect
+to the current situation and future expected financial and operational developments. Sustain-
+able business practices and the consideration of forward-thinking qualitative factors are
+important for Infineon's long-term success. As an enterprise very much aware of its responsi-
+bilities towards society, Infineon also takes account of non-financial factors, mainly in the
+fields of sustainability (see the chapter "Sustainability at Infineon") and human resources
+(see the chapter "Our employees"). Although these factors are not used to manage business
+performance, they nevertheless help Infineon achieve its financial targets.
+> Discrete power
+> Chip card modules
+Batam
+chip test and wafer test
+> Discrete semiconductors
+› Sensors
+> Wafer-level packaging
+› Competence center for
+package development
+Villach
+> Power semiconductors
+› Competence center
+for 300mm thin-wafer
+technology
+> MEMS components
+> Silicon carbide and
+gallium nitride technology
+(epitaxy, manufacturing)
+Cegléd
+> Medium- and high-power
+IGBT modules
+Kulim
+> Power semiconductors
+Malacca
+> Power semiconductors
+› Discrete semiconductors
+› Sensors
+> ICS
+› Package development
+Singapore
+› Competence center for
+> Wafer thinning
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Internal management system
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings
+and costs above the Segment Result line. This involves a review of gross profit, research and
+development expenses, selling, general administrative expenses and the ratio of these items
+to revenue. These performance indicators are used to manage the business at both Group and
+segment levels. For an analysis of changes in the fiscal year under report, see the chapter
+"Review of results of operations".
+Suppliers
+topics e.g. "Corporate
+Citizenship Panel"
+Committees for CSR
+91
+24/7
+Daily internal news
+Compliance Hotline
+Quarterly "All-Hands
+Meetings"
+Great Place to
+Work Survey
+Employees
+Occupational
+Health
+and Safety
+Human
+Resources
+Management,
+Human Rights
+Environmental
+Sustainability
+Infineon
+CSR
+Concept
+Management
+CSR
+Supply Chain
+Corporate
+Citizenship
+Roadshows
+•
+• Product requirements
+24/7
+• Infineon Service Center
+Suppliers-Assessment
+.
+.
+Principles of Purchasing
+Psee page 3 f.
+GRI G4-25, G4-26, G4-27
+Since 2014, Infineon has published information on opportunities and risks for the company
+derived from climate change via the Carbon Disclosure Project (CDP). In this year's CDP
+climate change report, Infineon has achieved a placing among the best companies in the
+"Information Technology” sector and the status of sector leader in the so-called DACH region
+(Germany, Austria and Switzerland).
+Furthermore, in the 2015 fiscal year Infineon qualified for inclusion in the Sustainability
+Yearbook for the fifth consecutive time. Moreover, "Oekom Research" has given Infineon
+the "Prime" rating.
+Infineon is listed in the "Dow Jones Sustainability™ Europe Index" and, for the first time, was
+the only European semiconductor manufacturer to be listed in the Dow Jones Sustainability™
+World Index in 2015. Infineon is also represented in other important indices, such as the
+"STOXX® Global ESG Leaders Indices" or the "FTSE4Good Index".
+In 2015, Infineon again qualified for listings in key sustainability indices, which assess companies
+according to environmental, social and governance criteria.
+The numerous areas and departments of Infineon utilize various channels of communication,
+engaging continually in conferences, forums, associations and surveys with the aim of fostering
+targeted communication with the respective stakeholder groups (see "Cooperation with
+universities" in the chapter "Our employees").
+As part of the continuous development and enhancement of our CSR concept, in addition to
+the materiality analysis (see the chapter "About this report") we view a sustained dialog with
+stakeholders as key to understanding their expectations. We have identified the most import-
+ant stakeholders for Infineon, taking into account the scope of the "Stakeholder Engagement
+Manual" drawn up by the organization "AccountAbility” (see the chapter "About this report”).
+In our materiality analysis we evaluate the expectations and requirements of our internal
+and external stakeholders in the field of sustainability in various topics in accordance with
+the sustainability reporting guidelines set out by the Global Reporting Initiative GRI 4. The
+results of our continuous dialog with our stakeholders have been integrated into the design
+of the analysis.
+we have identified six fields of activity: Business Ethics, Occupational Health and Safety,
+Environmental Sustainability, CSR Supply Chain Management, Corporate Citizenship, as well
+as Human Resources Management and Human Rights.
+93
+by experts
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+We understand Corporate Social Responsibility (CSR) as our voluntary responsibility towards
+both international and local societies. Our commitment is based on compliance with current
+legal requirements, the ten Principles of the UN Global Compact and the principle of sustain-
+ability as the symbiosis of economy, ecology and social engagement. Based on these tenets,
+⚫ Conferences &
+workshops
+surveys and studies
+Social and NGOs
+Citizenship activities
+Participation in
+Social stakeholders
+GRI G4-24, G4-25, G4-26, G4-27
+about water-stressed areas
+Awareness-raising campaign
+Compliance website
+•
+1 Any data in this chapter relating to International Rectifier are explicitly identified in the various sections.
+Services provided
+Trainings
+⚫ Audits
+92
+Psee page 144
+P see page 131
+P see page 139 ff.
+P see page 128 ff.
+The "Outlook" in the chapter "Report on expected developments, together with associated
+material risks and opportunities" contains a table showing the actual values achieved in
+the 2015 fiscal year for the key performance indicators, along with expectations for the 2015
+and 2016 fiscal years.
+Actual and target values for performance indicators
+For an analysis of orders received and the book-to-bill ratio in the previous fiscal year, see the
+chapter "Review of results of operations".
+The book-to-bill ratio gives a good indication of future trends in demand. If orders received
+are greater than revenue recognized within a given period, it is seen as an indication of future
+revenue growth.
+› Orders received as a percentage of revenue: The ratio of orders received and revenue
+recognized during the same accounting period (book-to-bill ratio).
+› Orders received: The aggregate of all orders received by the Group from customers during
+the relevant reporting period
+The analysis of current and future performance is rounded off by using the following opera-
+tional early indicators:
+Operational early indicators
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the
+key operational figures for capacity utilization and forecast capacity requirements are analyzed.
+The results of this analysis are used in determining investment requirements.
+For an analysis of changes in these key performance indicators during the previous fiscal year,
+see the chapter "Review of liquidity".
+> Investments: The total amount invested in property, plant and equipment and intangible
+assets, including capitalized research and development costs
+> Net working capital: Current assets less cash and cash equivalents, less financial invest-
+ments, less assets classified as held for sale, less current liabilities excluding short-term
+debt and current maturities of long-term debt, excluding liabilities classified as held for sale
+•
+> Gross cash position: Cash and cash equivalents plus financial investments
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its
+disposal and an optimal capital structure. Liquidity is managed at Group level, not at segment
+level, and uses the following key performance indicators:
+Liquidity performance indicators
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+> Net cash position: Gross cash position less short-term and long-term debt
+@www.infineon.com/csr_reporting
+Sustainability
+at Infineon'
+Customers
+Employees involved in
+Industry Associations
+⚫ Workshops
+Politics
+Business Ethics
+MANAGEMENT
+STAKEHOLDER
+Yearly Financial Statements
+•
+• Annual Report
+Quarterly segments presentation
+⚫ Political dialogs
+Quarterly Reports
+•
+G36
+Investors
+Infineon CSR Concept
+Annual General Meeting
+Roadshows & conferences
+.
+•
+In addition to the statutory audit of the Combined Management Report, KPMG AG Wirtschafts-
+prüfungsgesellschaft, Munich, has provided independent assurance ("limited assurance")
+regarding the sustainability performance information provided in this chapter in accordance
+with the International Standard for Assurance Engagements 3000 and the International
+Standard on Assurance Engagements 3410, the pertinent standards for assuring sustainability
+information. Further information, including the independent assurance report issued, can be
+found in the Corporate Social Responsibility section of the Infineon website.
+> To integrate International Rectifier
+Corporate Citizenship activities
+consistent with our guidelines.
+Target for the 2016 fiscal year
+@www.infineon.com/csr_reporting
+this field has increased. Our
+employees donated €24,000 for
+earthquake victims in Nepal, in addition
+to the sum donated by Infineon.
+Moreover, Infineon has set up an
+account for employees to donate money
+for refugees. For each euro donated,
+Infineon donates an additional euro.
+> Employee participation in
+Target achieved:
+Target achievement and summary
+of results in the 2015 fiscal year
+Corporate Citizenship
+evaluation system in accordance with
+the OECD guidance on implementing
+and maintaining a DRC conflict-free
+supply chain.
+> To maintain the DRC conflict-free
+supply chain.
+Targets for the 2016 fiscal year
+> The establishing of a query,
+registration and supplier
+Target achievement and summary
+of results in the 2015 fiscal year
+Target achieved:
+Conflict minerals
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+We have determined a Group-wide approach to this topic with the aim of guaranteeing the
+necessary transparency within our own supply chain.
+106
+> To integrate International Rectifier
+products in the Infineon conflict
+minerals declaration.
+Infineon uses the above-mentioned materials in the manufacture of its products and their
+functionality is crucial. Infineon is not listed on US stock exchanges and therefore not legally
+required to publish a report on conflict minerals. Nevertheless, as a member of the Conflict-
+Free Sourcing Initiative (CFSI), we are aware of our voluntary commitment and duty of
+due diligence in the supply chain. At the same time, we assist those of our customers who
+are required to perform due diligence within their supply chains in meeting their reporting
+duties in accordance with the requirements of the United States Securities and Exchange
+Commission (SEC).
+Employee
+volunteering
+In the 2015 fiscal year, Infineon identified 100 percent of its potential suppliers of conflict
+minerals and evaluated them with regard to their use. Based on the thorough response of our
+suppliers and in accordance with the requirements of the OECD guidance, we can duly state
+that Infineon products are fully DRC conflict-free. Moreover, we request our suppliers to continue
+purchasing only raw materials from smelters that meet the CFSI requirements or those of an
+equivalent auditing program.
+P see page 85
+1,132,638
+4,273
+16,810
+321,942
+789,613
+€
+Total
+Since Infineon does not purchase these metals directly from mines or smelters, we identify
+their origin in close cooperation with our direct suppliers. For this purpose we have introduced
+a standardized process throughout the organization, based on the OECD Due Diligence Guidance
+for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
+In-kind giving
+Donations
+in €
+Corporate Citizenship expenditure
+G55
+In the 2015 fiscal year, Infineon supported 324 activities worldwide. 30 percent of the
+donations were local communities' investments in the communities we interact with, and
+70 percent were donations to charitable activities.
+We understand Corporate Citizenship as our voluntary social commitment for the communities
+in which we operate. In the field of Corporate Citizenship, Infineon has defined four areas of
+activity: "Environmental Sustainability", "Local Social Needs", "Education for Future Genera-
+tions" and help in case of "Natural and Humanitarian Disasters”. In addition to monetary and
+material donations, the commitment of our employees can be expressed in voluntary activities.
+The above-mentioned areas of activity and engagement possibilities are contained in our
+Corporate Citizenship Guidelines. These guidelines ensure that our Corporate Citizenship
+activities are performed transparently and in line with our ethical principles. In addition, we
+have appointed a Citizenship representative at every Infineon site who is the person to
+contact in all matters relating to this topic.
+Corporate Citizenship
+We have set out our requirements in the Infineon "Conflict Minerals Policy" and the "Supplier
+Code for a Responsible Sourcing of Conflict Minerals", which have been published on our website.
+Sponsoring
+Respect for human rights is a matter of course for Infineon. The avoidance of conflict minerals
+throughout the supply chain is a firm contribution towards the prevention of human rights
+abuses.
+15,000,000
+Infineon products without DRC conflict minerals
+incl. Int.
+Infineon
+2015
+Infineon
+2015
+2014
+2013
+2012
+2011
+0
+||||||
+0.10
+35 GWh
+of 35 GWh of energy by the end of the
+2017 fiscal year.
+at our manufacturing sites worldwide
+which are capable of saving a total
+0.20
+> To implement projects and measures
+0.30
+Target for the 2016 fiscal year
+In July 2010, the USA's Dodd-Frank Act (Dodd-Frank Wall Street Reform and Consumer Protec-
+tion Act) was adopted. It contains disclosure and reporting obligations for companies listed in
+the USA concerning the utilization of so-called "conflict minerals” that originate from the
+Democratic Republic of Congo (DRC) or its adjoining countries. The term applies to tantalum,
+tin, gold and tungsten, inasmuch as their extraction and/or trade has directly or indirectly
+financed or benefited armed groups in the DRC or its adjoining countries.
+Rectifier
+in kilowatt hours per €
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+Greenhouse gas emissions
+Fueloil
+Diesel
+Gas
+PFCs
+Scope 3-Indirect¹
+Scope 2-Indirect
+Scope 1 - Direct
+800,673
+533,921
+237,868
+1,572,462
+in tons CO2 equivalents
+Calculation of the CO2 burden
+G 50
+The following emissions and immission have been included in the calculation of the carbon
+footprint:
+In calculating the Infineon carbon footprint, we have considered in accordance with PAS 2050
+the entire manufacturing process, including all of the utilities (raw materials and supplies) as
+well as internal and external logistics including final distribution to customers.
+The calculation of CO2 emissions is based on the ISO 14000 standard, which is concretized by
+the PAS (Public Available Specification) 2050 guideline issued by the BSI (British Standards
+Institution) for determining the ecological impact of various products, as well as by the principles
+of the Greenhouse Gas Protocol for determining carbon footprints (relevance, completeness,
+consistency, transparency, and accuracy).
+The classification of direct and indirect emissions is carried out as set out in the "Greenhouse
+Gas Protocol" in Scope 1, 2 and 3. The new Scope 2 guidelines now require companies to
+calculate and disclose two values for their Scope 2 emissions: "market-based accounting",
+which is based on provider-specific emission factors, and “location-based accounting", based
+on the average for the regional or national grid.
+At an early stage, Infineon started developing strategies to reduce the amount of material
+used to the technically necessary minimum, thereby minimizing CO2 emissions.
+101
+Petrol
+Energy consumption per revenue
+In the 2015 fiscal year, the energy consumption per revenue was 0.25 kilowatt hours per euro.
+Figures from previous years are also shown in graph 49 as a comparison.
+2015
+Infineon
+incl. Int.
+Rectifier
+| | | |
+1,253.07
+Electricity
+1,354.13
+non-renewable
+Indirect energy (Scope 2)
+2014
+2013
+2012
+2011
+0.28
+Fuel oil
+0
+6.24
+Diesel (cars)
+300
+0.68
+Diesel
+2015
+Infineon
+G49
+District heating
+Natural gas
+Firewood
+In the semiconductor industry, the WSC defines specific energy consumption as electricity
+consumed per square centimeter of wafer manufactured. Based on this definition, the WSC
+provides companies every year with an international value, which serves as a benchmark.
+Accordingly, in the 2014 calendar year, Infineon frontend manufacturing sites consumed
+approximately 40 percent less electricity per square centimeter of wafer manufactured than
+the worldwide average for the semiconductor industry in accordance with WSC.
+At our main manufacturing sites and in line with local requirements, we have implemented
+the systematics of the energy management standard ISO 50001 and continually analyze
+options to further improve energy efficiency. Improving energy efficiency means reducing
+specific energy consumption, which in turn means a reduction in the amount of energy
+required per manufactured unit.
+volume of 14.31 gigawatt hours (GWh)
+of electricity and district heating.
+We have also integrated our backend
+manufacturing sites in the energy
+savings analysis.
+measures that saved an annual
+> This year we implemented
+Target achieved:
+Target achievement and summary
+of results in the 2015 fiscal year
+100%
+60%
+Energy efficiency
+1 Frontend sites worldwide
+WSC
+Infineon'
+Standardized electricity consumption
+per square centimeter manufactured wafer
+G48
+Petrol (cars)
+Diesel (cars)
+Petrol
+Diesel
+■Fuel oil
+District heating
+Liquid gas
+Electricity
+101.06
+Firewood
+Electricity
+District heating
+Fuel and energy supply
+Water consumption
+Wastewater
+Scope 3 emissions refer to those generated for the provision and disposal of all raw materials
+and supplies as well as other utilities, goods transportation, travel and energy supply activi-
+ties (transmission losses). Scope 3 emissions totaled 800,673 tons of CO2.
+Scope 3 emissions
+This approach was selected in order to illustrate the implementations achieved so far in terms of
+regenerative energy supply, such as connecting the Infineon Campeon corporate headquarters
+to the district heating network of the geothermal plant in nearby Unterhaching (Germany).
+Taking into account provider-specific emission factors of the energy sources used, Scope 2
+emissions totaled 533,921 tons of CO2 in the fiscal year under report.
+Scope 2 emissions
+In addition to PFC reporting, we calculate emissions for other relevant substances used at
+Infineon and International Rectifier main manufacturing sites on an annual basis. In the 2015
+fiscal year 144,887 kilograms of sulfur oxides (SOX), 293,425 kilograms of nitrogen oxides
+(NOx), 331,160 kilograms of volatile organic compounds (VOCs), and 122,812 kilograms of
+particulate matter (PM) were emitted.
+103
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+1 In creating the Annual Report 2015 the WSC figures were not available.
+Maximum value
+■Infineon Frontends
+World Semiconductor Council¹
+Rectifier
+Infineon
+incl. Int.
+Infineon
+2020
+་་་།།།
+0
+0.5
+Product sustainable value
+1.00
+Our products and innovations are the key to manufacturing energy-efficient end products and
+applications, and thereby make an important contribution towards improving our carbon
+footprint.
+The Infineon carbon footprint
+Ratio around 1:23
+Around 1.6 million tons CO2 equivalents
+CO₂ burden¹
+Therefore, with its products and innovations and coupled with an efficient production,
+Infineon achieved a positive net benefit of approximately 35 million tons of CO2.
+however, is in the field of controls for industrial drives. Here, the estimated average improve-
+ment in efficiency has been adjusted in line with standard market values. The further
+increases in installed capacities for photovoltaics and wind power in 2014 compared with
+2013 and the inclusion of the new "induction cookers” product group were responsible for
+this improvement.
+Carbon footprint
+G 53
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+104
+> To integrate International Rectifier data
+in the carbon footprint calculation.
+Target for the 2016 fiscal year
+We have continued to improve the
+methodology for calculating our carbon
+footprint and induction cookers have
+now also been included in production
+savings.
+products over their use-phase was
+about 23 times higher than the CO₂
+emissions generated when manufac-
+turing the products.
+> The CO2 saved by Infineon
+products included in end
+Target achieved:
+Ecological net benefit
+Target achievement and summary
+of results in the 2015 fiscal year
+G see glossary, page 290
+During their use-phase, Infineon products in the fields of automotive electronics, industrial
+drives, servers, lighting, photovoltaics and wind energy as well as induction cooking alone
+enable savings of roughly 36.5 million tons of CO2 equivalents, 2.5 times higher than the
+previous year's figure. The increase is attributable to a number of factors. Improvements were
+made in the field of LEDs, where sales volumes have risen significantly. The sharpest increase,
+Complex processes and a multitude of influencing factors need to be considered when draw-
+ing up an entity's carbon footprint. By nature, carbon footprint calculations are subject to a
+certain degree of imprecision. However, in order to further minimize the resulting imprecision,
+Infineon has continued to refine its approach.
+The products manufactured by Infineon are used in a broad range of applications and contribute
+towards improving the ecological efficiency of end products and applications during their
+use-phase. Our high-performance products make it possible to operate large-scale wind farms
+and photovoltaic facilities and therefore the production of regenerative energy. They are also
+used in industrial applications such as drive systems and engine control units and make it
+possible, for instance, to reduce power losses. Other Infineon products, in turn, enable the
+development of new, more efficient technologies such as LED lighting or induction cookers.
+Together with their products in the fields of drivers and digital control, Infineon delivers energy-
+efficient system solutions for servers, data and telecommunications applications. This is
+illustrated by the two following examples. The 600-volt series CoolMOSTM C7 Superjunction (SJ)
+MOSFETs reduce turn-off losses by 50 percent compared with similar technologies and have
+therefore achieved ultra-low switching losses. High-power applications in switch-mode power
+supplies with stringent requirements regarding efficiency and operating costs such as state-
+of-the-art servers in data centers and base stations for telecommunications benefit in particular.
+The OptiMOST 5 25-volt and 30-volt product family also shows improved performance based
+on the consistent reduction of switching losses by 50 percent when compared to the previous
+technology. These systems can be operated at higher switching frequencies, resulting in sig-
+nificantly lower energy consumption and overall system costs. For example, implementing the
+new OptiMOS 25-volt would mean annual savings of 1.3 gigawatt hours (GWh) for an average
+of 50,000 computers working in a server farm.
+1.50
+2.00
+2.50
+Electricity
+660,362 tCO₂e
+Process
+chemicals
+13,170 tCO2e
+Process gases
+74,744 tCO2e
+460,421 tCO₂e
+Raw materials
+Input
+in tons CO2 equivalents (tCO2e)
+Allocation of emissions by origin
+G 51
+The following chart 51 illustrates the emissions by origin. The input streams show emissions
+that were generated in the course of supplying the materials. The output streams show
+emissions that were directly generated during production and through internal and external
+transportation.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+102
+2015 fiscal year.
+Altogether, the Infineon carbon footprint totaled 1.57 million tons of CO2 equivalents in the
+Flights
+Transport
+1 Further emissions along the value chain
+Infineon function cars
+Raw materials and supplies
+Waste
+Materials
+Internal and
+external
+transportation
+107,572 tCO₂e
+Infineon
+production sites
+Other energy
+32,159 tCO2e
+3.00
+3.50
+in tons CO2 per square meter
+Normalized Emission Rate
+G52
+We have decided to change our PFC reporting from the use of absolute values to the Normalized
+Emission Rate (NER). The emissions from Infineon and International Rectifier will be standard-
+ized to reflect volumes per square centimeter of wafer manufactured. We have selected the
+target of the World Semiconductor Council (WSC) as a reference. Based on the WSC NER value
+from 2010, the WSC aims to reduce its value by 30 percent to a NER of 2.2 by the year 2020.
+Our target is to remain below the maximum value of 2.2. With a NER of 1.62 we achieved our
+target for the 2015 fiscal year.
+However, the growing complexity of our products is leading to an increasing need for green-
+house gases.
+We minimize the use of these gases firstly by continually optimizing our processes by increas-
+ingly efficient manufacturing methods and intelligent abatement concepts and secondly
+through the use of alternative gases within the PFC group with higher utilization rates and
+lower greenhouse gas potential.
+The semiconductor industry uses various greenhouse gases in wafer-etching processes as well
+as for the cleaning of production equipment. The Perfluorinated Compounds (PFCs), sulfur
+hexafluoride (SF) and nitrogen trifluoride (NF3) used cannot be substituted by another class
+of substances. These gases mean around 92 percent of Scope 1 emissions.
+600
+Scope 1 emissions
+Target for the 2016 fiscal year
+> Due to better available data, we have
+changed our method of reporting
+and the resulting target. From now on
+we will orient our reporting on the
+WSC NER target value of 2.2 for 2020.
+Target achievement and summary
+of results in the 2015 fiscal year
+Normalized Emission Rate
+Air emissions
+217,668 tCO2e
+Waste
+1,763 tCO2e
+Output
+Wastewater
+3,099 tCO₂e
+Drinking water
+1,503 tCO2e
+> To maintain the Infineon NER below
+2.2 in the 2016 fiscal year. The typically
+growing complexity of our products
+is leading to an increasing need for
+greenhouse gases. Therefore the
+target is a challenging and reasonable
+reference value for the efficiency of
+our emissions' reduction measures.
+3.65
+Petrol (cars)
+0.06
+> Regardless of growing product
+complexity, our aim is that our specific
+water consumption does not exceed
+8.5 liters per square centimeter of wafer.
+Targets for the 2016 fiscal year
+5,000,000
+10,000,000
+20,000,000
+25,000,000
+in cubic meters
+Water consumption
+G41
+During the year under report, Infineon withdrew 21,379,138 cubic meters (m³) of water.
+Infineon sources water either from its own groundwater wells or from local providers, who
+supply both drinking and non-drinking water. Our water sources are shown in graph 41.
+> Infineon has published its Commu-
+nication on Progress to the UN's
+"CEO Water Mandate" on its website
+at: www.infineon.com/csr_reporting
+9.77 percent of ultrapure water is either
+recycled or reused in other processes.
+"Water Efficient Building" certificate
+received for a further building at the
+Singapore site.
+than the WSC global average to manu-
+facture one square centimeter of wafer.
+> Infineon consumed approxi-
+mately 21 percent less water
+Targets achieved:
+Target achievement and summary
+of results in the 2015 fiscal year
+Water management
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+98
+Discharge to river:
+9,784,342 m³
+> The preparation and approval of
+Business Continuity Plans for the
+International Rectifier sites of Temecula
+(USA) and Tijuana (Mexico). Business
+Continuity Plans serve to safeguard
+business activities in case of serious
+unforeseeable events, such as natural
+disasters or fires, and to minimize
+consequential damage for Infineon
+and its customers. Water shortages
+and climate change are part of this
+assessment.
+Discharge to river:
+4,673,037 m³
+G42
+G 43
+Groundwater
+2015
+Infineon
+incl. Int.
+Rectifier
+2015
+Infineon
+2014
+2013
+2012
+2011
+0
+100%
+79%
+WSC
+Infineon'
+Standardized water consumption
+per square centimeter manufactured wafer
+(excluding wastewater)
+Wastewater-direct discharge
+Wastewater - indirect discharge
+Other water discharges
+27.20%
+23.53%
+O
+49.27%
+Water discharges 2015
+Sewage plant:
+5,400,250 m³
+Direct discharge
+Indirect discharge
+Sustainable use of resources at our manufacturing sites
+Our global management system IMPRES integrates targets and processes relating to ecological
+sustainability (including energy management) as well as occupational safety and health
+protection. IMPRES is certified in accordance with ISO 14001 and OHSAS 18001 worldwide.
+Additionally it has been certified in accordance with ISO 50001 energy management standard
+at our main European manufacturing sites as well as our Campeon corporate headquarters.
+We are currently in the process of integrating sites that have become part of Infineon through
+the acquisition of International Rectifier in our multi-site certification and have begun
+to implement the integrated management system. The figures given in the sections "Water
+management", "Waste management" and "Efficient energy management" include Inter-
+national Rectifier data.
+Environmental sustainability
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+1 The Lost Day Rate is calculated as follows: total number of lost days/total hours worked x 200,000.
+Holidays and public holidays are included in the working hours.
+2015
+Infineon
+incl. Int.
+Rectifier
+2015
+Infineon
+2014
+2013
+2012
+2011
+0
+2
+4
+6
+8
+10
+Lost Day Rate (LDR) 1
+G39
+The growing scarcity of natural resources is one of today's greatest global challenges. Optimiz-
+ing efficiency in the use of resources offers both ecological and economic benefits and is a
+key component in our sustainability strategy worldwide.
+Water management
+Efficient water management is an integral part of our environmental management and should
+guarantee the sustainable use of water. The schematic diagram for water management at
+Infineon in the 2015 fiscal year is shown in chart 40.
+G40
+In accordance with
+purity requirements
+In accordance with
+purity requirements
+97
+Internal wastewater treatment
+Wastewater: 10,073,287 m³
+Sanitary systems, canteen area
+Water discharge after production: 19,857,629 m³
+Municipal wastewater (sewage plant)
+Non-ultrapure water
+Drinking water
+Ultrapure water:
+7,190,245 m³
+Production
+Non-drinking water:
+2,905,087 m³
+Drinking water:
+4,503,492 m³
+Groundwater:
+13,970,559 m³
+Water withdrawal
+(partly treated):
+21,379,138 m³
+Evaporation
+Psee pages 97 f. and 99 f.
+@www.infineon.com/csr_reporting
+Water use
+Water balance
+Cooling water:
+10,813,469 m³
+CO₂ savings²
+Around 36.5 million tons CO2 equivalents
+Non-drinking water
+Some of this water can be re-used several times. During the reporting period, 702,489 cubic
+meters (9.77 percent) of ultrapure water for production purposes and 1,106,540 cubic meters
+(10.98 percent) of production wastewater were re-used.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+100
+G see glossary, page 291
+> Regardless of growing product
+complexity, our aim is to keep the
+specific waste generation below
+27.5 grams per square centimeter of
+wafer manufactured.
+Target for the 2016 fiscal year
+Approximately 65.51 percent of waste
+generated at Infineon sites was recycled.
+> Compared with the WSC
+global average, Infineon sites
+generated approximately 50 percent
+less waste to manufacture one square
+centimeter of wafer.
+Target achieved:
+of results in the 2015 fiscal year
+Target achievement and summary
+Waste management
+Within its manufacturing chain, Infineon consumes the majority of its energy in its frontend
+manufacturing sites, where the facilities require highly sophisticated physical conditions,
+such as particularly demanding stable conditions in the cleanrooms, which means additional
+energy consumption. Due to their nature, backend processes require less energy than
+frontend processes, followed by the development and office sites, which consume the
+lowest percentage.
+At Infineon, energy is used mainly in the form of electricity in all stages of semiconductor
+manufacturing. Primary energy sources such as oil and gas play only a minor part.
+Efficient energy management
+Energy efficiency and climate protection
+During the 2015 fiscal year, a new waste collection center went into operation at the Villach
+(Austria) site with the aim of improving waste logistics. The center covers a total area of
+1,600 square meters. Furthermore, from the beginning of the new fiscal year, the Villach site
+plans to discontinue recycling its dimethylformamide (DMF) solvent itself and have the work
+performed by an external specialist with further technical capabilities. The change will on the
+one hand improve the quality of the recycled DMF and on the other hand significantly
+increase the recycling rate.
+The WSC has defined the total volume of waste in grams per square centimeter of wafer manu-
+factured to measure the efficiency of waste generation. In the 2014 calendar year, Infineon
+frontend sites worldwide generated around 50 percent less waste per square centimeter of
+wafer manufactured than the WSC global average.
+In the 2015 fiscal year, 67.30 percent of non-hazardous waste and 63.27 percent of hazardous
+waste were recycled. The percentages of the various waste management methods are illus-
+trated in chart 45.
+100%
+In the 2015 fiscal year, Infineon consumed worldwide roughly 1,467 gigawatt hours (GWh)
+of energy. Furthermore, Infineon gave off approximately 1.54 gigawatt hours to external
+50%
+consumers.
+GWh
+Petrol
+900
+0.63
+Liquid gas
+1,200
+98.73
+Natural gas
+1,500
+110.27
+non-renewable
+Direct energy (Scope 1)
+in gigawatt hours
+0.50
+Firewood
+Energy consumption
+0.50
+renewable
+G47
+Direct energy (Scope 1)
+Consumption by energy source is shown in graph 47 and in the adjoining table.
+1 Frontend sites worldwide
+WSC
+Infineon'
+65.51%
+0
+1.58%
+14.96%
+10.75%
+7.20%
+Waste management methods
+in the 2015 fiscal year
+G45
+In the 2015 fiscal year, waste totaled 32,940 tons, comprising 18,273 tons of non-hazardous
+waste and 14,667 tons of hazardous waste. Increases in production played a significant role in
+the increase in waste volumes compared to the previous year.
+Our sustainable waste management is based on waste separation by type. Secure disposal
+methods including recycling are applied depending on the type of waste. All our manufactur-
+ing sites work with certified waste management companies. Apart from statutory requirements,
+fluctuating production and construction projects have the greatest impact on the amounts
+of waste generated.
+Waste management
+99
+99
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+1 Frontend sites worldwide
+The high priority given to sustainable water consumption at Infineon is documented by
+its participation in the United Nations' "CEO Water Mandate". Our Communication on
+Progress regarding this initiative of the UN General Secretary is available on our website,
+@www.infineon.com/csr_reporting. We report on our handling of water and the associated
+opportunities and risks in the "Carbon Disclosure Project (CDP) Water Disclosure".
+According to the definition of the World Business Council for Sustainable Development
+(WBCSD), a water shortage exists when the total volume of renewable water resources avail-
+able in a given area per capita is lower than 1,700 cubic meters per year. We performed a risk
+analysis at country level using the WBCSD's "Global Water Tools" 2015. As a result, Singapore
+is the only Infineon manufacturing site located in an area impacted by water shortages. The
+Singapore site accommodates mainly office and testing areas with low levels of water demand
+and utilized only 0.59 percent of the entire volume of water consumed by Infineon during the
+2015 fiscal year. Nevertheless, water efficiency measures have been undertaken at the site,
+such as the installation of water-saving sanitary systems. For this reason, a further building at
+the Singapore site was awarded the "Water Efficient Building" certificate by the local water
+authority "PUB" during the 2015 fiscal year.
+The World Semiconductor Council (WSC) has defined water consumption in liters per square
+centimeter of wafer manufactured to measure the efficiency of water consumption. In the
+2014 calendar year, Infineon frontend sites worldwide consumed around 21 percent less water
+to manufacture a square centimeter of wafer than the WSC global average.
+After water has exited the manufacturing area, it is either directly or indirectly discharged,
+depending on its level of purity, the technical conditions and official permissions. The per-
+centages of water discharged are shown in chart 42.
+G 44
+Waste generation
+in tons
+20,000
+per square centimeter manufactured wafer
+Standardized waste generation
+Composting
+Incineration
+G46
+■Chemical treatment
+Recycling
+Landfill
+Non-hazardous waste
+2015
+Infineon
+incl. Int.
+Rectifier
+If water fails to meet our purity standards, then it is treated and afterwards used in our manu-
+facturing processes, either for cooling purposes, or to produce ultrapure production water.
+2015
+Infineon
+2013
+2012
+2011
+Hazardous waste
+0
+4,000
+8,000
+12,000
+16,000
+2014
+Net ecological benefit: CO2 emissions reduction of around 35 million tons
+0.40
+Infineon works constantly on developing alternatives for certain materials, such as lead, with
+the aim to use them as replacements, beyond the extent required by law.
+Target achieved:
+Target achievement and summary
+of results in the 2015 fiscal year
+CSR in the supply chain
+G54
+Compliance with our environmental, occupational safety and CSR requirements is an import-
+ant criterion in selecting future suppliers and assessing our current ones. Our Principles of
+Purchasing are based on internationally recognized guidelines, such as the principles of the
+UN Global Compact and the fundamental principles of the International Labour Organization
+(ILO) as well as our Business Conduct Guidelines. The requirements described therein cover
+the topics shown in diagram 54.
+Long-term partnership between Infineon and its suppliers is a core element of our corporate
+philosophy.
+Our responsibility along the supply chain
+105
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+Furthermore, we provide our customers with information on the chemical composition of the
+materials contained in our products.
+None of the Infineon products are in the scope of these directives. However, our customers
+expect Infineon products to meet legal requirements in their applications. The Infineon
+products comply with these requirements and conform to the substances restrictions in all
+applicable legal regulations, including those applicable in countries outside Europe.
+These are on the one hand the 2000/53/EC End-of-Life Vehicles Directive (ELV) and on the
+other hand the 2011/65/EU ROHS Directive that restricts the use of certain hazardous sub-
+stances in electrical and electronic equipment.
+Two important EU directives regulate the use of certain hazardous substances in end products
+as defined by EU legislators.
+The processes involved in manufacturing semiconductors are complex and require a wide
+variety of special chemicals and materials. At Infineon we responsibly manage the handling of
+hazardous substances to safeguard human health and the environment. The products manu-
+factured by Infineon meet all of the requirements set out in the REACH EU chemicals policy
+(Regulation EC 1907/2006).
+Compliance with legal and customer-specific requirements
+2 This figure is based on internally established criteria, which are explained in the explanatory notes. The figure relates to the calendar year 2014 and considers the following
+fields of application: automotive, LED, PC power supply, renewable energy (wind, photovoltaic), drives as well as induction cookers. CO2 savings are calculated on the
+basis of potential savings of technologies in which semiconductors are used. The CO2 savings are allocated on the basis of Infineon market share, semiconductor content
+and lifetime of the technologies concerned, based on internal and external experts' estimations. Despite the fact that CO2 footprint calculations are subject to imprecision
+due to the complex issues involved, the results are nevertheless clear.
+1 This figure considers manufacturing, transportation, function cars, flights, materials, chemicals, water/wastewater, direct emissions, energy consumption, waste, etc. and
+is based on internally collected data and externally available conversion factors. All data relate to the 2015 fiscal year.
+> We installed CSR evaluation
+for suppliers in the new supplier
+management tool and carried out
+evaluations.
+Target for the 2016 fiscal year
+Principles of Purchasing
+Labor
+standards
+Only suppliers who have committed to following our principles can enter into a business rela-
+tionship with Infineon.
+In the 2015 fiscal year we introduced a supplier management portal to provide our suppliers
+with a centralized platform for registering and updating relevant CSR parameters. This
+enables fast evaluations by the various specialists and the determination of further steps in
+cooperation with the suppliers, if necessary (see supply chain information in the chapter
+"Operations").
+Furthermore, our suppliers are contractually obliged to comply with our CSR requirements.
+Business gifts
+Fair business
+practices
+> To harmonize the supplier evaluation
+methodology and reporting with
+International Rectifier in the field
+of CSR.
+Environmental
+protection
+of interest
+Conflict
+Security
+Principles
+of Purchasing
+continuity
+Business
+and health
+safety
+Occupational
+planning
+Human rights
+31,405
+25
+Women in management positions (Infineon worldwide¹)
+G59
+The promotion of women in management positions is one of the key focuses of our diversity
+management policy. However, at currently 13 percent, we have not yet quite been able to
+achieve the objective we set ourselves in 2010 of increasing the percentage of female execu-
+tives in middle and upper management (Global Grade/Technical Ladder Grade 13+) to 15 per-
+cent by the end of the 2015 fiscal year. Nevertheless, the continual increase in recent years
+shows that we are on the right track with the measures undertaken to date.
+62.5
+2 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective comparison group.
+37.5
+20
+3 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+20.0%
+487
+15.0%
+12.1%
+12.5%
+13.0%
+10
+10.2%
+5
+0
+2010
+2013
+2014
+53.6
+15
+46.4
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Our employees
+75.4
+31,405
+26.8
+59.9
+13.3
+2 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective comparison group.
+3 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+2015
+111
+With regard to the breakdown by gender and age structure: Of 13,322 female employees,
+36.2 percent are under 30 years of age, 52.6 percent in the middle age group and 11.2 percent
+are over 50. Of 22,102 male employees, 18.7 percent are under 30 years of age, 64.3 percent
+in the middle age group and 17.0 percent are over 50.
+Middle and senior level management³
+Entry level management³
+Non-management staff
+Total
+1 International Rectifier not included
+Employees
+Female²
+Male²
+Total¹
+4,912
+13.0
+87.0
+5,320
+24.6
+21,173
+Target
+2015
+1 International Rectifier not included
+2020
+Entry level management²
+Non-management staff
+Total
+Per employee¹
+Female¹
+22.5
+26.5
+21.9
+32.1
+28.1
+33.9
+26.7
+29.0
+24.8
+27.2
+28.7
+26.3
+1 International Rectifier not included; calculated on the basis of the monthly workforce in the 2015 fiscal year.
+2 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+Training hours
+Production
+Research & Development
+Sales & Marketing
+Middle and senior level management²
+Target
+Training hours
+Our focus in this area is on professional training aimed at developing the technical know-how
+and innovation skills of our workforce; programs concentrating on improving the leadership
+and feedback culture within the organization; training courses on the development of social
+skills and aptitudes; project management training. In addition, in-house training opportunities,
+such as mentoring programs and on-the-job training, are also of importance to us.
+1 International Rectifier not included
+Under the "Law on Equal Participation of Women and Men in Management Positions in the
+Private and Public Sector", German legislators have introduced the mandatory requirement
+for each gender to have a minimum of 30 percent representation on the supervisory board of
+listed companies subject to co-determination such as Infineon Technologies AG. Furthermore,
+targets have to be set firstly by the Supervisory Board regarding the percentage of women on
+the Management Board and secondly by the Management Board regarding the first two man-
+agement levels below the Management Board (see the chapter "Corporate Governance"). The
+requirement to set targets for the percentage of women also concerns the Supervisory Board
+(in relation to the Board of Directors) and the Board of Directors (in relation to the first two
+management levels below the Board of Directors) of Infineon Technologies Dresden GmbH. Its
+Supervisory Board is also required to set targets regarding the proportion of women on the
+Supervisory Board itself (see the chapter "Corporate Governance").
+Cooperation with universities
+Infineon keenly promotes close contact with both students and academics with the aim of
+recruiting young professionals - for instance though special High Potential programs: Infineon
+is a member of the UNITECH network for the promotion of talented engineers in Europe. In
+the 2015 fiscal year, more than 25 “UNITECH fellows" participated in internships at Infineon.
+Cooperation with the Collège des Ingénieurs (CDI) has been very successful. Infineon has
+established itself as an attractive partner for this international MBA program.
+P see page 182 ff.
+P see page 182 ff.
+112
+G 60
+Training expenses¹
+€ in millions
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+9.2
+8.5
+7.3
+2013
+2014
+2015
+10.2
+P see page 96
+At selected leading universities in China, Infineon organizes "Student Dialogs" and "Infineon
+Days" and maintains "Joint Labs” and “Training Labs" to promote applied research and
+teaching.
+Qualifications and training
+We give high priority to staff training. We keep a permanent eye on our employees with all
+their skills and aptitudes to ensure their personal and professional development.
+In 2015, Infineon invested €9.21 million (2014: €8.5 million) in the further training of its staff.
+In 2015, our staff participated in a total of 836,554¹ hours of training. 39.41 percent of training
+hours was given to female employees and 60.6¹ percent to male employees. Production
+training hours with 72.8¹ percent accounted for the majority of the hours utilized.
+50.9
+nationalities (98)
+21,173
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Our employees
+Our human resource work focuses on the development of our employees and recruitment
+of new colleagues. We are convinced that successful human resource management is key
+to business success, since only satisfied and successful employees make long-term peak
+performance possible and support us in meeting our growth and profitability targets set out
+at the beginning of this report. We endeavor on a daily basis to promote the performance
+and potential of our employees in the best possible way. The three pillars of "Leadership
+excellence", "Promoting talent" and "Our workforce" combine all the activities that we use
+to achieve this objective.
+Acquisition and integration of International Rectifier
+The integration of US semiconductor manufacturer International Rectifier was a key factor in
+decisively shaping our human resources work during the previous fiscal year. At the time of the
+acquisition in January 2015, International Rectifier had a workforce of some 4,200 employees
+in about 20 countries.
+Our human resource work in the integration process focuses on incorporating the International
+Rectifier organization in the Infineon business structure, planning and implementing measures
+to ensure employee commitment, harmonizing remuneration systems and classifying employ-
+ees with effect from January 1, 2016, and support for cultural integration and guidance for
+managers and employees in this process of change by the change management team. A global
+project team of HR colleagues was set up at an early stage to implement the above-mentioned
+measures.
+The International Rectifier staff supported the integration with openness, great interest and
+a high level of commitment. In August 2015, 84 percent of Infineon and International Rectifier
+employees surveyed in the USA stated that they enjoy working at Infineon. We wish to build
+further on this positive feedback in the future.
+The next step in this cultural integration process is to introduce the Infineon High Performance
+Behavior Model as a basis for the further shaping of our common fundamental values.
+G 57
+High Performance Behavior Model
+Trust and
+respect others
+Be passionate
+about profit
+Foster your
+talents
+Team up
+for best
+results
+We commit.
+We innovate.
+We partner.
+We perform.
+Focus on the
+customer
+Drive value
+through
+innovation
+Strive for
+excellence
+Be ambitious
+and manage
+risks
+108
+During the 2015 fiscal year, Infineon enlarged the kindergarten within its Campeon head-
+quarters in Neubiberg (Germany). The extension building now makes it possible for 220 children
+from 34 different countries between the ages of eight months and six years to play together in
+various groups. €4.6 million were invested in enlarging the kindergarten. The Federal State of
+Bavaria contributed roughly one third of the sum. In parallel to the extension and apart from
+other measures, a compensation area was planted. The City of Munich and the local councils
+of Neubiberg, Unterhaching and Ottobrunn were all involved in this inter-communal project.
+The "Sonnenstrahl" association, together with Infineon Technologies Austria AG as cooperation
+partner, opened an international childcare facility focusing on science and technology at
+the Villach (Austria) site. The International Day Care Center has created new, publicly accessible
+childcare facilities and helps employees to combine professional and family life. The public
+facility is based on an innovative concept with an international focus.
+It is our aim to engage with local communities and invest in those. In cooperation with the
+company Kelag, Infineon has again clearly signalized its firm commitment to environment-
+and resource-friendly mobility by installing a state-of-the-art vehicle charging station at its
+Villach (Austria) site. The e-charging station is located on the Infineon parking lot and consists
+of a photovoltaic power plant with an output of 3.8 kilowatts peak (kWp). Charging points
+for e-scooters and e-cars are located under its roof. Battery charging equipment for e-bicycles
+has been installed in the adjacent bicycle parking area. With this project we are contributing
+towards providing the necessary mobility in the most environment- and resource-friendly way
+possible for our employees and the inhabitants in Villach.
+Local investments and services
+G56
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+107
+Examples of the Corporate Citizenship activities of Infineon in the 2015 fiscal year
+Education for
+Future Generations
+Local Social Needs
+> Haus der Zukunft: Initiative of the Federal Ministry of Education and Research
+19,626
+of Technology in Graz, Austria.
+> Chips@school: Pupils and teachers develop new ideas for the use
+of semiconductors
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+> LittleTech: Early support in technologies in kindergardens and primary schools
+> Foundation "Global Compact Network Germany"
+> "Home for single mothers" project in Kulim, Malaysia
+> "SOS Kinderdorf" in Moosburg, Germany
+Natural and
+Humanitarian Disasters
+> Help for the survivors of the earthquake in Nepal
+> Earmarked emergency aid for the medical supply of refugees
+Environmental
+Sustainability
+> Mangroves planting to protect the sea ecosystems in Batam, Indonesia
+> Support of the "EcoCap Movement" in Japan
+> Support of the Regensburg environmental center in Germany
+> "Learn for Life" project in China
+38.9
+109
+Leadership excellence
+Malaysia
+Germany
+Austria
+China
+Indonesia
+Other
+Administrative
+Middle and senior level management³
+Entry level management³
+Non-management staff
+Total
+1 International Rectifier not included
+Employees
+Under 30 years²
+30 to 50 years²
+Over 50 years²
+Total'
+4,912
+72.7
+27.3
+5,320
+3.2
+84.1
+12.7
+Infineon employs 35,424 persons of different nationalities. The five most prevalent nationali-
+ties represent a total of 74.8 percent of the workforce, with Malaysian nationals accounting
+for 26.2 percent and German nationals for 25.0 percent. A further 90 nationalities have a share
+of the total workforce of less than 1 percent each.
+As an international company, the diversity of our staff is particularly important to us. Our
+global diversity management provides the framework for a corporate culture which values the
+individuality of each staff member and promotes equal opportunities - irrespective of age,
+disability, ethnic-cultural origin, gender, religion, belief, or sexual identity. The focal points of
+our commitment to diversity may vary from one location to another and are tailored to suit
+local needs. For example, the diversity team in the Asia-Pacific region concentrates in particular
+on ethnic-cultural diversity and the demographic trend.
+Encouraging diversity
+In the Asia-Pacific region, due to the expectations of employees and the specific local context,
+in addition to the Infineon career paths we offer specially developed talent management pro-
+grams: "ENGINE" for management careers and "TechStar" for technical careers. Both programs
+focus on the key areas of training, interaction with management and the practical application
+of what has been learnt in specific projects.
+Open and honest feedback
+We believe that without honest and open feedback, it is not possible for an organization to
+develop. This basic premise is reflected in our values, which are collectively defined in our
+"High Performance Behavior Model”. These values are not purely theoretical. The High Perfor-
+mance Behavior Model shows how we aim to achieve Infineon's targets and set priorities.
+These behavioral descriptions play a significant role, for example, in our annual dialogs with
+employees under the global STEPS process (abbreviation for "Steps To Employees' Personal
+Success"). However, our fundamental culture of openness does not stop here. Feedback from
+teams to their managers is just as important as feedback from managers to staff. We have,
+therefore, established the format of the "leadership dialog", which is carried out every two
+years, as a supplement to the STEPS dialogs.
+The leadership dialog enables managers to obtain structured feedback from their staff, which
+helps them to reflect on their individual leadership conduct, identify strengths and potential
+areas for improvement, and hence promote cooperation, both with and within the team.
+Open feedback is always important to us in constructive dialog with our employees' represen-
+tatives at the various sites. Co-determination is a key factor in our human resources work.
+Together, and in a spirit of trust, we are building the basis for successfully implementing our
+key topics in the respective bodies, and especially in the Central Works Council and the Manage-
+ment Staff Representation Committee.
+Management development
+Good leadership is fundamental for Infineon's success, as it enables each individual to perform
+his or her tasks effectively and thereby contribute to the success of the company. At the same
+time, our employees expect to be able to develop their skills and competences in a suitable
+environment. With this in mind, creating an attractive working environment and long-term
+employee retention at Infineon are key tasks for our managers.
+We provide support for our managers in the form of numerous learning and development
+opportunities at the various leadership levels. Our approach to learning involves a variety
+of methods based on both theory and practice. We work on concrete practical examples at
+face-to-face training events and through computer-based training.
+An example of our course offerings is the "New Leader Orientation” program – an in-house
+workshop for new managers focusing on leadership culture and management tools at Infineon.
+In addition, Infineon ensures further development of leadership skills through the manage-
+ment training course "Leading People in a High Performance Company", to ensure that
+employees are motivated to meet Infineon's challenging objectives and that these skills can
+be passed on. By the end of the 2015 fiscal year, more than 2,100 managers at various levels
+worldwide had participated in this training. In a further training program “Leadership & Health",
+our top managers learn to identify stress factors at the workplace more effectively and to
+mitigate them. The “Health & Care" computer-based training also presents the aspect of
+health as a management task.
+In the context of reviewing the management career, we intend to offer further management
+training programs under the "Infineon Leadership Excellence Program" from the coming fiscal
+year. By combining specific in-house aspects with proven leadership practices, our aim is to
+continue promoting a uniform understanding of leadership within Infineon.
+110
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Our employees
+G58
+(Infineon worldwide 2015)
+25.2%
+26.2%
+6.8%
+8.0%
+25.0%
+8.8%
+Promoting talent
+Talent marketing and management
+At Infineon, depending on their individual knowledge and talents, development opportunities
+are available to employees in a variety of careers, based on Infineon's needs. Three career paths
+are already established: professional careers as an “Individual Contributor", in which individual
+expertise in a traditional business field, such as finance, purchasing or sales, is promoted; the
+"Technical Ladder", which enables our technical experts to develop; and the Management
+career path for (junior) managers. A further career path - the Project Management career - was
+introduced in summer 2015. This career path aims to offer our project managers clear pros-
+pects for their personal development and careers - and emphasizes the importance of imple-
+menting development projects for Infineon's success. The new career path provides project
+managers with optimum training to fulfil their tasks and empowers them to contribute their
+experience specifically to new projects.
+Due to the international nature of our business, we wish to offer our staff development pros-
+pects beyond organizational and national boundaries. The worldwide Development Confer-
+ences, during which managers discuss the further development of our talents with the Human
+Resources department, are an important instrument in this endeavor.
+Nationalities
+Total
+> Cooperation with the association of "Industrial Engineers" of the University
+Per employee¹
+G62
+9.4
+21.7
+7.2
+11.8
+11.6
+2.1
+3.4
+9.0
+departures²
+Rate of staff
+Male
+Female
+1 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective region.
+2 Figures in percent, calculated on the basis of the monthly workforce in the 2015 fiscal year.
+166
+12
+219
+1,927
+195
+476
+3,048
+Staff departures
+8.5
+16.8
+6.3
+19.8
+15.0
+7.0
+633
+7.0
+Age structure
+Under 30 years
+The foundations for the first manu-
+facturing building for 1-megabit
+memory chips in Regensburg were
+laid on October 23, 1984. Only two
+years later, in October 1986, the
+first samples were already manu-
+factured. The volume production
+started in December 1987. However,
+memory chips are no longer pro-
+duced in Regensburg. Today, this
+site manufactures sensors, power
+semiconductors and logic and
+radio-frequency components.
+October 2014
+30 years of microchips
+from Regensburg
+Notable events 2015
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+116
+Over 50 years
+30 to 50 years
+14.8%
+59.9%
+25.3%
+(Infineon worldwide 2015)
+2.7%
+(new entries worldwide 2015)
+33.1%
+Under 30 years
+Age structure
+G 63
+Over 50 years
+30 to 50 years
+With this aim in mind, our human resources work continues to focus on the pillars "Leadership
+excellence", "Promoting talent" and "Our workforce". Furthermore, the "HR Operational
+Excellence" initiative continues to improve our key processes in human resources. With stable
+processes, successful HR projects and efficient instruments, in our role as strategic partners
+and advisers to management and staff, we accompany Infineon on its high-performance path.
+Our human resource-related work is focused on sustaining successful initiatives and programs
+and developing new measures in response to present requirements. The long-term human
+resources strategy contributes ever anew to meeting Infineon's high-performance claim: Our
+aim is for our staff to be deployed competently and correctly, and to be motivated through
+personal success to contribute to Infineon's overall success.
+Outlook
+The higher average age of employees is reflected in a slight increase in the average length
+of service of Infineon employees worldwide, which rose from 9.4 years in the previous year
+to 9.6 years in the 2015 fiscal year. The average length of service of Infineon employees in
+Germany was 14.3 years, marginally lower than the previous year's 14.4 years.
+The average age of employees worldwide in the 2015 fiscal year is 38.1 years, marginally
+higher than one year earlier (2014 fiscal year: 37.1 years). The proportion of employees below
+30 s of age fell (2015 fiscal year: 25.3 percent, 2014 fiscal year: 27.5 percent). Likewise, the
+years
+proportion of the middle age group (2015 fiscal year: 59.9 percent, 2014 fiscal year: 60.2 per-
+cent) is lower, whereas the share of the group over 50 years of age has risen (2015 fiscal year:
+14.8 percent, 2014 fiscal year: 12.3 percent).
+Age structure and length of service
+Of the departures, 1,371 were women and 1,677 men. 1,727 employees were in the under-30 age
+group, 1,071 in the middle age group (30-50 years) and 250 in the over-50 age group. The
+worldwide employee turnover rate during the 2015 fiscal year was 9.0 percent, which represents
+a slight increase of 0.1 percentage points compared to 8.9 percent in the previous year. In
+Germany, the employee turnover rate was 2.1 percent (previous year: 3.4 percent). The per-
+centage figure includes voluntary terminations and other reasons for leaving.
+There were 3,048 staff departures from Infineon in the 2015 fiscal year. Of these, the majority
+(1,927 employees) were in the Asia-Pacific region, where the majority of new recruitments also
+occurred (2,562 employees). Employee turnover in the Americas region increased to 21.7 per-
+cent in the 2015 fiscal year, compared to 6.3 percent one year earlier. The increase is due to the
+inclusion of the new manufacturing site in Mexico, acquired in conjunction with the integration
+of International Rectifier. A high turnover in manufacturing is commonplace in Mexico. We are
+nevertheless working on bringing the figure down.
+64.2%
+11.9
+employees¹
+Rate of newly hired
+Total
+12
+1,529
+1,541
+10
+2,402
+2,412
+Female
+Employees on fixed-term contracts
+5
+1,335
+1,340
+7
+35,424
+1,982
+Male
+783
+8,734
+9,517
+854
+10,056
+10,910
+Female
+Employees on permanent contracts
+381
+17,028
+17,409
+1 International Rectifier not included; calculated on the basis of the monthly workforce in the 2015 fiscal year.
+1,989
+34,066
+1,358
+29,807
+181
+619
+11
+393
+2,562
+659
+1,014
+4,206
+employees
+Newly hired
+54.0%
+USA
+46.0%
+Therein:
+Americas
+Japan
+Asia- Therein:
+Pacific China
+Total Europe Therein:
+Germany
+(new entries worldwide 2015)
+Female/male employees
+G 61
+In total, 4,206 new employees were hired worldwide during the 2015 fiscal year, of whom
+1,933 were women and 2,273 men. 2,703 employees were under 30 years of age, 1,391
+belonged to the 30-50 age group and 112 were over 50 years of age.
+Employee recruitment and turnover
+115
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Our employees
+The worldwide personnel cost for current internal Infineon employees in the 2015 fiscal year
+totaled €1,939 million (2014 fiscal year: €1,490 million). The amount includes wages and
+salaries, including overtime and allowances, as well as social costs (pension expenses and
+social contributions).
+Employees, who were, for example, on parental leave or in the non-working phase of early
+retirement part-time working arrangements, are not active employees and therefore not
+included in the tables above. Similarly, temporary employees are not included. At September 30,
+2015, 2,654 temporary employees were working for Infineon worldwide, of whom 1,323 were
+women and 1,331 men. Approximately 77 percent of the external workers were employed in
+production, giving Infineon flexibility in its manufacturing capacities.
+1,181
+28,626
+November 2014
+International Rectifier
+shareholders approve
+acquisition
+Male¹
+January 2015
+Successful closing of
+the acquisition of
+International Rectifier
+Europe
+Therein: Germany
+Asia-Pacific
+Therein: China
+Japan
+Americas
+Therein: USA
+Total
+Number of employees
+Employee reporting was prepared in accordance with the requirements of the global report-
+ing initiative (GRI). Reporting in accordance with GRI covers all active, internal employees.
+Employees and personnel expense
+As of September 30, 2015, Infineon had a worldwide workforce of 35,424 employees, com-
+pared to 29,807 employees one year earlier. In addition, at September 30, 2015, Infineon
+employed a total of 267 apprentices and dual students, 80 interns and 846 working students.
+74 new apprentices and dual students were hired in the 2015 fiscal year.
+2015
+Employees by geographical region
+2014
+Female
+Male
+Total
+Female
+Male
+14,533
+3,499
+11,034
+13,179
+3,136
+10,043
+9,426
+2,415
+Total
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+114
+Infineon wants to attract the best possible staff and for that reason attractive, market-oriented
+remuneration and appropriate participation in the Company's success are a matter of course.
+We pay our staff on the basis of work-related criteria, such as job requirements and perfor-
+mance, and in accordance with the respective local market requirements. Men and women are
+paid equally at Infineon. Each employee shall receive appropriate, transparent remuneration
+for their work, in compliance with all legal standards.
+27.0
+IOR
+32.4
+20.9
+18.7
+27.2
+Our workforce
+Health management
+The health of our staff is extremely important to us and therefore we protect and promote it
+through our occupational health management programs. Preventive programs, such as
+"Fit4Health" in Germany and Austria or "Leadership in Healthy Lifestyle" in Singapore, boost
+health awareness in our staff. Additional demand-oriented local health initiatives supplement
+the range of measures on offer. Our occupational health management has received various
+awards: the "Corporate Health Award" for excellence, the quality label "BGF Österreich" and
+the "Singapore Health Award Gold".
+We attach great importance to providing our staff with a safe working environment. Our
+approach to occupational safety and health is based on the principle of prevention (see the
+chapter "Sustainability at Infineon").
+1 Not including International Rectifier.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+113
+Competence development
+How do we equip ourselves optimally for the working world of the future? We endeavor to
+answer this question with our strategic competence management program, which identifies
+the skill sets necessary for the future and suggests relevant development paths.
+Our offering of functional training is made available primarily via the "Academy Connect"
+platform. Cooperation has been established among a total of 11 global “functional academies"
+operating in specific segments and fields, with a view to providing coordinated learning to
+build up professional expertise. Academies exist, for example, in the fields of purchasing, finance,
+manufacturing, quality management and supply chain. The contents of courses available from
+the "PMM Power & RF Academy" have been devised especially for the Power Management &
+Multimarket segment and cover sales, marketing and applications development. The learning
+content on offer is expanded on an ongoing basis, as through the professional and targeted
+development of our staff we aim to reinforce our corporate strategy and increase productivity.
+Fringe benefits
+Fringe benefits are a longstanding tradition at Infineon and are also offered in various forms.
+All benefits form an integral part of the overall remuneration concept and reflect Infineon's
+responsibility to its staff. The scale and nature of the benefits are determined in accordance
+with the relevant regional statutory and standard market requirements. No distinction is
+made in this respect between full-time and part-time staff.
+In Germany and the Asia-Pacific region (including Japan), for example, in addition to employer
+and employee-financed pension plans, benefits granted include the items listed below (the
+exact arrangements are specific to each location):
+Industrial accident insurance
+Paid sick leave beyond the statutory minimum
+Continued wage payment to surviving dependants
+in the event of death
+Sabbatical
+Flexible transition to retirement pension
+Company car for work or as additional benefit
+Private car leasing from gross deferred compensation
+Long-service awards
+Preventive health program
+Family-friendly services, such as for example in-house
+kindergartens or working together with local organi-
+zations offering day-care facilities for children, vacation
+activities for children
+In the Asia-Pacific region (including Japan), in addition to these benefits, site-specific life
+insurance as well as hospital group insurance policies are also offered, which extend beyond
+the statutory provisions.
+Infineon also encourages various work-time models aimed at keeping working hours flexible,
+depending on individual employees' circumstances - such as in the form of trust-based work-
+ing hours, part-time work or teleworking arrangements. In the Asia-Pacific region (including
+Japan), for example, 90 percent of all sites already offer flexitime and 70 percent of all sites
+offer teleworking options.
+Compensation
+7,011
+8,888
+Our employees
+6,623
+11,058
+18,749
+Due to the acquisition of International Rectifier, there was an increase of 3,126 employees in
+the Americas. Almost half of the entire workforce was employed in the Asia-Pacific region
+(17,035). 41 percent of all employees were employed in Europe (14,533), with the majority
+working in Germany (9,426).
+In the workforce as a whole, at September 30, 2015, 2,412 female employees and 1,989 male
+employees had fixed-term contracts and 10,910 female employees and 20,113 male employees
+had permanent contracts. A total of 1,358 employees were working part-time at that date.
+2015
+2014
+Total
+Full-Time
+Part-Time
+Total
+Full-Time
+Part-Time
+Male
+29,807
+20,113
+Infineon issues two
+Eurobonds worth a total
+of €800 million
+March 2015
+Infineon acquires a 9.4 percent stake in the circuit-board manufacturer Schweizer
+Electronic AG in Schramberg (Germany). Infineon's stake is geared towards the
+development of technologies to embed power semiconductors into circuit boards
+and to expand the chip embedding technology to high-power automotive and
+industrial applications. While circuit boards are assembled on their front and
+backside today, chip embedding technology will enable the semiconductors to
+be "embedded" on the inside of the circuit board in the future. This makes the
+circuit board smaller. Systems with limited space in vehicles will benefit from this
+development; such as the electrical power steering system, active suspension
+or electrical pumps.
+ELECTRONIC
+SCHWEIZER
+November 2014
+Combination
+A Powerful
+=
+Infineon +IOR
+After the shareholders of Inter-
+national Rectifier had approved the
+transaction with a great majority
+in November 2014, the relevant
+authorities also issued the required
+releases. This makes the El Segundo
+(California, USA)-headquartered
+company part of Infineon as of
+January 13, 2015.
+2,265
+During an extraordinary general
+meeting, the shareholders of Inter-
+national Rectifier agreed to the
+planned acquisition by Infineon by
+a majority of 99.5 percent.
+Infineon has issued two Eurobonds
+with a total amount of €800 million.
+This transaction is the first of its
+kind in the Company's history.
+The issue proceeds replace the
+bridge financing granted by banks,
+which Infineon had secured in
+August 2014 for the acquisition of
+International Rectifier.
+22,102
+Infineon purchases shares
+of Schweizer Electronic
+183
+8,312
+8,723
+373
+17,035
+15,936
+7,715
+1,986
+980
+1,006
+1,748
+813
+935
+174
+36
+8,221
+138
+2,136
+35,424
+1,454
+373
+556
+2,207
+556
+183
+3,682
+112
+24
+136
+1,475
+682
+13,322
+DAX
+The criteria applied for testing membership in the DAX are the average market capitalization
+and trading volume in euro. Essential for the calculation of market capitalization are on the
+one hand the number of shares outstanding and on the other hand the number of free-float
+shares. As a result of the exercise of employee stock options, the number of shares in issue
+increased during the 2015 fiscal year by 1,532,251 shares to stand at 1,129,271,481 shares at
+September 30, 2015. The corresponding figure at the end of the previous fiscal year was
+1,127,739,230 shares. With the exception of 6 million own shares held by Infineon, all shares
+are deemed to be free float and hence taken into account in the calculation of the average
+market capitalization, which rose from €9.9 billion in the 2014 fiscal year to €10.9 billion in
+the 2015 fiscal year. In terms of its DAX ranking, Infineon improved by two places, moving up
+from place 24 at the end of the 2014 fiscal year to place 22 at the end of the 2015 fiscal year.
+SOX
+-
+Dow Jones US Semiconductor Index
+-
+Trading volumes and inclusion in indices
+The average volume of Infineon shares traded per day, measured in units, in the Xetra system,
+on the Frankfurt trading floor and on German regional stock exchanges, increased by 4 percent
+in the 2015 fiscal year to 7.6 million shares, compared to 7.3 million one year earlier. In euro
+terms, the average volume of Infineon shares traded per day rose year on year by 24 percent
+from €59.3 million to €73.7 million.
+The Infineon share is traded in the USA in the form of American Depositary Shares ("ADS")
+on the OTCQX International over-the-counter market under the ticker symbol "IFNNY". The
+average trading volume of 147 thousand ADS per day was more than double the 67 thousand
+ADS traded per day in the previous year. The number of ADS outstanding also rose sharply
+to a total of 23.2 million at September 30, 2015, compared to the 10.2 million ADS in circulation
+at the end of the previous fiscal year.
+The Infineon share was included in the Dow Jones Sustainability™ Europe Index for the first
+time in September 2010. There is an annual test for each company included to confirm that
+the criteria for retention in the index have been met. Infineon's compliance with these criteria
+was confirmed in September 2015 for the sixth year in succession. Moreover, Infineon was
+also included - for the first time and as the only European semiconductor manufacturer - in
+the Dow Jones Sustainability World Index, putting Infineon into the echelons of the top ten
+percent of sustainable semiconductor manufacturers worldwide. For further information on
+the topic of sustainability, please see the chapter "Sustainability at Infineon”.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+121
+The Infineon Share
+The prime objective of our communications with the capital market is to provide regular
+and detailed information to analysts as well as to current and future shareholders, investors
+and bondholders about Infineon's economic and technological developments.
+Dividend
+At the Annual General Meeting held in Munich on February 12, 2015, the shareholders approved
+the proposal, jointly put forward by Infineon's Management Board and Supervisory Board, to
+increase the dividend substantially. In May 2014, Infineon announced that the expected annual
+ratio of investments to revenue will decrease from approximately 15 percent to approximately
+13 percent. Infineon is also convinced that the acquisition of International Rectifier, announced
+on August 20, 2014 and closed on January 13, 2015 will make a positive contribution to Segment
+Result and free cash flow over the full economic cycle. With this in mind, the Management
+and Supervisory Boards presented a proposal at the Annual General Meeting that the dividend
+be increased by 6 cents from €0.12 to €0.18 per share. As a consequence, a total amount of
+€202 million was paid to the shareholders on February 13, 2015. Based on the good earnings
+performance in the 2015 fiscal year and Infineon's positive business outlook, a proposal will
+be made to the Annual General Meeting to be held in February 2016 to increase the dividend
+by a further 2 cents to €0.20.
+Infineon's strategy is to pursue a dividend policy that enables shareholders to adequately
+participate in growing earnings or, in times of flat or declining earnings and/or with negative
+free cash flows, to keep the dividend at least at a constant level.
+Infineon bonds
+- Infineon
+In March 2015, Infineon issued two bonds, one maturing in three-and-a-half years (€300 million)
+and one in seven years (€500 million), the first with a nominal interest rate of 1 percent and
+the second with a nominal interest rate of 1.5 percent. The two bonds have been listed since
+March on the Luxembourg Stock Exchange and also traded on German stock markets. The
+ISIN codes for the bonds are XS1191115366 and XS1191116174 respectively.
+Communication with capital markets
+The second relevant criterion is the euro volume of shares traded during the past 12 months
+in the Xetra system and on the Frankfurt trading floor. The total trading volume of the Infineon
+share climbed from €14.2 billion in the previous fiscal year to €17.7 billion in the 2015 fiscal year.
+This places Infineon in place 21 in the DAX ranking after place 20 in the 2014 fiscal year.
+09 |2015
+80
+07|2015
+September 30, 2014 = 100
+150
+The Annual Report, Quarterly Reports and telephone conferences held in conjunction with the
+release of financial data plus a whole range of detailed information, figures and tables made
+available on the Infineon website, form the basis for our communication with capital market
+participants.
+140
+130
+9.01
+8.19
+7.37
+120
+110
+08|2015
+100
+6.55
+10|2014
+11|2014
+12|2014
+01|2015
+02|2015
+03|2015
+04|2015
+05|2015
+06|2015
+90
+A further component of our Investor Relations activities is communication with analysts and
+investors at conferences and roadshows. During the 2015 fiscal year, the three members of
+the Management Board, the segment Heads, as well as the Investor Relations team, were all
+involved in capital market communication activities. We participated in nine investor confer-
+ences in Europe and the USA and organized eight roadshows. To provide detailed information
+on the business, a telephone conference was held for the Chip Card & Security segment as
+well as an investor conference in London for the Automotive segment. Investors were able to
+listen to the investor conference via webcast. All presentations and webcasts can be viewed
+and downloaded from the Investor Relations section of the Infineon website via "Reporting/
+Download Center". In addition to the events described above, a whole host of discussions
+were held with analysts and investors at group meetings, on a one-to-one basis and in telephone
+conference calls. More than 35 analysts continuously monitor Infineon's business perfor-
+mance and publish analyses on a regular basis. Prior to the placement of the two bonds in
+March 2015, a bond roadshow was held for institutional investors.
+Awards
+fiscal year
+Being at the forefront of technology, Infineon is the recipient of numerous awards and
+prizes – in the fields of research and development, production and quality on the one
+hand, as well as for its accomplishments in organization and processes on the other.
+The following overview shows a selection of the awards Infineon received during the
+course of the 2015 fiscal year.
+November 2014
+Work-Life Excellence Award
+The Tripartite Committee on Work-Life
+Strategy in Singapore has awarded
+Infineon for its efforts in creating a
+culture of balance between work and
+time off within the Company.
+European Supply Chain Excellence
+Award 2014
+Infineon received the 18th European Supply
+Chain Excellence Award in the category
+Automotive, Aerospace & Industrial in
+London for its excellent organization and
+administration of the entire supply chain
+as well as the results of the BEAR project
+(Backend Automation Roadmap). This was
+awarded in cooperation with Pricewater-
+houseCoopers.
+December 2014
+Ericsson Supply Excellence
+Award 2014
+Ericsson presented the Supply Excellence
+Award to Infineon for its outstanding
+delivery reliability and delivery quality
+in the 2014 calendar year.
+National Occupational
+Safety and Health
+Excellence Award 2014
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+The Malaysian Minister of Human
+Resources, Yang Berhormat Dato' Sri
+Richard Riot Anak Jaem, presented
+the National Occupational Safety and
+Health Excellence Award 2014 to
+Infineon for its continuous efforts to
+increase occupational safety at its
+manufacturing sites.
+Global Semiconductor Alliance (GSA)
+presents this prize, which Infineon
+GSA
+2014 AWARDS
+received in December
+2014, to semiconductor
+companies in the region
+of Europe, Middle East
+and Africa (EMEA)
+that have proven to be
+the strongest in terms
+of products, vision,
+leadership and market
+success. Members of
+the GSA include companies along the
+entire semiconductor supply chain
+from 30 countries.
+WINNER
+Supply ChainStandard
+european
+supply chain
+excellence
+тиму
+enc
+GSA honors Infineon as
+outstanding EMEA semi-
+conductor company
+122
+E-mail: investor.relations@infineon.com
+Fax: +49 89 234-955 2987
+2010
+Dividend for
+Dividend
+per share
+€0.10
+2011
+€0.12
+2012
+€0.12
+2013
+€0.12
+2014
+€0.18
+Proposal 2015
+€0.20
+@We use our Financial Calendar to inform
+interested parties of forthcoming reports
+and of our attendance at investor confer-
+ences: www.infineon.com/investor
+@Interested parties are able to participate
+in telephone conferences via a webcast in
+the Investor Relations section of the
+Infineon website:
+www.infineon.com/investor
+@www.infineon.com/investor
+I Retail investors can reach
+us via e-mail or telephone hotline
+with their questions:
+Phone: +49 89 234-26655
+P see page 92 ff.
+9.83
+Dodge & Cox Investment Managers
+11.47
+Year high
+13.42
+12.84
+10.35
+Year low
+8.80
+9.24
+6.47
+Daily average ADS traded
+146,820
+9.98
+66,501
+Shareholder structure¹
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The Infineon Share
+119
+awards 2014
+WINNER
+Thereof: Dodge & Cox International Stock Fund
+The Capital Group Companies, Inc.
+Thereof: Capital Research and Management Company
+Thereof: EuroPacific Growth Fund
+BlackRock, Inc.
+Thereof: BlackRock HoldCo 2, Inc.
+80,678
+10.30
+11.31
+Fiscal year closing (end September)
+Germany: Xetra closing in €
+Fiscal year closing (end September)
+Year high
+Year low
+10.06
+8.19
+7.40
+12.17
+9.42
+7.61
+6.95
+6.88
+4.96
+Daily average shares traded on regulated
+German stock exchanges
+7,602,198
+7,294,896
+8,134,049
+Thereof: Xetra trading in %
+95
+94
+94
+USA: OTCQX closing in US$
+Thereof: BlackRock Financial Management, Inc.
+10.65
+Allianz Global Investors Europe GmbH
+Thereof: Kuwait Investment Authority
++36.0%
++103.6%
+DAX
++2.0%
++12.4%
++33.9%
+Philadelphia Semiconductor Index (SOX)
+(5.6%)
++22.8%
++57.7%
++22.7%
+Dow Jones US Semiconductor Index
++22.7%
++54.3%
+Further share price increase in the 2015 fiscal year
+The upward trend of the Infineon share seen in previous years continued during the 2015 fiscal
+year, finishing the fiscal year at September 30, 2015 at a closing price of €10.06, 23 percent
+higher than its closing price of €8.19 one year earlier.
+After falling slightly at the beginning of the fiscal year, at which stage the low for the year of
+€6.95 was recorded, the share price rose relatively evenly during the remainder of the first half
+of the fiscal year. The volatility of the stock increased in spring 2015, with the Infineon share
+reaching its high for the year of €12.17 at the end of May. The subsequent share price correction
+took the price down to €8.69, followed by a recovery which took it up to its closing price of €10.06.
+The benchmark indices gained significantly less over the course of the 2015 fiscal year and
+were also less volatile. The DAX finished the twelve-month period to September 30, 2015 with
+a small gain of 2 percent. The US benchmark indices were not quite able to make good the
+losses recorded in the summer and closed at September 30, 2015 at levels lower than one year
+earlier, the Philadelphia Semiconductor Index (SOX) was 6 percent down and the Dow Jones US
+Semiconductor was 7 percent down.
+120
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G 64
+Development of the Infineon Technologies AG share compared to Germany's DAX Index and Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index from the beginning of the 2015 fiscal year (daily closing prices)
+Infineon share price in €
+12.29
+(6.8%)
+Infineon (Xetra)
+September 30,
+2012
+September 30,
+2013
+Sun Life Financial Inc.
+Thereof: Sun Life Global Investments Inc.
+Thereof: Sun Life Assurance Company of Canada -
+U.S. Operations Holdings, Inc.
+Thereof: Sun Life Financial (U.S.) Holdings Inc.
+9.95% (as per August 5, 2009)
+9.88% (as per August 5, 2009)
+8.02% (as per September 1, 2012)
+5.06% (as per July 28, 2011)
+4.98% (as per June 9, 2015)
+5.003% (as per May 7, 2015)
+5.004% (as per June 23, 2015)
+5.004% (as per June 23, 2015)
+5.02% (as per April 17, 2015)
+3.25% (as per December 23, 2014)
+3.25% (as per December 23, 2014)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+Thereof: Sun Life of Canada (U.S.) Financial Services Holdings Inc.
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+Thereof: Sun Life Financial (U.S.) Investments LLC
+Thereof: Massachusetts Financial Services Company MFS
+1 The number of shares held by, or attributable to, the investors listed above has been taken from the most recent
+mandatory notification received by Infineon Technologies AG from each of the relevant entities in accordance with
+sections 21 and 22 WPHG. The percentage disclosures are based on the share capital or number of shares at the
+date of receipt of each notification. Details of voting rights notified to the Company in accordance with sections 25
+and 25a WPHG which, in addition to shares actually held and to attributable shares, also take account of financial or
+other instruments which give an entitlement to acquire further shares, are published regularly on Infineon's website.
+@www.infineon.com/cms/en/
+about-infineon/investor/infineon-share/
+shareholder-structure
+Performance of the Infineon share and worldwide indices through September 30, 2015 since:
+September 30,
+2014
+State of Kuwait
+Automotive, Aerospace & Industrial
+Sa
+Infineon received two awards from the
+Chinese network manufacturer Huawei
+in the calendar year 2014. For its close
+partnership during the LTE development
+in China, Infineon was honored with
+the Excellent Core Partner Award. The
+Group also received the Excellent
+Quality Award.
+1 The calculation is based on unrounded figures. Own shares were not taken into consideration
+for calculation of market capitalization.
++10.0%
+11,554
+12,704
+Market capitalization' US$ in millions
++22.9%
+9,190
+11,294
+Market capitalization' € in millions
++0.1%
+Infineon share statistics
+1,128
+Shares issued' in millions
++0.1%
+2,255
+2,259
+Share capital' € in millions
+2014
+Change
+September 30, September 30,
+2015
+As of
+Infineon Technologies AG share capital, shares outstanding and market capitalization
+1,129
+Dow Jones Sustainability World Index
+Fiscal year ending September 30
+Our 2015 fiscal year
+Espoo Sa
+Bucharest R&D
+Istanbul Sa
+Seoul R&D Sa
+Cheonan M
+Nagoya Sal
+Osaka Sa O
+Tokyo Sa
+Xi'an Sa O
+Wuxi MOO
+Kulim M
+2015
+Ipoh R&D
+Singapore Dc R&D M Sa
+Batam M
+Shenzhen Sa
+Hong Kong Sa
+Shanghai Dc R&D Sa
+Taipeh Sa
+● Muntinlupa Sf
+Moscow Sa ○
+126
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Malacca R&D MO
+Dow Jones Sustainability™ Europe Index
+S&P-Europe-350
+MSCI Germany
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+118
+Helmut Warnecke (Managing Director of the Dresden site), Klaus Walther (Corporate Vice President
+Communications and Public Authorities & Associations), Federal Minister Prof. Dr. Johanna Wanka,
+Dr. Reinhard Ploss (CEO of Infineon), German Chancellor Dr. Angela Merkel, Prime Minister Stanislaw Tillich,
+Peter Schiefer (President Operations), Mathias Kamolz (Managing Director of the Dresden site).
+From left to right:
+LSPS develops, manufactures and
+sells IPMS (intelligent power mod-
+ules) that enable a higher energy
+efficiency in household appliances
+and air conditioning systems.
+On April 30, 2015, Infineon acquired
+the remaining shares in LS Power
+Semitech Co., Ltd. (LSPS) (Korea).
+The remaining share in the amount
+of 33.6 percent was transferred from
+the previous joint venture partner
+LS Industrial Systems Co., Ltd.
+(Korea) to Infineon.
+Infineon
+Complete acquisition
+of LSPS
+April 2015
+@A full overview of other major indices,
+in which the Infineon share is repre-
+sented, can be found on Infineon's
+website at www.infineon.com/cms/en/
+about-infineon/investor/infineon-share/
+Tech
+Other items on the agenda included a presentation in the analysis and
+characterization laboratory along with a live broadcast from the fab,
+during which the guests were able to see an existing Industrial Internet
+(Industry 4.0) manufacturing.
+German Chancellor Dr. Angela Merkel visited the Infineon site in Dresden
+on July 14, 2015 as part of her trip to Dresden's microelectronics cluster.
+She was accompanied by the Federal Minister for Education and Research
+Prof. Dr. Johanna Wanka and the Minister President of Saxony Stanislaw Tillich.
+They discussed the political framework for a competitive German development
+and production sector together with representatives from Infineon.
+Chancellor Dr. Angela Merkel visits Infineon Dresden
+July 2015
+In the scope of a capital increase
+by Vienna (Austria)-based TTTech
+Computertechnik AG, Infineon
+acquired a stake in this company
+which is specialized in highly
+reliable, networked and safety-
+relevant control systems in vehicles.
+Infineon and TTTech have worked
+together for many years, includ-
+ing on central driver assistance
+systems such as "ZFAS" by Audi
+(see opening page of "Automotive"
+in the chapter "The segments"
+P see page 54).
+Infineon invests in TTTech
+March 2015
+117
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notable events 2015
+2013
+Since the site's foundation in 1994, the fab in Dresden has been visited by all
+of the German Chancellors: Dr. Helmut Kohl for the groundbreaking ceremony
+for the 200-millimeter fab in June 1994, Gerhard Schröder for the ground-
+breaking ceremony for the 300-millimeter memory fab in May 2000, and now
+Dr. Angela Merkel in 2015.
+index-membership/
+The Infineon Share
+Share information
+Dow Jones Germany Titans 30
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones STOXX Europe 600
+DAX 30
+IFXGN.DE
+IFX GY (Xetra trading system), IFNNY US
+45662N103
+Index membership
+(selected)
+Reuters
+Bloomberg
+CUSIP
+Identification Number (WKN) 623100
+DE0006231004
+German Security
+ISIN Code
+6 million shares (as of September 30, 2015)
+Shares: Frankfurt Stock Exchange (FSE)
+ADS: over-the-counter (OTC) market (OTCQX)
+Options issued by third parties: inter alia Eurex
+IFX, IFNNY
+€2,259 million (as of September 30, 2015)
+1,129 million (as of September 30, 2015)
+Ordinary registered shares in the form of shares or American Depositary
+Shares (ADS) with a notional value of €2 each (ADS: shares = 1:1)
+Ticker symbol
+Option trading
+Own shares
+Listings
+Share capital
+Shares issued
+Share types
+Beijing R&D M Sa ●
+Two awards from Huawei
+O Padova R&D
+● Graz R&D
+Klagenfurt Sf
+Villach R&D M Sa
+Best Quality Award from Xiaomi
+During the 2015 Annual Supplier Days
+organized by the Chinese mobile tele-
+phone manufacturer Xiaomi, Infineon
+received the Best Quality Award for the
+first time.
+April 2015
+Excellent Quality Award from Toyota
+Infineon received the Excellent Quality
+Award from Toyota in April 2015 for
+supplying products with a consistently
+outstanding quality for many years. The
+award was presented by Toyota's largest
+car factory, the Hirose plant (Japan).
+June 2015
+Distinguished Partners
+in Progress Award
+For its important role in the creation
+of jobs and added value in Singapore
+in the last 45 years, Infineon received
+the Distinguished Partners in Progress
+Award from the Minister of Finance
+and Deputy Prime Minister Tharman
+Shanmugaratnam. The exclusive
+circle of award winners only includes
+33 enterprises so far.
+July 2015
+GLOB
+GLOBAL PLAYER
+AWARD2015
+Global Player Award
+ecoVadis
+As part of Export Day 2015, Infineon was
+presented the Global Player Award by
+the Austrian Vice-Chancellor Reinhold
+Mitterlehner and the President of the
+Austrian Federal Economic Chamber
+Christoph Leitl for its successful inter-
+nationalization.
+Bosch has awarded Infineon as an excel-
+lent supplier for the fifth time. This year
+the Group received the Innovation Prize
+for its radar system, which monolithically
+integrates the transmitter and receiver
+on one single chip in a package. Bosch
+uses the system to measure distances
+for adaptive distance and cruise control
+units, emergency brakes and a traffic
+jam assistant.
+September 2015
+Infineon is the only
+European semiconductor
+enterprise listed in the
+Dow Jones Sustainability
+World Index
+For the sixth year in a row, Infineon was
+confirmed as a member in the Dow Jones
+Sustainability Index. Additionally, Infineon
+was accepted into the World Index for the
+first time and as the only European semi-
+conductor company. This makes Infineon
+part of the most sustainable 10 percent
+of semiconductor enterprises worldwide.
+In January 2015, the listing was also
+confirmed in the Sustainability Yearbook.
+Only the top 15 percent of the most
+sustainable companies in the world are
+represented here.
+MEMBER OF
+Dow Jones
+Sustainability Indices
+In Collaboration with RobecoSAM
+Nomination for the
+Deutscher Zukunftspreis
+2015
+Infineon's radar chips were nominated for
+the Deutscher Zukunftspreis 2015, the
+German President's Award for Innovation
+in Science and Technology. The radar chips
+were one out of three technology projects
+from a total of 24 suggestions. The use of
+silicon and silicon germanium instead of
+gallium arsenide as well as an innovative
+package (see above the award from Bosch
+for radar chips) reduced the costs of radar
+systems to a level that they are now increas-
+ingly used in mid-range and low-end cars.
+This significantly increases safety in traffic.
+124
+Accolade for radar chips
+from Bosch
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+GOLD
+March 2015
+Supplier Gold Award from Midea
+In a group of ten award winners, Infineon
+was the only semiconductor manufacturer
+to receive the Supplier Gold Award from
+Midea in China for its IGBTs designed for
+home appliances.
+January 2015
+GREEN
+FREIGHT
+ASIA
+CERTIFICATE OF
+EXCELLENCE
+2014
+Infineon Technologies
+Asia Pacific Pte Ltd
+Singapore
+receg of your company's co
+GFA Lab Le Le One
+2015
+CSR Rating
+GREEN
+FREIGHT
+ASIA
+Green Label for shipping and transport
+Infineon takes care to reduce fuel consumption
+and thereby the cost and CO2 emissions in the
+shipment and transport of its products. Green
+Freight Asia, a nonprofit organization based in
+Singapore, has awarded the Green Label to the
+Group for the introduction of environmentally
+friendly practices.
+Two awards from BYD
+The Chinese car manufacturer BYD granted
+Infineon the Excellent Supplier Award 2014 as
+the most reliable supplier of semiconductors
+and the Technical Support Award 2014 for the IGBT
+modules to be used in electric and hybrid vehicles, which were customized for BYD.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Awards
+123
+February 2015
+Gold status from Ecovadis
+Ecovadis, an independent rating agency
+that monitors the sustainability of
+suppliers, analyzed Infineon with regard
+to ecological, social, ethical and financial
+influencing factors and awarded it the
+"Gold" status.
+BSR
+Infineon worldwide
+Infineon sites
+Dc
+Kista Sa O
+Warstein R&D M Sa
+Rotterdam Sa ○
+Hanover Sa
+Bristol R&D Sa O
+Reigate R&D
+Duisburg R&D Sa
+°
+● Dresden R&D M
+Saint-Denis Sa
+○
+Neu-Isenburg Sa ●
+Groẞostheim Dc
+Erlangen Sa
+Skovlunde R&D
+Regensburg R&D M
+Ditzingen Sa
+Augsburg R&D
+Zurich Sa
+Le Puy-Sainte-Réparade R&D
+Barcelona Sa ○
+● Porto Sf
+Madrid Sa O
+Bangalore R&D Sa ●
+Milan Sa O
+Pavia R&D O
+Linz, DICE R&D
+☐
+Neubiberg
+near Munich o
+F&E Sa
+● Vienna Sa
+Karlsruhe, Hitex Development Tools R&D M Sa
+Newport MO
+Dublin Sa O
+● São Paulo Sa
+Headquarters
+Regional headquarters
+Distribution center
+R&D Research & Development
+Manufacturing
+Service function
+M
+Sf
+Sales
+GRI G4-17
+Hayward Dc ...
+Milpitas Sa ...
+San Jose R&D M
+Morgan Hill R&D M
+El Segundo R&D Sa
+Torrance R&D
+Irvine R&D
+Mesa M
+Chandler R&D
+Temecula M
+Tijuana M
+Warwick R&D
+Tewksbury R&D
+Leominster R&D M Sa
+Lebanon Sa
+Livonia Sa O
+Kokomo Sa ○
+Durham Sa❤
+Raleigh Sa
+● Cegléd M
+Blackburn Sa
+2014
+We incur only minor marketing expenses for advertising and trade fairs due to our sales and
+customer structure.
+Cost of goods sold
+2015
+2014
+3,715
+2,673
+Change year-on-year
+€ in millions, except percentages
+39%
+Percentage of revenue
+64.1%
+61.9%
+Gross profit
+2,080
+1,647
+6%
+Book-to-bill ratio
+■Revenue
+Orders received
+The gross margin fell accordingly year-on-year from 38.1 percent to 35.9 percent. The drop
+compared to the previous fiscal year, which arose despite the revenue increase and the
+positive impact of the strong US dollar, was primarily due to the earnings impact on the cost
+of goods sold arising in conjunction with the purchase price allocation as well as acquisition-
+related expenses for International Rectifier amounting to €143 million. The main items in
+this context were higher amortization/depreciation on intangible assets and property, plant
+and equipment that have been stepped up to fair values in the course of the purchase price
+allocation as well as the additional expense of consuming inventories revalued to their fair
+value. Moreover, further investments were made in manufacturing facilities, with a view to
+creating a broader base for sustainable growth.
+A part of the cost of goods sold is incurred in currencies other than the euro. To some extent,
+the effects of exchange rates on the cost of goods sold offset a similar impact on revenue.
+Exchange rates had a net positive impact on gross profit in the low-triple-digit million range
+in the 2015 fiscal year.
+G 67
+Orders received and revenue
+€ in millions,
+except book-to-bill ratio
+1.12
+4,857
+4,320
+6,421
+5,795
+班
+1.11
+2014
+2015
+Percentage of revenue (gross margin)
+35.9%
+38.1%
+132
+Therein included grants received
+Percentage of revenue
+For information: capitalized development costs
+Percentage of research and development expenses
+2015
+2014
+717
+550
+30%
+5%
+12.4%
+12.7%
+59
+66
+1.0%
+Percentage of revenue
+Gross profit (revenue less cost of goods sold) amounted to €2,080 million in the 2015 fiscal year,
+an improvement of €433 million or 26 percent compared to €1,647 million one year earlier,
+and hence underproportionally to the 34 percent increase in revenue.
+Change year-on-year
+€ in millions, except percentages
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+G 68
+Gross profit and gross margin
+€ in millions
+38.1%
+1,647
+2,080
+H
+2014
+2015
+35.9%
+Acquisition- and integration-related costs result in higher operating expenses
+Operating expenses (research and development expenses and selling, general and
+administrative expenses) increased by €449 million to €1,495 million in the year under report
+(2014: €1,046 million), corresponding to 25.8 percent of revenue (2014: 24.2 percent).
+Research and development expenses (R&D expenses)
+R&D expenses consist primarily of personnel expenses, material expenses, depreciation and
+amortization and the cost of maintaining laboratory facilities required for R&D activities.
+R&D projects include technology and product development projects. R&D expenses also cover
+third-party costs related to technology and product development, as well as the cost of joint
+product and technology development arrangements with partners. Grants received in con-
+junction with R&D projects and capitalized development costs reduce the reported expense.
+Gross profit
+Percentage of revenue (gross margin)
+Research and development expenses
+> effects from the purchase price allocation of International Rectifier.
+> government grants received that are spread over the useful lives of production plants and
+> inventory risks
+4,320
+100%
+All regions contributed to revenue growth in the 2015 fiscal year. The acquisition of International
+Rectifier granted better access to the Chinese and US markets, a fact reflected in above-average
+growth rates in these countries.
+Of the total year-on-year revenue increase of €1,475 million, more than one half (€821 million
+or 56 percent) related to the Asia-Pacific region (excluding Japan), followed by the Europe,
+Middle East and Africa region, where revenue rose by €313 million or 21 percent of the total
+revenue increase. In the Americas region - and within that region particularly the USA, which
+remains the driving force for innovation - revenue grew by €226 million or 15 percent of the
+total revenue increase.
+The Asia-Pacific region (excluding Japan) had already become the largest region in the previous
+fiscal year, when it accounted for 43 percent of revenue, ahead of the Europe, Middle East
+and Africa region with 39 percent. The importance of the Asia-Pacific region (excluding Japan)
+continued to grow in the year under report, accounting for 46 percent of revenue, compared to
+the 35 percent generated in the Europe, Middle East and Africa region. The two regions together
+accounted for 81 percent (2014: 82 percent) of revenue and, therefore, remain Infineon's
+largest markets.
+Within the Asia-Pacific region (excluding Japan), China accounted for revenue of €1,337 million
+(23 percent) and therefore the largest share at individual country level. Germany followed in
+second place with €942 million (16 percent). It nevertheless remains an important technology
+center for the Automotive and Industrial sectors and, going forward, will continue to play
+a major role, firstly in the development of new products and solutions and secondly as
+a sales market.
+G66
+Revenue by region
+€ in millions
+3,000
+2,666
+2,500
+2,000
+2,020
+1,845
+100%
+1,707
+5,795
+367
+20%
+Japan
+399
+7%
+284
+7%
+Americas
+710
+12%
+484
+11%
+Therein: USA
+Total
+568
+10%
+8%
+1.5%
+1,500
+500
+Book-to-bill ratio still at high level
+The book-to-bill ratio was practically unchanged at 1.11 (2014: 1.12) and therefore remains
+at a high level. The value of orders received increased by 32 percent from €4,857 million to
+€6,421 million, boosted by organic growth, the strength of the US dollar and the acquisition
+of International Rectifier.
+Reduction in gross margin
+Cost of goods sold in the 2015 fiscal year amounted to €3,715 million, an increase of
+€1,042 million or 39 percent compared to €2,673 million in the previous fiscal year.
+Cost of goods sold comprises mainly:
+> material expenses – in particular for raw wafers,
+> personnel expenses,
+› depreciation and amortization,
+> overheads, including the maintenance of production facilities, operational supplies and
+license fees,
+> foundry as well as assembly and test costs charged by subcontractors and
+> manufacturing support, including buildings, supply facilities, quality control and
+management costs.
+In addition to volume-related factors, the cost of goods sold is also influenced by the following:
+› capacity utilization level of production facilities and related idle costs,
+> amortization of purchased and internally generated intangible assets,
+> product warranty costs,
+131
+1,000
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+Share of Group Revenue 2015
+Europe, Middle East, Africa
+Asia-Pacific (excluding Japan)
+Japan
+0
+710
+484
+399 284
+Europe,
+Middle East,
+Africa
+Asia-Pacific
+(excluding
+Japan)
+Japan
+Americas
+2015
+2014
+7%
+12%
+0
+46%
+35%
+Americas
+868
+100
+13.9%
+16.7%
+Revaluation of deferred tax assets resulting from
+1
+(73)
+Tax effects on adjustments
+72
+16
+the annually updated earnings forecast
+(2)
+3868
+Positive result from discontinued operations
+The result from discontinued operations, net of income taxes comprised the following:
+€ in millions
+Qimonda
+Wireline Communications business
+2
+(209)
+(48)
+Adjusted earnings from continuing operations attributable to
+G 71
+136
+135
+P see page 233 f.
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as
+a replacement or superior performance indicator, but rather as additional information
+to the net income and earnings per share (diluted) determined in accordance with IFRS.
+The calculation of earnings per share in accordance with IFRS is presented in detail in note 10
+to the Consolidated Financial Statements "Earnings per share".
+1 The calculation of the adjusted earnings per share is based on unrounded figures.
+0.48
+0.60
+1,123.0
+1,125.3
+539
+680
+Adjusted earnings per share (in euro) - diluted'
+Weighted-average number of shares outstanding - diluted
+shareholders of Infineon Technologies AG - diluted
+Wireless mobile phone business
+Result from discontinued operations, net of income taxes
+2015
+2014
+Plus/minus:
+Impairments on assets including assets
+2015
+2014
+620
+491
+classified as held for sale, net of reversals
+31
+Impact on earnings of restructuring and closures, net
+13
+Share-based compensation expense
+6
+Acquisition-related depreciation/amortization and other expenses
+274
+Gains (losses) on sales of assets, businesses,
+Earnings from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+Assets
+€ in millions (unless otherwise stated)
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase
+price allocations for acquisitions (in particular International Rectifier) as well as by other
+exceptional items.
+12
+29
+10
+8
+12
+47
+Psee page 265 ff.
+P see page 227 f.
+The result from discontinued operations, net of income taxes was a positive amount of
+€12 million for the 2015 fiscal year, compared to a positive amount of €47 million one year
+earlier. Income of €12 million was recognized during the 2015 fiscal year as a result of the
+reversal of provisions previously recorded in connection with risks relating to the Qimonda
+insolvency. See note 32 to the Consolidated Financial Statements “Legal risks" for information
+on risks relating to the Qimonda insolvency.
+Further information regarding the result from discontinued operations, net of income taxes,
+can be found in note 4 to the Consolidated Financial Statements.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+Higher earnings per share
+Net income of €634 million for the 2015 fiscal year was above the previous year's figure of
+€535 million.
+In line with the increase in net income, earnings per share (basic and diluted) rose from €0.48
+in the previous year to €0.56 in the 2015 fiscal year.
+Sharp improvement in adjusted earnings per share
+To enable better comparability of operating performance over time, Infineon computes
+adjusted earnings per share (diluted) as follows:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Review of financial condition
+€ in millions, except percentages
+€ in millions, except percentages
+Selling, general and administrative expenses
+Change year-on-year
+Percentage of revenue
+2015
+2014
+778
+496
+57%
+13%
+13.4%
+11.5%
+At 13.4 percent of revenue selling, general and administrative expenses were higher than in
+the previous fiscal year (11.5 percent). In absolute terms, selling, general and administrative
+expenses increased by €282 million to €778 million, mainly reflecting the first-time inclusion
+of International Rectifier; the earnings impact arising from the purchase price allocation;
+integration expenses incurred in conjunction with the acquisition; salary rises; and expenses
+incurred to expand the sales organization. Excluding the earnings impact arising from the pur-
+chase price allocation and integration expenses, the ratio of selling, general and administrative
+expenses, expressed as a percentage of revenue, was similar to the previous year.
+or interests in subsidiaries, net
+G70
+General and administrative expenses primarily consist of personnel expenses for administrative
+staff and non-manufacturing-related overhead costs, consultancy, legal and other fees for
+professional services as well as earnings impacts arising from the purchase price allocation
+and integration expenses incurred in conjunction with the acquisition of International Rectifier.
+Selling, general and
+administrative expenses
+Selling expenses primarily comprise personnel and non-personnel expenses related to selling
+activities as well as the cost of marketing, customer samples, marketing incentives and other
+marketing activities.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+G 69
+R&D expenses
+€ in millions
+12.7%
+550
+717
+2014
+2015
+R&D expenses
+Percentage of revenue
+P see page 70 ff.
+12.4%
+R&D expenses amounted to €717 million in the 2015 fiscal year, an increase of €167 million
+compared to the previous year's figure of €550 million or 12.4 percent (2014: 12.7 percent) of
+revenue. Thanks to economies of scale from higher revenue in the 2015 fiscal year, the figure
+remains within the target range of a low to mid-teen percentage of revenue. The increase in
+absolute terms compared to the previous year mainly relates to the integration of International
+Rectifier. In addition, research and development activities were intensified and additional staff
+recruited with the aim of broadening the basis for further growth. A total of 5,778 employees,
+including those from International Rectifier, worked in research and development functions
+at the end of the reporting period (September 30, 2014: 4,822 employees). Salary rises also
+contributed to the increase in research and development expenses.
+At €59 million, grants and subsidies were lower than in the previous fiscal year (€66 million).
+Capitalized development costs amounted to €100 million in the 2015 fiscal year, compared to
+€92 million one year earlier.
+The principal R&D activities undertaken during the 2015 fiscal year are described in more
+detail in the chapter "Research and development".
+Selling, general and administrative expenses
+92
+€ in millions
+778
+The net financial result (financial income less financial expenses) for the 2015 fiscal year was
+a negative €39 million, a deterioration by €30 million compared to the negative €9 million
+recorded one year earlier, mainly due to higher financing expenses. External debt of approxi-
+mately €1.6 billion raised to finance the purchase price payment to acquire International
+Rectifier resulted in higher financing expenses. Despite the deterioration in the gross cash
+position (see "Gross cash position and net cash position" in the chapter "Review of liquidity")
+and only a minimal amount of interest earned on liquidity, financial income remained
+unchanged to the previous year at €10 million, due to gains arising on the sale of marketable
+securities.
+P see page 231 ff.
+Tax benefit following reassessment of deferred tax assets
+As in the previous fiscal year, tax expense for the 2015 fiscal year was affected by foreign tax
+rates, non-deductible expenses, tax credits and changes in valuation allowances on deferred
+tax assets. Based on income from continuing operations before income taxes of €520 million,
+a tax benefit of €102 million arose due to the reversal of previously recognized valuation
+allowances on deferred tax assets. In the previous fiscal year, a tax expense of €31 million arose
+on income from continuing operations before income taxes of €519 million.
+In the 2015 fiscal year, the reassessment of the valuation allowance on deferred tax assets,
+relating primarily to tax loss carry-forwards and the utilization of previously unrecognized tax
+benefits, resulted in income of €209 million arising on the reversal of previously recognized
+valuation allowances on deferred tax assets on loss carry-forwards. In addition, expenses
+recognized in the 2015 fiscal year in conjunction with the purchase price allocation relating to
+the acquisition of International Rectifier reduced income from continuing operations before
+income taxes, and gave rise to related deferred tax income.
+Further details regarding income tax are provided in note 9 to the Consolidated Financial
+Statements.
+13%
+Total assets
+8%
+Non-current assets
+38%
+Current assets
+23%
+6,438
+8,741
+Negative impact on net finance result from additional debt capital
+496
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+134
+H
+11.5%
+2014
+2015
+13.4%
+Other operating income and expenses improved to a net negative amount
+of €30 million
+Other operating income and expenses gave rise to a net expense of €30 million for the 2015
+fiscal year, compared to a net expense of €76 million one year earlier. The improvement was
+mainly attributable to the inclusion in the previous fiscal year of a fine totaling €83 million
+in conjunction with chip card antitrust proceedings, offset by higher write-downs and
+restructuring expenses in the 2015 fiscal year.
+Other operating expenses include a charge of €19 million recognized in connection with the
+closure of the Techview manufacturing facility in Singapore (acquired in conjunction with the
+acquisition of International Rectifier), comprising a restructuring provision (€9 million) as well
+as impairment losses on property, plant and equipment and intangible assets (€10 million).
+Other operating income includes the gain of €9 million arising on the sale of patents (the
+majority of which were acquired from Qimonda) to Polaris Innovations Limited (Ireland),
+a subsidiary of Wi-Lan Inc. (Canada), and to Samsung Electronics Ltd. (Korea).
+Further details relating to other operating income and expenses are provided in note 7 to the
+Consolidated Financial Statements.
+-
+Selling, general and
+administrative expenses
+Percentage of revenue
+P see page 230
+133
+P see page 143
+23%
+Other income and expense, net
+Therein: China
+Statement of Financial Position Ratios:
+12%
+4,158
+4,665
+79%
+2,280
+Return on assets 1
+4,076
+677
+2,491
+(1%)
+1,603
+1,585
+36%
+268%
+7.3%
+8.3%
+Equity ratio 2
+Equity
+4,665 4,158
+Total assets up sharply due to acquisition of International Rectifier
+Compared to September 30, 2014, total assets increased by €2,303 million from €6,438 million
+to €8,741 million, mainly due to the acquisition of International Rectifier, with current assets
+up by €181 million and non-current assets up by €2,122 million. On the equity and liabilities
+side, liabilities increased by €1,796 million and equity by €507 million.
+Statement of financial position ratios changed accordingly, with the debt-to-equity ratio rising
+to 38.4 percent (mainly due to debt raised to partially finance the acquisition of International
+Rectifier) and the return on equity ratio falling to 53.4 percent.
+Key performance ratios for the 2015 fiscal year also changed accordingly, with the return
+on assets and ROCE down, despite increased earnings, to 7.3 percent (2014: 8.3 percent) and
+12.8 percent (2014: 20.3 percent) respectively, and the return on equity up to 13.6 percent
+(2014: 12.9 percent).
+Slight increase in current assets
+Current assets went up by 5 percent to €4,115 million at the end of the reporting period,
+compared to €3,934 million as of September 30, 2014. Infineon's gross cash position (sum
+total of cash and cash equivalents and financial investments) decreased by €405 million (see
+"Gross cash position and net cash position" in the chapter "Review of liquidity"). By contrast,
+trade receivables and inventories went up by a total of €583 million as a result of the segment's
+organic revenue growth, the acquisition of International Rectifier and currency factors.
+13.6%
+Return on equity 3
+2014
+2015
+€ in millions
+64.6%
+53.4%
+6,438
+8,741
+85%
+2,504
+Non-current liabilities
+11%
+Current liabilities
+9%
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+128
+144
+161
+165
+167
+169
+170
+GROUP PERFORMANCE
+128 Review of results of operations
+136 Review of financial condition
+24%
+407
+Total liabilities
+Total equity
+4,626
+5%
+3,934
+4,115
+Change
+year-on-year
+2014
+2015
+2014
+2015
+6%
+5%
+6%
+7%
+4%
+20%
+26%
+581
+Other liabilities
+379
+660
+11.0%
+12.8%
+20.3%
+and equipment
+2,093
+1,700
+2 Equity ratio = Total equity/Total assets
+Intangible assets
+1,738
+250
+3 Return on equity = Net income/Total equity
+Deferred tax assets
+604
+378
+4 Debt-to-equity ratio = (long-term and short-term debt)/Total equity
+12.9%
+Other assets
+4.5%
+1 Return on assets = Net income/Total assets
+12.9%
+1,337
+Gross cash position
+2,013
+2,418
+Trade and
+other receivables
+742
+581
+Inventories
+1,129
+707
+Property, plant
+Debt-to-equity ratio 4
+Inventory intensity5
+ROCE 6
+38.4%
+139 Review of liquidity
+5 Inventory intensity = Inventories (net)/Total assets
+404
+2014
+€ in millions
+2015 2014
+Trade and
+other payables
+802
+648
+Debt
+1,793
+186
+Pension plans and
+similar commitments
+426
+Provisions
+474
+2015
+422
+53%
+7%
+6 Calculation see following section about ROCE in this chapter
+8,741
+6,438
+G72
+Liabilities and equity
+8,741
+6,438
+9%
+10%
+3%
+6%
+21%
+10%
+5%
+6%
+5%
+65%
+REPORT ON EXPECTED DEVELOPMENTS, TOGETHER WITH
+8,741 6,438
+144 Outlook
+Automotive
+Industrial
+Power Control
+Power
+Management
+& Multimarket
+Chip Card &
+Security
+Other Operating Corporate and
+Segments Elimininations
+2015
+2014
+Psee page 52 ff.
+31%
+11% 0%
+17%
+41%
+Share of Group Revenue 2015
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+(1) (5)
+Chip Card & Security
+0
+494
+G 65
+Revenue by segment
+€ in millions
+2,500
+2,351
+2,000
+1,965
+1,500
+1,000
+1,794
+1,061
+971
+783
+666
+500
+14 22
+As in the previous year, business disposals had no impact on revenue in the 2015 fiscal year.
+Other Operating Segments
+A large share of revenue was generated in foreign currencies in the 2015 fiscal year, with
+revenue denominated in US dollars accounting for the highest share. The average euro/
+US dollar exchange rate moved from 1.36 in the previous fiscal year to 1.14 in the 2015 fiscal
+year. The impact of the fluctuation in the value of the US dollar was correspondingly high,
+a fact compounded by the high volumes recorded. Across all currencies and over the fiscal
+year as a whole, currency factors contributed a mid-triple-digit million amount to the
+revenue increase.
+Europe, Middle East, Africa
+2,020
+35%
+1,707
+39%
+Therein: Germany
+942
+16%
+859
+20%
+Asia-Pacific (excluding Japan)
+ASSOCIATED MATERIAL RISKS AND OPPORTUNITIES
+46%
+1,845
+43%
+2014
+Positive currency impact on revenue from strong US dollar
+2015
+Importance of Asia-Pacific continues to grow
+The currency impact is measured by applying the previous fiscal year's relevant average
+exchange rates to the 2015 fiscal year revenue.
+GRI G4-22
+€ in millions, except percentages
+Revenue
+Changes year-on-year
+2015
+2014
+5,795
+4,320
+34%
+12%
+129
+130
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+€ in millions, except percentages
+Revenue grew by €1,475 million to €5,795 million in the year under report (2014: €4,320 million).
+Thanks to the continuing upward trend on the semiconductor market, increased market share
+through organic growth, the acquisition of International Rectifier (International Rectifier
+contributed €682 million to revenue growth), as well as the strength of the US dollar, all four
+operating segments achieved year-on-year revenue growth: Automotive (up 20 percent or
+€386 million), Industrial Power Control (up 24 percent or €188 million), Power Management &
+Multimarket (up 69 percent or €733 million) and Chip Card & Security (up 35 percent or
+€172 million) (see detailed comments in the respective sections to the individual segments in
+the chapter "The segments").
+2,666
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+€ in millions, except earnings per share
+Sharp increase in revenue
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income and expenses, net
+Operating income
+Net financial result (financial income and expenses, net)
+Income from investments accounted for using the equity method
+Income tax
+Income from continuing operations
+Gain from discontinued operations, net of income taxes
+Net income
+Basic earnings per share (in euro)
+Diluted earnings per share (in euro)
+Adjusted diluted earnings per share (in euro)
+The consolidated statement of operations
+2015
+Review of results of operations
+Combined Management Report - Our 2015 fiscal year
+TREASURY AND CAPITAL REQUIREMENTS
+149 Risk and opportunity report
+OVERALL STATEMENT OF THE MANAGEMENT BOARD WITH RESPECT TO
+INFINEON'S FINANCIAL CONDITION AS OF THE DATE OF THIS REPORT
+INFINEON TECHNOLOGIES AG
+SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
+CORPORATE GOVERNANCE
+170 Information pursuant to section 289, paragraph 4, and section 315,
+paragraph 4, of the German Commercial Code (HGB)
+174 Corporate Governance Report
+179 Declaration concerning the management of the company
+186 Compensation report
+Combined
+Management Report
+Our 2015 fiscal year
+127
+128
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+2014
+Revenue
+4,320
+47
+634
+535
+0.56
+0.56
+0.48
+0.60
+0.48
+GRI G4-22
+P see page 135
+Sharp improvement in net income and adjusted earnings per share
+Net income improved year-on-year by €99 million to €634 million for the 2015 fiscal year.
+The upward trend in Infineon's business performance, the acquisition of International Rectifier
+and the strong US dollar during the 2015 fiscal year brought about a 34 percent rise in revenue.
+The contribution to earnings from higher revenue was offset almost entirely by the combined
+effect of higher expenses due to the strong US dollar and high acquisition-related expenses
+totaling €274 million (in particular expenses recognized in conjunction with the purchase price
+allocation and integration-related expenses) for International Rectifier. The reassessment and
+appreciation in value of deferred tax assets on loss carry-forwards amounting to €209 million
+rise to a net tax benefit of €102 million.
+gave
+Adjusted earnings per share (diluted) improved from €0.48 to €0.60 per share (see "Sharp
+improvement in adjusted earnings per share" in this chapter for details of the calculation).
+5,795
+Earnings per share (basic and diluted) amounted to €0.56 per share and were therefore higher
+than one year earlier (2014: €0.48).
+12
+488
+0.48
+(31)
+2,080
+622
+(717)
+(550)
+(778)
+(496)
+(30)
+(76)
+1,647
+525
+(39)
+(9)
+4
+3
+555
+102
+Financial investments
+(1,340)
+(1,360)
+Assets classified as held for sale
+Total current liabilities
+(1,585)
+Plus:
+Short-term debt and current maturities of long-term debt
+33
+35
+Liabilities classified as held for sale
+(1,058)
+(1,603)
+(673)
+4
+Less:
+525
+4
+3
+Less:
+Income tax
+102
+(31)
+Financial expense excluding interest expense²
+(1)
+Operating income from continuing operations after tax ①
+664
+497
+Assets
+8,741
+6,438
+Cash and cash equivalents
+Capital employed ②
+140
+5,176
+(2,593)
+(272)
+1,363
+(179)
+(140)
+(8)
+(413)
+529
+28
+2
+(385)
+531
+139
+555
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+988
+ROCE 1/②
+957
+2015
+2,452
+12.8%
+20.3%
+1 Financial income in the 2015 and 2014 fiscal year amounted to €10 million and €10 million, respectively, and consisted of
+€6 million and €10 million, respectively, of interest income (see note 8 to the Consolidated Financial Statements).
+2 Financial expense in the 2015 and 2014 fiscal year amounted to €49 million and €19 million, respectively, and consisted of
+€48 million and €19 million, respectively, of interest expense (see note 8 to the Consolidated Financial Statements).
+The reported ROCE was calculated using actual capital employed, without adjustment for
+exceptional factors such as provisions recorded in connection with the Qimonda insolvency
+and current liabilities arising in the previous year on the issue of put options on own shares
+in conjunction with Infineon's capital return program, both of which had the effect of reducing
+capital employed.
+P see page 231
+P see page 231
+Review of liquidity
+Cash flow
+€ in millions
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Net cash provided by (used in) financing activities from continuing operations
+Net change in cash and cash equivalents from discontinued operations
+Net change in cash and cash equivalents
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+2014
+2014
+Other
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of liquidity
+G73
+Debt by currencies
+53%
+46%
+1,793
+186
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+1%
+92%
+8%
+2014
+€ in millions
+2015
+2014
+2015
+Euro
+138
+P see page 265
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+137
+Review of financial condition
+Non-current assets higher due to acquisition of International Rectifier
+Non-current assets rose by €2,122 million (85 percent) from €2,504 million as of September 30,
+2014 to €4,626 million as of September 30, 2015, mostly due to the acquisition of International
+Rectifier and the expansion of manufacturing facilities.
+Based on the preliminary purchase price allocation (see note 3 to the Consolidated Financial
+Statements "Acquisitions"), goodwill of €729 million arose at the date of acquisition. This
+figure increased to €778 million as of September 30, 2015 due to exchange rate factors. Other
+intangible assets acquired in conjunction with the acquisition of International Rectifier, such
+as customer relationships and technologies, were measured at €701 million at the acquisition
+date, while acquired property, plant and equipment were recognized at a value of €379 million.
+Psee page 264 f.
+Other investments in property, plant and equipment and intangible assets in the 2015 fiscal
+year totaled €785 million. Investments related mainly to the manufacturing sites in Germany
+(mainly Regensburg and Dresden), Malaysia (Malacca and Kulim), and Austria (Villach).
+Depreciation and amortization on property, plant and equipment as well as on intangible
+assets amounted to €760 million in the 2015 fiscal year.
+Current liabilities nearly unchanged
+Current liabilities stood at €1,585 million at the end of the reporting period, €18 million
+(1 percent) lower than at September 30, 2014 (€1,603 million).
+Current provisions went down by €188 million during the twelve-month period. Current
+provisions relating to Qimonda decreased by €265 million, primarily due to payments made
+in conjunction with the partial settlement reached with Qimonda's insolvency administrator
+(see note 32 to the Consolidated Financial Statements "Legal risks"). Current provisions
+for obligations to employees increased by €88 million, largely reflecting the fact that the
+creation of provisions for the 2015 fiscal year exceeded payments for prior-year performance-
+related remuneration. Alongside current provisions, other current liabilities decreased by
+€36 million, partly due to an increase of €62 million in payables to employees mostly due to
+the acquisition of International Rectifier. By contrast, other current liabilities decreased as
+a result of the payment of €83 million in conjunction with the fine imposed by the European
+Commission ("EU Commission"), against which Infineon has meanwhile filed an appeal
+(see note 32 to the Consolidated Financial Statements "Legal risks").
+While current provisions and other current liabilities decreased in total by €224 million, trade
+payables increased by €154 million to stand at €802 million at the end of the reporting period
+(September 30, 2014: €648 million). This increase was partly due to the addition of trade
+payables from International Rectifier and partly to higher business volumes and investments.
+P see page 225 f.
+P see page 231 ff.
+Deferred tax assets increased by €226 million to €604 million (September 30, 2014: €378 million),
+primarily as a result of reversals of previously recognized valuation allowances on deferred tax
+assets relating to tax loss carry-forwards (see note 9 to the Consolidated Financial Statements
+"Income tax").
+947
+171
+US dollar
+Equity up due to net income and currency factors
+Equity increased by €507 million (12 percent) to €4,665 million at the end of the reporting
+period (September 30, 2014: €4,158 million). In addition to the net income of €634 million
+earned in the 2015 fiscal year, currency factors also added €100 million to equity. Equity was
+increased by €40 million due to the expiry of non-exercised put options on own shares.
+The dividend payment for the 2014 fiscal year reduced equity by €202 million. A further
+reduction by €27 million after tax resulted from actuarial losses, which arose on the measure-
+ment of pensions and similar obligations.
+The equity ratio fell to 53.4 percent at the end of the reporting period (September 30, 2014:
+64.6 percent) primarily due to debt taken on to finance the acquisition of International Rectifier.
+ROCE down due to increase in capital employed
+The Return on Capital Employed (ROCE) for the 2015 fiscal year fell to 12.8 percent from
+20.3 percent one year earlier.
+Deferred tax liabilities increased by €142 million to €147 million, mostly due to the revaluation
+of the carrying amounts of International Rectifier's assets and liabilities to their fair value as
+part of the purchase price allocation. Pensions and similar obligations went up by €47 million
+to €426 million (September 30, 2014: €379 million), mainly due to actuarial losses totaling
+€27 million.
+Capital employed increased during the twelve-month period from €2,452 million to
+€5,176 million, mostly due to the acquisition of International Rectifier, but also in part as
+a result of the reduction in provisions for Qimonda. The increase in operating income from
+continuing operations, net of tax, from €497 million in the previous year to €664 million in
+the 2015 fiscal year was insufficient to offset this effect.
+ROCE for the 2015 and 2014 fiscal years is calculated as follows:
+€ in millions
+Operating income
+Plus:
+Financial income excluding interest income¹
+Gain from investments accounted for using the equity method
+Capital employed - ROCE
+Non-current financial liabilities went up by €1,609 million to €1,760 million at the end of the
+reporting period (September 30, 2014: €151 million) as a result of debt raised in conjunction
+with the acquisition of International Rectifier (see note 22 to the Consolidated Financial State-
+ments "Debt"). In the 2015 fiscal year, the share of debt denominated in US dollars increased
+to 46 percent (September 30, 2014: 0 percent) as a result of a loan amounting to US$934 million.
+The share of debt denominated in euros decreased accordingly to 53 percent (September 30,
+2014: 92 percent). Information on debt maturities is provided in note 22 to the Consolidated
+Financial Statements "Debt".
+Non-current liabilities increased by €1,814 million to stand at €2,491 million at the end of
+the reporting period (September 30, 2014: €677 million).
+Non-current liabilities increased by debt raised to finance acquisition
+of International Rectifier
+828
+18
+15
+1,793
+186
+G 74
+ROCE
+€ in millions
+2,452
+5,176
+H
+20.3%
+2014
+2015
+12.8%
+2015
+P see page 225 ff.
+The net cash position, which is defined as the gross cash position less short-term and long-term
+debt, was positive as of September 30, 2015, despite the high negative free cash flow figure
+caused by the various factors described above. The net cash position amounted to €220 million
+at the end of the reporting period (September 30, 2014: €2,232 million), after dipping during
+the year to a negative amount of €176 million as of March 31, 2015 following payment of the
+purchase consideration for International Rectifier, payment of the dividend and payments
+to both the Qimonda insolvency administrator and the EU Commission. Infineon's net cash
+position had already returned to a positive amount of €49 million by June 30, 2015, thus
+bringing the capital structure back within the targeted range for the net cash position (see
+note 25 of the Consolidated Financial Statements "Capital management"), just one quarter
+after signing the contract to acquire International Rectifier.
+Net cash provided by operating activities from continuing operations amounted to
+€957 million and was thus €31 million lower than in the previous fiscal year (€988 million).
+The figure reported includes the payment of €104 million to settle disputes relating to the
+continuation of the right to use Qimonda patents as well as the payment of €83 million to the
+EU Commission in connection with the fine imposed in conjunction with chip card antitrust
+proceedings. Taking income from continuing operations before depreciation, amortization
+and impairment losses, interest and income taxes of €1,353 million as the starting point,
+cash-relevant changes in trade receivables and payables, provisions not relating to Qimonda,
+other assets and liabilities (excluding the payment to the EU Commission) and inventories,
+totaling €104 million, also reduced cash and cash equivalents. Income tax payments during
+the fiscal year under report totaled €93 million.
+FY 2015
+About 14% (at the
+mid-point of the planned
+range for revenue growth)
+Between €0 and
+€100 million
+Slight decrease compared to
+FY 2014
+About 15% (at the
+mid-point of the planned
+range for revenue growth)
+Between a negative amount
+of €1.6 billion to €1.7 billion
+Sharp decrease compared to
+previous fiscal year
+15.5%
+(1,654)
+12.8%
+Outlook
+FY 2016
+About 16% (at the
+mid-point of the planned
+range for revenue growth)
+Between €500 and
+€600 million
+Slight increase compared to
+FY 2015
+performance indicators
+Growth and profitability
+Actuals
+performance indicators
+12%
+compared to previous year
+Gross margin
+38.1%
+Increase by 8% plus/minus
+2 percentage points
+About the same as in
+FY 2014
+Increase by 36% plus/minus
+34%
+Increase by 13% plus/minus
+Research and
+550
+development expenses
+Change in revenue
+Outlook FY 2015, March 31, 2015
+After integration of
+International Rectifier
+FY 2015
+Original Outlook
+2015
+2014
+186
+Gross cash position
+Net cash position
+Debt
+144
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+€ in millions, except percentages
+Actuals
+FY 2014
+Principal
+performance indicators
+Segment Result Margin
+14.4%
+Free cash flow from
+continuing operations
+ROCE
+317
+20.3%
+Supplementary
+Report on expected developments,
+together with associated
+material risks and opportunities
+Outlook
+Actual and target values for performance indicators
+The following table as well as the subsequent comments compare the actual values of
+Infineon's key performance indicators with the forecasts updated in the Half-Year Financial
+Report to March 31, 2015 following closure of the acquisition of International Rectifier and
+show the outlook for the 2016 fiscal year. The forecasts for the 2016 fiscal year include the
+financial figures of International Rectifier for a full fiscal year. The performance figures shown
+for the 2015 fiscal year include figures for International Rectifier from January 13, 2015
+onwards, in other words with effect from the acquisition closure date.
+In addition, the original forecasts for the 2015 fiscal year, as presented in the 2014 Annual
+Report, are shown in the third column. These forecasts related to the expected development
+of the Infineon Group, without taking account of financial figures for International Rectifier:
+Selling, general and
+['T II.
+496
+Growth in line with or slightly
+above sales growth
+Growth in line with or slightly
+above sales growth
+About €850 million
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+145
+Outlook
+Infineon's principal performance indicators comprise Segment Result Margin, free cash flow
+from continuing operations and RoCE. With a Segment Result Margin of 15.5 percent, Infineon
+was slightly ahead of its forecast value of 15 percent for the 2015 fiscal year.
+In light of the purchase price payment for International Rectifier, payments made in connection
+with the partial Qimonda settlement and the payment of the fine imposed by the European
+Commission, a high negative free cash flow had been forecast for the 2015 fiscal year. With
+an actual negative free cash flow of €1,654 million, the mid-point of the forecast range was
+achieved. At about €400 million, the actual outcome for free cash flow adjusted for these
+exceptional items was also within the forecast range of between €350 and €500 million.
+A sharp decrease in the Return on Capital Employed (ROCE) was forecast due to the acquisition
+of International Rectifier. The actual value of 12.8 percent recorded for the 2015 fiscal year was
+well below the previous year's figure of 20.3 percent, in line with expectations. The decrease
+reflects the sharp rise in capital employed, which rose by €2,724 million to €5,176 million.
+The outcomes for the supplementary performance indicators were also in line with forecast.
+Revenue growth of 34 percent, for instance, was at the lower end of the forecast range of
+36 percent, plus or minus 2 percentage points.
+Due to the integration of International Rectifier and the related expenses, a considerable
+decrease in the gross margin was forecast. In actual fact, the gross margin finished at
+35.9 percent for the 2015 fiscal year, compared to 38.1 percent one year earlier.
+Operating expenses also developed as predicted. Research and development expenses
+increased by 30 percent, 4 percentage points below the rate of revenue growth. At 57 percent,
+the increase in selling, general and administrative expenses was, as expected, considerably
+higher than the revenue growth rate of 34 percent. A high proportion of the increase in selling,
+general and administrative expenses was attributable to acquisition-related expenses incurred
+in conjunction with the acquisition of International Rectifier. For this reason, the ratio of
+selling, general and administrative expenses to revenue in the 2015 fiscal year (13.4 percent)
+was at the upper end of the longer-term target range of a low-teen percentage of revenue.
+At 12.4 percent of revenue, research and development expenses were within the longer-term
+target range of a low to mid-teen percentage of revenue.
+Infineon's forecasts for the 2016 fiscal year are summarized in the table above and discussed
+in detail below.
+785
+Assumed euro/US dollar exchange rate
+146
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+In terms of revenue, the impact of exchange rates is limited almost entirely to the euro/
+US dollar rate, where a deviation of 1 cent in the actual exchange rate compared to the fore-
+cast rate would have an impact on revenue of between €7 million and €8 million per quarter,
+or approximately €30 million per fiscal year. Planning for the 2016 fiscal year is based on an
+assumed average exchange rate for the US dollar against the euro of US$1.10.
+Growth prospects for the world economy and the semiconductor market
+The world economy grew by 2.7 percent in the 2014 calendar year and is expected to grow
+by around 2.5 percent in the 2015 calendar year, slowed down by various unfavorable
+developments, including concerns about the economic situation in China and other emerging
+economies, a further escalation of the world's geopolitical crises and turbulence in financial
+markets around mid-year.
+Economic experts from the International Monetary Fund (IMF) forecast a slight improvement
+for the 2016 calendar year, with a growth rate of 3.0 percent. This more optimistic forecast is
+based on the assumption that the USA's economic upturn will continue and China's growth
+rate will remain at a somewhat slower, but still above-average rate. The experts predict
+a continuation of the Chinese government's policies aimed at preventing a faster economic
+slowdown. Japan's growth rate is also set to gain pace, albeit only moderately. The IMF forecasts
+further economic improvement for the eurozone on the back of low oil prices, a comparatively
+weak euro and continued expansionary monetary policies.
+In the 2014 calendar year, the global semiconductor market as denominated in US dollar
+grew at an above-average rate of 9 percent. Demand developed positively across all market
+segments, with only the semiconductor market for consumer electronic applications down
+compared to the previous year. Experts at the market research firm IHS forecast that semi-
+conductor revenues worldwide will decrease by just under 1 percent in the 2015 calendar year.
+In the automotive, industrial and chip card market sectors relevant for Infineon, however,
+growth rates of between 4 and 11 percent are forecast for the 2015 calendar year. By contrast,
+revenue in other semiconductor segments is expected to fall.
+For the 2016 calendar year, IHS forecasts growth of 2 percent for the global semiconductor
+market. The base scenario for this assessment is that the growth rate of the world economy
+will pick up to 3.0 percent. The fastest growth rate in 2016 (10 percent) is predicted for the
+industrial sector. The chip card and automotive semiconductor markets are expected to record
+growth of 8 and 7 percent respectively.
+Forecasts for the five-year period from 2015 to 2019 also show growth rates for these three
+sectors at above the expected level for the global semiconductor market as a whole, which,
+according to IHS, will grow by an average of 3 percent over this period. The fastest annual
+growth rate (9 percent) is predicted for the industrial sector. Over the same period, the
+automotive sector is expected to grow at an average rate of 6 percent, compared to a rate of
+5 percent for the chip card semiconductor market. By contrast, according to the IHS forecast,
+the semiconductor markets for communications, consumer electronics and computing
+applications will grow at rates below those of the global semiconductor market as a whole.
+Revenue increase of 13 percent expected, plus or minus 2 percentage points,
+compared to the previous fiscal year
+In view of the economic situation described above, Infineon expects Group revenue to
+increase by 13 percent, plus or minus 2 percentage points, in the 2016 fiscal year. The Power
+Management & Multimarket segment is expected to grow faster than the Group average.
+Revenue growth in the Industrial Power Control segment should be roughly in line with the
+Group average. The Automotive and Chip Card & Security segments are expected to be
+slightly lower than the Group average.
+As a globally operating organization, Infineon generates revenue not only in euros, but also
+in foreign currencies, predominantly US dollars. It also incurs expenses both in US dollars and
+in currencies closely correlated to the US dollar, such as the Singapore dollar, the Malaysian
+ringgit and the Chinese renminbi. The impact of non-euro denominated revenue and expenses
+does not always balance out. For this reason, fluctuations in exchange rates, particularly
+between the euro and the US dollar, influence the amounts reported for revenue and earnings.
+Excluding the effect of currency hedging instruments, the impact of a deviation of 1 cent in
+the actual exchange rate of the US dollar against the euro compared to the forecast rate would
+amount to a change in Segment Result of approximately €2 to €3 million per quarter, or
+approximately €8 to €12 million per fiscal year compared to the forecast value. These figures
+assume, however, that the exchange rates of currencies correlated with the US dollar - in
+which expenses arise for Infineon - change in parallel to the euro/US dollar exchange rate.
+About €800 million
+About €700 million
+668
+2 percentage points
+Considerable decrease
+compared to 38.1%
+in FY 2014
+Growth in line with or slightly
+below revenue growth
+Growth considerably above
+revenue growth
+35.9%
+2 percentage points
+Slight increase compared to
+FY 2015
+717
+30%
+778
+Growth in line with or slightly
+below revenue growth
+57%
+Growth slightly below
+revenue growth
+Liquidity
+performance indicators
+Gross cash position
+2,418
+56%
+Net cash position
+2,232
+Working capital
+(52)
+In the range of 40-50%
+relative to revenue, therefore
+above the target of 30-40%
+Net cash position (gross cash
+position higher than debt)
+Increase to €350
+to €450 million
+In the range of 30-40%
+relative to revenue, therefore
+within the target of 30-40%
+Net cash position (gross cash
+position higher than debt)
+2,013
+34.7%
+220
+In the range of 30-40%
+relative to revenue, therefore
+within the target of 30-40%
+Net cash position (gross cash
+position higher than debt)
+Increase to €500
+to €600 million
+550
+Between €700 and
+€850 million
+Investments
+administrative expenses
+2,232
+2,418
+1,793
+(2,593)
+(4,000)
+Net cash provided by
+operating activities from
+continuing operations
+Net cash used in investing
+activities from
+continuing operations
+Net cash provided by (used in)
+financing activities from
+continuing operations
+Net cash used from
+discontinued operations
+Net increase (decrease)
+in cash and cash equivalents'
+2015
+■■■2014
+1 Before effect of foreign exchange rate changes on cash and cash equivalents of €28 million and €2 million for the 2015 and 2014 fiscal year, respectively.
+142
+(3,000)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in
+operating activities and net cash provided by and/or used in or investing activities, both
+from continuing operations, after adjusting for cash flows related to the purchase and sale
+of financial investments. Free cash flow serves as an additional performance indicator, since
+Infineon holds part of its liquidity in the form of financial investments. This does not mean
+that the free cash flow calculated in this way is available to cover other disbursements, since
+dividend, debt-servicing obligations and other fixed disbursements are not deducted. Free
+cash flow should not be seen as a replacement or superior performance indicator, but rather
+as an additional useful piece of information over and above the disclosure of the cash flow
+reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
+other liquidity performance indicators and other performance indicators derived from the
+IFRS figures. Free cash flow includes only amounts from continuing operations, and is derived
+as follows from the Consolidated Statement of Cash Flows:
+€ in millions
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+2015
+2014
+957
+988
+(2,593)
+(272)
+(18)
+(399)
+Free cash flow
+(2,000)
+(413)
+(140) (8)
+In the previous fiscal year, taking income from continuing operations before depreciation,
+amortization and impairment losses, interest and income taxes of €1,045 million as the starting
+point, the principal items reducing net cash provided by operating activities from continuing
+operations were the increase in inventories and trade receivables (in aggregate €147 million)
+and income taxes paid (€52 million). Increases in trade payables and changes in other assets
+and liabilities (in aggregate €173 million) worked in the opposite direction. This figure also
+included the €83 million fine imposed on Infineon by the EU Commission.
+High level of cash used in investing activities from continuing operations
+due to acquisition of International Rectifier
+Net cash used in investing activities from continuing operations in the 2015 fiscal year
+totaled €2,593 million, of which €1,869 million (after deduction of cash acquired) related to
+the acquisition of International Rectifier (see note 3 to the Consolidated Financial Statements
+"Acquisitions"). €646 million was invested in property, plant and equipment and €139 million
+in intangible and other assets, the latter figure including an amount of €21 million relating
+to the acquisition of the Qimonda patents, most of which were sold in July 2015. In addition,
+€14 million in total was used to acquire shares in Schweizer Electronic AG, Schramberg
+(Germany) and TTTech Computertechnik AG, Vienna (Austria). Proceeds of €57 million were
+received on the disposal of items of property, plant and equipment and other assets, including
+€30 million arising on the sale of practically all of the Qimonda patents in July 2015, which
+had been acquired in conjunction with the settlement reached with the Qimonda insolvency
+administrator in October 2014. €18 million of cash was provided by the (net) sale of financial
+investments, mainly comprising money deposits with a term of between three and twelve
+months. The change in these items does not have any impact on Infineon's gross cash position,
+since the latter includes financial investments as well as cash and cash equivalents.
+In the previous fiscal year, net cash used in investing activities from continuing operations
+amounted to €272 million. Cash outflows included €567 million for property, plant and
+equipment, €101 million for intangible assets and €7 million (net of cash acquired) to increase
+Infineon's investment in LSPS. A net amount of €399 million was provided by the sale of
+financial investments.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+141
+Debt raised to finance International Rectifier acquisition results in net cash
+provided by financing activities from continuing operations
+Net cash provided by financing activities from continuing operations totaled €1,363 million
+in the 2015 fiscal year. Credit lines agreed with various national and international banks in
+August 2014 to finance the International Rectifier acquisition were drawn down in January 2015.
+€800 million of these amounts were repaid in March 2015 following the issue of two senior and
+unsecured bonds with a total nominal value of €800 million. Overall, net cash inflows totaled
+€1,584 million. In addition, the dividend for the 2014 fiscal year amounting to €202 million was
+also paid. An amount of €15 million was used to acquire the remaining 33.6 percent of the
+shares of LSPS.
+In the previous fiscal year, net cash used in financing activities from continuing operations
+amounted to €179 million, including €129 million used to pay the dividend for the 2013
+fiscal year and €35 million to repurchase parts of the convertible bond that fell due in 2014.
+A net amount of €25 million was used to repay non-current financial liabilities.
+Change in cash and cash equivalents from discontinued operations negatively
+impacted by payments in conjunction with the Qimonda partial settlement
+Net cash used from discontinued operations in the 2015 fiscal year totaled €140 million,
+of which €125 million (net of value added tax) related to payments in conjunction with the
+settlement reached with the Qimonda insolvency administrator. These payments were made
+as part of an amicable agreement reached to terminate the proceedings relating to claims
+pertaining to intragroup payments (which had been contested under insolvency law), and the
+settlement of other extra-judicial claims. The payments were also deemed to settle all other
+claims of the insolvency administrator, to the extent that they do not pertain to the alleged
+activation of a shell company and the liability for impairment of capital, as well as the residual
+liability of Qimonda Dresden.
+G75
+Cash flow
+€ in millions
+2,000
+1,363
+Review of liquidity
+1,000
+957 988
+529
+0
+།
+(1,000)
+(272)
+(179)
+(1,654)
+317
+Acquisition of International Rectifier results in substantial negative free cash flow
+Free cash flow in the 2015 fiscal year was a negative amount of €1,654 million, compared to a
+positive free cash flow of €317 million in the previous year. Of the figure for the 2015 fiscal year,
+€1,869 million (after deduction of cash acquired) related to the acquisition of International
+Rectifier. The payments to the Qimonda insolvency administrator, net of proceeds from the
+sale of the Qimonda patents, and the payment made to the EU Commission reduced free cash
+flow from continuing operations by €178 million. Excluding these exceptional items, free cash
+flow from continuing operations in the 2015 fiscal year would have totaled €393 million.
+Free cash flow in the previous fiscal year amounted to €317 million. Net cash provided by
+operating activities from continuing operations amounting to €988 million exceeded
+investments in property, plant and equipment and intangible assets totaling €668 million.
+G76
+Total debt
+Net cash position
+Septem-
+ber 30, 2015
+Septem-
+ber 30, 2014
+673
+1,058
+1,340
+1,360
+2,013
+2,418
+33
+35
+1,760
+151
+186
+220
+2,232
+Review of liquidity
+The gross cash position as of September 30, 2015 amounted to €2,013 million, down by
+€405 million on the €2,418 million reported at September 30, 2014. In addition to the negative
+free cash flow of €1,654 million described above, the gross cash position was also reduced
+by the dividend payment of €202 million and by payments totaling €140 million relating to
+the Qimonda insolvency and reported as net cash used from discontinued operations. Net
+debt raised amounting to €1,567 million and exchange gains of €28 million on cash and cash
+equivalents worked in the opposite direction.
+P see page 248
+G 77
+Liquidity position as of September 30, 2015 and 2014 by comparison
+€ in millions
+2,013
+220
+Short-term debt and current maturities of long-term debt
+Long-term debt
+Net cash provided by operating activities from continuing operations
+lower than in previous year
+Less:
+Financial investments
+Free cash flow
+€ in millions
+957
+(2,593)
+988
+(272)
+(399)
+(18)
+(1,654)
+As of September 30, 2015
+■Net cash provided by operating activities
+from continuing operations
+Net cash used in investing activities
+from continuing operations
+317
+As of September 30, 2014
+Purchase of and proceeds from sales
+of financial investments, net
+Free cash flow
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+143
+Gross cash position and net cash position
+The following table reconciles the gross cash position and net cash position (i.e. after deduction
+of debt). Since some liquid funds are held in the form of financial investments, which for IFRS
+purposes are not considered to be "cash and cash equivalents”, Infineon reports on its gross
+and net cash positions in order to provide investors with a better understanding of its overall
+liquidity. The gross and net cash positions are determined as follows from the Consolidated
+Statement of Financial Position:
+€ in millions
+Cash and cash equivalents
+Gross cash position
+1,793
+Impact of our global operations (RC: medium)
+Outlook
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness
+of the ICS with regard to the accounting and financial reporting process. The Management
+Board and the Investment, Finance and Audit Committee of the Supervisory Board are regularly
+informed of any significant control deficiencies and the effectiveness of the internal controls.
+The Risk Management and ICS are continuously reviewed to ensure compliance with internal
+and external requirements. Regular improvements made to the system contribute to the
+continuous monitoring of the relevant risk areas within the responsible organizational units.
+Internal controls at International Rectifier, defined on the basis of the Sarbanes-Oxley Act,
+were reviewed for their materiality and tested on a sample basis during the 2015 fiscal year.
+International Rectifier's ICS will be integrated in the Infineon Group's ICS during the 2016
+fiscal year in conjunction with the merger of legal entities and processes.
+Significant risks
+In the following section, we describe risks that could have a significant or materially adverse
+impact on Infineon's operations, liquidity, earnings, cash flows and reputation. Depending
+on the potential degree of impact and the estimated likelihood of occurrence, the risk class is
+shown in parentheses for each risk (e.g. "RC: high").
+Strategic risks
+Unsettled political and economic climate (RC: high)
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn - particularly in the markets we serve - may
+result in lower revenues than originally expected, with the consequence that we may not
+achieve our strategic target compound annual revenue growth rate of 8 percent. Risks can
+also arise due to political and social changes in countries in which we manufacture and/or
+sell our products.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+We therefore continue to monitor the European debt crisis where, under the pressure of high
+levels of public sector debt, governments are implementing a wide range of measures to
+consolidate budgetary shortfalls and cut investment expenditure. As a consequence of these
+developments, the level of trust of consumers and companies is characterized by uncertainty,
+while unemployment figures remain high in many EU countries. Added to this are the current
+geopolitical risks arising from the crisis in the Ukraine and the unrest in the Middle East.
+In addition, all legal entities, segments and relevant corporate functions confirm with their
+Representation Letter that all business transactions are accounted for, all assets and liabilities
+have been reflected in the Statement of Financial Condition and all expenses and income are
+accounted for.
+The economic recovery in the USA - a market which accounts for 10 percent (fiscal year 2014:
+8 percent) of our revenues, after the integration of International Rectifier - continues to pro-
+ceed at a slow pace. Strong revenue growth was achieved in China, where the share of Group
+revenue rose from 20 percent in 2014 to 23 percent in 2015. As a result, the risk exposure in
+the event of a further slowdown of growth in China, combined with a further deterioration in
+demand for exports, has increased. Regardless of our assessment of potential scenarios and
+outcomes within this complex construct of risks, these developments could have an adverse
+impact on Infineon's operations, financial condition, liquidity, cash flows and earnings.
+Particularly in the past, the global semiconductor market has been of a highly cyclical nature.
+Our target markets continue to be exposed to the risk of short-term market fluctuations.
+As a result, our own forecasts of future business developments are subject to a high degree
+of uncertainty. In the past, the cyclical pattern was fairly regular, at the end of which Infineon
+was able to participate in the upturn after a period of market weakness. It is, however, possible
+that future market downturns will follow another pattern, for example an L-shape. The absence
+of market growth or its decline would make it considerably more difficult to attain our own
+growth target. In the event that we are unprepared for market fluctuations, or our response to
+such fluctuations turns out to be inappropriate, this could have a sustained materially adverse
+impact on Infineon's operations, financial condition, liquidity and earnings.
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replaceability
+of our products. Due to the resulting aggressive pricing policies, we may possibly be unable
+to achieve our long-term strategic goals of increasing and/or maintaining market share and
+product pricing. Moreover, M&A activities in the semiconductor sector are resulting in an
+increasingly competitive environment. Potential benefits for competitors in this market include
+improved cost structures and stronger sales channels. The net effect could entail a negative
+impact on Infineon's earnings, especially on our strategic profitability target of achieving an
+average Segment Result Margin of 15 percent over the cycle.
+Operational risks
+Data and IT systems security (RC: high)
+The reliability and security of Infineon's information technology systems is of crucial
+importance. At the same time, the world has seen a general rise in the level of threats to data
+security. This applies increasingly to both the application of IT systems to support business
+processes and to internal and external communications. Despite the array of precautionary
+measures put in place, any major disruption to these systems could result in risks relating
+to the confidentiality, availability and reliability of data and systems used in development,
+manufacturing, selling or administration functions, which, in turn, could have an adverse
+impact on our reputation, competitiveness and operations.
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present
+additional risks that could result in loss of manufacturing or supply bottlenecks.
+153
+154
+Cyclical market and sector development (RC: high)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting
+process. An annual risk analysis is initially performed and the defined controls are revised, as
+and when required. The assessment involves identifying and updating significant risks relating
+to accounting and financial reporting in the relevant legal entities and corporate functions.
+The controls defined for identifying risks are documented in accordance with Group-wide
+guidelines. Regular random tests are performed to assess the effectiveness of the controls.
+These tests constitute the basis for the self-assessment of the appropriate extent and effective-
+ness of the controls. The results of this self-assessment are documented and reported in
+a global IT system. Any deficiencies identified are remedied with due consideration given to
+their potential impact.
+> Processes are in place for the segregation of duties and for the dual control principle in
+the context of preparing financial statements, as well as for authorization and access rules
+for relevant IT accounting systems.
+Likelihood of Occurrence
+Low Risk
+Medium Risk
+High Risk
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and
+reputation as well as the estimated probability of occurrence, a risk is classified as “high”,
+"medium" or "low".
+All reported risks and opportunities in their entirety are reviewed for the Infineon Group
+for possible correlation and overlap factors and are analyzed using an Infineon-specific
+categorization model. Regular risks and opportunities analysis and new developments in risk
+management culture are supplemented by interdisciplinary workshops held at segment,
+corporate and regional levels. Important information relevant for Infineon's Risk and Oppor-
+tunity Management System is available to all employees via our intranet system, including
+access to ERM tools and ERM guidelines, containing job descriptions for all functions involved
+in the process as well as all information necessary for reporting purposes.
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage
+and monitor identified risks and opportunities, and are responsible for formally determining
+a set of appropriate strategies (avoidance, mitigation, transfer to other parties, acceptance).
+Working closely with corporate functions and individual managers, the Risk and Opportunity
+Manager is also responsible for defining and monitoring the measures aimed at implementing
+the adopted management strategy. For our system to be successful, it is essential that risks and
+opportunities are managed and monitored pro-actively and with a great deal of commitment.
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS
+departments using procedures incorporated in business processes. Group Internal Audit also
+employs procedures to test compliance with legal requirements and Infineon guidelines and,
+where appropriate, rules relating to Risk and Opportunity management and initiates corrective
+measures. The Supervisory Board's Investment, Finance and Audit Committee oversees the
+effectiveness of the Risk Management System. As part of the statutory audit, the external Group
+auditor also examines our early warning system pursuant to section 91, paragraph 2, of the
+German Stock Corporation Act to ascertain its suitability to detect risks that could pose a threat
+to Infineon's going-concern status and reports annually thereon to the Chief Financial Officer
+(CFO) and the Investment, Finance and Audit Committee of the Supervisory Board.
+Assessment of effectiveness
+Internal Control System with respect to the financial reporting process
+The Internal Control System is an integral part of the accounting process in all relevant legal
+entities and corporate functions. The system monitors compliance with stated principles
+and stipulated procedures based on preventive and detective controls. Among other things,
+we regularly check that:
+> Group-wide financial reporting, measurement and accounting guidelines are continuously
+updated and adhered to;
+› Intragroup transactions are fully accounted for and properly eliminated;
+> Issues relevant for financial reporting and disclosures in connection with agreements
+entered into are recognized and appropriately presented;
+151
+152
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+> Processes and controls are in place to explicitly guarantee the completeness and correctness
+of the year-end financial statements and financial reporting;
+The principal focus of the ICS is on the financial reporting process, with the aim of monitoring
+the proper maintenance and effectiveness of accounting systems and financial reporting.
+The primary objective of the ICS is to minimize the risk of misstatement in Infineon's internal
+and external reporting and to ensure with a reasonable amount of certainty that the Consoli-
+dated Financial Statements comply with all relevant regulations. Appropriate controls must
+therefore be in place throughout the organization to ensure such compliance. Clear lines of
+responsibility are assigned to each of the processes.
+Combined Management Report - Our 2015 fiscal year
+Product quality trends (RC: medium)
+Product quality assurance is a key success factor for the business. Potential quality risks - for
+example due to the high utilization levels - can affect yield fluctuations and hence our ability
+to supply customers. The slightest shortfalls in product quality can lead to product recalls and
+potential costs related to liability claims. In addition, quality risks could also damage Infineon's
+reputation and thus have a negative impact on future results of operations.
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to
+the potential risk of default by banking partners with whom we do business. We counter this
+risk - which could still arise, despite various state-insured deposit protection mechanisms -
+by a combination of risk avoidance analyses and risk-spreading measures. The failure of
+these measures could have a materially adverse impact on Infineon's financial condition and
+liquidity situation.
+155
+156
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+P see page 261 ff.
+Psee page 265 ff.
+Currency risks (RC: medium)
+Our involvement and participation in various regional markets around the world creates cash
+flows in a number of currencies other than the euro - primarily in US dollars. A significant
+share of revenue on the one hand and of operating costs and investments on the other is
+denominated in US dollars and correlated currencies. For the most part, Infineon generates
+a US dollar surplus from these transactions.
+Risk of default by banking partners (RC: medium)
+Specified currencies are hedged Group-wide by means of derivative financial instruments.
+These hedges are based on forecasts of future cash flows, the occurrence of which is uncertain.
+Under these circumstances, exchange rate fluctuations could - despite hedging measures -
+also have a negative impact on earnings.
+Legal and compliance risks
+Qimonda insolvency (RC: medium)
+Due to the insolvency proceedings relating to Qimonda and claims brought against Infineon,
+we are exposed - even after the partial settlement reached on September 11, 2014 - to
+a substantial amount of potential liabilities, which are described in detail in note 32 to the
+Consolidated Financial Statements.
+Provisions are recognized in connection with these matters as of September 30, 2015. The
+provisions reflect the amount of those liabilities that management believes are probable and
+can be estimated with reasonable accuracy at that time. There can be no assurance that such
+provisions recorded will be sufficient to cover all liabilities that may ultimately be incurred
+in relation to these matters.
+Intellectual property rights and patents (RC: medium)
+As with many other companies in the semiconductor industry, allegations are made against
+us from time to time that we have infringed other parties' protected rights. Regardless of the
+prospects of success of such claims, substantial legal defense costs can arise.
+Whilst we often benefit from cross-licensing arrangements with major competitors and are
+keen to broaden the protection offered in this area by entering into new agreements, no
+such opportunities exist to safeguard against risks of this nature in the case of companies
+specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus
+resulting in significant claims for damages or restrictions in selling the products concerned.
+Any such outcome could in turn have an adverse impact on our earnings performance.
+Further information is provided in note 32 to the Consolidated Financial Statements.
+Further information regarding the management of financial risks is provided in note 31 to the
+Consolidated Financial Statements.
+147
+One of our key success factors is the availability of sufficient qualified employees at all times.
+There is, however, a general risk of losing qualified staff or not being able to recruit, train and
+retain adequately qualified staff within the business. A lack of technical or management staff
+could, among other things, restrict future growth and hence adversely impact our earnings
+performance.
+Need for qualified staff (RC: medium)
+Increasingly dynamic markets (RC: medium)
+The accelerating pace of events in the markets in which we operate, increased demands for
+flexibility by our customers, and short-term changes in order volumes could result in rising
+costs due to the under-utilization of manufacturing capacities, higher inventory levels and
+unfulfilled supplier contracts.
+Thus, despite the fact that manufacturing processes and sites have become even more
+flexible, fluctuations in capacity utilization levels and purchase commitments, coupled with
+idle costs at manufacturing sites, nevertheless pose risks to our cost position. These risks
+could possibly jeopardize our ability to attain growth and profitability targets, which are based
+on cycle averages.
+The situation is exacerbated by the fact that our products are highly dependent on the degree
+of success achieved by individual customers in their own markets. Furthermore, there is a risk
+of losing future business and design wins if we are unable to deliver volumes over and above
+our contractual obligations if called upon by the customer to do so. In the case of unexpectedly
+high demand, we therefore face the challenge of having to deliver increased volumes that
+require an appropriate level of upfront investment. This would put our target to limit investment
+to 13 percent of revenue over the economic cycle under pressure and have a correspondingly
+adverse impact on earnings.
+Dependence on the success of specific customers may also grow if they account for an
+above-average share of Infineon's revenue and earnings. This situation could be driven by
+an exceptionally strong performance by the relevant customer, resulting, for instance, from
+exceptional demand for its products or from consolidation trends, in particular those affecting
+our first- and second-tier customers.
+Product development delays (RC: medium)
+The ever-increasing complexity of technologies and products, shorter development cycles
+and higher customer expectations can cause a great deal of tension in the field of product
+development. Buffer times built into processes to compensate for potential delays are
+reduced accordingly. In the event of being unable to execute our development plans at
+the desired quality levels, the outcome could be development delays and increased develop-
+ment costs, which could have an adverse impact on our financial condition, liquidity, cash
+flows and earnings.
+Manufacturing cost trends - raw material prices, cost of materials
+and process costs (RC: medium)
+Our medium- and long-term forecasts as well as the strategic profitability target of a 15 percent
+Segment Result Margin over the economic cycle are based on expected manufacturing cost
+trends. In this context, measures aimed at optimizing manufacturing costs for raw materials
+and supplies, energy, labor and automation, as well as for bought-in services from external
+business partners, may not be feasible to the extent envisaged.
+Moreover, our dependence on various raw materials (such as gold and copper) used in manu-
+facturing and our energy requirements expose us to substantial price risks. We are also depen-
+dent on supplies of the so-called rare earths required for selected manufacturing processes in
+conjunction with process integration. At the time of writing, financial instruments are in place
+to hedge our price risk exposure for gold wire during the 2016 fiscal year, based on planned
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+volume requirements. The prices of raw materials and energy have recently been subject to
+significant fluctuation, and there is no reason to assume the situation will change in the near
+future. If we are unable to offset cost rises or pass them on to customers, it could have an
+adverse impact on earnings.
+Determining and adjusting manufacturing volumes (RC: medium)
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon
+to develop competitive and high-quality products designed to provide customized techno-
+logical solutions. In view of the rapid pace of technological change and increasingly stringent
+customer requirements, coordination processes need to become increasingly sophisticated.
+Failure to continue making progress in this area could result in quality problems, product
+development or market maturity delays as well as higher R&D expenses and hence adversely
+impact earnings performance.
+One risk that semiconductor companies operating in-house manufacturing facilities typically
+face is that of delays in the ramping-up of production volumes at new manufacturing sites,
+coupled with required transfer of technology. One good example is in the Automotive segment,
+where customers' product approval and testing processes can take place over an extended
+period of time, thus influencing our global manufacturing strategy as well as short- and
+medium-term capacity utilization. Failure to anticipate necessary manufacturing changes in
+good time could result in capacity shortages and hence lower revenue on the one hand as
+well as costs incurred due to under-utilization on the other.
+Dependence on individual manufacturing sites (RC: medium)
+Our South East Asian manufacturing sites are of critical importance for our production. If, for
+example, political upheavals or natural disasters in the region were to impede our ability to
+manufacture at these sites on the planned scale or to export products manufactured at those
+sites, it would have a negative impact on our financial condition, liquidity and earnings.
+Our current manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as expropriation of assets. The transfer of manufacturing capacities from
+these sites would, therefore, not only involve a great deal of time and technical effort, Infineon
+would also be required to bear the necessary cost of investment.
+Dependence on individual suppliers (RC: medium)
+We cooperate with numerous suppliers who provide us with materials and services, or who
+manage parts of our supply chain. We do not always have alternative sources for some of these
+suppliers and therefore depend on their ability to deliver products of the required quality.
+Failure of one or more of these suppliers to meet their obligations to Infineon could have an
+adverse impact on our earnings performance.
+5
+4
+Financial risks
+2
+Free cash flow from continuing operations
+As a result of the purchase price payment for International Rectifier, payments made in
+connection with the partial Qimonda settlement, Qimonda patents and the payment of the
+fine imposed by the European Commission, free cash flow from continuing operations for the
+2015 fiscal year deteriorated to a negative amount of €1,654 million. At €957 million, cash
+provided by operating activities from continuing operations in the 2015 fiscal year was highly
+positive. This figure is forecast to rise to between €1,300 million and €1,400 million in the 2016
+fiscal year. Overall, free cash flow from continuing operations is expected to rise to between
+€500 million and €600 million.
+Cash flows from financing activities
+A proposal will be put forward at the Annual General Meeting to take place in Munich (Germany)
+on February 18, 2016 that the dividend for the 2015 fiscal year be raised from €0.18 to €0.20.
+Assuming the Annual General Meeting approves this proposal, the total dividend will amount
+to approximately €225 million. Apart from the dividend payment, no other major changes
+in the cash flows from financing activities are expected as a result of cash inflows or outflows.
+Gross cash position and net cash position
+Infineon pursues the long-term target of maintaining a gross cash position of between 30 and
+40 percent of revenue. Further targets are to maintain a net cash position and to keep gross
+debt to a maximum level of twice the level of EBITDA.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+These targets are expected to be reached by the end of the 2016 fiscal year. Based on forecast
+performance, and despite the expected dividend payment, both the gross cash position and
+the net cash position should be higher than their levels of €2,013 million and €220 million
+respectively at September 30, 2015.
+Depreciation and amortization will rise to approximately €850 million, compared to €760 million
+in the 2015 fiscal year.
+ROCE
+Overall statement on the expected development of the Infineon group
+Based on forecasts of global economic development for the 2016 calendar year, Infineon
+predicts year-on-year revenue growth of 13 percent, plus or minus 2 percentage points. The
+gross margin is expected to increase slightly. At the mid-point of the planned range for revenue
+growth, the Segment Result Margin is expected to come in at about 16 percent of revenue.
+Summary of outlook for revenue and earnings
+2015
+34%
+Change in revenue compared to
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Our global business strategy requires the maintenance of R&D locations and manufacturing
+sites throughout the world. The location of such facilities is determined by market entry
+hurdles, technology and cost factors. Risks could, therefore, arise from adverse economic
+and geo-political developments in our regional markets, changes in legislation, and policies
+affecting trade and investment aimed at limiting free trade and varying practices of the
+regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate.
+These risks could restrict our business activities in those countries. We could also be exposed
+to fines, sanctions and damage to our reputation.
+Capital employed is expected to rise only slightly in the 2016 fiscal year, whereas net income
+is forecast to rise sharply. Therefore the Return on Capital Employed (ROCE) is likely to increase
+slightly compared to the previous year's level of 12.8 percent.
+the previous year
+The investments in operations relate in roughly equal portions to frontend-related capacity
+expansion measures, improvements to existing frontend manufacturing facilities and back-
+end-related investments. The plan is to expand both 200-millimeter and 300-millimeter
+manufacturing capacities. Continuous investments in automation, quality, innovation and
+infrastructure will also ensure that frontend manufacturing facilities keep pace with changing
+technological requirements. Around one third of capital expenditure in the 2016 fiscal year
+will be backend-related, focusing both on existing manufacturing facilities in terms of changes
+of the product portfolio, automation, quality, innovation and infrastructure as well as on the
+expansion of backend manufacturing capacities. The construction of a second manufacturing
+building at the Wuxi (China) site has already started.
+Investments (defined by Infineon as the sum of purchases of property, plant and equipment,
+purchases of intangible assets and capitalized research and development assets) are planned to
+rise to approximately €850 million in the 2016 fiscal year, compared with €785 million in the
+2015 fiscal year that comprised €646 million for property, plant and equipment and €139 million
+for capitalized development costs and intangible assets.
+3
+Gross margin expected to increase slightly
+The gross margin in the 2015 fiscal year was 35.9 percent. This figure includes the impact of
+acquisition-related expenses totaling €143 million. Adjusted for these expenses, the gross
+margin was 38.4 percent. At the mid-point of the range for forecast revenue growth, the gross
+margin for the 2016 fiscal year is expected to increase slightly.
+Operating expenses expected to increase
+Based on the forecast revenue growth, Infineon expects operating expenses to increase in
+absolute terms. As a percentage of revenue, however, the increase should be lower than revenue
+growth overall. Research and development expenses are forecast to grow in percentage terms
+at a similar rate to, or at a slightly lower rate than, revenue. Selling, general and administrative
+expenses are likely to increase less than revenue. The level of acquisition-related expenses
+included in operating expenses will be significantly lower than in the previous fiscal year.
+Segment Result Margin of approximately 16 percent expected
+Based on the forecast changes in revenue and expenses described above, the Segment
+Result Margin in the 2016 fiscal year is expected to increase to approximately 16 percent,
+at the mid-point of the planned range for revenue growth.
+Non-segment result
+Investments in property, plant and equipment at existing facilities and in intangible assets,
+including capitalized development costs, planned for the 2016 year will be in line with the
+target level of 13 percent of revenue.
+Infineon expects the non-segment result for the 2016 fiscal year to be a negative amount of
+between €200 million and €250 million, mainly attributable to acquisition-related expenses.
+The non-segment result in the 2015 fiscal year was a negative amount of €274 million.
+Infineon has taken on additional debt to finance the acquisition of International Rectifier.
+At September 30, 2015, debt amounted to €1,793 million, compared with cash and cash
+equivalents and financial investments totaling €2,013 million. Due to the increased interest
+payments on the higher level of debt and only minimal interest income earned on liquidity,
+the financial result for the 2016 fiscal year is expected to be in the region of a net expense of
+€40 million. In the 2015 fiscal year, the net expense was €39 million.
+The effective current tax rate (cash tax) for the Infineon Group in the 2016 fiscal year is
+forecast at approximately 15 percent. This tax rate is based on income, excluding the impact
+of the purchase price allocation in connection with the International Rectifier acquisition,
+and comprises the cash-effective German and foreign income taxes of Infineon Group entities.
+In Germany, Infineon's current tax expense is based on the applicable "minimum taxation"
+rules, under which only 40 percent of taxable profits arising in Germany are subject to current
+tax as a result of the utilization of tax loss carry-forwards. This results in a cash-effective tax
+rate of approximately 12 percent in Germany. At September 30, 2015, tax loss carry-forwards
+for German corporation tax and municipal trade tax purposes amounted to €2.3 billion and
+€3.4 billion respectively.
+148
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Working capital expected to increase
+As of September 30, 2015 the working capital amounted to €550 million. This figure is forecast
+to rise to between €700 million and €850 million at the end of the 2016 fiscal year.
+Investments and depreciation/amortization
+Financial result
+Gross margin
+Income taxes
+Segment Result Margin
+4
+Degree of Impact
+on Segment Result
+1
+<€20 million Marginal
+Likelihood of Occurrence
+3
+2
+2 >€20 million Minor
+3 >€60 million Moderate
+4 > €100 million Significant
+5 >€250 million Major
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+5 >90% Certain
+1
+35.9%
+1
+5
+Degree of Impact
+1 <10% Unlikely
+G78
+2016
+Risk assessment matrix
+15.5%
+Increase by 13% plus or minus
+2 percentage points
+Slight increase compared to FY 2015
+About 16% (at the mid-point of the
+planned range for revenue growth)
+Investments in the 2016 fiscal year will be in the region of €850 million. Depreciation
+and amortization as well will amount to approximately €850 million. Free cash flow from
+continuing operations will increase to an amount between €500 million and €600 million.
+The Return on Capital Employed (ROCE) is expected to increase slightly compared to the past
+year value of 12.8 percent.
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities and
+plays an important role in implementing the strategic targets described in the chapter "Group
+strategy" - namely achieving sustainable, profitable growth and preserving our financial
+resources through efficient employment of capital. Infineon's risk and opportunity profile is
+characterized by periods of rapid growth, followed by periods of significant market decline,
+a substantial need for capital investment in order to achieve and sustain our market position
+and an extraordinarily rapid pace of technological change. Gaining a leading edge through
+technological innovation also has a legal dimension. Against this background, Infineon's risk
+policy is aimed firstly at taking advantage of identified opportunities as quickly as possible in
+a way most appropriate to increasing the value of the business, and secondly at pro-actively
+mitigating risks – particularly those capable of posing a threat to Infineon's going-concern
+status - by adopting appropriate countermeasures. Risk management at Infineon is therefore
+closely linked to forecasting and the implementation of our business strategies. Ultimate
+responsibility for risk management lies with the Infineon Management Board.
+Various coordinated risk management and control system elements are in place that
+enable us to pursue our stated risk policy in practice. Alongside the "Risk and Opportunity
+Management System" and the "Internal Control System with respect to Financial Reporting
+Processes" described below, it also includes the related forecasting, management and
+internal reporting processes as well as the Compliance Management System.
+P see page 32 ff.
+149
+Risk and opportunity report
+In organizational terms, the Risk and Opportunity Management System is structured in a closed-
+loop, multiple-stage process, which stipulates the manner and criteria to be applied to identify,
+measure, manage and report on risks and opportunities and defines how the system is to be
+monitored as a whole. Major components of the system are a quarterly analysis of risks and
+opportunities, reporting by all consolidated entities, an analysis of the overall situation at
+segment, regional and Group level, and reporting to the Management Board on the risks and
+opportunities situation as well as major management measures undertaken. The Management
+Board, in turn, reports regularly to the Supervisory Board's Investment, Finance and Audit
+Committee. Where necessary, standard processes are supplemented by the ad-hoc reporting
+of any major risks identified between regular reporting dates.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative
+and/or qualitative terms, based on the variable degree of impact on operations, liquidity,
+earnings, cash flows and reputation on the one hand and likelihood of occurrence on the other.
+The scales used to measure these two factors (degree of impact and likelihood of occurrence)
+and the resulting risk assessment matrix are depicted in the following table.
+Risk and Opportunity Management System
+Infineon's centralized risk management system is based on a Group-wide, management-
+oriented Enterprise Risk Management (ERM) approach, which aims to cover all relevant risks
+and opportunities. The approach is based on the "Enterprise Risk Management - Integrated
+Framework" developed by the Committee of Sponsoring Organizations of the Treadway
+Commission (COSO). The objective of the system is the early identification, assessment and
+management of risks that could have a significant influence on Infineon's ability to achieve
+its strategic, operational, financial and compliance-related targets. We therefore define risk/
+opportunity as the occurrence of future uncertainties that could result in a negative or posi-
+tive variance from business planning. We incorporate all relevant organizational units within
+the Group in this analysis, thus covering all segments, significant centralized functions and
+regions. Accordingly, in conjunction with the acquisition of International Rectifier, the relevant
+organizational units at segment and regional level have been integrated in Infineon's Risk and
+Opportunity Management System.
+Responsibility for processes and systems relating to Risk and Opportunity Management rests
+with the Risk Management and Internal Control System (ICS) function within the corporate
+finance department and with designated Risk Officers working at segment, corporate function
+and regional levels. Responsibility for the identification, measurement, management and
+reporting of risks and opportunities lies with the management of the organizational unit
+concerned.
+150
+Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation
+or hedging measures, but without offsetting any provisions recognized. The time periods and
+the measurement categories used are closely linked to our short- and medium-term business
+planning and Group targets.
+> settle provisions and contingent liabilities, if and when they become payable or arise and
+> pay the proposed dividend.
+We expect to meet these requirements through
+> cash flows generated from operations,
+› available cash funds and our cash reserves in the form of financial investments and
+Debt repayment
+Financing our operations
+Based on our forecast for the 2016 fiscal year, we anticipate being able to finance operating
+activities out of cash flows provided by operating activities. Further information regarding
+fixed contractual obligations as of September 30, 2015 (such as leasing arrangements, fixed
+service and supply agreements for commodities, input materials, electricity, gas and other
+similar items) is provided in note 33 to the Consolidated Financial Statements.
+P see page 268 f.
+Investments
+> make scheduled debt and interest payments,
+Semiconductor manufacturing is very capital-intensive. Infineon's target ratio for future
+fiscal years for expected investments as a percentage of revenue over the economic cycle
+(for definition see the chapter "Internal Management System") is approximately 13 percent.
+Depending on the business situation, Infineon is currently planning investments for the 2016
+fiscal year of approximately €850 million (for details see "Outlook" in the chapter "Report
+on expected developments, together with associated material risks and opportunities").
+Firm investment commitments as of September 30, 2015 totaled €202 million.
+> available credit facilities.
+> finance planned investments,
+Cash pooling structures are in place for corporate liquidity management purposes. To the
+extent permitted by law and economically feasible, subsidiaries transfer all surplus cash to
+corporate bank accounts in order to ensure the best possible allocation of liquidity within the
+Group and to cover the financing requirements of other Group companies. In this way we are
+able to minimize external financing requirements and maintain an optimal capital structure
+with a correspondingly positive impact on financing costs. Settling intragroup transactions via
+internal bank accounts set up in accordance with our in-house banking approach, we are also
+able to reduce the volume of external banking transactions and hence bank fees.
+We require capital for the 2016 fiscal year amongst others to
+162
+As of September 30, 2015 Infineon's debt totaled €1,793 million, of which an amount of
+€33 million falls due for repayment in the 2016 fiscal year.
+> At subsidiary company level, responsibility for treasury matters lies with local financial
+executives and heads of finance, or, in the case of larger entities, with dedicated treasurers.
+Controlling functions at Group level ensure that transactions undertaken by individual
+business entities are in keeping with treasury principles.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+P see page 261 ff.
+> finance our operations,
+Corporate treasury function
+Liquidity accumulated at Group level is invested centrally by the Treasury department, based
+on a conservative approach to investments, in which security takes precedence over rates of
+return. The central Treasury department is also responsible for the efficient management of
+currency and interest rate risks. These risks are determined on the basis of consolidated cash
+flow forecasts, since only foreign currency cash flows not offset within the Group are hedged
+externally (for further information see note 31 to the Consolidated Financial Statements).
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide
+are arranged, structured and managed either directly or indirectly by the central Finance
+& Treasury department in accordance with stipulated treasury principles. Debt is normally
+unsecured and based on customary market terms and conditions.
+A crucial factor for the reliable implementation of treasury responsibilities is the use of
+capable and financially sound financial institutions. Partner banks worldwide are selected
+on the basis of the Treasury department's banking principles. Infineon maintains business
+relationships with various international and local commercial and investment banks and
+avoids becoming dependent on individual banks. Partner banks must demonstrate a high
+level of creditworthiness. Infineon assesses the creditworthiness of banks using a method-
+ology that calculates investment limits for individual banks each day, based on current ratings
+(Standard & Poor's, Moody's or Fitch) and credit default swap premiums. Any breaches of
+stipulated thresholds must be reported and risk exposures reduced. Infineon has spread its
+excess liquidity investments across more than ten banks. At September 30, 2015 no financial
+institution was responsible for more than 15 percent of Infineon's liquidity investments.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Treasury and capital requirements
+163
+Capital requirements for the 2016 fiscal year
+Treasury at Infineon is based on a centralized approach, in which the Group Finance & Treasury
+department is responsible for all major tasks and processes worldwide relating to financing
+and treasury matters. The starting point is the creation of a multi-year business plan with
+various scenarios for free cash flow. For the purposes of short-term liquidity management at
+operational level, all consolidated subsidiaries are included in a monthly rolling cash flow
+forecast. Simultaneously, a cash flow forecast is drawn up using a bottom-up approach
+based on the operating segments' forecasts. At the end of each quarter, the two forecasts are
+reconciled at a quarterly liquidity management meeting and checked for plausibility and
+possible deviations.
+Provisions and contingent liabilities
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
+In addition, provisions and contingent liabilities exist for various risks which could result in
+further cash outflows if the risks materialize (for detailed information see the section "Legal
+and compliance risks" in the chapter "Report on expected developments, together with
+associated material risks and opportunities" as well as note 33 and 32 to the Consolidated
+Financial Statements).
+For the 2016 fiscal year, we expect year-on-year revenue growth of 13 percent, plus or
+minus 2 percentage points, based on an assumed US dollar/euro exchange rate of US$1.10.
+We originally set out to raise International Rectifier's contribution margin to at least match
+Infineon's target of 15 percent for the Segment Result Margin over the economic cycle by
+the 2017 fiscal year. We achieved this target already in the last quarter of the 2015 fiscal year
+and therefore forecast a Segment Result Margin for the 2016 fiscal year of approximately
+16 percent at the mid-point of the range for forecast revenue. Planned investments for the
+2016 fiscal year are in the region of €850 million.
+> The Group Finance and Treasury department is responsible for specific corporate treasury
+transactions and for ensuring that Infineon's treasury principles are implemented worldwide.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+166
+165
+P see page 248
+We remain fully committed to achieving our targets and plan to grow at a compound annual
+revenue growth rate of 8 percent over the cycle, thereby generating a Segment Result Margin
+of 15 percent. Our intention is to achieve this growth with an average ratio of investments to
+revenue of 13 percent over the economic cycle.
+In recent years, we have focused systematically on growth markets where performance is being
+driven by modern-day social, economic and ecological trends. Our semiconductor solutions
+help make life easier, safer and more compatible with the environment - with technologies
+that perform better, consume less and are readily available to everyone. Microelectronics
+from Infineon are the key to a worthwhile future, by enabling us to combine the analog with
+the digital world. Our aspiration to contribute towards better living standards is set out in
+our new guiding principles. The acquisition of International Rectifier is helping us to perform
+better than ever in our growth markets.
+Even after the International Rectifier acquisition, which we financed partly with existing liquidity
+and partly by borrowings, the structure of Infineon's Statement of Financial Position remains
+extremely solid. Just three months after completion of the acquisition of International Rectifier,
+Infineon's net cash position had already returned to a positive amount of €49 million as of
+June 30, 2015, thus bringing the capital structure back within the targeted range for the net
+cash position (see note 25 of the Consolidated Financial Statements "Capital management").
+As of September 30, 2015 we report an equity ratio of 53.4 percent and a gross cash position in
+excess of €2 billion, enabling us to raise the dividend once again. Accordingly, a proposal will
+be made to the Annual General Meeting to raise the dividend for the 2015 fiscal year by 2 cents
+to 20 cents per share.
+-
+The 2015 fiscal year was a successful one for Infineon. With the acquisition of International
+Rectifier on January 13, 2015 we undertook the largest acquisition in Infineon's corporate
+history. The subsequent integration phase has now been largely completed. The 2015 fiscal
+year was also a good one in financial terms: Revenue rose by 34 percent to €5,795 million,
+Segment Result increased by 45 percent to €897 million and the Segment Result Margin
+improved by 1.1 percentage points to 15.5 percent, helped in part by tailwind from the stronger
+US dollar against the euro. After adjustment for the three major exceptional items - the
+International Rectifier acquisition, the Qimonda patents and the EU Commission – adjusted
+free cash flow from continuing operations was highly positive at €393 million and 24 percent
+higher than free cash flow from continuing operations one year earlier.
+Management Board with respect
+to Infineon's financial condition
+as of the date of this report
+Overall statement of the
+Further information regarding derivative financial instruments and the management of
+financial risks is provided in notes 30 and 31 to the Consolidated Financial Statements;
+information relating to put options on own shares is provided in note 24 to the Consolidated
+Financial Statements.
+We do not use derivative financial instruments for trading or speculative purposes.
+We employ the following derivative financial instruments for hedging purposes: forward
+foreign currency contracts to reduce exchange rate exposures and commodity swaps to
+reduce price risks for expected purchases of gold. We have employed put options on own
+shares in conjunction with our capital returns program.
+Derivative financial instruments
+P see page 88
+P see page 144 ff.
+P see pages 156 f. and 267 ff.
+164
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+P see page 247 f.
+Infineon issues guarantees in the ordinary course of business, primarily for the payment of
+import duties, the rental of buildings and contingent obligations related to government grants
+received. As of September 30, 2015, the undiscounted amount of potential future payments
+for guarantees was €72 million, of which up to a maximum of €14 million could have a cash flow
+impact in the 2016 fiscal year.
+Psee page 90
+Proposed dividend
+A dividend of €0.20 per share will be proposed to Infineon's shareholders for the 2015 fiscal
+year. Subject to shareholder approval, this would result in a distribution of approximately
+€225 million (for the previous fiscal year: €202 million). For further information, see note 24
+to the Consolidated Financial Statements.
+Coverage of capital requirements
+Our gross cash position as of September 30, 2015 amounted to €2,013 million. We also have
+access to various stand-alone short- and long-term credit facilities from various financial
+institutions totaling €77 million. Free cash flow from continuing operations (for definition
+see the chapter "Internal Management System") will be €500 to €600 million in the 2016 fiscal
+year, since cash provided by operating activities is expected to exceed planned investments.
+We have also applied for government grants in connection with specified investment projects.
+There is no assurance, however, that these funds will be approved, either on time or at all.
+Further information regarding grants received is provided in note 5 to the Consolidated
+Financial Statements.
+Taking into account the financial resources available to Infineon - including internal liquidity
+on hand, net cash that can be generated and available credit facilities - we assume that
+we will be able to cover our planned capital requirements for the 2016 fiscal year. Infineon
+has not undertaken steps for obtaining an official rating from any of the leading rating
+agencies. The Company expects to continue to have access to sufficient levels of financing
+on competitive terms without such rating, as evidenced by the successful issuance of two bonds
+in March 2015.
+P see page 247 and 257 ff.
+P see page 229
+> The CFO is responsible for setting treasury principles and after consultation with the CEO,
+for approving the Treasury Policy. The Treasury Committee, consisting of the CFO and
+selected members of senior management, decides on treasury-related matters, including
+exchange rates for planning purposes and currency hedging strategies, and issues the
+appropriate guidelines to ensure that these strategies are implemented.
+Opportunities
+Treasury principles and responsibilities
+Strategic initiative "Product to System" (OC: high)
+We see numerous opportunities for working with new materials, such as those associated
+with gallium nitride or silicon carbide, to develop new, more powerful and lower-cost
+products. These materials could well have a positive influence on our ability to attain our
+strategic growth and profitability targets.
+We are constantly striving to develop new technologies, products and solutions and to
+improve on existing ones, both separately and in collaboration with customers. We therefore
+continually invest in research and development relating to the use of new technologies
+and materials. Technologies and materials in current use may well lose their predominance
+in the foreseeable future, such as silicon, which could reach its physical limits in some areas
+of application.
+New technologies and materials (OC: high)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+The principal opportunities are described in the following section. The list is not exhaustive
+and represents only a cross-section of the opportunities available. Our assessment of these
+opportunities is subject to continuous change, reflecting the fact that our business, our markets
+and the technologies we deploy are continuously subject to new developments, bringing
+with them fresh opportunities, causing others to become less relevant, or otherwise changing
+the significance of an opportunity from our perspective. Depending on the potential degree
+of impact and the estimated probability of occurrence, each of these opportunities is assigned
+to an "opportunity class" in the same way that risks are allocated to a risk class. These classi-
+fications are shown in parentheses (e.g. "OC: medium”).
+The overall risk assessment is based on a consolidated view of all significant individual risks.
+We are not currently aware of any substantial risks capable of jeopardizing Infineon's going-
+concern status.
+Overall statement by Group Management on risk situation
+In certain cases,
+‚ insurance policies have been taken out to protect against potential claims
+and liability risks, with the aim of avoiding or at least minimizing any adverse impact on
+Infineon's financial condition and liquidity.
+We have established a Group-wide compliance management system with the aim of managing
+compliance-related risks on a systematic, comprehensive and sustainable basis. Under this
+system, major preventive procedures are continuously developed, other elements of the
+system revamped or strengthened, and appropriate responses established for possible or
+actual incidences of non-compliance with internal or external regulations.
+We minimize legal risks relating to intellectual property rights and patents by pursuing a
+well-defined patent strategy, including thorough patent research and selective development
+and registration of Infineon patents as well as precautionary protective measures in the form
+of agreements with major competitors. We aim to increase the number and scope of such
+cross-licensing agreements with leading competitors in order to reduce patent-related risks.
+However, no such opportunities exist to safeguard against risks of this nature in the case of
+companies specializing in exploiting patent rights.
+In the past, energy prices have been subject to fluctuations and, at times, to increases as a
+result of regulations. For this reason too, a high degree of energy efficiency has been an integral
+part of our sustainability strategy for many years.
+We are subject to legislation with regard to the environment, climate protection and the use
+of energy. Present or future environmental legislation and other government regulations,
+or amendments thereto, could require an adjustment to our operating activities and result
+in higher costs. Infineon keeps abreast of planned legislative changes and engages in these
+issues in various associations and organizations on an ongoing basis.
+In response to the general increase in threats to data security and the high degree of pro-
+fessionalism meanwhile applied in the area of cybercrime, we have initiated a data security
+program to provide the greatest possible protection against hacking attacks and related risks
+to our IT systems, networks, products, solutions and services. Once the required measures
+have been defined, they are then implemented in successive stages.
+We seek to minimize procurement-related risks through appropriate purchasing strategies
+and techniques, including constant product and cost analysis ("Best Cost Country Sourcing"
+and "Focus-on-Value"). These programs include cross-functional teams of experts, who are
+responsible for the standardization of purchasing processes with respect to material and
+technical equipment.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+158
+Application of accounting options and discretionary planning opportunities
+The description and assessment of Infineon's performance, financial condition and results
+of operations as presented in the Combined Management Report depend on the recognition
+and measurement methods applied as well as the assumptions and estimates used. These are
+described in detail in note 2 to the Consolidated Financial Statements and are, in all material
+respects, unchanged from the previous year.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Asian markets are particularly important to our long-term growth strategy. Our operations
+in China are impacted by the fact that the legal system in that country is still undergoing a
+phase of development and change. One example is the fact that local regulations could make
+it mandatory to enter into partnerships with local companies. These circumstances could lead
+to Infineon's intellectual property no longer being sufficiently protected and that intellectual
+property developed in China could not be freely transferred to other countries and locations,
+thus impairing revenue and profitability.
+Acquisitions and cooperation arrangements (RC: medium)
+In order to develop or expand our business, we may seek to acquire other businesses or enter
+into various forms of cooperation arrangements. In the case of acquisitions, there is a risk
+that these activities prove to be unsuccessful, particularly regarding the integration of people
+and products in existing business structures. These issues could adversely impact our financial
+condition and earnings performance.
+In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-com-
+pliance with antitrust regulations due to lack of knowledge or failure to make the people
+involved in such transactions adequately aware of the issues. This can result in high levels of
+cost (e.g. significant time spent by management, assignment of attorneys) and fines. Infineon's
+reputation may also suffer under these circumstances.
+With our extended "Product to System" strategy, we seek to identify additional benefits for
+our customers, in system terms, from within our broad portfolio of technologies and products.
+The strategy enables us to effectively exploit available revenue potential to an even greater
+degree and thereby achieve our growth and margin targets. This approach also helps us reduce
+the level of development costs incurred by customers and shorten the lead-time required to
+bring their products to market.
+The acquisition of International Rectifier was successfully executed in 2015 as planned.
+The risks described above, especially in terms of assimilating the two businesses, have not
+materialized to date.
+Measures to implement our risk management strategy
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor
+sector from economic and demand fluctuations and the risks related to Infineon's operations,
+financial condition, liquidity and earnings by closely monitoring changes in early warning
+indicators as well as by developing specific response strategies appropriate to the current
+position within the economic cycle. This can be done, for instance, by rigorously adjusting
+capacities and inventory levels at an early stage, initiating cost-saving measures and making
+flexible use of external production capacities, both at frontend and backend facilities.
+A raft of measures to improve manufacturing productivity was introduced under the "Next Level
+of Productivity" program during the 2015 fiscal year.
+At an operational level, we have adopted various quality management strategies aimed at
+avoiding quality risks (such as “Zero Defects” and “Six Sigma"), to prevent or solve problems
+and to improve our business processes. Our company-wide quality management system
+has been certified on a worldwide basis in accordance with ISO 9001 and ISO/TS 16949 for
+a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying
+and eliminating the reasons for quality-related problems at an early stage.
+A structured project management system is in place to handle development projects, including
+customer-specific projects. Clear project milestones and verification procedures required
+to be carried out during a project as well as clearly defined limits of authority help us identify
+potential project risks at an early stage and counter these risks with specific measures.
+157
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate
+these risks, we rely upon the advice of both in-house and external experts and provide suitable
+training to our employees.
+Group-wide treasury principles are in place regarding all issues relating to liquidity and
+financing, such as banking policies and strategies, execution of financing agreements, liquidity
+and investment management worldwide, currency and interest rate risk management and the
+handling of external and intragroup cash flows. Treasury principles, which apply throughout
+Infineon, are set out in the corresponding "Treasury Policy" and are regularly reviewed and
+updated. Three levels of responsibility play a key role for treasury principles:
+Support for change in energy policies and consideration of climate change issues
+(OC: medium)
+Infineon's semiconductors enable electricity to be generated from renewable energy sources.
+They also boost energy efficiency and offer efficiency gains at all stages of the energy
+industry's value-added chain, whether in generation, transmission, or above all in the use
+of electrical power. They form the basis for the intelligent and efficient use of energy in
+industrial applications, in power supplies for computers and consumer electronics, and in
+vehicles. These innovative technologies may enable us to grow revenue beyond our strategic
+target of 8 percent per annum.
+We are not subject to any statutory or legal capital requirements, nor are any defined in the
+Articles of Association.
+> Gross debt at a maximum of 2 x EBITDA (earnings from continuing operations before interest
+and taxes plus scheduled depreciation and amortization).
+> Positive net cash position and
+> Gross cash position of between 30 and 40 percent of revenue,
+Our principal objective for Group-wide treasury activities at Infineon is ensuring financial
+flexibility based on a solid capital structure. It is of prime importance for all companies in the
+semiconductor industry that sufficient cash funds are available to finance operating activities
+and planned investments throughout all phases of the business cycle. Furthermore, debt
+should only constitute a modest proportion of the financing mix. Based on these principles,
+Infineon has defined the following three key objectives for capital management, all of which
+continue to be pursued also after the acquisition of International Rectifier:
+Structure and principles of Infineon's treasury
+Treasury and capital requirements
+161
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Treasury and capital requirements
+The opportunities arising from the integration of International Rectifier are described in detail
+in the chapter "Group strategy”. Many of International Rectifier's products and technologies
+complement our own key focus areas. International Rectifier offers IGBT modules and IGBT
+driver ICs in the low-power range, whereas prior to the acquisition we have focused on high-
+performance modules. International Rectifier possesses a great deal of expertise when it comes
+to the new power semiconductor material, gallium nitride, whereas we have gained a wealth
+of experience over the years with silicon carbide. In terms of digitally controlled voltage con-
+version-related products, we used to concentrate mainly on servers, whereas International
+Rectifier has a strong position in the field of games consoles, graphic cards and in the network
+and cellular infrastructure sector. Our principal focus is on selling directly to customers, whereas
+International Rectifier's strength lies in sales through distribution channels. In regional terms,
+Infineon is particularly strong in Europe due to our origins, whereas International Rectifier
+complements us in particular in its home country, the USA, as well as in Asia. We intend to
+combine these compatible strengths to generate further economies of scope.
+International Rectifier acquisition (OC: medium)
+Our current liquidity position, which we describe in the chapter "Review of liquidity”, enables
+us to obtain favorable refinancing conditions. This fact gives Infineon both the financial
+headroom and the entrepreneurial flexibility it needs to implement its business strategies
+and initiatives.
+Liquidity position (OC: medium)
+The trend towards electronic identity documents is having a positive impact on Chip Card &
+Security segment revenue. Paper-based documents are increasingly being replaced by chip-
+based documents, thanks to the security offered by the latter. The story is similar with credit
+cards: Chip-based credit cards are rapidly replacing magnetic stripe cards. The migration
+to chip-based passports, electronic identity documents and credit cards will continue over
+the coming years and take place in various regions.
+Security applications (OC: medium)
+The continued trend towards mobility is also reflected in unbroken high demand for smart-
+phones and tablets. We are benefiting from this trend in two ways: firstly, through the compo-
+nents we supply for mobile devices (silicon-MEMS microphones, TVS diodes, GPS amplifiers,
+CMOS-RF switches), and secondly, through power semiconductors, which form the key
+components for energy-efficient chargers (high-voltage and low-voltage power transistors,
+driver ICs and control ICs).
+Growth from mobile applications (OC: medium)
+Ability to supply due to available capacities (OC: medium)
+Our own in-house frontend and backend capacities, the availability of external manufacturing
+capacities and the options available to expand manufacturing capacities at our sites in
+Dresden (Germany) and Kulim (Malaysia) place us in a flexible position to deliver the required
+production volumes. The availability of additional capacities, combined with the pro-active
+strategic and operational planning of internal and external resources, enable us to meet rising
+demand from both existing and new customers in the event of a market upturn. This, in turn,
+could have a positive impact on Infineon's future market share and earnings performance,
+with the consequence that the actual Segment Result Margin could be higher than the targeted
+level of 15 percent.
+Market access and activities in China (OC: medium)
+Our activities in China, which we consider to be a highly significant market, are currently
+on a scale that leaves a good deal of potential for expansion going forward. This relates to the
+following markets:
+New wind turbines are being built with increasingly powerful generators, resulting in greater
+semiconductor content per unit.
+Population growth and increasing industrialization in all parts of the world are resulting in
+ever-greater global demand for energy. Electricity is becoming the most important energy
+carrier of the 21st century. Fossil fuel sources exploited to cover energy and electricity require-
+ments are likely to become increasingly scarce and could even run out entirely at some point
+in the future. Alternative energy sources such as renewable energy need to be additionally
+explored. At the same time, it is imperative to reduce CO2 emissions, or at least any increase in
+them needs to be kept to a minimum. In order to achieve this goal, it is essential to increase
+the efficiency of electric power consumption.
+159
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Our starting position with photovoltaic systems in China is a highly promising one. We col-
+laborate with several leading Chinese inverter manufacturers and this year in particular have
+expanded the scope of our collaboration with the Chinese market leader. We also have a strong
+presence in China in the solar energy systems sector, which has become the most important
+single market in the world.
+If we succeed in positioning Infineon in China as an integral part of Chinese industry (and hence
+Chinese society), it can open up a multitude of new opportunities that will have a positive
+impact on the growth and profitability of our business.
+Further growth in semiconductor content in vehicles (OC: medium)
+We expect semiconductor content per vehicle to continue growing. The primary driving force
+behind this trend is the rising demand for active safety features and driver assistance systems.
+We are also convinced that the CO2 targets currently in place cannot be achieved without
+further electrification. In this context, electrification not only relates to hybrid and electric
+drives, but also to technologies such as electric power steering and electronic power brakes.
+IT security within the vehicle is also gaining in importance. Thanks to its expertise in the field of
+security controllers, Infineon is extremely well positioned to exploit opportunities in this area.
+160
+Off-balance-sheet financing arrangements such as the sale of receivables, sale-and-lease-
+back transactions or similar arrangements were not entered into during the 2015 and 2014
+fiscal years.
+Vehicle production in China is still expanding, albeit at a slower pace. China is also pressing
+ahead with expanding its high-speed railway infrastructure and is, meanwhile, one of the
+world's largest markets in the field of rail vehicles.
+Authorization to issue bonds with warrants and/or convertible bonds
+Psee page 149 ff.
+P see page 121
+Most transactions within the Infineon Group involving derivative financial instruments are
+handled by Infineon Technologies AG. The comments provided in the chapter "Treasury and
+capital requirements” regarding the nature and scope of transactions with derivative financial
+instruments and hedged risks apply to Infineon Technologies AG. Reference is also made to
+the notes to the Separate Financial Statements of Infineon Technologies AG.
+Expected developments, together with associated material risks and opportunities
+The expected developments, together with associated material risks and opportunities of
+Infineon Technologies AG are very similar to those of the Infineon Group. Moreover, it is
+assumed that the result from investments will play a major role in Infineon Technologies AG's
+earnings performance. As a general rule, Infineon Technologies AG participates in the risks
+of its subsidiaries and equity investments on the basis of the relevant shareholding. As the
+parent company, Infineon Technologies AG is integrated in the Infineon Group's overall risk
+management system and internal control system. For information in this context and a
+description of the expected developments, risks and opportunities of Infineon Technologies AG,
+please see the "Risk and opportunity report" in the chapter "Report on expected developments,
+together with associated material risks and opportunities”.
+For information regarding Infineon's long-term dividend policy, see the section "Dividend"
+in the chapter "The Infineon share".
+For the 2014 fiscal year, the Company paid a dividend of €0.18 per share (€202 million in total).
+Infineon Technologies AG reports unappropriated profit of €226 million in its financial state-
+ments for the fiscal year ended September 30, 2015. A cash dividend of €0.20 per share shall
+be proposed for this period at the Annual General Meeting. The disbursement of the proposed
+dividend is subject to approval by shareholders.
+P❘ see page 164
+Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available
+for distribution to shareholders is based on the level of unappropriated profit (Bilanzgewinn)
+recorded by the ultimate parent, as determined in accordance with the German Commercial
+Code (HGB).
+The equity ratio at the end of the reporting period was 67.3 percent, compared to 80.5 percent
+one year earlier.
+The increase in equity (€387 million) was mainly attributable to net income of €571 million
+recorded in the 2015 fiscal year. Payment of the dividend for the 2014 fiscal year (€202 million)
+reduced equity accordingly.
+169
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Significant events after the end of the reporting period
+The carrying amount of investments was increased by the reversal of an impairment loss
+previously recognized on the investment in Infineon Technologies Holding B.V. (€208 million)
+and reduced by a capital repayment of €149 million from the same entity. Cash and cash
+equivalents and marketable securities went down by €667 million during fiscal year 2015.
+Provisions for pensions and similar obligations increased by €80 million resulting from the
+reduction in the average market interest rate for the past seven years. Other provisions fell
+by €191 million in the 2015 fiscal year, primarily due to payments made in conjunction with
+the partial settlement reached with Qimonda's insolvency administrator (see note 32 to the
+Consolidated Financial Statements). The line item “Trade payables, liabilities to affiliated
+companies and other liabilities” increased by €160 million over the twelve-month period,
+mainly owing to a €184 million increase in liabilities to affiliated companies, while other
+liabilities decreased by €70 million.
+Infineon Technologies AG's financial condition in the 2015 fiscal year was significantly impacted
+by the acquisition of International Rectifier. On the assets side, increases were recorded for
+financial assets as well as for receivables and assets. The acquisition-related increase of financial
+assets and receivables primarily reflects a contribution to Infineon Technologies US HoldCo
+Inc. of €1,519 million including the offsetting impact from the hedging of foreign currency risk
+from the purchase price obligation for the acquisition of International Rectifier of €140 million
+and a loan receivable from Infineon Technologies US HoldCo Inc. amounting to €792 million.
+The Company issued two senior and unsecured bonds with a total nominal value of €800 million
+to finance the acquisition of International Rectifier. In addition, a bank loan amounting to
+€792 million (US$934 million) was procured.
+P see page 265
+Dividend
+7,458
+Significant events after the end
+of the reporting period
+of the Consolidated Financial Statements to the Supervisory Board.
+171
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Section 21, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed
+or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of
+a listed corporation to notify such corporation and the German Federal Financial Supervisory
+Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin”) immediately. As of Sep-
+tember 30, 2015, we have not been notified of any direct or indirect shareholdings reaching or
+exceeding 10 percent of the voting rights. The shareholdings notified to us as of September 30,
+2015 are presented in the Notes to the Financial Statements of Infineon Technologies AG
+under the information pursuant to section 160, paragraph 1, No. 8 AktG.
+Shareholdings exceeding 10 percent of the voting rights
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register
+of Infineon Technologies AG are recognized as shareholders of the Company. In order to be
+recorded in the share register of Infineon Technologies AG, shareholders are required to sub-
+mit to the Company the number of shares held by them and their name or company name,
+their address and, where applicable, their registered office and their date of birth. Pursuant to
+section 67, paragraph 4, AktG Infineon Technologies AG is entitled to request information from
+any party listed in the share register regarding the extent to which shares, to which the entry
+in the share register relates, are actually owned by the registered party and, if it does not own
+the shares, to receive the information necessary for the maintenance of the share register in
+relation to the party for whom the party concerned holds the shares. Section 67, paragraph 2,
+AktG stipulates that the shares concerned do not confer voting rights until such time as the
+information requested has been supplied in the appropriate manner.
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regula-
+tions of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example, pursuant
+to section 136 AktG shareholders are under certain circumstances prohibited from voting and
+according to section 71b AktG Infineon Technologies AG has no voting rights from its own
+shares. Non-compliance with the notification requirements pursuant to section 21, paragraph 1
+or 1a of the German Securities Trading Act (Wertpapierhandelsgesetz – “WpHG") can, according
+to section 28 WPHG, have the effect that certain rights - including the right to vote - may,
+temporarily at least, not exist. We are not aware of any contractual restrictions on voting rights
+or the transfer of shares.
+Restrictions on voting rights or the transfer of shares
+No significant events occurred between the end of the reporting period and the submission
+The Company held 6 million of the above-mentioned issued shares as own shares at the end
+of the reporting period (September 30, 2014: 6 million). Own shares held by the Company on
+the date of the Annual General Meeting do not carry a vote and are not entitled to participate
+in profit.
+Structure of the subscribed capital
+of the German Commercial Code (HGB)
+Information pursuant to section 289, paragraph 4,
+and section 315, paragraph 4,
+Corporate Governance
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+170
+The share capital of Infineon Technologies AG stood at €2,258,542,962 as of September 30, 2015.
+This sum is divided into 1,129,271,481 non-par registered shares, each of which represents
+a notional portion of the share capital of €2. Each share carries one vote and gives an equal
+right to the profit of the Company based on the profit appropriation resolved by shareholders
+at the Annual General Meeting.
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+9,487
+21
+Other provisions
+Provisions for pensions and similar obligations
+Special reserve with an equity portion
+6,002
+6,389
+229
+226
+1
+2,365
+1,165
+1,179
+2,243
+2,247
+Shareholders' equity
+Distributable profit
+Retained earnings
+2,737
+Total liabilities and shareholders' equity
+1
+62
+15
+Deferred income
+819
+2,578
+Liabilities
+819
+979
+142
+Trade payables, liabilities to affiliated companies and other liabilities
+804
+Bonds
+615
+504
+Provisions
+553
+362
+Liabilities to banks
+Capital reserves
+Shares with special control rights
+System of control over voting rights when employees' own shares and
+their control rights are not exercised directly
+Risk management
+The external audit of the Compliance Management System at Infineon Technologies AG and at
+two other major Group entities, commissioned at the end of the 2012 fiscal year, was completed
+in June 2014. Under the terms of this engagement, the Management Board commissioned an
+independent audit firm to test and report on the appropriateness, implementation and effec-
+tiveness of the Compliance Management System. The audit was conducted in accordance with
+the "Principles for the Proper Performance of Reasonable Assurance Engagements Relating
+to Compliance Management Systems (IDW PS 980)❞ issued by the Institute of Public Auditors
+in Germany (IDW). The main points of emphasis were the prevention of corruption and com-
+pliance with antitrust laws. Since the 2015 fiscal year the sustainability of the Compliance
+Management System in place at Group companies is additionally being ensured by regular
+audits primarily conducted in accordance with Audit Standard IDW PS 980.
+The Corporate Compliance Officer is supported by regional Compliance Officers. The Company
+has also established a Compliance Panel that meets on a regular basis and is composed of
+experienced managers from the Legal, Human Resources, Internal Audit and Security depart-
+ments and the Corporate Compliance Officer. The primary task of the panel is to deliberate
+on the current status of compliance throughout Infineon and to discuss key issues and reach
+decisions aimed at improving the compliance system. A whistleblowing system has been
+established as an important component of the compliance system. Infineon employees can
+contact the Corporate Compliance Officer on a confidential basis (anonymously, if desired) to
+report non-compliance with internal guidelines and applicable laws. Since 2011, an external
+lawyer serving in the capacity of an independent ombudsman has also been available to enable
+employees and business partners to pass on confidential information (anonymously, if desired)
+with respect to legal violations at Infineon. In collaboration with the Compliance Panel, the
+Corporate Compliance Officer follows up on every item of information communicated before
+deciding whether to initiate an internal investigation.
+Infineon Technologies AG's Corporate Compliance Officer reports directly to the Chief Financial
+Officer (CFO). The Corporate Compliance Officer coordinates the Compliance Management
+System, develops the Infineon compliance program based on a risk-oriented approach, draws
+up and revises guidelines, advises employees, receives complaints and tip-offs, including those
+made anonymously, and leads investigations aimed at clarifying compliance-related cases.
+In addition, he or she carries out regular compliance training measures for employees on topics
+such as antitrust law and the prevention of corruption. Extensive training measures were
+again carried out during the 2015 fiscal year.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+Infineon maintains an independent Compliance Office. The additional resources allocated
+underline Infineon's clear commitment to absolute compliance with the law and to maintaining
+ethical standards which protect the legitimate interests of employees, suppliers, customers,
+and shareholders, safeguard Infineon's reputation, and nonetheless take account of Infineon's
+needs. Beside the traditional compliance objectives, such as risk mitigation and increases in
+efficiency and effectiveness, compliance is promoted with a view to strengthening Infineon's
+image as a reliable and fair business partner and thus contributing to its overall success.
+Corporate Compliance Officer and Compliance Panel
+The Management Board sees the systematic and effective management of risks and oppor-
+tunities as an important part of good corporate governance and a key success factor for
+our business. The system in place ensures that risks and opportunities are detected at an
+early stage and risk exposures are minimized. The transparency of the Group's risk profile
+contributes to the systematic and continuous increase of the value of the business.
+We conduct our business responsibly and in compliance with legal requirements and adminis-
+trative regulations. We have established several guidelines that contribute towards achieving
+this objective. Infineon Technologies AG's Business Conduct Guidelines - as one of the key
+elements of our corporate governance system – are published on the internet and are manda-
+tory for the Management Board and all employees worldwide. The Business Conduct Guide-
+lines are regularly reviewed and updated. They include regulations on compliance with the
+law, interaction with business partners and third parties, the avoidance of conflicts of interest,
+interaction with Company institutions, data and information management as well as environ-
+mental protection, health and safety topics. Also included are regulations for the handling
+of complaints and communication relating to violations of the Business Conduct Guidelines
+and other mandatory Infineon specific rules.
+Business Conduct Guidelines
+Corporate Governance - standards for effective and responsible corporate management
+The Management Board and the Supervisory Board of Infineon Technologies AG view corporate
+governance as a comprehensive concept for responsible, transparent and value-led corporate
+management. Good corporate governance contributes towards increasing the value of the
+business on a sustainable basis, while at the same fostering trust in our entity among national
+and international investors, the financial markets, business partners, employees and the
+public. The Management Board, the Supervisory Board and the management ensure that
+corporate governance is actively implemented and continuously developed throughout the
+entity. Corporate governance at Infineon encompasses not only the German Corporate Gover-
+nance Code (Deutscher Corporate Governance Kodex - "DCGK"), but also the standards of
+the internal control system, compliance – particularly the Infineon's "Business Conduct
+Guidelines" - and regulations on organizational and supervisory duties within the entity. The
+Business Conduct Guidelines and the Regulations on Organizational and Supervisory Duties
+are available to all employees on the Infineon intranet for review and download.
+Corporate Governance practices
+Corporate Governance Report
+corporate-governance/compliance/
+business-conduct-guidelines/
+@www.infineon.com/cms/en/
+about-infineon/investor/
+Comparable arrangements for employees are only in place in a small number of individual cases.
+-
+The change-of-control clauses agreed with the members of the Management Board correspond
+to the recommendation made in section 4.2.3, paragraph 5, of the German Corporate Gover-
+nance Code. Such clauses are intended to give members of the Management Board security
+if a change-of-control situation occurs, and to preserve their independence in the event of
+a takeover bid.
+Our Group-wide Risk and Opportunity Management System, which is continuously adapted
+to changes in circumstances, consists of the following sub-processes: identification, analysis,
+controlling and monitoring of opportunities. Its effectiveness is reviewed regularly by the
+Supervisory Board's Investment, Finance and Audit Committee.
+Transparent management
+"Persons discharging managerial responsibilities”- which in Infineon's case includes members
+of the Management and Supervisory Boards as well as parties related to them - are required
+pursuant to Section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz) to
+notify the Company as well as the Federal Financial Supervisory Authority (Bundesanstalt
+für Finanzdienstleistungsaufsicht - BaFin) of own transactions involving Company shares or
+related financial instruments. This requirement, however, applies only if the total value of the
+transactions made by one of the above-mentioned persons amounts to €5,000 or more in one
+calendar year. The Company is obliged to publish the notifications it receives without undue
+delay and have them recorded in the Company Register. Such notices are also reported to BaFin.
+Directors' dealings
+Infineon's financial reporting system for the 2015 fiscal year is audited by KPMG AG Wirt-
+schaftsprüfungsgesellschaft, Munich (KPMG). The Quarterly and Half-Year Financial Reports
+were also subject to review by KPMG. The audit also considers the Company's system for the
+early identification of risks and the submission of the Declaration of Compliance in accordance
+with section 161 AktG. The Investment, Finance and Audit Committee discusses the Quarterly
+and Half-Year Financial Reports with the Management Board prior to publication. We have
+agreed with KPMG that the Chairman of the committee should be informed without delay if any
+possible reasons for exclusion or bias occur during the audit, unless they can be eliminated
+immediately. The auditors should also report immediately on all findings and occurrences
+material to the Supervisory Board's work that arise in the course of the audit and review
+engagements.
+Starting with the 2009 fiscal year, Infineon Technologies AG has prepared its Consolidated
+Financial Statements exclusively in accordance with International Financial Reporting
+Standards (IFRS) as applicable in the EU. The separate Financial Statements of Infineon
+Technologies AG are prepared in accordance with the German Commercial Code (HGB). The
+separate and consolidated Financial Statements of Infineon Technologies AG and the com-
+bined Management Report (Lagebericht) are published within 90 days of the end of the fiscal
+year upon approval by the Supervisory Board.
+Financial reporting and auditing
+The Company maintains a directors' and officers' group liability insurance policy ("D&O
+Insurance"). The D&O Insurance policy covers personal liability in the event of claims made
+in particular against members of the Management and Supervisory Boards for the indemnifi-
+cation of losses incurred in the performance of their duties. A deductible of 10 percent of the
+loss up to the amount of one-and-a-half times the annual fixed compensation of the member
+of the Management or Supervisory Board concerned has been agreed upon in accordance
+with the statutory regulation in section 93, paragraph 2, of the German Stock Corporation
+Act (AktG) (for the Management Board) and the recommendation in section 3.8 of the DCGK
+(for the Supervisory Board).
+D&O insurance
+Details of risk management at Infineon are presented in the chapter "Risk and opportunity
+report", which provides an in-depth description of both risk and opportunity management
+and the internal control system at Infineon.
+German law requires the Management Board to render a responsibility statement ("Bilanzeid").
+The information required for this purpose is confirmed internally to the Management Board
+by senior executives bearing management responsibility.
+Infineon Technologies AG also issues ad hoc announcements in addition to its regular
+reporting to publish information that is not in the public domain and the disclosure of which
+is deemed to have a significant impact on the value of the Infineon share.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+176
+175
+@www.infineon.com
+P see page 149 ff.
+We submit a quarterly report to our shareholders according to a defined financial calendar,
+covering our business development as well as financial position and financial performance.
+The members of the Management Board regularly inform shareholders, analysts, media
+and the general public about the quarterly and annual results. Our comprehensive investor
+relations service features regular meetings and telephone conferences with analysts and
+institutional investors. Reports, notices and disclosures are usually available on our website
+in German and English.
+The Company has a Disclosure Committee comprising experienced managers from the investor
+relations, communication, finance, financial reporting and accounting, legal and internal
+audit departments. The Disclosure Committee – in a different composition, as deemed appro-
+priate - reviews and approves specified financial and other material information published
+in conjunction with regular financial reporting or ad hoc announcements.
+No shares conferring special control rights have been issued.
+If a member of the Management Board leaves his or her position in connection with a change
+of control, that member is currently entitled to continued payment of the relevant annual
+remuneration for the entire remaining contract term. In accordance with a special contract
+termination right granted to members of the Management Board, the period of continued
+payment is capped at a maximum of 36 months in the event that the member resigns, or at a
+minimum of 24 months and a maximum of 36 months in the event that the member is removed
+from office or dismissed by Infineon Technologies AG. Further details are contained in the
+Compensation Report.
+Psee page 186 f.
+Even if the dilution protection regulations are applied, the option or conversion price must
+equal at least 90 percent of the average stock exchange price of the Company's shares in the
+Xetra closing auction on the Frankfurt Stock Exchange (or a comparable successor system);
+further details - including the conditions under which the option or conversion price may be
+reduced - are set out in the authorization.
+> in order to exclude fractional amounts resulting from a given subscription ratio from the
+subscription rights of the shareholders to the bonds or insofar as such action is necessary in
+order to grant holders of option or conversion rights from bonds that have already been or
+will in future be issued by the Company or its subordinated Group companies subscription
+rights to that extent to which they would be entitled after exercise of their rights or after
+fulfillment of any conversion obligations.
+> if the issue price is not substantially lower than the theoretical market value of the bonds,
+as determined in accordance with accepted methods of financial mathematics; however
+this only applies insofar as the shares to be issued to service the option and/or conversion
+rights established on this basis in aggregate do not exceed 10 percent of the share capital,
+either at the time of this authorization becoming effective or at the time of its exercise;
+The Annual General Meeting held on February 13, 2014 authorized the Management Board, in
+the period through February 12, 2019, either once or in partial amounts, to issue bonds with
+warrants and/or convertible bonds (referred to collectively as "bonds") in an aggregate nominal
+amount of up to €2,000,000,000, to guarantee such bonds issued by subordinated Group
+companies of the Company and to grant holders of bond options or conversion rights to up to
+130,000,000 no-par-value registered Company shares, representing a notional portion of the
+share capital of up to €260,000,000, in accordance with the relevant terms of the bonds. The
+Management Board is authorized, with the approval of the Supervisory Board, to exclude the
+subscription rights of the shareholders to the bonds,
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+172
+Psee page 245 f.
+The Management Board is authorized, subject to the requirements resolved by shareholders
+at the Annual General Meeting, to determine the further details of the bond issue, including its
+terms and conditions.
+The powers of the Management Board to issue shares derive from section 4 of the Articles of
+Association, in conjunction with applicable legal provisions. Further information relating
+to the Company's existing Authorized and Conditional Capital can be found in note 24 to the
+Consolidated Financial Statements.
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Asso-
+ciation rests with the Annual General Meeting. However section 10, paragraph 4, of the Articles
+of Association gives the Supervisory Board the authority to amend the Articles of Association
+insofar as such amendments relate merely to the wording, such as changes in the share capital
+amount resulting from a capital increase out of conditional or authorized capital or a capital
+decrease by means of cancellation of own shares. Unless the Articles of Association provide
+for another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual
+General Meeting regarding the amendment of the Articles of Association require a majority of
+at least three quarters of the share capital represented. Section 17, paragraph 1, of the Articles
+of Association of Infineon Technologies AG provides in principle for resolutions to be passed
+with a simple majority of the votes cast and, when a capital majority is required, with a simple
+majority of the capital unless a higher majority is required by law or in accordance with other
+stipulations contained in the Articles of Association.
+Rules governing the amendment of the Articles of Association
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment
+for members of the Management Board is five years. Re-appointment or extension of the
+term of office, in each case for a maximum of five years, is permitted (section 84, paragraph 1,
+sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association and section 84, para-
+graph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a deputy
+chairman of the Management Board. The Supervisory Board may revoke the appointment of
+a member of the Management Board and the Chairman of the Management Board for good
+cause (section 84, paragraph 3, AktG).
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board
+of Infineon Technologies AG shall consist of at least two members. The Management Board
+currently comprises three members. The Supervisory Board decides on the exact number of
+members of the Management Board and on their appointment and dismissal in accordance
+with section 5, paragraph 1, of the Articles of Association and section 84, paragraph 1, AktG.
+As Infineon Technologies AG falls within the scope of the German Co-Determination Act (Mit-
+bestimmungsgesetz - "MitbestG"), the appointment or dismissal of members of the Manage-
+ment Board requires a two-thirds majority of the votes of the members of the Supervisory
+Board (section 31, paragraph 2, MitbestG). If such majority is not achieved at the first ballot, the
+appointment may be approved on a recommendation of the Mediation Committee at a second
+ballot by a simple majority of the votes of the members of the Supervisory Board (section 31,
+paragraph 3, MitbestG). If the required majority is still not achieved, a third ballot is held in
+which the Chairman of the Supervisory Board has two votes (section 31, paragraph 4, MitbestG).
+If the Management Board does not have the required number of members, in urgent cases,
+the local court (Amtsgericht) of Munich makes the necessary appointment upon petition of
+a party concerned pursuant to section 85, paragraph 1, AktG.
+of the Management Board
+Rules governing the appointment and dismissal of members
+Employees who hold shares in Infineon Technologies AG exercise their control rights directly
+in accordance with the applicable laws and the Articles of Association, just like any other
+shareholders.
+Powers of the Management Board to issue shares
+Agreements for compensation in the event of a takeover bid
+Purchase of own shares
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization
+may - if not sold either via the stock exchange or by means of a public purchase offer addressed
+to all shareholders - be used for all legally admissible purposes. The shares may also be can-
+celled or offered to third parties in conjunction with business combinations or the acquisition
+of companies, parts of companies or participations in companies. Under specified circum-
+stances subject to the consent of the Supervisory Board, the shares may also be sold to third
+parties in return for cash payment (including by means other than through the stock exchange
+or through an offer to all shareholders), used to meet the Company's obligations under bonds
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+174
+Psee page 243 f.
+program-2013
+about-infineon/investor/capital-returns/
+@www.infineon.com/cms/en/
+P see page 247
+A resolution passed by the Annual General Meeting on February 28, 2013 authorizes Infineon
+Technologies AG, in the period through to February 27, 2018, to acquire its own shares,
+within the statutory boundaries, in an aggregate amount not exceeding 10 percent of the share
+capital at the time the resolution was passed or - if the latter amount is lower - of the share
+capital in existence at the time the authorization is exercised. The Company may not use the
+authorization for the purposes of trading in its own shares. The Management Board decides
+whether own shares are acquired through the stock exchange, by means of a public offer to
+purchase addressed to all shareholders or a public invitation to submit offers for sale or via a
+bank or other entity that meets the requirements of section 186, paragraph 5 sentence 1 AktG.
+The authorization includes differentiating requirements - in particular with regard to the
+permissible purchase price – for each method of acquisition.
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy
+agreements and approvals, supply contracts, joint venture agreements and license agreements
+contain customary change-of-control clauses, according to which a change in control of
+Infineon Technologies AG triggers the right of the other party at its sole discretion to terminate
+or to continue the agreement as well as other rights which may, under certain circumstances,
+be unfavorable for Infineon.
+In November 2013, the Company resolved a new capital returns program which expired on
+September 30, 2015. Program details are provided in note 24 to the Consolidated Financial
+Statements. Information relevant to the program was also regularly published on the
+Company's website.
+The use of own shares, acquired through derivative instruments, is governed by the same
+rules as applicable for the direct acquisitions of own shares.
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the
+Company is required to accept the shares under the derivative transactions. No other right to
+sell shares will apply in this connection.
+If own shares are acquired using derivatives in accordance with the requirements stipulated
+in the authorization, any right of the shareholders to conclude such derivative transactions
+with the Company will be excluded in analogous application of section 186, paragraph 3,
+sentence 4, AktG. Similarly, the shareholders have no right to conclude derivative transactions
+with the Company insofar as arrangements for the conclusion of derivative transactions
+include a preferred offer for the conclusion of derivative transactions concerning small
+volumes of shares.
+with warrants and convertible bonds and stock option plans, offered for sale or granted as
+a remuneration component to members of representative bodies and employees within the
+Group, and/or used to repay securities-backed loans. The subscription right of shareholders
+is excluded in all of the above cases (except when the shares are cancelled). In addition, the
+subscription rights of shareholders are excluded in respect of fractional amounts in instances
+in which the shares are sold through a public offer addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on February 28, 2013, the
+acquisition of Infineon Technologies AG shares may also be effected using equity derivatives.
+The total number of shares that can be acquired using derivatives may not exceed 5 percent
+of the Company's share capital, determined either at the time of this authorization becoming
+effective or at the time of its exercise through the use of the derivatives. The shares acquired
+through the exercise of this authorization are to be counted toward the acquisition threshold
+for the shares acquired in accordance with the authorization to acquire own shares as
+described above. The authorization stipulates other restrictions when derivatives are deployed,
+including their execution, term, servicing and acquisition price.
+173
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Significant agreements in the event of a change of control as a result of a takeover bid
+The credit facility agreement entered into in connection with the acquisition of International
+Rectifier as well as the eurobonds issued by Infineon (see note 22 to the Consolidated Financial
+Statements) contain defined change-of-control clauses which give creditors the right to
+terminate the instruments concerned and to call for early repayment. These clauses reflect
+standard market practice.
+Share capital
+795
+9,487
+(138)
+General and administrative expenses
+(400)
+(186)
+Other income (expense), net
+48
+39
+Result from investments, net
+361
+1,003
+Interest result
+(52)
+(22)
+Other financial result
+Income before taxes
+Income tax
+Net income
+(7)
+47
+618
+1,269
+(153)
+(47)
+Selling expenses
+(724)
+7,458
+Infineon Technologies AG
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Infineon Technologies AG
+In addition to reporting on the Infineon Group, in the following section we also report on the
+performance of Infineon Technologies AG.
+Infineon Technologies AG is the parent company of the Infineon Group and performs the
+Group's management and corporate functions. It takes on major group-wide responsibilities
+such as Finance and Accounting, Corporate Compliance, Human Resources, strategic and
+product-oriented R&D activities and also Corporate and Marketing Communication worldwide.
+Furthermore, it manages logistical processes throughout the Group. Infineon Technologies AG
+has its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Unlike the Consolidated Financial Statements, which are prepared in accordance with Inter-
+national Financial Reporting Standards ("IFRS”), Infineon Technologies AG's Separate Financial
+Statements are prepared in accordance with the provisions of the German Commercial Code
+("HGB"). The complete Separate Financial Statements are published separately.
+Earnings position
+Statement of income of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+€ in millions
+2015
+2014
+Revenue
+5,243
+4,601
+Cost of goods sold
+(3,698)
+(3,528)
+Gross profit
+1,545
+Research and development expenses
+(547)
+(28)
+1,073
+1,241
+Inventories
+5,775
+4,125
+517
+344
+Receivables and other assets
+1,481
+618
+Cash and cash equivalents, marketable securities
+1,672
+Current assets
+3,670
+3,301
+Prepaid expenses
+39
+28
+Active difference resulting from offsetting
+3
+4
+571
+Total assets
+Non-current assets
+3,651
+2,339
+474
+(137)
+5,245
+(228)
+(208)
+(784)
+226
+229
+Infineon Technologies AG's net income for the 2015 fiscal year was positively impacted by
+income from the reversal of an impairment loss previously recorded on its investment in
+Infineon Technologies Holding B.V. The carrying amount of the investment was increased by
+€208 million (September 30, 2014: €774 million). Infineon Technologies AG recorded sharp
+rises in revenue (14 percent) and gross profit (44 percent) for the 2015 fiscal year. Cost of goods
+sold increased by 5 percent.
+167
+168
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Infineon Technologies AG reports a net income of €571 million for the 2015 fiscal year. After
+transferring a total of €345 million to revenue reserves, unappropriated profit amounted to
+€226 million.
+Transfers to retained earnings according to section 58 paragraph 2 AktG
+Transfers to retained earnings according to section 58 paragraph 2a AktG
+Unappropriated profit at the end of year
+Net assets and financial position
+Statement of financial position of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+€ in millions
+Intangible assets, property, plant and equipment
+Financial assets
+2015
+Combined Management Report - Our 2015 fiscal year
+2014
+530
+184
+183
+The Mediation Committee, which consists of the Chairman of the Supervisory Board, the
+Vice-Chairman, one shareholder representative and one employee representative, submits
+specific recommendations to the Supervisory Board concerning the appointment of members
+of the Management Board if the first round of the election on the appointment does not result
+in the required majority of two thirds of the members of the Supervisory Board.
+The Supervisory Board rules of procedure provide for the formation of three committees:
+the Mediation Committee, the Executive Committee, and the Investment, Finance, and Audit
+Committee. The Supervisory Board has also established both a Strategy and Technology
+Committee and the Nomination Committee recommended in the DCGK. All Supervisory Board
+committees have an equal number of employee representatives and shareholder represen-
+tatives, apart from the Nomination Committee, which consists exclusively of shareholder
+representatives.
+Supervisory Board committees
+> General rule for maximum period of service on the Supervisory Board
+The Supervisory Board also recommends that members who have been elected by the
+employees do what they can, within the scope of their influence, to have the objectives and
+requirements profile taken into account in the nominations made by the relevant bodies on
+the employees' side. Lastly, the Supervisory Board recommends that the objectives should
+be taken into account by any of its members making an application for the appointment of
+a member of the Supervisory Board by the courts.
+› Age limit
+The Supervisory Board's objective is that its members do not, as a general rule, serve for
+more than three terms of office (i.e. normally no longer than 15 years).
+As a general rule, no-one older than 69 years of age should be proposed for membership
+of the Supervisory Board.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+The composition of the Supervisory Board is in accordance with the objectives as most recently
+defined in August 2015. In addition, the Supervisory Board observes the age limit stipulated
+in its rules of procedure, according to which "as a general rule” no-one older than 69 years
+of age should be proposed for membership of the Supervisory Board. In the opinion of the
+Supervisory Board, endorsed by the vote in favor at the Annual General Meeting, the case of
+Dr. Sünner, who already exceeded this age limit at the time of his appointment, constitutes
+a well-founded and therefore justified exception, notably on the grounds of his wealth of
+experience in taxation, law and compliance. The Supervisory Board currently comprises six
+women (37.5 percent) and ten men (62.5 percent). Four (25 percent) of the members of the
+Supervisory Board are aged between 30 and 50 and 12 (75 percent) are over 50. The composi-
+tion of the Supervisory Board therefore already complies with the requirements of the "Law
+on Equal Participation of Women and Men in Leadership Positions in the Private and Public
+Sector" (which do not yet formally apply to the Supervisory Board in its current composition),
+according to which each gender is required to have a minimum 30 percent representation
+on the Supervisory Board.
+The objectives and requirements profile approved by the Supervisory Board is taken into
+account when making nominations to the Annual General Meeting. As part of this process,
+the Supervisory Board also discloses any of the candidate's business or other relationships
+with Infineon, the Company's representative bodies and/or a major shareholder in the Com-
+pany, if an impartial shareholder making an objective decision about the election would
+consider such information to be of relevance. The same applies in respect of the work of the
+Nomination Committee, insofar as this committee performs the preparatory work for the
+Supervisory Board decision.
+The members of the Management Board and Supervisory Board are required to disclose any
+conflicts of interest to the Supervisory Board without delay. No conflicts of interest arose
+among the members of the Management Board and Supervisory Board in the 2015 fiscal year.
+The Executive Committee consists of the Chairman of the Supervisory Board, the Vice-
+Chairman, one shareholder representative and one employee representative. The duties of
+this committee include preparing the decisions to be taken by the full Supervisory Board
+regarding the appointment or dismissal of members of the Management Board and Manage-
+ment Board compensation. The Executive Committee is authorized in its own capacity to
+make decisions with respect to contracts with members of the Management Board, except in
+matters involving remuneration.
+The Investment, Finance and Audit Committee ("Audit Committee”) consists of the Chairman
+of the Supervisory Board, the Vice-Chairman and one further representative each of the share-
+holders and employees. The Chairman of the Investment, Finance, and Audit Committee,
+Dr. Sünner, has - among other qualifications - particular expertise in and extensive experience
+of financial reporting on account of his many years of service as chairman of the audit com-
+mittee of another DAX-listed corporation and accordingly qualifies as an "independent financial
+expert" pursuant to section 100, paragraph 5, of the German Stock Corporation Act.
+The Audit Committee monitors the Company's financial reporting process and discusses and
+examines the Separate Financial Statements and Consolidated Financial Statements prepared
+by the Management Board as well as the quarterly and half-yearly financial reports. It gives
+recommendations with respect to the approval of the Separate Financial Statements and Con-
+solidated Financial Statements by the Supervisory Board based on the independent auditor's
+report, submits recommendations to the Supervisory Board regarding the election of the
+independent auditor, engages the auditor elected at the Annual General Meeting to audit the
+Separate Financial Statements and Consolidated Financial Statements and review the interim
+financial reports, specifies the key areas to be examined in audit activities jointly with the
+auditor and is responsible for determining the auditor's compensation.
+Other matters addressed by the Audit Committee include monitoring the effectiveness of the
+internal control system, the internal audit system and the risk management system. In this
+capacity, it has the authority both to contact employees of the entity directly and to seek
+external assistance. Internal Audit reports annually to the Audit Committee, which can also
+specify an audit plan and key areas to be considered in audits.
+Furthermore, the Audit Committee is responsible for discussing compliance issues. The Manage-
+ment Board and the Corporate Compliance Officer regularly report to the Audit Committee on
+the structure and work of the compliance organization and on any particular compliance issues.
+The Strategy and Technology Committee, which consists of three shareholder representatives
+and three employee representatives, concerns itself with Infineon's business strategy and
+key technology issues.
+The Nomination Committee, which consists of the Chairman of the Supervisory Board and two
+further shareholder representatives, proposes to the Supervisory Board suitable candidates
+for recommendation to the Annual General Meeting.
+All committees regularly submit detailed reports on their work to the Supervisory Board.
+Further information about the work of the Supervisory Board and its committees can be found,
+together with details of the people who serve on them, in note 35 to the Consolidated Financial
+Statements and in the report of the Supervisory Board to the Annual General Meeting.
+Avoidance of conflicts of interest
+The German Corporate Governance Code requires prior approval to be given by the Supervisory
+Board before members of the Management Board accept mandates on external supervisory
+boards. In the fiscal year under report, the Supervisory Board's Executive Committee consented
+to Dr. Ploss taking on a mandate in the Supervisory Board of "Haus der Zukunft gGmbH" and
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+The composition of the Supervisory Board should be of an international nature. However,
+this international character is not to be understood restrictively in the sense of any specific
+(foreign) nationality. The decisive factor is more the intercultural influences and experiences
+and the resulting openness, the corresponding understanding and the ability to judge with
+regard to international topics and correlations. The Supervisory Board's objective is to have
+at least five international representatives among its ranks.
+Material transactions between the Company and members of the Management Board or
+related parties require the approval of the Supervisory Board. This also applies to consulting
+and other service or work contracts a member of the Supervisory Board enters into with the
+Company. As a precaution, in August 2015 the Supervisory Board approved a contract between
+the Company and the Technische Universität München (the Institute for Technical Electronics
+headed by Prof. Schmitt-Landsiedel) for the performance of research and development work.
+Prof. Schmitt-Landsiedel does not participate in the payments contractually required to be
+made by Infineon. For this reason, there is no conflict of interest. Dr. Sünner was Of Counsel
+with the law firm Allen & Overy from 2011 to the end of 2014. The Company had in the past
+engaged Allen & Overy in individual cases, but never received advice from Dr. Sünner personally
+in conjunction with any of these engagements. In addition, Dr. Sünner did not benefit - either
+directly or indirectly - from the fees paid for any of these engagements. A potential conflict of
+interest did not therefore arise.
+to Mr. Mittal taking on a mandate in the Board of Directors of Global Semiconductor Alliance
+(GSA). In the previous fiscal year, Mr. Mittal received the approval of the Supervisory Board to
+accept a mandate as member of the Board of Directors of the Singapore Economic Development
+Board and took up this position during the year under report.
+P see pages 275 ff. und 16 f.
+› International character
+According to German stock corporation law, the Management Board has overall responsibility
+for the management of the Company. The Company's Management Board has adopted
+rules of procedure with the consent of the Supervisory Board. These rules stipulate that the
+Company is managed jointly by all members of the Management Board, who should work
+together in a cooperative manner to achieve this end. Collaboration between the Management
+Board and the Supervisory Board is coordinated by the Chief Executive Officer (CEO). The
+CEO maintains regular contact with the Chairman of the Supervisory Board, with whom he
+discusses the key aspects of Infineon's strategy, corporate planning, business performance
+and risk management. At the ordinary meetings of the Supervisory Board, the Management
+Board reports comprehensively and promptly on Infineon's business performance, its economic
+situation and the economic situation of the individual segments, as well as Infineon's financial
+and investment planning. The CEO notifies the Chairman of the Supervisory Board without
+delay regarding any matters that are of material importance for assessing the position and
+development of the Company or for its management.
+Diversity also includes gender diversity. As a listed company subject to co-determination
+stipulations, by law the Supervisory Board must be made up of at least 30 percent women
+and at least 30 percent men.
+Infineon Technologies AG is subject to German stock corporation law, which stipulates a
+two-tier administrative system, with the Management Board responsible for management
+and the Supervisory Board responsible for corporate oversight. We are convinced that this
+separation of the two functions is an important precondition for good corporate governance.
+The Management Board and the Supervisory Board cooperate closely in Infineon's best interest.
+The Company concluded a consulting agreement with the former CEO, Mr. Bauer, in 2012
+when he stood down from the Management Board. In view of his candidacy for the Supervisory
+Board, the consultancy mandate ended on January 31, 2015.
+Management Board
+Infineon Technologies AG's Management Board comprises three members. In accordance with
+the DCGK, the Supervisory Board has set an age limit for Management Board membership,
+according to which members of the Management Board should, as a general rule, not be more
+than 67 years old. In accordance with its rules of procedure, the Supervisory Board takes
+account of diversity as well as technical and personal suitability in respect of the composition
+of the Management Board.
+The Management Board currently comprises only men (100 percent), of whom two are in the
+middle age group of between 30 and 50 years of age (66.7 percent) and one (33.3 percent) is in
+the 50+ age group.
+In conjunction with the implementation of the "Law on Equal Participation of Women and Men
+in Leadership Positions in the Private and Public Sector", which came into force on May 1, 2015,
+the Supervisory Board decided on a quota for women on the Management Board of 0 percent,
+which is compatible with applicable legislation until June 30, 2017. At the same time, however,
+the Supervisory Board gave a commitment to increase its efforts to develop and attract women
+with the professional and personal skills needed to take up Management Board positions. The
+Management Board is the Company's executive body. It is obliged, within the framework of
+the law, to serve the Company's interests and thereby pursue the goal of sustainably increasing
+Infineon's value taking into account the interests of all stakeholders. It determines Infineon's
+commercial objectives, strategy and corporate policy and defines how the Group is organized.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+Number of units
+Supervisory Board
+Work of the Supervisory Board
+The Supervisory Board advises and monitors the Management Board in its management of the
+entity. The Supervisory Board is informed by the Management Board regularly, comprehen-
+sively, and in a timely manner on all matters of relevance and agrees upon Infineon's corporate
+strategy and its implementation with the Management Board. The Supervisory Board discusses
+the quarterly reports and reviews and approves both the Separate Financial Statements and
+the Consolidated Financial Statements of Infineon Technologies AG. Any major decisions made
+by the Management Board, such as Group-wide financial and investment planning or major
+acquisitions and equity investments, divestitures, and financial measures, are subject to its
+approval. Further details are stipulated in the rules of procedure of the Management Board
+and the Supervisory Board. When Supervisory Board votes end in a tie, the Chairman of the
+Supervisory Board has two voting rights if voting is carried out for a second time and again
+results in a tie.
+The duties of the Supervisory Board and its committees are regulated by law, by the Articles
+of Association and by the rules of procedure of the Supervisory Board and its committees.
+In addition, the DCGK contains recommendations pertaining to Supervisory Board work.
+Once a year, the Supervisory Board reviews the efficiency of its work, including its interaction
+with the Management Board. The efficiency review is performed on the basis of a question-
+naire addressing different areas and criteria of the Supervisory Board's work. The results are
+subsequently discussed at a Supervisory Board meeting. In the 2010 fiscal year, an external
+independent consultant was engaged for the first time to conduct a detailed survey of Super-
+visory Board activities. The most recent efficiency review took place in summer 2015, again
+based on a questionnaire. No significant deficits in efficiency were identified.
+Composition of the Supervisory Board
+The Supervisory Board of Infineon Technologies AG currently comprises 16 members, with an
+equal number of shareholder and employee representatives, as stipulated in the German
+Co-Determination Act (Mitbestimmungsgesetz). The shareholder representatives are elected
+by the Annual General Meeting, the employee representatives by employee delegates at
+Infineon's German facilities in accordance with the German Co-Determination Act. The normal
+term of office of members of the Supervisory Board is approximately five years.
+New elections were held in the 2015 fiscal year for both the shareholder representative and
+the employee representative positions on the Supervisory Board. At the Supervisory Board
+meeting held on February 12, 2015, Wolfgang Mayrhuber was confirmed as Chairman and
+Johann Dechant elected as Deputy Chairman of the Supervisory Board. The terms of office of
+all members of the Supervisory Board will expire at the end of the Annual General Meeting
+that resolves on the approval of the acts of its members for the 2019 fiscal year.
+181
+182
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Concrete objectives for the Supervisory Board composition were specified in 2010 in accor-
+dance with the recommendation in section 5.4.1 DCGK (version: May 2010) and have been
+supplemented from time to time in subsequent years. In view of the changes in the law and
+DCGK recommendations in 2015, the Supervisory Board revised its catalog of objectives in
+August 2015. Accordingly, the most important of these is to ensure that the composition of
+the Supervisory Board enables it to optimally perform the duties prescribed to it by law and
+in the Company's Articles of Association. The Supervisory Board is of the opinion that - in
+addition to the personal suitability and technical competence of the individual members of
+the Supervisory Board and the high degree of independence required of the Supervisory
+Board and its members - diversity of know-how and experience within the Supervisory Board as
+a whole are decisive factors. This also includes the international character of its membership.
+Furthermore, an appropriate age limit and a general rule for a maximum period of service on
+the Supervisory Board should be observed. Taking all of these factors into consideration, the
+following objectives and requirements profile arises:
+› Personal suitability
+All members of the Supervisory Board must possess the necessary personality and integrity
+for the due performance of their duties. Members of the Supervisory Board must be loyal
+to the Company at all times and in particular comply strictly with their statutory obligation
+of confidentiality, with which they must be fully conversant. They must have sufficient
+availability and willingness to devote the necessary time and attention to their office.
+Before submitting its recommendations to the Annual General Meeting for the election of
+new members of the Supervisory Board, the Nomination Committee of the Supervisory
+Board therefore obtains assurance from the respective candidates that they are in a position
+to devote the necessary time to their future duties.
+› Technical competence
+When determining the composition of the Supervisory Board, it must be ensured that its
+members as a whole have the necessary technical competence to optimally perform its tasks.
+Furthermore, each individual member of the Supervisory Board must possess a sufficiently
+good understanding of the Company's business activities to serve as a basis for drawing
+objective conclusions in the Company's interests.
+› Independence
+Every effort should be made to ensure the maximum independence of the Supervisory Board
+and its members. A member is independent if he or she can reach decisions on matters
+considered by the Supervisory Board free of any possible conflict of interests, i.e. based
+entirely on objective criteria geared to the interests of the Company. Conversely, a member
+of the Supervisory Board is considered not to be independent if he or she has personal or
+business relationships with the Company, its representative bodies, a controlling share-
+holder or an entity related to such a controlling shareholder with whom a serious conflict
+of interests could arise (other than temporarily). No more than two former members of
+the Management Board should be members of the Supervisory Board. Members of the
+Supervisory Board should not exercise board functions or perform advisory tasks for major
+competitors. In the case of employee representatives, the fact of being employed by the
+Company alone is not considered to be a factor that limits their independence. The aim of
+the Supervisory Board is to have at least twelve independent representatives (including at
+least five shareholder representatives).
+› Diversity
+The overall composition of the Supervisory Board should comply with the principles of
+diversity. To the maximum degree possible, the composition of the Supervisory Board
+should therefore take into account the diversity found in an open and innovative global
+company such as Infineon. At the same time, however, no-one should be proposed or
+dropped as a candidate for the Supervisory Board simply because he or she possesses or
+lacks a certain diversity factor.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+Dresden GmbH
+Last name, first name
+0%
+0%
+0%
+0%
+0%
+25%
+16.7%
+statutory 30% quota
+figure
+situation
+Target
+Current
+Target
+figure
+Current
+situation
+Infineon Technologies
+Infineon Technologies AG
+2nd leadership level
+1st leadership level
+Management Board/Board of Directors
+Supervisory Board
+The targets to be achieved by June 30, 2017 by the entities concerned are as follows (in each
+case compared to the current situation):
+Pursuant to the "Law on Equal Participation of Women and Men in Leadership Positions in
+the Private and Public Sector", which came into force on May 1, 2015, the composition of the
+Supervisory Board of Infineon Technologies AG is required to include at least 30 percent women
+and at least 30 percent men. The Supervisory Board already complies with these requirements
+(which do not yet formally apply to the Supervisory Board in its current composition). Further-
+more, the Law requires Infineon Technologies AG to set targets for the proportion of women
+on the Management Board and in the two leadership levels below the Management Board.
+Within the Infineon Group, this requirement applies to Infineon Technologies AG and Infineon
+Technologies Dresden GmbH. Both entities are therefore required to set targets for its respec-
+tive Management Board/Board of Directors and the two leadership levels below board level as
+well as for the Supervisory Board.
+"Law on Equal Participation of Women and Men in Leadership Positions
+in the Private and Public Sector"
+Information regarding the composition of the Management Board, the Supervisory Board
+and the Supervisory Board's committees can be found in note 35 to the Consolidated Financial
+Statements.
+As of September 30, 2015, the shares in Infineon Technologies AG held by all members of
+the Management Board and Supervisory Board did not exceed 1 percent of the shares issued
+by the Company.
+Shareholdings of Management Board and Supervisory Board
+of the Supervisory Board's committees
+6%
+13.3%
+13.3%
+18.5%
+Function
+Description
+ISIN/WKN
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+Date of transaction
+Purchase/sale
+> Variable (performance-related) compensation: The variable compensation comprises
+three components: an annual bonus (short-term incentive), a multiple-year bonus (mid-term
+incentive) and a long-term variable compensation component (long-term incentive).
+> Fixed compensation: The fixed compensation comprises a contractual basic annual salary
+that has no link to performance and is paid in 12 equal monthly installments.
+All members of the Management Board receive as compensation for their service an annual
+income, which - based on a target achievement of 100 percent - comprises approximately
+45 percent fixed compensation and approximately 55 percent variable compensation
+components:
+The following securities transactions were notified to the Company during the previous
+fiscal year by persons discharging managerial responsibilities and parties related to them:
+There have been no changes in the Management Board compensation system in the 2015
+fiscal year compared to the 2014 fiscal year.
+The Management Board compensation system - similar to the compensation paid to the
+individual members of the Management Board - is defined and regularly reviewed by the full
+Supervisory Board on the basis of proposals from the Executive Committee. In accordance
+with applicable legal requirements and the recommendations of the DCGK, the compensation
+paid to the members of the Management Board is intended to reflect the typical level and
+structure of management board compensation at comparable companies in Germany and
+elsewhere, as well as Infineon's economic position and future prospects. The duties, responsi-
+bilities and performance of each member of the Management Board are also to be considered,
+as is Infineon's wider pay structure. This includes considering Management Board compen-
+sation in relation to the compensation of senior management and of the workforce as a whole,
+including changes in the level of compensation over time. The stated objective is that the
+compensation structure should be designed in such a way that it promotes sustainable busi-
+ness development, with a cap in place in the event of exceptional developments. Infineon
+aims to set compensation at a level that is competitive both nationally and internationally so
+as to inspire and reward dedication and success in a dynamic environment.
+Compensation system
+Management Board compensation
+This Compensation Report, which forms an integral part of the Management Report, explains
+the principles applied in determining compensation for the Management Board and Super-
+visory Board of Infineon Technologies AG and the level of remuneration paid to the individual
+members of the Management Board and Supervisory Board in accordance with the applicable
+legal requirements and the recommendations of the German Corporate Governance Code in
+the version dated May 5, 2015 (Deutscher Corporate Governance Kodex -"DCGK"). Infineon
+believes that transparent and understandable reporting of Management Board and Supervisory
+Board compensation represents a fundamental element of good corporate governance.
+Compensation report
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+186
+185
+Psee page 275 ff.
+22.2%
+22.2%
+20%
+Components of the Management Board compensation system
+and Supervisory Board and of the composition and mode of operation
+Price (per unit)
+Infineon shareholders take their decisions at the Annual General Meeting, which is held at
+least once a year. Each share carries one vote. Shareholders can attend the Annual General
+Meeting as long as they are entered in the share register and have duly registered for the
+meeting. The Annual General Meeting decides on all issues assigned to it by law, most notably
+on the formal approval of the conducting of business by the Management Board and the
+Supervisory Board, the profit appropriation, the election of the auditors, corporate agreements
+and amendments to the Articles of Association. Shareholders are entitled to make counter-
+proposals to motions introduced by management and to speak as well as ask questions at the
+Annual General Meeting. They also have the right, subject to certain conditions, to challenge
+resolutions of the Annual General Meeting, to request an extraordinary judicial review and to
+claim damages from corporate bodies of the Company on behalf of the Company when they
+identify incidences of misconduct or serious deficiencies in the Company's management and
+control. We wish to support our shareholders as far as possible in the exercising of their rights
+at the Annual General Meeting. Shareholders can register for our Annual General Meeting
+electronically, participate in voting by means of postal voting or by sending online instructions,
+e.g. to their proxies, and they can follow the general debate via the internet. All documents
+and information relating to the Annual General Meeting are available to any interested parties
+on our website. Our Investor Relations department, moreover, can be contacted throughout
+the
+year, , both by telephone and electronically, to ensure the exchange of information
+between us and our shareholders.
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+December 01, 2014
+Purchase
+€7.83
+2,957
+€23,144.44
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+December 01, 2014
+Purchase
+€7.83
+1,375
+€10,764.88
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+December 01, 2014
+Purchase
+€7.83
+1,503
+€11,768.49
+Total volume of transactions
+Transaction location
+€56,472.62
+Description of the mode of operation of the Management Board
+1,379
+€10,794.81
+€7.83
+Purchase
+December 01, 2014
+(i) At the beginning of each fiscal year, the target functions with respect to the two key
+performance indicators "free cash flow" and "Return on Capital Employed (ROCE)" are
+defined uniformly for all members of the Management Board. Underpinning the consistent
+approach taken to managing the business, the same target indicators - supplemented
+by the Segment Result - are used as the basis for determining the variable compensation
+components (bonus payments) for Infineon managers and employees. The two key per-
+formance indicators referred to above, which are described in more detail in the chapter
+"Internal Management System", are equally weighted for the purposes of measuring the STI.
+The short-term incentive (STI) is intended to reward performance over the preceding fiscal
+year reflecting Infineon's recent progress. Assuming a 100 percent target achievement of the
+variable compensation, the STI constitutes approximately 20 percent of target annual income.
+It is set by the Supervisory Board in a two-phase process:
+Total volume
+Dr. Ploss, Reinhard
+Chairman of the Management Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+November 28, 2014
+Purchase
+€7.88
+6,400
+€50,432.00
+November 28, 2014
+Purchase
+€7.89
+4,400
+177
+€34,694.00
+Transaction location
+€85,126.00
+Frankfurt Stock Exchange (Xetra)
+Last name, first name
+Function
+Description
+ISIN/WKN
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+Asam, Dominik
+Member of the Management Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+Total volume of transactions
+178
+Frankfurt Stock Exchange (Xetra)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+€11.94
+€257,885.52
+Frankfurt Stock Exchange (Xetra)
+P see page 249 f.
+@www.infineon.com
+Compensation of the Management Board and the Supervisory Board
+Details of Management Board and Supervisory Board compensation in the 2015 fiscal year
+are presented in the comprehensive Compensation Report, which also forms part of the
+Combined Management Report of Infineon Technologies AG.
+Share-based compensation programs for employees and members
+of the Management Board
+Infineon's share-based compensation programs are described in note 26 to the Consolidated
+Financial Statements. The full text of the plans may be viewed on the internet.
+A "Performance Share Plan" (PSP) was put into place in the 2015 fiscal year as part of the
+long-term remuneration of executives and selected Infineon employees worldwide. The same
+plan also applies to members of the Management Board, whereby the latter - unlike other
+plan participants - have a contractually secured claim. The principal conditions of the plan
+for members of the Management Board are described in the Compensation Report. Essentially
+the same conditions apply to other PSP participants, with rules differing only with respect to
+the requirement of personal investment in Infineon shares and in the event of early termi-
+nation. Moreover, the cap stipulated for Performance Shares only applies to members of the
+Management Board.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+Declaration concerning the management of the company
+(Part of the Combined Management Report – unaudited)
+Declaration of compliance with the German Corporate Governance Code issued for
+the 2015 fiscal year by the Management Board and Supervisory Board of Infineon
+Technologies AG in accordance with section 161 of the German Stock Corporation Act
+The Management Board and Supervisory Board issued the following declaration pursuant to
+section 161 AktG in November 2015:
+1.
+2.
+Since the submission of the last Declaration of Compliance in November 2014, Infineon
+Technologies AG has, with one exception, complied with all recommendations of the
+German Corporate Governance Code in the version dated June 24, 2014 (“Code”). The one
+exception, stated and explained in the November 2014 declaration, relates to the following:
+Section 5.4.6 of the Code recommends that any performance-related compensation of
+the members of the Supervisory Board should be oriented toward the sustainable growth
+of the enterprise. The similarity in terminology to the requirements contained in the
+German Stock Corporation Act with respect to compensation of members of the Manage-
+ment Board therefore seems to imply that performance-related compensation should also
+be based on a "multi-year assessment” for members of the Supervisory Board.
+Members of the Supervisory Board of Infineon Technologies AG receive both fixed and
+performance-related compensation, the latter only being paid if earnings per share in the
+previous fiscal year exceed a pre-defined amount.
+Both the Management Board and the Supervisory Board have deliberated on this topic on
+several occasions. They concluded in each case that the compensation system currently
+in place for the Supervisory Board is already oriented toward the sustainable growth of
+the enterprise even without a multi-year assessment, since the minimum amount required
+to trigger the compensation payment increases year-on-year, thus setting an incentive for
+improving earnings each year. As a consequence, neither of the boards saw any necessity
+to change the Supervisory Board compensation system, which had been approved by a
+large majority at the Annual General Meeting. The Management Board and the Supervisory
+Board have not changed their assessment of the situation.
+The new version of the Code, dated May 5, 2015, became effective on June 12, 2015. With
+the exception (described in point 1 of this declaration) of the unchanged recommendation
+contained in section 5.4.6 of the Code, Infineon Technologies AG has also complied with
+the applicable recommendations contained in this version of the Code and will continue
+to do so in the future.
+Relevant disclosures in respect of corporate governance practices
+The Company complies with all legal requirements with respect to corporate governance.
+With one exception, which is stated and explained in the Declaration of Compliance, Infineon
+also complies with the recommendations of the German Corporate Governance Code. Further-
+more, Infineon's corporate governance practices in particular underpin the guidelines on
+corporate conduct ("Business Conduct Guidelines") as well as the regulations relating to
+organizational and supervisory duties. Both of these sets of regulations are available to all
+employees worldwide on the Infineon Intranet.
+179
+180
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Shareholders and Annual General Meeting
+Sale
+June 2, 2015
+21,598
+Mittal, Arunjai
+Last name, first name
+Function
+Description
+ISIN/WKN
+Gruber, Peter
+Member of the Supervisory Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+Transaction location
+Member of the Management Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+Sale
+€10.06
+February 16, 2015
+€261,560.00
+Transaction location
+Total volume
+26,000
+Price (per unit)
+Purchase/sale
+Number of units
+ISIN/WKN
+Description
+Function
+Last name, first name
+Frankfurt Stock Exchange (Xetra)
+Date of transaction
+as
+The Supervisory Board was provided with written quarterly reports on Infineon's business
+performance, key financial data, risks and opportunities, significant issues, major areas of
+litigation and other important topics. Between quarterly reports, the Management Board also
+informed the Supervisory Board in a timely manner of current developments in the form of
+monthly reports.
+During the year under report, the Supervisory Board conscientiously performed all duties
+incumbent upon it in accordance with the law, the Company's statutes, and its own terms of
+reference. It both advised and monitored the Management Board based on the detailed infor-
+mation provided by the Management Board at Supervisory Board and committee meetings
+on business developments, in particular the market situation, significant transactions, key
+financial performance indicators and performance trends. In the course of the ensuing delib-
+erations, not only general strategies, but also relevant specific measures were agreed upon by
+the two boards. The Supervisory Board was always given ample opportunity to thoroughly
+examine any reports and resolutions proposed by the Management Board. In this context, it
+undertook measures to assure itself that the governance of Infineon's corporate affairs was
+lawful, compliant and appropriate.
+Main activities of the Supervisory Board
+The 2015 fiscal year was dominated by the acquisition of International Rectifier. Following
+approval of the acquisition by the antitrust authorities and in particular by the shareholders
+of International Rectifier, the transaction first announced in August 2014 was finally closed
+in January 2015. The acquisition was an important step for Infineon, as the combination of the
+two enterprises has now given rise to a powerful entity. The Infineon Group benefits from an
+expanded product portfolio and a broader regional structure, particularly regarding customers
+in the USA and Asia. The combination also gives Infineon additional system know-how in the
+management of electrical energy. Infineon's expertise with power semiconductors and how they
+are controlled has been enriched and its position as world market leader in this field extended.
+The integration process has gone well and is now more or less completed. The consolidated
+figures for the 2015 fiscal year show that we are making excellent progress. On behalf of the
+Supervisory Board, I once again take this opportunity to extend a warm welcome to all staff from
+International Rectifier and, equally, to thank everyone involved for the work performed to date.
+and Gentlemen,
+Ladies
+301
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+ASSOCIATED MATERIAL RISKS AND OPPORTUNITIES
+Report of the Supervisory Board
+to the Annual General Meeting
+139 Review of liquidity
+136 Review of financial condition
+128 Review of results of operations
+170
+169
+167
+165
+161
+144 Outlook
+144
+o Our 2015 fiscal year
+Content
+9
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+126
+INFINEON WORLDWIDE
+124
+AWARDS
+122
+THE INFINEON SHARE
+128
+149 Risk and opportunity report
+TREASURY AND CAPITAL REQUIREMENTS
+OVERALL STATEMENT OF THE MANAGEMENT BOARD WITH RESPECT TO
+283
+282
+282
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+CONSOLIDATED STATEMENT OF CASH FLOWS
+210
+208
+206
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+204
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+203
+CONSOLIDATED STATEMENT OF OPERATIONS
+202
+Financial Statements
+• Consolidated
+179 Declaration concerning the management of the company
+186 Compensation Report
+section 315, paragraph 4, of the German Commercial Code (HGB)
+174 Corporate Governance Report
+170 Information pursuant to section 289, paragraph 4, and
+SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
+CORPORATE GOVERNANCE
+INFINEON TECHNOLOGIES AG
+INFINEON'S FINANCIAL CONDITION AS OF THE DATE OF THIS REPORT
+118
+284
+NOTABLE EVENTS 2015
+OUR EMPLOYEES
+16
+14
+10
+10
+Content
+Content
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+8
+P see page 96 f.
+P see page 108 ff.
+P see page 93 f.
+P see page 174 ff.
+24
+GRI G4-19, G4-20, G4-21
+In our Business Conduct Guidelines, we set out our commitment to respect internationally
+valid human rights and work-related standards, including the protection of the personal
+dignity and privacy of every individual.
+Labor relations: We are convinced that effective human resources management is key to our
+business success and therefore to achieving our growth and profitability targets, given that
+peak performance is only feasible in the long run with satisfied and successful employees. The
+three pillars "Leadership excellence", "Promoting talent" and "Our workforce" combine all the
+activities we undertake on a daily basis to promote the performance and realize the potential
+of our employees in the best possible way.
+Further information on this material topic is provided in the section "Business ethics" in the
+chapter "Sustainability at Infineon" as well as in the chapter "Corporate Governance Report".
+As a participant of the UN Global Compact Initiative, Infineon made a voluntary commitment
+to abide by the principles included in it and reports about the implemented measures in its
+"Communication on Progress".
+Infineon's Corporate Compliance Officer reports directly to the Chief Financial Officer (CFO).
+The Corporate Compliance Officer coordinates the Compliance Management System, develops
+the Infineon compliance program based on a risk-oriented approach, draws up and revises
+guidelines, advises employees, receives complaints and tip-offs, and leads investigations
+aimed at clarifying any compliance-related cases.
+As part of the Compliance Management System, the extent of risks is assessed whenever
+incidences of corruption are identified and appropriate measures put in place.
+Employees and business partners have the opportunity to report any breaches to the Infineon
+Management, the Human Resources department and/or the Compliance department using
+various channels available within the organization. They may also make use of an anonymous
+whistleblower hotline and/or contact our external ombudsman.
+Business ethics: In order to meet our own high business ethics standards and simultaneously
+interact with our stakeholders as a sustainable and reliable partner, we need to be aware of
+risks both inside and outside the organization. Infineon Business Conduct Guidelines reflect
+the principles to be observed when conducting business and serve as an important basis for
+our daily operations. They apply to all employees worldwide – in dealing with colleagues as
+well as with customers, shareholders, business partners and the general public.
+7
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+ABOUT THIS REPORT
+Our occupational safety and health management system has been certified in accordance with
+the OHSAS 18001 standard at all of our main manufacturing sites as well as at our corporate
+headquarters. The system is designed to ensure that the required measures are taken to mini-
+mize any risks identified in the working environment that could endanger our employees.
+Further information on this material topic is provided in the section "Responsibility for
+our employees" within the chapter "Sustainability at Infineon" as well as in the chapter
+"Our employees”.
+26
+Management Board and Supervisory Board
+LETTER TO SHAREHOLDERS
+108
+SUSTAINABILITY AT INFINEON
+92
+INTERNAL MANAGEMENT SYSTEM
+88
+OPERATIONS
+80
+70
+RESEARCH & DEVELOPMENT
+66 Chip Card & Security
+62 Power Management & Multimarket
+58 Industrial Power Control
+54 Automotive
+THE SEGMENTS
+52
+32 Group strategy
+28 Successful 2015 fiscal year
+FINANCES AND STRATEGY
+Our Group
+Management Report
+• Combined
+REPORT OF THE SUPERVISORY BOARD TO THE ANNUAL GENERAL MEETING
+THE MANAGEMENT BOARD
+116
+Further Information
+REPORT ON EXPECTED DEVELOPMENTS, TOGETHER WITH
+AUDITOR'S REPORT
+4
+14
+ор
+Dr. Reinhard Ploss
+Chief Executive Officer
+Snicerely,
+Rihaal
+We sincerely hope you will continue to accompany us as these developments unfold.
+What lies ahead of us in the 2016 fiscal year? The usual seasonal slowdown and continuing uncertainty
+about the growth expectations of the Chinese economy are likely to affect business at the beginning
+of the new fiscal year. Nevertheless, based on an assumed exchange rate of US$1.10 to the euro - we
+expect year-on-year revenue growth in the current fiscal year of 13 percent, plus or minus 2 percentage
+points. We will focus in particular on further increasing profitability. Due to the measures decided
+and, to a large extent, already implemented for integrating International Rectifier, Infineon's Segment
+Result Margin is no longer expected to be diluted by the acquisition in the now running 2016 fiscal
+year. Accordingly, we expect a Segment Result Margin of approximately 16 percent at the mid-point of
+the forecast revenue range.
+Expectations for the 2016 fiscal year
+I would like to take this opportunity once again to welcome the about 4,200 new employees who have
+joined us from International Rectifier. You are now all part of the “Infineon family". We are already
+working together as one team and looking forward to a lively exchange of views and mutual learning.
+Together, we have achieved a lot over the past year, improving both revenue and Segment Result and
+making good progress with our strategic "Product to System" approach. Moreover, together we have
+successfully managed the biggest acquisition in our corporate history. I would like to draw particular
+attention to those Infineon employees, who have taken a great deal of time and effort to welcome and
+integrate our new colleagues from International Rectifier. The Management Board extends its whole-
+hearted thanks to all of you. We look forward to reaping the rewards of these strategic endeavors in
+the coming years. In this respect, we know we can continue to rely on the motivation, dedication and
+skills of our loyal workforce.
+Recognition of our employees' commitment
+Striving continuously to increase our profitability is also a vital aspect of sustainability for us. Only
+through profitability we are able to retain the financial headroom needed to become even more com-
+petitive and continue offering products that make our lives easier, safer and greener.
+We see the objective of sustainability as leaving future generations a world worth living in - a truly great
+responsibility. Similar to achieving of economic targets, sustainability is absolutely key to the way
+we operate. To take just one example: Our products and innovations enable savings of approximately
+36.5 million tons of CO2 emissions during their useful lives in end-user products - a net reduction of
+approximately 35 million tons more than the CO₂ emissions generated during the manufacture of those
+products. In recognition of our achievements, in the 2015 fiscal year we were listed in the prestigious
+Dow Jones Sustainability Index for the sixth year in succession.
+13
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Letter to shareholders
+Sustainability is one of the key factors driving our success. Ultimately, the demand for solutions that
+increase energy and resource efficiency is essential for our business. For this very reason, alongside the
+"systematic integration" of International Rectifier, we work tirelessly on improving the sustainability
+of our businesses and operations.
+Managing sustainably
+The regional distribution of our business has also shifted considerably, with China being now by far our
+most important sales market. The percentage of revenue generated in China has risen from 20 percent
+in the 2014 fiscal year to 23 percent in 2015, whereas our home market Germany - which last year also
+accounted for 20 percent of Infineon's revenue - now only accounts for 16 percent. Nevertheless,
+Germany remains an important center for innovation in automotive and industrial electronics that will
+continue to play a major role in the development of new products and solutions going forward.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+The Management Board
+From left to right: Arunjai Mittal, Dr. Reinhard Ploss, Dominik Asam
+16
+» We have deepened our system understanding through strategic
+acquisitions and partnerships. As a result, we can supply our
+customers even faster with products tailored to their requirements.<<
+Studies in electrical engineering at Shivaji University, Kohlapur, India (Dipl.-Ing.);
+Member of the Management Board since January 2012
+Sales, Marketing, Strategy Development and M&A
+Member of the Management Board, Regions,
+RESPONSIBILITY STATEMENT BY THE MANAGEMENT BOARD
+Arunjai Mittal
+>> We have expanded our leading market position and achieved the
+financial goals we set when we acquired International Rectifier
+ahead of time. Infineon has impressively demonstrated how we are
+successfully continuing on our growth path.«
+The acquisition of International Rectifier helped us strengthen our position in key regions. Our foothold
+in Silicon Valley, where the pace of the digital revolution is ultimately dictated, has become much
+stronger. The number of employees working for Infineon in the USA has risen from around 550 to around
+3,700, who now represent roughly 10 percent of Infineon's total workforce. Our stronger presence will
+allow us to participate in the innovations coming out of Silicon Valley and even be in a position to shape
+them with our technological expertise.
+Mechanical engineer (Dipl.-Ing.), Master of Business Administration (MBA);
+Member of the Management Board since January 2011
+Dominik Asam
+>> Our semiconductors are the key to a better future. We are addressing
+the right markets and expanding our lead through systematic
+integration: A strengthened portfolio and a wider range of system
+solutions will significantly contribute to our customers' success.<<
+Member of the Management Board since June 2007
+Doctorate in chemical engineering (Dr.-Ing.);
+Chief Executive Officer (CEO), Labor Director
+Dr. Reinhard Ploss
+15
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The Management Board
+Chief Financial Officer (CFO)
+Obviously, "systematic integration" also means striving for, and actually achieving, a higher enterprise
+value for Infineon as a result of the acquisition. We originally set out to raise International Rectifier's
+margin contribution to at least match Infineon's target of 15 percent for the Segment Result Margin over
+the economic cycle by the 2017 fiscal year. This goal has now been achieved much earlier than planned.
+Over the course of the 2015 fiscal year we continuously increased the margin contribution and already
+achieved our goal in the fourth quarter.
+GROUP PERFORMANCE
+"Systematic integration" also means remaining fully committed to our 300-millimeter manufacturing
+technology. In the medium term, this will include transferring some of International Rectifier's products
+to our 300-millimeter manufacturing site in Dresden (Germany). It will, of course, take a number of
+years to optimize the manufacturing landscape, but an initial step – for example transferring thin wafer
+processing from Singapore to Infineon locations – has been swiftly implemented.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+10
+10
+IMPRINT
+301
+FINANCIAL CALENDAR
+GRI G4 CONTENT INDEX
+297
+MEMBERSHIPS AND PARTNERSHIPS
+TECHNOLOGY GLOSSARY
+FINANCIAL GLOSSARY
+289
+287
+LIST OF GRAPHICS
+286
+FINANCIAL DATA 2011-2015
+Another important aspect of integrating International Rectifier is to combine all development activities
+relating to GaN-based power semiconductors. International Rectifier is a global leader in applying
+GaN layers onto standard silicon wafers. This is a key area of technological expertise paving the way to
+GaN-based components which are market-proven and competitive.
+Management Board and Supervisory Board
+Letter to shareholders
+296
+Dear shareholders and business partners,
+dear Infineon colleagues,
+12
+Over time, of course, we will implement many other product ideas by combining our strengths. Putting
+integration into practice is the best way of convincing customers and employees alike that we are on
+the right track. Motivated by early success stories arising from joint efforts, we continue to systematically
+realize synergies.
+Our plan to bolster our market access in certain regions, such as China and the USA, is also bearing
+fruit. We are generating additional economies of scope by combining semiconductor components from
+Infineon with the wide range of International Rectifier's packaging solutions, enabling us to exactly
+meet market demands.
+Effective October 1, 2015, International Rectifier has been fully absorbed within the three segments,
+Automotive, Industrial Power Control, and Power Management & Multimarket.
+Neubiberg, November 2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+112
+We acquired International Rectifier with the goal to systematically com-
+bine the strengths of the two groups. Since closing the transaction on
+January 13, 2015, we have already come a long way towards achieving
+that goal. Based on the concept of integration “from the outside in",
+our first step was to merge the sales structures of the two businesses,
+a milestone achieved by the end of March. Providing one face to the
+customer was a vital step for ensuring that business could continue to
+run smoothly. We aligned product portfolios and roadmaps systemati-
+cally and realized that overlaps were less than expected. Consequently
+the two companies complement each other even more ideally than
+originally expected.
+Systematic integration
+From the outset, great attention was paid to “cultural integration", encouraging the various teams to grow
+together as quickly as possible and to retain key individuals. We have been very successful in this
+respect: After only a few months, joint teams from Infineon and International Rectifier were in a position
+to offer customers new, tailor-made solutions. One good example is that of power supplies for server
+processors, whereby power transistors designed by Infineon are now controlled by a controller IC
+developed by International Rectifier.
+Data protection is a growing challenge in the internet era. We are leader
+for hardware-based security solutions, which create a kind of data vault
+and can be used in a wide range of applications, including chip-based
+payment cards, electronic ID, healthcare cards and mobile payment
+systems. Our know-how in this field goes well beyond traditional security
+controllers. If needed, we can provide our customers with optimally
+designed software and complete security solutions in collaboration with
+our partners - the purest form of "Product to System"
+The 2015 fiscal year turned out to be better for Infineon than we had expected. A fact we can be espe-
+cially proud of is that with the purchase of International Rectifier on January 13, 2015 we successfully
+closed the largest acquisition in the Company's history. Since then we have made such excellent
+progress in integrating the two enterprises that we have already achieved our goal of bringing the
+business of International Rectifier to the Group target of a Segment Result Margin of 15 percent in the
+fourth quarter of the 2015 fiscal year. Our success in this respect is also clearly shown in our financial
+key performance indicators for the whole Group: Revenue up by 34 percent and Segment Result up
+by 45 percent. The integration of International Rectifier diluted the Segment Result Margin to a lesser
+extent than initially anticipated. For the full fiscal year under report we managed not only to outperform
+the Segment Result Margin target of about 14 percent set at the beginning of the fiscal year - which
+did not include International Rectifier -, but also to achieve our over-the-cycle target of 15 percent
+Segment Result Margin for the whole Group. Admittedly, this was assisted to some extent by tailwind
+from a strong US dollar. The Infineon share also outperformed relevant benchmark indices such as the
+DAX and the Philadelphia Semiconductor Index (SOX). The Management Board and Supervisory Board
+will therefore propose at the Annual General Meeting to be held on February 18, 2016 to raise the
+dividend from 18 cents to 20 cents per share.
+11
+In recent years, we have focused systematically on growth markets that are driven by sustainable
+modern-day social, economic and ecological trends. We have attained leading market positions in our
+target markets - including, for instance, in the automotive semiconductor market, where our market
+share has now passed the 10 percent mark for the first time. Our strategic "Product to System"
+approach is helping us generate economies of scope on the back of our broad range of technological
+and product expertise, creating more added value for our customers and improving our margins
+systematically. We are the "system leader" for automotive semiconductors: No other manufacturer
+offers such a balanced portfolio of sensors, microcontrollers and power semiconductors. No company
+comes close to achieving as broad a coverage of essential functions as Infineon. Moreover, we are a
+leading player in terms of trend-setting applications designed to reduce CO2 emissions as well as those
+used in driver assistance systems. Therefore our motto: we make cars cleaner, safer and smarter.
+In the field of power semiconductors we have further extended our lead as the world's number one
+supplier. With a market share of 19 percent, our revenue is now nearly three times that of our closest
+competitor. One of the key success factors is our extensive portfolio of products and technologies,
+which enables us to address a greater range of applications than most competitors. Another factor is
+our manufacturing expertise: Infineon is the only manufacturer using silicon wafers with a diameter of
+300 millimeters, rather than the more common 200-millimeter silicon wafers, to manufacture power
+semiconductors, which allows for significantly more chips per wafer. This manufacturing technology
+will bring us crucial cost advantages in the future, which we will use to achieve the necessary pro-
+ductivity improvements in the long term. We are also market leader in the functional integration and
+digitalization of power management, enabling us to further reduce both conversion losses and system
+size, which in turn allows cutting system costs. We also expect further significant advances in developing
+next-generation semiconductor materials for power components - silicon carbide (SiC) and gallium
+nitride (GaN). Based on development results to date and our existing portfolio of patents, we are
+confident of being ideally positioned for any disruptive change in this area and, equally important,
+of playing an active role in shaping that change.
+Dr. Reinhard Ploss
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Letter to shareholders
+Chief Executive Officer
+Our products are helping improve the quality of people's lives in general.
+Infineon's solutions to improve energy efficiency are helping reduce
+emissions caused by the generation, transmission and consumption of
+electric power. Our mobility solutions help prevent accidents or limit
+their impact, increase driving comfort significantly and, of course, cut
+emissions. Our security solutions enable secure communication and
+secure data exchange in an increasingly connected world. Our semicon-
+ductor solutions enable us to link the analog with the digital world.
+Our aspiration to contribute towards better living standards is set out
+in our new mission statement: "Part of your life. Part of tomorrow".
+The acquisition of International Rectifier has complemented and
+strengthened Infineon in many respects. Consequently, after adopting
+the theme "Systematic growth" for the 2014 Annual Report, we have
+prepared this year's report under the motto of "Systematic integration".
+Fiscal Year
+Member of the
+Management Board
+Pension
+entitlements
+(annual) as of
+beginning
+of pension
+Benefit
+amounts
+determined
+period
+for the
+relevant
+fiscal year
+of pension
+and benefit
+entitlement
+Service cost
+(earned in the
+current year)
+Dr. Reinhard Ploss
+205,000
+5,634,266
+219,796
+(Chief Executive Officer)
+2014
+Present value
+2015
+Mr. Mittal already has a pension entitlement from his previous employment with Infineon that
+became vested under the applicable statutory provisions in September 2006. The contract
+appointing him to the Board specifically states that the amounts made available to cover his
+vested pension entitlements represent a continuation of this vested entitlement (and are,
+therefore, not subject to any separate vesting arrangements). The Company makes a fixed
+annual pension contribution on behalf of Mr. Mittal for each full fiscal year of service on the
+Board, equivalent to 30 percent of the relevant agreed basic annual salary; the Supervisory
+Board is not required to decide each time on the amount to be contributed. The pension
+contribution for the 2015 fiscal year amounted to €225,000.
+Pension entitlements
+718,872
+192,780
+1,637,579
+994,240
+241,183
+2,014,868
+691,049
+159,627
+1,561,936
+194
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+200,000
+Combined Management Report - Our 2015 fiscal year
+Commitments to members of the Management Board
+in €
+upon termination of employment
+The members of the Management Board who were in their positions prior to the introduction
+of the new compensation system in 2010 are contractually entitled to a defined benefit pension
+payment. In the 2015 fiscal year, this now only relates to Dr. Ploss, who has an entitlement
+to an annual retirement benefit, currently standing at €205,000 and which increases by €5,000
+for each full year of service on the Board, up to a maximum amount of €210,000. This entitle-
+ment is already vested, both contractually and under the applicable statutory provisions. The
+pension entitlement is required to be reviewed every three years from the start of payment
+of the pension in accordance with the German Company Pension Act (Betriebsrentengesetz).
+The Supervisory Board may decide to make an amendment as it sees fit, taking account of
+the needs of the recipient and the financial condition of the Company. If Dr. Ploss's mandate
+comes to an end, payment of the pension entitlement begins at the earliest at the age of 60.
+In accordance with the compensation system in place since 2010, Mr. Asam and Mr. Mittal -
+both of whom took up office after the new system had been approved - have both received
+a defined contribution pension commitment (rather than a defined benefit pension commit-
+ment based on the number of years of service), which is essentially identical to the Infineon
+pension plan applicable to all employees. The Company has accordingly set up a personal
+pension account (basic account) for each beneficiary and makes annual pension contributions
+to it. The Company adds annual interest to the balance in the basic account using the highest
+statutory interest rates valid for the insurance industry (guaranteed interest rates) until dis-
+bursement of the pension begins and may also award surplus credits. 95 percent of any income
+earned over and above the guaranteed interest rate is credited to the pension account, either
+at the date on which disbursement of the pension begins or, at the latest, when the beneficiary
+reaches the age of 60. The balance of the basic account when disbursement of the pension
+begins (due to age, invalidity or death) - increased by an adjusting amount in the event of
+invalidity or death - constitutes the retirement benefit entitlement and is paid out to the member
+of the Management Board or his or her surviving dependents in twelve annual installments,
+or, if so requested by the member of the Management Board, in eight annual installments, as
+a lump sum or as life-long pension.
+If the entitlements of members of the Management Board (i) have not yet legally vested or (ii)
+have legally vested, but are not protected by the state pension insurance scheme (Pensions-
+sicherungsverein), the Company maintains pension reinsurance policies in favor of, and
+pledged to, the members of the Management Board concerned.
+The plan rules applicable for Mr. Asam and Mr. Mittal differ in terms of the initial defined
+component, the annual transfer to the pension account and the vesting period.
+In addition to a one-time, contractually vested initial component of €540,000 paid as compen-
+sation for the loss of vested retirement pension entitlements in connection with the termina-
+tion agreement with his previous employer, Mr. Asam will receive from the Company for each
+fiscal year of his membership on the Management Board a pension contribution amounting to
+between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed
+basic annual salary, i.e. fixed compensation. As in the previous year, the pension contribution
+for Mr. Asam for the 2015 fiscal year has been set at 30 percent of his basic annual salary,
+which amounts to €225,000. The pension entitlements arising from the defined contributions
+made on behalf of Mr. Asam became vested with effect from December 31, 2013.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+195
+The amounts credited to the pension entitlements accounts of Mr. Asam and Mr. Mittal - in
+line with the plan rules applied to Infineon employees - are paid out on or after reaching the
+age of 67, provided the service contract has also ended, or, on request, at an earlier point in
+time if the service contract ends on or after reaching the age of 60. If the beneficiaries elect
+that their pension be paid out in monthly installments, the pension amount is adjusted
+automatically each year in accordance with the Infineon pension plan.
+Alongside the annual retirement entitlements and related benefit amounts, the following
+table shows the present values of pension entitlements earned to date and the service cost
+in accordance with IFRS. In accordance with IFRS, the service cost for the current fiscal year is
+determined at the beginning of the fiscal year concerned.
+Allowances and pension entitlements in the 2015 fiscal year
+5,287,480
+2015
+Dominik Asam
+11,120,628
+733,700
+10,202,820
+502,008
+Corporate Governance
+Compensation report
+196
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Early termination of service contract
+The service contracts of members of the Management Board include a change of control
+clause, which stipulates the terms that apply when the activities of a member of the Manage-
+ment Board are terminated in the event of a significant change in Infineon's ownership
+structure. A change of control for the purposes of this clause occurs when a third party, indi-
+vidually or together with another party, acquires at least 30 percent of the voting rights in
+Infineon Technologies AG as defined in section 30 of the German Securities Acquisition and
+Takeover Act (Wertpapiererwerbs- und Übernahmegesetz -"WpÜG”). Members of the Manage-
+ment Board have the right to resign and terminate their contracts within 12 months of the
+announcement of such a change of control and any who choose to do so are entitled to con-
+tinued payment of their annual remuneration up to the end of the originally agreed duration
+of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes a
+member of the Management Board or terminates his or her contract within 12 months of the
+announcement of a change of control, the members of the Management Board concerned
+are entitled to continued payment of the annual remuneration to the end of the originally
+agreed duration of their contract, subject to a minimum period of 24 months and a maximum
+period of 36 months.
+The Management Board service contracts otherwise contain no promises of severance pay
+for situations in which contracts are terminated early.
+Payments to former members of the Management Board in the 2015 fiscal year
+Former members of the Management Board received total payments of €1,124,622 (primarily
+pension benefits) in the 2015 fiscal year (2014: €1,103,977). As of September 30, 2015, accrued
+pension liabilities for former members of the Management Board amounted to €60,212,071
+(2014: €59,502,832).
+Review of Management Board compensation; changes to individual service contracts
+Review of Management Board compensation system and individual contracts
+In accordance with section 4.2.2 DCGK, the Supervisory Board engaged an external, independent
+compensation expert - most recently in the 2014 fiscal year - to review the appropriateness
+of the Management Board compensation system in place since October 1, 2010. In this context,
+the target annual incomes of each individual member of the Management Board were sub-
+jected to detailed scrutiny. The next review is scheduled to take place in the 2016 fiscal year.
+Increase in Management Board compensation
+The review of the individual target annual incomes of the members of the Management Board
+by an independent compensation expert in the 2014 fiscal year resulted in a rise in the com-
+pensation of members of the Management Board effective October 1, 2014. The compensation
+structure itself remained unchanged (see information provided in the 2014 Annual Report).
+205,000
+450,000
+411,000
+149,601
+200,000
+Total
+2015
+225,000
+2,163,812
+272,721
+2014
+205,500
+1,836,096
+192,780
+Arunjai Mittal
+2015
+225,000
+3,322,550
+241,183
+2014
+205,500
+3,079,244
+159,627
+2014
+Mr. Bauer did not receive any service fees in the 2014 or 2015 fiscal years relating to the
+consultancy agreement concluded on November 26, 2012, by him and the Company after
+prior approval by the Supervisory Board. The agreement, which provided only for the reim-
+bursement of expenses, was terminated effective January 31, 2015.
+Share-based compensation
+As described in the section "Management Board compensation", the contractually agreed
+LTI is granted to members of the Management Board in the form of "performance shares".
+The average price of the Infineon share relevant for the number of performance shares granted
+for the 2015 fiscal year was €8.49 (2014: €6.62).
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits
+to the individual members of the Management Board - also presented in accordance with
+DRS 17 - are shown in the following table:
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Corporate Governance
+Compensation report
+Dr. Reinhard Ploss
+Dominik Asam
+Chief Executive Officer
+Total compensation
+Chief Financial Officer
+2015
+2014
+2015
+2014
+2015
+Total
+2014
+2015
+2014
+Arunjai Mittal
+Member of the
+Management Board
+1,075,000
+Management Board compensation in the 2015 fiscal year in accordance with
+German Accounting Standard 17 (DRS 17)
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock
+option plan as an LTI, which was resolved at the 2010 Annual General Meeting. Subject to
+compliance with the terms of the Stock Option Plan 2010 – particularly the attainment of the
+absolute and percentage performance targets - the stock options allocated to members of the
+Management Board on the basis of this plan may still be exercised until December 14, 2019.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+187
+(ii) At the end of the fiscal year, the actual levels of target achievement for free cash flow and
+ROCE, and, hence the amount of the STI, are determined by the Supervisory Board.
+An STI is paid only if, on the basis of the approved financial statements, the levels of target
+achievement reach at least the 50 percent threshold for both performance indicators (free
+cash flow, ROCE). If one of the two target thresholds is not achieved, no annual bonus is paid
+for the relevant fiscal year. If the thresholds are achieved, the arithmetic mean of the two target
+achievements is calculated, and is used as the percentage rate to determine the actual STI
+amount. A cap of 250 percent applies, meaning that the maximum amount that can be paid is
+two and a half times the target STI (= 100 percent), regardless of the actual achievement level.
+The Supervisory Board may, in addition, increase or reduce the amount to be paid in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board as
+a whole, Infineon's position and any exceptional factors. A lower limit applies in this case such
+that the amount to be paid cannot be less than the amount that would be due given 50 percent
+target achievement. The upper limit for an upwards adjustment is the cap of 250 percent.
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI
+is calculated on a pro-rata monthly basis (one twelfth for each month started). Members
+of the Management Board are not entitled to receive an STI bonus for the fiscal year in which
+they resign from office or terminate their contract of their own volition or if their contract is
+terminated for good cause.
+The mid-term incentive (MTI) is intended to reward sustained performance by the Manage-
+ment Board reflecting Infineon's medium-term progress. In combination with the long-term
+incentive, the MTI ensures compliance with the stock corporation law requirement that the
+structure of compensation is "oriented toward sustainable growth of the enterprise". Assuming
+a 100 percent target achievement of the variable compensation, the MTI constitutes approxi-
+mately 20 percent of target annual income.
+A new MTI tranche commences every fiscal year. Each tranche has a term of three years and is
+paid in cash at the end of the term. The amount of the payment is determined on the basis of
+actual ROCE and free cash flow figures during each three-year period. For these purposes, the
+target values for ROCE and free cash flow for each individual year of an MTI tranche correspond
+to the STI targets set each year in advance. The level of target achievement for both the ROCE
+target and the free cash flow target must reach a threshold of 50 percent in each year of the
+relevant three-year period, otherwise the level of target achievement for the purposes of the
+MTI is set to zero for the year concerned. If the thresholds are exceeded, the level of target
+achievement determined for the STI in the relevant fiscal year also applies for the purposes of
+the MTI. The MTI to be paid at the end of the three-year period is determined by calculating
+the arithmetic mean of the three annual target achievement levels. Unlike the STI, the MTI is
+paid as calculated even if the mean level of target achievement for the three-year period is
+below the 50 percent threshold. A cap of 200 percent applies, meaning that the maximum
+amount that can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board
+as a whole, Infineon's situation and any exceptional factors. When exercising its judgment in
+this respect, the Supervisory Board also takes into account the level of achievement of the
+three-year target for revenue growth and Segment Result that is set each year by the Super-
+visory Board exclusively for this purpose. Unlike the STI, there is no lower limit for the amount
+by which the Supervisory Board can adjust the MTI; for the upper limit, however, the cap
+applies (200 percent).
+Corporate Governance
+Compensation report
+Additionally, the Supervisory Board has the option - based on its own best judgment - to grant
+a special bonus, among other things for special achievements of the Management Board or
+its individual members. This bonus is capped, however, at a maximum of 30 percent of the
+fixed compensation of the member of the Management Board.
+188
+If the term of office commences during a fiscal year, the MTI tranche is determined on a pro-rata
+basis (1/36 for each month of a full MTI tranche started). Upon leaving Infineon, regulations
+ensure that the member of the Management Board can only receive an MTI payment for the
+actual number of MTI tranches during his/her term of office. MTI tranches already started are
+forfeited if a mandate or service contract of a member of the Management Board comes to
+an end before the due date, for instance if a member resigns from office or terminates the con-
+tractual arrangements of his/her own volition or if the contract is terminated for good cause.
+The long-term incentive (LTI) is intended to reward long-term and, similar to the MTI, sustained
+performance on the part of members of the Management Board and, additionally, to ensure
+that their interests are aligned with the interest of the Company's shareholders regarding a
+positive share price development. Assuming a 100 percent target achievement of the variable
+compensation, the LTI constitutes approximately 15 percent of target annual income.
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share Plan.
+As well as being relevant for members of the Management Board, the new LTI also applies –
+with minor differences attributable to specific circumstances - to Infineon managers and
+selected Infineon employees worldwide.
+The (virtual) performance shares are allocated - initially on a provisional basis - on October 1
+of each fiscal year for the fiscal year beginning on that date. In this context, performance shares
+were issued on October 1, 2014 for the fiscal year beginning on that date. The performance
+shares are allocated on the basis of the contractually agreed "LTI allocation amount" in euros.
+The number of performance shares is determined by dividing the LTI allocation amount by the
+average price of the Infineon share (Xetra closing price) during the nine months prior to the
+allocation date. The prerequisite for the definitive allocation of the - at that stage still virtual -
+performance shares is that the relevant member of the Management Board invests 25 percent
+of his or her individual LTI allocation amount in Infineon shares and that the holding period of
+four years applicable both for the member's own-investment and for the performance shares
+has come to an end. Moreover, 50 percent of the performance shares are performance-related;
+they are only allocated definitively if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) between the date of the performance shares' provisional allocation
+and the end of the holding period. If the conditions for definitive allocation of performance
+shares - either of all or of only those that are not performance-related - are met at the end
+of the holding period, the member of the Management Board acquires a claim against the
+Company for the transfer of the corresponding number of (real) Infineon shares; performance
+shares, which do not achieve the target, are forfeited. The value of the performance shares
+definitively granted to the member of the Management Board per LTI tranche at the end of
+the holding period may not exceed 250 percent of the relevant LTI allocation amount; the
+performance shares above this amount are forfeited (cap).
+The shares are transferred to a securities custodian account attributable to the member of the
+Management Board; thereafter he/she can, as a general rule, freely dispose of them. The same
+also applies to Infineon shares acquired in conjunction with the own-investment requirement
+at the end of the holding period.
+The Supervisory Board has the right, at the end of the holding period, to make a cash settle-
+ment to the member of the Management Board rather than actually transfer Infineon shares.
+If the member of the Management Board leaves office during the first two years of the holding
+period applicable to the performance shares of a particular LTI tranche, those performance
+shares are forfeited unless the reason for leaving office is that the member of the Management
+Board has reached the contractually agreed age limit. The holding period for the own-invest-
+ment shares expires when the member of the Management Board leaves office; at that stage
+the member of the Management Board concerned can freely dispose of the shares. If the
+member of the Management Board leaves office at a later date - except if the member resigns
+from office or terminates the contractual arrangements of his/her own volition or if the contract
+is terminated for good cause - the LTI tranche (including the own-investment) remains in
+place unchanged. The member of the Management Board is then treated in all respects as if
+he/she were still in office; there is no pro rata reduction due to leaving office early.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+189
+The Supervisory Board is required to define suitable alternative LTI instruments of commen-
+surate value if it is impossible or not desired by the Supervisory Board to offer an LTI on the
+basis of the Performance Share Plan.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+670,094
+945,000
+1,110,909
+128,333
+384,999
+242,620
+175,000
+177,921
+128,333
+177,921
+128,333
+598,462
+128,333
+431,666
+175,000
+177,921
+128,333
+177,921
+128,333
+598,462
+431,666
+277,280
+196,407
+242,620
+35,909
+128,333
+2014-2016 tranche
+35,909
+980,909
+750,000
+41,368
+791,368
+685,000
+40,927
+725,927
+750,000
+29,445
+779,445
+685,000 2,575,000
+26,260 106,722
+711,260 2,681,722
+2,315,000
+103,096
+2,418,096
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+2015-2017 tranche
+831,840
+589,220
+858,872 994,240
+149,601 272,721
+1,989,382 2,058,329
+385,000
+589,220
+385,000 2,010,280 1,295,000
+Multi-year variable compensation
+Mid Term Incentive (MTI)1
+2012-2014 tranche
+2013-2015 tranche
+525,000
+Total compensation (DCGK) 2,714,845
+196,407
+Pension expense
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Total fixed compensation
+2015
+Dr. Reinhard Ploss
+Chief Executive Officer
+2014
+2015 (min.)
+2015 (max.)
+1,075,000
+in €
+35,909
+1,110,909
+1,075,000
+1,075,000
+35,909
+1,110,909
+35,909
+1,110,909
+Variable compensation
+Single-year variable compensation (STI)
+480,000
+420,000
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+945,000
+35,909
+980,909
+2014-2016 tranche
+Compensation granted to members of the Management Board in accordance with the DCGK
+(total compensation and compensation components) as well as the minimum and maximum
+values that can be achieved are shown in the following table:
+192
+729,821
+114,046
+593,038
+114,046
+1,013,333 1,013,333
+462,777
+P❘ see page 249
+Further details regarding the Performance Shares granted on October 1, 2015 for the 2016 fiscal
+year to the Members of the Management Board are provided in note 26 to the Consolidated
+Financial Statements.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Compensation report
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+191
+The Supervisory Board did not award any special bonuses to members of the Management
+Board during the 2015 fiscal year.
+Other awards and benefits
+The Company entered into a restitution agreement in the 2009 fiscal year with each of the
+active members of the Management Board at that time. Dr. Ploss is the only current member
+of the Management Board affected by such an agreement. These agreements provide for the
+Company to cover, to the extent permitted by law, all costs and expenses incurred by members
+of the Management Board in the performance of their duties for the Company in connection
+with legal, governmental, regulatory and parliamentary proceedings and investigations as
+well as arbitration proceedings, in which the member of the Management Board is involved
+in conjunction with his/her activities on behalf of the Company. However, the agreements
+specifically exclude any restitution of costs if the proceedings concern an action or omission
+that constitutes a culpable breach of the duty of care of the member of the Management
+Board pursuant to section 93, paragraph 2, of the German Stock Corporation Act ("AktG”).
+No payments were made by the Company during the 2015 fiscal year under these restitution
+arrangements.
+Management Board compensation in the 2015 fiscal year in accordance with
+the German Corporate Governance Code
+The DCGK recommends that the individual compensation components of each member of the
+Management Board be disclosed in accordance with specified criteria. It also recommends
+that disclosure is based on the model tables - in part diverging from DRS 17 - provided in the
+appendix to the Code.
+Compensation granted in accordance with DCGK
+The following table shows the value of compensation granted for the 2014 and 2015 fiscal years,
+including fringe benefits, as well as the minimum and maximum values that can be achieved
+for the 2015 fiscal year.
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed
+pursuant to the DCGK at the target value (i.e. the value in the event of 100 percent target
+achievement). The MTI is required to be disclosed - in a deviation from DRS 17 - at the target
+value for an "average probability scenario" at the grant date. For these purposes, Infineon
+assumes 100 percent target achievement. In addition, the pension expense, i.e. the service
+cost pursuant to IAS 19 (see "Commitments to the Management Board upon termination of
+employment" in this chapter), is also required to be included in the amount of total compen-
+sation disclosed in accordance with the DCGK.
+P see page 194 ff.
+Special bonuses
+2015-2017 tranche
+Long Term Incentive (LTI)
+Performance Share Plan¹
+Chief Financial Officer
+2014 2015 (min.) 2015 (max.)
+2015
+Arunjai Mittal
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Compensation report
+193
+Member of the Management Board
+2014 2015 (min.) 2015 (max.)
+750,000
+41,368
+791,368
+685,000
+Dominik Asam
+750,000
+40,927
+725,927
+41,368
+791,368
+41,368
+791,368
+750,000
+29,445
+779,445
+685,000
+26,260
+711,260
+750,000
+750,000
+29,445
+779,445
+29,445
+750,000
+2015
+In line with the DCGK recommendations, the pension expense meaning the service cost
+pursuant to IAS 19 constitutes the allocation amount (see previous table), even though it is
+not strictly speaking - an allocation.
+In accordance with the DCGK, share-based payments are deemed to be allocated on the basis
+of the relevant time and value for German tax law purposes. Accordingly, the members of
+the Management Board were not deemed to have been allocated share-based payments in
+either the 2015 or the 2014 fiscal year.
+Total variable compensation
+Pension expense
+Total compensation (DCGK)
+420,000
+480,000
+1,200,000
+960,000
+228,277
+1,188,277
+219,796
+247,426
+1,087,426
+149,601
+114,138
+114,138
+912,500
+3,072,500
+219,796
+219,796
+2,518,982
+2,217,936
+1,444,843
+4,403,205
+1 The figures of the active members of the Management Board in the 2015 fiscal year are based on a fair market value per
+performance share amounting to €5.31 (2014: €5.20), which was calculated using a Monte-Carlo simulation model taking
+account of the value-reducing cap.
+Allocation amount in accordance with DCGK
+Since compensation granted to members of the Management Board for the fiscal year does
+not always coincide with amounts disbursed in a particular fiscal year, a separate table is
+presented - in accordance with the relevant DCGK recommendation - showing the amounts
+flowing to members of the Management Board for the 2015 fiscal year (the "allocation amount"
+("Zufluss")).
+In line with the DCGK recommendations, the fixed compensation and the STI are required
+to be disclosed as the allocation amount for the fiscal year concerned. In the case of the MTI,
+the DCGK recommends that this is disclosed as flowing to members of the Management Board
+in the fiscal year, in which the plan term of the relevant MTI tranche ends. In this sense, in
+addition to the fixed compensation granted for 2015 and the STI, the allocation amount
+for the 2013-2015 MTI tranche also flowed to the members of the Management Board for the
+2015 fiscal year.
+120,000
+779,445
+121,403
+229,167
+1,013,333 1,013,333
+Stock
+options
+outstanding
+at the
+Stock
+options
+expired
+end of the
+fiscal year
+in the
+fiscal year
+Exercisable
+stock
+options
+outstanding
+at the
+end of the
+fiscal year
+Total
+expense
+for share-
+based
+Stock
+options
+outstanding
+at the
+beginning
+of the
+fiscal year
+compen-
+sation
+Number
+Number
+Member of the
+Management Board
+Fair Value
+grant date
+Number
+Number
+Number
+Number
+Number
+in €
+Fiscal year
+in €
+Virtual
+performance
+shares
+outstanding
+at the end
+of the
+fiscal year
+Virtual performance shares
+newly granted at the
+beginning of the fiscal year
+In accordance with their service contracts, members of the Management Board are entitled to
+a chauffeur-driven company car, which may also be used privately. Operating and maintenance
+costs for the company car and chauffeur are borne by the Company. Taxes arising on the fringe
+benefit related to private usage are borne by the members of the Management Board.
+Fringe benefits
+P see page 249
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+190
+Similarly, they did not receive any benefits from third parties in the 2015 and 2014 fiscal years,
+whether promised or actually paid, for their board activities at Infineon.
+Members of the Management Board did not receive any loans from Infineon, either in the 2015
+or 2014 fiscal years.
+2 The figures for the active members of the Management Board in the 2015 fiscal year are based on a fair market value per performance share amounting to €5.31 (2014: €5.20),
+which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+593,038
+of the
+fiscal year
+228,277 247,426 153,225 172,806 153,225 172,806 534,727
+1,822,637 1,250,759 1,294,694 942,805 1,294,694 942,805 4,412,025 3,136,369
+2,933,546 2,231,668 2,086,062 1,668,732 2,074,139 1,654,065 7,093,747 5,554,465
+Total variable compensation
+Performance Share Plan 2
+Long Term Incentive (LTI)
+219,796
+A fair market value of €5.31 (2014: €5.20) per performance share was determined for the 2015
+fiscal year, taking account - among other things - of the 250 percent cap of the LTI allocation
+amount.
+Regarding the calculation of the fair market value we refer to note 26 to the Consolidated
+Financial Statements.
+The following table shows the number of performance shares awarded to members of the
+Management Board in the 2015 fiscal year. In addition, the table contains information relating
+to the Stock Option Plan 2010, on the basis of which stock options were allocated to members
+of the Management Board for the final time in the 2013 fiscal year. No stock options were
+exercised and no stock options expired in the 2014 or 2015 fiscal years.
+Performance Share Plan
+Stock Option Plan 2010
+Virtual
+performance
+shares
+outstanding
+at the
+beginning
+Total compensation
+Dr. Reinhard Ploss
+2015
+47,582
+350,952
+350,952
+141,089
+Arunjai Mittal
+2015
+33,232
+28,856
+153,225
+62,088
+229,167
+33,232
+229,167
+2014
+33,232
+172,806
+33,232
+Total
+2015
+2014
+114,046
+100,702
+534,727
+214,748
+197,925
+172,806
+33,232
+2014
+42,990
+228,277
+90,572
+433,214
+433,214
+120,000
+314,286
+(CEO)
+2014
+47,582
+247,426
+47,582
+433,214
+433,214
+200,285
+Dominik Asam
+2015
+33,232
+153,225
+62,088
+350,952
+350,952
+217,610
+229,167
+340,000
+28,856
+308,000
+Chief Executive Officer
+Chief Financial Officer
+2015
+2014
+2015
+Arunjai Mittal
+Member of the
+Management Board
+2014
+2015
+2014
+Fixed compensation
+Basic annual salary
+1,075,000
+Fringe benefits
+35,909
+Total fixed compensation
+1,110,909
+945,000
+35,909
+980,909
+750,000
+41,368
+791,368
+685,000
+40,927
+725,927
+750,000
+29,445
+779,445
+685,000
+26,260
+711,260
+Variable compensation
+Single-year variable
+compensation (STI)
+831,840
+525,000
+589,220
+385,000
+Dominik Asam
+589,220
+Dr. Reinhard Ploss
+The total compensation allocated to the individual members of the Management Board
+for the 2015 fiscal year in accordance with DCGK - analyzed by component - is shown in the
+following table:
+340,000
+680,000
+153,225
+308,000
+340,000
+850,000
+340,000
+308,000
+308,000
+The Company also maintains accident insurance policies for members of the board.
+172,806
+76,613
+612,500
+153,225
+172,806
+76,613
+612,500
+833,225
+788,806
+76,613
+272,721 192,780 272,721
+1,897,314 1,707,513 1,140,702 3,206,589
+2,142,500
+833,225
+788,806
+272,721
+241,183
+159,627
+2,142,500
+241,183
+1,853,853 1,659,693 1,097,241 3,163,128
+76,613
+241,183
+in €
+850,000
+680,000
+Long Term Incentive (LTI)
+552,300
+Stock Option Plan 2010
+Performance Share Plan
+Total variable compensation
+1,384,140
+2013-2015 tranche
+306,049
+333,872
+333,872
+2012-2014 tranche
+385,000
+Mid Term Incentive (MTI)
+compensation
+Multi-year variable
+405,020
+405,020
+35
+55
+62
+(1)
+43
+(37)
+12
+100
+(130)
+(27)
+for the year ended September 30, 2015 and 2014
+(75)
+Inventories
+Trade receivables
+Financial investments
+Cash and cash equivalents
+ASSETS:
+2014
+2015
+Notes
+€ in millions
+as of September 30, 2015 and 2014
+Consolidated Statement of Financial Position
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+460
+669
+460
+669
+(130)
+(27)
+Non-controlling interests
+634
+Consolidated Statement of Comprehensive Income
+203
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Statement of Comprehensive Income
+0.48
+0.56
+10
+Net income
+0.04
+0.01
+10
+Diluted earnings per share (in euro) from discontinued operations
+0.44
+0.55
+10
+535
+Diluted earnings per share (in euro) from continuing operations
+Items that will not be reclassified to profit or loss:
+Actuarial losses on pension plans and similar commitments
+Total items that will not be reclassified to profit or loss
+Items that may be reclassified subsequently to profit or loss:
+Currency translation effects
+Net change in fair value of hedging instruments
+Net change in fair value of available-for-sale financial assets
+Total items that may be reclassified subsequently to profit or loss
+Other comprehensive income (loss) for the year, net of tax
+Total comprehensive income for the year, net of tax
+Attributable to:
+€ in millions
+Shareholders of Infineon Technologies AG
+Notes
+2015
+2014
+24
+Other comprehensive income
+Diluted earnings per share (in euro)
+1,603
+Income tax receivable
+202
+CONSOLIDATED STATEMENT OF OPERATIONS
+203
+204
+206
+208
+210
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+CONSOLIDATED STATEMENT OF CASH FLOWS
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+201
+Statements
+Consolidated
+202
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Consolidated Statement of Operations
+for the year ended September 30, 2015 and 2014
+€ in millions
+Notes
+2015
+2014
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Financial Statements
+Financial
+Consolidated
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+108,500
+Diana Vitale
+2015
+33,333
+13,000
+8,000
+54,333
+(since February 12, 2015)
+2014
+Total
+2015
+2014
+745,830
+600,000
+290,875
+90,000
+233,125
+220,000
+248,000 1,517,830
+286,000
+200
+Arunjai Mittal
+Dominik Asam
+Dr. Reinhard Ploss
+Management Board
+Neubiberg, November 20, 2015
+Other operating income
+The Company signed a contract on August 25, 2015 with the Technische Universität München
+relating to the provision of research and development services, to be performed primarily
+within the remit of the Chair of Professor Schmitt-Landsiedel. The Supervisory Board therefore
+approved the contract as a precautionary measure on August 4, 2015. No amount was paid
+in accordance with this contract to the Technische Universität München in the 2015 fiscal year.
+Corporate Governance
+Compensation report
+199
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2015
+or 2014 fiscal years.
+1 Based on earnings per share (undiluted) from continuing operations of €0.55 in 2015 and €0.44 in 2014.
+1,196,000
+Other matters (2015 fiscal year)
+Diluted earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:
+5,795
+(3,715)
+(31)
+Income from continuing operations
+622
+488
+Income from discontinued operations, net of income taxes
+4
+12
+47
+634
+535
+Net income
+Attributable to:
+Non-controlling interests
+Shareholders of Infineon Technologies AG
+102
+2
+535
+Basic earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:
+Basic earnings per share (in euro) from continuing operations
+10
+0.55
+0.44
+Basic earnings per share (in euro) from discontinued operations
+10
+0.01
+0.04
+Basic earnings per share (in euro)
+10
+0.56
+0.48
+632
+9
+Income tax
+519
+(2,673)
+2,080
+1,647
+(717)
+(550)
+(778)
+(496)
+7
+28
+26
+Other operating expenses
+7
+(58)
+(102)
+Operating income
+555
+525
+520
+Income from continuing operations before income taxes
+3
+4
+16
+Gain from investments accounted for using the equity method
+4,320
+(19)
+8
+Financial expenses
+10
+10
+8
+Financial income
+(49)
+Other current assets
+9
+1,058
+8
+Net interest result
+31
+(102)
+9
+Income tax
+514
+760
+15, 18
+(47)
+(12)
+535
+634
+27
+2014
+2015
+Notes
+Adjustments to reconcile net income to net cash provided by operating activities:
+Depreciation and amortization
+Minus: loss (income) from discontinued operations, net of income taxes
+Net income
+€ in millions
+for the year ended September 30, 2015 and 2014
+Consolidated Statement of Cash Flows
+42
+9
+Gains on disposals of property, plant and equipment
+(7)
+Change in provisions
+50
+Total liabilities
+19
+Change in trade payables
+(89)
+(133)
+13
+(58)
+(65)
+12
+Consolidated Financial Statements
+(2)
+31
+15, 18
+1
+1
+16
+Change in inventories
+Change in trade receivables
+Other non-cash result
+Impairment charges
+Dividends received from associated companies
+(2)
+3
+20
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+6,438
+2,491
+72
+86
+23
+70
+72
+20
+5
+147
+9
+379
+426
+151
+1,760
+22
+22
+Shareholders' equity:
+Ordinary share capital
+Additional paid-in capital
+Accumulated deficit
+Other reserves
+Own shares
+1,585
+677
+4,076
+2,280
+14
+8,741
+Total liabilities and equity
+4,158
+4,665
+Total equity
+4
+1
+Non-controlling interests
+4,154
+4,664
+Equity attributable to shareholders of Infineon Technologies AG
+206
+(40)
+(37)
+(37)
+64
+126
+(3,502)
+(2,897)
+5,414
+5,213
+2,255
+2,259
+24
+Put options on own shares
+(48)
+Change in other assets and liabilities
+(95)
+33
+35
+Non-current income tax receivable
+29
+3
+Deferred tax assets
+9
+604
+378
+Other non-current assets
+17
+155
+141
+Total non-current assets
+4,626
+2,504
+Total assets
+8,741
+6,438
+€ in millions
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+205
+Consolidated Statement of Financial Position
+16
+Investments accounted for using the equity method
+250
+1,738
+11
+1,340
+1,360
+12
+742
+581
+13
+1,129
+707
+9
+2
+Notes
+7
+229
+221
+Total current assets
+4,115
+3,934
+Property, plant and equipment
+15
+2,093
+1,700
+Goodwill and other intangible assets
+18
+14
+2015
+2014
+LIABILITIES AND EQUITY:
+981
+817
+Net cash provided by operating activities
+(7)
+(140)
+988
+957
+Net cash provided by operating activities from continuing operations
+Net cash used in operating activities from discontinued operations
+(52)
+(93)
+9
+26,000
+Income tax paid
+(14)
+8
+Interest paid
+10
+(29)
+74
+་གླུ 8 ཋ
+8
+8
+Interest received
+99
+(9)
+673
+Total non-current liabilities
+Long-term provisions
+Short-term debt and current maturities of long-term debt
+22
+33
+35
+Trade payables
+19
+802
+648
+Short-term provisions
+20
+402
+Other non-current liabilities
+590
+9
+123
+69
+Other current liabilities
+21
+225
+261
+Total current liabilities
+Long-term debt
+Pension plans and similar commitments
+Deferred tax liabilities
+Income tax payable
+25,000
+204
+50,000
+2014
+(since February 12, 2015)
+68,333
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Compensation report
+197
+Supervisory Board compensation
+Compensation structure
+The Supervisory Board compensation system was subjected to a thorough review in the 2010
+fiscal year and came into force with (retrospective) effect from October 1, 2010, in line with a
+proposal put forward by the Management Board and Supervisory Board to the Annual General
+Meeting on February 17, 2011.
+The compensation due to the Supervisory Board in each fiscal year (total compensation)
+is governed by section 11 of the Company's Articles of Association and comprises three
+components:
+> Fixed compensation (basic remuneration) of €50,000. This amount applies to each member
+of the Supervisory Board and is payable within one month of the end of the fiscal year;
+› A variable compensation component amounting to €1,500 for every €0.01 by which earnings
+per share exceed a minimum threshold of €0.30. This minimum threshold is increased by
+€0.03 every year, with the first increase taking effect for the fiscal year beginning October 1,
+2011. The minimum amount is therefore €0.42 for the 2015 fiscal year. The variable compen-
+sation component is determined in each case on the basis of the basic (undiluted) earnings
+per share from continuing operations, determined in accordance with the pertinent financial
+reporting regulations. The variable compensation component is limited to €50,000 per fiscal
+year. It also applies to each member of the Supervisory Board and falls due for payment
+once the Annual General Meeting following the fiscal year to which the compensation relates
+has ended;
+> An allowance recognizing the additional work involved in performing certain functions
+within the Supervisory Board: The Chairman of the Supervisory Board receives an allowance
+of €50,000, each Vice-chairman receives an allowance of €37,500, the Chairman of the Invest-
+ment, Finance and Audit Committee and the Chairwoman of the Strategy and Technology
+Committee each receive an allowance of €25,000 and each member of a Supervisory Board
+committee receives an allowance of €15,000 - with the exception of the Nomination Com-
+mittee and the Mediation Committee. The additional allowance is payable only if the body
+to which the Supervisory Board or committee member belongs has convened or passed
+resolutions in the fiscal year concerned. A member of the Supervisory Board performing more
+than one of the functions indicated receives only the highest single additional allowance
+payable to a member performing the functions concerned. The allowance is paid to the
+relevant holder of office within one month of the end of the fiscal year.
+Reinhard Gottinger
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or
+one of its committees, or takes on a Supervisory Board function for which an allowance is
+paid, the relevant compensation components are disbursed on a pro-rata basis (payment of
+one twelfth of the relevant annual compensation component for each (started) month of
+membership or exercise of function).
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in
+connection with the performance of their Supervisory Board duties and for any value-added
+tax payable by them in this connection. The Company also pays any value-added tax incurred
+on the total remuneration (including meeting attendance fees) of members of the Super-
+visory Board.
+198
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Compensation of the Supervisory Board for the 2015 fiscal year
+The total compensation (including meeting attendance fees) paid to the individual members
+of the Supervisory Board in the 2015 fiscal year comprises the following (these figures do not
+include value-added tax at 19 percent):
+Supervisory Board compensation
+In €
+Fiscal year
+Member of the
+Supervisory Board
+Fixed
+compen-
+sation
+As part of the total compensation, the Company additionally grants each member of the
+Supervisory Board a meeting attendance fee of €2,000 per meeting of the Supervisory Board
+or one of its committees that is attended in person. The meeting attendance fee is paid only
+once in cases in which more than one meeting is held on a given day.
+2015
+20,833
+8,125
+19,500
+50,000
+2015
+Gerhard Hobbach
+94,500
+22,000
+15,000
+7,500
+50,000
+2014
+100,500
+16,000
+15,000
+19,500
+50,000
+2015
+Peter Gruber
+42,750
+14,000
+3,750
+25,000
+2014
+until February 12, 2015)
+(since April 1, 2014
+39,208
+4,000
+6,250
+Variable
+15,000
+compen-
+sation
+Meeting
+attendance
+85,333
+(since February 12, 2015)
+2014
+Dr. Herbert Diess
+2015
+33,333
+13,000
+8,000
+54,333
+(since February 12, 2015)
+2014
+Alfred Eibl
+14,000
+2015
+2014
+25,000
+3,750
+7,500
+46,250
+Annette Engelfried
+2015
+33,333
+13,000
+10,000
+12,000
+7,500
+(until March 31, 2014)
+25,000
+13,000
+33,333
+Total
+fees
+compen-
+sation
+Peter Bauer
+2015
+33,333
+13,000
+8,000
+54,333
+(since February 12, 2015)
+2014
+Wigand Cramer
+2015
+20,833
+8,125
+6,250
+10,000
+45,208
+(until February 12, 2015)
+2014
+50,000
+7,500
+15,000
+30,000
+102,500
+Johann Dechant
+2015
+Allowance
+for specific
+functions
+16,000
+10,000
+2014
+7,500
+22,000
+79,500
+Gerd Schmidt
+2015
+20,833
+8,125
+15,625
+10,000
+54,583
+(until February 12, 2015)
+2014
+50,000
+7,500
+37,500
+28,000
+123,000
+50,000
+Prof. Dr. Doris
+2014
+14,000
+Wolfgang Mayrhuber
+2015
+50,000
+19,500
+50,000
+28,000
+147,500
+2014
+50,000
+7,500
+50,000
+34,000
+141,500
+Dr. Manfred Puffer
+2015
+50,000
+19,500
+83,500
+2014
+2015
+19,500
+94,500
+Kerstin Schulzendorf
+2015
+33,333
+13,000
+8,000
+54,333
+(since February 12, 2015)
+2014
+Dr. Eckart Sünner
+2015
+50,000
+19,500
+25,000
+18,000
+112,500
+100,500
+22,000
+50,000
+15,000
+50,000
+25,000
+16,000
+110,500
+Schmitt-Landsiedel
+2014
+50,000
+7,500
+25,000
+18,000
+100,500
+Jürgen Scholz
+2015
+19,500
+15,000
+16,000
+100,500
+2014
+7,500
+(since February 12, 2015)
+50,000
+2014
+20,000
+92,500
+Hans-Ulrich Holdenried
+2015
+50,000
+19,500
+15,000
+20,000
+104,500
+2014
+10,000
+10,000
+13,000
+33,333
+2015
+Dr. Susanne Lachenmann
+71,500
+14,000
+7,500
+50,000
+50,000
+7,500
+81,500
+12,000
+19,500
+50,000
+2015
+Prof. Dr. Renate Köcher
+98,500
+15,000
+26,000
+7,500
+66,333
+2014
+50,000
+15,000
+(40)
+13
+(202)
+(202)
+669
+2
+667
+35
+35
+(37)
+1
+(1)
+126
+(34)
+(4)
+100
+3
+(34)
+(4)
+100
+35
+634
+2
+632
+4,158
+4,158
+4
+4,154
+(37)
+26
+› Amendments to the transitional provisions of IFRS 10, IFRS 11 and IFRS 12 (effective date: January 1, 2014).
+These changes did not have a significant impact on the Consolidated Financial Statements.
+4
+3,776
+Total equity
+Non-controlling
+interests
+(75)
+535
+3,776
+43
+43
+12
+535
+12
+(8)
+3
+14
+of Infineon
+Technologies AG
+Total equity
+attributable to
+shareholders
+Put options
+on own shares
+Own shares
+Consolidated Statement of Changes in Equity
+209
+(37)
+13
+(75)
+(129)
+4,154
+(40)
+(37)
+35
+3
+26
+(18)
+4
+(22)
+460
+(37)
+(40)
+6
+6
+99
+1
+99
+1
+(129)
+460
+(37)
+6
+1 Basis of the Consolidated Financial Statements
+40
+A list of subsidiaries of Infineon Technologies AG is provided in note 35.
+Investments accounted for using the equity method
+Investments in associated companies and joint ventures (as defined below) are accounted for using the equity method
+(collectively: "Investments Accounted for Using the Equity Method").
+Associated companies and joint ventures
+An "associated company" is an entity over which Infineon has significant influence. Significant influence is the
+power to participate in the financial and operating policy decisions of the investee but is not control or joint control
+of those policies.
+A "joint venture" is a joint agreement whereby the parties that have joint control of the arrangement have rights to
+the net assets of the arrangement.
+A list of the associated companies of Infineon Technologies AG is provided in note 35.
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Equity method
+Based on the cost of investment at the date of acquisition of an interest in an associated company or joint venture,
+the carrying amount of the investment is increased or decreased at each subsequent reporting date for the share
+of profits or losses, dividends paid and other changes in equity of the associated company or joint venture, to the
+extent that they relate to Infineon's share of the investment.
+Goodwill arising from the acquisition of an associated company or joint venture is included in the carrying amount
+of the investment (net of accumulated impairment losses). Impairment losses in excess of the carrying amount of
+the investment in the entity are charged against other assets held related to the investment, such as intercompany
+loans or other receivables. If the carrying amount of the investment and of other assets related to the investment
+is written down to zero, it must be determined whether there are additional losses to be recognized, to the extent
+that Infineon has an obligation to fund such losses.
+Gains and losses on transactions with entities in which Infineon has an investment accounted for using the equity
+method are eliminated in proportion to Infineon's interest in the entity.
+Other equity investments
+Other equity investments, where Infineon has an ownership interest of less than 20 percent and does not have
+significant influence, are recorded at acquisition cost less any necessary write-downs for impairment if a fair value
+cannot be reliably determined.
+Functional currency, reporting currency and foreign currency translation
+213
+The currency of the primary economic environment in which an entity operates and normally generates and expends
+cash is considered to be the functional currency of that entity. The functional currency of Infineon Technologies AG
+is the euro. The Consolidated Financial Statements have been prepared with the euro as reporting currency.
+Foreign currency transactions are translated into the functional currency of the relevant entity using the exchange
+rates prevailing at the transaction date. Monetary assets and liabilities which are not denominated in the functional
+currency of the reporting entity are translated at the closing exchange rate prevailing at the end of the relevant
+reporting period. Exchange rate gains and losses from the currency translation are recognized in the Consolidated
+Statement of Operations as part of the operating result.
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary or
+has a right to such, and has the ability to influence these returns as a result of its power over the subsidiary.
+Power means that Infineon has existing rights that give Infineon the current ability to direct the relevant activities
+(the activities that significantly affect the investee's returns).
+Financial reporting rules issued not yet adopted
+The following new or amended Standards have been issued by the IASB and will generally be relevant to Infineon
+from today's perspective. They have not been applied in the Consolidated Financial Statements as of September 30,
+2015 since they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended
+Standards are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they
+are not adopted before their effective date, even if this is permitted for certain standards:
+› Amendments to IAS 1 "Disclosure Initiative" (effective date: January 1, 2016). Infineon is currently analyzing the
+impact on the Consolidated Financial Statements.
+› Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortization"
+(effective date: January 1, 2016). These changes will not have a significant impact on the Consolidated Financial
+Statements.
+> IFRS 9 "Financial Instruments” (effective date: January 1, 2018). Infineon is currently analyzing the impact on
+the Consolidated Financial Statements.
+› Amendments to IFRS 10 and IAS 28 "Sale or contribution of assets between an investor and its associate or
+joint venture" (effective date January 1, 2016 but indefinite postponement has been proposed) Infineon is
+currently analyzing the impact on the Consolidated Financial Statements.
+> IFRS 15 "Revenue from contracts with customers" (effective date: January 1, 2018). Infineon is currently
+analyzing the impact on the Consolidated Financial Statements.
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their fair
+value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value of
+acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+212
+Consolidated Financial Statements
+› Annual IFRS improvement cycle 2010-2012 (effective date: February 1, 2015). Infineon is currently analyzing
+the impact on the Consolidated Financial Statements.
+› Annual IFRS improvement cycle 2011-2013 (effective date: January 1, 2015). Infineon is currently analyzing
+the impact on the Consolidated Financial Statements.
+> Annual IFRS improvement cycle 2012-2014 (effective date: January 1, 2016). Infineon is currently analyzing
+the impact on the Consolidated Financial Statements.
+2 Summary of Significant Accounting Policies
+Basis of consolidation
+The Consolidated Financial Statements presented here include the financial statements of Infineon Technologies AG
+and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity which, directly or
+indirectly, is controlled by Infineon Technologies AG.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+6
+The assets and liabilities of foreign subsidiaries with functional currencies other than the euro are translated
+into euros using period-end exchange rates. Income and expenses of these entities are translated using the
+average exchange rate for the period under report. All cumulative differences arising from the currency translation
+of the equity in foreign subsidiaries arising from changes to exchange rates are recognized directly in equity in
+"Other reserves".
+€1 in units of foreign currency
+The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company for the
+year ended September 30, 2015 have been prepared in accordance with International Financial Reporting Standards
+("IFRS") and related interpretations effective as of September 30, 2015 as issued by the International Accounting
+Standards Board ("IASB") to the extent to which the IFRS and Interpretations have been adopted by the European
+Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements set forth
+in section 315a, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB").
+Infineon Technologies AG is a listed company under German law and ultimate parent company of the Infineon Group.
+The principal office of the Company is Am Campeon 1 – 12, 85579 Neubiberg (Germany). The Company is registered
+in the Commercial Register of the District Court of Munich under the number HRB 126492.
+The Infineon Group ("Infineon”) comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
+develop, manufacture and market a broad range of semiconductors and system solutions, collectively: semicon-
+ductors. The focus of activities is on automotive electronics, industrial electronics, information and communications
+infrastructure as well as hardware-based security. The product range includes standard, application-specific and
+customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
+signal applications. More than half of Infineon's revenue is generated by power semiconductors, the remaining
+revenue is attributable to high frequency components, sensors, driver components as well as microcontrollers
+for automotive, industrial and security applications. Research and development sites, manufacturing facilities,
+investments and customers are located mainly in Europe, Asia and North America.
+Financial Statements
+Notes to the Consolidated
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The fiscal year end for both Infineon and the Company is September 30 of each year.
+210
+1
+4,664
+(19)
+(5)
+(14)
+40
+40
+4,665
+The exchange rates of the primary currencies (€1 in foreign currency units) used in the preparation of the
+accompanying Consolidated Financial Statements, in alphabetical order, are as follows:
+The above-mentioned standards were complied with in full, on this basis the Consolidated Financial Statements
+convey a true and fair view of the financial position, cash flows and results of operations of Infineon.
+Infineon's accounting policies are described in more detail in note 2. The accounting and valuation policies used,
+as well as the explanatory comments and disclosures made in the IFRS Consolidated Financial Statements for
+the 2015 fiscal year are generally based on those used in the Consolidated Financial Statements for the year ended
+September 30, 2014.
+Japanese yen
+Malaysian ringgit
+Singapore dollar
+US dollar
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+> IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements", IFRS 12 "Disclosure of Interests
+in Other Entities”, IAS 27 "Separate Financial Statements" (effective date: January 1, 2014). IFRS 10 contains
+a new and broader definition of "control". A parent company has control when it has the decision-making power
+over the potential subsidiary based on voting rights or other rights, participates in positive as well as negative
+variable returns of the subsidiary and through its decision-making power can influence these returns. IFRS 11
+differentiates between Joint Operations and Joint Ventures. The accounting consequences of which are line-
+by-line accounting (joint operation) or equity accounting (joint venture). The disclosures of interests in other
+entities are the subject of IFRS 12. As a result of the introduction of the new standards IFRS 10-12, IAS 27 was
+amended accordingly. The application of IFRS 10, IFRS 11, IFRS 12 and IAS 27 had no significant impact on the
+Consolidated Financial Statements.
+› Amendments to IAS 36 "Disclosure of recoverable amount for non-financial assets” (effective date:
+January 1, 2014). These changes had no significant impact on the Consolidated Financial Statements.
+The Consolidated Financial Statements comprise the Consolidated Statement of Operations, Consolidated
+Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of
+Cash Flows, Consolidated Statement of Changes in Equity and the Notes to the Consolidated Financial Statements.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+› Amendments to IAS 32 "Financial Instruments: Presentation - Offsetting Financial Assets and Financial
+Liabilities" (effective date: January 1, 2014). These changes had no significant impact on the Consolidated
+Financial Statements.
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in
+the Consolidated Financial Statements for the year ended September 30, 2015:
+Financial reporting rules applied for the first time
+211
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+The Company's Management Board approved the Consolidated Financial Statements for submission to the
+Company's Supervisory Board on November 20, 2015.
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
+All amounts herein are presented in euros ("€") except where otherwise stated.
+› Amendment to IAS 28 "Investments in associates and joint ventures" (effective date: January 1, 2014).
+These changes had no significant impact on the Consolidated Financial Statements.
+Hedges
+Amount
+Other reserves
+7
+(35)
+(29)
+(831)
+22
+4
+2,398
+24
+22
+Closing rate
+28
+2
+22
+Proceeds from issuance of ordinary shares
+Change in cash deposited as collateral
+Repayments of long-term debt
+(1)
+Repurchase of subordinated convertible bonds
+11
+Cash outflows due to changes of non-controlling interests
+(179)
+1,363
+Net cash provided by (used in) financing activities
+Net cash used in financing activities from discontinued operations
+(179)
+1,363
+Net cash provided by (used in) financing activities from continuing operations
+1
+(129)
+24
+Dividend payments
+3
+24
+Proceeds from the issuance of put options on own shares
+(15)
+3
+(202)
+Net change in cash and cash equivalents
+Proceeds from issuance of long-term debt
+Net change in short-term debt
+Acquisitions of businesses, net of cash acquired
+(14)
+1,637
+1,496
+11
+(1,238)
+(1,478)
+3
+11
+Purchases of financial investments
+2014
+2015
+Notes
+Consolidated Statement of Cash Flows
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+€ in millions
+Proceeds from sales of financial investments
+Purchases of other equity investments
+Net change in related party financial receivables and payables
+(1,869)
+Purchases of intangible assets and other assets
+(273)
+(2,593)
+(1)
+(272)
+(2,593)
+Net cash used in investing activities from continuing operations
+Net cash used in investing activities from discontinued operations
+Net cash used in investing activities
+4
+(7)
+57
+(567)
+(646)
+15
+Purchases of property, plant and equipment
+(101)
+(139)
+18
+Proceeds from sales of property, plant and equipment and other assets
+Effect of foreign exchange rate changes on cash and cash equivalents
+Cash and cash equivalents at beginning of period
+Cash and cash equivalents at end of period
+Other comprehensive income (loss)
+for the period, net of tax
+632
+(3,502)
+5,414
+2,255
+1,127,739,230
+Net income
+(27)
+Balance as of October 1, 2014
+5,414
+2,255
+1,127,739,230
+Balance as of September 30, 2014
+(22)
+Other changes in equity
+3
+(3,502)
+Put options on own shares
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+(202)
+translation
+adjustment
+currency
+Foreign
+(2,897)
+5,213
+2,259
+1,129,271,481
+605
+Balance as of September 30, 2015
+Other changes in equity
+6
+9
+4
+1,532,251
+Share-based compensation
+Put options on own shares
+Issuance of ordinary shares:
+Exercise of stock options
+(14)
+6
+7
+92
+Note
+€ in millions, except for number of shares
+for the year ended September 30, 2015 and 2014
+Consolidated Statement of Changes in Equity
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+208
+Ordinary shares issued
+207
+673
+527
+1,058
+2
+28
+529
+(413)
+1,058
+Additional
+paid-in capital
+Accumulated
+deficit
+Shares
+46,171,936
+1
+484,260
+(129)
+405
+(130)
+(3,907)
+535
+5,549
+2,162
+1,081,083,034
+24
+Share-based compensation
+Exercise of stock options
+Exercise of conversion rights
+Issuance of ordinary shares:
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+Other comprehensive income (loss)
+for the period, net of tax
+Balance as of October 1, 2013
+Net income
+Securities
+Annual average exchange rate
+1.7025
+September 30, 2014
+Regular purchases and sales of financial assets are recognized on the basis of the settlement date. The settlement
+date is the date on which an asset is delivered to or by Infineon.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the
+acquisition or issuance of financial instruments are only included in the carrying amount if the financial instruments
+are not measured at fair value through profit or loss.
+A financial instrument is a contract that gives rise to a financial asset of one entity and at the same time a financial
+liability and/or equity instrument of another entity. Financial instruments containing both equity and liability
+elements (for example convertible bonds which give the holder the right to convert the bond into shares of the
+company), are required to be evaluated in accordance with IAS 32, "Financial Instruments: Presentation" and,
+where necessary, split into their equity and liability components.
+Financial instruments
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of
+three months or less, and are measured at their nominal amount.
+Cash and cash equivalents
+Present value of nominal amount at date of issue
+Acquisition cost
+Fair value/amortized cost
+Fair value/amortized cost
+Fair value directly through equity
+Financial assets are derecognized when the rights to receive payments from the investments have expired or
+have been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial
+liabilities are derecognized when they are extinguished, that is when the contractual obligation is discharged,
+cancelled or expired.
+Fair value through profit or loss
+Put options on own shares
+Remaining other liabilities
+Other financial liabilities
+Designated hedging instruments
+Measured at fair value through profit or loss
+Other financial liabilities:
+Other liabilities (current and non-current):
+Other provisions
+Projected unit credit method
+Expected settlement amount
+Fair value/amortized cost
+Fair value/amortized cost
+Pensions
+Own shares
+Provisions
+Infineon classifies financial assets into the following categories: "Loans and receivables", "Available-for-sale financial
+assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
+(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
+were not recorded at Infineon.
+Loans and receivables
+September 30, 2015
+Put options issued by the Company on its own shares are reported as "Obligation to acquire own shares" within
+other current liabilities provided settlement must occur by the delivery of a fixed number of shares in return for
+a fixed payment specified in advance. The obligation is recognized at the date of issue of the put option, measured
+at the present value of the amount expected to settle the option. A corresponding amount is recognized as a
+reduction of equity, reported within equity as "Put options on own shares". The option premium received on the
+issue of the put options is recognized as additional paid-in capital. The liabilities are recognized on an accrual
+basis, with the accrued interest recorded as an interest expense. The liability is extinguished when the put options
+are exercised, at which point the corresponding amounts are reclassified within equity from "Put options on own
+shares" to "Own shares". If the put option lapses, the amounts previously recognized as a reduction of equity and
+as a liability are derecognized.
+Put options on own shares
+Other financial liabilities
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. The
+gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity are
+recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
+Derivative financial instruments are measured at their fair value and included in "Other current assets" or
+"Other current liabilities".
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price
+changes (such as gold prices) for expected and highly probable future transactions in order to minimize the
+associated risk (cash flow hedges).
+Designated hedging instruments (cash flow hedges)
+All financial instruments in this category are measured at the value at the trading date. Derivative financial
+instruments with a positive fair value at the end of the reporting period are reported as "Other current assets"
+and those with a negative fair value at the end of the reporting period are reported as “Other current liabilities”.
+Infineon had no derivative financial instruments with a remaining term of more than 12 months in place as of
+September 30, 2015 and 2014.
+Derivative financial instruments are categorized as held for trading and measured at fair value through profit or loss
+unless they are designated as hedging instruments and hedge accounting is applied. All fair value gains and losses
+are recognized through profit or loss. Changes in the fair value of undesignated derivative financial instruments
+that relate to operating activities are recorded as part of cost of goods sold, those of undesignated derivative financial
+instruments relating to financing activities are recorded in financial income or financial expense.
+Infineon classifies financial liabilities into the following categories: "Financial liabilities measured at fair value
+through profit and loss" and "Other financial liabilities”. Furthermore, "Designated hedging instruments (cash flow
+hedges)" belong to financial liabilities.
+At Infineon financial assets or liabilities measured at fair value through profit or loss comprise almost entirely of
+derivatives used to hedge currency risks for which hedge accounting is not applied.
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+216
+215
+When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments previously
+recognized in equity are reclassified to profit or loss.
+For available-for-sale financial assets, a significant or prolonged decline in the fair value of the financial asset
+below its acquisition cost is considered as an indicator that the assets are impaired. If any such evidence exists, the
+cumulative loss that had been recognized directly in equity - measured as the difference between the acquisition
+cost and the current fair value, less any impairment loss previously recognized in profit or loss - is removed from
+equity with affecting income.
+Upon acquisition, available-for-sale financial assets are measured at fair value taking into account transaction
+costs. Subsequently they are measured at their fair value at the end of the relevant reporting period. Transaction
+costs relating to the acquisition of available-for-sale financial assets with a definite term and fixed or determinable
+payments are capitalized and recognized in the Consolidated Statement of Operations using the effective interest
+method. Changes in the fair value of available-for-sale financial assets are recognized directly in equity. If the fair
+value is permanently or significantly lower than the amortized cost, then an impairment loss is recognized through
+profit or loss.
+Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
+or are not allocated to any of the other categories (see above).
+Available-for-sale financial assets
+Loans and receivables are measured on initial recognition at their fair value plus incidental acquisition costs.
+Subsequently, they are measured at amortized cost using the effective interest method. Loans and receivables
+are tested for impairment. They are considered to be impaired when there is objective evidence that Infineon will
+not receive all amounts contractually due at the relevant due date. Objective evidence that indicates that impair-
+ment should be recorded would include, for example, known financial difficulties or the insolvency of a debtor.
+The impairment is recorded as an expense in profit or loss (in a separate allowance account). When a payment
+default becomes certain, such loans and receivables are considered to be uncollectible and derecognized along
+with the previously recognized allowance.
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
+in an active market. At Infineon the balance sheet items "Cash and cash equivalents”, “financial investments",
+"trade receivables" and "current and non-current other assets" all contain financial assets which are classified in
+the category "loans and receivables".
+Financial assets or liabilities measured at fair value through profit or loss
+Debt
+Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs.
+In subsequent periods they are measured at amortized cost using the effective interest method. The liability is
+derecognized when the contractual obligation is discharged, cancelled or expired.
+Equity and liabilities
+Assets
+Balance sheet item
+The following table summarizes the principal measurement bases used in the preparation of the Consolidated
+Financial Statements:
+Recognition and measurement principles
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+214
+1.3539
+1.1432
+1.2732
+1.1170
+1.5429
+1.6189
+1.5960
+4.3830
+4.2186
+4.1518
+4.9410
+139.0405
+136.4560
+138.9300
+2014
+Trade payables
+Cash and cash equivalents
+Financial investments
+134.1300
+Inventories
+Fair value directly through equity
+(Amortized) Cost
+Trade receivables
+Fair value through profit or loss
+Fair value directly through equity
+Fair value/amortized cost
+Impairment-only approach
+(Amortized) Acquisition or production cost
+Impairment-only approach
+Lower of acquisition or production cost and net realizable value
+Lower of carrying amount and fair value less costs to sell
+(Amortized) Acquisition or production cost
+Fair value/amortized cost
+Fair value/amortized cost
+Nominal amount
+2015
+Remaining other assets
+Measurement principle
+Property, plant and equipment
+Goodwill
+Intangible assets (except goodwill):
+with definite useful life
+with indefinite useful life
+Assets classified as held for sale
+Other financial assets:
+Loans and receivables
+Available-for-sale
+Designated hedging instruments
+Measured at fair value through profit or loss
+Other assets (current and non-current):
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
+Statement of Operations (see note 5).
+Share-based compensation
+Infineon has compensation plans in place in which equity instruments such as stock options or so-called perfor-
+mance shares are granted to members of the Management Board, senior managers and selected employees. In
+accordance with IFRS 2 "Share-based Payment", these compensation plans qualify as equity-settled share-based
+compensation and are accounted for accordingly. The fair value on the date of grant of the equity instruments
+granted is determined by an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model) and recognized as expense on a straight-line basis over the vesting period during which Infineon
+receives consideration from the Management Board or employee in the form of work performed, and, with respect
+to the stock options, the achievement of the respective targets (outperformance of the Philadelphia Semiconductor
+Index (SOX) over a predetermined period) is expected. The expense is charged to costs by function as part of the
+operating result and credited directly to equity (additional paid-in capital). The amount recognized as expense is
+adjusted in order to reflect either the actual number of equity instruments that can ultimately be exercised by the
+Management Board and employees, or the number allocated to the Management Board and employees.
+The proceeds received net of any directly attributable transaction costs are recognized in ordinary share capital and
+additional paid-in capital when the stock options are exercised. Performance shares do not result in any cash inflows.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Estimates and assumptions
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations
+of Infineon.
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+> valuation of inventory (see "Inventories" and note 13),
+> recoverability of trade receivables (see note 12),
+> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+long-lived assets" and note 18),
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 9),
+Grants for investments include both tax-free investment grants and taxable grants for investments in property,
+plant and equipment. Grants are recognized when it is reasonably assured that Infineon will comply with the
+conditions attached to the grant, and it is reasonably assured that the grant will be received. Tax-free investment
+grants are deferred and recognized over the remaining useful life of the subsidized asset. Taxable grants are
+deducted from the purchase and production cost of the related asset and thereby reduce depreciation and amorti-
+zation expense in future periods.
+> valuation of pension plans (see "Pensions and similar obligations" and note 29).
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on November 20, 2015.
+3 Acquisitions
+International Rectifier Corporation
+The acquisition of 100 percent of the shares and associated voting rights of International Rectifier Corporation
+("International Rectifier") based in El Segundo, California (USA) announced on August 20, 2014 was closed by
+Infineon on January 13, 2015.
+With this acquisition Infineon improves its competitive position. The Company benefits from the combination with
+a larger product portfolio and a broader regional presence, in particular with small and medium-sized companies in
+the USA and Asia. Through the integration, Infineon increases its power semiconductor and packaging technology
+expertise on the one hand, and on the other hand obtains additional system know-how in the field of power supply
+to electrical devices and motors. Additionally, knowledge of compound semiconductors, in particular Gallium
+Nitride, is pooled through the acquisition. Economies of scale arising in research and development as well as pro-
+duction strengthen the competitiveness of the company.
+The consideration transferred (purchase price) of the acquired company amounts to US$3,026 million. The purchase
+price allocation, based on the fair value of the assets, liabilities and contingent liabilities at the acquisition date,
+results in the recognition of intangible assets such as technologies, customer relationships and brands, and goodwill.
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+> recognition and valuation of provisions (see "Provisions" and notes 20 and 32) and
+Other returns are permitted only for quality-related reasons in the normal course of business within the applicable
+warranty period. Infineon records provisions for warranty costs as a charge to cost of goods sold based on historical
+experience as well as information available about other warranty costs.
+Capitalized development costs are reviewed for impairment annually as long as amortization over the expected
+useful life has not begun and, additionally, when evidence for a potential impairment exists. In particular, a decline
+in expected revenue or higher costs is evidence for a potential impairment.
+Contingent liabilities
+225
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon. Or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 32 and 33).
+Own shares
+Own shares held are measured at acquisition cost, including directly attributable transaction costs, and reported
+as a reduction of equity. In the case of own shares acquired by way of issuing put options on own shares, acquisition
+cost corresponds to the present value of the exercise value of the put options discounted back to issuance date.
+When own shares are cancelled at a subsequent date, Infineon's share capital is reduced by the appropriate pro rata
+amount of the shares to total share capital. Additional paid-in capital is reduced by the remaining difference to the
+acquisition cost.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+223
+Segment reporting
+The Management Board of Infineon Technologies AG, in its role as Infineon's chief operating decision maker,
+allocates resources and assesses the profitability of the operating segments. Segments and regions are identified
+and key performance figures selected in accordance with internal management and reporting systems (management
+approach). Underlying data used for this purpose are derived from the Consolidated Financial Statements drawn
+up in accordance with IFRS.
+Infineon's business is structured in four operating segments, namely Automotive, Industrial Power Control,
+Power Management & Multimarket and Chip Card & Security.
+The remaining activities of operations that have been sold are aggregated into "Other Operating Segments". Results
+and specific Group functions not allocated to the operating segments are recorded in "Corporate and Eliminations”.
+Revenue recognition
+Infineon generates revenues from the sale of semiconductor products and related system solutions. Infineon's
+semiconductor products include a wide variety of chips and components used in electronic applications ranging
+from automotive electronics and industrial applications to chip cards. Infineon's products are also used in a wide
+variety of microelectronic applications, such as computer systems, telecommunications systems and consumer
+goods. Revenue is allocated to the individual segments on the basis of differences in product type and applications.
+In addition, Infineon generates a small portion of its revenue from licensing its intellectual property rights to
+third parties, as well as development arrangements.
+Revenues are measured on the basis of the fair value of the consideration receivable.
+In principle Infineon recognizes revenue on sales to distributors by using the “sell in" method, that is when a
+product is sold to the distributor. In accordance with established business practice in the semiconductor industry,
+under certain circumstances distributors can apply for price protection and ship and debit credit notes. Price
+protection allows a distributor to request a credit note for unsold products held in inventory if Infineon reduced
+the standard list price of these products. In addition, in certain cases the distributor may request a ship and debit
+credit note for retrospective price adjustments. The authorization of these credits remains fully within the control
+of Infineon. Infineon calculates the provision for price protection and ship and debit in the period in which the
+related revenue is recorded. The ship and debit provision is determined based on rolling trends in the difference
+between the contract price and the standard list price to the distributor. The price protection provision is based on
+actual list prices and distributor inventory on hand. The availability of detailed distributor inventory data, the
+transparency of pricing for standard products and the long distributor pricing history enable Infineon to reliably
+estimate provisions for price protection and ship & debit credit notes at the end of the reporting period.
+In addition, distributors can, subject to certain conditions, exchange inventory for the same or other products,
+(stock rotation) or request scrap allowances. Stock rotation credit notes are accrued based on expected stock
+rotation in accordance with the contractual agreement. Distributor scrap allowances are accrued based on the
+contractual agreement and, upon submission of a valid claim, are granted up to a certain maximum based on turn-
+over in a given period. Historically, actual returns under such return provisions have been not material. Infineon
+monitors such product returns on an ongoing basis.
+224
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
+is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
+recognition purposes.
+Research and development costs
+Costs of research activities undertaken in order to gain new scientific or technical knowledge are expensed
+as incurred.
+Costs for development activities, the results of which lead to a plan or design for the production of new or sub-
+stantially improved products or process improvements, are capitalized if the development costs can be measured
+reliably, the product or process is technically and commercially feasible, future economic benefits are probable
+and Infineon intends, and has sufficient resources, to complete development and use or sell the asset. The costs
+capitalized include the cost of materials, direct labor and directly attributable general overhead expense that
+serves to prepare the asset for use. Such capitalized costs are presented as internally generated intangible assets
+within "Goodwill and other intangible assets" (see note 18). Development costs, which do not fulfill the criteria
+for capitalization, are expensed as incurred. Capitalized development costs are stated at cost less accumulated
+amortization and impairment charges. After the completion of the development phase and following the ramp-up
+of production, internally generated intangible assets are generally amortized as part of cost of goods sold over
+a period of three to five years.
+Grants
+Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods are
+transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will
+flow to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or
+receivable taking into account returns, settlement discounts and bonuses.
+Net cash outflow for the acquisition
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+266
+22
+379
+701
+11
+20
+2,043
+98
+20
+27
+88
+183
+16
+348
+1,695
+729
+2,424
+2,425
+(556)
+1,869
+Owing to the size and complexity of the acquisition, the analysis and valuation of the assets and liabilities acquired
+is not fully completed as at the date of publication of these Consolidated Financial Statements. Accordingly,
+the balances reported in these Consolidated Financial Statements as at September 30, 2015 should be considered
+preliminary.
+If the obligation decreases as a result of a change in the estimate, the provision is reversed proportionately and the
+resulting income recognized in the same functional area of the Consolidated Statement of Operations in which the
+original charge was recognized.
+4
+556
+(preliminary)
+1 Including €5 million foreign currency effect.
+The following table presents the preliminary allocation of the purchase price to assets and liabilities at the date
+of the acquisition:
+€ in millions
+Cash and cash equivalents
+Trade receivables
+Inventories
+Other current assets
+Property, plant and equipment
+Intangible assets
+Deferred tax assets
+Other non-current assets
+Total assets
+Trade payables
+Short-term provisions
+Other current liabilities
+Deferred tax liabilities
+Long-term provisions
+Other non-current liabilities
+Total liabilities
+Net assets acquired
+Goodwill
+Purchase price
+Paid in cash and cash equivalents during the 2015 fiscal year¹
+Acquired cash and cash equivalents
+226
+There is no offsetting with positive profit or loss effects. Claims for reimbursements from third parties are not offset
+against provisions, instead they are capitalized separately if their realization is virtually certain.
+1
+Provisions are measured at their expected settlement amount in accordance with IAS 37 "Provisions, Contingent
+Liabilities and Contingent Assets" or, where applicable, also in accordance with IAS 19 "Employee Benefits". The
+amount recognized for a provision is the best estimate of the expenditure required to settle the present obligation.
+Estimates of outcomes and financial effects are dependent upon the judgment of management, supplemented
+by experience gained from similar transactions and, where appropriate, the assessment of independent experts.
+The evidence considered also includes events after the reporting period and up to the date of preparation of the
+Consolidated Financial Statements. If the circumstances to be assessed encompass a large number of possible out-
+comes, the obligation is estimated by weighting all possible outcomes by their associated probabilities (expected
+value method). Where there is a continuous range of possible outcomes and each point in that range is as likely as
+any other, the average is used.
+after-tax WACC¹
+terminal growth rate¹
+€ in millions
+in %
+in %
+in %
+CGU within segment
+2015
+2014
+2015
+pre-tax WACC¹
+2014
+2014
+2015
+2014
+Industrial Power Control
+51
+4
+13.9
+13.1
+10.3
+10.3
+2015
+Book value of
+allocated goodwill
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the valuation
+parameters used.
+The discount rate is based on the after-tax weighted average cost of capital (WACC) for the entity in question.
+The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax WACC used to
+discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax cash flows and the
+after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate is derived using the
+Svensson method taking into account risk premiums, and the beta factor and debt ratio are derived from a group of
+companies comparable to the operating segment. The discount rate derived in this way reflects the current market
+rate of return as well as the specific risks attached to the respective segment.
+Other plant and office equipment
+Years
+10-25
+3-10
+1-10
+Impairment losses are recognized with non-scheduled depreciation. Corresponding reversals are made when the
+reasons for previous impairments no longer exist, provided that the reversal does not cause the carrying amount to
+exceed amortized acquisition or construction cost.
+When assets are sold, decommissioned or scrapped, the difference between the net proceeds and the carrying
+amount of the assets is recognized as a gain or loss in other operating income or expense.
+Infineon does not make use of the option to revalue property, plant and equipment as described in IAS 16 "Property,
+Plant and Equipment".
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+219
+Investment properties
+Infineon does not own any investment properties and therefore does not apply IAS 40 "Investment Properties".
+Leases
+Infineon is a lessee of property, plant and equipment. In the case of operating lease contracts, the lease costs
+are spread on a straight-line basis over the term of the lease arrangement. All leases where Infineon as lessee meets
+certain requirements which indicate beneficial ownership are accounted for as finance leases pursuant to IAS 17
+"Leases". This is the case when substantially all of the risks and rewards of ownership of the asset are transferred to
+Infineon as lessee.
+Recoverability of intangible assets and other long-lived assets
+Goodwill
+Goodwill is an intangible asset that represents the future economic benefits arising from assets acquired in a
+business combination that cannot be individually identified and separately recognized. Goodwill is the excess of
+the consideration paid for an interest in a business over the net fair value of acquired, separately identifiable assets,
+liabilities and contingent liabilities as at the date of acquisition. Goodwill arising from acquisitions of businesses
+is reported in the line item “Goodwill and other intangible assets" in the Consolidated Statement of Financial
+Position. Separately identifiable intangible assets acquired in a business combination are recognized and reported
+separately from goodwill.
+Goodwill acquired in a business combination is allocated to the cash-generating units (CGUS) or groups of CGUS
+that will benefit from the synergies generated by the business combination. A CGU represents the smallest
+identifiable group of assets that generates cash inflows from continuing activities and that is as independent as
+possible from other assets or asset groups. In the year under report Infineon has allocated the goodwill arising
+from the acquisition of International Rectifier to the reporting segments identified as groups of CGUs that will
+benefit from the synergies arising from the business combination in accordance with IAS 36.
+Acquired goodwill is only amortized if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as at June 30 and, additionally, whenever there are events or changes
+in circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the
+higher of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating
+segment including allocated goodwill exceeds the recoverable amount of this entity, the goodwill is impaired
+accordingly. Such impairments cannot be reversed in a subsequent period.
+Infineon determines the recoverable amount of a particular entity to which goodwill has been allocated on the
+basis of its value in use. The value in use is measured by estimating the present value of future cash flows that will
+be generated by the continuing operations of the entity discounted using an appropriate discount rate.
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year strategic business plan approved in the fiscal year just
+ended. The plan is calculated bottom-up based on certain central assumptions applied consistently throughout
+Infineon. Cash flows for periods beyond the planning horizon are estimated using a terminal value. Terminal
+growth rates used do not take into account investments to increase capacity for which no cash outflow has taken
+place, and are derived from publicly available market studies from market research institutes and do not exceed
+the historical long-term average growth rate for the sector in which the relevant segment operates.
+220
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+1
+Where cash flows are expected to arise after the next twelve months and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows. For the purposes of the present value calculation,
+Infineon uses a pre-tax interest rate that reflects current market interest rate expectations and the risks specific to
+the liability. In estimating the future outflow of economic benefits Infineon also includes inflation assumptions if
+applicable. Provisions for onerous contracts are measured at the lower of the expected cost of fulfilment or termi-
+nation of the contract. Additions to provisions are generally recognized in profit or loss.
+According to a preliminary valuation, goodwill arising from the acquisition totals €729 million which is not
+deductible for tax purposes. This goodwill from the acquisition of International Rectifier is primarily attributable
+to synergies and cost benefits arising from economies of scale.
+& Multimarket
+1-12
+4-12
+3-5
+2-8
+Infineon did not hold any other intangible assets with indefinite useful lives in either the 2015 or 2014 fiscal years.
+Refer also to the section "Research and development costs".
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+221
+Other non-current assets
+Infineon reviews non-current assets, including property, plant and equipment, for possible impairment whenever
+events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The
+recoverability of assets held is measured by comparing the carrying amount of the asset with its recoverable amount.
+The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use.
+The value in use is generally calculated based on discounted future cash flows of the CGU to which the asset is
+allocated. Considerable management judgment is necessary to estimate future cash flows.
+If such assets are considered to be impaired, the impairment recognized is measured as the amount by which
+the carrying value of the assets exceeds their recoverable amount. An impairment loss recognized in prior periods
+for an asset other than goodwill is reversed insofar as, since the last impairment, a change in the underlying
+assumptions has occurred which leads to a lower impairment requirement. The maximum possible reversal of
+an impairment loss is that which would lead to the carrying amount that would have been determined (net of
+scheduled depreciation and amortization) if no impairment loss had been recognized for that asset in prior years.
+3-5
+Pensions and similar obligations
+In the case of defined contribution plans, Infineon pays pre-determined amounts based on statutory or contractual
+regulations to an independent fund or to public or private pension insurance companies. Once the contributions
+are paid, Infineon has no further performance obligation. The contributions are recognized as expense in the year
+in which they fall due and are included in costs by function within the operating result. Liabilities are recorded for
+payments due to the various defined contribution plans. Prepaid contributions are recognized as an asset to the
+extent that a cash refund or a reduction of future payments is possible.
+All other plans that do not fall under the definition of a defined contribution plan are accounted for as defined
+benefit plans. These relate to the commitments of the Company to pay vested rights and current benefits to
+eligible present and former employees and their dependants. The obligations also relate to retirement pensions.
+The liability recognized in respect of defined benefit pension plans is the present value of the defined benefit
+obligation (DBO) at the end of the reporting period less the fair value of the plan assets, together with adjustments
+for past service costs. The present value of the DBO and resulting pension cost are determined in accordance with
+IAS 19 "Employee Benefits” annually for each separate plan by independent, qualified actuaries using the projected-
+unit-credit method. For the calculation, actuarial procedures are applied for which it is necessary to make specific
+assumptions. The most important of these are the discount rate, future expected increases in salaries and pensions,
+and mortality rates.
+Discount rates are determined on the basis of market yields at the end of the reporting period on high-grade,
+fixed interest corporate bonds from issuers carrying a very high credit rating that are denominated in the currency
+in which the benefits will be paid and that have remaining maturities approximating the terms of the related
+pension liability.
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result,
+are recognized on a net basis in the functional areas within the operating result. The net interest result arising
+from the multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is
+reported as financial expense. Actuarial gains and losses resulting from experience adjustments for defined benefit
+pension obligations and plan assets and from changes in actuarial assumptions are recognized directly in equity
+and presented in the Consolidated Statement of Comprehensive Income in the period in which they arise. Past
+service costs are recognized immediately in profit or loss.
+222
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Provisions
+Provisions are recognized for present legal and constructive obligations arising from past events that are likely to
+result in a future outflow of resources, the amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example the Qimonda insolvency, Infineon regularly assesses
+the probability of an unfavorable outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which it assesses at the relevant
+reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment, there is
+compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with reason-
+able accuracy at the time of assessment. As soon as additional information is available the affected estimates are
+reviewed and, where necessary, provisions for these proceedings are revised.
+Infineon provides benefits to most of its employees for the period after they have retired, either directly or as a
+result of payments to private and public institutions. The benefits provided differ according to the legal, economic
+and tax circumstances prevailing in the respective country and are mostly dependent on the length of service and
+the salary of the employee concerned. The occupational pension plans include both defined contribution and
+defined benefit plans.
+Years
+Other intangible assets
+Licenses and similar rights
+750
+19
+15.0
+12.4
+11.0
+10.2
+1
+1
+Corporate
+2
+2
+Total
+803
+25
+1 Valuation parameters as of June 30, 2015 and 2014.
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the calculation of the gross margin and segment margin, the WACC and terminal growth
+rate. In this way, Infineon takes account of the inherently uncertain nature of estimates and carries out impairment
+tests on goodwill based on scenarios that are less favorable than those considered most likely. Changes considered
+to be possible to the parameters identified would have had no effect on the value of goodwill.
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none of
+the operating segments gave rise to an impairment of goodwill in the year under report. As at the reporting date,
+there were no triggering events that indicate that the recoverable amount of an entity to which goodwill had been
+allocated could have fallen below the book value.
+Other intangible assets
+Other intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
+relationships (including order backlog), which are measured at acquisition cost, as well as capitalized development
+costs. These intangible assets have definite useful lives and are valued at their amortized acquisition or production
+costs with amortization recorded using the straight-line method over their expected economic life.
+Scheduled amortization of intangible assets is based on the following useful lives, applied consistently throughout
+the Group:
+Capitalized development costs
+Customer relationships
+Technologies
+Power Management
+Costs arising directly from the acquisition of International Rectifier (such as legal fees and bank commission),
+which form part of acquisition-related amortization and other expenses, amount to €10 million in total and are
+recognized entirely in selling, general and administrative expenses.
+Buildings
+Details of unrecognized contingent liabilities relating to International Rectifier's legal disputes (in particular
+environmental risks) can be found in note 32 "Legal risks – litigation and government inquiries – other”.
+Technical equipment and machinery
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+217
+Inventories
+Inventories encompass assets to be consumed in the production process or in the rendering of services (raw materials
+and supplies), that are in the production process at the balance sheet date (work in progress), or held for sale in
+the ordinary course of business (finished and purchased goods).
+Inventories are measured at the lower of acquisition or fully absorbed production cost - calculated using the
+weighted-average method - and net realizable value. Net realizable value corresponds to realizable sale proceeds
+under normal business conditions less estimated costs to complete and sell. Production cost comprises costs of
+material, production wages and an appropriate portion of attributable overheads, including attributable deprecia-
+tion and amortization on property, plant and equipment and intangible assets. Overhead mark-ups are determined
+on the basis of normal capacity utilization levels.
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Current and deferred income taxes
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward. By contrast, no deferred tax is recognized on goodwill
+arising in connection with business combinations. Similarly, deferred taxes are not recognized on the initial
+recognition of an asset or liability in connection with a transaction that is not a business combination and which,
+at the time of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit.
+Deferred tax assets and liabilities are measured using applicable tax rates and laws that have been enacted by the
+end of the reporting period or are about to be enacted, and are to be applied when the related deferred tax asset is
+realized or the deferred tax liability is settled.
+Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed
+deferred tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is
+probable that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit.
+Infineon reviews deferred tax assets for impairment at every reporting date. The assessment requires management
+to make assumptions about future taxable profits as well as other positive and negative influencing factors.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in Other Comprehensive Income.
+The gross carrying amount of the trade receivables acquired amount to €88 million at the acquisition date and
+correspond to their fair value.
+Discontinued operations
+For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
+deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimate.
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land,
+property rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on
+property, plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+If the construction phase of property, plant or equipment extends over more than 12 months, the interest
+incurred on related borrowed capital up to the date of completion is capitalized as part of the cost of acquisition or
+construction in accordance with the requirements of IAS 23 "Borrowing Costs". No interest was capitalized in the
+2015 and 2014 fiscal years.
+The cost of acquisition comprises the acquisition price plus incidental acquisition costs, and subsequent acquisition
+costs, less any reduction received on the acquisition price. The cost of self-constructed equipment comprises direct
+costs as well as appropriate allocations of the necessary material and manufacturing overheads.
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+Property, plant and equipment
+Where an obligation exists to decommission or dismantle an asset or restore a site to its former condition at the
+end of its useful life, the present value of the related future payments is capitalized along with the cost of acquisi-
+tion or construction at the point of purchase or completion, and is depreciated over the estimated useful life of
+the underlying asset. A liability is recognized for the same amount, the carrying amount of which is compounded
+in future periods.
+Assets held for sale can be non-current assets or groups of assets (for example assets of a subsidiary held for sale
+or assets related to discontinued operations), the carrying amounts of which will be realized primarily by way
+of a highly probable divestment transaction within the next twelve months or an already executed divestment
+transaction, and not through continued use. Assets held for sale are reported in the Statement of Financial Position
+as a separate line item within current assets. Liabilities that will be disposed of in a transaction together with
+the assets held for sale are reported separately in the liabilities and equity section of the Statement of Financial
+Position, within current liabilities, as "Liabilities held for sale".
+Discontinued operations are presented separately in the Consolidated Statement of Operations and Consolidated
+Statement of Cash Flows and the line item “Income/loss from discontinued operations, net of income taxes"
+includes the results of operating activities as well as gains and losses on the disposal of discontinued operations.
+Assets and liabilities held for sale
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+218
+Discontinued operations are reported when a component of an entity is either classified as held for sale or has
+already been disposed of. The component of an entity must be either (a) a separate major line of business or
+geographical area of operations, (b) part of a single coordinated plan to dispose a separate major line of business
+or geographical area of operations or (c) a subsidiary acquired exclusively with the intention to resale.
+Non-current assets classified as held for sale are no longer depreciated on a scheduled basis. Instead, they are
+measured at the lower of carrying amount or fair value less costs to sell at the end of the reporting period.
+40
+73
+1,123
+office equipment
+Other plant and
+7,220
+173
+Technical equipment
+258
+326
+6,529
+and machinery
+1,003
+7
+(106)
+14
+construction in progress
+14
+57
+314
+2
+(169)
+379
+646
+8,799
+Total
+(198)
+(4)
+25
+217
+272
+11
+Payments on account and
+1,175
+8
+(57)
+(2)
+nations'
+30
+A summary of changes in property, plant and equipment for the years ended September 30, 2015 and 2014
+is as follows:
+15 Property, plant and equipment
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+236
+235
+221
+Changes in property, plant and equipment 2015
+229
+34
+1
+41
+1
+9
+12
+34
+41
+82
+€ in millions
+October 1,
+2014
+30
+875
+and buildings
+Land, land rights
+combi-
+business
+30, 2015
+Cost
+September
+through
+Transfers
+9,712
+sitions
+Disposals
+Acqui-
+Additions
+Foreign
+currency
+effects
+Reclassi-
+fication
+1 For the year ended September 30, 2015, amounts shown under "Acquisitions through business combination" relate to assets acquired in connection with
+the acquisition of International Rectifier (see note 3).
+€ in millions
+76
+98
+2014
+2015
+Total
+Finished goods and merchandise
+Work in progress
+Raw materials and supplies
+€ in millions
+Inventories at September 30, 2015 and 2014 consist of the following:
+649
+13 Inventories
+With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there
+are no indications that customers, based on their past credit history and current creditworthiness assessments,
+are not able to meet their obligations.
+7
+16
+554
+577
+6
+16
+718
+As in the previous year, impairments are recognized as other operating expense in the Consolidated Statement
+of Operations. Property, plant and equipment amounting to €13 million was pledged as of September 30, 2015
+(prior year: €8 million).
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations mainly
+in cost of goods sold.
+Receivables with a maturity of more than one year are presented as other non-current assets (see note 17).
+Impairments consist with €15 million primarily of leasehold improvements (other plant and office equipment)
+and technical systems (technical equipment and machinery) in connection with the termination of manufacturing
+operations at Techview in Singapore.
+414
+217
+31
+45
+53
+50
+98
+2014
+2015
+Total
+Other
+Related party financial and other receivables
+382
+Derivative financial instruments
+Grants receivables
+Prepaid expenses
+VAT and other receivables from tax authorities
+€ in millions
+Other current assets at September 30, 2015 and 2014, consist of the following:
+14 Other current assets
+Inventories at September 30, 2015 and 2014 are stated net of write-downs of €117 million and €79 million,
+respectively.
+The amount of inventories recognized as expense in the 2015 and 2014 fiscal years largely corresponds to the cost
+of goods sold for each fiscal year.
+707
+1,129
+Third party financial and other receivables
+8,799
+18
+15
+Technical equipment
+875
+3
+9
+(1)
+7
+860
+and buildings
+Land, land rights
+nations
+and machinery
+combi-
+30, 2014
+September
+Foreign
+currency
+effects
+through
+Transfers
+Reclassi-
+fication
+Disposals
+Acqui-
+sitions
+October 1, Additions
+2013
+Cost
+business
+6,169
+344
+13
+567
+8,360
+Total
+272
+(101)
+1
+160
+212
+construction in progress
+Payments on account and
+1,123
+1
+4
+(58)
+1
+56
+1,119
+office equipment
+Other plant and
+6,529
+14
+91
+(102)
+Changes in property, plant and equipment 2014
+(161)
+Changes in the allowance for doubtful accounts for the 2015 and 2014 fiscal years were as follows:
+Third party trade receivables, net of allowances as of September 30, 2015
+Third party trade receivables, net of allowances as of September 30, 2014
+139
+Other
+279
+307
+Unused tax credits and excess foreign tax credits
+939
+846
+Tax loss carry-forwards
+(111)
+151
+(125)
+237
+Provisions and pension obligations
+(8)
+110
+(43)
+131
+(50)
+9
+(255)
+9
+Property, plant and equipment
+Intangible assets
+tax liabilities
+tax assets
+(28)
+Deferred
+143
+Total deferred taxes
+Deferred taxes recognized in equity
+Deferred tax benefit attributable to continuing operations
+Deferred tax arising from business acquisitions
+Deferred taxes, net as of the beginning of the fiscal year
+€ in millions
+The change of the net amount of deferred tax assets and liabilities can be broken down as follows:
+The increase of deferred tax liabilities mainly results from business acquisitions.
+Infineon assessed its deferred tax assets and the need for a valuation allowance. Based on the results of this
+assessment of deferred tax assets, considering all positive and negative factors and information relating to the
+foreseeable future, Infineon recognized deferred tax assets, after netting, of €604 million and €378 million as of
+September 30, 2015 and 2014, respectively.
+In Germany Infineon Technologies AG had corporation tax loss carry-forwards of €2.3 billion and municipal trade tax
+loss carry-forwards of €3.4 billion as of September 30, 2015. In other jurisdictions tax loss carry-forwards amounted
+to €127 million and unused tax credits and excess foreign tax credits of €307 million. Such tax loss carry-forwards,
+and tax credits and excess foreign tax credits are generally limited to use by the particular entity that generated
+the loss or credit, provided that they have not expired under current law. Of the tax loss carry-forwards in other
+jurisdictions, €98 million expire within nineteen years, thereof €5 million in the next five years, as a result of the
+respective legal requirements.
+(5)
+378
+(147)
+604
+175
+(175)
+304
+(304)
+Netting
+Total
+(1,078)
+(761)
+Valuation allowance
+(180)
+1,631
+(451)
+1,669
+(11)
+Foreign currency translation
+September 30, 2014
+Deferred
+tax liabilities
+25
+22
+Tax rate differential
+19
+13
+Change in available tax credits
+(151)
+(151)
+Expected income tax expense
+2014
+2015
+€ in millions
+A reconciliation of income taxes from continuing operations for the fiscal years ended September 30, 2015 and 2014,
+using as a basis the German combined statutory tax rate of 29 percent for the 2015 and 2014 fiscal years is as follows:
+The German combined statutory tax rate for Infineon Technologies AG is 29 percent for the 2015 and 2014 fiscal
+years. This comprised a corporate tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent thereon and
+a municipal trade tax rate of 13 percent.
+(31)
+102
+45
+253
+(76)
+(151)
+2014
+2015
+Income tax
+Deferred tax benefit
+Current tax expense
+Effects from the difference between local and functional currency (Malaysia)
+Deferred
+(23)
+Non-deductible expenses and tax-exempt income, net
+tax assets
+Deferred
+September 30, 2015
+€ in millions
+Deferred tax assets and liabilities as of September 30, 2015 and 2014 comprise the following:
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+232
+Due to better sustained results of operations deferred tax assets increased in the 2015 fiscal year.
+(31)
+102
+(3)
+(6)
+(3)
+Actual income taxes
+Other
+Effects due to changes in tax rate
+112
+309
+Change in valuation allowance on deferred tax assets
+(2)
+(41)
+Prior year taxes
+(30)
+(18)
+(1)
+Deferred taxes, net as of the end of the fiscal year
+2015
+2014
+Fixed-term bank deposits and money market funds
+€ in millions
+Financial investments at September 30, 2015 and 2014 comprise the following (for further information see also
+notes 30 and 31):
+Financial investments comprise fixed-term deposits with banks, money market funds, investment funds and
+securities. While fixed-term deposits with banks with an original term of more than three months and money
+market funds qualify as “loans and receivables” pursuant to IAS 39 "Financial Instruments: Recognition and
+Measurement", investment funds and securities are categorized as available-for-sale financial assets (for valuation
+see note 2).
+11 Financial investments
+> In the 2015 and 2014 fiscal year 1.3 million and 9.1 million, respectively, put options written on own shares were
+not taken into account since their exercise price was lower than the average share price during the reporting
+period. As at September 30, 2015 there were no put options on own shares outstanding (see note 24).
+> In the 2015 and 2014 fiscal years 9.8 million and 12.1 million, respectively, of stock options and performance
+shares issued to members of the Management Board and employees were not taken into account either because
+their exercise price was higher than the average share price during the reporting period, or the performance
+hurdle was not reached.
+The average number of potentially dilutive instruments that did not have a dilutive impact and were not taken into
+account in the calculation of diluted earnings per share included:
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+234
+233
+1 The calculation of earnings per share is based on unrounded figures.
+0.48
+0.56
+Earnings per share - basic and diluted
+0.04
+0.01
+Earnings per share (in euro) from discontinued operations, net of income taxes
+0.44
+0.55
+Earnings per share (in euro) from continuing operations
+Basic and diluted earnings per share¹ (in euro):
+1,123.0
+1,125.3
+Investment funds
+0.7
+Securities
+12 Trade Receivables
+584
+751
+2014
+2015
+1,360
+1,340
+64
+62
+122
+1,296
+1,156
+2014
+2015
+Allowance for doubtful accounts at end of the fiscal year
+Current year's allowance, net of reversals
+Usage of allowance, net
+Allowance for doubtful accounts at beginning of the fiscal year
+€ in millions
+Trade receivables, net
+Allowance for doubtful accounts
+Trade receivables, gross
+Trade receivables, related parties
+Trade receivables, third parties
+€ in millions
+Trade receivables due within one year at September 30, 2015 and 2014 consist of the following:
+Financial investments
+2.7
+11.6
+1,110.7
+6
+4
+10
+(1)
+(31)
+102
+2014
+2015
+Income taxes recognized directly in equity
+Income taxes
+Income taxes from continuing operations
+Income taxes from discontinued operations
+€ in millions
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax expense/benefit consisted of the following:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Infineon did not provide for additional income taxes or foreign withholding taxes on the cumulative retained
+earnings of foreign subsidiaries as of September 30, 2015 and 2014, to the extent that these earnings are intended
+to be indefinitely reinvested in those operations. It is not practicable to estimate the amount of unrecognized
+deferred tax liabilities for these undistributed foreign earnings.
+373
+457
+4
+(1)
+3
+4
+45
+253
+(172)
+321
+373
+105
+2
+(15)
+10 Earnings per share
+1,116.7
+(6.0)
+1,128.6
+(6.0)
+1,122.6
+Weighted-average number of shares outstanding - diluted
+- Effect of stock options and performance shares
+- Effect of potential conversion of convertible bond
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+- Adjustment for own shares
+Weighted-average number of shares outstanding (in millions):
+47
+12
+thereof from discontinued operations
+491
+€ in millions
+620
+538
+632
+Earnings attributable to shareholders of Infineon Technologies AG - diluted
+3
+535
+632
+Earnings attributable to shareholders of Infineon Technologies AG - basic
+Adjustment for interest expense on convertible bond
+2014
+2015
+€ in millions (unless otherwise stated)
+Basic and diluted earnings per share are calculated as follows:
+Basic earnings per share are calculated by dividing earnings by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
+such as interest expense, on the other.
+thereof from continuing operations
+Income tax from continuing operations for the fiscal years ended September 30, 2015 and 2014, is as follows:
+- Ordinary share capital
+Interest expenses for the 2015 fiscal year include among other things €7 million related to the amortization of trans-
+action costs in connection with the bridge financing of €800 million for the acquisition of International Rectifier, which
+was repaid on March 12, 2015 with the proceeds from the issuance of two senior, unsecured bonds (see note 22).
+2
+66
+59
+38
+40
+2014
+2015
+Total
+Selling, general and administrative expenses
+Research and development expenses
+Cost of goods sold
+Included in the Consolidated Statement of Operations in:
+€ in millions
+Infineon has received economic development funding from various governmental institutions, including grants for
+the construction of manufacturing facilities, for research and development activities and employee development.
+Grants and subsidies taken into consideration in profit or loss in the Consolidated Financial Statements during the
+2015 and 2014 fiscal years are as follows:
+5 Grants and subsidies
+229
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+47
+12
+8
+10
+Wireline Communications' share of discontinued operations, net of income taxes
+Wireless mobile phone business' share of discontinued operations, net of income taxes
+Income (loss) from discontinued operations, net of income taxes
+29
+12
+Qimonda's share of discontinued operations, net of income taxes
+1
+2014
+101
+In the 2015 and 2014 fiscal years taxable investment grants were deducted from the acquisition or construction cost
+of property, plant and equipment and intangible fixed assets with no material effect.
+1,273
+1,670
+2014
+2015
+1,820
+2,469
+891
+1,206
+929
+1,263
+2014
+2015
+Total (continuing and discontinued operations)
+Social insurance levies, pensions and similar obligations
+Wages and salaries
+€ in millions
+Personnel expenses comprised the following in the 2015 and 2014 fiscal years:
+Total (continuing and discontinued operations)
+Cost of purchased services
+Cost of raw materials, supplies and purchased goods
+€ in millions
+Expenses for purchased services and materials comprised the following in the 2015 and 2014 fiscal years:
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+amounts of expense for purchased services, materials and personnel.
+6 Cost of materials and purchased services as well as personnel expense
+For the compliance with the requirements attached to the grants and subsidies received and potential repayment
+requirements in case of nonfulfillment, see note 33.
+105
+2015
+€ in millions
+The results of Qimonda, the Wireline Communications business and the Wireless mobile phone business presented
+in the Consolidated Statements of Operations as "loss/income from discontinued operations, net of tax" for the
+2015 and 2014 fiscal years consist of the following:
+4
+753
+588
+(11)
+(7)
+742
+581
+2015
+2014
+7
+8
+-
+(1)
+4
+11
+7
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Third party trade receivables that are outstanding but not impaired at the reporting date comprise the following:
+€ in millions
+Carrying
+amount
+Thereof
+neither
+impaired nor
+past due
+Of which not impaired
+but past due
+Past due
+0-30 days
+Past due
+> 31 days
+9 Income tax
+740
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+227
+Revenue and profit contribution of International Rectifier
+Gain/loss from discontinued operations, net of income taxes
+Following the sale, Infineon continues to carry out activities contracted by IMC, which are reported as continuing
+operations under "Other Operating Segments" for segment reporting purposes.
+On August 30, 2010, Infineon entered into a contract for the sale of the mobile phone business of the Wireless
+Solutions segment ("Wireless mobile phone business") for a consideration of US$1.4 billion with Intel Corporation
+("Intel"). Businesses with analog and digital TV tuners and satellite radio receivers and with radio frequency
+power transistors for amplifiers in cellular base stations are the only areas of the Wireless Solutions segment that
+remained with Infineon. The sale was completed on January 31, 2011. All assets, patents, other intellectual property
+and selected liabilities allocated to the Wireless mobile phone business were separately transferred. The Wireless
+mobile phone business is being continued by the purchaser under the name "Intel Mobile Communications" ("IMC").
+In the 2014 fiscal year adjustments to the pre-tax gain on the sale due to the release of provisions along with
+subsequent income relating to the Wireless mobile phone business amounted to €8 million.
+Sale of the Wireless mobile phone business - discontinued operations
+On November 6, 2009 the Wireline Communications business was sold to various companies which are affiliates
+of Golden Gate Private Equity Inc. (Lantiq). In the 2014 fiscal year €10 million of subsequent income arose as a result
+of the release of a provision in connection with the sale.
+Sale of the Wireline Communications business - discontinued operations
+The remaining risks and provisions relating to Qimonda's insolvency are described in detail in note 32 "Legal risks -
+Proceedings in relation to Qimonda".
+Certain provisions relating to Qimonda's insolvency were required to be adjusted in the 2015 fiscal year as a
+result of new developments, these led to income after tax of €12 million. The partial settlement agreed with the
+administrator on September 11, 2014 and effected on October 9, 2014 had no effect on earnings from discontinued
+operations in the 2015 fiscal year. (For the gain on sale of patents purchased from Qimonda see note 7.)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+228
+› €135 million in "Net cash used in operating activities from discontinued operations” for the termination by
+mutual consent of the proceedings under insolvency law, the settlement of further out-of-court claims, as well as
+all other claims made by the administrator to the extent that these do not relate to the proceedings in connection
+with the alleged activation of a shell company, the liability for impairment of capital, and the residual liability of
+Qimonda Dresden.
+> €21 million in "Net cash used in investing activities from continuing operations" for the acquisition of the
+Qimonda patents, and
+269
+> €104 million in "Net cash used in operating activities from continuing operations" for the settlement of the dispute
+over the continuation of useage rights of the Qimonda patents,
+The Company agreed a partial settlement with the administrator on September 11, 2014 which was effected on
+October 9, 2014 (see note 32 "Legal risks - proceedings in relation to Qimonda"). On this day the Company paid
+€260 million to the administrator as partial settlement.
+On January 23, 2009, Qimonda AG (“Qimonda”), a majority-owned company, filed an application at the Munich
+Local Court to commence insolvency proceedings. On April 1, 2009, the insolvency proceedings were opened.
+Insolvency proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of
+these proceedings have already been completed. The results of these proceedings are reported as discontinued
+operations in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the
+extent that the underlying events occurred before the commencement of insolvency proceedings. To the extent
+that the events occurred after the commencement of insolvency proceedings, their results are reported as part of
+continuing operations.
+Qimonda - discontinued operations
+4 Disposals and discontinued operations
+On April 30, 2015 Infineon acquired the remaining 33.6 percent share in LS Power Semitech Co., Ltd. (LSPS), Korea,
+from LS Industrial Systems Co., Ltd. (LSIS), Korea. The purchase price of the share amounted to €15 million. As a
+result of the acquisition, non-controlling interests reduced by €5 million and additional paid-in capital by €10 million
+(see note 24).
+LS Power Semitech Co., Ltd.
+International Rectifier's business units have been completely integrated into the existing segments Automotive,
+Industrial Power Control and Power Management & Multimarket. By far the largest share has been allocated to the
+Power Management & Multimarket segment.
+682
+(133)
+Loss after tax
+Revenue
+€ in millions
+The amount of revenue and the net result from International Rectifier, which has been significantly affected by
+charges for acquisition-related amortization and other costs (see also note 34 Segment Reporting), and which has
+been taken into account in the Consolidated Statement of Operations for the reporting period since the acquisition
+date is as follows:
+The partial settlement payment of €260 million made to the Qimonda administrator on the settlement date is
+disclosed in the Consolidated Statement of Cash Flows for the 2015 fiscal year as follows:
+217
+If International Rectifier had been consolidated since October 1, 2014, Infineon would have recorded revenues
+of €6,072 million and a profit after tax of €610 million in the Consolidated Statement of Operations during the
+2015 fiscal year.
+1,490
+1
+(24)
+83
+1
+4
+10
+9
+8
+13
+3
+31
+2014
+2015
+26
+28
+6
+6
+4
+1
+1
+2
+1
+3
+2
+9
+21
+58
+102
+In the 2015 fiscal year €8 million of impairments of intangible assets, property, plant and equipment assets and
+assets classified as held for sale was allocated to the Industrial Power Control segment, €3 million (2014: €1 million)
+to the Automotive segment and €1 million to the Power Management & Multimarket segment. €19 million (2014:
+€2 million) was allocated to Corporate and Eliminations.
+19
+1,939
+49
+1
+19
+48
+2014
+2015
+10
+10
+4
+10
+10
+6
+2015
+231
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Other financial expenses
+Total
+€ in millions
+Financial expenses comprised the following in the 2015 and 2014 fiscal years:
+Total
+Valuation changes and gains on sales of financial investments
+Interest income
+€ in millions
+Financial income comprised the following in the 2015 and 2014 fiscal years:
+8 Financial income and expenses
+2014
+9
+Interest expenses
+2015
+533
+2,898
+129
+167
+1,708
+1,890
+14,989
+16,738
+8,766
+9,258
+12,959
+14,168
+1,753
+2014
+Total
+Americas
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+Europe
+The average number of employees by geographic region is as follows for the 2015 and 2014 fiscal years:
+Consolidated Financial Statements
+2014
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+230
+2015
+533
+Therein: USA
+28,610
+Expenses (income) in connection with legal disputes
+Other
+33,971
+Total
+Fine from the chip card antitrust proceedings
+Losses on disposals of assets
+Expenses in connection with rental income
+and assets classified as held for sale (see note 15 and 18)
+Impairments of intangible assets, property, plant and equipment assets
+€ in millions
+Other operating expenses comprised the following in the 2015 and 2014 fiscal years:
+Total
+Other
+Expenses for restructuring and similar measures
+Other income from customers
+Gain from revaluation of the former shareholding in LSPS
+7
+€ in millions
+Other operating income comprised the following in the 2015 and 2014 fiscal years:
+The increase of the number of employees in the 2015 fiscal year was mainly due to the acquisition of
+International Rectifier.
+Rental income
+Gains on disposals of assets
+Income from other equity investments
+Gain from sale of patents purchased from Qimonda
+Other operating income and expense
+56
+(24)
+Provisions related to Qimonda (see note 32)¹
+312
+(16)
+(257)
+Other
+41
+41
+34
+Total provisions
+(14)
+21
+55
+(6)
+(14)
+75
+Usage
+322
+802
+648
+660
+12
+Trade payables with a maturity of more than one year are reported in other non-current liabilities (see note 23).
+20 Provisions
+Short-term and long-term provisions at September 30, 2015 consist of the following:
+€ in millions
+Warranties
+October 1,
+Reversals
+2014
+Septem-
+ber 30, 2015
+Obligations to employees
+232
+283
+(189)
+(4)
+Additions
+338
+Obligation to acquire own shares
+(48)
+Accrued interest
+Fine from the chip card antitrust proceedings (see note 32)
+Related parties - financial and other payables
+Other
+Total
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+243
+2015
+2014
+135
+73
+16
+18
+14
+9
+9
+14
+3
+Derivative financial instruments with negative fair values
+Deferred grants and subsidies
+Deferred income
+Liabilities related to Qimonda (see note 32)
+474
+Thereof short-term
+590
+402
+Thereof long-term
+70
+72
+1 The usage of provisions related to Qimonda contains an amount of €14 million that was reclassified to other current liabilities in the 2015 fiscal year
+(see note 21).
+(476)
+Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
+flextime, service anniversary awards, other personnel costs and social security costs.
+Other provisions comprise provisions for onerous contracts, litigations (other than provisions relating to Qimonda),
+asset retirement obligations, delay on contracts, restructuring and miscellaneous other liabilities.
+Of the total provisions as of September 30, 2015 and 2014, a cash outflow of €402 million and €590 million, respec-
+tively, is expected to occur within one year. With the exception of the service anniversary awards of €22 million
+and €17 million as of September 30, 2015 and 2014, respectively, the cash outflow for the majority of the remaining
+€50 million and €53 million as of September 30, 2015 and 2014, respectively, is expected within two to seven years.
+21 Other current liabilities
+Other current liabilities at September 30, 2015 and 2014 consist of the following:
+€ in millions
+Payroll and similar obligations to employees
+Advanced payments
+VAT and other taxes payables
+Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements
+associated with products sold.
+636
+14
+2014
+(144)
+57
+23
+(3)
+(1)
+(4)
+(256)
+(133)
+13
+(13)
+(3)
+(392)
+1,738
+250
+Amortization and impairment
+October 1,
+2013
+Amorti-
+zation
+(1)
+Disposals
+5
+(131)
+25
+13
+(125)
+(29)
+8
+(12)
+(1)
+(159)
+260
+202
+(52)
+(1)
+(53)
+342
+(32)
+(32)
+262
+(17)
+793
+Impair-
+ment
+September
+30, 2014
+(131)
+23
+23
+13
+(256)
+250
+170
+242
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+19 Trade payables
+Trade payables at September 30, 2015 and 2014 consist of the following:
+€ in millions
+Trade payables, third parties
+Trade payables, related parties
+Trade payables
+2015
+136
+Foreign
+currency
+effects
+202
+סי יייס
+Carrying amounts
+September
+30, 2014
+September
+30, 2013
+25
+21
+(109)
+(25)
+10
+(1)
+(123)
+(8)
+(232)
+(33)
+10
+(1)
+(125)
+13
+118
+11
+13
+1
+943
+27
+4
+1
+514
+22
+1
+1,809
+134
+186
+8
+23 Other non-current liabilities
+Other non-current liabilities as of September 30, 2015 and 2014 consist of the following:
+€ in millions
+Personnel liabilities
+28
+Deferred income and liabilities from the linearization of expenses
+303
+16
+1-2 years
+2-3 years
+3-4 years
+5 years and after
+Total
+As of September 30, 2015
+As of September 30, 2014
+Debt
+Interest
+Debt
+Interest
+33
+29
+35
+3
+16
+28
+2
+Less than 1 year
+Deferred grants and subsidies
+Total
+Section 4(4) of the Articles of Association provides that the Management Board is authorized, with the approval
+of the Supervisory Board, to increase the share capital in the period until its expiry in February 11, 2020 once or in
+partial amounts by a total of up to €676,000,000 through the issue of new no par value registered shares, carrying
+a dividend right as of the beginning of the fiscal year in which they are issued, against contributions in cash or in
+kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval of the Supervisory Board,
+to exclude the subscription rights of the shareholders in certain cases. In accordance with German law, cash capital
+increases with subscription rights excluded pursuant to section 186, paragraph 3, fourth sentence of the AktG, are
+not permitted to exceed 10 percent of a company's share capital - neither at the time of the authorization becoming
+effective nor at the time of its exercise. For share capital increases against contributions in kind or a combination of
+cash contributions and contributions in kind, the authorization further provides an upper limit of 20 percent of the
+share capital, again measured either at the time the authorization becomes effective or, if the number is lower, at the
+time of its exercise.
+246
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Conditional capital
+As of September 30, 2015, the Company's Articles of Associations provide for three conditional capitals amounting
+to up to €309,357,082 (the previous Conditional Capital 2009/I was cancelled by the Annual General Meeting on
+February 12, 2015):
+› Conditional Capital III (registered in the Commercial Register as "Conditional Capital 2001/1") pursuant to
+section 4(5) of the Articles of Association of up to €25,357,082 that may be used to issue up to 12,678,541 new
+registered no par value shares in connection with the Company's stock option plans "Infineon Technologies AG
+2001 International Long Term Incentive Plan” and “Infineon Technologies AG Aktienoptionsplan 2006" ("Stock
+Option Plan 2006") (see note 26). During the 2015 fiscal year, a total of 389,298 new no par value shares with a
+proportionate amount of €2 per share were issued out of the Conditional Capital III as a result of the exercise of
+share options in connection with the Stock Option Plan 2006. Conditional Capital III decreased accordingly by
+€778,596 to €24,578,486. The corresponding change to the Articles of Association was submitted after the end
+of the reporting period and entered into the Commercial Register as requested. As since June 3, 2015 no further
+stock options may be exercised under the Stock Option Plan 2006, the Conditional Capital III is no longer required
+and so the Management Board and the Supervisory Board will propose to the Annual General Meeting that the
+Conditional Capital III should be cancelled.
+› Conditional Capital 2010/1 pursuant to section 4(10) of the Articles of Association of up to €24,000,000 that may
+be used to issue up to 12,000,000 new no par value registered shares in connection with the Company's "Infineon
+Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 26). During the 2015 fiscal year,
+a total of 1,142,953 new non-par shares with a proportionate amount of €2 per share were issued out of the Con-
+ditional Capital 2010/1 as a result of the exercise of share options in connection with the Stock Option Plan 2010.
+Conditional Capital 2010/1 decreased accordingly by €2,285,906 to €21,714,094. The corresponding change to
+the Articles of Association was submitted after the end of the reporting period and entered into the Commercial
+Register as requested.
+› Conditional Capital 2014 pursuant to section 4 (11) of the Articles of Association of up to €260,000,000 that may
+be used to issue up to 130,000,000 new no par value registered shares to satisfy the rights of the holders of
+warrants or convertible bonds, which the Company may issue at any time prior to February 12, 2019.
+Other reserves
+Changes in other reserves during the 2015 and 2014 fiscal years are as follows:
+€ in millions
+2015
+2014
+Pretax
+Tax
+803
+The previous Authorized Share Capitals 2010/1 and 2010/11 were cancelled by the Annual General Meeting on
+February 12, 2015. Only the Authorized Share Capital 2010/I was at the same time replaced by a new Authorized
+Share Capital 2015/1 totaling up to €676,000,000:
+Other
+Authorized share capital
+Additional paid-in capital
+2015
+2014
+28
+19
+16
+28
+14
+13
+28
+12
+86
+72
+24 Equity
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+245
+Ordinary share capital
+The ordinary share capital of Infineon Technologies AG increased during the 2015 fiscal year by €3,064,502.
+1,532,251 new shares were issued, all of which resulted from the exercise of employee stock options (2014: 484,260).
+As of September 30, 2015 the ordinary share capital stood at €2,258,542,962 divided into 1,129,271,481 no par value
+registered shares, each representing €2 of the Company's ordinary share capital. Each share grants the holder one
+vote and an equal portion of the profits in the form of a dividend as resolved by the Annual General Meeting. As of
+September 30, 2015, of the above-mentioned total number of issued shares the Company held 6 million own shares
+(2014: 6 million). Own shares held by the Company as at the date of the Annual General Meeting carry no voting
+rights and are not entitled to dividend.
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €201 million
+in the 2015 fiscal year, of which €202 million related to the dividend paid in February 2015. Additional paid-in capital
+decreased by €10 million as a result of the acquisition of LSPS (see note 3). The exercise of employee stock options
+increased additional paid-in capital by €9 million. Expenses amounting to €6 million for share-based compensation
+were recorded in the 2015 fiscal year, additional paid-in capital increased by the same amount (see note 26).
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €135 million in
+the 2014 fiscal year, of which €129 million related to the dividend paid in February 2014. The Company repurchased
+for €35 million and cancelled subordinated convertible bonds that were to become due in 2014 with a nominal value
+of €11 million during the 2014 fiscal year. €21 million, net of tax, was recorded directly as a reduction of additional
+paid-in capital reflecting the repurchase of conversion rights for 4.7 million shares associated with the convertible
+bond repurchase, measured on the basis of the conversion ratio at the time of repurchase (see note 22). Additional
+paid-in capital was increased by €3 million in the 2014 fiscal year as a result of option premiums received in connec-
+tion with put options on own shares. The exercise of employee stock options increased additional paid-in capital by
+€0.3 million. Expenses amounting to €6 million for share-based compensation were recorded in the 2014 fiscal year,
+additional paid-in capital increased by the same amount (see note 26).
+11
+€ in millions
+1,602
+33
+35
+Loans payable to banks:
+Unsecured loans, weighted average interest rate 1.76% (2014: 1.18%), due 2016-2023
+Bond €300 million, coupon 1.00%, due 2018
+Bond €500 million, coupon 1.50%, due 2022
+Long-term debt
+Total
+968
+151
+298
+494
+1,760
+151
+1,793
+186
+In connection with the acquisition of International Rectifier, Infineon Technologies AG entered into a financing
+agreement with several domestic and international banks in August 2014. The financing consisted of two senior,
+unsecured tranches:
+> a credit facility of US$934 million with a term of five years (term loan) and
+> a credit facility of €800 million with a term of one year and two extension options for Infineon each of six months
+(bridge financing).
+8
+Upon closing of the acquisition (see note 3) both credit facilities were fully drawn. The term loan in the amount of
+US$934 million was still outstanding as at September 30, 2015. The bridge financing was repaid in full, mainly out of
+the proceeds of the bond issue described below.
+35
+Current maturities of long-term debt, weighted average interest rate: 3.48% (2014: 3.04%)
+Loans payable to banks, weighted average interest rate: 4.35%
+Short-term debt and current maturities of long-term debt
+9
+3
+8
+83
+40
+1
+1
+4
+7
+225
+261
+The obligation to acquire own shares in connection with Infineon's capital returns amounts to €40 million as of
+September 30, 2014 and corresponds to the discounted exercise value of outstanding put options on Infineon
+Technologies AG shares as at issue date plus interest up to the end of the reporting period. No remaining put
+options were outstanding as of September 30, 2015 (see note 24).
+22 Debt
+Debt at September 30, 2015 and 2014 consists of the following:
+€ in millions
+2015
+2014
+25
+Aggregate amounts of debt and interest maturing in the coming years are as follows:
+244
+Consolidated Financial Statements
+Available
+110
+33
+77
+103
+35
+68
+968
+968
+1,685
+151
+1,534
+1,078
+1,001
+77
+1,788
+186
+Drawn
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Aggregate
+facility
+Available
+On March 10, 2015 the Company issued two senior, unsecured bonds with a total nominal amount of €800 million
+in an offering to institutional and private investors in Europe:
+> a bond with a nominal value of €300 million due in 2018 and bearing annual interest of 1.0 percent, and
+> a bond with a nominal value of €500 million due in 2022 and bearing annual interest of 1.5 percent.
+The bonds are listed on the Luxemburg Stock Exchange.
+The US$934 million term loan and the bonds totaling €800 million are recorded as other financial liabilities at
+amortized cost less directly attributable transaction costs.
+Other financial liabilities as of September 30, 2015 primarily consist of financing at Infineon Technologies Austria AG.
+In addition, Infineon has established several independent financing arrangements in the form of both short- and
+long-term credit facilities, in order to finance operating business requirements.
+The total lines of credit as of September 30, 2015 are summarized in the following table:
+€ in millions
+Term
+Short-term
+Long-term
+Total
+As of September 30, 2015
+As of September 30, 2014
+Aggregate
+Drawn
+facility
+30, 2014
+(15)
+30, 2015
+1,600
+237
+238
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+16 Investments accounted for using the equity method
+Infineon Technologies Bipolar GmbH & Co. KG
+Effective September 30, 2007, and based on an agreement with Siemens AG ("Siemens") dated September 28, 2007,
+the Company contributed all assets and liabilities of its high power bipolar business (including licenses, patents,
+and frontend and backend production assets) to a newly formed legal entity called Infineon Technologies Bipolar
+GmbH & Co. KG ("Bipolar”) located in Warstein (Germany). Siemens subsequently acquired a 40 percent interest in
+Bipolar. The agreement entered into by the companies grants Siemens certain contractual participating rights which
+inhibit Infineon from exercising control over Bipolar. Accordingly, Infineon accounts for its interest in strategically
+important Bipolar using the equity method. Bipolar's fiscal year ends on September 30.
+Cryptomathic Holding ApS
+The Company acquired its 25 percent share in Cryptomathic Holding ApS ("Cryptomathic") in May 2002. Crypto-
+mathic, through its subsidiary Cryptomathic A/S, develops and sells software and consultancy services in the
+field of digital security. As a result of a share buy-back, Infineon's share increased to 34 percent. On April 20, 2015,
+Infineon completed the sale of its investment (34 percent) in Cryptomathic for €4 million. The sale of the invest-
+ment accounted for using the equity method gave rise to a negligible pre-tax gain (€0 million). The proportional
+share of Cryptomathic's net income is recorded based on interim financial statements with a three month time lag.
+Summarized financial information
+The summarized financial information for associated companies accounted for using the equity method
+(not adjusted for the percentage ownership held by Infineon), for the years ended September 30, 2015 and 2014
+is as follows:
+€ in millions
+Bipolar
+Cryptomathic
+2015
+2014
+2015
+1,700
+2014
+(7,099)
+(2)
+(13)
+(5,421)
+1,108
+1,047
+(1,018)
+(72)
+58
+4
+(1)
+(1,029)
+94
+101
+(6,760)
+(481)
+159
+272
+212
+Net after tax
+(1)
+Current assets
+67
+Therein: total comprehensive income (loss) for the year, net of tax
+Revenue
+4
+3
+1
+85
+83
+10
+Depreciation and amortization
+3
+4
+Net interest result
+Net income (loss)
+Dividends received
+Other
+Carrying amount of Investments accounted for using the equity method
+Share of equity
+52
+(2)
+71
+(1)
+5
+7
+Non-current assets
+11
+10
+Current liabilities
+15
+14
+2
+Non-current liabilities
+12
+10
+Net debt
+11
+5
+Equity
+55
+53
+Therein: other comprehensive income (loss) for the year, net of tax
+51
+(4)
+(381)
+57
+40
+3
+(7,099)
+(627)
+158
+Depreciation and impairment
+October 1,
+2013
+Deprecia- Disposals
+tion
+I
+Carrying amount
+September
+30, 2015
+September
+30, 2014
+(9)
+(83)
+(4)
+(1,029)
+96
+Deprecia-
+Disposals
+tion
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Reclassi-
+fication
+Transfers
+Impair-
+ments
+Foreign
+currency
+effects
+September
+30, 2015
+(649)
+(34)
+2
+1
+(5,421)
+(510)
+(1)
+100
+(693)
+226
+September
+Reclassi-
+fication
+Transfers
+Impair-
+ments
+Foreign
+currency
+effects
+September
+30, 2014
+30, 2014
+30, 2013
+(620)
+(28)
+1
+(1)
+(1)
+(649)
+226
+240
+(5,122)
+September
+310
+Carrying amount
+2,093
+(6)
+(25)
+(5,867)
+1,353
+1,108
+1
+(4)
+(1,059)
+116
+94
+(3)
+314
+272
+(18)
+18
+(33)
+(7,619)
+1,700
+September
+1
+32
+Transfers
+from additions
+Foreign
+currency
+effects
+September
+30, 2014
+October 1,
+2013
+Additions
+internally
+developed
+Additions
+business
+combi-
+nations
+Goodwill acquired
+for consideration
+21
+Capitalized
+development costs
+Disposals
+245
+Purchased
+€ in millions
+(5)
+2
+201
+Other intangible assets
+17
+1
+18
+Total
+506
+100
+1,430
+18
+(13)
+89
+2,130
+1 For the year ended September 30, 2015, amounts shown under "Acquisitions through business combination" relate to assets acquired in connection with
+the acquisition of International Rectifier (see note 3).
+Changes in goodwill and other intangible assets 2014
+Cost
+18
+92
+1
+No intangible assets were transferred to a third party as security or pledged as of September 30, 2015 and 2014.
+The impairment to internally developed intangible assets of €12 million relates to the impairment of capitalized
+development projects owing to low expected contributions to earnings from these projects.
+Amortization and impairment
+October 1,
+2014
+Amorti-
+zation
+Disposals
+Impair-
+Foreign
+September
+ment
+currency
+effects
+30, 2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+241
+Carrying amounts
+September
+Reference is made to note 2, section "Recoverability of intangible assets and other long-lived assets" with respect
+to the procedures and assumptions used for the annual impairment test for goodwill as well as the goodwill
+allocated to the individual CGUS.
+Customer relationships
+506
+(10)
+Technologies
+Licenses and similar rights
+136
+Other intangible assets
+Total
+4
+8
+9
+(10)
+25
+327
+1
+154
+402
+92
+12
+9
+1
+33
+32
+Licenses and similar rights
+76
+75
+26
+23
+21
+10
+18
+5
+6
+5
+1
+16
+7
+7
+155
+141
+"Cash deposited as collateral" as of September 30, 2015 and September 30, 2014 consists of a rental deposit in
+connection with the Campeon head office of €75 million (see note 33).
+2014
+240
+2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+2
+1
+33
+32
+3
+The investment in Bipolar is allocated to the Industrial Power Control segment, and the investment in Cryptomathic
+was allocated to Other Operating Segments.
+17 Other non-current assets
+Other non-current assets at September 30, 2015 and 2014 consist of the following:
+€ in millions
+Cash deposited as collateral
+Prepaid expenses
+Assets related to the funding of employee benefits
+Other equity investments
+Long-term receivables
+Securities
+Other
+Total
+239
+154
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+18 Goodwill and other intangible assets
+729
+49
+803
+Capitalized
+development costs
+327
+100
+(8)
+419
+Customer relationships
+374
+21
+395
+Technologies
+278
+16
+294
+25
+Consolidated Financial Statements
+for consideration
+combi-
+The following table presents the composition of intangible assets for the years ended September 30, 2015 and 2014.
+Amortization of intangible assets is mainly presented in cost of goods sold or selling, general and administrative
+expenses. Impairments of intangible assets are presented as other operating expense.
+Changes in goodwill and other intangible assets 2015
+€ in millions
+Goodwill acquired
+Cost
+October 1, Additions
+Additions
+2014
+internally
+developed
+from
+Purchased
+additions
+Disposals
+Transfers
+business
+Foreign
+currency
+effects
+September
+30, 2015
+nations¹
+Pretax
+Depreciation and impairment
+Net after tax
+(2)
+Realized (gains) losses
+resulting from securities
+(4)
+1
+(3)
+---
+Unrealized (losses)
+(2)
+resulting from securities
+(1)
+1
+59
+3
+62
+55
+Tax
+October 1,
+2014
+Total
+(1)
+55
+(3)
+2
+Foreign currency translation differences
+12
+12
+Deal Contingent Forward
+(39)
+(39)
+39
+100
+Realized losses resulting
+resulting from hedge accounting
+39
+Unrealized gains (losses)
+6
+100
+6
+6
+6
+from hedge accounting
+2.3
+2015
+2014
+Domestic
+plans
+Foreign
+plans
+Domestic
+plans
+Foreign
+2.4
+3.2
+2.4
+2.0
+2.4
+2.0
+Projected future pension increases
+plans
+3.4
+914
+Discount rate at the end of the fiscal year
+2.0
+Plans that are wholly or partly funded
+Total
+763
+70
+833
+720
+68
+Rate of salary increase
+788
+141
+730
+131
+861
+Actuarial assumptions
+The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
+in %
+773
+0.7
+131
+0.7
+117
+786
+a 50 basis points lower discount rate
+847
+152
+999
+800
+136
+936
+a 50 basis points higher expected
+rate of salary increase
+783
+145
+928
+736
+669
+839
+73
+708
+Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high
+credit rating.
+Sensitivity analysis
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
+changes in one actuarial assumption holding all other assumptions constant.
+€ in millions
+2015
+2014
+Domestic
+2.0
+plans
+Total
+Domestic
+plans
+Foreign
+plans
+Total
+Present value of defined benefit pension
+plans with:
+a 50 basis points higher discount rate
+Foreign
+plans
+63
+253
+81
+(12)
+(3)
+(15)
+Plan settlements
+(7)
+(7)
+Foreign currency effects
+5
+5
+2
+2
+Fair value of plan assets at end of year
+437
+51
+488
+(18)
+(4)
+(14)
+Benefits paid
+2
+16
+Actuarial gains (losses)
+(2)
+(3)
+(5)
+22
+430
+2
+Contributions from Infineon
+13
+6
+19
+12
+6
+18
+24
+52
+482
+Net pension liability
+Consolidated Financial Statements
+The funding of the defined benefit obligations is as follows:
+€ in millions
+2015
+2014
+Domestic
+Foreign
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Total
+plans
+Domestic
+plans
+Foreign
+plans
+Total
+Plans that are wholly unfunded
+10
+71
+plans
+10
+254
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
+reported in the Consolidated Statement of Financial Position as at September 30, 2015 and 2014.
+(336)
+(90)
+(426)
+(300)
+(79)
+(379)
+Thereof: Infineon Technologies AG
+Thereof: Infineon Technologies Austria AG
+130
+(313)
+(281)
+(281)
+(40)
+(40)
+(37)
+(37)
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+(313)
+866
+754
+rate of salary increase
+(15)
+(3)
+(18)
+Interest cost
+(17)
+(5)
+(22)
+(20)
+(4)
+(24)
+Expected return on plan assets
+10
+2
+12
+14
+(25)
+(4)
+(21)
+Current service cost
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Amounts recognized in profit or loss and in total comprehensive income
+The expenses and income of defined benefit plans for the years ended September 30, 2015 and 2014 comprise
+the following:
+€ in millions
+2015
+2014
+2
+Domestic
+plans
+Total
+Domestic
+Foreign
+Total
+plans
+plans
+plans
+Foreign
+16
+Amortization of unrecognized
+past service (cost) benefit
+5-10 years
+Total
+2015
+2014
+21
+18
+21
+2-5 years
+18
+70
+197
+175
+321
+281
+Defined contribution plans
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or
+funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
+fixed contributions paid. Additionally the Group makes contributions to government pension schemes. Expenses
+for defined contribution plans amounted to €134 million and €114 million in the fiscal years ended September 30,
+2015 and 2014, respectively.
+82
+256
+1-2 years
+€ in millions
+3
+3
+Curtailment gain recognized
+Pension cost
+5
+5
+(28)
+(4)
+Less than 1 year
+(32)
+(21)
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees,
+otherwise they are recorded as research and development or selling, general and administrative expenses. Interest
+costs and expected return on plan assets were recorded net as part of financial expense.
+Actuarial losses of €30 million and actuarial losses of €130 million have been recognized outside of the Consoli-
+dated Statement of Operations in Other Comprehensive Income for the years ended September 30, 2015 and 2014,
+respectively.
+As of September 30, 2015 and 2014, cumulative actuarial losses amounted to €322 million and €292 million,
+respectively. In addition, cumulative actuarial losses amounting to €5 million, resulting from deferred compen-
+sation and health care plans, are also recognized directly in Other Comprehensive Income.
+In the 2016 fiscal year, payments of €21 million are expected to be made to plan assets of which €20 million relates
+to benefits paid directly to pension recipients by the Group companies, and €1 million is contributions to plan
+assets.
+The weighted average duration of defined benefit plans is around 18 and 17 years as of September 30, 2015
+and 2014, respectively.
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as at
+September 30, 2015 and 2014:
+(21)
+The actual return on plan assets in the fiscal year ended September 30, 2015 was €7 million (2014: €40 million).
+As a matter of policy Infineon's pension plans do not invest in shares of Infineon.
+The position "Other" in the table above comprises mainly commodity funds.
+715
+123
+838
+790
+143
+933
+745
+890
+129
+The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
+tables were applied.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+255
+Investment strategies
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities, and
+reinsurance policies is targeted to maximize the total long-term return on assets for a given level of risk. Investment
+risk is monitored on an ongoing basis through periodic portfolio reviews, coordination with investment managers
+and annual liability measurements. Investment policies and strategies are periodically reviewed to ensure the
+objectives of the plans are met, taking into account any changes in benefit plan design, market conditions or other
+material items. Furthermore, Infineon periodically commissions detailed asset/liability studies to be performed
+by third-party professional investment advisors and actuaries, the results of which are incorporated into the
+investment strategy.
+Plan asset allocation
+874
+As of September 30, 2015 and 2014 the allocation of invested plan assets to the major asset categories is as follows:
+136
+Increase in life expectancy by one year
+765
+137
+902
+724
+122
+846
+a 50 basis points higher expected
+14
+rate of pension increase
+146
+941
+746
+129
+875
+a 50 basis points lower expected
+rate of pension increase
+795
+a 50 basis points lower expected
+€ in millions
+Corporate bonds
+75
+33
+53
+33
+33
+3
+23
+78
+26
+15
+25
+8
+414
+74
+415
+67
+24
+Government bonds
+109
+130
+Equity securities
+Cash and cash equivalents
+Reinsurance policies
+Property
+Other
+Total
+2015
+3
+2014
+in an active
+market
+Not quoted
+in an active
+market
+Quoted
+in an active
+market
+Not quoted
+in an active
+market
+146
+153
+Quoted
+12
+(6)
+10
+As at 1 October, 2015 80,964 (virtual) performance shares were allocated to the Management Board and 1,301,206
+(virtual) performance shares were allocated to employees.
+250
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Stock Option Plan 2006 and Stock Option Plan 2010
+There are no material changes with respect to the stock option plans described in the consolidated financial
+statements as of September 30, 2013.
+The fair value of the stock options of the Stock Option Plans 2006 and 2010 is determined by an external expert
+using a recognized financial-mathematical method (Monte Carlo simulation model).
+The development of the 2006 and 2010 stock option plans during the 2014 and 2015 fiscal years is presented below:
+Options outstanding as of September 30, 2013
+Granted
+Number of
+options
+Weighted-
+average
+exercise price
+(in millions)
+(in €)
+5.20
+5.72
+5.31
+5.44
+Fiscal year 2015:
+September 30, 2018
+8.49
+1,040,198
+100,702
+Management Board
+Fiscal year 2014: Employees
+September 30, 2017
+11.8
+6.62
+Fiscal year 2014:
+September 30, 2017
+6.62
+114,046
+Management Board
+Fair Value per
+performance share
+in €
+1,235,370
+7.11
+Exercised
+Forfeited and expired
+(0.2)
+6.32
+9.5
+7.33
+1.9
+8.62
+27 Supplemental cash flow information
+7.11
+There were no significant non-cash transactions from acquisition or financing activities during the 2015 and
+2014 fiscal years.
+28 Transactions with related companies and persons
+Infineon has transactions in the normal course of business with associated and other related companies (collectively,
+"related companies"). The related companies which are controlled or significantly influenced by Infineon are
+disclosed in note 35. Related persons are persons in key management positions in particular members of the
+Management and Supervisory Board (see note 35) and their close relatives (collectively "related persons").
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Related companies
+Infineon purchases certain raw materials and services from, and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+Related companies receivables and payables consist exclusively of trade and other receivables and payables from
+and to associated and other related companies.
+Related companies receivables and payables as of September 30, 2015 and 2014 consist of the following:
+Cash and cash equivalents reported as of September 30, 2015 and 2014 totaling €673 million and €1,058 million,
+respectively, include €85 million and €53 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represents cash and cash equivalents of
+consolidated companies located in countries where the transfer of cash is legally restricted, for example the
+People's Republic of China.
+8.49
+(1.5)
+Options outstanding as of September 30, 2015
+Options outstanding as of September 30, 2014
+Exercisable at September 30, 2014
+(0.5)
+2.72
+(0.1)
+7.94
+11.2
+Exercisable at September 30, 2015
+7.29
+2.72
+Options outstanding as of September 30, 2014
+11.2
+7.29
+Granted
+Exercised
+Forfeited and expired
+0.4
+€ in millions
+September 30, 2018
+Number of
+performance shares
+at September 30, 2015
+The following table contains an overview of put options issued, lapsed and exercised during the 2015 and 2014
+fiscal year:
+In each case stated in millions
+Outstanding put options as of October 1, 2013
+Put options issued in the 2014 fiscal year
+Less: put options lapsed in the 2014 fiscal year
+Less: put options exercised in the 2014 fiscal year
+Outstanding put options as of September 30, 2014
+Put options issued during the 2015 fiscal year
+Less: put options lapsed in the 2015 fiscal year
+Less: put options exercised in the 2015 fiscal year
+Outstanding put options as of September 30, 2015
+Exercise
+value
+Underlying
+number of
+shares
+in €
+(in units)
+85
+14
+In November 2013 the Company resolved upon a new capital returns program of up to €300 million. In the course
+of this program the Company issued put options on own shares with a total volume of €85 million, all of which had
+lapsed by the end of the program on September 30, 2015.
+On May 9, 2011 Infineon Technologies AG resolved to make use of the authorization to repurchase shares given by
+shareholders at the Annual General Meeting on February 17, 2011 and to set up a corresponding capital returns
+program. During the 2013 fiscal year up to the end of the program on March 31, 2013, put options for 6 million shares
+were exercised which were still on hand as of September 30, 2015, and for which the Company paid €38 million to
+the holders of the options.
+Put options on own shares and own shares
+(2,897)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Accumulated deficit
+The following table shows a reconciliation of accumulated deficit as of September 30, 2015 and 2014:
+€ in millions
+As of October 1, 2013
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial loss on post employment benefit obligations net of tax of €3 million
+(45)
+As of September 30, 2014
+Actuarial gains on post employment benefit obligations net of tax of €1 million
+As of September 30, 2015
+(3,907)
+535
+(130)
+(3,502)
+632
+(27)
+Net income attributable to shareholders of Infineon Technologies AG
+(8)
+40
+6
+Infineon has entered into a number of standard covenants as a result of the financing of the acquisition of International
+Rectifier. The covenants contain, among other things, change of control clauses as well as the compliance with a
+debt cover ratio. This covenant ratio, which provides for a certain relationship between the size of debt (adjusted)
+and earnings (adjusted), was complied with in the 2015 fiscal year, indeed Infineon reached considerably stronger
+ratio than the minimum requirement. The entire outstanding loan which amounted to US$934 million as at Sep-
+tember 30, 2015 (see note 22) can become immediately repayable if the covenant agreement is not complied with
+by Infineon.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+249
+26 Share-based compensation
+In order to provide share-based compensation the Company has in place the Stock Option Plan 2006, the Stock
+Option Plan 2010 and, from the 2014 fiscal year, the Performance Share Plan.
+Share-based compensation expenses
+Share-based compensation expenses for the 2015 and 2014 fiscal years amounted to €6 million, respectively.
+The gross debt to EBITDA ratio was 1.4 as of September 30, 2015 (0.2 in 2014). Infineon continues to have sufficient
+financial flexibility to ensure that in addition to financing its planned investments it is also able to pay regular
+dividends (see note 24).
+Performance share plan
+Under this plan, (virtual) performance shares are initially provisionally allocated on October 1 for the fiscal year
+starting on that date according to a pre-determined LTI allocation amount in euro. With the allotment of a virtual
+performance share, the participant in the plan acquires the right to receive (real) Infineon shares once a personal
+investment in Infineon shares has reached a four-year holding period. The level of personal investment is dependent
+on position and LTI allocation.
+50 percent of the performance shares are performance-related, 50 percent are not dependent on performance.
+The performance-related shares are only finally allocated if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) during the period between the date of the provisional allocation and the end of the holding
+period. If at the end of the holding period the requirements for an allocation of performance shares - either all or
+only those that are not performance related - are fulfilled, then the entitlement to the transfer of the corresponding
+number of (real) Infineon shares is acquired. The value of the performance shares ultimately assigned to members
+of the Management Board may not exceed 250 percent of the respective LTI allocation; above this level performance
+shares are forfeited.
+The fair value of the performance shares at the date of allocation is determined by an external expert using a recog-
+nized financial-mathematical method (Monte Carlo simulation model). Variations in the underlying assumptions
+have no material effect on the fair value.
+The following is an overview of the allocations made:
+Tranche
+End of the
+waiting period
+Average share price
+of the nine months
+before grant in €
+A new Long Term Incentive Plan (LTI) consisting of a "performance share" plan was developed for the Management
+Board and selected senior executives as a successor to the Stock Option Plan 2010.
+Fiscal year 2015: Employees
+The gross cash position decreased from €2,418 million as of September 30, 2014, to €2,013 million as of September 30,
+2015 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on revenue of
+€5,795 million, the ratio of gross cash to revenue was 34.7 percent as of September 30, 2015 (56.0 percent in 2014)
+and thus within the targeted range.
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+Capital management as well as the corresponding objectives and definitions are based on ratios which in turn
+are based on the consolidated IFRS financial statements. Infineon defines its net cash position, or net debt position,
+as gross cash less short-term and long-term debt (gross debt). Gross cash is defined as the total of cash, cash
+equivalents and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before
+interest and taxes and EBITDA as EBIT plus depreciation/amortization.
+(40)
+409
+Dividends
+Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available for distribution to
+shareholders is based on the level of unappropriated profit (Bilanzgewinn) of the parent company, as determined
+in accordance with the HGB. All dividend payments must be approved by the Annual General Meeting.
+For the 2014 fiscal year, a cash dividend of €0.18 per share (total amount: €202 million) was paid in accordance
+with the resolution passed at the Annual General Meeting on February 12, 2015. For the 2013 fiscal year, a cash
+dividend of €0.12 per share (total amount: €129 million) was paid in accordance with the resolution passed at the
+Annual General Meeting on February 13, 2014.
+(6)
+247
+As of September 30, 2014, Infineon had a net cash position of €2,232 million. As a result of the acquisition of
+International Rectifier and the payment made by Infineon of a total of €343 million relating to the Qimonda
+partial settlement and the fine imposed by the European Commission (described in detail in note 32), there was a
+temporary net debt position in the second quarter of the 2015 fiscal year. As at September 30, 2015 Infineon had
+returned to a net cash position of €220 million.
+248
+Consolidated Financial Statements
+A dividend of €0.20 for each share entitled to a dividend shall be proposed to be paid from the €226 million of
+distributable profits of Infineon Technologies AG for the 2015 fiscal year. Taking into account the fact that own
+shares held by the Company at the time of the Annual General Meeting are not entitled to receive a dividend, this
+would result in an expected distribution of approximately €225 million. Since payment of the dividend depends
+on approval being given by the Annual General Meeting which is set to take place on February 18, 2016, a liability
+has not been recognized in the Consolidated Financial Statements.
+25 Capital management
+Infineon's principal capital management objective is to ensure financial flexibility on the basis of a solid capital
+structure. As with comparable companies in the semiconductor industry, it is of prime importance that sufficient
+cash funds are available to finance operating activities and planned investments throughout all phases of the
+business cycle. On the other hand, debt should only constitute a modest proportion of the financing mix. Based on
+these principles Infineon has defined the following three key objectives for capital management which are still
+being pursued following the acquisition of International Rectifier:
+> gross cash position of between 30 and 40 percent of revenue,
+> positive net cash position and
+> gross debt of not more than 2x EBITDA (earnings from continuing operations before tax, depreciation and
+amortization).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+2
+Trade and other receivables
+Trade and other payables
+(3)
+(30)
+(3)
+(3)
+Adjustments to
+demographic assumptions
+(1)
+(1)
+(2)
+(2)
+Adjustments to financial assumptions
+8
+(2)
+6
+(134)
+(27)
+Experience adjustments
+Actuarial gains (losses) for:
+(24)
+Current service cost
+(21)
+(4)
+(25)
+(15)
+(3)
+(18)
+(15)
+Past service income
+3
+Interest cost
+(17)
+(5)
+(22)
+(20)
+(4)
+3
+(149)
+Acquisitions
+(3)
+Present value of defined benefit obligation
+at end of year
+(773)
+(141)
+(914)
+(730)
+(131)
+(861)
+(3)
+Change in fair value of plan assets:
+430
+52
+482
+394
+43
+437
+Expected return on plan assets
+Fair value of plan assets at beginning of year
+(681)
+(3)
+Foreign currency effects
+(3)
+(1)
+(1)
+Curtailments
+5
+5
+Plan settlements
+(6)
+7
+Benefits paid by Infineon
+14
+4
+18
+12
+3
+15
+7
+Financial receivables
+(108)
+(861)
+€ in millions
+Sales and service charges
+Products and services received
+2015
+2014
+Associates
+Other related
+companies
+Associates
+Other related
+companies
+5
+1
+15
+80
+20
+81
+Sales and service charges to and products and services received from related companies in the 2015 and 2014
+fiscal years consist of the following:
+Financial payables
+1
+1
+September 30, 2015
+September 30, 2014
+Associates
+Other related
+companies
+Associates
+Other related
+companies
+29
+1
+3
+1
+1
+8
+1
+10
+2
+1
+As of September 30, 2015, related parties sales and services relationships with related companies resulted in
+purchase commitments of €1 million.
+Related persons
+The active members of the Management Board in the 2015 fiscal year received total fixed non-performance-related
+compensation for their services of €2.7 million (2014: €2.4 million). In addition, the members of the Management
+Board received variable performance-related compensation for their services in the 2015 fiscal year totaling
+€3.9 million (2014: €2.5 million). This comprised a Short Term Incentive of €2.0 million (2014: €1.3 million), and a
+Mid Term Incentive of €1.9 million (2014: €1.2 million). Furthermore, the Management Board received a Long Term
+Incentive (LTI) which, in 2015, took the form of performance shares. Previously the LTI was granted in the form of
+stock options based on the Stock Option Plan 2010. The expense resulting from the LTI amounted to €0.5 million
+(2014: €0.6 million). The total compensation granted to active members of the Management Board amounted to
+€7.1 million in the 2015 fiscal year (2014: €5.5 million).
+2015
+2014
+Domestic
+Foreign
+Total
+Domestic
+plans
+€ in millions
+plans
+Foreign
+plans
+Total
+Change in defined benefit obligations
+taking into account future salary increases:
+Present value at beginning of year
+(730)
+(131)
+plans
+(573)
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets
+to September 30, 2015 and 2014 is presented in the following table:
+The Group defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+The total compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2015 fiscal
+year, including attendance fees, amounted to €1.5 million (2014: €1.2 million). Employee representatives in the
+Supervisory Board who are employed by Infineon also receive a salary for their activities as employees.
+251
+252
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Former members of the Management Board received total payments of €1.1 million (especially pension payments)
+in the 2015 fiscal year (2014: €1.1 million).
+As of September 30, 2015, pension liabilities for former members of the Management Board amounted to
+€60.2 million (2014: €59.5 million).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Neither Infineon Technologies AG nor any of its subsidiaries have granted loans to any member of the Supervisory
+or Management Boards.
+In the 2015 and 2014 fiscal years there were no transactions between Infineon and related persons which fall
+outside of the scope of the existing employment, service or appointment terms, or of the contractual arrangements
+for their remuneration.
+29 Pension plans
+Defined benefit pension plans
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For the Infineon Group, the
+significant benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to
+Infineon Technologies Austria AG.
+In Germany Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. With the Infineon pension plan new entrants receive
+a defined contribution benefit which is funded by Infineon. Payments by the Infineon pension plan are generally
+made in twelve installments. For active employees who were, before the Infineon Pension Plan came into force,
+entitled to benefits in the form of an annuity, this commitment is the overriding one and thereby the possibility
+of an annuity is guaranteed. Together with former employees, whose pension benefit obligations are no longer
+transferred into the Infineon Pension Plan, this group makes up the largest part of the obligation at this time. The
+statutory framework is provided by the Company Pension Act (in German: Betriebsrentengesetz or BetrAVG) and
+by employment law in general. An appropriate provision is recorded for the German defined benefit pension plans,
+which are partly backed by plan assets. Individual agreements are in place for the members of the Management
+Board which are backed by pension reinsurance policies (detailed in the "Compensation Report" chapter).
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of
+service, others are dependent on average income over the service period. Furthermore, in certain countries Infineon
+makes severance payments irrespective of the reason for the termination of employment, these payments are
+usually defined by law in the relevant country. The liabilities arising from foreign defined benefit pension plans are
+partly covered by plan assets.
+The valuation date of the German and foreign pension plans is September 30, respectively.
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board as
+required by section 315a (1) in connection with section 314 (1) no. 6a, sentences 5 to 8 of the German Commercial
+Code, is provided in the Compensation Report which is part of the Combined Management Report.
+2
+Non-current liabilities:
+30 Additional disclosures on financial instruments
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments. Entities acquired as a result of the acquisi-
+tion of International Rectifier which still follow their own hedging strategy were excepted from this policy in the
+2015 fiscal year.
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+262
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2015 and 2014 fiscal years.
+Foreign exchange risk within the meaning of IFRS is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated in
+a foreign currency that is one that does not correspond to the functional currency, and the foreign currency
+represents the relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not
+risks within the meaning of IFRS 7.
+Foreign exchange risk
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial instruments,
+including those related to foreign exchange rates, interest rates and other price risks.
+Market risk
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate
+risk and price risk), credit risk and liquidity risk. Infineon's financial risk management program seeks to minimize
+potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments to hedge
+certain risks to which it is exposed. Financial risk management is carried out by the central Finance & Treasury (FT)
+department in accordance with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units. The FT department's policy
+contains principles for overall risk management as well as policies covering specific areas such as foreign exchange
+risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment
+of excess liquidity.
+31 Financial risk management
+As in the previous year, no hedge ineffectiveness was recorded in the Consolidated Statement of Operations for the
+aforementioned hedging relationships. As in the previous year, no gains or losses were transferred from other
+reserves to profit or loss as a result of cash flow hedges for future raw material purchases being cancelled following
+the decision that the occurrence of the hedged transaction had become unlikely.
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps
+which are designated as cash flow hedges. The fair value of these swaps amounted to negative €2 million as of
+September 30, 2015 and negative €2 million as of September 30, 2014. €3 million of unrealized losses arose from
+these transactions in the 2015 fiscal year (2014: €3 million unrealized losses), these reduced other reserves by
+a corresponding amount. At the same time, €3 million of gains were realized in the 2015 fiscal year on swap trans-
+actions concluded in the previous year (2014: €4 million of gains); this amount was transferred from other reserves
+into the Consolidated Statement of Operations.
+261
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+The Euro/US Dollar foreign currency forward contract contingent on closing of the acquisition of International
+Rectifier (Deal Contingent Forward) entered into in August 2014 gave partial protection against exchange rate
+risks arising from the purchase price obligation (see note 3) and became due upon completion of the acquisition.
+Amounts previously recorded in other reserves for this hedge were fully taken into account when calculating the
+purchase price in euros. No ineffectiveness was recorded in the Consolidated Statement of Operations for this
+hedge relationship. Additionally, for the aforementioned hedging purpose, holdings in US Dollars (US$196 million)
+generated from operating business activities in the 2015 fiscal year were also designated as cash flow hedges. Here
+too, amounts previously recorded in other reserves were fully taken into account when calculating the purchase
+price in euros. This hedging relationship also had no effect on the Consolidated Statement of Operations.
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. In 2015 as in 2014 no foreign exchange derivatives used to hedge ongoing business were
+designated as cash flow hedges.
+38
+(8)
+(2)
+42
+(2)
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 30.
+The following table shows the effects on profit or loss and equity for continuing operations of a 10 percent shift in
+the currency exchange rates for the major foreign currencies (which can be found in note 2) as of September 30, 2015
+and 2014. The assumed exchange rate changes relate only to financial instruments within the meaning of IFRS 7.
+€ in millions
+September 30, 2015
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures Infineon concluded additional financial derivative
+contracts for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk
+arising from the fluctuation of commodity prices. The change in relevant market prices as of September 30, 2015
+and September 30, 2014 had no significant impact on equity of the 2015 and 2014 fiscal years.
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have no significant impact on the result of the 2015 and 2014 fiscal years.
+According to IFRS 7 “Financial Instruments: Disclosures”, other price risk is defined as the risk that the fair value or
+future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
+arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
+to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in
+the market.
+Other price risk
+263
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Changes in market interest rates affect interest income and interest expense on variable rate financial instruments.
+Assuming an increase (decrease) of 100 basis points in market interest rates in 2015, interest income in the 2015
+fiscal year would have been worse (better) by €9 million; assuming an increase (decrease) of 100 basis points in
+market interest rates in 2014, interest income in the 2014 fiscal year would have been worse (better) by €0 million.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or loss
+and equity. Infineon prepares this using the iteration method. Infineon does not hold any fixed-rate financial assets
+or liabilities that are measured at fair value through profit or loss. Furthermore, Infineon did not hold any fixed-rate
+available-for-sale financial assets either in 2015 or 2014.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond
+issuances and debt financing. Due to the cyclical nature of its core business and the need to maintain high
+operational flexibility, Infineon holds a relatively high level of liquid financial assets that are invested in short-term
+fixed-interest instruments. These investments generally have a contract duration of between one and twelve
+months in order to achieve short-term interest rate returns. The risk to these assets of changing interest rates is
+partially offset by financial liabilities, some of which are based on variable interest rates.
+In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the
+fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
+41
+Interest rate risk
+3
+(2)
+(13)
+11
+(10%)
++10%
+(10%)
++10%
+Equity
+Profit or Loss
+September 30, 2014
+(11)
+Credit risk
+39
+1
+(40)
+(77)
+(21)
+36
+64
+3
+5
+2014
+2015
+Designated hedging instruments (cash flow hedges)
+Total
+Other financial liabilities
+Held for trading
+Loan and receivables
+Available-for-sale financial assets
+€ in millions
+The net gain or loss on financial instruments within continuing operations in the Group Statement of Operations
+amounted to the following:
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+260
+In the 2015 and 2014 fiscal years there were no reclassifications between the levels.
+In addition, other non-current assets include an option to sell shares in an equity holding for a fixed price. The option
+is recognized as a derivative financial instrument and is not designated as a hedging instrument. The fair value is
+determined using the Black-Scholes option pricing model (Level 3).
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
+market price is available, the fair value is determined by considering existing contractual arrangements based on
+externally observable dividend policy (Level 3).
+Other current liabilities contain derivative financial instruments, including cash flow hedges. Their fair value is
+determined by discounting future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
+prices) drawn from reliable external sources are used (Level 2).
+(6)
+(7)
+(35)
+(8)
+116
+(4)
+145
+25
+(2)
+171
+Fair value
+Par value
+Fair value
+Par value
+2014
+1,146
+2015
+Commodity swaps
+Deal Contingent Forward
+Forward exchange contracts purchased
+Forward exchange contracts sold
+€ in millions
+The nominal values and fair values of Infineon's derivative instruments as of September 30, 2015 and 2014 are
+as follows:
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts and commodity swaps. The objective is to reduce the impact of exchange rate and commodity
+price fluctuations on future net cash flows.
+Derivative financial instruments and hedging activities
+Infineon does not net financial instruments. The Infineon Group conducts derivative transactions according to the
+global netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and
+other comparable national framework agreements. These agreements contain no legally enforceable requirement
+for netting.
+Interest income from financial instruments not measured at fair value through profit and loss amounted to €6 million
+in the 2015 fiscal year (2014: €10 million); interest expense from such financial instruments amounted to €39 million
+(2014: €11 million).
+The currency effects included within net gains and losses amount to negative €2 million (2014: negative €4 million).
+This net currency effect arose exclusively from financial instruments according to IFRS 7.
+Total
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, the financial investments
+and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
+lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
+base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
+credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
+Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
+are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
+However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (Standard & Poor's, Moody's or
+Fitch) and credit default swap premiums. Any possible breaches of stipulated investment thresholds result in an
+immediate notification and a call to reduce the risk.
+Smartcard antitrust litigation
+Litigation and government inquiries
+32 Legal risks
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+17
+107
+6
+16
+21
+868
+1,035
+Total
+(7)
+(50)
+(57)
+Cash inflow¹
+7
+53
+60
+Cash outflow
+financial liabilities:
+Derivative
+17
+In October 2008, the EU Commission initiated an investigation into the Company and other manufacturers of chips
+for smartcards for alleged violations of antitrust laws. On September 3, 2014, the EU Commission imposed a fine of
+€83 million on Infineon which was paid in October 2014. Infineon rejects the allegations as unfounded. Moreover
+Infineon believes its procedural rights to have been violated by the EU Commission and brought an action against the
+decision to fine before the European Court of Justice in Luxembourg in mid-November 2014.
+Two class actions for damages in connection with the EU Commission investigative proceedings have been filed
+in Canada: The first action was filed in the state of British Columbia in July 2013, and the second in the state of
+Quebec in September 2014. The actions followed the press reports on the investigation and subsequent decision
+of the EU Commission. No dates have been set for court proceedings.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+In December 2014, an indirect customer filed a lawsuit against Infineon and Renesas in London (Great Britain)
+which was served upon the Company on April 20, 2015. In this lawsuit the plaintiff claims for damages in an amount
+still to be determined in connection with the allegations of the EU Commission.
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. As a result, Infineon recorded provisions and liabilities in connection
+with some of the above-mentioned matters totaling €55 million as of September 30, 2015 (2014: €315 million). Of
+the provisions and liabilities recorded as of September 30, 2015, €32 million has been provided in connection with
+the residual liability as former shareholder of Qimonda Dresden. For the defense of the proceedings still pending
+for the alleged activation of a shell company and liability for impairment of capital, the Company has recorded a
+provision of €18 million as of September 30, 2015. Remaining provisions in connection with the Qimonda insolvency
+total €5 million as of September 30, 2015. In October 2015 the Company paid €14 million to the insolvency adminis-
+trator for selected settlement agreements for residual liability claims for former employees of Qimonda Dresden.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Infineon recognizes provisions and liabilities for such obligations and risks which it assesses at the end of each
+reporting period are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
+having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory busi-
+ness; as a result certain long-standing creditors have residual liability claims against Infineon. These claims, which
+include the potential repayment of public subsidies, trade tax demands, receivables of service providers and
+suppliers and employee-related claims such as salaries and social security contributions, can only be exercised by
+the administrator acting in the name of the creditors concerned. In the meantime, settlements have been concluded
+with many of the residual liability creditors, in particular with respect to the employee-related claims.
+Due to the highly complex nature of the issues to be decided and the level of the claims asserted, it is not clear
+at this stage if this legal dispute can be ended with an out-of-court settlement, and absent a settlement when
+a first-instance court decision would be reached.
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who are
+supporting the respective parties with assessments and opinions.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On August 29, 2013
+the court appointed an independent expert in order to clarify the valuation issues raised by the administrator.
+Furthermore, an additional expert has yet to be appointed to deal with technical questions.
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documen-
+tation for the capital increase by independent auditing companies, one of which had been engaged by Infineon
+and the other of which was acting in the capacity of a court-appointed auditor of non-cash contributions and post-
+formation acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business
+area contributed had a value of several times the lowest issue price of the shares issued, while the court-appointed
+auditor of non-cash contributions and post-formation acquisitions confirmed to the court that the lowest issue
+price of the shares issued was covered - as legally required - by the value of the non-cash contributions. Addition-
+ally, in the course of its defense against the claims asserted by the administrator, Infineon has commissioned several
+expert opinions all of which arrive at the same conclusion, that the objections raised by the administrator against
+the valuation of the non-cash contribution are not valid.
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+107
+266
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on February 14, 2012
+the administrator also lodged a request for payment based on an alternative claim (in German: "Hilfsantrag"), as
+well as making other additional claims. In conjunction with this alternative claim, the administrator has requested
+the payment of at least €1.71 billion plus interest in connection with the alleged activation of a shell company. On
+June 15, 2012 the insolvency administrator increased his request for payment of February 14, 2012 on the grounds
+of activation of a shell company to at least approximately €3.35 billion plus interest. Furthermore, the insolvency
+administrator continues to base a substantial part of his alleged payment claims, as already asserted out of court
+against Infineon in August 2011 for an unspecified amount, on so-called liability for impairment of capital (in German
+"Differenzhaftung”). This claim is based on the allegation that, from the very beginning, the carved-out memory
+products business had a negative billion euro value. The administrator therefore asserts that Infineon is obliged to
+make good the difference between this negative value and the lowest issue price (in German: “geringster Ausgabe-
+betrag") of the subscribed stock. Additionally, the insolvency administrator has asserted a claim for repayment of
+allegedly unjustly charged consultancy fees in an amount of €10 million in connection with the flotation of Qimonda.
+The administrator filed a request for declaratory judgment in an unspecified amount against Infineon Technologies
+AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies Investment B.V.,
+at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to make good the
+deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of Qimonda began,
+i.e., to refund to Qimonda the difference between the latter's actual business assets when the insolvency proceedings
+began and its share capital (in German: “Unterbilanzhaftung"). The administrator contended that the commence-
+ment of operating activities by Qimonda amounted to what is considered in case law to be the activation of a shell
+company (in German: "Wirtschaftliche Neugründung"), and that this activation of a shell company was not disclosed
+in the correct manner. On March 6, 2012, with respect to another matter, the German Federal High Court issued a
+ruling on principle that any liability resulting from the activation of a shell company only depends on the situation
+at the date of the activation of a shell company and not, as asserted by the administrator, on the situation at the
+date on which insolvency proceedings are opened.
+Alleged activation of a shell company and liability for impairment of capital
+Additionally, further out-of-court claims of right to contest under insolvency law, as well as any other claims made
+by the administrator are settled, apart from those relating to the proceedings in connection with the alleged activa-
+tion of a shell company and liability for impairment of capital.
+With the partial settlement insolvency law proceedings contesting intercompany payments were also by mutual
+consent brought to a close.
+The partial settlement includes the acquisition by Infineon of Qimonda's patent business including the entire
+patent portfolio. On the closing day, the administrator transferred the patent business including the ownership of
+the patents to Infineon. With the exception of the proceedings mentioned below, the payment on the closing day
+by mutual consent ends the actions with respect to the continuing use of the Qimonda patents and Infineon's
+ownership of the license.
+On September 11, 2014 the Company and the administrator reached a partial settlement which was closed on
+October 9, 2014. On the closing day the Company paid €260 million to the administrator.
+Partial settlement on September 11, 2014
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products) were
+carved out from Infineon and transferred to Qimonda in the form of a non-cash contribution with economic effect
+from May 1, 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings on
+January 23, 2009. On April 1, 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
+given rise to various disputes between the administrator and Infineon.
+Proceedings in relation to Qimonda
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+265
+6
+16
+21
+14
+970
+332
+46
+1,004
+2,906
+financial liabilities
+Non derivative
+beyond 2020
+2020
+2019
+540
+2018
+2016
+2015
+€ in millions
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before September 30, 2015. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well ensuring
+the availability of funding through adequate levels of committed credit facilities.
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+Financing and liquidity risk
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+264
+Infineon has spread its cash investments over more than 10 banks. At September 30, 2015 no financial institution was
+responsible for more than 15 percent (2014: 14 percent) of Infineon's cash investments. This gives rise to a maxi-
+mum risk of €203 million (2014: €190 million) in the event of the default of a single financial institution assuming no
+deposit insurance scheme is in place. Infineon also holds derivative financial instruments with a positive fair value
+of €1 million (2014: €41 million, of which €39 million related to the Deal Contingent Forward).
+Contractual cash flows
+There is no active market for the securities included in financial investments. The fair value is calculated as the
+present value of future expected cash flows, taking into account valuation parameters which can be observed in
+the market (Level 2).
+Derivative
+Cash outflow
+865
+1,032
+financial liabilities
+Non derivative
+beyond 2019
+2019
+2018
+2017
+2016
+2015
+2014
+financial liabilities:
+540
+970
+332
+46
+1,012
+2,914
+Total
+(201)
+(201)
+Cash inflow'
+209
+209
+14
+3
+2017
+3
+3
+Financial liabilities
+€ in millions
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+258
+257
+3,232
+39
+3,106
+85
+2
+3,232
+Total
+118
+97
+21
+118
+Other non-current assets
+Non-current assets:
+115
+39
+74
+581
+1,360
+Balance as of September 30, 2015
+1,058
+Current liabilities:
+of long-term debt
+802
+802
+33
+33
+33
+Fair value
+(cash flow
+hedges)
+hedging
+instruments
+(amortized
+cost)
+liabilities
+financial
+through
+profit or loss
+Designated
+Other
+At fair value
+Carrying
+amount
+financial liabilities
+Categories of
+Total
+Other non-current liabilities
+Long-term debt
+Other current liabilities
+Trade payables
+Short-term debt and current maturities
+1,058
+1,296
+581
+64
+☐ ☐
+742
+1,340
+673
+Fair value
+Designated
+cash flow
+hedges
+Loans and
+receivables
+Available
+for sale
+At fair value
+through
+profit or loss
+Carrying
+amount
+Categories of financial assets
+Balance as of September 30, 2014
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Balance as of September 30, 2015
+Financial assets
+3
+€ in millions
+74
+1
+673
+184
+2
+115
+581
+1,360
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+2,958
+2,741
+802
+216
+2,958
+129
+97
+32
+129
+74
+73
+742
+742
+673
+1,340
+1,156
+1
+137
+1,058
+128
+Current Liabilities
+13
+63
+141
+217
+Total
+13
+19
+32
+Other non-current assets
+Non-current assets:
+Other current liabilities
+1
+62
+122
+184
+Other current assets
+Financial investments
+Level 3
+Level 2
+Level 1
+Fair value by category
+Fair value
+259
+1
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Total
+Current assets:
+5
+105
+7
+16
+126
+5
+16
+21
+41
+64
+9
+2014 Fiscal year
+9
+64
+9
+9
+Total
+Other current liabilities
+Current Liabilities
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Financial investments
+41
+Current assets:
+The following table presents the carrying amounts and the fair values of financial instruments by their respective
+classes, and a breakdown by category of financial instruments as defined by IAS 39.
+€ in millions
+648
+648
+648
+Trade payables
+35
+35
+35
+of long-term debt
+Short-term debt and current maturities
+Current liabilities:
+2,763
+Other current liabilities
+2
+7
+2,764
+32
+32
+32
+1,759
+1,760
+1,760
+137
+2
+2015 Fiscal year
+2,755
+179
+Balance as of September 30, 2014
+176
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
+1
+The allocation to the levels as of September 30, 2015 and 2014 is as follows:
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used
+in the determination of the fair value:
+For assets measured at amortized costs categorized as "Loans and receivables", it is assumed that the fair values
+correspond to their carrying amounts. The same assumption applies to liabilities resulting from trade payables and
+other current liabilities categorized as "Other financial liabilities (amortized cost)".
+1,028
+2
+1,025
+1,028
+15
+1
+Other non-current liabilities
+15
+2
+151
+179
+151
+151
+Total
+15
+Non-current liabilities:
+Long-term debt
+Chip Card & Security
+Power Management & Multimarket
+Industrial Power Control
+Of the €274 million "acquisition-related depreciation/amortization and other expenses" incurred in the 2015
+fiscal year, €143 million is attributable to cost of goods sold, €15 million to research and development expenses and
+€116 million to selling, general and administrative expenses.
+Depreciation and amortization:
+€ in millions
+519
+Other Operating Segments
+1 Included in the 2014 fiscal year is the €83 million fine imposed on Infineon by the EU-Commission in their chip card antitrust investigations.
+Automotive
+Depreciation and amortization allocated to the segments
+82
+2015
+2014
+284
+228
+112
+101
+165
+111
+61
+3
+506
+5
+520
+646
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+3
+Share-based compensation expense
+(19)
+620
+Plus/minus:
+Impairment on assets including assets classified as held for sale, net of reversals
+Impact on earnings of restructuring and closures, net
+(31)
+(3)
+(13)
+(8)
+114
+(6)
+(6)
+Acquisition-related depreciation/amortization and other expenses
+(274)
+(8)
+4
+Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
+2
+Other income and expense, net¹
+(16)
+(72)
+Operating income
+Financial income
+555
+525
+10
+10
+Financial expenses
+Gain (loss) from investments accounted for using the equity method, net
+Income from continuing operations before income taxes
+(49)
+(2)
+8
+707
+514
+Therein: China
+Japan
+Americas
+Therein: USA
+Total
+2015
+2014
+2,020
+942
+1,707
+859
+2,666
+1,845
+1,337
+868
+399
+284
+710
+568
+367
+5,795
+4,320
+The attribution of revenues from external customers is based on the customers' billing location. The average
+number of employees by geographic region is provided in note 6.
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2015 fiscal year. For the
+2014 fiscal year revenue with one single customer amounted to €441 million. This revenue is allocated to all
+four operating segments of Infineon.
+€ in millions
+Europe
+Non-current assets:
+897
+Asia-Pacific (without Japan)
+Therein: Germany
+Europe, Middle East, Africa
+Revenue:
+Income from associated companies accounted for using the equity method totaled €4 million and €3 million in the
+2015 and 2014 fiscal years, respectively, and was recognized in the Industrial Power Control segment. This allocated
+income is however not included in the Segment Result.
+€ in millions
+Inventories:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+2015
+2014
+321
+760
+214
+104
+228
+112
+58
+40
+396
+237
+1,129
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+273
+Entity-wide disclosures in accordance with IFRS 8
+The following is a summary of revenue and of non-current assets by geographic area for the years ended Septem-
+ber 30, 2015 and 2014:
+€ in millions
+126
+484
+76
+2015
+269
+270
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+34 Segment reporting
+Identification of Segments
+Infineon identifies reportable segments on the basis of the differences between the types of products and their
+applications.
+During the 2015 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Chip Card & Security. Additionally
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+Automotive
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+Industrial Power Control
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the
+generation, transmission and savings in the consumption of electric power.
+Power Management & Multimarket
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies as well as for mobile devices and mobile phone network infrastructures.
+Chip Card & Security
+The Chip Card & Security segment designs, develops, manufactures and markets semiconductor-based security
+products for card applications and networked systems.
+Other Operating Segments
+Other Operating Segments comprises the remaining activities of businesses that have been disposed of, and other
+business activities. Since the closing of the sale of the Wireline Communications business and the Wireless mobile
+phone business, supplies of product to Lantiq and Intel Mobile Communications under the corresponding production
+agreements, other than those assigned to discontinued operations, are included in this segment.
+Corporate and Eliminations
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+Similarly, certain items are included in Corporate and Eliminations which are not allocated to the other segments.
+These include certain corporate headquarter costs and specific strategic technology initiatives, such as the
+300-millimeter thin-wafer technology, which are not allocated to the segments since they arise from corporate
+decisions not within the direct control of segment management.
+Furthermore, raw materials, supplies and work in progress of the common production frontend facilities, and
+raw materials and supplies of the common backend facilities, are not under the control or responsibility of the
+operating segment management and are therefore allocated to corporate functions. Only work in progress of
+backend facilities and finished goods are allocated to the operating segments.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+271
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities
+to the individual segments
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to
+the segments.
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating
+targets and budgets for the segments.
+On December 23, 2003, the Company entered into a long-term lease contract with MoTo Objekt Campeon GmbH
+& Co. KG ("MoTo"). This included an agreement to lease our office complex south of Munich, Campeon, whose con-
+struction was completed by MoTo in the second half of 2005. Infineon has no obligations with respect to financing
+Moto and has taken over no guarantees related to the construction. The Company took on Campeon under an
+operating lease arrangement in October 2005 and completed the move of its employees to this new location in the
+2006 fiscal year. The complex was leased by the Company for a period of 20 years. After 15 years the Company has
+the option to acquire the complex or otherwise continue the lease for the remaining period of five years. Pursuant to
+the agreement, the Company placed a rental deposit of €75 million in escrow, which was included in cash deposited
+as collateral as part of other non-current assets in the Consolidated Statement of Financial Position as of Septem-
+ber 30, 2015 (see note 17). Lease payments are subject to limited adjustments based on specified financial ratios
+related to Infineon. The agreement was classified as an operating lease, in accordance with IAS 17, with monthly
+lease payments expensed on a straight-line basis over the lease term.
+Infineon, through certain of its sales and other agreements may, in the normal course of business, be obligated
+to indemnify its counterparties under certain conditions for warranties, patent infringement or other matters.
+The maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligation is contingent on events that may or may not occur in the future,
+and depends on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+In conjunction with its investing activities, Infineon receives government grants and subsidies related to the
+construction and financing of certain of its production facilities. Grants are also received for selected research and
+development projects. These amounts are recognized upon the achievement of specified criteria. Certain of these
+grants have been received contingent upon Infineon complying with certain project-related requirements, such as
+creating a specified number of jobs over a defined period of time. Infineon is committed to maintaining these
+requirements, and from today's perspective Infineon expects to be able to do so. Nevertheless, should such require-
+ments not be met, as of September 30, 2015, a maximum of €71 million (September 30, 2014: €66 million) of these
+subsidies could be refundable. This amount does not include any potential liabilities for Qimonda-related subsidies
+(see note 32).
+Long-term purchase commitments are in place for the supply of commodities and raw materials, in particular for
+wafers, semiconductor intermediate products, electricity and gas. Overall, these minimum purchase commitments
+give rise to other financial obligations amounting to approximately €728 million as at the reporting date (Septem-
+ber 30, 2014: €519 million). These contracts generally have terms of between one and seven years. Purchases under
+these agreements are recorded as incurred in the normal course of business. Infineon assesses its anticipated
+purchase requirements on a regular basis in order to meet customer demand for its products. An assessment of
+potential losses under these purchase contracts is made on a regular basis for example in the event that anticipated
+purchase quantities fall below the minimum contractual quantities.
+Therein: Germany
+93
+81
+55
+49
+48
+241
+Payments arising
+from sub-lease contracts
+(165)
+(17)
+(16)
+(15)
+Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals); impact
+on earnings of restructuring measures and closures; share-based compensation expense; acquisition-related
+depreciation/amortization and other expenses; gains (losses) on sales of assets, businesses, or interests in sub-
+sidiaries and other income (expense), including the costs of legal proceedings.
+(15)
+(87)
+Total
+402
+65
+40
+34
+33
+154
+Total rental expenses under operating lease contracts amounted to €67 million and €68 million in the 2015 and 2014
+fiscal years, respectively, and related mainly to minimum lease payments.
+The total income arising from sub-lease contracts amounted to €16 million and €18 million for the years ended
+September 30, 2015 and 2014, respectively.
+Contracts already entered into for commenced or planned investments in property, plant and equipment
+(purchase commitments) at September 30, 2015 amounted to €200 million (September 30, 2014: €122 million).
+Purchase commitments for planned investments in intangible assets at September 30, 2015 amounted to €2 million
+(September 30, 2014: €2 million).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+(15)
+2014
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+2015
+2014
+300
+259
+122
+144
+352
+172
+121
+43
+53
+6
+(3)
+(4)
+897
+620
+272
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+€ in millions
+Segment Result
+Industrial Power Control
+Automotive
+Segment Result:
+€ in millions
+Segment Information
+The following tables present selected segment data:
+€ in millions
+Revenue:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+2015
+2014
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+2,351
+971
+783
+1,794
+1,061
+666
+494
+14
+22
+(1)
+(5)
+5,795
+4,320
+The operating segments do not currently have any trading relationships with one another. Accordingly, there was
+no intersegment revenue during the 2015 and 2014 fiscal years. Costs are recharged if applicable without impact on
+profit or loss.
+1,965
+Asia-Pacific (without Japan)
+Annual General
+Meeting 2020
+Annual General
+Meeting 2020
+Japan
+Peter Gruber¹
+54
+Representative of
+Annual General
+Meeting 2020
+Senior Management
+Gerhard Hobbach¹
+53
+Annual General
+Meeting 2020
+Hans-Ulrich Holdenried 64
+Annual General
+Meeting 2020
+Prof. Dr. Renate Köcher
+63
+Annual General
+Meeting 2020
+Senior Vice President
+Operations Finance
+Infineon Technologies AG
+Member of the Infineon
+Works Council, Campeon,
+Infineon Technologies AG
+Management Consultant
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach
+Development Engineer
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH,
+Dresden
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH,
+Dresden
+Member of the Board of Directors
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia
+Member of the Supervisory Board
+> Integrata AG, Stuttgart
+(until February 10, 2015)
+> Wincor Nixdorf AG, Paderborn
+Member of the Supervisory Board
+2015)
+Annual General
+Meeting 2020
+(since February 12,
+50
+(until May 13, 2015)
+> Münchener Rückversicherungs-
+Gesellschaft AG, Munich
+Member of the Board of Directors
+> Heico Corporation, Hollywood, Florida, USA
+Member of the Administrative Board
+> BKK of Siemens AG, Heidenheim
+Member of the Supervisory Board
+> OSRAM Licht AG, Munich
+(Chairman)
+> OSRAM GmbH, Munich
+(Chairman)
+> Kontron AG, Eching
+(until August 31, 2015)
+275
+> Allianz SE, Munich
+276
+Name
+Age
+Term expires
+Occupation
+Membership of Supervisory Boards and
+comparable governing bodies of domestic
+and foreign companies
+Management Board
+Volkswagen AG, Wolfsburg
+Labor union secretary IG
+Metall district management,
+Berlin-Brandenburg-Saxony
+Dr. Herbert Diess
+56
+(since February 12,
+Annual General
+Meeting 2020
+Member of the
+2015)
+Annette Engelfried¹
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+> BMW AG, Munich
+> BMW AG, Munich
+> Nestlé Deutschland AG, Frankfurt am Main
+Deputy Chairwoman
+of the Infineon Works
+Council, Warstein,
+Infineon Technologies AG
+Member of the Board of Directors
+> Athene Holding Ltd., Pembroke, Bermuda
+> Athene Life Re Ltd., Pembroke, Bermuda
+Member of the Supervisory Board
+> Krones AG, Neutraubling
+Member of the Administrative Board
+> BKK of BMW AG, Dingolfing
+Member of the Supervisory Board
+> K+S AG, Kassel
+Wigand Cramer¹
+62
+February 12, 2015
+Labor union secretary
+IG Metall, Berlin
+Reinhard Gottinger¹
+54
+February 12, 2015
+Gerd Schmidt¹
+61
+February 12, 2015
+1 Employee representative
+Chairman of the
+Central Works Council
+Infineon Technologies AG
+Chairman of the
+Infineon Works Council,
+Regensburg,
+Infineon Technologies AG
+Independent works
+council representative
+of the Infineon Works
+Council, Dresden,
+Infineon Technologies
+Dresden GmbH
+Independent Attorney
+Munich Technical University
+First authorized agent
+of IG Metall, Regensburg
+Professor
+Management Consultant
+Dr. Susanne
+48
+Lachenmann¹
+Annual General
+Meeting 2020
+(since February 12,
+2015)
+Dr. Manfred Puffer
+52
+Annual General
+Meeting 2020
+Prof. Dr. Doris
+62
+Schmitt-Landsiedel
+Annual General
+Meeting 2020
+> Robert Bosch GmbH, Gerlingen
+Jürgen Scholz'
+Annual General
+Meeting 2020
+Kerstin Schulzendorf¹
+53
+(since February 12,
+Annual General
+Meeting 2020
+2015)
+Dr. Eckart Sünner
+71
+Diana Vitale¹
+40
+(since February 12,
+2015)
+567
+Former members of the Supervisory Board
+54
+Therein: China
+> Deutsche Lufthansa AG, Köln
+(Chairman)
+Membership of Supervisory Boards and
+comparable governing bodies of domestic
+and foreign companies
+> Infineon Technologies Mantel 21 GmbH, Neubiberg and
+> Infineon Technologies Mantel 27 GmbH, Neubiberg,
+make use of the possibility of exemption from the publication requirements for annual financial statements
+according to section 325 HGB.
+Infineon Technologies Dresden GmbH makes use of the possibility of exemption from the obligation to prepare
+a management report, and the exemption from the requirements of governing the publication of annual financial
+statements (section 325 HGB).
+Due to the insolvency, Qimonda and its subsidiaries are not included in the Company's Consolidated Financial
+Statements. Infineon has no information as to whether Qimonda draws up Consolidated Financial Statements or
+makes use of the possibility of exemptions with respect to their preparation.
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and
+the Supervisory Board and made permanently available to the public on the internet at www.infineon.com
+("About Infineon/Investor/Corporate Governance/Declaration of Compliance").
+Accounting fees pursuant to section 314 paragraph 1 no. 9 HGB
+Year-end audit fees
+At the Annual General Meeting held on February 12, 2015, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2015 financial statements and the Consolidated Financial
+Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2015 fiscal year amounted to
+€1.7 million for the audit of the Consolidated Financial Statements and various separate financial statements.
+Fees for other advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.4 million in the 2015 fiscal year
+for other audit services. These services consisted primarily of services rendered in connection with the review of
+quarterly financial statements.
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged the Company an aggregate of €22 thousand in the
+2015 fiscal year for professional services relating to tax.
+Fees for other services
+Fees of €0.1 million were charged by KPMG in the 2015 fiscal year for other services.
+Management Board and Supervisory Board
+Management compensation in the 2015 fiscal year
+The remuneration of the individual members of the Management Board and the Supervisory Board, as required
+by section 314 (1) no. 6a, sentences 5 to 8 HGB, is disclosed in the Compensation Report which is part of the
+Combined Management Report.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Management Board
+The members of the Management Board during the 2015 fiscal year were as follows:
+Name
+Age
+Term expires
+Dr. Reinhard Ploss
+59
+> Infineon Technologies Akquisitionsgesellschaft 2 mbH, Neubiberg,
+> Infineon Technologies Akquisitionsgesellschaft 1 mbH, Neubiberg,
+> Infineon Technologies Finance GmbH, Neubiberg,
+> Hitex GmbH, Karlsruhe,
+Americas
+Therein: USA
+Total
+2015
+2014
+1,504
+1,321
+982
+862
+939
+670
+31
+22
+September 30, 2020
+1
+1,449
+16
+1,402
+16
+3,893
+2,008
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+274
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+35 Additional information in accordance with HGB
+Application of exemption regulations
+The entities listed below have entered into control and profit and loss transfer agreements with Infineon
+Technologies AG, and intend to make use of the option contained in section 264 paragraph 3 HGB exempting
+incorporated companies from certain requirements relating to the preparation, audit and publication of annual
+financial statements:
+1
+Member of the Supervisory Board
+Dominik Asam
+December 31, 2018
+> Infineon Technologies Japan K.K.,
+Tokyo, Japan
+> International Rectifier Corporation,
+Wilmington, Delaware, USA
+(since January 13, 2015)
+The Supervisory Board
+The members of the Supervisory Board during the 2015 fiscal year, the Supervisory Board position held by them,
+their occupation, their membership of other supervisory and governing bodies and their ages are as follows (as
+at September 30, 2015):
+Name
+Age
+Term expires
+Occupation
+Wolfgang Mayrhuber
+Chairman
+68
+Annual General
+Meeting 2020
+Management Consultant
+Johann Dechant'
+Deputy Chairman
+50
+Annual General
+Meeting 2020
+(since February 12,
+2015)
+Peter Bauer
+55
+(since February 12,
+Annual General
+Meeting 2020
+2015)
+Chairman of the Infineon
+Works Council, Regensburg,
+Infineon Technologies AG
+Management Consultant
+> Infineon Technologies North America Corp.,
+Wilmington, Delaware, USA (Chairman)
+> Infineon Technologies India, Pvt. Ltd.,
+Bangalore, India
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore (Chairman)
+Member of the Board of Directors
+Arunjai Mittal
+44
+December 31, 2019
+Position
+Chairman of the
+Management Board,
+Chief Executive Officer,
+Labor Director
+Member of the
+Management Board,
+Executive Vice President,
+Chief Financial Officer
+Member of the
+Management Board,
+Executive Vice President
+Membership of Supervisory Boards and governing
+bodies of domestic and foreign companies
+(as at September 30, 2015)
+Member of the Supervisory Board
+> Infineon Technologies Austria AG,
+Villach, Austria (Chairman)
+Member of the Board of Directors
+46
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia (Chairman)
+> EPCOS AG, Munich
+> Infineon Technologies Austria AG,
+Villach, Austria
+Member of the Board of Directors
+> 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
+> International Rectifier Corporation,
+Wilmington, Delaware, USA
+(since January 13, 2015)
+Member of the Supervisory Board
+> tesa SE, Hamburg
+Member of the Supervisory Board
+from lease contracts
+International Rectifier's various lines of business have been fully integrated into Infineon's existing Automotive,
+Industrial Power Control and Power Management & Multimarket segments, whereby the largest proportion by far
+has been allocated to the Power Management & Multimarket segment.
+Payments due in
+13
+11
+7
+47
+4
+28
+In total, Infineon has guarantees outstanding to third parties as of September 30, 2015 amounting to €72 million.
+Guarantees are mainly issued for the payment of import duties, rentals of buildings, and contingent obligations
+related to government grants received.
+Other financial obligations and other risks
+110
+In addition to provisions, liabilities and contingent liabilities, Infineon also has other financial obligations, relating
+in particular to lease and long-term rental arrangements, and unconditional purchase commitments. These are
+explained in more detail below.
+Consolidated Financial Statements
+(€ in millions)
+Total
+Less than
+1 year
+1-2 years
+2-3 years
+3-4 years
+4-5 years After 5 years
+Undiscounted future minimum operating lease and rental payments arising from operating lease contracts at
+September 30, 2015 amounted to €446 million (September 30, 2014: €402 million). The corresponding payment
+obligations fall due as follows:
+as of September 30, 2014
+Guarantees
+28
+Contingent liabilities relate to possible future events, the occurrence of which would result in an obligation. The
+occurrence of these obligations is considered to be unlikely at the reporting date, but cannot be ruled out entirely.
+The following table summarizes Infineon's contingent liabilities with respect to external parties, excluding possible
+liabilities arising from litigation, as of September 30, 2015 and 2014:
+Payments due in
+(€ in millions)
+Total
+Less than
+1 year
+1-2 years
+2-3 years
+3-4 years
+4-5 years
+After 5 years
+Guarantees
+as of September 30, 2015
+72
+14
+8
+16
+4
+2
+Payment obligations as of September 30, 2015
+Payments arising
+from lease contracts
+594
+44
+Contingent liabilities
+177
+Payment obligations as of September 30, 2014
+Payments arising
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+268
+46
+267
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates are
+revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that
+a liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
+regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
+of law committed by individual employees or third parties.
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate to products, services, patents, environmental issues and other matters. Further-
+more, since the acquisition of International Rectifier Infineon is at present and may also in the future become sub-
+ject to various legal disputes and proceedings and exposed to risks related to current or previous activities of Inter-
+national Rectifier. In particular these include litigation and claims for environmental issues in which International
+Rectifier has been named as a defendant or a potentially responsible party or has made voluntary disclosures;
+in some instances with the involvement of governmental authorities and in others with non-governmental parties.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condition,
+liquidity position and results of operations, particularly in the period in which re-assessment is made.
+Other
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so, and accordingly represent contingent liabilities that are not included in provisions. This applies in particular
+to the legal dispute for alleged activation of a shell company and liability for impairment of capital described above.
+Should the alleged claims prove to be valid, substantial financial obligations could arise for Infineon which could
+have a material adverse effect on its business and its financial condition, liquidity position and results of operations.
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its
+business and financial condition, liquidity position and results of operations. Irrespective of the validity of the
+allegations and the success of the aforementioned claims and other matters described above, Infineon could incur
+significant costs in the defense of these matters.
+57
+39
+446
+100
+72
+61
+59
+83
+249
+Payments arising
+from sub-lease contracts
+53
+(17)
+(15)
+(15)
+(15)
+(14)
+(72)
+Total
+(148)
+33 Contingent liabilities and other financial commitments
+73
+150
+G78 Risk assessment matrix
+The two sensor chips are placed exactly
+on top of each other.
+G33 Interior design of the dual Hall sensor.
+143
+0.00
+Advanced Power Electronics Corp.
+N.A.
+N.A.
+N.A.
+Hsinchu County, Taiwan
+13
+0.20
+1.54
+and 2014 by comparison
+3
+68.92
+3
+666
+60
+60
+Warstein, Germany
+Cegléd, Hungary
+CHIL Semiconductors Corporation
+2.62
+5
+G77 Liquidity position as of September 30, 2015
+G76 Free cash flow
+market share 2014; Infineon in third place
+for the first time
+57
+57
+(Infineon worldwide)
+G60 Training expenses
+111
+112
+G20 Revenue and Segment Result of
+the Industrial Power Control segment
+58
+G61
+Female/male employees
+(new entries worldwide 2015)
+G21 Industrial Power Control
+segment revenue by region
+59
+G22 World discrete power semi-conductors
+and modules market share 2014
+61
+G23 World IGBT components market share 2014
+(discrete IGBTs and IGBT modules)
+61
+G24 World IPM (Intelligent Power Module)
+market share 2014
+G 62 Age structure (new entries worldwide 2015)
+G 63 Age structure (Infineon worldwide 2015)
+G64 Development of the Infineon Technologies AG
+share compared to Germany's DAX Index
+and Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index
+from the beginning of the 2015 fiscal year
+(daily closing prices)
+110
+G58 Nationalities (Infineon worldwide 2015)
+G59 Women in management positions
+G19 China automotive semiconductor
+57
+888
+G52
+G15 Development of Infineon's market share and
+relative market share for power semiconductors
+G53
+Normalized Emission Rate
+Carbon footprint
+102
+104
+49
+49
+G54 Principles of Purchasing
+105
+115
+G16 Revenue and Segment Result of
+54
+G17 Automotive Segment revenue by region
+G18 World automotive semiconductor
+market share 2014
+55
+55
+G57
+G55 Corporate Citizenship expenditure
+G56 Examples of the Corporate Citizenship
+activities of Infineon in the 2015 fiscal year
+High Performance Behavior Model
+106
+107
+108
+the Automotive segment
+115
+115
+G25 Revenue and Segment Result of the
+132
+65
+G70 Selling, general and administrative expenses
+133
+65
+G71
+Assets
+136
+66
+99
+G72 Liabilities and equity
+132
+136
+138
+G74
+ROCE
+138
+67
+G75 Cash flow
+141
+69
+G32 R&D expenses
+72
+62
+G73
+142
+G69 R&D expenses
+55
+Power Management & Multimarket segment
+G26 Power Management & Multimarket segment
+revenue by region
+G27 World standard power MOSFET
+market share 2014
+G28 World silicon microphone ICs
+market share 2014 by units
+G29 Revenue and Segment Result of
+the Chip Card & Security segment
+G30 Chip Card & Security
+segment revenue by region
+G31 World microcontroller-based
+chip card ICs market share 2014
+61
+62
+G 68 Gross profit and gross margin
+22
+Revenue by segment
+G 66
+Revenue by region
+G67
+63
+Orders received and revenue
+120
+129
+130
+131
+65
+G65
+Wilmington, Delaware, USA
+100
+0.00
+3
+100
+0.22
+0.03
+São Paulo, Brazil
+100
+0.03
+(0.04)
+3
+5
+Wilmington, Delaware, USA
+100
+0.00
+0.00
+Wilmington, Delaware, USA
+5
+100
+0.00
+0.00
+Villach, Austria
+6
+100
+0.10
+Zurich, Switzerland
+0.03
+0.09
+100
+100
+0.03
+10
+Infineon Technologies Romania s.r.l.
+Infineon Technologies RUS LLC
+Infineon Technologies Schweiz GmbH
+Infineon Technologies South America Ltda.
+IR International Holdings China, Inc.
+IR International Holdings, Inc.
+KAI Kompetenzzentrum Automobil-
+und Industrieelektronik GmbH
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+0.00
+MicroLinks Technology Corp.
+R Labco, Inc.
+Schweizer Electronic AG
+TTTech Computertechnik AG
+Xi'an IR PERI Company, Ltd.
+Bucharest, Romania
+6
+100
+0.04
+0.01
+Moscow, Russian Federation
+6
+OSPT IP Pool GmbH
+Lippstadt, Germany
+6
+24
+50
+N.A.
+N.A.
+Qimonda AG and its subsidiaries: 2
+2
+Celis Semiconductor Corp.
+Itarion Solar Lda.
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Qimonda AG in insolvency
+Qimonda Asia Pacific Pte. Ltd.
+Colorado Springs, Colorado, USA
+Xi'an, People's Republic of China
+17
+Vila do Conde, Portugal
+40
+2
+Malacca, Malaysia
+77
+2
+Munich, Germany
+Singapore, Singapore
+77
+2
+77
+2
+Neubiberg, Germany
+N.A.
+N.A.
+2.04
+0.14
+Kaohsiung, Taiwan
+13
+N.A.
+N.A.
+N.A.
+3
+Neubiberg, Germany
+100
+0.02
+N.A.
+0.00
+5
+100
+0.00
+0.00
+6
+Schramberg, Germany
+9
+48.44
+5.58
+Wien, Austria
+13
+Wilmington, Delaware, USA
+Infineon Technologies Mantel 27 GmbH
+0.00
+0.04
+13
+Berlin, Germany
+N.A.
+N.A.
+N.A.
+Coventry, Great Britain
+3
+88
+2.31
+0.41
+Infineon Technologies Austria Pensionskasse AG
+Infineon Technologies Bipolar Verwaltungs GmbH
+0.01
+Villach, Austria
+0.80
+(0.03)
+6
+3
+Warstein, Germany
+60
+0.03
+0.00
+3
+Infineon Technologies Canada, Inc.
+Infineon Technologies Delta GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Iberia S.L.U.
+100
+Infineon Technologies Ireland Ltd.
+0.02
+3
+0.00
+3
+DICE Danube Integrated Circuit Engineering GmbH
+Linz, Austria
+72
+0.10
+0.00
+EPOS embedded core & power systems
+GmbH & Co. KG
+EPOS embedded core & power systems
+Verwaltungs GmbH
+eupec Thermal Management Inc. in liquidation
+51
+Haus der Zukunft gGmbH
+Duisburg, Germany
+3
+100
+0.49
+0.20
+3
+Duisburg, Germany
+100
+0.05
+0.00
+Wilmington, Delaware, USA
+Hitex (UK) Limited
+48
+Madrid, Spain
+100
+Net result
+Foot-
+(€ in
+(€ in
+note
+in %
+millions)
+millions)
+Infineon Technologies Mantel 21 GmbH
+Neubiberg, Germany
+3
+Equity
+100
+0.00
+Infineon Technologies Mantel 24 GmbH
+Neubiberg, Germany
+3
+100
+0.02
+0.00
+3
+Infineon Technologies Mantel 26 AG
+Neubiberg, Germany
+100
+0.03
+St.John, New Brunswick, Canada
+Share-
+holdings
+Name of company
+0.00
+0.00
+3
+Neubiberg, Germany
+100
+0.02
+0.00
+3
+Neubiberg, Germany
+100
+0.02
+Registered office
+0.00
+100
+0.14
+0.03
+Dublin, Ireland
+3
+100
+0.42
+0.10
+GRI G4-17
+280
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+3
+2
+102
+G14 Segment Result and Segment Result Margin
+over the last three years
+Shanghai, People's
+Republic of China
+6
+100
+138.96
+14.70
+3
+Infineon Technologies Dresden GmbH
+Dresden, Germany
+100
+224.27
+0.00
+3
+Infineon Technologies Finance GmbH
+Neubiberg, Germany
+100
+369.89
+0.00
+3
+Infineon Technologies France S.A.S.
+St. Denis, France
+100
+11.43
+Infineon Technologies China Co., Ltd.
+0.24
+3.37
+100
+3
+100
+1.05
+Villach, Austria
+100
+495.59
+0.13
+118.75
+3
+Infineon Technologies Batam PT
+Batam, Indonesia
+3
+0.23
+100
+1.45
+3
+Infineon Technologies Cegléd Kft.
+Cegléd, Hungary
+100
+13.54
+(0.49)
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+Shanghai, People's
+Republic of China
+6
+16.23
+Rotterdam, The Netherlands
+3
+100
+Milan, Italy
+3
+100
+1.73
+0.40
+Klagenfurt, Austria
+3
+100
+6.42
+3.57
+Tokyo, Japan
+0.00
+3
+8.44
+2.35
+Seoul, Republic of Korea
+3
+100
+3.85
+0.73
+Infineon Technologies Neu-Isenburg Vertriebs GmbH
+Neu-Isenburg, Germany
+5
+100
+100
+Bayswater, Australia
+0.13
+3
+2,087.90
+250.79
+Hong Kong, People's
+Republic of China
+5
+100
+15.89
+3.16
+Infineon Technologies Holding B.V.
+Infineon Technologies Hong Kong Sales Limited
+Infineon Technologies Hong Kong, Ltd.
+100
+Infineon Technologies India, Pvt. Ltd.
+Infineon Technologies Investment B.V.
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., Ltd.
+Republic of China
+3
+100
+1.37
+0.17
+Bangalore, India
+4
+100
+14.47
+1.73
+Rotterdam, The Netherlands
+Hong Kong, People's
+7.94
+41.11
+3
+The members of the Company's Supervisory Board, individually or in aggregate, do not own, directly or indirectly,
+more than 1 percent of Infineon Technologies AG's outstanding share capital as of September 30, 2015.
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-12,
+D-85579 Neubiberg (Germany).
+277
+278
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Subsidiaries, associated companies and other related companies
+as of September 30, 2015
+Name of company
+Registered office
+Fully consolidated subsidiaries:
+Share-
+holdings
+in %
+Equity
+Net result
+Foot-
+(€ in
+millions)
+(€ in
+millions)
+note
+DICE Danube Integrated Circuit Engineering
+GmbH & Co. KG
+Linz, Austria
+72
+1.52
+1.47
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Dr. Manfred Puffer
+Prof. Dr. Renate Köcher
+Wolfgang Mayrhuber (Chairman)
+Supervisory Board committees
+Mediation Committee
+Wolfgang Mayrhuber (Chairman)
+Johann Dechant
+Hans-Ulrich Holdenried
+Jürgen Scholz
+Executive Committee
+Wolfgang Mayrhuber (Chairman)
+Johann Dechant
+Gerhard Hobbach
+Hans-Ulrich Holdenried
+3
+Investment, Finance and Audit Committee
+Johann Dechant
+Annette Engelfried
+Wolfgang Mayrhuber
+Strategy and Technology Committee
+Prof. Dr. Doris Schmitt-Landsiedel (Chairwoman)
+Peter Gruber
+Hans-Ulrich Holdenried
+Dr. Susanne Lachenmann
+Wolfgang Mayrhuber
+Jürgen Scholz
+Nomination Committee
+Dr. Eckart Sünner (Chairman)
+Hitex GmbH
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co. Ltd.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Wuxi) Co., Ltd.
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies Akquisitionsgesellschaft 1 mbH
+(prior Infineon Technologies Mantel 19 GmbH)
+Infineon Technologies Akquisitionsgesellschaft 2 mbH
+(prior Infineon Technologies Mantel 25 GmbH)
+Infineon Technologies Asia Pacific Pte. Ltd
+Infineon Technologies Australia Pty. Ltd.
+100
+125.01
+12.08
+6
+Wuxi, People's Republic of China
+Xi'an, People's Republic of China
+100
+135.74
+12.29
+6
+100
+6.92
+Malacca, Malaysia
+0.32
+3
+100
+0.05
+0.00
+3
+Neubiberg, Germany
+100
+0.02
+0.00
+Singapore, Singapore
+100
+Neubiberg, Germany
+162.23
+3
+128.86
+Infineon Technologies Austria AG
+Karlsruhe, Germany
+3
+100
+2.16
+0.00
+Beijing, People's Republic of China
+6
+100
+16.30
+1.06
+19.19
+Wuxi, People's Republic of China
+13.71
+(0.01)
+12
+Malacca, Malaysia
+100
+20.62
+1.46
+3
+3
+Kulim, Malaysia
+100
+100
+1.85
+Infineon Technologies Nordic AB
+Infineon Technologies North America Corp.
+(48.65)
+5
+Les Ulis (Courtaboeuf), France
+5
+100
+1.19
+0.22
+Mumbai, India
+8
+100
+0.92
+0.00
+5
+Milan, Italy
+100
+1.86
+0.06
+Newport, Great Britain
+100
+181.63
+(2.86)
+5
+Taipei, Taiwan
+36.71
+100
+Wilmington, Delaware, USA
+0.10
+5.32
+Seoul, Republic of Korea
+5
+100
+1.04
+0.02
+Kuala Lumpur, Malaysia
+100
+0.41
+0.00
+5
+100
+Curepipe, Mauritius
+100
+3.16
+0.02
+Bangalore, India
+100
+0.16
+0.00
+Skovlunde (Kopenhagen, Denmark)
+5
+100
+1.49
+5
+0.40
+5
+0.15
+in the 2015 fiscal year
+99
+G46
+Standardized waste generation
+99
+44
+G12 Development of global mobile data traffic
+G47
+Energy consumption
+100
+G48
+Other companies (non consolidated): 1
+2014 to 2019
+Standardized electricity consumption
+100
+G13 Expected growth in chip-based payment cards
+in the USA, China and India
+G49
+Energy consumption per revenue
+100
+46
+46
+G50
+Calculation of the CO2 burden
+101
+45
+5
+Infineon Technologies Bipoláris Kft.
+Associated companies:
+Newport, Great Britain
+5
+100
+41.94
+17.66
+Cheonan, Republic of Korea
+100
+8.36
+(0.75)
+3,9
+Neubiberg, Germany
+Infineon Technologies Bipolar GmbH & Co. KG
+6
+14.56
+2.39
+Tijuana, Mexico
+100
+9.37
+(28.36)
+5
+100
+2.90
+(0.90)
+6
+94
+12.13
+100
+Tokyo, Japan
+1.34
+0.23
+3
+Singapore, Singapore
+100
+55.19
+5
+1.38
+Taipei, Taiwan
+3
+100
+100
+2.17
+3
+Infineon Technologies U.K. Ltd.
+Bristol, Great Britain
+100
+2.38
+0.57
+11
+Infineon Technologies US HoldCo Inc.
+Wilmington, Delaware, USA
+100
+0.06
+0.54
+0.00
+m
+0.89
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Romania & Co. Societate
+in Comandita
+Infineon Technologies Shared Service Center,
+Unipessoal Lda.
+Infineon Technologies Southeast Asia Pte, Ltd.
+Infineon Technologies Taiwan Co., Ltd.
+Maia, Portugal
+Kista, Sweden
+3
+100
+6.03
+0.83
+0.85
+Wilmington, Delaware, USA
+112.30
+2.58
+3
+Muntinlupa City, Philippines
+100
+0.18
+0.17
+5
+Bucharest, Romania
+3
+100
+100
+G51 Allocation of emissions by origin
+Infineon Technologies US InterCo LLC
+11
+(256.59)
+5
+International Rectifier HiRel Products, Inc.
+International Rectifier Japan Co., Ltd.
+International Rectifier Korea
+International Rectifier Malaysia Sdn Bhd
+International Rectifier Mauritius, Inc.
+International Rectifier Power Management
+Private Limited (in liquidation)
+IR Denmark Aps
+IR EPI Services, Inc.
+IR France SAS
+1,238.56
+IR Infotech Private, Ltd. in liquidation
+IR Newport Limited
+IR Taiwan Co., Ltd.
+IR UK Holdings Limited
+LS Power Semitech Co., Ltd.
+Molstanda Vermietungsgesellschaft mbH
+Rectificadores Internacionales, S.A. de C.V.
+Shanghai International Rectifier Trading, Ltd.
+Shanghai, People's
+Republic of China
+Wilmington, Delaware, USA
+100
+41.07
+(52.22)
+5
+IR Italy s.r.l.
+Wilmington, Delaware, USA
+100
+International Rectifier Corporation
+100
+0.00
+0.00
+GRI G4-17
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+279
+Notes to the Consolidated Financial Statements
+Name of company
+Registered office
+Share-
+holdings
+Equity
+(€ in
+Wilmington, Delaware, USA
+Net result
+(€ in
+note
+in %
+millions)
+millions)
+International Rectifier Company (Great Britain), Ltd.
+Newport, Great Britain
+5
+100
+182.06
+14.14
+Foot-
+Qimonda Belgium BVBA in insolvency
+Debt by currencies
+77
+1,983
+2,232
+220
+Net cash position
+2,692
+2,235
+2,286
+2,418
+2,013
+Gross cash position
+5,873
+5,898
+5,905
+6,438
+8,741
+Total assets
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA
+1,940
+2011
+2,387
+1,129
+170
+250
+1,738
+Goodwill and other intangible assets
+1,343
+1,731
+1,600
+1,700
+2,093
+Property, plant and equipment
+5
+5
+Assets classified as held for sale
+507
+567
+609
+707
+Inventories
+2012
+2013
+2014
+(1)
+(5)
+2
+5
+1
+Total Revenue
+Gross profit
+Gross margin
+5,795
+4,320
+3,843
+3,904
+3,997
+2,080
+1,647
+1,323
+1,427
+Corporate and Eliminations
+216
+125
+26
+2015
+€ in millions, except otherwise stated
+Financial Data 2011-2015
+285
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+19.7%
+13.5%
+9.8%
+146
+14.4%
+786
+494
+463
+457
+428
+Other Operating Segments
+14
+22
+15.5%
+111
+Debt
+Provisions
+(2,499)
+(1,013)
+(328)
+(272)
+(2,593)
+Net cash used in investing activities from continuing operations
+983
+667
+610
+988
+957
+Net cash provided by operating activities from continuing operations
+CONSOLIDATED STATEMENTS OF CASH FLOWS DATA
+62.1%
+22.3%
+14.1%
+20.3%
+Net cash provided by (used in) financing activities
+from continuing operations
+1,363
+(179)
+and intangible assets and other assets
+Purchases of property, plant and equipment
+364
+428
+466
+514
+760
+Depreciation and amortization
+12.8%
+1,206
+(10)
+(8)
+(140)
+from discontinued operations
+Net increase in cash and cash equivalents
+(352)
+(199)
+(165)
+(40)
+1,654
+19.1%
+4.6%
+Total equity
+2,518
+2,323
+2,129
+2,280
+4,076
+Total liabilities
+836
+740
+721
+660
+474
+305
+295
+303
+186
+1,793
+4,665
+4,158
+3,776
+3,575
+8.3%
+7.3%
+33.4%
+11.9%
+7.2%
+12.9%
+13.6%
+57.1%
+7.2%
+60.6%
+64.6%
+53.4%
+Return on Capital Employed (ROCE)
+Return on assets
+Return on equity
+Equity ratio
+Statement of Financial Position Ratios
+3,355
+63.9%
+Cash flow
+35.9%
+34.4%
+Diluted earnings per share (in €)
+0.32
+(0.01)
+0.04
+0.01
+Diluted earnings (loss) per share from discontinued operations (in €)
+0.66
+0.39
+0.26
+0.44
+0.55
+Diluted earnings per share from continuing operations (in €)
+of Infineon Technologies AG (in €):
+Diluted earnings (loss) per share attributable to shareholders
+1.03
+0.40
+0.25
+0.56
+0.48
+0.48
+0.39
+12.2%
+9.7%
+327
+528
+562
+7.1%
+12.4%
+10.9%
+EBITDA 5
+EBIT margin 4
+EBIT3
+Return on sales²
+Key Data for the Consolidated Statement of Operations
+0.48
+0.60
+Adjusted earnings per share (in €) - diluted
+0.98
+0.25
+0.56
+Basic earnings per share (in €)
+0.35
+Income (loss) from discontinued operations, net of income taxes
+744
+432
+283
+488
+622
+Income from continuing operations
+30
+1
+(23)
+(31)
+102
+Income tax
+4
+(1)
+2
+3
+12
+47
+(11)
+(5)
+(0.01)
+0.04
+0.01
+Basic earnings (loss) per share from discontinued operations (in €)
+0.68
+0.40
+0.26
+0.44
+8.5%
+0.55
+Basic earnings (loss) per share attributable to shareholders of Infineon
+Technologies AG (in €):
+1,119
+427
+272
+535
+634
+Net income
+375
+Basic earnings per share from continuing operations (in €)
+10.9%
+453
+11.6%
+28.0%
+740
+525
+325
+455
+736
+Net financial result
+(39)
+(9)
+(21)
+(23)
+(26)
+527
+377
+620
+897
+Leuven, Belgium
+Segment Result Margin
+Segment Result:
+555
+Operating income
+(30)
+(42)
+36.6%
+41.4%
+Research and development expenses
+(717)
+(550)
+(525)
+(455)
+(439)
+(5)
+Selling, general and administrative expenses
+(496)
+(440)
+(475)
+(449)
+Other operating income and expense, net
+(30)
+(76)
+(33)
+(778)
+38.1%
+(13)
+(4)
+38
+144
+122
+Industrial Power Control
+279
+219
+167
+259
+300
+Automotive
+Segment Result
+1,104
+881
+793
+1,042
+1,322
+18.5%
+118
+202
+Power Management & Multimarket
+352
+(3)
+Corporate and Eliminations
+14
+5
+(9)
+6
+5
+Other Operating Segments
+(2)
+54
+39
+43
+121
+Chip Card & Security
+242
+142
+144
+172
+56
+4
+Free cash flow
+(668)
+Management Board
+Dr. Reinhard Ploss
+Dominik Asam
+Arunjai Mittal
+GRI G4-17
+282
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Responsibility Statement by the
+Management Board
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated
+Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss
+of the Group, and the Group Management Report, which has been combined with the Management Report for
+Infineon Technologies AG, includes a fair review of the development and performance of the business and
+the position of the Group, together with a description of the principal opportunities and risks associated with
+the expected development of the Group.
+Neubiberg, November 24, 2015
+Infineon Technologies AG
+Dr. Reinhard Ploss
+Dominik Asam
+Arunjai Mittal
+Auditor's Report
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Auditor's Report
+Infineon Technologies AG
+283
+Neubiberg, November 20, 2015
+The values in the above table represent financial statements prepared according to local requirements and are,
+in some cases, provisional.
+2
+2
+2
+2
+1 Certain immaterial subsidiaries were not consolidated in the 2015 and 2014 fiscal years. Infineon evaluates the significance of these subsidiaries annually
+at each reporting date. Net income, external revenue and total assets of all subsidiaries deemed to be immaterial were in total less than 1 percent of the respective
+Group values.
+2 On January 23, 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on April 1,
+2009. The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result
+of Qimonda AG's insolvency. In addition, the list of subsidiaries held by Qimonda AG was based on information from September 30, 2010, since Infineon had not
+received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies. Since all
+Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and results of operations.
+3 Equity and net result as of September 30, 2014.
+4 Equity and net result as of March 31, 2014.
+5 Equity and net result as of June 30, 2014.
+6 Equity and net result as of December 31, 2014.
+7 Equity and net result as of March 31, 2015.
+8 Equity and net result as of May 13, 2013 (period from April 1, 2013 until May 13, 2013).
+9 Equity and net result as of September 30, 2014 (short fiscal year from January 1, 2014 until September 30, 2014).
+10 Opening balance as of October 16, 2014.
+11 Opening balance as of November 1, 2014 (the company was founded on October 21, 2014 and consolidated for the first time as of November 1, 2014).
+12 Opening balance as of June 30, 2015 (the company was founded on April 17, 2015 and consolidated for the first time as of June 30, 2015).
+13 Share of less than 5 percent.
+43
+We have audited the consolidated financial statements prepared by the Infineon Technologies AG, Neubiberg,
+comprising the statements of financial position, operations, comprehensive income, cash flows and changes
+in equity, together with the management report of the Company and the Group for the business year from
+October 1, 2014 to September 30, 2015. The preparation of the consolidated financial statements and the group
+management report in accordance with IFRSS, as adopted by the EU, and the additional requirements of German
+commercial law pursuant to § 315a Abs. 1 HGB [Handelsgesetzbuch "German Commercial Code"] are the respon-
+sibility of the Managing Board of the Company. Our responsibility is to express an opinion on the consolidated
+financial statements and on the group management report based on our audit.
+We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German
+generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer
+[Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such
+that misstatements materially affecting the presentation of the net assets, financial position and results of opera-
+tions in the consolidated financial statements in accordance with the applicable financial reporting framework
+and in the group management report are detected with reasonable assurance. Knowledge of the business activities
+and the economic and legal environment of the Group and expectations as to possible misstatements are taken
+into account in the determination of audit procedures. The effectiveness of the accounting-related internal control
+system and the evidence supporting the disclosures in the consolidated financial statements and the group
+management report are examined primarily on a test basis within the framework of the audit. The audit includes
+assessing the annual financial statements of those entities included in consolidation, the determination of entities
+to be included in consolidation, the accounting and consolidation principles used and significant estimates made
+by management, as well as evaluating the overall presentation of the consolidated financial statements and group
+management report. We believe that our audit provides a reasonable basis for our opinion.
+Our audit has not led to any reservations.
+2014
+2013
+2012
+2011
+2,020
+942
+1,707
+859
+1,567
+795
+1,732
+1,920
+908
+1,090
+2,666
+1,845
+1,560
+1,470
+1,450
+1,337
+2015
+Americas
+Japan
+Therein: China
+In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSS, as
+adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB and give
+a true and fair view of the net assets, financial position and results of operations of the Group in accordance with
+these requirements. The group management report is consistent with the consolidated financial statements and
+as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of
+future development.
+Munich, November 20, 2015
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+Braun
+Wolper
+Wirtschaftsprüfer
+Wirtschaftsprüfer
+2
+284
+Further Information
+Financial Data 2011-2015
+€ in millions, except otherwise stated
+CONSOLIDATED STATEMENTS OF OPERATIONS DATA
+Revenue by region
+Europe, Middle East, Africa
+Therein: Germany
+Asia-Pacific (w/o Japan)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Foot-
+note
+Net result
+(€ in
+millions)
+millions)
+2
+2
+Qimonda France SAS in liquidation
+Qimonda Holding B.V. in insolvency
+Qimonda International Trade (Shanghai) Co. Ltd.
+Qimonda Investment B.V.
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+Qimonda Italy s.r.l. in liquidation
+Qimonda Korea Co. Ltd. in liquidation
+Qimonda Licensing LLC
+GRI G4-17
+Dresden, Germany
+Dresden, Germany
+St. Denis, France
+Rotterdam, The Netherlands
+Shanghai, People's
+Republic of China
+FFFF
+2
+77
+2
+77
+2
+བབྲབ
+2
+Qimonda Beteiligungs GmbH in insolvency
+Munich, Germany
+77
+2
+Qimonda Bratislava s.r.o. in liquidation
+Bratislava, Slovakia
+77
+2
+2
+Dresden, Germany
+77
+Qimonda Dresden Verwaltungsgesellschaft mbH
+in insolvency
+Dresden, Germany
+Qimonda Europe GmbH in liquidation
+Qimonda Finance LLC in insolvency
+Qimonda Flash Geschäftsführungs GmbH
+in liquidation
+Qimonda Flash GmbH in insolvency
+Munich, Germany
+Wilmington, Delaware, USA
+Qimonda Dresden GmbH & Co. OHG in insolvency
+868
+77
+77
+Suzhou, People's
+Republic of China
+Wilmington, Delaware, USA
+Wilmington, Delaware, USA
+Dresden, Germany
+Taipei, Taiwan
+Qimonda UK Ltd. in liquidation
+High Blantyre, Scotland
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+281
+Notes to the Consolidated Financial Statements
+Share-
+holdings
+in %
+77
+77
+77
+77
+77
+77
+Equity
+(€ in
+Qimonda Taiwan Co. Ltd. in liquidation
+Qimonda Richmond LLC in insolvency
+Qimonda Solar GmbH
+Qimonda Memory Product Development
+Center (Suzhou) Co., in liquidation
+Qimonda North America Corp. in insolvency
+Registered office
+2
+77
+2
+Rotterdam, The Netherlands
+77
+Suzhou, People's Republic of China
+2
+77
+2
+2
+77
+2
+Seoul, Republic of Korea
+77
+2
+Fort Lauderdale, Florida, USA
+77
+Name of company
+Padua, Italy
+(785)
+710
+663
+26,725
+29,807
+35,424
+Infineon employees (as of September 30 in total figures)
+8,031
+6,957
+10,729
+11,554
+12,704
+Market capitalization US$ in millions
+6,073
+5,335
+7,950
+9,190
+11,294
+Market capitalization € in millions
+1,087
+26,658
+1,080
+25,720
+2 Return on sales = net income/loss divided by revenue.
+in the 2015 fiscal year compared to
+the previous year
+G02 Revenue growth of the individual segments
+26
+to 2015 fiscal years
+G01 Dividend per share for the 2010
+Page
+Graphic
+List of graphics
+Further Information
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+286
+This would result in a distribution of approximately €225 million.
+7 A cash dividend of €0.20 per share for the 2015 fiscal year will be proposed at the Annual General Meeting.
+6 Return on assets = net income (loss) divided by total assets.
+5 EBITDA = EBIT plus scheduled depreciation and amortization.
+4 EBIT margin = EBIT divided by revenue.
+3 EBIT = earnings from continuing operations before interest and tax.
+1 The Industrial & Multimarket segment was split into two separate segments effective January 1, 2012, namely the Industrial Power Control segment
+and the Power Management & Multimarket segment. Prior year figures have been adjusted accordingly.
+1,081
+1,128
+1,129
+Closing price Xetra Trading System in €
+Dividend 7 in € million
+Dividend per share 7 in €
+The IFX Share (as of September 30)
+106
+(219)
+235
+317
+(1,654)
+(662)
+(585)
+107
+529
+(413)
+(887)
+(890)
+(378)
+Closing price OTCQX in US$
+Shares issued in million
+0.20
+0.18
+7.39
+6.44
+9.98
+10.30
+11.31
+5.59
+4.94
+7.40
+28
+8.19
+130
+129
+129
+202
+225
+0.12
+0.12
+0.12
+10.06
+G03 Revenue by segment in the 2015 fiscal year
+G04 Top 20 semiconductor manufacturers
+28
+G35
+1,660
+1,552
+Industrial Power Control
+971
+783
+651
+728
+797
+Power Management & Multimarket
+1,794
+1,061
+987
+929
+1,003
+Chip Card & Security
+666
+Waste management methods
+1,714
+1,965
+2,351
+Automotive
+399
+284
+227
+252
+202
+710
+484
+489
+G45
+G10 Expected growth of the server market worldwide
+G11 Development of Infineon's market share for
+silicon microphone ICs from 2006 to 2014
+425
+568
+367
+368
+332
+315
+Therein: USA
+Revenue by Segment
+450
+637
+38
+99
+97
+G 39 Lost Day Rate (LDR)
+G06 Compound annual growth rate of the main
+semiconductor target markets, 2014 to 2019
+G38 Injury Rate (IR)
+31
+G05 Infineon revenue by region
+Reports of possible compliance breaches
+G37
+30
+for the 2014 calendar year
+Infineon CSR Concept
+G36
+82
+75
+Page
+G34 "More out of less": The ampacity of
+silicon carbide (SiC) is far higher than that
+of silicon (Si). One 150-millimeter SiC wafer
+is able to switch the same amount of
+current as two 200-millimeter silicon wafers.
+Investments
+Graphic
+36
+G40 Water balance
+G07 Revenue in the fiscal years 1999 to 2015
+G41
+98
+98
+98
+97
+96
+94
+92
+12222222222
+various types of vehicles
+Waste generation
+Standardized water consumption
+G43
+38
+Water discharges 2015
+G42
+37
+compared to the global semiconductor market
+G08 Worldwide light vehicle production by region
+G09 Average semiconductor content of
+Water consumption
+G44
+Income (loss) from investments accounted for using the equity method
+Financial and investment planning and business strategy
+2014 2015
+Management Board and Supervisory Board
+P
+see page 174
+With the resolution dated May 6, 2014, the Supervisory Board generally approved the con-
+tinuation of cooperation between the Company and Technische Universität München
+(Institute for Technical Electronics, headed by Prof. Dr. Schmitt-Landsiedel). At its meeting held
+on August 4, 2015, the Supervisory Board approved the specific research and development
+contract subsequently drawn up.
+Other information relating to corporate governance at Infineon can be found in the Corporate
+Governance Report issued jointly by the two boards.
+Composition of the Supervisory Board
+The Supervisory Board was reconstituted during the year under report, firstly, due to the fact
+that all mandates for employee and shareholder representatives expired at the end of the 2015
+Annual General Meeting, and secondly, to take account of the requirement under co-determi-
+nation legislation to increase the size of the Supervisory Board from 12 to 16 members.
+Election of new employee representatives
+The following employee representatives were elected at the end of 2014 by delegates elected
+from the relevant Company locations: Johann Dechant, Annette Engelfried, Peter Gruber,
+Gerhard Hobbach, Dr. Susanne Lachenmann, Jürgen Scholz, Kerstin Schulzendorf and Diana
+Vitale. Gerd Schmidt, Wigand Cramer and Reinhard Gottinger are no longer members of the
+newly constituted Supervisory Board. The Supervisory Board would like to thank the employee
+representatives who have now left for their constructive and trusted cooperation over the past
+years and wishes them all the best for the future. Special thanks go to Mr. Schmidt, who had
+served on the Supervisory Board since the Company's foundation, working for many years
+with great success in the capacity of Deputy Chairman of the Supervisory Board.
+Election of new shareholder representatives
+The shareholder representatives were elected at the 2015 Annual General Meeting. All members
+of the Supervisory Board in office at that stage were re-elected as follows: Hans-Ulrich Holdenried,
+Prof. Dr. Renate Köcher, Wolfgang Mayrhuber, Dr. Manfred Puffer, Prof. Dr. Schmitt-Landsiedel
+and Dr. Eckart Sünner. Peter Bauer and Dr. Herbert Diess became shareholder representatives
+for the first time.
+The resolution on candidates to be put forward for election at the Annual General Meeting was
+taken at the meeting held on November 26, 2014. The resolution was prepared by the Nomi-
+nation Committee, which took a leading role in seeking and selecting potential candidates, a
+process already commenced during the 2014 fiscal year.
+The Supervisory Board explicitly welcomed the fact that all previously serving shareholder
+representatives wished to stand for re-election, particularly as personnel stability and continuity
+on the Supervisory Board is seen as an important factor for success in any sector, and all the
+more so in the rapidly changing semiconductor industry. The Supervisory Board agreed that
+two excellent candidates for the new mandates had been found in Mr. Bauer and Dr. Diess.
+In conjunction with the search and selection process, the Nomination Committee focused on
+opportunities to increase the number of female members on the Supervisory Board. Unfortu-
+nately, their intensive efforts failed to bear fruit. Irrespective of this outcome, Infineon exceeds
+the gender quota stipulated by law (which does not come into force until January 1, 2016 and
+therefore did not need to be complied with in the elections at the 2015 Annual General Meeting)
+with a current female quota of 37.5 percent.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+21
+Elections within the Supervisory Board
+The constituting meeting of the Supervisory Board took place immediately after the Annual
+General Meeting on February 12, 2015. At that meeting, Mr. Mayrhuber was re-elected as
+Chairman of the Supervisory Board and Mr. Dechant elected as Deputy Chairman.
+In addition to the statutorily prescribed Mediation Committee, the Supervisory Board once
+again resolved to form an Executive Committee, an Investment, Finance and Audit Committee,
+a Strategy and Technology Committee and a Nomination Committee. In keeping with the
+wishes of the Supervisory Board, all of these committees will be composed on a parity basis, i.e.
+with equal numbers of shareholder and employee representatives, with the exception of the
+Nomination Committee. Mr. Mayrhuber remains Chairman of the Supervisory Board, the
+Mediation Committee and the Executive Committee. He was also elected as Chairman of the
+Nomination Committee. Dr. Sünner will again chair the Investment, Finance and Audit Commit-
+tee. Prof. Dr. Schmitt-Landsiedel continues to chair the Strategy and Technology Committee.
+Report on the work of the Supervisory Board's Committees
+The committees draw up resolutions or prepare topics that are required to be dealt with by the
+full Supervisory Board. Certain decision-making powers have been delegated to committees,
+to the extent permitted under German law. The chairpersons of each committee routinely report
+on committee meetings at the next relevant full Supervisory Board meeting.
+Nomination and Mediation Committee
+After convening once in summer 2014, the Nomination Committee met again during the year
+under report to discuss the election of shareholder representatives at the 2015 Annual General
+Meeting as well as the necessary proposals for election to be put forward by the Supervisory
+Board. The recommendations to the full Supervisory Board regarding the proposals for election
+were then the subject of a written resolution.
+The Mediation Committee did not need to convene.
+Executive Committee
+The Executive Committee held one ordinary and one extraordinary meeting during the year
+under report, the latter taking place in the form of a telephone conference. In addition, one
+written resolution was taken.
+The ordinary meeting focused on preparing the Supervisory Board's resolution with respect to
+the appropriateness of Management Board compensation. At this meeting, the committee also
+drew up resolutions for the full Supervisory Board regarding the measurement of the variable
+compensation of the members of the Management Board. Important aspects of this work
+were to determine the degree to which targets for the 2014 fiscal year were achieved and to
+set new target levels for the 2015 fiscal year.
+At the extraordinary meeting, the Executive Committee prepared the Supervisory Board's
+resolutions on the various corporate governance issues referred to above, most notably speci-
+fying a target quota for the membership of women on the Management Board and revising the
+Supervisory Board's target catalog.
+22
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+21
+Investment, Finance and Audit Committee
+20
+The Company entered into a consultancy agreement with the former CEO, Mr. Bauer, in 2012
+when he stood down from the Management Board. In view of his candidacy for the Supervisory
+Board, the consultancy mandate ended on January 31, 2015.
+1 Proposal to the Annual General Meeting to be held on February 18, 2016.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+Wolfgang Mayrhuber
+Chairman of the Supervisory Board
+The Chairman of the Supervisory Board, the Chairman of the Investment, Finance and Audit
+Committee and the Chairwoman of the Strategy and Technology Committee were in continual
+contact with the Management Board. The Chairman of the Supervisory Board was also informed
+without delay by the Chief Executive Officer of all significant events relevant to the business.
+The full Supervisory Board Committee convened for six ordinary meetings during the 2015 fiscal
+year. At three of these meetings, one member on each occasion was absent and excused.
+Attendance at the meetings of the full Supervisory Board therefore averaged over 96 percent,
+while attendance at Supervisory Board committee meetings averaged over 98 percent.
+In the previous fiscal year, the Supervisory Board had already approved the acquisition of
+International Rectifier prior to signature of the contract in August 2014. In the year under report,
+alongside the regular updates reported by the Management Board on the progress of integra-
+tion, the focus of attention with respect to the acquisition turned to financing. Among other
+things, the Supervisory Board consented to the refinancing of the bridging facility, initially
+entered into to finance the acquisition, by means of the issuance of two corporate bonds
+(so-called "eurobonds").
+At its meeting held on November 17, 2014, the Supervisory Board approved the financial and
+investment budget including the overall investment budget and the borrowing limit deter-
+mined for the 2015 fiscal year, as presented by the Management Board. At the meeting held on
+May 12, 2015, the Supervisory Board agreed to an increase in total investments for the 2015
+fiscal year, in light of the acquisition of International Rectifier.
+The Supervisory Board continues to appreciate the importance of focusing one meeting a
+year exclusively on strategic topics. Therefore, in the meeting held on August 3, 2015, the
+Board engaged in a detailed discussion on Infineon's overall strategy, the principal trends
+in the semiconductor industry, the main areas of growth, Infineon's positioning and the
+competitive environment.
+17
+18
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+P see page 186
+Personnel matters
+At an early stage, the Supervisory Board agreed to extend Dr. Ploss's term of office as member
+of the Management Board, Chief Executive Officer and Labor Relations Director, which had been
+due to expire on September 30, 2015. Dr. Ploss's term of office has now been extended for a
+further five-year term that expires on September 30, 2020 and his service contract continued.
+The resolution relating to the extension was taken at the Supervisory Board meeting held on
+November 17, 2014.
+@www.infineon.com/cms/en/
+about-infineon/investor/
+corporate-governance/
+declaration-of-compliance/
+The "Law on Equal Participation of Women and Men in Leadership Positions in the Private
+and Public Sector" came into force during the year under report. The new law stipulates a
+gender quota of 30 percent for the supervisory boards of parity-based, co-determined listed
+corporations such as Infineon Technologies AG. Target quotas were also introduced by the
+new legislation, requiring the Supervisory Board to set a quota for female participation on the
+Management Board by the end of the year under report at the latest. The Supervisory Board
+was also required to stipulate a date no later than June 30, 2017 by which this target quota
+should be achieved. The Supervisory Board is convinced that the decisive criterion for selecting
+members of the Management Board must be their professional skills and personal suitability.
+Consideration must be given to ensuring that the members of the Management Board as a
+whole possess the knowledge, skills and experience required to exercise the board's duties to
+the fullest possible extent. The Supervisory Board seeks to ensure appropriate female repre-
+sentation on the Management Board within the framework of these specifications. In order to
+achieve this aim, the Supervisory Board is of the opinion that greater efforts are required to
+develop women for Management Board positions. In view of the successful work of the current
+Management Board team, and taking the agreed terms of service contracts into account, the
+Supervisory Board sees neither a practical need nor a legal opportunity to increase the per-
+centage of women on the Management Board at this current point in time. A target quota of
+0 percent was therefore determined and will remain valid until June 30, 2017.
+The Supervisory Board engages an external compensation expert to review the Management
+Board compensation system and the compensation of individual members of the Management
+Board on a regular basis. The results contained in the compensation expert's report presented
+during the 2015 fiscal year were discussed in detail during the Executive Committee meeting
+held on October 23, 2014 and by the full Supervisory Board on November 17, 2014. The com-
+pensation expert reached the conclusion that the compensation system complies with both the
+legal requirements and the recommendations set out in the German Corporate Governance
+Code. In particular, the review concluded that the compensation of Infineon's Management
+Board is commensurate with market conditions and that the variable compensation compo-
+nent is oriented towards the sustainable growth of the enterprise. The Supervisory Board shares
+the opinion of the compensation expert. The review report also considered the moderate
+increase in Management Board compensation effective October 1, 2014, resolved by the
+Supervisory Board at the meeting held on May 6, 2014, and confirmed the appropriateness
+of the increase.
+Detailed information concerning Management Board compensation is provided in the
+Compensation Report.
+Litigation
+The Supervisory Board was informed regularly and comprehensively regarding major legal
+disputes during the 2015 fiscal year and deliberated on them in conjunction with the Manage-
+ment Board. Besides the Company's appeal against the fine imposed by the EU Commission
+and the consequences of the Commission's decision, matters discussed included the legal
+disputes with the insolvency administrator of Qimonda AG.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+19
+Corporate governance
+Declaration of Compliance 2015
+As in previous years, the Supervisory Board and the Management Board resolved to issue the
+2015 Declaration of Compliance with one deviation from the Code's recommendations regard-
+ing Supervisory Board compensation. The two boards still consider that the compensation
+regulation resolved by the Annual General Meeting adequately takes account of Infineon's
+long-term success. With the exception of the recommendation with respect to Supervisory
+Board compensation, Infineon has complied with, and continues to comply with, all other
+recommendations contained in the Code. The most recent Declaration of Compliance was
+published on the Company's website in November 2015.
+Changes to the Supervisory Board's target catalog
+The German Corporate Governance Code recommends that the Supervisory Board determine
+specific targets for its composition. The Supervisory Board revised its existing catalog of targets
+in resolutions taken on November 17, 2014 and August 4, 2015, partly in response to the require-
+ment to enlarge the Supervisory Board from 12 to 16 members due to the increased size of the
+workforce. It was also necessary for the target catalog to reflect the new statutory gender
+quota for supervisory boards as well as changes to the German Corporate Governance Code
+that became applicable in the year under report. The changes to the Code related primarily
+to the introduction of recommendations concerning the usual length of appointments to a
+supervisory board. In this respect, the Supervisory Board was guided by its recognition of
+the importance of continuous personnel renewal, but that this must always be weighed against
+the benefits of having continuity on the Company's representative bodies. Stability in the
+composition of the Supervisory Board promotes a spirit of trust, both within the Supervisory
+Board itself and with the Management Board. Having given consideration to the above
+aspects, the Supervisory Board decided that its members should not, as a general rule, be
+appointed for more than three periods of office.
+Efficiency review for Supervisory Board activities
+The Supervisory Board examines the efficiency of its activities annually. Based on the ques-
+tionnaire tried and tested in past examinations, in summer 2015 members of the Supervisory
+Board were again requested to provide critical feedback regarding their work and the extent of
+cooperation between the two boards. The results of this survey were discussed at the Super-
+visory Board meeting held on August 4, 2015. No noteworthy shortcomings were identified.
+Assessment of potential conflicts of interest
+During the year under report, the Supervisory Board consented to Dr. Ploss taking on a
+mandate in the Supervisory Board of "Haus der Zukunft gGmbH" and to Mr. Mittal taking on
+a mandate in the Board of Directors of Global Semiconductor Alliance (GSA). Both of these
+entities are non-profit organizations. In the previous fiscal year, Mr. Mittal received the approval
+of the Supervisory Board to accept a mandate as member of the Board of Directors of the
+Singapore Economic Development Board. Mr. Mittal took up this position during the year under
+report. The exercising of these mandates does not conflict with any of Infineon's interests.
+Management Board compensation
+The Investment, Finance and Audit Committee convened four times during the year under report.
+20
+Other duties performed by the committee included specifying key areas to be examined by the
+external auditor, monitoring the auditor's independence and considering the additional services
+performed by the auditor. The committee prepared the Supervisory Board's proposal to the
+Annual General Meeting regarding the selection of the auditor to audit the Separate and Consol-
+idated Financial Statements and review the half-year financial statements. It subsequently
+engaged the auditor to perform these tasks and, furthermore, to review the quarterly financial
+statements. The relevant fee arrangements were also considered.
+70
+80
+OPERATIONS
+88
+INTERNAL MANAGEMENT SYSTEM
+92
+SUSTAINABILITY AT INFINEON
+108
+OUR EMPLOYEES
+116
+NOTABLE EVENTS 2015
+118
+THE INFINEON SHARE
+AWARDS
+124
+INFINEON WORLDWIDE
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+2010 2011 2012 2013
+Its activities centered on monitoring the financial reporting process, reviewing the half-year and
+quarterly financial statements, conducting the preliminary audit of the Separate Financial State-
+ments, Consolidated Financial Statements and Management Report of Infineon Technologies AG
+and of the Infineon Group, and discussing the audit report with the auditor. Another important
+task performed by the committee was to examine and discuss Infineon's financial and invest-
+ment plans and to determine a borrowing limit for the 2015 fiscal year. The committee also
+considered the effectiveness of the internal control system, internal audit system and risk
+management system. The committee's members also received reports from the Compliance
+Officer on a regular basis. The committee was provided with regular updates on significant
+legal disputes, including the Company's appeal against the fine imposed by the EU Commis-
+sion as well as the consequences of the Commission's decision. Matters discussed also included
+the legal disputes with the insolvency administrator of Qimonda AG, which were deliberated
+upon at length.
+10
+201
+18
+12 12 12
+RESEARCH & DEVELOPMENT
+in €-Cent
+G 01
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+26
+25
+Combined
+Management Report
+Our Group
+Combined Management Report - Our Group
+Dividend per share for the
+2010 to 2015 fiscal years
+66 Chip Card & Security
+122
+62 Power Management & Multimarket
+The committee (and the full Supervisory Board) gave lengthy consideration to the report drawn
+up by KPMG on the statutorily prescribed audit regarding compliance with the so-called
+EMIR Directive, which, among other things, imposes certain duties on entities such as Infineon
+with regard to derivatives management.
+The auditor attended all of the meetings of the Investment, Finance and Audit Committee and
+reported in detail on its audit activities.
+Strategy and Technology Committee
+The Strategy and Technology Committee convened three times during the period under report.
+The committee received detailed reports on the "excellence initiatives" in the area of research
+and development on the one hand and sales and marketing on the other. It also addressed issues
+relating to the acquisition and integration of International Rectifier. Topics dealt with at these
+meetings included future manufacturing and location strategies as well as the product and
+technology portfolio within the Group. The committee also considered a number of technological
+topics such as the potential offered, and challenges posed, by new semiconductor materials.
+Separate and Consolidated Financial Statements
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, audited the Separate Financial Statements of
+Infineon Technologies AG and the Consolidated Financial Statements as of September 30, 2015
+as well as the Management Report of Infineon Technologies AG and of the Infineon Group, and
+issued unqualified audit opinions thereupon. KPMG also reviewed the half-year and quarterly
+financial reports.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+The Separate Financial Statements, the Consolidated Financial Statements prepared in
+accordance with IFRS, the Management Report and the Management Board's proposal for
+the appropriation of unappropriated profit (all prepared by the Management Board) and the
+long-form reports of KPMG pertaining to the audits of the Separate Financial Statements, the
+Consolidated Financial Statements, and the Management Report, were discussed thoroughly
+with KPMG at the meeting of the Investment, Finance and Audit Committee held on November
+11, 2015. At the meeting, the aforementioned committee resolved to propose that the Super-
+visory Board approve the two sets of financial statements.
+The Chairman of the Investment, Finance and Audit Committee reported on the committee's
+recommendations at the meeting of the Supervisory Board held on November 17, 2015. At
+the Supervisory Board meeting held on November 24, 2015, the financial statements were
+examined thoroughly in the presence of the auditor and scrutinized by the Supervisory Board
+to ensure, in particular, that they were lawful, compliant and adequate.
+In view of the result of the audit, the Supervisory Board has no objections to the financial
+statements and the audit performed by the auditor. The Supervisory Board therefore concurred
+with the results of the audit on November 24, 2015 and approved the Separate Financial State-
+ments of Infineon Technologies AG and the Consolidated Financial Statements of the Infineon
+Group. The Separate Financial Statements have therefore been adopted.
+The Supervisory Board would like to express its thanks to the Management Board and to the
+entire staff for their outstanding commitment and excellent achievements during the 2015
+fiscal year.
+Neubiberg, November 2015
+On behalf of the Supervisory Board
+Wolfgang Mayrhuber
+Chairman of the Supervisory Board
+The scope, key areas and costs of the audit were also reported on at the aforementioned Super-
+visory Board meeting and the risk management system explained. The Management Report
+of Infineon Technologies AG and of the Infineon Group was also examined and found to be
+consistent with legal requirements in the opinion of the Supervisory Board. The Supervisory
+Board concurs with the statements made in the Management Report regarding Infineon's
+future development. The Supervisory Board has examined and endorses the Management
+Board's proposal for the appropriation of unappropriated profit, which provides for a dividend
+of €0.20 per qualifying share.
+24
+58 Industrial Power Control
+54 Automotive
+23
+THE SEGMENTS
+32 Group strategy
+28 Successful 2015 fiscal year
+52
+FINANCES AND STRATEGY
+Statements") and note 2 ("Summary of significant accounting policies").
+The Combined Management Report contains forward-looking statements
+about the business, financial condition and earnings performance of the
+Infineon Group. These statements are based on assumptions and projections
+based on currently available information and present estimates. They are
+subject to a multitude of uncertainties and risks. Actual business develop-
+ment may therefore differ materially from what has been expected. Beyond
+disclosure requirements stipulated by law, Infineon does not undertake
+any obligation to update forward-looking statements.
+This report combines the Group Management Report of the Infineon Group
+("Infineon" or "Group") - comprising Infineon Technologies AG (hereafter
+also referred to as "the Company") and its consolidated subsidiaries - and
+the Management Report of Infineon Technologies AG. It should be read in
+conjunction with the audited Consolidated Financial Statements, including
+the notes to the Consolidated Financial Statements ("notes") included else-
+where in this report. The audited Consolidated Financial Statements have
+been prepared on the basis of a number of assumptions and accounting
+policies more fully explained in note 1 ("Basis of the Consolidated Financial
+Our Group
+Combined
+Management
+Report
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+26
+Industry associations
+Further Information
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Memberships and partnerships
+Infineon is engaged in numerous industry associations
+and standardization organizations - some examples:
+> World Semiconductor Council (WSC; organization of regional semiconductor associations)
+> US Semiconductor Industry Association (SIA)
+> Industrial Internet Consortium (IIC)
+› European Semiconductor Industry Association (ESIA)
+› Association representing the Smart Security Industry (EUROSMART)
+> China Semiconductor Industry Association (CSIA)
+296
+› Federal Association for Information Technology, Telecommunications and New Media (BITKOM)
+> Global Semiconductor Alliance (GSA)
+A decimal prefix for usage in the international system of units.
+Zetta stands for 1021 = 1 sextillion, abbreviated "Z", for exam-
+ple zettabyte (ZByte).
+Decimal prefix for usage in the international system of units.
+Tera stands for 10¹² = 1 trillion, abbreviated “T”, for example
+terabyte (TByte).
+Thin slice of semiconductor material from which the actual
+chip is produced. Typical diameters for wafers currently
+are 200 millimeters and 300 millimeters.
+Wafer
+Variable Speed Drive. Electronic control units for controlling
+the speed (revolutions per minute) of electric motors.
+VSD
+Trusted Computing means that the hardware and software
+used in PCs, as well as other computer-controlled systems,
+such as mobile phones, can be controlled. This is achieved
+by means of an additional chip, the Trusted Platform Module
+(TPM), which can use cryptography to measure the integrity
+of the hardware and of the software data structures, while also
+saving these values in a verifiable way.
+Trusted Computing
+A transistor is an electronic component for switching and
+amplifying electrical signals. Transistors are used in fields
+including telecommunications, computer systems and power
+electronics both as discrete components and by the million
+in integrated circuits.
+Transistor
+Trusted Platform Module. A chip that adds elementary security
+functions such as license and data protection to a computer
+or similar device. TPMS can be integrated into tablet PCs,
+smartphones and consumer electronics as well as PCs and
+notebooks. A trusted computing platform (see Trusted Com-
+puting) can be created by combining a specially configured
+operating system and appropriate software with a device
+containing a TPM.
+TPM
+A wafer (see Wafer) is typically around 350 microns (μm; see
+Micron) thick when sawn into individual chips. A thin wafer
+is one that has been polished down to less than 200 microns
+thick (a human hair or a sheet of paper, by comparison, is
+about 60 microns thick). Thin wafer technology offers benefits:
+Thinner chips mean losses can be reduced and the heat gener-
+ated can be dissipated more effectively. Another advantage
+is that electrically active patterns can be produced on the
+backside as well, enabling the chip to provide completely new
+functions. Thin wafer chips also allow more compact packages.
+Thin wafer
+Tera
+> German Electrical and Electronic Manufacturers' Association (ZVEI)
+Zetta
+> German Association of the Automotive Industry (VDA)
+HEV/EV
+> International Electrotechnical Commission (IEC)
+Industrial Internet, Industry 4.0
+Insulated Gate Bipolar Transistor Module. IGBTs are semi-
+conductor components used increasingly in power electronics
+due to their robustness, high blocking voltage, and their
+ability to be triggered with negligible power. Modules are
+formed using several IGBTs in parallel within a single casing.
+These modules are used to drive electric motors both in
+automotive and industrial applications. Motor speed and
+torque can be regulated along a gradual scale. Trains such
+as Germany's ICE and France's TGV use IGBT modules for an
+efficient and rapid electrical drive control.
+IGBT Module
+Integrated Circuit. Electronic Component parts composed of
+semiconductor materials such as silicon; numerous compo-
+nents, including transistors, resistors, capacitors and diodes
+can be integrated into ICs and interconnected.
+IC
+The word "hybrid" comes from the Greek for "mixed" or
+"originating from two different sources". It has come to be
+used to denote the heart of a new drive technology in the
+automotive industry: hybrid vehicles operate with a combi-
+nation of a diesel or gas engine and an electric motor.
+Industrial Internet, in Germany commonly referred to as
+"Industrie 4.0", describes the gradual evolution towards the
+smart, efficient and flexible factory of the future. It is character-
+ized by high degrees of automation, deep horizontal and
+vertical integration of production and logistics processes,
+and the use of advanced “big data" analytics. Or simply put:
+Industrial Internet = Industrial Automation + Internet of Things
+(see Internet of Things).
+Hybrid technology
+Hybrid car
+High-voltage direct-current transmission. HVDC transmission
+is a method of transmitting electrical energy at high direct-
+current voltages of up to 800,000 volts over distances of more
+than 1,000 kilometers. HVDC transmission is also used for
+connecting offshore wind farms to the electricity grid on the
+mainland.
+HVDC
+Hybrid electric vehicle/electric vehicle: collective terms
+for vehicles powered partly or entirely by an electric motor
+(see hybrid car).
+Hertz (Hz) is the unit for frequency, and is named after the
+German physicist Heinrich Rudolf Hertz (1857-1894). The
+Hertz determines the number of oscillations per second, or
+more generally speaking, the number of repetitive processes
+per second. Frequently used units are kilohertz (one thousand
+oscillations per second), megahertz (one million oscillations
+per second) and gigahertz (one billion oscillations per second).
+A portable computer that can be used in a number of ways
+including as a note pad. The tablet is operated by applying
+a stylus or, increasingly, finger contact directly onto a
+touch-sensitive screen. Recently tablets have come to be
+used primarily for internet access and hence as a terminal
+for cloud computing (see cloud computing).
+A hybrid car is usually understood to be a motor vehicle that
+is driven by at least one electric motor, as well as a combustion
+engine. The hybrid drive is used in standard car construction
+to enhance efficiency, reduce consumption of fossil fuels or
+increase performance at lower engine speeds. In full hybrid
+cars the vehicle can be driven solely by the electric motor. In
+mild hybrid cars, the electric motor is simply used to support
+the combustion engine, for example when accelerating.
+Standardization organizations
+Internet of Things
+Integrity Guard
+> International Organization for Standardization (ISO)
+› Global Standards for the Microelectronics Industry (JEDEC)
+> Universal Serial Bus Implementers Forum (USB-IF)
+› TCG-Trusted Computing Group (Computer Security Standards)
+› European Telecommunications Standards Institute (ETSI)
+> Automotive Open System Architecture (AUTOSAR)
+The Internet of Things (IoT) is the network of physical objects
+that contain embedded electronics to compute, sense, actuate
+and communicate. There is no clearly defined “IoT market",
+instead the term loT describes an ongoing and long-term trend
+that affects many applications, some of which exist today
+with different names and many additional applications that
+might exist sometime in the future. For Infineon we currently
+see lot-related opportunities mainly in mobility, industry,
+energy, consumer and ICT (Information and Communication
+Technology) infrastructure markets.
+> German Institute for Standardization (DIN)
+Others
+> United Nations Global Compact
+Inverter
+293
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+Integrity Guard (IG) is a revolutionary security technology
+designed for chip cards and security applications, with which
+Infineon is ringing in a new era in the field of hardware-based
+security. IG was specially developed for sophisticated, long-
+life applications such as payment cards and government
+identification documents. IG enables a security controller for
+the first time to provide complete error detection and com-
+prehensive encryption of all chip functions across the entire
+data path within the chip. For this reason it is known as "digital
+security”. IG is used in the security controllers of the SLE 77
+and 78 families and has won numerous international awards.
+> German Commission for Electrical, Electronic & Information Technologies of DIN and VDE (DKE)
+Tablet
+Earnings per share in accordance with IFRS are influenced by
+amounts relating to purchase price allocations for acquisitions
+as well as by other exceptional items. In order to enable better
+comparability of operating performance over time, Infineon
+computes adjusted earnings per share by excluding extraordi-
+nary effects including the tax effect on them.
+Switch-mode power supply
+effect transistor. The correct way to write it is RDS(on). The R
+The term used to describe the minimal resistance of a field-
+On-state resistance
+Near field communication. An international communication
+standard for contactless data exchange over short distances.
+The initial drafts of the communication standard appeared
+several years ago, but the technology did not break through
+until 2011 when it was included in the first smartphones. NFC
+can be used as an access key to content on terminals and
+for services such as cashless payment and paperless ticketing.
+NFC
+Metric unit of length. Corresponds to the billionth part of a meter
+(10-9); the symbol is nm. The diameter of deoxyribonucleic
+acid (DNA) is roughly 2 nanometers. Fabrication features in the
+semiconductor industry are now measured in nanometers
+(see 40-/65-/90-nanometer technology).
+stands for the electrical resistance. The index DS stands for
+the connections to the field-effect transistor, which are known
+as Drain (D) and Source (S). "On" stands for the state of the
+field-effect transistor.
+Nanometer
+MOSFET
+Metric linear measure, corresponding to the millionth part
+of a meter (10-6). Symbol: μm. As an example, the diameter of
+a single human hair is 0.1 millimeters, or 100 μm.
+Micron (Micrometer)
+A microprocessor integrated into a single IC combined with
+memory and interfaces, which functions as an embedded
+system. Logic circuits of the highest complexity can be
+designed in a microcontroller and controlled by software.
+Microcontroller
+Micro-electro-mechanical system. A micro-electro-mechanical
+system, or simply a microsystem, is a miniaturized device,
+assembly or part that contains components of minute dimen-
+sions (only measurable in micrometers) that work together
+as a system. Usually a microsystem consists of one or more
+sensors, actuators and control electronics on one chip.
+Infineon manufactures microphones as MEMS. Due to their
+diminutive size, low power consumption, good shielding from
+interfering signals and low-cost production, these types of
+microphone are being increasingly installed in mobile devices
+such as smartphones, tablets, cameras, and accessories such
+as headsets and hearing aids.
+Metal-Oxide-Semiconductor Field-Effect Transistor. MOSFET
+is currently the most widely used transistor architecture.
+MOSFETs are used both in highly integrated circuits and in
+power electronics as special power MOSFETs.
+MEMS
+OptiMOS™
+Peta
+Associated Companies
+American Depositary Shares - ADSS are U.S.-traded securities
+represented by an American Depositary Receipt for non-U.S.
+issuers. These securities simplify the access to U.S. capital
+markets for non-U.S.-based companies, and in turn provide
+U.S. investors with investment opportunities in non-U.S. secu-
+rities. Since the delisting from the New York Stock Exchange
+("NYSE"), the Infineon ADSs have been traded over the counter
+on the OTCQX International Premier market as a sponsored
+Level 1 program with the ticker symbol IFNNY.
+ADS
+Hertz
+Adjusted EPS
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Financial Glossary
+Infineon's brand name for low-voltage power transistors for
+voltages between 20 and 300 V.
+Financial Glossary
+Plug-in hybrid electric vehicles combine the advantages of
+battery-powered vehicles with those powered by combustion
+engines. On short trips and in urban traffic, the vehicle is driving
+purely electrically, and, therefore, quietly, emission-free and
+economically. The electric power is supplied by the battery.
+The combustion engine is used on longer trips or whenever
+the battery needs recharging, making it possible to drive much
+further. The battery can be charged either using mains power
+or via the recuperation of braking energy.
+Plug-in hybrid electric vehicle (PHEV)
+Further Information
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+294
+Decimal prefix for usage in the international system of units.
+Peta stands for 1015 = 1 quadrillion, abbreviated "P", for example
+petabyte (PByte).
+Carve-Out
+A switch-mode power supply is an electronic module that
+transforms an AC voltage into a DC voltage. Switch-mode
+power supplies are more efficient than mains transformers
+and can be more compact and lighter than conventional
+power supplies containing a heavy transformer with a ferrous
+core. Switch-mode power supplies are mainly used in PCs,
+notebooks and servers. However, they also achieve a very high
+level of efficiency even at low power, so they are increasingly
+found in plug-in power supply units, for example as chargers
+for mobile phones.
+Decimal prefix for usage in the international system of units.
+Mega stands for 106 = 1,000,000 = 1 million, or "M" for short.
+In the world of information technology, Mega stands for
+220 1,048,576, e.g. megabyte (MByte).
+Laterally Diffused MOS transistor. The increasingly stringent
+standards concerning the electrical properties of field-effect
+transistors (MOSFETs) have led to the development of variations
+of the planar MOSFET in recent decades. They frequently
+differ in the design of their doping profile or the selection of
+material. For instance, there is a difference between lateral
+(i.e., those aligned parallel to the surface) and vertical designs.
+Whereas lateral transistors (LDMOS) are primarily used in
+radio-frequency applications for telecommunications, the
+vertical design is mainly used in the field of power electronics.
+Silicon
+A chemical element with semiconducting characteristics.
+Silicon is the most important raw material in the semicon-
+ductor industry.
+Silicon Carbide
+Compound semiconductor made from silicon (chemical
+symbol Si) and carbon (chemical symbol C). The abbreviation
+is SiC. Because of its special material properties (e.g. good
+thermal conductivity), SiC is used for Schottky diodes, as well
+as elsewhere (see Schottky diode).
+SIM cards
+Subscriber Identity Module cards. Chip cards that are inserted
+into mobile phones in order to identify the user within the
+network. They are used by mobile phone networks to provide
+connections to their customers.
+A shrink in the context of semiconductor manufacturing is the
+process of scaling manufacturing down from an existing feature
+size to the next smaller feature size. The move to smaller
+structures generally involves shrinking all semiconductor circuit
+elements equally, although there are some exceptions. Chip
+function is unchanged, but since the chips are smaller, more
+can be squeezed onto each wafer and manufacturing costs fall.
+Smartcard
+Smartphone
+A smartphone is an internet-ready mobile telephone that
+provides more computer functionality and connectivity than
+a modern conventional mobile telephone. Current smart-
+phones generally allow users to upgrade their device with new
+functions by installing additional programs known as apps.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+295
+Smart Power Technology
+Apart from the generally improved robustness of power
+semiconductor components with regard to high current and
+voltage peaks and the reduction of on-state resistance, an
+increasing number of functions are being integrated in the
+component. These components are then commonly known
+as Smart Power Devices and, apart from protective circuitries
+(such as thermal and overcurrent protection), they also contain
+more complex functions such as simple microcontrollers or
+analog-digital converters. The special technology needed
+to produce Smart Power Devices is known as Smart Power
+Technology, such as SPT9 from Infineon.
+Plastic card with built-in memory chip and/or microcontroller,
+which can be combined with a Personal Identification
+Number (PIN).
+Mega
+Shrink
+Semiconductor
+LDMOS
+A decimal prefix for usage in the international system of units,
+kilo stands for 103 = 1,000, or abbreviated to "k". In the world
+of information technology, Kilo stands for 210 = 1,024, or "K"
+for short, e.g. kilobyte (KByte).
+Kilo
+ISO 26262 is an ISO standard for safety-related electrical
+and electronic systems in various types of vehicle. ISO 26262
+defines a procedure model together with required activities
+and methods to be used in development and production.
+The implementation of the standard is designed to guarantee
+the functional safety of systems that include electrical and
+electronic components in vehicles. The standard is used by
+carmakers, automotive suppliers and testing institutions.
+ISO 26262
+An inverter, also called a DC/AC converter, is an electrical
+device for converting DC voltage into AC voltage, or direct
+current into alternating current. Inverters are used in solar
+power plants, for example, for converting the DC voltage
+generated in the solar modules into AC voltage, which is then
+fed into the electricity network.
+Crystalline material. Its electrical conductivity can be changed
+as desired by the application of doping materials (most
+often boron or phosphorus). Semiconductors include silicon
+or germanium. The term is also applied to ICs made of
+these materials.
+Power semiconductor
+Power transistor
+Power transistor is a term used in electronics to refer to a
+transistor for switching or controlling large voltages, currents
+and outputs. There is no standard method of differentiating
+between transistors for signal processing and power transistors.
+Power transistors are mainly produced in packages that enable
+installation on heat sinks, as it is otherwise impossible to
+handle the dissipation loss of several kilowatts that occurs
+with some types and applications (see power semiconductor).
+Repowering
+Repowering in a renewables context generally refers to the
+replacement of old wind turbines with newer, more powerful
+and more efficient models. This is done in order to make
+better use of the available locations and increase the installed
+capacity while simultaneously reducing the number of turbines.
+Schottky diode
+A special diode that has a metal-semiconductor junction
+rather than a semiconductor-semiconductor junction. The
+most frequently used semiconductor material up to 250 Volts
+is silicon. Silicon carbide (SiC) is used for voltages in excess
+of 300 Volts (see Silicon Carbide). SiC Schottky diodes offer
+a number of advantages over conventional diodes in power
+electronics. When used together with IGBT transistors, it is
+possible to dramatically reduce switching losses in the diode
+itself, as well as in the transistor. The name derives from the
+German physicist Walter Schottky (1886-1976).
+Over the last 30 years power semiconductors have mostly
+replaced electromechanical solutions in the areas of drive
+technology as well as power management and supply,
+due to their ability to form high energy flows almost at will.
+The advantage of these components is their ability to switch
+extremely rapidly (typically within a fraction of a second)
+between the "open" and the "closed" state. With the fast
+sequences of on/off pulses, almost any form of energy flow
+can be created, e.g. a sinus wave.
+A sensor based on the Hall principle, used for measuring
+magnetic fields, named after the US physicist Edwin Herbert
+Hall (1855-1938). Hall sensors are used in automobiles,
+for example, for detecting pedal positions or for measuring
+the speed at which shafts rotate.
+Authentication means the ability to prove one's own identity,
+i.e., proof of the authentic original. However, authentication
+does not necessarily refer to people only, but also to any
+tangible or intangible object, such as a device or an electronic
+document. A user can be authenticated in any one of three
+different ways: 1.) By providing a certain piece of information,
+i.e., the user knows something, such as a password; 2.) Through
+the use of a possession, i.e., the user possesses something,
+such as a key; 3.) Through the direct presence of the user,
+i.e., the user is someone or something, such as in the form of
+a biometric feature.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Net cash position
+Gross cash position less short-term and long-term debt.
+OTCQX
+One of three marketplaces for trading over-the-counter stocks
+provided and operated by the OTC Markets Group.
+Profit or loss and capital-share attributable to
+non-controlling interests
+Proportional share in net income and equity attributable to
+outside shareholders, and not to shareholders of the Infineon
+Group's parent company.
+Put options
+In the case of a put option, the buyer acquires a contractual
+right to sell a stipulated quantity of an underlying asset
+(e.g. a share) at a predetermined date (European option) at a
+specified price (underlying price). In return, the issuer receives
+an option premium from the buyer of the put option.
+Registered shares
+Shares registered in the name of a certain person. This
+person's details and number of shares are registered in
+the Company's share ledger in accordance with securities
+regulations. Only individuals registered in the Company's
+share ledger are considered shareholders of the Company and
+are, for example, able to exercise their rights at the Company's
+Annual General Meeting.
+ROCE
+Return on Capital Employed is defined as the operating
+result after tax from continuing operations divided by capital
+employed. RoCE shows the linkage between profitability and
+capital resources required to run the business.
+Segment Result
+Infineon defines Segment Result as operating income (loss)
+excluding: the net amount of asset impairments and reversals
+thereof; the impact on earnings of restructuring and closures;
+share-based compensation expense; acquisition-related
+depreciation/amortization and other expenses; gains (losses)
+on sales of assets, businesses, or interests in subsidiaries as
+well as other income (expense), including litigation costs. This
+is the measure that Infineon uses to evaluate the operating
+performance of its segments.
+Segment Result Margin
+An indicator of operating performance, calculated as the
+percentage of Segment Result in relation to revenue.
+Working capital
+"Mixed-signal" is a generic term for integrated circuits that
+operate simultaneously with analog and digital signals. Owing
+to similar requirements in terms of development and manu-
+facturing processes, they are generally grouped together with
+integrated circuits operating exclusively with analog signals,
+hence giving rise to the combination "analog-mixed-signal".
+Analog-mixed-signal
+Alternating Current (AC) to Direct Current (DC) conversion.
+This is a generic term for power supplies in which alternating
+current from the mains is converted to direct current, which
+often then needs to be precisely converted to a lower current
+(see also "DC-DC conversion").
+AC-DC conversion
+The anti-lock braking system is an electronic vehicle safety
+feature that prevents the wheels from locking during
+heavy braking.
+ABS
+A contractual arrangement whereby two or more parties
+undertake an economic activity that is subject to joint control.
+Manufacturing technology can be described by feature size,
+such as 90, 65, or 40 nanometers. The smaller the structures,
+e.g. lines and pitches, the smaller the chip and the cheaper
+its manufacturing. The 40 nanometer technology succeeds
+the 65 nanometer technology, which followed the 90 nano-
+meter technology.
+Comprehensive term for the manufacture and processing of
+wafers with a diameter of 300 millimeters.
+300-millimeter technology
+289
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+Technology Glossary
+Working capital consists of current assets less cash and cash
+equivalents, financial investments and assets held for sale
+less current liabilities excluding short-term debt and current
+maturities of long-term debt excluding liabilities classified as
+held for sale.
+40-/65-/90-nanometer technology
+Joint Venture
+International Financial Reporting Standards; Infineon prepares
+its Consolidated Financial Statements in accordance with IFRS,
+as adopted by the European Union.
+IFRS
+EPS
+A financial instrument that derives its value from the price,
+price fluctuations or expected price of an underlying asset
+(e.g. a security, currency or bond).
+Derivate
+A measure of a pension plans' liability at the calculation date
+assuming that the plan is ongoing and will not terminate in the
+foreseeable future.
+Defined benefit obligations (DBO)
+Since tax laws often differ from the recognition and measure-
+ment requirements of financial accounting standards, differ-
+ences can arise between (a) the amount of taxable income
+and pre-tax financial income for a year and (b) the tax bases
+of assets or liabilities and their reported amounts in financial
+statements. A deferred tax liability and corresponding expense
+results from income that has already been earned for account-
+ing purposes but not for tax purposes. Conversely, a deferred
+tax asset and corresponding benefit results from amounts
+deductible in future years for tax purposes but that have already
+been recognized for accounting purposes.
+Earnings Per Share. Basic earnings per share is calculated by
+dividing net income (loss) by the weighted average number
+of ordinary shares outstanding during the period. For the
+calculation of diluted earnings per share the weighted average
+number of ordinary shares outstanding is increased by all
+additional ordinary shares that would have been outstanding
+if potentially dilutive instruments had been converted into
+ordinary shares.
+Deferred tax
+DAX
+Convertible notes/bonds are interest-bearing securities which
+normally - in addition to the right to receive interest and
+repayment of the nominal amount - give the bearer a conver-
+sion option. During the term of the option (conversion period),
+the bearer can exchange the convertible bond/note for a
+specified number of shares of the issuing entity. The conversion
+ratio is stipulated and is typically adjusted for transactions
+affecting the shareholders, such as dividend payments. If the
+bondholder/noteholder does not convert the bond/note
+into shares during the conversion period, the issuer redeems
+the bond/note at the end of the term at its nominal amount.
+Convertible bond
+The cash-effective balance arising from inflows and outflows
+of funds over the fiscal year. The Consolidated Statement of
+Cash Flows is part of the Consolidated Financial Statements
+and shows how the Company generated cash during the
+period and where it spent cash, in terms of operating activities
+(cash the Company made by purchasing/selling goods and
+services), investing activities (cash the Company spent for
+investment, or cash it raised from divestitures), and financing
+activities (cash the Company raised by selling stocks, bonds
+and loans or spent for the redemption of stocks or bonds).
+Cash flow
+Legal separation of business operations (e.g. business units).
+Deutscher Aktienindex - The German Stock Index tracking the
+30 major German companies traded on the Frankfurt Stock
+Exchange, in terms of order volume or market capitalization.
+ASIC
+Equity Method
+Fair Value
+Revenues less cost of goods sold.
+Gross profit
+Total of cash and cash equivalents plus financial investments.
+Gross cash position
+An intangible asset of the Company that results from a busi-
+ness acquisition, representing the excess of the purchase price
+(cost) paid for the acquired business over the fair value of
+the separately identifiable assets acquired and liabilities and
+contingencies assumed. Under IFRS, goodwill is not reduced
+through scheduled amortization, but rather written down to its
+fair value if impaired. An impairment assessment is performed
+at least once a year.
+Goodwill
+Valuation method for interests in associated companies in
+which the investor has the ability to exercise significant
+influence over the investee's operating and financial policies.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+287
+Cash flow from operating and investing activities from continu-
+ing operations excluding cash flows related to the purchase
+or sale of financial investments.
+Free cash flow
+A forward transaction taking place on a set future date with indi-
+vidually negotiated contract terms where the delivery and pay-
+ment of a security is effected with the rate set on the day
+the transaction is concluded; in the case of a foreign exchange
+forward, the exchange of one currency for another at a fixed rate.
+Forward contract
+The fair value is defined as price that would be received to sell
+an asset or paid to transfer a liability in an orderly transaction
+between market participants at the measurement date.
+288
+Hall sensor
+Application Specific Integrated Circuit. Logic IC specially
+constructed for a specific application and customer;
+implemented on an integrated circuit.
+Application Specific Standard Product. Standard product
+designed for a specific use that can be used by many customers;
+implemented on an integrated circuit.
+Embedded flash
+A nonvolatile memory that is integrated on a chip together
+with a microcontroller processor core. The nonvolatile memory
+contains the program code.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+291
+Epitaxy
+From the Greek epi "upon" and taxis "arrangement" or "orien-
+tation". Epitaxy is a form of crystalline growth that occurs
+both in nature (such as in minerals) and in the technical world.
+In semiconductor technology, epitaxy is the artificial growth
+of crystalline layers on a substrate, which is usually a wafer.
+Epitaxy enables various doping profiles for transistors to be
+created, which are not feasible using other methods such as
+diffusion or ion implantation.
+EPS
+Electric Power Steering is an electrically-driven power steering
+system, which is equipped with an electric motor as opposed
+to hydraulically driven systems. The advantage is that the
+power steering can be tailored to suit the current requirement.
+In other words, it is only activated as needed during steering
+operations, which leads to greater fuel economy compared with
+hydraulic power steering systems.
+ESD
+Electrostatic discharge. ESD is a spark or disruptive discharge
+caused by a large potential difference in an electrically iso-
+lating material that causes a very short, high electrical current
+impulse capable of destroying electronic devices such as mobile
+telephones. The cause of the potential difference is mostly
+a static electricity charge, which can happen, for example,
+when walking over a carpet and can charge a person with up
+to 30,000 volts.
+ESC
+Electronic Stability Control. A vehicular technology system
+that uses sensors and computers to brake individual wheels
+in order to prevent skidding.
+Euro NCAP
+European New Car Assessment Programme. The Euro NCAP
+carries out crash tests and provides automobile buyers with
+a realistic, independent assessment of the safety features
+of many of the most sold vehicles in Europe. Euro NCAP was
+founded in 1997 and is meanwhile supported by seven
+European governments as well as automobile and consumer
+organizations from all EU states.
+Exa
+A decimal prefix for usage in the international system of units,
+Exa stands for 1018 = 1 quintillion, abbreviated "E", for example
+exabyte (EByte).
+FACTS
+292
+Global Positioning System. Satellite-based location identifi-
+cation and positioning system based on the transit time
+differences of received signals.
+GPS
+Giant Magneto-Resistance. The GMR effect is utilized in sensors
+for the purpose of measuring magnetic fields. GMR sensors
+are employed in a range of applications, e.g. as steering angle
+sensors in automobiles.
+GMR
+A decimal prefix for usage in the international system of units,
+Giga stands for 109 = 1 billion, abbreviated to "G", for example
+gigabyte (GByte).
+A driver assistance system is an electronic system integrated
+into a vehicle. It supports the driver in his driving task by
+providing information and warnings and – if designed for this -
+by actively intervening with the driving in a regulatory capacity.
+The driver has to consciously activate or deactivate the system.
+The driver assistance system can be overruled by the driver at
+any time.
+Giga
+Gallium nitride
+Frontend process is the designation for all process steps in
+cleanrooms that the entire wafer must complete. These are
+lithography, diffusion, ion implantation and application of
+circuitry levels. Some stations must be completed a number
+of times. At the end of the frontend process, the wafer may
+have been through as many as 500 individual process steps.
+After the conclusion of the frontend manufacturing, the
+processed wafers are transferred to backend manufacturing
+for testing and packaging (see Backend manufacturing).
+Frontend manufacturing
+Firmware is software that is embedded in electronic devices.
+It is mostly embedded in the memory of a microcontroller and
+cannot usually be replaced by the user. The term derives from
+the fact that firmware is functionally firmly connected with
+the hardware, which means that neither one can function
+without the other. It occupies an intermediate position
+between hardware and the application software.
+Firmware
+Flexible AC Transmission System - control systems used in
+electrical engineering. They are used in the field of electrical
+power supply to specifically control power transmission and
+distribution in AC networks, in which in principle components
+of power electronics and therefore power semiconductors
+such as IGBT modules are used. The controlling of power
+transfers can be implemented in alternating current networks
+by changing the idle and active power by means of capacitor
+batteries or compensation coils.
+Gallium nitride (abbreviated to GaN) is a compound semicon-
+ductor material made from gallium (chemical symbol Ga) and
+nitrogen (chemical symbol N). GaN is used for components
+including radio-frequency power MOSFETs (see MOSFET) on
+account of the material's special properties (such as good
+thermal conductivity and high electron mobility).
+Driver Assistance Systems
+Direct Current (DC) to Direct Current (DC) conversion. A high DC
+input voltage is converted to a mostly lower, highly precise DC
+output voltage. The DC-DC conversion is usually positioned on
+the motherboard in close proximity to the electrical consumer.
+These consumers can be, for example, the microprocessors of
+a PC or server, the graphics controller of a graphics card or the
+network processor of a telecommunications facility.
+DC-DC conversion
+290
+The breakthrough voltage for semiconductor components is
+the voltage that, when exceeded, the current increases sharply
+and can ultimately lead to the destruction of the component.
+The breakthrough voltage can be determined by the doping of
+the semiconductor layers.
+Breakthrough voltage
+Information unit; can take one of two values "true"/"false"
+or "0"/"1".
+Bit
+A power bipolar transistor is a specialized version of a bipolar
+transistor that is optimized for conducting and blocking large
+electric currents (up to several hundred amperes) and very
+high voltages (up to several 1,000 volts). In industry, the power
+bipolar transistor - like the power MOSFET (see MOSFET) often
+used as an alternative - constitutes an important industrial
+semiconductor component for influencing electric current.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Bipolar
+Bare die
+The part of the semiconductor manufacturing process that
+happens after the wafer has left the cleanroom (frontend
+manufacturing). This includes testing the chips at wafer
+level, repairing the chips if necessary, dicing the wafers and
+packaging the individual chips. There is a growing trend among
+semiconductor manufacturers to outsource the assembly,
+and sometimes even the testing, to independent assembly
+companies. Much of the assembly capacity is based in the
+Pacific Rim countries.
+Backend manufacturing
+Authentication
+Infineon brand name for the 32-bit multicore automotive
+microcontroller family.
+AURIX™
+A bare die is a single, unpackaged chip. Bare die business
+means the sale of fully processed, unpackaged chips. The
+packaging and subsequent testing of the packaged chips
+is performed by the customer. Bare die business is mostly
+conducted with IGBT module manufacturers that produce
+their own modules but not their own semiconductors.
+ASSP
+Brushless DC motor
+The electronic commutation does not cause wear and tear
+in BLDC motors, such as in standard DC motors. Moreover,
+BLDC motors do not require maintenance. Major advances in
+the field of power electronics and circuit design in recent
+years have made it possible to manufacture BLDC motors at
+a reasonable market price.
+High-voltage power transistor for voltages from 300 to 1,200 V.
+CoolMOST
+Control unit that can convert AC voltages of various rates and
+frequencies. This is achieved by means of power electronics.
+Converters are used in wind turbines, for example, in order to
+feed fluctuating wind energy into the power network with
+a voltage of constant frequency. In electric drive technology,
+for example in engine controllers and trains, a converter is
+used to generate an output voltage of variable, load-dependent
+frequency from a mains supply of constant frequency.
+Converter
+In contrast to silicon-based semiconductors, compound
+semiconductors consist of several chemical elements. The
+combination of materials from the chemical main group III
+(e.g. gallium) and V (e.g. nitrogen) have the electrical conduc-
+tivity of semiconductors. This also applies to the combination
+of materials from the main group IV (carbon, silicon). These
+compound semiconductors (e.g. gallium nitride or silicon
+carbide) are therefore of highest importance in technical
+applications in semiconductor technology, especially for
+power semiconductors.
+Compound Semiconductor
+An important type of electric motor is the so-called brushless
+DC motor (BLDC motors). Commutation in BLDC motors is
+performed electronically, depending on the rotor position,
+the rotor speed and the torque. The rotor position and torque
+can be measured via sensors, such as magnetic field sensors.
+Depending on this positional information, the windings, which
+generate the torque in the rotor, are controlled via appropriate
+power semiconductors.
+Common Criteria for Information Technology Security Evalua-
+tion, generally known as Common Criteria for short, constitute
+an international standard for evaluating and certifying the
+security of computer systems with regard to data security. The
+Common Criteria define seven levels of reliability (Evaluation
+Assurance Level, EAL1 to EAL7, i.e., the highest level), which
+describe the correctness of the implementation and the depth
+of inspection of the system being evaluated.
+Complementary Metal Oxide Semiconductor. Standard semi-
+conductor manufacturing technology used to manufacture
+microchips with low power usage and a high level of integration.
+CMOS
+Cloud computing is the provision of processing capacity,
+data storage, network capacity and ready-to-use software
+via a network with supply matched dynamically to demand.
+The IT infrastructure functions accessed appear remote and
+opaque from the user's perspective, as if enveloped in a cloud.
+The remote systems of the cloud are accessed via a network,
+usually the internet, using a terminal such as a netbook or
+tablet (see tablet).
+Cloud computing
+Unit of information in data processing components. One byte
+is equivalent to eight bits (see bit).
+Byte
+Common Criteria
+An entity in which the Company has significant influence,
+but not a controlling interest, over the operating and financial
+management policy decisions of the entity. Significant influ-
+ence is generally presumed when the Company holds between
+20 percent and 50 percent of the voting rights.
+G4-EN27 Activities to minimize the
+Content Index
+Visit us on the web:
+Am Campeon 1-12, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+www.infineon.com
+PRODUCT SUSTAINABLE VALUE
+Issue
+Further Information
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+300
+External
+Audit
+The avoided CO2 emissions were reported in the form of energy under
+the indicator EN6. These are equivalent to 2,814.60 CO₂e.
+Reported by the NER (Normalized Emission Rate). Herewith only
+PFC emissions were taken into account, since these are the most
+significant source of CO2 emissions.
+Due to the confidentiality of specific information, Infineon reported the
+specific energy consumption in gigawatt hours per euro (chart 49).
+The description of the Scope 3 emissions is based on the Infineon
+CO2 balance, which includes the whole energy consumption of Infineon,
+and is reported in metric tons of CO2 equivalents. The other steps,
+that is, the use phase of the products by the customer as well as their
+disposal, cannot be automatically calculated due to the different
+potential applications and fields of use of Infineon products.
+Through the use of products in which our semiconductors are used,
+Infineon has indirect economic impacts, for example in efficiency
+improvements. The significance of those impacts, was - due to
+external parameters - not determined in each individual case.
+During the 2015 fiscal year, Infineon could not identify any incidents
+of non-compliance with regulations and voluntary codes related to the
+impacts of products and services on health and safety.
+Limited Assurance
+Audit of the consolidated financial statements
+105-106
+Measures taken intended
+to contribute to the
+elimination of all forms of
+forced or compulsory labor
+in the supply chain
+environmental impacts
+of products and services
+G4-HR6
+103-104
+Contact for Investors and Analysts:
+Media Contact:
+and non-hazardous waste,
+by disposal methods
+INFINEON TECHNOLOGIES AG
+Headquarters:
+These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
+may therefore differ materially from what has been expected.
+G4-PR1
+101, 103-104
+103
+6
+Remarks
+Page
+products and other goods
+and materials
+impacts of transporting
+G4-EN30
+Significant environmental
+Reductions in the energy
+requirements of sold products
+G4-EN7
+Management approach
+Getty Images, Munich (Germany): page 59, 63, 74
+Fotostudio Reller GmbH, Munich (Germany): page 73, 76, 84
+Leopold Kostal GmbH & Co. KG, Lüdenscheid (Germany): page 74
+YouTube/Google ATAP, Mountain View (California, USA): page 74
+Fotolia, New York (New York, USA): page 77
+Note
+The following were brand names of Infineon Technologies AG in the 2015 fiscal year: Infineon, the Infineon logo,
+.dp digital power, AURIX, CoolMOS, OPTIGA, OptiMOS, REAL3, SOLID FLASH, XHP.
+Forward-looking statements
+This Report contains forward-looking statements about the business, financial condition and earnings
+performance of the Infineon Group.
+Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
+forward-looking statements.
+99
+G4-EN23 Total weight of hazardous
+97-98
+G4-EN6
+100
+Energy intensity
+G4-EN5
+100, 102
+Energy consumed outside
+of the organization
+G4-EN4
+of the organization
+100
+Energy consumed inside
+G4 - EN3
+4
+Management approach
+RESPONSIBLE MANUFACTURING
+General Standard Disclosures
+Issue
+STRATEGY AND ANALYSIS
+Remarks
+Page
+G4-1
+Statement from the
+Management Board
+Reductions in
+100
+energy consumption
+G4-EN7
+G4-EN21 Other significant air emissions 103
+G4-EN22 Volume of water discharges
+reductions achieved
+100
+G4 EN19 GHG emissions
+102
+G4-EN18 GHG emissions intensity
+101, 103
+G4 EN17 Other indirect (Scope 3)
+GHG emissions
+101, 103
+G4 EN16 Indirect (Scope 2)
+GHG emissions
+Significant product and
+GHG emissions
+G4 EN15 Direct (Scope 1)
+98
+G4-EN10 Total volume of water
+recycled and reused
+water withdrawn
+98
+Total volume of
+G4-EN8
+requirements of sold products
+103
+Reductions in the energy
+101-103
+10-13
+104
+G4-PR3
+1 preliminary
+Wednesday, November 30, 2016'
+Publication of fourth quarter and
+fiscal year 2016 results
+Publication of third quarter 2016 results
+Tuesday, August 2, 2016¹
+Publication of second quarter 2016 results
+Tuesday, May 3, 2016'
+ICM - International Congress Center Munich
+(Germany)
+(Start 10:00 a.m. CET)
+Thursday, February 18, 2016
+Annual General Meeting 2016
+Publication of first quarter 2016 results
+Tuesday, February 2, 2016¹
+Financial calendar
+External
+Audit
+In addition to the general accident data, in the 2015 fiscal year we
+began sorting the information by gender. The female employees
+had an IR of 0.45 and LDR of 7.39 and the male employees had
+an IR of 0.47 and LDR of 4.49. Reporting of the accident rate and
+lost days rate by region is not a global steering-relevant figure.
+Infineon has currently no globally harmonized information for
+the reporting of occupational diseases. The absenteeism rate
+is not a global steering-relevant figure.
+Infineon, including International Rectifier led 5,850 training hours
+on the individual "codes of conduct". This included information
+on human rights. In the last two years all employees were
+compulsorily trained.
+Compliance training is carried out in particular at management
+level and Board level. Splitting training participation by individual
+regions or employees category is not an indicator relevant to the
+management process for Infineon.
+Limited Assurance
+Audit of the consolidated financial statements
+96-97
+94
+Committees are in place
+that also offer employers,
+employees and/or employee
+representatives the opportunity
+to discuss on topics relating to
+environmental protection, and
+occupational safety and health
+Work-related accidents
+and lost days
+Visit us on the web: www.infineon.com
+G4-LA6
+Imprint
+8+
+GRI G4
+GRI G4 Content Index
+Audi AG, Ingolstadt (Germany): page 54, 55
+Rolf Bewersdorf, Frankfurt/Main (Germany): page 17
+Werner Bartsch, Hamburg (Germany): page 11, 14
+Tom Trenkle Fotografie, Gräfelfing (Germany): cover picture, page 1
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Printing:
+Photography:
+Designed by:
+Independent auditors: KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
+October 1 to September 30
+Investor Relations, Accounting, Consolidation & Reporting
+November 25, 2015
+Infineon Technologies AG, Neubiberg (Germany)
+Fiscal year:
+Copy deadline:
+Editors:
+Published by:
+You
+Tube
+in
+t
+f
+G4-LA5
+full-time employees
+113
+95
+Percentage of employees
+trained in anti-corruption
+7
+Management approach
+G4-SO4
+BUSINESS ETHICS
+94
+Incidents of discrimination
+and measures taken
+G4-HR3
+113
+Wage differences by gender
+G4-LA13
+110-111, 114
+Governance bodies by
+diversity categories
+G4-LA12
+5
+Management approach
+DIVERSITY AND EQUAL OPPORTUNITY
+services labeling
+about product and
+104
+Legally required information
+G4-S07
+Legal actions for
+264-265
+anti-competitive behavior
+Benefits provided to
+G4-LA2
+and new employee hires
+115
+Employee turnover by age
+group, gender and region
+G4-LA1
+and services provided
+252-256
+106-107
+Infrastructure investments
+G4-EC7
+service categories for which
+health and safety impacts are
+assessed for improvement
+Coverage of benefit plans
+7
+Management approach
+LABOR RELATIONS
+and measures taken
+94
+Incidents of discrimination
+G4-HR3
+94
+Employee training on
+human rights
+G4-HR2
+G4-EC3
+ORGANIZATIONAL PROFILE
+Kirsten Johannes Lassig, Dresden (Germany): page 117
+BluePrintGroup, Munich (Germany)
+Name of the organization
+Remarks
+For the definition of our stakeholders we evaluated international
+sustainability guidelines and directives, such as the OECD Guidelines
+for Multinational Enterprises, and applied the EFQM (European
+Foundation for Quality Management) Model for Excellence and
+the UN Global Compact Blueprint. For those activities included in
+chart 36, in which the frequency of engagement is not described,
+Infineon engagement is carried out regularly whenever required.
+The following topics require a special frequency of engagement:
+> Great Place to Work Assessment: is carried out every two years.
+> Suppliers' evaluation: is carried out for new suppliers. For specific
+supplier groups it is also carried out on an annual basis.
+> Principles of Purchasing: part of contractual negotiations.
+> Annual Report and yearly financial statements: on a yearly basis.
+GOVERNANCE
+G4-34
+Governance structure
+of the organization
+180-185
+ETHICS AND INTEGRITY
+G4-56
+Principles, standards
+and norms of behavior
+93-95, 174
+The reference to the external audit of G4-56
+is only relevant for the pages 93-95.
+Specific Standard Disclosures
+Issue
+Page
+Remarks
+PRESENCE IN LOCAL MARKETS
+Management approach
+5
+283, CSR website
+(www.infineon.com/
+csr_reporting)
+G4-EC4
+297-300
+External verification
+Stakeholder engagement
+3-4, 92-93
+G4-27
+Consideration of key concerns
+raised through stakeholders
+3-4,92-93
+REPORT PROFILE
+G4-28
+Reporting period
+2
+G4-29
+Date of most recent
+2
+previous report
+G4-30
+Reporting cycle
+2
+G4-31
+Contact point
+G4-32
+GRI Content Index
+G4-33
+302 (Back cover)
+Financial assistance received
+224
+from governments
+Page
+Remarks
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+GRI G4 Content Index
+G4-3
+Management approach
+G4-EC1
+Direct economic value
+generated and distributed
+G4-EC2
+G4-EC8
+Risks and opportunities
+posed by climate change
+Significant positive
+and negative indirect
+4
+Cover page
+"Infineon key data",
+89, 106, 224
+158, 159
+32-36
+Retained economic value is not reported.
+Splitting EVG&D by region or market is not relevant.
+G4-PR2
+economic impacts
+Total number of incidents
+of non-compliance with
+regulations and voluntary
+codes concerning the health
+and safety impacts of products
+LONG-TERM VIABILITY OF CORE BUSINESS
+Issue
+External
+Audit
+External
+Audit
+G4-EC8
+Significant identified
+32-36
+positive and negative
+indirect economic impacts
+G4-EC7
+G4-EN8
+Development of significant
+infrastructure investments
+and services supported
+Total water
+106-107
+98
+Page
+G4-SO1
+106-107
+community engagement
+G4-SO2
+Operations with significant
+actual and potential negative
+impacts on local communities
+GRI G4
+Splitting of "received benefits" by country is not relevant.
+Governments do not participate in Infineon.
+Through the use of products in which our semiconductors are
+used, Infineon has indirect economic impacts, for example
+in efficiency improvements. The significance of those impacts,
+was due to external parameters - not determined in each
+individual case.
+Indicator applicable due to the production site placed in a water-
+stressed area and the associated specific local requirements.
+Content Index
+During the 2015 fiscal year our worldwide citizenship
+representatives did not find any adverse effects.
+withdrawn by source
+Operations related to local
+Issue
+299
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Organization's supply chain
+Significant changes during
+the year under report
+118-121
+57, 61, 65, 69
+Cover page
+"Infineon
+at a glance"
+110 111, 114-115
+94
+85, 105-106
+116-117
+G4-14
+Consideration of
+28-31, 128-129
+precautionary approach
+G4-15
+Externally developed charters, 2-3
+principles and initiatives
+G4-16
+Memberships
+296
+IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
+G4-17
+Percentage of total employees
+covered by collective
+bargaining agreements
+G4-13
+G4-12
+G4-11
+G4-4
+Further Information
+Cover page
+Primary brands,
+Cover page
+products, and services
+G4-5
+Organization's headquarters
+G4-6
+Countries where the
+organization operates
+G4-18
+at a glance"
+124-125
+G4-7
+Nature of ownership
+and legal form
+G4-8
+Markets served
+G4-9
+Scale of the organization
+G4-10
+Employee structure
+124-125
+Structure of the organization
+"Infineon
+Report's boundaries and
+92
+stakeholder groups
+G4-25
+Selection of stakeholders
+3-4, 92-93
+Audit of the consolidated financial statements
+Limited Assurance
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+GRI G4 Content Index
+Materiality
+Disclosures
+GRI
+Infineon Technologies AG
+At Infineon stakeholders are involved continuously.
+297
+Nov 2015
+External
+Audit
+G4-26
+.
+124 125, 278-281
+298
+Overview of
+G4-24
+Service
+2-3,
+2-3
+limitations on its scope
+G4-19
+Explanatory Notes
+(www.infineon.
+com/csr_reporting)
+4-7
+G4-20
+Description of material aspects 4-7
+within the organization
+G4-21
+Description of material aspects 4-7
+outside the organization
+Material aspects
+STAKEHOLDER ENGAGEMENT
+Effect of any restatements
+of information
+G4-23
+Significant changes in
+the scope of the Report
+G4-22
+128-129,
+com/csr_reporting)
+Explanatory Notes
+(www.infineon.
+7%
+7%
+excluding Japan)
+20%
+22%
+18%
+23%
+13%
+12%
+11%
+100%
+100%
+100%
+Infineon revenue by region
+G05
+Industrial structures in China and Germany differ considerably. The German industry is charac-
+terized by strong demand from the automotive and industrial electronics sectors, whereas
+the Chinese market is dominated by electronic manufacturing services, which focus mainly on
+supplying electronics products, mostly to Western customers. This business model plays a
+significant role in the fields of durable consumer goods on the one hand and information and
+telecommunications sector-related products such as servers, PCs, notebooks and cellular
+phones on the other.
+6%
+23%
+16%
+21%
+The growing importance of China is also reflected in the regional spread of Infineon's revenue.
+China became Infineon's best-selling market for the first time in the 2014 fiscal year. Revenue
+again increased at an above-average rate in the 2015 fiscal year, partly due to China's com-
+paratively high growth rate, but even more significantly due to the contribution made by
+International Rectifier. With a figure of €1,337 million, China accounted for 23 percent (2014:
+20 percent) of Infineon's revenue. Germany came in well behind in second place with revenue
+of €942 million, corresponding to a market share of 16 percent (2014: 20 percent).
+31
+(excluding China,
+Asia-Pacific
+Germany
+Americas
+Middle East, Africa
+Japan
+China
+Europe (excluding
+Germany),
+2015
+2014
+2013
+19%
+19%
+20%
+20%
+23%
+The picture is very different, however, when it comes to the regional split of semiconductor
+sales. China has been the largest market for a number of years, accounting for a share of
+41.2 percent (US$146 billion) in the 2014 calendar year. During the same period, 13.3 percent
+(US$47 billion) of all semiconductors were sold in Europe.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Successful 2015 fiscal year
+More than half of global semiconductor revenue (53.2 percent) is generated by US companies.
+Japanese companies account for a further 11.5 percent. Only 8.2 percent of global semicon-
+ductor revenue is generated by companies based in Europe. Infineon is Europe's second-largest
+semiconductor manufacturer, just behind STMicroelectronics.
+Freescale
+Sony
+AMD
+NXP
+Avago
+3.7
+4.1
+4.5
+5.1
+5.4
+5.5
+5.6
+6.3
+6.8
+7.0
+32
+7.1
+nVidia
+Companies based in the Asia-Pacific region generate 27.1 percent of global semiconductor
+revenue. Korea is the most important Asian country with 16.5 percent of the worldwide
+production, followed by Taiwan with 6.5 percent. China (including Hong Kong) only plays a
+minor role with 2.6 percent.
+Marvell
+Infineon's ranking and market share by region (including International Rectifier)
+2.0%¹
+#10
+1.2%
+#18
+1.5%
+#14
+1.6%
+#14
+6.4%
+#3
+Market share
+Position
+1 Including a market share of 0.3 percent attributable to International Rectifier
+Source: IHS Inc., ❝2015 Competitive Landscaping Tool", August 2015
+Japan
+World
+Asia-Pacific
+Americas
+Europe, Middle East, Africa
+According to IHS, with revenue of US$7.072 billion, Infineon (including International Rectifier)
+was ranked 10th in the 2014 calendar year, corresponding to 2.0 percent of the world market.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Combined Management Report - Our Group
+Business strategy
+cations
+1.2%
+Communi-
+ductor Market
+2.3%
+Total Semicon-
+5.4%
+Card ICs¹
+Chip
+9.6%
+5.6%
+Automotive
+Industrial
+of the main semiconductor
+target markets, 2014 to 2019
+Compound annual growth rate
+G06
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+36
+Data
+Group strategy
+Processing
+0.5%
+7.4
+Our aim is to rely on multiple strengths: technological leadership, differentiating manufacturing
+technology, applications know-how and system understanding in our relevant target markets.
+We want to focus on our customers' success. We also wish to act as an agent of change, or in
+other words to change existing markets by means of innovation and/or to create new markets.
+To achieve a sustained increase in enterprise value, we naturally focus our attention in partic-
+ular on continually improving profitability. Our manufacturing strategy plays a key role in
+achieving this aim. In principle, we only wish to manufacture products ourselves if doing so
+gives us an advantage in terms of cost or differentiation. Our worldwide unique 300-millimeter
+thin-wafer manufacturing capability plays a crucial role in this respect.
+The acquisition of International Rectifier fits perfectly with the strategic principles stated above.
+The technologies and products offered by International Rectifier largely complement Infineon's
+existing portfolio. Combining the research and development activities and technologies of the
+two organizations will enable us to achieve continued high levels of growth and offer our cus-
+tomers as many new solutions as possible.
+Our fundamental aim is to achieve a leading market position in each segment. The associated
+benefits from economies of scale enable us to make the necessary investments to maintain
+competitiveness in the long term. Only sufficient expertise in the respective segments places
+us in a position to develop the right system solutions and provide support for our customers.
+With our segments, Automotive, Industrial Power Control, Power Management & Multimarket,
+and Chip Card & Security, we are operating in the most rapidly growing semiconductor target
+markets, in which we hold leading positions. Further details concerning the growth drivers for
+our four segments are provided in the next chapter.
+To achieve success in the semiconductor market and a sustained increase in enterprise value,
+it is therefore no longer sufficient to differentiate oneself merely in terms of technological
+leadership. It is also necessary to focus on the right markets and be sufficiently well positioned
+in these markets to achieve economies of scale.
+By adopting the strategic "Product to System" approach, we have taken the next step by looking
+at challenges from a new perspective, by assessing the factors that determine the success of a
+customer's product and its end application. System integration has always been the recipe for
+success in the world of semiconductors. In the past, we deployed individual transistors, simple
+ICs, software and sensors. Nowadays, all these components are integrated in a single chip.
+However, we are looking not only at how to achieve even greater integration, but also at how
+our customers' products can become better and cheaper, and at the challenges customers will
+have to face in the future. And once one system has been integrated, it is, of course, time to
+think about the integration of an even more complex system.
+Infineon differentiates itself most from the competition by offering many alternatives to solve
+challenges, first and foremost with market-leading technologies and products that offer added
+value. This has been the firm basis of our success in recent years.
+As a profit-making enterprise, we are committed to creating value for our customers - and
+therefore also for our employees and shareholders. We understand how technical systems are
+becoming increasingly efficient through the use of semiconductors and providing solutions
+for the world of today and the future.
+The challenges of the future are huge - but so too are the opportunities for Infineon. The path-
+ways described show how we can contribute to tackling these challenges. Our projects and
+solutions enable our customers to develop appropriate systems and offer them to consumers
+at affordable prices.
+Opportunities, objectives, strategy
+G see glossary, page 295
+Shipment Forecast", September 2015
+Source: IHS Inc., "Worldwide Semiconductor
+1 Source: IHS Inc., "Smart Cards Semiconductors",
+August 2015
+(0.2%)
+Consumer
+Driver-assisted systems will be launched in several stages on account of the more stringent
+requirements and associated complexity. Today, mass-produced vehicles already feature lane
+departure warning systems, adaptive cruise control, intelligent braking systems and parking
+assistance features. These vehicles are therefore partly automated. The next step is a higher
+degree of automation, in which the car takes control in certain situations up to a certain speed.
+The final step is full automation, in which mode the car is completely driverless. We can envisage
+that one day a fully automated car, acting as a driverless taxi, will pick up people and auto-
+nomously take them to their desired destination.
+The best argument in favor of computerized assistance systems is their speed. In traffic, an
+autonomous braking system reacts to an obstacle considerably faster than a human being,
+especially if that person is lacking concentration or experience. The long-term objective of
+automated mobility therefore also contributes towards improving the quality of urban life, with
+fewer accidents, improved traffic flow and far fewer traffic jams. Enhanced safety therefore
+also means greater physical comfort due to less traffic noise and lower particulate matter
+levels. Furthermore, automated driving also enables older people to remain independent for
+longer. A key point is that improved safety on roads benefits all road users, including cyclists
+and pedestrians.
+Rear-end collisions caused by lack of concentration can be significantly reduced through
+technical assistance. Automated driving in traffic jams on highways or in stop-and-go conditions
+in urban areas during peak traffic hours is therefore high up on the wish list of many drivers, as
+it enables them to make better use of their time.
+The world population continues to grow. According to the World Health Organization's fore-
+casts, some nine billion people will be living on Earth in 2050. People everywhere are striving
+to improve their living standards, giving rise to a number of challenges, such as growing
+industrialization and urbanization, and the need for both a significant increase in productivity
+and the highly efficient use of our dwindling global resources.
+Global changes and the associated challenges
+With its broad product portfolio, Infineon is looking at different ways to find solutions that will
+help bring about the changes described above. These changes are of the utmost relevance and
+are irreversible. Precisely here lies the economic potential for Infineon. Microelectronics from
+Infineon are the key to a future worth living - achieved with products that improve the quality
+of life and help preserve natural resources. We fully intend to live up to this high aspiration.
+We can advise our customers in their endeavors to tackle challenges and propose solutions
+that will bring additional success. We reduce development costs for our customers and shorten
+the time-to-market for their products. “Product to System" is therefore a strategic concept,
+which we are employing to maximize the opportunities to improve existing products and to
+identify and subsequently enter markets with completely new products. In the best case,
+our products can help open up markets that are new even for our customers, thus creating
+added value for them.
+33
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Today's success is founded on past decisions. And now, we aspire to shape tomorrow's success.
+Achieving this aim entails identifying opportunities, going for them and successfully capitalizing
+on them. This can be achieved either by continuing to apply the concepts that have brought
+us success in the past, or by adopting new approaches based on well-proven products or new
+cutting-edge technologies. With our strategic approach "Product to System", we are seeking
+to extract the maximum benefit from our broad portfolio of technologies and products. This
+strategic approach enables us to put our wide-ranging know-how in product and process
+technologies to even better use on the market. Thinking in terms of "system" helps us under-
+stand the factors that fuel the success of our customers and their markets, and enables us to
+generate added value as well as identify new market trends at an early stage.
+Strategic "Product to System" approach
+These changes represent major challenges for society, but also provide us with excellent
+opportunities to achieve growth and success. Before we address the opportunities, we would
+like to explain how we aspire to be successful in this rapidly changing world.
+> Technological changes due to connectivity and digitalization
+> The associated demand for resources and
+> The demographic trend
+In the coming decades we will be confronted with serious global changes:
+The key questions we ask in our mission statement are "What is our contribution?" and "How
+can we achieve success?" In this respect, these questions address fundamental issues, such
+as megatrends, changes to the competitive environment, innovations, customer expectations
+and political trends, and explain what we are focusing on. Our aim is to apply our products
+and our business model to find the best solutions for our customers. Long-term success requires
+constant reorientation to ensure our products meet customer requirements as effectively
+as possible or to change markets through innovation. This can only work if we create a frame-
+work that allows our staff to develop their full potential and thus ultimately contribute to
+Infineon's success.
+We design our products with the aim of contributing towards a better life. The requirements
+for a "better life" may differ considerably and result from the varying conditions that prevail
+throughout society as well as from the expectations of individuals within it. In developed
+countries, the self-parking car or the smartphone may represent convenience. In emerging
+economies, the availability of solar power may lead to an improvement in living conditions.
+Young people find it easy to use new electronic products, whereas the older generation is often
+wary of them. For some, the latest trends must be obtainable at an affordable price, while
+others want technology which assists them in some way and is easy to use. With the help of
+modern assistance systems, such as applications for electronically controlled lighting and
+shutters, domestic robots, robotic nurses and driver assistance systems in vehicles, it is possible
+to retain a great deal of independence in old age.
+Guiding principles
+While the strategy Infineon pursues in its core markets remains unchanged, the new strategic
+approach "Product to System" introduced in the 2013 fiscal year is already bearing fruit. Based
+on this, we devised a new mission statement from an overall perspective. It picks up on the
+underlying approach previously followed and builds on it in the light of future requirements.
+Our aspiration is to develop products that make life easier, safer and greener.
+Industrialization and urbanization: A consequence of industrialization is that more and more
+people are moving from rural areas to cities in order to reap the benefits of urban living and
+working. Today, more than half the world's population lives in towns and megacities. Each of
+these metropolitan areas is the growth engine for an entire region as well as a center of
+productivity. All metropolitan regions are, therefore, confronted with the problem of ever-
+growing traffic volumes on both road and rail.
+Sustainable mobility, both within conurbations (by metro and tram) and between conurbations
+(by high-speed and interurban trains), is the driving force for expanding public transportation
+systems. In addition to rail traffic, new concepts for private transportation are a must. The mere
+development of the road network generally fails to keep pace with the volume of traffic. Traffic
+density is increasing and so is the time spent in traffic jams as well as the risk of accidents.
+Easing the strain on drivers in monotonous stop-and-go traffic conditions is a highly desirable
+aim. Furthermore, 1.2 million people per year die in traffic accidents. It is a concern in all
+countries to bring about a steady decrease in the number of accident victims.
+Rise of productivity, digitalization and connectivity: To raise living standards for as many
+people as possible, it is also necessary to boost productivity, in other words to make "more" out
+of "less". This is relevant not only for developed countries, but also for emerging economies,
+first and foremost China. Unit labor costs - measured in labor costs in relation to productivity -
+play an important role in terms of an economy's international competitiveness. Rising wages
+must be compensated by corresponding productivity advantages in order to guarantee compet-
+itiveness. Greater productivity is partly achieved through increased levels of automation.
+Productivity improvements are not limited to labor costs, but also influence the amount of
+the materials and energy consumed. These aspects are also particularly important for us.
+The digitalization process will largely determine what life, work and manufacturing will be
+like in the developed regions going forward. In tandem with continually advancing connectivity,
+further steps toward globalization will be achieved and productivity increases facilitated.
+Digitalization is also making its mark in industries in countries that previously had a low level of
+automation and relied on low-cost human labor. Nevertheless, rising wage costs are also forcing
+these countries to introduce structural changes. Digitalization can boost both productivity
+and efficiency and bring these countries a few steps further forward in the value-added chain.
+Group strategy
+For mid-range and premium carmakers, even these optimizations will not be sufficient to
+achieve emission targets. For this reason, a considerably larger number of vehicles will need
+to be fitted with a hybrid or purely electric drive system.
+Concepts for private transport: Sustainable, safe mobility is the aim of private transport
+going forward. The electrification of both main and auxiliary power units, such as steering,
+pumps and fans, enables output to be adjusted to suit demand, thereby increasing vehicle
+efficiency and reducing CO2 emissions.
+We are at the dawn of a new, very exciting era of industrial automation, given the recent
+giant technological strides. Whereas robots have sometimes replaced people only for heavy,
+monotonous work, they are now becoming more sensitive and can therefore "feel" and carry
+out assembly work with haptic capabilities that otherwise only humans possess. They are also
+capable of responding to gestures. Moreover, robots can learn whilst "watching". A decades-old
+vision is, therefore, rapidly becoming reality, as practically anyone can use a robot and assign
+tasks to it. Man and machine will, in future, literally work "hand in hand". Robots will assist us
+not only in manufacturing, but also in nearly all aspects of our daily lives - a boon for the quality
+of life, especially for older people.
+Factory automation and productivity increase: Approximately two thirds of industrial electric
+power consumption worldwide is attributable to electric drives. The scope for leveraging
+savings through improving efficiency is, therefore, quite substantial. One option to reduce the
+amount of energy consumed by an electric motor is to control its rotational speed electronically,
+thereby permitting low-loss adjustment of the output power to suit demands. Typical applica-
+tions here are pumps and fans. Market penetration of electronic motor controls for variable
+speed drives is, therefore, set to increase.
+are already reaching grid parity. The next challenge we will then have to face with respect to
+the efficient use of renewable energy is the intermediate storage of electric energy, since electric
+power generation may fluctuate significantly during the day and over the year. Here too,
+power semiconductors will play a crucial part in providing the solution.
+35
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Energy and resource efficiency: In contrast to the situation many years ago, technologies are
+available today that enable electric power to be generated cost-efficiently from renewable
+sources. The aim is grid parity: If the generation of one kilowatt hour of electricity using a wind
+turbine or a solar module is no more expensive than through a gas- or coal-fired power plant,
+subsidies and feed-in tariffs are no longer necessary. Industry will then convert to renewable
+energy for both ecological and economic reasons. The first wind and solar farms in the USA
+Group strategy
+Solutions
+Not only machines, but vehicles too are becoming increasingly connected. They will commu-
+nicate both directly with one another (car-to-car) and with centralized systems (car-to-infra-
+structure). Vehicles will be able to contact control systems which, in turn, provide a real-time
+picture of the current traffic situation. It is therefore possible, for example, to be warned of an
+accident on the planned route, of a traffic jam just around a bend, or of extreme conditions
+such as black ice. Above all, however, active traffic management will improve the flow of traffic,
+which means that more vehicles will be able to move more quickly along the same roads and
+therefore produce fewer CO2 emissions, entirely in keeping with our motto "more out of less".
+The increasing connectivity of the machinery, appliances and IT systems operated by our
+respective business partners - in short, the “cyber-physical systems" - requires secure data
+exchange. The Industrial Internet will only succeed if process know-how can be reliably pro-
+tected from hacking attacks. Secure transmission of product- and manufacturing-related data
+throughout the supply and value-added chain within an open architecture is therefore of prime
+importance. The Industrial Internet will then enable new business models that extend across
+various industrial sectors. Confidence is therefore one of the most important prerequisites for
+the digitalization of the economy and the digital lifestyle in highly developed countries.
+Linking the real with the digital world will fundamentally change industrial processes.
+Semiconductors are the interface between the real and the digital worlds. Without semi-
+conductors, there would be no digitalization. Semiconductors are therefore the most
+important source of increased productivity and improved quality of life.
+The transformation towards more digital data in industry and the connectivity of billions of
+appliances is a radical change, possibly unequalled since the Industrial Revolution of the 18th
+and 19th centuries. The Chinese Government, for example, has adopted the "Made in China
+2025" program, , in which it has assigned top priority to the digitalization of its economy under
+its industrial policy. Likewise, Europe, and especially Germany, is pressing ahead with the
+value-added networks based on the Industrial Internet (Industry 4.0), whereby the aim is to
+achieve higher productivity through optimum capacity utilization, while keeping the use of
+resources and inventory levels to a minimum.
+G see glossary, page 292
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+34
+34
+Efficient use of global resources: The pivotal question is how to cope with increasing demand
+for resources without negatively impacting the climate. The current trend in climate change
+needs to be curbed or even reversed. Economic activity to date has put the climate and our
+environment under threat. In the absence of a further reduction in greenhouse gases, most
+notably of CO2 emissions, and in the absence of even more efficient vehicles, appliances and
+machinery going into the future, the constantly growing demand for energy cannot be cov-
+ered sustainably in either economic or ecological terms. Electricity and its consumption play a
+key role in this respect. The demand for electricity is continually growing, not only in devel-
+oped countries, but also an increasing number of households are being connected to the
+power grid, notably in emerging economies. Furthermore, electricity requirements per house-
+hold are also rising with better standards of living: first the fridge, then the TV, then the
+gaming console. In the absence of greater efficiency, the demand for electric power will grow
+exponentially. Recognizing that the best energy resource is energy-saving, boosting efficiency
+in the conversion of electric power makes a decisive contribution. Naturally, apart from saving
+energy, an increasing amount of energy needs to be generated from renewable sources rather
+than from fossil fuels.
+10.2 8.4
+SanDisk
+Renesas
+31%
+11%
+0%
+17%
+Automotive: €2,351 million
+41%
+Industrial Power Control: €971 million
+Power Management & Multimarket:
+€1,794 million
+Chip Card & Security: €666 million
+Other Operating Segments,
+69%
+Corporate and Eliminations: €13 million
+Infineon closes deal to acquire International Rectifier
+Following a 99.5 percent majority vote by the shareholders of International Rectifier in
+November 2014 and receipt of approval from the responsible authorities in January 2015, the
+acquisition of International Rectifier was closed on January 13, 2015. Since then, excellent
+progress has been made in terms of integration. The vast majority of International Rectifier's
+former business was allocated to the Power Management & Multimarket segment, while
+smaller parts were also allocated to the Automotive and Industrial Power Control segments.
+Revenue up sharply on the back of organic growth, currency effects and acquisition
+of International Rectifier, resulting in better-than-expected Segment Result Margin
+Infineon generated revenue of €5,795 million in the 2015 fiscal year, a 34 percent increase
+on the previous year's figure of €4,320 million. The sharp rise primarily reflects strong sales
+performances across all segments. Of particular note is the organic growth of 35 percent
+achieved by the Chip Card & Security segment. Infineon's strong revenue performance was
+also influenced by currency factors, most notably the appreciation of the US dollar against
+the euro (see the chapter “The segments" P page 52 for further details on the sales performance
+of the individual segments). The higher revenue was also partly due to the acquisition of Inter-
+national Rectifier, which contributed €682 million to the revenue figure in the 2015 fiscal year.
+The Segment Result for the 2015 fiscal year totaled €897 million, surpassing the previous year's
+figure of €620 million by 45 percent. The Segment Result Margin came in at 15.5 percent
+(2014: 14.4 percent). Infineon thereby exceeded the target set for the 2015 fiscal year. The
+Segment Result Margin of International Rectifier's business units increased significantly com-
+pared to the three-month period ended December 31, 2014, the last quarter prior to the
+acquisition.
+Net income and earnings per share up; free cash flow, return on capital employed
+and cash position down, mainly due to acquisition-related factors; significant capital
+structure targets nevertheless achieved
+Despite the high level of expenses incurred in conjunction with the acquisition of International
+Rectifier, net income increased in the 2015 fiscal year, thanks to the sharp rise in revenue
+as well as positive tax effects of €209 million (see the chapter "Review of results of operations"
+P page 128) and amounted to €634 million in the 2015 fiscal year, an increase of 19 percent
+compared to the previous year's figure of €535 million.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Successful 2015 fiscal year
+Basic and diluted earnings per share for the 2015 fiscal year amounted in each case to €0.56
+and were therefore 17 percent higher than the previous year's figure of €0.48 (also in each
+case). Adjusted earnings per share (diluted) improved year-on-year from €0.48 to €0.60
+(see the chapter "Review of results of operations" for details of the calculation of adjusted
+earnings per share).
+Free cash flow from continuing operations (see the chapter "Internal Management System"
+for definition) totaled a negative amount of €1,654 million in the 2015 fiscal year, a deteriora-
+tion of €1,971 million compared to the €317 million generated one year earlier. The sharp
+reduction mainly related to the purchase of International Rectifier (€1,869 million). Further-
+more, free cash flow from continuing operations was reduced by €178 million due to payments
+to the insolvency administrator for the settlement of the dispute over the continuation of
+the right to use Qimonda patents less the subsequent proceeds from the sale of the Qimonda
+patents as well as the payment to the EU Commission for the fine imposed in the chip card
+antitrust proceedings. Excluding these exceptional items, free cash flow from continuing
+operations in the 2015 fiscal year totaled €393 million, a year-on-year improvement of 24 per-
+cent. Net cash provided by operating activities amounting to €957 million thereby exceeded
+additions to property, plant and equipment and intangible assets totaling €785 million
+(2014: €668 million).
+The Return on Capital Employed (ROCE) in the 2015 fiscal year amounted to 12.8 percent and
+was thus well down on the previous year's figure of 20.3 percent. The decrease was mainly
+due to the acquisition of International Rectifier and the related higher level of capital employed.
+This effect could not be offset by the income from continuing operations after taxes which
+increased from €497 million to €664 million in the 2015 fiscal year. (For a definition of, and
+details relating to, the calculation of ROCE, see the chapters "Internal Management System"
+and "Review of financial condition".)
+Revenue by segment in the 2015
+fiscal year
+The gross cash position (see the chapter "Internal Management System" for definition) totaled
+€2,013 million as of September 30, 2015, a decrease of 17 percent compared to the previous
+year's reported figure of €2,418 million. In addition to the negative free cash flow of €1,654 mil-
+lion described above, the gross cash position was also reduced by the dividend payment
+of €202 million for the 2014 fiscal year and by payments totaling €140 million relating to the
+Qimonda insolvency reported as net cash used for discontinued operations. The main items
+working in the opposite direction were net debt raised totaling €1,567 million as well as
+positive free cash flow from continuing operations (adjusted for exceptional items).
+G 03
+35%
+year
+Finances
+and strategy
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+27
+28
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Successful 2015 fiscal year
+> Acquisition of International Rectifier closed;
+substantial progress made with integration
+> Strong revenue growth in all segments;
+Segment Result Margin better than expected
+> Good performance enables higher dividend
+G 02
+Revenue growth of the
+individual segments in the 2015 fiscal
+year compared to the previous year
+ATV¹
+IPC²
+PMM3
+CCS4
+20%
+24%
+2 Industrial Power Control
+3 Power Management & Multimarket
+4 Chip Card & Security
+Despite the decrease described above, our capital structure target in terms of the
+gross cash
+position - namely maintaining a gross cash position of between 30 and 40 percent of revenue
+(see note 25 "Capital management" to the Consolidated Financial Statements for the 2015
+fiscal year) - was also maintained for the 2015 fiscal year. The actual figure at the end of the
+reporting period was 35 percent of revenue.
+1 Automotive
+P see page 128
+50
+50.0
+40
+30
+38.1
+19.3
+16.1
+16.1
+H
+Micron
+Texas Instr.
+Broadcom
+12.2
+G04
+Top 20 semiconductor manufacturers for the 2014 calendar
+Revenue in billion US$
+1 Including revenue of US$1.135 billion recorded by International Rectifier.
+Source: IHS Inc., "2015 Competitive Landscaping Tool", August 2015. Foundries and subcontractors are not included in this market analysis.
+STMicro
+Infineor
+The net cash position (see the chapter "Internal Management System" for definition) decreased
+by 90 percent to stand at €220 million at the end of the 2015 fiscal year (September 30, 2014:
+€2,232 million). This significant decrease was attributable to the exceptional cash outflows
+referred to above, in particular the purchase price for International Rectifier. Based on these
+figures, Infineon's capital structure target in terms of the net cash position (see note 25
+"Capital management" to the Consolidated Financial Statements for the 2015 fiscal year) was
+again achieved.
+MediaTek
+60
+SK Hynix
+Toshiba
+Qualcomm
+P see page 90
+P see page 90
+P see page 139
+20
+P see page 91
+P see page 248
+P see page 91
+P see page 248
+30
+50
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+29
+Our dividend policy is aimed firstly at having our shareholders participate appropriately
+in growing earnings and secondly to at least keep the dividend at a constant level in times
+of flat or declining earnings and/or negative free cash flows.
+Based on the strong earnings performance in the 2015 fiscal year and Infineon's positive
+business outlook, a proposal will be made to the Annual General Meeting to be held on
+February 18, 2016 to pay a dividend of €0.20 per share, an increase of 2 cents compared to
+the previous year.
+Developments in the semiconductor industry
+According to the market research firm IHS, semiconductor revenues worldwide totaled
+US$355 billion in the 2014 calendar year, up 8.6 percent on the previous year. According to IHS,
+revenue recorded by Infineon (including International Rectifier) increased by 13.8 percent in
+the same period from US$6.212 billion to US$7.072 billion.
+The semiconductor market is highly fragmented. Only the two largest competitors had a market
+share in excess of 10 percent in the 2014 calendar year, namely Intel and Samsung Electronics,
+with revenues of US$49.964 billion (14.1 percent) and US$38.064 billion (10.7 percent) respec-
+tively. Intel is market leader for processors, Samsung Electronics for memory. Infineon does
+not operate in either of these product categories. Hence, neither of these companies competes
+directly with Infineon in these two categories. The ten largest companies account for 52 percent
+of global revenue. The remaining 48 percent is spread over several hundred other semicon-
+ductor companies.
+0
+Samsung
+Planned dividend increase of 2 cents
+Intel
+10
+Average semiconductor content
+of various types of vehicles
+Europe
+Asia-Pacific (excl. China, excl. Japan)
+China
+Japan
+1 CAGR = Compound Annual Growth Rate
+Other countries
+Source: IHS Inc., "Annual Light Vehicle Production 2007-2020", October 2015
+G 09
+in US$
+2020 e
+North America
+2019 e
+12.6
+2017 e
+2016 e
+2015 e
+2014
+22.9
+15.7
+29.6
+20.2
+22.6
+9.2
+8.7
+338
+17.0
+2018 e
+710
+Combined Management Report - Our Group
+ill
+19.0
+Traction systems: Sustainable and optimally connected mobility within metropolitan areas as
+well as between cities is one of the key topics of the 21st Century. Fast, reliable public mass
+transit systems are becoming increasingly decisive factors determining standards of living and
+competitiveness in many regions and cities worldwide. Our components are deployed in both
+city and suburban rail systems, trams and metro trains, but also in high-speed trains.
+China has meanwhile become one of the largest traction markets in the world, operating
+high-speed trains, interurban trains and metro systems. We also see an upswing in the market
+for train systems in other parts of Asia, where there is currently a far greater demand for metro
+and regional trains than for high-speed trains. Other growth markets are South Africa, South
+America and the Middle East. With Bombardier Transportation, CSR Times and Siemens, our
+customer base includes some of the biggest traction manufacturers worldwide.
+Infrastructure
+We generate around one third of segment revenue through long-term infrastructure projects,
+mostly driven by multi-year government programs that are independent of changing eco-
+nomic conditions. Somewhat less than half of revenue is attributable to the capital goods
+industry, which is impacted to a much larger extent by macroeconomic conditions. We earn
+the remainder of our revenue in the consumer goods industry, which is primarily affected by
+consumer spending.
+The products developed and manufactured by the Industrial Power Control segment have an
+impact along the entire value-added chain of electric power: generation, transmission and
+consumption. In the opening section "Business Strategy" of this chapter we demonstrated
+how energy efficiency contributes towards greater productivity and efficiency in order to meet
+the global challenges of modern times. It is precisely these factors that are driving growing
+demand for our power semiconductors.
+Growth drivers for the Industrial Power Control segment
+The number of electronic applications in vehicles is continually growing, due to the fact that
+around 80 percent of innovations are based on electronics. According to experts, this figure is
+unlikely to change in the foreseeable future. The total number of technical features | per vehicle
+is increasing perceptibly across all regions. Innovative solutions for security and comfort func-
+tions typically begin in premium vehicles and then migrate to the mid-range and compact
+classes, causing semiconductor content per vehicle to rise. Based on these factors, we expect
+our business in the field of semiconductors for automotive electronics to grow by an average
+of around 8 percent per annum.
+Summary for the Automotive segment:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+40
+40
+We predict that by the end of this decade every new car produced will be equipped with
+augmented data and IT security features. Infineon sees itself ideally positioned to handle this
+development, as we have a wealth of experience in the fields of data and IT security stemming
+from the expertise of our Chip Card & Security segment. Based on this know-how, our range of
+products includes security solutions for both vehicle-integrated microcontrollers and discrete
+security technology that suit all relevant vehicle applications.
+This connectivity, however, also entails a certain risk, as it offers hackers the opportunity to
+intervene in data traffic within the vehicle and thus manipulate certain functions. Communi-
+cation between the various control units, including safety-critical functions such as brakes
+and steering systems, needs to operate with the utmost safety, protected from unauthorized
+access. The safety of the vehicle and its occupants on the one hand and IT security on the other
+hand can no longer be viewed as separate issues. Vehicles are rapidly becoming computer
+networks on wheels, again generating an increased need for data and IT security.
+Connectivity, data and IT security: The era of vehicle connectivity has begun. Whether for
+internet services, navigation purposes, traffic reports, the automatic recording of toll fees,
+when updating software at a vehicle service center and particularly for eCall systems, there is
+a constant exchange of communication between the vehicle itself and a communication net-
+work (car-to-infrastructure). Moreover, both semi-autonomous and fully autonomous driving
+require supportive communication between vehicles (car-to-car).
+A vehicle fitted with ADAS can also be viewed as a kind of robot, as a computer-controlled
+machine that reacts extremely quickly and precisely to external influences. The "fail safe"
+performance of the installed components and subsystems is therefore of utmost importance.
+They need to be continually available and for that reason the safety-critical components
+such as sensors, microcontrollers and power semiconductors are designed with multiple
+redundancy, thus fueling demand for semiconductors. One good example is the magnetic
+field sensor pictured on the front page of this Annual Report, which in principle contains two
+sensors that function independently of each other.
+Active safety systems are being expanded to create advanced driver assistance systems (ADAS),
+which are becoming ever more important in road safety because of the considerable help they
+provide to motorists while driving. For example, they assist in critical situations or even correct
+a driving error if necessary, thereby reducing the risk of an accident. If a vehicle is capable of
+semi- or even fully autonomous driving and relieves the driver accordingly, it also improves
+driving comfort, enabling drivers to make better use of the time saved to work, for entertain-
+ment, or simply to relax.
+The next major growth market is that of active safety systems, which are capable of either
+completely avoiding an accident or at least significantly minimizing its negative consequences
+through active intervention. Prime examples of active safety systems are pedestrian recogni-
+tion, adaptive speed control or blind spot detection. Although these functions are mostly only
+installed in premium-class vehicles at the present time, they are becoming increasingly com-
+mon in the medium range, too.
+Safety and driver assistance systems: An encouraging development is generally noticeable
+throughout the developed economies: The number of traffic fatalities has been steadily decreas-
+ing for many years and is now stagnating at a low level. This general trend is mainly thanks to
+the widespread use of safety systems. However, passive safety systems are gradually reaching
+the limits of their effectiveness. Firstly, their technical potential is practically exhausted and
+occupant protection has meanwhile achieved a very high standard. Secondly, passive safety
+systems have already reached a high degree of market penetration, even in light vehicles.
+Exhaust gas testing procedures under more realistic conditions are currently the subject of
+intensive general debate. If legislators decide on regulations to introduce new, more realistic
+testing procedures, it will mean an implicit tightening of CO2 reduction targets, which would,
+in turn, additionally drive demand for semiconductors.
+39
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Group strategy
+Furthermore, it is essential to increase the number of electric and hybrid vehicles on the
+road, in order to lower the fleet averages of many automobile manufacturers to meet required
+target levels. Hybrid and electric vehicles require a far greater number of semiconductors than
+conventional models. Whereas the average vehicle powered by a conventional combustion
+engine is currently equipped with semiconductors worth around US$338 (approximately €300),
+average hybrid and electric vehicles have around US$700 (approximately €625) worth of semi-
+conductors installed in them respectively. Some three quarters of the additional value of
+semiconductors consists of power semiconductors. These components are crucial for operating
+powerful electric motors.
+Apart from the total number of vehicles produced, their technical features and therefore
+the average semiconductor content per vehicle plays an important role in demand for semi-
+conductors. Individual mobility is no longer conceivable without sustainability, i.e. the lowest
+possible pollution of the environment and the highest possible level of safety for all road
+users. Together with the growing popularity of vehicle connectivity, a number of trends are
+emerging that are continually increasing the number of semiconductors used in each car:
+Reduction of CO2 emissions: Legislators worldwide have adopted regulatory targets aimed at
+reducing CO₂ emissions in various regions and countries. For example, a requirement adopted
+by the European Commission in October 2013 stipulates an average reduction of CO2 emissions
+per car fleet from currently 130 grams of CO2 per kilometer to 95 grams of CO2 per kilometer
+by the year 2021. These targets are unlikely to be met solely by improving the efficiency of
+the conventional combustion engine. In order to meet these targets, the electrical consumers
+installed in vehicles need to be made more efficient. Hydraulic, mechanical and electrome-
+chanical parts need to be replaced with more efficient electronic and therefore semiconductor-
+based solutions.
+conductor Demand Forecast 2013-2022", June 2015
+Source: Strategy Analytics, "Automotive Semi-
+vehicle
+engine vehicle
+internal
+combustion hybrid
+plug-in pure electric
+vehicle
+704
+5.8
+3,000
+87.4
+2003
+2002
+2001
+2000
+1999
+0
+1,000
+~1,2002
+126,895
+2,000
+296,383
+5,100
+682
+Renewable energy: For both ecological and economic reasons, the growing demand for electric
+power can no longer be satisfied with fossil fuels to the degree seen in the past. For this reason,
+Europe, the USA, China and Japan have defined expansion targets for renewable energy with
+the aim of reducing CO2 emissions to their various targeted levels over the coming decades.
+At the G7 summit held in Elmau (Germany) in early June 2015, the seven leading industrialized
+nations pledged to completely forego the use of oil, gas and coal in the electric power, heating
+and transportation sectors by the end of the century, with the aim of reducing CO2 emissions to
+a net rate of zero in these sectors. By the year 2050 they are scheduled to be 40 to 70 percent
+lower than in 2010. The plan is to generate electric power exclusively from renewable sources.
+An all-embracing climate protection alliance is due to be forged at the climate summit to be
+held by the United Nations in Paris (France) in early December 2015.
+4,000
+CAGR (1999-2015): ~9% :
+5,000
+6,000
+P see page 88 ff.
+CAGR (1999-2015): +5.4%
+€ in millions
+Revenue in the fiscal years 1999 to 2015 compared to the global semiconductor market
+G 07
+Infineon achieved a compound annual revenue growth rate - not including the contribution
+from International Rectifier - of about 9 percent from fiscal year 1999 through 2015 with its
+current portfolio of products. We continue to operate in the same markets and, with our four
+segments, continue to focus on the megatrends described above. These focus areas are the
+source of the continued increase in demand for our products. Furthermore, International
+Rectifier's complementary sales and regional strongholds allow us access to new markets. We
+therefore expect to grow at around 8 percent per annum, essentially in line with our historic
+growth track record.
+Target 1: compound annual revenue growth rate of 8 percent
+Infineon introduced an internal control system for implementing its corporate strategy and for
+achieving its financial targets (see the chapter "Internal Management System").
+Based on our Group strategy, we want to achieve three financial targets:
+Target 1: Achieve a compound annual revenue growth rate of 8 percent.
+Target 2: Achieve a 15 percent Segment Result Margin over the economic cycle.
+Target 3: Limit our investment to 13 percent of revenue over the economic cycle.
+Financial targets
+Group strategy
+2004
+87.8
+2005
+2007
+90.3
+6.6
+93.6
+97.1
+102.5
+100.3
+CAGR (2014-2020): +2.7%
+in millions of vehicles
+Worldwide light vehicle production by region
+G08
+Growing prosperity usually leads to the desire for greater individual mobility, a fact particularly
+evident in the emerging economies in Asia and above all in China. The middle classes in India
+and China each grow by around 10 million people per year. In Africa and Asia, the transition
+from the bicycle or moped to the car is an expression of growing prosperity among the popu-
+lation. A compound annual revenue growth rate of 2.7 percent has been calculated for auto-
+motive production worldwide between 2014 and 2020 (source: IHS Inc.).
+Growth drivers for the Automotive segment
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+38
+view of the megatrends described in the previous chapter.
+In the following section we describe the main factors driving growth in our four segments in
+2 Based on market development assumptions, the 1999 fiscal year's revenue figures for some smaller product categories have been derived from the 2000 fiscal year's revenue figures.
+Source: WSTS, November 2015
+1 CAGR = Compound Annual Growth Rate
+Semiconductor world market (adjusted to the Infineon fiscal year)
+Revenue of Infineon based on today's portfolio (excl. Other Operating Segments and Corporate)
+Revenue International Rectifier
+2015
+2014
+2013
+2012
+2011
+2010
+2009
+2008
+2006
+Infineon is benefitting from the increasing number of wind farms and photovoltaic power
+plants, as per gigawatt of electricity generated, these systems require a multiple of the number
+of power semiconductors otherwise needed for conventional power plants. Unlike coal, gas
+or nuclear power plants, wind farms and photovoltaic systems do not have turbines that need
+to perform smoothly to generate a constant 50-hertz alternating current that can be directly
+fed into the grid. The effort involved in converting the electrical energy is greater.
+37
+41
+24,221
+16,124
+10,650
+6,751
+4,163
+2,514
+2014
+2015 e 2016e 2017e 2018 e 2019 e
+1 CAGR = Compound Annual Growth Rate
+Source: Cisco, "Visual Networking Index Forecast",
+May 2015
+G see glossary, page 289
+46
+46
+CAGR (2014-2019):
++57%
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Expected growth in chip-based
+payment cards in the USA, China
+and India
+in millions of cards
+640
+18
+399
+223
+CAGR (2014-2018):
++20.8%
+1,292
+1,365
+1,203
+G see glossary, page 293
+93
+1,051
+G 13
+in petabytes per month
+Development of global mobile data
+traffic 2014 to 2019
+G12
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+G11
+Development of Infineon's market
+share for silicon microphone ICs
+from 2006 to 2014
+8.8%
+3.5%
+5.2%
+34.3%
+26.5%
+2006 2008 2010 2012 2014
+Source: IHS Inc., "MEMS Microphones Data",
+April 2014 and October 2015
+DC-DC conversion: In the field of DC-DC conversion, intelligent point-of-load power manage-
+ment is becoming increasingly important. Servers, PCs and communication devices are supplied
+with higher voltages, which are then reduced to the lower voltage required, directly at the
+processor. Firstly, it is more practical and secondly, direct supply with a lower voltage is not
+technically feasible. The outputs range from a few watts to over 100 watts. Here too, we provide
+solutions for digitally controlled power supply, coupled with leading power components.
+The acquisition of International Rectifier has enabled us to enter new markets. Whereas
+Infineon has concentrated on power supply for high-performance servers to date, now we
+can also offer solutions for the most powerful graphic cards, telecommunications facilities
+and gaming consoles.
+DC motors: Due to the falling prices of lithium batteries and the lower cost of controls for
+brushless DC motors - which are stronger and more effective than conventional brush-type
+motors - new product categories are experiencing encouraging growth in unit numbers.
+Examples are efficient battery-powered homework tools, pedelecs and e-scooters. The latter
+are a big market, particularly in Asian cities, due to stricter emission regulations. Here too, we
+are profiting from International Rectifier, which enables us to complete our range of MOSFET
+power transistors in the low- to medium-voltage categories as well as providing us with estab-
+lished market access and sales channels in Asia.
+High-reliability components: Ambient conditions are extreme in the aerospace industry
+and when mining natural resources, which means the electronic components used in these
+applications need to meet very tough requirements. International Rectifier has occupied a
+leading position in this small, but very stable market for many years. International Rectifier
+also has outstanding expertise in the respective packaging technologies. The combination of
+existing Infineon technologies and the special-purpose packagings provided by International
+Rectifier are creating viable opportunities. Moreover, market access is complementary, as
+International Rectifier naturally has a strong position on the North American market, while
+Infineon traditionally has good access to European customers in this segment.
+Mobile devices: We serve the market for mobile devices primarily with sensors and radio-
+frequency components. Our most important product family in the field of sensors is MEMS-based
+silicon microphones, for which we supply two core components: the MEMS chip (a micro-
+electromechanical system) with the microphone membrane and the application-specific IC
+for signal conversion. The latest generation of mobile devices requires more microphones,
+sometimes in different versions, with a continually improving signal-to-noise ratio. These
+higher-quality microphones not only represent a differentiating feature for the smartphone
+manufacturer, they also open up completely new application options. For instance, additional
+microphones make voice control far easier, even in environments with high levels of back-
+ground noise. They also provide better quality for phone calls via the internet and the
+pave
+way for new applications. In addition, technologically state-of-the-art microphones are mean-
+while being installed right next to the camera, to achieve higher audio quality when making
+video recordings with a smartphone.
+Apart from growth in the number of devices sold and the increasing number of microphones
+per device, we benefit most from the fact that not only smartphones and tablets, but also
+notebooks are switching to silicon microphones. Moreover, completely new device categories
+are meanwhile becoming potential targets, such as smartwatches, activity trackers and gener-
+ally the "things" in the Internet of Things.
+The outstanding characteristics of our silicon microphones have enabled us to continually
+increase market share over the last few years. At 34.3 percent, we are currently number two
+on the market.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+45
+Group strategy
+The functionality of smartphones is being constantly expanded, driving demand for continually
+new and better sensors. We are currently expanding our product range to include new types
+of sensor, beginning with the MEMS pressure sensors such as the DPS310 (see "Power Manage-
+ment & Multimarket" in the chapter "The segments"). Further types of sensor that register
+other physical parameters for use in smartphones are currently being developed. We see
+enormous growth opportunities in the field of sensor technology for applications such
+as consumer electronics, automotive electronics and the Internet of Things.
+Another of our main focuses for mobile devices is in the field of radio-frequency components
+for wireless data transmission between cellular networks or satellite and mobile devices.
+During the transition from one cellular network standard to the next, the signal quality and
+consequently the RF characteristics of many components need to meet more exacting
+requirements. For instance, the frequency bands are closer together and need more precise
+frequency filters, more sensitive signal amplifiers and a greater number of faster antenna
+switches. For smartphones and tablets we offer radio-frequency CMOS switches for switching
+between various antennas.
+We are currently profiting considerably from the increasing number of Long-Term Evolution
+(LTE)-capable smartphones. This fourth-generation transmission standard is considerably
+more complex than the third generation (UMTS). LTE-capable smartphones contain a greater
+number of more highly integrated RF components than earlier generations.
+Cellular network infrastructure: The transition to the next cellular network standard is not
+only affecting the mobile devices but also the cellular network infrastructure. Every time a
+new standard is introduced, it takes into account the increasing number of cellular users and
+the exponentially growing data volume. The radio cells are becoming smaller, which means
+that more network access nodes need to be installed.
+Summary for the Power Management & Multimarket segment:
+The target markets addressed by the Power Management & Multimarket segment are develop-
+ing in different ways. We predict more growth in business with mobile devices than with power
+components. We expect overall business in the Power Management & Multimarket segment to
+grow by an average of roughly 9 percent per annum.
+Growth drivers for the Chip Card & Security segment
+The classic fields of application in this sector - payment cards and government ID - remain the
+basis for future growth. Ensuring the integrity of computers against tampering represents a
+further field of application for our security chips, as is the highly diverse field of authentication
+for accessories and spare parts. SIM cards for machine-to-machine communication will play
+an ever-greater role as a consequence of the increasing interconnectivity of devices and
+promise high growth rates. The Internet of Things, with all its facets, promises further, and in
+the long term perhaps the greatest opportunities for growth.
+P see page 62 ff.
+680
+592
+Whereas the downlink was the prevailing data direction at the beginning of the internet age,
+this has changed since the rapid spread of smartphones, the apps that run on them and above
+all the popularity of social media. The data stream in uplink mode has increased drastically
+with the uploading of images and videos as well as by message services. This data volume, which
+is meanwhile practically symmetrical, has also been taken into account in the new cellular
+network standards.
+USA
+AC-DC conversion: Growth in the field of power supply depends on performance, but even
+more from growth in the number of devices sold. For several years now, servers have experi-
+enced the highest growth in unit numbers and that is likely to remain so for the foreseeable
+future. Demand is being driven by the creation and expansion of data centers as well as the
+storage of all kinds of data on the internet. The demand for computing power and storage
+capacity is being primarily driven by the Internet of Things, the Industrial Internet and social
+networks. Moreover, we see opportunities to grow in the field of compact adapters for tablets
+and lightweight notebooks (“portables"). However, we do not expect growth with PCs and
+notebooks during the next few years.
+The target applications in detail:
+Group strategy
+43
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Apart from its power components, Infineon also specializes in components which potentially
+provide significant differentiation in the fields of mobile devices and cellular network infra-
+structure. We focus on areas where we can offer our customers significant added value with
+our high degree of expertise, mostly in technology, but also in terms of application.
+Our broadly diversified product portfolio in the Power Management & Multimarket segment
+addresses a wide variety of markets. We have been in the power supply business for decades
+with our power components. These include power supplies for converting alternating current
+to direct current (AC-DC conversion) and also DC-DC conversion for medium- and high-perfor-
+mance computers. This field includes high-performance PCs, servers, network computers,
+telecommunications equipment, gaming consoles and graphic cards. The acquisition of Inter-
+national Rectifier has additionally given Infineon access to the market for high-reliability
+power components, such as those required in the aerospace industry.
+The worldwide efforts to reduce CO2 emissions, firstly through the more efficient use of
+electric power and secondly through the increased use of renewable sources of energy, will
+lead to a further rise in demand for power semiconductor components. Moreover, the use
+of speed-regulated drives delivers significantly added value to functionality, an important
+aspect, particularly in the field of machine building. We expect our business with semi-
+conductors for industrial electronics to grow by an average of around 9 percent per annum.
+Growth drivers for the Power Management & Multimarket segment
+Summary for the Industrial Power Control segment:
+Apart from large home appliances, we also serve the market for induction cookers. In close
+cooperation with our leading customers, primarily in China, we have been developing IGBT
+power transistors for the specific needs of each application, such as single-field induction
+cookers and kitchen cookers with multiple cooking fields, for many years.
+Compact modules with outputs between 100 and 2,000 watts are installed in household appli-
+ances. These integrated IGBT modules, known as IPMS (Integrated Power Modules), are the core
+business of the Korea-based LS Power Semitech Co., Ltd. (LSPS) and a core competence of
+International Rectifier. The complete takeover of LSPS in the 2015 fiscal year has enabled us to
+further bolster our presence in the important Korean market which is home to global home
+appliances champions such as Samsung and LG. Furthermore, the acquisition of International
+Rectifier with its complementary portfolio of small IPMS opens up new markets for us in Asia,
+South America and the USA.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+We benefit in particular from the demand for replacements. For example, around 1.4 billion
+refrigerators and freezers are currently in use worldwide, consuming around 650,000 gigawatt
+hours of electric power per year, equivalent to the annual consumption of Germany. If every
+consumer purchasing a new appliance were to select the most energy-efficient unit from now
+on, energy consumption could be slashed by more than 30 percent by the year 2030. This illus-
+trative calculation even takes into account the fact that around 60 percent more refrigerators
+and freezers will to be in use worldwide by 2030
+Large household appliances: There have been a number of changes in this class of goods
+recently. To boost the efficiency of their appliances whether due to stricter efficiency regula-
+tions or to offer consumers better performance, a growing number of manufacturers are
+switching to electronically controlled motors. Whereas in the past it was only possible to switch
+a motor either on or off, motor controls now enable speed to be regulated to follow the current
+load. Examples of application are the water pumps in washing machines or dishwashers,
+refrigerator compressors, or ventilators in air conditioning systems.
+Consumer goods industry
+G see glossary, page 292
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+42
+Group strategy
+One way of reducing the amount of power an electric motor consumes is to use an electronic
+control system to regulate speed and thereby adjust performance to suit current needs. The
+market penetration of speed-regulating motor controls will therefore increase. At the present
+time, a good 15 percent of electric motors are controlled electronically and the trend is working
+in our favor, as the implementation of a variable speed drive system requires a large number
+of the power semiconductors we offer. The number of power semiconductors needed and their
+value depends on the performance class of the motor.
+In industry alone, around 300 million electric motors are installed around the globe and use
+around two thirds of all commercially consumed electric power. The leverage for cutting costs
+is therefore correspondingly large if their effectiveness is improved.
+Industrial motors are at the heart of manufacturing plants, wherever goods need to be moved
+or transported. Cranes, conveyor belts, robots and elevators are the typical fields of application.
+They are also deployed in the field of refrigeration and air conditioning as well as for simply
+generating compressed air. The strongest industrial electric motors work in sluices, cement mills,
+trains, in pumps for municipal waterworks, in air compressors for manufacturing technical
+gases and in compressors for gas pipelines.
+Automation: Industrial plants are being fitted with a growing number of electric motors. The
+fundamental driver behind this development is the necessity to raise productivity continually
+in order to secure a high standard of living for the population. In recent years the trend has
+led to greater automation in former low-cost regions where higher wages are now being paid.
+Where low-cost labor used to move the goods and carry out various types of work, robots and
+machines are now increasingly taking over these tasks. Furthermore, the stronger a company
+competes on a global basis, the greater the pressure to boost productivity. The next level of
+automation, and therefore higher productivity, will be achieved with the Industrial Internet
+(also referred to as "Industry 4.0"), which will not only initiate a further cycle of investment,
+but also contribute towards creating higher-quality jobs.
+Capital goods industry
+Photovoltaics: Here we notice that the market has been undergoing structural changes over
+the last few years. Whereas most of the demand for these products in the past 20 years came
+from the European market, the focus has meanwhile increasingly shifted to Asia and the USA.
+Infineon is very well positioned internationally and has cooperated with the world's leading
+manufacturers of PV inverters for a number of years. We profit to some degree from the
+growth of Chinese inverter manufacturers, partly due to the expansion of photovoltaic tech-
+nology in China itself, but also through the export of the inverters to other regions.
+In first-time installations too, increasingly large generators are meanwhile being installed,
+which means a greater number of semiconductors are required per wind turbine. This devel-
+opment is particularly evident in China, where we have been cooperating with the Chinese
+wind turbine manufacturer Goldwind since 2011. Whereas most turbines used to be installed
+with a maximum output of 1.5 megawatts, a growing number of new systems now generate
+two to three megawatts.
+2014 2015e 2016e 2017 e 2018 e
+Wind: We expect to see sustainable growth in the field of wind power in the medium and long
+term. Both China and the USA are promoting this technology. The replacement of older, less
+efficient wind turbines with more powerful, state-of-the-art versions, known as repowering, is
+set to continue for a long time to come. Many years ago, the first wind turbines were installed
+at windy locations and generated around 100 kilowatts of electricity. Now, however, they are
+being replaced by new models that generate around three megawatts. The volume of power
+semiconductor content installed increases with turbine output.
+In addition to growth in unit numbers, the increasing scale of semiconductor content in appli-
+cations is also helping us grow, driven by demand for smaller, lighter, more efficient devices.
+Many years ago we made a major step possible with the introduction of our CoolMOSTM
+high-voltage power transistors (G) see glossary, page 290). Now, however, a new, innovative leap is
+emerging in the field of adapters for computers, tablets and televisions with the introduction
+of new control concepts and the utilization of new types of semiconductor materials.
+The transition from analog to digitally controlled power supply is a great step forward in terms
+of boosting efficiency. "Digital Power Management” is the buzzword here - which we call
+".dp digital power™M 2.0”. A large part of the intellectual property and know-how, and therefore
+an increasing contribution to added value, is based on the complex control ICs. We cover the
+power range between 30 and 300 watts with our ".dp digital powerTM 2.0” family of products,
+thereby addressing markets not only for computers and consumer electronics, but also for
+LED applications.
+G see glossary, page 289 and page 290
+In the field of consumer electronics, we focus on providing our customers with differentiating
+features, such as flat-screen televisions that are made possible by our extremely compact
+power supply units, which are still based on silicon components today. They will become even
+more compact in future through the use of GaN-based components (see paragraph on Gallium
+nitride in the chapter "Research and development”). GaN-based components enable faster
+switching with fewer losses, which decisively improves the overall efficiency, but above all result
+in a significant size reduction, particularly in coils and condensers, which determine the overall
+dimensions. In keeping with our "Product to System" approach, we have agreed on the first
+close strategic cooperations in the field of flat-screen televisions.
+China
+Indien
+True to our strategic approach "Product to System", we work closely together with our custom-
+ers - primarily in order to better understand their needs, but also with the aim of seeing
+potential for innovation that is either unknown to the customer or requires major changes in
+concept. This approach enables us to identify the best solution in terms of size, costs, efficiency
+and power density. Infineon is one of the few semiconductor manufacturers that develops
+and produces control ICs and driver ICs as well as power transistors in its own right. In future,
+increasingly fine-tuned adjustment between driver ICs and discrete power transistors will be
+necessary. Future generations of power transistors will display different physical properties,
+whether through further miniaturization or new semiconductor materials such as gallium
+nitride (GaN). Driver ICs therefore need to be developed to suit the power transistors if the
+system as a whole is to achieve maximum efficiency. Together with its special packaging
+technology for power semiconductors, Infineon produces the entire range under one roof.
+We regard this fact as a genuine advantage for our customers.
+1 CAGR = Compound Annual Growth Rate
+Source: IHS Inc., "Payment & Banking Cards
+Report 2015", October 2015
+Payment cards: Chip-based cards increase the security of cashless payment systems. Whereas
+Europe began the process of replacing magnetic strip-based cards with chip-based payment
+cards some years ago, the conversion process is now under way in the USA and China. These
+two countries currently offer the greatest market potential in the field of payment. Several
+billion chip-based payment cards will be shipped to customers over the next few years. For the
+period from 2015 to 2018 (calendar years), market researchers forecast the delivery of almost
+5 billion cards in the USA, China and India.
+Our technology enjoys a high level of acceptance, attributable not only to our many years of
+excellent customer support and relations, but also to our extensive, renewed and customized
+product portfolio. In recent years, we have secured orders from all the major card manufac-
+turers supplying the US markets. The success of our security technology is reflected in the
+above-average growth in revenue recorded for our payment business in the 2015 fiscal year
+compared to the previous fiscal year.
+Mobile payments: The mobile telephone is now also a wallet. With the development of smart-
+phones, the mobile internet and Near Field Communication (NFC) technology, numerous
+functions and applications can now be integrated, such as vouchers, tickets, loyalty points
+and payment services. People are now experiencing a new form of convenience with their
+mobile phones, such as travelling on public transport using mobile tickets rather than coins
+or physical tickets, using their smartphones to pay contactlessly while at the same time
+redeeming coupons and collecting loyalty points or making secure bank payments. As a
+result, demand is growing for the secure storage and protection of confidential information
+on mobile phones.
+Infineon provides the security chip for this purpose, the so-called Secure Element (SE). The
+SE can either be built into the smartphone, known as an "embedded SE" (eSE), integrated
+in the SIM/UICC card or incorporated in a microSD card. Infineon offers a suitable solution for
+all three alternatives. The chips need to be at least as secure as credit cards.
+SIM cards for machine-to-machine (M2M) communication: SIM cards for M2M communication
+promise high growth rates, based on the fact that they are gaining in importance by virtue
+of the Internet of Things. M2M communication enables the automatic exchange of data from
+devices to other devices or service centers. Examples of M2M applications include vehicle-to-
+infrastructure communication, infotainment applications in vehicles, toll systems, smart
+meters in the energy sector and telematics systems for emergency calls, maintenance and
+navigation.
+Infineon meanwhile supplies over 70 percent of all government ID projects in Europe. In
+addition, according to the US Government Printing Office, Infineon is one of the main suppliers
+of security technology for the USA's electronic passports. It is the largest electronic passport
+project in the world. Infineon has been supplying the US Government Printing Office since
+the project began in 2005.
+Authentication: In order to safeguard electronic systems, it is essential to connect only autho-
+rized devices. In view of the growing number of connected devices being used by both busi-
+nesses and consumers, this aspect is rapidly growing in importance. It is a matter of protecting
+the connected devices against piracy, data manipulation, hacking and cyber attacks. Security,
+therefore, needs to be introduced whenever possible at each critical end point.
+J
+Battery-powered screwdriver with
+brushless DC motor
+G see glossary, page 290
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Government ID documents: Government identification documents include passports,
+national ID cards, driver's licenses and, in the wider sense, also healthcare cards. Such
+documents are increasingly equipped with a security chip.
+Expected growth of the server
+market worldwide
+P see page 76 f.
+G see glossary, page 291
+1 CAGR Compound Annual Growth Rate
+Source: Gartner, "Forecast: Servers, All Countries",
+September 2015
+2015e 2016e 2017e 2018 e
+2014
+10.1
+12.1
+11.7
+in millions of units
+11.0 11.3
+CAGR (2014-2018):
++4.6%
+G10
+44
+2003
+2004
+8.5%
+1.02
+2007
+2005
+2006
+1.31
+1.49
+1.50
+1.31
+1.08
+1.01
+8.4%
+2008
+1.65
+2009
+-Infineon relative market share²
+2011
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+8.1%
+50
+50
+Source: IHS Inc., several reports on power semiconductors 2004 to 2015
+2 The relative market share is defined as the proportion of market share held by the market leader (in all years presented for Infineon)
+compared to the market share of the second largest competitor in the relevant year.
+1 Including International Rectifier
+Infineon market share
+2.741
+1.71
+H
+1.69
+1.43
+田
+2014
+2013
+2012
+2010
+12.3%
+Segment Result
+11.2%
+For this reason, we are targeting a Segment Result Margin of 15 percent over the industry cycle.
+We are pleased to report that we were proceeding at a faster pace than originally anticipated
+to raise International Rectifier's business to the same level of Segment Result Margin as the
+Group as a whole. The contribution to the margin has already increased steadily during the
+2015 fiscal year and our goal has already been reached in the fourth quarter.
+Target 2: Segment Result Margin of 15 percent of revenue over the economic cycle
+Growth is only one of the prerequisites for attaining success on a sustainable basis - another is
+profitability. In this respect, the margin achieved by our products is an indicator of the added
+value they create for our customers. In order to work at viable levels of profitability, this means
+that we obviously direct our development efforts to the areas which generate the greatest
+benefits for our customers. Working profitably means putting our innovative strength to the
+most effective use in the best interests of customers and markets. In addition, we want to be
+able to maintain our development and sales efforts at the same level, even in more challenging
+phases of the industry cycle. We will also benefit in this respect from the acquisition of Inter-
+national Rectifier, given that the integration will enable us to generate synergies in manufac-
+turing as well as in development, sales and administration.
+Summary for target 1 (compound annual revenue growth rate of 8 percent)
+The major changes currently taking place are driving the growth of our four segments in
+different ways. Our target markets are growth markets that offer significantly greater opportu-
+nities for profitable growth than mature markets characterized by predatory competition.
+Overall, we expect a compound annual growth rate of approximately 8 percent for Infineon.
+The classical fields of application in this sector – payment cards and government ID - will
+continue to have the greatest impact on growth. At the same time, however, the fields of
+authentication and machine-to-machine communication are gaining in significance. We also
+expect a growing contribution from the Internet of Things in the coming years. We forecast
+a compound annual growth rate of 6 to 9 percent for our business with semiconductors for
+security solutions.
+Summary for the Chip Card & Security segment:
+Data requiring protection should be neither manipulated nor stolen. The fact that our leading
+security expertise is increasingly being called for chip card applications as well as for security-
+sensitive systems in vehicle and industrial applications can be seen in the following example:
+Security module incorporated in AURIX™: Vehicle manufacturers are interested in establishing
+increased protection to avoid their vehicles being tampered with as well as greater protection
+for their software and intellectual property relating to the microcontrollers within the vehicle.
+We have integrated the hardware security module (HSM) in our 32-bit multicore microcontrollers
+of our AURIX™ family, as a result of which the chip and the software installed on it are protected
+from unauthorized access and manipulation.
+15.5%
+Segment Result Margin
+2015
+2014
+2013
+897
+14.4%
+620
+9.8%
+377
+G see glossary, page 291
+In order to achieve our margin target also in future, we will focus to a greater extent on the
+following aspects:
+11.9% 11.8%
+> Realizing economies of scale in manufacturing, particularly from our 300-millimeter
+manufacturing capabilities and our 200-millimeter manufacturing site in Kulim (Malaysia)
+› Creating more prominent areas of differentiation on the back of the strategic approach
+"Product to system", as well as striving for technological leadership in all relevant sectors.
+10.7%
+10.2%
+9.7%
+9.4%
+19.2%¹
+€ in millions
+Development of Infineon's market share and relative market share for power semiconductors
+G15
+G see glossary, page 295
+We benefit from our comprehensive portfolio of power semiconductors that can be manufac-
+tured on 300-millimeter wafers: This includes low- and high-voltage MOSFET power devices
+on the one hand, and IGBT products used in discrete IGBT devices and IGBT modules on the
+other. We service a whole variety of sales markets in the industrial and automotive electronics
+sectors with these power semiconductor components. Our broad range of products enables
+us to manufacture in high volumes. It is for this very reason that we are confident of being
+able to achieve good utilization levels with the enormous capacities of a 300-millimeter plant
+within a reasonable time frame.
+2. Increasing productivity. We expect to achieve a 20 to 30 percent reduction in frontend unit
+costs when facilities are running at full capacity, thus ensuring long-term competitiveness.
+Technological change of this magnitude - in this case the move to larger wafer diameters -
+only takes place once every 10 to 15 years in the semiconductor industry particularly for
+power semiconductors. Only the largest providers will be able to achieve the high volumes
+required to operate such frontend manufacturing facilities at the scale and utilization levels
+necessary to secure unit cost advantages. As the undisputed market leader in the field of
+power semiconductors, Infineon is optimally positioned in this respect.
+1. Reducing the amount of capital employed per chip. Manufacturing capacities can be
+expanded with lower investment volumes using 300-millimeter technology. Our experience
+shows that it takes 30 percent less investment on average to build up additional manufac-
+turing capacity to a desired level on a 300-millimeter manufacturing line than it does on a
+200-millimeter line. There is also the advantage that less cleanroom space is required, due
+to the smaller number of machines required. The required investment volume per capacity
+unit is reduced, thus resulting in lower depreciation expense.
+so far with operations based on this manufacturing technology: in the manufacturing network
+located in Villach (Austria) and Dresden (Germany). This technology is contributing in the
+following ways to helping us achieve our margin target:
+Pivotal in achieving these aims is our 300-millimeter thin-wafer manufacturing capability for
+power semiconductors. As a technology leader, Infineon is the only company in the world
+Group strategy
+49
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+> Realizing economies of scale in research and development and in sales by achieving
+leading market positions in our target markets and
+G see glossary, page 289
+10-0
+Infineon has invested heavily in recent years in manufacturing process technologies and
+capacities for 300-millimeter thin wafer technology, in research and development for product
+and process technologies and in sales and marketing structures. These investments provide
+solid foundation for us to realize economies of scale and economies of scope in the future, and
+thus improve profitability. The acquisition of International Rectifier fits perfectly with this
+strategy. We are, therefore, confident of achieving our target of an average 15 percent Segment
+Result Margin over the industry cycle.
+18%
+54
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+AURIX™M: part of Audi's driver
+assistance systems
+At Audi, the central driver assistance system"zFAS" forms
+the core of future control systems for automated driving.
+A 32-bit multicore microcontroller of our AURIX™
+family ensures that the system is reliable.
+In its function as primary controller it sends
+out the commands for the brake, steering,
+engine and transmission.
+REVENUE
+€2,351 million
+SEGMENT RESULT
+€300 million
+Automotive
+Driver assistance systems, CO₂ reduction and connectivity are
+the major trends in the automotive sector
+Market share over 10 percent for the first time
+The Automotive segment in the 2015 fiscal year
+_
+SEGMENT RESULT MARGIN
+€121 million
+SEGMENT RESULT
+Asia-Pacific,
+Japan
+Americas
+56
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+P see page 74
+Business strategy and fields of application
+With more than 40 years of experience in automotive electronics, Infineon's product portfolio
+of sensors, microcontrollers and power semiconductors is one of the largest in the industry.
+A further distinctive feature is our strategic "Product to System” approach, through which we
+offer our customers solutions for the fields of application CO2 reduction, driver assistance
+systems, security, and comfort electronics.
+G16
+Going forward, we see three main trends emerging, which will determine the development of
+automotive technology - and which we strongly support with our products:
+Infineon is market leader for radar sensors with its 77/79 gigahertz silicon germanium
+technology (see the chapter "Research and Development"). For vehicle interiors, Infineon has
+developed the 3D image sensor REAL3TM for driver monitoring (see the chapter "Research and
+Development"). For external camera systems, Infineon offers 32-bit microcontrollers with
+special security concepts.
+Host processors form the core of future automated driving control systems. One example is
+Audi's central driver assistance system, known as "zFAS". A 32-bit AURIXTM multicore microcon-
+troller ensures the reliability of the system. In its function as main controller, in automated
+driving mode it sends out the commands for the steering, brakes, engine and transmission
+systems. In addition to controlling actuators, the AURIXTM microcontroller has a further key
+role as safety anchor in that it safeguards the components not qualified according to automo-
+tive industry standards.
+Actuators are also safety-critical applications. For this reason, one of the most important
+requirements of semi-automated or fully automated driving is that, should an error occur,
+the system nevertheless continues to operate reliably. Infineon fulfills this requirement by
+additionally offering ISO 26262-certified solutions with redundancy in case of error for these
+applications.
+CO2 reduction: A larger number of electric or hybrid vehicles is essential in order to meet
+CO2 reduction regulations. The present solutions - including 48-volt systems for start-stop
+systems, mild and plug-in hybrid vehicles and fully electric vehicles - convert the DC voltage
+from the battery to the AC voltage required for the drive motor. Infineon offers a wide range
+of power semiconductor components for these various systems: MOSFETs, discrete IGBTs,
+IGBT modules, silicon carbide components and driver ICs.
+However, in recent years, significant improvements have also been made for vehicles with
+combustion engines and this development is far from over. On the one hand, downsizing
+makes it possible to improve engine performance of smaller-capacity engines and at the
+same time reduce fuel consumption. A more sophisticated sensor system and more microcon-
+troller computing power are necessary for this purpose. On the other hand, the electrification
+of aggregates, such as water and gasoline pumps, and the transition from electromechanical
+and hydraulic power steering systems to electronic power steering are in progress. The elec-
+trical power of these units can be electronically controlled to suit the varying load, which
+boosts efficiency. The increasing market penetration of such applications and the electrifica-
+tion of further aggregates is contributing towards reducing CO2 emissions.
+€666 million
+IIIII
+Driver assistance systems: Active safety systems are currently developing to become advanced
+driver assistance systems (ADAS). ADAS for semi-automated or fully automated driving essen-
+tially consist of, firstly, sensors (for example, radar, interior and external cameras), secondly,
+a main host computer (the system intelligence, as it were) to analyze the sensor data and
+calculate the driving strategy, and thirdly, actuators (steering, brakes, engine control and
+transmission). Infineon provides solutions for all three of these most important areas of
+automated driving.
+Revenue and Segment Result
+of the Automotive segment
+€ in millions
+55
+Vehicles made in Germany, particularly premium brands, were in very high demand across all
+regions. On the other hand, sales figures fell noticeably in China in the second half of the fiscal
+year, reflected in the weaker pace of growth towards the end of the fiscal year.
+Buoyant demand was sustained for upper-range medium-sized vehicles, and especially for
+sports utility vehicles (SUVs), equipped with a broad array of additional safety and conve-
+nience features. Furthermore, the demand for semiconductor-based solutions to reduce CO2
+emissions and the rising demand for driver assistance systems contributed to the revenue
+increase. These trends were observed throughout all regions.
+Slight shifts in the regional revenue split resulted from the acquisition of International Rectifier.
+In view of International Rectifier's comparatively high revenue in the Americas, the most
+significant change occurred in that region. The share attributable to the Americas rose by
+2 percentage points to 17 percent. Due to the strong growth in the Chinese automotive indus-
+try, the percentage attributable to Asia-Pacific (including Japan) rose slightly to 40 percent
+(2014: 38 percent). Germany now accounts for 20 percent of revenue (2014: 23 percent).
+Segment Result
+The Segment Result totaled €300 million (including International Rectifier's contribution to
+the Segment Result from January 13, 2015), 16 percent up on the €259 million recorded one
+year earlier. The Segment Result Margin amounted to 13 percent of revenue (2014: 13 percent).
+The Segment Result followed the expected trend, in line with the increase in revenue. The first-
+time consolidation of International Rectifier had a slightly dilutive effect on the Segment Result.
+Audi piloted driving
+G17
+100%
+100%
+100%
+15%
+17%
+38%
+40%
+Automotive Segment revenue
+by region
+2015
+Az
+Automotive
+2,351
+1,965
+1,714
+259
+300
+167
+2013
+A7 concept
+2014
+Revenue
+Infineon recorded revenue of €2,351 million (including International Rectifier's contribution
+from January 13, 2015) for the Automotive segment in the 2015 fiscal year, an improvement of
+20 percent on the previous year's figure of €1,965 million. The segment generated 41 percent
+of Group revenue.
+The strong demand already emerging in North America at the beginning of the 2014 fiscal year
+continued throughout the 2015 fiscal year. The European automotive market grew moderately
+throughout the 2015 fiscal year, helped by perceptible recovery in Western Europe compared
+to recent years. The revival was prompted by a gradual economic upturn, pent-up demand for
+replacements and generally increased willingness to purchase a car.
+Revenue
+Segment Result
+0000
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+2015
+Over the course of the coming years, we will transfer production of some of International
+Rectifier's products to Infineon plants, in particular to our 300-millimeter plant in Dresden.
+The most likely candidates are low-voltage MOSFET as well as IGBT power devices. We will
+increase utilization levels and therefore achieve lower unit costs at an earlier stage.
+Europe (excluding
+Germany),
+Middle East, Africa
+Germany
+23%
+52
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+The segments
+IIIII
+Jo-o
+☐
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+53
+Automotive
+REVENUE
+SEGMENT RESULT
+SEGMENT RESULT MARGIN
+€2,351 million
+€300 million
+............ 13%
+Industrial
+P see page 92 ff.
+P see page 108 ff.
+-
+In order to achieve lasting growth with adequate profitability, we also have to run our busi-
+ness on a sustainable basis and ensure that our economic targets are in line with social and
+ecological requirements. We do this by pursuing responsible business practices and taking the
+expectations of relevant stakeholders into account. We set great store in the prudent use of
+natural resources and provide solutions for major societal challenges: the efficient use of
+energy, environmentally compatible mobility, and security in an interconnected world. In the
+chapter "Sustainability at Infineon", we have explained in detail why and how sustainability -
+alongside the attainment of economic targets – is key to the way we run our business and
+what targets we have set in this area.
+Target 3: Investment at 13 percent of revenue
+When deciding where to expand our manufacturing capacities, we primarily invest in our
+own facilities, where this significantly contributes towards differentiating our products from
+those of the competition. Power semiconductor components, radio frequency components
+and MEMS-based sensors in particular fall into this category. Where this is not the case, we are
+outsourcing an increasing volume of wafer processing and component packaging to manufac-
+turing partners.
+Capital intensity at Infineon has been determined to date by the use of 200-millimeter tech-
+nology. The new 300-millimeter thin-wafer technology, however, requires a lower level of
+investment for comparable units of capacity compared to 200-millimeter manufacturing.
+The level of investment required to boost production capacities for power semiconductors
+in order to achieve the targeted growth rate is, therefore, decreasing.
+Infineon is in the early stages of a growth curve for products manufactured using standard
+CMOS-based technologies with 65-nanometer and smaller feature sizes. Since the main
+differentiating factor for these products lies in the design and less in the process technology,
+we will no longer use this technology for in-house manufacturing and, instead, outsource
+the relevant volumes to contract manufacturers. We develop the modifications needed for our
+products in collaboration with these contract manufacturers, for instance integrated Flash
+memory (embedded Flash), which will obviate the need in future to invest in frontend manu-
+facturing capacity. In the case of security controllers sold by the Chip Card & Security segment,
+we have already been able to realize a high proportion of outsourced manufacturing. Further
+CMOS-based products will follow in the coming years.
+We will also continue to expand cooperation arrangements with contract manufacturers for
+backend manufacturing, for which there are no major differentiating features from a manufac-
+turing perspective. The proportion of standard packaging manufactured on this basis will
+also be increased at a swift pace. Consequently, a correspondingly lower level of investment
+is also to be expected in this area.
+Last but not least, we are improving productivity across all manufacturing processes by
+achieving better yields. In conjunction with the "Next Level of Productivity" program, we have
+implemented a series of measures which have significantly increased both current and
+expected manufacturing productivity.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Group strategy
+Power Control
+51
+Taking all these factors into consideration, including International Rectifier's business units,
+these various approaches allow us to achieve an average ratio of investments to revenue
+of 13 percent over the industry cycle.
+Investment volumes are structured to enable us to achieve our targeted compound revenue
+growth rate of 8 percent.
+Sustainable business operations
+Highly qualified, highly motivated employees and sustainable business operations
+are the prerequisites for our success
+The fast-moving semiconductor industry is characterized by ever-rising expectations in terms
+of technology, quality, speed and efficiency and is therefore a very challenging sector. Time
+and again, the dedication and great reliability of our entire staff have enabled us to successfully
+master these challenges. Men and women from more than 90 countries all contribute towards
+making Infineon a successful international company - with their skills, enthusiasm, and courage
+to question the status quo and forge new paths. We have been shaping the future, day by day,
+since the first semiconductors were invented.
+We are especially pleased that the integration of the new colleagues from International Rectifier
+has progressed so smoothly and that we have been able to add many new, complementary
+areas of expertise.
+We are well aware that our targets could not be met without the commitment and motivation
+of our highly qualified staff. In addition to pay commensurate with performance, other key
+factors are a strong leadership culture, the promotion of talent and a continuous commitment
+to our employees. You can read how we do this and about the relevant targets we have set in
+the chapter "Our employees".
+For a number of years International Rectifier has also pursued a consequent strategy of
+outsourcing manufacturing, which has resulted in a lower investment ratio. This fact will now
+also be factored into the overall figures.
+REVENUE
+SEGMENT RESULT
+€971 million
+Autonomous driving - including semi-autonomous driving systems already developed -
+is another manifestation of the Internet of Things. The things in this case are the vehicles that
+communicate directly with one another. Vehicles will be able to make contact with control
+systems, which will, in turn, provide a real-time picture of the current traffic situation. The use
+of web applications in vehicles will therefore increase sharply. The origin and correctness of
+the data must be proven, otherwise vehicles may be given the wrong commands.
+One interesting aspect of the "Internet of Things” is the role it plays in the Industrial Internet.
+In conjunction with Industrial Internet, production data or signals measured by sensors will
+be sent to a business partner or cloud computer via either wired or wireless connections.
+Connecting the supply and value-added chain in this way requires secure communication
+between business partners, as well as between the machines, devices and IT systems of the
+business partners involved. The Industrial Internet will only succeed if process know-how can
+be reliably protected against hacking attacks. Secure transmission of product- and produc-
+tion-related data within an open architecture will, therefore, be at the top of the agenda.
+Internet of Things: Depending on which market research report one reads, it is expected
+that between 50 and 100 billion devices will be connected via the internet in the coming
+10 to 15 years. The figure includes machines, robots, vehicles, containers and medical equip-
+ment, as well as everything that is meanwhile called “smart”: smart grid, smart factory,
+smart home, smart meter, smart car. The secure storage and transfer of data will be absolutely
+essential for many of these billions of connected “things”. If security is assured, these develop-
+ments will open up a whole new world of services which will ultimately change people's
+everyday lives.
+Following the introduction of Microsoft Windows® 10, which requires TPM functionality,
+the discrete TPM security chip is gaining in significance with respect to the operating system.
+Infineon's TPM security chips not only meet the hardware certification requirements of
+Microsoft Windows®, they are also recommended by Google for Chrome OS systems and
+supported by the major open-source operating systems such as Linux. A growing volume of
+computers with integrated TPM security chips have been sold in recent years. The Trusted
+Computing Group (TCG) puts the figure of PCs sold with TPM security chips at more than
+600 million units to date.
+With the OPTIGAT product family, Infineon supplies various security chips and security solu-
+tions for the authentication of electronic systems, from a complex IT infrastructure with
+numerous servers and computers to a system consisting of an end device and the appropriate
+accessories.
+47
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Whether automation technology in production, logistics, traffic guidance systems, building
+or home automation, the same base technologies are required for all of these applications. In
+this context, we see good potential in hardware-based security similar to what we offer with
+our security controllers. This can take the form of an individual component or the incorpora-
+tion of the relevant function in our automotive or industrial microcontrollers.
+17%
+2013
+35%
+25%
+23%
+20%
+23%
+24%
+BEE
+2014
+Security as an area of expertise overarching all segments: Infineon is increasingly leveraging
+its security know-how to broaden customer access to other areas of the business. Security
+expertise covering all areas of a business can be a good way of “opening doors" to our customers
+and may even be the decisive criterion for selecting Infineon as a supplier.
+48
+€122 million
+SEGMENT RESULT MARGIN 13%
+Power Management
+& Multimarket
+REVENUE
+SEGMENT RESULT
+SEGMENT RESULT MARGIN
+Group strategy
+€1,794 million
+20%
+Chip Card & Security
+REVENUE
+€ in millions
+Segment Result and Segment Result
+Margin over the last three years
+G14
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+€352 million
+11976
+This market analysis covers not only components
+of the Power Management & Multimarket segment,
+but also components of the Automotive segment.
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+57
+11.9%
+9.5%
+8.6%
+7.1%
+1 Including International Rectifier and LSPS
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+62
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Infineon
+46.1%
+DPS310
+DPS310 pressure sensor
+Infineon expands its portfolio of sensors.
+Thanks to the highly-accurate digital
+barometric pressure sensor DPS310, the
+exact height can be determined with only
+a few centimeters tolerance. It can be
+used to determine the floor level in build-
+ings or parking garages. Or the altitude
+covered when crossing the Alps.
+1.0 mm
+2.5 mm
+2.0 mm
+☐
+Power Management & Multimarket
+REVENUE
+€1,794 million
+Height measurement with a
+SEGMENT RESULT
+Infineon'
+ON Semi-
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+G23
+World IGBT components market
+share 2014 (discrete IGBTs and
+IGBT modules)
+Infineon'
+26.5%
+Mitsubishi
+21.6%
+Fuji Electric
+12.8%
+conductor
+Semikron
+4.3%
+Fairchild
+1 Including International Rectifier
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+G24
+World IPM (Intelligent Power Module)
+market share 2014
+Mitsubishi
+Fuji Electric
+Semikron
+7.3%
+€352 million
+Portfolio and market access strategically improved by means of
+integration of International Rectifier
+MEMS sensor product portfolio expanded
+The Segment Result totaled €352 million (including International Rectifier's contribution
+to the Segment Result from January 13, 2015), 105 percent up on the figure of €172 million
+recorded one year earlier. The Segment Result Margin amounted to 20 percent of revenue
+(2014: 16 percent).
+The improvement in the Segment Result was mainly driven by the increase in revenue.
+Furthermore, favorable currency effects also had a positive impact on the result.
+G26
+Power Management & Multimarket
+segment revenue by region
+100%
+7%
+100%
+6%
+100%
+10%
+Segment Result
+74%
+71%
+BEF
+2013
+19%
+22%
+19%
+2014
+2015
+Europe, Middle East, Africa
+Asia-Pacific, Japan
+Americas
+72%
+Shifts occurred in the regional revenue split as a result of the acquisition of International
+Rectifier. Due to the comparatively high level of revenue generated in the Americas and the
+comparatively low revenue generated in Europe, the main changes in this split occurred in
+these regions. Europe now accounts for only 19 percent of revenue (2014: 22 percent). The
+percentage attributable to the Americas rose by 4 percentage points to 10 percent. The share
+attributable to Asia-Pacific (including Japan) remained virtually unchanged at 71 percent
+(2014: 72 percent). The most significant country in the Asia-Pacific region is China. The high
+percentage of revenue generated in this market is due to the fact that major contract manu-
+facturers of devices for brand manufacturers (so-called Electronic Manufacturing Services,
+EMS) are established there. The brand manufacturers which place orders for such projects with
+Infineon, on the other hand, have their headquarters and product development centers
+located mostly in the USA or Europe.
+radio-frequency (RF) power transistors. Fifth, with each new generation of mobile telephony,
+the semiconductor content in smartphones rises. The increasing number of frequency bands
+and modulation concepts requires a growing number of RF components. Sixth, as a result of
+the growing market acceptance of silicon microphones and through gains in market share, our
+revenue from these products has risen.
+The segments
+Power Management & Multimarket
+The Power Management & Multimarket segment
+in the 2015 fiscal year
+G25
+Revenue and Segment Result
+of the Power Management &
+Multimarket segment
+€ in millions
+987
+1,061
+144
+172
+1,794
+352
+2013
+2014
+2015
+Revenue
+The Power Management & Multimarket segment generated revenue totaling €1,794 million
+in the 2015 fiscal year (including International Rectifier's contribution from January 13, 2015),
+69 percent up on the previous year's figure of €1,061 million. The segment accounted for
+31 percent of Infineon's total revenue.
+The growth in revenue is essentially due to six factors. First, the acquisition of International
+Rectifier. Approximately 70 percent of International Rectifier's revenue is attributable to the
+Power Management & Multimarket segment. Second, we benefited from favorable currency
+effects. Third, the breakthrough occurred in digital conversion concepts for DC-DC power
+management in servers, leading to a rise in demand for our controller ICs, driver ICs and low-
+voltage power MOSFET transistors. Fourth, the worldwide introduction of the fourth generation
+of cellular network infrastructure (LTE), especially in China, led to revenue growth for our
+■Revenue
+Segment Result
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+63
+Power Management & Multimarket segments.
+64
+also components of the Automotive and the
+This market analysis covers not only components
+G see glossary, page 292
+The IGBT modules of our new
+XHP™ family are highly compact
+and offer maximum scalability
+combined with a simplified
+system design. They are used in
+trains and large industrial drives.
+Business strategy and fields of application
+Electric power needs to be generated, transmitted to the consumer and then converted. Each
+of these steps has to be carried out as efficiently as possible, using the appropriate high-
+and maximum-performance IGBT components. The Industrial Power Control segment offers
+a comprehensive array of products for this purpose, consisting of discrete IGBT devices,
+IGBT modules, IGBT stacks, as well as driver ICs and driver boards for controlling IGBT modules.
+These products enable us to cover almost the entire power range from a few hundred watts
+to several megawatts.
+As a result of the acquisition of International Rectifier and the takeover of the remainder of
+Korean LS Power Semitech Co., Ltd. (LSPS), we have strengthened our position especially in
+the 100 to 2,000 watt power range. These two acquisitions enable us to benefit in particular
+from the compact IPMS (Intelligent Power Modules) of both companies and also from Interna-
+tional Rectifier's IGBT driver portfolio, which is complementary to Infineon's portfolio.
+LSPS has operated first and foremost in Korea. Due to LSPS we increased our access to the
+Korean market, and especially to major home appliance manufacturers operating internation-
+ally namely Samsung and LG. Going forward, we will use our worldwide sales infrastructure
+to market LSPS products - which are also compact IGBT modules with a power range of up to
+5,000 watts - in other countries and regions too.
+IGBT power components are to be found in a vast array of applications: for example, in indus-
+trial drives, such as pumps, fans and elevators, but also in wind power plants, photovoltaic
+systems, trains, home appliances, emergency power supplies and robots. In the course of this
+century, the importance of electricity controlled by semiconductors will continue to grow,
+especially in the field of electricity generation from renewable sources of energy which are
+supplanting fossil fuels. Electricity is becoming the most important energy carrier of the
+21st Century.
+Power semiconductors are often not only the determining factor for the functioning of our
+customers' products and systems, but also have a decisive impact on efficiency, size, weight
+and cost. In particular, the increase in power density - i.e. the electrical power converted
+within a certain volume - is the driving force behind the development of IGBT power devices.
+Together with our customers, we develop solutions for the following market trends:
+Maximum power density: Compact, lightweight control systems are achievable only with
+technologically leading products. It is often not feasible to make any further significant
+improvements by optimizing individual products. Based on our innovations and our under-
+standing of applications, we are taking the decisive step with our strategic "Product to
+System" approach.
+Examples include our technological leadership in the field of IGBT components for fifth-gener-
+ation technology, with an extended temperature range, silicon carbide (SiC) hybrid modules
+as well as the highly compact, scalable XHPT IGBT modules deployed in the three-digit kilowatt
+to megawatt range.
+Combined Management Report - Our Group
+Energy efficiency: The greatest scope for leveraging energy savings lies in improving efficiency
+in consumption. The savings potential from several hundred million industrial drives and
+billions of home appliances is vast. As a result of the introduction of new and/or stricter effi-
+ciency directives, there is a growing market for products such as industrial variable speed
+drives or speed-controlled refrigerator compressors.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+Industrial Power Control
+Fields of application
+Charging stations
+Home appliances
+for electric vehicles > Air conditioning
+> Dishwashers
+Energy transmission > Induction cooking
+> FACTS (Flexible
+AC Transmission
+Systems)
+> Microwave ovens
+> Refrigerators
+Industral drives¹
+> Automation
+technology
+Functional integration: Whereas in the past the development of power modules focused
+mainly on increasing the ampacity, a new dimension is now coming into play, namely the
+integration of further functions in addition to the actual power semiconductor components
+themselves. In future, an ever-growing number of components will be directly integrated in
+IGBT modules, such as sensors, security ICs, supporting microcontrollers and interfaces.
+> Climate technology
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+60
+The Segment Result amounted to €122 million (including International Rectifier's contribution
+to the Segment Result from January 13, 2015), a decrease of 15 percent compared to the
+previous year's €144 million. The Segment Result Margin amounted to 13 percent of revenue
+(2014: 18 percent).
+The Segment Result was positively impacted by the higher contribution from increased revenue
+and favorable exchange rate effects. On the other hand, there was a rise in operating expenses,
+especially for research and development, as well as a shift in demand from very high-end com-
+ponents to standard components, which are subject to greater price pressure.
+G21
+Industrial Power Control segment
+revenue by region
+100%
+100%
+100%
+12%
+9%
+60
+7%
+50%
+54%
+44%
+41%
+39%
+2013
+2014
+2015
+Europe, Middle East, Africa
+Asia-Pacific, Japan
+Americas
+44%
+> Conveyor technology
+› Cranes
+Industrial vehicles
+> Agricultural
+vehicles
+This development allows functionalities to be achieved that would be impossible with exter-
+nally attached components. Examples for such functionalities include remote maintenance,
+early identification of failures or authentication (G see glossary, page 289) of original parts.
+Digitalization: The trend toward digitalization of control loops was set in motion years ago with
+MOSFET-based AC-DC and DC-DC converters. This trend is now also starting for IGBT-based
+control units, whereby the chain - comprising control IC, IGBT driver and IGBT switch - is digi-
+talized and referred to as "Digital Control Power". Functional integration and digitalization are
+the most important steps that have been taken to make drive controls and inverters compatible
+for the Industrial Internet.
+G22
+World discrete power semi-
+conductors and modules market
+share 2014
+Infineon'
+Mitsubishi
+STMicro-
+electronics
+Fairchild
+Toshiba
+19.2%
+7.0%
+61
+5.9%
+5.4%
+Market position
+World market for discrete power semiconductors and modules
+The world market for power semiconductors - including discrete power semiconductors and
+modules, but excluding power ICs - continued the upturn that began in mid-2013 during the
+2014 calendar year, rising by 6.3 percent from US$15.282 billion to US$16.239 billion (source:
+IHS Inc.). Infineon's market share (including International Rectifier) amounted to 19.2 percent.
+Its lead over its nearest competitor in this still highly fragmented market is now 12.2 percent-
+age points. The five largest competitors together held 43.2 percent of the market.
+World market for discrete IGBTs and IGBT modules
+In the 2014 calendar year, the combined world market for discrete IGBTs and IGBT modules
+clearly outperformed the overall market for power semiconductors and grew by 11.1 percent
+to US$4.449 billion (2013: US$4.003 billion). Infineon's market share (including International
+Rectifier) stood at 26.5 percent in 2014. The five largest competitors together held 72.5 percent
+of the market.
+World market for IPMS
+In the 2014 calendar year, the world market for IPMS (Intelligent Power Modules) grew by
+10.4 percent to US$1,260 million (2013: US$1,141 million). Infineon (including International
+Rectifier and LS Power Semitech Co., Ltd. (LSPS)) achieved 5th place, with a market share
+of 7.1 percent. The five largest competitors together held 83.2 percent of the market.
+1 Including International Rectifier.
+5.7%
+power supplies
+Uninterruptible
+> Hybrid buses
+> Forklifts
+> Heavy construction
+vehicles
+Renewable energy
+generation
+> Photovoltaic
+systems
+> Wind turbines
+Traction
+> High-speed trains
+> Locomotives
+> Metro trains
+› Trams
+*****
+> Offshore wind farm
+HVDC lines
+> Washing machines
+1 Including motors, compressors, pumps and fans
+› Drives
+> Elevators
+› Escalators
+> Factory automation
+> Robotics
+> Rollers
+of the Industrial Power Control segment, but
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+Automotive
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+G see glossary, page 293
+10.4%
+Source: Strategy Analytics, "Automotive Semi-
+conductor Vendor Market Shares", April 2015
+1 Including International Rectifier
+electronics
+STMicro-
+Renesas
+Infineon'
+Freescale
+NXP
+10.1%
+in third place for the first time
+6.8%
+7.5%
+7.8%
+10.5%
+12.0%
+G19
+Source: Strategy Analytics, "Automotive Semi-
+conductor Vendor Market Shares", April 2015
+1 Including International Rectifier
+NXP
+China automotive semiconductor
+market share 2014; Infineon
+Freescale
+8.9%
+8.4%
+The Industrial Power Control segment in the 2015 fiscal year
+€122 million
+SEGMENT RESULT
+Digitalization and functional integration the next major topics
+Growing importance of home appliance business
+€971 million
+REVENUE
+Industrial Power Control
+International Rectifier's Driver IC and discrete
+IGBTs are part of the compressor's control unit
+8.6%
+IOR
+IGBT
+Treiber-IC
+IR
+J0-0
+Lo-i
+A motor control unit allows the performance of the
+compressor to be regulated as needed: high perfor-
+mance if the refrigerator is used frequently and
+a lower speed at night. This not only saves
+energy but also extends the lifespan
+and reduces disruptive noises.
+For a long time, the compressor of a refrigerator only
+had two operating states: "off" and "full speed until
+reaching the target temperature."
+Driver ICs and power switches for demand-based
+compressor control
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+58
+SSSS
+STMicro-
+electronics
+Infineon'
+Renesas
+> Power windows
+› Lighting
+> Hatchback
+> Electronic seat adjustment
+> Electronic control units
+> Door electronics
+> Air conditioning
+Comfort electronics
+> Transmission control
+> Steering
+> Start-stop system
+electric engines
+> Control for combustion and
+› Battery management
+> Battery charging control
+> Alternator control
+CO₂ reduction
+Fields of application
+We see our security know-how as essential for providing added value to our customers. In
+order to guarantee the functioning of the above-mentioned safety applications in increasingly
+connected vehicles under the present communication standards, encryption technologies are
+required. In this respect, we rely on the globally leading security expertise provided by our
+Chip Card & Security segment and use it in the fields of infotainment, emergency call systems,
+digital tachographs and vehicle communication. Furthermore, special hardware solutions
+integrated in microcontrollers help to safeguard the intellectual property of our customers,
+such as the program code for an engine control system.
+Connectivity and security: In future, a growing number of vehicles will be permanently con-
+nected to the internet. This connectivity serves, for example, to upload software updates or to
+provide the driver with access to specific services. Vehicles will also communicate with one
+another to an increasing extent. The technologies for the wireless communication coming into
+use are based on industry standards, making differentiation on a product level virtually
+impossible.
+> Motor control
+> Sunroof
+> Suspension
+> Windshield wipers
+World automotive semiconductor
+market share 2014
+G18
+In terms of market share by product category in the automotive semiconductor market,
+Infineon remained in second place for sensors, with 11.5 percent of the market, and in third
+place for microcontrollers with 8.7 percent of the market. Infineon remained the market
+leader for power semiconductors, increasing its market share to 24.8 percent on the back of
+organic growth and the acquisition of International Rectifier.
+With a market volume of US$9.268 billion, Europe is still by far the most important region for
+automotive semiconductors worldwide. Infineon remained market leader in Europe with
+14.1 percent market share. In Japan, the initiatives launched a few years ago have meanwhile
+paid off with above-average growth. In this country, which is heavily dominated by local sup-
+pliers, Infineon achieved its highest market share so far of 5.2 percent, making it the largest
+non-Japanese supplier on the market. The fastest growing region was China, where Infineon
+advanced to third place for the first time with a market share of 8.9 percent. In Korea, Infineon
+remained market leader by far, with a market share of 14.6 percent.
+According to analyses performed by the market research firm Strategy Analytics, the world
+market for automotive semiconductors grew by 9.4 percent, from US$25.177 billion in the
+2013 calendar year to US$27.537 billion in 2014. At 10.5 percent (including International
+Rectifier), Infineon's market share exceeded the 10 percent threshold for the first time. The
+five largest competitors together held 44.6 percent of the market.
+Market position
+> Original spare parts
+authentication
+(e.g. tachometer)
+> Manipulation protection
+› Digital tachograph
+› Communication (car-to-car,
+car-to-infrastructure)
+Security
+> Tire pressure monitoring system
+> Lane departure warning system
+> Radar-based distance warning
+> ESC (Electronic Stability Control)
+> Electronic power steering
+chassis suspension
+> Electronically controlled
+› Blind spot detection
+› Airbag
+Driver assistance systems
+> ABS
+G20
+Combined Management Report - Our Group
+Revenue and Segment Result of the
+€ in millions
+> Oil and gas exploration
+› Space systems
+> Submarine telecommuni-
+cations cables
+LED and conventional
+lighting systems
+Mobile devices
+› Activity trackers
+> Navigation devices
+> Smartphones
+> Tablets
+P see page 73
+> Commercial aviation
+> Defense technology
+Power management for:
+> Home appliances
+> IT and telecommunications
+> PCs and notebooks
+> Servers
+> Smartphones
+> Tablets
+Market position
+Standard power MOSFET devices
+The world market for standard MOSFET power transistors (low-voltage and high-voltage
+MOSFETs) totaled US$5.829 billion in the 2014 calendar year, an increase of 7.1 percent com-
+pared to the previous year's figure of US$5.441 billion (source: IHS Inc.). With a market share
+of 27.8 percent, Infineon (including International Rectifier) is the clear market leader in this
+field, 17.3 percentage points ahead of its nearest competitor. The five largest competitors
+together held 63.8 percent of the market.
+› Consumer electronics
+Chips for silicon microphones
+HiRel
+> Electric bicycles
+G see glossary, page 290
+Business strategy and fields of application
+Power management is one of the keys to the Power Management & Multimarket segment.
+The power range addressed by the segment spans from 10 watts for a smartphone charger
+to 3,000 watts for the power supply of a server. (Higher power output is addressed by the
+Industrial Power Control segment.) Approximately two thirds of segment revenue is attribut-
+able to power MOSFETs: low- and medium-voltage OptiMOS™ power transistors, high-voltage
+CoolMOST power transistors, driver ICs and control ICs. Approximately one quarter of revenue
+is generated by mobile devices (essentially sensors, radio frequency (RF) antenna switches,
+low-noise amplifiers and diodes). The remainder stems from business in cellular network
+infrastructure (RF power transistors for base stations).
+The factors driving our success in the Power Management & Multimarket segment are our
+leading core technologies and the ability to offer both differentiated solutions through our
+strategic approach "Product to System" and through our standard products for the mass
+market. International Rectifier complements us especially with respect to accessing the mass
+market. As a further aspect of our strategic approach "Product to System", we have stepped
+up relations with our lead customers in recent years, and we operate joint development
+laboratories with some of them. We offer development support for a series of other customers
+or carry out full development services on their behalf, enabling us to put our products to
+optimum use in customer applications and thereby achieve maximum efficiency as well as
+faster time-to-market.
+Through the acquisition of International Rectifier, we have extended our product and packaging
+portfolio towards low-voltage (up to 40 volts), but above all medium-voltage power transistors
+(40 to 150 volts). The latter are used in growth areas such as in solutions for DC-DC conversion,
+power tools, and in electric drives for pedelecs and e-scooters. Through International Rectifier
+we have also gained access to new direct and distribution customers, especially in the growth
+markets of Asia.
+An additional, entirely new product category resulting from the acquisition is that of compo-
+nents with highest reliability ("HiRel") for applications such as commercial aviation, aerospace
+and oil exploration. This business is more or less immune to macroeconomic cycles and
+seasonal effects.
+We develop solutions together with our customers for the following market trends:
+Increase of power density and digital power electronics: In energy converters there is a
+clear trend towards higher efficiency and greater compactness. Two factors are relevant with
+regard to power density: first, more output for the same size (for example, in power supplies
+for servers) and second, the same output in a smaller form factor (for example, power supplies
+for flat-screen televisions or chargers and adapters for mobile devices). Control ICs based on
+digital conversion (also known as "digital power management”) enable these requirements to
+be met faster and more effectively.
+Our solutions are based on highly efficient power transistors and diodes, partly manufactured
+from innovative materials such as silicon carbide and gallium nitride, driver ICs and control
+ICs. Furthermore, we provide support for our customers with our excellent application under-
+standing.
+Sensors: A key aspect of the Internet of Things is the "environmental sensing” of these things
+and the transmission of measurements to data centers. The trend is towards ever smaller
+and more accurate sensors and new types of sensor capable of recording further physical
+parameters. Infineon has been represented on the market with microphones based on its
+› Pedelecs
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+Power Management & Multimarket
+55
+leading MEMS technology for many years. Following on from the barometric pressure sensor,
+sensors are currently being developed to measure further physical parameters (see also the
+chapter "Research and Development”). MEMS-based sensors are only a few millimeters in size
+and deliver considerable energy savings. These sensors are leading to the creation of new
+product categories, such as smartwatches and activity trackers.
+Importance of mobile devices: Mobile devices are used ever more frequently for internet access
+and especially media consumption. In addition, the volume of data transmitted via the cellular
+network infrastructure is growing rapidly. Ever more base stations as network access points and
+new transmission standards take account of the growing number of users of mobile devices
+and the increasing volume of data traffic. Each new generation of smartphones calls for more
+frequency bands to be supported. Furthermore, requirements on RF characteristics increase
+with each new transmission standard. The complexity of RF components is therefore growing,
+which calls for more, but also ever higher integrated, RF components.
+Fields of application
+Cellular network infrastructure
+› Base stations
+DC motors
+> DIY appliances (power drills,
+cordless screwdrivers etc.)
+65
+3.283 billion chips for silicon microphones were sold worldwide in the 2014 calendar year
+(source: IHS Inc.), compared with 2.680 billion chips one year earlier, a growth rate of 22.5 per-
+cent. Infineon again succeeded in increasing its sales volume at an above-average rate of
+46.2 percent from 770 million chips to 1.126 billion chips, thus adding a further 5.6 percentage
+points to our market share, which therefore increased from 28.7 percent in 2013 to 34.3 percent
+in 2014. The five largest competitors together held 95.7 percent of the market.
+G27
+World standard power MOSFET
+market share 2014
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Security chip in Samsung smartphones
+Infineon provides security chips for a large
+number of mobile devices, thereby safeguarding
+the security of both confidential data, such as
+the user's bank details, and security-relevant
+transactions, such as payments.
+The Samsung flagship models Galaxy S6 and
+Galaxy S6 edge are equipped with our embedded
+Secure Element (eSE) security chip.
+59
+Industrial Power Control
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+Segment Result
+Revenue
+The rise in revenue benefited in particular from the acquisition of International Rectifier.
+In addition, the Korean subsidiary, LS Power Semitech Co., Ltd. (LSPS) made a full year's
+contribution to revenue, compared to only four months in the previous year. Revenue growth
+was also attributable to favorable currency effects and increased demand in all major fields
+of application. In particular, business in the fields of home appliances and renewable energies
+recorded above-average growth.
+66
+Infineon recorded revenue of €971 million (including International Rectifier's contribution
+from January 13, 2015) in the Industrial Power Control segment in the 2015 fiscal year,
+24 percent up on the previous year's figure of €783 million. The segment generated 17 percent
+of Group revenue.
+2015
+2014
+2013
+38
+122
+144
+651
+783
+971
+Revenue
+99
+Source: IHS Inc., "MEMS Microphones Report - 2015",
+October 2015
+1.5%
+Infineon'
+Renesas
+Fairchild
+STMicro-
+electronics
+Toshiba
+1 Including International Rectifier.
+27.8%
+10.5%
+9.2%
+8.6%
+7.7%
+G28
+World silicon microphone ICS
+market share 2014 by units
+Knowles
+Infineon
+Omron
+NRJC
+NeoMEMS
+47.4%
+34.3%
+8.4%
+4.1%
+Industrial Power Control segment
+Segment Result
+The shift in the regional revenue split towards Asia continued. The Asia-Pacific region (includ-
+ing Japan), accounted for 54 percent in the 2015 fiscal year, compared to 50 percent one year
+earlier. The larger share is attributable on the one hand to the higher economic growth of China
+compared to the other regions, and on the other hand to the acquisitions of International
+Rectifier and LSPS. Europe's share declined as a result from 41 percent the previous year to
+39 percent. The share for the Americas region amounted to 7 percent (2014: 9 percent).
+463
+Segment Result
+Revenue
+Strong revenue growth was recorded in the second quarter of the 2015 fiscal year and remained
+at the higher level in the following two quarters. Practically all lines of business contributed
+to revenue growth: high-end SIM cards with mobile payment functionality, government identi-
+fication as well as authentication solutions. Furthermore, the market launch of Samsung's
+flagship smartphone models Galaxy S6 and Galaxy S6 edge had a positive impact. Both models
+The Chip Card & Security segment generated revenue totaling €666 million in the 2015 fiscal
+year, with no contribution coming from the acquisition of International Rectifier. The
+35 percent increase over the previous year's figure of €494 million was therefore purely
+organic growth. The segment generated 11 percent of Group revenue.
+Revenue
+2015
+2014
+2013
+43
+39
+121
+494
+666
+€ in millions
+€121 million
+Revenue and Segment Result
+IIIII
+IIIII
+G 29
+The Chip Card & Security segment in the 2015 fiscal year
+Continued growth in the field of chip-based payment cards
+and governmental identification documents
+Significant jump in revenue and earnings
+of the Chip Card & Security segment
+SEGMENT RESULT
+€666 million
+REVENUE
+Chip Card & Security
+Capitalized development costs totaled €100 million in the 2015 fiscal year (2014: €92 million).
+Amortization of capitalized development costs totaled €29 million (2014: €25 million).
+Subsidies and grants for R&D decreased year-on-year from €66 million to €59 million in the
+2015 fiscal year.
+Whereas in the past both research and development were mostly either technology- or com-
+ponent-oriented, the systems in which the components are used are meanwhile playing an
+increasingly vital role. Innovative system solutions are developed with the aim of improving
+system functionality. Although the semiconductor components may well cost more than
+previously, savings and improvements in other areas create added value for the user. In many
+cases, conventional digital microelectronics are supplemented with non-digital components
+such as radio-frequency electronics, power electronics, sensor technology, actuators or software.
+R&D expenses are not only incurred for the development of new products, but also increas-
+ingly for entire platforms and new product families. These include, for example, digital power
+supply control, technology platforms for low- and high-voltage power switches, power semi-
+conductors based on the new materials silicon carbide and gallium nitride (see the section
+further below in this chapter) as well as new types of sensor, particularly those based on our
+magnetic field, radar, and MEMS technologies.
+At the end of the 2015 fiscal year, 5,778 people (or 16 percent of Infineon's total workforce)
+were employed in our research and innovation sites worldwide. At the end of the 2014 fiscal
+year, Infineon employed 4,822 people in that field, 16 percent of the total workforce. Again
+here, the increase is mainly attributable to the integration of International Rectifier, which
+brought an additional 11 R&D sites into the network. Infineon now maintains R&D depart-
+ments at 32 sites in 13 countries (see map at the end of this chapter).
+Silicon carbide diode in a package
+for surface-mounted assembly on
+printed circuit boards
+12.4%
+Patents
+Percentage of revenue
+G see glossary, page 294 and page 291
+Infineon's innovative strength and long-term competitiveness are also apparent in both the
+quantity and the quality of our patents. We applied for some 2,200 patents worldwide in the
+course of the 2015 fiscal year (including International Rectifier as of January 13, 2015), com-
+pared with around 2,100 applications one year earlier. Infineon's patent portfolio worldwide
+comprised approximately 25,000 patents and patent applications at the end of the 2015 fiscal
+year, compared with around 21,000 patents and applications at the end of the previous year,
+not including International Rectifier. The figure includes some 2,100 patents and applications
+that we acquired through the acquisition of International Rectifier.
+Our R&D activities additionally focus on manufacturing technologies and transistor architec-
+tures for power semiconductor components based on new materials. In the following sections
+we will introduce you to the advantages and ranges of application for power semiconductors
+based on silicon carbide and gallium nitride.
+73
+Radar chips: Our chips for radar-based sensors are used in consumer goods, in vehicle safety
+applications and in industrial and commercial machinery both individually and as system
+solutions. Two examples:
+By the end of the 2015 calendar year, the industrial version will be followed by a version
+designed for automotive applications, for use as a gearshift position sensor as well as in the
+steering column controls to measure the applications located there, such as the indicators,
+lights, high beam and windshield wiper controls.
+20
+19:15
+18
+Infineon's 60-gigahertz radar IC
+for controlling mobile devices via
+gesture recognition. It is possible
+to adjust the demonstration
+wristwatch featured in Google's
+"Project Soli❞ research project by
+"virtually" turning the winder, i.e.
+without touching the watch itself.
+P see page 123
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+74
+TLE 4998x8D
+Я Infineon
+Dual Hall sensor as packaged
+component
+sensor chip 2
+sensor chip 1
+magnetic field
+Interior design of the dual Hall
+sensor. The two sensor chips are
+placed exactly on top of each other.
+In May 2015, we presented another magnetic field sensor: a 3D magnetic field sensor. One
+of the most important development goals when designing this sensor was to keep power con-
+sumption as low as possible, with the aim of installing it in battery-powered consumer goods
+and industrial applications. Our 3D magnetic field sensor measures three-dimensional, linear
+and rotating movements with great precision. Joysticks, control components in household
+appliances, multi-functional switches and smart meters, for example, all require this type of
+measurement. The electricity meters are currently fitted with three one-way magnetic sensors
+in order to detect manipulation by means of large magnets; one one-way magnetic field sensor
+for each direction of the external magnetic field. Electronic electricity meters can now be made
+much smaller and also consume far less power, as our 3D magnetic field sensor is capable of
+replacing all three of the previous sensors. Our family of 3D magnetic sensors will be enlarged.
+G33
+In October 2014, for example, we presented a new type of package featuring two sensor chips,
+i.e. two dies, placed on top of each other (see cover picture of this Annual Report). Whereas
+an electric power steering system had previously required two separate sensors (including
+one sensor chip each) to reliably and precisely measure the torque of the steering axle, the
+dual Hall sensor package developed at our Regensburg site now only needs one sensor (includ-
+ing two sensor chips). Using a patented flip-chip process, the chips are now placed on top of
+each other and therefore occupy the same space as versions designed with only one sensor chip.
+The innovation saves valuable space and cuts system costs in safety-critical applications, which
+include not only the power steering system, but also the accelerator and brake pedals as
+well as the brushless DC motors built into the transmission and clutch systems. Safety-critical
+applications need to meet stringent requirements in accordance with ISO 26262 standards.
+Sensor redundancy plays a key role, which was solved with the integration of two sensor chips
+in the dual Hall sensor package as a particularly low-cost, space-saving solution.
+Sensors: Measuring the environment with widely differing types of sensor
+Magnetic field sensors: Magnetic field sensors can be used in a highly diverse range of appli-
+cations. They are used to measure position, speed and torque. According to the requirements
+of new applications, we are continually launching new types of magnetic field sensor that
+feature innovations in terms of packaging and configuration.
+A further focus of our R&D activities is the digitization of controls for | power semiconductors.
+We are currently in the transitional stage between analog and digital controls for power
+switches. For MOSFET-based controls, the transition already began several years ago and this
+trend is now starting for IGBT-based controls. Infineon is promoting digitization along the
+entire chain, which consists of control IC, driver ICs and power switches.
+R&D expenses
+Sensor technology is one of the main focuses of our research. Sensors measure the real, analog
+world. The signals measured are firstly digitized and then processed, transmitted and stored
+as digital values, in accordance with the requirements of the application. Infineon has almost
+40 years of experience in the design and manufacture of sensors and offers the most compre-
+hensive range of pressure and magnetic field sensors for automotive applications. Every day,
+Infineon supplies over one million of these sensors to the automotive industry and more than
+three million to smartphone manufacturers. Moreover, Infineon is researching and developing
+widely varying types of sensors; see the following sections about our activities in this field
+from the 2015 fiscal year.
+Principal research and development activities
+In conjunction with the partial settlement reached with the insolvency administrator of
+Qimonda AG in September 2014, in October 2014 Infineon acquired, among other things,
+approximately 8,800 patents and patent applications. In July 2015, these patents and patent
+applications were practically all sold to Polaris Innovations Limited, based in Ottawa
+(Canada), and Samsung Electronics Ltd., based in Seoul (Korea).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Research & development
+2015
+550
+2013
+SHHIC
+STMicro-
+electronics
+Samsung
+Infineon
+NXP
+World microcontroller-based
+chip card ICs market share 2014
+G31
+This market grew by 4.4 percent from US$2.52 billion in 2013 to US$2.63 billion in 2014. With
+growth well above market average, Infineon increased its market share by 2.6 percentage
+points. In contrast, all other major market players increased their revenue over the same period
+by less than the market average, thereby losing market share. The distance to the market
+leader decreased to 6.6 percentage points (2014: 10.4 percentage points). The five largest
+competitors together held 92.3 percent of the market.
+In the 2014 calendar year, Infineon held a 23.9 percent share of the world market for micro-
+controller-based chip card ICs (source: IHS Inc.). This market comprises contact-based and
+contactless microcontroller-based chip card ICs for applications in SIM cards, payment cards,
+government ID, access control, transport, and machine-to-machine communication.
+Market position
+Trusted Computing
+30.5%
+access control
+transactions
+Secure NFC (Near
+Field Communication)
+> NFC-based contact-
+less payments
+Payment systems
+> Credit/debit cards
+> Mobile payments
+› Conventional SIM cards
+> High-end SIM cards
+> Machine-to-machine
+communication
+Mobile communications
+> Smart Home
+> IT
+(Industry 4.0)
+> Industrial Internet
+> Connected driving
+Ticketing,
+23.9%
+16.0%
+15.2%
+|||
+717
+12.7%
+> We have already been successfully selling our 77-gigahertz silicon-germanium radar chips
+to automotive suppliers for around ten years (see the acknowledgement of Bosch in the
+chapter "Awards"). These sensor chips are used for measuring distances between 50 and
+250 meters. We also offer a 24-gigahertz radar chip to measure short distances.
+525
+13.7%
+€ in millions
+R&D expenses
+G 32
+> Sensor technology a primary focus of our technology
+and product development
+> Developer teams from Infineon and International Rectifier
+merged to form global research network
+> Research and development expenses in the 2015 fiscal year
+increased to €717 million
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+72
+71
+Research &
+development
+32 sites in 13 countries.
+At Infineon, about
+5,800 people are
+employed in research
+and development at
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+১
+70
+Source: IHS Inc., "Smart Cards Semiconductors",
+July 2015
+6.7%
+2014
+> We are currently working on completely new fields of application together with the US
+technology company Google as part of its "Project Soli" research project, with the aim of
+developing special-purpose radar sensor solutions for gesture and presence recognition.
+Google already presented the first application examples at its developer conference in
+San Francisco (California, USA) in May 2015. Gesture recognition will make it possible, for
+example, to control various devices through simple gestures. Finger movements in the air
+will make control knobs and touch-sensitive displays obsolete. Our radar chip employs
+a 60-gigahertz technology and combines the transceiver and the antenna in one package.
+3D image sensor chips: The first version of this type of sensor, which measures distances
+based on the runtime of a beam of infrared light, has meanwhile reached market maturity.
+In September 2015 at the IAA International Motor Show in Frankfurt (Germany), the German
+automotive supplier Kostal presented a 3D camera system designed to monitor people while
+driving, based on our 3D image sensor REAL3TM. The camera system is capable of measuring
+the exact position of the driver's head and measures the blinking of an eye even through
+glasses or sunglasses. The system is therefore capable of recognizing whether the driver is
+showing signs of fatigue (such as momentarily nodding off) or is distracted.
+"More out of less": the ampacity of silicon carbide (SiC) is far higher than that of silicon (Si).
+One 150-millimeter SiC wafer is able to switch the same amount of current as
+two 200-millimeter silicon wafers.
+The position of the 49 reference
+points is determined using the Kostal
+image recognition software.
+Business strategy and fields of application
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+68
+69
+67
+Europe, Middle East, Africa
+Asia-Pacific, Japan
+Americas
+2015
+2014
+Nearly 30 years of experience in the largest and most sophisticated security projects in the
+world has enabled Infineon to become a leader in security solutions. The Chip Card & Security
+segment's core competencies lie mainly in the fields of tailor-made security, contactless com-
+munication and embedded microcontroller solutions (embedded control). We have created
+innovations in each of the three core competencies: Integrity Guard for security, Coil on Module
+for contactless communication and SOLID FLASH™ for integrated security controller solutions.
+With these three technologies and further security solutions, we offer a broad portfolio of
+semiconductor-based security products for a wide range of chip card and security applications.
+"Easy-to-implement” is decisive for the market success of hardware-based security technology.
+Infineon has therefore developed special competence in the following aspects, which differen-
+tiate it from its competitors:
+2013
+44%
+50%
+51%
+48%
+41%
+8%
+100%
+100%
+8%
+9%
+41%
+100%
+> Tailored security: we provide the appropriate level of security for the target application
+> Embedded control: that is the ability to combine memory technologies to the security
+controllers optimally depending on the specific application
+Automotive
+› Spare parts
+> Industrial controllers
+> Games consoles
+> Accessories
+Authentication
+Fields of application
+The segments
+Chip Card & Security
+Finally, we are extending our range to include software and services in order to satisfy the
+different requirements of our customers in a broad range of countries. We offer support for
+certifying security solutions, provide reference designs and offer software closely related to
+our security controllers (such as firmware, driver software, and hardware-related application
+software). These services help reduce development costs and minimize our customers'
+time-to-market.
+› Contactless excellence: the demand is for secure, fast transactions; the key points are a high
+level of security, high data-transmission rates and rapid write-to-memory operations
+In addition to our traditional, internationally operating card customers and the smaller-scale
+customers operating more regionally, we are also focusing on globally operating large-scale
+customers in new markets for embedded control. These customers typically operate in the
+fields of the internet, the Internet of Things, smartphones or other mobile devices.
+60
+69
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Safeguarding mobile devices: Authentication solutions, such as embedded Secure Element
+or Trusted Platform Modules, are bringing new applications, such as mobile payment or
+platform integrity, to the mass market.
+Electronic governmental documents: The market penetration of chip-based official docu-
+ments, such as passports, national ID cards and driver's licenses, is increasing steadily. A grow-
+ing number of countries are converting for the first time or introducing further chip-based
+documents.
+Chip-based credit cards: The transition from magnetic-strip-based payment cards to chip-based
+payment cards is continuing, especially in the key markets USA and China.
+Contactless technologies: Such technologies are becoming increasingly important. Reliable
+and high-speed processing enhances ease of use for consumers and, with it, acceptance of the
+contactless use of payment cards and/or multifunctional chip cards. Enterprises and consumers
+both appreciate the advantages over contact-based systems.
+Internet of Things: In an increasingly connected world where literally everything is getting
+connected, the role of security is growing constantly. Security is not an option; it is a must.
+This increasing need for security is visible not only in the traditional applications like mobile
+communication, payment or government identification applications. Security is fast becoming
+a key aspect in existing and emerging applications in the areas of embedded systems and
+Internet of Things. Increasing frequency of security breaches is generating greater awareness
+of the need for security. Infineon is well positioned for future developments that are related to
+the Internet of Things and is already present on the market with security solutions, for
+example, in the field of connected vehicles.
+Together with customers, the Chip Card & Security segment is developing solutions relating
+to the following market trends:
+Alongside major projects in the payment cards and governmental identification documents
+sectors, we see growth potential increasingly in smaller and regional security projects. We are
+therefore diversifying our customer portfolio and expanding our sales structures, which have
+focused more on large-scale customers in the past. We see good potential to gain a growing
+percentage of smaller regional customers on the one hand and in strengthening the distribution
+channel on the other. We are also building up our presence in the regions in order to improve
+our service to locally based customers and better cater to their specific requirements. Our aim
+is to obtain an even better understanding of the factors that make our customers successful in
+each of their regions. Often it is not a technically superior product which is required, but rather
+a solution that offers the best value for money, i.e. it fulfills the specific security requirements
+for the application at the lowest possible system cost and can be implemented simply and
+quickly by the customer.
+Chip Card & Security segment
+revenue by region
+G30
+Alongside favorable exchange rate factors, the sharp rise in revenue and productivity improve-
+ments in all product categories contributed to the higher gross profit. Operating expenses
+rose less rapidly than revenue. As a result of the increasing scope of outsourcing to manufac-
+turing partners, some development expenses for manufacturing technologies were no longer
+incurred. Our ambitious “shrink strategy" - i.e. the early transfer to 90 nanometer and to
+65 nanometer manufacturing technology - is paying off.
+< 150 mm →
+200 mm
+200 mm →
+SiC
+(~177 cm²)
+Si
+(~314 cm²)
++
+(~314 cm²)
+Si
+Internet of Things
+Due to their material properties, SiC and GaN components are addressing different voltage
+classes. Whereas SiC technology is used in applications over 1,000 volts, GaN technology is
+better suited for use at 650 volts and below.
+G34
+G see glossary, page 293
+The ampacity of SiC components, for example, is incomparably higher than that of silicon
+components. Less than one third of the semiconductor area is required for a given amperage.
+This is a good example of how to make more out of less.
+In the continuous search for even more efficient power semiconductors for increasingly com-
+pact power supplies and controls, particularly silicon carbide (SiC, a combination of silicon
+and carbon) and gallium nitride (GaN, a combination of gallium and nitrogen) have proven to
+be the materials of choice. These new semiconductor materials are capable of switching
+higher voltages and currents than silicon-based components with smaller dimensions, while
+offering fewer losses.
+The ideal power transistor needs to be small, sufficiently robust to withstand high tempera-
+tures and transient voltage, and exhibit very little electrical resistance when turned on as well
+as minimal switching losses. It should also be capable of handling high switching frequencies,
+as this means the passive components used in the circuit (such as capacitors and inductors)
+can be made even smaller. These factors not only reduce costs for the customer, but also the
+size and weight of the systems, which, in turn, means savings on expensive raw materials.
+"More out of less": More compact power supplies and motor controls through
+new materials for power semiconductors
+MEMS-based sensor chips: In addition to our range of silicon microphone chips, at the Mobile
+World Congress in Barcelona (Spain) in February 2015 we presented the first barometric pressure
+sensor for the consumer goods market (see the opening page of "Power Management & Multi-
+market" in the chapter "The segments"). It is capable of precisely measuring the air pressure,
+making it possible, for example, to record the altitude covered when crossing the Alps or to
+navigate within buildings with the help of a smartphone. Moreover, we are researching further
+types of MEMS-based sensor types that are capable of measuring other physical variables for
+future use in smartphones.
+75
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Research & development
+Our REAL3™ 3D image sensor also plays an important part in Google's "Tango” research project,
+which takes a new approach to giving mobile devices the ability to sense and understand their
+surroundings and to implement a variety of new and innovative applications based on this
+ability. The merging of sensor and computer technology will make smartphones and tablets
+capable of measuring space and movement more quickly and realistically. This innovation
+is therefore set to create a completely new user experience, such as for navigating in closed
+areas or for highly realistic gaming experiences.
+P see page 62 ff.
+Silicon carbide: Focus on best-value solutions for the customer; product portfolio
+expanded to include SiC MOSFETS
+As the market participant offering the most comprehensive range of power semiconductors,
+Infineon's focus is on understanding our customers' applications. We aim to provide our
+customers with best-value solutions. Nowadays, solutions of this nature often rely on a
+coordinated combination of silicon and silicon carbide (SiC) components. It is the balance
+between the cost and performance benefits of the various components that ultimately leads
+to a sustainable improvement in customers' systems. These can relate to efficiency, costs,
+size, weight or time-to-market.
+Back in 2001, Infineon was the first semiconductor manufacturer worldwide to market a SiC
+diode. In May 2014 we presented what is meanwhile the fifth generation of our 1,200-volt SiC
+diode and in the 2015 fiscal year we expanded our package portfolio to include a flat package
+The Segment Result amounted to €121 million, a jump of 181 percent compared to the
+previous year's €43 million. The Segment Result Margin amounted to 18 percent of revenue
+(2014: 9 percent), the highest level ever since the foundation of Infineon.
+Segment Result
+The trend in the regional revenue split continued, with faster growth in the Asia-Pacific region
+(including Japan) compared to the other regions, resulting in a further increase in the percent-
+age attributable to this region to 51 percent (2014: 48 percent). There were several reasons
+for this: firstly, sustained demand for chip-based credit cards in China, secondly, the positive
+business trend in high-end SIM cards with mobile payment functionality in China, thirdly,
+the demand for eSE security chips in Korea and China, and, fourthly, new projects in the field
+of government identification in several Asian countries. Accordingly, Europe's 44 percent
+share in revenue recorded one year earlier fell to 41 percent. The share of the Americas region
+remained constant at 8 percent. The two largest projects in the USA are the electronic passport
+and chip-based credit cards.
+are equipped with our embedded Secure Element (eSE) security chip. At nearly 50 percent,
+the most significant revenue increase year-on-year was in payment cards business, the decisive
+factor being the increasing market penetration of chip-based credit cards in the USA and
+China, where the Chip Card & Security segment had previously established an optimal position.
+eSE
+Infineon
+2.55 mm
+2.72 mm
+The segments
+Chip Card & Security
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Gallium nitride: Infineon and International Rectifier developer teams merged within
+only three months, creating a technology and patent portfolio unique worldwide
+Gallium nitride (GaN) transistors also offer completely new, interesting properties compared
+with silicon transistors, making them suitable for future use in power supplies, for example.
+GaN transistors combine extremely low on-state resistance with minimal switching losses.
+Consequently, they allow for much higher frequencies than those possible with silicon tech-
+nologies, a fact that can be exploited to reduce the size of the overall system. However, this
+does not mean that an existing silicon power transistor will be simply replaced by a GaN
+power transistor. The full benefit will only be achieved when used with completely new power
+SiC components are also ideal for use in energy storage units, as in this application the battery
+needs to both charge and discharge with exceptional efficiency. Battery-backed photovoltaic
+systems are already making practical use of this technology and long-term potential exists for
+larger systems in the field of grid stabilization. Ultimately, we see the long-term possibility of
+strengthening the HiRel business (including high-reliability components) acquired through the
+acquisition of International Rectifier through the use of Infineon's SiC technology. Particularly
+high-temperature applications such as oil exploration could benefit from our SiC components.
+A special feature of our SiC manufacturing strategy is that, supplemented by a number of specific
+manufacturing tools, we are capable of manufacturing SiC components in the same produc-
+tion line as our silicon components, which means the same standards and quality requirements
+apply. In the course of converting SiC manufacturing to 150-millimeter wafers, we are already
+planning on preparing the first SiC technologies for qualification for automotive applications.
+This manufacturing concept will, of course, lead to a more competitive cost position.
+We also see the inductive charging of electric vehicles as a likely future application. Here,
+very high currents need to be switched with great precision in order to minimize inductive
+dispersion losses. Moreover, electrically powered vehicles themselves are another possible
+field of application for SiC components, where they are likely to be initially installed in
+on-board battery chargers for electric and plug-in hybrid vehicles. At a somewhat later point
+we expect to see SiC transistors installed in the powertrain, i.e. in the electric motor control
+system. The field of traction is yet another potential sales market, although due to the long
+development and qualification cycles in the traction industry, demand on this market is only
+likely to grow appreciably in a number of years.
+Going forward, we see controls for variable speed drives in particular as a potential field of
+application for our SiC components. This diverse market, which includes a broad variety of
+motor types and operating modes (stepper motors, robotics, high speed, high torque, etc.),
+is likely to constitute the largest field of application.
+Today's main areas of application for SiC components, i.e. SiC diodes, SiC transistors and SiC
+modules, are photovoltaic inverters and power supplies. In photovoltaic inverters, the high
+switching frequencies result in smaller passive components, which help reduce both size and
+weight, a crucial aspect in the final installation. SiC-based inverters of a given performance
+class can be installed by one single technician compared with two technicians for larger and
+heavier silicon-based inverters.
+We are also expanding our portfolio of SiC transistors in line with market requirements. In
+the 2014 fiscal year we introduced the first SiC transistor, a "SiC-JFET" (Junction Field Effect
+Transistor). Apart from this normally-on version, future generations of transistors will also
+be based on normally-off concepts.
+for surface-mounted assembly on printed circuit boards. The fifth generation of SiC diodes
+features improved characteristics in terms of both static and switching losses. Apart from our
+range of SiC diodes, which has been continually expanded over the last few years, our SiC
+hybrid modules have also enjoyed market success for several years.
+Infineon
+DPAK real2pin
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+नै
+76
+The German automotive supplier Kostal has developed a 3D camera for driver monitoring (see picture on right) as a pre-series
+prototype with integrated image processing, based on Infineon's 3D image sensor chip REAL3TM. The camera is capable of measuring
+the driver's facial contours by means of 49 reference points (see picture on left), even when light conditions are constantly changing.
+Together with the 3D depth data, the camera recognizes the head position, the direction in which he/she is looking and the closing
+of the eyelids. The camera is located behind the steering wheel and senses objects at a distance of up to 1.5 meters.
+Healthcare cards
+Research and development expenses (R&D expenses) totaled €717 million in the 2015 fiscal
+year, compared with €550 million in 2014; an increase of €167 million or 30 percent and there-
+fore slightly disproportionally lower than the revenue increase of 34 percent. The increase in
+absolute terms primarily results from the integration of International Rectifier. As a percent-
+age of revenue, we spent 12.4 percent on R&D during the 2015 fiscal year, compared with
+12.7 percent one year earlier and therefore remain within our desired target corridor of a
+low- to mid-teens percentage.
+> ID cards
+> Driver's licenses
+Governmental
+identification documents
+> Manipulation protection
+(e.g. digital tachometer)
+> Electronic tolls (toll collect)
+› Connected vehicles
+(e.g. eCall, car-to-car,
+car-to-infrastructure)
+0.70 mm
+› Passports
+9.8%
+378
+€ in millions
+Investments¹
+› Investments: €785 million
+> International Rectifier manufacturing sites integrated
+in the Infineon manufacturing network
+> First product for automotive applications qualified
+on 300-millimeter thin-wafer manufacturing technology
+785
+Combined Management Report - Our Group
+G35
+668
+2015
+2013
+2014
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Investments
+13.5%
+Percentage of revenue
+1 Property, plant and equipment and intangible assets
+Our investments during the 2015 fiscal year totaled €785 million, an increase of €117 million
+or 18 percent on the previous year's investment figure of €668 million. The investments included
+€21 million for the purchase of the Qimonda patents and €54 million for the expansion of the
+Kulim site (Malaysia). International Rectifier's investments are included from the date of first-
+time consolidation. Apart from the cost of expanding manufacturing capacity, the increased
+value of the US dollar led to higher investment figures.
+Investments expressed as a percentage of revenue decreased from 15.5 percent in the 2014
+fiscal year to 13.5 percent in the 2015 fiscal year. Of the total investments, €646 million related
+to property, plant and equipment (2014 fiscal year: €567 million) and €139 million to intangible
+assets, including capitalized R&D costs (2014: €101 million).
+By far the largest share of the investments in property, plant and equipment were made in
+manufacturing sites. Of those, around two thirds related to frontend sites and the majority
+of the remainder to backend sites. Most of the investments made at our frontend and backend
+sites were attributable to the following:
+15.5%
+82
+Operations
+Infineon's manufacturing
+Bangalore
+› Software and system
+development for auto-
+motive, industrial and
+chip card applications
+> Design flow and library
+development
+Shanghai
+> Application development
+> RF technology for cellular
+infrastructure
+Ipoh
+> Development of package
+derivatives
+> NPI (new product intro-
+duction) qualification
+Malacca
+› Package technology
+Singapore
+> IC, software and
+system development for
+automotive and industrial
+applications
+› Package technology
+> Test concepts
+80
+808
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Operations
+gh
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+81
+> Expansion of 300-millimeter frontend capacity
+sites employed a workforce
+of about 26,000 people -
+at 19 manufacturing sites
+in 11 countries.
+> Expansion of 200-millimeter frontend capacity in differentiating manufacturing technologies,
+such as power semiconductors and magnetic field sensors for automotive applications,
+MEMS sensors and radio frequency components
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Operations
+› Adaptation and re-equipping of manufacturing lines to accommodate changes in the product
+portfolio, especially the ramp of volume production of new technologies and products
+Number of suppliers increased due to the acquisition of International Rectifier;
+increased importance of contract manufacturers following the acquisition and
+implementation of our manufacturing strategy
+Compared to all suppliers, spending with contract manufacturers increased disproportion-
+ately. Firstly, because International Rectifier has traditionally had a higher outsourcing share
+than Infineon, and secondly as a result of our above-mentioned manufacturing strategy. We
+spent a good half of our revenue on externally manufactured products and services provided
+by our suppliers.
+G see glossary, page 289
+98
+86
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Manufacturing sites
+Infineon sites
+Frontend
+Backend
+Leominster
+> HiRel power components
+and HiRel modules
+San Jose
+> HiRel hybrid modules
+> HiRel printed circuit boards
+Morgan Hill
+› Competence center for
+RF power transistors
+Temecula
+> Power semiconductors
+(MOSFETs, IGBTs, diodes)
+Tijuana
+› Assembly
+Mesa
+> Epitaxy for silicon-based
+products
+One facet of our manufacturing strategy has therefore proved to be right, i.e. the outsourcing
+of manufacturing of products in non-differentiating technologies to foundries. We also imple-
+ment this strategy - outsourcing to subcontractors - in the area of backend manufacturing,
+such as for the standard packaging of high-voltage MOSFET power transistors.
+> Increased level of automation, expansion of Industrial Internet ("Industry 4.0") manufacturing
+> Expansion of backend manufacturing capacity
+The continuously increased manufacturing share outsourced to foundries in the course of
+the 2015 fiscal year has also led to a noticeable improvement in profitability. The Segment
+Result Margin of 18 percent in the Chip Card & Security segment is partly due to the lower rate
+of investment in in-house manufacturing and certain cost savings for developing the corre-
+sponding process technologies.
+Operations
+Since the integration of International Rectifier and the complete takeover of LS Power Semitech
+Co., Ltd. we now operate a total of 19 manufacturing sites in 11 countries: Dresden, Regensburg
+and Warstein (all in Germany); Villach (Austria); Newport (Wales, UK); Cegléd (Hungary);
+Morgan Hill, Temecula, San Jose, Leominster, Mesa (all in the USA), Tijuana (Mexico); Beijing
+and Wuxi (both in China); Malacca and Kulim (both in Malaysia); Cheonan (Korea); Batam
+(Indonesia) and Singapore (see map at the end of this chapter). As of September 30, 2015,
+these manufacturing sites employed a workforce of 25,909 people in manufacturing functions
+(September 30, 2014: 21,959 people at the Infineon sites at that date).
+> Development center for
+Industrial Internet
+Continued brisk demand for power semiconductors for automotive applications and the
+planned medium-term transfer of manufacturing from International Rectifier sites to Infineon
+sites led to the further expansion of the second manufacturing building at the 200-millimeter
+frontend site at Kulim (Malaysia), known as “Kulim 2”. The installation of the final infrastructural
+facilities started during the 2015 fiscal year. The "Ready for Equipment” milestone, i.e. the
+beginning of equipping the cleanroom, is scheduled for spring 2016.
+The Kulim (Malaysia) site. The first manufacturing building (left) was opened in 2006.
+The second manufacturing building is to be equipped with cleanroom manufacturing
+machinery as of spring 2016.
+In order to boost the productivity of our in-house manufacturing capability, we have put even
+more emphasis on our automation efforts in recent years. In the process, we have increased
+the productivity of our plant in Dresden (Germany) by roughly 10 percent through automation.
+Based on these positive experiences, we have also begun to increase the degree of automation
+at our sites in Kulim, Regensburg (Germany) and Villach (Austria), adapting our approach to
+suit the specific conditions at each site.
+The analysis of the optimization potential of the manufacturing infrastructure led to the
+decision to close the "Singapore Techview" site, where wafers are thinned. We also intend to
+relocate manufacturing capacities from the frontend site in Newport (Wales, UK) by the end
+of the 2017 calendar year and sell the property. The Mesa site (Arizona, USA), however, offers
+additional manufacturing capacity for epitaxy processes as well as know-how. We intend to
+expand this site to make better use of the existing capacities there with a view to fully utilizing
+them in the foreseeable future.
+83
+3
+84
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G see glossary, page 293
+G see glossary, page 290
+First volume production of auto-
+motive-qualified products on
+300-millimeter thin-wafers world-
+wide: the 40-volt OptiMOS™ 5
+Infineon
+40-Volt
+OptiMOS™ 5
+Product portfolio for 300-millimeter thin-wafer manufacturing expanded
+Towards the end of the 2014 fiscal year, we began manufacturing various types of products of
+low-voltage power semiconductors from our OptiMOST family, high-voltage power transistors
+from our CoolMOSTM family and also IGBT power transistors within our 300-millimeter frontend
+network, consisting of the sites in Dresden (Germany) and Villach (Austria). In the 2015 fiscal
+year we began manufacturing higher quantities of these products and thereby improving the
+utilization of these two fabs.
+Moreover, in the 2015 fiscal year the first product for automotive applications was granted
+customer approval: the 40-volt OptiMOSTM 5, for which volume production began during
+the 2015 fiscal year. Infineon is therefore the first semiconductor manufacturer worldwide
+to begin the volume production of automotive-qualified power semiconductors on 300-milli-
+meter thin-wafers (G see glossary, page 295). The 40-volt OptiMOST 5 is installed in a wide range
+of brushless DC motors and half-bridge automotive applications, such as power windows,
+sunroofs, hatchbacks, central locking systems, gasoline pumps, solenoid valves and DC-DC
+converters.
+Apart from transferring Infineon's own 200-millimeter manufacturing technologies to 300-milli-
+meter technologies, we also plan to transfer a number of International Rectifier products
+to Infineon sites, preferably to the 300-millimeter manufacturing site at Dresden. Low-voltage
+MOSFET and IGBT power transistors in particular will be considered for relocation. Primarily
+due to the planned phasing out of the Newport (Wales, UK) site (see previous section), manu-
+facturing capacities will be either relocated to Dresden or outsourced to manufacturing
+partners by the end of the 2017 calendar year.
+Infineon and UMC sign manufacturing contract for automotive applications
+In December 2014, Infineon and the Taiwan-based United Microelectronics Corporation (UMC),
+one of the world's leading semiconductor contract manufacturers, expanded their existing
+research and manufacturing partnership to include power semiconductors for automotive
+applications. Under the terms of the new contract, Infineon is transferring its Smart Power
+Technology (SPT9) to UMC. Manufacturing is scheduled to start at UMC's 300-millimeter fab in
+Taiwan in 2018. Thanks to its outstanding manufacturing expertise, UMC is capable of meeting
+the automotive quality requirements which are the highest across all industries.
+Automotive applications require an ever-increasing level of functionality and safety as well as
+cost-optimized solutions. In order to fulfill these requirements, power semiconductors need
+more and more digital logic capability. In the 2009 fiscal year, with SPT9, Infineon became the
+first semiconductor manufacturer worldwide to introduce a 130-nanometer manufacturing
+process qualified for automotive applications that combined complex digital logic circuits,
+microcontrollers, sensor interfaces and power electronics. It is therefore now possible to
+integrate numerous functions in one single chip that had previously been manufactured in
+several chips using various manufacturing technologies, thereby reducing the total number
+of components as well as the error rate in vehicles. Moreover, the use of SPT9 means the chip
+size is considerably smaller, which not only improves functionality, it also significantly increases
+productivity. The versatility of SPT9 automotive applications include the controlling of small
+electric motors such as those for power windows, windshield wipers, sunroofs, electronic seat
+adjustment, ventilation, oil pumps, water pumps and airbags.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+85
+Strategic manufacturing approach bears fruit: The Chip Card & Security segment
+is benefiting from increased foundry share
+› Competence center for
+compound semiconductor
+technologies
+The main areas of investment in the 2015 fiscal year
+> Technology development
+for sensors
+> Development of radiation-
+hardened components as
+well as components for
+medical applications
+> Development of package
+platforms
+Torrance
+› Control ICs for digital
+power management
+Irvine
+> DC-DC point-of-load ICs for
+server, telecommunications
+and router
+Chandler
+> Development and
+characterization of gallium
+nitride components
+> Epitaxy for gallium nitride
+technology
+Leominster
+> HiRel package development
+> HiRel power components
+> HiRel power modules
+Reigate
+› Package concept
+development
+> Package pathfinding
+› Thermal and electrical
+modeling
+Bristol
+› Microcontroller systems for
+automotive applications
+> Transistor development for
+GaN-on-Si technology
+El Segundo
+cellular infrastructure
+> RF power transistors for
+› Competence center for
+thin-wafer technology
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+77
+Research & development
+supply topologies, where the GaN components provide a maximum of added efficiency and
+greater compactness for the system as a whole. One example from our daily lives emphasizes
+the advantage of GaN for consumers, as this technology makes it possible to manufacture
+notebook adapters four times smaller and lighter than those currently on the market, i.e.
+about the size of a matchbox.
+We see two applications where the advantages of GaN technology over silicon technology
+offer the greatest customer benefit and therefore where the broadest market acceptance can
+be expected: firstly, in power supplies for servers, due to the stricter requirements in terms
+of efficiency, and secondly in power supplies for extremely thin televisions, due to the more
+compact design. When it comes to servers and telecommunications equipment that run
+around the clock, day in day out, every improvement in the efficiency of the power supply has
+a particularly high impact on power consumption and therefore on the electricity bill. Premium
+televisions, on the other hand, are becoming increasingly flat. Meanwhile, every millimeter
+of height is important. These days, the measurements of the power supply are largely deter-
+mined by the size of the passive components. With GaN transistors, these components are
+significantly smaller due to the higher switching frequencies, and the additionally reduced
+losses allow the use of far smaller heat sinks.
+The acquisition of International Rectifier has significantly strengthened our position in the field
+of GaN power semiconductors. Our combined know-how now enables us to develop products
+more quickly and therefore reduce time-to-market. Particularly important is our expertise in
+growing mono-crystalline layers of GaN on a silicon wafer substrate. These epitaxy processes
+are both difficult and important in mastering the so-called GaN-on-silicon technology: difficult
+because of the fact that silicon and GaN have different crystalline structures. Via multiples
+of intermediate layers of certain materials, each of which is only a few atomic layers thick, the
+geometry of the silicon crystal lattice is transferred to the geometry of the GaN crystal lattice.
+And important because the low-cost GaN-on-silicon wafers are the basis for competitively
+pricing the GaN components. All other alternative substrates are more expensive than the
+standard silicon wafer which is manufactured in high volumes.
+Our GaN development network includes sites in both Europe and the USA. At our site in Villach
+(Austria), our competence center for power electronics of all technologies and therefore
+also responsible for developing GaN technology, we have already implemented a complete
+frontend pilot line for processing 150-millimeter GaN wafers. Some of the development and
+characterization work on GaN components as well as the above-mentioned epitaxy processes
+are performed at sites in the USA. It is remarkable how quickly the various R&D activities have
+been able to merge. Teams that were previously in competition with one another have suc-
+cessfully united to form a cohesive unit within only a few months.
+In addition to strengthening our GaN expertise through the acquisition of International Rectifier,
+during the 2015 fiscal year we were successful in expanding our GaN product portfolio by
+licensing a key type of transistor. Infineon and the Japanese company Panasonic have signed
+an agreement covering the joint development of GaN components. In this context, Panasonic
+gave Infineon a license for normally-off GaN transistors.
+Furthermore, Infineon is expanding its range of products to include specific drivers and control
+ICs that enable the corresponding topologies and higher frequencies, allowing the advantages
+of GaN to be fully exploited. Infineon's GaN-on-silicon portfolio, combined with the GaN plat-
+form as part of the acquisition of International Rectifier and the partnership with Panasonic,
+positions Infineon as technology leader in the highly promising GaN market.
+The existing expertise in the field of power semiconductors at the Villach site and particularly
+the GaN manufacturing expertise were the reasons why Infineon Technologies Austria AG is both
+partner and head of the European "PowerBase" research project. The kick-off event was held
+at the Villach site in May 2015. The project, which continues until 2018, is focusing on devel-
+oping the next generation of GaN components and establishing a pilot line for GaN wafers in
+an industrial manufacturing environment with a view to achieving volume production.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+GaN transistors make it possible
+to manufacture highly compact
+power supplies, such as those
+required for flat-screen televisions
+78
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+R&D sites
+Warwick
+Tewksbury
+> Development of DC-DC
+converter, driver ICs and
+power ICs
+› Digital power managment
+for DC-DC power stages
+San Jose
+> Development of power
+semiconductors for space,
+aerospace, defense, and
+high-temperature appli-
+cations, e.g. hybrid DC-DC
+converter
+G see glossary, page 291
+79
+Morgan Hill
+> Automotive electronics
+› Contactless systems
+> Automotive power
+semiconductors
+Bucharest
+> Power semiconductors
+> Mixed-signal and RF ICs
+> Chip card ICs
+Beijing
+> Application development
+Seoul
+> Chip card applications
+system solutions
+Le Puy-Sainte-Réparade
+> Automotive applications:
+driver ICs and half-bridge
+driver for brushless
+DC motors
+Pavia
+> Driver ICs for motion control
+Padova
+> Power semiconductors
+> Mixed-signal components
+Villach
+R&D sites
+> Power semiconductors,
+analog and mixed-signal
+ICs for automotive and
+industrial applications
+> System integration for
+power semiconductors
+Graz
+> Sensor applications
+> RF ICs, especially radar ICS
+Duisburg
+> Technology development
+> ASIC development
+Warstein
+> Product development IGBT
+modules
+> Assembly and package
+technology for IGBT
+modules and IGBT stacks
+Skovlunde
+> HiRel DC-DC converter
+> HiRel high-level power
+management solutions
+› Software development for
+sensor products
+> Software for chip card
+applications
+Dresden
+> Highly-integrated and
+multi-functional CMOS
+technologies for RF, sensors
+and MEMS, among others
+> Discrete and integrated
+power semiconductors
+Augsburg
+Regensburg
+› Competence center for
+technology, preassembly
+and package development
+› Competence center for
+manufacturing innovation
+> Product and technology
+development for sensors
+Neubiberg near Munich
+> Technology integration
+> Design flow and library
+development
+Linz
+> IC, software and system
+development for micro-
+controllers, ASICs, sensors
+and chip card ICs
+> Power electronics for
+automotive and industrial
+applications
+> Manufacturing processes
+> Development center for
+Industrial Internet
+957
+8,741
+9,087
+Total assets
+4
+Total equity
+Net cash provided by operating activities from continuing operations
+5,023
+4,665
+8
+1
+1,313
+37
+2,093
+18
+Property, plant and equipment
+9
+15.5
+897
+15.2
+982
+Segment Result/Segment Result Margin
+17
+634
+743
+(83)
+Net cash used in investing activities from continuing operations
+12
+2,119
+(1,098)
+220
+58
+2
+Diluted earnings per share in €
+0.56
+0.66
+Basic earnings per share in €
++++
+471
+11
+2,013
+2,240
+5
+785
+826
+(2,593)
+10
+833
++++
+(1,654)
+490
+1,363
+(229)
+Net cash position²
+Gross cash position²
+Capital expenditure
+Depreciation and amortization
+Free cash flow²
+from continuing operations
+Net cash provided by (used in) financing activities
+760
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+16
+622
+0
+8
+Other Operating Segments
+5
+11
+665
+11
+698
+Chip Card & Security
+14
+31
+1,796
+32
+14
+2,050
+11
+17
+971
+1,073
+Industrial Power Control
+13
+41
+2,350
+41
+2,651
+Automotive
+0.66
+12
+Power Management & Multimarket
+19
+0
+Corporate and Eliminations
+741
+Income from continuing operations
+37
+555
+763
+Operating income
+2
+13.4
+(778)
+12.2
+(791)
+Selling, general and administrative expenses
+7
+(43)
+12.4
+11.9
+(770)
+Research and development expenses
+12
+35.9
+2,080
+36.0
+2,330
+Gross profit/Gross margin
+0
+(1)
+0
+(7)
+(717)
+0.56
+8 Report of the Supervisory Board
+Adjusted earnings per share in € - diluted
+125 Consolidated Statement of Comprehensive Income
+126 Consolidated Statement of Financial Position
+124 Consolidated Statement of Operations
+Consolidated Financial Statements
+99 Infineon Technologies AG
+102 Corporate Governance
+98 Overall statement of the Management Board
+with respect to Infineon's financial condition
+as of the date of this report
+95 Treasury and capital requirements
+associated material risks and opportunities
+78 Significant events after the end of the reporting period
+78 Report on expected developments, together with
+68 Group performance
+Our 2016 fiscal year
+66 The Infineon share
+61 Our employees
+61 Sustainability at Infineon
+127 Consolidated Statement of Cash Flows
+57 Internal management system
+53 Research and Development
+Locations
+49
+40 The segments
+18 Finances and strategy
+Our Group
+Combined Group Management Report
+to the Annual General Meeting
+The Management Board
+6
+2 Letter to shareholders
+Management Board and Supervisory Board
+Content
+55 Operations
+Sustainability rating by DJSI
+128 Consolidated Statement of Changes in Equity
+130 Notes to the Consolidated Financial Statements
+186 Responsibility Statement by the Management Board
+187 Auditor's Report
+5,795
+4
+The planned acquisition of Wolfspeed will expand our expertise once more. It will make us
+number one in silicon carbide-based power semiconductors while at the same time laying
+the foundations for becoming the market leader in radio-frequency power components. We
+are expanding our portfolio with future-oriented technologies and are thus addressing future
+growth markets such as electro-mobility, renewable energies and next-generation cellular
+infrastructures for the Internet of Things. And what's more: We are accelerating the market
+launch of these innovative technologies and helping to meet modern society's need for energy
+efficiency, networking and mobility with the most innovative semiconductor solutions. We
+expect the acquisition to be immediately accretive to Infineon's adjusted earnings-per-share.
+Wolfspeed is an investment in the future. However, we already laid the foundation for today's
+success in past months and years. This is particularly evident for example in our Automotive
+segment. Around 90 percent of the innovations in vehicles – and thus the greatest differen-
+tiation potential for automobile manufacturers - are based on electronics. The electrification
+of the powertrain and the growing penetration of advanced driver assistance systems (with
+autonomous vehicles being the long-term goal) have triggered a far-reaching transformation
+in the automotive industry. Infineon, as the system leader in automotive, is greatly benefiting
+from this development. This year these two sub-markets have reached a significant magnitude
+and will account for half of our automotive growth over the next five years. Our Automotive
+segment is thus an excellent example of our overall corporate strategy: In the past our technol-
+ogy innovations put us in a leading position, which we have further expanded with system
+understanding and the ability to adapt to changing demands. In the future this adaptability
+will continue to help us make our customers more successful with our products and solutions.
+Companies must be able to constantly reinvent themselves in order to remain successful in
+the long term. This means employees are called on to engage in new structures and new
+processes and fill them with life. Therefore I would like to take this opportunity to thank the
+employees of Infineon in the name of the entire Management Board. Your outstanding abilities,
+your motivation and your passion have made it possible for us to continue growing even in
+the face of this year's stagnating market and fierce competition. We have even managed to
+outpace the overall semiconductor market by more than the average of the 16 previous years.
+We look forward to joining together with you to reap the harvest of our hard work in the
+coming years and to address the next tasks awaiting us.
+Management Board and Supervisory Board
+Letter to shareholders
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+3
+We want to keep growing faster than the market in the future as well. This is why we are
+rigorously continuing on the path we have chosen. As a semiconductor manufacturer we are
+one of the first stages of the value chain for many industry segments. Our technologies are
+the basis for a large number of innovations that make life easier, safer and greener. This means
+we have to recognize at an early stage the direction in which our markets will develop over
+the coming years and we have to establish the prerequisites necessary to address the require-
+ments of the future today. Our objective in this context is to use our knowledge to create
+innovations that can change markets and clearly differentiate us from our competition on a
+long-term basis.
+The developments of recent years were recognized by the international rating agency S&P
+Global Ratings (S&P; formerly Standard & Poor's Ratings Services), which in February 2016 for
+the first time issued a long-term credit rating for Infineon. S&P has rated our creditworthiness
+as "BBB" (outlook "stable"). This gives Infineon the best current S&P rating of any European
+semiconductor manufacturer. The rating recognizes Infineon's growth, well above average
+compared to the rest of the industry, as well as our leading market position in several areas.
+S&P was also impressed by our strong financial profile. This rating offers us access to more
+favorable financing conditions in the capital market, which in turn helps enhance our organic
+growth strategy with strategic and financially viable acquisitions. We are actively shaping the
+current wave of consolidation in the semiconductor industry, for example with our planned
+acquisition of the US corporation Wolfspeed.
+Chief Executive Officer
+Dr. Reinhard Ploss
+Management Board and Supervisory Board
+Letter to shareholders
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Further Information
+2
+The 2016 fiscal year has proven that Infineon as a company enjoys solid health and pursues
+the right strategy. In recent years we have laid the foundation that ensures stability even
+in difficult times. We have focused on applications, technologies and products that are more
+in demand today than ever before in the context of global megatrends: automotive semicon-
+ductors, industrial power semiconductors, radio-frequency components and security solutions.
+Semiconductors are essential in tapping renewable energy sources. They reduce the amount
+of energy consumed by electric devices and facilitate systems that make transportation safer
+and cleaner. They are also at the heart of modern communications and enable fast and secure
+data traffic in an increasingly connected world. We have gained the expertise necessary to
+do all this over many years, and we continue to systematically expand it. Competence and
+good ideas are an excellent place to start, but a truly innovative company is characterized
+by the successful execution of ideas in the market.
+Infineon performed very well in the previous fiscal year. In spite of the difficult economic
+situation and a sluggish semiconductor market we grew once again and have achieved our
+targets. Revenue increased to 6,473 million euros, Segment Result improved to reach
+982 million euros, equivalent to a margin of 15 percent. Earnings per share rose to 66 cents.
+After two years in which we had benefited from the positive world economic situation, the
+2016 fiscal year presented us with challenges that we have readily mastered. We want our
+shareholders to have their fair share in this development. The Management Board and
+the Supervisory Board will therefore propose a dividend of 22 cents per share at the Annual
+General Meeting on February 16, 2017.
+and business partners,
+dear Infineon colleagues,
+Dear shareholders
+Neubiberg, November 2016
+Letter to shareholders
+Letter to shareholders
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+191 Imprint
+191 Financial calendar
+188 Technology Glossary
+All our activities are based on our strategic approach "Product to System", which we apply
+along our entire value chain to make our customers successful. This strategy is supported by
+additional elements: a culture of permanent innovation, continuous pursuit of technology
+leadership, a strong dedication to quality, differentiated in-house manufacturing and a
+go-to-market approach tailored to a variety of markets. As a result, we can offer our customers
+leading products at the highest possible quality and supply reliability, and can thus achieve
+our goal of growing profitably and faster than the market. This is our recipe for success, today
+and in the future.
+#1 in Europe
+Credit rating
+"BBB"
+13.1%
+1 Columns may not add up due to rounding. The business with XMC industrial microcontollers developed by Automotive and Chip Card & Security was
+transferred to Power Management & Multimarket and Industrial Power Control with effect from October 1, 2015. The pevious year figures have been
+adjusted according by.
+35,424
+36,299
+Infineon employees as of September 30
+Return on Capital Employed (ROCE) 2
+Debt-to-total-capital ratio
+Debt-to-equity ratio4
+Inventory intensity4
+12
+7.3%
+8.2%
+Return on assets4
+12.9%
+9
+14.8%
+Return on equity4
+4
+53.4%
+55.3%
+Equity ratio
+10
+0.20
+0.22
+Dividend per share in €³
+27
+0.60
+0.76
+13.6%
+2
+35.2%
+38.4%
+Segment Result
+(€ 15.2% Margin)
+€982 million
+Revenue (+12%)
+€6.473 billion
+Our growth strategy has proven itself
+and has earned the proper recognition:
+In February 2016 the rating agency S&P
+Global Ratings evaluated our credit-
+worthiness as "“BBB” (outlook “stable”),
+the highest credit-worthiness rating of
+any European semiconductor company.
+Furthermore, we earned the highest rating
+of any European semiconductor manu-
+facturer in the Dow Jones Sustainability
+Index (DJSI) and are listed in the DJSI
+World Index.
+Today our traditional core competencies
+are in greater demand than ever. At the
+same time we are preparing for the suc-
+cesses of tomorrow. During the past fiscal
+year we further strengthened our position
+in important future-oriented technologies
+through strategic acquisitions.
+We make our customers more successful
+with leading technology and system
+understanding. Here we benefit from long-
+term, global megatrends and develop
+solutions that make life easier, safer and
+greener.
+Infineon continued to grow during the 2016
+fiscal year. Revenue increased organically
+by 7 percent, and by 12 percent including
+the contribution from International
+Rectifier. Segment Result increased to
+€982 million, corresponding to a margin
+of 15.2 percent.
+at a glance
+Our year
+Our growth strategy has proven itself
+and has earned the proper recognition:
+In February 2016 the rating agency S&P
+Global Ratings evaluated our credit-
+worthiness as “BBB” (outlook “stable”),
+the highest credit-worthiness rating of
+any European semiconductor company.
+Furthermore, we earned the highest rating
+of any European semiconductor manu-
+facturer in the Dow Jones Sustainability
+Index (DJSI) and are listed in the DJSI
+World Index.
+Today our traditional core competencies
+are in greater demand than ever. At the
+same time we are preparing for the suc-
+cesses of tomorrow. During the past fiscal
+year we further strengthened our position
+in important future-oriented technologies
+through strategic acquisitions.
+We make our customers more successful
+with leading technology and system
+understanding. Here we benefit from long-
+term, global megatrends and develop
+solutions that make life easier, safer and
+greener.
+Infineon continued to grow during the 2016
+fiscal year. Revenue increased organically
+by 7 percent, and by 12 percent including
+the contribution from International
+Rectifier. Segment Result increased to
+€982 million, corresponding to a margin
+of 15.2 percent.
+2016
+Our year
+Infineon at a glance
+5 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+4 See the chapter "Review of financial condition" for definition, P page 73.
+3 A dividend per share of €0.22 for the 2016 fiscal year will be proposed to the Annual General Meeting on February 16, 2017.
+2 See the chapter "Internal management system" for definition, P page 57.
+2
+17
+12.8%
+15.0%
+(5)
+20.5%
+19.5%
+(8)
+18
+6,473
+2015
+16
+IIIII
+Page 47
+Chip Card & Security
+Page 44
+Power Management & Multimarket
+1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Jingchuan, Tomen, Weikeng and WPG Holding (SAC).
+Source: IHS Markit, October 2016
+Applications
+#1 with a market share of 27.6%
+for IGBT-based power semiconductors
+ABB / Alstom / Bombardier / CSR Times / Danfoss /
+Eaton/Emerson / Goldwind / Midea / Rockwell /
+Schneider Electric / Siemens / Toshiba / Vestas /
+Yaskawa
+Key customers'
+> IGBT module solutions incl. IGBT stacks
+> IGBT modules (low-power, medium-power, high-power)
+> Driver ICs
+› Discrete IGBTs
+› Bare die business
+Market position²
+> Charging stations for electric vehicles
+> DC motors
+> HiRel (high-reliability components)
+Market position²
+AAC/Airbus / Artesyn / Boeing / Cisco/Dell/ Delta /
+Ericsson / Hewlett Packard Enterprise / Huawei / Lenovo/
+LG Electronics / Lite-On / muRata / Nokia / Osram /
+Panasonic/Quanta / Samsung/ZTE
+Key customers'
+> TVS (transient voltage suppressor) diode
+> RF power transistors
+› RF antenna switches
+> MEMS and ASICS for silicon microphones
+> Low-voltage and high-voltage driver ICs
+> GPS low-noise amplifier
+> Discrete low-voltage and high-voltage power MOSFETS
+> Customized chips (ASICS)
+› Control ICs
+Product range
+> Cellular infrastructure
+> Mobile devices
+> Power management (adapters, chargers, power supplies)
+> LED and conventional lighting systems
+Product range
+#1 with a market share of 26.4%
+› Traction
+> Industrial vehicles
+> Security
+› Powertrain
+> Comfort electronics
+> Assistance systems and safety systems
+Applications
+Page 42
+Industrial Power Control
+Product range
+O=0C
+Automotive
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2016 fiscal year (ending September 30),
+the Company reported sales of about €6.5 billion with some 36,300 employees worldwide. Infineon is listed on
+the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Infineon at a glance
+infineon
+Infineon Technologies AG
+Annual Report 2016
+Revenue by segment
+Page 40
+> 32-bit automotive microcontrollers for powertrain,
+safety and driver assistance systems
+› Discrete power semiconductors
+> Industrial drives
+> Home appliances
+> Energy transmission
+› Charging stations for electric vehicles
+Applications
+Source: Strategy Analytics, April 2016
+#2 with a market share of 10.4%
+Market position²
+Autoliv / Bosch / BYD / Continental / Delphi / Denso /
+Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
+Mitsubishi/ Omron / Tesla / Valeo / ZF
+Key customers¹
+> Voltage regulators
+> Transceivers (CAN, LIN, Ethernet, FlexRay)
+› Radar
+> Power ICs
+> Magnetic and pressure sensors
+> Industrial microcontrollers
+> IGBT modules
+> Renewable energy generation
+for standard MOSFET power transistors
+> Uninterruptable power supplies
+Applications
+2,666
+48
+3,083
+6
+16
+942
+15
+1,000
+6
+35
+2,020
+33
+2,147
+12
+5,795
+6,473
+Change
+in %
+16
+2016/2015
+1,574
+1,337
+10
+Source: IHS Markit, October 2016
+568
+10
+661
+15
+12
+710
+13
+819
+6
+7
+399
+6
+424
+18
+23
+24
+revenue
+46
+in % of
+#2 with a market share of 24.8%
+Market position²
+Gemalto / Giesecke & Devrient / Google / HP/Lenovo/
+Microsoft/Oberthur Technologies / Safran Morpho /
+Samsung / US Government Publishing Office /
+Watchdata
+Key customers'
+> Dual-interface security controllers
+(contact-based and contactless)
+› Contactless security controllers
+› Contact-based security controllers
+Product range
+> Trusted computing
+> Ticketing, access control
+› Secure NFC transactions
+> Payment systems incl. mobile payment
+> Mobile communications
+> Internet of Things
+> Healthcare cards
+> Governmental identification documents
+> Authentication
+for microcontroller-based chip card ICs
+Source: IHS Markit, July 2016
+> Automotive
+Therein: USA
+in % of
+revenue
+€ in
+millions
+2016
+€ in
+millions
+Americas
+Japan
+2 All figures for 2015 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment.
+The figures provided in those sections with respect to changes in market share relate to the 2014 market share figures as calculated in 2016. Due to changes
+in the way the market is analyzed, these figures may differ from the 2014 market share figures reported in 2015.
+Therein: China
+Therein: Germany
+Europe, Middle East, Africa
+Revenue by region
+Fiscal year from October 1 to September 30
+As at and for the fiscal years ended September 30 (under IFRS)'
+Infineon key data
+Infineon at a glance
+Asia-Pacific (w/o Japan)
+In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-com-
+pliance with antitrust regulations due to lack of knowledge or failure to make the people
+involved in such transactions adequately aware of the issues. This can result in high levels of
+cost (e.g. significant time spent by management, assignment of attorneys) and fines. Infineon's
+reputation may also suffer under these circumstances.
+In order to develop or expand our business, we may seek to acquire other businesses or enter
+into various forms of cooperation arrangements. In the case of acquisitions, there is a risk
+that these activities prove to be unsuccessful, particularly regarding the integration of people
+and products in existing business structures. These issues could adversely impact our financial
+condition and earnings performance.
+In response to the general increase in threats to data security and the high degree of pro-
+fessionalism meanwhile applied in the area of cybercrime, we have initiated an information
+security program to further improve protection against hacking attacks and related risks to
+our IT systems, networks, products, solutions and services. Information security is achieved
+primarily with the aid of Infineon's systematically applied and global Information Security
+Management System (ISMS), the prime objectives of which are to identify and measure all
+potential IT risks and to ensure that effective processes and tools are in place to minimize
+and avoid risk. The ISMS covers all areas of Infineon's business and is certified to the globally
+recognized ISO/IEC 27001 standard. All relevant risk areas are continuously monitored and
+optimized in conjunction with regular internal and external audits.
+Asian markets are particularly important to our long-term growth strategy. Our operations in
+China are influenced by a legal system that may be subject to change. One example is the fact
+that local regulations could make it mandatory to enter into partnerships with local companies.
+These circumstances could lead on the one hand to Infineon's intellectual property no longer
+being sufficiently protected and on the other to intellectual property developed by Infineon in
+China not being freely transferable to other countries and locations, thus impairing revenue
+and profitability.
+91
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Acquisitions and cooperation arrangements (RC: medium)
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate
+these risks, we rely upon the advice of both in-house and external experts and provide suitable
+training to our employees.
+92
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor
+sector from economic and demand fluctuations and the risks related to Infineon's operations,
+financial condition, liquidity and earnings by closely monitoring changes in early warning
+indicators as well as by developing specific response strategies appropriate to the current
+position within the economic cycle. This can be done, for instance, by rigorously adjusting
+capacities and inventory levels at an early stage, initiating cost-saving measures and making
+flexible use of external manufacturing capacities, both at frontend and backend facilities.
+At an operational level, we have adopted various quality management strategies aimed at
+avoiding quality risks (such as "Zero Defects" and "Six Sigma"), to prevent or solve problems
+and to improve our business processes. Our company-wide quality management system
+has been certified on a worldwide basis in accordance with ISO 9001 and ISO/TS 16949 for
+a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying
+and eliminating the reasons for quality-related problems at an early stage.
+A structured project management system is in place to handle development projects, including
+customer-specific projects. Clear project milestones and verification procedures required
+to be carried out during a project as well as clearly defined limits of authority help us identify
+potential project risks at an early stage and counter these risks with specific measures.
+We seek to minimize procurement-related risks through appropriate purchasing strategies
+and techniques, including constant product and cost analysis ("Best Cost Country Sourcing"
+and "Focus-on-Value”). These programs include cross-functional teams of experts, who are
+responsible for the standardization of purchasing processes with respect to material and
+technical equipment.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2016 fiscal year
+2
+Measures to implement our risk management strategy
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Qimonda insolvency (RC: medium)
+Impact of our global operations (RC: medium)
+Combined Management Report | Our 2016 fiscal year
+90
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+90
+P see page 166 ff.
+Psee page 170 f.
+P see page 170 f.
+Specified currencies are hedged Group-wide by means of derivative financial instruments.
+These hedges are based on forecasts of future cash flows, the occurrence of which is
+uncertain. Under these circumstances, exchange rate fluctuations could – despite hedging
+measures - also have an adverse impact on earnings.
+Our global business strategy requires the maintenance of R&D locations and manufacturing
+sites throughout the world. The location of such facilities is determined by market entry
+hurdles, technology and cost factors. Risks could, therefore, arise from adverse economic
+and geopolitical developments in our regional markets, changes in legislation, and policies
+affecting trade and investment aimed at limiting free trade and varying practices of the
+regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate.
+These risks could restrict our business activities in those countries. We could also be exposed
+to fines, sanctions and damage to reputation.
+Risk of default by banking partners (RC: medium)
+Further information regarding the management of financial risks is provided in note 22 to the
+Consolidated Financial Statements.
+Legal and compliance risks
+Due to the insolvency proceedings relating to Qimonda and claims brought against Infineon,
+we are exposed - even after the partial settlement reached on September 11, 2014 - to
+a substantial amount of potential liabilities, which are described in detail in note 23 to the
+Consolidated Financial Statements.
+Provisions are recognized in connection with these matters as of September 30, 2016. The
+provisions reflect the amount of those liabilities that management believes are probable and
+can be estimated with reasonable accuracy at that time. There can be no assurance that such
+provisions recorded will be sufficient to cover all liabilities that may ultimately be incurred in
+relation to these matters.
+Intellectual property rights and patents (RC: medium)
+As with many other companies in the semiconductor industry, allegations are made against
+us from time to time that we have infringed other parties' protected rights. Regardless of the
+prospects of success of such claims, substantial legal defense costs can arise.
+Whilst we often benefit from cross-licensing arrangements with major competitors and
+are keen to broaden the protection offered in this area by entering into new agreements,
+no such opportunities exist to safeguard against risks of this nature in the case of companies
+specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus
+resulting in significant claims for damages or restrictions in selling the products concerned.
+Any such outcome could in turn have an adverse impact on our earnings performance.
+Further information is provided in note 23 to the Consolidated Financial Statements.
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the
+potential risk of a default by one or more of the banking partners with whom we do business.
+We mitigate this risk - which could still arise despite various state-insured deposit protection
+mechanisms - by a combination of risk avoidance analyses and risk diversification measures.
+The failure of these measures could have a materially adverse impact on Infineon's financial
+condition and liquidity situation.
+We minimize legal risks relating to intellectual property rights and patents by pursuing a
+well-defined patent strategy, including thorough patent research and selective development
+and registration of Infineon patents as well as precautionary protective measures in the form
+of agreements with major competitors. We aim to increase the number and scope of such
+cross-licensing agreements with leading competitors in order to reduce patent-related risks.
+However, no such opportunities exist to safeguard against risks of this nature in the case of
+companies specializing in exploiting patent rights.
+Our current liquidity position, which we describe in the chapter "Review of liquidity", enables
+us to obtain favorable refinancing conditions. This fact gives Infineon both the financial
+headroom and the entrepreneurial flexibility it needs to implement its business strategies
+and initiatives.
+In certain cases, insurance policies have been taken out to protect against potential claims
+and liability risks, with the aim of avoiding or at least minimizing any adverse impact on
+Infineon's financial condition and liquidity.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+94
+P see page 75
+At the G20 summit held in Hangzhou (China) in September 2016, China ratified the Paris climate
+agreement, thereby giving its formal commitment to reducing carbon emissions. As a conse-
+quence, the importance of expanding renewable energy sources in China has increased
+enormously. Our presence in this market, alongside our collaboration with leading companies
+in the wind and solar power sectors, will create further opportunities for long-term growth.
+Our success in positioning Infineon in China as an integral part of Chinese industry (and hence
+Chinese society) could well open up a multitude of new opportunities that is highly likely to
+have a positive impact on the growth and profitability of our business.
+Further growth in semiconductor content in vehicles (OC: medium)
+We expect semiconductor content per vehicle to continue growing. The primary driving force
+behind this trend is the rising demand for active safety features and driver assistance systems.
+We are also convinced that current global carbon emissions targets cannot be achieved
+without further electrification. The need for increased efforts in this field is relevant not only
+for electro-mobility (i.e. hybrid, plug-in hybrid and all-electric vehicles), but also for power
+units in vehicles with combustion engines. IT security within the vehicle is also further gaining
+in importance. Thanks to our expertise in the field of security controllers, we are extremely
+well positioned to exploit opportunities in this area.
+Growth from mobile applications (OC: medium)
+The continued trend towards mobility is also reflected in the unbroken high demand for
+smartphones and tablets. We benefit from this development in two ways. Firstly, through
+the components we supply for mobile devices (silicon-MEMS microphones, TVS diodes,
+GPS amplifiers, CMOS-RF switches), and secondly, through power semiconductors, which
+form the key components for energy-efficient chargers (high-voltage and low-voltage power
+transistors, driver ICs and control ICs).
+Security applications (OC: medium)
+The trend towards electronic identity documents is having a positive impact on Chip Card &
+Security segment revenue. Paper-based documents are increasingly being replaced by chip-
+based versions, due to the higher level of security they offer. New markets are also emerging
+in conjunction with the Internet of Things and the Industrial Internet ("Industry 4.0"). The
+authentication of devices is playing an increasingly important role in both of these fields, for
+which Infineon offers the corresponding security chips.
+Liquidity position (OC: medium)
+International Rectifier acquisition (OC: medium in the Annual Report 2015)
+ANNUAL REPORT 2016
+The opportunities arising from the acquisition of International Rectifier, described in the 2015
+Annual Report, were integrated during the 2016 fiscal year in the medium-term forecasts of
+the segments and are therefore no longer explicitly presented here.
+China is the world's biggest market for trains and home to the world's largest train manufacturer
+by far, which is an Infineon customer. The continued expansion of the domestic rail network
+and a growing volume of international infrastructure projects both represent growing business
+opportunities for Infineon.
+Vehicle production in China is still expanding, albeit at a slower pace. At the same time, rapid
+growth in the production of plug-in hybrid and all-electric vehicles has turned China into the
+world's largest market for electro-mobility.
+Infineon generates more revenue in China than in any other country. Accordingly, developments
+and growth opportunities in China are of utmost importance to the Group and relate to the
+following markets that we serve:
+Market access and activities in China (OC: medium)
+Overall statement by Group Management on risk situation
+The overall risk assessment is based on a consolidated view of all significant individual risks.
+We are not currently aware of any substantial risks capable of jeopardizing Infineon's going-
+concern status.
+Opportunities
+The principal opportunities are described in the following section. The list is not exhaustive
+and represents only a cross-section of the opportunities available. Our assessment of these
+opportunities is subject to continuous change, reflecting the fact that our business, our markets
+and the technologies we deploy are continuously subject to new developments, bringing with
+them fresh opportunities, causing others to become less relevant or otherwise changing the
+significance of an opportunity from our perspective. Depending on the potential degree of
+impact and the estimated probability of occurrence, each of these opportunities is assigned
+to an "opportunity class" (OC) in the same way that risks are allocated to a risk class. These
+classifications are shown in parentheses (e.g. “OC: medium”).
+New technologies and materials (OC: medium)
+We are constantly striving to develop new technologies, products and solutions and to
+improve on existing ones, both separately and in collaboration with customers. We therefore
+continually invest in research and development relating to the use of new technologies and
+materials. Technologies and materials in current use may well lose their predominance in
+the foreseeable future, such as silicon, which could reach its physical limits in some areas
+of application.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+We have established a Group-wide compliance management system with the aim of managing
+compliance-related risks on a systematic, comprehensive and sustainable basis. Under this
+system, major preventive procedures are continuously developed, other elements of the
+system revamped or strengthened, and appropriate responses established for possible or
+actual incidences of non-compliance with internal or external regulations. The Compliance
+Officer reports on a quarterly basis to the Investment, Finance and Audit Committee of the
+Supervisory Board.
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+333
+We see numerous opportunities for working with new materials, such as those associated
+with silicon carbide or gallium nitride, to develop more powerful and lower-cost products.
+These materials could well have a positive influence on our ability to attain our strategic
+growth and profitability targets. The planned acquisition of Wolfspeed could significantly
+accelerate the market launch of products based on silicon carbide and gallium nitride.
+Strategic approach "Product to System" (OC: medium)
+With the "Product to System" strategic approach, we seek to identify additional benefits on
+a system level for our customers from within our broad portfolio of technologies and products.
+The strategy enables us to exploit available revenue potential even more effectively and thereby
+to achieve our growth and margin targets. This approach also enables us to reduce customers'
+development costs and shorten lead times required to bring their products to market.
+Support for change in energy policies and consideration of climate change issues
+(OC: medium)
+Population growth and increasing industrialization in all parts of the world are resulting in
+ever-greater global demand for energy. Electric power is becoming the most important energy
+carrier of the 21st century. Renewables are already playing a key role in reducing carbon
+emissions. The long-term objective is to achieve a global decarbonization by the end of the
+century, as resolved at the Climate Change Conference held in Paris in December 2015.
+Infineon's semiconductors enable electric power to be generated from renewable energy
+sources. They also boost energy efficiency and offer efficiency gains at all stages of the energy
+industry's value-added chain, whether in generation, transmission, or above all in the use
+of electrical power. They form the basis for the intelligent and efficient use of electrical power,
+for instance in industrial applications, power supplies for computers, consumer electronics
+and vehicles.
+Ability to supply due to available capacities (OC: medium)
+Our in-house manufacturing capacities, together with those of our external partners, provide
+us with sufficient flexibility to meet requirements. Growing demand for power semiconductors
+has been met in particular by the expansion of our 300-millimeter manufacturing facilities in
+Dresden (Germany) and the opening of a second manufacturing facility at Kulim 2 (Malaysia).
+In response to rising demand for 77 GHz radar sensor ICs, the decision has been taken to
+expand capacities at our plant in Regensburg (Germany).
+The availability of additional capacities, combined with the proactive strategic and operational
+planning of internal and external resources, enable us to meet rising demand from both
+existing and new customers in the event of a market upturn.
+93
+INFINEON TECHNOLOGIES
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting
+process. An annual risk analysis is initially performed and the defined controls are revised, as
+and when required. The assessment involves identifying and updating significant risks relating
+to accounting and financial reporting in the relevant legal entities and corporate functions.
+The controls defined for identifying risks are documented in accordance with Group-wide
+guidelines. Regular random tests are performed to assess the effectiveness of the controls.
+These tests constitute the basis for an assessment of the appropriate extent and effectiveness
+of the controls. The results are documented and reported in a global IT system. Any deficiencies
+identified are remedied with due consideration given to their potential impact.
+Currency risks (RC: medium)
+Assessment of effectiveness
+Furthermore, in a Representation Letter, all legal entities, segments and relevant corporate
+functions confirm that all business transactions, all assets and liabilities and all income and
+expense items have been recognized in the financial statements.
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness
+of the ICS with regard to the accounting and financial reporting process. The Management
+Board and the Investment, Finance and Audit Committee of the Supervisory Board are regularly
+informed about any significant control deficiencies and the effectiveness of the internal controls.
+The Risk Management and ICS are continuously reviewed to ensure compliance with internal
+and external requirements. Regular improvements made to the system contribute to the
+continuous monitoring of the relevant risk areas within the responsible organizational units.
+International Rectifier's ICS was integrated in the Infineon Group's ICS during the 2016 fiscal
+year in conjunction with the merger of legal entities and processes.
+Significant risks
+In the following section, we describe risks that could have a significant or materially adverse
+impact on Infineon's operations, liquidity, earnings, cash flows and reputation and which have
+therefore been allocated to the risk classes “high” or “medium”. Depending on the potential
+degree of impact and the estimated likelihood of occurrence, the risk class is shown in paren-
+theses for each risk (e.g. “RC: high").
+Strategic risks
+Unsettled political and economic climate (RC: high)
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn - particularly in the markets we serve - may
+result in us not achieving our forecasted revenue. Risks can also arise due to political and
+social changes in countries in which we manufacture and/or sell our products.
+86
+98
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+87
+In this context, we are particularly monitoring the European debt crisis. As a consequence of
+high levels of public sector debt, measures are increasingly being taken to consolidate budge-
+tary shortfalls and cut investment expenditure. Uncertainty among consumers and companies
+is growing and unemployment remains high in many EU countries. A number of geopolitical
+risks, such as the crisis in Ukraine as well as unrest and civil wars in the Middle East, represent
+additional risk factors.
+> Processes are in place for the segregation of duties and for the dual control principle in the
+context of preparing financial statements, as well as for authorization and access rules for
+relevant IT accounting systems.
+We have once again achieved above-average revenue growth in China, as a result of which
+the share of Group revenue generated in this region rose again slightly from 23 percent in the
+2015 fiscal year to 24 percent in the 2016 fiscal year. Our dependence on the Chinese market
+therefore remains and constitutes a slightly higher risk than one year earlier. This risk includes
+the possibility of lower demand for exports to China and hence a decline in manufacturing
+capacity utilization levels. There is also a risk that an increased volume of previously imported
+semiconductors will be manufactured in China going forward. Regardless of our assessment
+of potential scenarios and outcomes within this complex set of risks, these developments
+could have an adverse impact on Infineon's operations, financial condition, liquidity, cash
+flows and earnings.
+› Processes and controls are in place to explicitly guarantee the completeness and correctness
+of the year-end financial statements and financial reporting;
+Combined Management Report | Our 2016 fiscal year
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and
+reputation as well as the estimated probability of occurrence, a risk is classified as "high",
+"medium" or "low".
+All reported risks and opportunities in their entirety are reviewed for the Infineon Group
+for possible correlation and overlap factors and are analyzed using an Infineon-specific
+categorization model. Regular risks and opportunities analysis and new developments in
+risk management culture are supplemented by interdisciplinary workshops held at segment,
+corporate and regional levels. Important information relevant for Infineon's Risk and Oppor-
+tunity Management System is available to all employees via our intranet system, including
+access to ERM tools and ERM guidelines, containing job descriptions for all functions involved
+in the process as well as all information necessary for reporting purposes.
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage
+and monitor identified risks and opportunities, and are responsible for formally determining
+a set of appropriate strategies (avoidance, mitigation, transfer to other parties, acceptance).
+Working closely with corporate functions and individual managers, the Risk and Opportunity
+Manager is also responsible for defining and monitoring measures aimed at implementing the
+adopted management strategy. For our system to be successful, it is essential that risks and
+opportunities are managed and monitored proactively and with a great deal of commitment.
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS
+departments using procedures incorporated in business processes. Group Internal Audit also
+tests compliance with legal requirements and Infineon guidelines and, where appropriate,
+rules relating to Risk and Opportunity Management and initiates corrective measures.
+The Supervisory Board's Investment, Finance and Audit Committee oversees the effectiveness
+of the Risk Management System. As part of the statutory audit, the external Group auditor also
+examines our early warning system pursuant to section 91, paragraph 2, of the German Stock
+Corporation Act to ascertain its suitability to detect risks that could pose a threat to Infineon's
+going-concern status and reports annually thereon to the Chief Financial Officer (CFO) and the
+Investment, Finance and Audit Committee of the Supervisory Board.
+Internal Control System with respect to the financial reporting process
+Our involvement and participation in various regional markets around the world creates
+cash flows in a number of currencies other than the euro - primarily in US dollars. A significant
+share of revenue on the one hand and of operating costs and investments on the other is
+denominated in US dollars and correlated currencies. For the most part, Infineon generates
+a US dollar surplus from these transactions.
+The Internal Control System is an integral part of the accounting process in all relevant legal
+entities and corporate functions. The system monitors compliance with stated principles
+and stipulated procedures based on preventive and detective controls. Among other things,
+we regularly check that:
+> Group-wide financial reporting, measurement and accounting guidelines are continually
+updated and adhered to;
+> Intragroup transactions are fully accounted for and properly eliminated;
+> Issues relevant for financial reporting and disclosures in connection with agreements entered
+into are recognized and appropriately presented;
+85
+85
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Cyclical market and sector development (RC: high)
+The principal focus of the ICS is on the financial reporting process, with the aim of monitoring
+the proper maintenance and effectiveness of accounting systems and financial reporting. The
+primary objective of the ICS is to minimize the risk of misstatement in Infineon's internal and
+external reporting and to ensure with a reasonable amount of certainty that the Consolidated
+Financial Statements comply with all relevant regulations. Appropriate controls must therefore
+be in place throughout the organization to ensure such compliance. Clear lines of responsibility
+are assigned to each of the
+processes.
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replaceability
+of our products. Due to the resulting aggressive pricing policies, we may be unable to achieve
+our long-term strategic goals of gaining and/or maintaining market share and of product
+pricing. Moreover, accelerating M&A (merger and acquisition) activity within the semiconductor
+industry could result in even tougher competition. Potential benefits for competitors in this
+market include improved cost structures and stronger sales channels. This situation could
+have an adverse impact on Infineon's earnings.
+Moreover, our dependence on various raw materials (such as gold and copper) used in
+manufacturing and our energy requirements expose us to substantial price risks. We are also
+dependent on supplies of the so-called rare earths required for selected manufacturing
+processes in conjunction with process integration. At the time of writing, financial instruments
+are in place to hedge our price risk exposure for gold wire during the 2017 fiscal year, based on
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+89
+planned volume requirements. The prices of raw materials and energy have recently been
+subject to significant fluctuation, and there is no reason to assume the situation will change
+in the near future. If we are unable to offset cost rises or pass them on to customers, it could
+have an adverse impact on earnings.
+Determining and adjusting manufacturing volumes (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost trends.
+In this context, measures aimed at optimizing manufacturing costs for raw materials and
+supplies, energy, labor and automation, as well as for bought-in services from external
+business partners, may not be feasible to the extent envisaged.
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon
+to develop competitive and high-quality products designed to provide customized techno-
+logical solutions. In view of the rapid pace of technological change and increasingly stringent
+customer requirements, coordination processes need to become increasingly sophisticated.
+Failure to continue making progress in this area could result in quality problems, product
+development or market maturity delays as well as higher R&D expenses and hence adversely
+impact our earnings performance.
+Dependence on individual manufacturing sites (RC: medium)
+Our South East Asian manufacturing sites are of critical importance for our production. If, for
+example, political upheavals or natural disasters in the region were to impede our ability to
+manufacture at these sites on the planned scale or to export products manufactured at those
+sites, it would have an adverse impact on our financial condition, liquidity and earnings.
+Our current manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as expropriation of assets. The transfer of manufacturing capacities from
+these sites would, therefore, not only involve a great deal of time and technical effort, Infineon
+would also be required to bear the necessary cost of investment.
+We cooperate with numerous suppliers who provide us with materials and services, or who
+manage parts of our supply chain. We do not always have alternative sources for some of these
+suppliers and therefore depend on their ability to deliver products of the required quality.
+Failure of one or more of these suppliers to meet their obligations to Infineon could have an
+adverse impact on our earnings performance.
+Need for qualified staff (RC: medium)
+One of our key success factors is the availability of sufficient qualified employees at all times.
+There is, however, a general risk of losing qualified staff or not being able to recruit, train and
+retain adequately qualified staff within the business. A lack of technical or management staff
+could, among other things, restrict future growth and hence adversely impact our earnings
+performance.
+Financial risks
+The worldwide semiconductor market is dependent on global economic growth and hence
+subject to fluctuations. Our target markets continue to be exposed to the risk of short-term
+market fluctuations. As a result, our own forecasts of future business developments are subject
+to a high degree of uncertainty. It is possible, for instance, that future market downturns will
+follow another pattern, for example an L shape. The absence of market growth or its decline
+would make it considerably more difficult to attain our own growth target. In the event that
+we are unprepared for market fluctuations, or our response to such fluctuations turns out to be
+inappropriate, this could have a sustained materially adverse impact on Infineon's operations,
+financial condition, liquidity and earnings.
+One risk that semiconductor companies operating in-house manufacturing facilities typically
+face is that of delays in the ramping-up of production volumes at new manufacturing sites,
+coupled with the required transfer of technology. One good example is in the Automotive
+segment, where customers' product approval and testing processes can take place over an
+extended period of time, thus influencing our global manufacturing strategy as well as short-
+and medium-term capacity utilization. Failure to anticipate these changes in the manufacturing
+process in good time could result in capacity shortages and hence lower revenue on the one
+hand as well as costs incurred due to under-utilization on the other.
+Manufacturing cost trends - raw material prices, cost of materials
+and process costs (RC: medium)
+Dependence on individual suppliers (RC: medium)
+Product development delays (RC: medium)
+The ever-increasing complexity of technologies and products, shorter development cycles
+and higher customer expectations can cause a great deal of tension in the field of product
+development. Buffer times built into processes to compensate for potential delays are reduced
+accordingly. In the event of being unable to execute our development plans at the desired
+quality levels, the outcome could be development delays and increased development costs,
+which could have an adverse impact on our financial condition, liquidity, cash flows and
+earnings.
+Data and IT systems security (RC: high)
+The reliability and security of Infineon's information technology systems is of crucial importance.
+At the same time, the world has seen a general rise in the level of threats to data security. This
+applies increasingly to both the application of IT systems to support business processes and
+to internal and external communications. Despite the array of precautionary measures put in
+place, any major disruption to these systems could result in risks relating to the confidentiality,
+availability and reliability of data and systems used in development, manufacturing, selling
+or administration functions, which, in turn, could have an adverse impact on our reputation,
+competitiveness and operations.
+Operational risks
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+88
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present
+additional risks that could result in loss of manufacturing or supply bottlenecks.
+The accelerating pace of events in the markets in which we operate, increased demands for
+flexibility by our customers, and short-term changes in order volumes could result in rising
+costs due to the under-utilization of manufacturing capacities, higher inventory levels and
+unfulfilled supplier contracts.
+Thus, despite the fact that manufacturing processes and sites have become even more flexible,
+fluctuations in capacity utilization levels and purchase commitments, coupled with idle costs
+at manufacturing sites, nevertheless pose risks related to our cost position. These risks could
+possibly jeopardize our ability to attain growth and profitability targets that are based on
+cycle averages.
+The situation is exacerbated by the fact that our products are highly dependent on the degree
+of success achieved by individual customers in their own markets. Furthermore, there is a risk
+of losing future business and design wins if we are unable to deliver volumes over and above
+our contractual obligations if called upon by the customer to do so. In the case of unexpectedly
+high demand, we therefore face the challenge of having to deliver increased volumes that
+require an appropriate level of upfront investment. This could have an adverse impact on our
+investment ratio and, ultimately, on earnings.
+Dependence on the success of specific customers may also grow if they account for an
+above-average share of Infineon's revenue and earnings. This situation could be driven by
+an exceptionally strong performance by the relevant customer, resulting, for instance, from
+exceptional demand for its products or from consolidation trends, in particular those affecting
+our first- and second-tier customers.
+Product quality trends (RC: medium)
+Product quality assurance is a key success factor for the business. Potential quality risks – for
+example due to high utilization levels - can affect yield fluctuations and hence our ability to
+supply customers. Shortfalls in product quality can lead to product recalls and potential costs
+related to liability claims. In addition, quality risks could also damage Infineon's reputation
+and thus have a significant adverse impact on future earnings.
+Increasingly dynamic markets (RC: high)
+804
+Liabilities to banks
+795
+Trade payables
+284
+1,301
+253
+Liabilities to affiliated companies
+678
+Other liabilities
+848
+48
+804
+142
+504
+409
+Provisions
+362
+316
+Other provisions
+93
+Provisions for pensions and similar obligations
+1
+1
+Special reserve with an equity portion
+Liabilities
+6,389
+Bonds
+3,237
+ANNUAL REPORT 2016
+Deferred income
+6,606
+Infineon Technologies AG reports unappropriated profit of €249 million in its financial
+statements for the fiscal year ended September 30, 2016. Based on earnings generated and
+Infineon's positive business outlook, a proposal will be made to the Annual General Meeting
+to pay a dividend of €0.22 per share for the 2016 fiscal year, an increase of €0.02 compared
+to the previous fiscal year. The disbursement of the proposed dividend is subject to approval
+by shareholders.
+Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available
+for distribution to shareholders is based on the level of unappropriated profit (Bilanzgewinn)
+recorded by the ultimate parent, as determined in accordance with the German Commercial
+Code (HGB).
+Dividend
+P see page 97
+P see page 83 ff.
+P see page 30
+101
+Infineon Technologies AG
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Combined Management Report | Our 2016 fiscal year
+2,578
+Treasury and capital requirements
+Treasury and capital requirements
+Principles and structure of Infineon's treasury
+The Infineon treasury's stated objective is to ensure financial flexibility based on a solid capital
+structure. It is of prime importance for all companies in the semiconductor industry to ensure
+that sufficient cash funds are available to finance operating activities and planned investments
+throughout all phases of the business cycle. Debt should only constitute a modest proportion
+of the financing mix, so that headroom is available at all times. Infineon has defined key capital
+management targets based on these general principles. These resulting capital structure
+targets were adjusted at the beginning of 2016, to reflect the strong revenue growth and the
+positive development of Infineon's profitability in recent years.
+Accordingly, Infineon plans to maintain a liquidity level (gross cash position) of at least €1 billion
+and additionally 10 to 20 percent of revenue. The previous target range for the gross cash
+position was between 30 and 40 percent of revenue. The upper limit for gross debt remains
+unchanged and should not exceed two times EBITDA (earnings from continuing operations
+before interest and taxes plus scheduled depreciation and amortization).
+The balance of these two figures is no longer subject to a separate target (previously: positive
+net cash position).
+Infineon is not subject to any statutory or legal capital requirements, nor are any defined in
+the Articles of Association.
+Provisions for pensions and similar obligations decreased by €49 million as a result of a new
+statutory rule, applied for the first time, requiring liabilities to be discounted using the average
+market interest rate for the past ten fiscal years. Other provisions decreased overall by
+€46 million. Liabilities increased by €659 million over the twelve-month period, mainly owing
+to a €623 million increase in liabilities to affiliated companies. The bank loan of €792 million
+(US$934 million) taken out in conjunction with the acquisition of International Rectifier was
+fully repaid out of proceeds from a US Private Placement (USPP) of notes, thus resulting in
+a decrease in liabilities to banks and an increase in other liabilities.
+Infineon Technologies AG's financial position compared to one year earlier was influenced
+by a number of factors. Within assets, increases were recorded for investments (€940 million)
+as well as for cash and cash equivalents and marketable securities (€282 million), reflecting
+changes to the investment structure within the Infineon Group. At the same time, receivables
+from affiliated companies decreased. The increase in equity (€217 million) was mainly attribu-
+table to net income of €407 million recorded in the 2016 fiscal year. Payment of the dividend
+for the 2015 fiscal year (€225 million) reduced equity accordingly.
+9,487
+10,265
+Total liabilities and shareholders' equity
+15
+12
+Principles and structure of Infineon's treasury
+Shareholders' equity
+General and administrative expenses
+249
+A crucial factor for the reliable implementation of treasury responsibilities is the use of
+capable and financially sound financial institutions. Infineon maintains business relationships
+with various international and local commercial and investment banks and avoids becoming
+dependent on individual banks. Partner banks must demonstrate a high level of credit-
+worthiness. Infineon has spread its excess liquidity investments across more than ten banks.
+At September 30, 2016 no financial institution was responsible for more than 13 percent of
+Infineon's liquidity investments.
+P see page 173
+Capital requirements for the 2017 fiscal year
+Financing our operations
+Based on our forecast for the 2017 fiscal year, we anticipate being able to finance operating
+activities out of cash flows provided by operating activities. Further information regarding
+fixed contractual obligations as of September 30, 2016 (such as leasing arrangements, fixed
+service and supply agreements for commodities, input materials, electricity, gas and other
+similar items) is provided in note 24 to the Consolidated Financial Statements.
+P see page 60
+P see page 82
+P see page 154
+P see page 151
+Investments
+Semiconductor manufacturing is very capital-intensive. Infineon's target ratio for future
+fiscal years for expected investments as a percentage of revenue over the economic cycle
+(for definition see the chapter "Internal Management System") is approximately 13 percent.
+Depending on the business situation, Infineon is currently planning investments for the 2017
+fiscal year of approximately €950 million (for details see the chapter "Outlook"). Firm investment
+commitments as of September 30, 2016 totaled €275 million.
+Debt repayment
+As of September 30, 2016, Infineon's debt totaled €1,769 million, of which an amount of
+€17 million falls due for repayment in the 2017 fiscal year.
+Proposed dividend
+A dividend of €0.22 per share will be proposed to Infineon's shareholders for the 2016 fiscal
+year. Subject to shareholder approval, this will result in a distribution of approximately
+€248 million (for the previous fiscal year: €225 million). For further information see note 15 to
+the Consolidated Financial Statements.
+Acquisition of Wolfspeed
+On July 14, 2016, the Company and Cree Inc. ("Cree"), USA, signed an agreement for the
+acquisition of Cree's Wolfspeed business. Infineon intends to buy Wolfspeed (including the
+related wafer substrate business) for a purchase price of US$850 million. The acquisition is
+subject to regulatory approvals in the relevant jurisdictions and customary closing conditions.
+The transaction will be financed by Infineon using cash on hand and three committed bank credit
+facilities with terms of up to five years (see note 14 to the Consolidated Financial Statements).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Treasury and capital requirements
+Capital requirements for the 2017 fiscal year | Derivative financial instruments | Rating
+97
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide
+are arranged, structured and managed either directly or indirectly by the central Finance &
+Treasury department in accordance with stipulated treasury principles. Debt is normally unse-
+cured and based on customary market terms and conditions.
+96
+Principles and structure of Infineon's treasury | Capital requirements for the 2017 fiscal year
+Treasury and capital requirements
+Overall statement of the
+Management Board with respect
+to Infineon's financial condition
+as of the date of this report
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Infineon was assigned a long-term credit rating from the international rating agency S&P for
+the first time in February 2016. The solid investment grade rating "BBB" (outlook "stable")
+reflects among other things Infineon's adjusted capital structure targets. S&P has confirmed
+Infineon's rating following the announcement of the planned acquisition of Wolfspeed.
+Rating
+We employ the following derivative financial instruments for hedging purposes: forward
+foreign currency contracts to reduce exchange rate exposures and commodity swaps to reduce
+price risks for expected purchases of gold. We have concluded two Euro/US Dollar Deal
+Contingent Forward contracts to hedge part of the exchange rate risks relating to the purchase
+price obligation for the planned acquisition of Wolfspeed. We do not use derivative financial
+instruments for trading or speculative purposes. Further information regarding derivative
+financial instruments and the management of financial risks is provided in notes 21 and 22 to
+the Consolidated Financial Statements.
+Derivative financial instruments
+P see page 162 ff.
+Taking into account the financial resources available to Infineon - including internal liquidity
+on hand, net cash that can be generated and available credit facilities - we assume that
+we will be able to cover our planned capital requirements for the 2017 fiscal year. This also
+includes guarantees issued mainly for the rental of buildings (see note 24 to the Consolidated
+Financial Statements).
+P see page 78
+Our gross cash position as of September 30, 2016 amounted to €2,240 million. We also have
+access to various stand-alone short- and long-term credit facilities from various financial
+institutions totaling €720 million. Free cash flow from continuing operations (for definition:
+see the chapter "Internal Management System") will be between €400 and €500 million in
+the 2017 fiscal year, since cash provided by operating activities is expected to exceed planned
+investments.
+P see page 166 ff.
+Treasury principles and responsibilities
+Group-wide treasury principles are in place regarding all issues relating to liquidity and
+financing, such as banking policies and strategies, execution of financing agreements, liquidity
+and investment management worldwide, currency and interest rate risk management and
+the handling of external and intragroup cash flows. Treasury principles are authorized by
+the Chief Financial Officer (CFO) and reviewed and updated regularly. They are set out in a
+corresponding "Treasury Policy" which is applicable Group-wide.
+Corporate treasury function
+Treasury at Infineon is firmly based on a centralized approach in which the Group Finance &
+Treasury department is responsible for all major tasks and processes worldwide relating
+to financing and treasury matters.
+Cash pooling structures are in place for corporate liquidity management purposes. To the
+extent permitted by law and economically feasible, subsidiaries transfer all surplus cash to
+corporate bank accounts in order to ensure the best possible allocation of liquidity within
+the Group and cover the financing requirements of other Group companies. In this way we are
+able to minimize external financing requirements and maintain an optimal capital structure
+with a correspondingly positive impact on financing costs. Settling intragroup transactions via
+internal bank accounts set up in accordance with our in-house banking approach, we are also
+able to reduce the volume of external banking transactions and hence bank fees.
+Liquidity accumulated at Group level is invested centrally by the Group Finance & Treasury
+department, based on a conservative approach to investments, in which preservation of capital
+is prioritized over return maximization. The Group Finance & Treasury department is also
+responsible for managing currency and interest rate risks. Foreign currency cash flows which
+are not offset within the Group are hedged externally (see note 22 to the Consolidated Financial
+Statements for further information).
+95
+95
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Coverage of capital requirements
+P see page 59
+P see page 174
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization
+may - if not sold either via the stock exchange or by means of a public offer to purchase
+addressed to all shareholders - be used for all legally admissible purposes. The shares may
+also be cancelled or offered to third parties in conjunction with business combinations or
+the acquisition of companies, parts of companies or participations in companies. Under
+specified circumstances subject to the consent of the Supervisory Board, the shares may also
+be sold to third parties in return for cash payment (including by means other than through
+the stock exchange or through an offer to all shareholders), used to meet the Company's
+obligations under bonds with warrants and convertible bonds and stock option plans, offered
+for sale or granted as a remuneration component to members of representative bodies and
+employees within the Group, and/or used to repay securities-backed loans. The subscription
+right of shareholders is excluded in all of the above cases (except when the shares are
+cancelled). In addition, the subscription rights of shareholders are excluded in respect of
+fractional amounts in instances in which the shares are sold through a public offer addressed
+to all shareholders.
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+No shares conferring special control rights have been issued.
+Shares with special control rights
+Section 21, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed
+or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of
+a listed corporation to notify such corporation and the German Federal Financial Supervisory
+Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin") immediately. As of Sep-
+tember 30, 2016, we have not been notified of any direct or indirect shareholdings reaching or
+exceeding 10 percent of the voting rights. The shareholdings notified to us as of September 30,
+2016 are presented in the Notes to the Financial Statements of Infineon Technologies AG
+under the information pursuant to section 160, paragraph 1, No. 8 AktG.
+Shareholdings exceeding 10 percent of the voting rights
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register
+of Infineon Technologies AG are recognized as shareholders of the Company. In order to be
+recorded in the share register of Infineon Technologies AG, shareholders are required to sub-
+mit to the Company the number of shares held by them and their name or company name,
+their address and, where applicable, their registered office and their date of birth. Pursuant
+to section 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information
+from any party listed in the share register regarding the extent to which shares, to which the
+entry in the share register relates, are actually owned by the registered party and, if it does not
+own the shares, to receive the information necessary for the maintenance of the share register
+in relation to the party for whom the party concerned holds the shares. Section 67, paragraph 2,
+AktG stipulates that the shares concerned do not confer voting rights until such time as the
+information requested has been supplied in the appropriate manner.
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regula-
+tions of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example, pursuant to
+section 136 AktG, shareholders are prohibited from voting under certain circumstances and,
+according to section 71b AktG, Infineon Technologies AG has no voting rights from its own
+shares. Furthermore, non-compliance with the notification requirements pursuant to
+section 21, paragraphs 1 or 1a of the German Securities Trading Act (Wertpapierhandels-
+gesetz - "WpHG") and to section 25, paragraph 1 or section 25a, paragraph 1, WpHG can,
+pursuant to section 28 WPHG, have the effect that certain rights (including the right to vote)
+may, temporarily at least, not exist. We are not aware of any contractual restrictions on voting
+rights or the transfer of shares.
+Restrictions on voting rights or the transfer of shares
+The Company held 6 million of the above-mentioned issued shares as own shares at the end
+of the reporting period (September 30, 2015: 6 million). Own shares held by the Company
+on the date of the Annual General Meeting do not carry a vote and are not entitled to participate
+in profit.
+The share capital of Infineon Technologies AG stood at €2,265,346,218 as of September 30, 2016.
+This sum is divided into 1,132,673,109 non-par registered shares, each of which represents
+a notional portion of the share capital of €2. Each share carries one vote and gives an equal
+right to the profit of the Company based on the profit appropriation resolved by shareholders
+at the Annual General Meeting.
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Structure of the subscribed capital
+Corporate Governance
+102
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Most transactions within the Infineon Group involving derivative financial instruments are
+handled by Infineon Technologies AG. The comments provided in the chapter "Treasury and
+capital requirements" regarding the nature and scope of transactions with derivative financial
+instruments and hedged risks apply to Infineon Technologies AG. Reference is also made to
+the notes to the Separate Financial Statements of Infineon Technologies AG.
+Expected developments, together with associated material risks and opportunities
+The expected developments, together with associated material risks and opportunities
+of Infineon Technologies AG are very similar to those of the Infineon Group. Moreover, it is
+assumed that the result from investments will play a major role in Infineon Technologies AG's
+earnings performance. As a general rule, Infineon Technologies AG participates in the risks
+of its subsidiaries and equity investments on the basis of the relevant shareholding. As the
+parent company, Infineon Technologies AG is integrated in the Infineon Group's overall risk
+management system and internal control system. For information in this context and a
+description of the expected developments, risks and opportunities of Infineon Technologies AG,
+see the chapter "Risk and opportunity report".
+For the 2015 fiscal year, the Company paid a dividend of €0.20 per share (€225 million in total).
+For information regarding Infineon's long-term dividend policy, see "Sustainable value creation
+for our shareholders" in the chapter "Group Strategy".
+INFINEON TECHNOLOGIES
+Information pursuant to section 289, paragraph 4, and
+section 315, paragraph 4, of the German Commercial Code (HGB)
+98
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Nature of control over voting rights when employees participate in the
+Company's capital and do not exercise their control rights directly
+A resolution passed by the Annual General Meeting on February 28, 2013 authorizes Infineon
+Technologies AG, in the period through February 27, 2018, to acquire its own shares, within
+the statutory boundaries, in an aggregate amount not exceeding 10 percent of the share capital
+at the time the resolution was passed or - if the latter amount is lower - of the share capital
+in existence at the time the authorization is exercised. The Company may not use the authori-
+zation for the purposes of trading in its own shares. The Management Board decides whether
+own shares are acquired through the stock exchange, by means of a public offer to purchase
+addressed to all shareholders or a public invitation to submit offers for sale or via a bank or
+other entity that meets the requirements of section 186, paragraph 5, sentence 1, AktG. The
+authorization includes differentiating requirements – in particular with regard to the permissible
+purchase price – for each method of acquisition.
+Purchase of own shares
+The Management Board is authorized, subject to the requirements resolved by shareholders
+at the Annual General Meeting, to determine the further details of the bond issue, including its
+terms and conditions.
+Even if the dilution protection regulations are applied, the option or conversion price must
+equal at least 90 percent of the average stock exchange price of the Company's shares in the
+Xetra closing auction on the Frankfurt Stock Exchange (or a comparable successor system);
+further details - including the conditions under which the option or conversion price may be
+reduced are set out in the authorization.
+> in order to exclude fractional amounts resulting from a given subscription ratio from the
+subscription rights of the shareholders to the bonds or insofar as such action is necessary
+in order to grant holders of option or conversion rights from bonds that have either already
+been or will in future be issued by the Company or its subordinated Group companies
+subscription rights to that extent to which they would be entitled after exercise of their
+rights or after fulfillment of any conversion obligations.
+> if the issue price is not substantially lower than the theoretical market value of the bonds,
+as determined in accordance with accepted methods of financial mathematics; however
+this only applies insofar as the shares to be issued to service the option and/or conversion
+rights established on this basis in aggregate do not exceed 10 percent of the share capital,
+either at the time of this authorization becoming effective or at the time of its exercise;
+nominal amount of up to €2,000,000,000, to guarantee such bonds issued by subordinated
+Group companies of the Company and to grant holders of bond options or conversion rights
+to up to 130,000,000 no-par-value registered Company shares, representing a notional portion
+of the share capital of up to €260,000,000, in accordance with the relevant terms of the bonds.
+The Management Board is authorized, with the approval of the Supervisory Board, to exclude
+the subscription rights of the shareholders to the bonds,
+104
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+ANNUAL REPORT 2016
+103
+INFINEON TECHNOLOGIES
+The Annual General Meeting held on February 13, 2014 authorized the Management Board,
+in the period through February 12, 2019, either once or in partial amounts, to issue bonds
+with warrants and/or convertible bonds (referred to collectively as "bonds") in an aggregate
+Authorization to issue bonds with warrants and/or convertible bonds
+to the Company's existing Authorized and Conditional Capital can be found in note 15 to the
+Consolidated Financial Statements.
+of Association, in conjunction with applicable legal provisions. Further information relating
+The powers of the Management Board to issue shares derive from section 4 of the Articles
+Powers of the Management Board to issue shares
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Asso-
+ciation rests with the Annual General Meeting. However section 10, paragraph 4, of the Articles
+of Association gives the Supervisory Board the authority to amend the Articles of Association
+insofar as such amendments relate merely to the wording, such as changes in the share capital
+amount resulting from a capital increase out of conditional or authorized capital or a capital
+decrease by means of cancellation of own shares. Unless the Articles of Association provide
+for another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual
+General Meeting regarding the amendment of the Articles of Association require a majority of
+at least three quarters of the share capital represented. Section 17, paragraph 1, of the Articles
+of Association of Infineon Technologies AG provides in principle for resolutions to be passed
+with a simple majority of the votes cast and, when a capital majority is required, with a simple
+majority of the capital unless a higher majority is required by law or in accordance with other
+stipulations contained in the Articles of Association.
+Rules governing the amendment of the Articles of Association
+Rules governing the appointment and dismissal of members of the Management Board
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board
+of Infineon Technologies AG shall consist of at least two members. Effective July 1, 2016, the
+Management Board was expanded from three to four members. The Supervisory Board deci-
+des on the exact number of members of the Management Board and on their appointment
+and dismissal in accordance with section 5, paragraph 1, of the Articles of Association and
+section 84, paragraph 1, AktG. As Infineon Technologies AG falls within the scope of the
+German Co-Determination Act (Mitbestimmungsgesetz - "MitbestG"), the appointment or
+dismissal of members of the Management Board requires a two-thirds majority of the votes of
+the members of the Supervisory Board (section 31, paragraph 2, MitbestG). If such majority is
+not achieved at the first ballot, the appointment may be approved on a recommendation of
+the Mediation Committee at a second ballot by a simple majority of the votes of the members
+of the Supervisory Board (section 31, paragraph 3, MitbestG). If the required majority is still not
+achieved, a third ballot is held in which the Chairman of the Supervisory Board has two votes
+(section 31, paragraph 4, MitbestG). If the Management Board does not have the required num-
+ber of members, in urgent cases, the local court (Amtsgericht of Munich) makes the necessary
+appointment upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment
+for members of the Management Board is five years. Re-appointment or extension of the
+term of office, in each case for a maximum of five years, is permitted (section 84, paragraph 1,
+sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association and section 84, para-
+graph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a deputy
+chairman to the Management Board. The Supervisory Board may revoke the appointment
+of a member of the Management Board and the Chairman of the Management Board for good
+cause (section 84, paragraph 3, AktG).
+P see page 153
+Employees who participate in the capital of Infineon Technologies AG exercise their control
+rights directly in accordance with the applicable laws and the Articles of Association, just like
+other shareholders.
+Acquisition of a majority shareholding in MoTo Objekt Campeon GmbH & Co. KG
+On November 17, 2016 Infineon entered into an agreement with Geneba RE 3 B.V. (Geneba)
+relating to the purchase of the latter's 93 percent shareholding in MoTo Objekt Campeon GmbH &
+Co. KG (MOTO) for an amount of €113 million (see the chapter "Significant events after the
+end of the reporting period”). The transaction will be financed by Infineon using cash on hand.
+Infineon performed well in the 2016 fiscal year, despite a difficult economic environment.
+We achieved our growth targets - revenue grew by 12 percent to €6,473 million and Segment
+Result improved by 9 percent to €982 million, the latter corresponding to a margin of 15.2 per-
+cent. Despite higher investments, free cash flow from continuing operations improved to
+€490 million. In the previous fiscal year, adjusted for the three exceptional items (the acquisi-
+tion of International Rectifier, the Qimonda partial settlement relating to patents, and the EU
+fine), free cash flow amounted to €393 million. Our performance in recent years has also been
+a convincing one for the international rating agency, S&P Global Ratings (S&P; formerly Standard
+& Poor's Ratings Services), which assigned a first-time long-term credit rating to Infineon in
+February 2016. S&P rates Infineon's creditworthiness with a "BBB" (outlook "stable") investment
+grade rating. Infineon therefore currently holds the highest S&P rating of any European semi-
+conductor manufacturer. We want our shareholders to participate appropriately in the excellent
+progress that Infineon is making. Therefore, at the Annual General Meeting to be held on
+February 16, 2017, the Management Board and the Supervisory Board will propose to raise
+the dividend by 2 cents (10 percent) to €0.22 per share.
+The 2016 fiscal year has shown that Infineon enjoys sound health and is pursuing the right
+strategy. In recent years, we have created a solid foundation for our business and focused
+our attention on applications, technologies and products, which are in greater demand than
+ever due to global megatrends. Over a period of many years we have built up, systematically
+expanded and successfully deployed to the benefit of our customers the competencies needed.
+Based on our strategic "Product to System" approach, we focus our efforts along the entire
+value-added chain on the success of our customers. This approach is complemented by other
+elements, namely an all-embracing culture of innovation, continuous striving for technological
+leadership, and extreme quality awareness. In-house production makes a genuine difference
+and facilitates a customized approach to the various markets, ensuring our continued success,
+both now and in the future.
+The planned acquisition of Wolfspeed will enable us to further broaden our range of expertise.
+The move will make us the leading market player in silicon carbide-based power semiconduc-
+tors, while at the same time paving the way to become market leader in RF power components.
+We are integrating tomorrow's technologies in our portfolio today, enabling us to address
+future growth markets such as electro-mobility, renewables, and next-generation cellular
+infrastructure relevant for the Internet of Things. The acquisition of Wolfspeed will enable
+us to bring these innovative technologies to market more quickly and make a meaningful
+contribution to serving the needs of a modern-day society by providing state-of-the-art semi-
+conductor solutions for energy efficiency, connectivity and mobility. We expect the acquisition
+to have an immediate positive impact on Infineon's adjusted earnings per share.
+517
+613
+Inventories
+5,775
+6,822
+Non-current assets
+5,245
+6,185
+530
+637
+2015
+Receivables and other assets
+2016
+Intangible assets, property, plant and equipment
+€ in millions
+German Commercial Code (condensed)
+Statement of financial position of Infineon Technologies AG in accordance with the
+Net assets and financial position
+100
+Combined Management Report | Our 2016 fiscal year
+Infineon Technologies AG
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Infineon Technologies AG posted a slight increase in revenue and gross profit (2 percent) in
+the 2016 fiscal year. The sharp year-on-year drop in the result from investments was mainly
+due to income recorded in the previous fiscal year in conjunction with the reversal of an
+impairment charge on the investment in Infineon Technologies Holding B.V., which took the
+carrying amount of the investment to the maximum level permitted under German Commercial
+Code. Infineon Technologies AG reports a net income of €407 million for the 2016 fiscal year.
+After transferring a total of €158 million to retained earnings, the unappropriated profit
+amounted to €249 million.
+226
+249
+Financial assets
+(208)
+832
+Cash and cash equivalents, marketable securities
+Distributable profit
+2,737
+2,897
+1,179
+1,207
+2,247
+2,253
+Retained earnings
+Capital reserves
+Share capital
+9,487
+1,481
+10,265
+3
+4
+Active difference resulting from offsetting
+39
+40
+Prepaid expenses
+3,670
+3,399
+Current assets
+1,672
+1,954
+Total assets
+226
+(137)
+Transfers to retained earnings according to section 58 paragraph 2 AktG
+Transfers to retained earnings according to section 58 paragraph 2a AktG
+Unappropriated profit at the end of year
+1,545
+1,576
+Gross profit
+(3,698)
+(3,781)
+Cost of goods sold
+5,243
+5,357
+Revenue
+2015
+2016
+Research and development expenses
+€ in millions
+Earnings position
+Infineon Technologies AG is the parent company of the Infineon Group and performs the
+Group's management and corporate functions. It takes on major Group-wide responsibilities
+such as Finance and Accounting, Corporate Compliance, Human Resources, strategic and pro-
+duct-oriented R&D activities, and also Corporate and Marketing Communication worldwide.
+Furthermore, it manages supply chain processes throughout the Group. Infineon Technologies AG
+has its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Unlike the Consolidated Financial Statements, which are prepared in accordance with Inter-
+national Financial Reporting Standards ("IFRS"), Infineon Technologies AG's Separate Financial
+Statements are prepared in accordance with the provisions of the German Commercial Code
+("HGB"). The complete Separate Financial Statements are published separately.
+In addition to reporting on the Infineon Group, in the following section we also report on the
+performance of Infineon Technologies AG.
+Infineon Technologies AG
+For the 2017 fiscal year, we expect year-on-year revenue growth - not yet taking into account
+the planned acquisition of Wolfspeed - of 6 percent, plus or minus 2 percentage points, based
+on an assumed US dollar/euro exchange rate of US$1.10. For the mid-point of the range for
+forecast revenue, we expect to achieve a Segment Result Margin of approximately 16 percent
+for the 2017 fiscal year. Planned investments for the 2017 fiscal year are in the region of
+€950 million.
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report | Infineon Technologies AG
+Combined Management Report | Our 2016 fiscal year
+99
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+It is also our intention to continue growing faster than the market in the future. Applying
+the same focused approach that served us well to date, we remain committed to our target of
+a compound annual revenue growth rate of 8 percent over the cycle and intend to generate
+a Segment Result Margin of 17 percent (previously 15 percent) across the cycle going forward.
+Our intention is to achieve this growth with an average ratio of investments to revenue of
+13 percent over the economic cycle.
+Statement of income of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+(158)
+(742)
+Selling expenses
+571
+407
+(47)
+(38)
+618
+445
+(7)
+21
+Net income
+Income tax
+Income before taxes
+(724)
+Other financial result
+Interest result
+361
+37
+Result from investments, net
+48
+37
+Other income (expense), net
+(400)
+(303)
+(153)
+(181)
+(52)
+The equity ratio at the end of the reporting period was 64.4 percent, compared to 67.3 percent
+one year earlier.
+Number
+P see page 111
+2015
+Arunjai Mittal 4
+Member of the
+Management Board
+178,947
+7,697
+171,250
+2016
+Member of the
+Management Board
+Jochen Hanebeck³
+Fringe benefits
+Basic annual salary
+Fixed compensation
+in €
+2016
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+2 The figures for the active members of the Management Board in the 2016 fiscal year are based on a fair market value per performance share amounting to €7.07 (2015: €5.31),
+which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+3 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property.
+281,501
+101,537
+153,225
+1,294,694
+2,086,062
+1,717,180
+925,995
+1,822,637
+2,933,546
+2,434,751
+1,324,027
+164,024
+228,277
+244,367
+Total compensation
+2015
+Total
+2015
+2016
+196,407
+112,087
+598,462
+691,534
+177,921
+201,537
+598,462
+177,921
+2016-2018 tranche
+2015-2017 tranche
+2014-2016 tranche
+2013-2015 tranche
+Mid Term Incentive (MTI)1
+Multi-year variable compensation
+2,010,280
+1,299,546
+589,220
+336,260
+76,153
+Single-year variable compensation (STI)
+Variable compensation
+Total fixed compensation
+2,575,000
+106,722
+2,681,722
+2,730,000
+120,282
+2,850,282
+750,000
+29,445
+779,445
+562,500
+26,962
+589,462
+2015
+Total variable compensation
+Performance Share Plan²
+Long Term Incentive (LTI)
+25,384
+41,185
+35,909
+35,724
+750,000
+1,075,000
+1,075,000
+2016
+2015
+2016
+2015
+2016
+Member of the
+Management Board
+Dr. Helmut Gassel³
+Dominik Asam
+Chief Financial Officer
+Dr. Reinhard Ploss
+Chief Executive Officer
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits
+to the individual members of the Management Board - also presented in accordance with
+DRS 17 - are shown in the following table:
+Total compensation
+Management Board compensation in the 2016 fiscal year in accordance with
+German Accounting Standard 17 (DRS 17)
+110
+Fringe benefits
+Basic annual salary
+Fixed compensation
+in €
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+1,110,724
+382,414
+1,110,909
+750,000
+41,368
+791,368
+112,087
+158,240
+196,407
+112,087
+277,280
+158,240
+177,921
+201,537
+242,620
+288,460
+177,921
+242,620
+2016-2018 tranche
+2015-2017 tranche
+2014-2016 tranche
+2013-2015 tranche
+Mid Term Incentive (MTI)1
+Multi-year variable compensation
+76,153
+589,220
+336,260
+831,840
+474,720
+Single-year variable compensation (STI)
+Variable compensation
+Total fixed compensation
+171,250
+8,714
+179,964
+791,185
+670,094
+Number
+112,087
+(Member of the Management Board)
+62,088
+62,088
+2016
+Arunjai Mittal³
+2015
+(Member of the Management Board)
+2016
+Jochen Hanebeck²
+2015
+(Member of the Management Board)
+2016
+Dr. Helmut Gassel¹
+62,088
+153,225
+28,856
+33,232
+2015
+(Chief Financial Officer)
+85,288
+164,024
+23,200
+62,088
+2016
+Dominik Asam
+90,572
+228,277
+2015
+42,990
+33,232
+153,225
+Number
+Number
+Fiscal year
+Member of the Management Board
+Total
+expense for
+share-based
+compensation
+Exercisable
+stock options
+outstanding
+at the end of
+the fiscal year
+Stock options
+forfeited in
+the fiscal year
+Stock options
+exercised in
+the fiscal year
+of the
+fiscal year
+Stock options
+outstanding at
+the end
+Stock Option Plan 2010
+of the
+fiscal year
+Stock options
+outstanding at
+the beginning
+3 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. The total cost of share-based
+compensation for Mr. Mittal relates to his period as member of the Management Board. We refer to the performance shares allocated to Mr. Mittal during the 2016 fiscal year in
+"Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)" in this chapter. The cost of these performance shares
+amount to €164,136.
+2 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+1 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property.
+214,748
+534,727
+100,702
+272,512
+408,391
+57,764
+214,748
+114,046
+2015
+2016
+Total
+62,088
+28,856
+INFINEON TECHNOLOGIES
+47,582
+(Chief Executive Officer)
+Fringe benefits
+Similarly, they did not receive any benefits from third parties in the 2016 and 2015 fiscal years,
+whether promised or actually paid, for their Board activities at Infineon.
+Members of the Management Board did not receive any loans from Infineon, either in the 2016
+or 2015 fiscal years.
+In accordance with a mutual agreement reached with the Supervisory Board, Mr. Mittal resig-
+ned as member of the Management Board effective June 30, 2016, with his service contract
+coming to an end effective September 30, 2016. In the period between the resignation date
+and definitively leaving office at the end of the 2016 fiscal year, Mr. Mittal continued to serve
+the Company on a similar scale to his previous workload, in order to facilitate the transfer
+of duties and allow his successor to familiarize himself with the job. For the period from July
+to September 2016, Mr. Mittal received the following compensation: fixed compensation
+of €187,500, fringe benefits amounting to €8,948. In line with contractual terms, multi-year
+variable compensation (MTI) also continues to be paid to Mr. Mittal for the currently relevant
+tranches (see table). Accordingly, the actual level of target achievement was assumed for
+the 2014-2016 tranche ending September 30, 2016, while for the 2015-2017 and 2016-2018
+tranches, a provision of €393,320.13 was recognized, based on the forecasted average level
+of target achievement for the period 2016 to 2018 (119.7 percent). In addition, it was agreed
+in the contract termination agreement between Mr. Mittal and the Company that the Perfor-
+mance Shares (LTI) previously allocated to Mr. Mittal are not forfeited as a consequence of
+his resignation. On October 1, 2015, Mr. Mittal was allocated 23,200 Performance Shares
+with a fair value of €164,024 for the 2016 fiscal year. At the same time, Mr. Mittal has given
+a commitment - for the period of one year following the termination of his contract i.e. until
+September 30, 2017 - not to work for any of Infineon's major competitors. In accordance with
+the contract termination agreement concluded with Mr. Mittal, the Company is not required
+to pay any compensation for this post-contractual non-competition clause. Total multi-year
+variable compensation, paid at the termination of Mr. Mittal's activities on the Management
+Board, amounted to €557,344.13.
+P see page 106 ff.
+111
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. The variable compensation
+elements STI and MTI awarded to Arnujai Mittal in the 2016 fiscal year were earned entirely during his membership of the Management Board.
+3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+2 The figures for the active members of the Management Board in the 2016 fiscal year are based on a fair market value per performance share amounting to €7.07 (2015: €5.31),
+which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+7,093,747
+4,412,025
+534,727
+408,391
+3,215,067
+6,065,349
+153,225
+1,294,694
+2,074,139
+761,971
+1,351,433
+280,484
+Total compensation
+101,537
+Total variable compensation
+Performance Share Plan²
+Long Term Incentive (LTI)
+433,182
+In accordance with their service contracts, members of the Management Board are entitled to a
+chauffeur-driven company car, which may also be used privately. Operating and maintenance
+costs for the company car and chauffeur are borne by the Company. Taxes arising on the fringe
+benefit related to private usage are borne by the members of the Management Board.
+2015
+The Company also maintains accident insurance policies for members of the Board.
+As described in the section "Management Board compensation", the contractually agreed
+LTI is granted to members of the Management Board in the form of "performance shares".
+The average price of the Infineon share relevant for the number of performance shares granted
+for the 2016 fiscal year was €10.56 (2015: €8.49).
+125,136
+244,367
+34,564
+90,572
+2016
+Dr. Reinhard Ploss
+grant date
+in €
+Member of the Management Board
+Number
+Fair value
+Number
+Number
+Fiscal year
+of the fiscal year
+at the end
+Virtual performance
+shares outstanding
+Virtual performance shares newly granted
+at the beginning of the fiscal year
+Performance Share Plan
+at the beginning
+of the fiscal year
+Virtual performance
+shares outstanding
+112
+Corporate Governance
+Compensation report
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The following table shows the number of performance shares awarded to members of the
+Management Board in the 2016 fiscal year. In addition, the table contains information relating
+to the Stock Option Plan 2010, on the basis of which stock options were allocated to members
+of the Management Board for the final time in the 2013 fiscal year.
+A fair market value of €7.07 (2015: €5.31) per performance share granted in the 2016 fiscal year
+was determined, taking account - among other things - of the 250 percent cap set on the LTI
+allocation amount.
+Share-based compensation
+For information regarding the compensation paid to Mr. Mittal after termination of his Board
+activities (i.e. for the months July to September 2016), see "Management Board compen-
+sation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)"
+in this chapter.
+Additionally, the Supervisory Board has the option - based in all cases on its own best
+judgment to grant a special bonus, among other things for special achievements of the
+Management Board or its individual members. This bonus is capped, however, at a maximum
+of 30 percent of the fixed compensation of the member of the Management Board.
+The Supervisory Board is required to define suitable alternative LTI instruments of commen-
+surate value if it is impossible or not desired by the Supervisory Board to offer an LTI on the
+basis of the Performance Share Plan.
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+114
+Compensation granted to members of the Management Board in accordance with the DCGK
+(total compensation and compensation components) as well as the minimum and maximum
+values that can be achieved are shown in the following table:
+Dr. Reinhard Ploss
+Chief Executive Officer
+2016
+2015 2016 (min.)
+2016 (max.)
+ANNUAL REPORT 2016
+2016
+2015 2016 (min.)
+2016 (max.)
+1,075,000
+1,075,000
+1,075,000
+1,075,000
+750,000
+35,724
+1,110,724
+35,909
+1,110,909
+35,724
+1,110,724
+35,724
+1,110,724
+41,185
+791,185
+Dominik Asam
+Chief Financial Officer
+INFINEON TECHNOLOGIES
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed pursuant
+to the DCGK at the target value (i.e. the value in the event of 100 percent target achievement).
+The MTI is required to be disclosed - in a deviation from DRS 17 - at the target value for
+an "average probability scenario" at the grant date. For these purposes, Infineon assumes
+100 percent target achievement. In addition, the pension expense, i.e. the service cost pur-
+suant to IAS 19 (see "Commitments to members of the Management Board upon termination
+of their Board activities" in this chapter), is also required to be included in the amount of total
+compensation disclosed in accordance with the DCGK.
+The following table shows the value of compensation granted for the 2015 and 2016 fiscal
+years, including fringe benefits, as well as the minimum and maximum values that can be
+achieved for the 2016 fiscal year.
+197,925
+263,540
+82,174
+120,000
+697,528
+120,000
+729,821
+1 When exercising stock options members of the Management Board may only make gains up to a pre-determined amount (cap). Where the cap has been reached in the fiscal year
+stock options are forfeited.
+2 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property.
+3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. The total cost of share-based
+compensation for Mr. Mittal relates to his period as member of the Management Board. We refer to the performance shares allocated to Mr. Mittal during the 2016 fiscal year in
+"Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)" in this chapter. The cost of these performance shares
+amount to €164,136.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+113
+P see page 155
+P see page 116
+Further details regarding the performance shares granted on October 1, 2016 for the 2017 fiscal
+year to the members of the Management Board are provided in note 17 to the Consolidated
+Financial Statements.
+Special bonuses
+The Supervisory Board did not award any special bonuses to members of the Management
+Board during the 2016 fiscal year.
+Other awards and benefits
+In the 2009 fiscal year, the Company entered into a restitution agreement with each of the
+active members of the Management Board at that time. Dr. Ploss is the only current member
+of the Management Board affected by the agreement. These agreements stipulate that the
+Company covers all costs and expenses of any legal, governmental, regulatory and/or parliamen-
+tary proceedings and investigations as well as arbitration proceedings, in which the member
+of the Management Board is involved in conjunction with his/her activities on behalf of the
+Company. However, the agreements specifically exclude any restitution of costs if the procee-
+dings concerned constitute a breach of the duty of care owed in conjunction with section 93,
+paragraph 2, AktG.
+Management Board compensation in the 2016 fiscal year in accordance with the
+German Corporate Governance Code
+The DCGK recommends that the individual compensation components of each member of the
+Management Board be disclosed in accordance with specified criteria. It also recommends
+that disclosure is based on the model tables – in part diverging from DRS 17 - provided in the
+appendix to the Code.
+Compensation granted in accordance with DCGK
+750,000
+41,368
+750,000
+750,000
+41,185
+228,277
+1,188,277
+219,796
+2,518,982
+122,183
+912,500
+164,024
+153,225
+82,012
+612,500
+122,183
+3,072,500
+844,024
+833,225
+82,012
+2,142,500
+271,061
+272,721
+271,061
+271,061
+1,232,907
+4,183,224
+1,906,270
+1,897,314
+1,144,258
+3,204,746
+1 The figures of the active members of the Management Board in the 2016 fiscal year are based on a fair market value per performance share amounting to €7.07 (2015: €5.31),
+which was calculated using a Monte-Carlo simulation.
+2 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property. Due to current actuarial assumptions past service costs for Dr. Gassel amounting to €1,981,124 have been
+recorded in the 2016 fiscal year in accordance with IAS 19.
+3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations. Due to current actuarial assumptions past service costs
+for Mr. Hanebeck amounting to €2,326,793 have been recorded in the 2016 fiscal year in accordance with IAS 19.
+4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his employment ended with effect from September 30, 2016. With relation to his pension expense,
+in accordance with his contract of employment Mr. Mittal is treated as if he had remained a member of the Management Board until September 30, 2016.
+2,315,091
+229,167
+667,619
+1,013,333
+Total compensation (DCGK)
+1,204,367
+41,185
+791,368
+791,185
+791,185
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+480,000
+480,000
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+1,200,000
+340,000
+340,000
+850,000
+2015-2017 tranche
+2016-2018 tranche
+480,000
+480,000
+340,000
+960,000
+340,000
+680,000
+Long Term Incentive (LTI)
+Performance Share Plan¹
+244,367
+Total variable compensation
+Pension expense
+1,013,333
+1,013,333
+2015
+2016
+Components of the Management Board compensation system
+107
+P see page 59
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The periodic review of the Management Board compensation system was performed by
+an external independent compensation expert during the 2016 fiscal year. Regardless of
+the existence of some scope for maneuverability, the expert concluded that the Company's
+compensation system complies with the requirements of the German Stock Corporation Act
+(Aktiengesetz) and the DCGK and is in line with current market conditions (for details of the
+review, see "Review of the Management Board compensation system and individual contracts"
+in this chapter).
+The Management Board compensation system - similar to the compensation paid to the
+individual members of the Management Board – is defined and regularly reviewed by the full
+Supervisory Board on the basis of proposals from the Executive Committee. In accordance
+with applicable legal requirements and the recommendations of the DCGK, the compensation
+paid to the members of the Management Board is intended to reflect the typical level and
+structure of management board compensation at comparable companies in Germany and
+elsewhere, as well as Infineon's economic position and future prospects. The duties, responsi-
+bilities and performance of each member of the Management Board are also to be considered,
+as is Infineon's wider pay structure. This includes considering Management Board compen-
+sation in relation to the compensation of senior management and of the workforce as a whole,
+including changes in the level of compensation over time. The stated objective is that the
+compensation structure should be designed in such a way that it promotes sustainable busi-
+ness development, with a cap in place in the event of exceptional developments. Infineon
+aims to set compensation at a level that is competitive both nationally and internationally,
+so as to inspire and reward dedication and success in a dynamic environment.
+Compensation system
+Management Board compensation
+This Compensation report, which forms part of the Management Report, explains the
+principles applied in determining compensation for the Management Board and Supervisory
+Board of Infineon Technologies AG and the level of remuneration paid to the individual
+members of the Management Board and Supervisory Board in accordance with the applicable
+legal requirements and the recommendations of the German Corporate Governance Code in
+the version dated May 5, 2015 (Deutscher Corporate Governance Kodex - "DCGK"). Infineon
+believes that transparent and understandable reporting of Management Board and Supervisory
+Board compensation represents a fundamental element of good corporate governance.
+Compensation report
+P see page 119
+The Corporate Governance Report in accordance with section 289a HGB is publicly available
+at www.infineon.com/declaration-on-corporate-governance.
+Declaration on Corporate Governance
+corporate-governance
+@www.infineon.com/declaration-on-
+The Corporate Governance Report is publicly available at www.infineon.com/corporate-
+governance-report.
+Corporate Governance Report
+corporate-governance-report
+@www.infineon.com/
+Comparable arrangements for employees are only in place in a small number of individual
+cases. Notwithstanding this, the terms of the Performance Share Plan, in which members of
+the Management Board and Infineon managers and selected Infineon employees worldwide
+participate, contains a rule that takes effect in the event of a defined change-in-control event,
+namely, when a party holds at least 30 percent of the voting rights in Infineon Technologies AG.
+The principal stipulation of the rule is that the four-year vesting period provided by the plan
+ends prematurely in the event of a change of control. This Performance Share Plan rule does
+not apply to members of the Management Board.
+106
+Corporate Governance Report | Declaration on Corporate Governance | Compensation report
+Corporate Governance
+There have been no changes in the Management Board compensation system in the 2016
+fiscal year compared to the 2015 fiscal year.
+Combined Management Report | Our 2016 fiscal year
+All members of the Management Board receive as compensation for their service an annual
+income which based on target achievement of 100 percent - comprises approximately 45 per-
+cent fixed compensation and approximately 55 percent variable compensation components:
+> Variable (performance-related) compensation: The variable compensation comprises three
+components: an annual bonus (short-term incentive), a multiple-year bonus (mid-term
+incentive) and a long-term variable compensation component (long-term incentive).
+If the member of the Management Board leaves office during the first two years of the full
+four-year holding period applicable to the performance shares of a particular LTI tranche,
+those performance shares are forfeited unless the reason for leaving office is that the member
+of the Management Board has reached the age limit specified in his/her service contract. Only
+the holding period for the own-investment shares expires when the member of the Manage-
+ment Board leaves office; at that stage the member of the Management Board concerned can
+freely dispose of the shares. If the member of the Management Board leaves office at a later
+date - except the member resigns from office or terminates the contractual arrangements of
+his/her own volition, or if the contract is terminated by the Company for good cause - the LTI
+tranche (including the own-investment) remains in place unchanged. The member of the
+Management Board is then treated in all respects as if he/she were still in office; there is no
+pro rata reduction in the LTI tranche due to leaving office early.
+The Supervisory Board has the right, at the end of the holding period, to make a value-equi-
+valent cash settlement to the member of the Management Board rather than actually transfer
+Infineon shares.
+The shares are transferred to a securities custodian account attributable to the member of
+the Management Board; thereafter, he/she can freely dispose of them. The same also applies
+to Infineon shares acquired in conjunction with the own-investment requirement at the end
+of the holding period.
+the Philadelphia Semiconductor Index (SOX) between the date of the performance shares'
+provisional allocation and the end of the holding period. If the conditions for the definitive
+allocation of performance shares - either of all or of only those that are not performance-
+related - are met at the end of the holding period, the member of the Management Board
+acquires a claim against the Company for the transfer of the corresponding number of (real)
+Infineon shares. Performance shares which do not achieve the target are forfeited. The value
+of the performance shares definitively granted to the member of the Management Board
+per LTI tranche at the end of the holding period may not exceed 250 percent of the relevant
+LTI allocation amount; the performance shares above this amount are forfeited (cap).
+109
+Corporate Governance
+Compensation report
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The (virtual) performance shares are allocated - initially on a provisional basis - on October 1
+of each fiscal year for the fiscal year beginning on that date. The performance shares are allo-
+cated on the basis of the contractually agreed "LTI allocation amount" in euros. The number of
+performance shares is determined by dividing the LTI allocation amount by the average price
+of the Infineon share (Xetra closing price) during the nine months prior to the allocation date.
+The prerequisites for the definitive allocation of the - at that stage still virtual - performance
+shares are (i) that the relevant member of the Management Board invests 25 percent of his
+or her individual LTI allocation amount in Infineon shares (with the own-investment already
+required to be undertaken in conjunction with the provisional allocation) and (ii) that the
+holding period of four years applicable both for the member's own-investment and for the
+performance shares has come to an end. Moreover, 50 percent of the performance shares are
+performance-related; they are only allocated definitively if (iii) the Infineon share outperforms
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share
+Plan. As well as being relevant for members of the Management Board, the new LTI also
+applies - with minor differences attributable to specific circumstances - to Infineon managers
+and selected Infineon employees worldwide.
+The long-term incentive (LTI) is intended to reward long-term and, similar to the MTI, sustained
+performance on the part of members of the Management Board and, additionally, to ensure
+that their interests are aligned with the interest of the Company's shareholders regarding a
+positive share price development. Assuming a 100 percent target achievement of the variable
+compensation, the LTI constitutes approximately 15 percent of target annual income.
+If the term of office commences during a fiscal year, the MTI tranche is determined on a pro-rata
+basis (1/36 for each month of a full MTI tranche started). Upon leaving Infineon, regulations
+ensure that the member of the Management Board can only receive an MTI payment for the
+actual number of MTI tranches during his/her term of office. MTI tranches already started are
+forfeited if a mandate or service contract of a member of the Management Board comes to an
+end before the due date, for instance if a member resigns from office or terminates the con-
+tractual arrangements of his/her own volition or if the contract is terminated by the Company
+for good cause.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board
+as a whole, Infineon's situation and any exceptional factors. When exercising its judgment
+in this respect, the Supervisory Board also takes into account the level of achievement of the
+three-year target for revenue growth and Segment Result that is set each year by the Super-
+visory Board exclusively for this purpose. Unlike the STI, there is no lower limit for the amount
+by which the Supervisory Board can adjust the MTI; for the upper limit, however, the cap
+applies (200 percent).
+A new MTI tranche, each with a term of three years, commences every fiscal year. The incentive
+is paid in cash at the end of the three-year term. The amount of the payment is determined
+on the basis of actual ROCE and free cash flow figures during each three-year period. For these
+purposes, the target values for ROCE and free cash flow for each individual year of an MTI tranche
+correspond to the STI targets set each year in advance. The level of target achievement for
+both the RoCE target and the free cash flow target must reach a threshold of 50 percent in
+each year of the relevant three-year period, otherwise the level of target achievement for the
+purposes of the MTI is set to zero for the year concerned. If the thresholds are exceeded, the
+level of target achievement determined for the STI applies for the relevant annual tranche of
+the MTI. The MTI to be paid at the end of the three-year period is determined by calculating
+the arithmetic mean of the three annual target achievement levels. Unlike the STI, the MTI is
+paid as calculated, even if the mean level of target achievement for the three-year period is
+below the 50 percent threshold. A cap of 200 percent applies, meaning that the maximum
+amount that can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+108
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The mid-term incentive (MTI) is intended to reward sustained performance by the Manage-
+ment Board reflecting Infineon's medium-term progress. In combination with the long-term
+incentive, the MTI ensures compliance with the stock corporation law requirement that the
+structure of compensation is "oriented toward sustainable growth of the enterprise". Assuming
+a 100 percent target achievement of the variable compensation, the MTI constitutes approxi-
+mately 20 percent of target annual income.
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI
+is calculated on a pro-rata monthly basis (one twelfth for each month started). Members of
+the Management Board are not entitled to receive an STI bonus for the fiscal year in which
+they resign from office or terminate their contracts of their own volition or if their contract is
+terminated by the Company for good cause.
+An STI is paid only if, on the basis of the approved financial statements, the levels of target
+achievement reach at least the 50 percent threshold for both performance indicators (free
+cash flow, ROCE). If one of the two target thresholds is not achieved, no annual bonus is paid
+for the relevant fiscal year. If the thresholds are achieved, the arithmetic mean of the two
+target achievements is calculated and used as the percentage rate to determine the actual
+STI amount. A cap of 250 percent applies, meaning that the maximum amount that can be
+paid is two-and-a-half times the target STI (= 100 percent), regardless of the actual achieve-
+ment level. The Supervisory Board may, in addition, increase or reduce the amount to be paid
+in each case by up to 50 percent, as it sees fit, based on the performance of the Management
+Board as a whole, Infineon's position, and any exceptional factors. A lower limit applies in
+this case such that the amount to be paid cannot be less than the amount that would be due
+given 50 percent target achievement. The upper limit for an upward adjustment is the cap
+of 250 percent.
+(ii) At the end of the fiscal year, the actual levels of target achievement for free cash flow and
+ROCE and, hence the amount of the STI, are determined by the Supervisory Board.
+(i) At the beginning of each fiscal year, the target functions with respect to the two key
+performance indicators "free cash flow” and “Return on Capital Employed (ROCE)" are
+defined uniformly for all members of the Management Board. Underpinning the con-
+sistent approach taken to managing the business, the same target indicators - supple-
+mented by the Segment Result - are used as the basis for determining the variable
+compensation components (bonus payments) for Infineon managers and employees.
+The two key performance indicators referred to above, which are described in more detail
+in the chapter "Internal Management System", are equally weighted for the purposes
+of measuring the STI.
+The short-term incentive (STI) is intended to reward performance over the preceding fiscal
+year, reflecting Infineon's recent progress. Assuming a 100 percent target achievement of the
+variable compensation, the STI constitutes approximately 20 percent of target annual income.
+It is set by the Supervisory Board in a two-phase process:
+> Fixed compensation: The fixed compensation comprises a contractual basic annual salary
+that has no link to performance and is paid in twelve equal monthly installments.
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock
+option plan as an LTI, which was resolved at the 2010 Annual General Meeting. Subject to
+compliance with the terms of the Stock Option Plan 2010 – particularly the attainment of the
+absolute and percentage performance targets - the stock options allocated to members of the
+Management Board on the basis of this plan may still be exercised until December 14, 2019.
+ANNUAL REPORT 2016
+The change-of-control clauses agreed with the members of the Management Board corres-
+pond to the recommendation made in section 4.2.3, paragraph 5, of the German Corporate
+Governance Code. Such clauses are intended to give members of the Management Board
+security if a change-of-control situation occurs, and to preserve their independence in the
+event of a takeover bid.
+350,952
+130,952
+167,740
+52,260
+213,678
+(Chief Financial Officer)
+2015
+350,952
+350,952
+217,610
+Dr. Helmut Gassel 2
+2016
+(Member of the Management Board)
+2015
+Jochen Hanebeck³
+2016
+(Member of the Management Board)
+2015
+Arunjai Mittal 4
+2016
+229,167
+229,167
+160,607
+(Member of the Management Board)
+2015
+229,167
+Total
+2016
+INFINEON TECHNOLOGIES
+Dominik Asam
+120,000
+If a member of the Management Board leaves his or her position in connection with a defined
+change of control (namely, where a party holds at least 50 percent of the voting rights in
+Infineon Technologies AG), that member is currently entitled to continued payment of the
+relevant annual remuneration for the entire remaining contract term. In accordance with a
+special contract termination right granted to members of the Management Board, the period
+of continued payment is capped at a maximum of 36 months in the event that the member
+resigns, or at a minimum of 24 months and a maximum of 36 months in the event that the
+member is removed from office or dismissed by Infineon Technologies AG. Further details are
+contained in the Compensation Report.
+Various financing contracts with lending banks and capital market creditors (see note 14 to
+the Consolidated Financial Statements) contain defined change-of-control clauses which give
+creditors the right to call for early repayment. These clauses reflect standard market practice.
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy
+agreements and approvals, supply contracts, joint venture agreements and license agree-
+ments contain customary change-of-control clauses, according to which a change in control of
+Infineon Technologies AG triggers the right of the other party at its sole discretion to terminate
+or to continue the agreement as well as other rights which may, under certain circumstances,
+be unfavorable for Infineon.
+Significant agreements in the event of a change of control
+The use of own shares, acquired through derivatives, is governed by the same rules as
+applicable for the direct acquisition of own shares.
+If own shares are acquired using derivatives in accordance with the requirements stipulated in
+the authorization, any right of the shareholders to conclude such derivative transactions with
+the Company will be excluded in analogous application of section 186, paragraph 3, sentence 4,
+AktG. Similarly, the shareholders have no right to conclude derivative transactions with the
+Company insofar as arrangements for the conclusion of derivative transactions include a pre-
+ferred offer for the conclusion of derivative transactions concerning small volumes of shares.
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the
+Company is required to accept the shares under the derivative transactions. No other right to
+sell shares will apply in this connection.
+According to a resolution passed by the Annual General Meeting on February 28, 2013, the
+acquisition of Infineon Technologies AG shares may also be effected using equity derivatives.
+The total number of shares that can be acquired using derivatives may not exceed 5 percent
+of the Company's share capital, determined either at the time of this authorization becoming
+effective or at the time of its exercise through the use of the derivatives. The shares acquired
+through the exercise of this authorization are to be counted toward the acquisition threshold
+for the shares acquired in accordance with the authorization to acquire own shares as described
+above. The authorization stipulates other restrictions when derivatives are deployed, including
+their execution, term, servicing and acquisition price.
+P see page 106
+P see page 151
+105
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+in €
+Number
+Dr. Reinhard Ploss
+2016
+433,214
+307,500
+95,800
+29,914
+120,000
+323,243
+(Chief Executive Officer)
+2015
+433,214
+433,214
+314,286
+25,384
+INFINEON TECHNOLOGIES
+2015
+2016 (max.)
+171,250
+8,714
+171,250
+8,714
+171,250
+171,250
+8,714
+179,964
+179,964
+179,964
+7,697
+178,947
+171,250
+7,697
+178,947
+171,250
+7,697
+178,947
+562,500
+26,962
+589,462
+2016 (min.)
+2015
+115
+Arunjai Mittal 4
+Member of the Management Board
+2016
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+2016
+Dr. Helmut Gassel²
+Member of the Management Board
+750,000
+29,445
+779,445
+2015
+2016
+Jochen Hanebeck³
+Member of the Management Board
+2015
+2016 (min.)
+2016 (max.)
+2016
+2016 (min.) 2016 (max.)
+562,500
+562,500
+26,962
+25,458
+205,422
+654,500
+25,458
+859,922
+308,000
+29,321
+516,268
+29,321
+208,268
+654,500
+29,321
+862,768
+680,000
+833,225
+241,677 241,183
+1,511,139 1,853,853
+513,422
+1,530,000
+241,677 241,677
+831,139 2,361,139
+year
+Since compensation granted to members of the Management Board for the 2016 fiscal
+does not always coincide with amounts disbursed in a particular fiscal year, a separate table
+is presented - in accordance with the relevant DCGK recommendation - showing the amounts
+flowing to members of the Management Board for the 2016 fiscal year (the "allocation
+amount" ("Zufluss")).
+In line with the DCGK recommendations, the fixed compensation and the STI are required to
+be disclosed as the allocation amount for the relevant fiscal year concerned. In the case of the
+MTI, the DCGK recommends that this is disclosed as flowing to members of the Management
+Board in the fiscal year in which the plan term of the relevant MTI tranche ends. In this sense,
+in addition to the fixed compensation and the STI granted for the 2016 fiscal year, the allocation
+amount for the 2014-2016 MTI tranche also flowed to the members of the Management Board
+in the 2016 fiscal year. In accordance with the DCGK, share-based payments are deemed to
+be allocated on the basis of the relevant time and value for German tax law purposes. In line
+with the DCGK recommendations, the pension expense meaning the service cost pursuant
+to IAS 19 constitutes the allocation amount (see previous table), even though it is not - strictly
+speaking- an allocation.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Allocation amount in accordance with DCGK
+Total
+308,000
+25,458
+680,000
+26,962
+589,462
+589,462
+77,000
+231,000
+192,500
+77,000
+153,225
+462,000
+192,500
+340,000
+340,000
+850,000
+340,000
+462,000
+340,000
+231,000
+2016
+210,000
+225,000
+225,000
+552,750
+Member of the Supervisory Board
+Fiscal year
+in €
+Supervisory Board compensation
+The total compensation (including meeting attendance fees) paid to the individual members
+of the Supervisory Board in the 2016 fiscal year comprises the following (these figures do not
+include value-added tax at 19 percent):
+121
+Compensation report
+Fixed
+compen-
+sation
+Corporate Governance
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in
+connection with the performance of their Supervisory Board duties and for any value-added
+tax payable by them in this connection. The Company also pays any value-added tax incurred
+on the total remuneration (including meeting attendance fees) of members of the Super-
+visory Board.
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or one
+of its committees, or takes on a Supervisory Board function for which an allowance is paid,
+the relevant compensation components are disbursed on a pro-rata basis (payment of one
+twelfth of the relevant annual compensation component for each (started) month of member-
+ship or exercise of function).
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one of its
+committees that is attended in person. The meeting attendance fee is paid only once if more
+than one meeting is held on a given day.
+› An allowance recognizing the additional work involved in performing certain functions
+within the Supervisory Board: The Chairman of the Supervisory Board receives an allowance
+of €90,000, each Vice-chairman receives an allowance of €30,000, the Chairman of the Invest-
+ment, Finance and Audit Committee and the Chairman of the Strategy and Technology
+Committee each receive an allowance of €25,000 and each member of a Supervisory Board
+committee receives an allowance of €15,000 - with the exception of the Nomination Com-
+mittee and the Mediation Committee. The additional allowance is payable only if the body
+to which the Supervisory Board or committee member belongs has convened or passed
+resolutions in the fiscal year concerned. A member of the Supervisory Board performing more
+than one of the functions indicated receives only the highest single additional allowance
+payable to a member performing the functions concerned. The allowance is paid to the
+relevant holder of office within one month of the end of the fiscal year.
+› A fixed compensation (basic remuneration) of €90,000. This amount applies to each member
+of the Supervisory Board and is payable within one month of the close of the fiscal year.
+Combined Management Report | Our 2016 fiscal year
+The compensation due to the Supervisory Board in each fiscal year (total compensation) is
+governed by section 11 of the Company's Articles of Association and comprises the following:
+Variable
+compen-
+sation
+Meeting
+attendance
+fees
+2016
+Wigand Cramer³
+54,333
+8,000
+13,000
+33,333
+2015
+Allowance
+for specific
+functions
+116,417
+10,417
+90,000
+2016
+Peter Bauer²
+sation
+compen-
+Total
+16,000
+Compensation report
+The Supervisory Board compensation system was subject to a thorough review by an indepen-
+dent expert in the 2016 fiscal year and amended with (retrospective) effect from October 1,
+2015, in line with a proposal put forward by the Management Board and Supervisory Board
+to the Annual General Meeting on February 18, 2016. The objective of the amendment was
+to remove the previous variable compensation component and structure Supervisory Board
+compensation in future in compliance with the recommendations of the DCGK. Due to the
+removal of the variable compensation component, the fixed compensation component
+was simultaneously increased to a commensurate market level. Shareholders approved the
+proposals put forward by the Management Board and Supervisory Board to the 2016 Annual
+General Meeting with a large majority.
+Supervisory Board compensation
+The service contracts of members of the Management Board include a change of control
+clause, which stipulates the terms that apply when the activities of a member of the Manage-
+ment Board are terminated in the event of a significant change in Infineon's ownership struc-
+ture. A change of control for the purposes of this clause occurs when a third party, individually
+or together with another party, acquires at least 50 percent of the voting rights in Infineon
+Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover
+Act (Wertpapiererwerbs- und Übernahmegesetz – “WpÜG”). Members of the Management
+Board have the right to resign and terminate their service contracts within 12 months of the
+announcement of such a change of control and any who choose to do so are entitled to
+continued payment of their annual remuneration up to the end of the originally agreed dura-
+tion of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes
+Early termination of service contracts
+3 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his employment ended with effect
+from September 30, 2016. With relation to his pension provisions, in accordance with his contract of employment Mr. Mittal
+is treated as if he had remained a member of the Management Board until September 30, 2016.
+2 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+Due to current actuarial assumptions past service costs for Mr. Hanebeck amounting to €2,326,793 have been recorded in the
+2016 fiscal year in accordance with IAS 19.
+1 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing
+Officer. He is responsible for Sales & Marketing, Regions, Strategy Development, Mergers & Acquisitions and Intellectual
+Property. Due to current actuarial assumptions past service costs for Dr. Gassel amounting to €1,981,124 have been recorded
+in the 2016 fiscal year in accordance with IAS 19.
+733,700
+11,120,628
+INFINEON TECHNOLOGIES
+450,000
+2015
+567,517
+18,223,665
+241,183
+3,322,550
+241,677
+2,511,117
+205,000
+Compensation structure
+ANNUAL REPORT 2016
+Corporate Governance
+120
+Compensation report
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Review of the Management Board compensation system and individual contracts
+In accordance with section 4.2.2 DCGK, the Supervisory Board engaged an external, independent
+compensation expert during the 2016 fiscal year to review the Management Board compen-
+sation system in place since October 1, 2010 and conclude on its compliance with applicable
+legislation and overall appropriateness. In this context, the target annual incomes of each
+individual member of the Management Board were subjected to detailed scrutiny. The review
+came to the conclusion that the Company's compensation system complies with both the legal
+requirements and the recommendations set out in the German Corporate Governance Code
+(DCGK). In particular, it was deemed that the compensation of Infineon's Management Board
+is commensurate with market conditions and that the variable compensation component is
+oriented towards the sustainable growth of the enterprise. Furthermore, the individual target
+annual incomes of the members of the Management Board are appropriate, both horizontally
+(i.e. looking at comparable companies) and vertically (i.e. looking at Infineon's various employee
+groupings). The compensation expert did, however, point out the existence of some scope
+for maneuverability with regard to the target annual incomes and pension arrangements.
+The results of the compensation expert's review, presented in a final report in the fall 2016, were
+discussed in detail during the Executive Committee meeting held on October 24, 2016 and
+by the full Supervisory Board on November 15, 2016. The Supervisory Board concurred with
+the conclusions reached by the compensation expert. It therefore passed a resolution to
+change the pension arrangements in place for Dr. Ploss for the period from January 2016
+onwards to a defined contribution basis (for details, see "Allowances and pension entitlements
+in the 2016 fiscal year" in this chapter).
+Payments to former members of the Management Board in the 2016 fiscal year
+Former members of the Management Board received total payments of €1,200,241
+(primarily pension benefits) in the 2016 fiscal year (2015: €1,124,622). As of September 30,
+2016, accrued pension liabilities for former members of the Management Board amounted
+to €77,037,350 (2015: €60,212,071).
+Combined Management Report | Our 2016 fiscal year
+For information regarding the compensation paid to Mr. Mittal after termination of his Board
+activities (i.e. for the months July to September 2016), see "Management Board compen-
+sation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)"
+in this chapter.
+Benefits to members of the Management Board who left office during the
+2016 fiscal year
+The Management Board service contracts otherwise contain no promises of severance pay
+for situations in which contracts are terminated early.
+a member of the Management Board or terminates his or her contract within 12 months of
+the announcement of a change of control, the members of the Management Board concerned
+are entitled to continued payment of their annual remuneration to the end of the originally
+agreed duration of their contract, subject to a minimum period of 24 months and a maximum
+period of 36 months.
+Psee page 116 ff.
+P see page 111
+119
+Compensation report
+In accordance with a mutual agreement reached with the Supervisory Board, Mr. Mittal
+resigned as member of the Management Board effective June 30, 2016, with his service con-
+tract coming to an end effective September 30, 2016. In the period between the resignation
+date and definitively leaving office at the end of the 2016 fiscal year, Mr. Mittal continued to
+serve the Company on a similar scale to his previous workload, in order to facilitate the trans-
+fer of duties and allow his successor to familiarize himself with the job. Accordingly, Mr. Mittal
+continued to receive employment benefits in accordance with his service contract until
+September 30, 2016. In addition, Mr. Mittal was allowed to keep the performance shares allo-
+cated to him prior to October 1, 2015, despite his resignation from the Management Board.
+At the same time, Mr. Mittal has given a commitment - for the period of one year following
+the termination of his contract i.e. until September 30, 2017 - not to work for any of Infineon's
+major competitors. In accordance with the contract termination agreement concluded with
+Mr. Mittal, the Company is not required to pay any compensation for this post-contractual
+non-competition clause.
+2015
+in €
+116
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+118
+P see page 119
+In conjunction with its review of the Management Board compensation system and the
+compensation of individual members of the Management Board (for details of the review,
+see "Review of Management Board compensation and individual contracts"), the Supervisory
+Board passed a resolution to bring the existing pension plan for Dr. Ploss into line with changed
+circumstances. The previous fixed amount arrangement did not reflect current circumstances,
+in particular the fact that Dr. Ploss' appointment as Chief Executive Officer runs until 2020. The
+Supervisory Board's recognition of the need to take action was confirmed in the report drawn
+up the external compensation expert. Under the new arrangements, Dr. Ploss receives a defined
+contribution pension commitment for the period from January 2016 onwards, similar to the
+arrangements already in place for the other members of the Management Board and essentially
+identical to the Infineon pension plan applicable to all employees. In the case of Dr. Ploss, the
+fixed contribution amount has been set at 30 percent of his agreed basic annual salary.
+Alongside the annual retirement entitlements and related benefit amounts, the following
+table shows the present values of pension entitlements earned to date and the service cost in
+accordance with IFRS. As Dr. Ploss's pension entitlement is already fully vested, no service cost
+arises for the 2016 fiscal year. The service cost reported in the table for Dr. Gassel, Mr. Hanebeck
+and Mr. Mittal only relates to periods of current Board activities. The present value of pensions
+and benefit entitlements also depends on changes in the discount rates that are required to
+be applied (September 30, 2016: 1.0 percent; September 30, 2015: 2.4 percent).
+Pension entitlements
+in €
+Fiscal year
+Member of the
+Management Board
+Pension
+entitlements
+(annual) as
+of beginning
+of pension
+period
+Benefit
+amounts
+determined
+for the
+relevant
+INFINEON TECHNOLOGIES
+The amounts credited to the pension entitlement accounts of Dr. Gassel, Mr. Hanebeck and
+Mr. Mittal - in line with the plan rules applied to Infineon employees - are paid out on or after
+reaching the age of 67, provided the service contract has also ended, or, upon request, at an
+earlier point in time if the service contract ends on or after reaching the age of 60. If the bene-
+ficiaries elect that their pension be paid out in monthly installments, the pension amount is
+adjusted automatically each year in accordance with the Infineon pension plan.
+Dr. Gassel, Mr. Hanebeck and Mr. Mittal have statutorily vested pension entitlements dating
+from their previous periods of employment with Infineon. The contracts appointing them
+to the Board specifically state that the amounts made available to cover their vested pension
+entitlements represent a continuation of those vested entitlements (and are, therefore, not
+subject to any separate vesting arrangements). The Company makes a fixed annual pension
+contribution on behalf of Dr. Gassel, Mr. Hanebeck and Mr. Mittal for each full fiscal year of
+service on the Board, equivalent to 30 percent of the relevant agreed basic annual salary.
+The Supervisory Board is not required to decide each time on the amount to be contributed.
+Pension contributions for the 2016 fiscal year amounted to €225,000 for Mr. Mittal and €51,375
+each for Dr. Gassel and Mr. Hanebeck (proportionate pension contribution for three months
+of Board activities).
+In addition to a one-time, contractually vested initial component of €540,000 paid as compen-
+sation for the loss of vested retirement pension entitlements in connection with the termination
+agreement with his previous employer, Mr. Asam will receive from the Company for each
+fiscal year of his membership on the Management Board a pension contribution amounting
+to between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed
+basic annual salary, i.e. fixed compensation. As in the previous year, the pension contribution
+for Mr. Asam for the 2016 fiscal year has been set at 30 percent of his basic annual salary, which
+amounts to €225,000. The pension entitlements arising from the defined contributions made
+on behalf of Mr. Asam became vested with effect from December 31, 2013.
+3 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. With relation to his
+pension expense, in accordance with his contract of employment Mr. Mittal is treated as if he had remained a member of the Management Board until September 30, 2016.
+P see page 111
+For information regarding the compensation allocated to Mr. Mittal after termination of
+his Board activities (i.e. for the months July to September 2016), see "Management Board
+compensation in the 2016 fiscal year in accordance with German Accounting Standard 17
+(DRS 17)" in this chapter.
+Commitments to members of the Management Board
+of their Board activities
+upon
+Allowances and pension entitlements in the 2016 fiscal year
+termination
+Present value
+of pension
+and benefit
+entitlement
+The members of the Management Board who were in their positions prior to the introduction
+of the new compensation system in 2010 are contractually entitled to a defined benefit pension
+payment; these entitlements were not affected by the new compensation system. In the 2016
+fiscal year, this only relates to Dr. Ploss, who, under these arrangements, has an entitlement to
+an annual retirement benefit of €210,000. This entitlement is already vested, both contractually
+and under the applicable statutory provisions (for details of the review of pension entitlements
+of Dr. Ploss adopted by the Supervisory Board, see the end of this section).
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+117
+In accordance with the compensation system in place since 2010, Mr. Asam, Dr. Gassel,
+Mr. Hanebeck and Mr. Mittal – all of whom took up office after the new system had been
+approved - have each received a defined contribution pension commitment (rather than
+a defined benefit pension commitment based on the number of years of service), which is
+essentially identical to the Infineon pension plan applicable to all employees. The Company
+has accordingly set up a personal pension account (basic account) for each beneficiary and
+makes annual pension contributions to it. The Company adds annual interest to the balance
+in the basic account using the highest statutory interest rates valid for the insurance industry
+(guaranteed interest rates) until disbursement of the pension begins and may also award
+surplus credits. Ninety-five percent of any income earned over and above the guaranteed
+interest rate is credited to the pension account, either at the date on which disbursement of
+the pension begins or, at the latest, when the beneficiary reaches the age of 60. The balance
+of the basic account when disbursement of the pension begins (due to age, invalidity or
+death) - increased by an adjusting amount in the event of invalidity or death - constitutes
+the retirement benefit entitlement and is paid out to the member of the Management Board
+or his or her surviving dependents in twelve annual installments, or, if so requested by the
+member of the Management Board, in eight annual installments, as a lump sum or as a life-
+long pension.
+If the entitlements of members of the Management Board (i) have not yet legally vested or
+(ii) have legally vested, but are not protected by the state pension insurance scheme (Pensions-
+sicherungsverein), the Company maintains pension reinsurance policies in favor of, and
+pledged to, the members of the Management Board concerned.
+The plan rules applicable for Mr. Asam on the one hand and Dr. Gassel, Mr. Hanebeck and
+Mr. Mittal on the other differ in terms of the initial defined component, the annual transfer to
+the pension account, and the vesting period:
+INFINEON TECHNOLOGIES
+Original
+service cost
+(earned in the
+current year)
+fiscal year
+Dr. Reinhard Ploss
+51,375
+2,780,620
+25,458
+(Member of the Management Board)
+2015
+Jochen Hanebeck²
+2016
+2016
+51,375
+29,321
+(Member of the Management Board)
+2015
+Arunjai Mittal³
+2016
+(Member of the Management Board)
+2015
+3,540,697
+2 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations. Due to current actuarial assumptions past service costs
+for Mr. Hanebeck amounting to €2,326,793 have been recorded in the 2016 fiscal year in accordance with IAS 19.
+Dr. Helmut Gassel¹
+2,163,812
+2016
+210,000
+6,832,791
+(Chief Executive Officer)
+2015
+205,000
+5,634,266
+272,721
+219,796
+2016
+225,000
+2,558,440
+271,061
+(Chief Financial Officer)
+2015
+225,000
+Dominik Asam
+1 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property. Due to current actuarial assumptions past service costs for Dr. Gassel amounting to €1,981,124 have been
+recorded in the 2016 fiscal year in accordance with IAS 19.
+1,675,191 2,014,868
+241,677 241,183
+Total fixed compensation
+1,110,724
+1,075,000
+35,909
+1,110,909
+750,000
+41,185
+791,185
+750,000
+41,368
+791,368
+171,250
+171,250
+35,724
+562,500
+8,714
+179,964
+7,697
+26,962
+29,445
+178,947
+589,462
+779,445
+750,000
+Variable compensation
+1,075,000
+Fixed compensation
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dominik Asam
+Chief Financial Officer
+Dr. Helmut Gassel¹
+Member of the
+Management Board
+Jochen Hanebeck²
+Member of the
+Management Board
+Arunjai Mittal³
+Member of the
+Management Board
+2016
+Basic annual salary
+Fringe benefits
+2015
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+The total compensation allocated to the individual members of the Management Board
+for the 2016 fiscal year in accordance with DCGK - analyzed by component - is shown in the
+following table:
+Single-year variable
+474,720
+962,500
+Total variable
+compensation
+1,730,800
+Pension expense
+Total compensation (DCGK) 2,841,524 2,714,845
+1,384,140 1,806,552
+219,796 271,061
+2,868,798
+550,000
+994,240
+272,721
+25,458
+2,058,329
+281,575
+76,153
+29,321
+284,421
+844,052
+994,240
+76,153
+compensation (STI)
+Stock Option Plan 2010
+Performance Share Plan
+507,792
+831,840
+336,260 589,220
+76,153
+76,153
+336,260
+589,220
+Multi-year variable
+Long Term Incentive (LTI)
+compensation
+Tranche 2013-2015
+552,300
+405,020
+Tranche 2014-2016
+706,080
+507,792
+405,020
+Mid Term Incentive (MTI)
+20,833
+Compensation of the Supervisory Board for the 2016 fiscal year
+6,250
+(1)
+2
+744
+632
+8
+0.66
+0.55
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+8
+00
+8
+0.66
+0.56
+Diluted earnings per share (in euro) from continuing operations
+Diluted earnings per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+8
+0.66
+0.01
+Basic earnings per share (in euro)
+Basic earnings per share (in euro) from discontinued operations
+Basic earnings per share (in euro) from continuing operations
+36
+102
+Income from continuing operations
+741
+622
+Income from discontinued operations, net of income taxes
+4
+2
+12
+Net income
+743
+634
+Attributable to:
+Non-controlling interests
+Shareholders of Infineon Technologies AG
+Basic earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+0.55
+7
+8
+8
+90,000
+2016
+Dr. Eckart Sünner
+54,333
+8,000
+13,000
+33,333
+25,000
+2015
+10,000
+90,000
+2016
+Kerstin Schulzendorf²
+100,500
+16,000
+15,000
+100,000
+24,000
+139,000
+2015
+0.66
+0.56
+1 The calculation of earnings per share is based on unrounded figures.
+Total
+13,000
+33,333
+2015
+106,000
+16,000
+90,000
+2016
+Diana Vitale 2
+112,500
+18,000
+25,000
+19,500
+8,125
+0.01
+Income tax
+520
+705
+Dr. Helmut Gassel
+Jochen Hanebeck
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Content
+123 Consolidated
+Financial Statements
+124 Consolidated Statement of Operations
+Dominik Asam
+125 Consolidated Statement of Comprehensive Income
+127 Consolidated Statement of Cash Flows
+128 Consolidated Statement of Changes in Equity
+130 Notes to the Consolidated Financial Statements
+123
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+126 Consolidated Statement of Financial Position
+Dr. Reinhard Ploss
+Management Board
+Neubiberg, November 22, 2016
+1,440,000
+745,830
+262,084
+8,000
+330,000
+290,875
+233,125
+54,333
+2,032,084
+248,000 1,517,830
+1 Based on earnings per share (undiluted) from continuing operations of €0.55 in the 2015 fiscal year. The Supervisory Board
+compensation was restructured with effect from October 1, 2015 from which date a variable compensation component
+was no longer awarded.
+2 For members of the Supervisory Board who joined since February 12, 2015, the compensation was awarded on a pro-rata basis.
+3 For members of the Supervisory Board serving up until February 12, 2015, the compensation was awarded on a pro-rata basis.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+122
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2016
+or 2015 fiscal years.
+Other matters
+The company signed a contract on August 25, 2015 with the Technische Universität München
+relating to the provision of research and development services, to be performed primarily
+within the remit of the Chair of Professor Schmitt-Landsiedel. The Supervisory Board therefore
+approved the contract as a precautionary measure on August 4, 2015. In accordance with this
+contract the first rate of €50,000 was paid to the Technische Universität München in the 2016
+fiscal year.
+Consolidated Statement of Operations
+Consolidated Statement of Operations
+for the year ended September 30, 2016 and 2015
+€ in millions
+28
+Other operating expenses
+(23)
+(58)
+Operating income
+763
+555
+Financial income
+6
+10
+Financial expenses
+(67)
+(49)
+Gain from investments accounted for using the equity method
+3
+4
+Income from continuing operations before income taxes
+17
+19,500
+(778)
+(717)
+124
+Notes
+2016
+2015
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income
+6,473
+5,795
+(4,143)
+(3,715)
+2,330
+2,080
+(770)
+(791)
+50,000
+50,000
+127,000
+2015
+100,500
+16,000
+15,000
+19,500
+50,000
+2015
+2016
+127,000
+15,000
+90,000
+2016
+Peter Gruber
+39,208
+4,000
+6,250
+22,000
+90,000
+15,000
+24,000
+15,000
+19,500
+50,000
+2015
+133,000
+28,000
+15,000
+90,000
+2016
+Hans-Ulrich Holdenried
+100,500
+16,000
+15,000
+19,500
+50,000
+2015
+129,000
+8,125
+20,000
+20,833
+2016
+2016
+Dr. Herbert Diess2
+85,333
+14,000
+25,000
+13,000
+33,333
+90,000
+2015
+30,000
+30,000
+90,000
+2016
+Johann Dechant 2
+45,208
+10,000
+150,000
+14,000
+104,000
+2015
+Reinhard Gottinger³
+68,333
+12,000
+10,000
+13,000
+33,333
+2015
+125,000
+20,000
+15,000
+90,000
+2016
+Annette Engelfried 2
+54,333
+8,000
+13,000
+33,333
+2015
+104,500
+Gerhard Hobbach
+2016
+8,125
+20,833
+2015
+2016
+Gerd Schmidt³
+83,500
+14,000
+15,625
+19,500
+2015
+104,000
+14,000
+90,000
+2016
+Dr. Manfred Puffer
+147,500
+50,000
+10,000
+54,583
+Prof. Dr. Doris
+22,000
+15,000
+90,000
+2016
+Jürgen Scholz
+110,500
+16,000
+25,000
+19,500
+50,000
+2015
+Schmitt-Landsiedel
+128,667
+22,000
+16,667
+90,000
+Prof. Dr. Renate Köcher
+28,000
+50,000
+2016
+50,000
+19,500
+90,000
+102,000
+2015
+50,000
+19,500
+12,000
+81,500
+Dr. Susanne Lachenmann 2
+2016
+90,000
+15,000
+22,000
+127,000
+12,000
+33,333
+2015
+2015
+34,000
+90,000
+90,000
+2016
+214,000
+66,333
+10,000
+10,000
+13,000
+Wolfgang Mayrhuber
+Repayments of long-term debt
+14
+(846)
+Cash outflows due to changes of non-controlling interests
+(831)
+1
+Proceeds from issuance of ordinary shares
+15
+26
+11
+Change in cash deposited as collateral
+2,398
+Net change in related party financial receivables and payables
+14
+Proceeds from issuance of long-term debt
+(1)
+19
+2
+(8)
+14
+Net change in short-term debt
+(2,593)
+(1,098)
+3
+Net cash used in investing activities from discontinued operations
+Net cash used in investing activities
+824
+(15)
+Cash and cash equivalents at end of period
+15
+(2,593)
+673
+1,058
+625
+673
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Consolidated Statement of Changes in Equity
+128
+Consolidated Statement of Changes in Equity
+28
+Dividend payments
+(413)
+Cash and cash equivalents at beginning of period
+Effect of foreign exchange rate changes on cash and cash equivalents
+Net change in cash and cash equivalents
+1,363
+(229)
+Net cash provided by (used in) financing activities
+Net cash used in financing activities from discontinued operations
+1,363
+(229)
+Net cash provided by (used in) financing activities from continuing operations
+(202)
+(225)
+(36)
+(1,098)
+1,738
+57
+Investments accounted for using the equity method
+32
+33
+Non-current income tax receivable
+Deferred tax assets
+Other non-current assets
+for the year ended September 30, 2016 and 2015
+7
+3
+7
+623
+604
+162
+155
+3
+Total non-current assets
+1,656
+2,093
+1,129
+7
+6
+2
+281
+229
+12
+Total current assets
+4,115
+Property, plant and equipment
+Goodwill and other intangible assets
+22
+12
+2,119
+4,492
+4,595
+4,626
+Total assets
+209
+225
+Total current liabilities
+1,530
+1,585
+Long-term debt
+Other current liabilities
+14
+1,760
+Pension plans and similar commitments
+20
+604
+426
+Deferred tax liabilities
+1,752
+123
+120
+402
+9,087
+8,741
+LIABILITIES AND EQUITY
+Short-term debt and current maturities of long-term debt
+14
+17
+33
+Trade payables
+857
+802
+Short-term provisions
+13
+Income tax payable
+37
+327
+1,191
+7
+11
+774
+(27)
+(159)
+(27)
+(28)
+100
+Net change in fair value of hedging instruments
+(159)
+(6)
+Net change in fair value of available-for-sale financial assets
+(1)
+(1)
+Total items expected to be reclassified to profit or loss in the future
+(35)
+62
+(37)
+Other comprehensive income (loss) for the year, net of tax
+634
+Total items not expected to be reclassified to profit or loss in the future
+Currency translation effects
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Consolidated Statement of Comprehensive Income
+Consolidated Statement of
+Comprehensive Income
+for the year ended September 30, 2016 and 2015
+743
+€ in millions
+Notes
+2016
+2015
+15
+Net income
+Actuarial losses on pension plans and similar commitments
+125
+(194)
+35
+549
+Septem-
+ber 30, 2015
+ASSETS
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+Septem-
+ber 30, 2016
+Income tax receivable
+625
+673
+9
+1,615
+1,340
+10
+Other current assets
+Notes
+€ in millions
+as of September 30, 2016 and 2015
+669
+Total comprehensive income for the year, net of tax
+Attributable to:
+Non-controlling interests
+Shareholders of Infineon Technologies AG
+(1)
+550
+2
+667
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Consolidated Statement of Financial Position
+126
+Consolidated Statement of Financial Position
+742
+10
+147
+Long-term provisions
+50
+Change in provisions
+13
+(72)
+(48)
+Change in other assets and liabilities
+57
+(60)
+Interest received
+6
+8
+Interest paid
+(26)
+(14)
+(95)
+Income tax paid
+Change in trade payables
+(66)
+2
+1
+Impairment charges
+Other non-cash result
+Change in trade receivables
+Change in inventories
+(133)
+12
+31
+6
+10
+(25)
+(65)
+11
+16
+7
+(126)
+(93)
+Acquisitions of businesses, net of cash acquired
+Purchases of intangible assets and other assets
+Purchases of property, plant and equipment
+322
+(11)
+(1,869)
+(14)
+12
+(139)
+12
+(716)
+(646)
+Proceeds from sales of property, plant and equipment and other assets
+14
+(110)
+1,496
+3,855
+9
+Net cash provided by operating activities from continuing operations
+1,313
+957
+Net cash used in operating activities from discontinued operations
+(22)
+(140)
+Net cash provided by operating activities
+1,291
+817
+Purchases of financial investments
+Proceeds from sales of financial investments
+Purchases of other equity investments
+9
+(4,130)
+(1,478)
+Dividends received from joint ventures
+(7)
+5
+Gains on disposals of property, plant and equipment
+Equity attributable to shareholders of Infineon Technologies AG
+Non-controlling interests
+Total equity
+Total liabilities and equity
+2,265
+2,259
+Own shares at cost
+5,016
+(2,312)
+(2,897)
+91
+126
+(37)
+(37)
+5,213
+Other reserves
+Accumulated deficit
+Additional paid-in capital
+13
+76
+72
+Other non-current liabilities
+92
+86
+Total non-current liabilities
+Total liabilities
+Shareholders' equity:
+2,534
+2,491
+4,064
+4,076
+15
+Ordinary share capital
+5,023
+Net cash used in investing activities from continuing operations
+4,664
+5,023
+(2)
+(12)
+Adjustments to reconcile net income to net cash provided by operating activities:
+Depreciation and amortization
+12
+833
+634
+760
+7
+(36)
+(102)
+Net interest result
+58
+42
+Income tax
+743
+18
+Minus: income from discontinued operations, net of income taxes
+4,665
+9,087
+8,741
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Consolidated Statement of Cash Flows
+Consolidated Statement of Cash Flows
+for the year ended September 30, 2016 and 2015
+€ in millions
+127
+Notes
+2016
+2015
+Net income
+1
+€ in millions,
+(12)
+Balance as of October 1, 2014
+immaterial
+immaterial
+February 1, 2015
+February 1, 2015
+January 1, 2015
+Impact on Infineon
+Effective date
+Annual IFRS improvement cycle 2011-2013
+Annual IFRS improvement cycle 2010-2012
+"Employee benefits" for defined benefit plans
+(Amendments to IAS 19)
+IAS 19
+immaterial
+Standard/amendment/interpretation
+Financial reporting rules applied for the first time
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
+The Company's Management Board presented the Consolidated Financial Statements on November 22, 2016.
+The Group currency is the euro ("€").
+The fiscal year end for both Infineon and the Company is September 30 of each year.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company
+the year ended September 30, 2016 have been prepared in accordance with International Financial Reporting
+Standards ("IFRS") and related interpretations effective as of September 30, 2016 as issued by the International
+Accounting Standards Board ("IASB") to the extent to which the IFRS and interpretations have been adopted by the
+European Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements
+set forth in section 315a, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB"). The
+aforementioned standards were complied with in full.
+for
+Designated hedging instruments
+Other financial liabilities
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in the
+Consolidated Financial Statements for the year ended September 30, 2016:
+Financial reporting rules issued not yet applied
+The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from today's
+perspective. They have not been applied in the Consolidated Financial Statements as of September 30, 2016 since
+they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended Standards
+INFINEON TECHNOLOGIES
+Clarification of acceptable methods of depreciation and amortization
+(Amendments to IAS 16 and IAS 38)
+IAS 16/
+IAS 38
+IFRS 9
+immaterial
+January 1, 2017
+(Amendments to IAS 12)
+Recognition of deferred tax assets for unrealized losses
+immaterial
+immaterial
+January 1, 2017
+Cash flow statements (Disclosure initiative - Amendments to IAS 7)
+IAS 7
+IAS 12
+January 1, 2016
+(Disclosure initiative - Amendments to IAS 1)
+Presentation of financial statements
+IAS 1
+Expected impact
+on Infineon
+Effective date
+Standard/amendment/interpretation
+are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they are not
+applied before their effective date, even if this is permitted for certain standards.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+Remaining other liabilities
+Put options on own shares
+Own shares
+Fair value/amortized cost
+Fair value/amortized cost
+Upon acquisition, available-for-sale financial assets are measured at fair value taking into account transaction
+costs. Subsequently they are measured at their fair value at the end of the relevant reporting period. Transaction
+costs relating to the acquisition of available-for-sale financial assets with a definite term and fixed or determinable
+payments are capitalized and recognized in the Consolidated Statement of Operations using the effective interest
+method. Changes in the fair value of available-for-sale financial assets are recognized directly in equity. If the fair
+value is permanently or significantly lower than the amortized cost, then an impairment loss is recognized through
+profit or loss.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+134
+For available-for-sale financial assets, a significant or prolonged decline in the fair value of the financial asset
+below its acquisition cost is considered as an indicator that the assets are impaired. If any such evidence exists, the
+cumulative loss that had been recognized directly in equity - measured as the difference between the acquisition
+cost and the current fair value, less any impairment loss previously recognized in profit or loss - is removed from
+equity with affecting income.
+When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments previously
+recognized in equity are reclassified to profit or loss.
+Financial assets or liabilities measured at fair value through profit or loss
+At Infineon financial assets or liabilities measured at fair value through profit or loss comprise almost entirely of
+derivatives used to hedge currency risks for which hedge accounting is not applied.
+Designated hedging instruments (cash flow hedges)
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price changes
+(such as gold prices) for expected and highly probable future transactions in order to minimize the associated risk
+(cash flow hedges).
+Derivative financial instruments are measured at their fair value and included in "Other current assets" or
+"Other current liabilities".
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument.
+The gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity
+are recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+Other financial liabilities
+Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs.
+In subsequent periods they are measured at amortized cost using the effective interest method. The liabilities are
+derecognized when the contractual obligations are discharged, cancelled or expired.
+Inventories
+Inventories encompass assets to be consumed in the production process or in the rendering of services (raw materials
+and supplies), that are in the production process at the balance sheet date (work in progress), or held for sale in
+the ordinary course of business (finished and purchased goods).
+Inventories are measured at the lower of acquisition or fully absorbed production cost - calculated using the
+weighted-average method – and net realizable value. Net realizable value corresponds to realizable sale proceeds
+under normal business conditions less estimated expected costs to complete and sell. Production cost comprises
+costs of material, production wages and an appropriate portion of attributable overheads, including attributable
+depreciation and amortization on property, plant and equipment and intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
+or are not allocated to any of the other categories (see above).
+January 1, 2016
+Available-for-sale financial assets
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
+in an active market. At Infineon the balance sheet items "Cash and cash equivalents", "Financial investments",
+"Trade receivables" and current and non-current "Other assets" all contain financial assets which are classified in
+the category "Loans and receivables".
+Projected unit credit method
+Expected settlement amount
+Fair value through profit or loss
+Fair value directly through equity
+Fair value/amortized cost
+Fair value/amortized cost
+Present value of nominal amount at date of issue
+Acquisition cost
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+133
+Cash and cash equivalents
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of
+three months or less, and are measured at their nominal amount.
+Financial instruments
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the
+acquisition or issuance of financial instruments are only included in the carrying amount if the financial instruments
+are not measured at fair value through profit or loss.
+Regular purchases and sales of financial assets are recognized on the basis of the settlement date. The settlement
+date is the date on which an asset is delivered to or by Infineon.
+Financial assets are derecognized when the rights to receive payments from the investments have expired or have
+been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial liabilities
+are derecognized when they are extinguished, that is when the contractual obligation is discharged, cancelled
+or expired.
+Infineon classifies financial assets into the following categories: "Loans and receivables", "Available-for-sale financial
+assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
+(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
+were not held by Infineon.
+Infineon classifies financial liabilities into the following categories: “Financial liabilities measured at fair value through
+profit and loss" and "Other financial liabilities”. Furthermore, “Designated hedging instruments (cash flow hedges)"
+belong to financial liabilities.
+Loans and receivables
+Loans and receivables are measured on initial recognition at their fair value plus incidental acquisition costs.
+Subsequently, they are measured at amortized cost using the effective interest method. Loans and receivables are
+tested for impairment. They are considered to be impaired when there is objective evidence that Infineon will not
+receive all amounts contractually due at the relevant due date. Objective evidence that indicates that impairment
+should be recorded would include, for example, known financial difficulties or the insolvency of a debtor. The
+impairment is recorded as an expense in profit or loss (in a separate allowance account). When a payment default
+becomes certain, such loans and receivables are considered to be uncollectible and derecognized along with the
+previously recognized allowance.
+Other financial liabilities:
+Financial instruments
+none
+Intangible assets (except goodwill):
+Property, plant and equipment
+Goodwill
+Assets classified as held for sale
+Inventories
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Assets
+Measurement principle
+with definite useful life
+Balance sheet item
+Recognition and measurement principles
+1.1432
+1.1065
+1.1170
+1.1225
+4.2186
+1.5429
+1.5266
+1.5960
+1.5270
+The following table summarizes the principal measurement bases used in the preparation of the Consolidated
+Financial Statements:
+with indefinite useful life
+Other assets (current and non-current):
+Other financial assets:
+Other liabilities (current and non-current):
+Other provisions
+Pensions
+Provisions
+Debt
+Trade payables
+Equity and liabilities
+Fair value through profit or loss
+Fair value directly through equity
+(Amortized) Cost
+Fair value/amortized cost
+Fair value directly through equity
+Impairment-only approach
+(Amortized) Acquisition or production cost
+Impairment-only approach
+Lower of acquisition or production cost and net realizable value
+Lower of carrying amount and fair value less costs to sell
+(Amortized) Acquisition or production cost
+Fair value/amortized cost
+Fair value/amortized cost
+Nominal amount
+Remaining other assets
+Designated hedging instruments
+Measured at fair value through profit or loss
+Available-for-sale
+Loans and receivables
+4.5685
+4.9410
+4.6434
+136.4560
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their fair
+value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value of
+acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary
+or has a right to such, and has the ability to influence these returns as a result of its power over the subsidiary.
+Power means that Infineon has existing rights that give Infineon the current ability to direct the relevant activities
+(the activities that significantly affect the aforementioned returns).
+The Consolidated Financial Statements presented here include the financial statements of Infineon Technologies AG
+and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity which, directly
+or indirectly, is controlled by Infineon Technologies AG.
+Basis of consolidation
+2 Summary of Significant Accounting Policies
+131
+impacts are still
+being analyzed
+impacts are still
+being analyzed
+immaterial
+none
+January 1, 2019
+January 1, 2016
+Annual IFRS improvement cycle 2012-2014
+Leases
+IFRS 16
+January 1, 2018
+Revenue from contracts with customer
+IFRS 15
+January 1, 2016
+Accounting for acquisitions of interests in joint operations
+(Amendments to IFRS 11)
+IFRS 11
+impacts are still
+being analyzed
+A list of subsidiaries of Infineon Technologies AG is provided in note 26.
+January 1, 2018
+Functional currency, reporting currency and foreign currency translation
+Foreign currency transactions are translated into the functional currency of the relevant entity using the exchange
+rates prevailing at the transaction date. Monetary assets and liabilities which are not denominated in the functional
+currency of the reporting entity are translated at the closing exchange rate prevailing at the end of the relevant
+reporting period. Exchange rate gains and losses from the currency translation are recognized in the Consolidated
+Statement of Operations as part of the operating result.
+122.8719
+134.1300
+112.9300
+2015
+2016
+September 30, 2015
+September 30, 2016
+Annual average exchange rate
+Closing rate
+US dollar
+Singapore dollar
+Malaysian ringgit
+Japanese yen
+€1 in units of foreign currency
+The exchange rates of the primary currencies (€1 in foreign currency units) used in the preparation of the
+accompanying Consolidated Financial Statements, in alphabetical order, are as follows:
+The assets and liabilities of foreign subsidiaries with functional currencies other than the euro are translated
+into euros using period-end exchange rates. Income and expenses of these entities are translated using the
+average exchange rate for the period under report. All cumulative differences arising from the currency translation
+of the equity in foreign subsidiaries arising from changes to exchange rates are recognized directly in equity in
+"Other reserves".
+132
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
+prepared with the euro as reporting currency.
+except for number of shares.
+Measured at fair value through profit or loss
+6
+744
+4,665
+1
+4,664
+4,665
+1
+4,664
+(19)
+(5)
+(14)
+40
+40
+40
+6
+Non-
+(1)
+13
+743
+(194)
+5,023
+9
+25
+5,023
+(37)
+(5)
+(2)
+98
+9
+25
+(225)
+(225)
+549
+(1)
+550
+(194)
+13
+(202)
+(202)
+(4)
+100
+(34)
+(4)
+100
+4,158
+634
+2
+632
+4
+4,154
+(40)
+(37)
+35
+3
+26
+(34)
+126
+(1)
+1
+669
+2
+667
+35
+35
+(6)
+E
+INFINEON TECHNOLOGIES
+(28)
+(1)
+(28)
+(37)
+1
+(1)
+126
+(37)
+(6)
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+1,532,251
+4
+9
+6
+Other changes in equity
+(14)
+Balance as of September 30, 2015
+1,129,271,481
+2,259
+5,213
+(2,897)
+Balance as of October 1, 2015
+Net income
+1,129,271,481
+2,259
+(202)
+5,213
+605
+(3,502)
+632
+Net income
+Other comprehensive income (loss)
+for the period, net of tax
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+Issuance of ordinary shares:
+Exercise of stock options
+Share-based compensation
+Put options on own shares
+Note
+Ordinary shares issued
+Additional
+paid-in capital
+Accumulated
+deficit
+Shares
+Amount
+15
+1,127,739,230
+2,255
+5,414
+(27)
+controlling
+interests
+(2,897)
+Other comprehensive income (loss)
+for the period, net of tax
+Own shares
+Securities
+Hedges
+Foreign
+currency
+translation
+adjustment
+Other reserves
+Put options
+on own shares
+Total equity
+attributable to
+shareholders
+of Infineon
+Technologies AG
+129
+1 Basis of the Consolidated Financial Statements
+Infineon Technologies AG is a listed company under German law and ultimate parent company of the Infineon Group.
+The principal office of the Company is Am Campeon 1 - 12, 85579 Neubiberg (Germany). The Company is registered
+in the Commercial Register of the District Court of Munich (Germany) under the number HRB 126492.
+The Infineon Group ("Infineon") comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
+develop, manufacture and market a broad range of semiconductors and related system solutions. The focus of
+activities is on applications for automotive electronics, industrial electronics, information and communications
+infrastructure as well as hardware-based security. The product range includes standard, application-specific and
+customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
+signal applications. More than half of Infineon's revenue is generated by power semiconductors, the remaining
+revenue is attributable to high frequency components, sensors, driver components as well as microcontrollers
+for automotive, industrial and security applications. Research and development sites, manufacturing facilities,
+investments and customers are located mainly in Europe, Asia and North America.
+130
+Notes to the Consolidated
+Financial Statements
+Consolidated Statement of Changes in Equity
+744
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+(159)
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+585
+(225)
+Issuance of ordinary shares:
+Exercise of stock options
+3,401,628
+6
+19
+Share-based compensation
+9
+Balance as of September 30, 2016
+1,132,673,109
+2,265
+5,016
+(2,312)
+ANNUAL REPORT 2016
+Total equity
+Therein: USA
+75
+Americas
+3
+12
+(1)
+2015
+2016
+Income from discontinued operations, net of income taxes
+2
+Others business' share of discontinued operations, net of income taxes
+€ in millions
+Gain/loss from discontinued operations, net of income taxes
+The current risks and provisions relating to Qimonda's insolvency are described in detail in note 23, section "Pro-
+ceedings in relation to Qimonda".
+2
+2
+110
+Qimonda's share of discontinued operations, net of income taxes
+101
+12
+ANNUAL REPORT 2016
+33
+2015
+2016
+Total
+Selling, general and administrative expenses
+Research and development expenses
+INFINEON TECHNOLOGIES
+Cost of goods sold
+€ in millions
+Infineon has received grants and subsidies from various governmental institutions under government business
+development programs, including grants for the construction of manufacturing facilities, for research and develop-
+ment activities and employee development. Grants and subsidies taken into consideration in profit or loss in the
+Consolidated Financial Statements during the 2016 and 2015 fiscal years are as follows:
+143
+5 Grants and subsidies
+59
+Consolidated Financial Statements
+Included in the Consolidated Statement of Operations in:
+40
+For the compliance with the requirements attached to the grants and subsidies received and potential repayment
+requirements in case of nonfulfillment, see note 24.
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+expenses for purchased services, materials and personnel.
+2016
+2015
+1,734
+1,670
+313
+269
+2,469
+2,047
+The average number of employees by geographic region is as follows for the 2016 and 2015 fiscal years:
+Europe
+Therein: Germany
+Asia-Pacific (without Japan)
+Therein: China
+Japan
+1,939
+6 Cost of materials and purchased services as well as personnel expense
+2,707
+1,295
+Expenses for purchased services and materials comprised the following in the 2016 and 2015 fiscal years:
+€ in millions
+Cost of raw materials, supplies and purchased goods
+Cost of purchased services
+Total (continuing and discontinued operations)
+Personnel expenses comprised the following in the 2016 and 2015 fiscal years:
+1,206
+€ in millions
+Social insurance levies, pensions and similar obligations
+Total (continuing and discontinued operations)
+2016
+2015
+1,412
+1,263
+Wages and salaries
+Notes to the Consolidated Financial Statements
+Cree's Board of Directors and Infineon's Supervisory Board have already approved the acquisition. The approval of
+the responsible regulatory authorities is required to conclude the transaction. Completion and execution of the
+transaction is expected at the beginning of the 2017 calendar year.
+On January 23, 2009, Qimonda AG (“Qimonda”), a majority owned company, filed an application at the Munich
+Local Court to commence insolvency proceedings. On April 1, 2009, the insolvency proceedings opened. Insolvency
+proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of these insolvency
+proceedings have already been completed. The impacts of these proceedings are reported as discontinued opera-
+tions in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency proceedings. To the extent that the
+events occurred after the commencement of insolvency proceedings, their results are reported as part of continuing
+operations.
+& Multimarket
+Corporate
+Total
+746
+750
+14.0
+15.0
+10.7
+11.0
+1
+1
+2
+799
+2
+Power Management
+803
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the calculation of revenue growth, gross margins, the WACC and terminal growth rate.
+In this way, Infineon takes account of the inherently uncertain nature of estimates and carries out impairment tests
+on goodwill based on scenarios that are less favorable than those considered most likely. Changes considered to
+be possible to the parameters identified would have had no effect on the value of goodwill.
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none
+of the operating segments gave rise to an impairment of goodwill in the year under report. As at the reporting date,
+there were no triggering events that indicate that the recoverable amount of an entity to which goodwill had been
+allocated could have fallen below the book value.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+138
+Intangible assets and other non-current assets
+Infineon reviews non-current assets, including property, plant and equipment and intangible assets for possible
+impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
+be recoverable. The recoverability of assets held is measured by comparing the carrying amount of the asset with
+its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs to
+sell and its value in use. The value in use is generally calculated based on discounted future cash flows of the CGU
+to which the asset is allocated. Considerable management judgment is necessary to estimate future cash flows.
+If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the
+carrying value of the assets exceeds their recoverable amount. An impairment loss recognized in prior periods for an
+asset other than goodwill is reversed insofar as, since the last impairment, a change in the underlying assumptions
+has occurred which leads to a lower impairment requirement. The maximum possible reversal of an impairment loss
+is that which would lead to the carrying amount that would have been determined (net of scheduled depreciation
+and amortization) if no impairment loss had been recognized for that asset in prior years.
+Capitalized development costs (see also "Research and development costs" in this chapter) that are not subject
+to scheduled depreciation are tested for impairment annually and additionally whenever there are indications of
+impairment. Indications for impairment in particular include a reduction of expected revenues or increased costs.
+Pensions and similar obligations
+Infineon provides benefits to most of its employees for the period after they have retired, either directly or as a
+result of payments to private and public institutions. The benefits provided differ according to the legal, economic
+and tax circumstances prevailing in the respective country and are mostly dependent on the length of service
+and the salary of the employee concerned. The occupational pension plans include both defined contribution and
+defined benefit plans.
+In the case of defined contribution plans, Infineon pays pre-determined amounts based on statutory or contractual
+regulations to an independent fund or to public or private pension insurance companies. Once the contributions
+are paid, Infineon has no further performance obligation. The contributions are recognized as expense in the year
+in which they fall due and are included in costs by function within the operating result. Liabilities are recorded for
+payments due to the various defined contribution plans. Prepaid contributions are recognized as an asset to the
+extent that a cash refund or a reduction of future payments is possible.
+1 Valuation parameters as of June 30, 2016 and 2015.
+All other plans that do not fall under the definition of a defined contribution plan are accounted for as defined
+benefit plans. These relate to the commitments of Infineon to pay vested rights and current benefits to eligible
+present and former employees and their dependants. The obligations also relate to retirement pensions. The
+liability recognized in respect of defined benefit pension plans is the present value of the defined benefit obligation
+(DBO) at the end of the reporting period less the fair value of the plan assets, together with adjustments for past
+service costs. The present value of the DBO and resulting pension cost are determined in accordance with IAS 19
+"Employee Benefits" annually for each separate plan by independent, qualified actuaries using the projected-unit-
+credit method. For the calculation, actuarial procedures are applied for which it is necessary to make specific
+assumptions. The most important of these are the discount rate, future expected increases in salaries and pensions,
+and mortality rates.
+1
+10.3
+Notes to the Consolidated Financial Statements
+137
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year strategic business plan approved in the fiscal year just
+ended. The plan is calculated bottom-up based on certain central assumptions applied consistently throughout
+Infineon. Cash flows for periods beyond the planning horizon are estimated using a terminal value. Terminal growth
+rates used do not take into account investments to increase capacity for which no cash outflow has taken place,
+and are derived from publicly available market studies from market research institutes and do not exceed the
+historical long-term average growth rate for the sector in which the relevant segment operates.
+The discount rate is based on the after-tax weighted average cost of capital (WACC) for the entity in question.
+The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax WACC used to
+discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax cash flows and the
+after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate is derived using the
+Svensson method taking into account risk premiums, and the beta factor and debt ratio are derived from a group of
+companies comparable to the operating segment. In this way the discount rate derived reflects the current market
+rate of return as well as the specific risks attached to the respective segment.
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the
+valuation parameters used:
+Book value of
+allocated goodwill
+pre-tax WACC¹
+after-tax WACC¹
+terminal growth rate¹
+€ in millions
+in %
+in %
+in %
+1
+Segment
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+Industrial Power Control
+51
+51
+12.8
+13.9
+9.9
+2016
+In the 2016 and 2015 fiscal years adjustments to individual provisions arose as a result of recent developments in
+connection with the insolvency of Qimonda, as well as subsequent income from other discontinued operations.
+These led to earnings after tax as shown in the table below.
+Discount rates are determined on the basis of market yields at the end of the reporting period on high-grade,
+fixed interest corporate bonds from issuers carrying a very high credit rating that are denominated in the currency
+in which the benefits will be paid and that have remaining maturities approximating the terms of the related
+pension liability.
+ANNUAL REPORT 2016
+Grants
+Grants for investments include both tax-free investment grants and taxable grants for investments in property,
+plant and equipment. Grants are recognized when it is reasonably assured that Infineon will comply with the
+conditions attached to the grant, and it is reasonably assured that the grant will be received. Tax-free investment
+grants are deferred and recognized over the remaining useful life of the subsidized asset. Taxable grants are
+deducted from the purchase and production cost of the related asset and thereby reduce depreciation and amorti-
+zation expense in future periods.
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
+Statement of Operations (see note 5).
+Estimates and assumptions
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations
+of Infineon.
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 7),
+> valuation of inventory (see "Inventories" and note 11),
+> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+long-lived assets" and note 12),
+> recognition and valuation of provisions (see "Provisions" and notes 13 and 23), and
+> valuation of pension plans (see "Pensions and similar obligations" and note 20).
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+Costs of research activities undertaken in order to gain new scientific or technical knowledge are expensed as incurred.
+Costs for development activities, the results of which lead to a plan or design for the production of new or sub-
+stantially improved products or process improvements, are capitalized if the development costs can be measured
+reliably, the product or process is technically and commercially feasible, future economic benefits are probable
+and Infineon intends, and has sufficient resources, to complete development and use or sell the asset. The costs
+capitalized include the cost of materials, direct labor and directly attributable general overhead expense that
+serves to prepare the asset for use. Such capitalized costs are presented as internally generated intangible assets
+within "Goodwill and other intangible assets" (see note 12). Development costs, which do not fulfill the criteria
+for capitalization, are expensed as incurred. Capitalized development costs are stated at cost less accumulated
+amortization and impairment charges. After the completion of the development phase and following the ramp-up
+of production, internally generated intangible assets are generally amortized as part of cost of goods sold over
+a period of three to five years.
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on November 22, 2016.
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+142
+3 Acquisitions
+International Rectifier Corporation
+The acquisition of 100 percent of the shares and associated voting rights of International Rectifier Corporation
+("International Rectifier") based in El Segundo, California (USA) was closed by Infineon on January 13, 2015.
+The purchase price allocation for International Rectifier was finalized in January 2016; there were no adjustments
+in the 2016 fiscal year.
+Wolfspeed
+On July 14, 2016, the Company and Cree Inc. USA ("Cree") signed a contract for the acquisition of Cree's Wolfspeed
+business. Infineon intends to buy Wolfspeed (including the related wafer substrate business) for a purchase price of
+US$850 million. With the acquisition Infineon broadens its strategic portfolio of compound semiconductors.
+Total
+4 Disposals and discontinued operations
+Qimonda - discontinued operations
+INFINEON TECHNOLOGIES
+INFINEON TECHNOLOGIES
+Research and development costs
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+139
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result, are
+recognized on a net basis in the functional areas within the operating result. The net interest result arising from the
+multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is reported
+as financial expense. Actuarial gains and losses resulting from experience adjustments for defined benefit pension
+obligations and plan assets and from changes in actuarial assumptions are recognized directly in equity and
+presented in the Consolidated Statement of Comprehensive Income in the period in which they arise. Past service
+costs are recognized immediately in profit or loss.
+Provisions
+Provisions are recognized for present legal and/or constructive obligations arising from past events that are likely
+to result in a future outflow of resources, the amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example the Qimonda insolvency, Infineon regularly assesses
+the probability of an unfavorable outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which it assesses at the relevant
+reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment, there is
+compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with reason-
+able accuracy at the time of assessment. As soon as additional information is available the affected estimates are
+reviewed and, where necessary, provisions for these proceedings are revised.
+Provisions are measured at their expected settlement amount in accordance with IAS 37 "Provisions, Contingent
+Liabilities and Contingent Assets" or, where applicable, also in accordance with IAS 19 "Employee Benefits". The
+amount recognized for a provision is the best estimate of the expenditure required to settle the present obligation.
+Estimates of outcomes and financial effects are dependent upon the judgment of management, supplemented
+by experience gained from similar transactions and, where appropriate, the assessment of independent experts.
+The evidence considered also includes events after the reporting period and up to the date of preparation of the
+Consolidated Financial Statements. If the circumstances to be assessed encompass a large number of possible
+outcomes, the obligation is estimated by weighting all possible outcomes by their associated probabilities
+(expected value method). Where there is a continuous range of possible outcomes and each point in that range is
+as likely as any other, the average is used.
+Where cash flows are expected to arise after the next twelve months and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows. For the purposes of the present value
+calculation, Infineon uses a pre-tax interest rate that reflects current market interest rate expectations and the
+risks specific to the liability. In estimating the future outflow of economic benefits Infineon also includes inflation
+assumptions if applicable. Provisions for onerous contracts are measured at the lower of the expected cost of
+fulfilment or termination of the contract. Additions to provisions are generally recognized in profit or loss.
+There is no offsetting with positive profit or loss effects. Claims for reimbursements from third parties are not offset
+against provisions, instead they are capitalized separately if their realization is virtually certain.
+If the obligation decreases as a result of a change in the estimate, the provision is reversed proportionately and
+the resulting income recognized in the same functional area of the Consolidated Statement of Operations in which
+the original charge was recognized.
+INFINEON TECHNOLOGIES
+141
+ANNUAL REPORT 2016
+Notes to the Consolidated Financial Statements
+140
+Contingent liabilities
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon. Or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 23 and 24).
+Revenue recognition
+Infineon generates revenues from the sale of semiconductor products and related system solutions. Infineon's
+semiconductor products include a wide variety of chips and components used in electronic applications ranging
+from automotive electronics and industrial applications to chip cards. Infineon's products are also used in a wide
+variety of microelectronic applications, such as computer systems, telecommunications systems and consumer
+goods. Revenue is allocated to the individual segments on the basis of differences in product type and applications.
+In addition, Infineon generates a small portion of its revenue from the granting of licenses.
+Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods
+are transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will
+flow to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or
+receivable taking into account returns, settlement discounts and bonuses.
+In principle Infineon recognizes revenue on sales to distributors by using the “sell in" method, that is when a product
+is sold to the distributor. In accordance with established business practice in the semiconductor industry, under
+certain circumstances distributors can apply for price protection and ship and debit credit notes. Price protection
+allows a distributor to request a credit note for unsold products held in inventory if Infineon reduced the standard
+list price of these products. In addition, in certain cases the distributor may request a ship and debit credit note
+for retrospective price adjustments. The authorization of these credits remains fully within the control of Infineon.
+Infineon calculates the provision for price protection and ship and debit in the period in which the related revenue
+is recorded. The ship and debit provision is determined based on rolling trends in the difference between the
+contract price and the standard list price to the distributor. The price protection provision is based on actual list
+prices and distributor inventory on hand. The availability of detailed distributor inventory data, the transparency
+of pricing for standard products and the long distributor pricing history enable Infineon to reliably estimate
+provisions for price protection and ship & debit credit notes at the end of the reporting period.
+Distributors can, subject to certain conditions, return a limited amount of inventory (stock return) or request
+scrap allowances. Stock return credit notes are accrued based on expected stock returns in accordance with the
+contractual agreement combined with historical experience. Distributor scrap allowances are accrued based on
+the contractual agreement and, upon submission of a valid claim, are granted up to a certain maximum based
+on turnover in a given period. Infineon monitors such product returns on an ongoing basis and adjusts accrual
+assumptions accordingly. Other returns are only permitted for quality defects within the ordinary warranty period.
+In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
+is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
+recognition purposes.
+Cost of goods sold
+Cost of goods sold includes the manufacturing costs of products sold during the reporting period. In addition, among
+other things cost of goods contain idle costs, inventory risks, warranty issues as well as the amortization of capital-
+ized development costs. Recognized foreign currency effects as well as changes in the fair value of undesignated
+derivative financial instruments that are connected to the operating business are recognized in cost of goods.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Consolidated Financial Statements
+2016
+Intangible assets (excluding goodwill)
+2015
+€ in millions
+2015
+2016
+Income tax from continuing operations for the fiscal years ended September 30, 2016 and 2015, is as follows:
+144
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+7 Income tax
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+33,971
+35,996
+1,753
+2,092
+2,898
+Current tax expense
+(116)
+(151)
+Deferred tax benefit
+Change in available tax credits
+(151)
+(203)
+Expected income tax expense
+2016
+€ in millions
+A reconciliation of income taxes from continuing operations for the fiscal years ended September 30, 2016 and 2015,
+using as a basis the German combined statutory tax rate of 29 percent for the 2016 and 2015 fiscal years is as follows:
+3,705
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax laws applicable in the relevant
+countries and is taxed based on the applicable tax rates for these countries.
+A deferred tax benefit of €87 million results from the creation and reversal of temporary differences.
+Current tax expenses include an income tax benefit relating to previous fiscal years of €10 million.
+102
+36
+253
+152
+Income tax
+The German combined statutory tax rate for Infineon Technologies AG is 29 percent for the 2016 and 2015 fiscal years.
+This comprises a corporate tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent and a municipal trade
+tax rate of 13 percent.
+70
+167
+1,890
+The cost of acquisition comprises the acquisition price plus incidental acquisition costs, and subsequent acquisition
+costs, less any reduction received on the acquisition price. The cost of self-constructed equipment comprises direct
+costs as well as appropriate allocations of the necessary material and manufacturing overheads.
+Where an obligation exists to decommission or dismantle a fixed asset or restore a site to its former condition
+at the end of its useful life, the present value of the related future payments is capitalized along with the cost of
+acquisition or construction at the point of purchase or completion, and is depreciated over the estimated useful life
+of the underlying asset. A liability is recognized for the same amount, the carrying amount of which is compounded
+in future periods.
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land,
+property rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on
+property, plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+Buildings
+Technical equipment and machinery
+Years
+10-25
+3-10
+1-10
+Other plant and office equipment
+When fixed assets are sold, decommissioned or scrapped, the difference between the net proceeds and the carrying
+amount of the assets is recognized as a gain or loss in other operating income or expense.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+Property, plant and equipment
+For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
+deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimate.
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in other comprehensive income.
+1,998
+16,738
+9,258
+9,727
+17,148
+14,168
+14,971
+2015
+172
+INFINEON TECHNOLOGIES
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+135
+Current and deferred income taxes
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward. By contrast, no deferred tax is recognized on goodwill
+arising in connection with business combinations. Similarly, deferred taxes are not recognized on the initial recog-
+nition of an asset or liability in connection with a transaction that is not a business combination and which, at the
+time of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit. Deferred tax assets
+and liabilities are measured using applicable tax rates and laws that have been enacted by the end of the reporting
+period or are about to be enacted, and are to be applied when the related deferred tax asset is realized or the
+deferred tax liability is settled.
+Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed
+deferred tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is
+probable that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit.
+Infineon reviews deferred tax assets for impairment at every reporting date. The assessment requires management
+to make assumptions about future taxable profits as well as other positive and negative influencing factors.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+ANNUAL REPORT 2016
+Intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
+relationships (including order backlog), which are measured at acquisition cost, as well as capitalized development
+costs. These intangible assets have definite useful lives and are valued at their amortized acquisition or production
+costs with amortization recorded using the straight-line method over their expected economic life.
+13
+27
+128
+146
+Unused tax credits and excess foreign tax credits
+447
+492
+Tax loss carry-forwards
+(125)
+152
+(173)
+190
+Provisions and pension obligations
+(43)
+66
+(26)
+93
+Other
+142
+(62)
+110
+(147)
+604
+(10)
+623
+Total
+304
+(304)
+Property, plant and equipment
+457
+Netting
+(451)
+908
+(467)
+1,080
+Total deferred taxes
+(28)
+(457)
+Tax rate differential
+(255)
+(206)
+Other
+Effects due to changes in tax rate
+309
+63
+Change in valuation allowance on deferred tax assets
+(41)
+Prior year taxes
+19
+(10)
+25
+Non-deductible expenses and tax-exempt income, net
+(23)
+7
+Effects from the difference between local and functional currency (Malaysia)
+14
+Actual income taxes
+32
+(3)
+(4)
+17
+Intangible assets
+liabilities
+Deferred tax
+Deferred tax
+assets
+Deferred tax
+liabilities
+assets
+5
+Deferred tax
+September 30, 2016
+€ in millions
+Deferred tax assets and liabilities as of September 30, 2016 and 2015 comprise the following:
+Effects due to changes in tax rate arise mainly from the integration of International Rectifier in Singapore and the
+resulting applicability of a lower tax rate.
+102
+36
+(6)
+September 30, 2015
+Scheduled amortization of intangible assets is based on the following useful lives:
+136
+Customer relationships
+Capitalized development costs
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Infineon determines the recoverable amount of a particular unit to which goodwill has been allocated on the basis
+of its value in use. The value in use is measured by estimating the present value of future cash flows that will be
+generated by the continuing operations of the entity discounted using an appropriate discount rate.
+Goodwill acquired in a business combination is allocated to the cash-generating units (CGUS) or groups of CGUS
+that will benefit from the synergies generated by the business combination. A CGU represents the smallest
+identifiable group of assets that generates cash inflows from continuing activities and that is as independent as
+possible from other assets or asset groups.
+Goodwill is an intangible asset that represents the future economic benefits arising from assets acquired in a
+business combination that cannot be individually identified and separately recognized. Goodwill is the excess of
+the consideration transferred for an interest in a business over the net fair value of acquired, separately identifiable
+assets, liabilities and contingent liabilities as at the date of acquisition. Goodwill arising from acquisitions of
+businesses is reported in the line item "Goodwill and other intangible assets" in the Consolidated Statement of
+Financial Position. Separately identifiable intangible assets acquired in a business combination are recognized and
+reported separately from goodwill.
+Goodwill
+Recoverability of intangible assets and other long-lived assets
+Infineon is a lessee of property, plant and equipment which are categorized as operating or finance leases in
+accordance with IAS 17 “Leases”. In the case of operating lease contracts, the lease costs are spread on a straight-line
+basis over the term of the lease arrangement.
+2-8
+Acquired goodwill is only impaired if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as at June 30 and, additionally, whenever there are events or changes in
+circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the
+higher of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating
+segment including allocated goodwill exceeds the recoverable amount of this entity, the goodwill is impaired
+accordingly. Such impairments cannot be reversed in subsequent periods.
+4-12
+1-12
+3-5
+Years
+Leases
+Infineon did not hold any intangible assets with indefinite useful lives in either the 2016 or 2015 fiscal years.
+Other intangible assets
+Licenses and similar rights
+3-5
+Technologies
+1
+1,210
+Payments on account and construction in progress
+314
+271
+(3)
+9,712
+284
+Total property, plant and equipment
+716
+(171)
+(20)
+15
+(298)
+(64)
+Technical equipment and machinery
+1,175
+Other plant and office equipment
+7,648
+(23)
+210
+(95)
+336
+7,220
+10,237
+1,095
+2
+73
+(9)
+26
+83
+Goodwill and other intangible assets
+98
+Capitalized development costs
+12
+(1)
+212
+18
+2,130
+18
+110
+201
+(13)
+2,225
+Changes in property, plant and equipment and goodwill and other intangible assets 2015
+Cost
+Allowance for doubtful accounts at beginning of the fiscal year
+€ in millions
+Changes in the allowance for doubtful accounts for the 2016 and 2015 fiscal years were as follows:
+(2)
+Goodwill acquired for consideration
+283
+(12)
+Customer relationships
+Technologies
+Licenses and similar rights
+Total goodwill and other intangible assets
+803
+(4)
+1
+799
+1,003
+517
+395
+1
+396
+294
+419
+Land, land rights and buildings
+Additions
+€ in millions
+€ in millions
+Inventories at September 30, 2016 and 2015 consist of the following:
+11 Inventories
+Receivables with a maturity of more than one year are presented as other non-current assets.
+With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there are
+no indications that customers, based on their past credit history and current creditworthiness assessments, are not
+able to meet their obligations.
+6
+16
+718
+740
+6
+14
+753
+773
+Third party trade receivables, net of allowances as of September 30, 2016
+Third party trade receivables, net of allowances as of September 30, 2015
+Past due
+> 31 days
+Past due
+0-30 days
+but past due
+742
+2015
+11
+7
+Usage of allowance, net
+Current year's allowance, net of reversals
+Raw materials and supplies
+Allowance for doubtful accounts at end of the fiscal year
+11
+Third party trade receivables that are outstanding but not impaired at the reporting date comprise the following:
+€ in millions
+Carrying
+amount
+Thereof
+neither
+impaired
+nor past due
+Of which not impaired
+11
+Work in progress
+Finished goods and merchandise
+Total
+148
+12 Property, plant and equipment, goodwill and other intangible assets
+A summary of changes in property, plant and equipment as well as in goodwill and other intangible assets for the
+years ended September 30, 2016 and 2015 is as follows:
+Changes in property, plant and equipment and goodwill and other intangible assets 2016
+Cost
+October 1,
+2015
+2016
+Acquisitions
+through
+business
+Reclassi-
+fication
+Foreign
+currency
+effects
+Septem-
+ber 30, 2016
+combi-
+nations
+Disposals
+Property, plant and equipment
+Notes to the Consolidated Financial Statements
+ANNUAL REPORT 2016
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+111
+98
+701
+Consolidated Financial Statements
+649
+382
+1,191
+1,129
+Cost of sales consist mainly of inventory-related expenses in the 2016 and 2015 fiscal years.
+Inventories at September 30, 2016 and 2015 are stated net of write-downs of €136 million and €117 million,
+respectively.
+INFINEON TECHNOLOGIES
+379
+774
+Deferred taxes, net as of the beginning of the fiscal year
+(11)
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Basic and diluted earnings per share are calculated as follows for the fiscal years ended September 30, 2016
+and 2015:
+€ in millions (unless otherwise stated)
+Earnings attributable to shareholders of Infineon Technologies AG - basic and diluted
+thereof from continuing operations
+thereof from discontinued operations
+Weighted-average number of shares outstanding (in millions):
+- Ordinary share capital
+- Adjustment for own shares
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+- Effect of stock options and performance shares
+Weighted-average number of shares outstanding - diluted
+Basic and diluted earnings per share¹ (in euro):
+(6.0)
+1,125.2
+1,131.2
+12
+2
+620
+742
+Basic earnings per share are calculated by dividing earnings by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
+such as interest expense, on the other.
+632
+2015
+2016
+146
+1 The calculation of earnings per share is based on unrounded figures.
+Earnings per share (in euro) from discontinued operations, net of income taxes
+Earnings per share (in euro) - basic and diluted
+Earnings per share (in euro) from continuing operations
+744
+8 Earnings per share
+105
+38
+4
+5
+253
+153
+(172)
+373
+(2)
+457
+2016
+Deferred taxes, net as of the end of the fiscal year
+Foreign currency translation
+Deferred taxes recognized in equity
+Deferred tax benefit attributable to continuing operations
+Deferred tax arising from business acquisitions
+2015
+1,128.6
+(6.0)
+1,122.6
+(1)
+457
+4
+5
+(1)
+(3)
+102
+36
+613
+2015
+Income taxes recognized directly in equity
+Income taxes
+Income taxes from discontinued operations
+Income taxes from continuing operations
+€ in millions
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax benefit consisted of the following:
+Infineon did not provide for additional income taxes or foreign withholding taxes on the cumulative retained
+earnings of foreign subsidiaries as of September 30, 2016 and 2015, to the extent that these earnings are intended
+to be indefinitely reinvested in those operations.
+2016
+(11)
+4.1
+1,129.3
+ber 30, 2015
+784
+751
+1
+The change of the net amount of deferred tax assets and liabilities can be broken down as follows:
+There are no material tax loss carry-forwards for which no deferred tax assets were recognized and which are
+subject to expiration under statutory tax regulations. There are no material tax credits for which no deferred tax
+assets were recognized and which will expire within the next 12 years.
+668
+740
+190
+243
+3,451
+2,427
+2015
+2016
+Temporary differences
+Tax credits
+Tax loss carry forwards (Corporate tax and local income tax)
+753
+785
+2
+October 1,
+2014
+€ in millions
+INFINEON TECHNOLOGIES
+Septem-
+ANNUAL REPORT 2016
+Notes to the Consolidated Financial Statements
+145
+In Germany Infineon Technologies AG had corporation tax loss carry-forwards of €2.0 billion and municipal trade
+tax loss carry-forwards of €3.1 billion as of September 30, 2016.
+In other jurisdictions corporation tax loss carry-forwards amounted to €142 million and local income tax loss
+carry-forwards amounted to €303 million. Additionally unused tax credits and excess foreign tax credits of
+€389 million exist.
+Infineon assessed its deferred tax assets for the need for a valuation allowance. Based on the results of this
+assessment of deferred tax assets, considering all positive and negative factors and information relating to the
+foreseeable future, Infineon recognized deferred tax assets, after netting, of €623 million as of September 30, 2016.
+No deferred taxes were recorded for the following items (gross amounts):
+€ in millions
+Consolidated Financial Statements
+Septem-
+ber 30, 2016
+147
+Trade receivables, net
+1,157
+Septem-
+ber 30, 2015
+Septem-
+ber 30, 2016
+Financial investments
+Securities
+Fixed-term bank deposits and money market funds
+Investment funds
+1,156
+€ in millions
+9 Financial investments
+0.56
+0.66
+0.55
+0.01
+0.66
+1,125.3
+Financial investments comprise fixed-term deposits with banks, investment funds, money market funds and securi-
+ties. While fixed-term deposits with banks with an original term of more than three months and money market
+funds qualify as loans and receivables pursuant to IAS 39 "Financial Instruments: Recognition and Measurement",
+investment funds and securities are categorized as available-for-sale financial assets (for valuation see note 2).
+Financial investments at September 30, 2016 and 2015 comprise the following (for further information see also
+notes 21 and 22):
+2.7
+399
+59
+Allowance for doubtful accounts
+Trade receivables, gross
+Trade receivables, related parties
+Trade receivables, third parties
+€ in millions
+Trade receivables due within one year at September 30, 2016 and 2015 consist of the following:
+122
+10 Trade receivables
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+1,340
+1,615
+62
+Notes to the Consolidated Financial Statements
+Additions
+Other intangible assets
+Disposals
+€ in millions
+The total lines of credit as of September 30, 2016 and 2015 are summarized in the following table:
+Furthermore, in connection with the pending acquisition of Wolfspeed (see note 3), Infineon concluded a financing
+agreement for three senior unsecured lines of credit with several international banks: a line of US$250 million
+with a term of three years, a line of €200 million with a term of four years and a line of US$250 million with a term
+of five years. The lines will be drawn down at the time the acquisition is completed.
+In addition, Infineon has established several independent financing arrangements in the form of both short- and
+long-term credit facilities, in order to finance operating business requirements.
+Moreover, as of September 30, 2016, besides two senior and unsecured bonds of €800 million, there are other
+financial liabilities which primarily relate to financing for Infineon Technologies Austria AG.
+The term loan in the amount of US$934 million, which Infineon had raised from several international banks in
+connection with the acquisition of International Rectifier (see note 3), was repaid in full out of the USPP proceeds
+on April 13, 2016.
+> Notes with a nominal value of US$235 million due in 2028.
+> Notes with a nominal value of US$350 million due in 2026, and
+> Notes with a nominal value of US$350 million due in 2024,
+Infineon successfully completed a US private placement of notes (USPP) with a nominal value of US$935 million
+in April 2016. The senior, unsecured USPP notes, which bear average annual interest of 4.09 percent, consist of
+the following:
+1,793
+1,769
+Total
+1,760
+1,752
+830
+USPP notes US$935 million, weighted average interest rate 4.09%, due 2024-2028
+Long-term debt
+494
+496
+Bond €500 million, coupon 1.50%, due 2022
+298
+298
+Bond €300 million, coupon 1.00%, due 2018
+968
+128
+Unsecured loans, weighted average interest rate 0.52% (2015: 1.76%), due 2017-2023
+Loans payable to banks:
+Acquisitions
+33
+September 30, 2016
+17
+September 30, 2015
+Aggregate
+facility
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+77
+1,001
+1,078
+720
+144
+864
+Total
+968
+968
+646
+127
+773
+Long-term
+77
+33
+110
+74
+17
+91
+Short-term
+Available
+Drawn
+Aggregate
+facility
+Available
+Drawn
+Term
+8
+25
+17
+32
+(3)
+(11)
+5
+41
+Provisions related to Qimonda (see note 23)
+46
+(17)
+(5)
+12
+56
+Warranties
+288
+(10)
+(241)
+217
+322
+Obligations to employees
+2016
+Reversals
+Usage
+Additions
+2015
+September 30,
+October 1,
+€ in millions
+Short-term and long-term provisions at September 30, 2016 consist of the following:
+13 Provisions
+No property, plant and equipment was pledged as of September 30, 2016 (prior year: €13 million), equally no
+intangible assets were transferred to a third party as security or pledged as of September 30, 2016 and 2015.
+Other
+55
+9
+(14)
+Current maturities of long-term debt, weighted average interest rate: 1.37% (2015: 3.48%)
+Loans payable to banks, weighted average interest rate in the previous year: 4.35%
+Short-term debt and current maturities of long-term debt
+ber 30, 2015
+ber 30, 2016
+€ in millions
+Septem-
+Septem-
+151
+Debt at September 30, 2016 and 2015 consists of the following:
+14 Debt
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+The gross cash position increased from €2,013 million as of September 30, 2015, to €2,240 million as of Septem-
+ber 30, 2016 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on
+revenue of €6,473 million, the ratio of gross cash to revenue was €1 billion plus 19.2 percent of revenue as of
+September 30, 2016, thereby at the upper end of the target range. In the previous year the ratio of gross cash to
+revenue was €1 billion plus 17.5 percent of revenue.
+INFINEON TECHNOLOGIES
+Of the total provisions as of September 30, 2016 and 2015, a cash outflow of €327 million and €402 million, respec-
+tively, is expected to occur within one year. With the exception of the service anniversary awards of €27 million
+and €22 million as of September 30, 2016 and 2015, respectively, the cash outflow for the majority of the remaining
+€49 million and €50 million as of September 30, 2016 and 2015, respectively, is expected within two to seven years.
+Aggregate amounts of debt and interest maturing in the coming years are as follows:
+Other provisions comprise provisions for litigations (other than provisions relating to Qimonda), asset retirement
+obligations, onerous contracts and miscellaneous other liabilities.
+Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
+flextime, service anniversary awards, other personnel costs and social security costs.
+76
+327
+402
+72
+Thereof long-term
+Thereof short-term
+403
+(43)
+(271)
+243
+474
+Total provisions
+37
+(13)
+Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements associated
+with products sold.
+€ in millions
+Less than 1 year
+1-2 years
+Unrealized (losses) resulting from securities
+Total
+(3)
+1
+(4)
+resulting from securities
+Realized (gains) losses
+(1)
+2
+(3)
+1
+(3)
+4
+resulting from hedge accounting
+Unrealized gains (losses)
+9
+6
+(1)
+(1)
+resulting from hedge accounting
+Realized (gains) losses
+(39)
+(39)
+(6)
+(6)
+Deal Contingent Forward
+100
+100
+(28)
+(28)
+(1)
+(1)
+(1)
+(1)
+The gross debt to EBITDA ratio was 1.1 as of September 30, 2016 (1.4 in 2015). Infineon continues to have sufficient
+financial flexibility to ensure that in addition to financing its planned investments it is also able to pay regular
+dividends (see note 15) and complete the pending acquisition of Wolfspeed.
+Infineon's main capital management objective is to ensure financial flexibility on the basis of a solid capital
+structure. As with comparable companies in the semiconductor industry, it is of prime importance that sufficient
+cash funds are available to finance operating activities and planned investments throughout all phases of the
+business cycle. On the other hand, debt should only constitute a modest portion of the financing mix. Based on
+these principles Infineon has defined key objectives for capital management. These capital structure targets were
+adjusted in February 2016 to reflect the strong revenue growth and the positive development of Infineon's profit-
+ability and will continue to be pursued by Infineon after the planned acquisition of Wolfspeed (see note 3).
+Accordingly, Infineon plans to maintain a liquidity level (gross cash position) of at least €1 billion plus additionally
+10 to 20 percent of revenue. The previous target range for the gross cash position amounted to 30 to 40 percent
+of revenue. The upper limit for gross debt of no more than two times EBITDA continues to apply. The net amount
+of these two capital structure targets is no longer subject to its own target (previously: positive net cash position).
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+In February 2016, for the first time, Infineon was assigned a long-term credit rating "BBB" (outlook "stable") by the
+international rating agency S&P Global Ratings (S&P). The solid investment grade rating reflects among other things
+Infineon's adjusted capital structure targets. S&P confirmed Infineon's rating following the announcement of the
+planned acquisition of Wolfspeed (see note 3).
+16 Capital management
+154
+Due to the results achieved in the reporting period as well as a positive business outlook, a dividend of €0.22 for
+each share entitled to a dividend shall be proposed to be paid from the €249 million of distributable profits of
+Infineon Technologies AG for the 2016 fiscal year, an increase of €0.02 compared to the previous year. This would
+result in an expected distribution of approximately €248 million. The payment of this dividend depends on the
+approval of the Annual General Meeting on February 16, 2017.
+For the 2015 fiscal year, a cash dividend of €0.20 per share (total amount: €225 million) was paid. For the 2014
+fiscal year, a cash dividend of €0.18 per share (total amount: €202 million) was paid.
+Dividends
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+(2,312)
+(159)
+744
+Foreign currency translation differences
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial gains on post-employment benefit obligations net of tax of €5 million
+As of September 30, 2016
+(27)
+632
+(3,502)
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial loss on post-employment benefit obligations net of tax of €1 million
+As of September 30, 2015
+As of October 1, 2014
+€ in millions
+The following table shows a reconciliation of accumulated deficit as of September 30, 2015 and 2016:
+Accumulated deficit
+62
+3
+59
+(35)
+(3)
+(32)
+(2,897)
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations mainly
+in cost of goods sold. Amortization of intangible assets is mainly presented in cost of goods sold or selling, general
+and administrative expenses.
+Net after tax
+Pretax
+1,341
+27
+943
+42
+8
+28
+303
+43
+108
+28
+16
+29
+33
+ཆེ ཆེ
+46
+303
+46
+17
+Interest
+Debt
+Interest
+Debt
+September 30, 2015
+September 30, 2016
+152
+Total
+5 years and after
+3-4 years
+2-3 years
+186
+514
+22
+1,777
+Net after tax
+Tax
+Pretax
+September 30, 2015
+September 30, 2016
+€ in millions
+Changes in other reserves during the 2016 and 2015 fiscal years are as follows:
+Other reserves
+> Pursuant to section 4 (6) of the Articles of Association the share capital is conditionally increased by up to
+€260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights of the
+holders of warrants or convertible bonds, which the Company may issue at any time prior to February 12, 2019
+(Conditional Capital 2014).
+› Pursuant to section 4(5) of the Articles of Association the share capital is conditionally increased by up to
+€21,714,094 through the issue up to 10,857,047 new no par value registered shares in connection with the Com-
+pany's "Infineon Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 17) (Conditional
+Capital 2010/1). During the 2016 fiscal year, a total of 3,401,628 new no par value shares with a proportionate
+amount of share capital of €2 per share were issued out of the Conditional Capital 2010/1 as a result of the exercise
+of share options in connection with the Stock Option Plan 2010. Conditional Capital 2010/1 decreased accordingly
+by €6,803,256 to €14,910,838. The corresponding change to the Articles of Association was submitted after the
+end of the reporting period and entered into the Commercial Register as requested.
+As of September 30, 2016, the Company's Articles of Associations provide for two conditional capitals amounting
+to up to €281,714,094 (the previous Conditional Capital III was cancelled by the Annual General Meeting on
+February 18, 2016):
+Conditional capital
+› Section 4(7) of the Articles of Association provides that the Management Board is authorized, with the approval
+of the Supervisory Board, to increase the share capital in the period up to February 17, 2021 - either once or in
+partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against contributions
+in cash for the purpose of increasing the issue to employees of the Company or its Group companies (Authorized
+Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares. The shares
+may be issued in such a manner that the contribution to be paid on such shares is covered by the portion of the
+profit for the year that the Management Board and Supervisory Board could transfer to revenue reserves in
+accordance with section 58, paragraph 2, AktG.
+153
+Tax
+Notes to the Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+> Section 4(4) of the Articles of Association provides that the Management Board is authorized, with the approval of
+the Supervisory Board, to increase the share capital in the period until its expiry in February 11, 2020 once or in
+partial amounts by a total of up to €676,000,000 through the issue of new no par value registered shares, carrying
+a dividend right from the beginning of the fiscal year in which they are issued, against contributions in cash or in
+kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval of the Supervisory Board,
+to exclude the subscription rights of the shareholders in certain cases. In accordance with German law, cash capital
+increases with subscription rights excluded pursuant to section 186, paragraph 3, fourth sentence of the AktG,
+are not permitted to exceed 10 percent of a company's share capital - neither at the time of the authorization
+becoming effective nor at the time of its exercise. For share capital increases against contributions in kind or a
+combination of cash contributions and contributions in kind, the authorization further provides an upper limit of
+20 percent of the share capital, again measured either at the time the authorization becomes effective or, if the
+value is lower, at the time of its exercise.
+As of September 30, 2016, the Company's Articles of Associations provide for two authorized share capitals
+amounting to up to €706,000,000 (the Authorized Share Capital 2016/I was created by the Annual General Meeting
+on February 18, 2016):
+Authorized share capital
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €201 million in
+the 2015 fiscal year, of which €202 million related to the dividend paid in February 2015. As a result of the acquisition
+of the remaining 33.6 percent share in LS Power Semitech Co., Ltd. (LSPS), Korea, from LS Industrial Systems Co.,
+Ltd. (LSIS), Korea for €15 million on April 30, 2015, additional paid-in capital decreased by €10 million and non-con-
+trolling interests were reduced by €5 million. The exercise of employee stock options increased additional paid-in
+capital by €9 million. Expenses amounting to €6 million for share-based compensation were recorded in the 2015
+fiscal year, additional paid-in capital increased by the same amount.
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €197 million
+in the 2016 fiscal year, of which €225 million related to the dividend paid in February 2016. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €19 million. Expenses amounting to €9 million for share-based compensation were recorded in
+the 2016 fiscal year, additional paid-in capital increased by the same amount (see note 17).
+The ordinary share capital of Infineon Technologies AG increased during the 2016 fiscal year by €6,803,256.
+3,401,628 new shares were issued as a result of the exercise of stock options by employees as well as by current
+and past members of the Management Board (2015: 1,532,251). As of September 30, 2016 the ordinary share capital
+stood at €2,265,346,218 divided into 1,132,673,109 no par value registered shares, each representing €2 of the
+Company's ordinary share capital. Each share grants the holder one vote and an equal portion of the profits in the
+form of a dividend as resolved by the Annual General Meeting. As of September 30, 2016, of the above mentioned
+total number of issued shares the Company held 6 million own shares (2015: 6 million). Own shares held by the
+Company as at the date of the Annual General Meeting carry no voting rights and are not entitled to dividend.
+Additional paid-in capital
+Ordinary share capital
+15 Equity
+Interest expense incurred in connection with debt for the years ended September 30, 2016 and 2015, was €64 mil-
+lion and €48 million, respectively.
+134
+1,809
+363
+Consolidated Financial Statements
+Reference is made to note 2, section "Recoverability of intangible assets and other long-lived assets" with respect
+to the procedures and assumptions used for the annual impairment test for goodwill as well as the carrying amount
+of goodwill allocated to individual CGUS or groups of CGUS.
+ANNUAL REPORT 2016
+150
+16
+(6,305)
+1,343
+1,353
+(1,059)
+(87)
+64
+(1,082)
+128
+116
+284
+314
+(7,619)
+(665)
+162
+(1)
+5
+(8,118)
+2,119
+(7)
+2,093
+89
+(5,867)
+amortization
+Reclassi-
+fication
+Carrying amount
+149
+Impairments
+Foreign
+Septem-
+currency
+effects
+ber 30, 2016
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+(693)
+(42)
+9
+6
+(11)
+(731)
+364
+310
+(536)
+799
+803
+(159)
+(10)
+8
+14
+(392)
+(168)
+6
+(15)
+(569)
+1,656
+1,738
+Depreciation and impairment
+Carrying amount
+October 1, Depreciation/
+Disposals
+2014
+amortization
+Reclassi-
+fication
+Impairments
+Foreign
+currency
+effects
+(6)
+(4)
+57
+49
+(31)
+(15)
+(205)
+312
+260
+(53)
+(68)
+(121)
+275
+Disposals
+342
+(43)
+5
+(70)
+213
+262
+(144)
+(20)
+1
+(163)
+(32)
+Septem-
+October 1, Depreciation/
+2015
+Notes to the Consolidated Financial Statements
+40
+1,003
+7,220
+Other plant and office equipment
+1,123
+73
+14
+(57)
+14
+8
+1,175
+Payments on account and construction in progress
+272
+217
+25
+(4)
+(198)
+2
+314
+Total property, plant and equipment
+173
+8,799
+(106)
+326
+Reclassi-
+through
+business
+fication
+Foreign
+currency
+effects
+Septem-
+ber 30, 2015
+combi-
+nations¹
+€ in millions
+Property, plant and equipment
+Land, land rights and buildings
+875
+30
+82
+(2)
+11
+7
+Technical equipment and machinery
+6,529
+258
+646
+379
+(169)
+154
+18
+32
+(5)
+2
+201
+17
+1
+18
+506
+118
+1,430
+(13)
+89
+2,130
+1 For the year ended September 30, 2015, amounts shown under "Acquisitions through business combinations" relate to assets acquired in connection with the acquisition
+of International Rectifier.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+294
+16
+278
+395
+57
+9,712
+Goodwill and other intangible assets
+Goodwill acquired for consideration
+Capitalized development costs
+Customer relationships
+Technologies
+Licenses and similar rights
+Other intangible assets
+Depreciation and impairment
+Total goodwill and other intangible assets
+729
+49
+803
+327
+100
+(8)
+419
+374
+21
+25
+Impairments on property, plant and equipment in the previous fiscal year consisted primarily of €15 million of
+leasehold improvements (other plant and office equipment) and technical equipment in connection with the
+termination of manufacturing operations at Techview in Singapore which was disposed of in the 2016 fiscal year.
+In this regard €4 million of impairments were released. The release was recognized as other operating expense in
+the Consolidated Statement of Operations as was the impairment in the previous year. The impairment to inter-
+nally developed intangible assets of €15 million (prior year: €12 million) relates to the impairment of capitalized
+development projects owing to lower expected contributions to earnings from these projects. Impairments of
+intangible assets are presented as other operating expense.
+ber 30, 2015
+Septem-
+(125)
+25
+803
+1,700
+2,093
+(7,619)
+(33)
+(18)
+158
+(627)
+(7,099)
+272
+314
+(3)
+3
+94
+116
+(5,421)
+(510)
+96
+(1)
+(6)
+(25)
+(29)
+(5,867)
+226
+1,108
+(1,029)
+(83)
+57
+(4)
+(1,059)
+1,353
+8
+(12)
+(1)
+(1)
+(4)
+14
+(256)
+(133)
+13
+(3)
+(13)
+(392)
+1,738
+250
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+(3)
+310
+23
+(144)
+(159)
+260
+202
+(52)
+(1)
+(53)
+57
+342
+(32)
+262
+(131)
+(17)
+5
+(1)
+(32)
+Septem-
+ber 30, 2015
+Capital management as well as the corresponding targets and definitions are based on indicators determined on
+the basis of the consolidated IFRS financial statements. Gross cash is defined as the total of cash, cash equivalents
+and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before interest and
+taxes and EBITDA as EBIT plus scheduled depreciation and amortization.
+(693)
+ber 30, 2014
+(649)
+(34)
+2
+1
+(9)
+(4)
+Foreign
+Domestic
+Foreign
+Domestic
+Projected future pension increases
+September 30, 2016
+plans
+Rate of salary increase
+September 30, 2015
+plans
+Total
+plans
+1.0
+Discount rate at the end of the fiscal year
+2.4
+3.2
+2.0
+2.3
+2.0
+2.4
+2.0
+plans
+2.2
+1,104
+Actuarial assumptions
+Total
+Plans that are wholly unfunded
+11
+93
+104
+10
+71
+81
+Plans that are wholly or partly funded
+Total
+953
+The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
+79
+763
+70
+833
+964
+172
+1,136
+773
+141
+0.6
+914
+1,032
+Foreign
+plans
+2.0
+Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high
+credit rating.
+a 50 basis points higher
+expected rate of salary increase
+a 50 basis points lower
+928
+plans
+783
+1,152
+177
+975
+expected rate of salary increase
+a 50 basis points higher
+999
+152
+847
+1,245
+186
+1,059
+a 50 basis points lower discount rate
+839
+131
+708
+1,038
+160
+878
+a 50 basis points higher discount rate
+expected rate of pension increase
+0.7
+a 50 basis points lower
+167
+Sensitivity analysis
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
+changes in one actuarial assumption holding all other assumptions constant.
+€ in millions
+Present value of defined
+benefit pension plans with:
+September 30, 2016
+September 30, 2015
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+164
+940
+Increase in life expectancy by one year
+expected rate of pension increase
+941
+146
+795
+1,159
+177
+982
+902
+137
+765
+1,121
+954
+145
+(18)
+ANNUAL REPORT 2016
+18
+4
+14
+22
+8
+14
+Foreign currency effects
+Benefits paid by Infineon
+7
+Plan settlements
+(3)
+(3)
+Acquisitions
+6
+7
+Present value of defined
+5
+5
+430
+488
+51
+437
+Fair value of plan assets at beginning of year
+Change in fair value of plan assets:
+benefit obligation at end of year
+(914)
+(141)
+(773)
+(1,136)
+(172)
+(964)
+(6)
+(6)
+(2)
+8
+(179)
+(20)
+(17)
+(23)
+(5)
+754
+Interest cost
+(5)
+(5)
+Past service income
+(25)
+(4)
+(21)
+(26)
+(5)
+(21)
+Current service cost
+35
+52
+3
+(22)
+(159)
+Adjustments to financial assumptions
+(1)
+(1)
+(13)
+(13)
+Adjustments to demographic assumptions
+(30)
+(3)
+(27)
+(3)
+(1)
+(2)
+Experience adjustments
+Actuarial gains (losses) for:
+(5)
+482
+Expected return on plan assets
+11
+Thereof: Infineon Technologies Austria AG
+(313)
+(313)
+(461)
+Thereof: Infineon Technologies AG
+(426)
+(90)
+(336)
+(604)
+(110)
+(494)
+Net pension liability
+488
+51
+437
+(56)
+532
+(40)
+INFINEON TECHNOLOGIES
+plans
+plans
+Total
+Foreign
+Domestic
+September 30, 2015
+September 30, 2016
+€ in millions
+159
+The funding of the defined benefit obligations is as follows:
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
+reported in the Consolidated Statement of Financial Position as at September 30, 2016 and 2015.
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+(40)
+(861)
+62
+Fair value of plan assets at end of year
+11
+13
+Contributions from Infineon
+(5)
+(3)
+(2)
+34
+11
+23
+Actuarial gains (losses)
+12
+2
+10
+13
+2
+24
+470
+13
+19
+5
+5
+(5)
+(5)
+Foreign currency effects
+(7)
+(7)
+Plan settlements
+(18)
+(4)
+(14)
+(22)
+(8)
+(14)
+Benefits paid
+6
+(131)
+(730)
+(914)
+There were no significant non-cash transactions from acquisition or financing activities during the 2016 and 2015
+fiscal years.
+18 Supplemental cash flow information
+The costs for share-based compensation amounted to €9 million and €6 million in the 2016 and 2015 fiscal years,
+respectively.
+Costs for share-based compensation
+6.0 million and 9.5 million stock options with an average exercise price per option of €7.18 and €7.33 were
+outstanding as at September 30, 2016 and 2015, respectively. Of these, 1.9 million were exercisable as at both
+September 30, 2016 and 2015.
+Stock Option Plan 2010
+As at October 1, 2016, 80,704 (virtual) performance shares were allocated to the Management Board and 960,160
+(virtual) performance shares were allocated to employees.
+1 The fair value of the performance shares at the grant date is determined by an external expert using a recognized financial-mathematical method
+(Monte Carlo simulation model).
+5.20
+114,046
+6.62
+September 30, 2017
+Fiscal year 2014: Management Board
+5.72
+1,199,588
+Cash and cash equivalents reported as of September 30, 2016 and 2015 totaling €625 million and €673 million,
+respectively, include €115 million and €85 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represents cash and cash equivalents of
+consolidated companies located in countries where the transfer of cash is legally restricted, for example the
+People's Republic of China.
+6.62
+INFINEON TECHNOLOGIES
+Consolidated Financial Statements
+Other related
+companies
+Joint
+ventures
+September 30, 2015
+September 30, 2016
+Financial payables
+Trade and other payables
+Financial receivables
+Trade and other receivables
+€ in millions
+Infineon purchases certain raw materials and services from and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+Related companies receivables and payables as of September 30, 2016 and 2015 consist of the following:
+Related companies
+Infineon has transactions in the normal course of business with associated and other related companies (collectively,
+"related companies"). The related companies which are controlled or significantly influenced by Infineon are
+disclosed in note 26. Related persons are persons in key management positions in particular members of the
+Management and Supervisory Board (see note 26) and their close relatives (collectively "related persons").
+19 Transactions with related companies and persons
+156
+Notes to the Consolidated Financial Statements
+ANNUAL REPORT 2016
+Joint
+ventures
+September 30, 2017
+5.31
+at September 30, 2016
+Fair value per
+performance share
+Number of
+performance shares
+the nine months
+before grant in €
+Average share price of
+End of the
+waiting period
+Tranche
+The following is an overview of the allocations made:
+Performance share plan
+The Company makes use of the Stock Option Plan 2010 and, from the 2014 fiscal year, the Performance Share Plan
+in order to provide share-based compensation.
+17 Share-based compensation
+Both the term loan of US$934 million which Infineon had raised in connection with the acquisition of International
+Rectifier as well as the USPP notes of US$935 million which have been used for full repayment of the term loan
+in April 2016, contain a number of standard covenants, including among other things, change of control clauses
+as well as the compliance with a debt coverage ratio. This covenant ratio, which provides for a certain relationship
+between the size of debt (adjusted) and earnings (adjusted), was complied with in the 2016 fiscal year; Infineon
+achieved a ratio that was significantly above the minimum requirement. The entire outstanding USPP notes which
+amounted to US$935 million as at September 30, 2016 (see note 14) can become immediately repayable if the
+covenant agreement is not complied with by Infineon.
+155
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+in €¹
+Fiscal year 2014: Employees
+Fiscal year 2016: Employees
+10.56
+100,702
+8.49
+September 30, 2018
+Fiscal year 2015: Management Board
+5.44
+1,003,944
+8.49
+September 30, 2018
+Fiscal year 2015: Employees
+7.07
+7.26
+1,186,294
+80,964
+10.56
+September 30, 2019
+Fiscal year 2016: Management Board
+September 30, 2019
+INFINEON TECHNOLOGIES
+Other related
+companies
+1
+The Group defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+158
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The valuation date of the German and foreign pension plans is September 30, respectively.
+In Germany Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. With the Infineon pension plan new entrants receive
+a defined contribution benefit which is funded by Infineon. Payments by the Infineon pension plan are generally
+made in twelve installments. For active employees who were, before the Infineon Pension Plan came into force,
+entitled to benefits in the form of an annuity, this commitment is the overriding one and thereby the possibility
+of an annuity is guaranteed. Together with former employees, whose pension benefit obligations are no longer
+transferred into the Infineon Pension Plan, this group makes up the largest part of the obligation at this time. The
+statutory framework is provided by the Company Pension Act (in German: Betriebsrentengesetz or BetrAVG) and
+by employment law in general. An appropriate provision is recorded for the German defined benefit pension plans,
+which are partly backed by plan assets. Individual agreements are in place for the members of the Management
+Board which are backed by pension reinsurance policies (detailed in the "Compensation Report" chapter).
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of
+service, others are dependent on average income over the service period. Furthermore, in certain countries
+Infineon makes severance payments irrespective of the reason for the termination of employment, these payments
+are usually defined by law in the relevant country. The liabilities arising from foreign defined benefit pension plans
+are partly covered by plan assets.
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For the Infineon Group, the
+significant benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to
+Infineon Technologies Austria AG.
+Defined benefit pension plans
+20 Pension plans
+In the 2016 and 2015 fiscal years there were no further significant transactions between Infineon and related persons
+which fall outside of the scope of the existing employment, service or appointment terms, or of the contractual
+arrangements for their remuneration.
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board as
+required by section 315a (1) in connection with section 314 (1) no. 6a, sentences 5 to 8 of the German Commercial
+Code, is provided in the Compensation Report which is part of the Combined Management Report.
+Neither Infineon Technologies AG nor any of its subsidiaries have granted loans to any member of the Supervisory
+or Management Boards.
+As of September 30, 2016, pension liabilities for former members of the Management Board amounted to €77.0 million
+(2015: €60.2 million).
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets to
+September 30, 2016 and 2015 is presented in the following table:
+The total compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2016
+fiscal year, including attendance fees, amounted to €1.7 million (2015: €1.5 million). Employee representatives in
+the Supervisory Board who are employed by Infineon also receive a salary for their activities as employees.
+Former members of the Management Board received total payments of €1.2 million (in particular pension payments)
+in the 2016 fiscal year (2015: €1.1 million).
+€ in millions
+2016
+(141)
+(773)
+Present value at beginning of year
+into account future salary increases:
+plans
+plans
+plans
+plans
+Total
+Foreign
+Domestic
+Total
+Foreign
+Domestic
+2015
+Change in defined benefit obligations taking
+1
+For information regarding the compensation paid to Mr. Mittal after termination of his Management Board activities,
+see "Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17
+(DRS 17)" in the compensation report in the chapter "Corporate Governance Report".
+Notes to the Consolidated Financial Statements
+Joint
+ventures
+2015
+2016
+Products and services received
+Sales and service charges
+€ in millions
+Sales and service charges to and products and services received from related companies in the 2016 and 2015
+fiscal years consist of the following:
+1
+1
+1
+8
+1
+8
+1
+1
+Other related
+157
+companies
+Other related
+companies
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+In accordance with a mutual agreement reached with the Supervisory Board, Mr. Mittal resigned as member of the
+Management Board effective June 30, 2016 and his service contract came to an end effective September 30, 2016.
+During the period between his resignation from the Management Board and the end of his service contract at the
+end of the 2016 fiscal year, Mr. Mittal continued to be available in his previous role in order to facilitate the transfer of
+duties and the induction of his successor. Mr. Mittal is still entitled to a payment of €557,344.13 under his service
+contract which expired on September 30, 2016.
+The active members of the Management Board in the 2016 fiscal year received total fixed non-performance-
+related compensation for their services of €2.9 million (2015: €2.7 million). In addition, the members of the Manage-
+ment Board received variable performance-related compensation for their services in the 2016 fiscal year totaling
+€2.8 million (2015: €3.9 million). This comprised a Short Term Incentive of €1.3 million (2015: €2.0 million), and a
+Mid Term Incentive of €1.5 million (2015: €1.9 million). Furthermore, the Management Board received a Long Term
+Incentive (LTI) which, since 2014, takes the form of performance shares. The expense resulting from the LTI
+amounted to €0.4 million (2015: €0.5 million). The total compensation granted to active members of the Manage-
+ment Board amounted to €6.1 million in the 2016 fiscal year (2015: €7.1 million).
+Related persons
+As of September 30, 2016, sales and services relationships with related companies resulted in purchase commitments
+of €5 million (September 30, 2015: €1 million).
+20
+80
+14
+77
+1
+5
+1
+3
+Joint
+ventures
+136
+in %
+992
+Non-current liabilities:
+121
+8
+111
+2
+121
+Other current liabilities
+857
+857
+857
+Trade payables
+17
+17
+17
+of long-term debt
+Short-term debt and current maturities
+Current liabilities:
+Balance as of September 30, 2016
+Financial liabilities
+Long-term debt
+Other non-current liabilities
+Total
+1,752
+802
+802
+Trade payables
+33
+33
+33
+of long-term debt
+Short-term debt and current maturities
+Current liabilities:
+Fair value
+Balance as of September 30, 2015
+8
+2,745
+2
+2,755
+8
+8
+8
+1,827
+1,752
+2,830
+802
+163
+hedging
+instruments
+Non-current assets:
+74
+73
+742
+742
+1,340
+1,156
+184
+673
+673
+1
+74
+742
+673
+1,340
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Other non-current assets
+129
+32
+97
+cost)
+(amortized
+Designated
+Other
+financial
+liabilities
+through
+profit or loss
+At fair value
+Carrying
+amount
+Categories of
+financial liabilities
+Notes to the Consolidated Financial Statements
+(cash flow
+hedges)
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+2,958
+2,741
+216
+1
+2,958
+Total
+129
+€ in millions
+Other current liabilities
+137
+7
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Financial investments
+Current assets:
+2015 fiscal year
+10
+10
+10
+10
+Total
+Other current liabilities
+Current liabilities:
+14
+60
+417
+491
+Total
+Current liabilities:
+Other current liabilities
+Total
+184
+Domestic
+plans
+In the 2016 and 2015 fiscal years there were no reclassifications between the levels.
+In addition, other non-current assets include an option to sell shares in an equity holding for a fixed price. The
+option is recognized as a derivative financial instrument and is not designated as a hedging instrument. The fair
+value is determined using the Black-Scholes option pricing model (Level 3).
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
+market price is available, the fair value is determined by considering existing contractual arrangements based on
+externally observable dividend policy (Level 3).
+Other current liabilities contain derivative financial instruments, including cash flow hedges. Their fair value is
+determined by discounting future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
+prices) drawn from reliable external sources are used (Level 2).
+There is no active market for the securities included in financial investments. The fair value is calculated as the
+present value of future expected cash flows, taking into account valuation parameters which can be observed in the
+market (Level 2).
+9
+9
+9
+14
+9
+63
+141
+217
+13
+19
+32
+62
+1
+1
+122
+13
+18
+32
+Other non-current assets
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used
+in the determination of the fair value:
+For assets measured at amortized costs categorized as "Loans and receivables", it is assumed that the fair values
+correspond to their carrying amounts. The same assumption applies to liabilities resulting from trade payables and
+other current liabilities categorized as "Other financial liabilities (amortized cost)".
+2,763
+2
+2,755
+7
+32
+890
+32
+1,760
+1,760
+32
+2,764
+Total
+Other non-current liabilities
+Long-term debt
+Non-current liabilities:
+137
+2
+128
+1,759
+132
+3,234
+> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
+ANNUAL REPORT 2016
+Non-current assets:
+1
+1
+59
+399
+458
+Other current assets
+Financial investments
+Level 3
+INFINEON TECHNOLOGIES
+Level 2
+Fair value by category
+Fair value
+164
+Current assets:
+2016 fiscal year
+€ in millions
+The allocation to the levels as of September 30, 2016 and 2015 is as follows:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Level 1
+1
+Foreign
+plans
+490
+The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
+tables were applied.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+160
+Investment strategies
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities, and
+reinsurance policies is targeted to maximize the total long-term return on assets for a given level of risk. Investment
+risk is monitored on an ongoing basis through periodic portfolio reviews, coordination with investment managers
+and annual liability measurements. Investment policies and strategies are periodically reviewed as part of detailed
+studies of assets and liabilities by independent investment advisors and actuaries to ensure the objectives of the
+plans are met, taking into account any changes in benefit plan structure, market conditions or other material items.
+The aim is to optimize the risk-return portfolio of plan assets against the liabilities using a diversified portfolio of
+investments within a defined risk budget and to thereby increase the funding ratio in the long term.
+Plan asset allocation
+As of September 30, 2016 and 2015 the allocation of invested plan assets to the major asset categories is as follows:
+€ in millions
+Government bonds
+Corporate bonds
+Equity securities
+Cash and cash equivalents
+Reinsurance policies
+Property
+Other
+933
+143
+790
+1,164
+(21)
+(26)
+(5)
+(21)
+Total
+Foreign
+plans
+plans
+plans
+Domestic
+Total
+Total
+Domestic
+plans
+2015
+2016
+161
+past service (cost) benefit
+Pension cost
+Amortization of unrecognized
+Expected return on plan assets
+Interest cost
+172
+Foreign
+(4)
+September 30, 2016
+in an active
+market
+24
+15
+460
+72
+414
+74
+Government and corporate bonds are traded in liquid markets and the majority of them have an investment
+grade rating.
+The position "Other" in the table above comprises mainly commodity funds and certificates.
+As a matter of policy Infineon's pension plans do not invest in shares or debt instruments of Infineon.
+The actual return on plan assets in the fiscal year ended September 30, 2016 was €47 million (2015: €7 million).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Amounts recognized in profit or loss and in total comprehensive income
+The expenses and income of defined benefit plans for the years ended September 30, 2016 and 2015 comprise
+the following:
+€ in millions
+Current service cost
+2,743
+19
+25
+23
+3
+Not quoted
+in an active
+market
+September 30, 2015
+Quoted
+Not quoted
+in an active
+market
+140
+146
+153
+1
+130
+Quoted
+3
+78
+6
+33
+-
+33
+-
+33
+3
+19
+133
+(25)
+in an active
+market
+(5)
+Categories of financial assets
+Balance as of September 30, 2015
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Balance as of September 30, 2016
+Financial assets
+€ in millions
+The following table presents the carrying amounts and the fair values of financial instruments by their respective
+classes, and a breakdown by category of financial instruments as defined by IAS 39.
+21 Additional disclosures on financial instruments
+162
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+Carrying
+amount
+At fair value
+through
+profit or loss
+Loans and
+receivables
+Designated
+cash flow
+hedges
+3,234
+100
+(18)
+32
+132
+88
+1
+87
+88
+INFINEON TECHNOLOGIES
+774
+774
+1,615
+1,157
+458
+1,615
+625
+625
+625
+Fair value
+774
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or
+funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
+fixed contributions paid. Additionally the Group makes contributions to government pension schemes. Expenses for
+defined contribution plans amounted to €162 million and €144 million in the fiscal years ended September 30, 2016
+and 2015, respectively.
+Available
+for sale
+321
+(32)
+(4)
+(28)
+(41)
+(8)
+(33)
+3
+3
+(5)
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees,
+otherwise they are recorded as research and development or selling, general and administrative expenses. Interest
+costs and expected return on plan assets were recorded net as part of financial expense.
+12
+8-
+2
+10
+13
+2
+11
+Defined contribution plans
+(5)
+(17)
+(22)
+(23)
+(5)
+As of September 30, 2016 and 2015, cumulative actuarial losses amounted to €482 million and €322 million,
+respectively. In addition, cumulative actuarial losses amounting to €7 million, resulting from deferred compen-
+sation and health care plans, are also recognized directly in other comprehensive income.
+197
+315
+191
+Actuarial losses of €160 million and €30 million have been recognized outside of the Consolidated Statement of
+Operations in other comprehensive income for the years ended September 30, 2016 and 2015, respectively.
+82
+81
+21
+21
+21
+Septem-
+ber 30, 2015
+22
+Total
+5-10 years
+2-5 years
+1-2 years
+In the 2017 fiscal year, payments of €21 million are expected to be made to plan assets which relate to benefits paid
+directly to pension recipients by the Group companies.
+Less than 1 year
+Septem-
+ber 30, 2016
+€ in millions
+The weighted average duration of defined benefit plans is around 18 years as of September 30, 2016 and 2015,
+respectively.
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as at
+September 30, 2016 and 2015:
+financial liabilities
+1,483
+46
+352
+152
+1,052
+3,137
+Derivative
+52
+financial liabilities:
+3,148
+709
+709
+Cash inflow¹
+(698)
+(698)
+Total
+1,063
+352
+52
+Non derivative
+Cash outflow
+beyond 2021
+Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
+base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
+credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
+Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
+are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
+However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+2020
+According to IFRS 7 "Financial Instruments: Disclosures", other price risk is defined as the risk that the fair value or
+future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
+arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
+to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+46
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have no significant impact on the result of the 2016 and 2015 fiscal years.
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures Infineon concluded additional financial derivative
+contracts for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk
+arising from the fluctuation of commodity prices. The change in relevant market prices as of September 30, 2016
+and September 30, 2015 had no significant impact on equity of the 2016 and 2015 fiscal years.
+Credit risk
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, the financial investments
+and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
+lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (S&P, Moody's or Fitch) and
+credit default swap premiums. Any possible breaches of stipulated investment thresholds result in an immediate
+notification and a call to reduce the risk.
+Infineon has spread its cash investments over more than 10 banks. At September 30, 2016 no financial institution
+was responsible for more than 13 percent (2015: 15 percent) of Infineon's cash investments. This gives rise to
+a maximum risk of €177 million (2015: €203 million) in the event of the default of a single financial institution
+assuming no deposit insurance scheme is in place. Infineon also holds derivative financial instruments with
+a positive fair value of €1 million in 2016 and 2015, respectively.
+Financing and liquidity risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well ensuring
+the availability of funding through adequate levels of committed credit facilities.
+2021
+INFINEON TECHNOLOGIES
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+169
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before September 30, 2016. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+€ in millions
+Due in
+as of September 30, 2016
+Total
+2017
+2018
+2019
+ANNUAL REPORT 2016
+1,483
+Notes to the Consolidated Financial Statements
+Total
+970
+14
+540
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+23 Legal risks
+Litigation and government inquiries
+Smartcard antitrust litigation
+In October 2008 the EU Commission initiated an investigation into the Company and other manufacturers of chips
+for smartcards for alleged violations of antitrust laws. On September 3, 2014 the EU Commission imposed a fine of
+€83 million on Infineon which was paid in October 2014. Infineon rejects the allegations as unfounded. Moreover
+Infineon believes its procedural rights to have been violated by the EU Commission and brought an action against
+the decision to fine before the European Court of Justice in Luxembourg in mid-November 2014. An oral hearing
+took place on April 28, 2016.
+Two class actions for damages in connection with the EU Commission investigative proceedings have been filed in
+Canada: the first action was filed in the state of British Columbia in July 2013, and the second in the state of Quebec
+in September 2014. The actions followed the press reports on the investigation and subsequent decision of the
+EU Commission. No dates have been set for court proceedings.
+In December 2014, an indirect customer filed a lawsuit against Infineon and Renesas in London (Great Britain) which
+was served upon the Company on April 20, 2015. In this lawsuit the plaintiff claims for damages in an amount still
+to be determined in connection with the allegations of the EU Commission.
+Any further statements about these matters by the Company could therefore seriously compromise the Company's
+position in these proceedings.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+170
+Proceedings in relation to Qimonda
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products) were
+carved out from Infineon and transferred to Qimonda in the form of a non-cash contribution with economic effect
+from May 1, 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings
+on January 23, 2009. On April 1, 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
+given rise to various disputes between the insolvency administrator and Infineon.
+On September 11, 2014 the Company and the insolvency administrator reached a partial settlement including the
+acquisition by Infineon of Qimonda's patent business which was closed on October 9, 2014. On the closing day
+the Company paid €260 million to the insolvency administrator. With the partial settlement all claims made by the
+insolvency administrator have been settled, apart from those relating to the proceedings in connection with the
+alleged activation of a shell company and liability for impairment of capital as well as the residual liability of
+Qimonda Dresden.
+Alleged activation of a shell company and liability for impairment of capital
+The insolvency administrator filed a request for declaratory judgment in an unspecified amount against Infineon
+Technologies AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies
+Investment B.V., at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to
+make good the deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of
+Qimonda began, i.e., to refund to Qimonda the difference between the latter's actual business assets when the
+insolvency proceedings began and its share capital (in German: "Unterbilanzhaftung"). The insolvency administrator
+contended that the commencement of operating activities by Qimonda amounted to what is considered in case
+law to be the activation of a shell company (in German: "Wirtschaftliche Neugründung"), and that this activation
+of a shell company was not disclosed in the correct manner. On March 6, 2012, with respect to another matter, the
+German Federal High Court issued a ruling on principle that any liability resulting from the activation of a shell
+company only depends on the situation at the date of the activation of a shell company and not, as asserted by the
+insolvency administrator, on the situation at the date on which insolvency proceedings are opened.
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on February 14,
+2012 the insolvency administrator also lodged a request for payment based on an alternative claim (in German:
+"Hilfsantrag"), as well as making other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in connection with the alleged
+activation of a shell company. On June 15, 2012 the insolvency administrator increased his request for payment
+of February 14, 2012 on the grounds of activation of a shell company to at least approximately €3.35 billion plus
+interest. Furthermore, the insolvency administrator continues to base a substantial part of his alleged payment
+claims, as already asserted out of court against Infineon in August 2011 for an unspecified amount, on so-called
+liability for impairment of capital (in German "Differenzhaftung"). This claim is based on the allegation that, from
+the very beginning, the carved-out memory products business had a negative billion euro value. The insolvency
+administrator therefore asserts that Infineon is obliged to make good the difference between this negative value
+and the lowest issue price (in German: "geringster Ausgabebetrag") of the subscribed stock. Additionally the
+insolvency administrator has asserted a claim for repayment of allegedly unjustly charged consultancy fees in an
+amount of €10 million in connection with the flotation of Qimonda.
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documentation
+for the capital increase by independent auditing companies, one of which had been engaged by Infineon and the
+other of which was acting in the capacity of a court-appointed auditor of non-cash contributions and post-formation
+acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business area contri-
+buted had a value of several times the lowest issue price of the shares issued, while the court-appointed auditor
+of non-cash contributions and post-formation acquisitions confirmed to the court that the lowest issue price of
+the shares issued was covered - as legally required - by the value of the non-cash contributions. Additionally, in
+the course of its defense against the claims asserted by the insolvency administrator, Infineon has commissioned
+several expert opinions all of which arrive at the same conclusion, that the objections raised by the insolvency
+administrator against the valuation of the non-cash contribution are not valid.
+Other price risk
+332
+46
+1,012
+2,914
+2016
+2017
+2018
+2019
+2020
+beyond 2020
+Non derivative
+financial liabilities
+2,906
+1,004
+46
+as of September 30, 2015
+332
+14
+540
+Derivative
+financial liabilities:
+Cash outflow
+209
+209
+Cash inflow¹
+(201)
+(201)
+Total
+970
+168
+5
+Consolidated Financial Statements
+Interest income from financial instruments not measured at fair value through profit and loss in the 2016 and 2015
+fiscal year amounted to €6 million, respectively; interest expense from such financial instruments amounted to
+€53 million (2015: €39 million).
+Infineon does not net financial instruments. The Infineon Group conducts derivative transactions according to the
+global netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and
+other comparable national framework agreements. Under the terms of these agreements, any netting arising from
+the occurrence of certain future events would have no material effect on the balance sheet presentation of these
+financial instruments.
+Derivative financial instruments and hedging activities
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts and commodity swaps. The objective is to reduce the impact of exchange rate and commodity
+price fluctuations on future net cash flows.
+The nominal values and fair values of Infineon's derivative instruments as of September 30, 2016 and 2015 are
+as follows:
+€ in millions
+Forward exchange contracts sold
+Forward exchange contracts purchased
+Designated cash flow hedges
+Deal Contingent Forward
+Commodity swaps
+Total
+September 30, 2016
+September 30, 2015
+Nominal
+value
+Fair value
+Nominal
+value
+Fair value
+165
+171
+(2)
+167
+(2)
+The currency
+effects included within net gains and losses amount to positive €1 million (2015: negative €2 million).
+This net currency effect arose exclusively from recognized financial instruments.
+(35)
+(48)
+(6)
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+165
+The net gain or loss on financial instruments (including interest income and expense) within continuing operations
+in the Group Statement of Operations amounted to the following:
+€ in millions
+Available-for-sale financial assets
+Loan and receivables
+Held for trading
+Other financial liabilities
+145
+Designated hedging instruments (cash flow hedges)
+2016
+2015
+2
+INFINEON TECHNOLOGIES
+(22)
+64
+7
+(21)
+(33)
+(77)
+(2)
+Total
+(4)
+455
+(8)
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 21.
+The following table shows the effects on profit or loss and equity for continuing operations of a 10 percent shift in
+exchange rates for the major foreign currencies (which can be found in note 2) as of September 30, 2016 and 2015.
+The assumed exchange rate changes relate only to financial instruments within the meaning of IFRS 7.
+€ in millions
+September 30, 2016
+September 30, 2015
+Interest rate risk
+Profit or Loss
+Equity
++10%
+(10%)
++10%
+(10%)
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments.
+6
+(40)
+49
+11
+(13)
+In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the fair
+value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond issu-
+ances and debt financing. Due to the cyclical nature of its core business and the need to maintain high operational
+flexibility, Infineon holds a relatively high level of liquid financial assets that are invested in short-term fixed-interest
+instruments. These investments generally have a contract duration of between one and twelve months in order
+to achieve short-term interest rate returns. The risk to these assets of changing interest rates is partially offset by
+financial liabilities, some of which are based on variable interest rates.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or
+loss and equity. Infineon prepares this using the iteration method. Infineon does not hold any fixed-rate financial
+assets or liabilities that are measured at fair value through profit or loss. Furthermore, Infineon did not hold any
+fixed-rate available for sale financial assets either in 2016 or 2015.
+Changes in market interest rates affect interest income and interest expense on variable rate financial instruments.
+Assuming an increase (decrease) of 100 basis points in market interest rates in 2016, interest income in the 2016
+fiscal year would have been worse (better) by €2 million; assuming an increase (decrease) of 100 basis points in
+market interest rates in 2015, interest income in the 2015 fiscal year would have been worse (better) by €9 million.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+(7)
+Notes to the Consolidated Financial Statements
+167
+Consolidated Financial Statements
+39
+1
+41
+(2)
+(9)
+(8)
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. In 2016 as in 2015 no foreign exchange derivatives used to hedge ongoing business were
+designated as cash flow hedges.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+166
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps
+which are designated as cash flow hedges. The fair value of these swaps amounted to positive €1 million as of
+September 30, 2016 and negative €2 million as of September 30, 2015. €4 million of unrealized gains arose from
+these transactions in the 2016 fiscal year (2015: €3 million unrealized losses), these increased other reserves by
+a corresponding amount. At the same time, €1 million of gains were realized in the 2016 fiscal year on swap trans-
+actions concluded in the previous year (2015: €3 million of losses); this amount was transferred from other reserves
+into the Consolidated Statement of Operations. As in the previous year, no hedge ineffectiveness was recorded in
+the Consolidated Statement of Operations for these hedging relationships. As in the previous year, no gains or losses
+were transferred from other reserves to profit or loss as a result of cash flow hedges for future raw material pur-
+chases being cancelled following the decision that the occurrence of the hedged transaction had become unlikely.
+22 Financial risk management
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate
+risk and price risk), credit risk and liquidity risk. Infineon's financial risk management program seeks to minimize
+potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments to hedge
+certain risks to which it is exposed. Financial risk management is carried out by the central Finance & Treasury (FT)
+department in accordance with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units. The FT department's policy
+contains principles for overall risk management as well as policies covering specific areas such as foreign exchange
+risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment
+of excess liquidity.
+Market risk
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial instruments,
+including those related to foreign exchange rates, interest rates and other price risks.
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Foreign exchange risk
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated
+in a foreign currency that is one that does not correspond to the functional currency, and the foreign currency
+represents the relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not
+risks within the meaning of IFRS 7.
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2016 and 2015 fiscal years.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+In order to partly hedge against the exchange rate risk associated with the purchase price obligation arising from
+the planned acquisition of Wolfspeed (see note 3), the Company entered into two transaction-dependent Euro/
+US Dollar foreign currency forward contracts (Deal Contingent Forwards) in July 2016. Each had a nominal value of
+US$250 million and was accounted for as a cash flow hedge. As at September 30, 2016 the two Deal Contingent
+Forwards had a total fair value of negative €8 million. The change in value of negative €6 million was recorded in
+other reserves. In the 2016 fiscal year Deal Contingent Forward ineffectiveness totaling €2 million was recorded in
+the Consolidated Statement of Operations. When the acquisition of Wolfspeed is completed, which is expected
+to take place at the beginning of the 2017 calendar year, the effective part of the hedges will be recognized when
+the goodwill arising from the transaction is determined.
+ANNUAL REPORT 2016
+152
+Notes to the Consolidated Financial Statements
+57
+83
+446
+Total
+(72)
+(14)
+(15)
+(15)
+(15)
+(17)
+(148)
+from sub-lease contracts
+46
+Payments arising
+53
+59
+61
+72
+100
+594
+from lease contracts
+Payments arising
+Payment obligations as of September 30, 2015
+144
+39
+41
+249
+44
+39
+177
+Consolidated Financial Statements
+The Chip Card & Security segment designs, develops, manufactures and markets hardware-based security products
+for card applications and connected systems.
+Chip Card & Security
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies as well as for mobile devices and cellular infrastructure.
+Power Management & Multimarket
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the
+conversion of electric energy in the medium to high power range. The components are used to generate energy,
+transmit it with low losses and use it efficiently.
+Industrial Power Control
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+Automotive
+During the 2016 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Chip Card & Security. Additionally
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+Infineon identifies reportable segments on the basis of the differences between the types of products and their
+applications.
+Identification of segments
+25 Segment reporting
+On December 23, 2003, the Company entered into a long-term lease contract with MoTo Objekt Campeon GmbH &
+Co. KG ("Moto"). This included an agreement to lease our office complex south of Munich, Campeon, whose con-
+struction was completed by MoTo in the second half of 2005. Infineon has no obligations with respect to financing
+MoTo and has taken over no guarantees related to the construction. The Company took on Campeon under an
+operating lease arrangement in October 2005 and completed the move of its employees to this new location in the
+2006 fiscal year. The complex was leased by the Company for a period of 20 years. After 15 years the Company has
+the option to acquire the complex or otherwise continue the lease for the remaining period of five years. Pursuant
+to the agreement, the Company placed a rental deposit of €75 million in escrow, which was included in cash depos-
+ited as collateral as part of other non-current assets in the Consolidated Statement of Financial Position as of Sep-
+tember 30, 2016. Lease payments are subject to limited adjustments based on specified financial ratios of Infineon.
+The agreement was classified as an operating lease, in accordance with IAS 17, with monthly lease payments
+expensed on a straight-line basis over the lease term. On November 17, 2016, Infineon entered into an agreement
+with Geneba RE 3 B.V. (Geneba) relating to the purchase of the latter's 93 percent shareholding in MoTo for an amount
+of €113 million. The purchase requires the approval of the responsible regulatory authorities. The transaction is
+expected to be completed towards the end of the 2016 calendar year and will result in the subsequent full consoli-
+dation of MoTo.
+Infineon, through certain of its sales and other agreements may, in the normal course of business, be obligated
+to indemnify its counterparties under certain conditions for warranties, patent infringement or other matters.
+The maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligation is contingent on events that may or may not occur in the future,
+and depends on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+In total, Infineon has guarantees outstanding to third parties as of September 30, 2016 amounting to €33 million
+(September 30, 2015: €29 million) mainly related to rentals of buildings.
+174
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+In conjunction with its investing activities, Infineon receives government grants and subsidies related to the
+construction and financing of certain of its production facilities. Grants are also received for selected research and
+development projects. These amounts are recognized upon the achievement of specified criteria. Certain of these
+grants have been received contingent upon Infineon complying with certain project-related requirements, such
+as creating a specified number of jobs over a defined period of time. Infineon is committed to maintaining these
+requirements, and from today's perspective Infineon expects to be able to do so. Nevertheless, should such
+requirements not be met, as of September 30, 2016, a maximum of €66 million (September 30, 2015: €71 million)
+of these subsidies could be refundable. This amount does not include any potential liabilities for Qimonda-related
+subsidies (see note 23).
+Long-term purchase commitments are in place for the supply of commodities and raw materials, in particular for
+wafers, semiconductor intermediate products, electricity and gas. Overall, these minimum purchase commitments
+give rise to other financial obligations amounting to approximately €810 million as at the reporting date (Septem-
+ber 30, 2015: €728 million). These contracts generally have terms of between one and five years. Purchases under
+these agreements are recorded as incurred in the normal course of business. Infineon assesses its anticipated
+purchase requirements on a regular basis in order to meet customer demand for its products. An assessment
+of potential losses under these purchase contracts is made on a regular basis for example in the event that antici-
+pated purchase quantities fall below the minimum contractual quantities.
+Purchase commitments for planned investments in intangible assets at September 30, 2016 amounted to €1 million
+(September 30, 2015: €2 million).
+Contracts already entered into for commenced or planned investments in property, plant and equipment (purchase
+commitments) at September 30, 2016 amounted to €274 million (September 30, 2015: €200 million).
+The total income arising from sub-lease contracts amounted to €16 million for the years ended September 30, 2016
+and 2015, respectively.
+Total rental expenses under operating lease contracts amounted to €83 million and €67 million in the 2016 and
+2015 fiscal years, respectively, and related mainly to minimum lease payments.
+62
+76
+1-2 years
+465
+173
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its business
+and financial condition, liquidity position and results of operations. Irrespective of the validity of the allegations
+and the success of the aforementioned claims and other matters described above, Infineon could incur significant
+costs in the defense of these matters.
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates are
+revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that
+a liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
+regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
+of law committed by individual employees or third parties.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condition,
+liquidity position and results of operations, particularly in the period in which reassessment is made.
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate to products, services, patents, environmental issues and other matters.
+Other
+172
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so, and accordingly represent contingent liabilities that are not included in provisions. This applies in particular
+to the legal dispute for alleged activation of a shell company and liability for impairment of capital described above.
+Should the alleged claims prove to be valid, substantial financial obligations could arise for Infineon which could
+have a material adverse effect on its business and its financial condition, liquidity position and results of operations.
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. As a result, Infineon recorded provisions and liabilities in connection
+with some of the above-mentioned matters totaling €32 million and €55 million as of September 30, 2016 and Sep-
+tember 30, 2015, respectively. Of the provisions recorded as of September 30, 2016, €12 million has been provided in
+connection with the residual liability as former shareholder of Qimonda Dresden. For the defense of the proceedings
+still pending for the alleged activation of a shell company and liability for impairment of capital, the Company has
+recorded a provision of €18 million as of September 30, 2016. Remaining provisions in connection with the Qimonda
+insolvency total €2 million as of September 30, 2016.
+Infineon recognizes provisions and liabilities for such obligations and risks which it assesses at the end of each
+reporting period are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
+having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+Due to the highly complex nature of the issues to be decided and the level of the claims asserted, it is not clear at
+this stage if this legal dispute can be resolved with an out of court settlement, and, if this is not the case, when a
+first-instance court decision would be reached.
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who
+are supporting the respective parties with assessments and opinions.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On August 29, 2013
+the court appointed an independent expert to clarify the valuation issues raised by the insolvency administrator
+and to address technical matters.
+103
+171
+24 Other financial commitments
+In addition to provisions and liabilities, Infineon also has other financial obligations, relating in particular to
+lease and long-term rental arrangements, and unconditional purchase commitments. These are explained in more
+detail below.
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory business;
+as a result certain long-standing creditors have residual liability claims against Infineon. These claims can only
+be exercised by the insolvency administrator acting in the name of the creditors concerned. In the meantime settle-
+ments have been concluded with most of the major liability creditors.
+Payments due in
+(58)
+Undiscounted future minimum operating lease and rental payments arising from operating lease contracts at
+September 30, 2016 amounted to €465 million (September 30, 2015: €446 million). The corresponding payment
+obligations fall due as follows:
+Total
+(15)
+(15)
+(15)
+(15)
+(133)
+from sub-lease contracts
+Payments arising
+202
+54
+56
+(15)
+91
+(€ in millions)
+Total
+77
+2-3 years
+3-4 years
+4-5 years
+Less than
+1 year
+After
+5 years
+118
+Payment obligations as of September 30, 2016
+Payments arising
+from lease contracts
+598
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore (Chairman)
+(since July 1, 2016)
+> Infineon Technologies Japan K.K.,
+Tokyo, Japan (Chairman)
+(since July 1, 2016)
+Member of the Supervisory Board
+> Infineon Technologies Austria AG,
+Villach, Austria
+(since June 14, 2016)
+> Infineon Technologies Dresden GmbH, Dresden
+(until June 15, 2016)
+Member of the Board of Directors
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia
+(since August 12, 2016)
+Member of the Supervisory Board
+> tesa SE, Hamburg
+(since July 1, 2016)
+Member of the Board of Directors
+Wilmington, Delaware, USA
+> Infineon Technologies Austria AG,
+Villach, Austria (Chairman)
+Member of the Board of Directors
+> Infineon Technologies Americas Corp.,
+(since July 1, 2016)
+179
+Position
+Chairman of the
+Management Board,
+Chief Executive Officer,
+Labor Director
+Member of the
+Management Board,
+Executive Vice President,
+Chief Financial Officer
+Member of the
+Management Board
+Management Board
+Member of the
+Management Board,
+Executive Vice President
+Membership of Supervisory Boards
+and governing bodies of domestic and
+foreign companies (as at September 30, 2016)
+> Infineon Technologies Americas Corp.,
+Member of the Supervisory Board
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia (Chairman)
+Member of the Supervisory Board
+> EPCOS AG, Munich
+> Infineon Technologies Austria AG,
+Villach, Austria
+Member of the Board of Directors
+> Infineon Technologies Americas Corp.,
+Wilmington, Delaware, USA
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore
+> Infineon Technologies China Co., Ltd.,
+Shanghai, People's Republic of China
+Member of the Board of Directors
+Wilmington, Delaware, USA
+Occupation
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+June 30, 2019
+Wolfgang Mayrhuber 69
+Chairman
+Annual General
+Meeting 2020
+Management Consultant
+Johann Dechant¹
+Deputy Chairman
+51
+Annual General
+Meeting 2020
+Peter Bauer
+56
+Annual General
+Meeting 2020
+Dr. Herbert Diess
+57
+Annual General
+Meeting 2020
+Annette Engelfried¹
+51
+Annual General
+Meeting 2020
+Peter Gruber¹
+55
+Representative of
+Annual General
+Meeting 2020
+Senior Management
+Term expires
+(until June 30, 2016)
+Age
+180
+Singapore (Chairman)
+(until June 30, 2016)
+> Infineon Technologies India Pvt. Ltd.,
+Bangalore, India
+(until June 30, 2016)
+> Infineon Technologies Japan K.K., Tokyo, Japan
+(until June 30, 2016)
+Jochen Hanebeck
+48
+June 30, 2019
+Member of the
+(since July 1, 2016)
+Arunjai Mittal
+45
+(until June 30, 2016)
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The Supervisory Board
+The members of the Supervisory Board during the 2016 fiscal year, the Supervisory Board position held by them,
+their occupation, their membership of other supervisory and governing bodies and their ages are as follows:
+Name
+52
+Information pursuant to section 161 Stock Corporation Act (AktG)
+December 31, 2018
+424
+399
+819
+710
+661
+568
+6,473
+5,795
+The allocation of revenues from external customers is based on the customers' billing location. The average
+number of employees by geographic region is provided in note 6.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+178
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2016 and 2015 fiscal year.
+€ in millions
+Non-current assets:
+Europe
+Therein: Germany
+Asia-Pacific (without Japan)
+Therein: China
+1,337
+Japan
+1,574
+3,083
+INFINEON TECHNOLOGIES
+1,191
+1,129
+Entity-wide disclosures in accordance with IFRS 8
+The following is a summary of revenue and of non-current assets by geographic area for the years ended
+September 30, 2016 and 2015:
+€ in millions
+Revenue:
+Europe, Middle East, Africa
+Therein: Germany
+Asia-Pacific (without Japan)
+Therein: China
+Japan
+Americas
+Therein: USA
+Total
+2016
+2015
+2,147
+2,020
+1,000
+942
+2,666
+Americas
+Therein: USA
+Total
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged the Company an aggregate of €0.4 million in the 2016
+fiscal year for tax consulting services.
+Fees for other services
+Fees of €30 thousand were charged by KPMG in the 2016 fiscal year for other services.
+Management Board and Supervisory Board
+Management compensation in the 2016 fiscal year
+As required by section 314 (1), no. 6a, sentences 5 to 8 HGB, the remuneration of the individual members of
+the Management Board and the Supervisory Board is disclosed in the Compensation Report which is part of the
+Combined Management Report.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board
+The members of the Management Board during the 2016 fiscal year were as follows:
+Name
+Age
+Term expires
+Dr. Reinhard Ploss
+60
+September 30, 2020
+Dominik Asam
+47
+In addition to the amounts described above, KPMG charged an aggregate of €0.1 million in the 2016 fiscal year
+for other attestation services.
+At the Annual General Meeting held on February 18, 2016, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2016 financial statements and the Consolidated Financial
+Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2016 fiscal year amounted to
+€1.7 million for the audit of the Consolidated Financial Statements and various separate financial statements.
+Fees for other attestation services
+Year-end audit fees
+Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+1,718
+1,504
+1,095
+982
+834
+939
+38
+31
+Dr. Helmut Gassel
+2
+1,286
+1,449
+1,279
+1,402
+3,840
+3,893
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+26 Additional information in accordance with HGB
+Chairman of the Infineon
+Works Council, Regensburg,
+Infineon Technologies AG
+Management Consultant
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and
+the Supervisory Board and made permanently available to the public on the internet at www.infineon.com
+("About Infineon/Investor/Corporate Governance/Declaration of Compliance").
+1
+Member of the
+Management Board
+Volkswagen AG,
+Wolfsburg
+(since December 1, 2015)
+Membership of Supervisory Boards and
+comparable governing bodies of domestic and
+foreign companies (as at September 30, 2016)
+(4)
+(2)
+(6)
+(16)
+Operating income
+Financial income
+Financial expenses
+763
+555
+6
+10
+(67)
+(49)
+Gain (loss) from investments accounted for using the equity method, net
+Income from continuing operations before income taxes
+3
+4
+705
+520
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
+Other income and expense, net
+Notes to the Consolidated Financial Statements
+(274)
+Acquisition-related depreciation/amortization and other expenses
+5
+(4)
+(3)
+982
+897
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+€ in millions
+Segment Result
+2016
+2015
+982
+897
+Plus/minus:
+Impairment on assets including assets classified as held for sale, net of reversals
+Impact on earnings of restructuring and closures, net
+(16)
+(31)
+7
+(13)
+Share-based compensation expense
+(9)
+(6)
+(191)
+1
+177
+Of the €191 million (2015: €274 million) “acquisition-related depreciation/amortization and other expenses"
+incurred in the 2016 fiscal year, €96 million (2015: €143 million) is attributable to cost of goods sold, €10 million
+(2015: €15 million) to research and development expenses and €85 million (2015: €116 million) to selling, general
+and administrative expenses.
+760
+Income from joint ventures accounted for using the equity method totaled €3 million and €4 million in the 2016 and
+2015 fiscal years, respectively, and was recognized in the Industrial Power Control segment. This allocated income
+is however not included in the Segment Result.
+€ in millions
+Inventories:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+338
+321
+115
+126
+255
+228
+49
+58
+833
+In the 2016 fiscal year €6 million (2015: €3 million) of impairments of intangible assets, property, plant and
+equipment assets and assets classified as held for sale was allocated to the Automotive segment, €4 million (2015:
+€8 million) to the Industrial Power Control segment, €1 million (2015: €1 million) to the Power Management &
+Multimarket segment and €4 million (2015: €0 million) to the Chip Card & Security segment. €1 million (2015:
+€19 million) was allocated to Corporate and Eliminations.
+114
+646
+€ in millions
+Depreciation and amortization:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Depreciation and amortization allocated to the segments
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+2016
+2015
+302
+284
+120
+112
+186
+165
+82
+82
+3
+3
+693
+140
+126
+135
+323
+Member of the Advisory Board
+> Porsche Holding GmbH, Salzburg, Austria
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH, Dresden
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH, Dresden
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+175
+Other Operating Segments
+Other Operating Segments comprises the remaining activities of businesses that have been disposed of, and
+other business activities. Since the closing of the sale of the Wireless mobile phone business, supplies of product
+to Intel Mobile Communications under the corresponding production agreements, other than those assigned to
+discontinued operations, are included in this segment.
+Corporate and Eliminations
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+Similarly, certain items are included in Corporate and Eliminations which are not allocated to the other segments.
+These include certain corporate headquarter costs and specific strategic technology initiatives, such as the
+300-millimeter thin-wafer technology, which are not allocated to the segments since they arise from corporate
+decisions not within the direct control of segment management.
+Furthermore, raw materials, supplies and work in progress of the common production frontend facilities, and raw
+materials and supplies of the common backend facilities, are not under the control or responsibility of the operating
+segment management and are therefore allocated to corporate functions. Only work in progress of backend facilities
+and finished goods are allocated to the operating segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities
+to the individual segments
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to
+the segments.
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating targets
+and budgets for the segments.
+Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals); impact
+on earnings of restructuring measures and closures; share-based compensation expense; acquisition-related
+depreciation/amortization and other expenses; gains (losses) on sales of assets, businesses, or interests in sub-
+sidiaries and other income (expense), including the costs of legal proceedings.
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+(since November 1, 2015)
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+Anting, People's Republic of China
+(since November 1, 2015)
+Member of the Supervisory Board
+> Deutsche Lufthansa AG, Cologne
+(Chairman)
+> Münchener Rückversicherungs-
+Gesellschaft AG, Munich
+Member of the Board of Directors
+> Heico Corporation, Hollywood, Florida, USA
+Member of the Administrative Board
+> BKK of Siemens AG, Heidenheim/Brenz
+Member of the Supervisory Board
+> OSRAM Licht AG, Munich
+(Chairman)
+> OSRAM GmbH, Munich
+(Chairman)
+Member of the Supervisory Board
+> Porsche Austria GmbH, Salzburg, Austria
+(since December 23, 2015)
+> Porsche Holding GmbH, Salzburg, Austria
+(since December 3, 2015)
+> Porsche Retail GmbH, Salzburg, Austria
+(since December 23, 2015)
+Member of the Board of Directors
+> FAW-Volkswagen Automotive Co., Ltd.,
+Changchun, People's Republic of China
+> Shanghai Volkswagen Automotive Co., Ltd.,
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+(1)
+6,473
+5,795
+The business with XMC industrial microcontrollers developed by Automotive and Chip Card & Security was
+transferred to Power Management & Multimarket and Industrial Power Control with effect from October 1, 2015.
+The previous year's figures have been adjusted accordingly.
+The operating segments do not currently have any trading relationships with one another. Accordingly, there was
+no intersegment revenue during the 2016 and 2015 fiscal years. Costs are recharged if applicable without impact on
+profit or loss.
+€ in millions
+Segment Result:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+2016
+2015
+396
+331
+126
+115
+328
+(7)
+14
+8
+665
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Segment information
+The following tables present selected segment data:
+€ in millions
+Revenue:
+Automotive
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Labor union secretary
+IG Metall district
+management, Berlin-
+Brandenburg-Saxony
+Senior Vice President
+Operations Finance
+Infineon Technologies AG
+Corporate and Eliminations
+176
+2016
+2015
+2,651
+2,350
+1,073
+971
+2,050
+1,796
+698
+Total
+Industrial Power Control
+n. a.
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia
+(0.05)
+6
+Warstein, Germany
+3
+60
+0.03
+0.00
+St. John, New Brunswick, Canada
+3
+0.85
+100
+0.00
+Neubiberg, Germany
+100
+0.02
+0.00
+Neubiberg, Germany
+100
+0.02
+0.00
+0.00
+3
+100
+0.27
+0.50
+0.18
+Duisburg, Germany
+100
+0.05
+0.00
+Wilmington, Delaware, USA
+51
+(0.03)
+Villach, Austria
+0.00
+Berlin, Germany
+12
+n. a.
+n. a.
+n. a.
+Coventry, Great Britain
+3
+88
+1.60
+3
+100
+Madrid, Spain
+100
+n. a.
+n. a.
+Bucharest, Romania
+100
+0.03
+0.00
+6
+Moscow, Russian Federation
+100
+100
+6
+0.03
+Zurich, Switzerland
+100
+0.20
+3
+0.03
+São Paulo, Brazil
+100
+(0.04)
+0.12
+3
+Warsaw, Poland
+0.00
+0.14
+0.04
+Dublin, Ireland
+3
+100
+0.41
+0.12
+Neubiberg, Germany
+100
+11, 13
+0.02
+3
+Neubiberg, Germany
+3
+100
+0.04
+0.00
+Neubiberg, Germany
+100
+0.03
+0.00
+3
+Duisburg, Germany
+0.00
+Neubiberg, Germany
+100
+0.03
+0.00
+3, 13
+Skovlunde (Copenhagen), Denmark
+Wilmington, Delaware, USA
+Tokyo, Japan
+100
+7
+1.58
+(6.48)
+0.09
+100
+3.64
+0.20
+8
+100
+9.96
+0.35
+Kuala Lumpur, Malaysia
+100
+8
+7
+1,580.94
+Wilmington, Delaware, USA
+IR International Holdings, Inc.
+KAI Kompetenzzentrum Automobil-
+und Industrieelektronik GmbH
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+MicroLinks Technology Corp.
+OSPT IP Pool GmbH
+GRI G4-17
+183
+Registered office
+100
+Share-
+Net result
+Foot-
+holdings
+(€ in
+(€ in
+note
+in %
+millions)
+millions)
+Equity
+0.46
+0.02
+Curepipe, Mauritius
+60
+67.88
+0.97
+3, 15
+60
+1.80
+0.22
+Hsinchu County, Taiwan
+12
+Cegléd, Hungary
+n. a.
+n. a.
+Wilmington, Delaware, USA
+100
+0.00
+0.00
+Linz, Austria
+72
+3
+0.10
+n. a.
+Warstein, Germany
+6
+(1.20)
+100
+4.33
+(0.07)
+8
+Newport, Great Britain
+100
+149.67
+(5.22)
+Neubiberg, Germany
+100
+1.92
+(12.64)
+6
+Tijuana, Mexico
+100
+9.03
+(0.58)
+8
+Shanghai, People's Republic of China
+100
+2.90
+(0.01)
+IR International Holdings China, Inc.
+3
+4
+יי
+77
+77
+St. Denis, France
+2
+77
+Rotterdam, The Netherlands
+77
+Qimonda International Trade (Shanghai) Co. Ltd.
+Dresden, Germany
+Shanghai, People's Republic of China
+Qimonda Italy s.r.l. in liquidation
+Qimonda Investment B.V.
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+Qimonda Korea Co. Ltd. in liquidation
+Qimonda Licensing LLC
+Qimonda Memory Product Development
+Center (Suzhou) Co., in liquidation
+Rotterdam, The Netherlands
+2
+77
+77
+2
+Dresden, Germany
+Wilmington, Delaware, USA
+Munich, Germany
+77
+2
+Singapore, Singapore
+77
+Leuven, Belgium
+77
+2
+Munich, Germany
+77
+77
+Bratislava, Slovakia
+77
+Dresden, Germany
+77
+Dresden, Germany
+77
+Munich, Germany
+77
+2
+2
+77
+Suzhou, People's Republic of China
+Padua, Italy
+77
+2
+77
+1 Certain subsidiaries were not consolidated due to immateriality.
+2 On January 23, 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally
+opened on April 1, 2009. The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction
+of Infineon's rights as a result of Qimonda AG's insolvency. Additionally, Qimonda and its subsidiaries are not included in the Company's Consolidated
+Financial Statements. In addition, the list of subsidiaries held by Qimonda AG was based on information from September 30, 2010, since Infineon had not
+received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies.
+Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and
+results of operations.
+3 Equity and net result as of September 30, 2015.
+4 Equity and net result as of March 31, 2015.
+5 Equity and net result as of June 30, 2015.
+6 Equity and net result as of December 31, 2015.
+7 Equity and net result as of September 30, 2015 (period from July 1, 2014 until September 30, 2015).
+High Blantyre, Scotland
+8 Equity and net result as of September 30, 2015 (period from July 1, 2015 until September 30, 2015).
+10 Equity and net result as of May 13, 2013 (period from April 1, 2013 until May 13, 2013).
+11 Equity and net result as of September 30, 2015 (period from October 16, 2014 until September 30, 2015).
+12 Share of less than 5 percent.
+13 Exemption pursuant to Section 264 (3) German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325
+German Commercial Code.
+14 Exemption pursuant to Section 264 (3) German Commercial Code from certain obligations to prepare annual financial statements and a management
+report pursuant to section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements pursuant to
+Section 325 German Commercial Code.
+15 Infineon accounts for its interest using the equity method because there are certain contractual participation rights of the other joint venturer inhibiting
+Infineon from exercising control.
+GRI G4-17
+434
+Member of the Board of Directors
+9 Equity and net result as of December 31, 2015 (period from April 17, 2015 until December 31, 2015).
+77
+Qimonda UK Ltd. in liquidation
+Taipei, Taiwan
+Seoul, Republic of Korea
+77
+2
+Fort Lauderdale, Florida, USA
+77
+Suzhou, People's Republic of China
+77
+Qimonda North America Corp. in insolvency
+Wilmington, Delaware, USA
+77
+2
+Qimonda Richmond LLC in insolvency
+Qimonda Solar GmbH
+Qimonda Taiwan Co. Ltd. in liquidation
+Wilmington, Delaware, USA
+2
+77
+2
+Dresden, Germany
+77
+77
+Malacca, Malaysia
+40
+Vila do Conde, Portugal
+24
+1.72
+(0.32)
+6
+Kaohsiung, Taiwan
+12
+n. a.
+n. a.
+n. a.
+Lippstadt, Germany
+Neubiberg, Germany
+100
+0.02
+0.00
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+184
+Name of company
+3
+R Labco, Inc.
+0.00
+100
+100
+0.16
+0.00
+Mumbai, India
+10
+100
+0.92
+0.00
+Wilmington, Delaware, USA
+0.10
+8
+0.00
+0.00
+Wilmington, Delaware, USA
+8
+100
+0.00
+0.00
+Villach, Austria
+6
+100
+Schweizer Electronic AG
+TTTech Computertechnik AG
+Xi'an IR PERI Company, Ltd.
+51.45
+5.46
+Wien, Austria
+12
+n. a.
+n. a.
+n. a.
+Xi'an, People's Republic of China
+50
+9
+n. a.
+Qimonda Dresden GmbH & Co. OHG in insolvency
+Qimonda Dresden Verwaltungsgesellschaft mbH
+in insolvency
+Qimonda Europe GmbH in liquidation
+Qimonda Finance LLC in insolvency
+Qimonda Flash Geschäftsführungs GmbH
+in liquidation
+Qimonda Flash GmbH in insolvency
+Qimonda France SAS in liquidation
+Qimonda Holding B.V. in insolvency
+2
+Colorado Springs, Colorado, USA
+17
+n. a.
+Schramberg, Germany
+0.00
+0.00
+Qimonda AG and its subsidiaries: 2
+Celis Semiconductor Corp.
+Itarion Solar Lda.
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Qimonda AG in insolvency
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda Belgium BVBA in insolvency
+Qimonda Beteiligungs GmbH in insolvency
+Qimonda Bratislava s.r.o. in liquidation
+Registered office
+Share-
+Equity
+Net result
+holdings
+in %
+(€ in
+millions)
+(€ in
+millions)
+Foot-
+note
+Wilmington, Delaware, USA
+8
+100
+Bangalore, India
+IR Infotech Private, Ltd. (in liquidation)
+396
+Infineon Technologies South America Ltda.
+72
+1.93
+1.88
+Karlsruhe, Germany
+100
+2.16
+0.00
+3,13
+Beijing, People's Republic of China
+Wuxi, People's Republic of China
+Linz, Austria
+6
+14.69
+1.48
+100
+19.66
+(2.70)
+9
+Malacca, Malaysia
+3
+100
+100
+25.23
+Villach, Austria
+Kulim, Malaysia
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Subsidiaries, joint ventures and other related companies as of September 30, 2016
+Name of company
+Registered office
+182
+Share-
+holdings
+in %
+Bayswater, Australia
+Equity
+Foot-
+(€ in
+millions)
+(€ in
+millions)
+note
+Fully consolidated subsidiaries:
+DICE Danube Integrated Circuit Engineering
+GmbH & Co. KG
+Hitex GmbH
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co. Ldt.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Wuxi) Co., Ltd.
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd
+Infineon Technologies Australia Pty. Ltd.
+Infineon Technologies Austria AG
+Net result
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-12,
+D-85579 Neubiberg (Germany).
+3.29
+125.34
+55.68
+3
+100
+1.35
+0.20
+100
+520.53
+122.59
+3
+193.40
+Infineon Technologies Batam PT
+100
+13.96
+1.69
+Infineon Technologies Cegléd Kft.
+Cegléd, Hungary
+100
+14.63
+3
+0.76
+Batam, Indonesia
+100
+100
+n. a.
+(11.78)
+3
+Malacca, Malaysia
+3
+100
+148.72
+15.70
+Wuxi, People's Republic of China
+100
+3
+118.75
+6
+Xi'an, People's Republic of China
+6
+100
+6.77
+0.20
+Wilmington, Delaware, USA
+Singapore, Singapore
+100
+n. a.
+10.02
+The members of the Company's Supervisory Board, individually or in aggregate, do not own, directly or indirectly,
+more than 1 percent of Infineon Technologies AG's outstanding share capital as of September 30, 2016.
+181
+Dr. Manfred Puffer
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach
+Development Engineer
+Management Consultant
+Professor
+Munich Technical University,
+Munich
+Member of the Supervisory Board
+> Wincor Nixdorf AG, Paderborn
+(until September 30, 2016)
+Member of the Supervisory Board
+> Allianz SE, Munich
+> BMW AG, Munich
+Infineon Technologies AG
+Management Consultant
+> Robert Bosch GmbH, Gerlingen
+Member of the Supervisory Board
+> Athene Lebensversicherung AG, Wiesbaden
+Member of the Board of Directors
+> Athene Holding Ltd., Pembroke, Bermuda
+> Athene Life Re Ltd., Pembroke, Bermuda
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+> Nestlé Deutschland AG, Frankfurt/Main
+Name
+Infineon Works Council,
+Campeon,
+(until November 8, 2016)
+International Rectifier Power Management
+Private Limited (in liquidation)
+Gerhard Hobbach 1
+54
+Annual General
+Meeting 2020
+Hans-Ulrich Holdenried
+65
+Annual General
+Meeting 2020
+Prof. Dr. Renate Köcher
+64
+Member of the
+Annual General
+Meeting 2020
+49
+1
+Dr. Manfred Puffer
+53
+Annual General
+Meeting 2020
+Annual General
+Meeting 2020
+Prof. Dr. Doris
+63
+Schmitt-Landsiedel
+Annual General
+Meeting 2020
+Dr. Susanne
+Lachenmann
+Age
+Term expires
+Occupation
+Executive Committee
+Wolfgang Mayrhuber (Chairman)
+Johann Dechant
+Gerhard Hobbach
+Hans-Ulrich Holdenried
+Investment, Finance and Audit Committee
+Dr. Eckart Sünner (Chairman)
+Johann Dechant
+Annette Engelfried
+Jürgen Scholz
+Wolfgang Mayrhuber
+Peter Bauer (Chairman)
+Peter Gruber
+Hans-Ulrich Holdenried
+Dr. Susanne Lachenmann
+Wolfgang Mayrhuber
+Jürgen Scholz
+Nomination Committee
+Wolfgang Mayrhuber (Chairman)
+Prof. Dr. Renate Köcher
+Strategy and Technology Committee
+Hans-Ulrich Holdenried
+Johann Dechant
+Wolfgang Mayrhuber (Chairman)
+Jürgen Scholz¹
+55
+Annual General
+Meeting 2020
+First authorized agent
+of IG Metall, Regensburg
+Kerstin Schulzendorf¹
+54
+Annual General
+Meeting 2020
+Dr. Eckart Sünner
+72
+Diana Vitale¹
+41
+Annual General
+Meeting 2020
+Annual General
+Meeting 2020
+Independent works council
+representative of the Infineon
+Works Council, Dresden,
+Infineon Technologies
+Dresden GmbH
+Independent Attorney
+Deputy Chairwoman
+of the Infineon Works
+Council, Warstein,
+Infineon Technologies AG
+Membership of Supervisory Boards and
+comparable governing bodies of domestic and
+foreign companies (as at September 30, 2016)
+Member of the Supervisory Board
+> Krones AG, Neutraubling
+Member of the Administrative Board
+> BKK of BMW AG, Dingolfing
+Member of the Supervisory Board
+> K+S AG, Kassel
+1 Employee representative
+Supervisory Board committees
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+Shanghai, People's Republic of China
+Mediation Committee
+3.47
+100
+5.52
+0.32
+Wilmington, Delaware, USA
+100
+n. a.
+n. a.
+8
+Muntinlupa City, Philippines
+Kista, Sweden
+100
+(0.05)
+Cheonan, Republic of Korea
+100
+3
+17.58
+8.75
+Newport, Great Britain
+100
+157.26
+(0.36)
+2.00
+0.00
+100
+100
+15.09
+3
+5.07
+Seoul, Republic of Korea
+3
+100
+4.06
+0.95
+35.76
+Rotterdam, The Netherlands
+n. a.
+n. a.
+Neu-Isenburg, Germany
+5
+100
+10.56
+2.63
+Newport, Great Britain
+7
+100
+Tokyo, Japan
+7
+3
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Infineon Technologies US InterCo LLC
+Infineon Technologies Vermögens-
+verwaltungsgesellschaft mbH
+International Rectifier HiRel Denmark Aps
+International Rectifier HiRel Products, Inc.
+International Rectifier Japan Co., Ltd.
+International Rectifier Malaysia Sdn Bhd
+International Rectifier Mauritius, Inc.
+IR Newport Limited
+Molstanda Vermietungsgesellschaft mbH
+Rectificadores Internacionales, S.A. de C.V.
+Shanghai International Rectifier Trading, Ltd.
+Joint ventures:
+Infineon Technologies Bipolar GmbH & Co. KG
+Infineon Technologies Bipoláris Kft.
+Other companies (non consolidated):1
+Advanced Power Electronics Corp.
+CHIL Semiconductors Corporation
+Name of company
+DICE Danube Integrated Circuit Engineering GmbH
+GmbH & Co. KG
+EPOS embedded core & power systems
+Verwaltungs GmbH
+eupec Thermal Management Inc. (in liquidation)
+Haus der Zukunft gGmbH
+Hitex (UK) Limited
+Infineon Technologies Austria Pensionskasse AG
+Infineon Technologies Bipolar Verwaltungs GmbH
+Infineon Technologies Canada, Inc.
+Infineon Technologies Delta GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Iberia S.L.U.
+Infineon Technologies Ireland Ltd.
+Infineon Technologies Mantel 24 GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Schweiz GmbH
+100
+Infineon Technologies Romania s.r.l.
+Infineon Technologies RUS LLC
+EPOS embedded core & power systems
+Bucharest, Romania
+ANNUAL REPORT 2016
+GRI G4-17
+100
+1.77
+0.88
+3
+100
+1.66
+0.32
+100
+3.49
+INFINEON TECHNOLOGIES
+1.22
+100
+0.56
+0.01
+3
+Wilmington, Delaware, USA
+100
+2,225.98
+3
+0.00
+Bristol, Great Britain
+3
+Infineon Technologies Polska sp.z.o.o.
+6.69
+100
+369.89
+0.00
+3, 13
+Infineon Technologies France S.A.S.
+St. Denis, France
+3
+100
+11.52
+Neubiberg, Germany
+0.08
+Infineon Technologies Holding 2 B.V.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies Hong Kong Sales Limited
+Infineon Technologies Hong Kong, Ltd.
+Infineon Technologies India, Pvt. Ltd.
+Infineon Technologies Investment B.V.
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., Ltd.
+Infineon Technologies Maasstad C.V.
+Infineon Technologies Neu-Isenburg Vertriebs GmbH
+Infineon Technologies Newport Holding Limited
+Infineon Technologies North Carolina Inc.
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Nordic AB
+n. a.
+100
+Wilmington, Delaware, USA
+3.91
+0.27
+Infineon Technologies China Co., Ltd.
+Shanghai, People's Republic of China
+100
+141.80
+9.92
+6
+Infineon Technologies Dresden GmbH
+Dresden, Germany
+100
+224.27
+0.00
+3, 14
+Infineon Technologies Epi Services, Inc.
+Infineon Technologies Finance GmbH
+Wilmington, Delaware, USA
+8
+100
+(11.48)
+1.22
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Ltd.
+Infineon Technologies Romania & Co. Societate
+in Comandita
+Infineon Technologies Federal Solutions Inc.
+Infineon Technologies Taiwan Co., Ltd.
+100
+1.61
+0.24
+Bangalore, India
+100
+15.10
+4
+0.76
+Rotterdam, The Netherlands
+People's Republic of China
+3
+0.00
+Milan, Italy
+3
+100
+Infineon Technologies Shared Service Center,
+Unipessoal Lda.
+1.82
+100
+0.49
+Klagenfurt, Austria
+100
+Hong Kong,
+0.13
+7
+Rotterdam, The Netherlands
+Maia, Portugal
+5.00
+100
+n. a.
+Taipei, Taiwan
+Singapore, Singapore
+100
+n. a.
+n. a.
+n. a.
+100
+2,031.23
+Infineon Technologies U.K. Ltd.
+Infineon Technologies US HoldCo Inc.
+222.50
+Hong Kong,
+People's Republic of China
+20.81
+Rotterdam, The Netherlands
+100
+From left to right:
+Dominik Asam, Dr. Reinhard Ploss, Jochen Hanebeck, Dr. Helmut Gassel
+7
+Report of the Supervisory Board to the Annual General Meeting
+ANNUAL REPORT 2016
+Management Board and Supervisory Board
+8
+Report of the Supervisory Board
+to the Annual General Meeting
+Ladies
+men
+INFINEON TECHNOLOGIES
+The Management Board
+Helmut Gassel was born on March 13, 1964
+in Dortmund, Germany. He studied at
+the Ruhr-University in Bochum and received
+a degree in physics and a doctorate in
+electrical engineering. He joined Infineon
+(Siemens AG until 1999) in 1995.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Reinhard Ploss has been a member of the
+Management Board of Infineon Technologies AG
+since 2007. He has been Chief Executive Officer
+since October 1, 2012, responsible for Segments,
+Group Strategy, Communications & Government
+Relations, Human Resources (Labor Director),
+Legal, Research & Development.
+Reinhard Ploss was born on December 8, 1955
+in Bamberg. He studied process engineering
+at the Technical University of Munich and in
+1986 received his doctorate. He began his
+career at Infineon (Siemens AG until 1999) in
+the same year.
+and Gentlem
+Dominik Asam
+Chief Financial Officer
+Dominik Asam has been the Chief Financial
+Officer of Infineon Technologies AG since
+2011, responsible for Accounting & Reporting,
+Financial Controlling, Financial Planning,
+Investor Relations, Tax, Treasury, Audit,
+Compliance, Export Control, Risk Manage-
+ment, Business Continuity and Information
+Technology.
+Dominik Asam was born on March 6, 1969
+in Munich. He studied at the Technical
+University of Munich and the École Centrale
+in Paris. He is a graduate mechanical
+engineer and an "Ingénieur des Arts et
+Manufactures". In addition, he completed an
+MBA at INSEAD in Fontainebleau, France.
+Dominik Asam joined Infineon in 2003.
+Dr. Helmut Gassel
+Chief Marketing Officer
+Helmut Gassel has been a member of the
+Management Board and Chief Marketing Officer
+of Infineon Technologies AG since 2016. He is
+responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions
+and Intellectual Property.
+Jochen Hanebeck
+Member of the Management Board
+Jochen Hanebeck has been a member of the
+Management Board of Infineon Technologies AG
+since 2016. He is responsible for Operations,
+including Manufacturing, Logistics, Quality,
+Customs and Purchasing.
+Jochen Hanebeck was born on February 2,
+1968 in Dortmund. He received a degree
+in electrical engineering from RWTH Aachen
+University. He has been with Infineon since
+1994 (Siemens AG until 1999).
+6.
+Management Board and Supervisory Board
+Infineon has grown strongly in recent years, and - contrary to many of its competitors and
+despite the current contraction of the semiconductor market – remains firmly on growth
+course. Infineon's success story is attributable in particular to its strategic focus on fast-growing,
+future-oriented technologies such as energy efficiency, electro-mobility, driver assistance
+systems, renewables, and the Internet of Things. Following the successful integration of
+International Rectifier, the largest acquisition in Infineon's corporate history, we are now on
+the verge of securing a decisive long-term technological lead for ourselves in precisely
+these rapidly growing markets with our planned purchase of the Wolfspeed division of the
+US company Cree. We greatly look forward to writing the next chapter in Infineon's success
+story, not least due to the momentum provided by a partially reorganized and strengthened
+management team.
+10
+During the 2016 fiscal year, the Supervisory Board diligently performed all the duties incumbent
+upon it in accordance with the law, the Company's statutes and its own terms of reference.
+Throughout the year, we consulted extensively with the Management Board and diligently
+oversaw its activities in both an advisory and a monitoring capacity. Our input was based on
+the detailed information provided to us by the Management Board at Supervisory Board and
+committee meetings relating to business developments, significant transactions, the quarterly
+financial reports and corporate planning. In addition to coordinating its overall strategy with
+us, the Management Board sought our advice on a range of relevant specific measures. The
+Supervisory Board was given ample opportunity to thoroughly examine any reports and reso-
+lutions proposed by the Management Board at all times. In this context, we undertook various
+measures to assure ourselves that the governance of Infineon's corporate affairs was lawful,
+compliant and appropriate.
+The Supervisory Board decided to adapt the pension arrangements for Dr. Reinhard Ploss,
+the Company's Chief Executive Officer, who had previously been contractually entitled to
+receive a pension based on a defined benefit fixed amount. This entitlement, however, was
+based on him leaving Infineon at the age of 60 and did not reflect the fact that Dr. Ploss'
+appointment as Chief Executive Officer runs until 2020. The Supervisory Board's recognition of
+the need to take action was confirmed in the report drawn up by the external compensation
+expert. In accordance with the compensation system for the Management Board in place since
+2010, Mr. Asam, Mr. Mittal, Dr. Gassel and Mr. Hanebeck - all of whom took up office after
+approval of the new system – have received a defined contribution pension commitment
+(rather than a defined benefit pension commitment based on the number of years of service),
+which is essentially identical to the Infineon pension plan applicable to all employees. Dr. Ploss'
+service contract was also changed in line with this defined contribution basis.
+Chief Executive Officer
+The German Corporate Governance Code recommends subjecting management board
+compensation systems to regular review. The most recent review at Infineon took place in
+2014. During the fiscal year under report, the Supervisory Board again engaged an external
+independent compensation expert to review the compensation system and the target annual
+incomes of the individual members of the board. The compensation expert concluded that
+the compensation system complies with both the legal requirements and the recommendations
+set out in the German Corporate Governance Code (DCGK). In particular, the expert concluded
+that the compensation of Infineon's Management Board is commensurate with market
+conditions and that the variable compensation component is oriented towards promoting
+the sustainable growth of the enterprise. Furthermore, the target annual incomes of the
+individual members of the Management Board were found to be appropriate. The compensa-
+tion expert did, however, point out the existence of some scope for maneuverability. The results
+of the compensation expert's review, presented in a final report in the fall, were discussed in
+detail at the Executive Committee meeting held on October 24, 2016 and by the full Supervisory
+Board at its meeting held on November 15, 2016. The Supervisory Board concurs with the
+assessment of the compensation expert.
+Management Board compensation
+P see page 106
+11
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+During the fiscal year under report, in light of Infineon's growth, the Supervisory Board took
+the decision to enlarge the Management Board from three to four members. Infineon's revenue
+has practically doubled since the beginning of the decade. The demanding nature of the
+duties performed by the Management Board has increased massively. We had deliberated for
+some time on how to best maintain the level of momentum within an increasingly complex
+environment and also to relieve our Chief Executive Officer Dr. Reinhard Ploss from certain
+responsibilities, and thought the time had come to bolster the management team. In the
+course of filling the newly created Management Board position and finding a suitable successor
+for Mr. Mittal, the Supervisory Board gave consideration to both internal and external solutions,
+including focusing on potential female candidates. A human resources consultant was engaged
+to conduct the external search and also to evaluate potential internal candidates. At the
+conclusion of this process, the decision to appoint managers from within the organization was
+seen as the best option for Infineon. The choice fell on two highly experienced people, both
+of whom have outstanding track records in responsible positions at Infineon over many years:
+Jochen Hanebeck, previously Division President Automotive, was appointed Member of the
+Board for the newly created "Operations" function, effective July 1, 2016 and for a period of
+three years. Dr. Helmut Gassel, previously Division President Industrial Power Control, was
+appointed Member of the Management Board and Chief Marketing Officer. He is responsible
+for Sales & Marketing, Regions, Strategy Development, Mergers & Acquisitions and Intellectual
+Property, also effective July 1, 2016 and for a period of three years. The Supervisory Board
+wishes these two new members of the Board every success.
+It was with the deepest regret that the Supervisory Board accepted the request of Arunjai Mittal,
+Member of the Management Board, to leave Infineon at the end of the 2016 fiscal year due to
+family reasons. At a personal level, Mr. Mittal was highly esteemed by staff, the Management
+Board and members of the Supervisory Board alike. He has received highly deserved recognition
+for his outstanding work in various key positions at Infineon. Over a period of many years, he
+helped build up Infineon's power semiconductor business and continued this valuable work
+with outstanding success after becoming a member of the Management Board at the beginning
+of 2012. Mr. Mittal played a significant role in developing Infineon's position in major growth
+markets and, with the takeover of International Rectifier, successfully oversaw the largest
+acquisition in the company's history. We would like to express our particular thanks to Mr. Mittal
+and wish him well for the future in both his private and professional life.
+Personnel matters
+The Supervisory Board continues to appreciate the importance of devoting one meeting per
+year exclusively to strategic topics. Accordingly, at the meeting held on August 3, 2016, the
+key elements of Infineon's strategy, the principal technological trends currently shaping the
+sector, and the requirements and political framework for doing business in the USA und China,
+including Infineon's positioning in these regions, were all discussed at considerable length.
+Furthermore, the Supervisory Board addressed the impact and potential opportunities arising
+in view of the trend towards consolidation within the semiconductor industry.
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+The Supervisory Board was provided with written quarterly reports on Infineon's business
+performance, key financial data, risks and opportunities, major areas of litigation and other
+important topics. Between quarterly reports, the Management Board also kept us informed of
+current developments in the form of monthly reports.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+Wolfgang Mayrhuber
+Main activities of the Supervisory Board
+Chairman of the Supervisory Board
+In my capacity as Chairman of the Supervisory Board, I maintained regular contact with the
+Management Board, as did the respective chairpersons of the Investment, Finance and Audit
+Committee and the Strategy and Technology Committee. I was informed without delay by the
+Chief Executive Officer of all significant events relevant to the business.
+The full Supervisory Board Committee convened for six ordinary and two extraordinary
+meetings during the 2016 fiscal year. Attendance at the meetings of the full Supervisory Board
+averaged nearly 94 percent, while attendance at Supervisory Board committee meetings was
+100 percent.
+Financial and investment planning, acquisitions, business strategy
+At its meeting held on November 17, 2015, the Supervisory Board approved the financial
+and investment budget, including the overall investment budget and the borrowing limit
+determined for the 2016 fiscal year, as presented by the Management Board.
+Acquisitions - whether previously implemented or currently planned - were a key topic of
+focus for the Supervisory Board during the fiscal year under report. Concerning the acquisition
+of International Rectifier, the Management Board reported on the highly successful conclusion
+of the integration process. Moreover, following the issuance of two corporate bonds ("euro
+bonds") during the 2015 fiscal year to repay the euro-denominated portion of the initial loan
+to finance the acquisition, the US dollar-denominated loan was also refinanced in the 2016
+fiscal year in the form of a US Private Placement of notes. These new financing arrangements
+have enabled Infineon to take advantage of the favorable interest environment, put fixed
+long-term interest rates in place and further improve the company's debt maturity profile.
+Above all, however, at several ordinary and two extraordinary meetings, the Supervisory Board
+spent a significant amount of time considering the planned acquisition of Wolfspeed, a division
+of the US semiconductor manufacturer Cree. The Supervisory Board was extensively briefed
+on possible alternatives to the deal and on the rationale for the acquisition. Following extensive
+consultations, the Supervisory Board approved the acquisition and the related financing
+arrangements. The Supervisory Board shares the Management Board's positive assessment of
+the excellent fit of Infineon's and Wolfspeed's business and know-how as well as the expectation
+that the acquisition will strengthen Infineon's leading position in major growth markets.
+INFINEON TECHNOLOGIES
+9
+Dr. Reinhard Ploss
+The committees draw up resolutions or prepare topics that need to be dealt with by the full
+Supervisory Board. Certain decision-making powers have been delegated to the committees,
+to the extent permitted under German law. The chairpersons of each committee routinely
+report on committee meetings at the next relevant full Supervisory Board meeting.
+Management Board and Supervisory Board
+The Management Board
+13
+@www.infineon.com/
+corporate-governance-report
+Efficiency review for Supervisory Board activities
+The Supervisory Board examines the efficiency of its activities annually. Based on the
+questionnaire tried and tested in past examinations, in summer 2016 Supervisory Board
+members were again requested to provide comprehensive feedback regarding their work
+and the extent of cooperation between the two boards. The results of this survey were
+discussed in detail at the Supervisory Board meeting held on August 4, 2016. No noteworthy
+shortcomings were identified.
+Potential conflicts of interest
+The Supervisory Board again addressed the issue of potential conflicts of interest during
+the year under report, concluding that no such conflict of interest exists for Infineon. In
+particular, consent was given for Dr. Ploss to take on a mandate in the Board of Trustees of
+the Technische Universität München.
+Further information on corporate governance at Infineon can be found in the joint
+Corporate Governance Report of the two boards, which has been made publicly available
+on Infineon's website.
+Report on the work of the Supervisory Board's Committees
+Details of Management Board compensation - in particular the amounts paid to individual
+members in the 2016 fiscal year - can be found in the comprehensive Compensation Report
+in the Annual Report.
+Nomination and Mediation Committee
+The Nomination Committee convened once during the year under report to deliberate in
+general terms on succession planning and the future composition of shareholder represen-
+tatives in the Supervisory Board and the necessary measures. As a result, there have been
+various discussions between the Nomination Committee's chairperson and the committee
+members regarding ongoing developments in this process.
+The Mediation Committee did not need to convene.
+Executive Committee
+The Executive Committee held one ordinary and five extraordinary meetings during the
+year under report.
+The ordinary meeting focused on preparing the Supervisory Board's resolutions with respect
+to the measurement of the Management Board's variable compensation. The main aspects
+of this work were to determine the degree to which targets for the 2015 fiscal year had been
+achieved and to set new target levels for the 2016 fiscal year.
+In the extraordinary meetings, the Executive Committee prepared the amendment to the
+Supervisory Board compensation system. It also drew up the full Supervisory Board's
+resolutions relating to Mr. Mittal's resignation, the enlargement of the Management Board,
+and the appointments of Dr. Gassel and Mr. Hanebeck.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+14
+Investment, Finance and Audit Committee
+The Investment, Finance and Audit Committee convened five times during the year under review.
+Its activities centered on monitoring the financial reporting process, reviewing the half-year
+and quarterly financial statements, conducting the preliminary audit of the Separate Financial
+Statements, Consolidated Financial Statements and Combined Management Report for
+Infineon Technologies AG and the Infineon Group, and discussing the audit reports with the
+auditor. The committee also examined and deliberated on the financial and investment
+budget as well as the borrowing limit for the 2016 fiscal year. Furthermore, the committee
+considered the effectiveness of the internal control system, internal audit system and risk
+management system. The committee's members also received reports from the Compliance
+Officer on a regular basis as well as regular updates on significant legal disputes.
+Moreover, the committee took time to address various financing issues (the restructuring of
+loans originally raised to finance the acquisition of International Rectifier and the financing of
+the planned acquisition of Wolfspeed) and made recommendations for the corresponding
+Supervisory Board resolutions.
+Other duties performed by the committee included specifying key areas to be examined
+by the external auditor, monitoring the auditor's independence, and considering the scope
+of non-audit-related services performed by the auditor. In this context, the committee
+gave detailed consideration to the new statutory requirements for fiscal year-end audits,
+particularly the stricter rules that will apply in future to non-audit-related services provided
+by the auditor.
+The committee prepared the Supervisory Board's proposal to the Annual General Meeting
+regarding the selection of the auditor and issued the contracts for the corresponding
+audit engagements. The relevant fee arrangements were also considered.
+The committee (and the full Supervisory Board) gave lengthy consideration to the report
+drawn up by KPMG on the statutorily prescribed audit regarding compliance with the so-called
+EMIR Directive, which, among other things, imposes certain requirements on entities such
+as Infineon with regard to derivatives management.
+The auditor attended the meetings of the Investment, Finance and Audit Committee and
+reported in detail on its audit activities.
+The Management Board
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+ор
+Chief Executive Officer
+Dr. Reinhard Ploss
+Rihaal Dys
+Snicerely,
+We sincerely hope you will continue to accompany us on this path also in the future.
+Our solutions address the central challenges of our time: energy efficiency, sustainable mobility
+and security in an increasingly connected world. This means we are used to thinking in terms of
+long timelines and to planning our actions well in advance. And we consider their long-term
+impacts. This is why sustainability is an essential component of our corporate culture. On the
+one hand, sustainability is an important demand driver, since energy-efficient power semi-
+conductors account for approximately 60 percent of our revenue. On the other hand we also
+emphasize using resources diligently in manufacturing and constantly try to improve the
+sustainability of our own business activities. As a company we want to do our part in passing
+on a livable world to future generations. In recognition of the significance of this topic we will
+in the future publish an independent Sustainability Report. You will find this year's Sustain-
+ability Report on our website. We have reduced the scope of the Annual Report in comparison
+with previous editions so that we can provide you with all the relevant information in an even
+more concise way, in response to the desire expressed by a large number of our shareholders.
+What lies ahead of us? Infineon will continue to grow. For the 2017 fiscal year, we expect
+revenue to increase by 6 percent year-on-year - plus or minus 2 percentage points. At the
+mid-point of the forecast revenue range the Segment Result Margin will be approximately
+16 percent. Going forward, the further ramp and utilization of our 300-millimeter site in
+Dresden will have a positive impact on our earnings. Additionally, we will benefit from cost
+advantages due to the integration of International Rectifier's manufacturing landscape as
+well as from a stronger US dollar. Considering these factors, we have decided to raise our
+margin target throughout the cycle from previously 15 percent to now 17 percent of revenue.
+sustainability
+reporting
+@www.infineon.com/
+Management Board and Supervisory Board
+Letter to shareholders
+ANNUAL REPORT 2016
+ANNUAL REPORT 2016
+5
+ANNUAL REPORT 2016
+The original versions of all Declarations of Compliance can be found on Infineon's website.
+In the most recent Declaration of Compliance, issued in November 2016, the Board of Manage-
+ment and the Supervisory Board declared that Infineon Technologies AG has complied and
+continues to comply with all of the Code's recommendations.
+Updated Declaration of Compliance 2015 and Declaration of Compliance 2016
+The Declaration of Compliance issued in November 2015 was updated by the declaration
+issued in March 2016, to the extent that the previously reported deviation relating to section
+5.4.6 of the German Corporate Governance Code (compensation of the Supervisory Board)
+was eliminated. The deviation had been declared in connection with the performance-related
+compensation component paid to the members of the Supervisory Board. Due to the fact
+that this compensation component was not based on a multi-year assessment, it was unclear as
+to whether it fully complied with the Code's requirements. Following the amendment made
+to the Supervisory Board compensation system, namely the elimination of performance-related
+compensation, the Code's recommendation on supervisory board compensation is now being
+fully complied with.
+Corporate governance
+INFINEON TECHNOLOGIES
+Litigation
+The Supervisory Board was provided with regular and comprehensive information regarding
+major legal disputes during the 2016 fiscal year, which were then thoroughly discussed with
+the Management Board. The main items addressed were the Company's appeal against the
+fine imposed by the EU Commission in 2014 relating to antitrust proceedings and the dispute
+with the insolvency administrator of Qimonda AG pertaining to alleged residual liability claims.
+Supervisory Board compensation
+declaration-of-compliance/
+@www.infineon.com/cms/en/about-
+infineon/investor/corporate-governance/
+12
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+The Supervisory Board compensation system was also subjected to a thorough review by an
+independent compensation expert during the year under report. The system was subsequently
+amended in line with a proposal put forward by the Management Board and Supervisory
+Board to the Annual General Meeting on February 18, 2016. The objective of the amendment
+was to remove the previous variable compensation component and to determine Supervisory
+Board compensation purely on the basis of fixed amounts in future. Due to the removal of the
+variable compensation component, the fixed compensation component was simultaneously
+increased to a commensurate market level. Shareholders approved the proposals put forward
+by the Management Board and the Supervisory Board to the 2016 Annual General Meeting
+by a large majority. The corresponding amendment to the Articles of Association was entered
+in the commercial register in March 2016, at which stage it became valid. The compensation
+rule took effect retrospectively as from October 1, 2015.
+INFINEON TECHNOLOGIES
+NFC
+Near field communication. An international communication
+standard for contactless data exchange over short distances.
+The initial drafts of the communication standard appeared
+several years ago, but the technology did not break through
+until 2011 when it was included in the first smartphones. NFC
+can be used as an access key to content on terminals and
+for services such as cashless payment and paperless ticketing.
+Power transistor
+INFINEON TECHNOLOGIES
+MOSFET
+From the Greek epi "upon" and taxis "arrangement" or "orien-
+tation". Epitaxy is a form of crystalline growth that occurs
+both in nature (such as in minerals) and in the technical world.
+In semiconductor technology, epitaxy is the artificial growth
+of crystalline layers on a substrate, which is usually a wafer.
+Epitaxy enables various doping profiles for transistors to be
+created, which are not feasible using other methods such as
+diffusion or ion implantation.
+Epitaxy
+Control unit that can convert AC voltages of various rates and
+frequencies. This is achieved by means of power electronics.
+Converters are used in wind turbines, for example, in order to
+feed fluctuating wind energy into the power network with
+a voltage of constant frequency. In electric drive technology,
+for example in engine controllers and trains, a converter is
+used to generate an output voltage of variable, load-dependent
+frequency from a mains supply of constant frequency.
+Converter
+In contrast to silicon-based semiconductors, compound
+semiconductors consist of several chemical elements. The
+combination of materials from the chemical main group III
+(e.g. gallium) and V (e.g. nitrogen) have the electrical conduc-
+tivity of semiconductors. This also applies to the combination
+of materials from the main group IV (carbon, silicon). These
+compound semiconductors (e.g. gallium nitride or silicon
+carbide) are therefore of highest importance in technical
+applications in semiconductor technology, especially for
+power semiconductors.
+Compound Semiconductor
+Complementary Metal Oxide Semiconductor. Standard semi-
+conductor manufacturing technology used to manufacture
+microchips with low power usage and a high level of integration.
+CMOS
+A power bipolar transistor is a specialized version of a bipolar
+transistor that is optimized for conducting and blocking large
+electric currents (up to several hundred amperes) and very
+high voltages (up to several 1,000 volts). In industry, the power
+bipolar transistor - like the power MOSFET (see MOSFET) often
+used as an alternative - constitutes an important industrial
+semiconductor component for influencing electric current.
+Bipolar
+INFINEON TECHNOLOGIES
+A bare die is a single, unpackaged chip. Bare die business
+means the sale of fully processed, unpackaged chips. The
+packaging and subsequent testing of the packaged chips
+is performed by the customer. Bare die business is mostly
+conducted with IGBT module manufacturers that produce
+their own modules but not their own semiconductors.
+The part of the semiconductor manufacturing process that
+happens after the wafer has left the cleanroom (frontend
+manufacturing). This includes testing the chips at wafer
+level, repairing the chips if necessary, dicing the wafers and
+packaging the individual chips. There is a growing trend among
+semiconductor manufacturers to outsource the assembly,
+and sometimes even the testing, to independent assembly
+companies. Much of the assembly capacity is based in the
+Pacific Rim countries.
+Backend manufacturing
+Authentication means the ability to prove one's own identity,
+i.e., proof of the authentic original. However, authentication
+does not necessarily refer to people only, but also to any
+tangible or intangible object, such as a device or an electronic
+document. A user can be authenticated in any one of three
+different ways: 1.) By providing a certain piece of information,
+i.e., the user knows something, such as a password; 2.) Through
+the use of a possession, i.e., the user possesses something,
+such as a key; 3.) Through the direct presence of the user,
+i.e., the user is someone or something, such as in the form of
+a biometric feature.
+Authentication
+Application Specific Integrated Circuit. Logic IC specially
+constructed for a specific application and customer;
+implemented on an integrated circuit.
+ASIC
+"Mixed-signal" is a generic term for integrated circuits that
+operate simultaneously with analog and digital signals. Owing
+to similar requirements in terms of development and manu-
+facturing processes, they are generally grouped together with
+integrated circuits operating exclusively with analog signals,
+hence giving rise to the combination "analog-mixed-signal".
+Analog-mixed-signal
+Power transistor is a term used in electronics to refer to a
+transistor for switching or controlling large voltages, currents
+and outputs. There is no standard method of differentiating
+between transistors for signal processing and power transistors.
+Power transistors are mainly produced in packages that enable
+installation on heat sinks, as it is otherwise impossible to
+handle the dissipation loss of several kilowatts that occurs
+with some types and applications (see power semiconductor).
+Comprehensive term for the manufacture and processing of
+wafers with a diameter of 300 millimeters.
+Bare die
+Metal-Oxide-Semiconductor Field-Effect Transistor. MOSFET
+is currently the most widely used transistor architecture.
+MOSFETs are used both in highly integrated circuits and in
+power electronics as special power MOSFETs.
+ANNUAL REPORT 2016
+189
+Further Information
+Technology Glossary
+ANNUAL REPORT 2016
+Micro-electro-mechanical system. A micro-electro-mechanical
+system, or simply a microsystem, is a miniaturized device,
+assembly or part that contains components of minute dimen-
+sions (only measurable in micrometers) that work together
+as a system. Usually a microsystem consists of one or more
+sensors, actuators and control electronics on one chip.
+Infineon manufactures microphones as MEMS. Due to their
+diminutive size, low power consumption, good shielding from
+interfering signals and low-cost production, these types of
+microphone are being increasingly installed in mobile devices
+such as smartphones, tablets, cameras, and accessories such
+as headsets and hearing aids.
+MEMS
+An inverter, also called a DC/AC converter, is an electrical
+device for converting DC voltage into AC voltage, or direct
+current into alternating current. Inverters are used in solar
+power plants, for example, for converting the DC voltage
+generated in the solar modules into AC voltage, which is then
+fed into the electricity network.
+Inverter
+Integrity Guard (IG) is a revolutionary security technology
+designed for chip cards and security applications, with which
+Infineon is ringing in a new era in the field of hardware-based
+security. IG was specially developed for sophisticated, long-
+life applications such as payment cards and government
+identification documents. IG enables a security controller for
+the first time to provide complete error detection and com-
+prehensive encryption of all chip functions across the entire
+data path within the chip. For this reason it is known as “digital
+security”. IG is used in the security controllers of the SLE 77
+and 78 families and has won numerous international awards.
+Integrity Guard
+Insulated Gate Bipolar Transistor Module. IGBTs are semi-
+conductor components used increasingly in power electronics
+due to their robustness, high blocking voltage, and their
+ability to be triggered with negligible power. Modules are
+formed using several IGBTs in parallel within a single casing.
+These modules are used to drive electric motors both in
+automotive and industrial applications. Motor speed and
+torque can be regulated along a gradual scale. Trains such
+as Germany's ICE and France's TGV use IGBT modules for an
+efficient and rapid electrical drive control.
+IGBT Module
+Further Information
+Technology Glossary
+Integrated Circuit. Electronic Component parts composed of
+semiconductor materials such as silicon; numerous compo-
+nents, including transistors, resistors, capacitors and diodes
+can be integrated into ICs and interconnected.
+High-voltage direct-current transmission. HVDC transmission
+is a method of transmitting electrical energy at high direct-
+current voltages of up to 800,000 volts over distances of more
+than 1,000 kilometers. HVDC transmission is also used for
+connecting offshore wind farms to the electricity grid on the
+mainland.
+HVDC
+A sensor based on the Hall principle, used for measuring
+magnetic fields, named after the US physicist Edwin Herbert
+Hall (1855-1938). Hall sensors are used in automobiles,
+for example, for detecting pedal positions or for measuring
+the speed at which shafts rotate.
+Hall sensor
+Gallium nitride (abbreviated to GaN) is a compound semicon-
+ductor material made from gallium (chemical symbol Ga) and
+nitrogen (chemical symbol N). GaN is used for components
+including radio-frequency power MOSFETs (see MOSFET) on
+account of the material's special properties (such as good
+thermal conductivity and high electron mobility).
+Gallium nitride
+Frontend process is the designation for all process steps in
+cleanrooms that the entire wafer must complete. These are
+lithography, diffusion, ion implantation and application of
+circuitry levels. Some stations must be completed a number
+of times. At the end of the frontend process, the wafer may
+have been through as many as 500 individual process steps.
+After the conclusion of the frontend manufacturing, the
+processed wafers are transferred to backend manufacturing
+for testing and packaging (see Backend manufacturing).
+Frontend manufacturing
+Flexible AC Transmission System - control systems used in
+electrical engineering. They are used in the field of electrical
+power supply to specifically control power transmission and
+distribution in AC networks, in which in principle components
+of power electronics and therefore power semiconductors
+such as IGBT modules are used. The controlling of power
+transfers can be implemented in alternating current networks
+by changing the idle and active power by means of capacitor
+batteries or compensation coils.
+FACTS
+IC
+Schottky diode
+Imprint
+Silicon Carbide
+Published by:
+Editors:
+Copy deadline:
+Fiscal year:
+Independent auditors:
+Designed by:
+Photography:
+Printing:
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+November 29, 2016
+October 1 to September 30
+KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Werner Bartsch, Hamburg (Germany): page 3, 7
+G. Peschke Druckerei GmbH, Parsdorf (Germany)
+Note
+The following were brand names of Infineon Technologies AG in the 2016 fiscal year: Infineon,
+the Infineon logo, AURIX, CoolMOS, Hybrid PACK, MIPAQ, OPTIGA, OptiMOS, PrimePACK, REAL3.
+Forward-looking statements
+This Report contains forward-looking statements about the business, financial condition and earnings
+performance of the Infineon Group.
+These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
+may therefore differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
+forward-looking statements.
+INFINEON TECHNOLOGIES AG
+Headquarters:
+Contact for Investors and Analysts:
+Media Contact:
+Visit us on the web:
+Am Campeon 1-12, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+www.infineon.com
+300-millimeter technology
+You
+Tube
+in
+t
+8+
+Compound semiconductor made from silicon (chemical
+symbol Si) and carbon (chemical symbol C). The abbreviation
+is SiC. Because of its special material properties (e.g. good
+thermal conductivity), SiC is used for Schottky diodes, as well
+as elsewhere (see Schottky diode).
+Switch-mode power supply
+A switch-mode power supply is an electronic module that
+transforms an AC voltage into a DC voltage. Switch-mode
+power supplies are more efficient than mains transformers
+and can be more compact and lighter than conventional
+power supplies containing a heavy transformer with a ferrous
+core. Switch-mode power supplies are mainly used in PCs,
+notebooks and servers. However, they also achieve a very high
+level of efficiency even at low power, so they are increasingly
+found in plug-in power supply units, for example as chargers
+for mobile phones.
+Thin wafer
+A wafer is typically around 350 microns (µm) thick when
+sawn into individual chips. A thin wafer is one that has been
+polished down to less than 200 microns thick (a human hair
+or a sheet of paper, by comparison, is about 60 microns thick).
+Thin wafer technology offers benefits: Thinner chips mean
+losses can be reduced and the heat generated can be dissipated
+more effectively. Another advantage is that electrically active
+patterns can be produced on the backside as well, enabling
+the chip to provide completely new functions. Thin wafer chips
+also allow more compact packages.
+TPM
+Trusted Platform Module. A chip that adds elementary security
+functions such as license and data protection to a computer
+or similar device. TPMs can be integrated into tablet PCs,
+smartphones and consumer electronics as well as PCs and
+notebooks. A trusted computing platform (see Trusted Com-
+puting) can be created by combining a specially configured
+operating system and appropriate software with a device
+containing a TPM.
+Trusted Computing
+Trusted Computing means that the hardware and software
+used in PCs, as well as other computer-controlled systems,
+such as mobile phones, can be controlled. This is achieved
+by means of an additional chip, the Trusted Platform Module
+(TPM), which can use cryptography to measure the integrity
+of the hardware and of the software data structures, while also
+saving these values in a verifiable way.
+190
+Financial calendar
+Thursday, February 2, 20171
+A special diode that has a metal-semiconductor junction
+rather than a semiconductor-semiconductor junction. The
+most frequently used semiconductor material up to 250 Volts
+is silicon. Silicon carbide (SiC) is used for voltages in excess
+of 300 Volts (see Silicon Carbide). SiC Schottky diodes offer
+a number of advantages over conventional diodes in power
+electronics. When used together with IGBT transistors, it is
+possible to dramatically reduce switching losses in the diode
+itself, as well as in the transistor. The name derives from the
+German physicist Walter Schottky (1886-1976).
+Publication of first quarter 2017 results
+Annual General Meeting 2017
+(Start 10:00 a.m. CET)
+ICM - International Congress Center Munich
+(Germany)
+Thursday, May 4, 2017'
+Publication of second quarter 2017 results
+Tuesday, August 1, 2017¹
+Publication of third quarter 2017 results
+Tuesday, November 14, 2017¹
+Publication of fourth quarter and
+fiscal year 2017 results
+1 preliminary
+Visit us on the web: www.infineon.com
+f
+Thursday, February 16, 2017
+188
+ANNUAL REPORT 2016
+Technology Glossary
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial
+Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and
+the Combined Management Report includes a fair review of the development and performance of the business and
+the position of the Group, together with a description of the principal opportunities and risks associated with the
+expected development of the Group.
+186
+Responsibility Statement by the
+Management Board
+Further Information
+Responsibility Statement by the Management Board
+Further Information
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Jochen Hanebeck
+Neubiberg, November 29, 2016
+Dr. Helmut Gassel
+Dr. Reinhard Ploss
+185
+Management Board
+Infineon Technologies AG
+Neubiberg, November 22, 2016
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+Technology Glossary
+Dominik Asam
+Infineon Technologies AG
+INFINEON TECHNOLOGIES
+Dominik Asam
+Dr. Reinhard Ploss
+Further Information
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Wirtschaftsprüfer
+Wirtschaftsprüfer
+Wolper
+Wirtschaftsprüfungsgesellschaft
+KPMG AG
+Munich, November 22, 2016
+Braun
+Our audit has not led to any reservations.
+We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German
+generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer
+[Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such
+that misstatements materially affecting the presentation of the net assets, financial position and results of opera-
+tions in the consolidated financial statements in accordance with the applicable financial reporting framework
+and in the Group Management Report are detected with reasonable assurance. Knowledge of the business activities
+and the economic and legal environment of the Group and expectations as to possible misstatements are taken
+into account in the determination of audit procedures. The effectiveness of the accounting-related internal control
+system and the evidence supporting the disclosures in the consolidated financial statements and the Group
+Management Report are examined primarily on a test basis within the framework of the audit. The audit includes
+assessing the annual financial statements of those entities included in consolidation, the determination of entities
+to be included in consolidation, the accounting and consolidation principles used and significant estimates made
+by management, as well as evaluating the overall presentation of the consolidated financial statements and Group
+Management Report. We believe that our audit provides a reasonable basis for our opinion.
+Dr. Helmut Gassel
+We have audited the consolidated financial statements prepared by the Infineon Technologies AG, Neubiberg,
+comprising the statements of financial position, operations, comprehensive income, cash flows and changes
+in equity, together with the management report of the Company and the Group for the business year from
+October 1, 2015 to September 30, 2016. The preparation of the consolidated financial statements and the Group
+Management Report in accordance with IFRSS, as adopted by the EU, and the additional requirements of German
+commercial law pursuant to § 315a Abs. 1 HGB [Handelsgesetzbuch "German Commercial Code"] are the respon-
+sibility of the Managing Board of the Company. Our responsibility is to express an opinion on the consolidated
+financial statements and on the Group Management Report based on our audit.
+Auditor's Report
+187
+Further Information
+Auditor's Report
+INFINEON TECHNOLOGIES
+In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSS, as
+adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB and give
+a true and fair view of the net assets, financial position and results of operations of the Group in accordance with
+these requirements. The Group Management Report is consistent with the consolidated financial statements and
+as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of
+future development.
+Jochen Hanebeck
+12.3
+9.7
+6.7
+6.9
+6.8
+Toshiba
+8.8
+NXP
+0
+Micron
+Avago
+Qualcomm
+SK Hynix
+Samsung
+Intel
+15.3 14.1 ****
+16.5 16.5
+6.1
+Texas Instruments
+5.7
+Renesas
+5.0
+42%
+13%
+13%
+Global semiconductor sales 2015
+by region (total market size
+US$347 billion)
+Analog Devices
+5% market share
+10% market share
+ON Semiconductor
+AMD
+5.3
+nVidia
+Sony
+Source: IHS Markit, "2016 Competitive Landscaping Tool", August 2016. Foundries and subcontractors are not included in this market analysis.
+Apple
+MediaTek
+Infineon
+3.4
+3.5
+3.9
+4.4
+SanDisk
+10
+Based on earnings generated in the 2016 fiscal year and Infineon's positive business outlook, a
+proposal will be made to the Annual General Meeting, which will be held on February 16, 2017,
+to pay a dividend of €0.22 per share, an increase of 2 cents compared to the previous year.
+30
+P see page 95 ff.
+1 Proposal to the Annual General Meeting to be held
+on February 16, 2017.
+2010 2011 2012 2013 2014 2015 2016
+221
+10
+12 12 12
+18
+20
+in € cents
+The net cash position (see the chapter "Internal Management System" for definition) increased
+by 114 percent to stand at €471 million at the end of the 2016 fiscal year (September 30, 2015:
+€220 million), in line with the increase in the gross cash position.
+Dividend per share for the
+2010 to 2016 fiscal years
+20
+20
+2016 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The gross cash position (see the chapter "Internal Management System" for definition) totaled
+€2,240 million as of September 30, 2016, an increase of 11 percent compared to the previous
+year's reported figure of €2,013 million. The free cash flow from continuing operations of
+€490 million described above exceeded the dividend payment of €225 million for the 2015
+fiscal year.
+The Return on Capital Employed (ROCE) in the 2016 fiscal year amounted to 15.0 percent,
+well up on the previous year's figure of 12.8 percent. The improvement was mainly due to the
+year-on-year increase in operating income from continuing operations from €664 million to
+€799 million. For a definition of, and details relating to, the calculation of ROCE, see the chapters
+"Internal Management System" and "Review of financial condition".
+P see page 60
+20
+Planned dividend increases by 10 percent
+10%
+40.2
+40
+50
+51.4
+60
+Revenue in billion US$
+Top 20 semiconductor manufacturers for the 2015 calendar year
+The 20 largest companies account for 69.8 percent of global revenue. The remaining 30.2 percent
+is spread over approximately 2,000 other semiconductor companies. These figures highlight
+the extremely fragmented structure of the semiconductor sector. In the meantime, however, a
+certain degree of consolidation is taking place within individual product categories. By acquiring
+International Rectifier, Infineon added momentum to the latest wave of consolidation in the
+power semiconductor sector. The planned acquisition of Wolfspeed is another important step
+in this field. Similarly, ON Semiconductor's acquisition of Fairchild on September 19, 2016 will
+contribute to further consolidation. This transaction has not yet been taken into account in
+the market figures for the 2015 calendar year.
+The semiconductor market is highly fragmented. Only the two largest players had a market
+share in excess of 10 percent in the 2015 calendar year with a market size of US$347.118 billion
+(source: market research company IHS Markit), with Intel taking a 14.8 percent share with
+revenue of US$51.420 billion and Samsung Electronics taking an 11.6 percent share with
+revenue of US$40.156 billion. The market share of all other competitors was below 5 percent.
+Infineon finished in 11th place with a 2.0 percent market share with revenue of US$6.813 billion.
+Intel is market leader for processors, Samsung Electronics for memory. Infineon does not
+operate in either of these categories. Hence, neither of these companies competes directly
+with Infineon in these two product categories. Of the top 20 semiconductor manufacturers,
+the following compete with Infineon: Samsung (only in the field of chip card ICs, with revenue
+accounting for only approximately 1 percent of Samsung's revenue), Texas Instruments, NXP,
+Toshiba, STMicroelectronics, Renesas and ON Semiconductor.
+Our dividend policy is aimed firstly at enabling our shareholders to participate appropriately
+in the success of the business and secondly to at least keep the dividend at a constant level in
+times of flat or declining earnings.
+21
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Semiconductor revenues worldwide totaled €295.996 billion in the 2016 fiscal year (source:
+World Semiconductor Trade Statistics). This reflects a decrease of 0.1 percent compared to the
+revenue of €296.353 billion for the 2015 fiscal year. During the same period Infineon could
+generate an organic growth of revenue of 6.6 percent.
+Developments in the semiconductor industry
+The purchase agreement with Cree also includes core competencies in wafer substrate manu-
+facturing for SiC, as well as for SiC with a monocrystalline GaN layer for RF power applications.
+Covering the entire value chain will enable us to optimize the combination of materials used
+in our power semiconductor components as part of our strategic "Product to System" approach.
+Also, after the acquisition of Wolfspeed, Infineon will be in a position to meet the capital
+structure targets it has set itself. Furthermore, the long-term credit rating received for the
+first time in February 2016 will not change as a result of the planned acquisition (see the
+chapter "Treasury and capital requirements" for detailed information on Infineon's capital
+structure targets and its credit rating).
+The acquisition will enable us to provide the broadest offering in compound semiconductors
+based on SiC and GaN and further strengthen our position as a leading supplier of power and
+RF power components in high-growth markets such as electro-mobility, renewables, and
+next-generation cellular infrastructure relevant for the Internet of Things. We will therefore
+become the number one market player for SiC-based power semiconductors and intend to
+become number one in RF power components by 2020.
+On July 14, 2016, Infineon and Cree Inc. ("Cree"), USA, signed a contract relating to the purchase
+of Cree's Wolfspeed Power and RF division ("Wolfspeed"). Infineon intends to acquire Wolf-
+speed (including the related wafer substrate business) for a purchase price of US$850 million.
+Wolfspeed, which is based in Research Triangle Park, North Carolina, USA, and employs
+approximately 550 people worldwide, is a leading provider of power semiconductors based
+on silicon carbide (SiC) and high-frequency (RF) power components based on gallium nitride
+on silicon carbide (GaN-on-SiC).
+Acquisition of Wolfspeed
+2016 fiscal year
+22%
+8.2%
+Europe,
+Mitsubishi
+Infineon
+CCS
+PMM
+IPC
+ATV
+Manufacturing
+Security
+Radio-frequency
+Sensor systems
+Embedded control
+World discrete power semiconductor
+and modules market share 2015
+Power control
+Power
+Core competency
+Infineon makes use of its core competencies across all segments
+This concept can be clearly illustrated by a number of examples: Demands for the reduction
+of CO2 emissions in the automobile promote the development of electric vehicles. At the same
+time, the desire for better road safety is helping the breakthrough of radar-based assistance
+systems. Both of these developments result in higher demand for semiconductors. Furthermore,
+our power semiconductors are making all kinds of power supplies more efficient and more
+compact: New materials such as silicon carbide make it possible for example to design power
+inverters for photovoltaic systems that are significantly smaller than previous models and
+approximately 20 percent less expensive to manufacture - while the value of the power semi-
+conductors they contain increases. Radio-frequency components based on gallium nitride
+are a prerequisite for fast mobile communication networks compliant with the 5G standard.
+Sensor technologies open up new application fields such as Augmented Reality in smartphones
+and intuitive operation of a large number of devices by gesture control. Security controllers
+ensure protection of data traffic in an increasingly connected world.
+Not only does Infineon rely on the right growth drivers, it also has the expertise and the strategic
+concepts needed to benefit from these drivers. Our strategy is based on three pillars. First,
+we focus on those markets in which we can achieve a leading position: automotive, power
+supplies, industrial power electronics, radio-frequency technologies and security. Second,
+we establish the basis for these leading positions with comprehensive expertise on technology,
+products and applications which we constantly expand both within existing as well as new
+application areas. The third pillar is our strategic approach "Product to System". Based on
+far-reaching system understanding we want to offer customers solutions that will make them
+more successful and will increase potential sales and profits for Infineon. Here we expect
+our knowledge to drive innovations that can change markets and clearly differentiate us from
+our competition in the long term.
+The three pillars of our strategy: Focus, technology leadership and
+system understanding
+Fairchild
+STMicro-
+electronics
+Vishay
+As illustrated above, our strategic approach "Product to System" goes well beyond thinking
+in terms of technologies and products. We want to understand what markets demand and how
+they are changing. Only then will we be able to understand how we can change the markets
+ourselves. Thus we consider more than just the direct sales opportunities for our products and
+solutions: We also look at our customers' success factors and the development of end-markets.
+By doing so, we recognize at an early stage when the foundation of our business is changing.
+This is a prerequisite for timely reaction, guaranteeing sustainable differentiation in growth
+applications and increasing profit. For example, we ask ourselves how we can help make the
+next generation of radar systems for assisted driving both less expensive and more precise at
+the same time. Our optimized chip set and a new assembly technology that simplifies overall
+The strategic approach "Product to System" defines our actions
+We have established a stable foundation in recent years by focussing on core competencies
+that are in higher demand today than ever in the face of global megatrends. Over the years we
+have built and systematically expanded the technical expertise needed to do so. And since
+good ideas do not become innovations until they have been successful in the market, we have
+also developed the appropriate concepts for turning our strategy into entrepreneurial success.
+At the center of all this is our strategic approach "Product to System", which we apply along our
+entire value chain, oriented towards the success of our customers. This approach is supported
+by additional elements: A strong innovation culture, continuous pursuit of technology leader-
+ship, well-developed quality consciousness, differentiated manufacturing and tailor-made
+go-to-market strategies fitting the various individual markets. This puts us in a position to offer
+our customers leading products as well as the highest possible quality and supply reliability.
+In doing so we achieve the objective of growing profitably and faster than the market.
+Success factors in strategy
+These are also the criteria we used in evaluating the planned acquisition of Wolfspeed, which
+we announced on July 14, 2016 and which we expect to close at the beginning of the 2017
+calendar year. Wolfspeed will strengthen our position in important growth markets such as
+electro-mobility, renewable energies and next generation mobile communications infrastruc-
+ture for the Internet of Things. The transaction also includes the related silicon carbide wafer
+substrate business. We want the future-oriented technology of silicon carbide-based power
+semiconductors and gallium nitride-based radio-frequency power components to help us
+grow faster than the market and secure a leading position in the corresponding segments or
+work towards a leading position within the foreseeable future. We expect the acquisition to
+be immediately accretive to Infineon's adjusted earnings per share. And Wolfspeed's culture,
+in which the development of leading technology know-how is highly regarded, fits excellently
+with Infineon.
+We supplement our organic growth with targeted acquisitions. These acquisitions have to meet
+three criteria: They must be strategically viable, financially reasonable and culturally fitting.
+An acquisition thus has to strengthen Infineon's market position according to our strategic
+orientation and has to be a viable addition to our range of expertise. The business acquired
+has to increase our profit, contribute to our margin target of 17 percent (previously 15 percent)
+throughout the cycle and must earn a return at least equal to the capital costs. And finally
+the corporate culture of a potential acquisition candidate must be a good fit with Infineon's
+culture, ideally contributing valuable elements to it.
+Acquisitions add to organic growth
+24
+24
+automation. Thanks to digitalization, agriculture for example can achieve higher yields
+with more environmentally friendly methods; at the same time new possibilities open up for
+consumers. This also includes protection of data exchange from abuse, thus ensuring the
+acceptance of the ever-increasing degree of networking in our society. Infineon benefits from
+these trends because they stimulate long-term demand in our target markets.
+Group strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Infineon has continued to develop and expand its traditional core competencies in the area of
+power semiconductors, hardware-based security, radio-frequency technologies and embedded
+control and has added to these competencies expertise in adjacent fields such as sensor tech-
+s
+nologies. We utilize the know-how of the entire corporate network in each application area,
+including our leading manufacturing technology. Today we are the clear market leader in power
+semiconductors as well as the system leader in automotive and leader in security solutions.
+Source: IHS Markit, "Power Semiconductor Discretes
+& Modules Report", October 2016
+5.0%
+5.7%
+6.1%
+6.3%
+18.7%
+Finances and strategy
+23
+Group strategy
+Finances and strategy
+Free cash flow from continuing operations (see the chapter "Internal Management System"
+for definition) totaled a positive amount of €490 million in the 2016 fiscal year, an improvement
+of €2,144 million compared to the negative amount of €1,654 million reported in the previous
+fiscal year. During that reporting period, free cash flow from continuing operations had been
+negatively impacted by the payment of the purchase price consideration for International
+Rectifier, payments to the Qimonda insolvency administrator (partial settlement) and payments
+to the EU Commission (fine imposed in conjunction with chip card antitrust proceedings)
+totaling €2,047 million. After adjusting for these exceptional items, free cash flow from continu-
+ing operations in the 2015 fiscal year was a positive amount of €393 million. Compared to
+this figure, the year-on-year improvement was 25 percent. Net cash provided by operating
+activities amounting to €1,313 million (2015: €957 million) thereby exceeded additions to
+property, plant and equipment and intangible assets in the reporting period totaling €826 million
+(2015: €785 million).
+Compound annual growth rate of the main semiconductor target markets, 2015 to 2020
+Today Infineon addresses the three fastest growing segments of the semiconductor market for
+the period from 2015 to 2020: Market researchers predict a compound annual growth rate of
+8.2 percent for industrial power semiconductors, 7.3 percent for chip card ICs and 5.8 percent
+for automotive semiconductors. Demand in these segments is driven by long-term, global
+megatrends.
+Infineon's objective is sustainable profitable growth. This is why we focus on markets in which
+we can be successful with our core competencies in the long term and pursue the leading
+position in these markets. In an effort to always offer the best solutions on the market to our
+customers we achieve three things: We continuously increase the enterprise value for our
+shareholders, offer our employees a safe and attractive working environment and also help
+make life easier, safer and greener.
+22
+Group strategy
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+7.3%
+ANNUAL REPORT 2016
+Tool", June 2016
+Source: IHS Markit, "Application Market Forecast
+excluding Japan)
+(excluding China,
+Americas
+Asia-Pacific
+Japan
+Middle East, Africa
+China
+INFINEON TECHNOLOGIES
+Looking at the regional spread of semiconductor sales, China has been the dominant factor
+for many years. In the 2015 calendar year, 41.5 percent of all semiconductors were absorbed
+there. EMS (Electronic Manufacturing Services) play a special role in China. These contract
+manufacturers assemble electronic products predominantly for Western customers. This
+business model plays a significant role for durable consumer goods on the one hand and
+information and telecommunications sector-related products such as servers, PCs, notebooks
+and cellular phones on the other. A large proportion of the semiconductors sold to China are
+later on re-exported as part of a finished product.
+5.8%
+3.4%
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Semiconductors are essential in tapping renewable energy sources. They reduce the power
+consumed by electric devices and enable systems that make transportation safer and cleaner.
+Furthermore, semiconductor technology is the backbone of modern communication and data
+technologies. Answers to the challenges of our time would be unthinkable without the use of
+semiconductors. And this becomes even more true as the real and digital worlds converge,
+generating new potentials. Digitalization increases the productivity of industrial manufacturing
+processes. This development, also referred to as the Industrial Internet, reaches far beyond
+Opportunities in the convergence of the real and digital worlds
+According to the United Nations, the world's population numbered approximately 7.3 billion
+people in 2015. This figure is expected to climb to 7.8 billion by 2020 and to reach 8.5 billion
+by 2030. World population continues to grow at a fast pace, accompanied by a corresponding
+rise in the demand for energy, nutrition, sustainable concepts for traffic within and between
+expanding metropolitan areas and high-performance communications infrastructure. At the
+same time natural resources such as fossil fuels and arable land are growing more and more
+scarce. New solutions are called for if we are to continue providing a constantly growing popu-
+lation with energy and nutrition and a higher standard of living while minimizing the impact
+on the environment. The key is making "more from less". Microelectronics plays a key role in
+achieving this goal.
+Global megatrends drive core business
+Strategic fundamentals
+2 Source: ABI Research, "Secure Smart Card & Embedded Security IC Technologies", July 2016; microcontroller ICs
+1 Source: IHS Markit, "Worldwide Semiconductor Shipment Forecast", October 2016
+|||ili
+cations¹
+Communi-
+Data
+Consumer¹
+Chip Card ICs 2 Automotive'
+Industrial¹
+Total Semi-
+1.4%
+2.8%
+3.4%
+conductor Market' Processing'
+Earnings per share for the 2016 fiscal year amounted to €0.66 (basic and diluted), 18 percent
+up on the previous fiscal year's figure of €0.56 (basic and diluted). Adjusted earnings per share
+(diluted) improved year-on-year from €0.60 to €0.76 (see the chapter "Review of results of
+operations" for details of the calculation of adjusted earnings per share).
+STMicroelectronics
+Improvement in key performance indicators
+78
+Significant events after the end of the reporting period
+78
+Effective October 1, 2015, business with XMC
+industrial microcontrollers - developed by
+Automotive and Chip Card & Security - was
+transferred to Power Management & Multimarket
+and Industrial Power Control. The previous
+year's figures have been adjusted accordingly.
+This report combines the Group Management
+Report of the Infineon Group ("Infineon" or
+"Group") - comprising Infineon Technologies AG
+(hereafter also referred to as "the Company")
+and its consolidated subsidiaries - and the
+Management Report of Infineon Technologies AG.
+The Combined Management Report contains
+forward-looking statements about the business,
+financial condition and earnings performance
+of the Infineon Group. These statements are
+based on assumptions and projections based
+on currently available information and present
+estimates. They are subject to a multitude of
+uncertainties and risks. Actual business devel-
+opment may therefore differ materially from
+what has been expected. Beyond disclosure
+requirements stipulated by law, Infineon does
+not undertake any obligation to update forward-
+looking statements.
+75 Review of liquidity
+73 Review of financial condition
+68 Review of results of operations
+68 Group performance
+Our 2016 fiscal year
+66 The Infineon share
+61 Our employees
+61 Sustainability at Infineon
+57 Internal management system
+55 Operations
+Report on expected developments, together with
+associated material risks and opportunities
+79 Outlook
+83 Risk and opportunity report
+17
+ང་
+106 Compensation report
+106 Declaration on Corporate Governance
+106 Corporate Governance Report
+section 315, paragraph 4, of the German Commercial Code (HGB)
+102 Information pursuant to section 289, paragraph 4, and
+53 Research and Development
+102 Corporate Governance
+99
+as of the date of this report
+with respect to Infineon's financial condition
+Overall statement of the Management Board
+98
+Treasury and capital requirements
+95
+Infineon Technologies AG
+49 Locations
+47 Chip Card & Security
+44 Power Management & Multimarket
+INFINEON TECHNOLOGIES
+At the meeting of the Investment, Finance and Audit Committee held on November 14, 2016,
+intensive discussions were held with the auditor regarding the Separate Financial statements,
+the Consolidated Financial Statements prepared in accordance with IFRS, the Combined
+Management Report, the proposed profit appropriation, and the auditor's findings. Based on
+these discussions, the Investment, Finance and Audit Committee resolved to propose to the
+Supervisory Board to approve the financial statements after being drawn up by the Management
+Board and to consent to the proposed profit appropriation.
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, audited the Separate Financial Statements
+of Infineon Technologies AG and the Consolidated Financial Statements as of September 30,
+2016 as well as the Combined Management Report for Infineon Technologies AG and the
+Infineon Group, and issued unqualified audit opinions thereon. KPMG also reviewed Infineon's
+half-year and quarterly financial reports.
+Separate and Consolidated Financial Statements
+In May 2016, Prof. Dr. Schmitt-Landsiedel ceased to be a member of the Strategy and Technol-
+ogy Committee and accordingly also gave up the chair. The position has been taken over by
+Mr. Bauer, who has both the technical expertise and the necessary practical experience in
+setting strategies for a technology company operating in a fiercely competitive environment.
+Beginning of November 2016, Prof. Dr. Schmitt-Landsiedel has for personal reasons also ceased
+to be a member of the full Supervisory Board. Prof. Dr. Schmitt-Landsiedel has been a member
+of the Supervisory Board since 2005 and, particularly as longtime chairperson of the Strategy
+and Technology Committee, substantially contributed to the board's successful work. We
+would like to express our thanks to Prof. Dr. Schmitt-Landsiedel and wish her well for the future.
+The committee was provided with information on the current status of patents within the
+semiconductor industry, including details of Infineon's strategy in this field. It also closely
+examined International Rectifier's product portfolio and, as part of the integration process,
+inquired into the progress being made to achieve uniform customer interfaces in the areas of
+sales, marketing, logistics and finance. It also focused its attention on the Chip Card & Security
+and Power Management & Multimarket segments and inquired into the quality improvement
+initiatives as well as measures aimed at raising customer satisfaction.
+under report.
+ANNUAL REPORT 2016
+year
+15
+Strategy and Technology Committee
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Despite ongoing expenses in conjunction with the acquisition of International Rectifier, net
+income benefited from the earnings contribution provided by revenue growth of €678 million
+(see the chapter "Review of results of operations") and amounted to €743 million for the
+fiscal year ended September 30, 2016, an increase of 17 percent on the previous year's figure
+of €634 million.
+The Strategy and Technology Committee convened three times during the
+INFINEON TECHNOLOGIES
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+At the meeting of the Supervisory Board held on November 15, 2016, the Chairman of the
+Investment, Finance and Audit Committee reported on the committee's recommendations. In
+the course of this meeting, all topics relevant for the financial statements and all significant
+audit issues were discussed in detail with the auditor and examined by the Supervisory Board.
+The examination also covered the proposal to pay a dividend of €0.22 per entitled share.
+The Separate Financial Statements, the Consolidated Financial Statements prepared in
+accordance with IFRS, the Combined Management Report, the Management Board's proposal
+for the appropriation of unappropriated profit (all prepared by the Management Board) and
+KPMG's long-form reports on the audits of the Separate Financial Statements, the Consolidated
+Financial Statements and the Combined Management Report were all made available to the
+Supervisory Board at its meeting held on November 29, 2016. Taking into account the insights
+gained at the meeting held on November 15, 2016, the Supervisory Board concluded that it
+has no objections to the financial statements and the audits performed by the auditor. In its
+opinion, the Combined Management Report complies with legal requirements. Likewise, the
+Supervisory Board concurs with the assertions regarding Infineon's future development made
+therein. The Supervisory Board therefore concurred with the results of the audit and approved
+the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements of the Infineon Group. The Separate Financial Statements were accordingly
+adopted. The Supervisory Board also approved the Management Board's proposal for the
+appropriation of unappropriated profit.
+42 Industrial Power Control
+40 Automotive
+40 The segments
+31 Growth drivers
+22 Group strategy
+18 2016 fiscal year
+18 Finances and strategy
+16
+Our Group
+Content
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Chairman of the Supervisory Board
+Wolfgang Mayrhuber
+On behalf of the Supervisory Board
+Neubiberg, November 2016
+The Supervisory Board wishes to thank the Management Board and the entire staff for their
+unfailing commitment and outstanding achievements during the 2016 fiscal year.
+Combined
+ANNUAL REPORT 2016
+Group Management Report
+2016 fiscal year
+6%
+7%
+7%
+13%
+12%
+11%
+100%
+100%
+100%
+Infineon revenue by region
+2016 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+P see page 60
+P see pages 59 and 75
+20%
+23%
+24%
+2014
+19
+Combined Management Report | Our Group
+Finances and strategy
+18%
+Americas
+Japan
+Germany
+China
+2016
+P see page 59
+19%
+Europe (excluding Germany), Middle East, Africa
+Asia-Pacific (excluding China, excluding Japan)
+19%
+15%
+16%
+20%
+24%
+23%
+2015
+P see page 72
+23%
+ANNUAL REPORT 2016
+13%
+4 Chip Card & Security
+3 Power Management & Multimarket
+2 Industrial Power Control
+1 Automotive
+5%
+CCS4
+11%
+PMM3
+individual segments in the 2016 fiscal
+year compared to the previous year
+Revenue growth of the
+> Good performance enables higher dividend
+> Organic growth of 7 percent achieved despite difficult market
+conditions; Segment Result Margin within forecast range
+2016 fiscal year
+P see page 68 f.
+18
+ATV¹
+14%
+IPC2
+32%
+INFINEON TECHNOLOGIES
+Corporate and Eliminations: €1 million
+Revenue by segment in the 2016
+fiscal year
+Other Operating Segments,
+Chip Card & Security: €698 million
+€2,050 million
+Power Management & Multimarket:
+Industrial Power Control: €1,073 million
+Automotive: €2,651 million
+Finances and strategy
+11%
+16%
+The Segment Result for the 2016 fiscal year totaled €982 million, 9 percent up on the
+€897 million reported one year earlier. At 15.2 percent (2015: 15.5 percent), the Segment
+Result Margin ended up within the range forecast at the beginning of the fiscal year (see
+the chapter "Outlook" P page 79 f.).
+China has been Infineon's most important sales market for several years now and, with a figure
+of €1,574 million, accounted for 24 percent (2015: 23 percent) of Infineon's revenue during
+the fiscal year under report. Germany followed once again with revenue of €1,000 million and
+a revenue share of 15 percent (2015: 16 percent).
+Revenue up on the back of organic growth, currency effects and acquisition
+of International Rectifier; Segment Result Margin within forecast range
+Infineon generated revenue of €6,473 million in the 2016 fiscal year, a 12 percent increase
+on the previous year's figure of €5,795 million. Revenue growth primarily reflects strong sales
+performances across all segments (see the chapter "The segments" P page 40 ff.) and the
+first-time inclusion of International Rectifier for a full twelve-month period, compared with
+the previous fiscal year, when revenue was included only for the period after closing of the
+acquisition on January 13, 2015. Considering this fact, Infineon managed to achieve 7 percent
+organic growth in a difficult economic environment and despite a generally contracting
+semiconductor market. Infineon's strong business performance was also influenced by cur-
+rency factors, most notably the appreciation of the US dollar against the euro. Approximately
+2 percent of the 12 percent revenue growth was attributable to currency factors.
+41%
+0%
+2017e
+2016 e
+2015
+22.7
+"Vision Zero" is one of the most ambitious objectives of the automotive industry: Vehicles
+are to become so safe that serious or even fatal traffic accidents no longer occur; today
+approximately 90 percent of such accidents are attributable to human error. Safety systems
+can prevent such errors or at least limit their consequences.
+29.3
+2018 e
+12.8
+23.7
+15.2
+20.9
+China
+2020 e
+8.8
+Japan
+North America
+Other countries
+"Vision Zero" and Automated Driving
+Asia-Pacific (excl. China, excl. Japan)
+1 CAGR = Compound Annual Growth Rate
+Source: IHS Markit, "Annual Light Vehicle Production Forecast", August 2016
+And the number of electronic applications in the vehicle itself also continues to rise, with
+approximately 90 percent of the innovations now based on electronics. According to forecasts
+by market experts, this rate will remain unchanged in the years to come. Overall, a constant
+increase in electronic equipment in vehicles can be observed across all regions. Innovative
+solutions for safety and comfort functions typically first penetrate premium-class vehicles,
+after which they are then gradually introduced in mid-range and compact classes, increasing
+the semiconductor value per vehicle.
+2019 e
+Europe
+In the previous chapters we have described Infineon's strategy in detail. One of its key elements
+is a focus on markets in which we can be successful in the long term. In the following we will
+outline the most important growth drivers for our business, grouped according to four higher-
+level trends: individual mobility, efficient power management, mobile communication as well
+as sensor technologies and security.
+17.5
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+Growth drivers
+31
+Individual mobility
+Increasing prosperity usually leads to the desire for individual mobility. This is particularly
+evident in newly industrializing countries: The middle classes in India and China are growing
+annually by around ten million people each, a development which also drives rising demand
+for automobiles. In Africa the transition from the bicycle or moped to the car is also a sign of
+increasing prosperity. An average annual growth rate of 2.6 percent is expected for worldwide
+automobile production for the years 2015 to 2020 (Source: IHS Markit).
+Worldwide light vehicle production by region
+in millions of vehicles
+CAGR (2015-2020): +2.6%
+100.7
+98.3
+95.0
+91.4
+92.8
+6.1
+88.7
+5.0
+18.8
+8.6
+Combined Management Report | Our Group
+222
+Growth drivers
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+34
+World market for standard IGBT
+modules in solar energy
+US$ in millions
+CAGR¹ (2015-2020):
++9.2%
+192
+157
+164
+172
+244
+2015 2016 e 2017e 2018 e 2019 e 2020 e
+1 CAGR = Compound Annual Growth Rate
+Source: IHS Markit, "Power Semiconductor
+Intelligence Service", September 2016
+Efficient power conversion
+Renewable energy
+For both environmental and economic reasons it is not possible to meet the increasing need
+for electric power using fossil fuels to a similar extent as in the past. Europe, the USA, China and
+Japan have therefore defined development targets for renewable energy that will reduce CO2
+emissions in the coming decades to their respective target values. In December 2015 at the
+World Climate Conference in Paris the participating nations reached a climate protection agree-
+ment which for the first time anchors the upper limit for global warming in international law at a
+mandatory maximum of two degrees Celsius. Furthermore, greenhouse gas neutrality is to be
+achieved in the second half of this century. The agreement took effect as of November 4, 2016.
+Decarbonizing through the use of renewable energy sources is the key to a sustainable supply
+of energy. Infineon benefits from the rise in construction of wind farms and photovoltaic
+systems, since for every gigawatt of power generated these systems require many times more
+power semiconductors than the amount found in conventional power plants. In contrast to coal,
+gas or nuclear power plants, wind and photovoltaic power plants don't have turbines whose
+steady operation generates a constant 50 hertz alternating current allowing energy to be fed
+directly into the power grid. Power electronic systems are required to perform the necessary
+conversion.
+Wind: We expect steady growth in the wind energy sector in the mid- to long-term. For each
+megawatt generated, wind parks require approximately 30 times more semiconductor content
+than conventional coal-fired power plants. China and the USA are promoting wind energy.
+Furthermore, the refurbishment of older, lower-performing wind power turbines with modern,
+high-performance wind turbines, referred to as “repowering", will continue for some time.
+Stronger generators are also being used in initial installations, driving higher demand for semi-
+conductors for each wind power turbine. This development is especially evident in China, where
+we have been collaborating with the Chinese wind turbine manufacturer Goldwind since 2011.
+While in the past primarily turbines generating up to 1.5 megawatts were installed, today an
+increasing majority of turbine generators producing 2 to 3 megawatts is being used.
+Photovoltaics: The market researcher IHS Markit expects an average annual growth rate of
+9.2 percent for power semiconductor modules for solar energy until 2020. For several years
+now we have been observing a structural change resulting from the gradual migration of the
+business from Europe to Asia and the USA. Infineon enjoys a very broad international presence
+and has been partnering for years with the world's leading manufacturers of photovoltaic
+inverters. Among other things, we benefit from the growth of Chinese inverter manufacturers,
+both in terms of the expansion of photovoltaics in China itself and from the export of inverters
+to other regions. Furthermore, we are working together closely with leading European manu-
+facturers who are also very successful in the USA. Efficient conversion and low system costs help
+cut power generation costs in photovoltaic systems while helping reach grid parity in comparison
+to conventionally generated power. This makes it possible to pursue further expansion while
+eliminating the need for subsidies. The advantages of power semiconductors based on silicon
+carbide can be fully exploited in inverters. The transition to this new technology will cut system
+costs for manufacturers in the future, while the value of the semiconductors used to build the
+inverters will rise. The planned acquisition of Wolfspeed will let us accelerate this develop-
+ment and in doing so help us win further market share.
+INFINEON TECHNOLOGIES
+The need for an appropriate charging infrastructure grows as electric vehicles become
+more widely adopted. A well-developed network of charging stations is another incentive for
+purchasing electric vehicles. In order to raise the level of electro-mobility acceptance, China
+has begun operation of charging stations along the country's eight most important highways,
+including the important connection between Beijing and Shanghai. By 2020 as many as
+10,000 charging stations with 120,000 charging points will be in operation, with a correspond-
+ing investment volume of approximately US$770 million. The charging stations are rated at
+up to 100 kilowatts and each one requires power semiconductors worth from US$200 to
+US$300. The network of publicly accessible charging stations can be expected to grow in other
+countries in the years to come as well. In addition to dedicated electric service stations, it is
+also possible to integrate charging stations in street lights.
+Charging stations for electric vehicles
+Optimization of the internal combustion engine alone will not be enough in order to achieve
+defined objectives and service customer demands for sustainable mobility. Above and beyond
+this, the efficiency of electric power consumption within the vehicle will have to be improved
+and hydraulic or mechanical solutions will have to be replaced with more efficient electrical
+and therefore semiconductor-based solutions. Furthermore a rise in the number of hybrid and
+electric vehicles will be a necessity in the effort to reduce the fleet average of many vehicle
+manufacturers to the required target value. Hybrid and electric vehicles are characterized by
+significantly higher semiconductor content than conventional vehicle models. Today's solutions,
+from mild and plug-in hybrid vehicles up to completely electric vehicles, convert the battery's
+direct current into the alternating current required by the electric drive. Infineon offers a wide
+variety of power semiconductor components for these various systems. While a car with a
+conventional internal combustion engine contains an average semiconductor value of US$352,
+the value contained in an average hybrid or electric vehicle is approximately US$700. Here
+approximately three quarters of the incremental semiconductor content is accounted for by
+power semiconductors. They are the decisive factor in the high power electric drives and
+are also the key to cutting costs. Innovative system solutions and in particular the use of silicon
+carbide-based components have an enormous potential when it comes to making electric
+driving more affordable.
+The automotive industry is constantly working to reduce emissions. These efforts are in part
+required by legal regulations: Thus, for example a new European Commission rule requires the
+reduction of average fleet emissions to 95 grams CO2 per kilometer by the year 2021. A lively
+discussion is currently taking place surrounding exhaust gas testing procedures under more
+realistic conditions. If the legislature should decide on regulations for new, more realistic
+testing procedures, it would implicitly mean tighter CO2 reduction rules, which would in turn
+increase the demand for semiconductors. Furthermore, today customers increasingly make
+purchase decisions while fully aware of the fact that reduced fuel consumption saves money,
+minimizes impact on health and the environment and thus contributes to improving the
+quality of life, especially in metropolitan areas.
+32
+In spite of the constantly increasing number of vehicles on the road, the number of traffic
+fatalities in developed nations has dropped over the course of several years. More than
+anything this is the result of safety systems. Active safety systems constitute an especially large
+growth market. By directly intervening in driving actions, these systems can either completely
+prevent accidents or significantly reduce their consequences. Examples here are pedestrian
+detection, adaptive cruise control and blind spot detection. In the meantime these functions
+can be found not only in the luxury class, but also increasingly in medium-class vehicles.
+Active safety systems are then enhanced to become driver assistance systems, which are of
+increasing importance for road safety, since they provide the driver with extensive support
+while driving. For example, they assist in critical situations and help correct driving errors
+when necessary, thus reducing the risk of accidents. Systems for partial and completely auto-
+mated driving consist essentially of sensors (such as radar, interior and exterior cameras), a
+central high-performance computer (the intelligence of the system, so to speak) for evaluation
+of the sensor data and the calculation of the driving strategy, and lastly of actuators (steering,
+braking, engine control and transmission). As a leading provider of system solutions Infineon
+has an extensive product portfolio for assistance systems and automated driving.
+The microcontrollers of our AURIXTM family ensure the reliability of the systems. In its function
+as main controller, AURIXTM sends out the commands for the actuators in automated operations.
+Furthermore, it has another key role as safety anchor in that it safeguards the components
+not qualified according to automotive industry standards.
+Actuators are also safety-critical applications. One of the most important requirements for
+partially and fully automated driving is that the system continues to work reliably even in case
+of a defect. In order to achieve this, Infineon offers ISO 26262-certified components for these
+applications with redundancy in case of failure: Safety-critical components and subsystems have
+to be highly available, i.e. protected against failure. This is why such sensors, microcontrollers
+and
+power semiconductors are deployed redundantly, also increasing the level of demand for
+semiconductors.
+Our components strongly contribute to supporting vehicle drivers and bringing us closer to
+autonomous driving. And the connection to the internet makes it possible to equip vehicles with
+more and more new functions and services. Once again, semiconductors play an important role.
+Networking, data and IT security
+Another important trend is the continuously rising degree of interconnection between
+vehicles. This development opens up opportunities for many new services, but also increases
+the danger of unauthorized access to systems by a third party. This means secure data
+exchange among the various on-board systems as well as with other vehicles and the infra-
+structure has to be maintained. Vehicle and personal safety on the one hand and data and
+information security on the other hand can no longer be provided independently of one
+another. The vehicle is becoming a "connected computer on wheels". The need for data and
+IT security in the vehicle will thus continue to grow. Infineon is ideally positioned to benefit
+from this trend, with decades of experience in this area in the Chip Card & Security segment.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Finances and strategy
+Average semiconductor content
+of various types of vehicles
+in US$
+352
+712
+704
+Internal Plug-in- Pure electric
+combustion hybrid vehicle
+engine vehicle
+vehicle
+Source: Strategy Analytics, "Automotive Semi-
+conductor Demand Forecast 2014-2023", May 2016
+CO₂ reduction
+Growth drivers
+Our shareholders benefit from this positive performance. We also pursue a dividend policy
+aimed at letting shareholders adequately participate in Infineon's economic development and
+at paying out at least a constant dividend even in periods of slower growth.
+Furthermore, we systematically expand our abilities, for example whenever the requirements
+of our markets change, or when we see long-term growth potential in a new business segment.
+Thus, as the market leader, we began researching new materials for power semiconductors
+at an early stage. Silicon carbide and gallium nitride are particularly well-suited for use in the
+field of power electronics. The planned acquisition of Wolfspeed will increase our strengths in
+this area. At the same time, in sensor technologies we intentionally moved into new territory
+some time ago, fully aware of the fact that detection of environmental data would become
+increasingly important in our target markets. Today we have a comprehensive portfolio of
+sensors for a wide range of systems in automotive applications, for mobile devices, consumer
+electronics and the Internet of Things. We have increased our share in the market for silicon
+microphones, one example of acoustic sensors, from 1.5 percent in calendar year 2007 to a
+current 31.1 percent.
+-SOX
+25
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Digitalization does not only play a major role in our markets: The way we manufacture, develop
+and interact with markets is changing as well. Today we are already successfully adopting
+the concept of the Industrial Internet: Automation is linked to the use of big-data methods in
+operations. The computer evaluates data on over 1,000 manufacturing steps to detect atypical
+deviations and point out possible causes. This will also help us meet the high quality require-
+ments demanded by the automotive industry in the future as well, requirements which will
+become ever more stringent with each step towards autonomous driving and the associated
+necessary system reliability. Digitalization will change the way we work in all areas, be it
+logistics, at the customer site or in research and development. For example we want to
+accelerate learning and knowledge building in development, where we already make very
+extensive use of computer-based methods. This will help us keep our technological lead in
+spite of growing challenges and will let us successfully master the complexity involved in
+thinking in terms of systems.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+28
+Financial targets underline our claim to grow
+Today Infineon is excellently positioned. We are addressing the fastest growing market segments
+and benefit from long-term megatrends. Our investments in recent years have yielded a solid
+foundation for the realization of economies of scale and scope and for increasing our profit-
+ability. As the clear number one in power semiconductors, system leader in automotive and
+leader in security solutions we achieve correspondingly high production volumes and can
+invest in retaining and expanding our technology leadership.
+Our strategy is based on sustainable, profitable growth, reflected in the ambitious targets we
+have set for ourselves. They emphasize on the one hand the high level of expectations we place
+on ourselves, and on the other hand ensure that we achieve the necessary balance between
+growth in sales, profitability and investment volume.
+Target 1: 8 percent average annual growth in revenue
+Infineon's current business has grown at an average rate of approximately 9 percent annually
+since the company was established as an independent corporation in fiscal year 1999 -
+excluding the revenue growth due to acquisitions. We remain active in the same markets and
+our four segments are positioned to capitalize on the megatrends mentioned earlier, which
+are driving a steady demand momentum for our products. We therefore expect to be able to
+continue growing in the future at a pace very close to the historical rate. A detailed description
+of the individual growth drivers follows in the next chapter. Here our strategic approach
+"Product to System" helps us develop better solutions with our broad technology and product
+expertise and thus to create significant added value for our customers who are willing to pay
+more for solutions that are worth more. Furthermore, we are using tailor-made go-to-market
+strategies to broaden our customer base and generate more business. In doing so we want
+to continue to grow at an average of 8 percent per year.
+Target 2: 17 percent Segment Result through the cycle
+Growth is only one prerequisite for sustainable success. Another criterion is profitability.
+Here the margin achieved by our products is an indicator for the value our products create for
+the customer. When we work profitably on a sustainable basis, it means that we steer our
+developments to the point where they provide the highest benefit to our customers. Working
+profitably means using innovative strength effectively by meeting the demand of the customer
+and the markets. In addition, we want to continue our development and sales achievements
+at unabated speed even in difficult market phases. Going forward, we want to achieve an
+average Segment Result Margin of 17 percent of sales through the cycle (the previous target
+was 15 percent). Today, we are benefiting from a stronger US dollar, giving us some margin
+tailwind compared to the situation when we published our previous targets. In order to achieve
+this goal on a sustainable basis, we are relying among other things on cost advantages from
+the integration of International Rectifier's manufacturing Landscape as well as from the
+further ramp and utilization of our 300-millimeter site in Dresden (Germany). We also leverage
+economies of scale in research and development and sales through leading positions in our
+target markets. And technology leadership and the strategic approach "Product to System"
+enable us to maintain a higher degree of differentiation. In the 2016 fiscal year we achieved a
+Segment Result Margin of 15.2 percent.
+Target 3: Investments amounting to 13 percent of revenue
+When expanding our manufacturing capacities we only invest in our own manufacturing facili-
+ties when it makes a fundamental contribution to the differentiation of our products. This is
+true in particular of power semiconductors, radio-frequency components and MEMS-based
+sensors. When this is not the case, we outsource an increasing amount of our wafer processing
+and our package assembly to manufacturing partners.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+system assembly enable more progress than when we concentrate only on cutting costs of
+individual products. The situation is similar for the example of silicon carbide technologies in
+photovoltaic inverters discussed above. Thinking in terms of systems characterizes all aspects
+of our entrepreneurial actions, from our differentiated manufacturing to specific sales concepts
+for dynamic sub-markets and close collaboration with customers, tailored to meet the respec-
+tive requirements. This way we want to make sure that Infineon takes optimum advantage
+of its leading position in the various markets and key technologies. Extensive resources are
+necessary in order to provide both a broad portfolio and in-depth system expertise. This means
+Infineon can offer the product with the best possible price/performance ratio for every appli-
+cation at competitive costs.
+Technology leadership means added value for customers
+Customers choose Infineon because we stand for competitive cutting edge technology in terms
+of the highest possible quality and reliability. Our engineers anticipate many challenges even
+before our customers are affected by them. We meet the highest quality requirements of the
+automotive industry, achieve the highest efficiency in power switching and deliver solutions
+for the most challenging security projects in the world. We are also capable of applying this
+specific expertise throughout the entire corporate network. As an example our barometric
+pressure sensors, which make indoor navigation possible for mobile devices, are based on the
+same technology as those used in cars for determining the optimum gasoline-air mixture.
+And beyond payment cards and government IDs, our expertise in security is in higher demand
+than ever in the age of the Internet of Things (IoT): In this area customers concentrate on opti-
+mizing the interaction of networked devices and prefer to purchase the performance feature
+"Security" as a solution that is easy to implement. Infineon recognized this trend at an early
+stage and now offers the corresponding controllers and software as well as the comprehensive
+know-how of the Infineon Security Partner Network. The network partners develop security
+solutions custom-tailored to meet the needs of individual industry sectors and markets. The
+service range covers the entire value chain, from consulting and design all the way to system
+integration and service management.
+We continuously enhance our expertise in order to be able to always offer the best solution in
+every business segment. Our strategic approach "Product to System" goes beyond incremental
+continuous improvement of products and lets us leverage potential enhancements for our
+customers at the system level.
+Digitalization changes the way we work
+Flexible go-to-market strategies accommodate rapidly changing markets
+Going forward we will address our customers with more flexibility and innovative go-to-market
+strategies. Historically, Infineon has grown through close collaboration with key customers, with
+whom we have successfully defined products that enabled us to penetrate the broad market
+thereafter. We reach many of our smaller customers through distributors. We will increase our
+leverage of the enormous potential of the distribution channel with standardized but flexible
+products for the mass market. Here we benefit from the acquisition of International Rectifier,
+which has for quite some time successfully used this model, characterized by short-term
+delivery reliability, continuous and pragmatic adjustment of the product portfolio and close
+partnership with distributors. Digitalization and the Internet of Things will create new challenges.
+From the thermostat all the way to the car, today more and more devices are connected with
+the internet and as a result offer new functionality. The manufacturers usually concentrate on
+making these devices “smart” with the best possible sensing and data processing capability.
+They are neither able nor interested in dealing with the underlying semiconductor technologies.
+We want to make our products and solutions more easily available to these vendors, for example
+through optimized product bundles and support in the form of reference designs. Here in
+particular our system understanding makes the difference. This broad sales strategy lets us
+maximize revenues with existing technologies while at the same time increasing the yield of
+our investments in research and development.
+Another milestone in terms of manufacturing technologies is the introduction of a larger wafer
+diameter for power semiconductor manufacturing. The use of 300-millimeter thin wafer tech-
+nology provides significant advantages in productivity and reduces use of capital. However,
+the technical challenges are substantial. Infineon is as yet the only company to successfully
+complete this step. The advantages in terms of productivity will manifest themselves as soon
+as we reach 20 to 30 percent of the currently planned full capacity, a level we expect to reach
+by the end of 2017.
+In addition to innovation, delivery reliability, quality and cost reduction are essential factors
+in the orientation of our manufacturing landscape. Innovation activities are centered in Europe.
+Our Asian sites focus on efficiency and will support further growth. As an example, we suc-
+cessfully launched an additional production module in Kulim (Malaysia). This helps us ensure
+our delivery reliability, particularly important to our customers in the automotive industry.
+This means we are well prepared for further expansion in the area of electro-mobility, also
+associated with increased demand for power semiconductors.
+27
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+In many application areas, for example in power electronics and sensor technologies, our
+manufacturing methods and our process expertise give us a strategic advantage because we
+can offer components that can only be produced using highly demanding manufacturing
+technologies. Several years ago we were the first company in the world to develop highly-
+integrated circuits for the 77 gigahertz frequency range based on innovative silicon germanium
+technology. This cuts the cost of radar systems which as a result are used more widely in
+vehicles outside of the premium segment, making street traffic safer.
+Combined Management Report | Our Group
+All our actions are aimed at creating value for the customer and at opening up opportunities for
+differentiation to us. This also applies to manufacturing. We manufacture in-house provided
+we can thereby differentiate ourselves from the competition in the market. On the other hand,
+when it comes to standard technologies, usually in the case of highly-integrated products
+such as microcontrollers and chipcard ICs, we primarily work with contract manufacturers. We
+thereby utilize our invested capital in the most efficient way possible and optimize our invest-
+ments in research and development.
+The development of the 3D image sensor REAL3™ is a good example of a start-up concept. It
+all began with the idea of a highly innovative technology, without a clear specific idea of which
+applications would make best use of its potential. A team worked together with key customers
+to develop and test a variety of applications. In the meantime we have seen initial successes
+in the smartphone business and with automotive safety applications that help protect fatigued
+or distracted drivers from accidents. In the field of industrial power semiconductors we are
+following a different approach: Our MIPAQTM Pro power module addresses inverters for wind,
+solar and industrial power applications. Here our customers' requirements are clearly defined
+and we differentiate ourselves in the market by means of a combination of leading technologies,
+system understanding and security expertise. The module enables compact designs, provides
+high reliability and is also equipped with a security controller that makes it possible to
+authenticate original components.
+This is why innovation and system thinking ideally complement one another. We think about
+what the key factors are and how we can combine several innovative, sometimes at first sight
+minimal steps to form a larger whole that will in turn provide an additional and substantial
+benefit for the customer. Thus today our claim to innovation covers all areas of our company:
+logistics, operations, technology, products, system solutions and partnership with the customer.
+Depending on particular market demands we focus on different aspects. Several units within
+the company act like start-ups, while others use a comprehensive approach to leverage new
+areas of differentiation. Of course in doing so we implement the entire spectrum of possibilities
+and expertise that Infineon has to offer. This is all driven by a well-developed culture of collab-
+oration which is one of our permanent differentiating features.
+Innovation is one of the most fundamental success factors in the semiconductor industry
+and is for us an important basis for differentiating Infineon from competition. Infineon has
+shown time and again that our technological and product innovation lets us grow faster than
+the market and increase profitability. But challenges are growing as well: Competition is
+intensifying. Competitive coverage of the application areas in our markets calls for a wider
+and wider technology portfolio. And development efforts are increasing disproportionally
+as technologies gradually approach physical barriers. This fact underlines the significance of
+economies of scale and the connection between technology leadership and size. Previous
+concepts for success are too shortsighted under these conditions and have to be either
+expanded or rethought.
+Innovation drives differentiation
+26
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Strategic advantages through in-house manufacturing
+Dow Jones US Semiconductor Index
+Finances and strategy
+29
+10.06
+160
+150
+140
+130
+120
+110
+100
+9.05
+90
+10|2015
+11|2015
+12|2015
+01|2016
+02|2016
+03|2016
+04|2016 05|2016
+06|2016
+07|2016 08|2016 09|2016
+Infineon
+DAX
+11.06
+12.07
+13.07
+14.08
+Psee page 97
+Up to now our capital intensity has been characterized by existing 200-millimeter technologies.
+However, compared with 200-millimeter manufacturing, the new 300-millimeter thin wafer
+technology requires less investment relative to the capacity provided. This reduces the amount
+of investment in manufacturing capacities for power semiconductors that is necessary in order
+to achieve growth targets.
+For products manufactured using standard CMOS technologies with structures of 65 nanometers
+or less we work together with contract manufacturers, developing the necessary technology
+modifications together with them. The essential differentiation of these products lies in the
+design and less so in the process technology, which is why we no longer manufacture them
+in our own facilities, thereby eliminating the investments in frontend manufacturing which
+would otherwise be necessary.
+We will also continue to expand our partnerships with contract manufacturers in non-differ-
+entiating areas of backend manufacturing, i.e. package assembly, in particular for standard
+packages. This will mean a corresponding reduction in the amount of investment as well.
+And we also increase output by continuously increasing the productivity of all our manufac-
+turing processes. Taken together, all these strategies work towards achieving the target
+of investing an average of approximately 13 percent of revenue over the cycle. This includes
+approximately 2 percent of capitalized development costs. In the fiscal year just completed
+the investment ratio amounted as targeted to 13 percent. Our investment volume is
+defined so that it will help us realize our target objective of an average growth in revenue
+of 8 percent annually.
+Capital structure targets demonstrate our reliability
+It is important to our customers that Infineon remains a dependable partner that will also be
+able to supply reliably for many years to come. As an employer, we also want to give this kind
+of long-term reliability to our employees, even well beyond their active working lives in the
+form of retirement benefits. As a result we give a high priority to solid creditworthiness. This is
+reflected by our conservative capital structure targets.
+Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount
+of €1 billion provides a solid liquidity reserve for contingent liabilities and retirement fund
+liabilities which are independent of revenue. Furthermore, 10 to 20 percent of revenue means
+we always have access to enough cash to be able to finance the operating business during all
+phases of the business cycle.
+The upper limit on our gross financial debt is twice Earnings Before Interest, Tax, Depreciation
+and Amortization (EBITDA). Our moderate debt level and the well distributed maturity profile
+reaching until 2028 allow us to reliably service our debt, independent of the current capital
+markets environment.
+The rating agency S&P Global Ratings (S&P) has evaluated Infineon's creditworthiness as
+"BBB" (outlook "stable") (see the chapter "Treasury and Capital Requirements"). At present
+this gives Infineon the best S&P rating of any European semiconductor manufacturer.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Group strategy
+Combined Management Report | Our Group
+Group strategy
+30
+Sustainable value creation for our shareholders
+We are convinced that organic growth in the medium to long term creates the highest value.
+A good indicator here is the spread between the Return on Capital Employed (ROCE) and
+the Weighted Average Cost of Capital (WACC). Even after the acquisition of International
+Rectifier in the previous fiscal year our Returns on Capital Employed exceed our capital
+costs. In periods without effects related to acquisitions, our ROCE corresponds to approxi-
+mately twice the amount of the WACC when our financial targets are achieved. We intend
+to continue to achieve this kind of return on every euro we invest in organic growth and in
+doing so to continuously increase our enterprise value.
+Our strategy has paid off: Infineon continues its path of sustainable, profitable growth. Our
+operating profitability and our sound capital structure give us the financial flexibility to
+invest in future growth. This continuous value creation has been manifested in past years
+in constantly increasing earnings per share as well as in the appreciation of our company
+in the capital market.
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index for the 2016 fiscal year (daily closing prices)
+Infineon share price in €
+September 30, 2015 = 100
+16.09
+15.08
+Finances and strategy
+33
+7.6%
+38
+331
+2,350
+2,651
+Revenue
+€ in millions
+of the Automotive segment
+Revenue and Segment Result
+41
+Automotive
+The segments
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Another important trend is that vehicles are getting more and more connected. This enables
+many new services, while entailing the danger of unauthorized access by third parties.
+The exchange of data among the various on-board systems as well as with other vehicles and
+infrastructures has therefore to be secured. We offer the right solutions for a secure vehicle
+architecture with our IT security expertise and the chips from our Chip Card & Security segment.
+396
+Advanced Driver Assistance Systems (ADAS) support the driver with the increasingly complex
+task of driving: While passive systems such as seatbelt tensioners and airbags reduce the impact
+of a possible collision, active systems such as emergency braking assistants even intervene
+independently in the driving process to prevent collisions altogether. The next level is cars that
+drive autonomously - first only in certain environments, later on completely without a driver.
+The first models that can park automatically are already on the market. Infineon offers a
+comprehensive product portfolio for driver assistance systems. In addition to our sensors and
+power semiconductors, our AURIX™ microcontrollers are being used more and more frequently
+in ADAS applications.
+Infineon is the leading provider of system solutions for automotive electronics, with over
+40 years of experience and the industry's most comprehensive portfolio of power semi-
+conductors, sensors and microcontrollers. Following the guiding principle of "clean, safe
+and smart" the Automotive segment addresses the industry's current megatrends: Electro-
+mobility, automated driving as well as connectivity and advanced security. Our profound
+system understanding helps car manufacturers in their efforts to reduce CO2 emissions
+and to avoid accidents. Electro-mobility and automated driving increase the semiconductor
+bill-of-material per vehicle and are expected to account for 50 percent of our growth in
+Automotive on a 5-years horizon. Infineon is the only semiconductor manufacturer to benefit
+from both of these megatrends.
+The Automotive segment in the 2016 fiscal year
+Automotive
+FF4DOROTA01E3 56
+Infineon
+is ideal for use in main inverters
+and generators for hybrid and
+electric vehicles
+The power module Hybrid PACK™
+DSC (double sided cooling)
+SEGMENT RESULT
+€396 million
+€2,651 million
+REVENUE
+40
+40
+The segments
+The segments
+Automotive
+Over the last two years the market for electric vehicles has finally reached the tipping point
+and gained considerable momentum. In China alone production tripled in calendar year 2015
+to approximately 340,000 units. Long treated as a vision of the distant future, electro-mobility
+has now reached a significant market size. Today's hybrid and electric vehicles contain an
+average semiconductor bill-of-material of approximately US$700, more than twice as much
+as cars with internal combustion engines. Hybrid vehicles have to accommodate a compact
+and high-performance inverter in the already crowded motor compartment. In the previous
+fiscal year we introduced the HybridPACK™ DSC (double sided cooling) module, reducing the
+size and weight of the inverter by approximately 60 percent compared to previous solutions
+while maintaining the same performance levels. We therefore expect a lot of interest from
+car manufacturers. Power semiconductors based on silicon carbide will enable even more
+compact inverters and on-board chargers in the future. The planned acquisition of Wolfspeed
+will significantly strengthen our portfolio in this area.
+Combined Management Report | Our Group
+2015
+Segment Result
+EFFE
+> Digital tachograph
+> Original spare parts
+authentication
+car-to-infrastructure)
+> Communication (car-to-car,
+Security
+› Battery charging control
+› Battery management
+> Combustion engine control
+> Electric motor control
+Powertrain
+> Electronic control units
+> Electronic seat adjustment
+> Door electronics
+Comfort electronics
+> Air conditioning
+Applications
+› Blind spot detection
+> Anti-blocking system
+> Automatic parking
+Assistance and safety systems
+> Airbag
+2016
+42
+The segments
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The Segment Result was positively influenced by higher revenues. In addition, improved
+productivity, in particular in the second half of the 2016 fiscal year, helped increase the
+Segment Result Margin. However, this was partly offset by temporary ramp-up costs for the
+new frontend manufacturing facility Kulim 2 (Malaysia).
+The Segment Result totaled €396 million, an increase of 20 percent to the previous year's figure
+of €331 million. The Segment Result Margin stood at 14.9 percent (previous year: 14.1 percent)
+of revenue.
+Development of Segment Result
+Sales figures for the vehicle markets in Europe, North America and China were up. The high
+demand for vehicles in the upper middle class, in particular sports utility vehicles (SUVs)
+continued globally. This vehicle type is characterized by a comparably high level of additional
+features for safety and comfort functions. Furthermore, vehicles from German car manufac-
+turers, in particular premium class vehicles, were in particularly high demand in all regions.
+The increasing demand for radar sensor ICs was due on the one hand to the increasing market
+penetration of radar-based driver assistance systems and on the other hand to the higher
+number of radar sensors per vehicle. In particular our 77 gigahertz radar solutions for driver
+assistance systems were in very high demand. At present Infineon is the leading supplier to
+the most important manufacturers of radar systems in the Europe, North America and Asia
+regions. As a result of the rising demand for 77 gigahertz radar sensor ICs, we sold more than
+12 million units in the completed fiscal year and thus about the same number compared with
+the two preceding years taken together. In order to be able to continue meeting these rising
+demands in the future, expansion of the frontend manufacturing capacities has begun for this
+product in Regensburg (Germany).
+The ever increasing penetration of driver assistance systems for automated driving led to an
+increase in demand for our radar sensor ICs and our AURIX™ family 32-bit multi-core micro-
+controllers. Design-wins secured in previous years in the areas of active safety systems as well
+as for camera-based driver assistance systems resulted in a significant revenue increase for
+AURIX™ microcontrollers in the 2016 fiscal year.
+Worldwide demand for hybrid and electric vehicles soared. This was especially true in China,
+which has in the meantime become the world's largest market for electro-mobility. Another
+record-breaking year for production and sales is expected for the 2016 calendar year for vehicles
+with plug-in hybrid or pure electric drives.
+As in the previous year, the megatrends electro-mobility and automated driving were key
+growth drivers in the 2016 fiscal year. Furthermore, for the first time International Rectifier
+contributed to revenue throughout the entire 2016 fiscal year instead of only approximately
+eight and a half months in the previous year.
+The Automotive segment generated revenues totaling €2,651 million in the 2016 fiscal year, an
+increase of 13 percent on the previous year's figure of €2,350 million. The segment contributed
+41 percent of Group revenue.
+Revenue development
+Automotive Industrial Power Control
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Infineon uses its access and the relationship to its customers to market security products and
+offer them in combination with other components as system solutions. We see our opportu-
+nity in this area in the field of hardware-based security in the form we offer with our security
+controllers - either as an individual component or in the form of a feature integrated in our
+automotive or industrial microcontrollers: Our hardware-based security solutions have put us
+in the lead position. Furthermore we can offer to our customers the broad expertise of the
+Infineon Security Partner Network, covering the entire value chain from consulting and design
+all the way to system integration and service management.
+Finances and strategy
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+AC-DC conversion: Growth in the power supply sector depends on the performance and even
+more so on the unit growth of the devices. In addition to smartphones, for several years the
+highest unit growth has been found in the area of computer servers, a situation not expected
+to change in the foreseeable future. This is a result of the installation and expansion of data
+centers and cloud solutions for storing data of all types in the internet. The high demand here
+also means corresponding demand for the power semiconductors used in the associated
+power supplies. Demand for computing power and storage capacity is currently being driven
+by social networks; going forward the primary driver will be the Internet of Things and the
+Industrial Internet. Furthermore we expect growth opportunities in business with compact
+chargers for tablets and lightweight notebooks (also called portables). However, we do not
+expect growth associated with PCs and notebook computers in the upcoming years.
+DC-DC conversion: In the field of DC-DC conversion, intelligent point-of-load power manage-
+ment is becoming increasingly important. Servers, PCs and communication devices are
+supplied with higher voltages, which are then stepped down to the voltages needed directly
+at the processor. This is more practical, since as a rule a large number of different voltages
+is needed, while on the other hand direct supply with a lower voltage and high performance is
+technically not possible. The performance requirements of a processor range from a just few
+watts to over 100 watts. An additional growth driver is the digitalization of the control loop.
+The requirements regarding dynamic, efficiency levels and standby consumption are continu-
+ously growing. Analog control loops are increasingly meeting their limitations and are being
+replaced with digital systems.
+Power supplies for electric equipment essentially consist of two stages. First the power unit
+converts the alternating current (AC) from the grid into direct current (DC), referred to as
+AC-DC conversion. In a second step this direct current is precisely converted directly at the
+point of load to suit the respective requirements, for example for the processor of a server.
+This second step is referred to as DC-DC conversion.
+Power supplies
+More and more manufacturers are switching to controlled motors in order to increase the
+efficiency of their products, whether because of stricter efficiency regulations or to be able
+to offer the consumer more efficient devices with lower noise emissions and longer service
+lives. Applications in which a motor could only be switched on or off in the past are now
+making way for systems in which motor controls ensure load-driven speed control. Application
+examples here are washing machine and dishwasher motors, refrigerator compressors and
+air conditioner fans. The underlying principle is simple: In order for a device to function
+efficiently, sensors constantly measure data, e.g. the temperature, air humidity and motor
+rotation speed of a refrigerator. A microcontroller then uses this data to calculate the optimum
+rotation speed. Power semiconductors amplify the control signals from the microcontroller
+and form the interface to the motor.
+Major home appliances
+Multicopters: Multicopters represent a relatively new application area with very large growth
+potential. The popularity of these remote-controlled aircraft has long grown beyond the ranks
+of hobby pilots, finding increasing utilization in commercial applications. Initial tests with
+delivery drones have already been conducted, focusing on use not only for parcel delivery but
+also for time-critical transportation of medication. In agriculture multicopters are already
+being used to monitor farm land. Multicopters require a large number of semiconductors for
+controlling their direct current motors, from microcontrollers to sensors and MOSFET power
+transistors, all the way to radio-frequency components for navigation, collision avoidance and
+communication.
+Multicopters are finding increasing
+use for commercial purposes and
+require a large number of various
+semiconductor components
+Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+Growth drivers
+ANNUAL REPORT 2016
+One important model type of electric drives is referred to as the brushless direct current motor
+(BLDC motor). In BLDC motors commutation is electronic; depending on the rotor position,
+rotor rotation speed and torque. Rotor position and rotation speed can for example be detected
+using sensors (e.g. magnetic field sensors). The windings that generate the torque on the rotor
+are controlled via power semiconductors based on this position information. The electronic
+commutation avoids losses in BLDC motors, in contrast to motors with brush-based commuta-
+tion. Because of their high energy efficiency and their low weight to power ratio, brushless
+direct current motors are frequently used among other things in battery-operated systems.
+Power tools: Millions of households around the world rely on cordless power tools when
+making repairs. Since the end customer expects robust and reliable portable tools, the purchase
+decision is based not only on price, but especially on ease of use and long battery life. Battery-
+operated power tools also have to be equipped with diagnostic and safety functions in order
+to create user confidence in the application through quality and safety. The demand for suitable
+semiconductor solutions is correspondingly high.
+Brushless DC motors
+Industrial motors are at the heart of a large number of systems, for example cranes, conveyor
+belts and robots. They are used wherever objects need to be moved or transported. Electric
+motors are also used in refrigeration pumps and air conditioning and the simple production of
+compressed air. The strongest industrial electric drives are found in sluices, cement mills,
+pumps in municipal waterworks, in air compressors used in the production of technical gases
+and in compressors for natural gas pipelines. Approximately 300 million electric motors have
+been installed around the world in industrial applications alone, accounting for approximately
+two thirds of commercially consumed electric power. This constitutes a substantial lever when
+it comes to savings resulting from improvements in the degree of efficiency. One possibility
+to reduce the energy consumed by an electric motor is to use an electronic control system to
+regulate speed, i.e. adapting performance to suit current needs. The market penetration of
+speed-regulating motor controls can thus be expected to increase. Modern manufacturing
+facilities in which constant adjustment of rotation speed is necessary are not even possible
+without regulated electric motors. The next level of automation will be achieved with the
+Industrial Internet, which will give rise to a new investment cycle. At present only around
+15 percent of the electric drives in use are controlled electronically. This is good news for
+Infineon: The realization of a speed-controlled motor unit requires a large number of the power
+semiconductors we provide to the market. Their number and value depend on the performance
+class of the motor.
+Automation
+By now China has become the largest railway vehicle market in the world. Here in particular
+high-speed trains, overland trains and urban rail play a major role. We also expect a more
+vibrant market for traction systems in the rest of Asia. Here industrialization is leading to rising
+demand in particular for urban and regional rail systems. Further growth markets are South
+Africa, South America, the Middle East and most probably in the future the USA. Our customers
+are the world's largest manufacturers in the traction sector, including Bombardier Transportation,
+China's CRRC and Siemens.
+One of the key topics of the 21st century is sustainable and optimally connected mobility
+within urban metropolitan areas as well as mobility between cities. Today reliable and fast
+public transportation is more important than ever for the quality of life and competitiveness
+of many regions and cities around the world. Our components are used both in local public
+transportation trains, subway trains and trams as well as in high-speed trains.
+Traction systems
+35
+Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Growth drivers
+Radio-frequency and optical sensors
+INFINEON TECHNOLOGIES
+37
+Networking and sensor systems
+Radio-frequency power components
+Security as cross-segment expertise
+The Internet of Things refers to devices and machines connected to the internet, thus enabling
+data exchange and device control (for example home appliances, electricity meters, sensors,
+webcams). The trend towards increased levels of networking is having the greatest impact in
+the areas automotive, Industrial Internet, Smart Home and information and communications
+infrastructure. Here security plays a decisive role. The increasing number of hacking attacks
+underlines the importance of the appropriate precautions. In order to secure electronic systems,
+it is important that only authorized devices are connected with one another so that they can
+be protected against data manipulation and cyberattacks. Security thus has to be ensured at as
+many critical end-points as possible, often referred to in this context as the topic of embedded
+security. Infineon supplies the OPTIGA™ product family of various security chips and security
+solutions for authentication of electronic systems: From complex IT infrastructures with large
+numbers of servers and computers all the way down to tablets such as the Microsoft Surface
+Pro 4 or routers such as the Google OnHub.
+Security for the Internet of Things
+Infineon supplies the security chip, known as the Secure Element (SE), for all these applications.
+The SE can either be built into the smartphone (referred to as "embedded SE"), integrated in
+a SIM/UICC card or located on a microSD card. Infineon offers the necessary solutions for all
+three alternatives.
+Today payment services can be integrated in mobile devices thanks to the development of
+smartphones and wearables, the mobile internet and Near Field Communication (NFC)
+technologies. However, cash-free payment is only one of the many mobile device functions
+involving the storage and processing of sensitive information. For example, people are experi-
+encing new forms of comfort when travelling on public transportation with mobile tickets
+instead of using coins and physical tickets.
+Security for mobile devices
+Government IDs include passports, national identity cards and in the broader sense driver's
+licenses and health care cards. These documents are increasingly being equipped with security
+chips. The market penetration of chip-based official government documents is steadily on
+the rise. More and more countries are making the transition to the chip-based documents
+or increasing the range of such documents in use. Infineon is the leading provider of security
+solutions for ID projects in Europe. Furthermore, according to the US Government Publishing
+Office (US GPO) Infineon is one of the main suppliers for the security technologies used in
+electronic passports in the USA. Infineon has been supplying the US GPO since the beginning
+of the project in 2005.
+Government identification documents
+the ring
+A security controller from Infineon,
+including antenna, is built into
+Contactless payment with a ring:
+39
+Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Radio-frequency (RF) power components form the foundation for modern communication
+technologies. One of the main application areas is mobile communications infrastructure.
+Mobile data traffic is constantly increasing: While 5.3 exabytes (5.3 billion gigabytes) were
+transferred each month using mobile communications in the year 2015, experts expect the
+values for the year 2021 to reach 52 exabytes per month. At the beginning of the internet era
+downloading (downlink) was the prevalent data traffic direction. This has changed as a result
+of mass adoption of the smartphone and the rise of social media. Data traffic in uplink has
+risen drastically due to uploading pictures and videos as well as messaging services, making
+both directions almost symmetrical today.
+Every new mobile communication standard needs to accommodate increasing numbers of
+mobile communication subscribers as well as an exponential increase in data traffic. Cell sizes
+are shrinking, and as a result more network access nodes are being installed. The infrastructure
+for upcoming mobile communications standards such as 5G and its successors will use
+frequencies of up to 80 gigahertz. Only the most advanced compound semiconductors can
+provide the necessary output power at these high frequencies. Compound semiconductors
+based on gallium nitride-on-silicon (GaN-on-Si) offer a high degree of integration and make it
+possible to use frequencies as high as 10 gigahertz. The acquisition of International Rectifier
+approximately two years ago specifically strengthened us in this area. Semiconductors based
+on gallium nitride-on-silicon carbide (GaN-on-SiC) even make it possible to use frequencies as
+high as 80 gigahertz. The planned acquisition of Wolfspeed will expand our portfolio to
+include this future-oriented technology as well, making us the provider of the most compre-
+hensive product range and creating the foundation for us to become market leader in
+radio-frequency power components.
+Radio-frequency small-signal components
+RF components are not only required in the base stations of cellular infrastructures, but also
+in mobile devices. With every new smartphone generation more and more frequency ranges
+have to be supported. During the transition from one mobile communications standard to the
+next the requirements on signal quality and thus on the RF properties of many components
+rise. As an example, closely adjacent frequency bands require more precise frequency filters,
+more sensitive signal amplifiers and a larger number of faster antenna switches. Today's
+smartphones and tablets use our RF CMOS switches for switching between various antennas,
+among other things.
+We are currently substantially benefiting from the increasing number of LTE (Long-Term Evolu-
+tion)-capable smartphones. This fourth-generation transmission standard has a significantly
+higher level of complexity compared to the third generation (UMTS). LTE-capable smartphones
+contain more RF components with a higher degree of integration than earlier smartphone
+generations. The transition to the 5G standard will mean an increase in this complexity.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+> Distance warning systems
+Combined Management Report | Our Group
+On the other hand our REAL3TM image sensor chip works based on infrared light. It lets devices
+see in three dimensions using the time-of-flight principle. For each pixel the chip determines
+how long the light transmitted takes to travel from the source to the object and back again, and
+uses this data to calculate the distance to the object. Infineon is the only provider worldwide
+whose image sensor chip meets the requirements of the Google technology platform Tango. The
+technology is featured in the PHAB2 Pro smartphone from Lenovo and enables three-dimen-
+sional images of the surrounding environment. This makes it possible to represent objects in
+what is referred to as Augmented Reality. Other applications are for example alertness assistants
+and fatigue detection in partially automated driving as well as gesture recognition in vehicles.
+MEMS (Micro-Electromechanical Systems) sensors
+MEMS-based silicon microphones are our most important product family when it comes to
+sensors for mobile devices. The latest generation of mobile devices requires several differing
+microphone variants with increasingly better signal-to-noise ratios. Improved acoustic capa-
+bilities not only mean the potential to differentiate for the smartphone manufacturer, but also
+an entirely new range of possible applications for high-performance microphones. Thus for
+example additional microphones significantly improve voice control even in scenarios with high
+background noise levels and improve the acoustic quality of telephone calls. Furthermore,
+microphones fulfilling the highest technical requirements are installed next to the camera in
+order to achieve even higher audio quality for video recordings made with the smartphone.
+On top of unit growth in terms of devices and the growing number of microphones installed
+per device, we also significantly benefit from the fact that besides smartphones, tablets and
+notebook computers are also switching to silicon microphones. And entirely new device classes
+are emerging as potential application areas, including for example headphones featuring
+active noise cancellation.
+At the same time devices are being designed to include more and more functions that require
+detection of additional physical parameters. This further drives demand for new sensors.
+Barometric pressure sensors support new functions such as indoor navigation in high-rise
+buildings and shopping centers. Gas sensors can monitor air quality: An appropriately equipped
+smartphone could for example warn the user of potentially harmful smog levels. We see
+enormous growth opportunities in the application areas of consumer electronics, automotive
+electronics and the Internet of Things.
+Security
+There are two fundamental application areas for our security controllers: Classic applications
+such as payment cards, government IDs and public transportation tickets on the one hand,
+and on the other the rapidly growing field referred to as embedded security applications. This
+includes for example making mobile payment transactions secure, preventing the manipula-
+tion of computers and the authentication of connected devices. Here in particular the Internet
+of Things with all its facets promises long-term growth potential.
+RF components play an important role in sensor technologies as well. In addition to automotive
+applications we also see a wide variety of interesting use cases in mobile devices and consumer
+electronics. For example, radar chips can be used to precisely control devices with hand
+movements. Gesture recognition technology thus opens a whole range of new possibilities
+for the interaction between humans and machines.
+> Electronic chassis control
+36
+> Electronic stability control
+Renewable energy
+generation
+> Hybrid busses
+> Forklifts
+› Construction vehicles
+> Agricultural vehicles
+Industrial vehicles
+> Rolling mills
+> Robotics
+> Materials handling
+> Escalators
+> Elevator systems
+› Drives
+> Automation technology
+> Air conditioning technology
+> Photovoltaic systems
+> Wind power turbines
+Industrial drives¹
+> Washing machines
+> Refrigerators
+> Microwave ovens
+> Induction cookers
+Home appliances
+> Air conditioners
+› Dishwashers
+Applications
+> Offshore wind farm
+HVDC lines
+> FACTS (Flexible AC
+Transmission Systems)
+Energy transmission
+Charging stations for
+electric vehicles
+44
+Industrial Power Control | Power Management & Multimarket
+The segments
+Combined Management Report | Our Group
+1 Including motors, compressors, pumps and fans.
+ANNUAL REPORT 2016
+Traction
+> Locomotives
+The Power Management & Multimarket segment includes business with power semiconductors
+for power supplies, components for cellular infrastructure and mobile devices as well as
+high-reliability components for applications in harsh environments.
+Infineon is the clear number one in the global MOSFET market. Based on leading base tech-
+nologies, we offer a broad product portfolio including drivers, controllers and MOSFET power
+transistors for low-voltage (up to 40 volts), mid-range (from 40 volts up to 500 volts) and
+high-voltage applications (over 500 volts). Our products set the standard for the two central
+requirements of the market: conversion efficiency and power density. One important field of
+application in the low-voltage range is power supplies for servers. We are excellently positioned
+here with our system solution for digital DC voltage regulation. It includes an integrated power
+stage as well as digital controllers which comply with the standard specifications (VR12.5,
+VR13) and which are used together with our OptiMOS™ power transistors by the leading server
+manufacturers. Our highly successful CoolMOS™ family for high voltages is typically used in
+AC-DC power supplies. In the previous fiscal year we expanded our portfolio to include a variant
+with an optimized price/performance ratio for the mass market (800 volt CoolMOSTM P7) and a
+derivative for high-end applications (CoolMOSTM C7 Gold). These are just two of many examples
+for the extensive breadth of our portfolio, ranging from standard products to highly developed
+and differentiating components.
+> Electronic power steering
+in the 2016 fiscal year
+The Power Management & Multimarket segment
+Power Management & Multimarket
+CoolMOST P7
+800V
+TO-247
+Infineon
+The 800 Volt CoolMOST P7 series
+is optimized with regard to
+efficiency, ease of application
+and system costs
+SEGMENT RESULT
+€328 million
+REVENUE
+& Modules Report", October 2016
+Source: IHS Markit, "Power Semiconductor Discretes
+> High-speed trains
+The world market for IGBT-based power semiconductors - discrete IGBT power semiconductors
+and IGBT modules - reached US$3.944 billion in the 2015 calendar year, a decline of 11.8 percent
+compared to the previous year value of US$4.473 billion (source: IHS Markit). Infineon was
+able to increase its market share from 26.5 percent in the previous year to 27.6 percent in the
+2015 calendar year and increased the distance to the number 2 in the market to 7.0 percentage
+points (previous year: 4.9 percentage points). The five largest competitors together held
+73.2 percent of the market.
+4.9%
+Finances and strategy
+Fairchild
+Semikron
+12.5%
+Fuji Electric
+20.6%
+Mitsubishi
+27.6%
+Infineon
+World IGBT-based power
+semiconductor market share 2015
+Uninterruptable
+power supplies
+› Trams
+› Metro trains
+Market position
+INFINEON TECHNOLOGIES
+€2,050 million
+The Segment Result totaled €126 million, an increase of 10 percent compared to the previous
+year's figure of €115 million. The Segment Result Margin stood at 11.7 percent (previous year:
+11.8 percent) of revenue.
+Market position
+7.0%
+7.7%
+10.3%
+10.4%
+14.2%
+Source: Strategy Analytics, "Automotive Semi-
+conductor Vendor Market Shares", April 2016
+Instruments
+Texas
+electronics
+STMicro-
+Renesas
+Infineon
+NXP
+In spite of the strong growth in the still relatively small application areas of driver assistance
+systems and electro-mobility and the overall rise in demand for automotive semiconductors,
+in the 2015 calendar year the world market shrank slightly by 0.6 percent to US$27.363 billion,
+down from US$27.537 billion in the 2014 calendar year (source: Strategy Analytics). The reasons
+were essentially currency effects (on the one hand the strengthening of the Yen to the US dollar
+and on the other hand the strengthening of the Euro to the US dollar). There were major
+differences in growth rates in the individual regions. The markets in North America, Europe
+and Korea developed uniformly and declined by 2 to 3 percent. However, the market in Japan
+shrank by 11.2 percent, dropping behind the Chinese market. The market in China itself grew
+by 17.0 percent and has become the third largest market in the world for the first time.
+Renesas lost 1.7 percentage points of market share, dropping behind Infineon. However, the
+NXP acquisition of Freescale created a new number 1. This meant that Infineon maintained
+the number 2 position with a market share of 10.4 percent (previous year: 10.5 percent). The
+five largest competitors together held 49.6 percent of the market.
+World automotive semiconductor
+market share 2015
+manipulation (e.g. odometer)
+> Protection against hardware
+> Transmission control
+> Hatchback
+> Start-stop system
+› Generator control
+> Windshield wipers
+> Tire pressure monitoring system
+› Sunroof
+> Lane departure warning system
+> Steering
+> Lighting
+The Segment Result was positively influenced by higher revenues. This was partly offset by
+currency effects and temporary ramp-up costs for the new frontend manufacturing facility
+Kulim 2 (Malaysia).
+> Power window
+> Protection against
+software manipulation
+In terms of power semiconductors for automotive applications, Infineon was able to strengthen
+its number 1 position by 0.4 percentage points to reach a market share of 25.2 percent. For
+microcontrollers Infineon remained in third place with an almost unchanged market share of
+8.6 percent (previous year: 8.7 percent). In sensors Infineon gained 0.4 percentage points of
+market share to reach 11.9 percent, strengthening its number 2 position. Infineon is not present
+or hardly present in the remaining product categories, including among other things memory,
+optical components and analog ICs not related to power semiconductors.
+> Suspension
+€1,073 million
+971
+115
+2015
+126
+2016
+Segment Result
+1,073
+In the 2016 fiscal year business with components for renewable energy sources developed
+particularly well. During this period, wind power turbines with Infineon technology were
+installed around the world, totaling a capacity of more than 23 gigawatts. We have also been
+highly successful with a module series especially designed for the challenging conditions in
+wind turbines. It combines our PrimePACK™ packaging technology with IGBT5 power transis-
+tors and the new .XT interconnection technology, making the module particularly efficient,
+compact and durable. Fully in line with our strategic "Product to System" approach they also
+cut system costs for our customers while increasing the value of the built-in semiconductors.
+Also the leading manufacturers of photovoltaic inverters rely on our application understanding
+and our outstanding technologies. The strengths of power semiconductors based on silicon
+carbide (SiC) can be particularly well exploited in this market. Today we already offer SiC
+diodes and hybrid modules; we have also announced a SiC MOSFET. The planned acquisition
+of Wolfspeed will enable us to accelerate the trend towards SiC-based power semiconductors
+and will further strengthen our competitive position in the market.
+Revenue development
+The revenue increase was primarily driven by renewable energies. The worldwide increase
+in wind and photovoltaic power capacities continued. The development targets of several
+important countries such as China, the USA or India drove the increased demand. The dispro-
+portionally high growth rates of recent years in this area also led to a change of revenue
+distribution by end-markets. In the meantime renewable energies account for approximately
+one fifth of the segment's revenues.
+Development of Segment Result
+The segment also benefited from the rise of electro-mobility. Revenue from IGBT modules
+for hybrid and electric busses increased significantly, in particular with Chinese customers. In
+other areas,
+such as drives and traction systems as well as in natural gas and oil production,
+we saw flat or slightly declining demand. Furthermore, for the first time International Rectifier
+contributed to revenue throughout the entire 2016 fiscal year, compared with only about eight
+and a half months in the previous year.
+REVENUE
+In the first half of the 2016 fiscal year, the major home appliance business was characterized
+by weakness due to inventories held by Chinese customers. Outside of China demand was
+satisfying, especially in Korea. Nevertheless, the year-on-year growth rate turned out to be
+disproportionately high. As a result major home appliances became the third largest business
+of the segment.
+We also benefit from the growing electrification of commercial and agricultural vehicles, where
+electronic components are subjected to strong temperature fluctuations, heavy vibrations and
+dirt. In addition to efficiency and power density, in this market the ruggedness and reliability
+of our components are also strong and compelling sales arguments for our customers. The
+same is true for hybrid and electric busses. For example, several tens of thousands of electric
+busses are already driving on the streets of China with modules from Infineon, and the number
+continues to grow.
+Revenue
+The Industrial Power Control segment generated revenues totaling €1,073 million in the
+2016 fiscal year, an increase of 11 percent compared to €971 million in the previous year. The
+segment contributed 16 percent of Group revenue.
+Revenue and Segment Result of the
+Industrial Power Control segment
+The Industrial Power Control segment in the 2016 fiscal year
+€ in millions
+The core competence of the Industrial Power Control segment is the conversion of electrical
+energy for medium to high power performance. Applications range from the refrigerator, with a
+few hundred watts, all the way to natural gas compressors with as much as 50 megawatts. The
+product portfolio includes discrete IGBTs, IGBT modules, drivers and controllers as well as their
+combination in so-called Intelligent Power Modules (IPMs) or pre-fabricated stack units. Infineon
+is the world market leader for IGBT-based power semiconductors (discretes and modules).
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The segments
+INFINEON TECHNOLOGIES
+Industrial Power Control
+43
+The PrimePACKTM module series
+is especially configured for the
+demanding conditions found in
+wind power turbines
+44
+SEGMENT RESULT
+€126 million
+1
+Industrial Power Control
+(Industry 4.0)
+Healthcare cards
+› Passports
+Government identification
+documents
+> Driver's licenses
+> Credit/debit cards
+> Connected driving
+> IT
+Internet of Things
+> National identity cards
+> Industrial Internet
+> Mobile payment
+Mobile communications
+› Conventional SIM cards
+> High-end SIM cards
+> Machine-to-machine
+communication
+> NFC-based contactless
+payment
+Secure NFC transactions
+Ticketing, access control
+Trusted Computing
+World microcontroller-based
+chip card ICs market share 2015
+NXP
+Payment systems
+Infineon
+Samsung
+> Smart Home
+(e.g. odometer, digital tachograph)
+After the payment card business benefited extraordinarily strongly from the delivery of chip-
+based credit cards in the USA and China in the 2015 fiscal year with an increase of approxi-
+mately 50 percent, this business was expected to decelerate in the 2016 fiscal year. It showed,
+therefore, growth only in the high single-digit range. After the initial roll-out phase, now the
+replacement phase will begin, as is typical for the payment cards market.
+> Electronic toll collection
+The Chip Card & Security segment in the 2016 fiscal year
+STMicro-
+The Chip Card & Security segment has around 30 years of experience with the largest and
+most demanding security projects in the world. As a leading provider of security solutions
+we address the classic smart-card applications, while also offering solutions for embedded
+security within larger electronic systems.
+Traditional application areas include payment cards, electronic government IDs, SIM cards
+for mobile communication and ticketing solutions. Particularly the business with government
+IDs continued to grow during the previous fiscal year. In Europe we supply around 70 percent
+of all ID document projects. We not only won further business in Europe but also in Asia and
+South America. We are also successful in smaller and regional security projects by which we
+further diversified our customer portfolio. During the summer, the operators of the Korean
+civilian airports KAC (Korea Airports Corporation) began to implement a new building access
+control system for example. Airports are among the best protected premises in the world,
+therefore security requirements are particularly high. The solution now being implemented is
+based on the open CIPURSE™ security standard; Infineon supplies the chips for the employee IDs.
+The project is another milestone on the road to establishing CIPURSE™, after two major cities
+in Europe and South America have started using the standard for their public transportation
+ticketing systems. Infineon provided crucial support in the development and introduction of
+CIPURSE™ as we are convinced of the advantages of open standards.
+The main challenge in many application areas is realizing the highest possible level of security
+while using the least amount of space. Here we have an excellent position: This summer
+the company NFC Ring presented a ring with a contactless payment function using a security
+controller from Infineon. It communicates with the payment terminal in a matter of milliseconds
+using a tiny antenna and initiates the secure payment transaction while using encryption
+procedures. The ring can be used for payment in the same manner as a chip-based credit card
+but is much more convenient. Infineon is the world's first and as of yet only semiconductor
+company to fulfill the requirements of the international EMV (Europay International, Master-
+Card and VISA) standard.
+The continuous evolution of the Internet of Things makes security functions embedded in
+connected devices more and more important. Embedded security is used to secure mobile
+devices such as laptop computers, tablets and wearables, as well as securing information and
+communication infrastructures, industrial facilities and connected vehicles. Awareness of the
+need for hardware-based security technologies is continuously growing in this area. Solutions
+which are easy to implement, such as our successful OPTIGA™ TPM chip, are particularly
+attractive to our customers. Furthermore we provide support in the certification of security
+solutions, provide reference designs and offer software that is closely related to our security
+controllers (for example firmware, driver software and hardware-related application software).
+With these services we reduce the development costs of our customers and accelerate the
+market launch of their products.
+Revenue development
+The Chip Card & Security segment generated revenues totaling €698 million in the 2016 fiscal
+year, an increase of 5 percent compared to the previous year's figure of €665 million. The
+segment contributed 11 percent of Group revenue.
+Compared with the 2015 fiscal year, in which almost all business segments contributed to
+revenue growth, individual business segments developed quite differently during the previous
+fiscal year. The largest contribution to revenue growth came from business with government
+IDs. We were also able to win new projects in Europe, Asia and South America.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Chip Card & Security
+48
+High-end SIM cards with mobile payment functionality benefited in the 2015 fiscal year from
+the market launch of several very successful smartphones. There was no such special effect
+in the 2016 fiscal year. In the same manner, in the Pay TV business, typically characterized by
+project business, major projects also ended with the 2015 fiscal year. Thus, there was a
+decline in revenue in the 2016 fiscal year compared to the previous year.
+However, demand for notebooks and tablets containing our TPM (Trusted Platform Module)
+chip was very positive. Also demand from smartphones and smartwatches for our embedded
+Secure Element (eSE) security chips was strong. Overall, we expect the highest long-term growth
+rates in the area of embedded security, which includes authentication solutions in addition
+to the two other applications mentioned above.
+Development of Segment Result
+The Segment Result totaled €135 million, an increase of 7 percent on the previous year's figure
+of €126 million. The Segment Result Margin stood at 19.3 percent (previous year: 18.9 percent),
+the highest profitability of this segment since the inception of the company. The Segment Result
+improved with higher revenues which was partly offset by currency effects.
+Applications
+Authentication
+› Accessories
+› Game consoles
+> Industrial control systems
+› Spare parts
+Automotive
+› Connected vehicles (e.g. eCall,
+car-to-car, car-to-infrastructure)
+> Protection against manipulation
+electronics
+Manufacturing
+30.5%
+Denmark
+Skovlunde
+- Power semiconductors, analog and
+mixed-signal ICs and sensors
+Competence center for thin-wafer and
+compound semiconductor technologies
+- HiRel products
+FE - Power semiconductors
+-
+- SiC and GaN technology
+Finland
+Espoo
+sales
+France
+Le Puy-Sainte-
+- Power ICs
+Réparade
+Saint-Denis
+sales
+Germany
+Augsburg
+- Software for chip card applications
+Ditzingen
+sales
+Dresden
+- CMOS derivative technologies for RF
+and sensors, among others
+Chip Card & Security
+FE
+BE = Backend
+Frontend
+sales
+Villach
+24.8%
+16.2%
+15.1%
+10.4%
+Source: IHS Markit, "Smart Cards Semiconductors",
+July 2016
+Market position
+The world market for microcontroller-based chipcard ICs includes contact-based and contact-
+less ICs for applications in SIM cards, payment cards, government IDs, access control, transport
+as well as machine-to-machine communication. This market grew by 2.6 percent in the 2015
+calendar year,
+from US$2.65 billion in the 2014 calendar year to US$2.72 billion (source: IHS
+Markit). Infineon held a market share of 24.8 percent in the 2015 calendar year.
+Infineon grew the fastest among all other market participants and was able to acquire 1.1 per-
+centage points of market share. The distance to the market leader was reduced to 5.7 percentage
+points (previous year: 7.0 percentage points). The five largest competitors together held
+97.0 percent of the market.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Locations
+Locations
+CEC Huada
+Europe
+Graz
+Function
+Research and Development
+FE
+- Chip card applications
+- Power semiconductors
+- Sensor products
+Klagenfurt
+service function
+Linz
+- RF ICS
+Vienna
+sales
+Austria
+Segment Result
+> Submarine telecommunications
+2015
+Power Management & Multimarket
+46
+46
+Charging stations
+for electric vehicles
+DC motors
+> eBikes
+> DIY tools
+(cordless screwdrivers etc.)
+> Multicopters
+> Pedelecs
+As in previous years, the business with wireless communications infrastructure, in particular
+for fourth generation (LTE) networks, was dominated by activities in China. Network expansion
+did not accelerate any further. As a result, revenues in this area remained slightly below the
+previous year's level.
+Development of the Segment Result
+The Segment Result totaled €328 million, an increase of 2 percent compared to the previous
+year's figure of €323 million. The Segment Result Margin was 16.0 percent (previous year:
+18.0 percent) of revenue.
+The Segment Result increased with higher revenues. This was largely offset by higher operating
+expenses, especially for research and development, as well as by temporary ramp-up costs
+for the new frontend manufacturing facility Kulim 2 (Malaysia), impacting the Segment Result
+margin negatively.
+Applications
+HiRel
+> Commercial aviation
+> Defense technologies
+> Oil and natural gas exploration
+› Space systems
+LED and conventional
+lighting systems
+Power management
+› Consumer electronics
+> Home appliances
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+In general, the launch of new smartphone models did not trigger end customer demand as
+expected. Therefore, global sales of smartphones hardly increased year over year Therefore,
+in the 2016 fiscal year the business with components for smartphones remained below our
+original expectations. However, our diversification strategy was successful in the second half
+of the 2016 fiscal year: For the first time we achieved significant revenue with local Chinese
+smartphone manufacturers.
+- 200 mm and 300 mm manufacturing
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The segments
+Power Management & Multimarket
+45
+45
+Revenue and Segment Result
+of the Power Management &
+Multimarket segment
+€ in millions
+Revenue
+> IT and telecom
+2,050
+323
+328
+2015
+2016
+Segment Result
+The trend towards more and more sensors in mobile devices is unbroken. We profit from this
+development with our leading MEMS (Micro-Electromechanical Systems) technology: As an
+example, our barometric pressure sensors are particularly small and efficient. They operate
+in a broad temperature range and can detect altitudes with an accuracy down to only a few
+centimeters. This makes them ideally suited for applications in areas such as navigation, local-
+ization, health and weather monitoring in smartphones, wearables and devices of the Internet
+of Things. Furthermore, we continuously expand our portfolio of radar-based sensors. These
+sensors are used in mobile devices as well as in industrial applications, for example for precise
+tank level metering.
+The planned acquisition of Wolfspeed will also strengthen our position in radio-frequency
+power components for next-generation cellular infrastructures (5G). This lays the foundation
+for us taking over the leading position in the future.
+Revenue development
+The Power Management & Multimarket segment generated revenues totaling €2,050 million
+in the 2016 fiscal year, an increase of 14 percent compared to the previous year's figure of
+€1,796 million. The segment contributed 32 percent of Group revenue.
+This growth in revenue was primarily driven by increased demand for MOSFET power transistors
+in all voltage classes. Furthermore, for the first time International Rectifier made a contribution
+to revenues over the entire 2016 fiscal year, as opposed to only approximately eight and a half
+months in the previous year.
+On the one hand, our low- and mid-voltage OptiMOST power semiconductors benefited greatly
+from the increasing number of applications with direct current motors, in particular with
+brushless direct current motors. Examples are battery-powered do-it-yourself tools as well as
+multicopters for transport, agriculture and leisure. In these areas in particular the acquisition
+of International Rectifier made an essential contribution to the expansion of our product and
+application portfolios and thus to diversification. On the other hand, the demand for OptiMOSTM
+power transistors remained high also in applications without motors: for example in power
+supplies for servers as well as in photovoltaic inverters. In servers, demand grew in particular
+for DC-DC power supplies with digital control. Besides our OptiMOSTM power transistors for
+low-voltage applications, also our control ICs and driver ICs were sought after.
+Electro-mobility is not only a driver for our Automotive segment, but also for our Power
+Management & Multimarket segment. When it comes to the charging infrastructure either IGBT
+or MOSFET power transistors are used, depending on topology. In China's charging infrastruc-
+ture rollout, MOSFET power transistors are the technology of choice. In this application the
+technological edge of our CoolMOSTM high-voltage power transistors became evident once more.
+Their benchmark energy efficiency reduces cooling requirements. This allows building more
+compact charging stations. Thanks to this leading technology we were chosen as the preferred
+supplier in China.
+1,796
+> PCs and notebooks
+> Servers
+> Smartphones
+Sumitomo
+Wolfspeed
+34.8%
+24.1%
+10.6%
+8.1%
+3.6%
+Source: ABI Research, "RF Power Semiconductors",
+July 2016
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Infineon
+The segments
+47
+REVENUE
+€698 million
+SEGMENT RESULT
+€135 million
+With the advent of the Internet
+of Things, the awareness of the
+need for hardware-based security
+technologies for connected
+systems is continuously rising
+Revenue and Segment Result
+of the Chip Card & Security segment
+€ in millions
+Revenue
+698
+665
+126
+135
+Chip Card & Security
+2016
+Ampleon
+The world market for radio-frequency power transistors reached US$1.513 billion in calendar
+year 2015 (source: market research firm ABI Research. A comparison with the previous year
+was not available, since no market study was conducted for calendar year 2014). With a market
+share of 10.6 percent Infineon was in third place in the market (no specification available
+regarding the previous year). The five largest competitors together accounted for an 81.2 percent
+market share.
+> Tablets
+Mobile devices
+› Activity trackers
+> Navigation devices
+> Smartphones
+> Tablets
+Cellular infrastructure
+› Base stations
+World standard power MOSFET
+market share 2015
+Infineon
+Fairchild
+Renesas
+NXP
+STMicro-
+Toshiba
+26.4%
+9.5%
+8.9%
+8.0%
+7.3%
+Source: IHS Markit, "Power Semiconductor Discretes
+& Modules Report", October 2016
+World RF power semiconductors
+market share 2015
+Market position
+Standard MOSFET power transistors
+The world market for standard MOSFET power transistors (low-voltage and high-voltage
+MOSFETs) reached US$5.484 billion in the 2015 calendar year, an 8.8 percent decline compared
+to the previous year's value of US$6.012 billion (source: IHS Markit). With a 26.4 percent market
+share Infineon continues to be the clear market leader (previous year: 25.3 percent). The
+distance to number 2 was 16.9 percentage points (previous year: 14.1 percentage points).
+The five largest competitors together held 60.1 percent of the market.
+Radio-frequency power transistors
+electronics
+Duisburg
+The segments
+Erlangen
+GRI G4-17
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Locations
+Americas
+Brasil
+Function
+Research and Development
+São Paulo
+sales
+Mexico
+Tijuana
+USA
+Chandler
+sales
+Development and characterization
+Manufacturing
+FE = Frontend
+BE Backend
+BE
+- Power semiconductors
+Durham
+El Segundo
+sales
+sales
+- Components for space and aviation
+- Package platforms
+Hayward
+distribution center
+Kokomo
+sales
+Lebanon
+sales
+of GaN components
+Taiwan
+Taipei
+- Test concepts
+center, sales
+Osaka
+sales
+Tokyo
+sales
+Korea
+Cheonan
+BE
+- IGBT modules
+Seoul
+sales
+- System solutions for automotive electronics
+- System integration for power
+semiconductors
+Malaysia
+Ipoh
+- Package derivatives
+Kulim
+Malacca
+FE
+- Package technology
+ters, distribution
+Competence center for final test
+BE
+- IC, software and system development
+regional headquar-
+Leominster
+- ICS
+Philippines
+Muntinlupa
+Singapore
+- Discrete semiconductors
+- Sensors
+- Power semiconductors
+BE
+- Package technology
+- Power semiconductors
+- Interface to subcontractors
+sales
+sales
+- HiRel power modules
+€ in millions
+12.7%
+550
+770
+717
+12.4%
+11.9%
+2014
+2015
+2016
+R&D expenses
+Percentage of revenue
+53
+Research and development expenses (R&D expenses) amounted to €770 million in the 2016
+fiscal
+year, ‚ after €717 million in the previous year, representing an increase of €53 million or
+7 percent. The year-over-year increase was slower in percentage terms than the increase in
+revenue which grew by 12 percent. In the 2016 fiscal year we spent 11.9 percent on R&D relative
+to revenue compared to 12.4 percent in the previous year. With this rate we are well within our
+target range, i.e. a percentage of revenue in the low- to mid-teens.
+R&D expenses
+At the end of the 2016 fiscal year we employed 6,057 employees (17 percent of Infineon's total
+workforce) at our research and development sites worldwide; at the end of the 2015 fiscal year
+this figure stood at 5,778 employees (16 percent of the total workforce). Infineon maintains
+R&D departments at 34 sites in 14 countries (see the chapter "Locations", P page 49 ff.).
+Principal research and development activities
+R&D expenses are not only incurred for product development, but also increasingly for
+platform developments, for new product families and for new manufacturing technologies.
+This includes for example digital power management, technology platforms for low- and high-
+voltage power switches, power semiconductors based on the new materials silicon carbide
+and gallium nitride, and finally new sensor types, in particular those based on our magnetic
+field, radar, infrared and MEMS (micro-electromechanical systems) technologies.
+While in the past both research and development were primarily focused on technologies or
+components, today the systems in which the components are used are playing a decisive role.
+Innovative system solutions start with the optimization of system functionality. When savings
+and improvements - for example for passive components, cooling systems, packages, weight,
+reliability - create value for the customer, the customer will be prepared to pay a higher price
+for the enabling semiconductor component. Here digital microelectronics are often combined
+with components from the areas of radio-frequency, control of power components, sensor
+systems and actuators, resulting in a significant increase in performance.
+One focus point of our research is in the area of sensor systems. Sensors capture the real, analog
+world. The signals measured are first digitized and then processed, transmitted and stored
+as digital values in accordance with the requirements of the intended application. Infineon has
+almost 40 years of experience in sensor design and sensor manufacturing and offers the most
+comprehensive portfolio of pressure and magnetic field sensors for automotive applications.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Research and Development
+54
+P see page 23
+Furthermore, Infineon researches and develops a highly diverse range of sensor types. We
+have already received the first customer orders for the digital barometric pressure sensor
+we introduced last year, which will in turn generate revenue in the 2017 fiscal year. In addition
+to automotive applications, our 3D image sensor REAL3TM will now also be used in consumer
+electronics. The technology for 3D capture of the environment will be put to use in the smart-
+phone PHAB2 Pro from Lenovo.
+Together with the Belgian nano- and microelectronics research center Imec, Infineon has started
+development of a highly-integrated 79 gigahertz CMOS radar sensor chip. CMOS technology
+enables a higher degree of integration and allows a reduction in manufacturing costs. The
+objective is a cost-effective one-chip solution, although signal quality and transmission power
+are lower compared to the silicon-germanium-based radar sensor chips. We will therefore
+continue to build our 77 gigahertz radar sensor chip for long-range applications based on silicon
+germanium. The 79 gigahertz band has particular advantages over the established 24 gigahertz
+band. In the short-range it allows higher angle and distance resolution. Automated parking
+and blind spot detection are the target applications here. Infineon's portfolio of radar sensor
+chips, the most comprehensive in the industry, makes it possible to realize the radar-based
+safety cocoon for semi and fully automated driving.
+In addition to sensors, manufacturing technologies and transistor architectures for power
+semiconductor components based on new materials are another important focus area of our
+R&D activities. In the 2016 fiscal year we announced a new MOSFET power transistor based
+on silicon carbide (SiC). The strengths of SiC are found in applications of 600 volts and higher.
+This material enables power switches with significantly lower switching and conduction
+losses. However, because of the expensive substrate material involved, SiC also has a cost
+disadvantage. Therefore, SiC will become the material of choice wherever compactness and
+efficiency are key requirements, for example in on-board chargers and powertrains for electric
+and hybrid vehicles, as well as in photovoltaic inverters. Modification of the system design
+and topology will make it possible for other applications to make use of these advantages as
+well. This is due to the fact that disproportionally high savings with other components make
+it possible to reduce system costs in spite of the higher expenses associated with SiC MOSFET.
+The same is true for power transistors based on gallium nitride. Here we are currently develop-
+ing the next generation of transistors, which will be used in highly-compact power supplies.
+Another focus point of our R&D activities is in digital control of power semiconductors. We
+currently witness the transition from analog control to digital control of power switches. Digital
+control systems enable much easier adoption to various operating conditions (for example
+stand-by, partial load, full load) and also enable better use of the ever more complex power
+components. Programmability of the control ICs enables customers to adapt the function of
+the control unit to meet their requirements with shorter learning cycles. This transition already
+began several years ago for MOSFET-based control loops; the trend is now also starting for
+IGBT-based control loops. Infineon provides components for all stages of the digital control
+loop, namely control ICs, driver ICs and power switches.
+Infineon makes systematic use of its technical core competencies in close collaboration among
+the Segments (see the table in the chapter "Group Strategy/Strategic Fundamentals"). This lets
+us make efficient use of our economies of scale for power semiconductors, radio-frequency
+and security.
+Patents
+Another indication of the innovation power and long-term competitiveness of Infineon is the
+number and quality of our patents. In the 2016 fiscal year we applied for approximately 2,000
+patents worldwide, compared to approximately 2,200 patent applications in the previous year.
+At the end of the 2016 fiscal year the worldwide patent portfolio consisted of approximately
+27,000 patents and patent applications (previous year: approximately 25,000 patents and patent
+applications). The planned acquisition of Wolfspeed will add approximately 2,000 patents and
+patent applications.
+The capitalized development costs in the 2016 fiscal year amounted to €98 million (previous
+year: €100 million). Amortization of capitalized development costs totaled €31 million
+(previous year: €29 million) in the 2016 fiscal year. Subsidies and grants for R&D increased
+from €59 million in the 2015 fiscal year to €75 million in the 2016 fiscal year.
+Research and Development
+Combined Management Report | Our Group
+Research and Development
+ANNUAL REPORT 2016
+BE - HiRel power components
+- HiRel power modules
+Livonia
+sales
+Mesa
+Milpitas
+- Epitaxy
+FE
+- Epitaxy
+regional head-
+quarters, sales
+Morgan Hill
+- RF power transistors
+BE
+- RF power transistors
+Raleigh
+San Jose
+sales
+INFINEON TECHNOLOGIES
+52
+52
+GRI G4-17
+- Control ICs for digital power management
+- DC-DC converter, driver ICs and power ICS
+- HiRel power components
+- Power semiconductors
+- Digital power management solutions
+for DC-DC power stages
+Tewksbury
+Torrance
+Warwick
+Temecula
+- HiRel hybrid modules
+BE
+- Power semiconductors for space,
+aerospace, defense, and high-temperature
+applications
+FE
+sales
+Nagoya
+- Power ICs
+49
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Locations
+50
+Great Britain
+Bristol
+Newport
+Reigate
+Hungary
+Cegléd
+Function
+Research and Development
+sales
+- Microcontroller systems for automotive
+applications
+- Package concept development
+GRI G4-17
+- Package pathfinding
+Dublin
+sales
+Italy
+Milan
+sales
+Padova
+- Power ICs
+Pavia
+- Driver ICs for motion control
+Portugal
+Porto
+service function
+Romania
+Bucharest
+Ireland
+- Assembly and package technology for
+IGBT modules
+- IGBT modules
+BE
+sales
+Groẞostheim
+distribution center
+Karlsruhe
+sales
+Hanover
+Neubiberg
+near Munich
+Neu-Isenburg
+Regensburg
+- Power semiconductors
+-System-on-chip development
+sales
+- Hitex software development tools
+for embedded systems
+headquarters, sales - Technology integration
+- Design flow and library development
+- IC, software and system development
+for microcontrollers, ASICS, sensors
+and chip card ICs
+- Product development IGBT modules
+sales
+Warstein
+- Sensors
+- Power semiconductors
+BE -Chip card modules
+Russian Federation
+- Power semiconductors
+Radio-frequency
+FE
+- Technology development for sensors
+- Competence center for preassembly and
+package development
+sales
+- Power electronics
+- Analog and mixed-signal components
+Japan
+Moscow
+Spain
+Australia
+Blackburn
+sales
+China
+Beijing
+sales
+- Application development
+BE
+Hong Kong
+sales
+Shanghai
+distribution center,
+- Application development
+sales
+FE = Frontend
+BE Backend
+Shenzhen
+Wuxi
+BE -Chip card modules
+- Discrete semiconductors
+- Power semiconductors
+Xi'an
+sales
+India
+Bangalore
+sales
+- Software and system development
+- Design flow and library development
+Indonesia
+Batam
+BE
+sales
+sales
+Manufacturing
+Function
+Barcelona
+sales
+Madrid
+sales
+Sweden
+Kista
+sales
+Switzerland
+Zurich
+sales
+The Netherlands
+Rotterdam
+sales
+Turkey
+Research and Development
+Istanbul
+GRI G4-17
+Asia-Pacific
+51
+Combined Management Report | Our Group
+Locations
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+BE - IGBT modules
+sales
+- Power semiconductors
+BE
+FE = Frontend
+Backend
+Manufacturing
+- Chip card ICs
+- Mixed-signal and RF ICS
+- Power ICs
+FE
+- IGBT stack assembly
+Our focus in this area is on professional training aimed at developing the technical know-how
+and innovation skills of our workforce; programs concentrating on improving the leadership
+and feedback culture within the organization; training courses on the development of social
+skills and aptitudes; project management training. In addition, in-house training opportunities,
+such as mentoring programs and on-the-job training, are also of importance to us.
+We give high priority to staff training. We continously keep an eye on our employees with all
+their skills and aptitudes to ensure their personal and professional development.
+INFINEON TECHNOLOGIES
+Be ambitious
+and manage
+risks
+12
+61
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Our employees
+62
+62
+These behavioral descriptions play a significant role, for example, in the annual dialogs with
+employees under the global STEPS process (abbreviation for Steps To Employees' Personal
+Success). However, our fundamental culture of openness does not stop there. Feedback from
+teams to their managers is just as important as feedback from managers to staff. We have,
+therefore, established the format of the "leadership dialog", which is carried out every two
+years, and acts as a supplement to the STEPS dialogs. Managers receive structured feedback
+from their staff as part of the leadership dialog process, thus enabling them to reflect on their
+individual leadership conduct, identify strengths and potential areas for improvement and
+hence promote cooperation, both with and within the team.
+Open feedback is always important to us in constructive dialog with our employees' represen-
+tatives at the various sites. Co-determination is a key factor in our human resources work.
+Together, and in a spirit of trust, we are building the basis for successfully implementing our key
+topics in the respective bodies, particularly in the Central Works Council and the Management
+Staff Representation Committee.
+Regular participation in the Great Place to Work® survey enables us to measure the progress
+we are making in terms of leadership and feedback culture. Our objective is to provide our
+employees with a working environment in which they can give their very best. Results from
+the spring 2016 survey show that we have made improvements in all categories compared
+to 2013. Particularly gratifying for us is that 78 percent of all employees participating in the
+survey responded with "All in all, this is a very good place to work".
+Strive for
+excellence
+Management development
+We provide support to our managers in the form of numerous learning and development
+opportunities at the various leadership levels. Our approach to learning involves a variety
+of methods based on both theory and practice. We work on concrete practical examples at
+face-to-face training events and through computer-based trainings.
+In addition to our core “Infineon Leadership Excellence Programs", we also offer training
+on a range of topics required in specific situations. One example of this is the "New Leader
+Orientation" program – an in-house workshop for new managers focusing on leadership
+culture and management tools at Infineon. In another training program offered in Asia -
+"Leadership in Healthy Lifestyle" - our top managers learn how to make the most of their
+resources and increase health competence. The e-learning-based “Health & Care" program
+focuses on the issue of health as a managerial task.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Our employees
+63
+Promoting talent
+Talent marketing and management
+At Infineon, depending on their individual knowledge and talent, development opportunities
+are available to employees in a variety of careers, based on Infineon's needs. Four career
+paths are already established:
+> the professional career as an “Individual Contributor”, in which individual expertise in a
+traditional business field, such as finance, purchasing or sales, is promoted;
+Good leadership is essential for Infineon's success, as it enables each individual to perform
+his or her tasks effectively and therefore contribute to the success of the company. At the
+same time, our employees expect to be able to develop their skills and competences within
+a suitable environment. With this in mind, creating an attractive working environment and
+long-term employee retention at Infineon are key tasks for our managers.
+Drive value
+through
+innovation
+Focus on the
+customer
+We commit.
+We innovate.
+We partner.
+We perform.
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the
+key operational figures for capacity utilization and forecast capacity requirements are analyzed.
+The results of this analysis are used in determining investment requirements.
+Operational early indicators
+The analysis of current and future performance is rounded off by using the following opera-
+tional early indicators:
+› Orders received: The aggregate of all orders received by the Group from customers during
+the relevant reporting period
+› Orders received as a percentage of revenue: The ratio of orders received and revenue
+recognized during the same accounting period (book-to-bill ratio)
+The book-to-bill ratio gives a good indication of future trends in demand. If orders received
+are greater than revenue recognized within a given period, it is seen as an indication of future
+revenue growth.
+For an analysis of orders received and the book-to-bill ratio in the previous fiscal year, see
+the chapter "Review of results of operations".
+Actual and target values for performance indicators
+The chapter "Outlook” contains a table showing the actual values achieved in the 2016 fiscal
+year for the key performance indicators, along with expectations for the 2016 fiscal year and
+the 2017 fiscal year.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Sustainability at Infineon | Our employees
+@www.infineon.com/sustainability_reporting
+Sustainability at
+Infineon
+Sustainability activities are described in the report "Sustainability at Infineon", which is
+available on our website.
+Our employees
+Our human resources work focuses on developing our existing workforce and recruiting new
+staff as required. We firmly believe that effective human resources management is the key to
+commercial success, as only fulfilled, successful employees are able to deliver long-term peak
+performance and support us in meeting the growth and profitability targets set out at the
+beginning of this report. We continually endeavor to promote the performance and potential
+of our employees in the best possible way. The three pillars of "Leadership excellence",
+"Promoting talent" and "Our workforce" provide a framework to the activities we deploy to
+achieve this objective.
+Leadership excellence
+Open and honest feedback
+An organization cannot progress without open and honest feedback. This basic premise is
+reflected in our values, which are collectively defined in our "High Performance Behavior
+Model" (see graph). These values are not purely theoretical: The High Performance Behavior
+Model shows how we aim to achieve Infineon's targets and set priorities.
+High Performance Behavior Model
+Trust and
+respect others
+Be passionate
+about profit
+Foster your
+talents
+Team up
+for best
+results
+> the "Technical Ladder", which enables our technical experts to develop;
+> the Project Management career, which offers our project managers clear prospects for their
+personal development and careers - and emphasizes the importance of implementing
+development projects for Infineon's success; and
+> the Management career path for (junior) managers.
+As an international company, we wish to offer our staff development prospects beyond
+organizational and national boundaries. The worldwide Development Conferences, during
+which managers discuss the specific development of our talents with the Human Resources
+team, are an important instrument in this endeavor.
+25
+20
+15
+15.0%
+12.1%
+12.5%
+13.0%
+13.4%
+10
+10.2%
+5
+0
+2010'
+20131
+2014¹
+2016
+Target
+2020
+1 International Rectifier not included
+64
+P see page 106
+In conjunction with the "Law on Equal Participation of Women and Men in Leadership Positions
+in the Private and Public Sector", Infineon Technologies AG and Infineon Technologies Dresden
+GmbH have set targets for the percentage of women in the two leadership levels below the
+Management Board. We will report on the extent of target attainment for the Supervisory
+Board, Management Board/Board of Directors as well as for the two leadership levels below
+board level (see the chapter "Corporate Governance") as of June 30, 2017.
+Cooperation with universities
+Infineon keenly promotes close contact with both students and academics with the aim of
+recruiting young professionals – for instance through special “High Potential" programs:
+Infineon has been a member of the UNITECH network for promoting talented engineers since
+2002. In the meantime, UNITECH has developed into a sustainable recruiting ground for inter-
+national, high-caliber staff for Infineon. Our cooperation with the Collège des Ingénieurs (CDI)
+has proven highly successful over the years. Infineon has established itself as an attractive
+and reliable partner for this international MBA program.
+At selected top universities in China, Infineon organizes "Student Dialogs” and “Infineon
+Days" and sponsors "Joint Labs", "Training Labs” and an endowment chair for the long-term
+promotion of application-based research and teaching.
+Qualifications and training
+Women in management positions (Infineon worldwide)
+For an analysis of changes in these key performance indicators during the previous fiscal year,
+see the chapter "Review of liquidity".
+Our employees
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+In the Asia-Pacific region (including Japan), due to the expectations of employees and the
+specific local context, in addition to the Infineon career paths, we offer specially designed talent
+management programs: "ENGINE" for management careers and "TechStar" for technical
+careers. Both programs focus on the key areas of training, interaction with management and
+the practical application of what has been learnt in specific projects.
+Encouraging diversity
+As an international company, the diversity of our staff is particularly important to us. Our
+global diversity management provides the framework for a corporate culture which values
+the individuality of each staff member and promotes equal opportunities - irrespective
+of age, disability, ethnic-cultural origin, gender, religion, belief, or sexual identity. The focal
+points of our commitment to diversity may vary from one location to another and are tailored
+to suit local needs. For example, the diversity team in the Asia-Pacific region concentrates in
+particular on ethnic-cultural diversity and the demographic trend.
+The promotion of women to management positions is one of the key focus areas of our diversity
+management policy. We had set ourselves the ambitious target of increasing the percentage
+of female executives to 15.0 percent by the end of the 2015. Despite a steady upward trend
+in recent years to 13.4 percent, we did not quite achieve this target. We intend to reinforce our
+efforts and now plan to achieve the target by 2020. Individual measures and performance
+indicators are being put in place across the business with a view to achieving the target. We
+remain committed to our long-term target of 20 percent of women in management positions.
+Employees
+Female¹
+Male'
+Total
+Middle and senior level management²
+5,999
+13.4
+86.6
+Entry level management²
+Non-management staff
+6,538
+25.7
+74.3
+23,762
+46.9
+53.1
+Total
+36,299
+37.5
+62.5
+1 Figures expressed in percentages based on the workforce at September 30, 2016.
+2 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+Combined Management Report | Our Group
+> Investments: The total amount invested in property, plant and equipment and intangible
+assets, including capitalized development costs
+2015'
+> Net cash position: Gross cash position less short-term and long-term debt
+56
+Milestones and essential investment focuses in manufacturing in the 2016 fiscal year
+Continued high demand for automotive power semiconductors resulted in further expansion
+of the second manufacturing building at the frontend site at Kulim, known as "Kulim 2". The
+"Ready for Equipment” milestone, i.e. the beginning of equipping the cleanroom, was reached
+on January 15, 2016. The official opening of the manufacturing building took place on schedule
+on May 13, 2016. This date also marked the beginning of volume production.
+Furthermore, the concluded fiscal year saw investments at the frontend and backend sites
+primarily in the following areas:
+> Expansion of 200-millimeter frontend manufacturing capacities for differentiating manufac-
+turing technologies such as MEMS-based sensors, radio-frequency components, as well as
+power semiconductors and magnetic field sensors for automotive applications.
+> Expansion of 300-millimeter frontend manufacturing capacities (see following paragraph).
+> Increased level of automation at our frontend and backend sites, for example improvement
+of the wafer transport system and mathematically optimized manufacturing planning.
+> Expansion of backend manufacturing capacities, in particular in Malacca, and also in Wuxi
+with the construction of a second manufacturing facility.
+› Adaptation and retooling of manufacturing lines to accommodate the modified product
+portfolio, in particular due to the beginning of volume production for new technologies
+and products.
+Ramp-up of 300-millimeter thin wafer manufacturing takes place as planned
+The continuous expansion of manufacturing capacities for our 300-millimeter frontend
+manufacturing network, consisting of the sites in Dresden and Villach, progressed as planned.
+The next milestones are set for the end of calendar year 2017. By then we want to have equipped
+20 to 30 percent of the available cleanroom space with 300-millimeter thin wafer manufacturing
+equipment. We then expect 300-millimeter manufacturing costs per chip to reach the level of
+our 200-millimeter manufacturing.
+The utilization level of the 300-millimeter manufacturing capacities is increasing for several
+reasons. First of all, it is no longer possible to meet demands for our power semiconductor
+components with the 200-millimeter fabs alone. Secondly, we are shifting part of the manu-
+facturing activities from Newport to Dresden. And finally, in the future certain new products
+will be manufactured on 300-millimeter manufacturing lines only, for example the 800 volt
+power transistor CoolMOSTM P7, introduced in the 2016 fiscal year.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Internal management system
+Internal
+management system
+57
+P see page 22 ff.
+@www.infineon.com/sustainability_reporting
+P see page 61 ff.
+P see page 102 ff.
+The internal management system at Infineon is designed to assist in implementing the Group
+strategy described in "Group strategy" in the chapter "Finances and strategy". Accordingly,
+performance indicators are used which enable profitable growth and efficient employment of
+capital to be measured. Infineon has set itself the targets of:
+> achieving a compound annual revenue growth rate of 8 percent
+> thereby achieving a 17 percent (previously 15 percent) Segment Result Margin over the
+economic cycle, and
+> limiting investments to 13 percent of revenue over the economic cycle
+Overall, reaching these financial targets yields in a sustainable increase in the value of the
+business, brought about by achieving a premium on the cost of capital in the long term.
+Combined Management Report | Our Group
+Operations
+In this context, growth, profitability and investments are all interdependent. Profitability is
+the prerequisite for being able to finance operations internally, which, put another way, means
+opening up potential opportunities for growth. Growth, in turn, requires continual investment
+in research and development as well as in manufacturing capacities. Growing at a commen-
+surate rate allows Infineon to achieve leading market positions and to generate economies
+of scope that contribute to greater profitability. Employing financial resources efficiently is a
+critical factor in achieving these goals.
+ANNUAL REPORT 2016
+Of the amount invested in property, plant and equipment, the largest share is accounted for by
+investments in manufacturing facilities. Here in turn approximately two thirds went on frontend
+manufacturing facilities, with the rest essentially going on backend manufacturing facilities.
+> Net working capital: Current assets less cash and cash equivalents, less financial investments,
+less assets classified as held for sale, less current liabilities excluding short-term debt, and
+current maturities of long-term debt, excluding liabilities classified as held for sale
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Operations
+Operations
+55
+55
+Investments
+€ in millions
+15.5%
+668
+826
+785
+13.5%
+卅
+2014
+2015
+Investments
+2016
+12.8%
+Percentage of revenue
+1 Property, plant and equipment and intangible assets
+Our manufacturing strategy follows the basic principle that in-house manufacturing has to
+result in a differentiation potential in terms of costs and/or performance. If this is not the case
+we outsource manufacturing. This applies both to frontend manufacturing and backend
+manufacturing. This is the most efficient way to use our capital employed and to optimize
+our investments.
+For frontend manufacturing this principle means that power semiconductors, sensors and
+radio-frequency components are preferably manufactured at our own manufacturing sites.
+Here we gain a strategic advantage from our manufacturing technologies and our process
+expertise because we can offer components which can only be manufactured with leading-
+edge manufacturing techniques. In the case of CMOS-based process technologies on the
+other hand we work together with manufacturing partners. This applies to the majority of our
+products manufactured in 90 nanometer manufacturing technologies as well as all products
+manufactured in 65 nanometer and 40 nanometer manufacturing technologies. These are
+primarily highly-integrated products such as microcontrollers and security ICs. In backend
+manufacturing for certain package types we work with subcontractors in order to ensure
+adequate capacity growth and to be able to better manage phases of high fluctuation in
+demand. Standard power semiconductor packages are an example here.
+Another successful step in the area of manufacturing technology is the introduction of a
+larger wafer diameter for manufacturing of power semiconductors. The use of 300-millimeter
+thin wafers creates significant advantages in terms of productivity and reduces the amount
+of capital required. However, the technical challenges involved are substantial. Infineon is
+as of yet the only company to successfully complete this step. Further information on the
+ramp-up of 300-millimeter thin wafer technology can be found at the end of this chapter.
+Infineon maintains a total of 19 manufacturing sites in eleven countries: Dresden, Regensburg
+and Warstein (all Germany); Villach (Austria); Newport (Wales, UK); Cegléd (Hungary); Beijing
+and Wuxi (both China); Malacca and Kulim (both Malaysia); Cheonan (Korea); Batam (Indonesia);
+Singapore; Tijuana (Mexico) as well as Leominster, Mesa, Morgan Hill, San Jose and Temecula
+(all USA) (see the chapter "Locations"). As of September 30, 2016, 26,383 employees were
+employed in Operations at these manufacturing sites (previous year: 25,909 employees).
+In the 2016 fiscal year our investments amounted to €826 million, representing an increase
+of €41 million or 5 percent compared to the €785 million invested in the previous year. Relative
+to revenues, the investments in the complete fiscal year stood at 12.8 percent, slightly lower
+compared to the previous year's 13.5 percent. €716 million of the overall investment volume
+went on property, plant and equipment (previous year: €646 million) and €110 million went on
+intangible assets including capitalized R&D costs (previous year: €139 million).
+INFINEON TECHNOLOGIES
+Infineon deploys a comprehensive controlling system to manage its business with respect
+to the strategic targets it has set itself. The system involves the use of financial and operating
+key performance indicators. Information for controlling purposes is derived from annual
+long-term planning, quarterly outlooks, orders received per week and actual monthly financial
+results. This knowledge enables management to base its decisions on sound information
+with respect to the current situation and future expected financial and operational develop-
+ments. Sustainable business practices and the consideration of forward-thinking qualitative
+factors are important for Infineon's long-term success. As an enterprise very much aware
+of its responsibilities towards society, Infineon also takes account of non-financial factors,
+mainly in the fields of sustainability (see "Sustainability at Infineon" on our website) and
+human resources (see the chapter "Our employees"). Although these factors are not used to
+manage business performance, they nevertheless help Infineon achieve its financial targets.
+P see page 49 ff.
+INFINEON TECHNOLOGIES
+Return on Capital Employed (ROCE)
+The performance indicator RoCE measures the ability of capital to provide a return and is
+defined as the operating result after tax from continuing operations divided by capital
+employed. Capital employed consists of non-current assets and net working capital. ROCE
+shows the correlation between profitability and the capital resources required to run the
+business.
+ROCE =
+Operating result after tax from continuing operations
+Capital employed
+P see page 75
+This key performance indicator describes how efficiently a company manages its resources.
+ROCE is also analyzed by Infineon at Group level only and not at segment level. A comparison
+of a company's ROCE and its weighted cost of capital provides information on the extent to
+which returns have been generated in excess of shareholders' and debt holders' expectations.
+Thus RoCE serves as a tool for value-based management.
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets
+and net working capital. Asset intensity describes the amount of assets necessary to generate
+a certain level of revenue (for an analysis of the derivation of and change in ROCE in the 2016
+fiscal year, see the chapter "Review of financial condition").
+Other performance indicators
+The principal performance indicators described above are supplemented by others that provide
+information about growth potential, cost efficiency by functional area and liquidity.
+Growth and profitability performance indicators
+Revenue growth is compared continuously with the rate of growth of relevant target markets.
+This ties in directly with our strategic target of profiting continuously from the growth of our
+target markets. A further indicator for future revenue growth is the number of design wins,
+whereby we regularly measure actual outcomes against targets.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Internal management system
+60
+60
+P see page 68 ff.
+P see page 75 ff.
+P see page 70
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings
+and costs above the Segment Result line. This involves a review of gross profit, research and
+development expenses, selling, general administrative expenses and the ratio of these items
+to revenue. These performance indicators are used to manage the business at both Group and
+segment levels (for an analysis of changes in the fiscal year under report, see the chapter
+"Review of results of operations").
+Liquidity performance indicators
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its
+disposal and an optimal capital structure. Liquidity is managed at Group level, not at segment
+level, and uses the following key performance indicators:
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with all relevant legal
+requirements and, of equal importance, that its internal Corporate Governance Standards
+are complied with (see the chapter "Corporate Governance").
+> Gross cash position: Cash and cash equivalents plus financial investments
+Effective investment management plays a key role with regard to managing free cash flow.
+Our stated strategy of managing investments systematically and limiting them to 13 percent
+of revenue should be seen in this context. Free cash flow is considered by Infineon only at
+Group level and not at segment level.
+Infineon manages net working capital levels by focusing relentlessly on optimizing levels of
+inventories, trade receivables and trade payables.
+P see page 79
+An important key performance indicator for Infineon is the free cash flow figure, defined as net
+cash provided by or used in operating activities and net cash provided by or used in investing
+activities, both from continuing operations, after adjusting for cash flows related to the
+purchase and sale of financial investments. Free cash flow measures the ability to generate
+sufficient cash flows to finance day-to-day operations and fund required investments out
+of the ongoing business. It is Infineon's stated target to sustainably generate positive free cash
+flow (see the chapter "Review of financial condition" for an analysis of free cash flow in the
+2016 fiscal year).
+The main levers for generating free cash flow are profitability, the ability to manage working
+capital efficiently and the levels of investments.
+P see page 169 ff.
+P see page 40 ff. and page 18 ff.
+Performance indicators
+ANNUAL REPORT 2016
+Principal performance indicators
+In order to measure its success in implementing its strategies, Infineon uses the following
+three overarching performance indicators:
+› Segment Result to measure the operating profitability of its various businesses and of
+the portfolio as a whole
+> Free cash flow from continuing operations to measure the amount of cash generated or
+used excluding financing activities
+> Return on Capital Employed (ROCE) to measure capital efficiency
+Segment Result is the key figure for measuring operating performance. Expressed as a percent-
+age of revenue (Segment Result Margin), it measures profitability of revenue and shows how
+well operations are being managed. The activities of Infineon's segments are managed on the
+basis of Segment Result. Responsibility for optimizing Segment Result within the framework
+of Group strategy (as approved by the Management Board) rests with the management teams
+of the relevant segments, acting, however, in coordination with the Management Board.
+Free cash flow from continuing operations enables us to measure how well operating profit-
+ability is being converted into cash inflows. This key figure also provides information on the
+efficient use of working capital and property, plant and equipment.
+58
+The three performance indicators described above are also the cornerstones of the system for
+variable compensation within Infineon. Most variable salary components for employees and
+management are directly linked to these performance indicators.
+Free cash flow
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE)
+against the cost of capital, in order to ensure value creation.
+Psee page 77
+59
+Internal management system
+Combined Management Report | Our Group
+Combined Management Report | Our Group
+Internal management system
+INFINEON TECHNOLOGIES
+Segment Result is defined as operating income (loss) excluding the following: the net amount
+of asset impairments and reversals thereof; the impact on earnings of restructuring and
+closures; share-based compensation expense; acquisition-related depreciation/amortization
+and other expenses; gains (losses) on sales of assets, businesses, or interests in subsidiaries as
+well as other income (expense), including litigation costs (see note 23 to the Consolidated
+Financial Statements for a computation of the relevant figures). Court and legal fees arising in
+conjunction with licensing Infineon's patents are included in Segment Result, as is any related
+income. Segment Result is the indicator that Infineon uses to evaluate the operating perfor-
+mance of its segments (for an analysis of Group and individual segment performance in the
+2016 fiscal year, see the chapter "The segments" and the section "2016 fiscal year").
+Segment Result
+Since revenue growth correlates with all three performance indicators and especially with
+Segment Result, it is not used as a key performance indicator in its own right.
+ANNUAL REPORT 2016
+0.12
+2014
+0.18
+2015
+0.20
+Proposal 2016
+0.22
+P see page 30
+Trading volumes and DAX ranking
+The average volume of Infineon shares traded, measured in units, in the Xetra system,
+dropped by 28 percent in the 2016 fiscal year compared to the previous year. 5.5 million shares
+were traded daily in the 2016 fiscal year, compared to 7.6 million shares in the previous year.
+The average daily trading volume of Infineon shares in euros fell slightly by 7 percent from
+€73.7 million in fiscal 2015 to €68.5 million in the 2016 fiscal year.
+Infineon improved by 5 places in the DAX ranking in terms of market capitalization, moving
+from 22nd place at the end of the 2015 fiscal year to 17th place at the end of the 2016 fiscal
+year. In terms of the volume traded in euros in Xetra and on the Frankfurt trading floor during
+the last twelve months, Infineon ranked 19th in the 2016 fiscal year, up from 21st place in
+the previous year.
+Shareholder structure
+As of September 30, 2016, four shareholders each held more than 3 percent of the Infineon
+shares issued; two of the four shareholders held more than 5 percent. At the end of the 2015
+fiscal year, six shareholders held more than 3 percent of shares each. The share capital held
+by retail investors dropped from 11.79 percent at the end of the 2015 fiscal year to 9.53 percent
+at September 30, 2016.
+Dividend
+Group performance
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Group performance
+2013
+Review of results of operations
+The Infineon share is traded in the USA in the form of American Depositary Shares ("ADS”) on
+the OTCQX International over-the-counter market under the ticker symbol "IFNNY". The average
+trading volume rose from 147 thousand ADS per day in the previous fiscal year to 216 thousand
+ADS per day in the 2016 fiscal year. The number of ADS outstanding also dropped to 16.7 million
+units at September 30, 2016, from 23.2 million ADS at the end of the 2015 fiscal year.
+After the dividend for the 2014 fiscal year had already been increased from €0.12 to €0.18,
+the Management Board and Supervisory Board decided to propose a further increase of
+the dividend to €0.20 per share for the 2015 fiscal year to the Annual General Meeting on
+February 18, 2016. The shareholders approved the proposal and thus on February 19, 2016
+the amount of €225 million was paid out to shareholders. At that point in time the number
+of shares entitled to a dividend was 1,123,271,481 units. At September 30, 2016 the number
+of shares issued was 1,132,673,109. This figure includes the unchanged amount of 6 million
+shares owned by the company, which are not entitled to a dividend. Based on positive
+business developments and Infineon's positive business outlook, a proposal will be made
+to shareholders at the 2017 Annual General Meeting to increase the dividend for the 2016
+fiscal year by 2 cents or 10 percent from €0.20 to €0.22. For more information on Infineon's
+dividend policy, see "Sustainable value creation for our shareholders" in the chapter
+"Group strategy".
+Allianz Global Investors GmbH
+The Capital Group Companies
+BlackRock Inc.
+2012
+03|2016
+04|2016 05|2016
+Review of results of operations
+06|2016 07|2016 08|2016
+09|2016
+Infineon
+DAX
+■SOX
+Dow Jones US Semiconductor Index
+Shareholder structure
+72.12%
+5.74%
+5.08%
+4.28%
+3.25%
+9.53%
+O
+State of Kuwait/
+Kuwait Investment Authority
+Retail investors
+Other
+Dividend for
+fiscal year
+Dividend per share
+in €
+2010
+0.10
+2011
+0.12
+0.12
+The consolidated statement of operations
+4
+€ in millions, except earnings per share
+Income from continuing operations
+741
+622
+Income from discontinued operations, net of income taxes
+2
+12
+Net income
+743
+634
+Basic earnings per share (in euro)
+102
+0.56
+0.66
+0.56
+Adjusted earnings per share (in euro) - diluted
+0.76
+0.60
+Net income improved
+Psee page 72
+P see page 40 ff.
+02|2016
+Net income improved year-on-year by €109 million to €743 million for the 2016 fiscal year
+on the back of revenue growth. The €83 million decrease in acquisition-related depreciation,
+amortization and other expenses (2016: €191 million; 2015: €274 million) for International
+Rectifier (primarily expenses recognized in conjunction with the purchase price allocation)
+was largely offset by a €66 million reduction in income tax benefits.
+Diluted earnings per share (in euro)
+36
+Income tax
+3
+Revenue
+2016
+2015
+6,473
+5,795
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+2,330
+2,080
+(770)
+(717)
+(791)
+(778)
+Other operating income and expenses, net
+(6)
+(30)
+Operating income
+763
+555
+Net financial result (financial income and expenses, net)
+Income from investments accounted for using the equity method
+(61)
+(39)
+68
+01|2016
+Trading in the USA
+11|2015
+e-mail or telephone hotline:
+Phone: +49 89 234-26655
+Fax: +49 89 234-955 2987
+E-mail: investor.relations@infineon.com
+@Interested parties are able to participate
+in telephone conferences via a webcast in
+the Investor Relations section of the
+Infineon website:
+www.infineon.com/investor
+@A full overview of other major indices,
+in which the Infineon share is repre-
+sented, can be found on Infineon's
+website at www.infineon.com/cms/en/
+about-infineon/investor/infineon-share/
+index-membership/
+Basic information on shares and bonds
+☐ Questions may be directed to us via
+Share types
+Shares issued¹
+Own shares
+ISIN
+WKN
+Ticker symbol
+Bloomberg
+Reuters
+Listings
+Market capitalization²
+Daily average shares traded on Xetra
+Market capitalization²
+Share capital
+Daily average ADS traded
+The Infineon share
+Combined Management Report | Our Group
+Earnings per share (basic and diluted) amounted to €0.66 per share and were therefore higher
+than one year earlier (2015: €0.56).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Our employees
+Our workforce
+Health management
+The health of our staff is imperative. We therefore protect and promote it through our
+occupational health management program. Preventive programs, such as "Fit4Health"
+in Germany and Austria or H.A.P.P.Y. (Healthy Active People Program for You) in Singapore
+boost health competence in our staff. Additional demand-oriented local health initiatives
+supplement the range of measures on offer.
+Competence development
+How do we equip ourselves optimally for the working world of the future? We endeavor
+answer to this question by our strategic competence management program, which identifies
+the skill sets necessary for the future and suggests relevant development paths.
+The Infineon share
+Our offering of functional training is made available primarily via the "Academy Connect"
+platform. Cooperation has been established among a total of 11 global "functional academies"
+operating in specific segments and fields, with a view to providing coordinated learning to
+build up professional expertise. Academies exist, for example, in the fields of purchasing,
+finance, manufacturing, quality management and supply chain. The learning content on offer
+is expanded on an ongoing basis, as through the professional and targeted development
+of our staff we aim to reinforce our corporate strategy and increase productivity.
+As of September 30, 2016 Infineon had a worldwide workforce of 36,299 employees,
+compared to 35,424 employees one year earlier.
+The worldwide personnel cost for current internal Infineon employees in the 2016 fiscal year
+totaled €2,047 million (2015 fiscal year: €1,939 million). This amount includes wages and
+salaries, including overtime and allowances, as well as social costs (pension expenses and
+social contributions).
+Outlook
+Our human resources work focuses on continuing successful initiatives and programs and
+developing new measures in response to current requirements. Infineon's long-term human
+resources strategy continually contributes to meeting our high-performance aspirations.
+Our aim is to deploy our workforce both competently and correctly - and to be motivated
+through personal success to contribute to Infineon's overall success.
+With this aim in mind, our human resources work focuses on the three pillars "Leadership
+excellence", "Promoting talent" and "Our workforce”. Furthermore, the "HR Operational
+Excellence" initiative continues to improve our key processes in human resources. With
+a combination of stable processes and efficient instruments, the HR team – in its role as
+strategic partner and adviser for management and staff - accompanies Infineon on its
+high-performance path.
+Subsequent to completing the integration of International Rectifier during the 2016 fiscal
+year, one of the areas to which the HR department will turn its attention during the 2017
+fiscal year will be the scheduled acquisition of Wolfspeed.
+65
+99
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Employees and personnel expense
+Index membership (selected)
+1.0% Infineon Bond from March 10, 2015
+1.5% Infineon Bond from March 10, 2015
+Rating of S&P Global Ratings
+1 The number of shares issued includes own shares.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The Infineon share
+67
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index for the 2016 fiscal year (daily closing prices)
+Infineon share price in €
+September 30, 2015 = 100
+16.09
+15.08
+14.08
+13.07
+12.07
+99
+11.06
+160
+150
+140
+130
+120
+110
+100
+9.05
+90
+10|2015
+10.06
+66
+During the 2016 fiscal year the Infineon share continued the upward trend seen in previous
+years, finishing the fiscal year at a closing price of €15.88, 58 percent higher than its closing
+price of €10.06 at the end of fiscal 2015. The price of the Infineon share reached its low for the
+year, €9.75, at the beginning of the fiscal year. After that, the price rose continuously, with at
+times volatile price fluctuations. The Infineon share reached its high for the year of €15.88 on
+the last day of trading in the fiscal year, September 30, 2016. During the 2016 fiscal year the
+value of the Infineon share significantly outperformed comparable benchmark indices. In this
+period the Philadelphia Semiconductor Index (SOX) rose by 39 percent and the Dow Jones US
+Semiconductor Index rose by 35 percent. The 9 percent increase in value of the DAX was
+significantly lower in the fiscal year just completed.
+Further share price increase in 2016 fiscal year
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+€2,265,346,218 (as of September 30, 2016),
+€2,258,542,962 (as of September 30, 2015)
+1,132,673,109 (as of September 30, 2016),
+1,129,271,481 (as of September 30, 2015)
+6 million shares (as of September 30, 2016)
+DE0006231004
+623100
+IFX (share), IFNNY (ADS)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-XE
+Shares: Frankfurt Stock Exchange (FSE)
+€17,892 million (as of September 30, 2016)
+5,469,535 (in the 2016 fiscal year)
+ADS, over-the-counter trading on the OTC market (OTCQX)
+US$20,032 million (as of September 30, 2016)
+216,173 (in the 2016 fiscal year)
+DAX 30
+Dow Jones STOXX Europe 600
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones Germany Titans 30
+MSCI Germany
+S&P-Europe-350
+Dow Jones Sustainability World Index
+Dow Jones Sustainability Europe Index
+due on September 10, 2018, ISIN: XS1191115366
+due on March 10, 2022, ISIN: XS1191116174
+since February 2016: "BBB" (outlook "stable")
+2 Own shares were not taken into consideration for calculation of market capitalization.
+12|2015
+Adjusted earnings per share (diluted) improved sharply from €0.60 to €0.76 per share (see "Sharp
+improvement in adjusted earnings per share" in this chapter for details of the calculation).
+0.66
+Revenue grew by €678 million to €6,473 million in the year under report (2015: €5,795 million).
+The increase primarily reflects strong business performances across all segments (see the
+chapter “The segments") and the first-time inclusion of International Rectifier for a full twelve-
+month period, contrasting with the previous fiscal year when revenue was included only for
+the period after closing of the acquisition on January 13, 2015.
+5%
+8%
+4,665
+5,023
+Total equity
+7%
+0%
+4,076
+4,064
+Total liabilities
+18%
+20%
+5%
+2%
+2,534
+Non-current liabilities
+(3%)
+1,585
+1,530
+Current liabilities
+4%
+8,741
+9,087
+Total assets
+(1%)
+4,626
+2,491
+4,595
+2015
+Statement of Financial Position Ratios:
+Property, plant
+1,191
+1,129
+Inventories
+774
+742
+other receivables
+38.4%
+35.2%
+Debt-to-equity ratio 4
+Trade and
+13.6%
+2016
+14.8%
+2,240
+2,013
+Gross cash position
+53.4%
+55.3%
+Equity ratio 2
+2016
+2015
+€ in millions
+7.3%
+8.2%
+Return on assets 1
+Return on equity 3
+9%
+4,115
+4,492
+1,125
+1,129
+Weighted-average number of shares outstanding - diluted
+680
+853
+shareholders of Infineon Technologies AG - diluted
+Adjusted earnings from continuing operations attributable to
+(209)
+(59)
+the annually updated earnings forecast
+Revaluation of deferred tax assets resulting from
+(73)
+Adjusted earnings per share (in euro) - diluted¹
+(49)
+16
+6
+2
+4
+274
+191
+6
+9
+13
+(7)
+31
+16
+Tax effects on adjustments
+0.76
+0.60
+1 The calculation of the adjusted earnings per share is based on unrounded figures.
+Non-current assets
+Current assets
+Change
+year-on-year
+Septem-
+ber 30, 2015
+ber 30, 2016
+€ in millions, except percentages
+Septem-
+23%
+24%
+13%
+13%
+9%
+8%
+25%
+23%
+9,087
+8,741
+73
+Review of financial condition
+Review of financial condition
+Group performance
+Combined Management Report | Our 2016 fiscal year
+Assets
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as a
+replacement or superior performance indicator, but rather as additional information to
+the net income and earnings per share (diluted) determined in accordance with IFRS.
+The calculation of earnings per share in accordance with IFRS is presented in detail in note 8
+to the Consolidated Financial Statements.
+P see page 146
+Inventory intensity 5
+ROCE6
+620
+13.1%
+15.0%
+Euro
+2016
+2015
+€ in millions
+2016
+2015
+0%
+1%
+47%
+46%
+53%
+53%
+947
+1,769
+Debt by currencies
+74
+Review of financial condition
+Group performance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Current provisions and liabilities for obligations to employees decreased by €58 million,
+largely reflecting the fact that payments made for prior-year performance-related remune-
+ration exceeded the amount accrued for the 2016 fiscal year. By contrast, trade payables
+were €55 million higher than one year earlier, mainly as a corollary to the organic revenue
+growth recorded by the segments and the resulting increase in inventories.
+Current liabilities marginally lower; non-current liabilities almost unchanged
+Current liabilities stood at €1,530 million at the end of the reporting period, €55 million
+(3 percent) lower than at September 30, 2015 (€1,585 million). Non-current liabilities remained
+almost unchanged at €2,534 million (September 30, 2015: €2,491 million).
+Non-current assets decreased slightly from €4,626 million as of September 30, 2015 to
+€4,595 million as of September 30, 2016. Investments in property, plant and equipment
+totaling €716 million were higher than the depreciation expense of €665 million during
+the same period. Investments related mainly to the manufacturing sites in Regensburg
+(Germany), Kulim (Malaysia), Villach (Austria) and Malacca (Malaysia). By contrast, invest-
+ments in intangible assets amounting to €110 million were lower than the amortization
+expense for the period totaling €168 million.
+Slight decrease in non-current assets
+Current assets were up by 9 percent to €4,492 million at the end of the reporting period,
+compared to €4,115 million as of September 30, 2015. Infineon's gross cash position (sum
+total of cash and cash equivalents and financial investments) improved by €227 million
+(see "Gross cash position and net cash position" in the chapter "Review of liquidity" P page 77).
+In addition, trade receivables and inventories increased by €94 million in total as a result of
+organic revenue growth across the segments.
+1,793
+Increase in current assets due to higher gross cash position
+939
+828
+Good sales performance and the full-year inclusion of International Rectifier
+drive revenue growth
+Capital employed - ROCE
+The operating income from continuing operations after tax rose year-on-year from €664 million
+to €799 million, as a result of which the return on capital employed (ROCE) also increased from
+12.8 percent to 15.0 percent, despite the fact that capital employed went up from €5,176 million
+as of September 30, 2015 to €5,334 million as of September 30, 2016. The performance again
+enabled Infineon to more than cover its cost of capital in the 2016 fiscal year.
+Increase in earnings gives rise to higher ROCE
+The equity ratio improved to 55.3 percent as of the end of the reporting period (September 30,
+2015: 53.4 percent).
+Equity increased by €358 million (8 percent) to €5,023 million at the end of the reporting
+period (September 30, 2015: €4,665 million), mainly due to the net income generated in the
+2016 fiscal year amounting to €743 million. Working in the opposite direction, equity was
+reduced during the reporting period by the dividend of €225 million paid for the 2015 fiscal
+year and by actuarial losses amounting to €159 million (net of tax) - recognized in other
+comprehensive income - arising in conjunction with pension plans and similar commitments
+(see notes 15 and 20 to the Consolidated Financial Statements P page 153 and 157 ff.).
+Equity up due to net income for the year
+Information on debt maturities is provided in note 14 to the Consolidated Financial Statements
+P page 152.
+The percentage share of total debt (short- and long-term) denominated in euros remained
+unchanged at 53 percent compared to the end of the previous fiscal year. The percentage
+share of debt denominated in US dollars increased marginally to 47 percent (2015: 46 percent).
+The US$934 million loan, which Infineon had raised with various international banks in
+conjunction with the acquisition of International Rectifier, was fully repaid out of proceeds
+from the issue of USPP notes (US Private Placement).
+Percentage share of debt denominated in euro unchanged
+Non-current liabilities increased slightly from €2,491 million as of September 30, 2015 to
+€2,534 million as of September 30, 2016. Liabilities for pension plans and similar commitments
+went up by €178 million, primarily due to actuarial losses. By contrast, deferred tax liabilities
+decreased by €137 million, mainly reflecting the reduction of deferred tax liabilities relating to
+the acquisition of International Rectifier and the reversal of allowances on deferred tax assets
+relating to German and foreign entities.
+1,769
+US dollar
+0
+2015
+12.8%
+H
+15.0%
+5,334
+5,176
+€ in millions
+ROCE
+1,793
+18
+Other
+830
+2016
+8,741 9,087
+4,665 5,023
+Equity
+9%
+9%
+9,087
+8,741
+Liabilities and equity
+6 Calculation see following section about ROCE in this chapter
+4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
+5 Inventory intensity = Inventories (net)/Total assets
+9,087
+8,741
+484
+422
+21%
+Other assets
+623
+604
+2 Equity ratio = Total equity/Total assets
+Deferred tax assets
+1 Return on assets = Net income/Total assets
+1,656
+1,738
+Intangible assets
+2,119
+2,093
+and equipment
+12.8%
+3 Return on equity = Net income/Total equity
+20%
+5%
+7%
+431
+581
+Other liabilities
+403
+474
+Provisions
+604
+426
+similar commitments
+Pension plans and
+857
+1,769
+1,793
+Debt
+802
+other payables
+Trade and
+2016
+2015
+€ in millions
+2016
+2015
+55%
+53%
+5%
+7%
+4%
+5%
+12.9%
+742
+7%
+2016
+69
+China accounted for €1,574 million or 24 percent of Infineon's worldwide revenue and therefore
+for the largest share at individual country level, followed by Germany at €1,000 million or
+15 percent.
+The Asia-Pacific region (excluding Japan) had already become the largest region in the previous
+fiscal year, when it accounted for 46 percent of revenue, ahead of the Europe, Middle East
+and Africa region with 35 percent. The importance of the Asia-Pacific region (excluding Japan)
+continued to grow in the year under report, accounting for 48 percent of revenue, compared
+to the 33 percent generated in the Europe, Middle East and Africa region.
+With an increase of €417 million, more than one half (62 percent) of revenue growth related
+to the Asia-Pacific region (excluding Japan), followed by the Europe, Middle East and Africa
+region, which recorded a €127 million or 19 percent increase in revenue, and the Americas
+region, where revenue rose by €109 million (16 percent of total revenue growth).
+The acquisition of International Rectifier resulted in better access to the Chinese and
+US markets, a fact reflected in above-average revenue growth in these regions. Infineon also
+grew in all other regions.
+100%
+5,795
+100%
+6,473
+Total
+10%
+568
+69
+10%
+Therein: USA
+12%
+710
+13%
+819
+Americas
+7%
+399
+6%
+424
+Japan
+23%
+661
+1,337
+INFINEON TECHNOLOGIES
+Combined Management Report | Our 2016 fiscal year
+36.0%
+A part of the cost of goods sold is incurred in currencies other than the euro. To some extent,
+the effects of exchange rates on the cost of goods sold offset a similar impact on revenue,
+with the result that the positive currency effect on the gross margin was lower in the fiscal year
+under report.
+The gross margin improved slightly from 35.9 percent to 36.0 percent year-on-year. Lower
+expenses in conjunction with the purchase price allocation and other acquisition-related
+expenses for International Rectifier were largely offset by higher costs of goods sold, attribu-
+table to a change in the product mix and to start-up expenses for Kulim 2 and 300-millimeter
+manufacturing. Moreover, further investments were made in manufacturing facilities, with
+a view to creating a broader base for sustainable growth. Expenses in conjunction with the
+purchase price allocation and other acquisition-related expenses for International Rectifier
+reduced earnings by €96 million in the 2016 fiscal year, compared with €143 million in the
+previous fiscal year and relate in particular to amortization and depreciation on intangible
+assets and property, plant and equipment. In the previous fiscal year, additional expenses
+arose from consuming inventories revalued to their fair value in conjunction with the
+purchase price allocation.
+Gross margin slightly improved
+The book-to-bill ratio was virtually unchanged at 1.09 (2015: 1.11) and therefore remained
+at a high level. The value of orders received increased by 10 percent to €7,050 million in the
+2016 fiscal year (2015: €6,421 million).
+Book-to-bill ratio still at high level
+2,330
+€ in millions
+Gross profit and gross margin
+Orders received ― Book-to-bill ratio
+Revenue
+1.09
+2016
+ANNUAL REPORT 2016
+2015
+5,795
+6,473
+6,421
+7,050
+1.11
+except book-to-bill ratio
+€ in millions,
+Orders received and revenue
+10
+70
+Review of results of operations
+Group performance
+开
+24%
+1,574
+Therein: China
+Other Operating
+Segments
+Chip Card &
+Security
+Power
+Management &
+Multimarket
+Industrial
+Power Control
+Automotive
+0
+(7) (1)
+8 14
+500
+698 665
+1,073 971
+1,000
+Corporate and
+Elimininations
+1,500
+2,050
+2,000
+2,350
+2,500
+2,651
+3,000
+Review of results of operations
+Combined Management Report | Our 2016 fiscal year
+Group performance
+€ in millions
+Revenue by segment
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+1,796
+2016
+2015
+32%
+46%
+2,666
+48%
+3,083
+Asia-Pacific (excluding Japan)
+16%
+942
+15%
+1,000
+Therein: Germany
+35%
+2,020
+33%
+2,147
+Europe, Middle East, Africa
+2015
+2016
+€ in millions, except percentages
+Significance of Asia-Pacific continues to grow; China ahead of Germany
+as most important sales market
+A significant share of revenue was generated in foreign currencies in the 2016 fiscal year,
+with revenue denominated in US dollars accounting for the largest share. The average euro/
+US dollar exchange rate changed from 1.14 in the previous fiscal year to 1.11 in the 2016 fiscal
+year. Across all currencies and over the fiscal year as a whole, currency factors contributed
+approximately 2 percent to the revenue increase. The currency impact is measured by applying
+the previous fiscal year's relevant average exchange rates to the 2016 fiscal year revenue.
+Positive currency impact on revenue from US dollar
+2015
+Industrial Power Control
+Share of Group Revenue 2016
+Automotive
+41%
+16%
+11% 0%
+€ in millions, except percentages
+2,080
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+35.9%
+H
+791
+778
+13.4%
+€ in millions
+administrative expenses
+Selling, general and
+13.4%
+12.2%
+57%
+2%
+778
+2015
+791
+2016
+Percentage of revenue
+Change year-on-year
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+The main R&D activities undertaken during the 2016 fiscal year are described in more detail
+in the chapter "Research and Development" P page 53 f.
+R&D expenses amounted to €770 million in the 2016 fiscal year, an increase of €53 million
+or 7 percent compared to the previous year's figure of €717 million. At 11.9 percent (2015:
+12.4 percent) of revenue, R&D expenses therefore remained within the target range of a low-
+to mid-teen percentage of revenue. The principal reasons for the increase were the inclusion
+of International Rectifier for the full twelve-month period compared to the previous year and
+the fact that research and development activities were intensified. Among other measures
+taken, additional staff was recruited with the aim of broadening the basis for further growth.
+A total of 6,057 employees worked in research and development functions at the end of the
+reporting period (September 30, 2015: 5,778 employees).
+11.9%
+2016
+Percentage of revenue
+R&D expenses
+2015
+2015
+2016
+Psee page 144 f.
+艹
+Other income and expense, net
+or interests in subsidiaries, net
+Losses (gains) on sales of assets, businesses,
+Acquisition-related depreciation/amortization and other expenses
+Share-based compensation expense
+Impact on earnings of restructuring and closures, net
+Impairments on assets including assets classified
+as held for sale, net of reversals
+Earnings from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+Plus/minus:
+€ in millions (unless otherwise stated)
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase
+price allocations for acquisitions (in particular International Rectifier) as well as by other
+exceptional items. To enable better comparability of operating performance over time, Infineon
+computes adjusted earnings per share (diluted) as follows:
+Selling, general and
+administrative expenses
+Percentage of revenue
+Sharp improvement in adjusted earnings per share
+Earnings per share improved
+72
+Review of results of operations
+Group performance
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Further details regarding income tax are provided in note 7 to the Consolidated Financial
+Statements.
+In the previous fiscal year, the reassessment and reversal of valuation allowances on deferred
+tax assets amounting to €209 million resulted in an income tax benefit of €102 million, based
+on income from continuing operations before income tax of €520 million.
+As in the previous fiscal year, tax expense for the 2016 fiscal year was affected by foreign tax
+rates, non-deductible expenses, tax credits and changes in valuation allowances on deferred
+tax assets. Overall, an income tax benefit of €36 million arose on income from continuing
+operations before income tax of €705 million. The deferred income tax benefit arose primarily
+in conjunction with the acquisition and integration of International Rectifier. In addition to the
+reversal of deferred tax liabilities relating to the purchase price allocation, income of €43 million
+was recognized as a result of changes in valuation allowances on tax credits, which became
+utilizable as a result of the integration of International Rectifier.
+Reduction of deferred tax liabilities and changes in valuation allowances on
+deferred tax assets give rise to deferred tax benefit
+At 12.2 percent of revenue selling, general and administrative expenses were lower in
+percentage terms than in the previous fiscal year (13.4 percent). In absolute terms, however,
+they edged up by €13 million to €791 million, mainly due to the inclusion of International
+Rectifier for the full twelve-month period. Unlike in the current fiscal year, the previous year's
+figures also included transaction-related costs (legal services and bank fees) relating to the
+acquisition of International Rectifier.
+12.2%
+The improvement in net income resulted in a corresponding increase in earnings per share.
+Compared to earnings per share of €0.56 (basic and diluted) in the previous fiscal year, the
+corresponding figures for the 2016 fiscal year both amounted to €0.66.
+12.4%
+Combined Management Report | Our 2016 fiscal year
+770
+€ in millions, except percentages
+Grants received in conjunction with R&D projects and capitalized development costs reduce
+the amount of R&D expenses recognized.
+Research and development expenses (R&D expenses)
+Operating expenses (research and development expenses and selling, general and
+administrative expenses) increased year-on-year by €66 million to €1,561 million (2015:
+€1,495 million), corresponding to 24.1 percent of revenue (2015: 25.8 percent).
+35.9%
+36.0%
+2,080
+2,330
+64.1%
+64.0%
+39%
+12%
+Research and development expenses
+3,715
+2016
+Slight decrease in ratio of operating expenses to revenue
+Percentage of revenue (gross margin)
+Gross profit
+Percentage of revenue
+Change year-on-year
+Cost of goods sold
+Percentage of revenue (gross margin)
+Gross profit
+H
+2016
+2015
+4,143
+Change year-on-year
+2015
+2016
+R&D expenses
+€ in millions
+717
+Percentage of revenue
+71
+Review of results of operations
+Group performance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+100
+13.9%
+12.7%
+Percentage of research and development expenses
+98
+For information: capitalized development costs
+INFINEON TECHNOLOGIES
+59
+1.0%
+717
+30%
+770
+11.9%
+Therein included grants received
+12.4%
+Percentage of revenue
+75
+1.2%
+2015
+7%
+(18)
+957
+(1,098)
+275
+1,313
+2015
+(2,593)
+Gross cash position and net cash position
+(1,654)
+Net cash provided by operating activities exceeds investments
+Free cash flow in the 2016 fiscal year was a positive amount of €490 million. Net cash provided
+by operating activities from continuing operations amounting to €1,313 million exceeded
+investments in property, plant and equipment and intangible assets totaling €826 million.
+By contrast, free cash flow in the previous fiscal year was a negative amount of €1,654 million,
+which included €1,869 million (after deduction of cash acquired) relating to the acquisition
+of International Rectifier. In addition, payments to the Qimonda insolvency administrator, net
+of proceeds from the sale of the Qimonda patents, and to the EU Commission reduced free
+cash flow from continuing operations by €178 million.
+The following table reconciles the gross cash position and the net cash position (i.e. after
+deduction of debt). Since some liquid funds are held in the form of financial investments,
+which, for IFRS purposes, are not considered to be "cash and cash equivalents", Infineon
+reports on its gross and net cash positions in order to provide investors with a better under-
+standing of its overall liquidity. The gross and net cash positions are determined as follows
+from the Consolidated Statement of Financial Position:
+€ in millions
+625
+2016
+Septem-
+ber 30, 2015
+Cash and cash equivalents
+Septem-
+ber 30, 2016
+490
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+Net cash used for discontinued operations
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in
+operating activities and net cash provided by and/or used in investing activities, both from
+continuing operations, after adjusting for cash flows related to the purchase and sale of
+financial investments. Free cash flow serves as an additional performance indicator, since
+Infineon holds part of its liquidity in the form of financial investments. This does not mean
+that the free cash flow calculated in this way is available to cover other disbursements, since
+dividend, debt-servicing obligations and other fixed disbursements are not deducted. Free
+cash flow should not be seen as a replacement or superior performance indicator, but rather
+as an additional useful item of information over and above the disclosure of the cash flow
+reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
+other liquidity performance indicators and other performance indicators derived from the
+IFRS figures. Free cash flow includes only amounts from continuing operations, and is derived
+as follows from the Consolidated Statement of Cash Flows:
+Net cash provided by operating activities from continuing operations
+significantly up on previous year
+Net cash provided by operating activities from continuing operations in the 2016 fiscal
+year amounted to €1,313 million, an improvement of €356 million on the €957 million reported
+for the previous fiscal year. The main reason for the improvement was the €259 million
+increase in income from continuing operations before scheduled depreciation, amortization,
+impairment charges, interest and taxes totaling €1,612 million (2015: €1,353 million). In addi-
+tion, the figure reported for the previous fiscal year includes a payment of €104 million to settle
+disputes relating to the continuation of the right to use Qimonda patents as well as a payment
+of €83 million to the EU Commission relating to a fine imposed in conjunction with chip card
+antitrust proceedings.
+Net cash used in investing activities from continuing operations mainly reflects
+investments in property, plant and equipment
+673
+Net cash used in investing activities from continuing operations totaled €1,098 million
+in the 2016 fiscal year, resulting primarily from investments in property, plant and equipment
+(€716 million) and in intangible and other assets (€110 million). Net purchases of financial
+investments resulted in a cash outflow of €275 million.
+Net cash used in investing activities from continuing operations in the previous fiscal year
+amounted to €2,593 million, including €1,869 million (after deduction of cash acquired) for
+the acquisition of International Rectifier. Investments in property, plant and equipment and in
+intangible and other assets totaled €785 million.
+Dividend payment results in net cash used in financing activities from
+continuing operations
+Net cash used in financing activities from continuing operations totaled €229 million in
+the 2016 fiscal year. This figure includes primarily the cash outflow for the dividend payment
+for the 2015 fiscal year amounting to €225 million. In April 2016, Infineon also successfully
+completed a US Private Placement (USPP) of notes with a volume of US$935 million, which
+provided net proceeds amounting to €819 million. The US dollar loan of US$934 million raised
+in conjunction with the acquisition of International Rectifier was subsequently repaid, resulting
+in a cash outflow of €820 million.
+€ in millions
+Net cash provided by financing activities from continuing operations in the 2015 fiscal year
+amounted to €1,363 million, comprising mainly a net cash inflow of €1,584 million in con-
+junction with the financing of the acquisition of International Rectifier and a cash outflow for
+the dividend paid for the 2014 fiscal year amounting to €202 million.
+In the previous fiscal year, net cash used for discontinued operations amounted to €140 million,
+of which €125 million (net of value added tax reimbursed) related to payments in conjunction
+with the partial settlement reached with the Qimonda insolvency administrator.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Group performance
+Review of liquidity
+77
+Free cash flow
+Net cash used for discontinued operations in the 2016 fiscal year totaled €22 million, mainly
+due to payments to the Qimonda insolvency administrator (€14 million) relating to settlement
+agreements reached for residual liability claims pertaining to Qimonda Dresden employees
+and legal defense costs.
+Financial investments
+The shares are being sold by Geneba RE 3 B.V. The purchase consideration amounts to
+€113 million and will be financed by Infineon out of cash on hand. The acquisition will earn
+a rate of return well above Infineon's borrowing cost and, as from the beginning of the 2017
+fiscal year, is accretive to the Segment Result by a low double-digit million euro amount. Free
+cash flow for the 2017 fiscal year will decrease as a result of the payment of the €113 million
+purchase consideration. In subsequent years, the transaction will result in an increase in free
+cash flow of between €20 million and €30 million per year. MoTo's existing financial liabilities
+amounting to approximately €220 million will increase Infineon's debt accordingly.
+1,340
+P see page 174
+On November 17, 2016, Infineon signed a purchase agreement to acquire 93 percent of the shares
+of MoTo Objekt Campeon GmbH & Co. KG ("MoTo"). The purchase requires the approval of
+the responsible regulatory authorities. The transaction is expected to be completed towards
+the end of the 2016 calendar year and will result in the subsequent full consolidation of MoTo.
+Moto is the owner and lessor of the existing Campeon office complex in Neubiberg, near Munich,
+the location of Infineon's headquarters. A lease agreement relating to the office complex,
+with a lease term of 20 years, has been in place with MoTo since October 2005. After a period
+of 15 years, Infineon has the right to acquire the property or lease it for an additional five-year
+period (see note 24 to the Consolidated Financial Statements).
+Report on expected developments,
+together with associated
+material risks and opportunities
+P see page 78
+On July 14, 2016, Infineon and Cree signed a contract relating to the purchase of Cree's
+Wolfspeed business. Infineon intends to acquire Wolfspeed, including the related wafer
+substrate business, for a purchase price of US$850 million. Closing, which is expected to take
+place at the beginning of the 2017 calendar year, requires approval from the responsible
+regulatory authorities. For this reason, the forecasts made in this chapter only relate to the
+Infineon Group's operations. Once the acquisition has been successfully completed, the
+outlook will be adjusted to take account of the new corporate structure.
+On November 17, 2016, Infineon signed a purchase agreement to acquire 93 percent of the
+shares of MoTo Objekt Campeon GmbH & Co. KG (MOTO) (see the chapter "Significant events
+after the end of the reporting period”). The impact of this transaction on Infineon's key
+performance indicators is included in the outlook provided below.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+€ in millions, except percentages
+Principal performance indicators
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+79
+Outlook
+Actual and target values for performance indicators
+76
+The following table and subsequent comments compare the actual values of Infineon's key
+performance indicators with the original forecasts for the 2016 fiscal year and show the outlook
+for the 2017 fiscal year. The performance figures for the 2016 fiscal year include the financial
+figures of International Rectifier for a full fiscal year. Actuals shown for the 2015 fiscal year
+include figures for International Rectifier from January 13, 2015 onwards, in other words with
+effect from the acquisition closure date.
+Significant events after the end
+of the reporting period
+Significant events after the end of the reporting period | Report on expected developments, together with associated material risks and opportunities
+78
+Combined Management Report | Our 2016 fiscal year
+Gross cash position
+2,240
+2,013
+Less:
+Short-term debt and current maturities of long-term debt
+Long-term debt
+17
+33
+1,752
+1,615
+1,760
+1,769
+1,793
+Net cash position
+471
+220
+Free cash flow totaling €490 million easily exceeded the dividend payment of €225 million.
+The gross cash position as of September 30, 2016 increased accordingly by €227 million.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Total debt
+Review of liquidity
+Operating income from continuing operations after tax ⑫①ID:
+Combined Management Report | Our 2016 fiscal year
+36
+102
+Financial expense excluding interest expense²
+(3)
+(1)
+799
+664
+Assets
+9,087
+8,741
+Less:
+Cash and cash equivalents
+(625)
+(673)
+Financial investments
+(1,615)
+(1,340)
+Income tax
+Less:
+4
+3
+Actuals
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Group performance
+Review of financial condition | Review of liquidity
+ROCE for the 2016 and 2015 fiscal years is calculated as follows:
+75
+Assets classified as held for sale
+€ in millions
+2016
+2015
+763
+555
+Plus:
+Financial income excluding interest income¹
+4
+Gain from investments accounted for using the equity method
+Operating income
+Group performance
+Total current liabilities
+(1,585)
+Net cash used in investing activities from continuing operations
+(1,098)
+(2,593)
+Net cash provided by (used in) financing activities from continuing operations
+Net change in cash and cash equivalents from discontinued operations
+(229)
+1,363
+(22)
+(140)
+Net change in cash and cash equivalents
+(36)
+(413)
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+(12)
+28
+(48)
+(385)
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+957
+1,313
+Net cash provided by operating activities from continuing operations
+2015
+Plus:
+Short-term debt and current maturities of long-term debt
+17
+33
+Liabilities classified as held for sale
+Capital employed ②
+ROCE 1/②
+5,334
+(1,530)
+5,176
+12.8%
+1 Financial income in the 2016 and 2015 fiscal year amounted to €6 million and €10 million, respectively, and consisted of
+€6 million, respectively, of interest income.
+2 Financial expense in the 2016 and 2015 fiscal year amounted to €67 million and €49 million, respectively, and consisted of
+€64 million and €48 million, respectively, of interest expense.
+The reported ROCE was calculated using actual capital employed, without adjustment for
+exceptional factors such as provisions recorded in connection with the Qimonda insolvency,
+amounts relating to purchase price allocations for acquisitions and changes in deferred tax
+assets and liabilities, all of which influencing the level of capital employed.
+Review of liquidity
+Cash flow
+€ in millions
+2016
+15.0%
+FY 2015
+35.9%
+Actuals
+FY 2016
+Investments and depreciation/amortization
+Investments (defined by Infineon as the sum of purchases of property, plant and equipment,
+purchases of intangible assets and capitalized development assets) are planned to rise in the
+2017 fiscal year to approximately €950 million. This figure compares with €826 million in the
+2016 fiscal year, comprising investments in property, plant and equipment (€716 million) and
+capitalized development assets and other intangible assets (€110 million). Investments in
+capitalized development assets and other intangible assets in the 2017 fiscal year are planned
+at a similar level to one year earlier. The total figure for planned investments in the region of
+€950 million includes approximately €35 million for a new office building at Infineon's head-
+quarters in Neubiberg near Munich. The ratio for investments as a percentage of revenue (at the
+mid-point of the planned range for the 2017 fiscal year) is forecast at 13.8 percent. Excluding
+expenditure on the new office building, the percentage rate is about 13 percent.
+The investments in operations relate in roughly equal portions to frontend-related capacity
+expansion measures, improvements to existing frontend manufacturing facilities and backend-
+related investments, and will contribute to the expansion of Infineon's 200-millimeter as well
+as its 300-millimeter manufacturing capacities. Continuous investments in automation, quality,
+innovation and infrastructure will also ensure that frontend manufacturing facilities keep
+pace with changing technological requirements. Around one third of capital expenditure in
+the 2017 fiscal year will be used to improve and expand backend manufacturing facilities.
+Depreciation and amortization are expected to be in the region of €830 million.
+Free cash flow from continuing operations
+Free cash flow in the 2017 fiscal year is forecast to reach an amount of between €400 million
+and €500 million.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Psee page 29 f.
+P see page 78
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook | Risk and opportunity report
+83
+Gross cash position and net cash position
+The gross cash position is expected to finish the 2017 fiscal year at a level of between €1.7 billion
+and €2.4 billion. Hence, Infineon expects to meet its capital structure targets again in the 2017
+fiscal year. See "Capital structure targets demonstrate our reliability” in the chapter “Group
+strategy" for information on capital structure targets.
+ROCE
+Capital employed is forecast to rise in the 2017 fiscal year, with net income remaining more or
+less stable. The Return on Capital Employed (ROCE) is therefore expected to decrease slightly
+compared to its previous year's level of 15.0 percent. This decrease is due to the fact that
+the expected improvement in Segment Result is offset by higher tax expenses, as well as an
+increase in capital employed that is the result of the consolidation of MoTo (see the chapter
+"Significant events after the end of the reporting period").
+Overall statement on the expected development of the Infineon Group
+Based on forecasts for the global economy and the semiconductor market in the 2017 calendar
+year, Infineon predicts year-on-year revenue growth of 6 percent, plus or minus 2 percentage
+points. The gross margin is expected to improve slightly. At the mid-point of the planned range
+for revenue growth, the Segment Result Margin is expected to come in at about 16 percent.
+Investments will be about €950 million. Depreciation and amortization are expected to be about
+€830 million. Free cash flow from continuing operations is expected to reach an amount of
+between €400 million and €500 million. The Return on Capital Employed (ROCE) is expected
+to decrease slightly compared to its previous year's level of 15.0 percent.
+Working capital is forecast to finish the 2017 fiscal year at between €750 million and €900 million.
+Psee page 22 ff.
+Working capital
+The effective current tax rate (cash tax) for the Infineon Group in the 2017 fiscal year is fore-
+cast at approximately 15 percent. This tax rate is based on income, excluding the impact of
+the purchase price allocation in connection with the International Rectifier acquisition, and
+comprises the cash-effective German and foreign income taxes of Infineon Group entities.
+Based on our expectations for the global economy and for the semiconductor market
+segments relevant for Infineon as described above, Infineon forecasts revenue growth of
+6 percent, plus/minus 2 percentage points, for the 2017 fiscal year. The Automotive segment
+is expected to grow at a substantially faster rate than the Group average. Growth in the
+Industrial Power Control segment is forecast to be roughly in line with or slightly higher than
+the Group average. The Power Management & Multimarket and Chip Card & Security segments
+are both expected to report growth rates below the Group average.
+Slight upward trend in gross margin expected
+At the mid-point of the planned range for revenue growth, the gross margin for the 2017
+fiscal year is expected to rise slightly. The gross margin will still be negatively influenced by
+acquisition-related expenses.
+Operating expenses expected to increase
+Infineon expects operating expenses to increase in absolute terms as a result of revenue growth.
+As a percentage of revenue, however, the increase should be lower than revenue growth.
+Research and development expenses and selling, general and administrative expenses are
+both forecast to increase below revenue growth. Acquisition-related expenses included in
+operating expenses are expected to be slightly below the previous fiscal year's level.
+Segment Result Margin of approximately 16 percent expected
+Based on the forecast changes in revenue and expenses described above, the Segment Result
+Margin in the 2017 fiscal year is expected to increase to approximately 16 percent, at the
+mid-point of the planned range for revenue growth.
+Non-segment result
+Infineon expects the non-segment result for the 2017 fiscal year to be a negative amount of
+between €200 million and €250 million, mainly attributable to acquisition-related expenses
+(2016 fiscal year: minus €219 million). Approximately €130 million of the forecasted amount
+relates to non-cash-relevant depreciation and amortization arising in conjunction with the
+International Rectifier acquisition.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+82
+Financial result
+At September 30, 2016, debt amounted to €1,769 million, compared with cash and cash
+equivalents and financial investments totaling €2,240 million. The financial result (financial
+income less financial expense) for the 2016 fiscal year was a net expense of €61 million. After
+the planned acquisition of Wolfspeed takes legal effect, Infineon will raise additional debt of
+approximately US$720 million and use some of its gross cash position to finance the purchase
+price. The resulting higher level of debt, combined with the lower amount of interest income
+that will be earned on reduced volumes of cash and cash equivalents, means that the financial
+result for the 2017 fiscal year will decline year-on-year.
+Income taxes
+In Germany, Infineon's current tax expense is based on the applicable "minimum taxation"
+rules, under which only 40 percent of taxable profits arising in Germany are subject to current
+tax as a result of the utilization of tax loss carry-forwards. This results in a cash-effective tax
+rate of approximately 12 percent in Germany. At September 30, 2016, tax loss carry-forwards
+for German corporation tax and municipal trade tax purposes amounted to €2.0 billion and
+€3.1 billion respectively.
+Risk and opportunity report
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities and
+plays an important role in implementing the strategic targets described in the chapter "Group
+strategy" - namely achieving sustainable, profitable growth and preserving our financial
+resources through efficient employment of capital. Infineon's risk and opportunity profile is
+characterized by periods of rapid growth, followed by periods of significant market decline,
+a substantial need for capital investment in order to achieve and sustain our market position
+and an extraordinarily rapid pace of technological change. Gaining a leading edge through
+technological innovation also has a legal dimension. Against this background, Infineon's risk
+policy is aimed firstly at taking advantage of identified opportunities as quickly as possible in
+a way most appropriate to increasing the value of the business, and secondly at proactively
+mitigating risks - particularly those capable of posing a threat to Infineon's going-concern
+status - by adopting appropriate countermeasures. Risk management at Infineon is therefore
+closely linked to forecasting and the implementation of our business strategies. Ultimate
+responsibility for risk management lies with the Infineon Management Board.
+Coordinated risk management and control system elements are in place that enable us to
+pursue our stated risk policy in practice. Alongside the "Risk and Opportunity Management
+System" and the "Internal Control System with respect to Financial Reporting Processes"
+described below, it also includes the related forecasting, management and internal reporting
+processes as well as the Compliance Management System.
+5 >€250 million Major
+1 <10% Unlikely
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+5 >90% Certain
+1
+1
+2
+3
+4
+5
+Likelihood of Occurrence
+Low Risk
+Medium Risk
+High Risk
+Original Outlook
+FY 2016
+4 > €100 million Significant
+3 >€60 million Moderate
+2 >€20 million Minor
+2
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+84
+Risk and Opportunity Management System
+Infineon's centralized risk management system is based on a Group-wide, management-
+oriented Enterprise Risk Management (ERM) approach, which aims to cover all relevant risks
+and opportunities. The approach is based on the "Enterprise Risk Management - Integrated
+Framework" developed by the Committee of Sponsoring Organizations of the Treadway
+Commission (COSO). The objective of the system is the early identification, assessment and
+management of risks that could have a significant influence on Infineon's ability to achieve its
+strategic, operational, financial and compliance-related targets. We therefore define risk/
+opportunity as the occurrence of future uncertainties that could result in a negative or positive
+variance from forecast. We incorporate all relevant organizational units within the Group in
+this analysis, thus covering all segments, significant centralized functions and regions.
+Responsibility for processes and systems relating to Risk and Opportunity Management
+rests with the Risk Management and Internal Control System (ICS) function within the corpo-
+rate finance department and with designated Risk Officers working at segment, corporate
+function and regional levels. Responsibility for the identification, measurement, management
+and reporting of risks and opportunities lies with the management of the organizational
+unit concerned.
+In organizational terms, the Risk and Opportunity Management System is structured in a
+closed-loop, multiple-stage process, which stipulates the manner and criteria to be applied to
+identify, measure, manage and report on risks and opportunities and defines how the system
+is to be monitored as a whole. Major components of the system are a quarterly analysis of risks
+and opportunities, reporting by all consolidated entities, an analysis of the overall situation
+at segment, regional and Group level, reporting to the Management Board on the risks and
+opportunities situation as well as major management measures undertaken. The Management
+Board, in turn, reports regularly to the Supervisory Board's Investment, Finance and Audit
+Committee. Where necessary, standard processes are supplemented by the ad-hoc reporting
+of any major risks identified between regular reporting dates.
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative
+and/or qualitative terms, based on the dimensions degree of impact on operations, liquidity,
+earnings, cash flows and reputation on the one hand and likelihood of occurrence on the other.
+The scales used to measure these two factors (degree of impact and likelihood of occurrence)
+and the resulting risk assessment matrix are depicted in the following table.
+Revenue increase of 6 percent expected, plus or minus 2 percentage points,
+compared to the previous fiscal year
+Risk assessment matrix
+5
+4
+Degree of Impact
+on Segment Result
+1
+<€20 million Marginal
+Likelihood of Occurrence
+3
+Degree of Impact
+At an expected growth rate of 4.8 percent, the outlook for the global semiconductor market
+is considerably more optimistic for the 2017 calendar year.
+Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation
+or hedging measures, but without offsetting any provisions recognized. The time periods and
+the measurement categories used are closely linked to our short- and medium-term business
+planning and Group targets.
+IMF economists forecast a growth rate of 2.8 percent for the 2017 calendar year. Economic
+stimulus measures in China, Japan and other countries, as well as low interest rates, should
+have a positive impact on demand in the fields of consumer spending and investments. The
+expected continued recovery in oil and commodity prices would also provide some welcome
+financial headroom for raw material-exporting countries. Brazil and Russia could therefore exit
+their two-year-long recession at some stage during the 2017 calendar year. Nevertheless, the
+level of risks and challenges to which the world - and hence the world economy - is exposed
+remains high. Protectionist tendencies, the threat of terrorism and unresolved conflicts in
+various countries and regions are just some of the factors that could have a negative impact.
+Increase by 13%
+12%
+compared to previous year
+Gross margin
+plus/minus 2 percentage points
+Slight increase compared to FY 2015
+36.0%
+Research and
+717
+Development expenses
+30%
+Selling, general and
+778
+Increase in line with or
+slightly below revenue growth
+Increase slightly below revenue growth
+770
+7%
+791
+Increase by 6%
+plus/minus 2 percentage points
+Slight increase compared to FY 2016
+Increase below revenue growth
+34%
+Change in revenue
+performance indicators
+Growth and profitability
+Outlook
+FY 2017
+The global semiconductor market has mirrored the world economy's performance over the
+past two years. After slipping by 2.0 percent in the 2015 calendar year, the semiconductor
+market is expected to register another slight contraction in the 2016 calendar year.
+Segment Result Margin
+15.5%
+About 16% (at the mid-point of the
+planned range for revenue growth)
+15.2%
+Free cash flow from
+(1,654)
+Increase below revenue growth
+Between €500 and €600 million
+About 16% (at the mid-point of the
+planned range for revenue growth)
+Between €400 and €500 million
+continuing operations
+ROCE
+12.8%
+Slight increase compared to FY 2015
+15.0%
+Slight decrease compared to FY 2016
+Supplementary
+490
+administrative expenses
+performance indicators
+2%
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+80
+60
+Comparison of original outlook and actual figures for the 2016 fiscal year
+A Segment Result Margin of 16 percent was forecast at the mid-point of the planned range for
+revenue growth. Actual revenue growth in the 2016 fiscal year was 12 percent, 1 percentage
+point lower than the mid-point. The Segment Result Margin of 15.2 percent was therefore in
+line with expectations. Free cash flow totaled €490 million in the 2016 fiscal year, slightly below
+the expected range of between €500 million and €600 million. The Return of Capital employed
+(ROCE) improved year-on-year from 12.8 percent to 15.0 percent and therefore in line with
+expectations.
+About €950 million
+Explanatory comments to the outlook for the 2017 fiscal year
+Assumed euro/US dollar exchange rate
+Growth prospects for the global economy and the semiconductor market
+The world economy grew by 2.6 percent in the 2015 calendar year. Global gross domestic product
+(GDP) is expected to grow by around 2.4 percent in the 2016 calendar year. The world economy
+has therefore continued to move sideways and without the increase in momentum which had
+still been predicted by economists at the International Monetary Fund (IMF) in the fall of 2015.
+At that stage, the forecast growth rate for the 2016 calendar year stood at 3.0 percent, which
+was subsequently adjusted downwards as the year progressed in the face of deteriorating eco-
+nomic conditions. Like previous years, the 2016 calendar year was dominated by geopolitical
+crises and fears of terrorism. On top of this came the surprising vote of the British electorate
+to leave the European Union. This decision, which is likely to have negative repercussions for
+economic growth, will also raise levels of uncertainty over the coming years. Outside Europe
+the US economy progressed rather weakly compared to the previous growth. China labored
+on with the process of economic transformation and Japan, too, showed no signs of economic
+recovery. Countries such as Brazil and Russia, where state revenues are closely tied to oil and
+commodity prices, continued to suffer from low, albeit slowly recovering prices.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+57%
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+81
+As a globally operating organization, Infineon generates revenue not only in euros, but also in
+foreign currencies, predominantly in US dollars. It also incurs expenses both in US dollars and in
+currencies closely correlated to the US dollar, such as the Singapore dollar, the Malaysian ringgit
+and the Chinese renminbi. The impact of non-euro denominated revenue and expenses does
+not always balance out. For this reason, fluctuations in exchange rates, particularly between
+the euro and the US dollar, influence the amounts reported for revenue and earnings. Excluding
+the effect of currency hedging instruments, the impact of a deviation of 1 cent in the actual
+exchange rate of the US dollar against the euro compared to the forecast rate would amount
+to a change in Segment Result of approximately €2 to €3 million per quarter, or approximately
+€8 to €12 million per fiscal year compared to the forecast value. These figures assume, however,
+that the exchange rates of currencies correlated with the US dollar - in which expenses arise
+for Infineon - change in parallel to the euro/US dollar exchange rate. In terms of revenue, the
+impact of exchange rates is limited almost entirely to the euro/US dollar rate, where a deviation
+of 1 cent in the actual exchange rate compared to the forecast rate would have an impact on
+revenue of approximately €8 million per quarter, or approximately €32 million per fiscal year.
+Planning for the 2017 fiscal year is based on an assumed average exchange rate for the US dollar
+against the euro of US$1.10.
+Between €750 and €900 million
+Revenue grew by 12 percent in the 2016 fiscal year and therefore within the forecast range
+of 13 percent plus/minus 2 percentage points. The gross margin increased as forecast slightly
+from 35.9 percent to 36.0 percent year-on-year. Operating expenses developed better than
+expected. Growth in line with or slightly below revenue growth had been forecast for research
+and development expenses as well as for selling, general and administrative expenses.
+Research and development expenses increased by 7 percent, 5 percentage points below the
+rate of revenue growth and therefore in line with expectations. By contrast, selling, general
+and administrative expenses increased by only 2 percent, compared with revenue growth of
+12 percent, and therefore at a substantially less pronounced rate than revenue.
+739
+2,013
+34.7%
+826
+In the range of 30%-40% relative to revenue,
+therefore within the target of 30%-40%
+2,240
+34.6%
+In the range of €1.7-€2.4 billion and
+therefore within the target range of €1 billion
++10% to 20% of revenue
+220
+Net cash position
+Liquidity performance indicators
+Net cash position
+(gross cash position higher than debt)
+Between €700 and €850 million
+About €850 million
+471
+785
+Investments
+Gross cash position
+Working capital
+Net cash position
+(gross cash position higher than debt)
+550
+3,083
+6
+1,094
+1,000
+15
+33
+9
+3,447
+49
+15
+10
+12
+1,735
+25
+1,574
+24
+463
+7
+424
+9
+2,147
+6
+48
+32
+Therein: Germany
+9
+Infineon at a glance
+881
+Infineon key data
+As of and for the fiscal years ended 30 September (under IFRS)'
+Fiscal year from 1 October to 30 September
+Revenue by region
+Europe, Middle East, Africa
+Asia-Pacific (w/o Japan)
+Therein: China
+Japan
+2,272
+Americas
+2017
+€ in
+millions
+in % of
+revenue
+€ in
+millions
+2016
+in % of
+revenue
+2017/2016
+Change
+in %
+7,063
+6,473
+Therein: USA
+12
+13
+13
+5
+Chip Card & Security
+708
+10
+703
+11
+1
+Other Operating Segments
+9
+0
+8
+0
+Corporate and Eliminations
+3
+0
+(7)
+0
++++
+Gross profit/Gross margin
+2,621
+37.1
+2,330
+2 All figures for 2016 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment.
+The figures provided in those sections with respect to changes in market share relate to the 2015 market share figures as calculated in 2017. Due to changes
+in the way the market is analyzed, these figures may differ from the 2015 market share figures reported in 2016.
+31
+819
+2,041
+2,148
+8
+714
+10
+661
+10
+8
+Revenue by segment
+7,063
+6,473
+9
+Automotive
+2,989
+42
+2,656
+41
+13
+Industrial Power Control
+1,206
+17
+1,072
+17
+13
+Power Management & Multimarket
+31
+for microcontroller-based chip card ICs
+Source: IHS Markit, Technology Group, July 2017
+> Radar sensor ICs (77 GHz)
+Market position²
+Market position²
+#2 with a market share of 10.7%
+Source: Strategy Analytics, April 2017
+Applications
+> Charging stations for electric vehicles
+> Energy distribution
+> Home appliances
+> Industrial drives
+> Industrial robots
+> Industrial vehicles
+> Renewable energy generation
+› Traction
+> Uninterruptable power supplies
+Product range
+› Bare die business
+> Discrete IGBTs
+> Driver ICs
+> IGBT modules (low-power, medium-power, high-power)
+> IGBT module solutions incl. IGBT stacks
+> Silicon carbide modules
+Key customers¹
+ABB/Alstom / Bombardier / CRRC / Danfoss/
+Eaton / Emerson / Goldwind / Midea / Rockwell /
+Schneider Electric / Siemens / Toshiba / Vestas /
+Yaskawa
+Market position²
+Autoliv / Bosch / BYD / Continental / Delphi / Denso /
+Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
+Mitsubishi Electric / Omron / Preh / Valeo/ZF
+#1 with a market share of 26.6%
+Key customers¹
+> Transceivers (CAN, LIN, Ethernet, FlexRay)
+Infineon
+Infineon at a glance
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2017 fiscal year (ending 30 September),
+the Company reported sales of more than €7 billion with some 37,500 employees worldwide. Infineon is listed
+on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Automotive
+Page 38
+O=C
+이
+Industrial Power Control
+Page 41
+Applications
+> Assistance systems and safety systems
+> Comfort electronics
+> Powertrain
+> Security
+Product range
+> 32-bit automotive microcontrollers for powertrain,
+safety and driver assistance systems
+> Discrete power semiconductors
+> IGBT modules
+> Industrial microcontrollers
+> Magnetic and pressure sensors
+> Power ICs
+36.0
+> Voltage regulators
+#1 with a market share of 24.8%
+for IGBT-based power semiconductors
+Source: IHS Markit, Technology Group, August 2017
+Power Management & Multimarket
+Market position²
+#1 with a market share of 26.4%
+for standard MOSFET power transistors
+Source: IHS Markit, Technology Group, August 2017
+Applications
+> Authentication
+> Automotive
+> Governmental identification documents
+> Healthcare cards
+> Internet of Things
+> Mobile communications
+> Payment systems incl. mobile payment
+> Ticketing, access control
+> Trusted computing
+Product range
+> Contact-based security controllers
+> Contactless security controllers
+> Dual-interface security controllers
+(contact-based and contactless)
+> Embedded security controllers
+Key customers'
+Gemalto / Giesecke & Devrient / Google / HP/
+Idemia/Lenovo/Microsoft / Samsung/
+US Government Publishing Office / Watchdata
+Ericsson / Hewlett Packard Enterprise / HP / Huawei /
+Lenovo / LG Electronics / Lite-On / Nokia / Osram /
+Panasonic/Quanta / Samsung / ZTE
+1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Intron, Jingchuan, Macnica, Weikeng and WPG Holding (SAC).
+Airbus / Artesyn / Boeing / Cisco / Dell / Delta /
+> TVS (transient voltage suppressor) diode
+Page 44
+Chip Card & Security
+Page 46
+Applications
+> Charging stations for electric vehicles
+> DC motors
+> HiRel (high-reliability components)
+> Internet of Things
+> LED and conventional lighting systems
+> Power management (adapters, chargers, power supplies)
+> Mobile devices
+> Cellular infrastructure
+Product range
+› Control ICs
+> Customized chips (ASICS)
+> Discrete low-voltage and high-voltage power MOSFETS
+> GPS low-noise amplifier
+> Low-voltage and high-voltage driver ICs
+> MEMS and ASICS for silicon microphones
+> Pressure sensors
+> Radar sensor ICs (24 GHz, 60 GHz)
+> RF antenna switches
+> RF power transistors
+Key customers¹
+12
+Adjusted earnings per share in € - diluted
+(776)
+€7.063
+billion
+#1
+Revenue
++9%
+€1.208
+billion
+"BBB"
+Rated credit-
+worthiness
+"S&P Global
+Ratings"
+in
+At Infineon, success is not only defined by
+the targets that we achieve but also by the
+way that brought us there: Sustainability
+is at the core of our thinking. The highest
+rating of any European semiconductor manu-
+facturer in the Dow Jones Sustainability
+Index (DJSI) and the listing in the DJSI World
+Index are both reward and motivation.
+Europe
+DJSI
+Segment
+Result and
+Margin
+* 17.1%
+Content
+Management Board and Supervisory Board
+2 Letter to shareholders
+6 The Management Board
+8 Report of the Supervisory Board
+to the Annual General Meeting
+Combined Management Report
+Our Group
+Rating
+by
+Today our traditional core competencies
+are in greater demand than ever. At the
+same time we continue to refine our growth
+strategy to prepare for the success of
+tomorrow. During the past fiscal year we
+have once again made strong progress
+in strategic projects.
+We make our customers more successful
+with leading technology and system under-
+standing. Here we benefit from long-term,
+global megatrends and develop solutions
+that make life easier, safer and greener.
+Infineon continued to grow during the 2017
+fiscal year. Revenue increased by 9 percent.
+Segment Result increased to €1.208 billion,
+corresponding to a margin of 17.1 percent.
+Thus, the profitability target, which we
+raised at the beginning of the fiscal year,
+has been achieved earlier than expected.
+1 Columns may not add due to rounding. Individual small product groups were transferred to other segments with effect from 1 October 2016.
+The previous year's figures have been adjusted accordingly.
+2 See the chapter "Internal management system" for definition, P page 60.
+32.5%
+35.2%
+18.4%
+19.5%
+15.0%
+3
+3 A dividend per share of €0.25 for the 2017 fiscal year will be proposed to the Annual General Meeting on 22 February 2018.
+4 See the chapter "Review of financial condition" for definition, P page 72.
+5 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+Infineon at a glance
+Our year
+2017
+Infineon continued to grow during the 2017
+fiscal year. Revenue increased by 9 percent.
+Segment Result increased to €1.208 billion,
+corresponding to a margin of 17.1 percent.
+Thus, the profitability target, which we
+raised at the beginning of the fiscal year,
+has been achieved earlier than expected.
+We make our customers more successful
+with leading technology and system under-
+standing. Here we benefit from long-term,
+global megatrends and develop solutions
+that make life easier, safer and greener.
+Today our traditional core competencies
+are in greater demand than ever. At the
+same time we continue to refine our growth
+strategy to prepare for the success of
+tomorrow. During the past fiscal year we
+have once again made strong progress
+in strategic projects.
+At Infineon, success is not only defined by
+the targets that we achieve but also by the
+way that brought us there: Sustainability
+is at the core of our thinking. The highest
+rating of any European semiconductor manu-
+facturer in the Dow Jones Sustainability
+Index (DJSI) and the listing in the DJSI World
+Index are both reward and motivation.
+The title page shows an unprocessed silicon carbide (SiC) wafer.
+What can easily be seen is that – unlike silicon - the compound
+semiconductor material SiC is transparent. Infineon sources the
+wafers from specialized suppliers. After processing, SiC wafers
+are also opaque due to different metallization layers.
+SiC offers advantages compared to silicon especially in the field
+of power semiconductors. During the 2017 fiscal year, Infineon
+launched the first power MOSFETs based on SiC.
+You can read more about applications and further development
+activities for our SiC product portfolio in the chapters "The
+segments - Industrial Power Control” (page 42) and “Research
+and development” (page 54).
+Our year
+at a glance
+16 Finances and strategy
+38 The segments
+49
+Locations
+Chief Executive Officer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Neubiberg, November 2017
+Dear shareholders
+and business partners,
+dear Infineon colleagues,
+The 2017 fiscal year was very eventful for Infineon. We
+grew faster than expected, achieved our increased profit-
+ability target of 17 percent Segment Result Margin earlier
+than expected and minimized the impact of the terminated
+acquisition of Wolfspeed. The 2017 fiscal year was not only
+eventful but also successful for Infineon. Your company
+performed very well during this period. Revenue increased
+to €7,063 million, Segment Result improved to reach
+€1,208 million at a margin of 17.1 percent. The earnings per
+share increased to 70 cents, which means we have solidly
+delivered on our outlook that was increased in March.
+We want our shareholders to benefit from this as well: The
+Management Board and the Supervisory Board will propose
+a dividend of 25 cents per share to the Annual General
+Meeting on 22 February 2018.
+2
+Management Board and Supervisory Board
+Letter to shareholders
+Psee page 56 f.
+P see page 42
+Such a strong growth dynamic was not necessarily to be expected at the outset of the fiscal year.
+Therefore we initially guided for revenue growth of 6 percent and a Segment Result Margin of
+16 percent in November 2016. However, demand in spring was higher than expected - in particular
+for semiconductors for automotive and industrial applications as well as for power management -
+and it remained at a high level throughout the fiscal year. Under these favorable conditions we
+were not only able to increase our revenue and Segment Result, but we also achieved major
+milestones in two strategic projects. First, our growth-oriented manufacturing strategy enabled
+us to serve the growing demand for power semiconductors. Our 300-millimeter thin wafer site
+in Dresden (Germany) is playing a key role in this regard. By the end of calendar year 2017 we will
+equip up to 30 percent of the cleanroom space available with tools. We expect the productivity
+advantage will begin to take effect then, and the costs per chip in 300-millimeter manufacturing
+will drop below the level of our 200-millimeter sites. We are already benefiting from the lower
+investments per chip today. You can read more on this topic in the chapter on "Operations".
+Second, silicon carbide has finally made a breakthrough as a base technology for power transis-
+tors with superior characteristics. In the 2017 fiscal year we earned first revenue with our silicon
+carbide MOSFET. We have received orders from leading manufacturers of PV inverters, among
+other customers. You'll find more details in the chapter on "Industrial Power Control".
+One year ago in the Letter to Shareholders I wrote about the planned acquisition of Wolfspeed.
+As you know today, the matter took a different turn: The US authority CFIUS (Committee on
+Foreign Investment in the United States) did not approve the transaction. Of course, this is not
+what we had expected. The primary objective of the acquisition was to leverage Wolfspeed's
+outstanding competencies in gallium nitride-on-silicon carbide (GaN-on-SiC) technology in order
+to take the lead in the world market for power amplifiers in base stations in the medium-term.
+Wolfspeed would also have helped us accelerate the market launch of silicon carbide-based
+power semiconductors. However, we did not wait for the transaction to close but instead went on
+with the development of our own SiC Trench MOSFET technology. Therefore, in the 2017 fiscal
+year, we were able to bring to market a product that we have developed ourselves and that is
+already being well-received. The further development of the technology platform is one of our
+future-oriented projects that is highly relevant for renewable energy and mobility.
+One key success factor – besides technology competence - is our strategic approach "From
+Product to System". This concise title represents the central idea we align with in both our
+daily business activities and our long-term considerations: We want to better understand our
+customers' systems and the requirements of their markets so that we can make even more
+targeted use of our semiconductor expertise. This way we make our customers more successful
+and increase the potential profits for Infineon. In keeping with this approach we continuously
+and carefully develop our strategy, since systems change along with technological progress,
+becoming more complex and in some cases calling for new competencies. We take action wher-
+ever this is the case and where we at the same time see a strategic advantage in doing so. This
+is particularly evident in the area of software. Our business model has always been based on
+technological expertise, whether in the form of discrete components, integrated solutions or
+mixed-signal components. Furthermore, in recent years we have established the necessary
+know-how to supply our chips with corresponding software, whenever desired and viable. The
+most recent example is our strategic minority investment in the British company XMOS Limited
+(Bristol), a specialist in voice control technologies. This step has intensified an already existing
+partnership. Going forward we will work closely together in important customer projects, thus
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+3
+Management Board and Supervisory Board
+Letter to shareholders
+P see page 20 ff.
+P see page 55
+quickly expanding our technology competence. Furthermore, we will gain an even better under-
+standing of the interaction of sensors, processors and algorithms and strengthen our position
+in a promising future market which we currently already supply with leading MEMS technology.
+Our extensive system understanding lets us serve customers with various approaches and
+lets us address their individual needs in a targeted manner. You'll find out more in the chapter
+on "Group Strategy".
+Our core expertise is and will remain semiconductor technology. We want to strengthen our posi-
+tion as technology leader by continuing to strive for innovation. We demonstrated our innovative
+strength again in the previous fiscal year. I have already mentioned our success with silicon carbide;
+we also managed equally impressive achievements in the area of Post-Quantum-Cryptography.
+Quantum computers are still more of a scientific phenomenon with mass adoption still many
+years out. The extremely high computing power of these machines will make it possible for them
+to break encryption algorithms that are in use today. This is a threat to systems and data that
+are generated today and that will still need to be protected many years from now. Therefore, as a
+leading provider of security solutions we must now begin preparing for the smooth transition
+from today's conventional security protocols to Post-Quantum-Cryptography. And this is no easy
+task, given that equally complicated encryption procedures will have to work properly in small
+chips with limited storage capacities. In May Infineon specialists were the first ever to implement
+a system for Post-Quantum key exchange on a commercially available contactless security chip.
+This makes us a pioneer in the development of encryption methods that are capable of with-
+standing the power of the quantum computer. You can read more on the topic in the chapter
+"Research and development".
+One thing that nobody has yet been able to decrypt is the formula for guaranteed success. How-
+ever, as a company we can establish basic prerequisites and formulate strategic guiding principles
+to foster our success. Whether or not this will come to fruition lies in the hands - and heads - of
+the over 37,000 people who make Infineon what it is. On behalf of the entire Management Board
+I would therefore like to express our sincere gratitude to you, the employees of Infineon: for what
+you do, and also for how you do it. The world seems to have become more complicated in 2017.
+Global challenges are putting societal solidarity to the test, nationalism and protectionism are
+becoming more widespread and international conflicts are growing in intensity. Infineon stands
+for the opposite: for a diverse society and for an economy based on free trade. As engineers we
+know that there are no easy answers to complicated questions. And as commercial people we
+understand that isolation hampers growth. At Infineon people from over 100 nations work together
+at sites in more than 20 countries. And although they may be spread all over the world, they all
+live in a single culture of cooperation and help make life easier, safer and greener. We can be
+proud of that.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+4
+Infineon Technologies AG
+Dr. Reinhard Ploss
+36,299
+Letter to shareholders
+Management Board and Supervisory Board
+53 Research and development
+56 Operations
+58 Internal management system
+61 Sustainability at Infineon
+61 Our employees
+66 The Infineon share
+Our 2017 fiscal year
+68 Group performance
+78 Report on expected developments, together with
+associated material risks and opportunities
+92 Overall statement of the Management Board
+with respect to Infineon's financial condition
+as of the date of this report
+93 Infineon Technologies AG
+95 Significant events after the end of the reporting period
+96 Corporate Governance.
+Consolidated Financial Statements
+114 Consolidated Statement of Operations
+115 Consolidated Statement of Comprehensive Income
+116 Consolidated Statement of Financial Position
+117 Consolidated Statement of Cash Flows
+118 Consolidated Statement of Changes in Equity
+120 Notes to the Consolidated Financial Statements
+Further Information
+177 Responsibility Statement by the Management Board
+178 Independent Auditor's Report
+184 Technology Glossary
+187 Financial calendar
+187 Imprint
+Letter to shareholders
+Research and development expenses
+37,479
+Return on Capital Employed (ROCE)²
+982
+15.2
+23
+Property, plant and equipment
+2,659
+2,119
+25
+Total assets
+9,945
+9,087
+17.1
+9
+5,636
+5,023
+12
+Net cash provided by operating activities from continuing operations
+1,728
+1,313
+32
+Net cash used in investing activities from continuing operations
+(1,131)
+(1,098)
+Total equity
+1,208
+Segment Result/Segment Result Margin
+6
+11.0
+(770)
+11.9
+1
+Selling, general and administrative expenses
+(819)
+11.6
+(791)
+12.2
+4
+Operating income
+983
+763
+29
+Income from continuing operations
+791
+741
+7
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+(1)
+2
+790
+743
+(3)
+Net cash used in financing activities from continuing operations
+Free cash flow²
+(340)
+(229)
+6
+0.85
+0.76
+12
+Dividend per share in €³
+0.25
+0.22
+24
+14
+Equity ratio
+56.7%
+55.3%
+Return on equity4
+14.0%
+14.8%
+Return on assets4
+Inventory intensity4
+7.9%
+8.2%
+12.5%
+13.1%
+Debt-to-equity ratio4
+Debt-to-total-capital ratio
+0.66
+Infineon employees as of 30 September
+0.70
+6
+(48)
+594
+490
+21
+Depreciation and amortization
+Capital expenditure
+Gross cash position²
+Net cash position²
+812
+833
+(3)
+1,022
+826
+24
+2,452
+2,240
+9
+618
+471
+31
+Basic earnings per share in €
+0.70
+0.66
+Diluted earnings per share in €
+Annual Report 2017
+14.9%
+44
+2
+92
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Our current liquidity position, which we describe in the chapter "Review of liquidity", enables us to obtain favorable
+refinancing conditions. This fact gives Infineon both the financial headroom and the entrepreneurial flexibility it
+needs to implement its business strategies and initiatives.
+Liquidity position (OC: medium)
+The trend towards electronic identity documents is having a positive impact on Chip Card & Security segment
+revenue. Paper-based documents are increasingly being replaced by chip-based versions, due to the higher level
+of security they offer. New markets are also emerging in conjunction with the Internet of Things and the Industrial
+Internet ("Industry 4.0"). The authentication of devices is playing an increasingly important role in both of these
+fields, for which Infineon offers the corresponding security chips.
+Security applications (OC: medium)
+The continued trend towards mobility is also reflected in the unbroken high demand for smartphones and tablets.
+We benefit from this development in two ways. Firstly, through the components we supply for mobile devices
+(silicon-MEMS microphones, TVS diodes, GPS signal amplifiers, CMOS-RF switches), and secondly, through power
+semiconductors, which form the key components for energy-efficient chargers (high-voltage and low-voltage
+power transistors, driver ICs and control ICs).
+Growth from mobile applications (OC: medium)
+We are also convinced that current global carbon emissions targets cannot be achieved without further electrification.
+The need for increased efforts in this field is relevant not only for electro-mobility (i.e. hybrid, plug-in hybrid and
+all-electric vehicles), but also for power units in vehicles with combustion engines. IT security within the vehicle is
+also further gaining in importance. Thanks to our expertise in the field of security controllers, we are extremely
+well positioned to exploit opportunities in this area.
+Overall statement of the Management Board
+with respect to Infineon's financial condition
+as of the date of this report
+We expect semiconductor content per vehicle to continue growing. The primary driving force behind this trend is
+the rising demand for active safety features and driver assistance systems.
+Our success in positioning Infineon in China as an integral part of Chinese industry (and hence Chinese society)
+could well open up a multitude of new opportunities that is highly likely to have a positive impact on the growth
+and profitability of our business.
+At the G20 summit held in Hangzhou (China) in September 2016, China ratified the Paris climate agreement,
+thereby giving its formal commitment to reducing carbon emissions. As a consequence, the importance of
+expanding renewable energy sources in China has increased enormously. Our presence in this market, alongside
+our collaboration with leading companies in the wind and solar power sectors, will create further opportunities
+for long-term growth.
+Psee page 75 ff.
+91
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+China is the world's biggest market for trains and home to CRRC, the world's largest train manufacturer by far,
+which is an Infineon customer. The continued expansion of the domestic rail network and a growing volume of
+international infrastructure projects both represent growing business opportunities for Infineon.
+Vehicle production in China is still expanding, albeit at a slower pace. At the same time, rapid growth in the produc-
+tion of plug-in hybrid and all-electric vehicles has turned China into the world's largest market for electro-mobility.
+Infineon generates more revenue in China than in any other country. Accordingly, developments and growth
+opportunities in China are of the utmost importance to the Group and relate to the following markets that we serve:
+Market access and activities in China (OC: medium)
+The availability of additional capacities, combined with the pro-active strategic and operational planning of internal
+and external resources, enable us to meet rising demand from both existing and new customers in the event of a
+market upturn. We benefited from this trend during the previous fiscal year.
+Further growth in semiconductor content in vehicles (OC: medium)
+Our in-house manufacturing capacities, together with those of our external partners, provide us with sufficient
+flexibility to meet demand requirements. Growing demand for power semiconductors has been met in particular by
+the expansion of our 300-millimeter manufacturing facilities in Dresden (Germany) and the second manufacturing
+facility at Kulim 2 (Malaysia). Manufacturing capacity at our plant in Regensburg (Germany) has been expanded in
+response to greater demand for 77 GHz radar sensor ICs. Capacity has also been expanded in Warstein (Germany)
+as a result of increased demand for IGBT modules for hybrid and all-electric cars.
+Infineon made very good progress in the 2017 fiscal year. Revenue grew by 9 percent from €6,473 million
+to €7,063 million year-on-year. Segment Result improved by 23 percent from €982 million to €1,208 million, giving
+a margin of 17.1 percent. We already achieved our average margin target of 17 percent over the cycle, which had
+been raised at the beginning of the 2017 fiscal year, in the year of its announcement. Adjusted earnings per share
+(diluted) increased to 85 cents. Despite investments, free cash flow from continuing operations improved from
+€490 million to €594 million year-on-year. The international rating agency S&P Global Ratings (S&P) continues to
+rate Infineon's creditworthiness with an investment grade rating of "BBB" (outlook “stable”). Infineon therefore
+currently holds the highest S&P rating of any European semiconductor manufacturer. We want our shareholders to
+participate appropriately in the excellent progress that Infineon is making. Therefore, at the Annual General Meeting
+to be held on 22 February 2018, it will be proposed to raise the dividend by 3 cents (14 percent) to €0.25 per share.
+During the past fiscal year, we not only increased revenue and earnings, but also made significant progress in a
+number of strategic innovation projects, particularly the ramp-up of our 300-millimeter thin-wafer manufacturing
+facility in Dresden (Germany) and the market launch of silicon carbide - the base technology for power transistors
+with superior properties - enabling Infineon to generate its first revenue with silicon carbide MOSFETS.
+It is our intention to continue growing faster than the market as we move forward. We remain committed to our
+target of a compound annual revenue growth rate of 8 percent over the cycle. With an increase of 12 percent in the
+2016 fiscal year, followed by 9 percent in the fiscal year under report, we have surpassed this mark for two years in
+succession. However, the semiconductor market remains cyclical. Sooner or later, macroeconomic conditions will
+change and demand in the automotive and industrial sectors - which has been extremely high of late - will revert to
+normal levels. For the 2018 fiscal year, we expect year-on-year revenue growth of 9 percent, plus or minus 2 percentage
+points, based on an assumed depreciation of the US dollar/euro exchange rate to US$1.15. At the mid-point of the
+range for forecast revenue, we expect to achieve a Segment Result Margin of approximately 17 percent for the 2018
+fiscal year. Planned investments for the 2018 fiscal year are expected to be between €1.1 billion and €1.2 billion.
+20161
+2017
+Transfers to retained earnings according to section 58, paragraph 2, AktG
+Unappropriated profit at the end of year
+Income after taxes/net income
+Income tax
+Other financial result
+Interest result
+Result from investments, net
+Other income (expense), net
+General and administrative expenses
+Selling expenses
+Research and development expenses
+In recent years, we have created a solid foundation for our business and focused our attention on technologies,
+products and applications, which are in greater demand than ever due to global megatrends. Over a period of
+many years we have built up, systematically expanded and successfully deployed the competencies needed - to
+the benefit of our customers. Based on our strategic "Product to System” approach, we focus our efforts along the
+entire value-added chain on the success of our customers. This approach is complemented by other elements;
+a comprehensive culture of innovation, the continual pursuit of technological leadership, strong quality awareness,
+product differentiation enabled by in-house production, and an approach customized to the various markets.
+In this way we ensure our continued success, both now and in the future.
+Gross profit
+Revenue
+€ in millions
+Statement of income of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+Earnings position
+Unlike the Consolidated Financial Statements, which are prepared in accordance with International Financial
+Reporting Standards ("IFRS"), Infineon Technologies AG's Separate Financial Statements are prepared in accordance
+with the provisions of the German Commercial Code ("HGB"). The complete Separate Financial Statements are
+published separately.
+Infineon Technologies AG is the parent company of the Infineon Group and performs the Group's management
+and corporate functions. It takes on major Group-wide responsibilities such as Finance and Accounting, Corporate
+Compliance, Human Resources, strategic and product-oriented R&D activities, and also Corporate and Marketing
+Communication worldwide. Furthermore, it manages supply chain processes throughout the Group. Infineon
+Technologies AG has its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+In addition to reporting on the Infineon Group, in the following section we also provide information on the
+performance of Infineon Technologies AG.
+Infineon Technologies AG
+93
+Infineon Technologies AG
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Cost of goods sold
+5,789
+Ability to supply due to available capacities (OC: medium)
+With the "Product to System" strategic approach, we seek to identify additional benefits on a system level for our
+customers from within our broad portfolio of technologies and products. The strategy enables us to exploit available
+revenue potential even more effectively and thereby achieve our growth and margin targets. This approach also
+enables us to reduce customers' development costs and shorten lead times required to bring their products to market.
+Support for change in energy policies and consideration of climate change issues (OC: medium)
+Population growth and increasing industrialization in all parts of the world are resulting in ever-greater
+global demand for energy. Electric power is becoming the most important energy carrier of the 21st century.
+Renewables are already playing a key role in reducing carbon emissions. The long-term objective is to achieve
+global decarbonization by the end of the century, as resolved at the Climate Change Conference held in Paris
+(France) in December 2015.
+Our global business strategy requires the maintenance of R&D locations and manufacturing sites throughout the
+world. The location of such facilities is determined by market entry hurdles, technology and cost factors. Risks
+could, therefore, arise from adverse economic and geopolitical developments in our regional markets, changes in
+legislation, and policies affecting trade and investment aimed at limiting free trade and varying practices of the
+regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate. These risks could restrict
+our business activities in those countries. We could also be exposed to fines, sanctions and damage to reputation.
+Asian markets are particularly important to our long-term growth strategy. Our operations in China are influenced
+by a legal system that may be subject to change. One example is the fact that local regulations could make it
+mandatory to enter into partnerships with local companies. These circumstances could lead on the one hand
+to Infineon's intellectual property no longer being sufficiently protected and on the other to intellectual property
+developed by Infineon in China not being freely transferable to other countries and locations, thus impairing
+revenue and profitability.
+Impact of our global operations (RC: medium)
+Further information in regards to litigation and government inquiries are provided in note 19 to the Consolidated
+Financial Statements.
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus resulting in significant
+claims for damages or restrictions in selling the products concerned. Any such outcome could in turn have an
+adverse impact on our earnings performance.
+P see page 154 ff.
+88
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Whilst we often benefit from cross-licensing arrangements with major competitors and are keen to broaden the
+protection offered in this area by entering into new agreements, no such opportunities exist to safeguard against
+risks of this nature in the case of companies specializing in the exploitation of patent rights.
+As with many other companies in the semiconductor industry, allegations are made against us from time to time
+that we have infringed other parties' protected rights. Regardless of the prospects of success of such claims,
+substantial legal defense costs can arise.
+Intellectual property rights and patents (RC: medium)
+Acquisitions and cooperation arrangements (RC: medium)
+Provisions are recognized in connection with these matters as of 30 September 2017. The provisions reflect the
+amount of those liabilities that management believes are probable and can be estimated with reasonable accuracy
+at that time. There can be no assurance that these provisions will be sufficient to cover all liabilities that may be
+incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Qimonda insolvency (RC: medium)
+Legal and compliance risks
+Further information regarding the management of financial risks is provided in note 23 to the Consolidated
+Financial Statements.
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the potential risk of
+a default by one or more of the banking partners with whom we do business. We mitigate this risk - which could
+still arise despite various state-insured deposit protection mechanisms - by a combination of risk avoidance
+analyses and risk-diversification measures. The failure of these measures could have a materially adverse impact
+on Infineon's financial condition and liquidity situation.
+Risk of default by banking partners (RC: medium)
+Specified currencies are hedged Group-wide by means of derivative financial instruments. These hedges are based
+on forecasts of future cash flows, the occurrence of which is uncertain. Under these circumstances, exchange rate
+fluctuations could – despite hedging measures – also have an adverse impact on earnings.
+Our involvement and participation in various regional markets around the world creates cash flows in a number
+of currencies other than the euro - primarily in US dollars. A significant share of revenue on the one hand and
+of operating costs and investments on the other is denominated in US dollars and correlated currencies. For the
+most part, Infineon generates a US dollar surplus from these transactions.
+Currency risks (RC: medium)
+Financial risks
+One of our key success factors is the availability of sufficient qualified employees at all times. There is, however,
+a general risk of losing qualified staff or not being able to recruit, train and retain adequately qualified staff within
+the business. A lack of technical or management staff could, among other things, restrict future growth and hence
+adversely impact our earnings performance.
+Need for qualified staff (RC: medium)
+We cooperate with numerous suppliers who provide us with materials and services, or who manage parts of our
+supply chain. We do not always have alternative sources for some of these suppliers and therefore depend on their
+ability to deliver products of the required quality. Failure of one or more of these suppliers to meet their obligations
+to Infineon could have an adverse impact on our earnings performance.
+Due to the insolvency proceedings relating to Qimonda and claims brought against Infineon, we are exposed -
+even after the partial settlements reached - to substantial risks, which are described in detail in note 19 to the
+Consolidated Financial Statements.
+Infineon's semiconductors enable electric power to be generated from renewable energy sources. They also
+boost energy efficiency and offer efficiency gains at all stages of the energy industry's value-added chain, whether
+in generation, transmission, or above all in the use of electrical power. They form the basis for the intelligent and
+efficient use of electrical power, for instance in industrial applications, power supplies for computers, consumer
+electronics and vehicles.
+In order to develop or expand our business, we may seek to acquire other businesses or enter into various forms of
+cooperation arrangements. In the case of acquisitions, there is a risk that these activities prove to be unsuccessful,
+particularly regarding the integration of people and products in existing business structures. These issues could
+adversely impact our financial condition and earnings performance.
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate these risks, we rely
+upon the advice of both in-house and external experts and provide suitable training to our employees.
+Strategic approach "Product to System" (OC: medium)
+We are constantly striving to develop new technologies, products and solutions and to improve on existing ones,
+both separately and in collaboration with customers. We therefore continually invest in research and development
+relating to the use of new technologies and materials. Technologies and materials in current use may well lose their
+predominance in the foreseeable future, such as silicon, which is reaching its physical limits in some applications.
+We see numerous opportunities for working with new materials, such as those associated with silicon carbide
+or gallium nitride, to develop more powerful and lower-cost products. These materials could well have a positive
+influence on our ability to attain our strategic growth and profitability targets.
+New technologies and materials (OC: medium)
+90
+90
+Risk and opportunity report
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+The principal opportunities are described in the following section. The list is not exhaustive and represents only
+a cross-section of the opportunities available. Our assessment of these opportunities is subject to continuous
+change, reflecting the fact that our business, our markets and the technologies we deploy are continuously subject
+to new developments, bringing with them fresh opportunities, causing others to become less relevant or otherwise
+changing the significance of an opportunity from our perspective. Depending on the potential degree of impact
+and the estimated probability of occurrence, each of these opportunities is assigned to an "opportunity class"
+(OC) in the same way that risks are allocated to a risk class. These classifications are shown in parentheses (e.g.
+"OC: medium”).
+Opportunities
+The overall risk assessment is based on a consolidated view of all significant individual risks. We are not currently
+aware of any substantial risks capable of jeopardizing Infineon's going-concern status.
+In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-compliance with anti-trust
+regulations due to lack of knowledge or failure to make the people involved in such transactions adequately
+aware of the issues. This can result in high levels of cost (e.g. significant time spent by management, assignment
+of attorneys) and fines. Infineon's reputation may also suffer under these circumstances.
+Overall statement by Group Management on risk situation
+We have established a Group-wide compliance management system with the aim of managing compliance-related
+risks on a systematic, comprehensive and sustainable basis. Under this system, major preventive procedures are
+continuously developed, other elements of the system revamped or strengthened, and appropriate responses
+established for possible or actual incidences of non-compliance with internal or external regulations. The Compliance
+Officer reports on a quarterly basis to the Chief Financial Officer and bi-annually to the Investment, Finance and
+Audit Committee of the Supervisory Board.
+We minimize legal risks relating to intellectual property rights and patents by pursuing a well-defined patent
+strategy, including thorough patent research and selective development and registration of Infineon patents as
+well as precautionary protective measures in the form of agreements with major competitors. We aim to increase
+the number and scope of such cross-licensing agreements with leading competitors in order to reduce patent-
+related risks. However, no such opportunities exist to safeguard against risks of this nature in the case of companies
+specializing in exploiting patent rights.
+In response to the general increase in threats to data security and the high degree of professionalism meanwhile
+applied in the area of cybercrime, we have initiated an information security program to further improve protection
+against hacking attacks and related risks to our IT systems, networks, products, solutions and services. Information
+security is achieved primarily with the aid of Infineon's systematically applied and global Information Security
+Management System (ISMS), the prime objectives of which are to identify and measure all potential IT risks and
+to ensure that effective processes and tools are in place to minimize and avoid risk. The ISMS covers all areas
+of Infineon's business and is certified to the globally recognized ISO/IEC 27001 norm. All relevant risk areas are
+continuously monitored and optimized in conjunction with regular internal and external audits.
+We seek to minimize procurement-related risks through appropriate purchasing strategies and techniques,
+including constant product and cost analysis ("Best Cost Country Sourcing" and "Focus-on-Value"). These programs
+include cross-functional teams of experts who are responsible for the standardization of purchasing processes
+with respect to material and technical equipment.
+A structured project management system is in place to handle development projects, including customer-specific
+projects. Clear project milestones and verification procedures required to be carried out during a project as well as
+clearly defined limits of authority help us identify potential project risks at an early stage and counter these risks
+with specific measures.
+89
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+At an operational level, we have adopted various quality management strategies aimed at avoiding quality risks
+(such as "Zero Defects” and “Six Sigma"), to prevent or solve problems and to improve our business processes. Our
+company-wide quality management system has been certified on a worldwide basis in accordance with ISO 9001
+and ISO/TS 16949 for a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying and eliminating the
+reasons for quality-related problems at an early stage.
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor sector from
+economic and demand fluctuations and the risks related to Infineon's operations, financial condition, liquidity
+and earnings by closely monitoring changes in early warning indicators as well as by developing specific response
+strategies appropriate to the current position within the economic cycle. This can be done, for instance, by
+rigorously adjusting capacities and inventory levels at an early stage, initiating cost-saving measures and making
+flexible use of external manufacturing capacities, both at frontend and backend facilities.
+Measures to implement our risk management strategy
+In certain cases, insurance policies have been taken out to protect against potential claims and liability risks,
+with the aim of avoiding or at least minimizing any adverse impact on Infineon's financial condition and liquidity.
+Dependence on individual suppliers (RC: medium)
+5,378
+(3,839)
+350
+Provisions
+Other provisions
+93
+140
+Provisions for pensions and similar obligations
+1
+1
+6,606
+6,995
+249
+306
+316
+Special reserve with an equity portion
+Unappropriated profit
+2,897
+3,203
+1,207
+1,226
+2,253
+2,260
+Retained earnings
+Capital reserves
+Share capital
+10,265
+10,792
+Shareholders' equity
+Total assets
+490
+Bonds
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+The equity ratio at the end of the reporting period was 64.8 percent, compared to 64.4 percent one year earlier.
+Provisions for pensions and similar obligations increased by €47 million as a result of the reduction in the average
+market interest rate for the past ten years used to measure obligations. Other provisions increased by a total of
+€34 million, mainly due to higher provisions for performance-related employee remuneration. Liabilities went up
+by €59 million in the 2017 fiscal year, mainly due to a €37 million increase in other liabilities.
+The increase in equity (€389 million) was mainly attributable to net income of €612 million recorded in the 2017
+fiscal year. Payment of the dividend for the 2016 fiscal year (€248 million) reduced equity accordingly.
+Within assets, increases were recorded for financial assets (€115 million) due to the capital increase at Infineon
+Technologies Vermögensverwaltungsgesellschaft mbH in connection with the acquisition of the shares of MoTo
+GmbH & Co. KG (see note 3 to the Consolidated Financial Statements) and for cash and cash equivalents and
+marketable securities (short-term investments) (€262 million). Cash and cash equivalents and marketable securities
+account for 59 percent of current assets.
+P see page 132
+10,265
+10,792
+Total liabilities and shareholders' equity
+12
+10
+Deferred income
+409
+3,237
+848
+885
+Liabilities
+Other liabilities
+1,301
+1,291
+Liabilities to affiliated companies
+284
+316
+Trade payables
+804
+804
+3,296
+(4,228)
+4
+Active difference resulting from offsetting
+Combined Management Report | Our 2017 fiscal year
+Infineon Technologies AG
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Infineon Technologies AG recorded 8 percent revenue growth in the 2017 fiscal year. Gross profit was almost
+unchanged year-on-year. Infineon Technologies AG reports net income of €612 million for the 2017 fiscal year.
+This figure includes a profit distribution of €337 million from Infineon Technologies Holding B.V., Rotterdam (the
+Netherlands) (2016: €0 million). After transferring a total of €306 million to retained earnings, the unappropriated
+profit amounted to €306 million.
+1 Information on the reclassifications in the 2016 fiscal year can be found in the individual financial statements of Infineon Technologies AG.
+249
+306
+(158)
+(306)
+407
+612
+(38)
+(46)
+Net assets and financial position
+21
+(74)
+37
+478
+36
+(161)
+(172)
+(240)
+(259)
+(787)
+(907)
+1,539
+1,561
+24
+4
+Statement of financial position of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+==
+40
+Prepaid expenses
+3,399
+3,736
+Current assets
+1,954
+2,216
+Cash and cash equivalents, marketable securities
+832
+903
+Receivables and other assets
+613
+94
+617
+7,008
+6,185
+6,300
+637
+708
+30 Septem-
+ber 2016
+30 Septem-
+ber 2017
+Inventories
+Non-current assets
+Financial assets
+Intangible assets, property, plant and equipment
+€ in millions
+6,822
+P see page 154 f.
+7
+87
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Dependence on the success of specific customers may also grow if they account for an above-average share of
+Infineon's revenue and earnings. This situation could be driven by an exceptionally strong performance by the
+relevant customer, resulting, for instance, from exceptional demand for its products or from consolidation trends,
+in particular those affecting our first- and second-tier customers.
+The situation is exacerbated by the fact that our products are highly dependent on the degree of success achieved
+by individual customers in their own markets. Furthermore, there is a risk of losing future business and design
+wins if we are unable to deliver volumes over and above our contractual obligations if called upon by the customer
+to do so. In the case of unexpectedly high demand, we therefore face the challenge of having to deliver increased
+volumes that require an appropriate level of upfront investment. This could have an adverse impact on our planned
+investment ratio and, ultimately, on earnings.
+Thus, despite the fact that manufacturing processes and sites have become even more flexible, fluctuations in
+capacity utilization levels and purchase commitments, coupled with idle costs at manufacturing sites, nevertheless
+pose risks related to our cost position. These risks could possibly jeopardize our ability to attain growth and profit-
+ability targets that are based on cycle averages.
+The accelerating pace of events in the markets in which we operate, increased demands for flexibility by our
+customers and short-term changes in order volumes could result in rising costs due to the under-utilization of
+manufacturing capacities, higher inventory levels and unfulfilled commitments to suppliers.
+Increasingly dynamic markets (RC: high)
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present additional risks that
+could result in loss of manufacturing or supply bottlenecks.
+85
+The reliability and security of Infineon's information technology systems are of crucial importance. At the same
+time, the world has seen a general rise in the level of threats to data security. This applies to the deployment of
+IT systems to support business processes on the one hand and internal and external communications on the other.
+Despite the array of precautionary measures put in place, any major disruption to these systems could result in risks
+relating to the confidentiality, availability and reliability of data and systems used in development, manufacturing,
+selling or administration functions, which, in turn, could have an adverse impact on our reputation, competitiveness
+and operations.
+The rapid pace of technological change in the market also results in a greater replaceability of our products. Due to
+the resulting aggressive pricing policies, we may be unable to achieve our long-term strategic goals of gaining and/
+or maintaining market share and of product pricing. Moreover, accelerating M&A (Merger and Acquisition) activity
+within the semiconductor industry could result in even tougher competition. Potential benefits for competitors in
+this market include improved cost structures and stronger sales channels. Overall, this situation could have an
+adverse impact on Infineon's earnings.
+The worldwide semiconductor market is dependent on global economic growth and hence subject to fluctuations.
+Our target markets continue to be exposed to the risk of short-term market fluctuations. As a result, our own
+forecasts of future business developments are subject to a high degree of uncertainty. It is possible, for instance,
+that future market downturns will follow another pattern, for example, an L shape. The absence of market growth
+or its decline would make it considerably more difficult to attain our own growth target. In the event that we are
+unprepared for market fluctuations, or our response to such fluctuations turns out to be inappropriate, this could
+have a sustained materially adverse impact on Infineon's operations, financial condition, liquidity and earnings.
+Increased market competition and commoditization of products (RC: high)
+Cyclical market and sector development (RC: high)
+Risk and opportunity report
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2017 fiscal year
+Psee page 162 ff.
+Operational risks
+85
+Data and IT systems security (RC: high)
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2017 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Risk and opportunity report
+Dependence on individual manufacturing sites (RC: medium)
+One risk that semiconductor companies operating in-house manufacturing facilities typically face is that of delays
+in the ramping-up of production volumes at new manufacturing sites, or in case of transfers of technologies. One
+good example is in the Automotive segment, where customers' product approval and testing processes can take
+place over an extended period of time, thus influencing our global manufacturing strategy as well as short- and
+medium-term capacity utilization. Failure to anticipate these changes in the manufacturing process in good time
+could result in capacity shortages and hence lower revenue on the one hand as well as costs incurred due to
+under-utilization on the other.
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon to develop competitive
+and high-quality products designed to provide customized technological solutions. In view of the rapid pace of
+technological change and increasingly stringent customer requirements, coordination processes need to become
+increasingly sophisticated. Failure to continue making progress in this area could result in quality problems,
+product development or market maturity delays as well as higher R&D expenses and hence adversely impact our
+earnings performance.
+Our South East Asian manufacturing sites are of critical importance for our production. If, for example, political
+upheavals or natural disasters in the region were to impede our ability to manufacture at these sites on the planned
+scale or to export products manufactured at those sites, it would have an adverse impact on our financial condition,
+liquidity and earnings. Our current manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as expropriation of assets. The transfer of manufacturing capacities from these sites would,
+therefore, not only involve a great deal of time and technical effort, Infineon would also be required to bear the
+necessary cost of investment.
+Determining and adjusting manufacturing volumes (RC: medium)
+Manufacturing cost trends - raw material prices, cost of materials and process costs (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost trends. In this context, measures
+aimed at optimizing manufacturing costs for raw materials and supplies, energy, labor and automation, as well as
+for bought-in services from external business partners, may not be feasible to the extent envisaged.
+Moreover, our dependence on various materials (such as wafer substrates) and raw materials (such as gold and
+copper) used in manufacturing, as well as our energy requirements expose us to substantial price risks. We are also
+dependent on supplies of the so-called rare earths required for selected manufacturing processes in conjunction
+with process integration. At the time of writing, financial instruments are in place to hedge our price risk exposure
+for gold wire during the 2018 fiscal year, based on planned volume requirements. The prices of raw materials and
+energy have recently been subject to significant fluctuation, and there is no reason to assume the situation will
+change in the near future. If we are unable to offset cost rises or pass them on to customers via price adjustments,
+it could have an adverse impact on earnings.
+The ever-increasing complexity of technologies and products, shorter development cycles and higher customer
+expectations can cause a great deal of tension in the field of product development. Buffer times built into processes
+to compensate for potential delays are reduced accordingly. In the event of being unable to execute our development
+plans at the desired quality levels, the outcome could be development delays and increased development costs,
+which could have an adverse impact on our financial condition, liquidity, cash flows and earnings.
+Product development delays (RC: medium)
+Product quality assurance is a key success factor for the business. Potential quality risks - for example, due to the
+high utilization levels - can affect yield fluctuations and hence our ability to supply customers. Shortfalls in product
+quality can lead to product recalls and potential costs related to liability claims. In addition, quality risks could also
+damage Infineon's reputation and thus have a significant adverse impact on future earnings.
+Product quality trends (RC: medium)
+86
+Risk and opportunity report
+-
+(Virtual) performance shares were allocated previously on 1 October of each fiscal year for the fiscal year beginning
+on that date - initially on a provisional basis. Following a recommendation made by the Executive Committee, on
+3 August 2017 the Supervisory Board resolved that the provisional allocation of performance shares for LTI purposes
+will take place in future on 1 March of each fiscal year. Consequently, based on the four-year term of the relevant
+tranche, the definitive allocation of (real) Infineon shares will take place at the end of the month of February four
+years later.
+102
+Combined Management Report | Our 2017 fiscal year
+Corporate Governance
+The long-term incentive (LTI) is intended to reward long-term and, similar to the MTI, sustained performance on
+the part of members of the Management Board and, additionally, to ensure that their interests are aligned with the
+interest of the Company's shareholders regarding a positive share price development. Assuming a 100 percent target
+achievement of the variable compensation, the LTI constitutes approximately 15 percent of target annual income.
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share Plan. As well as being
+relevant for members of the Management Board, the new LTI also applies - with minor differences attributable
+to specific circumstances and as a benefit paid voluntarily by the Company - to Infineon managers and selected
+Infineon employees worldwide.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Compensation report
+The performance shares are allocated on the basis of the contractually agreed "LTI allocation amount” in euro.
+This amount is reduced accordingly if the member of the Management Board takes up office during a fiscal year.
+The number of performance shares is determined by dividing the LTI allocation amount by the average price of the
+Infineon share (Xetra closing price) during the nine months prior to the allocation date. The prerequisites for the
+definitive allocation of the - at that stage still virtual – performance shares are (i) that the member of the Manage-
+ment Board invests 25 percent of his/her individual LTI allocation amount in Infineon shares in compliance with an
+own-investment requirement pertaining to the provisional allocation) and (ii) that the holding period of four years
+applicable both for the member's own-investment and for the performance shares has come to an end. 50 percent
+of the performance shares are also performance-related; they are only allocated definitely if (iii) the Infineon share
+outperforms the Philadelphia Semiconductor Index (SOX) between the date of the performance shares' provisional
+allocation and the end of the holding period. If the conditions for the definitive allocation of performance shares -
+either of all or of only those that are not performance-related - are met at the end of the holding period, the member
+of the Management Board acquires a claim against the Company for the transfer of the corresponding number of
+(real) Infineon shares. Performance shares which do not achieve the target are forfeited. The value of the performance
+shares definitively granted to the member of the Management Board per LTI tranche at the end of the holding
+period may not exceed 250 percent of the relevant LTI allocation amount; the performance shares above this amount
+are forfeited (cap).
+Corporate Governance
+The Supervisory Board has the right, at the end of the holding period, to make a value-equivalent cash settlement
+to the member of the Management Board rather than actually transfer Infineon shares. On 3 August 2017 the
+Supervisory Board resolved that the performance shares maturing on expiry of 30 September 2017 relating to the
+tranche awarded on 1 October 2013 will not be allocated in the form of Infineon shares, but rather - in accordance
+with the option specified in the Performance Share Plan - will be settled in cash.
+If the member of the Management Board leaves office during the first two years of the full four-year holding period
+applicable to the performance shares of a particular LTI tranche, those performance shares are forfeited unless
+the reason for leaving office is ill-health, good cause for which the member is not responsible or the fact that the
+age limit specified in the service contract has been reached. Only the holding period for the own-investment shares
+expires when the member of the Management Board leaves office; at that stage the member of the Management
+Board concerned can freely dispose of the shares. If the member of the Management Board resigns from office at
+a later date - unless the resignation is for good cause for which the member is not responsible or if the board
+member's contract is terminated by the Company for good cause – the LTI tranche (including the own-investment)
+remains in place unchanged. The member of the Management Board is then treated in all respects as if he/she
+were still in office; there is no pro rata reduction in the LTI tranche due to leaving office early.
+The Supervisory Board is required to define suitable alternative LTI instruments of commensurate value if it is
+impossible or not desired by the Supervisory Board to offer an LTI on the basis of the Performance Share Plan.
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock option plan as an LTI,
+which was resolved at the 2010 Annual General Meeting. Subject to compliance with the terms of the Stock Option
+Plan 2010 - particularly the attainment of the absolute and percentage performance targets - the stock options
+allocated to members of the Management Board on the basis of this plan may still be exercised until 14 Decem-
+ber 2019.
+Additionally, the Supervisory Board has the option - based in all cases on its own best judgment - to grant a
+special bonus, among other things for special achievements of the Management Board or its individual members.
+This bonus is capped, however, at a maximum of 30 percent of the fixed compensation of the member of the
+Management Board.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Compensation report
+103
+If the term of office commences during a fiscal year, the MTI tranche is reduced on a pro-rata basis (by 1/36 for
+each full month missing from the complete MTI tranche). Upon leaving Infineon, regulations ensure as a general
+rule that the member of the Management Board can only receive an MTI payment for the number of MTI tranches
+corresponding to the member's term of office, reduced where appropriate, on a pro-rata basis. MTI tranches already
+started are forfeited if a mandate or service contract of a member of the Management Board comes to an end
+before the due date, for instance if a member resigns from office (unless the resignation is for good cause for which
+the member is not responsible) or if the board member's contract is terminated by the Company for good cause.
+The shares are transferred to a securities custodian account attributable to the member of the Management Board;
+thereafter he/she can freely dispose of them. The same also applies to Infineon shares acquired in conjunction with
+the own-investment requirement at the end of the holding period.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each case by up to 50 percent,
+as it sees fit, based on the performance of the Management Board as a whole, Infineon's situation and any excep-
+tional factors. When exercising its judgment in this respect, the Supervisory Board also takes into account the
+extent to which the three-year target for revenue growth and Segment Result (set each year by the Supervisory
+Board exclusively for this purpose) has been achieved and the degree of success achieved complementing organic
+growth through M&A activities. Unlike the STI, there is no lower limit for the amount by which the Supervisory
+Board can adjust the MTI; for the upper limit, however, the cap applies (200 percent).
+The periodic review of the Management Board compensation system by an external independent compensation
+expert, started during the previous fiscal year, was completed during the 2017 fiscal year. Notwithstanding the
+existence of some scope for maneuverability, the expert concluded that the Company's compensation system com-
+plies with the requirements of the German Stock Corporation Act (Aktiengesetz) and the DCGK and is in line with
+current market conditions (for details of the review see "Review of the Management Board compensation system
+and individual contracts" in this chapter).
+The mid-term incentive (MTI) is intended to reward sustained performance by the Management Board reflecting
+Infineon's medium-term progress. In combination with the long-term incentive, the MTI therefore ensures compliance
+with the stock corporation law requirement that the structure of compensation is "oriented toward sustainable
+growth of the enterprise”. Assuming a 100 percent target achievement of the variable compensation, the MTI con-
+stitutes approximately 20 percent of target annual income.
+P see page 58 ff.
+Management Board compensation
+Compensation system
+The Management Board compensation system - similar to the compensation paid to the individual members of
+the Management Board - is defined and regularly reviewed by the full Supervisory Board on the basis of proposals
+made by the Executive Committee. In accordance with applicable legal requirements and the recommendations of
+the DCGK, the compensation paid to members of the Management Board is intended to reflect the typical level and
+structure of management board compensation at comparable companies, as well as Infineon's economic position
+and future prospects. The duties, responsibilities and performance of each member of the Management Board are
+also to be considered, as is Infineon's wider pay structure. This includes considering Management Board compen-
+sation in relation to the compensation of senior management and of the workforce as a whole, including changes
+in the level of compensation over time. The stated objective is that the compensation structure should be designed
+in such a way that it promotes sustainable business development, with a cap in place in the event of exceptional
+developments. Infineon aims to set compensation at a level that is competitive both nationally and internationally,
+so as to inspire and reward dedication and success in a dynamic environment.
+Management Board compensation in the 2017 fiscal year in accordance with
+Components of the Management Board compensation system
+There have been no changes to the Management Board compensation system in the 2017 fiscal year compared
+to the previous fiscal year.
+All members of the Management Board receive as compensation for their service an annual income which - based
+on target achievement of 100 percent - comprises approximately 45 percent fixed compensation and approximately
+55 percent variable compensation components:
+> Fixed compensation: The fixed compensation comprises a contractually agreed basic annual salary that is not
+linked to performance and is paid in twelve equal monthly installments.
+A new MTI tranche, each with a term of three years, commences every fiscal year. The incentive is paid in cash at
+the end of the three-year term. The amount of the payment is determined on the basis of actual ROCE and free cash
+flow figures during each three-year period. For these purposes, the target values for ROCE and free cash flow for
+each individual year of an MTI tranche correspond to the STI targets set each year in advance. The level of achieve-
+ment for both the ROCE target and the free cash flow target must reach a threshold of 50 percent in each year of
+the relevant three-year period, otherwise it is deemed - for MTI purposes - to be zero for the year concerned. If the
+thresholds are exceeded, the level of target achievement determined for the STI applies for the relevant annual
+tranche of the MTI. The MTI to be paid at the end of the three-year period is determined by calculating the arithmetic
+mean of the three annual target achievement levels. Unlike the STI, the MTI is paid as calculated, even if the mean
+level of target achievement for the three-year period is below 50 percent. A cap of 200 percent applies, meaning
+that the maximum amount that can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+> Variable (performance-related) compensation: The variable compensation comprises three components -
+an annual bonus (short-term incentive), a multiple-year bonus (mid-term incentive) and a long-term variable
+compensation component (long-term incentive).
+(i) At the beginning of each fiscal year, the target functions with respect to the two key performance indicators
+"free cash flow" and "Return on Capital Employed (ROCE)" are defined uniformly for all members of the
+Management Board. Underpinning the consistent approach taken to managing the business, the same target
+indicators - supplemented by the Segment Result - are used as the basis for determining the variable com-
+pensation components (bonus payments) for Infineon managers and employees. The two key performance
+indicators referred to above, which are described in more detail in the chapter "Internal Management System",
+are equally weighted for the purposes of measuring the STI.
+(ii) At the end of the fiscal year, the actual levels of target achievement for free cash flow and ROCE and, hence the
+amount of the STI payouts, are determined by the Supervisory Board.
+An STI is paid only if, on the basis of the approved financial statements, the levels of target achievement reach
+at least the 50 percent threshold for both performance indicators (free cash flow, ROCE). If one of the two target
+thresholds is not achieved, no annual bonus is paid for the relevant fiscal year. If the thresholds are achieved, the
+arithmetic mean of the two target achievements is calculated and used as the percentage rate to determine the
+actual STI amount. A cap of 250 percent applies, meaning that the maximum amount that can be paid is two-and-
+a-half times the target STI (= 100 percent), regardless of an actual higher achievement level. The Supervisory Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Corporate Governance
+Compensation report
+101
+may, in addition, increase or reduce the amount to be paid in each case by up to 50 percent, as it sees fit, based on
+the performance of the Management Board as a whole, Infineon's position, and any exceptional factors. A lower
+limit applies in this case such that the amount to be paid cannot be less than the amount that would be due given
+50 percent target achievement. The upper limit for an upward adjustment is the cap of 250 percent.
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI is reduced on a pro-rata
+monthly basis (by one twelfth for each full month missing from the complete STI tranche). A member of the
+Management Board is not entitled to receive an STI bonus for the fiscal year in which he/she resigns from office
+(unless the resignation is for a reason ("good cause"), for which the member is not responsible) or if the board
+member's contract is terminated by the Company for good cause.
+The short-term incentive (STI) is intended to reward performance over the preceding fiscal year, reflecting Infineon's
+recent progress. Assuming a 100 percent target achievement of the variable compensation, the STI constitutes
+approximately 20 percent of target annual income. It is set by the Supervisory Board in a two-phase process:
+German Accounting Standard 17 (DRS 17)
+750,000
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits to the individual
+members of the Management Board - also presented in accordance with DRS 17 - are shown in the following table:
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+670,080
+474,720
+474,640
+336,260
+429,968
+76,153
+171,250
+8,714
+179,964
+Multi-year variable compensation
+2014-2016 tranche
+2016-2018 tranche
+2017-2019 tranche
+288,460
+201,537
+243,040
+158,240
+172,153
+112,087
+Mid Term Incentive (MTI)1
+Total compensation
+685,000
+47,728
+732,728
+750,000
+41,185
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dominik Asam
+Chief Financial Officer
+Dr. Helmut Gassel³
+Member of the
+Management Board
+2017
+791,185
+2016
+2016
+2017
+2016
+1,075,000
+1,075,000
+P see page 111
+36,154
+1,111,154
+35,724
+1,110,724
+43,203
+793,203
+2017
+100
+P see page 99 ff.
+Corporate Governance
+Information pursuant to section 289, paragraph 4, and section 315,
+paragraph 4, of the German Commercial Code (HGB)1
+Structure of the subscribed capital
+The share capital of Infineon Technologies AG stood at €2,272,401,858 as of 30 September 2017. This sum is divided
+into 1,136,200,929 non-par registered shares, each of which represents a notional portion of the share capital of €2.
+Each share carries one vote and gives an equal right to the profit of the Company based on the profit appropriation
+resolved by shareholders at the Annual General Meeting.
+The Company held 6 million of the abovementioned issued shares as own shares at the end of the reporting period
+(30 September 2016: 6 million). Own shares held by the Company on the date of the Annual General Meeting do
+not carry a vote and are not entitled to participate in profit.
+Restrictions on voting rights or the transfer of shares
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regulations of the German
+Stock Corporation Act (Aktiengesetz - "AktG"). For example, pursuant to section 136 AktG shareholders are prohibited
+from voting under certain circumstances and, according to section 71b AktG, Infineon Technologies AG has no
+voting rights from its own shares. Furthermore, non-compliance with the notification requirements pursuant to
+section 21, paragraphs 1 or 1a of the German Securities Trading Act (Wertpapierhandelsgesetz - "WpHG") and to
+section 25, paragraph 1 or section 25a, paragraph 1, WpHG can, pursuant to section 28 WPHG, have the effect that
+certain rights (including the right to vote) may, temporarily at least, not exist. We are not aware of any contractual
+restrictions on voting rights or the transfer of shares.
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register of Infineon Techno-
+logies AG are recognized as shareholders of the Company. In order to be recorded in the share register of Infineon
+Technologies AG, shareholders are required to submit to the Company the number of shares held by them and
+their name or company name, their address and, where applicable, their registered office and their date of birth.
+Pursuant to section 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information from any
+party listed in the share register regarding the extent to which shares, to which the entry in the share register relates,
+are actually owned by the registered party and, if it does not own the shares, to receive the information necessary
+for the maintenance of the share register in relation to the party for whom the party concerned holds the shares.
+Section 67, paragraph 2, AktG stipulates that the shares concerned do not confer voting rights until such time as the
+information requested has been supplied in the appropriate manner.
+Shareholdings exceeding 10 percent of the voting rights
+Section 21, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed or, after exceeding,
+fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of a listed corporation to notify such corpora-
+tion and the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht –
+"BaFin") immediately. As of 30 September 2017, we have not been notified of any direct or indirect shareholdings
+reaching or exceeding 10 percent of the voting rights. The shareholdings notified to us as of 30 September 2017 are
+presented in the Notes to the Financial Statements of Infineon Technologies AG under the information pursuant
+to section 160, paragraph 1, No. 8 AktG.
+Corporate Governance
+Shares with special control rights
+Nature of control over voting rights when employees participate in the Company's capital and do not
+exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise their control rights directly in
+accordance with the applicable laws and the Articles of Association, just like other shareholders.
+1 In accordance with section 80 of the Introductory Act to the German Commercial Code (EGHGB), the sections 289a, paragraph 1 and 315a, paragraph 1 HGB -
+in the version pertaining to the CSR Directive Implementation Act dated 11 April 2017 - are applicable for the first time for the fiscal year beginning after
+31 December 2016 (i.e. for Infineon's 2018 fiscal year).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+96
+96
+Combined Management Report | Our 2017 fiscal year
+Corporate Governance
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+No shares conferring special control rights have been issued.
+97
+Psee page 173 ff.
+Corporate Governance
+Combined Management Report | Our 2017 fiscal year
+Infineon Technologies AG | Significant events after the end of the reporting period
+P see page 28
+Psee page 81 ff.
+P see page 77
+Dividend
+Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available for distribution to
+shareholders is based on the level of unappropriated profit (Bilanzgewinn) recorded by the ultimate parent, as
+determined in accordance with the German Commercial Code (HGB).
+Infineon Technologies AG reports unappropriated profit of €306 million in its financial statements for the fiscal year
+ended 30 September 2017. Due to the strong business performance, a proposal will be made to shareholders
+at the Annual General Meeting 2018 to increase the dividend for the 2017 fiscal year by 3 cents to € 0.25 per share.
+The disbursement of the proposed dividend is subject to approval by shareholders.
+The Company paid a dividend of €0.22 per share (€248 million in total) for the 2016 fiscal year.
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+For information regarding Infineon's long-term dividend policy, see "Sustainable value creation for our shareholders"
+in the chapter "Group Strategy".
+The expected developments, together with associated material risks and opportunities of Infineon Technologies AG
+are very similar to those of the Infineon Group. Moreover, it is assumed that the result from investments will play
+a major role in Infineon Technologies AG's earnings performance. As a general rule, Infineon Technologies AG
+participates in the risks of its subsidiaries and equity investments on the basis of the relevant shareholding. As the
+parent company, Infineon Technologies AG is integrated in the Infineon Group's overall risk management system
+and internal control system. For more information on this topic, together with associated material risks and oppor-
+tunities of Infineon Technologies AG, see the chapter "Risk and opportunity report".
+Most transactions within the Infineon Group involving derivative financial instruments are handled by Infineon
+Technologies AG. The comments provided in "Principles and structure of Infineon's treasury" within the chapter
+"Review of liquidity" regarding the nature and scope of transactions with derivative financial instruments and
+hedged risks apply to Infineon Technologies AG. Reference is also made to the Notes to the Separate Financial
+Statements of Infineon Technologies AG.
+Significant events after the end
+of the reporting period
+Psee page 169
+Significant events after the end of the reporting period correspond to the events described in note 25 to the
+Consolidated Financial Statements.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+95
+95
+Combined Management Report | Our 2017 fiscal year
+Expected developments, together with associated material risks and opportunities
+Compensation report
+Psee page 149 f.
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board of Infineon Technologies AG
+shall consist of at least two members. The Management Board currently comprises four members. Members of the
+Management Board are appointed and dismissed by the Supervisory Board in accordance with section 84, paragraph 1,
+AktG. As Infineon Technologies AG falls within the scope of the German Co-Determination Act (Mitbestimmungs-
+gesetz - "MitbestG"), the appointment or dismissal of members of the Management Board requires a two-thirds
+majority of the votes of the members of the Supervisory Board (section 31, paragraph 2, MitbestG). If such majority
+is not achieved at the first ballot, the appointment may be approved on a recommendation of the Mediation Com-
+mittee at a second ballot by a simple majority of the votes of the members of the Supervisory Board (section 31,
+paragraph 3, MitbestG). If the required majority is still not achieved, a third ballot is held in which the Chairman of
+the Supervisory Board has two votes (section 31, paragraph 4, MitbestG). If the Management Board does not have
+the required number of members, in urgent cases, the local court (Amtsgericht of Munich) makes the necessary
+appointment upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB) | Corporate Governance Report |
+Declaration concerning the management of the Company | Compensation report
+99
+99
+P see page 142 f.
+243,040
+Significant agreements in the event of a change of control
+Various financing contracts with lending banks and capital market creditors (see note 12 to the Consolidated
+Financial Statements) contain defined change-of-control clauses which give creditors the right to call for early
+repayment. These clauses reflect standard market practice.
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy agreements and
+approvals, supply contracts, joint venture agreements and license agreements contain customary change-of-control
+clauses, according to which a change in control of Infineon Technologies AG triggers the right of the other party
+at its sole discretion to terminate or to continue the agreement as well as other rights which may, under certain
+circumstances, be unfavorable for Infineon.
+If a member of the Management Board leaves his or her position in connection with a defined change of control
+(namely, where a party holds at least 50 percent of the voting rights in Infineon Technologies AG) that member
+is currently entitled to continued payment of the relevant annual remuneration for the entire remaining contract
+term. In accordance with a special contract termination right granted to members of the Management Board,
+the period of continued payment is capped at a maximum of 36 months in the event that the member resigns, or at
+a minimum of 24 months and a maximum of 36 months in the event that the member is removed from office or
+dismissed by Infineon Technologies AG. Further details are contained in the Compensation Report.
+Corporate Governance
+The change-of-control clauses agreed with the members of the Management Board correspond to the recommen-
+dation made in section 4.2.3, paragraph 5, of the German Corporate Governance Code. Such clauses are intended
+to give members of the Management Board financial security in the event of a change of control, with a view to
+preserving their independence in this situation.
+Corporate Governance Report
+The Corporate Governance Report is publicly available.
+@www.infineon.com/corporate-governance-report
+Declaration concerning the management of the Company
+The Declaration on Corporate Governance in accordance with section 289a and section 315, paragraph 5, of the
+German Commercial Code (HGB)¹ has been made publicly accessible.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/corporate-governance
+Compensation report
+This Compensation Report, which forms part of the Combined Management Report, explains the principles applied
+in determining compensation for the Management Board and Supervisory Board of Infineon Technologies AG and
+the level of remuneration paid to the individual members of the Management Board and Supervisory Board in
+accordance with the applicable legal requirements and the recommendations of the German Corporate Governance
+Code in the version dated 7 February 2017 (Deutscher Corporate Governance Kodex - "DCGK"). Infineon believes
+that transparent and understandable reporting of Management Board and Supervisory Board compensation
+represents a fundamental element of good corporate governance.
+1 In accordance with Article 80 of the Introductory Act to the German Commercial Code (EGHGB), the sections 289f and 315d of the German Commercial
+Code (HGB) - in the version pertaining to the CSR Directive Implementation Act dated 11 April 2017 - are applicable for the first time for the fiscal year
+beginning after 31 December 2016 (i.e. for Infineon's 2018 fiscal year).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Comparable arrangements for employees are only in place in a small number of individual cases. Notwithstanding
+the above points, the conditions of both the Performance Share Plan (open to participation by members of the
+Management Board, managers and other selected employees of the worldwide company) and the Restricted Stock
+Unit Plan (additionally applicable to specified employees of Infineon in the USA) contain rules that are triggered
+in the event of a defined change of control (namely holding at least 30 percent of the voting rights of Infineon
+Technologies AG). For the most part, these rules specify that the vesting periods that are envisaged by the relevant
+plans are aborted in the event of a change of control. The corresponding rule in the Performance Share Plan does
+not, however, apply to members of the Management Board, given that the service contracts take precedence.
+Rules governing the appointment and dismissal of members of the Management Board
+Combined Management Report | Our 2017 fiscal year
+The use of own shares, acquired through derivatives, is governed by the same rules as applicable for the direct
+acquisition of own shares.
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment for members of the
+Management Board is five years. Re-appointment or extension of the term of office, in each case for a maximum
+of five years, is permitted (section 84, paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of
+Association and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a
+deputy chairman to the Management Board. The Supervisory Board may revoke the appointment of a member of
+the Management Board and the Chairman of the Management Board for good cause (section 84, paragraph 3, AktG).
+Rules governing the amendment of the Articles of Association
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Association rests with the
+Annual General Meeting. However, section 10, paragraph 4, of the Articles of Association gives the Supervisory
+Board the authority to amend the Articles of Association insofar as such amendments relate merely to the wording,
+such as changes in the share capital amount resulting from a capital increase out of conditional or authorized
+capital or a capital decrease by means of cancellation of own shares. Unless the Articles of Association provide for
+another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual General Meeting regarding
+the amendment of the Articles of Association require a majority of at least three quarters of the share capital repre-
+sented. Section 17, paragraph 1, of the Articles of Association of Infineon Technologies AG provides in principle
+for resolutions to be passed with a simple majority of the votes cast and, when a capital majority is required, with
+a simple majority of the capital unless a higher majority is required by law or in accordance with other stipulations
+contained in the Articles of Association.
+Powers of the Management Board to issue shares
+The powers of the Management Board to issue shares derive from section 4 of the Articles of Association, in
+conjunction with applicable legal provisions. Further information relating to the Company's existing Authorized
+and Conditional Capital can be found in note 15 to the Consolidated Financial Statements.
+Authorization to issue bonds with warrants and/or convertible bonds
+The Annual General Meeting held on 13 February 2014 authorized the Management Board, in the period through
+12 February 2019, either once or in partial amounts, to issue bonds with warrants and/or convertible bonds (referred
+to collectively as "bonds") in an aggregate nominal amount of up to €2,000,000,000, to guarantee such bonds issued
+by subordinated Group companies of the Company and to grant holders of bond options or conversion rights to
+up to 130,000,000 no-par-value registered Company shares, representing a notional portion of the share capital
+of up to €260,000,000, in accordance with the relevant terms of the bonds. The Management Board is authorized,
+with the approval of the Supervisory Board, to exclude the subscription rights of the shareholders to the bonds,
+> if the issue price is not substantially lower than the theoretical market value of the bonds, as determined in
+accordance with accepted methods of financial mathematics; however this only applies insofar as the shares to be
+issued to service the option and/or conversion rights established on this basis in aggregate do not exceed 10 percent
+of the share capital, either at the time of this authorization becoming effective or at the time of its exercise;
+> in order to exclude fractional amounts resulting from a given subscription ratio from the subscription rights
+of the shareholders to the bonds or insofar as such action is necessary in order to grant holders of option or
+conversion rights from bonds that have either already been or will in future be issued by the Company or its
+subordinated Group companies subscription rights to that extent to which they would be entitled after exercise
+of their rights or after fulfillment of any conversion obligations.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+98
+Even if the dilution protection regulations are applied, the option or conversion price must equal at least 90 percent
+of the average stock exchange price of the Company's shares in the Xetra closing auction on the Frankfurt Stock
+Exchange (or a comparable successor system); further details - including the conditions under which the option or
+conversion price may be reduced - are set out in the authorization.
+The Management Board is authorized, subject to the requirements resolved by shareholders at the Annual General
+Meeting, to determine the further details of the bond issue, including its terms and conditions.
+Purchase of own shares
+A resolution passed by the Annual General Meeting on 28 February 2013 authorizes Infineon Technologies AG, in
+the period through 27 February 2018, to acquire its own shares, within the statutory boundaries, in an aggregate
+amount not exceeding 10 percent of the share capital at the time the resolution was passed or - if the latter amount
+is lower- of the share capital in existence at the time the authorization is exercised. The Company may not use the
+authorization for the purposes of trading in its own shares. The Management Board decides whether own shares
+are acquired through the stock exchange, by means of a public offer to purchase addressed to all shareholders or a
+public invitation to submit offers for sale or via a bank or other entity that meets the requirements of section 186,
+paragraph 5, sentence 1, AktG. The authorization includes differentiating requirements – in particular with regard to
+the permissible purchase price – for each method of acquisition.
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization may – if not sold either via
+the stock exchange or by means of a public offer to purchase addressed to all shareholders - be used for all legally
+admissible purposes. The shares may also be canceled or offered to third parties in conjunction with business
+combinations or the acquisition of companies, parts of companies or participations in companies. Under specified
+circumstances subject to the consent of the Supervisory Board, the shares may also be sold to third parties in
+return for cash payment (including by means other than through the stock exchange or through an offer to all
+shareholders), used to meet the Company's obligations under bonds with warrants and convertible bonds and
+stock option plans, offered for sale or granted as a remuneration component to members of representative bodies
+and employees within the Group, and/or used to repay securities-backed loans. The subscription right of share-
+holders is excluded in all of the above cases (except when the shares are canceled). In addition, the subscription
+rights of shareholders are excluded in respect of fractional amounts in instances in which the shares are sold
+through a public offer addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on 28 February 2013, the acquisition of Infineon
+Technologies AG shares may also be effected using equity derivatives. The total number of shares that can be
+acquired using derivatives may not exceed 5 percent of the Company's share capital, determined either at the time
+of this authorization becoming effective or at the time of its exercise through the use of the derivatives. The shares
+acquired through the exercise of this authorization are to be counted toward the acquisition threshold for the
+shares acquired in accordance with the authorization to acquire own shares as described above. The authorization
+stipulates other restrictions when derivatives are deployed, including their execution, term, servicing and acquisi-
+tion price.
+If own shares are acquired using derivatives in accordance with the requirements stipulated in the authorization,
+any right of the shareholders to conclude such derivative transactions with the Company will be excluded in
+analogous application of section 186, paragraph 3, sentence 4, AktG. Similarly, the shareholders have no right to
+conclude derivative transactions with the Company insofar as arrangements for the conclusion of derivative trans-
+actions include a preferred offer for the conclusion of derivative transactions concerning small volumes of shares.
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the Company is required to
+accept the shares under the derivative transactions. No other right to sell shares will apply in this connection.
+Corporate Governance
+158,240
+2015-2017 tranche
+2016-2018 tranche
+2017-2019 tranche
+433,182
+727,095
+112,087
+25,384
+155,951
+382,414
+415,193
+112,087
+2015-2017 tranche
+691,534
+201,537
+2014-2016 tranche
+Mid Term Incentive (MTI)1
+Multi-year variable compensation
+1,299,546
+2,004,656
+336,260
+76,153
+429,968
+Single-year variable compensation (STI)
+155,951
+Variable compensation
+727,095
+Performance Share Plan²
+P see page 100 ff.
+104
+Corporate Governance
+Compensation report
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+4 With effect from 30 June 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from 30 September 2016.
+3 With effect from 1 July 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for operations.
+2 The figures for the active members of the Management Board in the 2017 fiscal year are based on a fair market value per performance share amounting to
+€11.25 (2016: €7.07), which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+6,065,349
+8,136,062
+3,215,067
+4,781,961
+761,971
+1,351,433
+101,537
+280,484
+1,649,124
+Total compensation
+932,108
+Total variable compensation
+408,391
+907,922
+190,238
+Long Term Incentive (LTI)
+Members of the Management Board did not receive any loans from Infineon, either in the 2017 or 2016 fiscal years.
+2,730,000
+120,282
+2,850,282
+562,500
+26,962
+589,462
+932,108
+925,995
+1,202,937
+1,324,027
+2,434,751
+1,714,808
+2,825,962
+190,238
+164,024
+211,838
+244,367
+315,608
+Total compensation
+Total variable compensation
+Performance Share Plan²
+Long Term Incentive (LTI)
+155,951
+172,153
+243,040
+25,384
+155,951
+112,087
+172,153
+101,537
+3,195,000
+159,101
+3,354,101
+1,996,140
+1,664,836
+178,947
+717,016
+171,250
+7,697
+685,000
+32,016
+Total fixed compensation
+Fringe benefits
+Basic annual salary
+Fixed compensation
+2016
+2017
+2016
+Total
+Management Board
+2017
+2016
+Arunjai Mittal4
+Member of the
+Management Board
+2017
+Member of the
+Management Board
+Jochen Hanebeck³
+in €
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+2 The figures for the active members of the Management Board in the 2017 fiscal year are based on a fair market value per performance share amounting to
+€11.25 (2016: €7.07), which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+3 With effect from 1 July 2016 Dr. Helmut Gassel was appointed to the Management Board with responsibility for strategy development, sales and marketing,
+and the regions.
+281,501
+1,717,180
+Similarly, they did not receive any benefits from third parties in the 2017 and 2016 fiscal years, whether promised
+or actually paid, for their Board activities at Infineon.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+In accordance with their service contracts, members of the Management Board are entitled to a chauffeur-driven
+company car, which may also be used for private purposes. Operating and maintenance costs for the company
+car and chauffeur are borne by the Company. Taxes arising on the fringe benefit related to private usage are borne
+by the members of the Management Board.
+16,910
+190,238
+16,910
+2017
+Jochen Hanebeck²
+2016
+(Member of the Management Board)
+16,910
+190,238
+16,910
+2017
+Dr. Helmut Gassel¹
+85,288
+164,024
+23,200
+62,088
+2016
+Fringe benefits
+(Chief Financial Officer)
+2016
+2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+3 With effect from 30 June 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from 30 September 2016.
+2 With effect from 1 July 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for operations.
+1 With effect from 1 July 2016 Dr. Helmut Gassel was appointed to the Management Board with responsibility for strategy development, sales and marketing,
+and the regions.
+272,512
+291,128
+62,088
+907,922
+408,391
+80,704
+57,764
+214,748
+2016
+210,424
+2017
+Total
+62,088
+2016
+(Member of the Management Board)
+Arunjai Mittal³
+104,118
+(Member of the Management Board)
+211,838
+Number
+of the fiscal year
+at the end
+Virtual performance
+shares outstanding
+at the beginning of the fiscal year
+Virtual performance shares newly granted
+Performance Share Plan
+Fair value
+grant date
+Number
+at the beginning
+of the fiscal year
+Virtual performance
+shares outstanding
+Member of the
+Management Board
+The following table shows the number of performance shares awarded to members of the Management Board in
+the 2017 fiscal year. In addition, the table contains information relating to the Stock Option Plan 2010, on the basis
+of which stock options were allocated to members of the Management Board for the final time in the 2013 fiscal year.
+As described in the section "Management Board compensation", the contractually agreed LTI is granted to members
+of the Management Board by the Company in the form of "performance shares". The average price of the Infineon
+share relevant for the number of performance shares granted for the 2017 fiscal year was €13.01 (2016: €10.56).
+A fair market value of €11.25 (2016: €7.07) per performance share granted in the 2017 fiscal year was determined,
+taking account - among other things - of the cap of 250 percent cap set on the LTI allocation amount.
+Share-based compensation
+The Company also maintains accident insurance policies for members of the Board in the case of death (€3 million)
+and invalidity (€5 million).
+Fiscal
+Number
+year
+Dr. Reinhard Ploss
+18,830
+in €
+2017
+Dominik Asam
+125,136
+244,367
+34,564
+90,572
+85,288
+125,136
+2016
+(Chief Executive Officer)
+153,190
+315,608
+28,054
+2017
+94,858
+2017
+Dr. Helmut Gassel²
+213,678
+350,952
+(Member of the Management Board)
+167,740
+130,952
+52,260
+2016
+(Member of the Management Board)
+2017
+94,858
+2016
+2016
+Arunjai Mittal 4
+2017
+229,167
+(Member of the Management Board)
+Jochen Hanebeck³
+Cost of goods sold
+68,152
+2017
+2016
+229,167
+(Chief Financial Officer)
+285,173
+62,800
+130,952
+2017
+Dominik Asam
+323,243
+Dr. Reinhard Ploss
+120,000
+95,800
+307,500
+433,214
+2016
+(Chief Executive Officer)
+376,461
+99,300
+208,200
+307,500
+29,914
+Total
+Compensation granted to members of the Management Board in accordance with the DCGK (total compensation
+and compensation components) as well as the minimum and maximum values that can be achieved are shown
+in the following table:
+2016
+Compensation granted in accordance with DCGK
+The following table shows the value of compensation granted for the 2016 and 2017 fiscal years, including fringe
+benefits, as well as the minimum and maximum values that can be achieved for the 2017 fiscal year.
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed pursuant to the DCGK at the
+target value (i.e. the value in the event of 100 percent target achievement). The MTI is required to be disclosed - in a
+deviation from DRS 17 - at the target value for an "average probability scenario" at the grant date. For these purposes,
+Infineon assumes 100 percent target achievement. In addition, the pension expense, i.e. the service cost pursuant to
+IAS 19 (see "Commitments to members of the Management Board upon termination of their Board activities" in this
+chapter), is also required to be included in the amount of total compensation disclosed in accordance with the DCGK.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Combined Management Report | Our 2017 fiscal year
+year
+Corporate Governance
+2017 (max.)
+2017 (min.)
+2016
+Dominik Asam
+Chief Financial Officer
+Dr. Reinhard Ploss
+Chief Executive Officer
+106
+2017
+Variable compensation
+Total fixed compensation
+2017
+2017
+Compensation report
+German Corporate Governance Code
+438,452
+1,013,333
+667,619
+271,000
+263,540
+167,452
+82,174
+120,000
+160,607
+851,350
+697,528
+1 When exercising stock options members of the Management Board may only make gains up to a pre-determined amount (cap). Where the cap has been
+reached in the fiscal year stock options have expired.
+The DCGK recommends that the individual compensation components of each member of the Management Board
+be disclosed in accordance with specified criteria. It also recommends that disclosure is based on the model tables -
+in part diverging from DRS 17 - provided in the appendix to the Code.
+2 With effect from 1 July 2016 Dr. Helmut Gassel was appointed to the Management Board with responsibility for strategy development, sales and marketing,
+and the regions.
+4 With effect from 30 June 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from 30 September 2016.
+P see page 151 f.
+P see page 108 ff.
+Further details regarding the performance shares granted to the members of the Management Board on 1 Octo-
+ber 2016 for the 2017 fiscal year are provided in note 17 to the Consolidated Financial Statements. In a change
+from previous practice, the performance shares for the 2018 fiscal year will not be allocated to the members of the
+Management Board until 1 March 2018.
+Special bonuses
+The Supervisory Board did not award any special bonuses to members of the Management Board during the 2017
+fiscal year.
+Other awards and benefits
+In the 2009 fiscal year, the Company entered into a restitution agreement with each of the active members of the Man-
+agement Board at that time. Dr. Ploss is the only current member of the Management Board affected by the agreement.
+These agreements stipulate that the Company covers all costs and expenses of any legal, governmental, regulatory
+and/or parliamentary proceedings and investigations as well as arbitration proceedings, in which the member of
+the Management Board is involved in conjunction with his/her activities on behalf of the Company. However, the
+agreements specifically exclude any restitution of costs if the Company initiates proceedings against the member of
+the Management Board for a breach of the duty of care owed in conjunction with section 93, paragraph 2, German
+Stock Corporation Act (Aktiengesetz).
+Management Board compensation in the 2017 fiscal year in accordance with the
+3 With effect from 1 July 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for operations.
+Management Board
+Gross profit
+Number
+Basic earnings per share (in euro) attributable to
+Shareholders of Infineon Technologies AG
+Non-controlling interests
+Attributable to:
+743
+790
+2
+(1)
+5
+shareholders of Infineon Technologies AG:1
+Income (loss) from discontinued operations, net of income taxes
+Net income
+791
+Income from continuing operations
+36
+(142)
+4
+705
+933
+Income from continuing operations before income taxes
+Income tax
+3
+741
+3
+Basic earnings per share (in euro) from continuing operations
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Basic earnings per share (in euro) from discontinued operations
+Basic earnings per share (in euro)
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+666
+(1)
+790
+744
+0.70
+0.66
+2016 2017 (min.)
+0.70
+Diluted earnings per share (in euro) from continuing operations
+Diluted earnings per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+6
+0.70
+0.66
+6
+6
+0.70
+0.66
+1 The calculation of earnings per share is based on unrounded figures.
+0.66
+in €
+Gain from investments accounted for using the equity method
+(63)
+Research and development expenses
+Combined Management Report | Our 2017 fiscal year
+Corporate Governance
+Compensation report
+105
+Stock options
+outstanding
+at the begin-
+ning of the
+fiscal year
+Stock Option Plan 2010
+Stock options
+outstanding
+at the end
+of the
+fiscal year
+Stock options
+exercised in
+the fiscal year
+Selling, general and administrative expenses
+Stock options
+expired in
+the fiscal
+year¹
+at the end of
+the fiscal year
+Total
+expense for
+share-based
+compen-
+sation
+Member of the
+Fiscal
+Number
+Number
+Number
+Number
+Exercisable
+stock options
+outstanding
+(67)
+Other operating income
+6,473
+6
+10
+Financial expenses
+Financial income
+763
+983
+Operating income
+(23)
+(57)
+7,063
+Other operating expenses
+14
+(791)
+(819)
+(770)
+(776)
+2,330
+2,621
+(4,143)
+(4,442)
+17
+2017 (max.)
+Combined Management Report | Our 2017 fiscal year
+36,154
+1,111,154
+90,000
+2017
+Annette Engelfried
+104,000
+14,000
+90,000
+2016
+96,000
+6,000
+90,000
+2017
+Dr. Herbert Diess
+150,000
+30,000
+15,000
+30,000
+2016
+146,000
+26,000
+30,000
+90,000
+2017
+Johann Dechant
+116,417
+16,000
+10,417
+90,000
+2016
+133,000
+18,000
+90,000
+20,000
+125,000
+2016
+24,000
+15,000
+90,000
+2017
+Hans-Ulrich Holdenried
+129,000
+24,000
+15,000
+90,000
+2016
+123,000
+18,000
+15,000
+90,000
+2017
+Gerhard Hobbach
+127,000
+90,000
+15,000
+20,000
+125,000
+Peter Gruber
+2017
+25,000
+90,000
+18,000
+123,000
+2016
+90,000
+15,000
+22,000
+15,000
+90,000
+2017
+sation
+Payments to former members of the Management Board in the 2017 fiscal year
+The Management Board service contracts otherwise contain no promises of severance pay for situations in which
+contracts are terminated early.
+The service contracts of members of the Management Board include a change of control clause, which stipulates
+the terms that apply when the activities of a member of the Management Board are terminated in the event of
+a significant change in Infineon's ownership structure. A change of control for the purposes of this clause occurs
+when a third party, individually or together with another party, acquires at least 50 percent of the voting rights
+in Infineon Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover Act (Wert-
+papiererwerbs- und Übernahmegesetz - "WpÜG”). Members of the Management Board have the right to resign and
+terminate their service contracts within twelve months of the announcement of such a change of control and any
+who choose to do so are entitled to continued payment of their annual remuneration through to the end of the
+originally agreed duration of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes a
+member of the Management Board or terminates his or her contract within twelve months of the announcement of
+a change of control, the members of the Management Board concerned are entitled to continued payment of their
+annual remuneration through to the end of the originally agreed duration of their contract, subject to a minimum
+period of 24 months and a maximum period of 36 months.
+Early termination of service contracts
+4 With effect from 30 June 2016 Arunjai Mittal resigned from the Management Board, his employment ended with effect from 30 September 2016.
+3 With effect from 1 July 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for operations.
+2 With effect from 1 July 2016 Dr. Helmut Gassel was appointed to the Management Board with responsibility for strategy development, sales and
+marketing, and the regions.
+1 The upper line for Dr. Ploss shows the contribution amount, the present value and the service cost relating to the defined contribution entitlements
+additionally granted to him with effect from 1 January 2016. The second line shows the pension entitlements and the present value of his
+fixed amount pension plan. Income from past service cost amounting to €1,114,773 was recognized in the 2017 fiscal year.
+567,517
+18,223,665
+913,581
+241,677
+2,511,117
+14,171,827
+225,000
+958,500
+552,750
+210,000
+2016
+210,000
+205,500
+3,361,736
+162,385
+(Member of the Management Board)
+2016
+51,375
+Total compensation (primarily pension benefits) of €1,324,427.14 (2016: €1,200,241) is granted to the former
+members of the Management Board in the 2017 fiscal year. As of 30 September 2017, accrued pension liabilities
+for former members of the Management Board amounted to €67,862,601 (2016: €77,037,350).
+3,540,697
+Arunjai Mittal 4
+2017
+(Member of the Management Board)
+2016
+Total
+2017
+29,321
+129,000
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Corporate Governance
+Compensation report
+1,075,000
+Meeting
+attendance
+fees
+functions
+for specific
+compen-
+sation
+Peter Bauer
+Member of the Supervisory Board
+Allowance
+Fixed
+Fiscal year
+in €
+Supervisory Board compensation
+The total compensation (including meeting attendance fees) paid to the individual members of the Supervisory
+Board in the 2017 fiscal year comprises the following (these figures do not include value-added tax at 19 percent):
+Compensation of the Supervisory Board for the 2017 fiscal year
+112
+Compensation report
+Corporate Governance
+111
+Review of the Management Board compensation system and individual contracts
+In accordance with section 4.2.2 DCGK, the Supervisory Board has engaged an external, independent compensation
+expert to review the Management Board compensation system in place since 1 October 2010 and conclude on its
+compliance with applicable legislation and its overall appropriateness. In this context, the target annual incomes of
+each individual member of the Management Board were subjected to detailed scrutiny. The expert's report concluded
+that the Company's compensation system complies with legal requirements and with the recommendations set
+out in the German Corporate Governance Code (DCGK). In particular, the expert concluded that the compensation
+of Infineon's Management Board is commensurate with market conditions and that the variable compensation
+component is oriented towards the sustainable growth of the enterprise. Notwithstanding the conclusion that
+the individual target annual incomes of the members of the Management Board are appropriate, both horizontally
+(i.e. looking at comparable companies) and vertically (i.e. looking at Infineon's various employee groupings), the
+report points out the existence of some scope for maneuverability. The results of the compensation expert's review,
+presented in a final report in fall 2016, were discussed in detail during the Executive Committee meetings held on
+24 October 2016 and 9 May 2017 and by the full Supervisory Board on 15 November 2016 and 18 May 2017. The
+Supervisory Board concurred with the conclusions reached by the compensation expert. It has therefore resolved
+to increase the compensation of the members of the Management Board with effect from 1 October 2017 - in the
+case of Dr. Ploss by 15 percent and in the case of Mr. Asam, Dr. Gassel and Mr. Hanebeck by 10 percent respectively.
+The intention is for the relation of the individual compensation components and hence the compensation structure
+overall to remain unchanged.
+Supervisory Board compensation
+Compensation structure
+The Supervisory Board compensation system was most recently amended at the Annual General Meeting held on
+18 February 2016, with (retrospective) effect from 1 October 2015. The objective of the amendment was to remove
+the previous variable compensation component and structure Supervisory Board compensation in future in
+compliance with the recommendations of the DCGK.
+Combined Management Report | Our 2017 fiscal year
+The compensation due to the Supervisory Board in each fiscal year (total compensation) is governed by section 11
+of the Company's Articles of Association and comprises the following:
+› An allowance recognizing the additional work involved in performing certain functions within the Supervisory
+Board: The Chairman of the Supervisory Board receives an allowance of €90,000, each Vice-chairman receives
+an allowance of €30,000, the Chairman of the Investment, Finance and Audit Committee and the Chairman of the
+Strategy and Technology Committee each receive an allowance of €25,000 and each member of a Supervisory
+Board committee receives an allowance of €15,000 - with the exception of the Nomination Committee and the
+Mediation Committee. The additional allowance is payable only if the body to which the Supervisory Board or
+committee member belongs has convened or passed resolutions in the fiscal year concerned. A member of the
+Supervisory Board performing more than one of the functions indicated receives only the highest single additional
+allowance payable to a member performing the functions concerned. The allowance is paid to the relevant
+holder of office within one month of the end of the fiscal year.
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one of its committees that is
+attended in person. The meeting attendance fee is paid only once if more than one meeting of the relevant
+committees takes place on a given day.
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or one of its committees, or
+takes on a Supervisory Board function for which an allowance is paid, the relevant compensation components are
+disbursed on a pro-rata basis, i.e. payment of one twelfth of the relevant annual compensation component for each
+(started) month of membership or exercise of function.
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in connection with the
+performance of their Supervisory Board duties and for any value-added tax payable by them in this connection.
+The Company also pays any value-added tax incurred on their total remuneration (including meeting attendance
+fees) for the members of the Supervisory Board.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+› A fixed compensation (basic remuneration) of €90,000. This amount applies to each member of the Supervisory
+Board and is payable within one month of the close of the fiscal year.
+2016
+90,000
+15,000
+1,425,000
+1,440,000
+2016
+2017
+Total
+106,000
+16,000
+90,000
+2016
+102,000
+12,000
+90,000
+2017
+Diana Vitale
+139,000
+24,000
+25,000
+90,000
+90,000
+12,000
+102,000
+2016
+90,000
+10,000
+260,000
+100,000
+2017
+90,000
+25,000
+20,000
+135,000
+2016
+Dr. Eckart Sünner
+2017
+288,000
+262,084
+Revenue
+2016
+2017
+114
+Notes
+€ in millions
+for the year ended 30 September 2017 and 2016
+Consolidated Statement of Operations
+Consolidated Statement of Operations
+Consolidated Financial Statements
+113
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+120 Notes to the Consolidated Financial Statements
+118 Consolidated Statement of Changes in Equity
+117 Consolidated Statement of Cash Flows
+116 Consolidated Statement of Financial Position
+115 Consolidated Statement of Comprehensive Income
+330,000
+1 Joined as Member of the Supervisory Board since 16 February 2017. The compensation for 2017 therefore was awarded on a pro-rata basis.
+2 Joined as Member of the Supervisory Board until 8 November 2017. The compensation for 2017 therefore was awarded on a pro-rata basis.
+2,032,084
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2017 or 2016 fiscal years.
+Neubiberg, 17 November 2017
+Management Board
+1,973,000
+Dr. Reinhard Ploss
+Dr. Helmut Gassel
+Jochen Hanebeck
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Content
+Consolidated
+Financial Statements
+114 Consolidated Statement of Operations
+Dominik Asam
+2017
+Kerstin Schulzendorf
+22,000
+90,000
+2016
+216,000
+36,000
+90,000
+90,000
+2017
+Géraldine Picaud 1
+Wolfgang Mayrhuber
+127,000
+22,000
+15,000
+90,000
+2016
+123,000
+18,000
+15,000
+28,000
+133,000
+Prof. Dr. Renate Köcher
+2017
+90,000
+16,000
+90,000
+106,000
+90,000
+12,000
+102,000
+Dr. Susanne Lachenmann
+2017
+90,000
+2016
+127,000
+34,000
+2017
+15,000
+90,000
+2016
+123,000
+18,000
+15,000
+90,000
+2017
+Jürgen Scholz
+128,667
+22,000
+16,667
+90,000
+2016
+15,000
+15,000
+2017
+60,000
+6,000
+66,000
+2016
+Dr. Manfred Puffer
+2017
+214,000
+90,000
+110,000
+2016
+90,000
+14,000
+104,000
+Prof. Dr. Doris Schmitt-Landsiedel²
+20,000
+Jochen Hanebeck³
+Total
+compen-
+2,780,620
+77,000
+308,000
+562,500
+26,962
+589,462
+717,016
+32,016
+685,000
+685,000
+32,016
+717,016
+171,250
+7,697
+178,947
+685,000
+32,016
+717,016
+47,728
+732,728
+685,000
+685,000
+47,728
+732,728
+171,250
+8,714
+179,964
+685,000
+47,728
+732,728
+231,000
+2017 (max.)
+2016
+107
+Arunjai Mittal
+Member of the Management Board
+2017
+2017 (max.)
+2017 (min.)
+2016
+Jochen Hanebeck4
+Member of the Management Board
+2017
+2017 (min.) 2017 (max.)
+2016
+Member of the Management Board
+Dr. Helmut Gassel³
+Compensation report
+2017 (min.)
+308,000
+770,000
+308,000
+108
+The total compensation allocated to the individual members of the Management Board for the 2017 fiscal year in
+accordance with DCGK - analyzed by component - is shown in the following table:
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2017 fiscal year
+in €
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+In line with the DCGK recommendations, the fixed compensation and the STI are required to be disclosed as the
+allocation amount for the relevant fiscal year concerned. In the case of the MTI, the DCGK recommends that this is
+disclosed as flowing to members of the Management Board in the fiscal year in which the plan term of the relevant
+MTI tranche ends. In addition to the fixed compensation and the STI granted for the 2017 fiscal year, the allocation
+amount for the 2015-2017 MTI tranche therefore flowed to the members of the Management Board in the 2017 fiscal
+year. In accordance with the DCGK, share-based payments are deemed to be allocated on the basis of the relevant
+time and value for German tax law purposes. The performance shares issued on 1 October 2013 which were settled
+in cash after the end of the 2017 fiscal year (see "Components of the Management Board compensation system"
+in this chapter) will not be disclosed as having flowed until the 2018 fiscal year in the following table. In line with
+the DCGK recommendations, the pension expense (meaning the service cost pursuant to IAS 19) constitutes the
+allocation amount (see previous table), even though it is not - strictly speaking - an allocation.
+Since compensation granted to members of the Management Board for the 2017 fiscal year does not coincide fully
+with amounts disbursed in a particular fiscal year, a separate table is presented - in accordance with the relevant
+DCGK recommendation - showing the amounts flowing to members of the Management Board for the 2017 fiscal year
+(the "allocation amount" ("Zufluss")).
+Allocation amount in accordance with DCGK
+P see page 100 ff.
+241,677
+1,511,139
+680,000
+1,936,000
+95,119
+162,385 162,385
+974,520 2,815,401
+308,000
+29,321
+516,268
+550,000
+77,000
+231,000
+616,000
+308,000
+770,000
+340,000
+25,458
+340,000
+190,238
+806,238
+132,853
+1,671,819
+308,000
+25,458
+513,422
+95,119 550,000 190,238
+95,119 1,936,000 806,238
+132,853 132,853 162,385
+960,700 2,801,581 1,685,639
+95,119
+616,000
+2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+5 With effect from 30 June 2016 Arunjai Mittal resigned from the Management Board, his employment ended with effect from 30 September 2016.
+Long Term Incentive (LTI)
+680,000
+340,000
+960,000
+340,000
+480,000
+480,000
+2017-2019 tranche
+2016-2018 tranche
+850,000
+340,000
+340,000
+1,200,000
+Mid Term Incentive (MTI)
+Multi-year variable compensation
+480,000
+480,000
+1,075,000
+35,724
+1,110,724
+1,075,000
+36,154
+1,111,154
+1,075,000
+750,000
+36,154
+1,111,154
+43,203
+793,203
+Performance Share Plan¹
+750,000
+41,185
+791,185
+750,000
+43,203
+43,203
+793,203
+793,203
+Single-year variable compensation (STI)
+750,000
+Dr. Reinhard Ploss
+Chief Executive Officer
+315,608
+157,804
+4 With effect from 1 July 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for operations.
+3 With effect from 1 July 2016 Dr. Helmut Gassel was appointed to the Management Board with responsibility for strategy development, sales and marketing, and the regions.
+2 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year (see "Benefits and pension entitlements in the 2017 fiscal year"
+in this chapter).
+1 The figures of the active members of the Management Board in the 2017 fiscal year are based on a fair market value per performance share amounting to €11.25 (2016: €7.07),
+which was calculated using a Monte-Carlo simulation.
+3,232,923
+1,196,342
+1,906,270
+1,982,261
+4,504,777
+1,590,081
+2,315,091
+297,220
+297,220
+271,061
+297,220
+321,123
+321,123
+912,500
+211,838
+164,024
+Total variable compensation
+1,275,608 1,204,367
+157,804
+244,367
+3,072,500
+844,024
+105,919
+105,919 2,142,500
+612,500
+Pension expense²
+Total compensation (DCGK)
+321,123
+2,707,885
+891,838
+Dominik Asam
+Chief Financial Officer
+Corporate Governance
+Jochen Hanebeck³
+for the
+relevant
+Benefit
+amounts
+determined
+entitlements
+(annual) as
+of beginning
+Pension
+110
+Fiscal year
+in €
+Pension entitlements
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Alongside the annual retirement entitlements and related benefit amounts, the following table shows the present
+values of pension entitlements earned to date and the service cost in accordance with IFRS. The service cost
+reported in the table for Dr. Gassel and Mr. Hanebeck only relates to periods of current Board activities. The present
+value of pension and benefit entitlements is particularly dependent on changes in the discount rate required to be
+applied (30 September 2017: 1.8 percent, 30 September 2016: 1.0 percent).
+The amounts credited to the pension entitlement accounts of the members of the Management Board - in line with
+the plan rules applied to Infineon employees - are paid out on or after reaching the age of 67, provided the service
+contract has also ended, or, upon request, at an earlier point in time if the service contract ends on or after reaching
+the age of 60. If the beneficiaries elect that their pension be paid out in monthly installments, the pension amount
+is adjusted automatically each year in accordance with the Infineon pension plan.
+> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result of their previous periods of
+employment in senior management positions with Infineon. The contracts appointing them to the Board specifi-
+cally state that the amounts made available to cover their vested pension entitlements represent a continuation
+of those vested entitlements and are, therefore, not subject to any separate vesting arrangements. The Company
+makes a fixed annual pension contribution on behalf of Dr. Gassel and Mr. Hanebeck for each full fiscal year of
+service on the Board, equivalent to 30 percent of the relevant agreed basic annual salary. The Supervisory Board
+is not required to decide each time on the amount to be contributed. The pension contributions for the 2017
+fiscal year for Dr. Gassel and Mr. Hanebeck amounted in each case to €205,500.
+> On joining the Management Board, the Company made a one-time, contractually vested initial pension contri-
+bution of €540,000 on behalf of Mr. Asam as compensation for the loss of vested retirement pension entitlements
+in connection with the termination agreement with his previous employer. For each fiscal year of his membership
+on the Management Board, Mr. Asam also receives a pension contribution from the Company amounting to
+between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed basic annual salary.
+As in the previous year, the pension contribution for Mr. Asam for the 2017 fiscal year has been set at 30 percent
+of his basic annual salary and therefore amounts to €225,000. The pension entitlements arising from the defined
+contributions made on behalf of Mr. Asam vested with effect from 31 December 2013.
+> The defined contribution pension plan in place for Dr. Ploss is also based on a fixed contribution amount of
+30 percent of the relevant agreed basic annual salary. The pension contribution made by the Company for the
+2017 fiscal year amounted to €322,500.
+1 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year (see "Benefits and pension entitlements in the 2017 fiscal year"
+in this chapter).
+2 With effect from 1 July 2016 Dr. Helmut Gassel was appointed to the Management Board with responsibility for strategy development, sales and marketing, and the regions.
+3 With effect from 1 July 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for operations.
+4 With effect from 30 June 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from 30 September 2016.
+Commitments to members of the Management Board upon termination of their Board activities
+Benefits and pension entitlements in the 2017 fiscal year
+In accordance with the Management Board compensation system in place since 2010, the members of the Manage-
+ment Board have, in the meantime, all received a defined contribution pension commitment, which is essentially
+identical to the Infineon pension plan applicable to all employees. The Company has accordingly set up a personal
+pension account (basic account) for each beneficiary and makes annual pension contributions to it. The Company
+adds annual interest to the balance in the basic account using the highest statutory interest rates valid for the
+insurance industry (guaranteed interest rates) until disbursement of the pension begins and may also award sur-
+plus credits. Ninety-five percent of any income earned over and above the guaranteed interest rate is credited to
+the pension account, either at the date on which disbursement of the pension begins or, at the latest, when the
+beneficiary reaches the age of 60. The balance of the basic account when disbursement of the pension begins
+(due to age, invalidity or death) – increased by an adjusting amount in the event of invalidity or death - constitutes
+the retirement benefit entitlement and is paid out to the member of the Management Board or his or her surviving
+dependents in twelve annual installments, or, if so requested by the member of the Management Board, in eight
+annual installments, as a lump sum or as a life-long pension. In addition to the defined contribution pension plan
+that has been in place for Dr. Ploss since 1 January 2016, a fully vested fixed-amount pension entitlement of
+€210,000 p.a. also exists for his Board activities up to 31 December 2015 which will not increase in future.
+Present value
+-
+Combined Management Report | Our 2017 fiscal year
+Corporate Governance
+Compensation report
+109
+If the entitlements of members of the Management Board (i) have not yet legally vested or (ii) have legally vested,
+but are not protected by the state pension insurance scheme (Pensionssicherungsverein), the Company maintains
+pension reinsurance policies in favor of, and pledged to, the members of the Management Board concerned.
+The plan rules applicable to members of the Management Board differ in terms of the initial defined component,
+the annual transfer to the pension account and the vesting period.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+1,675,191
+of pension
+and benefit
+entitlement
+Member of the
+Management Board
+Dr. Helmut Gassel²
+Member of the
+Management Board
+2016
+(Member of the Management Board)
+132,853
+2,716,822
+205,500
+2017
+Dr. Helmut Gassel²
+271,061
+2,558,440
+225,000
+2016
+(Chief Financial Officer)
+297,220
+2,586,986
+225,000
+2017
+of pension
+period
+fiscal year
+Dr. Reinhard Ploss¹
+2017
+322,500
+629,343
+Original
+service cost
+(earned in the
+current year)
+321,123
+210,000
+4,876,940
+2016
+210,000
+6,832,791
+Dominik Asam
+(Chief Executive Officer)
+284,421
+51,375
+Member of the
+Management Board
+474,720
+670,080
+compensation (STI)
+Single-year variable
+Variable compensation
+589,462
+562,500
+26,962
+171,250
+7,697
+178,947
+685,000
+32,016
+717,016
+171,250
+8,714
+179,964
+685,000
+47,728
+732,728
+750,000
+41,185
+791,185
+750,000
+35,724
+43,203
+1,110,724 793,203
+241,677
+Total fixed compensation
+1,075,000
+1,075,000
+Arunjai Mittal 4
+Member of the
+Management Board
+2017
+2016
+2017
+2016
+474,640
+2017
+2017
+2016
+2017
+2016
+Fixed compensation
+Basic annual salary
+Fringe benefits
+2016
+336,260
+36,154
+1,111,154
+76,153
+429,968
+29,321
+162,385
+844,052
+76,153
+429,968
+76,153
+25,458
+281,575 1,309,369
+429,968
+132,853
+1,295,549
+Total compensation (DCGK) 4,306,577 2,841,524 2,595,823 2,868,798
+321,123
+Pension expense
+1,730,800
+Total variable compensation 2,874,300
+962,500
+550,000
+1,505,400 1,806,552
+297,220 271,061
+Stock Option Plan 2010 1,525,500
+Performance Share Plan
+550,000
+76,153
+336,260
+Multi-year variable
+compensation
+Mid Term Incentive (MTI)
+2014-2016 tranche
+429,968
+507,792
+507,792
+2015-2017 tranche
+678,720
+480,760
+Long Term Incentive (LTI)
+706,080
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary or
+has a right to such, and has the ability to influence these returns as a result of its power over the subsidiary.
+Power means that Infineon has existing rights that give Infineon the current ability to direct the relevant activities
+(the activities that significantly affect the aforementioned returns).
+The Consolidated Financial Statements presented here include the financial statements of Infineon Technologies AG
+and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity which, directly
+or indirectly, is controlled by Infineon Technologies AG.
+Basis of consolidation
+2 Summary of significant accounting policies
+P see page 173 ff.
+123
+The new standard applies to fiscal years that begin on or after 1 January 2019, accordingly Infineon will apply the
+standard from the fiscal year that begins on 1 October 2019. Infineon has just begun to review the quantitative and
+qualitative effects that the adoption of IFRS 16 will have on the Consolidated Financial Statements, and therefore
+cannot yet reliably estimate their extent. As lessee Infineon can use either the retrospective approach or the modified
+retrospective approach with optional practical simplification rules during the transition phase. The Company has not
+yet decided which transition approach will be adopted.
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+IFRS 16 introduces a standardized accounting model by which leasing contracts are to be recorded in the balance
+sheet of the lessee. This means that in future all assets and liabilities arising from a leasing agreement lessees
+must be recognized by the lessee. IFRS 16 makes provisions for exceptions for short term leasing arrangements with
+a duration of twelve months or less, and for leasing arrangements for low-value assets. The distinction between
+finance and operating leases is still required in the accounts of the lessor.
+IFRS 16 "Leases"
+In a cross-functional IFRS 15 project, Infineon captured and evaluated the effect on the Consolidated Financial
+Statements. The IFRS 15 project was divided into an analysis and design phase as well as an implementation phase.
+The analysis phase is well underway as of the balance sheet date, though not yet completed. It has concluded that
+future revenue under particular contract types will be recognized over a period of time instead of at a particular
+point in time. This will tend towards an earlier recognition than has previously been the case. For some customers
+with whom Infineon holds consignment stock, revenue recognition will shift from the point of withdrawal of goods
+and products by the customer to the point of delivery into the consignment warehouse. The changes will involve
+the separate disclosure of contract assets and liabilities in the Consolidated Statement of Financial Position as
+well as expanded quantitative and qualitative disclosure in the Notes to the Consolidated Financial Statements.
+Infineon does not expect a significant quantitative effect on the Consolidated Financial Statements overall. A reliable
+estimate of the accounting impact is not possible at this stage of the project, but only after completion of the system
+implementation of the technical concept.
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their
+fair value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value
+of acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of
+the fair value of items acquired over consideration paid is recognized as a gain.
+Notes to the Consolidated Financial Statements
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+Malaysian ringgit
+A list of subsidiaries of Infineon Technologies AG is provided in note 26.
+Functional currency, reporting currency and foreign currency translation
+The functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
+prepared with the euro as reporting currency.
+Foreign currency transactions are translated into the functional currency of the relevant entity using the exchange
+rates prevailing as of the transaction date. Monetary assets and liabilities which are not denominated in the
+functional currency of the reporting entity are translated at the closing exchange rate prevailing at the end of the
+relevant reporting period. Exchange rate gains and losses from the currency translation are recognized in the
+Consolidated Statement of Operations as part of the operating result.
+The assets and liabilities of foreign subsidiaries with functional currencies other than the euro are translated
+into euros using period-end exchange rates. Income and expenses of these entities are translated using the
+average exchange rate for the period under report. All cumulative differences arising from the currency translation
+of the equity in foreign subsidiaries arising from changes to exchange rates are recognized directly in equity in
+"Other reserves".
+The exchange rates of the primary currencies (€1 in foreign currency units) used in the preparation of the
+accompanying Consolidated Financial Statements, in alphabetical order, are as follows:
+€1 in units of foreign currency
+Closing rate
+Annual average exchange rate
+30 September 2017
+30 September 2016
+2017
+2016
+Japanese yen
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+The new standard provides a comprehensive framework for determining whether, to what extent, and at which point
+in time or over which period revenue should be recognized. For this purpose, the standard provides a principle-
+based, uniform, five-step model, which is to be applied to all categories of revenue transactions with customers.
+In essence revenue is recognized at the point control is transferred to the customer. IFRS 15 is to be applied to
+fiscal years beginning on or after 1 January 2018. Infineon will apply the standard from the fiscal year beginning
+on 1 October 2018. Cumulative effects that arise from the first-time application will be recognized directly in equity
+(modified retrospective approach).
+Share-based payment (classification and measurement
+of share-based payment transactions - Amendment to IFRS 2)
+122
+IFRIC 23
+IFRIC 22
+1 January 2019
+Leases
+IFRS 16
+1 January 2018
+Foreign currency transactions and advance consideration
+Uncertainty over income tax treatments
+including clarifications to IFRS 15
+IFRS 15
+1 January 2018
+Financial instruments
+IFRS 9
+1 January 2018
+132.8200
+Revenue from contracts with customers
+IFRS 15 "Revenue from Contracts with Customers"
+1 January 2018
+immaterial
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+IFRS 9 contains new rules for the classification and measurement of financial assets, which are based in particular
+on the underlying business model of the portfolio to which the financial asset is assigned and the specific form of the
+contractually agreed cash flows. Infineon assumes that financial assets that are presently recognized at amortized
+cost or at fair value through equity will in future be recognized at fair value through profit or loss. In future, according
+to IFRS 9, the recognition of the impairment of financial instruments will be based on expected losses instead of
+losses already incurred as is the case at present under IAS 39. For this purpose, models have been developed to
+estimate future credit losses for trade receivables as well as cash and cash equivalents and financial investments,
+which will be integrated into the existing credit risk management processes. IFRS 9 also contains new rules for
+the application of hedge accounting, which at Infineon will primarily result in changes to the documentation and
+effectiveness requirements. The provisions on financial liabilities have been largely adopted from IAS 39, expanded
+quantitative and qualitative disclosure in the Notes to the Consolidated Financial Statements are also required. The
+new standard is to be applied to fiscal years beginning on or after 1 January 2018, Infineon will apply the standard
+from the fiscal year beginning on 1 October 2018. According to present information, Infineon does not anticipate
+any material effects on the Consolidated Financial Statements, although the impact cannot yet be reliably quantified.
+The new measurement and classification requirements as well as those for impairments are generally to be applied
+retrospectively, whereas the new hedge accounting requirements are to be applied prospectively. Infineon will
+make use of the exemption which allows comparative information for previous periods to remain unadjusted. The
+difference arising from the transition to IFRS 9 will be recognized directly in equity at the beginning of the fiscal year
+in which the standard is first applied.
+IFRS 9 "Financial Instruments"
+none
+1 January 2019
+1 January 2018
+none
+1 January 2017
+Annual IFRS improvement cycle 2014-2016 -
+Amendments to IFRS 12
+immaterial
+immaterial
+see explanations
+below the table
+see explanations
+below the table
+see explanations
+below the table
+Annual IFRS improvement cycle 2014-2016 -
+Amendments to IFRS 1 and IAS 28
+4.9827
+Remaining other assets
+123.5746
+Fair value/amortized cost
+Lower of acquisition or production cost and net realizable value
+Lower of carrying amount and fair value less costs to sell
+(Amortized) Acquisition or production cost
+Impairment-only approach
+(Amortized) Acquisition or production cost
+Fair value/amortized cost
+Fair value directly through equity
+Fair value through profit or loss
+Fair value directly through equity
+(Amortized) Cost
+Trade payables
+Debt
+Provisions
+Pensions
+Other provisions
+Other liabilities (current and non-current):
+Other financial liabilities:
+Fair value/amortized cost
+Measured at fair value through profit or loss
+Other financial liabilities
+Remaining other liabilities
+Own shares
+Fair value/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Fair value through profit or loss
+Fair value directly through equity
+Fair value/amortized cost
+Fair value/amortized cost
+Acquisition cost
+124
+Cash and cash equivalents
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of
+three months or less, and are measured at their nominal amount.
+Financial instruments
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the
+acquisition or issuance of financial instruments are only included in the carrying amount if the financial instruments
+are not measured at fair value through profit or loss.
+Regular purchases and sales of financial assets are recognized on the basis of the settlement date.
+Financial assets are derecognized when the rights to receive payments from the investments have expired or
+have been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial
+liabilities are derecognized when they are extinguished, that is when the contractual obligation is discharged,
+canceled or expired.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Designated hedging instruments
+Nominal amount
+Measurement principle
+Equity and liabilities
+122.8719
+4.8052
+4.5685
+Singapore dollar
+US dollar
+1.6031
+1.5270
+1.5425
+1.5266
+1.1806
+1.1225
+1.1060
+1.1065
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Recognition and measurement principles
+Measured at fair value through profit or loss
+Designated hedging instruments
+Loans and receivables
+Available-for-sale
+Other assets (current and non-current):
+Other financial assets:
+with definite useful life
+Intangible assets (except goodwill):
+Property, plant and equipment
+Goodwill
+112.9300
+4.6434
+Assets classified as held for sale
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Assets
+Balance sheet item
+The following table summarizes the principal measurement bases used in the preparation of the Consolidated
+Financial Statements:
+Inventories
+IFRS 2
+1
+1 January 2017
+833
+812
+11
+(2)
+743
+790
+Income tax
+21
+2017
+Notes
+117
+Plus/minus: loss (income) from discontinued operations, net of income taxes
+Adjustments to reconcile net income to net cash provided by operating activities:
+Depreciation and amortization
+Net income
+€ in millions
+2016
+for the year ended 30 September 2017 and 2016
+Net interest result
+142
+11
+2
+2
+5
+2
+Change in inventories
+4
+Change in trade receivables
+Impairment charges
+Dividends received from joint ventures
+Losses on disposals of property, plant and equipment
+58
+56
+(36)
+Other non-cash result
+Consolidated Statement of Cash Flows
+Consolidated Statement of Cash Flows
+Consolidated Financial Statements
+4,309
+Own shares at cost
+Other reserves
+Accumulated deficit
+Additional paid-in capital
+Ordinary share capital
+4,064
+immaterial
+2,534
+2,211
+92
+112
+76
+67
+Total liabilities
+15
+2,272
+2,265
+9,087
+9,945
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Total liabilities and equity
+Total equity
+5,023
+5,636
+(37)
+(37)
+91
+31
+(2,312)
+(1,404)
+5,016
+4,774
+5
+16
+28
+6
+Purchases of intangible assets and other assets
+Proceeds from sales of businesses and interests in subsidiaries, net of cash disbursed
+Acquisitions of shares in MoTo, net of cash acquired
+(11)
+(5)
+Acquisitions of businesses, net of cash acquired
+Purchases of property, plant and equipment
+(9)
+3,855
+3,303
+8
+Proceeds from sales of financial investments
+(4,130)
+(3,300)
+Purchases of other equity investments
+11
+11
+351
+(1,098)
+(1,131)
+14
+4
+Proceeds from issuance of long-term debt
+Net change in related party financial receivables and payables
+Net change in short-term debt
+Net cash used in investing activities from continuing operations
+Net cash used in investing activities from discontinued operations
+Net cash used in investing activities
+Proceeds from sales of property, plant and equipment and other assets
+(716)
+(874)
+(110)
+(148)
+10
+(112)
+8
+13
+Purchases of financial investments
+1,723
+Change in other assets and liabilities
+(72)
+91
+13
+Change in provisions
+57
+(23)
+177
+(66)
+(73)
+10
+(25)
+(91)
+9
+Change in trade payables
+(60)
+Interest received
+9
+Net cash provided by operating activities
+(22)
+(5)
+Net cash used in operating activities from discontinued operations
+1,313
+1,728
+Net cash provided by operating activities from continuing operations
+(126)
+(142)
+4
+Income tax paid
+(26)
+(58)
+Interest paid
+6
+1,291
+12
+Total non-current liabilities
+Long-term provisions
+30 Septem-
+ber 2017
+Notes
+€ in millions
+as of 30 September 2017 and 2016
+Consolidated Statement of Financial Position
+116
+30 Septem-
+Consolidated Statement of Financial Position
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+1 Contains income from investments accounted for using the equity method in the 2017 fiscal year of €1 million (2016: expense €2 million).
+550
+865
+Shareholders of Infineon Technologies AG
+(1)
+Consolidated Financial Statements
+Non-controlling interests
+ber 2016
+Cash and cash equivalents
+10
+774
+851
+9
+1,615
+1,592
+ASSETS
+8
+860
+Other current assets
+Income tax receivable
+Inventories
+Trade receivables
+Financial investments
+625
+549
+865
+(194)
+115
+Attributable to:
+Total comprehensive income for the year, net of tax
+Other comprehensive income (loss) for the year, net of tax
+Total items expected to be reclassified to profit or loss in the future
+Net change in fair value of available-for-sale financial assets
+Note
+Net change in fair value of hedging instruments
+Net income
+€ in millions
+for the year ended 30 September 2017 and 2016
+Consolidated Statement of
+Comprehensive Income
+Consolidated Statement of Comprehensive Income
+Consolidated Financial Statements
+Actuarial gains (losses) on pension plans and similar commitments¹
+Total items not expected to be reclassified to profit or loss in the future
+Currency translation effects
+2017
+2016
+15
+75
+(35)
+(43)
+(1)
+2
+(6)
+4
+(28)
+(49)
+(159)
+118
+(159)
+118
+743
+790
+1,240
+1,191
+4
+5
+103
+4
+Income tax payable
+327
+422
+13
+120
+Short-term provisions
+1,020
+Trade payables
+17
+323
+12
+Short-term debt and current maturities of long-term debt
+857
+Other current liabilities
+230
+209
+10
+18
+4
+Deferred tax liabilities
+604
+503
+14
+Pension plans and similar commitments
+1,752
+1,511
+12
+Long-term debt
+1,530
+2,098
+Total current liabilities
+LIABILITIES AND EQUITY
+Other non-current liabilities
+9,087
+Total assets
+Goodwill and other intangible assets
+2,119
+2,659
+11
+Property, plant and equipment
+4,492
+11
+4,871
+23
+5
+Assets classified as held for sale
+281
+300
+6
+Total current assets
+1,586
+1,656
+Investments accounted for using the equity method
+4,595
+5,074
+Total non-current assets
+162
+189
+Other non-current assets
+623
+612
+4
+Deferred tax assets
+3
+4
+Non-current income tax receivable
+32
+28
+9,945
+(1,131)
+(1)
+Shareholders' equity:
+(8)
+9
+9
+25
+25
+(225)
+(225)
+(2,312)
+549
+550
+(6)
+(1)
+(28)
+585
+(194)
+(1)
+(194)
+98
+(5)
+118
+790
+790
+790
+5,023
+5,023
+(2)
+(37)
+(2)
+98
+(2,312)
+5,023
+5,023
+(37)
+(5)
+(6)
+(1)
+(28)
+Hedges
+Securities
+Foreign
+Own shares
+Other reserves
+Accumulated
+deficit
+currency
+translation
+adjustment
+Consolidated Statement of Changes in Equity
+4,774
+2,272
+1,136,200,929
+(13)
+17
+19
+Consolidated Financial Statements
+Total equity
+attributable to
+shareholders
+of Infineon
+Technologies AG
+119
+(159)
+4,665
+743
+(1)
+744
+744
+1
+4,664
+(37)
+1
+(1)
+126
+(2,897)
+controlling
+interests
+Total equity
+Non-
+(49)
+2
+4
+75
+1 January 2016
+immaterial
+1 January 2016
+Impact on Infineon
+Effective date
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+none
+Annual IFRS improvement cycle 2012-2014
+IFRS 11
+IAS 16/IAS 38 Clarification of acceptable methods of depreciation and amortization
+(Amendments to IAS 16 and IAS 38)
+(Disclosure initiative - Amendments to IAS 1)
+Presentation of financial statements
+IAS 1
+Standard/amendment/interpretation
+Accounting for acquisitions of interests in joint operations
+(Amendments to IFRS 11)
+1 January 2016
+1 January 2016
+none
+Recognition of deferred tax assets for unrealized losses
+(Amendments to IAS 12)
+IAS 12
+immaterial
+1 January 2017
+Cash flow statements (Disclosure initiative -
+Amendments to IAS 7)
+IAS 7
+Expected impact
+on Infineon
+(1,098)
+Standard/amendment/interpretation
+The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from
+today's perspective. They have not been applied in the Consolidated Financial Statements as of 30 September 2017
+since they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended
+Standards are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they
+are not applied before their effective date, even if this is permitted for certain standards.
+Financial reporting rules issued not yet applied
+121
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+immaterial
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in the
+Consolidated Financial Statements for the year ended 30 September 2017:
+7
+Financial reporting rules applied for the first time
+The Group currency is the euro ("€").
+(17)
+(13)
+(13)
+26
+26
+(248)
+(17)
+(248)
+865
+4
+2
+(49)
+908
+75
+865
+(17)
+(1,404)
+32
+The fiscal year end for both Infineon and the Company is 30 September of each year.
+The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company for the
+year ended 30 September 2017 have been prepared in accordance with International Financial Reporting Standards
+("IFRS") and related interpretations effective as of 30 September 2017 as issued by the International Accounting
+Standards Board ("IASB") to the extent to which the IFRS and interpretations have been endorsed by the European
+Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements set forth
+in section 315a, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB") (in the 17 July 2015
+version of the Accounting Directive Implementation Act). The aforementioned standards were complied with in full.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+1 Basis of the Consolidated Financial Statements
+Infineon Technologies AG is a listed company under German law and ultimate parent company of the Infineon Group.
+The principal office of the Company is Am Campeon 1-12, 85579 Neubiberg (Germany). The Company is registered
+in the Commercial Register of the District Court of Munich (Germany) under the number HRB 126492.
+The Infineon Group ("Infineon") comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
+develop, manufacture and market a broad range of semiconductors and related system solutions. The focus of
+activities is on applications for automotive electronics, industrial electronics, information and communications
+infrastructure as well as hardware-based security. The product range includes standard, application-specific and
+customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
+signal applications. More than half of Infineon's revenue is generated by power semiconductors, the remaining
+revenue is attributable to high frequency components, sensors, driver components as well as microcontrollers
+for automotive, industrial and security applications. Research and development sites, manufacturing facilities,
+investments and customers are located mainly in Europe, Asia and North America.
+120
+Financial Statements
+Notes to the Consolidated
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+5,636
+5,636
+(37)
+(1)
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
+The Company's Management Board presented the Consolidated Financial Statements on 17 November 2017.
+3,527,820
+Effective date
+5,016
+Exercise of stock options
+Issuance of ordinary shares:
+Other comprehensive income (loss) for the period, net of tax
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Net income
+Balance as of 1 October 2015
+except for number of shares.
+Share-based compensation
+€ in millions,
+Consolidated Statement of Changes in Equity
+118
+Consolidated Statement of Changes in Equity
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+625
+for the year ended 30 September 2017 and 2016
+Balance as of 30 September 2016
+Balance as of 1 October 2016
+Net income
+1,129,271,481
+15
+Amount
+Shares
+Additional
+paid-in capital
+Ordinary shares issued
+Notes
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Balance as of 30 September 2017
+Other changes in equity
+Share-based compensation
+Exercise of stock options
+Issuance of ordinary shares:
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Other comprehensive income (loss) for the period, net of tax
+860
+2,259
+673
+Cash and cash equivalents at end of period
+Net change in cash and cash equivalents
+Net cash used in financing activities
+Net cash used in financing activities from discontinued operations
+Net cash used in financing activities from continuing operations
+Dividend payments
+Proceeds from issuance of ordinary shares
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash deposited as collateral
+824
+2
+12
+(1)
+20
+(248)
+Repayments of long-term debt
+12
+(119)
+(846)
+Cash and cash equivalents at beginning of period
+(12)
+(17)
+(36)
+252
+(229)
+(340)
+(229)
+(340)
+(225)
+(248)
+15
+26
+26
+1
+625
+5,213
+15
+3,401,628
+2,265
+6
+19
+17
+9
+1,132,673,109
+2,265
+1,132,673,109
+5,016
+(225)
+Change in valuation allowance on deferred tax assets
+Prior year taxes
+Non-deductible expenses and tax-exempt income, net
+(11)
+Effects from the difference between local and functional currency (Malaysia)
+Tax rate differential
+Effects due to changes in tax rate
+(1)
+(271)
+Expected income tax expense
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2016
+2017
+€ in millions
+(203)
+Change in available tax credits
+The utilization of tax loss carry forwards, tax credits and temporary differences for which deferred tax assets had
+not previously been recorded resulted in current tax income of €13 million in the 2017 fiscal year.
+In the 2017 fiscal year, the profit or loss effect from the valuation allowances on deferred tax assets for tax credits
+amounted to €4 million, and from temporary differences €15 million. A write-up of deferred tax assets for tax loss
+carry forwards of €76 million was recorded. For temporary differences the write-up amounted to €17 million in
+the 2017 fiscal year.
+32
+(18)
+63
+19
+25
+7
+27
+70
+གླམ * ཋ8Ø
+Other
+Actual income taxes
+A reconciliation of income taxes from continuing operations for the fiscal years ended 30 September 2017 and 2016,
+using as a basis the German combined statutory tax rate of 29 percent for the 2017 and 2016 fiscal years is as follows:
+(142)
+36
+Effects due to changes in applicable tax rates arise mainly from changes to applicable tax rates in Germany (municipal
+trade tax) and in Singapore.
+(4)
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax laws applicable in the relevant
+countries and is taxed based on the applicable tax rates for these countries.
+The German combined statutory tax rate for Infineon Technologies AG is 29 percent for the 2017 and 2016 fiscal
+years. This comprises a corporate tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent and a municipal
+trade tax rate of 13 percent.
+A deferred tax benefit of €51 million results from the creation and reversal of temporary differences.
+> valuation of pension plans (see “Pensions and similar obligations" and note 14).
+> recognition and valuation of provisions (see "Provisions" and notes 13 and 19) and
+> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+long-lived assets" and note 11),
+> valuation of inventory (see "Inventories" and note 10),
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 4),
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations
+of Infineon.
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Estimates and assumptions
+For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
+deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimates.
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in other comprehensive income.
+and page 144 ff.
+Psee page 128 f.
+P see page 129 f.,
+page 143 f. and
+page 154 ff.
+P see page 140 ff.
+P see page 127 f.
+and page 139
+P see page 126
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on 17 November 2017.
+3 Acquisitions
+Acquisition of 93 percent of the shares in MoTo Objekt Campeon GmbH & Co. KG
+With a purchase agreement dated 17 November 2016 and with an effective date of 30 December 2016, Infineon
+acquired 93 percent of the shares in MoTo Objekt Campeon GmbH & Co. KG (MoTo) for €112 million, net of cash
+acquired. Moto is owner and lessor of the existing Campeon office complex in Neubiberg near Munich, the location
+of Infineon's headquarters. Besides fixed assets with a fair value of €366 million, Infineon also took over MoTo's
+existing financial liabilities of €219 million. In addition, cash of €1 million was acquired.
+36
+(142)
+152
+(17)
+(116)
+(125)
+2016
+2017
+133
+Consolidated Financial Statements
+Current tax expense includes an income tax expense of €4 million relating to previous fiscal years.
+Deferred tax income (expense)
+Current tax expense
+€ in millions
+Income tax from continuing operations for the fiscal years ending 30 September 2017 and 2016 is as follows:
+4 Income tax
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+The share acquisition is classified as an "asset deal" in accordance with IFRS 3 and the assets and liabilities were
+recognized at their respective fair value. MoTo was fully consolidated from 30 December 2016.
+Income tax
+Notes to the Consolidated Financial Statements
+30 September 2016
+134
+Total
+612
+(18)
+623
+(10)
+In Germany Infineon Technologies AG had corporate tax loss carry-forwards of €1.8 billion and municipal trade tax
+loss carry-forwards of €2.9 billion as of 30 September 2017.
+In other jurisdictions corporate tax loss carry-forwards amounted to €31 million and local income tax loss carry-
+forwards amounted to €216 million. Additionally there are unused tax credits and excess foreign tax credits of
+€401 million.
+Infineon assessed its deferred tax assets for the need for a valuation allowance. Based on the results of the
+assessment of deferred tax assets, considering all positive and negative factors and information relating to the
+foreseeable future, Infineon recognized deferred tax assets, after netting, of €612 million as of 30 September 2017.
+No deferred taxes were recorded for the following items (gross amounts):
+€ in millions
+Tax loss carry forwards (corporate tax and local income tax)
+Tax credits
+Temporary differences
+2017
+2016
+1,868
+2,427
+457
+(457)
+536
+(536)
+(173)
+Tax loss carry-forwards
+430
+492
+Unused tax credits and excess foreign tax credits
+141
+146
+Other
+260
+165
+142
+(62)
+Total deferred taxes
+1,147
+(554)
+1,080
+(467)
+Netting
+(92)
+Deferred tax assets and liabilities as of 30 September 2017 and 2016 comprise the following:
+243
+740
+Provisions and pension obligations
+(26)
+93
+(40)
+122
+(206)
+17
+(210)
+35
+Property, plant and equipment
+Intangible assets
+Deferred
+tax liabilities
+Deferred
+tax assets
+Deferred
+tax liabilities
+Deferred
+tax assets
+30 September 2017
+€ in millions
+255
+(212)
+190
+(2)
+There are no tax loss carry-forwards for which material deferred tax assets were not recognized and which are
+subject to expiration under statutory tax regulations. Of the tax credits for which no deferred tax assets were
+recognized, €27 million will expire in the coming five years.
+The change of the net amount of deferred tax assets and liabilities can be broken down as follows:
+€ in millions
+Deferred taxes, net as of the beginning of the fiscal year
+Deferred taxes attributable to continuing operations
+Deferred taxes recognized in equity
+Foreign currency translation
+Deferred taxes, net as of the end of the fiscal year
+516
+P see page 131 f.
+and page 133 ff.
+2017
+2016
+613
+457
+(17)
+153
+(2)
+5
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+132
+In the case of defined contribution plans, Infineon pays pre-determined amounts based on statutory or contractual
+regulations to an independent fund or to public or private pension insurance companies. Once the contributions
+are paid, Infineon has no further performance obligation. The contributions are recognized as expense in the year
+in which they fall due and are included in costs by function within the operating result. Liabilities are recorded for
+payments due to the various defined contribution plans. Prepaid contributions are recognized as an asset to the
+extent that a cash refund or a reduction of future payments is possible.
+Consolidated Financial Statements
+The discount rate for future cash flows is based on the after-tax weighted average cost of capital (WACC) for the
+CGU in question. The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax
+WACC used to discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
+cash flows and the after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate is
+derived using the Svensson method taking into account risk premiums, and the beta factor and debt ratio are
+derived from a group of companies comparable to the operating segment. In this way the discount rate derived
+reflects the current market rate of return as well as the specific risks attached to the respective segment.
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year strategic business plan approved in the fiscal year just
+ended. The plan is calculated bottom-up based on certain central assumptions applied consistently throughout
+Infineon. Cash flows for periods beyond the planning horizon are estimated using a terminal value. Terminal growth
+rates used do not take into account investments to increase capacity for which no cash outflow has taken place,
+and are derived from publicly available market studies from market research institutes and do not exceed the
+historical long-term average growth rate for the sector in which the relevant segment operates.
+Infineon determines the recoverable amount of a particular CGU to which goodwill has been allocated on the basis
+of its value in use. The value in use is measured by estimating the present value of future cash flows that will be
+generated by the continuing operations of the CGU discounted using an appropriate discount rate.
+Acquired goodwill is only impaired if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as of 30 June and, additionally, whenever there are events or changes
+in circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the
+higher of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating
+segment to which the goodwill is allocated goodwill exceeds the recoverable amount of this CGU, the goodwill is
+impaired accordingly. Such impairments cannot be reversed in subsequent periods.
+Goodwill acquired in a business combination is the excess of the consideration transferred for an interest in a business
+over the net fair value of acquired, separately identifiable assets, liabilities and contingent liabilities as of the date
+of acquisition. Goodwill is reported in the line item "Goodwill and other intangible assets" in the Consolidated
+Statement of Financial Position and is allocated to the cash-generating units (CGUS) or groups of CGUS that will
+benefit from the synergies generated by the business combination. A CGU represents the smallest identifiable
+group of assets that generates cash inflows from continuing activities and that are largely independent of the cash
+inflows from other assets or group of assets.
+Recoverability of intangible assets and other long-lived assets
+Goodwill
+Infineon did not hold any intangible assets with indefinite useful lives in either the 2017 or 2016 fiscal years.
+2-8
+3-5
+4-12
+1-12
+3-5
+Years
+127
+Other intangible assets
+Licenses and similar rights
+Technologies
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Customer relationships
+Consolidated Financial Statements
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the
+valuation parameters used:
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+Segment
+in %
+in %
+in %
+€ in millions
+terminal growth rate¹
+after-tax WACC¹
+pre-tax WACC¹
+Book value of
+allocated goodwill
+128
+Notes to the Consolidated Financial Statements
+Capitalized development costs
+Scheduled amortization of intangible assets is based on the following useful lives:
+Notes to the Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Derivative financial instruments are measured at their fair value and included in "Other current assets" or
+"Other current liabilities".
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price
+changes (such as gold prices) for expected and highly probable future transactions in order to minimize the
+associated risk (cash flow hedges).
+Designated hedging instruments (cash flow hedges)
+At Infineon financial assets or liabilities measured at fair value through profit or loss comprise almost entirely of
+derivatives used to hedge currency risks for which hedge accounting is not applied.
+Financial assets or liabilities measured at fair value through profit or loss
+Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
+or are not allocated to any of the other categories (see above). Upon acquisition they are measured at fair value
+taking into account transaction costs and are subsequently measured at their fair value at the end of the relevant
+reporting period. Transaction costs relating to the acquisition of available-for-sale financial assets with a definite
+term and fixed or determinable payments are capitalized and recognized in the Consolidated Statement of Operations
+using the effective interest method. Changes in the fair value of available-for-sale financial assets are recognized
+directly in equity. If the fair value is permanently or significantly lower than the amortized cost, then an impairment
+loss is recognized through profit or loss. For available-for-sale financial assets, a significant or prolonged decline
+in the fair value of the financial asset below its acquisition cost is considered as an indicator that the assets are
+impaired. If any such evidence exists, the cumulative loss that had been recognized directly in equity - measured as
+the difference between the acquisition cost and the current fair value, less any impairment loss previously recog-
+nized in profit or loss – is removed from equity and transferred to profit or loss. When financial assets classified as
+available-for-sale are sold, the accumulated fair value adjustments previously recognized in equity are reclassified
+to profit or loss.
+Available-for-sale financial assets
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
+in an active market. At Infineon the balance sheet items "Cash and cash equivalents", "Financial investments",
+"Trade receivables" and current and non-current "Other assets" all contain financial assets which are classified in
+the category "Loans and receivables”. Loans and receivables are measured on initial recognition at their fair value
+plus incidental acquisition costs. Subsequently, they are measured at amortized cost using the effective interest
+method and are tested for impairment. They are considered to be impaired when there is objective evidence that
+Infineon will not receive all amounts contractually due at the relevant due date. Objective evidence that indicates
+that impairment should be recorded would include, for example, known financial difficulties or the insolvency
+of a debtor. The impairment is recorded as an expense in profit or loss (in a separate allowance account). When a
+payment default becomes certain, such loans and receivables are considered to be uncollectible and derecognized
+along with the previously recognized allowance.
+Loans and receivables
+Infineon classifies financial liabilities into the following categories: "Financial liabilities measured at fair value
+through profit and loss" and "Other financial liabilities”. Furthermore, “Designated hedging instruments (cash flow
+hedges)" belong to financial liabilities.
+Infineon classifies financial assets into the following categories: “Loans and receivables", "Available-for-sale financial
+assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
+(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
+were not held by Infineon.
+125
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+126
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. The
+gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity are
+recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+Other financial liabilities
+594
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
+relationships, which are measured at acquisition cost, as well as capitalized development costs. These intangible
+assets have definite useful lives and are valued at their amortized acquisition or production costs with amortization
+recorded using the straight-line method over their expected economic life.
+1-10
+10-25
+3-10
+Years
+Intangible assets (excluding goodwill)
+2016
+Other plant and office equipment
+Buildings
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land,
+property rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on
+property, plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+Property, plant and equipment
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Inventories are measured at the lower of historical acquisition or fully absorbed production cost - calculated using
+the weighted-average method - and net realizable value. Net realizable value corresponds to realizable sale proceeds
+under normal business conditions less estimated expected costs to complete and sell. Production cost comprises
+costs of material, production wages and an appropriate portion of attributable overheads, including attributable
+depreciation and amortization on property, plant and equipment and intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Inventories
+Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs.
+In subsequent periods they are measured at amortized cost using the effective interest method. The liabilities
+are derecognized when the contractual obligations are discharged, canceled or expired.
+Technical equipment and machinery
+Notes to the Consolidated Financial Statements
+Automotive
+0
+Infineon generates revenues from the sale of semiconductor products and related system solutions. Infineon's
+semiconductor products include a wide variety of chips and components used in electronic applications ranging
+from automotive electronics and industrial applications to chip cards. Infineon's products are also used in a wide
+variety of microelectronic applications, such as computer systems, telecommunications systems and consumer
+goods. Revenue is allocated to the individual segments on the basis of differences in product type and applications.
+In addition, Infineon generates a small portion of its revenue from the granting of licenses.
+Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods
+are transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will
+flow to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or
+receivable taking into account returns, settlement discounts and bonuses.
+Revenue recognition
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon, or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 18 and 19).
+Contingent liabilities
+If the obligation decreases as a result of a change in the estimate, the provision is adjusted accordingly and the
+resulting income recognized in the same functional area of the Consolidated Statement of Operations in which the
+original charge was recognized.
+Where cash flows are expected to arise after the next twelve months and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows.
+P see page 152 ff.
+130
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Provisions are measured at their expected settlement amount. The amount recognized for a provision is the best
+estimate of the expenditure required to settle the present obligation. Estimates of outcomes and financial effects
+are dependent upon the judgment of management, supplemented by experience gained from similar transactions
+and, where appropriate, the assessment of independent experts. If the circumstances to be assessed encompass
+a large number of possible outcomes, the obligation is estimated by weighting all possible outcomes by their
+associated probabilities (expected value method). Where there is a continuous range of possible outcomes and
+each point in that range is as likely as any other, the average is used.
+With regard to legal proceedings and litigation, for example, the Qimonda insolvency, Infineon regularly assesses
+the probability of an unfavorable outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which it assesses at the relevant
+reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment, there is
+compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with reason-
+able accuracy at the time of assessment. As soon as additional information is available the affected estimates are
+reviewed and, where necessary, provisions for these proceedings are revised.
+Provisions are recognized for present legal and/or constructive obligations arising from past events that are likely
+to result in a future outflow of resources, the amount of which can be reliably estimated.
+Provisions
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result, are
+recognized on a net basis in the functional areas within the operating result. The net interest result arising from the
+multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is reported
+as financial expense. Actuarial gains and losses resulting from experience adjustments for defined benefit pension
+obligations and plan assets and from changes in actuarial assumptions are recognized directly in equity and
+presented in the Consolidated Statement of Comprehensive Income in the period in which they arise. Past service
+costs are recognized immediately in profit or loss.
+Discount rates are determined on the basis of market yields at the end of the reporting period on high-grade,
+fixed interest corporate bonds from issuers carrying a very high credit rating that are denominated in the currency
+in which the benefits will be paid and that have remaining maturities approximating the terms of the related
+pension liability.
+In principle Infineon recognizes revenue on sales to distributors by using the "sell in" method, that is when a product
+is sold to the distributor. In accordance with established business practice in the semiconductor industry, under
+certain circumstances distributors can apply for price protection and ship and debit credit notes. Price protection
+allows a distributor to request a credit note for unsold products held in inventory if Infineon has reduced the standard
+list price of these products. In addition, in certain cases the distributor may request a ship and debit credit note for
+price adjustments. The authorization of these credits remains fully within the control of Infineon. Infineon calculates
+the provision for price protection and ship and debit in the period in which the related revenue is recorded. The
+ship and debit provision is determined based on rolling trends in the difference between the contract price and the
+standard list price to the distributor. The price protection provision is based on actual list prices and distributor
+inventory on hand. The availability of detailed distributor inventory data, the transparency of pricing for standard
+products and the long distributor pricing history enable Infineon to reliably estimate provisions for price protection
+and ship & debit credit notes at the end of the reporting period.
+All other plans that do not fall under the definition of a defined contribution plan are accounted for as defined
+benefit plans. These relate to the commitments of Infineon to pay vested rights and current benefits to eligible
+present and former employees and their dependants. The obligations also relate to retirement pensions. The
+liability recognized in respect of defined benefit pension plans is the present value of the defined benefit obligation
+(DBO) at the end of the reporting period less the fair value of the plan assets, together with adjustments for past
+service costs. The present value of the DBO and resulting pension cost are determined in accordance with IAS 19
+"Employee Benefits" annually for each separate plan by independent, qualified actuaries using the projected-unit-
+credit method. For the calculation, actuarial procedures are applied for which it is necessary to make specific
+assumptions. The most important of these are the discount rate, future expected increases in salaries and pensions,
+and mortality rates.
+Distributors can, subject to certain conditions, return a limited amount of inventory (stock return) or request
+scrap allowances. Stock return credit notes are accrued based on expected stock returns in accordance with the
+contractual agreement combined with historical experience. Distributor scrap allowances are accrued based on
+the contractual agreement and, upon submission of a valid claim, are granted up to a certain maximum based on
+turnover in a given period. Infineon monitors such product returns on an ongoing basis and adjusts accrual
+assumptions accordingly. Other returns are only permitted for quality defects within the ordinary warranty period.
+In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
+is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
+recognition purposes.
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed deferred
+tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is probable that
+the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit. Infineon
+reviews deferred tax assets for impairment at every reporting date. The assessment requires management to make
+assumptions about future taxable profits as well as other positive and negative influencing factors.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward. By contrast, no deferred tax is recognized on goodwill arising
+in connection with business combinations. Similarly, deferred taxes are not recognized on the initial recognition
+of an asset or liability in connection with a transaction that is not a business combination and which, at the time
+of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit. Deferred tax assets and
+liabilities are measured using applicable tax rates and laws that have been enacted by the end of the reporting
+period or are about to be enacted, and are to be applied when the related deferred tax asset is realized or the
+deferred tax liability is settled.
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Current and deferred income taxes
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
+Statement of Operations (see note 7).
+Grants are recognized when it is reasonably assured that Infineon will comply with the conditions attached to the
+grant, and it is reasonably assured that the grant will be received. Investment related grants are deducted from the
+purchase and production cost of the related asset and thereby reduce depreciation and amortization expense in
+future periods.
+Grants
+Costs of research activities are expensed as incurred. Costs for development activities, the results of which lead
+to a plan or design for the production of new or substantially improved products or process improvements, are
+capitalized if the development costs can be measured reliably, the product or process is technically and commer-
+cially feasible, future economic benefits are probable and Infineon intends, and has sufficient resources, to complete
+development and use or sell the asset. The costs capitalized include the cost of materials, direct labor and directly
+attributable general overhead expense that serves to prepare the asset for use. Such capitalized costs are presented
+as internally generated intangible assets within "Goodwill and other intangible assets" (see note 11). Development
+costs, which do not fulfill the criteria for capitalization, are expensed as incurred. Capitalized development costs
+are stated at cost less accumulated amortization and impairment charges. After the completion of the development
+phase and following the ramp-up of production, internally generated intangible assets are generally amortized as
+part of cost of goods sold over a period of three to five years.
+Research and development expenses
+Cost of goods sold includes the manufacturing costs of products sold during the reporting period. In addition,
+among other things cost of goods sold contains idle costs, inventory risks, warranty issues as well as the amorti-
+zation of capitalized development costs. Recognized foreign currency effects as well as changes in the fair value
+of undesignated derivative financial instruments that are connected to the operating business are recognized in
+cost of goods sold.
+Cost of goods sold
+P see page 137
+P see page 140 ff.
+131
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+129
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+& Multimarket
+Power Management
+1.0
+1.5
+9.9
+9.4
+12.8
+12.4
+51
+48
+Industrial Power Control
+n. a.
+1.5
+n. a.
+9.2
+n. a.
+12.3
+Corporate
+Total
+704
+746
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Infineon provides benefits to most of its employees for the period after they have retired, either directly or as a
+result of payments to private and public institutions. The benefits provided differ according to the legal, economic
+and tax circumstances prevailing in the respective country and are mostly dependent on the length of service
+and the salary of the employee concerned. The occupational pension plans include both defined contribution and
+defined benefit plans.
+Pensions and similar obligations
+Infineon reviews non-current assets, including property, plant and equipment and intangible assets for possible
+impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
+recoverable. The recoverability of assets held for use is measured by comparing the carrying amount of the asset
+with its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs
+to sell and its value in use. The value in use is generally calculated based on discounted future cash flows of the
+CGU to which the asset is allocated. Considerable management judgment is necessary to estimate future cash flows.
+If such assets are considered to be impaired, the impairment recognized is measured as the amount by which
+the carrying value of the assets exceeds their recoverable amount. An impairment loss recognized in prior periods
+for an asset other than goodwill is reversed insofar as, since the last impairment, a change in the underlying
+assumptions has occurred which leads to a lower impairment requirement. The maximum possible reversal of
+an impairment loss is that which would lead to the carrying amount that would have been determined (net of
+scheduled depreciation and amortization) if no impairment loss had been recognized for that asset in prior years.
+Capitalized development costs (see also the section "Research and development expenses" in this chapter) that
+are not subject to scheduled depreciation are tested for impairment annually and additionally whenever there are
+indications of impairment. Indications for impairment in particular include a reduction of expected revenues or
+increased costs.
+Intangible assets and other non-current assets
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none
+of the operating segments gave rise to an impairment of goodwill in the year under report. As of the reporting date,
+there were no triggering events that indicate that the recoverable amount of a CGU to which goodwill had been
+allocated could have fallen below the book value.
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the calculation of revenue growth, gross margins, the WACC and terminal growth rates.
+In this way Infineon takes account of the inherently uncertain nature of estimates and carries out impairment
+tests on goodwill based on scenarios that are less favorable than those considered most likely. Changes considered
+to be possible to the parameters identified would have had no effect on the value of goodwill.
+P see page 131
+5
+1 Valuation parameters as of 30 June 2017 and 2016.
+2
+2
+759
+1.0
+1.5
+10.7
+10.4
+14.0
+14.1
+799
+613
+€ in millions
+29
+517
+Total goodwill and other intangible assets
+Other intangible assets
+Licenses and similar rights
+Technologies
+Customer relationships
+129
+Capitalized development costs
+799
+Goodwill acquired for consideration
+Goodwill and other intangible assets
+11,206
+(42)
+(14)
+5
+(215)
+(3)
+283
+(4)
+643
+759
+(45)
+(60)
+(14)
+396
+7
+2,225
+18
+(11)
+19
+212
+2
+148
+392
+366
+10,237
+(27)
+215
+(127)
+437
+7,648
+Technical equipment and machinery
+8,146
+1,501
+(10)
+45
+(21)
+366
+32
+1,095
+(6)
+874
+Other plant and office equipment
+76
+Total property, plant and equipment
+332
+(1)
+(4)
+(274)
+(2)
+1,210
+329
+and construction in progress
+Payments on account
+1,227
+(8)
+14
+(65)
+284
+(10)
+275
+(1)
+9,712
+Total property, plant and equipment
+284
+(298)
+(3)
+271
+716
+314
+Payments on account
+1,210
+1
+15
+(64)
+83
+and construction in progress
+1,175
+(171)
+10,237
+Technologies
+396
+1
+395
+Customer relationships
+517
+(20)
+98
+Capitalized development costs
+799
+(4)
+803
+Goodwill acquired for consideration
+Goodwill and other intangible assets
+419
+Other plant and office equipment
+7,648
+(23)
+Foreign
+currency
+Transfers
+Disposals Reclassi-
+fication
+Additions Acquisitions
+through
+2015
+1 October
+30 Septem-
+Cost
+Changes in property, plant and equipment and goodwill and other intangible assets 2016
+2 For the year ended 30 September 2017, transfers relate to assets that were classified as held for sale.
+1 For the year ended 30 September 2017, amounts shown under property, plant and equipment as "Acquisitions through business combinations" relate to assets acquired in
+connection with the acquisition of MoTo.
+2,306
+18
+219
+€ in millions
+ber 2016
+business
+effects
+210
+(95)
+336
+7,220
+Technical equipment and machinery
+1,095
+2
+73
+(9)
+26
+1,003
+Land, land rights and buildings
+Property, plant and equipment
+nations
+combi-
+Land, land rights and buildings
+294
+Property, plant and equipment
+combi-
+Trade receivables, related parties
+Trade receivables, third parties
+€ in millions
+Trade receivables due within one year as of 30 September 2017 and 2016 consist of the following:
+9 Trade receivables
+1,615
+Trade receivables, gross
+1,592
+56
+399
+466
+1,157
+1,070
+30 Septem-
+ber 2016
+59
+30 Septem-
+ber 2017
+Allowance for doubtful accounts
+30 Septem-
+ber 2017
+€ in millions
+Changes in the allowance for doubtful accounts for the 2017 and 2016 fiscal years were as follows:
+774
+851
+(11)
+(9)
+Trade receivables, net
+785
+1
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+784
+860
+ber 2016
+30 Septem-
+860
+Allowance for doubtful accounts at beginning of the fiscal year
+Financial investments
+Investment funds
+33
+37
+2016
+2017
+Total
+Selling, general and administrative expenses
+68
+Research and development expenses
+Included in the Consolidated Statement of Operations in:
+€ in millions
+Infineon has received grants and subsidies from various governmental institutions under government business
+development programs including grants for the construction of manufacturing facilities, for research and develop-
+ment activities and employee development. Grants and subsidies taken into consideration in profit or loss in the
+Consolidated Financial Statements during the 2017 and 2016 fiscal years are as follows:
+35,996
+36,962
+2,092
+Cost of goods sold
+Securities
+75
+2
+Fixed-term bank deposits and money market funds
+€ in millions
+Financial investments as of 30 September 2017 and 2016 comprise the following (for further information see also
+notes 22 and 23):
+Financial investments comprise fixed-term deposits with banks, investment funds, money market funds and securities.
+While fixed-term deposits with banks with an original term of more than three months and money market funds
+qualify as loans and receivables pursuant to IAS 39 “Financial Instruments: Recognition and Measurement", invest-
+ment funds and securities are categorized as available-for-sale financial assets (for valuation see note 2).
+8 Financial investments
+P see page 158 ff.
+1
+Psee page 123 ff.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+For compliance with the requirements attached to the grants and subsidies received and potential repayment
+requirements in case of nonfulfillment, see note 18.
+110
+106
+138
+Allowance for doubtful accounts at end of the fiscal year
+2017
+2016
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Inventories as of 30 September 2017 and 2016 are stated net of write-downs of €131 million and ���136 million,
+respectively.
+1,191
+1,240
+379
+360
+Consolidated Financial Statements
+701
+111
+131
+ber 2016
+ber 2017
+30 Septem-
+30 Septem-
+749
+Cost of sales consists mainly of inventory-related expenses in the 2017 and 2016 fiscal years.
+Notes to the Consolidated Financial Statements
+A summary of changes in property, plant and equipment as well as in goodwill and other intangible assets
+for the years ended 30 September 2017 and 2016 is as follows:
+30 Septem-
+ber 2017
+Foreign
+currency
+effects
+business
+Transfers 2
+Reclassi-
+fication
+Disposals
+11 Property, plant and equipment, goodwill and other intangible assets
+Acquisitions
+through
+Additions
+1 October
+Cost
+140
+€ in millions
+Changes in property, plant and equipment and goodwill and other intangible assets 2017
+2016
+Total
+Finished goods and merchandise
+Work in progress
+net of allowances as of 30 September 2017
+Third party trade receivables,
+Past due
+> 31 days
+Past due
+0-30 days
+Thereof not
+past due
+Carrying
+amount
+851
+€ in millions
+11
+9
+4
+(2)
+7
+11
+Third party trade receivables, net of allowances for doubtful accounts, at the reporting date comprise the following:
+831
+16
+4
+Raw materials and supplies
+Inventories as of 30 September 2017 and 2016 consist of the following:
+10 Inventories
+Receivables with a maturity of more than one year are presented as other non-current assets.
+With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there are
+no indications that customers, based on their past credit history and current creditworthiness assessments, are not
+able to meet their obligations.
+139
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+6
+14
+753
+773
+net of allowances as of 30 September 2016
+Third party trade receivables,
+nations¹
+2,062
+(12)
+283
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+1,738
+1,656
+(569)
+(15)
+6
+P see page 142
+(168)
+14
+8
+(10)
+(6)
+(4)
+57
+(392)
+49
+Psee page 153
+Notes to the Consolidated Financial Statements
+After 5 years
+1-5 years
+Less than
+1 year
+Total
+€ in millions
+Debt as of 30 September 2017 and 2016 consists of the following:
+Consolidated Financial Statements
+12 Debt
+As of 30 September 2017
+Payments due in (€ in millions)
+Undiscounted future minimum lease payments to be received from operating lease arrangements excluding
+sub-lease arrangements (see note 18) for Infineon as lessor are as follows:
+Property, plant and equipment of €210 million serves mainly as collateral for existing financing arrangements
+as of 30 September 2017 (prior year: €0 million) (see note 12).
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations
+mainly in cost of goods sold. Amortization of intangible assets is mainly presented in cost of goods sold or selling,
+general and administrative expenses. Impairments on property, plant and equipment and intangible assets are
+reported under other operating expenses.
+142
+As of 30 September 2016
+96
+(163)
+(20)
+803
+799
+2,093
+2,119
+(8,118)
+5
+(159)
+(1)
+(665)
+(7,619)
+314
+284
+116
+128
+162
+1
+(31)
+(205)
+(144)
+262
+213
+(70)
+5
+(43)
+(15)
+(32)
+275
+(121)
+(68)
+(53)
+260
+312
+342
+21
+60
+15
+95
+Available
+Drawn
+Aggregate
+facility
+Available
+Drawn
+23
+Aggregate
+facility
+30 September 2017
+143
+Short-term
+Long-term
+Total
+Term
+€ in millions
+The total lines of credit as of 30 September 2017 and 2016 are summarized in the following table:
+30 September 2016
+Notes to the Consolidated Financial Statements
+72
+17
+Aggregate amounts of debt and interest maturing in the coming years are as follows:
+The credit lines agreed in the previous fiscal year of US$500 million and €200 million for the acquisition of
+Wolfspeed which was not successfully concluded were canceled early by Infineon in February 2017.
+720
+144
+864
+72
+91
+248
+646
+127
+773
+225
+225
+74
+320
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Infineon has established further independent financing arrangements in the form of both short- and long-term
+credit facilities, in order to finance operating business requirements.
+24
+30 Septem-
+ber 2016
+30 Septem-
+ber 2017
+Total
+USPP notes US$935 million, weighted average interest rate 4.09%, due 2024 - 2028
+Long-term debt
+Bond €500 million, coupon 1.50%, due 2022
+17
+Bond €300 million, coupon 1.00%, due 2018
+Loans payable to banks:
+Short-term debt and current maturities of long-term debt
+Current maturities of long-term debt, weighted average interest rate: 1.65% (2016: 1.37%)
+Bond €300 million, coupon 1.00%, due 2018
+2
+6
+8
+Unsecured loans, weighted average interest rate 0.73% (2016: 0.52%), due 2018-2023
+Secured term loans, weighted average interest rate 2.03%, due 2018-2021
+299
+323
+17
+The bond of €300 million is due for repayment in September 2018 and was therefore transferred to short-term debt
+as of 30 September 2017.
+In order to optimize its capital structure Infineon repaid a loan of €100 million in June 2017.
+In connection with the acquisition of shares in MoTo in December 2016 Infineon took over existing financial
+liabilities with a fair value of €219 million, secured on the property (land and buildings). Following intervening
+repayments, the carrying amount as of 30 September 2017 is €214 million of which €198 million is reported under
+long-term liabilities.
+1,769
+1,834
+1,752
+1,511
+830
+790
+496
+496
+298
+198
+128
+27
+(1,082)
+1
+64
+(1,059)
+(498)
+(6,305)
+364
+730
+(771)
+4
+113
+2
+15
+(60)
+(731)
+tization
+effects
+amor-
+(1)
+ber 2016
+1
+(6,669)
+332
+2
+192
+(652)
+(8,118)
+128
+20
+120
+5
+64
+(94)
+(1,082)
+1,343
+1,477
+(1,107)
+284
+ber 2017
+currency
+2,225
+(2)
+(13)
+110
+2,130
+Total goodwill and other intangible assets
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+18
+Other intangible assets
+212
+(1)
+12
+201
+Licenses and similar rights
+18
+ber 2017
+Consolidated Financial Statements
+141
+ments
+30 Septem-
+30 Septem-
+30 Septem-
+Foreign
+Impair-
+Notes to the Consolidated Financial Statements
+Transfers 2
+Disposals
+Depre-
+ciation/
+2016
+1 October
+Carrying amount
+Depreciation/amortization and impairment
+Reclassi-
+fication
+(8,547)
+2,659
+2,119
+ber 2016
+30 Septem-
+Carrying amount
+amor-
+tization
+1 October
+2015
+30 Septem-
+ber 2016
+30 Septem-
+Foreign
+currency
+effects
+fication
+Transfers
+Depre- Disposals Reclassi-
+ciation/
+Depreciation/amortization and impairment
+1,656
+1,586
+Impair-
+ments
+(720)
+ber 2015
+(42)
+1,353
+1,343
+(6,305)
+16
+(7)
+89
+(693)
+(536)
+310
+364
+(731)
+(11)
+6
+9
+(5,867)
+2
+(5)
+12
+275
+213
+(179)
+(58)
+(121)
+312
+(70)
+396
+(5)
+2
+(39)
+(205)
+799
+759
+(247)
+(41)
+2
+(109)
+(160)
+(569)
+8
+7
+(11)
+(1)
+(10)
+49
+45
+(174)
+10
+(21)
+(163)
+213
+166
+(87)
+3,705
+Current year's allowance, net of reversals
+172
+Interest
+322
+48
+17
+46
+20
+44
+303
+46
+21
+44
+108
+Debt
+43
+41
+8
+42
+1,297
+178
+1,341
+186
+1,836
+355
+1,777
+363
+Net financial result for the 2017 and 2016 fiscal year includes €56 million and €58 million net interest expenses which
+include in addition to borrowing costs other interest expenses such as net interest expense for pension liabilities.
+176
+13 Provisions
+Interest
+30 September 2016
+5
+(3)
+(6)
+36
+(142)
+2016
+2017
+Income taxes
+Income taxes recognized directly in equity
+Income taxes from continuing operations
+Income taxes from discontinued operations
+€ in millions
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax consisted of the following:
+Debt
+no deferred tax has been recognized because the timing of the reversal can be controlled and it is not probable that
+the temporary difference will reverse in the foreseeable future.
+135
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Psee page 154 f.
+€ in millions
+Less than 1 year
+1-2 years
+2-3 years
+3-4 years
+5 years and after
+Total
+30 September 2017
+In connection with investments in subsidiaries there are taxable temporary differences of €668 million for which
+(148)
+Short-term and long-term provisions as of 30 September 2017 consist of the following:
+1 October
+403
+352
+(232)
+(34)
+489
+Thereof short-term
+3,767
+327
+76
+422
+67
+Obligations to employees include, among others, costs of variable compensation, outstanding vacation and flextime,
+service anniversary awards, other personnel costs and social security costs.
+Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements associated
+with products sold.
+Total provisions
+Other provisions comprise provisions for litigations (other than provisions relating to Qimonda), asset retirement
+obligations, onerous contracts and miscellaneous other liabilities.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+144
+Of the total provisions as of 30 September 2017 and 2016, a cash outflow of €422 million and €327 million, respec-
+tively, is expected to occur within one year. With the exception of the service anniversary awards of €27 million
+as of 30 September 2017 and 2016, respectively, the cash outflow for the majority of the remaining €40 million and
+€49 million as of 30 September 2017 and 2016, respectively, is expected within two to seven years.
+Psee page 99 ff.
+14 Pension plans
+Defined benefit pension plans
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For the Infineon Group, the
+significant benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to
+Infineon Technologies Austria AG.
+In Germany Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. With the Infineon pension plan new entrants receive
+a defined contribution benefit which is funded by Infineon. Payments by the Infineon pension plan are generally
+made in twelve installments. For active employees who were, before the Infineon Pension Plan came into force,
+entitled to benefits in the form of an annuity, this commitment is the overriding one and thereby the possibility
+of an annuity is guaranteed. Together with former employees, whose pension benefit obligations are no longer
+transferred into the Infineon Pension Plan, this group makes up the largest part of the obligation at this time. The
+statutory framework is provided by the Company Pension Act (in German: Betriebsrentengesetz or "BetrAVG") and
+by employment law in general. An appropriate provision is recorded for the German defined benefit pension plans,
+which are partly backed by plan assets. Individual agreements are in place for the members of the Management
+Board which are backed by plan assets (detailed in the chapter "Compensation Report”).
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of service,
+others are dependent on average income over the service period. Furthermore, in certain countries Infineon makes
+severance payments irrespective of the reason for the termination of employment, these payments are usually
+defined by law in the relevant country. The liabilities arising from foreign defined benefit pension plans are partly
+covered by plan assets.
+The valuation date of both the German and foreign pension plans is 30 September.
+The Group defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+€ in millions
+49
+(7)
+Additions
+Usage
+Reversals
+2016
+30 Septem-
+ber 2017
+Obligations to employees
+288
+282
+(210)
+(6)
+354
+Warranties
+(7)
+46
+(10)
+(17)
+53
+P see page 154 f.
+Provisions related to Qimonda (see note 19)
+Other
+32
+10
+(5)
+(4)
+33
+37
+26
+34
+38
+Thereof long-term
+5 Disposals and discontinued operations and assets
+classified as held for sale
+744
+791
+742
+(1)
+2
+1,134.6
+(6.0)
+1,128.6
+1,131.2
+(6.0)
+1,125.2
+5.3
+4.1
+790
+1,133.9
+0.70
+0.66
+0.70
+0.66
+P see page 153
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+7 Additional notes to the Statement of Operations
+Cost of materials and purchased services as well as personnel expense
+1,129.3
+2016
+2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Newport
+On 29 September 2017, 100 percent of the shares of IR Newport Limited ("Newport") were sold. The consideration
+received in the 2017 fiscal year amounted to €15 million. Overall, a loss on deconsolidation of €13 million arose from
+the transaction which was recorded under other operating expenses. This primarily resulted from the reclassification
+to profit or loss of €20 million of cumulative currency translation effects due to the devaluation of the British pound,
+which had been recognized in other comprehensive income during the previous fiscal year just ended and previous
+fiscal years. Assets of €33 million were deconsolidated in the 2017 fiscal year in connection with the loss of control.
+This included cash divested in the amount of €5 million. In addition, liabilities of €6 million were deconsolidated.
+Assets classified as held for sale
+On 30 September 2017, land and buildings as well as technical equipment and machinery with a carrying amount
+of €23 million (30 September 2016: €0 million) were disclosed as assets classified as held for sale.
+6 Earnings per share
+Basic earnings per share are calculated by dividing earnings by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
+such as interest expense, on the other.
+Basic and diluted earnings per share are calculated as follows for the fiscal years ended 30 September 2017 and 2016:
+€ in millions (unless otherwise stated)
+Earnings attributable to shareholders of Infineon Technologies AG - basic and diluted
+thereof from continuing operations
+thereof from discontinued operations
+Weighted-average number of shares outstanding (in millions):
+- Ordinary share capital
+- Adjustment for own shares
+Adjustments for:
+- Effect of share-based compensation
+Weighted-average number of shares outstanding - diluted
+Basic and diluted earnings per share¹ (in euro):
+Earnings per share (in euro) from continuing operations
+Earnings per share (in euro) from discontinued operations, net of income taxes
+Earnings per share (in euro) - basic and diluted
+1 The calculation of earnings per share is based on unrounded figures.
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+expenses for purchased services, materials and personnel.
+Expenses for purchased services and materials comprised the following in the 2017 and 2016 fiscal years:
+€ in millions
+Cost of raw materials, supplies and purchased goods
+Europe
+Therein: Germany
+Asia-Pacific (without Japan)
+Therein: China
+Japan
+Americas
+Therein: USA
+Total
+Grants and subsidies
+2017
+2016
+15,566
+14,971
+10,124
+9,727
+17,448
+17,148
+1,963
+1,998
+Income taxes recorded directly in equity consist of current and deferred taxes of €2 million, respectively,
+which offset one another.
+181
+The average number of employees by geographic region is as follows for the 2017 and 2016 fiscal years:
+136
+2,047
+313
+Cost of purchased services
+Total (continuing and discontinued operations)
+Personnel expenses comprised the following in the 2017 and 2016 fiscal years:
+€ in millions
+Wages and salaries
+Social insurance levies, pensions and similar obligations
+Total (continuing and discontinued operations)
+137
+2017
+2016
+1,497
+1,412
+1,426
+1,295
+2,923
+2,707
+2017
+2016
+1,868
+1,734
+338
+2,206
+Notes to the Consolidated Financial Statements
+Weighted-average number of shares outstanding – basic
+In the 2017 and 2016 fiscal years adjustments to individual provisions arose as a result of recent developments
+in connection with the insolvency of Qimonda, as well as subsequent income from other discontinued operations.
+These led to earnings after tax as shown in the table below.
+The current risks and provisions relating to Qimonda's insolvency are described in detail in note 19 "Proceedings
+in relation to Qimonda".
+Income/loss from discontinued operations, net of income taxes
+€ in millions
+Qimonda's share of discontinued operations, net of income taxes
+Others business' share of discontinued operations, net of income taxes
+Income from discontinued operations, net of income taxes
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2017
+2016
+(1)
+3
+(1)
+2
+Consolidated Financial Statements
+(1)
+On 23 January 2009, Qimonda AG ("Qimonda"), a majority owned company, filed an application at the Munich
+Local Court to commence insolvency proceedings. On 1 April 2009, the insolvency proceedings opened. Insolvency
+proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of these insolvency
+proceedings have already been completed. The impacts of these proceedings are reported as discontinued
+operations in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the
+extent that the underlying events occurred before the commencement of insolvency proceedings. To the extent
+that the events occurred after the commencement of insolvency proceedings, their results are reported as part of
+continuing operations.
+Qimonda - discontinued operations
+Realized (gains) losses resulting
+(66)
+(28)
+(28)
+Deal Contingent Forward
+6
+6
+(3)
+(1)
+(2)
+from hedge accounting
+Unrealized gains (losses) resulting
+(1)
+(6)
+(1)
+1
+(66)
+1
+from hedge accounting
+(6)
+Foreign currency translation differences
+Total
+Tax
+30 September 2017
+€ in millions
+146
+The funding of the defined benefit obligations is as follows:
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
+reported in the Consolidated Statement of Financial Position as of 30 September 2017 and 2016.
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+(56)
+69
+(56)
+€ in millions
+(53)
+4
+2017
+2016
+Pretax
+Tax
+Net after tax
+Pretax
+Net after tax
+(3)
+from securities
+30 September 2016
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+151
+P see page 76 f.
+P see page 150
+P see page 142
+16 Capital management
+Infineon's main capital management objective is to ensure financial flexibility on the basis of a solid capital structure.
+As with comparable companies in the semiconductor industry, it is of prime importance that sufficient cash funds
+are available to finance operating activities and planned investments throughout all phases of the business cycle.
+On the other hand, debt should only constitute a modest portion of the financing mix.
+Based on these principles Infineon has defined key objectives for capital management. Accordingly, Infineon plans
+to maintain a liquidity level (gross cash position) of at least €1 billion plus additionally 10 to 20 percent of revenue.
+Gross debt shall amount to no more than two times EBITDA.
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+Capital management as well as the corresponding targets and definitions are based on indicators determined on
+the basis of the consolidated IFRS financial statements. Gross cash is defined as the total of cash, cash equivalents
+and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before interest and
+taxes and EBITDA as EBIT plus scheduled depreciation and amortization.
+The gross cash position increased from €2,240 million as of 30 September 2016 to €2,452 million as of 30 Sep-
+tember 2017 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on
+revenue of €7,063 million, the ratio of gross cash to revenue was €1 billion plus 20.6 percent of revenue as of
+30 September 2017, thereby slightly above the target range. In the previous year the ratio of gross cash to revenue
+was €1 billion plus 19.2 percent of revenue.
+With gross debt of €1,834 million as of 30 September 2017 (30 September 2016: €1,769 million) and EBITDA of
+€1,801 million for the 2017 fiscal year (2016: €1,596 million), gross debt to EBITDA ratio was 1.0 as of 30 Septem-
+ber 2017 (30 September 2016: 1.1). Infineon continues to have sufficient financial flexibility to ensure that in
+addition to financing its planned investments it is also able to pay regular dividends (see note 15).
+Due to the results achieved in the reporting period as well as a positive business outlook, a dividend of €0.25 for
+each share entitled to a dividend shall be proposed to be paid from the €306 million of distributable profits of
+Infineon Technologies AG for the 2017 fiscal year, an increase of €0.03 compared to the previous year. This would
+result in an expected distribution of approximately €283 million. The payment of this dividend depends on the
+approval of the Annual General Meeting on 22 February 2018.
+The USPP notes of US$935 million issued in April 2016 contain a number of standard covenants, including among
+other things change of control clauses as well as the compliance with a debt coverage ratio, which provides for
+a certain relationship between the size of debt (adjusted) and earnings (adjusted). The financial liabilities, which
+were taken over in connection with the acquisition of MoTo, also contain three standard covenants based on certain
+financial ratios (equity ratio, debt ratio and liquidity ratio).
+17 Share-based compensation
+The Company makes use of the Stock Option Plan 2010 and, from the 2014 fiscal year, the Performance Share Plan
+in order to provide share-based compensation.
+Performance share plan
+A new Long Term Incentive Plan (LTI) consisting of a "performance share" plan was developed for the Management
+Board and selected senior executives as a successor to the Stock Option Plan 2010.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+152
+Under this plan, (virtual) performance shares are initially provisionally allocated on 1 October (from the 2018
+fiscal year 1 March) of the current fiscal year according to a pre-determined LTI allocation amount in euro. With the
+allotment of a virtual performance share, the participant in the plan acquires the right to receive (real) Infineon
+shares once a personal investment in Infineon shares - depending on position and LTI allotment amount - has
+reached a four-year holding period.
+50 percent of the performance shares are performance-related, 50 percent are not dependent on performance.
+The performance-related shares are only finally allocated if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) during the period between the date of the provisional allocation and the end of the holding
+period. If at the end of the holding period the requirements for an allocation of performance shares - either all or
+only those that are not performance related - are fulfilled, then the entitlement to the transfer of the corresponding
+number of (real) Infineon shares is acquired. The value of the performance shares ultimately assigned to members
+of the Management Board may not exceed 250 percent of the respective LTI allocation amount; above this level
+performance shares are forfeited.
+The fair value of the performance shares at the date of allocation was determined by an external expert using
+a recognized financial-mathematical method (Monte Carlo simulation model for the prediction of share price and
+index developments). The fair value of the instruments granted was determined taking into account future dividends
+as well as the payment cap.
+The following is an overview of the allocations made:
+In the 2017 fiscal year Infineon was significantly above the minimum requirements of all covenants. Should Infineon
+not comply with the covenants attached to the USPP notes, then all USPP notes outstanding as of 30 September 2017
+amounting to US$935 million (see note 12) could become immediately repayable. A lack of compliance with the
+covenants of the financial liabilities, which were taken over in connection with the acquisition of MoTo, would only
+result in additional annual fees, but not in a repayment obligation.
+Realized (gains) losses resulting
+For the 2016 fiscal year, a cash dividend of €0.22 per share (total amount: €248 million) was paid. For the 2015
+fiscal year, a cash dividend of €0.20 per share (total amount: €225 million) was paid in the 2016 fiscal year.
+(1,404)
+1
+1
+Unrealized gains (losses) resulting
+from securities
+1
+1
+(1)
+(1)
+Total
+(59)
+(1)
+(60)
+(32)
+(3)
+Dividends
+(35)
+The following table shows a reconciliation of accumulated deficit as of 30 September 2017 and 2016:
+€ in millions
+As of 1 October 2015
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial losses on pension plans and similar commitments net of tax of €5 million
+As of 30 September 2016
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial gains on pension plans and similar commitments net of tax of €2 million
+As of 30 September 2017
+(2,897)
+744
+(159)
+(2,312)
+790
+118
+Accumulated deficit
+Domestic
+plans
+Foreign
+plans
+893
+170
+1,063
+982
+177
+1,159
+a 50 basis points lower expected
+rate of pension increase
+863
+159
+1,022
+940
+164
+rate of pension increase
+1,104
+896
+167
+1,063
+992
+172
+1,164
+The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
+tables were applied.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+As of 30 September 2017, the Company's Articles of Associations provide for two conditional capitals amounting to
+up to €274,910,838:
+> Pursuant to section 4, paragraph 5, of the Articles of Association the share capital is conditionally increased
+by up to €14,910,838 through the issue of up to 7,455,419 new no par value registered shares in connection with
+the Company's “Infineon Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 17)
+(Conditional Capital 2010/1). During the 2017 fiscal year, a total of 3,527,820 new no par value shares with a
+proportionate amount of share capital of €2 per share were issued out of the Conditional Capital 2010/1 as a
+result of the exercise of share options in connection with the Stock Option Plan 2010. Conditional Capital 2010/1
+decreased accordingly by €7,055,640 to €7,855,198. The corresponding change to the Articles of Association
+was submitted after the end of the reporting period and entered into the Commercial Register as requested.
+> Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is conditionally increased by up
+to €260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights of
+the holders of warrants or convertible bonds, which the Company may issue at any time prior to 12 February 2019
+(Conditional Capital 2014).
+Increase in life expectancy by one year
+a 50 basis points higher expected
+1,121
+167
+Present value of defined benefit pension
+plans with:
+a 50 basis points higher discount rate
+804
+153
+957
+878
+160
+1,038
+a 50 basis points lower discount rate
+956
+177
+1,133
+1,059
+186
+1,245
+a 50 basis points higher expected
+rate of salary increase
+887
+168
+1,055
+975
+177
+1,152
+a 50 basis points lower expected
+rate of salary increase
+866
+160
+1,026
+954
+Other reserves
+Foreign
+plans
+Domestic
+plans
+Foreign
+plans
+in %
+The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
+Actuarial assumptions
+1,136
+172
+964
+1,040
+164
+876
+1,032
+79
+953
+949
+Discount rate at the end of the fiscal year
+83
+Plans that are wholly or partly funded
+Total
+104
+93
+11
+91
+81
+10
+Plans that are wholly unfunded
+plans
+Total
+Foreign
+Domestic
+plans
+Total
+866
+Rate of salary increase
+Projected future pension increases
+30 September 2017
+plans
+Domestic
+30 September 2016
+30 September 2017
+€ in millions
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
+changes in one actuarial assumption holding all other assumptions constant.
+Sensitivity analysis
+Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high
+credit rating.
+1.9
+2.0
+2.1
+1.8
+2.3
+Tranche
+2.0
+2.6
+2.0
+2.2
+1.0
+2.7
+1.8
+plans
+plans
+Foreign
+Domestic
+Changes in other reserves during the 2017 and 2016 fiscal years are as follows:
+Foreign
+plans
+Domestic
+plans
+30 September 2016
+Total
+End of the
+waiting period
+Total
+Number of performance
+11111
+13
+2
+7
+2
+5
+(23)
+(5)
+(18)
+(14)
+(4)
+(10)
+1
+(26)
+(21)
+(30)
+(6)
+(24)
+Total
+Foreign
+plans
+Domestic
+plans
+Total
+Foreign
+plans
+Domestic
+plans
+2016
+2017
+(5)
+1
+(5)
+(5)
+81
+98
+22
+27
+21
+26
+ber 2016
+30 Septem-
+30 Septem-
+ber 2017
+Defined contribution plans
+5-10 years
+Total
+2-5 years
+1-2 years
+Less than 1 year
+€ in millions
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as of
+30 September 2017 and 2016:
+The weighted average duration of defined benefit plans is around 17 and 18 years as of 30 September 2017 and
+2016, respectively.
+In the 2018 fiscal year, payments of €26 million are expected to be made to plan assets which relate to benefits paid
+directly to pension recipients by the Group companies.
+As of 30 September 2017 and 2016, cumulative actuarial losses amounted to €368 million and €482 million,
+respectively. In addition, cumulative actuarial losses amounting to €6 million and €7 million, respectively, resulting
+from deferred compensation and health care plans, are also recognized directly in other comprehensive income.
+Actuarial gains of €115 million and actuarial losses of €161 million have been recognized outside net income in
+other comprehensive income for the years ended 30 September 2017 and 2016, respectively.
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees,
+otherwise they are recorded as research and development or selling, general and administrative expenses. Interest
+costs and expected return on plan assets were recorded net as part of financial expense.
+(41)
+(8)
+(33)
+(36)
+(8)
+(28)
+148
+223
+past service (cost) benefit
+Pension cost
+Expected return on plan assets
+150
+1
+153
+1
+160
+140
+127
+Not quoted
+in an active
+market
+Quoted
+in an active
+market
+30 September 2016
+Not quoted
+in an active
+market
+Quoted
+in an active
+market
+133
+30 September 2017
+Other
+Property
+Reinsurance policies
+Cash and cash equivalents
+Equity securities
+Corporate bonds
+Government bonds
+€ in millions
+As of 30 September 2017 and 2016 the allocation of invested plan assets to the major asset categories is as follows:
+Plan asset allocation
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities, and
+reinsurance policies is targeted to maximize the total long-term return on assets for a given level of risk. Investment
+risk is monitored on an ongoing basis through periodic portfolio reviews, coordination with investment managers
+and annual liability measurements. Investment policies and strategies are periodically reviewed as part of detailed
+studies of assets and liabilities by independent investment advisors and actuaries to ensure the objectives of the
+plans are met, taking into account any changes in benefit plan structure, market conditions or other material items.
+The aim is to optimize the risk-return portfolio of plan assets against the liabilities using a diversified portfolio of
+investments within a defined risk budget and to thereby increase the funding ratio in the long term.
+Investment strategies
+Total
+3
+6
+1
+Interest cost
+Current service cost
+€ in millions
+The expenses and income of defined benefit plans for the years ended 30 September 2017 and 2016 comprise
+the following:
+Amounts recognized in profit or loss and in total comprehensive income
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+The actual return on plan assets in the fiscal year ended 30 September 2017 was €6 million (2016: €47 million).
+As a matter of policy Infineon's pension plans do not invest in shares or debt instruments of Infineon.
+The position "Other" in the table above comprises mainly commodity funds and certificates.
+Government and corporate bonds are traded in liquid markets and the majority of them have an investment
+grade rating.
+72
+460
+69
+468
+19
+25
+19
+24
+19
+3
+15
+3
+33
+-
+34
+Amortization of unrecognized
+Average share price
+of the nine months
+before grant in €
+191
+315
+5.31
+30 September 2017
+6.62
+1,182,830
+5.72
+30 September 2017
+6.62
+114,046
+5.20
+The Management Board (for employees) and the Supervisory Board (for the Management Board) resolved and
+communicated within the fourth quarter of the 2017 fiscal year to settle the tranche for the 2014 fiscal year due
+in October 2017 in cash. As a result, €28 million (at a share price of €21.90) were reclassified from the additional
+paid-in capital to other current liabilities at that date.
+Stock Option Plan 2010
+2.5 million and 6.0 million stock options with an average exercise price per option of €7.08 and €7.18 were
+outstanding as of 30 September 2017 and 2016, respectively. Of these, 2.5 and 1.9 million were exercisable as of
+30 September 2017 and 2016, respectively.
+100,702
+Costs for share-based compensation
+18 Other financial commitments
+In addition to provisions and liabilities, Infineon also has other financial obligations which are not recognized in
+the Consolidated Statement of Financial Position, relating in particular to lease arrangements and unconditional
+purchase commitments. These are explained in more detail below.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+153
+Undiscounted future minimum lease payments arising from operating lease arrangements to be made by Infineon
+as lessee are the following:
+Payments due in (€ in millions)
+As of 30 September 2017
+Less than
+1 year
+1-5 years
+The costs for share-based compensation amounted to €13 million and €9 million in the 2017 and 2016 fiscal years,
+respectively.
+8.49
+30 September 2018
+Fiscal year 2015: Management Board
+Fiscal year 2014: Employees
+Fiscal year 2014: Management Board
+shares outstanding
+as of 30 September 2017
+Fair value per
+performance share
+in €
+Fiscal year 2017: Employees
+30 September 2020
+13.01
+934,232
+11.86
+Fiscal year 2017: Management Board
+Fiscal year 2016: Employees
+30 September 2020
+13.01
+80,704
+11.25
+30 September 2019
+10.56
+1,142,538
+7.26
+Fiscal year 2016: Management Board
+30 September 2019
+10.56
+80,964
+7.07
+Fiscal year 2015: Employees
+30 September 2018
+8.49
+988,112
+5.44
+After 5 years
+374
+308
+140
+The insolvency administrator filed a request for declaratory judgment in an unspecified amount against Infineon
+Technologies AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies
+Investment B.V., at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to
+make good the deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of
+Qimonda began, i.e., to refund to Qimonda the difference between the latter's actual business assets when the
+insolvency proceedings began and its share capital (in German: “Unterbilanzhaftung”). The insolvency administrator
+contended that the commencement of operating activities by Qimonda amounted to what is considered in case
+law to be the activation of a shell company (in German: "Wirtschaftliche Neugründung"), and that this activation
+of a shell company was not disclosed in the correct manner. On 6 March 2012, with respect to another matter, the
+German Federal High Court issued a ruling on principle that any liability resulting from the activation of a shell
+company only depends on the situation at the date of the activation of a shell company and not, as asserted by the
+insolvency administrator, on the situation at the date on which insolvency proceedings are opened.
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on 14 February
+2012 the insolvency administrator also lodged a request for payment based on an alternative claim (in German:
+"Hilfsantrag"), as well as making other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in connection with the alleged
+activation of a shell company. On 15 June 2012 the insolvency administrator increased his request for payment
+of 14 February 2012 on the grounds of activation of a shell company to at least approximately €3.35 billion plus
+interest. Furthermore, the insolvency administrator continues to base a substantial part of his alleged payment
+claims, as already asserted out of court against Infineon in August 2011 for an unspecified amount, on liability for
+impairment of capital (in German “Differenzhaftung"). This claim is based on the allegation that, from the very
+beginning, the carved-out memory products business had a negative billion euro value. The insolvency adminis-
+trator therefore asserts that Infineon is obliged to make good the difference between this negative value and the
+lowest issue price (in German: "geringster Ausgabebetrag") of the subscribed stock. Additionally, the insolvency
+administrator has asserted a claim for repayment of allegedly unjustly charged consultancy fees in an amount of
+€10 million in connection with the flotation of Qimonda.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+147
+(53)
+150
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+> Section 4, paragraph 7, of the Articles of Association provides that the Management Board is authorized, with
+the approval of the Supervisory Board, to increase the share capital in the period up to 17 February 2021 - either
+once or in partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against
+contributions in cash for the purpose of increasing the issue to employees of the Company or its Group companies
+(Authorized Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares.
+The shares may be issued in such a manner that the contribution to be paid on such shares is covered by the
+portion of the profit for the year that the Management Board and Supervisory Board could transfer to revenue
+reserves in accordance with section 58, paragraph 2, AktG.
+-
+> Section 4, paragraph 4, of the Articles of Association provides that the Management Board is authorized, with the
+approval of the Supervisory Board, to increase the share capital in the period until its expiry on 11 February 2020
+once or in partial amounts by a total of up to €676,000,000 through the issue of new no par value registered shares,
+carrying a dividend right from the beginning of the fiscal year in which they are issued, against contributions in
+cash or in kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval of the Super-
+visory Board, to exclude the subscription rights of the shareholders in certain cases. In accordance with German
+law, cash capital increases with subscription rights excluded pursuant to section 186, paragraph 3, sentence 4,
+of the AktG, are not permitted to exceed 10 percent of a company's share capital – neither at the time of the
+authorization becoming effective nor at the time of its exercise. For share capital increases against contributions
+in kind or a combination of cash contributions and contributions in kind, the authorization further provides
+an upper limit of 20 percent of the share capital, again measured either at the time the authorization becomes
+effective or, , if the value is lower, at the time of its exercise.
+Alleged activation of a shell company and liability for impairment of capital
+As of 30 September 2017, the Company's Articles of Associations provide for two authorized share capitals amounting
+to up to €706,000,000:
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €197 million
+in the 2016 fiscal year, of which €225 million related to the dividend paid in February 2016. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €19 million. Expenses amounting to €9 million for share-based compensation were recorded in
+the 2016 fiscal year, additional paid-in capital increased by the same amount.
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €242 million
+in the 2017 fiscal year, of which €248 million related to the dividend paid in February 2017. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €19 million. Expenses amounting to €13 million for share-based compensation were recorded in
+the 2017 fiscal year, additional paid-in capital increased by the same amount. In addition, negative €26 million (net
+after tax) was recorded in additional paid-in capital in the 2017 fiscal year in connection with the settlement of the
+2014 fiscal year tranche of the Performance Share Plan. The Management Board and the Supervisory Board decided
+to settle the tranche in cash for the 2014 fiscal year. This amount has been reclassified to other current liabilities
+(for details see note 17).
+Additional paid-in capital
+The ordinary share capital of Infineon Technologies AG increased during the 2017 fiscal year by €7,055,640.
+3,527,820 new shares were issued as a result of the exercise of stock options by employees as well as by current
+and past members of the Management Board (2016: 3,401,628). As of 30 September 2017, the ordinary share capital
+stood at €2,272,401,858 divided into 1,136,200,929 no par value registered shares, each representing €2 of the
+Company's ordinary share capital and is fully paid. Each share grants the holder one vote and an equal portion
+of the profits in the form of a dividend as resolved by the Annual General Meeting. As of 30 September 2017, of the
+abovementioned total number of issued shares the Company held 6 million own shares (2016: 6 million). Own
+shares held by the Company as of the date of the Annual General Meeting carry no voting rights and are not entitled
+to dividend.
+Ordinary share capital
+15 Equity
+P see page 152
+149
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or funds.
+Infineon has no further performance obligations or risks with regard to these pension plans in excess of the fixed
+contributions paid. Additionally, the Group makes contributions to government pension schemes. Expenses for
+defined contribution plans amounted to €165 million and €162 million in the fiscal years ended 30 September 2017
+and 2016, respectively.
+Authorized share capital
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products)
+were carved out from Infineon and transferred to Qimonda in the form of a non-cash contribution with economic
+effect from 1 May 2006. Qimonda filed an application at the Munich Local Court to commence insolvency
+proceedings on 23 January 2009. On 1 April 2009, the insolvency proceedings formally opened. The insolvency
+of Qimonda has given rise to various disputes between the insolvency administrator and Infineon.
+Proceedings in relation to Qimonda
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+72
+598
+118
+278
+202
+P see page 132
+P see page 142
+P see page 154 f.
+As of 30 September 2016
+Total undiscounted future minimum sub-lease payments to be received as of 30 September 2017 amounted to
+€1 million (30 September 2016: €133 million).
+Rental expenses under operating lease arrangements amounted to €60 million and €83 million in the 2017 and
+2016 fiscal years, respectively, and related mainly to minimum lease payments made. Total income arising from
+sub-lease arrangements amounted to €4 million and €16 million in the 2017 and 2016 fiscal years.
+The changes compared to the previous fiscal year are mainly due to the full consolidation of MoTo Objekt Campeon
+GmbH & Co. KG as owner of the Campeon office complex in Neubiberg near Munich, the location of Infineon's head-
+quarters, from 30 December 2016 (see note 3). Since then Infineon is no longer the operating lessee, but the owner of
+this office complex. The decline in undiscounted future minimum sub-lease payments to be received is accompanied
+by an increase in undiscounted future minimum lease payments to be received from operating lease arrangements
+excluding sub-lease arrangements (see note 11).
+Contracts already entered into for commenced or planned investments in property, plant and equipment
+(purchase commitments) as of 30 September 2017 amount to €359 million (30 September 2016: €274 million).
+Purchase commitments for planned investments in intangible assets as of 30 September 2017 amount to €1 million
+(30 September 2016: €1 million). Besides there were further commitments to invest in non-current assets amounting
+to €10 million (30 September 2016: €0 million).
+Long-term purchase commitments are in place for the supply of commodities and raw materials, in particular
+for wafers, semiconductor intermediate products, electricity and gas. Overall, these minimum purchase commit-
+ments give rise to other financial obligations amounting to approximately €958 million as of the reporting date
+(30 September 2016: €810 million). These contracts generally have terms of between one and five years. Purchases
+under these agreements are recorded as incurred in the normal course of business. Infineon assesses its anticipated
+purchase requirements on a regular basis in order to meet customer demand for its products. An assessment of
+potential losses under these purchase contracts is made on a regular basis, for example, in the event that anticipated
+purchase quantities fall below the minimum contractual quantities.
+In conjunction with its investing activities, Infineon receives government grants and subsidies related to the con-
+struction and financing of certain of its production facilities. Grants are also received for selected research and
+development projects. These amounts are recognized upon the achievement of specified criteria. Certain of these
+grants have been received contingent upon Infineon complying with and maintaining of certain project-related
+requirements, such as creating a specified number of jobs over a defined period of time. Infineon is committed to
+maintaining these requirements, and from today's perspective Infineon expects to be able to do so. Nevertheless,
+should such requirements not be met, as of 30 September 2017, a maximum of €131 million (30 September 2016:
+€66 million) of these subsidies could be refundable. This amount does not include any potential liabilities for
+Qimonda-related subsidies (see note 19).
+In total, Infineon has guarantees outstanding to third parties outside the Group as of 30 September 2017 amounting
+to €2 million (30 September 2016: €1 million).
+Infineon, through certain sales and other agreements may, in the normal course of business, be obligated to
+indemnify its counterparties under certain conditions for warranties, patent infringement or other matters.
+The maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligation is contingent on events that may or may not occur in the future,
+and depends on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+154
+19 Legal risks
+Litigation and government inquiries
+Smartcard antitrust litigation
+In October 2008 the EU Commission initiated an investigation into the Company and other manufacturers of
+chips for smartcards for alleged violations of antitrust laws. In September 2014 the EU Commission imposed
+a fine of €83 million on Infineon which was paid in October 2014. Infineon rejects the allegations as unfounded.
+Infineon brought an action against the decision before the General Court of the European Union in November 2014.
+The Court dismissed Infineon's action and in February 2017 Infineon filed an appeal to the European Court of
+Justice against this decision.
+Two class actions for damages of an unspecified amount in connection with the EU Commission investigative
+proceedings have been filed in Canada: The first action was filed in the state of British Columbia in July 2013, and
+the second in the state of Quebec in September 2014. The actions followed the press reports on the investigation
+and subsequent decision of the EU Commission. No dates have been set for court proceedings.
+In December 2014 an indirect customer filed a lawsuit against Infineon and Renesas in London (Great Britain)
+which was served upon the Company in April 2015. In this lawsuit the plaintiff claims for damages in an amount
+still to be determined in connection with the allegations of the EU Commission.
+96
+Thereof: Infineon Technologies Austria AG
+Conditional capital
+(461)
+(20)
+20
+1
+(21)
+Experience adjustments
+Actuarial gains (losses) for:
+(2)
+(23)
+(18)
+(14)
+(4)
+(10)
+Interest cost
+(5)
+(5)
+(5)
+(1)
+Adjustments to
+19
+5
+14
+Benefits paid by Infineon
+(179)
+(20)
+(3)
+(159)
+8
+128
+Adjustments to financial assumptions
+(13)
+(13)
+demographic assumptions
+136
+14
+1
+Past service income (cost)
+plans
+Domestic
+Total
+Foreign
+Domestic
+2016
+plans
+2017
+€ in millions
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets
+to 30 September 2017 and 2016 is presented in the following table:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+P see page 151 f.
+(461)
+145
+1
+plans
+Change in defined benefit obligations
+taking into account future salary increases:
+(26)
+(5)
+(21)
+(30)
+(6)
+(24)
+Foreign
+plans
+Current service cost
+(141)
+(773)
+(1,136)
+(172)
+(964)
+Present value at beginning of year
+(914)
+8
+Total
+Foreign currency effects
+(5)
+(2)
+(2)
+Foreign currency effects
+(22)
+(8)
+(5)
+(14)
+(5)
+(14)
+Benefits paid
+24
+11
+13
+(19)
+20
+Fair value of plan assets at end of year
+63
+(373)
+22
+(373)
+Thereof: Infineon Technologies AG
+(604)
+(110)
+474
+(494)
+(101)
+(402)
+532
+62
+470
+537
+(503)
+6
+Net pension liability
+Contributions from Infineon
+470
+Fair value of plan assets at beginning of year
+Change in fair value of plan assets:
+(1,136)
+(172)
+(964)
+62
+(1,040)
+Present value of defined benefit obligation
+at end of year
+5
+5
+14
+4
+4
+(876)
+532
+(164)
+(1)
+34
+(1)
+11
+Actuarial gains (losses)
+13
+11
+2
+23
+2
+5
+Expected return on plan assets
+488
+51
+7
+437
+30 September 2016
+Current liabilities:
+Other current liabilities
+Total
+56
+Financial investments
+Other current assets
+Non-current assets:
+Other non-current assets
+Current assets:
+21
+19
+485
+566
+Total
+21
+40
+Other non-current assets
+Non-current assets:
+4
+Total
+4
+60
+Current liabilities:
+417
+Total
+In the 2017 and 2016 fiscal years there were no reclassifications between the levels.
+466
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
+market price is available, the fair value is determined by considering existing contractual arrangements based on
+externally observable dividend policy (Level 3).
+Other current assets and liabilities contain derivative financial instruments, including cash flow hedges. Their fair
+value is determined by discounting future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
+prices) drawn from reliable external sources are used (Level 2).
+There is no active market for the securities included in financial investments. The fair value is calculated as the
+present value of future expected cash flows, taking into account valuation parameters which can be observed in
+the market (Level 2).
+10
+10
+10
+10
+14
+60
+Other current liabilities
+491
+18
+32
+1
+1
+59
+399
+458
+2
+2
+2
+2
+14
+522
+Total
+Financial investments
+8
+1,827
+1,752
+1,752
+Other non-current liabilities
+Long-term debt
+Non-current liabilities:
+121
+8
+111
+2
+8
+121
+857
+857
+857
+Trade payables
+17
+17
+17
+maturities of long-term debt
+Short-term debt and current
+3,089
+The net gain or loss on financial instruments (including interest income and expense) within continuing operations
+in the Consolidated Statement of Operations amounted to the following:
+Other current liabilities
+Other current assets
+8
+2
+Current assets:
+Level 3
+Level 2
+Level 1
+Fair value by category
+Fair value
+160
+30 September 2017
+€ in millions
+The allocation to the levels as of 30 September 2017 and 2016 is as follows:
+Notes to the Consolidated Financial Statements
+2,755
+Consolidated Financial Statements
+> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used in
+the determination of the fair value:
+Other non-current assets include €75 million (2016: €75 million) relating to the Campeon leasing agreement and
+MoTo's loan agreements (see note 12) which are deposited in ascrow. Additional €9 million (2016: €0 million) from an
+agreement related to the residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+(see note 19) which are deposited in escrow in order to secure potential claims against Infineon.
+For assets measured at amortized cost categorized as "Loans and receivables", it is assumed that the fair values
+correspond to their carrying amounts. The same assumption applies to liabilities resulting from trade payables and
+other current liabilities categorized as "Other financial liabilities (amortized cost)".
+P see page 155
+P see page 142
+2,830
+8
+2,745
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+€ in millions
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Loan and receivables
+The following table shows the effects on profit or loss for the 2017 and 2016 fiscal year and equity as of 30 Septem-
+ber 2017 and 2016 for continuing operations of a 10 percent shift in exchange rates for the major foreign currencies
+(which can be found in note 2). The assumed exchange rate changes relate only to financial instruments within the
+meaning of IFRS 7.
+P see page 123
+163
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 22.
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments.
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2017 and 2016 fiscal years.
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated in
+a foreign currency that does not correspond to the functional currency, and the foreign currency represents the
+relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not risks within the
+meaning of IFRS 7.
+Foreign exchange risk
+3,029
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial instruments,
+including those related to foreign exchange rates, interest rates and other price risks.
+Market risk
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate
+risk and price risk), credit risk, financing and liquidity risk. Infineon's financial risk management program seeks to
+minimize potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments to
+hedge certain risks to which it is exposed. Financial risk management is carried out by the central Finance & Treasury
+(FT) department in accordance with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units. The FT department's policy
+contains principles for overall risk management as well as policies covering specific areas such as foreign exchange
+risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment
+of excess liquidity.
+23 Financial risk management
+P see page 160
+concluded in the previous year (2016: €1 million gain); this amount was transferred from other reserves into the
+Consolidated Statement of Operations. As in the previous year, no hedge ineffectiveness was recorded in the
+Consolidated Statement of Operations for these hedging relationships. As in the previous year, no gains or losses
+were transferred from other reserves to profit or loss as a result of cash flow hedges for future raw material pur-
+chases being canceled following the decision that the occurrence of the hedged transaction had become unlikely.
+162
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps
+which are designated as cash flow hedges. The fair value of these swaps amounted to positive €1 million as of
+30 September 2017 and positive €1 million as of 30 September 2016. €2 million of unrealized losses arose from these
+transactions in the 2017 fiscal year (2016: €4 million unrealized gains), these decreased other reserves by a corre-
+sponding amount. At the same time, €1 million of losses were realized in the 2017 fiscal year on swap transactions
+€ in millions
+30 September 2017
+30 September 2016
+Profit or Loss
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures Infineon concluded additional financial derivative
+contracts for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk
+arising from the fluctuation of commodity prices. The change in relevant market prices as of 30 September 2017
+and 2016 had no significant impact on equity in the 2017 and 2016 fiscal years.
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have no significant impact on the result of the 2017 and 2016 fiscal years.
+According to IFRS 7 "Financial Instruments: Disclosures”, other price risk is defined as the risk that the fair value or
+future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
+arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
+to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+Other price risk
+Changes in market interest rates affect interest income and interest expense on variable rate financial instruments.
+Assuming an increase (decrease) of 100 basis points in market interest rates in 2017, interest result in the 2017 fiscal
+year would have been worse (better) by €1 million; assuming an increase (decrease) of 100 basis points in market
+interest rates in 2016, interest result in the 2016 fiscal year would have been worse (better) by €2 million.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or loss
+and equity. Infineon prepares this using the iteration method. Infineon does not hold any fixed-rate financial assets
+or liabilities that are measured at fair value through profit or loss. Furthermore, Infineon did not hold any fixed-rate
+available for sale financial assets either in 2017 or 2016.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond
+issuances and debt financing. Due to the cyclical nature of its core business and the need to maintain high
+operational flexibility, Infineon holds a relatively high level of liquid financial assets that are invested in short-term
+fixed-interest instruments. These investments generally have a contract duration of between one and twelve
+months in order to achieve short-term interest rate returns. The risk to these assets of changing interest rates is
+not material in the current period of low or zero interest rates.
+In order to partly hedge against the exchange rate risk associated with the purchase price obligation arising from
+the planned acquisition of Wolfspeed, the Company entered into two transaction-dependent Euro/US Dollar foreign
+currency forward contracts (Deal Contingent Forwards) in July 2016. Each had a nominal value of US$250 million
+and was accounted for as a cash flow hedge. As of 30 September 2016 the two Deal Contingent Forwards had a total
+fair value of negative €8 million. The change in value of negative €6 million was recorded in other reserves. In the
+2016 fiscal year Deal Contingent Forward ineffectiveness totaling €2 million was recorded in the Consolidated State-
+ment of Operations. As result of the discontinuation of the acquisition of Wolfspeed in February 2017, both Deal
+Contingent Forwards were canceled and the cash flow hedge terminated. Cash inflows for the Company of €5 million
+resulted from the cancellation of the Deal Contingent Forwards. The book value of the two Deal Contingent Forwards
+as well as the amount recognized in the other reserves were derecognized and financial income of €7 million was
+recorded in the 2017 fiscal year.
+In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the
+fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
+49
+(40)
+(7)
+6
+(25)
+21
+(10%)
++10%
+(10%)
++10%
+Equity
+Interest rate risk
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. In 2017 as in 2016 no foreign exchange derivatives used to hedge ongoing business were
+designated as cash flow hedges.
+(9)
+2
+Derivative financial instruments and hedging activities
+Infineon does not net financial instruments. The Infineon Group conducts derivative transactions according to the
+global netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and
+other comparable national framework agreements. Under the terms of these agreements, any netting arising from
+the occurrence of certain future events would have no material effect on the balance sheet presentation of these
+financial instruments.
+Interest income from financial instruments not measured at fair value through profit and loss in the 2017 fiscal year
+amounted to €9 million (2016: €6 million); interest expense from such financial instruments amounted to €49 million
+(2016: €53 million).
+The currency effects included within net gains and losses amount to positive €5 million (2016: positive €1 million).
+This net currency effect arose exclusively from recognized financial instruments.
+161
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+(46)
+(37)
+(33)
+63
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts and commodity swaps. The objective is to reduce the impact of exchange rate and commodity
+price fluctuations on future net cash flows.
+7
+(2)
+(22)
+(96)
+2
+2016
+2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Total
+Other financial liabilities
+Held for trading
+Designated as fair value through profit and loss
+(2)
+Available-for-sale financial assets
+The nominal values and fair values of Infineon's derivative instruments as of 30 September 2017 and 2016
+are as follows:
+Forward exchange contracts sold
+1
+39
+1
+33
+(8)
+455
+(2)
+167
+1
+126
+165
+€ in millions
+281
+Nominal
+value
+value
+Fair
+Nominal
+value
+30 September 2016
+30 September 2017
+Total
+Commodity swaps
+Deal Contingent Forward
+Designated cash flow hedges
+Forward exchange contracts purchased
+Fair
+value
+2
+1,615
+40
+14
+77
+17
+79
+1
+3
+2
+16
+Other related
+companies
+Joint
+ventures
+Other related
+companies
+Joint
+ventures
+2016
+2017
+Products and services received
+Sales and service charges
+€ in millions
+Sales and service charges to and products and services received from related companies in the 2017 and 2016
+fiscal years consist of the following:
+1
+1
+1
+8
+1
+Psee page 99 ff.
+As of 30 September 2017, sales and services relationships with related companies resulted in purchase commitments
+of €23 million (30 September 2016: €5 million).
+Related persons
+Members of the Management Board active in the 2017 fiscal year received fixed non-performance-related compen-
+sation for their services of €3.4 million (2016: €2.9 million). In addition, the members of the Management Board
+received variable performance-related compensation for their services in the 2017 fiscal year of €3.8 million (2016:
+€2.8 million). This comprised a Short Term Incentive of €2.0 million (2016: €1.3 million), and a Mid Term Incentive
+of €1.8 million (2016: €1.5 million). Furthermore, the Management Board received a Long Term Incentive (LTI) which,
+since 2014, takes the form of performance shares. The expense resulting from the LTI amounted to €0.9 million (2016:
+€0.4 million). The compensation granted to active members of the Management Board amounted to €8.1 million
+in the 2017 fiscal year (2016: €6.1 million).
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Balance as of 30 September 2017
+Financial assets
+€ in millions
+10
+The following table presents the carrying amounts and the fair values of financial instruments by their respective
+classes, and a breakdown by category of financial instruments as defined by IAS 39.
+158
+Cash and cash equivalents reported as of 30 September 2017 and 2016 totaling €860 million and €625 million,
+respectively, include €128 million and €115 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represents cash and cash equivalents of
+consolidated companies located in countries where the transfer of cash is legally restricted, for example, the
+People's Republic of China.
+21 Supplemental cash flow information
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+In the 2017 and 2016 fiscal years there were no further significant transactions between Infineon and related persons
+which fall outside of the scope of the existing employment, service or appointment terms, or of the contractual
+arrangements for their remuneration.
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board
+as required by section 315a, paragraph 1, in connection with section 314, paragraph 1, no. 6a, sentences 5
+to 8, of the German Commercial Code, is provided in the Compensation Report which is part of the Combined
+Management Report.
+As of 30 September 2017, pension liabilities for former members of the Management Board amounted to €67.9 million
+(2016: €77.0 million).
+Former members of the Management Board received payments of €1.3 million (in particular pension payments)
+in the 2017 fiscal year (2016: €1.2 million).
+The compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2017 fiscal year,
+including attendance fees, amounted to €2.0 million (2016: €1.7 million). Employee representatives in the Super-
+visory Board who are employed by Infineon also receive a salary for their activities as employees.
+22 Additional disclosures on financial instruments
+1
+1
+1
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so, and accordingly represent contingent liabilities that are not included in provisions. This applies in particular
+to the legal dispute for alleged activation of a shell company and liability for impairment of capital described above.
+Should the alleged claims prove to be valid, substantial financial obligations could arise for Infineon which could
+have a material adverse effect on its business and its financial condition, liquidity position and results of operations.
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. As a result, Infineon recorded provisions in connection with some of the
+abovementioned matters totaling €33 million and €32 million as of 30 September 2017 and 30 September 2016,
+respectively. Of the provisions recorded as of 30 September 2017, €6 million has been provided in connection with
+the residual liability as former shareholder of Qimonda Dresden. For the defense of the proceedings still pending
+for the alleged activation of a shell company and liability for impairment of capital, the Company has recorded a
+provision of €25 million as of 30 September 2017. Remaining provisions in connection with the Qimonda insolvency
+total €2 million as of 30 September 2017.
+Infineon recognizes provisions and liabilities for such obligations and risks which it assesses at the end of each
+reporting period are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
+having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory business;
+as a result certain long-standing creditors have residual liability claims against Infineon. These claims can only
+be exercised by the insolvency administrator acting in the name of the creditors concerned. In the meantime,
+settlements have been concluded with most of the major liability creditors.
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+Due to the highly complex nature of the issues to be decided and the level of the claims asserted, it is not clear
+at this stage if this legal dispute can be resolved with an out of court settlement, and, if this is not the case, when a
+first-instance court decision would be reached.
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who
+are supporting the respective parties with assessments and opinions.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On 29 August 2013
+the court appointed an independent expert to clarify the valuation issues raised by the insolvency administrator
+and to address technical matters.
+Notes to the Consolidated Financial Statements
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documentation
+for the capital increase by independent auditing companies, one of which had been engaged by Infineon and the
+other of which was acting in the capacity of a court-appointed auditor of non-cash contributions and post-formation
+acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business area contri-
+buted had a value of several times the lowest issue price of the shares issued, while the court-appointed auditor
+of non-cash contributions and post-formation acquisitions confirmed to the court that the lowest issue price of the
+shares issued was covered - as legally required – by the value of the non-cash contributions. Additionally, in the
+course of its defense against the claims asserted by the insolvency administrator, Infineon has commissioned several
+expert opinions all of which arrive at the same conclusion, that the objections raised by the insolvency administrator
+against the valuation of the non-cash contribution are not valid.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, its financial investments
+and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
+lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
+base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
+credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
+Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
+are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
+However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (S&P, Moody's or Fitch) and
+credit default swap premiums. Possible breaches of stipulated investment thresholds result in immediate notifi-
+cation and the requirement to reduce the risk.
+Infineon has spread its cash investments over more than ten banks. As of 30 September 2017 no financial institution
+was responsible for more than 12 percent (2016: 13 percent) of Infineon's cash investments. This gives rise to a
+maximum risk of €181 million (2016: €177 million) in the event of the default of a single financial institution assuming
+no deposit insurance scheme is in place. Infineon also holds derivative financial instruments with a positive fair
+value of €4 million in 2017 (2016: €1 million).
+Financing and liquidity risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well as ensuring
+the availability of funding through adequate levels of committed credit facilities.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Credit risk
+155
+Balance as of 30 September 2016
+156
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate to products, services, patents, environmental issues and other matters.
+Financial payables
+Trade and other payables
+Financial receivables
+Trade and other receivables
+Joint Other related
+ventures companies
+Joint Other related
+ventures companies
+30 September 2016
+30 September 2017
+157
+€ in millions
+Related companies receivables and payables as of 30 September 2017 and 2016 consist of the following:
+Other
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Infineon purchases certain raw materials and services from and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+Related companies
+Infineon has transactions in the normal course of business with joint ventures and other related companies
+(collectively, "related companies"). The related companies are disclosed in note 26. Related persons are persons
+in key management positions in particular members of the Management and Supervisory Board (see note 26)
+and their close relatives (collectively "related persons").
+20 Transactions with related companies and persons
+P see page 170 f.
+Psee page 173 ff.
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its
+business and financial condition, liquidity position and results of operations. Irrespective of the validity of the
+allegations and the success of the aforementioned claims and other matters described above, Infineon could incur
+significant costs in the defense of these matters.
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates are
+revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that
+a liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However, future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condi-
+tion, liquidity position and results of operations, particularly in the period in which reassessment is made.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
+regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
+of law committed by individual employees or third parties.
+Consolidated Financial Statements
+3,031
+Current assets:
+Financial investments
+cost)
+(amortized
+liabilities
+profit or loss
+financial
+through
+Designated
+Other
+At fair value
+Carrying
+amount
+159
+financial liabilities
+Categories of
+Current liabilities:
+Balance as of 30 September 2017
+Financial liabilities
+€ in millions
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+3,234
+1
+2,743
+hedging
+instruments
+(cash flow
+hedges)
+Fair value
+Short-term debt and current
+40
+40
+1,566
+1,511
+1,511
+Current liabilities:
+Balance as of 30 September 2016
+Total
+Other non-current liabilities
+Long-term debt
+Non-current liabilities:
+490
+137
+2
+137
+Other current liabilities
+1,020
+1,020
+1,020
+Trade payables
+326
+323
+323
+maturities of long-term debt
+135
+3,234
+Total
+132
+163
+101
+1
+97
+851
+851
+1,592
+1,070
+522
+860
+860
+40
+3
+851
+1,592
+860
+Fair value
+Designated
+cash flow
+hedges
+Loans and
+receivables
+Available
+for sale
+At fair value
+through
+profit or loss
+Carrying
+amount
+Categories of financial assets
+Trade receivables
+101
+Cash and cash equivalents
+123
+3,567
+100
+32
+132
+Other non-current assets
+Non-current assets:
+Other current assets
+88
+1
+87
+88
+774
+163
+774
+1,157
+458
+1,615
+625
+625
+625
+3,567
+1
+3,001
+562
+3
+774
+164
+1,240
+264
+holdings
+Infineon
+note
+Techno-
+in %
+logies AG
+(€ in
+millions)
+(€ in
+millions)
+Fully consolidated subsidiaries:
+7
+DICE Danube Integrated Circuit Engineering GmbH & Co. KG Linz, Austria
+Hitex GmbH
+72
+0
+2.39
+2.34
+Karlsruhe, Germany
+100
+100
+Foot-
+2.16
+Net result
+thereof
+Dr. Susanne Lachenmann
+Wolfgang Mayrhuber
+Jürgen Scholz
+Nomination Committee
+Wolfgang Mayrhuber (Chairman)
+Prof. Dr. Renate Köcher
+Dr. Manfred Puffer
+172
+The members of the Company's Supervisory Board, individually or in aggregate, do not own more than 1 percent of
+Infineon Technologies AG's outstanding share capital as of 30 September 2017.
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-12,
+D-85579 Neubiberg (Germany).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Subsidiaries, joint ventures and other related companies
+as of 30 September 2017
+Name of company
+173
+Registered office
+Share-
+Equity
+0.00
+7,12,13
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co. Ltd.
+138.45
+21.64
+Melaka, Malaysia
+100
+0
+160.12
+7
+21.53
+Infineon Technologies (Wuxi) Co., Ltd.
+Wuxi, People's Republic of China
+10
+100
+0
+123.70
+10.43
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd
+Infineon Technologies Australia Pty Limited
+Infineon Technologies Austria AG
+Bayswater, Australia
+0
+100
+7
+2.63
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Kulim, Malaysia
+Beijing, People's Republic of China
+100
+0
+15.77
+1.76
+10
+Hans-Ulrich Holdenried
+Wuxi, People's Republic of China
+0
+18.79
+10
+0.04
+7
+Melaka, Malaysia
+100
+0
+26.14
+100
+Peter Gruber
+Peter Bauer (Chairman)
+Strategy and Technology Committee
+Hans-Ulrich Holdenried
+Prof. Dr. Renate Köcher
+Dr. Susanne Lachenmann'
+Géraldine Picaud
+(since 16 February 2017)
+Dr. Manfred Puffer
+Jürgen Scholz¹
+Kerstin Schulzendorf¹
+Dr. Eckart Sünner
+Diana Vitale¹
+Member of the Infineon
+Works Council Campeon,
+Infineon Technologies AG
+Management Consultant
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach, Germany
+Development Engineer
+Group CFO Essilor International,
+Charenton-le-Pont, France
+Management Consultant
+First authorized agent of
+IG Metall Regensburg
+Expert in the frontend-production
+Independent Attorney
+Deputy Chairwoman of the
+Infineon Works Council Warstein,
+Infineon Technologies AG
+Member of the Advisory Board
+> Bridge imp GmbH, Grünwald, Germany
+Member of the Supervisory Board
+> Allianz SE, Munich, Germany (until 3 May 2017)
+Gerhard Hobbach 1
+> Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
+> Infineon Technologies Dresden GmbH, Dresden, Germany
+Member of the Board of Directors
+Member of the Supervisory Board
+People's Republic of China
+> Shanghai Volkswagen Automotive Co., Ltd., Anting,
+People's Republic of China
+Member of the Advisory Board
+> Porsche Holding GmbH, Salzburg, Austria
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+171
+> BMW AG, Munich, Germany
+Name
+Peter Gruber¹
+Representative of
+Senior Management
+Occupation
+Labor union secretary
+IG Metall district management,
+Berlin-Brandenburg-Saxony
+Senior Vice President
+Operations Finance
+Infineon Technologies AG
+Membership of Supervisory Boards
+and comparable governing bodies of domestic
+and foreign companies (as of 30 September 2017)
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH, Dresden, Germany
+Annette Engelfried¹
+Villach, Austria
+> Robert Bosch GmbH, Gerlingen, Germany
+Member of the Board of Directors
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Supervisory Board committees
+Mediation Committee
+Wolfgang Mayrhuber (Chairman)
+Johann Dechant
+Hans-Ulrich Holdenried
+Jürgen Scholz
+Executive Committee
+Wolfgang Mayrhuber (Chairman)
+Johann Dechant
+Gerhard Hobbach
+Hans-Ulrich Holdenried
+Investment, Finance and Audit Committee
+Dr. Eckart Sünner (Chairman)
+Johann Dechant
+Annette Engelfried
+Wolfgang Mayrhuber
+1 Employee representative
+Munich Technical University,
+Munich, Germany
+Professor
+Prof. Dr. Doris Schmitt-Landsiedel
+(until 8 November 2016)
+> Alstom S.A., Saint-Ouen, France
+> Vision For Life Foundation, Charenton-le-Pont, France
+(until 7 July 2017)
+> Vision Direct Group Ltd., London, Great Britain
+> Essilor India Private Limited, Bangalore, India
+> Xiamen Yarui Optical Co. Ltd., Xiamen,
+People's Republic of China
+› Artgri Group International Pte. Ltd., Singapore
+Member of the Supervisory Board
+> Athene Lebensversicherung AG, Wiesbaden, Germany
+> Nestlé Deutschland AG, Frankfurt/Main, Germany
+> Bremer Kreditbank AG, Bremen, Germany
+> Nova KBM Bank, Maribor, Slovenia
+Member of the Board of Directors
+> Athene Holding Ltd., Pembroke, Bermuda
+Member of the Supervisory Board
+> Krones AG, Neutraubling, Germany
+Member of the Administrative Board
+> BKK of BMW AG, Dingolfing, Germany
+Member of the Supervisory Board
+> K+S AG, Kassel, Germany
+Former members of the
+Supervisory Board
+> Bankhaus Neelmeyer, Bremen, Germany (since 4 April 2017)
+> FAW-Volkswagen Automotive Co., Ltd., Changchun,
+Xi'an, People's Republic of China
+100
+0
+4.20
+0.77
+7
+Klagenfurt, Austria
+100
+0
+6.84
+4.20
+Tokyo, Japan
+100
+0
+16.19
+3.35
+7
+Seoul, Republic of Korea
+7
+100
+0
+100
+4.02
+Milan, Italy
+0.00
+23.18
+3.40
+Hong Kong, People's Republic of China
+7
+100
+0
+1.86
+0.33
+Bangalore, India
+100
+0
+9.97
+(4.65)
+4
+Rotterdam, The Netherlands
+7
+100
+0
+0.13
+7
+1.03
+Rotterdam, The Netherlands
+7
+100
+0
+(0.18)
+0.12
+Cheonan, Republic of Korea
+7
+100
+100
+43.44
+1.72
+Bristol, Great Britain
+7
+100
+0
+156.71
+2.97
+Bucharest, Romania
+100
+0
+Muntinlupa City, Philippines
+7
+0.30
+5.49
+100
+0
+10.29
+0.29
+Neu-Isenburg, Germany
+100
+0
+14.30
+3.74
+0
+6
+Bristol, Great Britain
+100
+0
+34.96
+0.00
+7
+Kista, Sweden
+100
+0
+7
+100
+7
+Hong Kong, People's Republic of China
+Infineon Technologies Batam PT
+7
+100
+0
+13.26
+0.99
+7
+100
+0
+15.71
+1.21
+Batam, Indonesia
+Cegléd, Hungary
+10
+Shanghai, People's Republic of China
+100
+0
+3.54
+0.23
+128.98
+771.93
+0,004
+100
+0
+6.70
+0.24
+Wilmington, Delaware, USA
+100
+0
+2,495.67
+(15.77)
+7
+Shanghai, People's Republic of China
+Singapore, Singapore
+0
+296.83
+326.40
+7
+100
+0
+1.40
+0.08
+7
+100
+10
+10
+0
+0.43
+Rotterdam, The Netherlands
+100
+0
+34.96
+(0.06)
+7
+9
+Singapore, Singapore
+100
+0
+1,435.84
+160.74
+Rotterdam, The Netherlands
+7
+100
+100
+4,860.63
+282.39
+8.26
+0
+100
+St. Denis, France
+150.12
+14.86
+Dresden, Germany
+100
+100
+224.27
+0.00
+7,12,14
+Wilmington, Delaware, USA
+100
+100
+(7.74)
+3.18
+Neubiberg, Germany
+100
+50
+369.89
+0.00
+7,12,13
+7
+0
+2.85
+Member of the Board of Directors
+> Porsche Holding GmbH, Salzburg, Austria
+1
+1
+(1)
+(4)
+1,208
+982
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+€ in millions
+2017
+2016
+Segment Result:
+1,208
+982
+Plus/minus:
+Impairment on assets including assets classified as held for sale, net of reversals
+Impact on earnings of restructuring and closures, net
+(5)
+(16)
+(3)
+7
+135
+Share-based compensation expense
+124
+427
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+167
+There are currently limited levels of trading relationships between the operating segments. Costs are recharged in
+general without impact on profit or loss.
+€ in millions
+Segment Result:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+2017
+2016
+474
+363
+183
+133
+354
+(13)
+(9)
+Acquisition-related depreciation/amortization and other expenses
+Depreciation and amortization:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+2017
+2016
+350
+302
+112
+120
+173
+186
+Chip Card & Security
+47
+82
+Other Operating Segments
+1
+3
+Depreciation and amortization allocated to the segments
+€ in millions
+Of the €153 million (2016: €191 million) “acquisition-related depreciation/amortization and other expenses"
+incurred in the 2017 fiscal year, €89 million (2016: €96 million) is attributable to cost of goods sold, €2 million
+(2016: €10 million) to research and development expenses and €62 million (2016: €85 million) to selling, general
+and administrative expenses.
+In the 2017 fiscal year €0 million (2016: €6 million) of impairments of intangible assets, property, plant and equipment
+assets and assets classified as held for sale was allocated to the Automotive segment, €0 million (2016: €4 million)
+to the Industrial Power Control segment, €3 million (2016: €1 million) to the Power Management & Multimarket
+segment and €2 million (2016: €4 million) to the Chip Card & Security segment. €0 million (2016: €1 million) was
+allocated to Corporate and Eliminations.
+705
+(153)
+(191)
+Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
+Other income and expense, net
+(15)
+(4)
+(36)
+(6)
+Operating income
+Financial income
+6,473
+983
+10
+6
+Financial expenses
+Gain (loss) from investments accounted for using the equity method, net
+Income from continuing operations before income taxes
+(63)
+(67)
+3
+3
+933
+763
+7,063
+(7)
+3
+709
+Cash inflow¹
+(698)
+(698)
+Total
+3,148
+1,063
+352
+152
+52
+46
+1,483
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+24 Segment reporting
+Identification of segments
+Infineon identifies reportable segments on the basis of the differences between the products and applications.
+During the 2017 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Chip Card & Security. Additionally,
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+Automotive
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+709
+Cash outflow
+financial liabilities:
+Derivative
+539
+936
+As of 30 September 2016
+Total
+2017
+2018
+2019
+2020
+2021
+Industrial Power Control
+beyond 2021
+financial liabilities
+3,137
+1,052
+352
+152
+52
+52
+46
+1,483
+Non derivative
+683
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the
+conversion of electrical energy for medium and high-power applications. The products are used in applications
+for generation, low loss transmission and efficient use of electrical energy.
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies, mobile devices, mobile phone network infrastructures as well as applications
+with special demands on their robustness and reliability.
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2017
+2016
+2,989
+2,656
+1,206
+1,072
+2,148
+2,041
+708
+703
+9
+8
+Revenue:
+€ in millions
+The following tables present selected segment data:
+Individual small product groups were transferred to other segments with effect from 1 October 2016. The previous
+year's figures have been adjusted accordingly.
+Chip Card & Security
+The Chip Card & Security segment designs, develops, manufactures and markets semiconductor-based security
+products for card-based applications, government documents, and security functions in networked systems.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+166
+Other Operating Segments
+Other Operating Segments comprises the remaining activities of businesses that have been disposed of, and
+other business activities. Since the closing of the sale of the Wireless mobile phone business, supplies of product
+to Intel Mobile Communications under the corresponding production agreements, other than those assigned to
+discontinued operations, are included in this segment.
+Corporate and Eliminations
+Power Management & Multimarket
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+Furthermore, raw materials, supplies and work in progress of the common frontend production, and raw materials
+and supplies of the common backend production, are not under the control or responsibility of the operating
+segment management and are therefore allocated to corporate functions. Only work in progress of backend
+production and finished goods are allocated to the operating segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities to
+the individual segments
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to the segments.
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating targets
+and budgets for the segments.
+Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals); impact
+on earnings of restructuring measures and closures; share-based compensation expense; acquisitionrelated depre-
+ciation/amortization and other expenses; gains (losses) on sales of assets, businesses, or interests in subsidiaries
+and other income (expense), including the costs of legal proceedings.
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+Segment information
+Similarly, certain items are included in Corporate and Eliminations which are not allocated to the other segments.
+These include certain corporate headquarters costs and selected topics, which are not allocated to the segments
+since they arise from corporate decisions and are not within the direct control of segment management.
+> Porsche Retail GmbH, Salzburg, Austria
+693
+129
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board
+The members of the Management Board during the 2017 fiscal year were as follows:
+Name
+Dr. Reinhard Ploss
+Dominik Asam
+Dr. Helmut Gassel
+Jochen Hanebeck
+Position
+Chairman of the
+Management Board,
+Chief Executive Officer,
+Labor Director
+Member of the
+Management Board,
+Executive Vice President,
+Chief Financial Officer
+Member of the
+Management Board
+Member of the
+Management Board
+Membership of Supervisory Boards
+and governing bodies of domestic and
+foreign companies (as of 30 September 2017)
+Member of the Supervisory Board
+As required by section 314, paragraph 1, no. 6a, sentences 5 to 8, HGB, the remuneration of the individual members
+of the Management Board and the Supervisory Board is disclosed in the Compensation Report which is part of the
+Combined Management Report.
+> Infineon Technologies Austria AG, Villach, Austria
+(Chairman)
+Management compensation in the 2017 fiscal year
+Fees of €0.1 million were charged by KPMG in the 2017 fiscal year for other services. These included quality assurance
+in the implementation of regulatory requirements and advisory services in connection with the introduction of
+new accounting principles, such as IFRS 15 and IFRS 9.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+25 Significant events after the end of the reporting period
+No significant events occurred between the end of the reporting period and the preparation of the Consolidated
+Financial Statements.
+169
+P see page 99 ff.
+26 Additional information in accordance with HGB
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and
+the Supervisory Board and made permanently available to the public on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
+Year-end audit fees
+At the Annual General Meeting held on 16 February 2017, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2017 Separate Financial Statements and the Consolidated Financial
+Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2017 fiscal year amounted to
+€1.8 million for the audit of the Consolidated Financial Statements and various Separate Financial Statements
+including an integrated audit review of the Interim Financial Statements.
+Fees for other advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.1 million in the 2017 fiscal year
+for other audit services which include, in particular, the audit of the disclosures in the Sustainability Report,
+as well as other legally or contractually mandatory audits, e.g. audits according to the EEG, EMIR audit pursuant
+to section 20 WPHG, and confirmations of compliance with contractual terms.
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged €0.3 million in the 2017 fiscal year for tax consulting
+services in connection with implemented business acquisitions, restructuring and the assessment of individual items.
+Fees for other services
+Management Board and Supervisory Board
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (since 5 October 2017)
+Member of the Supervisory Board
+Peter Bauer
+Dr. Herbert Diess
+Chairman of the Infineon
+Works Council Regensburg,
+Infineon Technologies AG
+Management Consultant
+Member of the
+Management Board
+Volkswagen AG,
+Wolfsburg, Germany
+Membership of Supervisory Boards
+and comparable governing bodies of domestic
+and foreign companies (as of 30 September 2017)
+Member of the Supervisory Board
+> Deutsche Lufthansa AG, Cologne, Germany (Chairman)
+(until 24 September 2017)
+> Münchener Rückversicherungs-Gesellschaft AG, Munich,
+Germany (until 31 December 2016)
+Member of the Board of Directors
+> Heico Corporation, Hollywood, Florida, USA
+Member of the Administrative Board
+> BKK of Siemens AG, Heidenheim/Brenz, Germany
+Member of the Supervisory Board
+> OSRAM Licht AG, Munich, Germany (Chairman)
+> OSRAM GmbH, Munich, Germany (Chairman)
+Member of the Supervisory Board
+> Porsche Austria GmbH, Salzburg, Austria
+Johann Dechant¹
+Deputy Chairman
+Management Consultant
+Wolfgang Mayrhuber
+Chairman
+Occupation
+> EPCOS AG, Munich, Germany (until 17 May 2017)
+> Infineon Technologies Austria AG, Villach, Austria
+> Zalando SE, Berlin, Germany (since 31 May 2017)
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+> Infineon Technologies China Co., Ltd., Shanghai,
+People's Republic of China
+Member of the Board of Directors
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (Chairman)
+> Infineon Technologies Japan K.K., Tokyo, Japan
+(Chairman)
+Member of the Supervisory Board
+> Infineon Technologies Austria AG, Villach, Austria
+Member of the Board of Directors
+> Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
+(Chairman)
+170
+The Supervisory Board
+The members of the Supervisory Board during the 2017 fiscal year, the Supervisory Board position held by them,
+their occupation, and their membership of other supervisory and governing bodies are as follows:
+Name
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+(Chairman)
+3,840
+4,299
+1,279
+115
+68
+255
+49
+49
+401
+434
+1,191
+Entity-wide disclosures in accordance with IFRS 8
+The following is a summary of revenue in the 2017 and 2016 fiscal year and of non-current assets by geographic area
+for the years ended 30 September 2017 and 2016:
+€ in millions
+Revenue:
+Europe, Middle East, Africa
+Therein: Germany
+Asia-Pacific (without Japan)
+Therein: China
+Japan
+Americas
+Therein: USA
+129
+338
+397
+ber 2016
+140
+812
+833
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+P see page 137
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Income from joint ventures accounted for using the equity method totaled €3 million in the 2017 and 2016
+fiscal years, respectively, and was recognized in the Industrial Power Control segment. This allocated income is
+however not included in the Segment Result.
+€ in millions
+Total
+Inventories:
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Corporate and Eliminations
+Total
+168
+30 Septem-
+ber 2017
+30 Septem-
+Automotive
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+2017
+2,272
+Americas
+Therein: USA
+Total
+30 Septem-
+ber 2017
+30 Septem-
+ber 2016
+2,306
+1,718
+1,727
+1,095
+873
+834
+41
+38
+2
+2
+1,118
+1,286
+1,110
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+2,147
+1,094
+1,000
+3,447
+3,083
+1,735
+1,574
+463
+424
+2016
+881
+714
+661
+7,063
+6,473
+The allocation of revenues from external customers is based on the customers' billing location. The average number
+of employees by geographic region is provided in note 7.
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2017 and 2016 fiscal year.
+€ in millions
+Non-current assets:
+Europe
+819
+246
+1.15
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+0.11
+0
+100
+10
+Warsaw, Poland
+Infineon Technologies Sp. z o.o.
+n. a.
+n. a.
+100
+100
+0.06
+Neubiberg, Germany
+11
+n. a.
+n. a.
+100
+100
+Neubiberg, Germany
+Infineon Technologies Mantel 30 GmbH
+11
+n. a.
+n. a.
+Infineon Technologies Mantel 31 GmbH
+Infineon Technologies Romania s.r.l.
+Bucharest, Romania
+10
+0.12
+0
+100
+10
+Moscow, Russian Federation
+Silicon Alps Cluster GmbH
+R Labco, Inc.
+OSPT IP Pool GmbH
+MicroLinks Technology Corp.
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+KAI Kompetenzzentrum Automobil- und
+Industrieelektronik GmbH
+ITA Vermögensverwertungs GmbH in liquidation
+IR International Holdings, Inc.
+IR International Holdings China, Inc.
+(in Liquidation)
+International Rectifier Power Management Private Limited
+Infineon Technologies South America Ltda
+Infineon Technologies Schweiz GmbH in liquidation
+Infineon Technologies RUS LLC
+0.00
+0.03
+0
+100
+11,12,13
+0.00
+100
+Neubiberg, Germany
+0.39
+0
+100
+Dublin, Ireland
+7
+0.04
+0.14
+0
+100
+Madrid, Spain
+0.13
+7
+0.02
+100
+7
+100
+Neubiberg, Germany
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Ireland Limited
+Infineon Technologies Campeon
+Verwaltungsgesellschaft mbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Gamma GmbH
+0.00
+0.02
+100
+0.00
+7
+Neubiberg, Germany
+100
+Infineon Technologies Mantel 29 GmbH
+n. a.
+n. a.
+100
+100
+11,12,13
+Neubiberg, Germany
+Infineon Technologies Mantel 28 GmbH
+7,12,13
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+0.00
+0.04
+100
+100
+Neubiberg, Germany
+7
+0.00
+0.02
+0
+100
+Baden, Switzerland
+100
+0
+208
+Cash inflow¹
+(206)
+(206)
+Total
+3,392
+1,534
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+GRI G4-17
+n. a.
+208
+n. a.
+n. a.
+3
+0.00
+0.00
+0
+100
+7
+Wilmington, Delaware, USA
+Villach, Austria
+0.00
+0.02
+0
+Cash outflow
+financial liabilities:
+Derivative
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+165
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before 30 September 2017. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+€ in millions
+Due in the fiscal year
+As of 30 September 2017
+Total
+2018
+2019
+2020
+2021
+2022
+beyond 2022
+Non derivative
+financial liabilities
+3,390
+1,532
+68
+69
+246
+539
+936
+Infineon Technologies Cegléd Kft.
+100
+Neubiberg, Germany
+7
+0.00
+0
+7
+0.00
+0.00
+0
+7
+oooo
+100
+100
+Wilmington, Delaware, USA
+Villach, Austria
+100
+Wilmington, Delaware, USA
+100
+Bangalore, India
+0.16
+0.13
+0
+10
+100
+São Paulo, Brazil
+0.03
+0.21
+0.00
+100
+0
+0.00
+n. a.
+n. a.
+0
+n. a.
+3
+Kaohsiung, Taiwan
+10
+0.06
+1.78
+24
+24
+Lippstadt, Germany
+0.00
+0.09
+10
+0
+100
+Villach, Austria
+10
+(0.16)
+0.99
+0
+7
+0.00
+Neubiberg, Germany
+100
+7
+millions)
+logies AG
+in %
+(€ in
+(€ in
+Techno-
+Foot-
+note
+Infineon
+holdings
+Net result
+millions)
+Equity
+Share-
+Registered office
+174
+International Rectifier HiRel Denmark ApS
+International Rectifier HiRel Products, Inc.
+International Rectifier Japan Co., Ltd.
+International Rectifier Malaysia Sdn. Bhd.
+International Rectifier Mauritius, Inc.
+Molstanda Vermietungsgesellschaft mbH
+MoTo Objekt Campeon GmbH & Co. KG
+Rectificadores Internacionales, S.A. de C.V.
+Shanghai International Rectifier Trading Ltd.
+Innoluce B.V.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Name of company
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+GRI G4-17
+thereof
+Nijmegen, The Netherlands
+10
+100
+Curepipe, Mauritius
+100
+Kuala Lumpur, Malaysia
+(1.38)
+7.10
+0
+100
+Tokyo, Japan
+7
+7
+52.00
+55.46
+0
+100
+Wilmington, Delaware, USA
+0.13
+1.71
+0
+100
+Herlev, Denmark
+0.49
+1.25
+0
+7,12,14
+0.00
+10.19
+100
+Taipei, Taiwan
+0.31
+7
+1.97
+100
+100
+Maia, Portugal
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies Shared Service Center,
+Unipessoal Lda.
+Infineon Technologies Reigate Limited
+Infineon Technologies Romania & Co. Societate
+in Comandita
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Newport Holding Limited
+Infineon Technologies Nordic AB
+Infineon Technologies Neu-Isenburg Vertriebs GmbH
+Infineon Technologies Investment B.V.
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., Ltd.
+Infineon Technologies Maasstad C.V.
+Infineon Technologies Hong Kong Ltd.
+Infineon Technologies India Private Limited
+Infineon Technologies Hong Kong Sales Limited
+Infineon Technologies Holding B.V.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding 2 B.V.
+Infineon Technologies Finance GmbH
+Infineon Technologies France S.A.S.
+Infineon Technologies China Co., Ltd.
+Infineon Technologies Dresden GmbH
+Infineon Technologies Epi Services, Inc.
+Infineon Technologies Delta GmbH
+100
+100
+0
+2.88
+100
+Neubiberg, Germany
+8.07
+7
+1,511.21
+0
+100
+Wilmington, Delaware, USA
+Infineon Technologies US InterCo LLC
+Infineon Technologies Vermögens-
+verwaltungsgesellschaft mbH
+0.00
+2,149.55
+0
+100
+Wilmington, Delaware, USA
+Infineon Technologies US HoldCo Inc.
+0.07
+7
+(0.63)
+0
+100
+Bristol, Great Britain
+Infineon Technologies U.K. Limited
+0.74
+7
+Neubiberg, Germany
+69
+Neubiberg, Germany
+100
+Duisburg, Germany
+7
+0.22
+0.57
+100
+7
+100
+Duisburg, Germany
+0.00
+100
+0.10
+72
+7
+Linz, Austria
+0.00
+0.00
+0
+100
+7
+Wilmington, Delaware, USA
+n. a.
+0
+0.06
+0.00
+3
+0.00
+100
+0.00
+0
+100
+7
+St. John, New Brunswick, Canada
+7
+0.00
+0.03
+60
+60
+Warstein, Germany
+0.28
+1.71
+0
+88
+Coventry, Great Britain
+n. a.
+n. a.
+n. a.
+n. a.
+Berlin, Germany
+n. a.
+0
+7
+Hsinchu County, Taiwan
+3.22
+10
+0.42
+9.62
+7
+10,16
+8.53
+71.49
+8,12,13
+(1.54)
+0.38
+(0.03)
+1.81
+7
+0.07
+5
+106 000
+100
+Shanghai, People's Republic of China
+100
+n. a.
+93
+Tijuana, Mexico
+0.39
+Joint ventures:
+0.49
+Infineon Technologies Bipoláris Kft.
+0.20
+1.99
+Infineon Technologies Bipolar GmbH & Co. KG
+3
+0
+60
+7,17
+0.38
+65.27
+60
+60
+669
+7
+EPOS embedded core & power systems GmbH & Co. KG
+Cegléd, Hungary
+DICE Danube Integrated Circuit Engineering GmbH
+EPOS embedded core & power systems Verwaltungs GmbH
+Haus der Zukunft gGmbH
+Advanced Power Electronics Corp.
+CHIL Semiconductors Corporation
+Infineon Technologies Bipolar Verwaltungs GmbH
+Other companies (not consolidated):1
+Infineon Technologies Canada, Inc.
+Warstein, Germany
+Hitex (UK) Limited
+Our audit approach
+The recognition of provisions, explanatory notes on contingent liabilities or further disclosures regarding risks
+from the insolvency of Qimonda AG largely depend on the judgments and assumptions of the Management Board.
+The same applies to the valuation of provisions. Consequently, there are risks with respect to the IFRS compliant
+presentation of the related risks. These judgments and assumptions were of particular significance in our view,
+given the amount of the claims asserted against Infineon in these insolvency proceedings.
+With economic effect from 1 May 2006, all material assets and liabilities as well as business activities relating
+to memory business were spun off from Infineon Technologies AG to Qimonda AG as an in-kind contribution.
+On 23 January 2009, Qimonda AG filed an application to open insolvency proceedings at the Munich District Court,
+which commenced on 1 April 2009. Due to the insolvency of Qimonda AG various legal disputes between the
+insolvency administrator and Infineon evolved. Litigation focusses claims asserted by the insolvency administrator
+with respect to valuation of the in-kind contribution to Qimonda AG. The valuation of the in-kind contribution by
+Infineon was based on an independent valuation expert's opinion. Furthermore, Infineon was the general partner
+(with unlimited liability) of Qimonda Dresden GmbH & Co. OHG until the spin-off of the memory business. As a
+result, certain former creditors have asserted follow-up liability claims against Infineon.
+For the risks associated with the insolvency of Qimonda AG, provisions amounting to €33 million were recognized as
+of 30 September 2017 (as of 30 September 2016: €32 million). There also are disclosures on contingent liabilities and
+further explanatory notes included in the Notes to the Consolidated Financial Statements.
+Financial statement risk
+We conducted our audit of the Consolidated Financial Statements and Group Management Report in accordance
+with section 317 HGB and the EU Audit Regulation (No 537/2014; hereinafter referred to as "EU Audit Regulation")
+and the generally accepted standards for the audit of financial statements promulgated by the German Institute
+of Public Auditors (IDW). Our responsibilities under those regulations and guidelines are further described in the
+"Auditor's responsibilities for the audit of the Consolidated Financial Statements and Group Management Report"
+section of our report. We are independent of the Group companies in accordance with the requirements of European
+Union law as well as German commercial law and the rules of professional conduct, and we have fulfilled our
+other ethical responsibilities under German professional law in accordance with these requirements. In addition,
+pursuant to Article 10 (2) (f) EU Audit Regulation, we hereby declare that we did not provide any of the prohibited
+non-audit services referred to in Article 5 (1) EU Audit Regulation. We believe that the audit evidence we obtained is
+sufficient and appropriate to provide a basis for our opinion on the Consolidated Financial Statements and Group
+Management Report.
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
+the Consolidated Financial Statements for the fiscal year from 1 October 2016 to 30 September 2017. These matters
+were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in forming
+our opinion thereon, but we do not provide a separate opinion on these matters.
+Risks associated with the insolvency of Qimonda AG
+Key audit matters in the audit of the Consolidated Financial Statements
+179
+Independent Auditor's Report
+Further Information
+In the course of our audit we assessed the process established by the Company to ensure the documentation,
+assessment of the outcome of proceedings as well as the presentation of the resulting legal risks in the financial
+statements.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Please refer to the Notes to the Consolidated Financial Statements for the accounting policies applied. The assessment
+of the underlying assumptions is presented under note 2 and disclosures on legal risks under note 19.
+We had regular meetings with the Management Board and legal department of the Company to gain an under-
+standing of current developments and reasons for the resulting judgments, and obtained a written statement
+in this regard from the Company. Furthermore, we assessed the probability of the use of provisions by inspecting
+the underlying documents.
+Independent Auditor's Report
+Furthermore, we interviewed the valuation expert engaged by the Company regarding the valuation opinions
+in the course of the Company's defence against the claims asserted by the insolvency administrator and assessed
+the adequacy of the methods applied by consultation of a valuation expert.
+We also verified the determination and amount of cost of capital used. In doing so, we also considered available
+capital market and balance sheet figures from comparable companies. In order to take account of existing forecast
+uncertainty, the Company investigated the impact of potential changes in cost of capital on the relevant amounts
+stated (sensitivity analysis) and compared alternative scenarios with its own values stated. We assessed this analysis.
+Finally, we assessed whether the disclosures in the Notes to the Consolidated Financial Statements regarding
+impairment of goodwill are complete and adequate.
+Basis for opinion
+We asked the division controllers and segment managers to explain the business plan, especially the revenue and
+earnings trend of the Power Management & Multimarket segment as well as the planned development of production
+volumes in that segment. In this context, revenue performance in particular was critically reviewed and assessed
+based on publicly available market estimates and information as to whether the revenue performance used for
+measurement is within a reasonable range. We analysed adherence to the budget by comparing the expected revenue
+performance of prior years with the revenue actually generated. The trend of the business plan was acknowledged
+by us through comparisons of historical values as well as through estimates by analysts. For the trend in investment
+rate we compared the planned and actual historical values in order to assess the accuracy of estimates.
+The valuation model was assessed for compliance with IFRS with the assistance of our valuation experts.
+Our audit procedures included, amongst others, auditing whether the five-year strategic business plan for the Group
+prepared by the Management Board, as well as the assumptions used for impairment testing pursuant to IAS 36,
+were regularly updated and approved by the Supervisory Board as part of its supervisory function.
+Our audit approach
+As a considerable share of goodwill is allocated to the Power Management & Multimarket segment, impairment testing
+of this group of cash-generating units is of particular significance with regard to the value of this financial position
+item. In view of the fact that the data and assumptions used for impairment testing are subject to judgment, there
+is the risk for the financial statements that impairment is not identified at all or not in time. Moreover, it needs to
+be ensured that the disclosures in the Notes to the Consolidated Financial Statements are complete and adequate.
+The Consolidated Financial Statements of Infineon Technologies AG include goodwill at an amount of €759 million.
+Pursuant to IAS 36, goodwill, an intangible asset with an indefinite useful life, has to be tested for impairment at
+least annually (at Infineon Technologies AG always as of 30 June). Impairment testing of goodwill is complex
+and depends on a number of factors that require judgment. These include in particular the anticipated business
+performance of individual business divisions over the next five years, the assumed long-term growth rates and
+underlying cost of capital. The five-year plan prepared by segment management and the Management Board has to
+integrate technological developments, planned production volumes, investment rates, long-term growth rates in
+semiconductor markets and production costs.
+Financial statement risk
+180
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Please refer to the Notes to the Consolidated Financial Statements for the accounting policies applied (note 2). The
+assessment of the underlying assumptions as well as disclosures on impairment testing are presented under note 2.
+Impairment testing of goodwill
+The recognition and measurement of the provision for risks associated with the insolvency of Qimonda AG as well
+as underlying judgments and assumptions of the Management Board are appropriate. The disclosures on contingent
+liabilities and other disclosures in the Notes to the Consolidated Financial Statements are complete and adequate.
+Our conclusions
+Finally, we ascertained the completeness of disclosures on contingent liabilities as well as other disclosures in the
+Notes to the Consolidated Financial Statements.
+To the extent that settlements were reached in the meantime regarding amounts postponed previously, we compared
+the original estimates with the actual amounts paid to obtain an indication of the effectiveness of the Management
+Board's risk assessment in the reporting year.
+We obtained a legal counsel's confirmation to audit the Management Board's risk assessment.
+Pursuant to section 322, paragraph 3, sentence 1 HGB, we state that our audit has not led to any reservations with
+respect to compliance of the Consolidated Financial Statements and the Group Management Report.
+Further Information
+> the accompanying Consolidated Financial Statements comply, in all material respects, with the IFRS as adopted
+by the EU, and the supplementary requirements of German commercial law pursuant to section 315a HGB old
+version and give a true and fair view of the net assets and financial position of the Group as of 30 September 2017,
+and of its results of operations for the fiscal year from 1 October 2016 to 30 September 2017, in accordance with
+these requirements, and
+Responsibility Statement by the Management Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dominik Asam
+Dr. Reinhard Ploss
+176
+Further Information
+Management Board
+Neubiberg, 17 November 2017
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+GRI G4-17
+16 Exemption pursuant to section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
+17 Infineon accounts for its interest using the equity method because there are certain contractual participation rights of the other joint ventures inhibiting Infineon from
+exercising control.
+Our conclusions
+Infineon Technologies AG
+Responsibility Statement by the
+Management Board
+177
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial
+Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and
+the Combined Management Report includes a fair review of the development and performance of the business and
+the position of the Group, together with a description of the principal opportunities and risks associated with the
+expected development of the Group.
+In our opinion, based on our audit findings,
+We have audited the Consolidated Financial Statements of Infineon Technologies AG, Neubiberg and its subsidiaries
+("Group") - which comprise the Consolidated Statement of Financial Position as of 30 September 2017, the Consoli-
+dated Statement of Operations, the Consolidated Statement of Comprehensive Income, the Consolidated Statement
+of Changes in Equity and the Consolidated Statement of Cash Flows for the fiscal year from 1 October 2016 to
+30 September 2017, as well as the Notes to the Consolidated Financial Statements, including a summary of signifi-
+cant accounting policies. We have also audited the Combined Management Report of Infineon Technologies AG,
+Neubiberg for the fiscal year from 1 October 2016 to 30 September 2017.
+Opinion
+Report on the audit of the Consolidated Financial Statements
+and Group Management Report
+To Infineon Technologies AG, Neubiberg
+Independent Auditor's Report
+For the Consolidated Financial Statements and Combined Management Report we have issued an unqualified
+auditor's report. The English language text below is a translation of the auditor's report. The original German text
+shall prevail in the event of any discrepancies between the English translation and the German original. We do
+not accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings
+that may derive from the translation.
+178
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dominik Asam
+Dr. Reinhard Ploss
+Infineon Technologies AG
+Neubiberg, 21 November 2017
+> the accompanying Combined Management Report as a whole provides a suitable view of the Group's position.
+In all material respects, the Group Management Report is consistent with the Consolidated Financial Statements,
+complies with German statutory requirements and suitably presents the opportunities and risks of future
+development.
+The valuation model used for impairment testing of goodwill is appropriate and in line with the accounting
+policies to be applied. The Management Board's assumptions and judgments are reasonable and balanced overall.
+The disclosures in the Notes to the Consolidated Financial Statements are complete and appropriate.
+Braun
+Please refer to the Notes to the Consolidated Financial Statements for the accounting policies applied (note 2).
+Further details on deferred tax assets can be found under note 4.
+184
+Technology Glossary
+Technology Glossary
+Further Information
+Wirtschaftsprüfer
+Pritzer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+300-millimeter technology
+Wirtschaftsprüfer
+Wirtschaftsprüfungsgesellschaft
+KPMG AG
+Munich, 21 November 2017
+The auditor responsible for the engagement is Michael Pritzer.
+Auditor responsible for the engagement
+We were appointed as Group auditors at the shareholders' meeting held on 16 February 2017. We were appointed
+by the Supervisory Board on 3 May 2017. We have been engaged as Group auditors of Infineon Technologies AG,
+Neubiberg uninterruptedly since the audit of the Consolidated Financial Statements of the 1999/2000 fiscal year.
+We declare that the audit opinion in this auditor's report is consistent with the additional report to the audit
+committee referred to in Article 11 of the EU Audit Regulation (audit report).
+Other disclosures pursuant to Article 10 of the EU Audit Regulation
+15 Exemption pursuant to section 285, paragraph 11b, German Commercial Code from the obligations to disclose information of subsidiaries.
+Comprehensive term for the manufacture and processing of
+wafers with a diameter of 300 millimeters.
+Analog-mixed-signal
+"Mixed-signal" is a generic term for integrated circuits that
+operate simultaneously with analog and digital signals. Owing
+to similar requirements in terms of development and manu-
+facturing processes, they are generally grouped together with
+integrated circuits operating exclusively with analog signals,
+hence giving rise to the combination "analog-mixed-signal".
+Epitaxy
+Control unit that can convert AC voltages of various rates and
+frequencies. This is achieved by means of power electronics.
+Converters are used in wind turbines, for example, in order to
+feed fluctuating wind energy into the power network with
+a voltage of constant frequency. In electric drive technology,
+for example, in engine controllers and trains, a converter is
+used to generate an output voltage of variable, load-dependent
+frequency from a mains supply of constant frequency.
+Converter
+In contrast to silicon-based semiconductors, compound
+semiconductors consist of several chemical elements. The
+combination of materials from the chemical main group III
+(e.g. gallium) and V (e.g. nitrogen) have the electrical conduc-
+tivity of semiconductors. This also applies to the combination
+of materials from the main group IV (carbon, silicon). These
+compound semiconductors (e.g. gallium nitride or silicon
+carbide) are therefore of highest importance in technical
+applications in semiconductor technology, especially for
+power semiconductors.
+Compound semiconductor
+Complementary Metal Oxide Semiconductor. Standard semi-
+conductor manufacturing technology used to manufacture
+microchips with low power usage and a high level of integration.
+CMOS
+A power bipolar transistor is a specialized version of a bipolar
+transistor that is optimized for conducting and blocking large
+electric currents (up to several hundred amperes) and very
+high voltages (up to several 1,000 volts). In industry, the power
+bipolar transistor - like the power MOSFET (see MOSFET) often
+used as an alternative - constitutes an important industrial
+semiconductor component for influencing electric current.
+Bipolar
+A bare die is a single, unpackaged chip. Bare die business
+means the sale of fully processed, unpackaged chips. The
+packaging and subsequent testing of the packaged chips
+is performed by the customer. Bare die business is mostly
+conducted with IGBT module manufacturers that produce
+their own modules but not their own semiconductors.
+Bare die
+The part of the semiconductor manufacturing process that
+happens after the wafer has left the cleanroom (see frontend
+manufacturing). This includes testing the chips at wafer
+level, repairing the chips if necessary, dicing the wafers and
+packaging the individual chips. There is a growing trend among
+semiconductor manufacturers to outsource the assembly,
+and sometimes even the testing, to independent assembly
+companies. Much of the assembly capacity is based in the
+Pacific Rim countries.
+Backend manufacturing
+Authentication means the ability to prove one's own identity,
+i.e., proof of the authentic original. However, authentication
+does not necessarily refer to people only, but also to any
+tangible or intangible object, such as a device or an electronic
+document. A user can be authenticated in any one of three
+different ways: 1.) By providing a certain piece of information,
+i.e., the user knows something, such as a password; 2.) Through
+the use of a possession, i.e., the user possesses something,
+such as a key; 3.) Through the direct presence of the user,
+i.e., the user is someone or something, such as in the form of
+a biometric feature.
+Authentication
+Application Specific Integrated Circuit. Logic IC specially
+constructed for a specific application and customer;
+implemented on an integrated circuit.
+ASIC
+From the matters communicated with those charged with governance, we determine those matters that were of
+most significance in the audit of the Consolidated Financial Statements of the current period and are therefore
+the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
+disclosure about the matter.
+Measurement of deferred tax assets
+We also provide those charged with governance with a statement that we have complied with relevant ethical
+requirements regarding independence, and to communicate with them all relationships and other matters that
+may reasonably be thought to bear on our independence, and where applicable, related safeguards.
+› Perform audit procedures on the prospective information presented by the Management Board in the Group
+Management Report. Based on sufficient and appropriate audit evidence, we hereby in particular trace the
+significant assumptions used by the Management Board as a basis for the prospective information and assess
+the appropriate derivation of the prospective information from these assumptions. We are not issuing a separate
+audit opinion on the prospective information as well as the underlying assumptions. There is a significant,
+unavoidable risk that future events will deviate significantly from the prospective information.
+In preparing the Consolidated Financial Statements, the Management Board is responsible for assessing the
+Group's ability to continue as a going concern. Furthermore, the Management Board is responsible for disclosing,
+as applicable, matters related to the going concern. In addition, the Management Board is responsible for using
+the going concern basis of accounting unless the intention is to liquidate the Group or to cease operations, or there
+is no realistic alternative to do so.
+The Management Board is responsible for the preparation of the Consolidated Financial Statements which, in
+all material respects, comply with IFRS, as adopted by the EU, and the supplementary requirements of German
+commercial law pursuant to section 315a, paragraph 1, HGB, and that the Consolidated Financial Statements
+give a true and fair view of the net assets, financial position and results of operations of the Group in accordance
+with these requirements. Furthermore, the Management Board is responsible for such internal control as they
+determine is necessary to enable the preparation of Consolidated Financial Statements that are free from material
+misstatement, whether due to fraud or error.
+Responsibilities of the Management and Supervisory Boards for the Consolidated Financial Statements
+and the Group Management Report
+The valuation model used for measuring deferred tax assets is appropriate and in line with the accounting policies
+to be applied. The assumptions of the Management Board with regard to the measurement of deferred taxes are
+reasonable and balanced overall. All the required disclosures in the Notes to the Consolidated Financial Statements
+were made.
+Our conclusions
+We assessed the value of recognized deferred tax assets for loss carryforwards, tax credits and deductible temporary
+differences based on internal corporate forecasts of the future tax income situation of Infineon Technologies AG
+and its main entities within the tax group for income purposes (domestic tax group) as well as international
+Group entities using the budget prepared by the Management Board, and also evaluated the suitability of the
+underlying planning data. We also convinced ourselves of the completeness of the disclosures in the Notes to
+the Consolidated Financial Statements.
+We verified the Company's calculation of the values for mathematical accuracy.
+Moreover, the Management Board is responsible for preparing the Group Management Report, which as a whole
+provides a suitable view of the Group's position, and, in all material respects, is consistent with the Consolidated
+Financial Statements, complies with German statutory requirements and suitably presents the opportunities
+and risks of future development. Furthermore, the Management Board is responsible for such arrangements and
+measures (systems) as they determine are necessary to enable the preparation of the Group Management Report
+in compliance with the applicable requirements of German commercial law and for providing sufficient and
+appropriate evidence for the assertions in the Group Management Report.
+We analyzed the business plan and had it explained to us. In this context, we critically reviewed revenue performance
+in key segments based on publicly available market estimates and information and assessed whether it is within
+a reasonable range. We analyzed adherence to the budget by comparing the expected revenue performance of
+prior years with the revenue actually generated. We assessed the trend of business planning through comparison
+with historical values as well as through estimates by analysts. The tax adjustments and underlying assumptions
+were assessed and compared with historical values.
+Our audit approach
+181
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Infineon Technologies AG accounts deferred tax assets of €612 million in the Consolidated Statement of Financial
+Position. Of this amount, €430 million relates to tax loss carryforwards. Deferred tax assets are measured based on
+the Group's five-year strategic business plan prepared by the Management Board as well as the profit plan for each
+entity derived therefrom. The business plan is heavily dependent on estimates made by the Management Board
+and is therefore subject to uncertainty. Recognizing deferred tax assets requires estimates of future taxable income
+and the usability of loss carryforwards as well as tax credits. Due to the inherent judgment, the measurement of
+deferred tax assets is of particular importance to us. There is also the risk of incomplete disclosures in the Notes to
+the Consolidated Financial Statements.
+Financial statement risk
+We involved our tax specialists in the audit of the tax matters together to the audit team. With their support,
+we assessed the processes established by Infineon Technologies AG for the measurement of deferred tax assets
+arising from temporary differences and loss carryforwards as well as tax credits.
+The Supervisory Board is responsible for monitoring the Group's financial reporting process for preparing the
+Consolidated Financial Statements and the Group Management Report.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Further Information
+> Evaluate consistency of the Group Management Report with the Consolidated Financial Statements, its legal
+compliance and presentation of the Group's position.
+183
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+> Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
+activities within the Group to express an opinion on the Consolidated Financial Statements and the Group
+Management Report. We are responsible for the direction, supervision and performance of the Group audit.
+We remain solely responsible for our audit opinion.
+> Evaluate the overall presentation, structure and content of the Consolidated Financial Statements, including the
+disclosures, and whether the Consolidated Financial Statements represent the underlying transactions and events
+in a manner that gives a true and fair view of the net assets, financial position, and results of operations of the
+Group in accordance with IFRS, as adopted by the EU, and the supplementary requirements of German commercial
+law pursuant to section 315a HGB old version.
+> Conclude on the appropriateness of Management Board's use of the going concern basis of accounting and,
+based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
+may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material
+uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Con-
+solidated Financial Statements and Group Management Report or, if such disclosures are inadequate, to modify
+our particular opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
+report. However, future events or conditions may cause the Group to cease to continue as a going concern.
+> Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
+related disclosures made by the Management Board.
+› Obtain an understanding of internal control relevant to the audit of the Consolidated Financial Statements, and
+of the arrangements and measures relevant to the audit of the Group Management Report, in order to design
+audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
+the effectiveness of these systems of the Company.
+> Identify and assess the risks of material misstatements of the Consolidated Financial Statements and the Group
+Management Report, whether due to fraud or error, design and perform audit procedures responsive to those
+risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
+not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
+may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
+As part of our audit we exercise professional judgment and maintain professional skepticism throughout the audit.
+We also:
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
+with section 317 HGB and the EU Audit Regulation, as well as in compliance with the German generally accepted
+standards for the audit of financial statements promulgated by the German Institute of Public Auditors (IDW), will
+always detect a material misstatement. Misstatements can arise from fraud or error and are considered material if,
+individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
+taken on the basis of these Consolidated Financial Statements and this Group Management Report.
+Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a whole
+are free from material misstatements, whether due to fraud or error, and whether the Group Management Report
+as a whole provides a suitable view of the Group's position, as well as, in all material respects, is consistent with
+the Consolidated Financial Statements and our audit findings, complies with German statutory requirements, and
+suitably presents the opportunities and risks of future development, and to issue an auditor's report that includes
+our opinion on the Consolidated Financial Statements and the Group Management Report.
+Auditor's responsibilities for the audit of the Consolidated Financial Statements and the
+Group Management Report
+182
+Independent Auditor's Report
+We communicate with those charged with governance regarding, among other matters, the planned scope and
+timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
+identify during our audit.
+14 Exemption pursuant to section 264, paragraph 3, German Commercial Code from certain obligations to prepare annual financial statements and a management report pursuant
+to section 264 et seq. German Commercial Code from the obligations to disclose the annual financial statements pursuant to section 325 German Commercial Code.
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+12 Control and profit transfer agreement.
+2
+Colorado Springs, Colorado, USA
+Bristol, Great Britain
+Qimonda Dresden GmbH & Co. OHG in insolvency
+Qimonda Bratislava s.r.o. in liquidation
+Qimonda Beteiligungs GmbH in insolvency
+Qimonda Belgium BVBA in insolvency
+17
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+Qimonda AG and its subsidiaries: 2
+n. a.
+n. a.
+0
+Qimonda AG in insolvency
+n. a.
+2
+2
+77
+Bratislava, Slovakia
+2
+77
+Munich, Germany
+77
+Leuven, Belgium
+40
+77
+2
+28
+77
+Munich, Germany
+2
+77
+Melaka, Malaysia
+Singapore, Singapore
+15
+n. a.
+n. a.
+Infineon
+holdings
+Net result
+Equity
+thereof
+Share-
+Registered office
+Foot-
+note
+175
+Xi'an IR PERI Company, Ltd.
+TTTech Computertechnik AG
+Schweizer Electronic AG
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Name of company
+From the Greek epi "upon" and taxis "arrangement" or "orien-
+tation". Epitaxy is a form of crystalline growth that occurs
+both in nature (such as in minerals) and in the technical world.
+In semiconductor technology, epitaxy is the artificial growth
+of crystalline layers on a substrate, which is usually a wafer.
+Epitaxy enables various doping profiles for transistors to be
+created, which are not feasible using other methods such as
+diffusion or ion implantation.
+XMOS Limited
+Techno-
+in %
+logies AG
+0
+50
+Xi'an, People's Republic of China
+n. a.
+n. a.
+n. a.
+n. a.
+Vienna, Austria
+3
+4.73
+53.75
+9
+9
+Schramberg, Germany
+10
+(€ in
+millions)
+(€ in
+millions)
+2
+13 Exemption pursuant to section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to section 325 German
+Commercial Code.
+Dresden, Germany
+Qimonda Dresden Verwaltungsgesellschaft mbH
+in insolvency
+2
+77
+Wilmington, Delaware, USA
+2
+77
+Wilmington, Delaware, USA
+77
+Qimonda Solar GmbH
+2
+77
+2
+77
+2
+77
+77
+2
+Suzhou, People's Republic of China
+FFFF
+Qimonda Taiwan Co. Ltd. in liquidation
+77
+11 The entity was founded in the 2017 fiscal year.
+10 Equity and net result as of 31 December 2016.
+9 Equity and net result as of 30 September 2016 (period from 18 January 2016 until 30 September 2016).
+8 Equity and net result as of 30 September 2016 (period from 1 January 2016 until 30 September 2016).
+7 Equity and net result as of 30 September 2016.
+6 Equity and net result as of 30 June 2016.
+5 Equity and net result as of 15 June 2016 (period from 1 October 2015 until 15 June 2016).
+Qimonda UK Ltd. in liquidation
+4 Equity and net result as of 31 March 2016.
+2 On 23 January 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009.
+The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's
+insolvency. In addition, the list of subsidiaries held by Qimonda AG is based on information from 30 September 2010, since Infineon had not received any further information from
+the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies. Since all Qimonda-related investments were written down in
+full in previous years, they have no effect on Infineon's net assets, financial position and results of operations.
+High Blantyre, Scotland
+Taipei, Taiwan
+Dresden, Germany
+1 Certain subsidiaries were not consolidated due to immateriality.
+77
+77
+3 Share of not more than 5 percent.
+Fort Lauderdale, Florida, USA
+Seoul, Republic of Korea
+77
+2
+77
+Dresden, Germany
+77
+Wilmington, Delaware, USA
+2
+77
+Dresden, Germany
+Munich, Germany
+Qimonda Flash Geschäftsführungs GmbH in liquidation
+Qimonda Finance LLC in insolvency
+Qimonda Europe GmbH in liquidation
+2
+77
+Dresden, Germany
+2
+Qimonda Flash GmbH in insolvency
+77
+2
+Qimonda France SAS in liquidation
+2
+77
+Shanghai, People's Republic of China
+Rotterdam, The Netherlands
+Suzhou, People's Republic of China
+Padua, Italy
+Qimonda Richmond LLC in insolvency
+Qimonda North America Corp. in insolvency
+Qimonda Memory Product Development Center
+(Suzhou) Co., in liquidation
+Qimonda Licensing LLC
+Qimonda Korea Co. Ltd. in liquidation
+Qimonda Italy s.r.l. in liquidation
+Qimonda Investment B.V.
+Qimonda International Trade (Shanghai) Co. Ltd.
+77
+2
+Rotterdam, The Netherlands
+Qimonda Holding B.V. in insolvency
+77
+St. Denis, France
+77
+Vila do Conde, Portugal
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Management Board and Supervisory Board
+Letter to shareholders
+10
+10
+P see page 99 ff.
+Management Board compensation
+In accordance with section 4.2.2 of the German Corporate Governance Code (DCGK), the Super-
+visory Board regularly engages an external, independent compensation expert to review the well-
+proven Management Board compensation system in place since 1 October 2010 and to conclude
+on its compliance with applicable legislation as well as its overall appropriateness. The periodic
+review, initiated during the previous fiscal year, was completed during the 2017 fiscal year. In this
+context, the target annual incomes of each individual member of the Management Board were
+subjected to detailed scrutiny. The compensation expert concluded that the Company's compen-
+sation system complies with legal requirements and with the recommendations contained in the
+DCGK. In particular, the expert concluded that the compensation of Infineon's Management Board
+is commensurate with market conditions and that the variable compensation component is
+oriented towards promoting the sustainable growth of the enterprise. The compensation and the
+individual target annual incomes of the members of the Management Board were found to be
+appropriate, both horizontally (i.e., looking at comparable companies) and vertically (i.e., looking
+at Infineon's various employee groupings). The compensation expert did, however, point out the
+existence of scope for raising the level of remuneration. The results of the compensation expert's
+review, presented in fall 2016, were discussed in detail by the Executive Committee and the full
+Supervisory Board. The Supervisory Board concurred with the conclusions reached by the compen-
+sation expert - also with regard to the scope for maneuverability highlighted in the report - and
+concluded that a comparison of market conditions, the situation at competitors and, last but not
+least, the outstanding work performed by the Management Board, justify a measured adjustment
+of the current level of compensation. For this reason, following the recommendation of the
+Executive Committee, the Supervisory Board decided to increase the compensation of the mem-
+bers of the Management Board with effect from 1 October 2017 as follows: Dr. Ploss, by 15 percent;
+Mr. Asam, Dr. Gassel and Mr. Hanebeck, each by 10 percent. The ratio of the individual compen-
+sation components to one another and the compensation system as such remain unchanged.
+With this outcome, the Supervisory Board continues to pursue a compensation policy based on
+a moderate level of remuneration.
+Furthermore, following a recommendation of the Executive Committee, the Supervisory Board
+resolved that the allocation of performance shares in conjunction with the long-term variable
+LTI component will take place in future on 1 March of each fiscal year (and no longer on 1 October
+as previously practiced). The change is largely of a technical and administrative nature, in that
+it brings the timing of the allocation for the members of Management Board for LTI purposes into
+line with the timing of the allocation of performance shares to Infineon employees, also brought
+forward to 1 March to coincide with annual personnel dialogs.
+A tranche of performance shares fell due for settlement for the first time at the end of the 2017
+fiscal year. As the stipulated performance hurdle was achieved, the tranche allocated in 2013 is
+required to be settled in full following the expiry of the four-year holding period. The Supervisory
+Board resolved to settle the entitlement of members of the Management Board resulting from
+this tranche in cash rather than in shares. In this point, too, equality of treatment was therefore
+achieved with Infineon employees, for whom the Management Board also decided upon cash
+settlement of the current tranche.
+Details of Management Board compensation - in particular the amounts paid to individual
+members in the 2017 fiscal year - can be found in the comprehensive Compensation Report in
+the Annual Report.
+Litigation
+Report of the Supervisory Board to the Annual General Meeting
+The Supervisory Board was regularly provided with detailed information regarding major legal
+disputes during the 2017 fiscal year, which were then thoroughly discussed with the Management
+Board. These included in particular the Company's appeal, brought before European courts,
+against the antitrust fine imposed by the EU Commission in 2014 and the dispute with the insol-
+vency administrator of Qimonda AG pertaining to alleged residual liability claims.
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+Corporate governance
+Declaration of Compliance 2017
+In the most recent Declaration of Compliance, issued in November 2017, the Management Board
+and the Supervisory Board declared that Infineon Technologies AG has complied and continues
+to comply with all of the recommendations contained in the DCGK.
+The original versions of all Declarations of Compliance are available on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+Revision and publication of terms of reference for the Management Board
+and Supervisory Board
+In view of the fact that the terms of reference for the Management Board and Supervisory Board
+had last been revised in 2013, they were subjected during the fiscal year under report to a compre-
+hensive revision by the Supervisory Board. No fundamental modifications to their content were
+required, with the consequence that the changes decided upon by the Supervisory Board were
+largely of a clarifying and editorial nature.
+In the context of the revision, it was also resolved to publish all terms of reference on the Infineon
+website. @www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Management Board and Supervisory Board
+9
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Report of the Supervisory Board to the Annual General Meeting
+Report of the Supervisory Board
+to the Annual General Meeting
+Ladies
+and Gentlemen,
+The Infineon success story in recent years is characterized
+not only by its promise to deliver long-term growth and
+a steady improvement in earnings, but also by its ability
+to keep that promise. This fact was amply borne out again
+in the 2017 fiscal year. Admittedly, the attempt to take
+over Wolfspeed (a business unit of the US semiconductor
+manufacturer Cree) in mid-February 2017 - aborted due to
+security concerns of the US government - was certainly a
+disappointment. Just one month later, however, Infineon
+demonstrated its underlying strength in impressive style
+by announcing an increased outlook for the full fiscal year,
+as a result of which the share price jumped by almost
+10 percent. These developments clearly reflect our strong
+strategic position, in particular with our solutions for
+electro-mobility, autonomous driving, renewable energy
+generation and the efficient use of electric power. The
+markets are growing - and we are growing even faster than
+the markets. Long-term trends are also encouraging, which is good news for the Infineon Group
+and its employees, but also, of course, for you as shareholders, as you will not only be profiting
+from positive share price developments. The Management Board and Supervisory Board are
+again recommending an increase in the dividend, this year by 14 percent to €0.25 per share -
+without compromising on the excellent creditworthiness the Company enjoys or the solid
+financial targets it has set itself. The Infineon success story continues.
+Wolfgang Mayrhuber
+Chairman of the Supervisory Board
+Main activities of the Supervisory Board
+During the 2017 fiscal year, the Supervisory Board continued to perform its duties in accordance
+with the law, the Company's statutes and its own terms of reference with great commitment.
+We supervised and provided advice to the Management Board in equal measure. Our input was
+mainly based on detailed reports presented by the Management Board at Supervisory Board
+and committee meetings, dealing with current business developments, significant transactions,
+the quarterly financial reports and corporate planning. The Management Board discussed and
+coordinated corporate strategy as well as key operational issues with us. The Supervisory Board
+was given ample opportunity to thoroughly examine any reports and resolutions proposed by
+the Management Board. In this context, we undertook various measures to assure ourselves that
+the governance of Infineon's corporate affairs was lawful, compliant and appropriate.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+8
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+The Supervisory Board was provided with written quarterly reports on Infineon's business perfor-
+mance, key financial data, risks and opportunities, major areas of litigation and other important
+topics. Between quarterly reports, the Management Board also kept us informed of current
+developments in the form of monthly reports.
+In my capacity as Chairman of the Supervisory Board, I maintained regular contact with the
+Management Board, as did each of the chairpersons of the Investment, Finance and Audit
+Committee and the Strategy and Technology Committee. I was informed without delay by the
+Chief Executive Officer of all events of significance to the Infineon Group, when necessary
+outside of the regular Supervisory Board meetings.
+During the 2017 fiscal year, the Supervisory Board met six times and passed one resolution on
+the basis of written communication. Attendance measured in relation to these various proceed-
+ings averaged nearly 96 percent. Dr. Diess was excused from attending the meetings held on
+15 November 2016, 16 February 2017 and 2 August 2017. Ms. Picaud was unable to attend the
+meeting held on 16 February 2017. Attendance at Supervisory Board committee meetings was
+100 percent.
+Financial and investment planning; business strategy; cybercrime
+At its meeting held on 15 November 2016, the Supervisory Board approved the financial and
+investment budget, including the overall investment budget for the 2017 fiscal year as presented
+by the Management Board, and confirmed the unchanged borrowing limit.
+The Supervisory Board continues to attach great importance to devoting one meeting per year
+exclusively to strategic topics. With this point in mind, the strategy of the Infineon Group and its
+key elements were discussed at great length at the Supervisory Board meeting held specifically for
+this purpose on 2 August 2017. Topics covered included key business drivers, focus areas and
+technological competencies on the one hand as well as financial targets on the other. Market and
+application trends in the semiconductor industry were also considered, as well as the specific
+strengths and weaknesses of Infineon. In addition, the Supervisory Board deliberated extensively
+on the M&A strategy currently pursued by the Management Board to complement Infineon's suc-
+cessful history of organic growth.
+At a separate meeting, the Supervisory Board studied information on the important issue of
+cybercrime, the related threat situation as well as precautionary and protective measures put in
+place by the Management Board.
+Personnel matters
+The "Law on Equal Participation of Women and Men in Leadership Positions in the Private and
+Public Sector", which came into force on 1 May 2015, not only requires that the composition of
+the Supervisory Board of Infineon Technologies AG includes at least 30 percent women and men
+respectively. The Supervisory Board is additionally required to determine a target quota for the
+percentage of women on the Management Board and at the same time specify a timeframe within
+which the target should be achieved. Such a target quota was determined for the first time shortly
+after the law came into force. At that point in time, the Supervisory Board had good reasons
+for agreeing upon a target of 0 percent. The Supervisory Board has now set a new target quota
+of 20 percent, which will remain valid until 30 June 2022.
+Efficiency examination for Supervisory Board activities
+The Supervisory Board examines the efficiency of its activities annually. These examinations had
+been carried out in the past on the basis of an in-house questionnaire. For the fiscal year under
+report, the Supervisory Board decided to perform the examination with the assistance of an exter-
+nal independent consultant. In the course of this process, personal interviews were conducted
+with each member of the Supervisory Board as well as with the Chairman of the Management Board
+and the Chief Financial Officer. The results of the external efficiency examination were discussed
+at length at the Supervisory Board meeting held on 3 August 2017. The examination provided a
+positive picture of the work of the Supervisory Board and its collaboration with the Management
+Board. No noteworthy shortcomings were identified.
+Examination of potential conflicts of interest
+The members of the Management Board and Supervisory Board disclose any conflicts of interest
+to the Supervisory Board without delay. No conflicts of interest arose in connection with the
+members of the Management Board and Supervisory Board in the 2017 fiscal year.
+Other duties performed by the committee included specifying key areas to be examined by
+the external auditor, monitoring the auditor's independence, and considering the scope of
+non-audit-related services performed by the auditor.
+The committee prepared the Supervisory Board's proposal to the Annual General Meeting regard-
+ing the election of the auditor and issued the contracts for the corresponding audit engagements.
+The relevant fee arrangements were also considered.
+The committee (and the full Supervisory Board) gave consideration to the report drawn up by
+KPMG on the statutorily prescribed audit regarding compliance with the so-called EMIR Directive,
+which, among other things, imposes certain requirements on entities such as Infineon with
+regard to derivatives management.
+Finally, the Supervisory Board also deliberated at length on the potential threat of cybercrime
+and the measures implemented by Infineon to combat it.
+The auditor attended the meetings of the Investment, Finance and Audit Committee and reported
+in detail on its audit activities.
+Strategy and Technology Committee
+The Supervisory Board's Strategy and Technology Committee convened three times during the
+fiscal year under report. It was provided with in-depth reports on sales and marketing activities
+as well as on manufacturing strategy. In addition, the Committee considered the planned - and
+later aborted - acquisition of Wolfspeed (a business unit of the US semiconductor manufacturer
+Cree) and other M&A activities, including strategic investments in the venture capital sector.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+13
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+Separate and Consolidated Financial Statements
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, audited the Separate Financial Statements
+of Infineon Technologies AG and the Consolidated Financial Statements as of 30 September 2017
+as well as the Combined Management Report for Infineon Technologies AG and the Infineon
+Group, and issued unqualified audit opinions thereon. The Half-Year Financial Report was also
+subject to a review.
+At the meeting of the Investment, Finance and Audit Committee held on 9 November 2017,
+intensive discussions were held with the auditor regarding the Separate Financial Statements,
+the Consolidated Financial Statements, the Combined Management Report, the proposed
+profit appropriation, and the auditor's findings. The Investment, Finance and Audit Committee
+resolved to propose to the Supervisory Board that the financial statements drawn up by the
+Management Board be approved and the proposed profit appropriation agreed to.
+The Separate Financial Statements, the Consolidated Financial Statements, the Combined
+Management Report, the Management Board's proposal for the appropriation of unappropriated
+profit (all prepared by the Management Board) and KPMG's long-form audit reports were all made
+available to the Supervisory Board at the meeting held on 21 November 2017. At this meeting,
+the Chairman of the Investment, Finance and Audit Committee reported in depth on the corre-
+sponding recommendations of the Committee. In addition, all material issues relevant to the
+financial statements and the audit, including key audit matters, were discussed in detail with the
+auditor and examined by the Supervisory Board. The examination also covered the proposal to
+pay a dividend of €0.25 per entitled share.
+The Supervisory Board concluded that it has no objections to the financial statements and the
+audits performed by the auditor. In its opinion, the Combined Management Report complies
+with legal requirements. Likewise, the Supervisory Board concurs with the assertions regarding
+Infineon's future development made therein. The Supervisory Board therefore concurred with the
+results of the audit and approved the Separate Financial Statements of Infineon Technologies AG
+and the Consolidated Financial Statements of the Infineon Group. The Separate Financial State-
+ments were accordingly adopted. The Supervisory Board also approved the Management Board's
+proposal for the appropriation of unappropriated profit.
+The Supervisory Board wishes to thank the Management Board and the entire staff of Infineon
+once again for their great commitment and outstanding achievements during the 2017 fiscal year.
+Neubiberg, November 2017
+On behalf of the Supervisory Board
+Wolfgang Mayrhuber
+Chairman of the Supervisory Board
+Its activities centered on monitoring the financial reporting process, reviewing the half-year
+and quarterly financial statements, conducting the preliminary audit of the Separate Financial
+Statements, Consolidated Financial Statements and Combined Management Report for Infineon
+Technologies AG and the Infineon Group, and discussing the audit reports with the auditor. In
+addition, the committee also examined the financial and investment budget for the 2017 fiscal
+year and deliberated on the borrowing limit. Furthermore, the committee considered the effec-
+tiveness of the internal control, internal audit, risk management and compliance management
+systems. The committee's members also received reports from the Compliance Officer on a
+regular basis as well as timely updates on significant legal disputes.
+14
+The Investment, Finance and Audit Committee convened four times during the fiscal year under
+report.
+In its extraordinary meetings, the Executive Committee prepared the resolutions of the Super-
+visory Board regarding the target quota for the percentage of women on the Management Board,
+the adjustments to the compensation of members of the Management Board, the change in
+the date of the annual allocation for the LTI performance shares and the settlement of the perfor-
+mance share tranche which fell due in 2017.
+Prior to members of the Management Board assuming sideline activities, especially supervisory
+board mandates outside the Company, the DCGK requires that permission be given by the Super-
+visory Board. During the 2017 fiscal year, the Supervisory Board's Executive Committee gave
+its permission for Dr. Ploss to assume a mandate as a member of the Executive Committee of
+VDE Verband der Elektrotechnik Elektronik Informationstechnik e.V. and for Dr. Gassel to assume
+mandates on the Board of Directors of Global Semiconductor Alliance (GSA), on the Board of
+Directors of ZVEI Zentralverband Elektrotechnik- und Elektronikindustrie e.V. and on the Advisory
+Board of Fraunhofer-Institut für Integrierte Systeme und Bauelementetechnologie (IISB).
+The Supervisory Board was also informed that Mr. Asam has been elected to the Supervisory
+Board of Zalando SE and appointed chairman to its audit committee. The Infineon Supervisory
+Board had already approved this mandate in the previous fiscal year.
+Further information on corporate governance at Infineon can be found in the joint Corporate
+Governance Report of the Management Board and Supervisory Board and in the Corporate
+Governance Statement. Both of these documents are publicly available on the Infineon website.
+@www.infineon.com/corporate-governance-report
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+11
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+Composition of the Supervisory Board
+Following the departure of Prof. Dr. Doris Schmitt-Landsiedel from the Supervisory Board in
+November 2016, Géraldine Picaud was elected as her successor at the Annual General Meeting
+held on 16 February 2017. Ms. Picaud's mandate will expire at the end of the Annual General
+Meeting that resolves on the approval of the acts of the members of the Supervisory Board for
+the 2021 fiscal year.
+Concrete objectives for the composition of the Supervisory Board were specified in 2010 in accor-
+dance with the recommendation in section 5.4.1 DCGK and developed in subsequent years to
+form a catalog of objectives. This recommendation was modified in the new version of the Code
+dated 7 February 2017 to the effect that supervisory boards are now also required to draw up a
+profile of skills and expertise (competency profile) for the board as a whole. The existing Infineon
+catalog of objectives already contained some of the characteristics of a competency profile due
+to the inclusion of a requirements profile. Nevertheless, the Supervisory Board took the modifica-
+tion of the Code's recommendation as an opportunity to comprehensively revise the catalog of
+objectives. In doing so, the Supervisory Board saw it as important to specify individual require-
+ments for each member of the Supervisory Board, including in terms of personality, integrity and
+availability. It was also seen as equally important to ensure that the Supervisory Board as a whole
+has the necessary expertise to perform its tasks as optimally as possible. The range of expertise
+within the Supervisory Board must be sufficiently broad to ensure that it can take account of the
+interests of all relevant stakeholders, such as employees, customers, investors and the general
+public on the one hand as well as play a proactive role in accompanying organizational and tech-
+nological change on the other. The catalog of objectives for the composition of the Supervisory
+Board, revised with effect from 3 August 2017 and now including a competency profile, forms part
+of the Corporate Governance Statement, which is available on Infineon's website.
+@www.infineon.com/declaration-on-corporate-governance
+Supervisory Board committees
+The committees draw up resolutions or prepare topics that need to be dealt with by the full
+Supervisory Board. Certain decision-making powers have been delegated to the committees, to
+the extent permitted under German law. The chairpersons of each committee routinely report
+on committee meetings at the next relevant full Supervisory Board meeting.
+Nomination and Mediation Committee
+The Nomination Committee convened for six meetings during the reporting period. The Com-
+mittee worked intensively on succession planning for shareholder representatives - firstly, with
+respect to finding a replacement due to Prof. Dr. Doris Schmitt-Landsiedel leaving the Board, and
+secondly, in order to find suitable candidates to fill vacancies in the medium and long term. The
+Nomination Committee attaches great importance to ensuring that the shareholder side of the
+Supervisory Board will continue to comprise highly competent representatives in the long term.
+The Mediation Committee did not need to convene.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+12
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+Executive Committee
+During the fiscal year under report, the Executive Committee held one ordinary meeting, two
+extraordinary meetings and passed one resolution on the basis of written communication.
+The ordinary meeting focused on preparing the Supervisory Board's resolutions with respect to
+the measurement of the Management Board's variable compensation. The main aspects of this
+work were to determine the degree to which targets for the 2016 fiscal year were achieved and
+to set new targets for the 2017 fiscal year.
+Investment, Finance and Audit Committee
+Management Board and Supervisory Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Helmut Gassel has been a member of the
+Management Board and Chief Marketing Officer
+of Infineon Technologies AG since 2016. He is
+responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions
+and Intellectual Property.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Jochen Hanebeck was born on 2 February
+1968 in Dortmund. He received a degree
+in electrical engineering from RWTH Aachen
+University. He has been with Infineon since
+1994 (Siemens AG until 1999).
+Member of the Management Board
+Jochen Hanebeck has been a member of the
+Management Board of Infineon Technologies AG
+since 2016. He is responsible for Operations,
+including Manufacturing, Logistics, Quality,
+Customs and Purchasing.
+Jochen Hanebeck
+7
+Helmut Gassel was born on 13 March 1964
+in Dortmund. He studied at the Ruhr-University
+in Bochum and received a degree in physics
+and a doctorate in electrical engineering. He
+joined Infineon (Siemens AG until 1999) in 1995.
+Chief Marketing Officer
+Dr. Helmut Gassel
+The Management Board
+Management Board and Supervisory Board
+6
+Dominik Asam was born on 6 March 1969
+in Munich. He studied at the Technical
+University of Munich and the École Centrale
+in Paris. He is a graduate mechanical
+engineer and an "Ingénieur des Arts et
+Manufactures". In addition, he completed an
+MBA at INSEAD in Fontainebleau, France.
+Dominik Asam joined Infineon in 2003.
+Dominik Asam has been the Chief Financial
+Officer of Infineon Technologies AG since
+2011, responsible for Accounting & Reporting,
+Financial Controlling, Financial Planning,
+Investor Relations, Tax, Treasury, Audit,
+Compliance, Export Control, Risk Manage-
+ment, Business Continuity and Information
+Technology.
+Chief Financial Officer
+Dominik Asam
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Reinhard Ploss has been a member of the
+Management Board of Infineon Technologies AG
+since 2007. He has been Chief Executive Officer
+since 1 October 2012, responsible for Segments,
+Group Strategy, Communications & Government
+Relations, Human Resources (Labor Director),
+Legal, Research and Development.
+My special thanks go to the employees at the Newport (Wales) site. In the course of the integration
+of International Rectifier, approximately two and a half years ago we announced our intention
+not to operate the plant after the end of calendar year 2017. Nevertheless the local team showed
+enormous dedication in maintaining the quality and reliability of the site's manufacturing activi-
+ties. In September we sold the fab to Neptune 6 Limited of Cardiff (Wales), thus finding a viable
+solution for ensuring the future of the site.
+Companies are always a part of the communities they exist in. That entails certain responsibilities.
+As a result we place high expectations on ourselves - both with regards to the objectives we plan
+to achieve and in terms of the path which takes us closer to achieving these goals. The demand
+for energy-efficient power semiconductors is an essential growth driver for our company. This is
+why we ensure that natural resources are used efficiently in our own business activities as well.
+We are publishing detailed information on this topic in a separate Sustainability Report, which
+you will find on our website. @ www.infineon.com/csr_reporting
+You already know our growth target: Throughout the cycle we want to increase revenue by an
+average of 8 percent annually. With a 12 percent increase in the previous year followed now by
+a 9 percent increase, we have exceeded this goal for two years in a row. And we don't want to
+rest on our laurels: We are well aware of the fact that the semiconductor market remains cyclical.
+Eventually, the basic macroeconomic conditions will change and the recent extremely high
+demand in the automotive and industrial sectors will normalize. Today we expect revenue growth
+of 9 percent for the 2018 fiscal year, plus or minus 2 percentage points. The depreciation of the
+US dollar against the euro is a headwind for us and has been taken into account in this forecast.
+We expect a Segment Result Margin of 17 percent at the mid-point of the forecast revenue range.
+We are excellently prepared to continue our track record of growth.
+We are very pleased to continue down this path with you.
+Reinhard Ploss was born on 8 December 1955
+in Bamberg. He studied process engineering
+at the Technical University of Munich and in
+1986 received his doctorate. He began his
+career at Infineon (Siemens AG until 1999) in
+the same year.
+Dr. Reinhard Ploss
+Chief Executive Officer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Suicenly
+Reitrad
+LO
+Management Board and Supervisory Board
+The Management Board
+The Management Board
+Dr. Reinhard Ploss
+Chief Executive Officer
+5
+Power transistor is a term used in electronics to refer
+to a transistor for switching or controlling large voltages,
+currents and outputs. There is no standard method of
+differentiating between transistors for signal processing
+and power transistors. Power transistors are mainly pro-
+duced in packages that enable installation on heat sinks,
+as it is otherwise impossible to handle the dissipation
+loss of several kilowatts that occurs with some types and
+applications.
+Power transistor
+Near field communication. An international communication
+standard for contactless data exchange over short distances.
+The initial drafts of the communication standard appeared
+several years ago, but the technology did not break through
+until 2011 when it was included in the first smartphones. NFC
+can be used as an access key to content on terminals and
+for services such as cashless payment and paperless ticketing.
+NFC
+Technology Glossary
+MOSFET
+Schottky diode
+Further Information
+Metal-Oxide-Semiconductor Field-Effect Transistor. MOSFET
+is currently the most widely used transistor architecture.
+MOSFETs are used both in highly integrated circuits and in
+power electronics as special power MOSFETs.
+A special diode that has a metal-semiconductor junction
+rather than a semiconductor-semiconductor junction.
+The most frequently used semiconductor material up to
+250 volts is silicon. Silicon carbide (SiC) is used for voltages
+in excess of 300 volts (see Silicon Carbide). SiC Schottky
+diodes offer a number of advantages over conventional
+diodes in power electronics. When used together with IGBT
+transistors, it is possible to dramatically reduce switching
+losses in the diode itself, as well as in the transistor. The
+name derives from the German physicist Walter Schottky
+(1886-1976).
+1 October to 30 September
+Chemical symbol of silicon carbide (see Silicon carbide).
+Silicon carbide
+Compound semiconductor made from silicon (chemical
+symbol Si) and carbon (chemical symbol C). The abbreviation
+is SiC. Because of its special material properties (e.g. good
+thermal conductivity), SiC is used for Schottky diodes, as well
+as elsewhere (see Schottky diode).
+Switch-mode power supply
+A switch-mode power supply is an electronic module that
+transforms an AC voltage into a DC voltage. Switch-mode
+power supplies are more efficient than mains transformers
+and can be more compact and lighter than conventional
+power supplies containing a heavy transformer with a ferrous
+core. Switch-mode power supplies are mainly used in PCs,
+notebooks and servers. However, they also achieve a very
+high level of efficiency even at low power, so they are
+increasingly found in plug-in power supply units, for example,
+as chargers for mobile phones.
+Thin wafer
+A wafer is typically around 350 microns (μm) thick when
+sawn into individual chips. A thin wafer is one that has been
+polished down to less than 200 microns thick (a human hair
+or a sheet of paper, by comparison, is about 60 microns thick).
+Thin wafer technology offers benefits: Thinner chips mean
+losses can be reduced and the heat generated can be dissi-
+pated more effectively. Another advantage is that electrically
+active patterns can be produced on the backside as well,
+enabling the chip to provide completely new functions.
+Thin wafer chips also allow more compact packages.
+TPM
+Trusted Platform Module. A chip that adds elementary
+security functions such as license and data protection to
+a computer or similar device. TPMs can be integrated into
+tablet PCs, smartphones and consumer electronics as
+well as PCs and notebooks. A trusted computing platform
+(see Trusted Computing) can be created by combining
+a specially configured operating system and appropriate
+software with a device containing a TPM.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Sic
+Micro-electro-mechanical system. A micro-electro-mechanical
+system, or simply a microsystem, is a miniaturized device,
+assembly or part that contains components of minute dimen-
+sions (only measurable in micrometers) that work together
+as a system. Usually a microsystem consists of one or more
+sensors, actuators and control electronics on one chip.
+Infineon manufactures microphones as MEMS. Due to their
+diminutive size, low power consumption, good shielding from
+interfering signals and low-cost production, these types of
+microphone are being increasingly installed in mobile devices
+such as smartphones, tablets, cameras, and accessories such
+as headsets and hearing aids.
+Further Information
+An inverter, also called a DC/AC converter, is an electrical
+device for converting DC voltage into AC voltage, or direct
+current into alternating current. Inverters are used in solar
+power plants, for example, for converting the DC voltage
+generated in the solar modules into AC voltage, which is then
+fed into the electricity network.
+Frontend process is the designation for all process steps in
+cleanrooms that the entire wafer must complete. These are
+lithography, diffusion, ion implantation and application of
+circuitry levels. Some stations must be completed a number
+of times. At the end of the frontend process, the wafer may
+have been through as many as 500 individual process steps.
+After the conclusion of the frontend manufacturing, the
+processed wafers are transferred to backend manufacturing
+for testing and packaging (see Backend manufacturing).
+Frontend manufacturing
+Flexible AC Transmission System - control systems used in
+electrical engineering. They are used in the field of electrical
+power supply to specifically control power transmission and
+distribution in AC networks, in which in principle components
+of power electronics and therefore power semiconductors
+such as IGBT modules are used. The controlling of power
+transfers can be implemented in alternating current networks
+by changing the idle and active power by means of capacitor
+batteries or compensation coils.
+FACTS
+185
+Technology Glossary
+Trusted Computing
+GaN
+Chemical symbol of gallium nitride (see Gallium nitride).
+Hall sensor
+A sensor based on the Hall principle, used for measuring
+magnetic fields, named after the US physicist Edwin Herbert
+Hall (1855-1938). Hall sensors are used in automobiles, for
+example, for detecting pedal positions or for measuring the
+speed at which shafts rotate.
+HVDC
+High-voltage direct-current transmission. HVDC transmission
+is a method of transmitting electrical energy at high direct-
+current voltages of up to 800,000 volts over distances of more
+than 1,000 kilometers. HVDC transmission is also used for
+connecting offshore wind farms to the electricity grid on the
+mainland.
+IC
+Integrated Circuit. Electronic Component parts composed of
+semiconductor materials such as silicon; numerous compo-
+nents, including transistors, resistors, capacitors and diodes
+can be integrated into ICs and interconnected.
+IGBT Module
+Insulated Gate Bipolar Transistor Module. IGBTs are semi-
+conductor components used increasingly in power electronics
+due to their robustness, high blocking voltage, and their
+ability to be triggered with negligible power. Modules are
+formed using several IGBTS in parallel within a single casing.
+These modules are used to drive electric motors both in
+automotive and industrial applications. Motor speed and
+torque can be regulated along a gradual scale. Trains such
+as Germany's ICE and France's TGV use IGBT modules for an
+efficient and rapid electrical drive control.
+Integrity Guard
+Integrity Guard (IG) is a revolutionary security technology
+designed for chip cards and security applications, with which
+Infineon is ringing in a new era in the field of hardware-based
+security. IG was specially developed for sophisticated, long-
+life applications such as payment cards and government
+identification documents. IG enables a security controller for
+the first time to provide complete error detection and com-
+prehensive encryption of all chip functions across the entire
+data path within the chip. For this reason it is known as "digital
+security”. IG is used in the security controllers of the SLE 77
+and 78 families and has won numerous international awards.
+KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
+Inverter
+MEMS
+Trusted Computing means that the hardware and software
+used in PCs, as well as other computer-controlled systems,
+such as mobile phones, can be controlled. This is achieved
+by means of an additional chip, the Trusted Platform Module
+(TPM), which can use cryptography to measure the integrity
+of the hardware and of the software data structures, while
+also saving these values in a verifiable way.
+Visit us on the web: www.infineon.com
+186
+Photography:
+Printing:
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+21 November 2017
+www.infineon.com
+Am Campeon 1-12, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+Visit us on the web:
+Contact for Investors and Analysts:
+Media Contact:
+INFINEON TECHNOLOGIES AG
+Headquarters:
+Designed by:
+The IHS Markit reports, data and information referenced herein (the “IHS Markit Materials") are the copyrighted property
+of IHS Markit Ltd. and its subsidiaries (“IHS Markit”) and represent data, research, opinions or viewpoints published by
+IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and
+not as of the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change
+without notice and neither IHS Markit nor, as a consequence, Infineon have a duty or responsibility to update the IHS Markit
+Materials or this presentation. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable,
+the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit
+and the IHS Markit globe design are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the
+property of IHS Markit or their respective owners.
+Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
+forward-looking statements.
+These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
+may therefore differ materially from what has been expected.
+This report contains forward-looking statements about the business, financial condition and earnings
+performance of the Infineon Group.
+Forward-looking statements
+The following were brand names of Infineon Technologies AG in the 2017 fiscal year: Infineon, the Infineon logo,
+AURIX, CIPURSE, CoolGaN, CoolMOS, CoolSIC, Hybrid PACK, IMOTION, OPTIGA, OptiMOS, REAL3.
+Note
+G. Peschke Druckerei GmbH, Parsdorf (Germany)
+Werner Bartsch, Hamburg (Germany): page 2, 6-7
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Specific disclaimer for IHS Markit reports, data and information referenced in this document:
+Independent auditors:
+Fiscal year:
+Copy deadline:
+Financial calendar
+Wednesday, 31 January 2018¹
+Publication of first quarter 2018 results
+Thursday, 22 February 2018
+Annual General Meeting 2018
+(Start 10:00 a.m. CET)
+ICM - International Congress Center Munich
+(Germany)
+Thursday, 3 May 2018¹
+Publication of second quarter 2018 results
+Wednesday, 1 August 2018¹
+Publication of third quarter 2018 results
+Monday, 12 November 2018¹
+Publication of fourth quarter and
+fiscal year 2018 results
+1 preliminary
+Gallium nitride
+Imprint
+f
+in
+TM
+Published by:
+Editors:
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Gallium nitride (abbreviated to GaN) is a compound semicon-
+ductor material made from gallium (chemical symbol Ga) and
+nitrogen (chemical symbol N). GaN is used for components
+including radio-frequency power MOSFETs (see MOSFET) on
+account of the material's special properties (such as good
+thermal conductivity and high electron mobility).
+0
+55.0
+16%
+15%
+15%
+19%
+18%
+2015
+2016
+Europe (excluding Germany), Middle East, Africa
+Asia-Pacific (excluding China, excluding Japan)
+24%
+Germany
+China
+Americas
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2017
+17%
+Combined Management Report | Our Group
+Finances and strategy
+2017 fiscal year
+18
+Japan
+P see page 60
+and page 74
+P see page 61
+24%
+25%
+The Segment Result for the 2017 fiscal year totaled €1,208 million, 23 percent up on the €982 million reported
+one year earlier. Our margin target of 17 percent on average over the cycle, which had been raised at the beginning
+of the fiscal year 2017, was achieved already in the year of its announcement, with the Segment Result Margin
+coming in at 17.1 percent (2016: 15.2 percent). The actual Segment Result Margin was therefore higher than the
+figure of 16 percent at the mid-point of the planned range for revenue growth as forecast at the beginning of the
+fiscal year and, moreover, in line with the increased outlook for the fiscal year of 17 percent at the mid-point of
+the planned range for revenue growth announced on 24 March 2017 (see the chapter "Outlook").
+Improvement in key performance indicators
+Net income rose to €790 million due to the positive Segment Result contibution driven by the revenue increase
+which was partially offset by higher income tax expense (see the chapter "Review of results of operations").
+Compared to the previous year's figure of €743 million, net income improved by 6 percent.
+Earnings per share for the 2017 fiscal year amounted to €0.70 (basic and diluted), 6 percent up on the €0.66 (basic
+and diluted) reported for in the previous year. Adjusted earnings per share (diluted) improved year-on-year from
+€0.76 to €0.85 (see the chapter "Review of results of operations" for details of the calculation of adjusted earnings
+per share).
+Free cash flow from continuing operations (see the chapter “Internal Management System" for definition) totaled
+€594 million in the 2017 fiscal year, an increase of €104 million or 21 percent over the previous fiscal year's figure
+of €490 million. Net cash provided by operating activities of €1,728 million (2016: €1,313 million) exceeded additions
+to property, plant and equipment and intangible assets totaling €1,022 million (2016: €826 million) and disburse-
+ments to acquire 93 percent of the shares of MoTo Objekt Campeon GmbH & Co. KG ("MoTo"), the owner of the
+Campeon office complex and Infineon's headquarters in Neubiberg.
+G 03
+Infineon revenue by region
+100%
+23%
+100%
+12%
+13%
+12%
+7%
+6%
+7%
+23%
+24%
+100%
+50
+P see page 61
+The Return on Capital Employed (ROCE) in the 2017 fiscal year amounted to 14.9 percent, compared to 15.0 percent
+one year earlier. With operating income from continuing operations after tax rising from €799 million to €847 million,
+the 0.1 percentage point decrease in ROCE is attributable to the higher capital employed figure, which increased
+from €5,334 million to €5,695 million year-on-year (for a definition of, and details relating to, the calculation of ROCE,
+see the chapters "Internal Management System" and "Review of financial condition").
+22
+2013
+2014
+2015
+2016
+2017
+Combined Management Report | Our Group
+Finances and strategy
+251
+19
+G see graph 06
+Intel is market leader for processors, Samsung for memory. Infineon does not operate in either of these categories.
+Hence, neither of these companies competes directly with Infineon in these two product categories. Of the top 20
+semiconductor manufacturers, the following compete with Infineon: Samsung (only in the field of chip card ICs,
+with revenue accounting for only approximately 1 percent of Samsung's revenue), Texas Instruments, Toshiba, NXP,
+STMicroelectronics, Renesas and ON Semiconductor.
+The 20 largest companies account for 70.7 percent of global revenue. The remaining 29.3 percent is spread over
+more than 1,500 other semiconductor companies. These figures highlight the highly fragmented structure of
+the semiconductor sector. However, further consolidation can be expected within individual product categories.
+For example, the acquisition of Fairchild by ON Semiconductor on 19 September 2016 created a new number two
+in the power semiconductor segment behind Infineon.
+Looking at the regional distribution of semiconductor sales, China has been the dominant factor for many years. In
+the 2016 calendar year, 43 percent (2015: 42 percent) of all semiconductors were absorbed by that market. In China,
+contract manufacturers - so called Electronic Manufacturing Services (EMS) - play a special role. They assemble
+electronic products predominantly for Western customers. The business model plays a significant role for durable
+consumer goods on the one hand and information and telecommunications sector-related products such as servers,
+PCs, notebooks and cellular phones on the other. A large proportion of the semiconductors mounted in China are
+subsequently re-exported as part of a finished product.
+G 05
+Top 20 semiconductor manufacturers for 2016 calendar year
+Revenue in billion US$
+60
+G see graph 05
+G see graph 04
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2012
+The gross cash position (see the chapter "Internal Management System" for definition) totaled €2,452 million as
+of 30 September 2017, an increase of 9 percent compared to the previous year's figure of €2,240 million. The free
+cash flow from continuing operations of €594 million described above exceeded the combined total of the dividend
+payment for the 2016 fiscal year (€248 million) and long-term debt repayments (€119 million).
+Planned to raise dividend by 14 percent
+Our dividend policy is aimed firstly at enabling our shareholders to participate appropriately in the success of the
+business and secondly to at least keep the dividend at a constant level in times of flat or declining earnings.
+Based on the strong performance in the 2017 fiscal year, a proposal will be made to the Annual General Meeting
+(to be held on 22 February 2018) to pay a dividend of €0.25 per share, an increase of 3 cents or 14 percent.
+Developments in the semiconductor industry
+Semiconductor revenues worldwide totaled €353.964 billion in the 2017 fiscal year (source: World Semiconductor
+Trade Statistics). This corresponds to an increase of 19.6 percent compared to the revenue of €296.080 billion
+generated during the 2016 fiscal year. The high growth rate can mainly be attributed to the steep rise in prices
+within the memory products category. Revenue generated in this product category - comprising mainly DRAM and
+flash memory products - grew by 55.4 percent, and with a volume of €99.667 billion, accounted for around 28 percent
+of the entire semiconductor market. Infineon recorded 9.1 percent revenue growth during the same period.
+The semiconductor market is highly fragmented. Only the two largest competitors had a market share in excess of
+5 percent in the 2016 calendar year (source: market research company IHS Markit). Based on a total market size of
+US$352.531 billion, Intel and Samsung took market shares of 15.6 percent and 11.5 percent respectively, with revenue
+amounting to US$54.980 billion and US$40.389 billion respectively. The market share of all other competitors was
+below 5 percent. Infineon finished in 11th place with revenue of US$7.197 billion and a 2.0 percent market share.
+G 04
+Dividend per share for the 2010 to 2017 fiscal years
+1 Proposal to the Annual General Meeting to be held on 22 February 2018.
+in € cents
+18
+20
+12
+12
+12
+10
+2010
+2011
+20
+2017 fiscal year
+Samsung
+40
+ON Semi-
+conductor
+STMicro-
+electronics
+Mitsubishi
+Toshiba
+18.5%
+9.2%
+5.3%
+4.9%
+4.7%
+Source: Based on or includes content supplied by IHS Markit, Technology Group,
+"Power Semiconductor Annual Market Share Report", August 2017.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+22
+Infineon
+22
+market share 2016
+G 08
+Communi-
+cations'
+Chip Card
+Semiconductor
+Market'
+ICS²
+1 Source: Based on or includes content supplied by IHS Markit, Technology Group, "Worldwide Semiconductor Shipment Forecast", September 2017.
+2 Source: ABI Research, "Secure Smart Card & Embedded Security IC Technologies", August 2017; microcontroller ICs
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+21
+G see graph 08
+The three pillars of our strategy: Focus, technology leadership and system understanding
+Not only does Infineon rely on the right growth drivers, it also has the expertise and the strategic concepts needed
+to benefit from these drivers. Our strategy is based on three pillars. First, we focus on those markets in which we
+can achieve a leading position: automotive, power supplies, industrial power electronics, radio-frequency technol-
+ogies and security. Second, we establish the basis for these leading positions with manufacturing know-how as well
+as comprehensive expertise on technology, products and applications which we constantly expand both within
+existing as well as new application areas. The third pillar is our strategic approach "Product to System". Based on
+far-reaching system understanding we want to offer customers solutions that will make them more successful and
+will increase potential sales and profits for Infineon. Here we expect our knowledge to drive innovations that can
+change markets and clearly differentiate us from our competition in the long term.
+This concept can be clearly illustrated by a number of examples: Demands for the reduction of CO2 and NOx emis-
+sions in the automotive industry promote the development of electric vehicles. At the same time, the desire for better
+road safety and more driving comfort is helping the breakthrough of radar-based assistance systems. Both of these
+developments result in higher demand for semiconductors per car. In industrial applications, our power semicon-
+ductors are making all kinds of power supplies more efficient and more compact: New materials such as silicon
+carbide (SiC) make it possible, for example, to design power inverters for photovoltaic systems that are significantly
+smaller than previous models. Furthermore, their lower weight allows for much easier installation in the field. Even
+though the value of the power semiconductor content increases, production costs for the overall system are reduced
+by more than 10 percent. Sensor technologies open up new application fields such as Augmented Reality in smart-
+phones and intuitive operation of a large number of devices by gesture control. Security controllers ensure protection
+of data traffic in an increasingly connected world.
+Infineon has continued to develop and expand its traditional core competencies in the area of power semiconductors,
+hardware-based security, radio-frequency technologies and embedded control and has added to these competencies
+expertise in adjacent fields such as sensor technologies. We utilize the know-how of the entire corporate network
+in each application area, including our leading manufacturing technology. Today we are the clear market leader in
+power semiconductors, the market leader in security solutions as well as the system leader in automotive.
+Acquisitions add to organic growth
+We supplement our organic growth with targeted acquisitions. These acquisitions have to meet three criteria:
+They must be strategically viable, financially reasonable and culturally fitting. An acquisition thus has to strengthen
+Infineon's market position according to our strategic orientation and has to be a viable addition to our range of
+expertise. The business acquired has to increase our profit, contribute to our margin target of an average of 17 percent
+throughout the cycle and must earn a return at least equal to the capital costs. And finally the corporate culture of a
+potential acquisition candidate must be a good fit with Infineon's culture, ideally contributing valuable elements to it.
+World discrete power semiconductor and modules
+Total
+G see graph 09
+We have established a stable foundation in recent years by focusing on core competencies that are in higher demand
+today than ever in the face of global megatrends. Over the years we have built and systematically expanded the
+technical expertise needed to do so. And since good ideas do not become innovations until they have been success-
+ful in the market, we have also developed the appropriate concepts for turning our strategy into entrepreneurial
+success and value creation. At the center of all this is our strategic approach "Product to System", which we apply
+along our entire value chain, oriented towards the success of our customers. This approach is supported by addi-
+tional elements: A strong innovation culture, continuous pursuit of technology leadership, well-developed quality
+consciousness, differentiated manufacturing and tailor-made go-to-market strategies fitting the various individual
+markets. This puts us in a position to offer our customers leading products as well as the highest possible quality
+and supply reliability. In doing so we achieve the objective of growing profitably and faster than the market.
+Finances and strategy
+Group strategy
+23
+Technology know-how has always been the foundation of our business model, whether in the form of discrete
+components, integrated solutions or mixed-signal components. Our broad portfolio ranges from single compo-
+nents all the way to solutions with hardware-related software. This enables us to provide targeted support to our
+customers while choosing from a variety of approaches. Some customers continue to differentiate themselves
+from their competitors by means of their own software and just purchase the necessary hardware from us. We go
+one step further with automotive microcontrollers and security controllers, which we supply with special firmware
+that supports the basic functionality of the hardware and cannot be modified. More extensive functions can then
+be implemented using additional program code. For example, in the 2017 fiscal year we launched the second
+generation of our digital motor control platform iMOTION™. It was developed for use in major home appliances
+and comes with a development kit that meets the priorities of our customers in this market: lower system costs,
+reduced development effort, shorter development times and high reliability. ¡MOTION™ already comes with all
+algorithms required to control the electric motor. Only a small number of application-specific parameters need to
+be defined in order to complete programming. Since we think in terms of systems, we can support all of these
+different approaches. It's not always the most sophisticated solution that provides the biggest value added to the
+customer: Standard components may also be just the right fit. Nevertheless, system understanding creates a com-
+petitive advantage because it gives us the ability to provide more thorough advice, and because this knowledge
+lets us develop better products.
+The same logic applies to our strategic minority investment in the British company XMOS Limited (Bristol). Already
+in spring, we presented a joint solution at the Mobile World Congress in Barcelona (Spain). The interaction of radar
+sensors and silicon microphones from Infineon with an audio processor and speech recognition algorithms from
+XMOS enables the recognition of individual users even in large groups, thus supporting reliable voice control. Our
+investment will strengthen the partnership with XMOS Limited and will help us develop an even better understand-
+ing of the interdependencies between hardware and algorithms. This puts us in an excellent position to participate
+in the future growth of voice-controlled devices. Going forward, the interaction between human beings and machines
+will be less keyboard-centric and will rely on more natural means of communication instead - especially on voice,
+gesture and facial expressions. Voice control will thus become a key success factor in the Internet of Things (IoT).
+The strategic "Product to System” approach also plays an essential role in the development and introduction of
+new technologies, for example, with the new semiconductor materials silicon carbide (SiC) and gallium nitride (GaN).
+These components are typically more expensive than silicon-based products, but thanks to new system architectures
+they also open the door to many new dimensions of benefit for the customer, for example, a smaller form factor,
+higher efficiency and lower system costs. The realization of these benefits implies higher research and development
+efforts on the part of our customers. Therefore, we support the introduction of these new technologies in two ways:
+On the one hand, we work closely together with our highly innovative customers while on the other hand providing
+less technology-oriented customers with solutions that are easy to implement.
+Technology leadership means added value for customers
+Customers choose Infineon because we stand for competitive cutting edge technology in terms of the highest
+possible quality and reliability. Our engineers anticipate many challenges even before our customers are affected
+by them. We meet the highest quality requirements of the automotive industry, achieve the highest efficiency in
+power switching and deliver solutions for the most challenging security projects in the world. We are also capable
+of applying this specific expertise throughout the entire corporate network. As an example, our barometric pressure
+sensors, which make indoor navigation possible for mobile devices, are based on the same technology as those used
+in cars for determining the optimum gasoline-air mixture. And beyond payment cards and government IDs, our
+expertise in security is in higher demand than ever in the era of the Internet of Things: In this area customers concen-
+trate on optimizing the interaction of networked devices and prefer to purchase the feature "Security" as a solution
+that is easy to implement. Infineon recognized this trend at an early stage and now offers the corresponding con-
+trollers and software as well as the comprehensive know-how of the Infineon Security Partner Network. The network
+partners develop security solutions custom-tailored to meet the needs of individual industry sectors and markets.
+The service range covers the entire value chain, from consulting and design all the way to system integration and
+service management.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+24
+Furthermore, we systematically expand our abilities, for example, whenever the requirements of our markets
+change, or when we see long-term growth potential in a new business segment. Thus, as the market leader, we
+began researching new materials for power semiconductors at an early stage. SiC and GaN are particularly well-
+suited for use in the field of power electronics. Going forward, we will also strengthen our expertise in power control
+and expand our product portfolio. As the number one in MOSFETs and IGBTs we consider this an adjacent area with
+interesting opportunities for further growth. Then again, in sensor technologies we intentionally moved into new
+territory some time ago, fully aware of the fact that detection of environmental data would become increasingly
+important in our target markets. Today we have a comprehensive portfolio of sensors for a wide range of systems in
+automotive applications, for mobile devices, consumer electronics and the Internet of Things. Our success in silicon
+microphones illustrates the flexibility of our approach and how we adapt to changing market requirements: We have
+increased our share in this market over the last ten years to a current 33.5 percent with leading MEMS technology.
+Then, during the previous fiscal year, we started offering a microphone in our own package and also took a first step
+towards building software know-how with our recent strategic minority investment in XMOS.
+Innovation drives differentiation
+Innovation is one of the most fundamental success factors in the semiconductor industry and is for us an important
+basis for differentiating Infineon from competition. Infineon has shown time and again that our technological and
+product innovation lets us grow faster than the market and increase profitability. But challenges are growing as
+well: Competition is intensifying. Competitive coverage of the application areas in our markets calls for a wider and
+wider technology portfolio. And development efforts are increasing disproportionally as technologies gradually
+approach physical barriers. This fact underlines the significance of economies of scale and the connection between
+technology leadership and size. Previous concepts for success are too shortsighted under these conditions and
+have to be either expanded or rethought.
+This is why innovation and system thinking ideally complement one another. We think about what the key factors
+are and how we can combine several innovative, sometimes at first sight minimal steps to form a larger whole that
+will in turn provide an additional and substantial benefit for the customer. Thus today our claim to innovation
+covers all areas of our company: logistics, operations, technology, products, system solutions and partnership with
+the customer. Depending on particular market demands we focus on different aspects. Several units within the
+Company act like start-ups, while others use a comprehensive approach to leverage new areas of differentiation.
+Of course in doing so we implement the entire spectrum of possibilities and expertise that Infineon has to offer.
+This is all driven by a well-developed culture of collaboration which is one of our permanent differentiating features.
+For example, during the 2017 fiscal year we generated first revenues with our CoolSIC™ MOSFET. Its market launch is
+the result of many years of research and development activities that are now beginning to pay off. Manufacturers of
+PV inverters are among the first customers. Furthermore, CoolSiCTM modules will soon be put into use in European
+fast charging stations for electric vehicles and 15 automobile manufacturers and automotive component manufac-
+turers are also evaluating the product for future vehicle platforms. This makes SiC technology an ideal example for
+the strategic "Product to System” approach: By transitioning to SiC we are creating higher value for the customer
+and for Infineon. The system costs for production of PV inverters go down, smaller and lighter devices are easier to
+install and the semiconductor content value increases significantly. This technology strengthens our position in
+several end-markets at the same time.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Success factors in strategy
+Software
+Competencies evolve over time
+The strategic approach "Product to System" defines our actions
+As illustrated above, our strategic approach "Product to System" goes well beyond thinking in terms of technolo-
+gies and products. We want to understand what markets demand and how they are changing. Only then will we be
+able to understand how we can change the markets ourselves. Thus we consider more than just the direct sales
+opportunities for our products and solutions: We also look at our customers' success factors and the development
+of end-markets. By doing so, we recognize at an early stage when the foundation of our business is changing.
+This is a prerequisite for timely reaction, guaranteeing sustainable differentiation in growth applications and
+increasing profit.
+In order for this to succeed, we have to understand the environment in which our customers' products are used,
+how they are embedded in larger systems, what other devices they interact with, what requirements they have to
+fulfill and what tasks they are intended to perform. And we also have to take into consideration which active and
+passive components they use, whether they use software and what capabilities our customers contribute to the value
+creation process. Equipped with this knowledge we can leverage our competencies even better: We can translate
+what is technologically possible into a commercially viable product, thus providing the greatest possible benefit to
+our customers. What we mean by this can be demonstrated using the three examples already mentioned: Sensor
+systems not only capture information about the surrounding environment, but also interpret and process the data
+they gather in order to initiate a particular action; digital control loops in power supplies enable higher energy effi-
+ciency at both high and low load levels; and security controllers are capable of distinguishing authorized access
+from unauthorized access. In addition to the hardware components involved, this also requires varying degrees of
+software support. Thus to a certain degree system understanding also means: Software understanding.
+G 09
+System know-how is bridging the gap between base technology and customer system
+Full system
+functionality
+Partial system
+functionality
+Building block
+Single function
+Base technology
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Customer system
+Algorithms
+System know-how
+Firmware
+Integration of analog
+and digital functionality
+Discrete components
+Hardware
+40.4
+Consumer¹
+Data
+5.7
+5.6
+5.8
+7.2
+7.0
+6.0
+nVidia
+Western Digital
+Renesas
+Apple
+Sony Semiconductor
+ON Semiconductor
+AMD
+HiSilicon
+10% market share
+5% market share
+3.6
+STMicroelectronics
+4.8
+Infineon
+NXP
+30
+20
+10
+H
+Intel
+China has been Infineon's most important sales market for several years now and, with a figure of €1,735 million,
+accounted for 25 percent (2016: 24 percent) of Infineon's revenue during the fiscal year under report. Next in
+line for Infineon were Germany with revenue of €1,094 million and a 15 percent share (2016: 15 percent), the USA
+with €714 million and a 10 percent share (2016: 10 percent) and Japan with €463 million and a 7 percent share
+(2016: 6 percent).
+Qualcomm
+Broadcom
+SK Hynix
+Micron
+Texas Instruments
+15.4 15.0 ... 14.7
+12.7 12.7*******
+10.3 9.3
+8.7
+Toshiba
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Competitive Landscaping Tool - Q3 Update", August 2017.
+Foundries and subcontractors are not included in this market research.
+MediaTek
+1
+Processing
+4.2
+G 06
+Strategic fundamentals
+Global megatrends drive core business
+According to the United Nations, the world's population will grow by 1 billion people to a total of 8.6 billion by 2030.
+At the same time fossil fuels are becoming scarcer and current concepts - for example, for traffic, industry and com-
+munications infrastructure - are reaching their limits. Microelectronics plays a key role in providing a constantly
+growing population with energy and a higher standard of living while minimizing the impact on the environment.
+The key is making "more from less".
+Opportunities in the convergence of the real and digital worlds
+Semiconductors are essential in tapping renewable energy sources. They reduce the power consumed by electric
+devices and enable systems that make transportation cleaner, safer and smarter. Furthermore, semiconductor
+technology is the backbone of modern communication and data technologies. Answers to the challenges of our
+time would be unthinkable without the use of semiconductors. And this becomes even more true as the real and
+digital worlds converge, generating new potentials. Digitalization increases the productivity of industrial manufac-
+turing processes. This development, also referred to as the Industrial Internet, reaches far beyond automation.
+Thanks to digitalization, agriculture, for example, can achieve higher yields with more environmentally friendly
+methods. At the same time the digital transformation opens up new possibilities for consumers. The prerequisite
+for this is the protection of data exchange from abuse in order to ensure the acceptance of the ever-increasing
+degree of networking in our society. Infineon benefits from these trends because they stimulate long-term demand
+in our target markets.
+G 07
+Compound annual growth rate of the main semiconductor target markets 2016 to 2021
+8.2%
+6.8%
+6.7%
+6.6%
+6.2%
+4.8%
+4.1%
+|||||||
+Automotive¹
+Industrial��
+Today Infineon addresses the two fastest growing segments of the semiconductor market: Until 2021 market
+researchers predict a compound annual growth rate of 8.2 percent for automotive semiconductors and 6.8 percent
+for industrial power semiconductors. Demand in these segments is driven by long-term, global megatrends.
+5.0
+Infineon's objective is sustainable profitable growth. This is why we focus on markets in which we can be successful
+with our core competencies in the long term and pursue the leading position in these markets. In an effort to always
+offer the best solutions on the market to our customers we achieve three things: We continuously increase the
+enterprise value for our shareholders, offer our employees a safe and attractive working environment and also help
+make life easier, safer and greener.
+20
+Global semiconductor sales 2016 by region
+(total market size US$353 billion)
+9%
+14%
+O
+43%
+13%
+21%
+Europe, Middle East, Africa
+Asia-Pacific (excluding China, excluding Japan)
+China
+Japan Americas
+Source: Based on or includes content supplied by IHS Markit, Technology Group,
+"Application Market Forecast Tool", September 2017.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+Group strategy
+G see graph 07
+P see page 60
+The net cash position (see the chapter "Internal Management System" for definition) increased by 31 percent to
+stand at €618 million at the end of the 2017 fiscal year (30 September 2016: €471 million).
+P see page 68
+Our 2017 fiscal year
+68 Group performance
+68 Review of results of operations
+72 Review of financial condition
+75 Review of liquidity
+78 Report on expected developments, together with
+associated material risks and opportunities
+78 Outlook
+81 Risk and opportunity report
+66 The Infineon share
+93
+95
+Significant events after the end of the reporting period
+96 Corporate Governance
+96 Information pursuant to section 289, paragraph 4, and
+section 315, paragraph 4, of the German Commercial Code (HGB)
+99 Corporate Governance Report
+99 Declaration concerning the management of the company
+99 Compensation report
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+15
+Combined Management Report | Our Group
+92 Overall statement of the Management Board with respect
+to Infineon's financial condition as of the date of this report
+Infineon Technologies AG
+Finances and strategy
+61 Our employees
+56 Operations
+P see page 71
+Content
+This report combines the Group Management
+Report of the Infineon Group ("Infineon" or
+"Group") - comprising Infineon Technologies AG
+(hereafter also referred to as "the Company")
+and its consolidated subsidiaries - and the
+Management Report of Infineon Technologies AG.
+The Combined Management Report contains
+forward-looking statements about the business,
+financial condition and earnings performance
+of the Infineon Group. These statements are
+based on assumptions and projections based
+on currently available information and present
+estimates. They are subject to a multitude of
+uncertainties and risks. Actual business devel-
+opment may therefore differ materially from
+what has been expected. Beyond disclosure
+requirements stipulated by law, Infineon does
+not undertake any obligation to update forward-
+looking statements.
+Effective 1 October 2016, a number of small
+product groups were allocated to other seg-
+ments. The previous year's figures have been
+adjusted accordingly.
+Combined
+Management Report
+Our Group
+16 Finances and strategy
+61 Sustainability at Infineon
+16 2017 fiscal year
+29 Growth drivers
+38 The segments
+38 Automotive
+41 Industrial Power Control
+44 Power Management & Multimarket
+46 Chip Card & Security
+49 Locations
+53 Research and development
+20 Group strategy
+2017 fiscal year
+58 Internal management system
+2017 fiscal year
+13%
+13%
+31%
+5%
+1%
+10% 0%
+17%
+42%
+Industrial Power Control: €1,206 million
+Power Management & Multimarket: €2,148 million
+Chip Card & Security: €708 million
+Other Operating Segments, Corporate and Eliminations:
+€12 million
+16
+Combined Management Report | Our Group
+Finances and strategy
+2017 fiscal year
+17
+G see graph 03
+Finances and strategy
+P see page 78
+Revenue by segment in the 2017 fiscal year
+G 02
+Automotive: €2,989 million
+4 Chip Card & Security
+> Revenue up 9 percent within a favorable market environment;
+Segment Result Margin of 17.1 percent achieved
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+> Good performance enables higher dividend
+P see page 78
+G see graph 01
+G see graph 02
+Revenue growth better than original forecast; raised margin target over the cycle already achieved
+in the 2017 fiscal year
+Infineon generated revenue of €7,063 million in the 2017 fiscal year, a 9 percent increase on the previous year's
+figure of €6,473 million. With this performance, Infineon surpassed the revenue growth rate of 6 percent, plus
+or minus 2 percentage points, forecast at the beginning of the fiscal year and was also within the raised target
+range of between 8 and 11 percent announced on 24 March 2017 (see the chapter "Outlook”). Revenue growth
+was primarily driven by strong demand for semiconductors used in automotive, industrial and power supply
+applications. Our top-selling Automotive segment contributed 56 percent, thus more than half of the total revenue
+growth of €590 million (see the chapter "The segments”).
+G 01
+Revenue growth of the individual segments
+P see page 38 ff.
+in the 2017 fiscal year compared to the previous year
+2 Industrial Power Control
+1 Automotive
+CCS4
+3 Power Management & Multimarket
+IPC2
+ATV'
+PMM³
+Legal requirements for fleet emissions of the
+four major regions
+G see graph 13
+G see graph 12
+Emission reduction
+The automotive industry strives to continuously reduce emissions. These efforts are partly required by legal regula-
+tions: Thus, for example, a new European Commission rule requires the reduction of average fleet emissions to
+95 grams CO2 per kilometer by the year 2021. More realistic exhaust gas testing procedures like the WLTP (Worldwide
+Harmonized Light-Duty Vehicles Test Procedure) cycle effective from September 2017 imply tighter CO2 reduction
+rules, which increase the demand for semiconductors. Furthermore, today customers increasingly make purchase
+decisions while fully aware of the fact that reduced fuel consumption saves money, minimizes impact on health
+and the environment and thus contributes to improving the quality of life, especially in metropolitan areas.
+Optimization of the internal combustion engine alone will no longer be enough in order to meet legal requirements,
+achieve defined objectives and service customer demands for sustainable mobility. Above and beyond this, the
+efficiency of electric power consumption within the vehicle will have to be improved and hydraulic or mechanical
+solutions will have to be replaced with more efficient electrical and therefore semiconductor-based systems.
+31
+In addition to CO2, hazardous nitrous oxides, also referred to as NOx, are catching more and more attention. They
+are a result of the combustion of fossil fuels and, in addition to a variety of other factors, lead to an increased
+particle pollution. Diesel engines are responsible for the majority of NOx emissions in cities, which is why the idea
+of prohibiting older diesel-powered vehicles in urban areas is repeatedly being considered. The risk of not being
+able to drive into the protected zones at all or only under certain conditions may well influence the buying decisions
+of many customers and will represent a competitive disadvantage for the diesel engine compared to other drive
+types in the mid- to long-term.
+Electro-mobility
+In order to reduce the fleet average to the required target value many vehicle manufacturers add hybrid and
+electric vehicles to their product portfolio. These are characterized by significantly higher semiconductor content
+than conventional vehicle models. Today's solutions convert the battery's direct current into the alternating current
+required by the electric drive. Infineon offers a wide variety of power semiconductor components for these various
+systems. While a car with a conventional internal combustion engine contains an average semiconductor value of
+US$355, the value contained in an average hybrid, plug-in hybrid or electric vehicle is approximately US$695. Here
+approximately three quarters of the incremental semiconductor content is accounted for by power semiconductors.
+They are the decisive factor in the high power electric drives and are also the key to cutting costs.
+G 12
+Grams CO2/km normalized to NEDC test cycle
+100
+Transition from internal combustion engine vehicles
+to electric vehicles increases demand for power
+semiconductors in the drivetrain by a factor of ~15
+200
+180
+160
+140
+2010
+120
+80
+Growth drivers
+60
+G 13
+Finances and strategy
+China - Japan North America Other countries
+30
+21.5
+2015
+23.5
+2021e
+Europe Asia-Pacific (excluding China, excluding Japan)
+1 CAGR Compound Annual Growth Rate
+Source: Based on or includes content supplied by IHS Markit, Automotive Group,
+"Annual Light Vehicle Production Forecast", September 2017.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Combined Management Report | Our Group
+Growth drivers
+"Vision Zero" is one of the most ambitious objectives of the automotive industry: Vehicles are to become so safe
+that serious or even fatal traffic accidents no longer occur; today approximately 90 percent of such accidents are
+attributable to human error. Safety systems can prevent such errors or at least limit their consequences.
+In spite of the constantly increasing number of vehicles on the road, the number of traffic fatalities in developed
+nations has dropped over the course of several years. Further progress towards "Vision Zero" requires more safety
+systems. Active safety systems constitute an especially large growth market. By directly intervening in driving actions,
+these systems can either completely prevent accidents or significantly reduce their consequences. Examples here
+are pedestrian detection, adaptive cruise control and blind spot detection. In the meantime these functions can be
+found not only in the luxury class, but also increasingly in medium-class vehicles.
+Step by step active safety systems are enhanced to become driver assistance systems. By providing the driver
+with extensive support while driving they enable higher comfort and increase road safety. For example, they assist
+in critical situations and help correct driving errors when necessary, for example, by initiating an emergency stop.
+Systems for partial and fully automated driving consist essentially of sensors (such as radar, interior or exterior
+cameras), a central high-performance computer for interpretation of the sensor data (the intelligence of the system,
+so to speak) and the determination of the driving strategy, and lastly of actuators (steering, braking, engine control
+and transmission). As a leading provider of system solutions Infineon has an extensive product portfolio for assis-
+tance systems and automated driving.
+The microcontrollers of our AURIX™ family ensure the reliability of the systems. On the actuator level, AURIX™ is in
+charge of local real-time computing and sends out the commands. Furthermore, it has another key role as safety
+anchor in that it safeguards the components not qualified according to automotive industry standards.
+Actuators are also safety-critical applications. One of the most important requirements for partially and fully auto-
+mated driving is that the system continues to work reliably even in case of a defect. In order to achieve this, Infineon
+offers ISO 26262-certified components for these applications with redundancy in case of failure: Safety-critical
+components and subsystems have to be highly available, i.e. protected against failure. This is why such sensors,
+microcontrollers and power semiconductors are deployed redundantly, increasing the level of demand for semi-
+conductors.
+Our components strongly contribute to supporting vehicle drivers and bringing us closer to autonomous driving.
+And the connection to the internet makes it possible to equip vehicles with more and more functions and services.
+Once again, semiconductors play an important role.
+Networking, data and IT security
+The continuously rising degree of interconnection between vehicles opens up opportunities for many new services,
+but also increases the danger of unauthorized access to systems by a third party. This means secure data exchange
+among the various on-board systems as well as with other vehicles and the infrastructure has to be maintained.
+Vehicle and personal safety on the one hand and data and information security on the other hand can no longer be
+provided independently of one another. The vehicle is becoming a "connected computer on wheels” and part of the
+Internet of Things. The need for data and IT security in the vehicle continues to grow. Infineon is ideally positioned
+to benefit from this trend, with decades of experience in this area in the Chip Card & Security segment.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+30
+Advanced driver assistance systems and automated driving
+2020
+Finances and strategy
+Growth drivers
+China
+1 Mild hybrid vehicles are not considered here.
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+32
+In addition to vehicles with an electric drivetrain, so-called mild hybrid vehicles based on 48-volt technology also
+help reduce emissions. More and more mechanical features are being operated electrically, thus testing the limits
+of the 12-volt electrical system. An additional 48-volt onboard system is used to supply high-power systems such
+as electric turbocharger, electric power steering and anti-roll bar. Market researchers expect an additional power
+semiconductor content of around US$75 required for power control and for the connection of the two onboard
+systems. 48-volt technology is the entry level of the hybrid world. While the additional power semiconductor con-
+tent may be lower compared to vehicles with an electric drivetrain, units are far higher and are expected to reach
+15 million vehicles by 2025.
+Going forward, innovative system solutions and in particular the use of silicon carbide-based components have
+an enormous potential when it comes to making electric driving more affordable. On-board chargers and main
+inverter become more compact, lighter and efficient with silicon carbide, extending the range of the vehicle.
+The need for an appropriate charging infrastructure grows as electric vehicles become more widely adopted.
+A well-developed network of charging stations is another incentive for purchasing electric vehicles. In order to raise
+the level of electro-mobility acceptance, China has begun operation of charging stations along the country's eight
+most important highways, including the important connection between Beijing and Shanghai. By 2020 as many as
+10,000 charging stations with 120,000 charging points will be in operation, with a corresponding investment volume
+of approximately US$770 million. 202 cities will benefit from this infrastructure which covers 36,000 kilometers of
+highway. The charging stations are rated at up to 100 kilowatts and each one requires power semiconductors worth
+from US$200 to US$300. The network of publicly accessible charging stations can be expected to grow in other
+countries in the years to come as well. A consortium of German OEMs has recently started a project targeting the
+creation of 1,000 ultra-high-power charging stations with 350 kilowatts at 400 sites in Europe by 2020. Infineon
+is supplying SiC based power modules for the project. In addition to dedicated electric service stations, it is also
+possible to integrate charging stations in street lights.
+Energy efficiency
+Renewable energy
+For both environmental and economic reasons it is not possible to meet the increasing need for electric power
+using fossil fuels to the same extent as in the past. The Paris Climate Accord, which took effect in November 2016,
+is the first agreement of its kind to be binding under international law. It obligates countries participating in the
+World Climate Conference to limit global warming to a maximum of two degrees Celsius. Furthermore, greenhouse
+gas neutrality is to be achieved in the second half of the 21st century. And even if the new US administration's
+position regarding the Accord has yet to be finalized, the fight against climate change is still receiving broad politi-
+cal support. Thus, for example, the mayors of many major US cities and the governors of several US states have
+asserted their commitment to climate protection. Furthermore China and the state of California even entered into
+a bilateral agreement on climate protection in June 2017.
+Other features (power and non-power semiconductors)
+Decarbonizing through the use of renewable energy sources is the key to a sustainable supply of energy. Infineon
+benefits from the rise in construction of wind farms and photovoltaic systems. For every gigawatt of power generated
+these systems require many times more power semiconductors than the amount found in conventional power plants.
+In contrast to coal, gas or nuclear power plants, wind and photovoltaic power plants do not have turbines whose
+steady operation generates a constant 50 hertz alternating current allowing energy to be fed directly into the power
+grid. Power electronic systems are required to perform the necessary conversion.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+2016
+33
+Photovoltaics: The market researcher IHS Markit expects an average annual growth rate of 9.0 percent for IGBT
+modules for solar energy from 2016 until 2021. For several years now we have been observing a structural change
+resulting from the gradual migration of the business from Europe to Asia and the USA. Infineon enjoys a very broad
+international presence and has been partnering for years with the world's leading manufacturers of photovoltaic
+inverters. Among other things, we benefit from the growth of Chinese inverter manufacturers, both in terms of the
+expansion of photovoltaics in China itself and from the export of inverters to other regions. Furthermore, we are
+working together closely with leading European manufacturers who are also very successful in the USA. Efficient
+conversion and low system costs help cut power generation costs in photovoltaic systems while helping reach grid
+parity in comparison to conventionally generated power. This makes it possible to pursue further expansion while
+eliminating the need for subsidies. PV inverters are among the first systems to use power semiconductors based on
+silicon carbide. The transition to silicon carbide reduces system costs and installation effort, while the value of the
+semiconductors contained in the product increases significantly.
+Traction systems
+One of the key topics of the 21st century is sustainable and optimally connected mobility within urban metropolitan
+areas as well as mobility between cities. Today reliable and fast public transportation is more important than ever
+for the quality of life and competitiveness of many regions and cities around the world. Our components are used
+both in local public transportation trains, subway trains and trams as well as in high-speed trains.
+China is one of the largest railway vehicle markets in the world. On the Beijing - Shanghai line the first high-speed
+train went into service in the summer of 2017, travelling at speeds of up to 350 kilometers per hour. The train uses
+IGBT modules from Infineon. Overland trains and urban rail systems also play a major role in China. We also expect
+a more vibrant market for traction systems in the rest of Asia. Here industrialization is leading to rising demand
+in particular for urban and regional rail systems. Further growth markets are India and the USA. Our customers
+are the world's largest manufacturers in the traction sector, including Bombardier Transportation, China's CRRC
+and Siemens.
+Automation
+Industrial motors are at the heart of a large number of systems, for example, cranes, conveyor belts and robots.
+They are used wherever objects need to be moved or transported. Electric motors are also used in refrigeration
+pumps and air conditioning and the simple production of compressed air. The strongest industrial electric drives
+are found in sluices, cement mills, pumps in municipal waterworks, in air compressors used in the production of
+technical gases and in compressors for natural gas pipelines. Electric motors account for 28 percent of the global
+electric power consumption. This constitutes a substantial lever when it comes to savings resulting from improve-
+ments in the degree of efficiency. One possibility to reduce the energy consumed by an electric motor is to use
+an electronic control system to regulate speed, i.e. adapting performance to suit current needs. The market pene-
+tration of speed-regulating motor controls can thus be expected to increase. Modern manufacturing facilities in
+which constant adjustment of rotation speed is necessary are not even possible without regulated electric motors.
+The realization of a speed-controlled motor unit requires a large number of the power semiconductors we provide
+to the market. Their number and value depend on the performance class of the motor. The next level of automation
+will be achieved with the Industrial Internet, which will give rise to a new investment cycle.
+Wind: We expect steady growth in the wind energy sector in the mid- to long-term. For each megawatt generated,
+wind parks require approximately 30 times more semiconductor content than conventional coal-fired power plants.
+China and the USA are promoting wind energy. Furthermore, the refurbishment of older, lower-performing wind
+power turbines with modern, high-performance wind turbines, referred to as "repowering", will continue for some
+time. Stronger generators are also being used in initial installations, driving higher demand for semiconductors for
+each wind power turbine. This development is especially evident in China, where we have been collaborating with
+the Chinese wind turbine manufacturer Goldwind since 2011. While in the past primarily turbines generating up to
+1.5 megawatts were installed, today an increasing majority of turbine generators producing 2 to 3 megawatts is
+being used.
+Drivetrain non-power semiconductors
+electric vehicles'
+value in
+USA
+Japan - EU
+Historical performance
+- Enacted targets
+Proposed targets
+Source: The International Council for Clean Transportation, 2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+in US$
+695
+Increase by a
+factor of ~15
+355
+17
+38
+300
+265
+130
+300
+Semiconductor
+value in
+internal combustion
+engine vehicles
+Drivetrain power semiconductors
+Semiconductor
+2025
+15.4
+140
+27.1
+Finances and strategy
+Group strategy
+27
+Target 2: 17 percent Segment Result through the cycle
+Growth is only one prerequisite for sustainable success. Another criterion is profitability. Here the margin achieved
+by our products is an indicator for the value our products create for the customer. When we work profitably on a
+sustainable basis, it means that we steer our developments to the point where they provide the highest benefit to
+our customers. Working profitably means using innovative strength effectively by meeting the demand of the
+customer and the markets. In addition, we want to continue our development and sales achievements at unabated
+speed even in difficult market phases. We want to achieve an average Segment Result Margin of 17 percent of sales
+through the cycle. In order to achieve this goal on a sustainable basis, we are relying among other things on econo-
+mies of scale as well as on cost advantages from the further ramp and utilization of our 300-millimeter site in
+Dresden (Germany). We also leverage economies of scale in research and development and sales through leading
+positions in our target markets. And technology leadership and the strategic approach "Product to System" enable
+us to maintain a higher degree of differentiation. In the 2017 fiscal year we achieved a Segment Result Margin of
+17.1 percent.
+Target 3: Investments amounting to 13 percent of revenue
+When expanding our manufacturing capacities we only invest in our own manufacturing facilities when it makes a
+fundamental contribution to the differentiation of our products. This is true in particular of power semiconductors,
+radio-frequency components and MEMS-based sensors. When this is not the case, we outsource an increasing
+amount of our wafer processing and our package assembly to manufacturing partners.
+Up to now our capital intensity has been characterized by existing 200-millimeter technologies. However, compared
+with 200-millimeter manufacturing, the new 300-millimeter thin wafer technology requires less investment relative
+to the capacity provided. This reduces the amount of investment in manufacturing capacities for power semicon-
+ductors that is necessary in order to achieve growth targets.
+For products manufactured using standard CMOS technologies with structures of 65 nanometers or less we work
+together with contract manufacturers, developing the necessary technology modifications together with them. The
+essential differentiation of these products lies in the design and less so in the process technology, which is why
+we no longer manufacture them in our own facilities, thereby eliminating the investments in frontend manufacturing
+and development of base technologies which would otherwise be necessary.
+We will also continue to expand our partnerships with contract manufacturers in non-differentiating areas of
+backend manufacturing, i.e. package assembly, in particular for standard packages. This will mean a corresponding
+reduction in the amount of investment as well.
+Combined Management Report | Our Group
+And we also increase output by continuously increasing the productivity of all our manufacturing processes. Taken
+together, all these strategies work towards achieving the target of investing an average of approximately 13 percent
+of revenue over the cycle. This includes approximately 2 percent of capitalized development costs. Our investment
+volume is defined so that it will help us realize our target of an average growth in revenue of 8 percent annually.
+Depending on the market environment, in individual years the actual level of investment may differ from this target,
+and particularly in years of above average revenue growth exceed the target. For example in the fiscal year just
+ended, in light of strong demand the investment ratio amounted to 14 percent thus exceeding the defined target.
+It is important to our customers that Infineon remains a dependable partner that will also be able to supply reliably
+for many years to come. As an employer, we also want to give this kind of long-term reliability to our employees,
+even well beyond their active working lives in the form of retirement benefits. As a result we give a high priority to
+solid creditworthiness. This is reflected by our conservative capital structure targets.
+Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount of €1 billion provides a
+solid liquidity reserve for contingent liabilities and retirement fund liabilities which are independent of revenue.
+Furthermore, 10 to 20 percent of revenue means we always have access to enough cash to be able to finance the
+operating business during all phases of the business cycle.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+28
+The upper limit on our gross financial debt is twice Earnings Before Interest, Tax, Depreciation and Amortization
+(EBITDA). Our moderate debt level and the well distributed maturity profile reaching until 2028 allow us to reliably
+service our debt, independent of the respective capital markets environment.
+The rating agency S&P Global Ratings (S&P) has evaluated Infineon's creditworthiness as "BBB" (outlook “stable”).
+At present this gives Infineon the best S&P rating of any European semiconductor manufacturer.
+G see graph 10
+Capital structure targets demonstrate our reliability
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Infineon's current business has organically grown at an average rate of approximately 9 percent annually since the
+Company was established as an independent corporation in fiscal year 1999. We hold leading positions in our core
+markets and have systematically entered adjacent markets in the past. Our four segments are positioned to capitalize
+on the megatrends mentioned earlier, which are driving a steady demand momentum for our products. We there-
+fore expect to be able to continue growing in the future at a pace very close to the historical rate. A detailed descrip-
+tion of the individual growth drivers follows in the next chapter. Here our strategic approach "Product to System"
+helps us develop better solutions with our broad technology and product expertise and thus to create significant
+added value for our customers who are willing to pay more for solutions that are worth more. Furthermore, we
+are using tailor-made go-to-market strategies to broaden our customer base and generate more business. In doing
+so we want to continue to grow at an average of 8 percent per year. In the 2017 fiscal year we grew by 9 percent.
+Target 1: 8 percent average annual growth in revenue
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+25
+Strategic advantages through in-house manufacturing
+All our actions are aimed at creating value for the customer and at opening up opportunities for differentiation to us.
+This also applies to manufacturing. We manufacture in-house provided we can thereby differentiate ourselves from
+the competition in the market. On the other hand, when it comes to standard technologies, usually in the case of
+highly-integrated products such as microcontrollers and chip card ICs, we primarily work with contract manufacturers.
+We thereby utilize our invested capital in the most efficient way possible and optimize our investments in research
+and development.
+In many application areas, for example, in power electronics and sensor technologies, our manufacturing methods
+and our process expertise give us a strategic advantage because we can offer components that can only be pro-
+duced using leading-edge manufacturing technologies. Several years ago we were the first company in the world to
+develop highly-integrated circuits for the 77 gigahertz frequency range based on innovative silicon germanium
+technology. This cuts the cost of radar systems which as a result are used more widely in vehicles outside of the
+premium segment, making street traffic safer.
+In addition to innovation, delivery reliability, quality and cost reduction are essential factors in the orientation of
+our manufacturing landscape. Innovation activities with regard to manufacturing processes are centered in Europe.
+Our Asian sites focus on efficiency and will support further growth. As an example, we successfully launched an
+additional production module in Kulim (Malaysia) one year ago. This helps us ensure our delivery reliability, partic-
+ularly important to our customers in the automotive industry. This means we are well prepared for further expansion
+in the area of electro-mobility, also associated with increased demand for power semiconductors.
+Another milestone in terms of manufacturing technologies is the introduction of a larger wafer diameter for power
+semiconductor manufacturing. The use of 300-millimeter thin wafer technology provides significant advantages in
+productivity and reduces use of capital. By the end of the 2017 calendar year we will equip up to 30 percent of the
+cleanroom space available in Dresden (Germany) with tools. We expect the productivity advantage will begin to take
+effect then, and the costs per chip in 300-millimeter manufacturing will drop below the level of our 200-millimeter
+sites. We benefit from the lower investments per chip already today.
+Flexible go-to-market strategies accommodate rapidly changing markets
+Going forward we will address more customers with more flexibility and innovative go-to-market strategies. Histori-
+cally, Infineon has grown through close collaboration with key customers, with whom we have successfully defined
+products that enabled us to penetrate the broad market thereafter. We reach many of our smaller customers through
+distributors. We will increase our leverage of the enormous potential of the distribution channel with standardized
+but flexible products for the mass market. Here we have made good progress by emphasizing short-term delivery
+reliability, continuous and pragmatic adjustment of the product portfolio and close partnership with distributors.
+Digitalization and the Internet of Things will create new business models. From the thermostat all the way to the car,
+today more and more devices are connected with the internet and as a result offer new functionality. The manufac-
+turers usually concentrate on making these devices “smart” with the best possible sensing and data processing
+capability. They are neither able nor interested in dealing with the underlying semiconductor technologies. We want
+to make our products and solutions more easily available to these vendors, for example, through optimized product
+bundles and support in the form of reference designs. Here in particular our system understanding makes the differ-
+ence. At the same time we are engaging in networks consisting of distributors, development service providers and
+manufacturing service providers. These networks enable smaller companies and start-ups to jointly develop and
+manufacture electronics for new functions and new devices and thus make the Internet of Things a reality. This broad
+sales strategy lets us maximize revenues with existing technologies while at the same time increasing the yield of
+our investments in research and development.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+26
+46
+Digital transformation
+Digitalization is underway and is changing the way we develop, manufacture and interact with markets. Today
+we are already successfully adopting the concept of the Industrial Internet ("Industry 4.0"): Automation is linked to
+the use of big-data methods in operations. The computer evaluates data on over 1,000 manufacturing steps to
+detect atypical deviations and point out possible causes. This will also help us meet the high quality requirements
+demanded by the automotive industry in the future as well, requirements which will become ever more stringent
+with each step towards autonomous driving and the associated necessary system reliability. New methods will
+not only be applied in manufacturing but also in research and development, planning, logistics and in the way we
+interact with customers. For example, we want to accelerate learning and knowledge building in development,
+where we already make very extensive use of computer-based methods. This will help us keep our technological
+lead in spite of growing challenges and will let us successfully master the complexity involved in thinking in terms
+of systems.
+Digitalization is also becoming increasingly important for the products, solutions and services that we offer to our
+customers. Ultimately it will change the way humans, machines and computers interact. Speech, gestures and facial
+expressions are becoming more and more important. What is referred to as "Deep Machine Learning" and neural
+networks are an essential success factor and call for new competencies and methods. We have already been
+successful in a number of pilot projects in this context and will further develop our strategy in this direction over
+the upcoming years. But not only will technology change, the way in which we develop solutions across the entire
+organization will evolve as well. This requires flexible procedures and organizational structures. Here the continu-
+ing evolution of our culture and the development of corresponding competencies over the last few years are paying
+off. Today teams from various organizational units are already working together, while they can take over or dele-
+gate responsibilities independently of traditional domains - always keeping the higher-level objective in mind.
+Financial targets underline our claim to grow
+Today Infineon is excellently positioned. We are addressing the fastest growing market segments and benefit from
+long-term megatrends. Our investments in recent years have yielded a solid foundation for the realization of econo-
+mies of scale and scope and for increasing our profitability. As the clear number one in power semiconductors, system
+leader in automotive and leader in security solutions we realize economies of scale and can invest in retaining and
+expanding our technology leadership.
+Our strategy is based on sustainable, profitable growth, reflected in the ambitious targets we have set for ourselves.
+They emphasize on the one hand the high level of expectations we place on ourselves, and on the other hand ensure
+that we achieve the necessary balance between growth in sales, profitability and investment volume.
+Sustainable value creation for our shareholders
+We are convinced that organic growth in the medium to long term creates the highest value. A good indicator
+here is the spread between the Return on Capital Employed (ROCE) and the Weighted Average Cost of Capital
+(WACC). Excluding effects related to acquisitions, our ROCE corresponds to approximately twice the amount of
+the WACC when our financial targets are achieved. We intend to continue to achieve this kind of return on every
+euro we invest in organic growth and in doing so to continuously increase our enterprise value.
+Our strategy has paid off: Infineon continues its path of sustainable, profitable growth. Our operating profit-
+ability and our sound capital structure give us the financial flexibility to invest in future growth. This continuous
+value creation has been manifested in past years in constantly increasing earnings per share as well as in the
+appreciation of our company in the capital market.
+Our shareholders benefit from this positive performance. We also pursue a dividend policy aimed at letting
+shareholders adequately participate in Infineon's economic development and at paying out at least a constant
+dividend even in periods of slower growth.
+Finances and strategy
+Growth drivers
+Growth drivers
+29
+29
+In the previous chapters we have described Infineon's strategy in detail. One of its key elements is a focus on markets
+in which we can be successful in the long term. In the following we will outline the most important growth drivers
+for our business, grouped according to four higher-level trends: individual mobility, efficient power management,
+sensing and data transmission as well as security.
+G see graph 11
+Individual mobility
+Global population growth as well as increasing industrialization drive demand for all means of mass transportation
+like planes and trains but also privately owned vehicles like cars and e-bikes. Cars are a symbol for prosperity and
+the key to individual mobility. This is particularly evident in newly industrializing countries: The growth of the
+middle classes in India and China drives - among other things - rising demand for automobiles. An average annual
+growth rate of 2.2 percent is expected for worldwide automobile production for the years 2016 to 2021 (source:
+IHS Markit).
+Infineon benefits from this development in two ways: From more units as well as from the increasing number of
+electronic applications in the vehicle itself. Approximately 90 percent of the innovations are based on electronics
+by now. According to forecasts by market experts, this rate will remain unchanged in the years to come. Overall,
+a constant increase in electronic equipment in vehicles can be observed across all regions. Innovative solutions for
+safety and comfort functions typically first penetrate premium-class vehicles, after which they are then gradually
+introduced in mid-range and compact classes, increasing the semiconductor value per vehicle.
+G 11
+Worldwide light vehicle production by region
+in million vehicles
+CAGR (2016-2021): +2.2%
+103.9
+7.4
+93.1
+5.0
+18.0
+17.8
+8.6
+8.8
+31.0
+Combined Management Report | Our Group
+12.9
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+08 |2017
+G 10
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2017 fiscal year (daily closing prices)
+Infineon share price in €
+30 September 2016 = 100
+23.82
+22.23
+20.64
+19.06
+17.47
+15.88
+150
+Brushless DC motors
+130
+120
+110
+100
+14.29
+90
+Infineon
+10|2016 11|2016 12|2016
+■DAX
+01|2017
+02|2017
+-SOX
+03|2017 04|2017 05|2017
+■Dow Jones US Semiconductor Index
+06|2017 07|2017
+09|2017
+One important model type of electric drives is referred to as the brushless direct current motor (BLDC motor). In
+BLDC motors commutation is electronic; depending on the rotor position, rotor rotation speed and torque. Rotor
+position and rotation speed can, for example, be detected using sensors (e.g. magnetic field sensors). The windings
+that generate the torque on the rotor are controlled via power semiconductors based on this position information.
+The electronic commutation avoids losses in BLDC motors, in contrast to motors with brush-based commutation.
+Because of their high energy efficiency and their low weight to power ratio, brushless direct current motors are
+frequently used among other things in battery-operated systems.
+Multicopters: Multicopters represent a relatively new application area with very large growth potential. The
+popularity of these remote-controlled aircraft has long grown beyond the ranks of hobby pilots, finding increasing
+utilization in commercial applications. Initial tests with delivery drones have already been conducted, focusing on
+use not only for parcel delivery but also for time-critical transportation of medication. In agriculture multicopters
+are already being used to monitor farm land. Multicopters require a large number of semiconductors for controlling
+their direct current motors, from microcontrollers to sensors, drivers and MOSFET power transistors, all the way to
+radio-frequency components for navigation, collision avoidance and communication. Additional power semicon-
+ductors are required for the charging stations.
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+for more efficient home appliances such as
+air conditioning systems
+The transition to controlled motors allows
+Power supplies for electric equipment essentially consist of two stages. First the power unit converts the alter-
+nating current (AC) from the grid into direct current (DC), referred to as AC-DC conversion. In a second step this
+direct current is precisely converted directly at the point of load to suit the respective requirements, for example,
+for the processor of a server. This second step is referred to as DC-DC conversion. Both stages require power
+semiconductors.
+Power supplies
+| 01
+Major home appliances
+Power tools: Millions of households worldwide rely on cordless power tools when it comes to making repairs. The
+end user's purchase decision is based on factors such as price, ruggedness, ease of use and length of battery time.
+Furthermore, diagnostic and safety features create trust in quality and operational safety. All these properties are
+highly dependent on the semiconductor solutions used.
+I see image 01
+34
+Growth drivers
+Finances and strategy
+More and more manufacturers are switching to controlled motors in order to increase the efficiency of their products,
+whether because of stricter efficiency regulations or to be able to offer the consumer more efficient devices with
+lower noise emissions and longer service lives. Applications in which a motor could only be switched on or off in the
+past are now making way for systems in which motor controls ensure load-driven speed control. Examples here are
+washing machine and dishwasher motors, refrigerator compressors and air conditioner fans. The underlying principle
+is simple: In order for a device to function efficiently, sensors constantly measure data, e.g. the temperature, air
+humidity and motor rotation speed of a refrigerator. A microcontroller then uses this data to calculate the optimum
+rotation speed. Power semiconductors amplify the control signals from the microcontroller and form the interface
+to the motor.
+36
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+I see image 02
+102
+MEMS (Micro-Electromechanical Systems) sensors: MEMS-based silicon microphones are our most important
+product family when it comes to sensors for mobile devices and consumer electronics. The latest generation of mobile
+devices requires several microphone variants with increasingly better signal-to-noise ratios. Superior acoustic
+capabilities are not only an opportunity for smartphone manufacturers to differentiate themselves from competi-
+tion, these capabilities also open the door to entirely new applications for high-performance microphones. Thus,
+for example, additional microphones significantly improve voice control even in environments with high levels of
+background noise and the sound quality during telephone calls. In addition, microphones with the highest technical
+requirements are installed next to the camera to ensure high audio quality when making video recordings with the
+smartphone. This summer we began providing our silicon microphones in our own package, which allows us to
+optimally adjust the package and membrane to one another, achieving even higher performance.
+In addition to the increasing number of devices and the higher number of microphones per device, we benefit most
+from the emergence of new application areas. Besides tablets, notebooks and headphones with active noise cancel-
+lation, voice-controlled smart speakers will become an important driver for future demand for silicon microphones.
+At the same time devices include more and more features that require detection of additional physical parameters,
+thus fueling demand for constant innovation not only in the area of MEMS sensors. Barometric pressure sensors, for
+example, support new features such as indoor navigation. Gas sensors can monitor air quality: A smartphone could
+thus, for example, warn the user about smog. Here we see enormous growth opportunities in the application areas
+of consumer electronics, automotive electronics and in the Internet of Things.
+Radar: RF technologies are also used for sensor applications. Besides automotive applications, we see many inter-
+esting possibilities in mobile devices and consumer electronics. For example, radar chips can be used to control
+devices precisely through gesture recognition technologies, opening up a new dimension for interaction between
+human beings and machines. Radar technologies are also used in industrial applications to detect persons and
+objects, making a wide variety of applications such as cooperative robots and intelligently controlled street lights
+possible.
+The performance of sensor systems can be further increased through sensor fusion (the intelligent combination of
+several technologies). More sensors capture even more information about the ambient conditions, thus providing
+additional context. One good example here is the already mentioned partnership with XMOS Limited: The interaction
+of radar sensors and silicon microphones from Infineon with audio processors and speech recognition algorithms
+from XMOS makes it possible to detect commands from individual persons even when they are surrounded by large
+groups and thus supports reliable voice control. The system uses radar to determine the position of people in the
+room, identifies the speaker and aligns the microphones for better detection. This helps avoid the detection of false
+commands, e.g. through the sound of the TV set.
+Mobile phones: Radio-frequency components are not only required in cellular base stations, but also in mobile
+devices. Every new smartphone generation needs to support a larger number of frequency bands. The transition
+from one mobile communications standard to the next entails that the requirements placed on signal quality and
+thus on the RF properties of many components also rise at the same time. The fourth-generation LTE (Long Term
+Evolution) transmission standard is, for example, significantly more complex than the third generation standard
+(UMTS). LTE-capable smartphones contain more RF components, which are at the same time more integrated than
+previous generations. Thus, for example, closely adjacent frequency bands require more precise frequency filters,
+more sensitive signal amplifiers and a larger number of faster antenna switches. Today's smartphones and tablets
+use among other things our RF CMOS switches for switching between different antennas. The degree of complexity
+will further increase with the transition to the 5G standard.
+Sensors for consumer electronics and industrial applications
+Network providers are looking to high-performance infrastructure in order to achieve higher data rates and to
+improve network coverage in preparation for the exponential increase in data volumes. The migration of network
+architectures to smaller cells makes it possible among other things to use higher frequency bands and to better
+exploit the available frequency spectrum. Radio-frequency components will be required both for communication
+between mobile devices and base stations and for wireless broadband connection of the local network to the
+main network (Wireless Backhaul).
+Growth drivers
+Mobile communications
+Sensing and data transmission
+> FACTS (Flexible AC
+Transmission Systems)
+DC-DC conversion: In the field of DC-DC conversion, intelligent point-of-load power management is becoming
+increasingly important. Servers, PCs and communication devices are supplied with higher voltages, which are then
+stepped down to the voltages needed directly at the processor. This is more practical, since as a rule a large number
+of different voltages is needed, while on the other hand direct supply with a lower voltage and high performance is
+technically not possible. The performance requirements of a processor range from a just few watts to over 100 watts.
+An additional growth driver is the digitalization of the control loop. The requirements regarding dynamic, efficiency
+levels and standby consumption are continuously growing. Analog control loops are increasingly meeting their
+limitations and are being replaced with digital systems.
+AC-DC conversion: Growth in the power supply sector depends on the performance and even more so on the
+unit growth of the devices. In addition to smartphones, for several years the highest unit growth has been found in
+the area of computer servers, a situation not expected to change in the foreseeable future. This is a result of the
+installation and expansion of data centers and cloud solutions for storing data of all types in the internet. The high
+demand here also means corresponding demand for the power semiconductors used in the associated power
+supplies. Demand for computing power and storage capacity is currently being driven by social networks; going
+forward the primary driver will be the Internet of Things and the Industrial Internet. Furthermore, we expect growth
+opportunities in business with compact chargers for tablets and lightweight notebooks (also called portables).
+However, we do not expect growth associated with PCs and notebook computers in the upcoming years.
+35
+The success of voice-controlled devices
+is driving demand for highly sensitive
+silicon microphones
+Finances and strategy
+Combined Management Report | Our Group
+G 16
+> Offshore wind farm
+HVDC lines
+1 Including motors, compressors, pumps and fans.
+Uninterruptable
+power supplies
+G see graph 17
+Cellular infrastructure: Radio-frequency (RF) power components form the foundation of modern communication
+technologies. One of the main application areas is cellular infrastructure. Mobile data traffic volumes are continu-
+ously increasing: While 8.8 exabytes (equivalent to 8.8 billion gigabytes) were transferred via cellular communications
+each month in 2016, experts expect 71 exabytes per month in the year 2022. In addition to the rise of data-intensive
+smartphone apps, the Internet of Things and connected vehicles will be key drivers of this development going
+forward.
+Infineon
+IM69D130
+There are two fundamental application areas for our security controllers: Classic applications such as payment
+cards, government IDs and public transportation tickets on the one hand, and on the other the rapidly growing field
+referred to as embedded security applications. This includes, for example, making mobile payment transactions
+secure, preventing the manipulation of computers and the authentication of connected devices. Here in particular
+the Internet of Things with all its facets promises long-term growth potential.
+Combined Management Report | Our Group
+The segments
+Automotive
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+The largest market for electric vehicles is China: Here the number of units manufactured in calendar year 2016
+increased by 51.7 percent to 517,000 units. Infineon does not only benefit from the growing number of vehicles but
+also from the increasing semiconductor content per car: Today, semiconductors worth US$695 are built into the
+average hybrid, plug-in hybrid- and electric vehicles, about twice the amount built into vehicles with a combustion
+engine only. For the value of power semiconductors in the powertrain we even expect a fifteen-fold increase. Power
+semiconductors have a significant influence on the vehicle's range and charging time, but also on its size and weight.
+This is why, for example, our EDT2 IGBTs and our Hybrid PACK™ DSC (Double Sided Cooling) modules, especially
+optimized for energy efficiency and ruggedness, are being particularly well received by the market. We won orders
+for our power semiconductors in the automotive sector during the 2017 fiscal year worth more than €1.5 billion,
+with projects running over a period of five to ten years. This is twice the amount of the previous year. In the future,
+our silicon carbide technology (SiC) will also contribute to growth. We assume that in the upcoming years more and
+more newly developed platforms will use components based on SiC - initially for on-board chargers, and from
+2021 onwards for the powertrain. Their considerably higher switching speed and lower conduction losses compared
+to silicon-based components makes conversion of electric power much more efficient and much more compact.
+Due to the reduced losses the cooling effort is lower as well. During the 2017 fiscal year interest in the samples of
+our CoolSIC™ power modules was strong.
+Infineon benefits more than other semiconductor manufacturers from both the trend towards electro-mobility and
+the rise of automated driving. Both developments lead to a strong increase in the average semiconductor content
+per vehicle and are expected to account for approximately one half of our growth in Automotive over the next five
+years. In addition, we benefit from new functions in the areas of lighting, comfort and safety as well as from the
+further electrification of the classic powertrain.
+More than 40 years of experience and the industry's most comprehensive portfolio of power semiconductors, sensors
+and microcontrollers make Infineon the leading provider of system solutions for automotive electronics. Following the
+guiding principle of "clean, safe and smart" the Automotive segment works on the vehicles of tomorrow together
+with manufacturers and their suppliers. Our focus is on the core of the car, e.g. drivetrain, safety and comfort. These
+domains feature the larger share of the semiconductor content. Some functions are enabled only through our pro-
+ducts. For example, we managed to significantly reduce system costs for radar sensor ICs through innovation, thus
+enabling, for example, the adoption of emergency braking assistant systems in the compact class. We succeed with
+outstanding technology, system understanding and a strong customer focus. Toyota, DENSO and Bosch, three of
+the leading companies in the automotive industry, presented Infineon with awards for outstanding quality during
+the 2017 fiscal year.
+SEGMENT RESULT
+€474 million
+€2,989 million
+REVENUE
+The Automotive segment in the 2017 fiscal year
+Automotive
+38
+The segments
+The segments
+Automotive
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Infineon uses its access and the relationship to its customers to market security products and offer them in combi-
+nation with other components as system solutions. We see our opportunity in this area in the field of hardware-
+based security in the form we offer with our security controllers - either as an individual component or in the form
+of a feature integrated in our automotive or industrial microcontrollers: Our hardware-based security solutions have
+put us in the lead position. Furthermore, we can offer our customers the broad expertise of the Infineon Security
+Partner Network, covering the entire value chain from consulting and design all the way to system integration and
+service management.
+Security as cross-segment expertise
+The Internet of Things refers to devices and machines connected to the internet, thus enabling data exchange and
+device control (for example, home appliances, electricity meters, sensors, webcams). The trend towards increased
+levels of networking is having the greatest impact in the areas of automotive, Industrial Internet, Smart Home and
+information and communications infrastructure. Here security plays a decisive role. The increasing number of hack-
+ing attacks underlines the importance of the appropriate precautions. In order to secure electronic systems, it
+is important that only authorized and authenticated devices are connected with one another so that they can be
+protected against data manipulation and cyberattacks. Security thus has to be ensured at as many critical end-
+points as possible, often referred to in this context as the topic of embedded security. Infineon supplies the OPTIGAT
+product family of various security chips and security solutions for authentication of electronic systems: From
+complex IT infrastructures with large numbers of servers and computers all the way down to routers and tablets.
+Security for the Internet of Things
+Today payment services can be integrated into mobile devices thanks to the development of smartphones and
+wearables, the mobile internet and Near Field Communication (NFC) technologies. However, cash-free payment
+is only one of the many mobile device functions involving the storage and processing of sensitive information. For
+example, people are experiencing new forms of comfort when travelling on public transportation with mobile tickets
+instead of using coins and physical tickets. Infineon supplies the security chip, known as the Secure Element (SE),
+for all these applications. The SE can either be built into the smartphone (referred to as "embedded SE" (eSE)), inte-
+grated in a SIM card or located on a microSD card. Infineon offers the necessary solutions for all three alternatives.
+Security for mobile devices
+Government IDs include passports, national identity cards and in the broader sense driver's licenses and health care
+cards. These documents are increasingly being equipped with security chips. The market penetration of chip-based
+official government documents is steadily on the rise. More and more countries are making the transition to the
+chip-based documents or increasing the range of such documents in use. Infineon is the leading provider of security
+solutions for ID projects in Europe. Furthermore, according to the US Government Printing Office (US GPO) Infineon
+is one of the main suppliers for the security technologies used in electronic passports in the USA. Infineon has been
+supplying the US GPO since the beginning of the project in 2005.
+Government identification documents
+Market position
+Security
+37
+Growth drivers
+Finances and strategy
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+The world market for IGBT-based power semiconductors – discrete IGBT power transistors and IGBT modules -
+reached US$4.392 billion in the 2016 calendar year, an increase of 3.9 percent compared to the previous year's
+value of US$4.229 billion (Source: IHS Markit). Infineon was able to further improve its leadership position with a
+market share of 26.6 percent (an increase of 1.2 percentage points). The five largest market players together
+accounted for a market share of 69.5 percent.
+ON Semi-
+World IGBT-based power semiconductor
+Furthermore, the market introduction of our silicon carbide (SiC) MOSFET technology went very well. The first avail-
+able product of the CoolSiCTM family is our Easy 1B module which we have been offering since the end of the previous
+fiscal year. In the 2018 fiscal year we will expand the product portfolio to include bare die and discrete MOSFETS.
+Two of the leading manufacturers of PV inverters, SMA and KACO, have already decided to rely on our MOSFET tech-
+nology in upcoming device generations. Here SiC enables more compact and lighter systems and thus creates value
+for our customers. We are excellently positioned to benefit from the dynamic of the SiC market. Nevertheless, the
+market for IGBT-based power semiconductors is and will remain significantly bigger in the foreseeable future. Thus,
+we are striving to expand our market leadership here through further innovation. Our comprehensive product port-
+folio lets us address both price-sensitive and high-end applications with tailored solutions.
+The trend towards the electrification of industrial and delivery vehicles also continued in the 2017 fiscal year. The
+electronic components in these vehicles are exposed to strong temperature fluctuations, vibrations and dirt. This
+means that in addition to efficiency and power density, the ruggedness and reliability of our components are strong
+sales arguments for our customers. The same is true for hybrid and electric busses. For example, several tens of
+thousands of electric busses are already driving on the streets of China with modules from Infineon - and the number
+continues to grow.
+Revenue development
+In the Industrial Power Control segment Infineon recorded revenue of €1,206 million in the 2017 fiscal year, an
+increase of 13 percent compared to €1,072 million revenue in the previous year. The segment contributed 17 percent
+of Group revenue.
+The revenue increase was primarily driven by the household appliance business. The main reasons were first of
+all the high demand for air conditioners in Asia and Eastern Europe, second the increase in our supply share
+with important Asian customers, and third the market success of our compact, highly-integrated IGBT modules,
+referred to as IPMS (Intelligent Power Modules) and the members of our iMOTION™ product family. Furthermore,
+the depletion of previous excess inventories at Chinese household appliance manufacturers resulted in additional
+positive effects.
+The second largest source of revenue increase was components for renewable energy (wind and photovoltaics).
+Both of these business areas have approximately the same size in terms of revenue. The wind turbine and PV
+inverter businesses were both primarily driven by the installation of new capacities in China, where government
+measures are supporting the high development targets.
+Revenue and Segment Result
+of the Industrial Power Control segment
+€ in millions
+1,072
+1,206
+LL
+133
+183
+G see graph 16
+2016
+Revenue
+Segment Result
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+The segments
+Industrial Power Control
+43
+Development of Segment Result
+Segment Result was €183 million, representing an increase of 38 percent compared to the previous year's Segment
+Result of €133 million. The Segment Result Margin was 15.2 percent (previous year: 12.4 percent).
+Segment Result was positively impacted mainly by the increased revenue. Furthermore, in the 2017 fiscal year
+the temporary ramp-up costs for the frontend manufacturing facility Kulim 2 (Malaysia) were lower than in the
+previous year.
+Applications
+Energy generation
+> Energy storage
+> Photovoltaic systems
+> Wind power turbines
+2017
+G 17
+42
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+market share 2016
+Infineon
+Mitsubishi
+Fuji Electric
+39
+conductor
+Semikron
+26.6%
+17.0%
+12.2%
+7.1%
+6.6%
+Source: Based on or includes content supplied by IHS Markit, Technology Group,
+"Power Semiconductor Annual Market Share Report", August 2017.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Industrial Power Control
+Combined Management Report | Our Group
+Power Management & Multimarket
+44
+Power Management &
+Multimarket
+The Power Management & Multimarket segment
+in the 2017 fiscal year
+SEGMENT RESULT
+REVENUE
+€2,148 million
+€427 million
+The Power Management & Multimarket segment includes business with power semiconductors for power supplies,
+components for cellular infrastructure and mobile devices as well as high-reliability components for applications
+in harsh environments.
+Infineon is the clear number one in the global MOSFET market. In addition to leading technology for low-voltage
+(up to 40 volts), mid-range (from 40 to 500 volts) and high-voltage applications (over 500 volts), our broad product
+portfolio also includes the corresponding drivers and controllers. The target applications typically require the highest
+possible energy efficiency and power density. The products from Power Management & Multimarket set standards
+here. One important application area in the low-voltage sector is DC-DC power supplies for servers. We are excel-
+lently positioned here with our system solution for digital voltage regulation. Digital control loops allow for higher
+efficiency at both low and high load levels. Our solution comprises an integrated power stage as well as digital
+controllers that comply with the standard specifications (VR12.5, VR13) and which are used by the leading server
+manufacturers. Furthermore, we are very successful in low-voltage applications with our OptiMOS™ family. For
+example, these components are required to control DC motors like they can be found in battery-powered devices.
+Our highly successful CoolMOST family for high voltages is typically used in AC-DC power supplies, for example,
+for servers, desktop PCs, notebooks and televisions. Our broad portfolio ranges from cost-optimized variants
+for price-sensitive markets all the way to especially high-performance components for high-end devices. Based
+on our position as the clear MOSFET market leader, we also intend to strengthen our competencies in power control
+going forward.
+During the previous fiscal year, first customers have begun to successfully use our gallium nitride (GaN) technologies
+in AC-DC applications, in particular in high-performance power supplies for data centers. The products of the
+CoolGaN™ family enable better conversion efficiency at lower system costs and with more compact system designs.
+The transition to GaN requires the customer to make modifications to system architecture. We support them with
+our far-reaching system understanding.
+The trend towards mobile devices containing more and more sensors is continuing. Our technology portfolio puts
+us in an excellent position here, too. For example, since last summer we also offer our silicon microphones in a
+package that we have developed ourselves. This enables us to optimize the interaction of membrane and package,
+and thus increase sensitivity while reducing noise. Infineon's own Dual Backplate technology has doubled the
+distance at which the microphone can clearly detect voice commands from a user. Besides addressing the unabated
+demand for silicon microphones from the smartphone sector, we are now also able to tap the growth potential of
+voice-controlled devices due to the outstanding characteristics of our products. Going forward we will also benefit
+from our strategic investment in XMOS Limited, a speech recognition technology specialist. With this step we have
+intensified our already existing partnership and will gain access to technological information at a level of detail that
+would otherwise not be possible. This will give us an even better understanding of the interaction of sensors, pro-
+cessors and algorithms and will strengthen our position in a promising market that we are already addressing today
+with leading MEMS technology. We are also continuously expanding our product portfolio for radar-based sensors.
+These sensors are used in mobile devices as well as in industrial applications such as robots and multicopters in
+order to detect obstacles. They also play an increasingly important role in the interaction between humans and
+machines and are used, for example, in gesture recognition.
+The segments
+G see graph 14
+G14
+The ever-increasing degree of automation in vehicles also implies that vehicles are getting more and more connected.
+This allows for many new services, but at the same time digitization also entails the danger of unauthorized access
+by third parties. This entails the need to securely exchange data both between various on-board systems as well as
+with other vehicles and the infrastructure. We offer the right solutions for a safe and secure vehicle architecture
+with our IT security expertise and the security controllers of the Chip Card & Security segment.
+Infineon was able to improve its number one position for automotive power semiconductors by 0.4 percentage points
+to reach a 25.6 percent market share. Infineon retained its market share for microcontrollers almost unchanged at
+8.7 percent (previous year: 8.6 percent). Infineon gained 0.6 percentage points of market share for sensors to reach
+12.5 percent and thus strengthened the number two position. Infineon is hardly represented or not represented at
+all in the remaining product categories, including memory, optical components and non-power-related analog ICs.
+While the market leader NXP lost 0.2 percentage points in market share (from 14.2 percent to 14.0 percent), Infineon
+gained 0.3 percentage points (from 10.4 percent to 10.7 percent). Renesas lost market share for the fourth year
+in a row and in 2016 dropped under the 10 percent mark to 9.8 percent. The five largest market players together
+accounted for a market share of 49.7 percent.
+The world market for automotive semiconductors surpassed the US$30 billion mark for the first time ever in the
+2016 calendar year. It increased from US$27.363 billion in the 2015 calendar year by 10.4 percent to US$30.214 billion
+(Source: Strategy Analytics). All regions contributed significantly to growth. The fastest growing region was China,
+as has been the case in previous years. With a growth rate of 18.8 percent the Chinese market reached a volume of
+US$5.556 billion, putting it only slightly behind the North American market (US$5.745 billion), which grew by
+6.4 percent. China will most likely advance to become the second-largest market for automotive semiconductors in
+the 2017 calendar year. Europe, the largest market (US$9.858 billion) grew by 8.3 percent. While global vehicle pro-
+duction increased by approximately 5 percent, the value of semiconductors per vehicle increased by approximately
+6 percent. This trend was already evident in previous years and can be expected to continue in upcoming years.
+This means the growth of the automotive semiconductor market will be driven increasingly by the equipment of the
+vehicles (primarily by driver assistance systems) and the transition to electro-mobility, and less so by increases in
+vehicle manufacturing volumes.
+Market position
+page 40
+G see graph 15
+41
+Automotive Industrial Power Control
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares",
+April 2017
+7.4%
+7.8%
+9.8%
+10.7%
+14.0%
+electronics
+STMicro-
+Instruments
+Texas
+Renesas
+Infineon
+NXP
+World automotive semiconductor market share 2016
+G 15
+software manipulation
+> Protection against
+manipulation (e.g. odometer)
+Industrial Power Control
+REVENUE
+€1,206 million
+SEGMENT RESULT
+€183 million
+The Industrial Power Control segment in the 2017 fiscal year
+Robotics
+Charging stations
+for electric vehicles
+› Trams
+> Metro trains
+> Locomotives
+> High-speed trains
+Traction
+> Rolling mills
+> Materials handling
+> Escalators
+> Elevator systems
+› Drives
+> Automation technology
+> Air conditioning
+technology
+> Protection against
+Industrial drives¹
+› Construction vehicles
+> Forklifts
+> Agricultural vehicles
+Industrial vehicles
+> Refrigerators
+> Washing machines
+> Microwave ovens
+> Induction cooktops
+> Air conditioners
+> Dishwashers
+Home appliances
+Energy consumption
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+We saw very high levels of demand for power semiconductors across all regions and applications in the 2017 fiscal
+year. Business with components for major home appliances developed particularly well, for example, with air condi-
+tioners and refrigerators. More and more manufacturers are making the transition to inverterized motors in which
+the rotation speed adjusts to the respective current load situation (Variable Speed Drives or VSDs). This principle
+implies a different motor design which allows for more efficient operation. Our motor control platform ¡MOTION™,
+the second generation of which we introduced in the last fiscal year, is specifically designed to meet the require-
+ments of VSD applications: It combines hardware in various levels of integration with software. Entirely in keeping
+with our strategic "Product to System” approach, we are reducing our customers' system costs by up to 30 percent
+in spite of increasing semiconductor content while also shortening the time to market. Consumers benefit from
+lower electricity bills and higher comfort. Therefore, this product is in high demand.
+The core competency of the Industrial Power Control segment is the efficient conversion of electric energy along
+the entire value chain: generation, transmission and consumption. Applications range all the way from wind turbines
+and HVDC (high-voltage direct current) transmission to the household refrigerator. The product portfolio includes
+discrete IGBTs, unpackaged IGBT components (the so-called bare die business), IGBT modules, drivers and controllers
+as well as the combination of drivers and switches in what are called Intelligent Power Modules (IPMs). Infineon is
+the global market leader for IGBT-based power semiconductors (discretes and modules).
+> Hybrid busses
+Another important growth driver is the increasing number of Advanced Driver Assistance Systems (ADAS). These
+systems support the driver in an increasingly demanding variety of tasks: Passive systems such as the seatbelt
+tensioners or airbags mitigate the impact of a collision; active systems such as emergency braking assistants even
+intervene without human intervention in the driving process in order to prevent collisions. The next level is cars
+that will drive autonomously - at first on a partially-automated basis in certain environments, and then completely
+autonomous in all traffic situations. The first models, which are able to park by themselves, are already on the
+market. Infineon provides a comprehensive product portfolio for all the sub-tasks performed by assistance systems:
+sense (sensors), compute (microcontrollers) and actuate (power semiconductors).
+authentication
+> Digital tachograph
+safety systems
+› Airbag
+Assistance systems and
+Applications
+The Segment Result was positively impacted by the higher revenue as well as by improvements in productivity.
+In addition, in the 2017 fiscal year the temporary ramp-up costs for the frontend manufacturing facility Kulim 2
+(Malaysia) were lower than in the preceding year. We are preparing for more growth due to the high demand for our
+products in the area of electro-mobility. In this context we have begun to set up additional backend manufacturing
+lines in Warstein (Germany) and Wuxi (China), resulting in temporary ramp-up costs.
+Segment Result was €474 million, representing an increase of 31 percent compared to the previous year's Segment
+Result of €363 million. The Segment Result Margin was 15.9 percent (previous year: 13.7 percent).
+Development of Segment Result
+Global demand for upper mid-range vehicles - especially for SUVs (Sport Utility Vehicles) - remained high. This
+vehicle type is specially equipped with significantly more safety and comfort features than other vehicles. We
+furthermore benefited from the fact that vehicles from German automobile manufacturers, in particular premium
+brands, were in particularly high demand across all regions.
+Demand for radar sensor ICs increased on the one hand due to the growing market penetration of radar-based driver
+assistance systems, and on the other hand due to the rising number of radar sensors per vehicle. In particular,
+demand for our 77 gigahertz radar solutions for driver assistance systems remained high. At present Infineon is one
+of the leading suppliers to the most important radar system manufacturers in Europe, North America and Asia.
+Because of the increasing demand for 77 gigahertz radar sensor ICs we sold approximately twice as many as in the
+preceding fiscal year.
+40
+40
+Automotive
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2017
+Segment Result
+2016
+363
+474
+2,656
+2,989
+Revenue
+€ in millions
+of the Automotive segment
+Revenue and Segment Result
+The spread of driver assistance systems associated with automated driving resulted in increased demand for our radar
+sensor ICs and for our 32-bit multi-core microcontrollers of the AURIXTM family. AURIXTM microcontrollers benefited
+from customer orders in the area of safety systems acquired in the previous years - including electrically controlled
+power steering as well as camera-based driver assistance systems - and achieved a significant revenue increase
+once again in the 2017 fiscal year. Infineon traditionally has a strong position with 32-bit microcontrollers in the
+powertrain sector. With the development of corresponding 32-bit microcontroller derivatives, Infineon is now also
+addressing the area of safety and driver assistance systems, thus acquiring new growth markets.
+We grew in all product categories during the last fiscal year. This was to a certain degree based on emission reduc-
+tion in vehicles with combustion engines as well as on new comfort features; the megatrends electro-mobility and
+automated driving were however the most significant growth drivers, as has been the case in previous years. In
+China in particular the number of vehicles produced and registered featuring plug-in hybrid or purely electric drives
+continues to grow rapidly. Sales of electric vehicles also increased in the other regions, primarily due to a wider
+variety of available models by which new groups of buyers could be addressed.
+In the Automotive segment Infineon recorded revenue of €2,989 million in the 2017 fiscal year, an increase of
+13 percent compared to €2,656 million revenue in the previous year. The segment contributed 42 percent of the
+Group revenue.
+Revenue development
+> Anti-blocking system
+> Automatic parking
+> Autonomous emergency
+braking system
+› Blind spot detection
+> Communication (car-to-car,
+car-to-infrastructure)
+Security
+> Transmission control
+> Start-stop system
+› Generator control
+> Electric motor control
+> Combustion engine control
+› Battery management
+› Battery charging control
+> Alternator control
+Powertrain
+> Windshield wipers
+> Suspension
+› Sunroof
+> Original spare parts
+> Steering
+> Lighting
+> Hatch door
+> Electronic seat adjustment
+> Electronic control units
+> Door electronics
+> Air conditioning
+Comfort electronics
+> Tire pressure monitoring system
+> Lane departure warning system
+> Electronic stability control
+> Electronic power steering
+> Electronic chassis control
+> Distance warning systems
+> Cruise control
+> Power window
+Energy transmission
+There was no major change in revenues in the other areas, including traction, uninterruptable power supplies,
+energy transmission and industrial vehicles.
+In the largest business segment, industrial drives, overall there was a slight decline in demand. While individual
+industrial applications, for example, small drives or bulk processing, referred to as discrete factory automation,
+experienced revenue increases, other high-power applications such as oil and natural gas production stagnated
+or even declined.
+- Assembly and package technology for
+SiC modules
+Hong Kong
+Shanghai
+- IGBT stack assembly
+BE
+- Application development
+sales, research and
+development
+BE
+Manufacturing
+FE = Frontend
+Backend
+Beijing
+China
+sales
+Blackburn
+Australia
+Main competence areas in
+research and development
+General function
+Asia-Pacific
+Locations
+Combined Management Report | Our Group
+Asia-Pacific
+sales
+Shenzhen
+distribution center, sales,
+research and development
+sales
+- Application development
+sales
+Nagoya
+Japan
+- Power ICs
+BE
+Batam
+- Discrete semiconductors
+- Power semiconductors
+- IGBT modules
+Indonesia
+- Design flow and library development
+- Software and system development
+sales, research and
+development
+Bangalore
+India
+- Application development
+sales, research and
+development
+Xi'an
+Chip card modules
+BE
+Wuxi
+50
+- IGBT modules
+BE
+BE = Backend
+sales
+Moscow
+Russian Federation
+- Mixed-signal and RF ICS
+-Chip card ICs
+- Power ICs
+research and development
+Bucharest
+service function
+Spain
+Porto
+Romania
+- Driver ICs for motion control
+- Power ICs
+research and development
+research and development
+Pavia
+Padova
+sales
+Milan
+- Package pathfinding
+Portugal
+Barcelona
+sales
+Madrid
+Manufacturing
+FE = Frontend
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+GRI G4-17
+sales
+Istanbul
+Turkey
+sales
+Rotterdam
+Lidar sensors
+research and development
+Nijmegen
+The Netherlands
+sales
+Zurich
+Switzerland
+sales
+Kista
+Sweden
+sales
+Osaka
+sales
+Tokyo
+sales
+- HiRel power components
+BE
+- HiRel power components
+sales, research and
+development
+Leominster
+sales
+sales
+Lebanon
+Kokomo
+- Package platforms
+- Components for space and aviation
+sales, research and
+development
+distribution center
+Hayward
+El Segundo
+of GaN components
+research and development - development and characterization
+Chandler
+USA
+- Power semiconductors
+BE
+- HiRel power modules
+Tijuana
+- HiRel power modules
+sales
+- Power semiconductors
+FE
+Temecula
+Tewksbury
+Torrance
+Warwick
+- HiRel hybrid modules
+BE
+- Power semiconductors for space,
+aerospace, defense and high-temperature
+applications
+research and development
+San Jose
+- RF power transistors
+BE
+- RF power transistors
+- Epitaxy
+FE
+sales
+research and development
+regional headquarters, sales
+research and development - Epitaxy
+Morrisville
+Mesa
+Milpitas
+Morgan Hill
+Livonia
+- Package concept development
+Mexico
+São Paulo
+research and development
+Philippines
+Muntinlupa
+Singapore
+- Discrete semiconductors
+- Power semiconductors
+BE
+- Package technology
+research and development
+- Power semiconductors
+FE
+- Package derivatives
+research and development
+Ipoh
+Kulim
+Melaka
+Malaysia
+- System solutions for automotive electronics
+- System integration for power
+semiconductors
+sales, research and
+development
+- IGBT modules
+BE
+Cheonan
+Seoul
+Korea
+- Interface to subcontractors
+sales
+Taiwan
+GRI G4-17
+Brasil
+52
+52
+Manufacturing
+FE = Frontend
+BE Backend
+Main competence areas in
+research and development
+General function
+Americas
+Locations
+Combined Management Report | Our Group
+Americas
+51
+BE - Competence center for final test
+- ICs
+- Sensors
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+sales
+- Test concepts
+- IC, software and system development
+- Package technology
+regional headquarters,
+distribution center, sales,
+research and development
+Taipei
+research and development
+research and development
+research and development
+- Microcontroller systems for automotive
+applications
+Italy
+market share 2016
+World microcontroller-based chip card ICs
+G 21
+During this period Infineon was the fastest growing of all market players, gaining 0.9 percentage points in market
+share to reach a new market share of 24.8 percent (previous year: 23.9 percent). Infineon now once again holds the
+number 1 position. The five largest market players together accounted for a market share of 85.0 percent.
+The world market for microcontroller-based chip card ICs includes contact-based and contactless ICs for applica-
+tions in SIM cards, payment cards, governmental identification documents, access control, transport and machine-
+to-machine communication. This market shrank by 1.8 percent in the 2016 calendar year, from US$2.84 billion in
+calendar year 2015 to US$2.79 billion (Source: IHS Markit).
+Market position
+G see graph 21
+Ticketing, access control
+Trusted Computing
+Infineon
+> NFC-based contactless
+payment
+> Credit/debit cards
+Payment systems
+> Machine-to-machine
+communication
+> High-end SIM cards
+› Conventional SIM cards
+Mobile communications
+> Smart Home
+> Industrial Internet
+(Industry 4.0)
+> IT
+> Mobile payment
+NXP
+Samsung
+STMicro-
+research and development - Chip card applications
+Main competence areas in
+research and development
+General function
+Graz
+Austria
+Europe
+Locations
+Europe
+Locations
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Source: Based on or includes content supplied by IHS Markit, Technology Group,
+"Smart Cards Semiconductors", July 2017.
+9.3%
+10.5%
+16.2%
+24.2%
+24.8%
+CEC Huada
+electronics
+> Connected driving
+Internet of Things
+> Passports
+> National identity cards
+2016
+124
+135
+708
+703
+€ in millions
+of the Chip Card & Security segment
+Revenue and Segment Result
+G 20
+Demand for our TPM solutions increased considerably, driven by their use in computers, servers and a variety of
+connected devices. A similar trend was visible for our authentication solutions.
+On the other hand it was very gratifying to see the development of demand for our security solutions for embedded
+SIM, TPM (Trusted Platform Module) and authentication. Our embedded SIM solution, used mainly in eCall vehicle
+applications, achieved the highest revenue growth, almost doubling the previous year's level. In this context we are
+benefitting from legal requirements that all new cars sold in Europe must have an emergency call (eCall) function
+starting in March 2018. The automotive industry has however already begun equipping many new cars with an
+eCall function this year.
+A number of smartphones and smartwatches equipped with our embedded Secure Element (eSE) security chip were
+partly replaced by new models during the 2017 fiscal year. As a result this area experienced the segment's largest
+drop in revenue. It was not possible to compensate for these losses because only a small number of manufacturers
+are active in the market with only a small number of products.
+Business with payment cards is still mainly subject to developments in China and USA markets. The initial roll-out
+phase was already concluded towards the end of the previous year; now replacement business is following. On the
+whole payment card market development was weaker than forecast for the 2017 fiscal year. Nevertheless, it was
+possible to keep revenue at almost the same level achieved previously.
+As in the previous year, business with governmental identification documents contributed the largest amount to
+revenue growth. Business with replacement documents is significantly increasing due to the high penetration of
+chip-based documents in many countries around the world. In addition, more and more countries are introducing
+additional chip-based documents.
+In the Chip Card & Security segment Infineon recorded revenue of €708 million in the 2017 fiscal year, an increase
+of 1 percent compared to €703 million in revenue for the previous year. The segment contributed 10 percent of the
+Group revenue.
+Revenue development
+In an increasingly connected world the idea of security can no longer be limited to the protection of stored infor-
+mation, but rather has to include protection during data transmission as well. This is why Embedded Security is
+becoming increasingly important in the era of the Internet of Things. Hardware-based security solutions are necessary
+in order to authenticate components or even entire systems and to ensure the integrity of information. This is the
+only way to effectively protect against unauthorized access to mobile devices such as laptops, tablets and wearables,
+as well as to information and communications infrastructure and industrial facilities. In this context, solutions that
+are easy to implement - such as our successful OPTIGATM Trusted Platform Module and OPTIGA™ Trust chip families -
+are particularly attractive to our customers. With our software and system expertise we are able to provide reference
+designs. In addition, we offer support in the certification of security solutions and provide software that is closely
+related to our security controllers (for example, firmware, driver software and hardware-related application software).
+These services reduce our customers' development expenses and accelerate the time to market of their products.
+G see graph 20
+47
+2017
+Manufacturing
+FE = Frontend
+Revenue
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+> Healthcare cards
+> Driver's licenses
+Government identification documents
+> Protection against manipulation
+(e.g. odometer, digital tachograph)
+> Electronic toll collection
+> Connected vehicles (e.g. eCall,
+car-to-car, car-to-infrastructure)
+Automotive
+› Spare parts
+> Industrial control systems
+Applications
+The Segment Result was €124 million, a decline of 8 percent compared to the Segment Result of the previous year
+of €135 million. The Segment Result Margin was 17.5 percent (previous year: 19.2 percent). The Segment Result
+was impacted primarily by increased operating expenses. This includes on the one hand the increase in headcount
+in the areas of research and development, administration and sales, which started in the previous year, and on the
+other hand higher development expenses due to a larger number of customer projects and the expansion of the
+product portfolio. These activities were partly already initiated in the previous year and represent an adjustment of
+our organizational structure to the strong increases in revenue experienced in recent years.
+› Game consoles
+› Accessories
+Authentication
+48
+Development of Segment Result
+Chip Card & Security
+The segments
+Combined Management Report | Our Group
+Segment Result
+BE = Backend
+- Power semiconductors
+- Sensor products
+Klagenfurt
+Linz
+Vienna
+- Sensors
+BE -Chip card modules
+- Power semiconductors
+- Power semiconductors
+- Analog and mixed-signal components
+FE - Radio-frequency
+- Technology development for sensors
+Competence center for preassembly and
+package development
+research and development
+49
+sales
+Neu-Isenburg
+Regensburg
+- Power electronics
+- IC, software and system development
+for microcontrollers, ASICS, sensors
+and chip card ICs
+Design flow and library development
+- Technology integration
+for embedded systems
+- Hitex software development tools
+sales, research and
+development
+headquarters, sales,
+research and development
+distribution center
+sales
+- IGBT modules
+Neubiberg
+near Munich
+Warstein
+- Product development IGBT modules
+-Assembly and package technology for
+IGBT modules
+logistics
+Dublin
+Ireland
+Cegléd
+Hungary
+sales, research and
+development
+research and development
+Reigate
+Bristol
+Great Britain
+Main competence areas in
+General function
+Europe
+Locations
+Combined Management Report | Our Group
+- SiC modules
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+GRI G4-17
+Combined Management Report | Our Group
+BE
+sales, research and
+development
+research and development
+Hanover
+Karlsruhe
+- System-on-chip development
+France
+Espoo
+-SiC and GaN technology
+- Power semiconductors
+sales
+Finland
+- HiRel products
+research and development
+Herlev
+Denmark
+- Competence center for thin-wafer and
+compound semiconductor technologies
+FE
+- Power semiconductors, analog and
+mixed-signal ICs and sensors
+sales, research and
+development
+Villach
+sales
+- RF ICs
+research and development
+service function
+Le Puy-Sainte-
+Groẞostheim
+research and development
+Réparade
+- Power semiconductors
+sales
+Erlangen
+sales, research and
+development
+Duisburg
+- 200 mm and 300 mm
+manufacturing
+FE
+- CMOS derivative technologies for RF
+and sensors, among others
+research and development
+Dresden
+- Software for chip card applications
+research and development
+sales
+Ditzingen
+Augsburg
+Germany
+sales
+Toulouse
+sales
+Saint-Denis
+- Power ICs
+- DC-DC converter, driver ICs and power ICs
+- Control ICs for digital power management
+- Digital power management solutions
+for DC-DC power stages
+GRI G4-17
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Renesas
+Toshiba
+STMicro-
+electronics
+26.4%
+13.4%
+9.2%
+7.5%
+7.3%
+Source: Based on or includes content supplied by IHS Markit, Technology Group,
+"Power Semiconductor Annual Market Share Report", August 2017.
+Combined Management Report | Our Group
+The segments
+Power Management & Multimarket | Chip Card & Security
+Applications
+Combined Management Report | Our Group
+46
+Charging stations
+for electric vehicles
+DC motors
+> eBikes
+> DIY tools
+(cordless screwdrivers, etc.)
+> Multicopters
+› Pedelecs
+HiRel
+› Commercial aviation
+> Defense technologies
+> Oil and natural gas exploration
+› Space systems
+> Submarine telecommunications
+cables
+46
+The segments
+Power Management & Multimarket
+45
+Chip Card & Security
+ON Semi-
+conductor
+Infineon
+World standard power MOSFET market share 2016
+G 19
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2017
+Segment Result
+2016
+427
+354
+LI
+2,148
+2,041
+Revenue
+€ in millions
+of the Power Management & Multimarket segment
+45
+G see graph 18
+Revenue development
+In the Power Management & Multimarket segment Infineon recorded revenue of €2,148 million in the 2017 fiscal
+year, an increase of 5 percent compared to €2,041 million revenue in the previous year. The segment contributed
+31 percent of the Group revenue.
+The revenue increase was driven by our power semiconductor business. This includes our business segments for
+AC-DC power supplies and DC-DC power supplies, both of which have grown double-digit.
+Our OptiMOS™ power transistors for the low- and mid-range voltage classes benefitted from the rising number
+of applications with DC motors, in particular with brushless DC motors. Examples here are battery-powered
+do-it-yourself tools as well as multicopters for transport, agriculture and leisure. At the same time demand for our
+OptiMOS��� power transistors remained high in applications without motors, for example, in PV inverters and in
+DC-DC power supplies with digital control loops in servers. Here, besides our OptiMOSTM low-voltage power transis-
+tors our control ICs and driver ICs are benefiting as well.
+LED and conventional
+lighting systems
+The revenue boost for AC-DC power supplies came on the one hand from a positive economic environment across
+all application areas and on the other hand from a significant expansion in the model range of our high-voltage
+power transistors in the CoolMOST family. The technological lead demonstrated by these products is reflected
+among other things in the outstanding market success of our products in the equipping of electric vehicle charging
+stations in China. The highest demand for CoolMOSTM products is however for power supplies of all types, in particu-
+lar for high-efficiency power supplies used for servers in data centers.
+As in past years, network business, in particular with the fourth generation (LTE), was dominated by activities in
+China. Here, infrastructure investments declined, resulting in revenue below the previous year's level in this area.
+Development of Segment Result
+Segment Result was €427million, representing an increase of 21 percent compared to the previous year's Segment
+Result of €354 million. The Segment Result Margin was 19.9 percent (previous year: 17.3 percent).
+Segment Result was positively impacted by the higher revenue. Furthermore, the temporary ramp-up costs for the
+frontend manufacturing facility Kulim 2 (Malaysia) were lower in the 2017 fiscal year than in the previous year.
+G 18
+Revenue and Segment Result
+The weakness in the area of smartphones which appeared in the second half of the 2016 fiscal year continued until
+the middle of the 2017 fiscal year. Demand did not recover until the second half of the fiscal year. Nevertheless
+there was still a drop in revenue for this business over the entire 2017 fiscal year.
+Power management
+The segments
+> Home appliances
+2016
+2017
+11.0%
+Percentage of revenue
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our Group
+H
+Research and development
+P see page 42
+One focus point of our research is in the area of sensor systems. Sensors capture the real, analog world. The signals
+measured are first digitized and then processed, transmitted and stored as digital values in accordance with the
+requirements of the intended application. Infineon has almost 40 years of experience in sensor design and sensor
+manufacturing and offers the most comprehensive portfolio of pressure and magnetic field sensors for automotive
+applications.
+Furthermore, manufacturing technologies and transistor architectures for power semiconductor components
+based on new materials are an important future-oriented focus area of our research and development activities.
+In May of the concluded fiscal year we brought our first MOSFET power transistor based on silicon carbide (SiC) to
+the market with resounding success. Within the shortest period of time our customers have committed to projects
+with us comprising an order value in the low three-digit million euro range. Our current main product is a 1,200-volt
+SiC module (see also the chapter "The segments - Industrial Power Control"). The main applications are PV inverters
+as well as the infrastructure for electro-mobility, in particular fast charging stations. These successful projects show
+that the terminated acquisition of Wolfspeed in February 2017 has not had any detrimental impact on our business
+in this application area. While preparing for the acquisition we accelerated development of the SiC trench MOSFET
+in order to complete the next technological step. Furthermore, an initiative was launched aiming at accelerating
+our SiC-related developments and thus the market launch of our own products. New positions were created in all
+regions and all functional groups (Technology Development, Quality Management, Sales, Application Engineering)
+for this purpose. Our future development activities in the area of SiC will focus on expanding the product portfolio,
+both in terms of additional form factors (i.e. the package and the topologies in the modules) and in terms of higher
+voltage classes (for example 1,700 volts). Additionally, we are working to qualify these components for use in electric
+vehicles. Some examples of applications here are onboard battery charging units as well as the main inverter for
+the powertrain in the mid to long term.
+I see image 03
+We have also made significant progress in the area of gallium nitride (GaN). Initiated almost three years ago, the
+program developing products based on what is referred to as an Enhancement Mode (e-Mode) GaN transistor
+has reached another milestone: In the concluded fiscal year we brought the first products of our CoolGaN™ family,
+a variety of 600-volt GaN power transistors, to the market. They have already generated first revenue.
+The main applications for these GaN products are power supplies optimized for the highest possible efficiency for
+use with high-performance servers in data centers. With ratings of up to 3,000 watts, power supplies using GaN
+can be designed differently from silicon-based power supplies. Depending on the configuration, this can help realize
+system cost advantages. The higher efficiency reduces cooling effort and cuts the cost of heat sinks and air condi-
+tioning. This is important because efficiency and thus minimization of operating expenses is a key requirement of
+the operators of the data centers, the likes of Google, Facebook, Amazon Web Services and Microsoft. The power
+consumption of such major data centers with up to 40,000 servers is in the two-digit megawatt range. An increase in
+efficiency by one percentage point equals savings of several hundreds of kilowatts. At the same time the compact-
+ness, i.e. the power density, measured in watts per cubic centimeter, can be increased. Power density is important
+because every square meter of floor space in these air-conditioned spaces is very expensive.
+54
+776
+770
+11.9%
+Combined Management Report | Our Group
+> Consumer electronics
+Research and development
+Research and development
+G see graph 22
+P see page 49 ff.
+53
+Research and development expenses amounted to €776 million in the 2017 fiscal year, after €770 million in the
+previous year, representing an increase of €6 million or 1 percent. The year-over-year increase was slower in percent-
+age terms than the increase in revenue which grew by 9 percent. In the 2017 fiscal year we spent 11.0 percent on
+research and development relative to revenue compared to 11.9 percent in the previous year. With this rate we are
+well within our target range, i.e. a percentage of revenue in the low- to mid-teens.
+At the end of the 2017 fiscal year we employed 6,362 people (17 percent of Infineon's total workforce) at our
+research and development sites worldwide; at the end of the 2016 fiscal year this figure stood at 6,057 employees
+(17 percent of the total workforce). Infineon maintains research and development departments at 36 sites in
+15 countries (see the chapter "Locations").
+The capitalized development costs in the 2017 fiscal year amounted to €129 million (previous year: €98 million).
+Amortization of capitalized development costs totaled €39 million (previous year: €31 million) in the 2017 fiscal
+year. Subsidies and grants for research and development decreased from €75 million in the 2016 fiscal year to
+€68 million in the 2017 fiscal year.
+Principal research and development activities
+Research and development expenses are not only incurred for product development, but also increasingly for
+platform developments, for new product families and for new manufacturing technologies. This includes, for example,
+digital power management, technology platforms for low- and high-voltage power switches, power semiconductors
+based on the new materials silicon carbide and gallium nitride, and finally new sensor types, in particular those
+based on our magnetic field, radar, infrared and MEMS (micro-electro-mechanical systems) technologies.
+While in the past both research and development were primarily focused on technologies or components, today
+the systems in which the components are used are playing a decisive role. Innovative system solutions start with
+the optimization of system functionality. If savings and improvements – for example, for passive components, cooling
+systems, packages, weight, reliability - create value for the customer, the customer is willing to pay a higher price
+for the enabling semiconductor component. Here, digital microelectronics are often combined with components
+from the areas of radio-frequency, control of power components, sensor systems and actuators, resulting in a
+significant increase in performance. Furthermore, hardware is increasingly being complemented by software.
+G 22
+R&D expenses
+€ in millions
+Besides servers, power density is also important for extremely thin flat screen monitors as well as in compact chargers
+and adapters for mobile terminal devices. It will however most likely take quite a while until GaN transistors gain
+broad acceptance in these price-sensitive markets.
+03
+R&D expenses
+› Telecom
+SEGMENT RESULT
+€124 million
+REVENUE
+€708 million
+IIII
+IIIII
+The world market for standard MOSFET power transistors had a volume of US$5.775 billion in calendar year 2016,
+an increase of 5.1 percent compared to the previous year's value of US$5.496 billion (Source: IHS Markit). Infineon is
+still the clear market leader with a market share of 26.4 percent (previous year: 25.9 percent). The distance to the
+second place competitor was 13.0 percentage points (previous year: 11.9 percentage points). The five largest market
+players together account for a market share of 63.8 percent.
+Market position
+G see graph 19
+page 45
+> Tablets
+The Chip Card & Security segment in the 2017 fiscal year
+> Activity trackers
+> Navigation devices
+> Smartphones
+> Voice control
+› Sensors
+› Communications
+Internet of Things
+› Base stations
+Cellular infrastructure
+› Servers
+> PCs and notebooks
+Mobile devices
+The Chip Card & Security segment has over 30 years of experience dealing with the most demanding and largest
+security projects in the world. As a leading provider of security solutions we address the classic smart-card applica-
+tions, while also offering solutions for the area of embedded security within larger electronic systems.
+Chip Card & Security
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Traditional application areas include payment cards, electronic government IDs, SIM cards for mobile communi-
+cation and ticketing solutions. Business with governmental identification documents continued to grow in the
+2017 fiscal year. In Europe we supply approximately 70 percent of all ID document projects and won further business
+here as well as in Asia, Africa and Latin America. We were also successful in smaller and regional security projects
+with which we further diversified our customer portfolio. Thus, for example, more and more public transportation
+network operators are choosing ticketing solutions based on the open security standard CIPURSE™. Infineon provided
+crucial support for the development and introduction of CIPURSE™. Going forward Infineon will also be contribut-
+ing its security expertise in the definition of standards in the area of mobile communication: Since spring 2017,
+we have been a member of GSMA (Global System for Mobile Communications Association). As the leading industry
+association in the cellular communications industry it defines, for example, the requirements for new embedded
+SIM (ESIM) solutions. eSIMs are integrated in a connected device during the manufacturing process and are required
+for identification with the network operator. Among other things our broad portfolio includes the world's smallest
+eSIM chip for especially compact portable devices such as smartwatches. eSIMs are also used in the car: certified
+eSIM security controllers from Infineon are used for the emergency call function (eCall) which will be mandatory for
+all new cars in the EU as of 31 March 2018.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+600 V e-Mode
+CoolGaNT
+> Mobile devices
+Infineon
+The new 600 volt GaN power switches offer
+highest efficient and most compact power
+supplies for servers in data centers. Electricity
+consumption and floor space are key to run
+such data centers economically.
+60
+60
+P see page 76
+The main levers for generating free cash flow are profitability, the ability to manage working capital efficiently and
+the levels of investments.
+An important key performance indicator for Infineon is the free cash flow figure, defined as net cash provided by or
+used in operating activities and net cash provided by or used in investing activities, both from continuing operations,
+after adjusting for cash flows related to the purchase and sale of financial investments. Free cash flow measures
+the ability to generate sufficient cash flows to finance day-to-day operations and fund required investments out of
+the ongoing business. It is Infineon's stated target to sustainably generate positive free cash flow (see the chapter
+"Review of liquidity" for an analysis of free cash flow in the 2017 fiscal year).
+> Segment Result and Segment Result Margin to measure the operating profitability of its various businesses
+and of the portfolio as a whole
+Infineon manages net working capital levels by focusing relentlessly on optimizing levels of inventories, trade
+receivables and trade payables.
+Effective investment management plays a key role with regard to managing free cash flow. Our stated strategy of
+managing investments systematically should be seen in this context. Free cash flow is considered by Infineon only
+at Group level and not at segment level.
+In order to measure its success in implementing its strategies, Infineon uses the following three overarching
+performance indicators:
+Free cash flow
+Internal management system
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE) against the cost of
+capital, in order to ensure value creation.
+> Return on Capital Employed (ROCE) to measure capital efficiency
+Segment Result is the key figure of the Group for measuring operating performance. Expressed as a percentage
+of revenue (Segment Result Margin), it measures profitability of revenue and shows how well operations are being
+managed. The activities of Infineon's segments are managed on the basis of Segment Result. Responsibility for
+optimizing Segment Result within the framework of Group strategy (as approved by the Management Board) rests with
+the management teams of the relevant segments, acting, however, in coordination with the Management Board.
+Free cash flow from continuing operations enables us to measure how well operating profitability is being converted
+into cash inflows. This key figure also provides information on the efficient use of working capital and property,
+plant and equipment.
+The three performance indicators described above are also the cornerstones of the system for variable compen-
+sation within Infineon. Most variable salary components for employees and management are directly linked to
+these performance indicators.
+Since all three performance indicators and especially Segment Result strongly correlate with the revenue growth,
+the latter is not used as a key performance indicator in its own right, but is covered by the key indicators indirectly.
+Segment Result
+Segment Result is defined as operating income (loss) excluding the following: the net amount of asset impairments
+and reversals thereof; the impact on earnings of restructuring and closures; share-based compensation expense;
+acquisition-related depreciation/amortization and other expenses; gains (losses) on sales of assets, businesses, or
+interests in subsidiaries as well as other income (expense), including litigation costs (see note 24 to the Consolidated
+Financial Statements for a computation of the relevant figures). Court and legal fees arising in conjunction with
+licensing Infineon's patents are included in Segment Result, as is any related income. Segment Result is the indicator
+that Infineon uses to evaluate the operating performance of its segments (for an analysis of Group and individual
+segment performance in the 2017 fiscal year, see the chapter "The segments" and the section "2017 fiscal year").
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+59
+59
+Return on Capital Employed (ROCE)
+Combined Management Report | Our Group
+> Free cash flow from continuing operations to measure the amount of cash generated or used excluding
+financing activities
+The performance indicator RoCE measures the ability of capital to provide a return and is defined as the operating
+result after tax from continuing operations divided by capital employed. Capital employed consists of non-current
+assets and net working capital. RoCE shows the correlation between profitability and the capital resources required
+to run the business.
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the key operational
+figures for capacity utilization and forecast capacity requirements are analyzed. The results of this analysis are used
+in determining investment requirements.
+Operating result after tax from continuing operations
+Capital employed
+For an analysis of changes in these key performance indicators during the previous fiscal year, see the chapter
+"Review of liquidity".
+> Investments: The total amount invested in property, plant and equipment and intangible assets, including
+capitalized development costs
+> Net working capital: Current assets less cash and cash equivalents, less financial investments, less assets classi-
+fied as held for sale, less current liabilities excluding short-term debt, and current maturities of long-term debt,
+excluding liabilities classified as held for sale
+> Net cash position: Gross cash position less short-term and long-term debt
+› Gross cash position: Cash and cash equivalents plus financial investments
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its disposal and an
+optimal capital structure. Liquidity is managed at Group level, not at segment level, and uses the following key
+performance indicators:
+Liquidity performance indicators
+P see page 78
+P see page 75 ff.
+The chapter "Outlook" contains a table showing the actual values achieved in the 2017 fiscal year for the key
+performance indicators, along with expectations for the 2017 fiscal year and the 2018 fiscal year.
+Sustainability at Infineon
+Sustainability activities are described in the report "Sustainability at Infineon", which is available on Infineon's website.
+@www.infineon.com/csr_reporting
+ROCE =
+Our employees
+Principal performance indicators
+Actual and target values for performance indicators
+Internal management system | Sustainability at Infineon | Our employees
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Revenue growth is compared continuously with the rate of growth of relevant target markets. This ties in directly
+with our strategic target of profiting continuously from the growth of our target markets. A further indicator for
+future revenue growth is the number of design wins, whereby we regularly measure actual outcomes against targets.
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings and costs above the
+Segment Result line. This involves a review of gross profit, research and development expenses, selling, general
+administrative expenses and the ratio of these items to revenue. These performance indicators are used to manage
+the business at both Group and segment levels (for an analysis of changes in the fiscal year under report, see the
+chapter "Review of results of operations").
+The principal performance indicators described above are supplemented by others that provide information about
+growth potential, cost efficiency by functional area and liquidity.
+Other performance indicators
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets and net working capital.
+Asset intensity describes the amount of assets necessary to generate a certain level of revenue (for an analysis of
+the derivation of and change in ROCE in the 2017 fiscal year, see the chapter "Review of financial condition").
+This key performance indicator describes how efficiently a company manages its resources. ROCE is also analyzed
+by Infineon at Group level only and not at segment level. A comparison of a company's ROCE and its weighted cost
+of capital provides information on the extent to which returns have been generated in excess of shareholders' and
+debt holders' expectations. Thus ROCE serves as a tool for value-based management.
+Psee page 68 ff.
+P see page 74
+Our human resources work focuses on developing our existing workforce and recruiting new staff as required.
+We firmly believe that effective human resources management is the key to commercial success, as only fulfilled,
+healthy and successful employees are able to deliver long-term peak performance and support us in meeting the
+growth and profitability targets set out at the beginning of this report. We continually endeavor to promote the
+performance and potential of our employees in the best possible way. The three pillars of "Leadership excellence",
+"Promoting talent” and “Our workforce" combine the range of activities we deploy to achieve this objective.
+Performance indicators
+1. Expansion of 300-millimeter frontend manufacturing capacities for differentiating manufacturing technologies
+for power semiconductors such as MOSFET and IGBT power switches. Even though power switches based on
+compound semiconductors are showing high growth, the by far higher demand in the foreseeable future will come
+from these classical power semiconductors.
+P see page 165 ff.
+Investments in the 2017 fiscal year focused on four areas:
+Milestones and essential investment focuses in manufacturing in the 2017 fiscal year
+Of the amount invested in property, plant and equipment, the largest share is accounted for by investments in
+manufacturing facilities. Here in turn approximately two thirds went to frontend manufacturing facilities, with the
+rest essentially going to backend manufacturing facilities.
+In the 2017 fiscal year our investments amounted to €1,022 million, representing an increase of €196 million or
+24 percent compared to the €826 million invested in the previous year. Relative to revenues, the investments in the
+2017 fiscal year increased to 14.5 percent compared to the previous year's 12.8 percent. €874 million of the overall
+investment volume were dedicated to property, plant and equipment (previous year: €716 million) and €148 million
+to intangible assets including capitalized development costs (previous year: €110 million).
+57
+Combined Management Report | Our Group
+Operations
+G see graph 23
+page 56
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+1 Property, plant and equipment and intangible assets
+Percentage of revenue
+-
+Investments
+14.5%
+2017
+2016
+826
+1,022
+12.8%
+€ in millions
+G 23
+Investments'
+Infineon maintains a total of 18 manufacturing sites in 10 countries: Dresden, Regensburg and Warstein (all Germany);
+Villach (Austria); Cegléd (Hungary); Beijing and Wuxi (both China); Melaka and Kulim (both Malaysia); Cheonan (Korea);
+Batam (Indonesia); Singapore; Tijuana (Mexico) as well as Leominster, Mesa, Morgan Hill, San Jose and Temecula
+(all USA) (see the chapter "Locations"). As of 30 September 2017, 27,105 employees were employed in Operations
+at these manufacturing sites (previous year: 26,383 employees).
+Manufacturing capacities are being continuously expanded as planned, with the next milestone set for the end
+of calendar year 2017. By then we will equip up to 30 percent of the cleanroom space available in our Dresden
+(Germany) facility with tools for 300-millimeter thin wafer manufacturing. We expect the productivity advantage will
+begin to take effect then, and the costs per chip in 300-millimeter manufacturing will drop below the level of our
+200-millimeter sites. We benefit from the lower investments per chip already today. Demand for 300-millimeter-
+capable products such as MOSFETs and IGBTs is very high, so that further expansion steps are already in planning
+or implementation.
+Another successful step in the area of manufacturing technology is the introduction of a larger wafer diameter for
+manufacturing of power semiconductors. The use of 300-millimeter thin wafers creates significant advantages in
+terms of productivity and reduces the amount of capital required. However, the technical challenges involved are
+substantial. Infineon is as of yet the only company to successfully master this transition.
+For frontend manufacturing this principle means that power semiconductors, sensors and radio-frequency compo-
+nents are preferably manufactured at our own manufacturing sites. Here we gain a strategic advantage from our
+manufacturing technologies and our process expertise because we can offer components which can only be manu-
+factured with leading-edge manufacturing techniques. In the case of CMOS-based process technologies on the other
+hand we work together with manufacturing partners. This applies to the majority of our products manufactured
+in 90 nanometer manufacturing technologies as well as all products manufactured in 65 nanometer and smaller
+technologies. These are primarily highly-integrated products such as microcontrollers and security ICs. In backend
+manufacturing for certain package types we work with subcontractors in order to ensure adequate capacity growth
+and to be able to better manage phases of high fluctuation in demand. We will further increase these activities, in
+particular for the areas of standard power semiconductor packages.
+Our manufacturing strategy follows the basic principle that in-house manufacturing has to result in a differentiation
+potential in terms of costs and/or performance. If this is not the case we outsource manufacturing. This applies both
+to frontend manufacturing and backend manufacturing. This is the most efficient way to use our capital employed
+and to optimize our investments.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+2. Expansion of 200-millimeter frontend manufacturing capacities for differentiating manufacturing technologies
+such as MEMS-based sensors and radio-frequency components, as well as power semiconductors and magnetic
+field sensors for automotive applications.
+3. Complete retooling of the silicon carbide (SiC) manufacturing lines to 150-millimeter wafers. The volume produc-
+tion of SiC MOSFETs launched in the concluded fiscal year was performed on 150-millimeter wafers from the
+very beginning. Furthermore, the manufacturing lines for SiC diodes were converted from 100-millimeter wafers
+to 150-millimeter wafers. Infineon is now one of the first companies worldwide to manufacture its complete
+SiC portfolio on wafers with a 150 millimeter diameter.
+4. Expansion of backend manufacturing capacities for electro-mobility. Backend manufacturing capacities were
+expanded due to the high demand for IGBT modules for powertrains in hybrid and purely electric vehicles. Expan-
+sion for IGBT modules of the HybridPACK™ family took place in Warstein. Furthermore, a second manufacturing
+building was completed in Wuxi. In the future, IGBT modules of the HybridPACK™ family will be manufactured on
+one floor of the multi-storey building for subsequent supply to the Chinese electric vehicles market.
+Combined Management Report | Our Group
+Internal management system
+59
+58
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+As part of the process of managing business performance, management also attaches great importance to ensuring
+that Infineon acts in strict compliance with all relevant legal requirements and, of equal importance, that its internal
+Corporate Governance Standards are complied with (see the chapter "Corporate Governance").
+Infineon deploys a comprehensive controlling system to manage its business with respect to the strategic targets
+it has set itself. The system involves the use of financial and operating key performance indicators. Information for
+controlling purposes is derived from annual long-term planning, quarterly outlooks, orders received per week and
+actual monthly financial results. This knowledge enables management to base its decisions on sound information
+with respect to the current situation and future expected financial and operational developments. Sustainable
+business practices and the consideration of forward-thinking qualitative factors are important for Infineon's long-
+term success. As an enterprise very much aware of its responsibilities towards society, Infineon also takes account
+of non-financial factors, mainly in the fields of sustainability (see report "Sustainability at Infineon" on our website
+@www.infineon.com/csr_reporting) and human resources (see the chapter "Our employees"). Although these factors are
+not used to manage business performance, they nevertheless help Infineon achieve its financial targets.
+In this context, growth, profitability and investments are all interdependent. Profitability is the prerequisite for
+being able to finance operations internally, which, put another way, means opening up potential opportunities for
+growth. Growth, in turn, requires continual investment in research and development as well as in manufacturing
+capacities. Growing at a commensurate rate allows Infineon to achieve leading market positions and to generate
+economies of scope that contribute to greater profitability. Employing financial resources efficiently is a critical
+factor in achieving these goals.
+Overall, reaching these financial targets yields in a sustainable increase in the value of the business, brought about
+by achieving a premium on the cost of capital in the long term.
+> realizing the abovementioned revenue growth with investments of 13 percent relative to revenue over the
+economic cycle.
+> thereby achieving a 17 percent Segment Result Margin over the economic cycle and
+> achieving a compound annual revenue growth rate of 8 percent
+The internal management system at Infineon is designed to assist in implementing the Group strategy described
+in the chapter "Group strategy”. Accordingly, performance indicators are used which enable profitable growth and
+efficient employment of capital to be measured. Infineon has set itself the targets of:
+P see page 38 ff.
+and page 16 ff.
+Psee page 96 ff.
+P see page 20 ff.
+management system
+Internal
+Internal management system
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+› Completion of the expansion of wafer manufacturing capacities in Regensburg. Mainly components for automotive
+applications, in particular radar, are manufactured here.
+> Expansion of backend manfacturing capacities in Melaka, under application of Industry 4.0 elements that
+increase manufacturing efficiency.
+› Adaptation and retooling of manufacturing lines to accommodate the modified product portfolio, in particular
+due to the beginning of volume production for new technologies and products.
+> Increased level of automation at our frontend and backend sites, for example, improvement of the wafer
+transport system.
+Furthermore, the concluded fiscal year saw investments at the frontend and backend sites primarily in the
+following areas:
+The Newport (Wales, UK) site was sold as of the end of the concluded fiscal year. An agreement was made with
+the new owner on a foundry partnership covering a period of two years. This will allow the new owner to get off to
+a successful start and puts Infineon in a position to better supply its customers in times of high demand for power
+semiconductors.
+P see page 61 ff.
+12
+Promoting talent
+Combined Management Report | Our Group
+Our employees
+13.9%
+13.4%
+13.0%
+12.5%
+12.1%
+15.0%
+15
+20
+25
+Women in management positions (Infineon worldwide)
+G 25
+At selected top universities in China, Infineon organizes "Student Dialogs” and “Infineon Days" and sponsors
+"Joint Labs", "Training Labs" and an endowment chair for the long-term promotion of application-based research
+and teaching.
+Infineon keenly promotes close contact with both students and academics with the aim of recruiting young profes-
+sionals - for instance, through special “High Potential” programs: Infineon has been a member of the UNITECH
+network for promoting talented engineers since 2002. In the meantime, UNITECH has developed into a sustainable
+recruiting ground for international, high-caliber staff for Infineon. Our cooperation with the Collège des Ingénieurs
+(CDI) has proven highly successful over the years. Infineon has established itself as an attractive and reliable partner
+for this international MBA program.
+Cooperation with universities
+In conjunction with the "Law on Equal Participation of Women and Men in Leadership Positions in the Private and
+Public Sector", Infineon Technologies AG and Infineon Technologies Dresden GmbH have set targets for the per-
+centage of women in the two leadership levels below the Management Board. Details of levels of attainment as of
+30 June 2017 and the new targets are contained in the chapter "Corporate Governance".
+3 Including the Management Board.
+1 Figures based on the workforce as of 30 September 2017, in the respective comparison group.
+2 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist expertise as well as project
+management functions as defined in the internal job evaluation system.
+62.7%
+37.3%
+53.5%
+46.5%
+24,233
+73.5%
+26.5%
+6,978
+10
+86.1%
+10.2%
+0
+Combined Management Report | Our Group
+Research and development
+55
+55
+The development of the next generation of our GaN transistor has already begun. Its new architecture makes it possi-
+ble to realize smaller and thus more cost-effective transistors. This will support the introduction of GaN technology
+also in price-sensitive markets. We are also working on integrated GaN solutions in which either several transistors or
+transistors and control are monolithically connected or are packaged together. These compact solutions can be
+used, for example, for motor control units in washing machines and air conditioners. Volume production of our GaN
+products takes place in Villach (Austria) in a 150-millimeter wafer manufacturing line. The transition of
+volume production to 200-millimeter wafers is currently being planned.
+Another focus area of our research and development activities is the digital control of power semiconductors. We
+currently witness the transition from analog control to digital control of power switches. Digital control systems
+enable much easier adoption to various operating conditions (for example, stand-by, partial load, full load) and also
+enable better use of the increasingly complex power components. Programmability of the control ICs enables
+customers to adapt the function of the control unit to meet their requirements with shorter learning cycles. This
+transition already began several years ago for MOSFET-based control loops; the trend has now also started for
+IGBT-based control loops. Infineon provides components for all stages of the digital control loop, namely control
+ICs, driver ICs and power switches.
+Infineon makes systematic use of its technical core competencies in close collaboration among the segments.
+This lets us make efficient use of our economies of scale for power semiconductors, radio-frequency and security.
+Infineon is the first company worldwide to demonstrate an algorithm for Post-Quantum Cryptography
+on contactless security chips
+The world of security calls for visionary actions. Infineon's developers have to be able to live mentally in the future
+and have to think today about how to meet the requirements that will be placed on their products in 10 or 20 years.
+For example, today's passports have a service life of up to 10 years. Connected vehicles and industrial control
+systems should also be able to operate securely 20 years from now. This means the implemented security solutions
+have to provide long-term protection, taking into account at the time of their delivery the kinds of attacks which
+under certain circumstances may not be possible for many years to come. Quantum computers are part of such
+a scenario which could mean a threat to today's security functionalities 10, 20 or maybe even 30 years from now.
+Future quantum computers will be able to perform especially demanding tasks much faster than conventional
+computers can. Unfortunately the abilities of the quantum computer will include being able to attack many currently
+applied cryptographic methods with great ease. In order to keep this from happening, Infineon is working now on
+encryption technology for this future time, referred to as Post-Quantum Cryptography (PQC), in order to integrate
+these technologies in security products from Infineon. As the developers of the segment Chip Card & Security
+showed in the concluded fiscal year, entirely new and special algorithms can be implemented on conventional
+processors which, because of their architecture, are practically impossible or at least extremely difficult for even
+quantum computers to break.
+It was necessary to find new algorithms. That is the essential point. Based on the knowledge of how quantum
+computers work it was possible to derive an idea of how new encryption algorithms would have to look in order to
+be impervious to attacks by quantum computers. These new algorithms can run on conventional computer archi-
+tectures and security controllers. Furthermore, Infineon is now the first IC manufacturer to succeed in showing that
+PQC algorithms also work on contactless security chips. This achievement is anything but trivial because of the
+limited resources available on such chips, with only a small amount of storage present for software. And because
+the chips are contactless, they have to generate their energy from the electromagnetic waves emitted by the reader
+and must thus operate with a highly limited energy supply. It also has to be possible to transmit the encrypted data
+in only fractions of a second.
+The major objective is to make the algorithm available for a large number of applications, hence for all the smaller
+products such as payment cards, health care cards and electronic passports. In the next step standards will be
+defined so that the systems - cards and readers from different manufacturers - will be able to communicate with
+one another. This might be achieved by 2023. In the following years the first products will then be developed to
+market readiness.
+Patents
+Another indication of the innovation power and long-term competitiveness of Infineon is the number and quality of
+our patents. In the 2017 fiscal year we applied for approximately 1,800 patents worldwide, compared to approxi-
+mately 2,000 patent applications in the previous year. At the end of the 2017 fiscal year the worldwide patent portfolio
+consisted of approximately 27,300 patents and patent applications (previous year: approximately 27,000).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+56
+Combined Management Report | Our Group
+Operations
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+1 International Rectifier not included
+Target
+2020
+2017
+2016
+2015'
+20141
+2013'
+2010'
+5
+61
+13.9%
+Total
+63
+Combined Management Report | Our Group
+Our employees
+and manage
+risks
+Be ambitious
+Strive for
+excellence
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Drive value
+through
+innovation
+Focus on the
+customer
+We commit.
+We innovate.
+We partner.
+We perform.
+Team up
+for best
+results
+Foster your
+talents
+Be passionate
+about profit
+Trust and
+respect others
+High Performance Behavior Model
+G24
+Regular participation in the Great Place to Work® survey enables us to measure the progress we are making in terms
+of leadership and feedback culture. Our objective is to provide our employees with a working environment in which
+they can give their very best. Results from the spring 2016 survey show that we have made improvements in all
+categories compared to 2013. Particularly gratifying for us is that 78 percent of all employees participating in the
+survey responded with "All in all, this is a very good place to work".
+Open feedback is always important to us in constructive dialog with our employees' representatives at the various
+sites. Co-determination is a key factor in our human resources work. Together, and in a spirit of trust, we are building
+the basis for successfully implementing our key topics in the respective bodies, particularly in the Central Works
+Council and the Management Staff Representation Committee.
+A culture of feedback does not only come about during the dialog between manager and staff, it is also an important
+aspect of working together in teams and projects, and is therefore proactively encouraged. Whether gathering
+information from operating departments in the form of employee questionnaires, obtaining feedback as part of the
+general process of corporate communications or assessing outcomes when key project or process steps are achieved,
+all of these techniques constitute an integral part of our daily working routines.
+These behavioral descriptions play a significant role, for example, in the annual dialogs with employees under the
+global STEPS process (abbreviation for Steps To Employees' Personal Success). However, our fundamental culture
+of openness does not stop there. Feedback from teams to their managers is just as important as feedback from
+managers to staff. In addition to the STEPS dialogs, we have therefore established the format of the "leadership
+dialog", which is carried out every two years for senior level management with direct responsibility for five or more
+members of staff. Managers receive structured feedback from their staff as part of the leadership dialog process,
+thus enabling them to reflect on their individual leadership conduct, identify strengths and potential areas for
+improvement and hence promote cooperation, both with and within the team.
+An organization cannot progress without open and honest feedback. This basic premise is reflected in our values,
+which are collectively defined in our "High Performance Behavior Model”. These values are not purely theoretical:
+The High Performance Behavior Model shows how we aim to achieve Infineon's targets and set priorities.
+Open and honest feedback
+Leadership excellence
+G see graph 24
+62
+62
+Management development
+6,268
+Good leadership is essential for Infineon's success, as it enables each individual to perform his or her tasks effectively
+and therefore contribute to the success of the Company. At the same time, our employees expect to be able to
+develop their skills and competencies within a suitable environment. With this in mind, creating an attractive work-
+ing environment and long-term employee retention at Infineon are key tasks for our managers.
+The "Infineon Leadership Excellence Program" provides a training framework to support managers as far as possible
+in their leadership role and management responsibility. In addition to the training provided, participating managers
+carry out a self-assessment, which is subsequently followed up by coaching.
+Male¹
+Female
+Employees
+Total
+Non-management staff
+Entry level management²
+Middle and senior level management 2,3
+P see page 99
+The promotion of women to management positions is one of the key focus areas of our diversity management policy.
+We had set ourselves the ambitious target of increasing the percentage of female executives to 15 percent by the
+end of the 2020. We succeeded in raising the proportion of women at the middle and senior management level from
+13.4 percent in 2016 to 13.9 percent in 2017. Individual measures and performance indicators are being put in place
+across the business with a view to achieving the target. We remain committed to our long-term target of 20 percent
+of women in management positions.
+As an international company, the diversity of our staff is particularly important to us. Our global diversity manage-
+ment provides the framework for a corporate culture which values the individuality of each staff member and
+promotes equal opportunities - irrespective of age, disability, ethnic-cultural origin, gender, religion, belief or
+sexual identity. The focal points of our commitment to diversity may vary from one location to another and are
+tailored to suit local needs.
+Encouraging diversity
+64
+Our employees
+Combined Management Report | Our Group
+G see graph 25
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+In the Asia-Pacific region (including Japan), due to the expectations of employees and the specific local context, in
+addition to the Infineon career paths, we offer specially designed talent management programs: "ENGINE” for
+management careers and "TechStar" for technical careers. Both programs focus on the key areas of training, inter-
+action with management and the practical application of what has been learnt in specific projects.
+As an international company, we wish to offer our staff development prospects beyond organizational and national
+boundaries. The worldwide Development Conferences, during which managers discuss the specific development
+of our talents with the Human Resources team, are an important instrument in this endeavor.
+> the Management career path for (junior) managers.
+> the Project Management career, which offers our project managers clear prospects for their personal develop-
+ment and careers – and emphasizes the importance of implementing development projects for Infineon's
+success; and
+> the "Technical Ladder", which enables our technical experts to develop;
+> the professional career as an "Individual Contributor", in which individual expertise in a traditional business
+field, such as finance, purchasing or sales, is promoted;
+At Infineon, depending on their individual knowledge and talents, development opportunities are available to
+employees in a variety of careers, based on Infineon's needs. Four career paths have already been established:
+Talent marketing and management
+Alongside the "Infineon Leadership Excellence Program", we also offer training on a range of topics required in
+specific situations. One example of this is the "New Leader Orientation" program - an in-house workshop for new
+managers focusing on leadership culture and management tools at Infineon. In another training program offered
+in Asia - "Leadership in Healthy Lifestyle" - our top managers learn how to make the most of their resources
+and increase health awareness. The e-learning-based "Health & Care" program focuses on the issue of health as a
+managerial task.
+We provide support for our managers in the form of numerous learning and development opportunities at the
+various leadership levels. Our approach to learning involves a variety of methods based on both theory and practice.
+We work on concrete examples at face-to-face training events and e-learnings. Mentoring programs and learning-
+in-tandem also promote learning outcomes which can be quickly put into practice.
+37,479
+Growth and profitability performance indicators
+Operations
+P see page 49 ff.
+ROCE 1/②
+35.2%
+32.5%
+14.8%
+14.0%
+55.3%
+56.7%
+8.2%
+7.9%
+12%
+5,023
+5,636
+6%
+4,064
+4,309
+(13%)
+2,534
+2,211
+37%
+1,530
+2,098
+9%
+12.5%
+9,087
+13.1%
+15.0%
+2016
+Gross cash position
+€ in millions
+2017
+2016
+57%
+55%
+5%
+5%
+4%
+5%
+7%
+5%
+18%
+20%
+10%
+9%
+9,945
+9,087
+Liabilities and equity
+G 30
+14.9%
+2017
+9,945
+4,595
+25%
+25%
+9,945
+9,087
+G 29
+Assets
+6 Calculation see following section about ROCE in this chapter
+5 Inventory intensity = Inventories (net)/Total assets
+4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
+3 Return on equity = Net income/Total equity
+2 Equity ratio = Total equity/Total assets
+1 Return on assets = Net income/Total assets
+4
+ROCE 6
+Inventory intensity 5
+Debt-to-equity ratio:
+Return on equity ³
+3
+Equity ratio 2
+Return on assets¹
+Statement of Financial Position ratios:
+Total equity
+9%
+10%
+-
+9%
+5,074
+8%
+4,492
+4,871
+Change
+year-on-year
+ber 2016
+ber 2017
+30 Septem-
+30 Septem-
+72
+2017
+2016
+5%
+5%
+6%
+7%
+16%
+18%
+27%
+23%
+12%
+13%
+€ in millions
+2016
+Total liabilities
+1,834
+1,769
+790
+830
+939 1,044
+2017
+2016
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+US dollar
+Euro
+€ in millions
+57%
+43%
+1,834
+2017
+1,769
+2016
+53%
+47%
+Debt by currencies
+G|31
+Combined Management Report | Our 2017 fiscal year
+Total liabilities stood at €4,309 million as of 30 September 2017 and were therefore €245 million (6 percent) higher
+than as of 30 September 2016 (€4,064 million). Trade payables increased by €163 million, mainly as a consequence
+of organic revenue growth recorded by the segments and high levels of investment. Debt went up by €65 million in
+total, whereby liabilities of €219 million resulting from the full consolidation of MoTo financial liabilities described
+above were offset by repayments of non-current debt amounting to €119 million. Currency factors reduced debt by
+€40 million. Information on debt maturities is provided in note 12 to the Consolidated Financial Statements.
+Provisions and liabilities to employees increased by €57 million due to the fact that allocations to the provision
+for performance-related employee remuneration for the fiscal year under report exceeded payments made for
+the previous fiscal year. Working in the opposite direction, provisions for pension plans and similar commitments
+decreased by €101 million, mainly reflecting actuarial gains attributable to the current trend in interest rates
+(see note 14 to the Consolidated Financial Statements for further information).
+Group performance
+74
+Capital employed ②
+Short-term debt and current maturities of long-term debt
+Total current liabilities
+Assets classified as held for sale
+Financial investments
+Cash and cash equivalents
+Plus/less:
+Assets
+Operating income from continuing operations after tax ①⑫D
+Gain from investments accounted for using the equity method
+Income tax
+Financial result excluding interest result¹
+Plus/less:
+Operating income
+€ in millions
+ROCE for the 2017 and 2016 fiscal years is calculated as follows:
+Operating income from continuing operations after tax rose by 6 percent from €799 million to €847 million
+year-on-year. Capital employed increased by 7 percent from €5,334 million as of 30 September 2016 to €5,695 million
+as of 30 September 2017. As a result, the Return on Capital Employed (ROCE) fell slightly from 15.0 percent to
+14.9 percent. The performance again enabled Infineon to more than cover its cost of capital in the 2017 fiscal year.
+ROCE of 14.9 percent generated
+The equity ratio improved to 56.7 percent as of the end of the reporting period (30 September 2016: 55.3 percent).
+Equity increased by €613 million (12 percent) to €5,636 million at the end of the reporting period (30 September
+2016: €5,023 million). The main items increasing equity were net income for the 2017 fiscal year (€790 million)
+and actuarial gains (€118 million, net of tax), the latter arising in conjunction with pension plans and similar
+commitments and recognized in other comprehensive income (see notes 14 and 15 to the Consolidated Financial
+Statements). The main items decreasing equity were the dividend paid for the 2016 fiscal year (€248 million) and
+currency effects (€66 million).
+Equity up mainly due to net income for the year
+P see page 144 ff.
+Review of financial condition
+Increase in liabilities mainly due to full consolidation of MoTo
+Non-current assets increased by €479 million from €4,595 million at the end of the previous fiscal year to stand at
+€5,074 million as of 30 September 2017. Infineon acquired 93 percent of the shares of MoTo Objekt Campeon GmbH
+& Co. KG ("MoTo") effective 30 December 2016, since which time MoTo's assets and liabilities have been fully
+consolidated by the Infineon Group. Property, plant and equipment increased by €366 million as a result. Other
+investments in property, plant and equipment totaled €874 million. Depreciation during the twelve-month
+period amounting to €652 million had a counter effect. Investments related primarily to the manufacturing sites
+in Melaka and Kulim (both Malaysia), Dresden and Regensburg (both Germany) and Villach (Austria). Goodwill and
+other intangible assets went down by €58 million due to exchange rate factors. Investments in intangible assets
+(€148 million) were lower than the amortization expense (€160 million).
+Increase in non-current assets due to full consolidation of MoTo and investments
+Intangible assets
+489
+403
+Provisions
+2,119 2,659
+Property, plant and equipment
+503
+604
+Pension plans and similar commitments
+1,191 1,240
+Inventories
+1,834
+1,769
+Debt
+G 28
+851
+774
+Trade and other receivables
+857 1,020
+Trade and other payables
+2,240 2,452
+1,656 1,586
+Other liabilities
+431
+463
+Current assets went up by 8 percent to €4,871 million at the end of the reporting period, compared to €4,492 million
+as of 30 September 2016. Therein Infineon's gross cash position (sum total of cash and cash equivalents and financial
+investments) increased by €212 million (see "Gross cash position and net cash position" in the chapter "Review of
+liquidity" for further information). In addition, inventories and trade receivables increased by €126 million in total
+as a result of organic revenue growth across the segments.
+Increase in current assets mainly reflects improved gross cash position
+P see page 144 ff.
+P see page 142 f.
+G see graph 31
+Psee page 76 f.
+73
+Review of financial condition
+Group performance
+Combined Management Report | Our 2017 fiscal year
+2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+9,087
+9,087 9,945
+545
+484
+Other assets
+5,023 5,636
+Equity
+612
+623
+Deferred tax assets
+9,945
+2017
+4,143
+Total assets
+2016
+2017
+€ in millions (unless otherwise stated)
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase price allocations for
+acquisitions (in particular International Rectifier) as well as by other exceptional items. To enable better compara-
+bility of operating performance over time, Infineon computes adjusted earnings per share (diluted) as follows:
+Further improvement in adjusted earnings per share
+The improvement in net income resulted in a corresponding increase in earnings per share. Compared to earnings
+per share of €0.66 (basic and diluted) in the previous fiscal year, the corresponding figures for the 2017 fiscal year
+both amounted to €0.70.
+Earnings per share improved
+Further details regarding income tax expense are provided in note 4 to the Consolidated Financial Statements.
+Based on pre-tax income of €933 million and income tax expenses of €142 million, the effective tax rate for the 2017
+fiscal year amounted to 15.2 percent. In the 2016 fiscal year, an income tax benefit of €36 million was recorded mainly
+due to deferred income tax arising in conjunction with the acquisition and integration of International Rectifier.
+As in the previous fiscal year, income tax expense for the 2017 fiscal year was affected by foreign tax rates,
+non-deductible expenses, tax credits and changes in valuation allowances on deferred tax assets.
+Effective tax rate of 15.2 percent
+The net amount from other operating income and expenses decreased from negative €6 million to negative €43 million
+year-on-year. The amount reported includes the loss of €13 million arising from the sale of 100 percent of the
+shares of IR Newport Limited ("Newport") (see note 5 to the Consolidated Financial Statements) and contractually
+agreed compensation of €12 million paid to the US company Cree Inc. as a consequence of the non-completion of
+the Wolfspeed acquisition.
+Other operating expenses increased
+At 11.6 percent of revenue selling, general and administrative expenses were lower in percentage terms than in
+the previous fiscal year (12.2 percent). In absolute terms, they went up by €28 million or 4 percent to €819 million,
+and therefore at a less pronounced rate than revenue growth.
+P see page 133 ff.
+Psee page 136
+71
+Review of results of operations
+Group performance
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+12.2%
+Earnings from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+11.6%
+791
+2016
+42%
+Share of Group revenue 2017
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments,
+Corporate and Eliminations
+Combined Management Report | Our 2017 fiscal year
+Group performance
+Review of results of operations
+10
+70
+Increase in gross margin
+-
+The gross margin increased from 36.0 percent to 37.1 percent year-on-year. The improvement was mainly attribut-
+able to revenue growth – in particular in the Automotive segment - and the resulting higher capacity utilization.
+Positive currency factors also played a role. The line item "Cost of goods sold" still includes the earnings impact
+arising in conjunction with the purchase price allocation and acquisition-related expenses for International Rectifier
+(in particular higher depreciation/amortization on intangible assets and property, plant and equipment, which
+were revalued to their fair value as part of the purchase price allocation) amounting to €89 million (2016: €96 million).
+€ in millions, except percentages
+Cost of goods sold
+Change year-on-year
+Percentage of revenue
+Gross profit
+Percentage of revenue (gross margin)
+2017
+4,442
+2%
+4%
+791
+2017
+Percentage of research and development expenses
+For information: capitalized development costs
+Percentage of revenue
+Therein included grants received
+Percentage of revenue
+Change year-on-year
+Research and development expenses
+€ in millions, except percentages
+Grants received in conjunction with R&D projects and capitalized development costs reduce the amount of
+R&D expenses recognized.
+Research and development expenses (R&D expenses)
+Operating expenses (research and development expenses and selling, general and administrative expenses)
+increased year-on-year by €34 million to €1,595 million (2016: €1,561 million), corresponding to 22.6 percent of
+revenue (2016: 24.1 percent).
+Operating expenses as percentage of revenue continue to fall
+36.0%
+37.1%
+2,330
+2,621
+64.0%
+62.9%
+12%
+7%
+2016
+776
+770
+1%
+819
+2016
+2017
+Percentage of revenue
+Change year-on-year
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+The main R&D activities undertaken during the 2017 fiscal year are described in more detail in the chapter
+"Research and development".
+R&D expenses amounted to €776 million in the 2017 fiscal year, an increase of €6 million or 1 percent compared to
+the previous year's figure of €770 million. At 11.0 percent (2016: 11.9 percent) of revenue, R&D expenses therefore
+remained within the target range of a low- to mid-teen percentage of revenue. Research and development activities
+were intensified, additional staff recruited and other measures taken in order to broaden the basis for further
+growth. A total of 6,362 employees worked in research and development functions at the end of the reporting
+period (30 September 2016: 6,057 employees).
+17%
+P see page 53 ff.
+16.6%
+98
+129
+1.2%
+1.0%
+75
+68
+11.9%
+11.0%
+7%
+12.7%
+10% 0%
+31%
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Tax effects on adjustments
+6
+36
+Other income and expense, net
+4
+15
+Losses (gains) on sales of assets, businesses, or interests in subsidiaries, net
+191
+153
+Acquisition-related depreciation/amortization and other expenses
+9
+13
+Share-based compensation expense
+(7)
+3
+16
+5
+Impairments on assets including assets classified as held for sale, net of reversals
+Impact on earnings of restructuring and closures, net
+Plus/minus:
+742
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+(49)
+(49)
+Revaluation of deferred tax assets resulting from the annually updated earnings forecast
+(59)
+Non-current assets
+Current assets
+€ in millions, except percentages
+Review of financial condition
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior
+performance indicator, but rather as additional information to net income and earnings per share (diluted)
+determined in accordance with IFRS. The calculation of earnings per share in accordance with IFRS is presented
+in detail in note 6 to the Consolidated Financial Statements.
+Review of results of operations | Review of financial condition
+Group performance
+Combined Management Report | Our 2017 fiscal year
+G see graph 29
+and 30
+P see page 136
+The reported ROCE was calculated using actual capital employed, without adjustment for exceptional factors
+such as provisions recorded in connection with the Qimonda insolvency, purchase price allocations for acquisitions
+as well as changes in deferred tax assets and liabilities, each of which influences the level of capital employed.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Adjusted earnings per share (in euro) - diluted'
+0.76
+0.85
+1,129
+1,134
+853
+967
+Weighted-average number of shares outstanding (in million) - diluted
+shareholders of Infineon Technologies AG - diluted
+Adjusted earnings from continuing operations attributable to
+1 The calculation of the adjusted earnings per share is based on unrounded figures.
+Current liabilities
+1 Financial result in the 2017 and 2016 fiscal year amounted to negative €53 million and negative €61 million, respectively, and included negative €56 million
+and negative €58 million, respectively, of interest result.
+14.9%
+2,656
+2,500
+2,000
+2,148
+2,041
+1,500
+1,206
+1,072
+1,000
+708 703
+500
+98
+3 (7)
+0
+Automotive
+Industrial
+Power Control
+Power
+Management &
+Multimarket
+Chip Card &
+Security
+Other Operating Corporate and
+Segments Elimininations
+2017
+2016
+2,989
+3,000
+€ in millions
+Revenue by segment
+5,334
+5,695
+17
+323
+(1,530)
+(2,098)
+(23)
+(1,615)
+(1,592)
+(625)
+15.0%
+(860)
+9,945
+799
+847
+36
+(142)
+3
+3
+(3)
+3
+763
+9,087
+Non-current liabilities
+983
+(142)
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2017 fiscal year (daily closing prices)
+Infineon share price in €
+G 26
+In recent years Infineon has continuously increased the dividend payment up to €0.20 per share for the 2015 fiscal
+year. In the previous fiscal year, the Management Board and Supervisory Board proposed a further increase of the
+dividend by 10 percent to €0.22 per share for the 2016 fiscal year to the Annual General Meeting on 16 February 2017.
+The shareholders approved the proposal. Thus, in compliance with the new regulations of the German Stock
+Corporation Act (AktG), the amount of €248 million was paid out to shareholders on the third business day after the
+Annual General Meeting, 21 February 2017. At that point in time the number of shares entitled to a dividend was
+1,126,673,109 units. As of 30 September 2017 the number of shares issued was 1,136,200,929. This figure includes
+the unchanged amount of 6 million shares owned by the Company, which are not entitled to a dividend. Based on
+Infineon's positive business developments, a proposal is to be made to shareholders at the 2018 Annual General
+Meeting to increase the dividend for the 2017 fiscal year by 3 cents from €0.22 to €0.25. For more information on
+Infineon's dividend policy, see "Sustainable value creation for our shareholders" in the chapter "Group strategy".
+Dividend
+As of 30 September 2017, three shareholders each held more than 3 percent of the Infineon shares issued. At the end
+of the 2016 fiscal year, four shareholders held more than 3 percent of shares each. At 9.52 percent, the share capital
+held by retail investors at the end of the 2017 fiscal year remained more or less stable, compared to 9.53 percent at
+the end of the previous year.
+Shareholder structure
+In the DAX ranking, Infineon improved by one place in terms of market capitalization, moving from 17th place at the
+end of the 2016 fiscal year to 16th place at the end of the 2017 fiscal year. In terms of the volume traded in euros in
+Xetra and on the Frankfurt trading floor during the last twelve months, Infineon ranked 19th in the 2017 fiscal year,
+unchanged compared to the previous year.
+In the USA, the Infineon share is traded in the form of American Depositary Shares ("ADS") on the OTCQX Interna-
+tional over-the-counter market under the ticker symbol "IFNNY”. The average daily ADS trading volume dropped in
+the 2017 fiscal year from 216 thousand ADS to 98 thousand ADS. The number of ADS outstanding rose on the other
+hand from 16.7 million ADS at the end of the 2016 fiscal year to 21.8 million ADS as of 30 September 2017.
+P see page 28
+G see graph 27
+67
+The Infineon share
+Combined Management Report | Our Group
+99
+30 September 2016 = 100
+66
+The average volume of Infineon shares traded, measured in units, in the Xetra system, declined by 25 percent in the
+2017 fiscal year compared to the previous year. 4.1 million shares were traded daily in the 2017 fiscal year, compared
+to 5.5 million shares in the previous year. On the other hand the average daily trading volume of Infineon shares
+measured in euros rose 8 percent from €68.5 million in fiscal 2016 to €74.3 million in the 2017 fiscal year.
+Trading volumes and DAX ranking
+During the 2017 fiscal year the Infineon share continued the upward trend seen in previous years, finishing the fiscal
+year at a closing price of €21.27, 34 percent higher than its closing price of €15.88 at the end of fiscal 2016. During
+the first few months of the 2017 fiscal year the price of the Infineon share developed for the most part sideways with
+slight fluctuations. The price of the Infineon share reached its low for the year, €15.33, on 2 December 2016. After
+this, the price rose with more volatile price fluctuations, resulting in a year end price of €21.27. This was also the
+highest price for the 2017 fiscal year. With an increase of 34 percent during the 2017 fiscal year, the value of the
+Infineon share outperformed comparable benchmark indices, the DAX and Dow Jones U.S. Semiconductor Indices.
+In this period the DAX rose by 22 percent and the Dow Jones U.S. Semiconductor Index rose by 29 percent. During
+the same period the Philadelphia Semiconductor Index (SOX) rose by 40 percent, thus even exceeding the increase
+of the Infineon share.
+Further share price increase in 2017 fiscal year
+page 67
+G see graph 26
+due on 10 September 2018, ISIN: XS1191115366
+due on 10 March 2022, ISIN: XS1191116174
+since February 2016: "BBB" (outlook "stable")
+Rating of S&P Global Ratings
+1.5% Infineon Bond from 10 March 2015
+1.0% Infineon Bond from 10 March 2015
+Bond information
+2 Own shares were not taken into consideration for calculation of market capitalization.
+1 The number of shares issued includes own shares.
+Dow Jones Sustainability Europe Index
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Dow Jones Sustainability World Index
+23.82
+2016
+3,447
+49%
+3,083
+48%
+1,735
+25%
+1,574
+24%
+463
+7%
+424
+6%
+881
+12%
+22.23
+819
+714
+10%
+661
+10%
+7,063
+100%
+6,473
+100%
+With an increase of €364 million, more than one half (62 percent) of revenue growth related to the Asia-Pacific region
+(excluding Japan), followed by the Europe, Middle East and Africa region, which recorded a €125 million or 21 percent
+increase in revenue, and the Americas region, where revenue rose by €62 million (11 percent of total revenue growth).
+The Asia-Pacific region (excluding Japan) was already the largest region in the previous fiscal year, when it accounted
+for 48 percent of revenue. The importance of the Asia-Pacific region (excluding Japan) continued to grow during
+the fiscal year under report, accounting for 49 percent of revenue, followed by the Europe, Middle East and Africa
+region with 32 percent.
+China accounted for €1,735 million or 25 percent of Infineon's worldwide revenue and therefore for the largest
+share at individual country level, followed by Germany at €1,094 million or 15 percent.
+17.47
+19.06
+20.64
+13%
+15%
+S&P-Europe-350
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones Germany Titans 30
+Share capital
+Share types
+Basic information on shares
+investor).
+(www.infineon.com/
+Relations pages
+our Investor
+ences via the internet
+as a webcast on
+@ It is possible to
+participate in the
+telephone confer-
+The Infineon share
+The Infineon share
+Combined Management Report | Our Group
+99
+65
+Shares issued¹
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Our human resources work focuses on continuing successful initiatives and programs and developing new measures
+in response to current requirements. Infineon's long-term human resources strategy continually contributes to
+meeting our high-performance aspirations. Our aim is to deploy our workforce both competently and correctly,
+motivating employees to contribute to Infineon's overall success through their own personal success.
+Outlook
+The worldwide personnel cost for current, internal Infineon employees in the 2017 fiscal year totaled €2,206 million
+(2016 fiscal year: €2,047 million). This amount includes wages and salaries, including overtime and allowances, as
+well as social costs (pension expenses and social contributions).
+As of 30 September 2017 Infineon had a worldwide workforce of 37,479 employees, compared to 36,299 employees
+one year earlier.
+Employees and personnel expense
+Our offering of functional training is made available primarily via the "Academy Connect" platform. Cooperation
+has been established among a total of 11 global "functional academies" (operating in specific segments and fields)
+as well as other internal training providers, with a view to providing coordinated learning to build up professional
+expertise. Academies exist, for example, in the fields of purchasing, finance, manufacturing, quality management
+and supply chain. The learning content on offer is expanded on an ongoing basis, as through the professional and
+targeted development of our staff we aim to reinforce our corporate strategy and increase productivity.
+How do we equip ourselves optimally for the working world of the future? We endeavor to answer this question with
+our strategic competence management program, which identifies the skill sets necessary for the future and suggests
+relevant development paths.
+Competence development
+The health of our staff is imperative. We therefore protect and promote it through our occupational health manage-
+ment program. Preventive programs, such as "Fit4Health" in Germany and Austria or H.A.P.P.Y. (Healthy Active People
+Program for You) in Singapore boost health awareness in our staff.
+Health management
+Our workforce
+Our focus in this area is on professional training aimed at developing the technical know-how and innovation skills
+of our workforce; programs concentrating on improving the leadership and feedback culture within the organization;
+training courses on the development of social skills and aptitudes; project management training. In addition,
+in-house training opportunities, such as mentoring programs and on-the-job training, are also of importance to us.
+We give high priority to staff training. We continuously keep an eye on our employees with all their skills and aptitudes
+to ensure their personal and professional development.
+Qualifications and training
+With this aim in mind, our human resources work focuses on the three pillars "Leadership excellence", "Promoting
+talent" and "Our workforce". Over the coming years, we intend to set the right course for the future by further devel-
+oping our human resources initiative “Connect”, thereby strengthening our aspiration to be a high-performance
+company. State-of-the-art digital technologies will be deployed to make our HR processes even more efficient.
+Standardizing and simplifying our systems and processes throughout the organization will also help us achieve this
+goal. "Connect" will enable us to align our actions with our stated business strategy and to develop our corporate
+culture further.
+MSCI Germany
+Own shares
+We are available to
+Dow Jones STOXX Europe 600
+DAX 30
+98,358 (in the 2017 fiscal year)
+US$28,504 million (as of 30 September 2017)
+ADS, over-the-counter trading on the OTC market (OTCQX)
+4,143,726 (in the 2017 fiscal year)
+€24,039 million (as of 30 September 2017)
+Shares: Frankfurt Stock Exchange (FSE)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-XE
+IFX (share), IFNNY (ADS)
+623100
+6 million shares (as of 30 September 2017)
+DE0006231004
+€2,272,401,858 (as of 30 September 2017),
+€2,265,346,218 (as of 30 September 2016)
+1,136,200,929 (as of 30 September 2017),
+1,132,673,109 (as of 30 September 2016)
+of €2 each (ADS: shares = 1:1)
+ISIN
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+www.infineon.com/cms/en/about-infineon/investor/
+@ A full overview of other major indices in which the Infineon
+share is represented can be found on Infineon's website at
+Index membership (selected)
+Daily average ADS traded
+Market capitalization²
+Trading in the USA
+Daily average shares traded on Xetra
+Market capitalization²
+Listings
+Bloomberg
+Reuters
+Ticker symbol
+WKN
+(+49 89 234-26655).
+our private share-
+holders by email
+(investor.relations
+@infineon.com)
+and by telephone
+infineon-share/index-membership/
+Combined Management Report | Our Group
+Our employees
+1,000
+1,094
+0.12
+Retail investors
+Other
+2014
+0.18
+2015
+0.20
+2016
+0.22
+Proposal 2017
+0.25
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Group performance
+Review of results of operations
+2013
+Group performance
+The consolidated statement of operations
+€ in millions, except earnings per share
+68
+2017
+2016
+Revenue
+7,063
+6,473
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income and expenses, net
+Operating income
+2,621
+Review of results of operations
+2,330
+State of Norway
+2012
+130
+120
+110
+100
+14.29
+90
+Infineon
+10|2016 11|2016
+DAX
+12|2016 01 | 2017
+02|2017
+03|2017 04|2017 05|2017 06|2017
+07|2017
+08|2017
+09|2017
+0.12
+-SOX
+G 27
+Shareholder structure
+76.34%
+5.74%
+5.23%
+3.17%
+O
+9.52%
+Dividend for fiscal year
+2010
+Dividend per share in €
+0.10
+Allianz Global Investors GmbH
+2011
+0.12
+BlackRock Inc.
+■Dow Jones US Semiconductor Index
+15%
+(776)
+(819)
+P see page 38 ff.
+Net income improved
+Net income improved by €47 million to €790 million year-on-year. Revenue grew by 9 percent to €7,063 million
+thanks to positive sales developments. The resulting earnings contribution, largely reflecting positive sales volume
+trends, helped operating income to rise by 29 percent or €220 million to €983 million. This increase was offset by a
+higher income tax expense (see note 4 to the Consolidated Financial Statements). The amounts reported include
+acquisition-related depreciation, amortization and other expenses totaling €153 million (2016: €191 million), mainly
+for International Rectifier (predominantly expenses recognized in conjunction with the purchase price allocation).
+Earnings per share (basic and diluted) amounted to €0.70 per share and were therefore up on the previous fiscal year
+(2016: €0.66).
+Adjusted earnings per share (diluted) improved further from €0.76 to €0.85 per share (see "Further improvement in
+adjusted earnings per share" in this chapter for details of the calculation).
+Revenue growth reflects positive sales volume trends
+Revenue grew by €590 million to €7,063 million in the 2017 fiscal year (2016: €6,473 million). All four operating
+segments reported year-on-year revenue growth on the back of positive sales volume trends (see the chapter
+"The segments"). Revenue growth was driven mainly by strong demand for semiconductors used in automotive,
+industrial and power supply applications. The top-selling Automotive segment contributed more than half
+(56 percent) to total revenue growth.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Group performance
+Review of results of operations
+69
+69
+No significant impact of currency effects on revenue
+The majority of revenue was generated in foreign currencies in the 2017 fiscal year, with revenue denominated in
+US dollars accounting for the largest share. The average euro/US dollar exchange rate of around US$ 1.11 did not
+change compared to the previous year. Across all currencies and over the fiscal year as a whole, currency factors
+contributed less than 1 percent to the revenue increase. Thereby the currency impact compared to the previous fiscal
+year is measured by applying the previous fiscal year's relevant average exchange rates to 2017 fiscal year revenue.
+G❘ see graph 28
+page 69
+Significance of Asia-Pacific continues to grow; China ahead of Germany as most important sales market
+Europe, Middle East, Africa
+Therein: Germany
+Asia-Pacific (excluding Japan)
+Therein: China
+Japan
+Americas
+Therein: USA
+Total
+2017
+2016
+2,272
+32%
+2,147
+33%
+€ in millions, except percentages
+(770)
+P see page 71
+0.76
+(791)
+(43)
+(6)
+983
+763
+Net financial result (financial income and expenses, net)
+(53)
+(61)
+Income from investments accounted for using the equity method
+3
+3
+Income tax
+15.88
+36
+P see page 133 ff.
+Income from continuing operations
+741
+Income (loss) from discontinued operations, net of income taxes
+Net income
+(1)
+2
+790
+743
+Basic earnings per share (in euro)
+0.70
+0.66
+Diluted earnings per share (in euro)
+0.70
+0.66
+Adjusted earnings per share (in euro) – diluted
+0.85
+791
+140
+150
+(1,098)
+Investments and depreciation/amortization
+Working capital is forecast to finish the 2018 fiscal year at between €650 million and €850 million.
+Working capital
+In Germany, Infineon's current tax expense is based on the applicable "minimum taxation" rules, under which
+only 40 percent of taxable profits arising in Germany are subject to current tax due to the utilization of tax loss
+carry-forwards. This results in a current tax rate of approximately 12 percent in Germany. As of 30 September 2017,
+tax loss carry-forwards for German corporation tax and municipal trade tax purposes amounted to €1.8 billion and
+€2.9 billion respectively.
+The effective current tax rate for the Infineon Group in the 2018 fiscal year is forecast at approximately 15 percent.
+This tax rate is influenced in particular by tax losses available for carry-forward in Germany.
+Income taxes
+The financial result (financial income less financial expense) for the 2017 fiscal year was a net expense of €53 million.
+A financial result at a similar level is expected for the 2018 fiscal year.
+Investments (defined by Infineon as the sum of purchases of property, plant and equipment, purchases of intangible
+assets and capitalized development costs) are expected to rise to between €1.1 billion and €1.2 billion in the 2018
+fiscal year. In the 2017 fiscal year this figure amounted to €1,022 million, comprising investments in property, plant
+and equipment (€874 million) and in capitalized development costs and other intangible assets (€148 million).
+Investments in capitalized development costs and other intangible assets in the 2018 fiscal year are planned at a
+similar level to one year earlier.
+Financial result
+Non-segment result
+Based on the forecast changes in revenue and expenses described above, in the 2018 fiscal year the Segment Result
+Margin is expected to amount to 17 percent at the mid-point of the planned range for revenue growth.
+Segment Result Margin of approximately 17 percent expected
+Infineon expects operating expenses to increase in absolute terms as a result of revenue growth. Research and
+development expenses are likely to rise at a slightly more pronounced rate than revenue. Selling, general and
+administrative expenses are expected to increase at a lower rate than revenue. Acquisition-related expenses
+included in operating expenses are predicted to be slightly below the previous fiscal year's level.
+Operating expenses predicted to increase
+At the mid-point of the planned range for revenue growth, the gross margin for the 2018 fiscal year is expected to
+rise slightly. The gross margin will continue to be negatively influenced by acquisition-related expenses.
+Slight upward trend in gross margin expected
+Infineon expects the non-segment result for the 2018 fiscal year to be a negative amount in the region of €150 million
+(2017 fiscal year: negative €225 million) mainly due to acquisition related expenses. Approximately €100 million
+of the forecast amount relates to non-cash-relevant depreciation and amortization arising in conjunction with the
+International Rectifier acquisition.
+Based on our expectations for the global economy and for the semiconductor market segments relevant for
+Infineon as described above and an assumed average exchange rate of US$1.15 against the euro, Infineon forecasts
+revenue growth of 9 percent, plus/minus 2 percentage points, for the 2018 fiscal year. The Automotive segment
+is expected to grow at a meaningfully faster rate than the Group average. The Industrial Power Control and Power
+Management & Multimarket segments are both expected to report growth rates below the Group average. Due to
+the difficult market situation, revenue in the Chip Card & Security segment is forecast to remain similar to the
+previous fiscal year. The average euro/US dollar exchange rate during the 2017 fiscal year was 1.11 and thus more
+favorable for Infineon's revenue and earnings performance than the exchange rate of 1.15 now assumed for the
+coming fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Report on expected developments, together with associated material risks and opportunities
+Outlook | Risk and opportunity report
+Effective risk and opportunity management is central to all of our business activities and plays an important role
+in implementing the strategic targets described in the chapter "Group strategy" - namely achieving sustainable,
+profitable growth and preserving our financial resources through efficient employment of capital. Infineon's risk
+and opportunity profile is characterized by periods of rapid growth, followed by periods of significant market
+decline, a substantial need for capital investment in order to achieve and sustain our market position and an
+extraordinarily rapid pace of technological change. Gaining a leading edge through technological innovation also has
+a legal dimension. Against this background, Infineon's risk policy is aimed firstly at taking advantage of identified
+opportunities as quickly as possible in a way most appropriate to increasing the value of the business, and secondly
+at pro-actively mitigating risks – particularly those capable of posing a threat to Infineon's going-concern status - by
+adopting appropriate countermeasures. Risk management at Infineon is therefore closely linked to forecasting and
+the implementation of our business strategies. Ultimate responsibility for risk management lies with the Infineon
+Management Board.
+Risk policy: Underlying principles of our risk and opportunity management
+Risk and opportunity report
+P see page 20 ff.
+Based on forecasts for the global economy and the semiconductor market in the 2018 calendar year, Infineon
+expects revenue growth of 9 percent year-on-year, plus or minus 2 percentage points. On this basis, the gross margin
+should increase slightly. At the mid-point of the planned range of revenue growth, the Segment Result Margin is
+expected to come in at about 17 percent. Investments will rise to between €1.1 billion and €1.2 billion. Depreciation
+and amortization are expected to be in the region of €880 million. Free cash flow from continuing operations is
+expected to reach an amount of between €500 million and €600 million. The Return on Capital Employed (ROCE) is
+predicted to increase slightly.
+Overall statement on the expected development of the Infineon Group
+The Return on Capital Employed (ROCE) is expected to increase slightly in the 2018 fiscal year, with slight increases
+forecast for both net income and capital employed.
+Combined Management Report | Our 2017 fiscal year
+ROCE
+Gross cash position
+Free cash flow in the 2018 fiscal year is forecast to come in at between €500 million and €600 million.
+Free cash flow from continuing operations
+Depreciation and amortization are expected to be in the region of €880 million.
+The ratio of investments to revenue at the mid-point of the planned range of revenue growth for the 2018 fiscal year
+should be about 15 percent and hence above the target level of 13 percent of revenue. This development reflects
+high investments in additional manufacturing capacities in light of rising demand, especially for electro-mobility
+products. Planned investments in manufacturing facilities during the 2018 fiscal year will focus on expanding
+frontend capacities, including further expansion of Infineon's 200-millimeter as well as its 300-millimeter manu-
+facturing capacities. A significant amount is also earmarked to upgrade backend facilities and capacities. A smaller
+part of the investments will be used to ensure that existing frontend manufacturing facilities remain state-of-the art
+in terms of automation, quality, innovation and infrastructure.
+P see page 27 f.
+81
+The gross cash position is expected to finish the 2018 fiscal year at a level between €1.8 billion and €2.6 billion. Hence,
+Infineon again expects to meet its capital structure targets in the 2018 fiscal year. See "Capital structure targets
+demonstrate our reliability" in the chapter "Group strategy" for more information on capital structure targets.
+Revenue increase of 9 percent expected, plus or minus 2 percentage points, compared to the
+previous fiscal year
+60
+80
+Increase slightly
+Slight increase
+plus/minus 2 percentage points
+Increase by 9%
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+621
+1,022
+(gross cash position higher than debt)
+Between €750 million and €900 million
+About €950 million
+above revenue growth
+826
+739
+Working capital
+618
+€1 bn
++21%
+2,452
+In the range of €1.7 billion - €2.4 billion
+and therefore within the target range of
+€1 billion + 10% to 20% of revenue
+Net cash position
+471
+Investments
+Increase below revenue growth
+In the range of €1.8 billion - €2.6 billion
+and therefore within the target range of
+€1 billion + 10% to 20% of revenue
+Net cash position
+(gross cash position higher than debt)
+Between €650 million and €850 million
+Between €1.1 billion and 1.2 billion
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Market analysts forecast that the global semiconductor market as a whole (i.e. including memory ICs and micro-
+processors) will grow by 17.8 percent in the 2017 calendar year, reflecting the sharp rise in demand for memory ICs.
+Sales of memory ICs are expected to generate revenue growth of 51.0 percent in the 2017 calendar year. Assuming
+that growth in the area of memory ICs returns to normal, the total semiconductor market is expected to expand by
+5.4 percent in the 2018 calendar year. All growth figures are based on market sizes measured in US dollars.
+The markets served by Infineon are also benefiting from the healthy state of the global economy. The global semi-
+conductor market relevant for Infineon (i.e. excluding memory ICs and microprocessors) grew by 1.4 percent in
+the 2016 calendar year (source: IHS Markit, Technology Group) and is expected to grow by 7.3 percent year-on-year
+in the 2017 calendar year. Growth of 4.7 percent is forecast for the 2018 calendar year.
+The world economy grew by 2.5 percent in the 2016 calendar year. Based on the assessment of experts at the
+International Monetary Fund (IMF), growth is expected to reach 3.0 percent in the 2017 calendar year. In fall 2016,
+the growth rate for the 2017 calendar year was still predicted at 2.8 percent. Over the course of the 2017 calendar
+year, the global economy has therefore developed better than expected. According to the experts, the upswing is
+on a solid footing and is set to continue throughout the 2018 calendar year. The expected growth rate for the 2018
+calendar year is 3.1 percent. Various geopolitical risks remain, however. An escalation of the North Korean conflict,
+for instance, could slow down the upswing.
+Growth prospects for the global economy and the semiconductor market
+As a globally operating organization, Infineon generates revenue not only in euros, but also in foreign currencies,
+predominantly US dollars. It also incurs expenses in US dollars and, to some extent, in currencies correlated to the
+US dollar, such as the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of non-euro
+denominated revenue and expenses usually does not balance out. For this reason, fluctuations in exchange rates,
+particularly between the euro and the US dollar, influence the amounts reported for revenue and earnings. A rising
+US dollar has a positive impact, whereas a falling US dollar has an adverse impact on revenue and earnings.
+Excluding the effect of currency hedging instruments, the impact of a deviation of 1 cent in the actual exchange rate
+of the US dollar against the euro compared to the forecast rate would amount to a change in Segment Result of
+approximately €3 million per quarter or approximately €12 million per fiscal year compared to the forecast value.
+These figures assume, however, that the exchange rates of currencies correlated with the US dollar - in which
+expenses arise for Infineon - change in parallel to the euro/US dollar exchange rate. In terms of revenue, the impact
+of exchange rates is limited almost entirely to the euro/US dollar rate, where a deviation of 1 cent in the actual
+exchange rate compared to the forecast rate would have an impact on revenue of approximately €9 million per
+quarter or approximately €36 million per fiscal year. Planning for the 2018 fiscal year is based on an assumed average
+exchange rate of US$1.15 against the euro.
+year
+Explanatory comments to the outlook for the 2018 fiscal
+Assumed euro/US dollar exchange rate
+The gross margin improved from 36.0 percent in the 2016 fiscal year to 37.1 percent in the 2017 fiscal year, in line
+with expectations. Operating expenses developed better than expected. In the outlook, the prediction was that
+research and development expenses as well as selling, general and administrative expenses would exhibit an
+increase below revenue growth. Selling, general and administrative expenses increased by 4 percent, which was
+5 percentage points below the rate of revenue growth and in line with expectations. Research and development
+expenses increased by only 1 percent, well below the 9 percent revenue growth achieved and significantly better
+than originally forecast.
+The original forecast envisaged a Segment Result Margin of 16 percent at the mid-point of the planned range
+for revenue growth. Revenue grew by 9 percent in the 2017 fiscal year with year. Consequently, the actual growth
+rate finished 1 percentage point above the originally stated range of 4 to 8 percent. The higher growth rate helped
+generate a Segment Result Margin of 17.1 percent. Free cash flow totaled €594 million in the 2017 fiscal year,
+therefore also above the expected range of between €400 million and €500 million. At 14.9 percent, as predicted,
+the Return on Capital Employed (ROCE) was slightly down on the previous year's figure of 15.0 percent.
+Comparison of original outlook and actual figures for the 2017 fiscal year
+79
+Outlook
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2017 fiscal year
+-
+Net cash position
+Coordinated risk management and control system elements are in place that enable us to pursue our stated risk
+policy in practice. Alongside the "Risk and Opportunity Management System" and the "Internal Control System with
+respect to Financial Reporting Processes” described below, it also includes the related forecasting, management
+and internal reporting processes as well as the Compliance Management System.
+G see graph 32
+> Issues relevant for financial reporting and disclosures in connection with agreements entered into are recognized
+and appropriately presented;
+> Intragroup transactions are fully accounted for and properly eliminated;
+> Group-wide financial reporting, measurement and accounting guidelines are continually updated and adhered to;
+The ICS is an integral part of the accounting process in all relevant legal entities and corporate functions. The system
+monitors compliance with stated principles and stipulated procedures based on preventive and detective controls.
+Among other things, we regularly check that:
+The principal focus of the Internal Control System (ICS) is on the financial reporting process, with the aim of
+monitoring the proper maintenance and effectiveness of accounting systems and financial reporting. The primary
+objective of the ICS is to minimize the risk of misstatement in Infineon's internal and external reporting and to
+ensure with a reasonable amount of certainty that the Consolidated Financial Statements comply with all relevant
+regulations. Appropriate controls must therefore be in place throughout the organization to ensure such compliance.
+Clear lines of responsibility are assigned to each of the processes.
+Internal Control System with respect to the financial reporting process
+The Supervisory Board's Investment, Finance and Audit Committee oversees the effectiveness of the Risk Manage-
+ment System. As part of the statutory audit, the external Group auditor also examines our early warning system
+pursuant to section 91, paragraph 2, of the German Stock Corporation Act to ascertain its suitability to detect risks
+that could pose a threat to Infineon's going-concern status and reports annually thereon to the Chief Financial
+Officer (CFO) and the Investment, Finance and Audit Committee of the Supervisory Board.
+> Processes and controls are in place to explicitly guarantee the completeness and correctness of the year-end
+financial statements and financial reporting;
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS departments using
+procedures incorporated in business processes. Group Internal Audit also tests compliance with legal requirements
+and Infineon guidelines and, where appropriate, rules relating to Risk and Opportunity Management and initiates
+corrective measures.
+All reported risks and opportunities in their entirety are reviewed for the Infineon Group for possible correlation and
+overlap factors and are analyzed using an Infineon-specific categorization model. Regular risks and opportunities
+analysis and new developments in risk management culture are supplemented by interdisciplinary workshops
+held at segment, corporate and regional levels. Important information relevant for Infineon's Risk and Opportunity
+Management System is available to all employees via our intranet system, including access to ERM tools and ERM
+guidelines, containing job descriptions for all functions involved in the process as well as all information necessary
+for reporting purposes.
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and reputation as well as the
+estimated probability of occurrence, a risk is classified as "high", "medium" or "low".
+83
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2017 fiscal year
+88
+82
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage and monitor identified
+risks and opportunities, and are responsible for formally determining a set of appropriate strategies (avoidance,
+mitigation, transfer to other parties, acceptance). Working closely with corporate functions and individual managers,
+the Risk and Opportunity Manager is also responsible for defining and monitoring measures aimed at implementing
+the adopted management strategy. For our system to be successful, it is essential that risks and opportunities are
+managed and monitored pro-actively and with a great deal of commitment.
+5 >90% Certain
+› Processes are in place for the segregation of duties and for the dual control principle in the context of preparing
+financial statements, as well as for authorization and access rules for relevant IT accounting systems.
+Combined Management Report | Our 2017 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+We have once again achieved above-average revenue growth in China, as a result of which the share of Group
+revenue generated in this region rose again slightly from 24 percent in the 2016 fiscal year to 25 percent in the 2017
+fiscal year. Our dependence on the Chinese market therefore remains and constitutes a slightly higher risk than
+one year earlier. This risk includes the possibility of lower demand for exports to China and hence a decline in
+manufacturing capacity utilization levels. There is also a risk that an increased volume of previously imported
+semiconductors will be manufactured in China and that a greater volume of semiconductors manufactured in
+China will be exported. Regardless of our assessment of potential scenarios and outcomes within this complex set
+of risks, these developments could have an adverse impact on Infineon's operations, financial condition, liquidity,
+cash flows and earnings.
+In this context, we are particularly monitoring the European debt crisis. As a consequence of the ongoing high
+levels of public sector debt, measures are increasingly being taken to consolidate budgetary shortfalls and cut
+investment expenditure. Uncertainty among consumers and companies is growing and unemployment remains
+high in many EU countries. Risks also arise in conjunction with current geopolitical risks, such as the conflict
+between the USA and North Korea as well as unrest and civil wars in the Middle East.
+As a globally operating company, our business is highly dependent on global economic developments. A worldwide
+economic downturn – particularly in the markets we serve - may result in us not achieving our forecasted revenue.
+Risks can also arise due to political and social changes, particularly in countries in which we manufacture and/or sell
+our products.
+Unsettled political and economic climate (RC: high)
+Strategic risks
+In the following section, we describe risks that could have a significant or materially adverse impact on Infineon's
+operations, liquidity, earnings, cash flows and reputation and which have therefore been allocated to the risk classes
+"high" or "medium". Depending on the potential degree of impact and the estimated likelihood of occurrence, the
+risk class is shown in parentheses for each risk (e.g. “RC: high”).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Significant risks
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness of the ICS with
+regard to the accounting and financial reporting process. The Management Board and the Investment, Finance and
+Audit Committee of the Supervisory Board are regularly informed about any significant control deficiencies and
+the effectiveness of the internal controls.
+Furthermore, in a Representation Letter, all legal entities, segments and relevant corporate functions confirm that
+all business transactions, all assets and liabilities and all income and expense items have been recognized in the
+financial statements.
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting process. An annual
+risk analysis is initially performed and the defined controls are revised, as and when required. The assessment
+involves identifying and updating significant risks relating to accounting and financial reporting in the relevant
+legal entities and corporate functions. The controls defined for identifying risks are documented in accordance with
+Group-wide guidelines. Regular random tests are performed to assess the effectiveness of the controls. These tests
+constitute the basis for an assessment of the appropriate extent and effectiveness of the controls. The results are
+documented and reported in a global IT system. Any deficiencies identified are remedied with due consideration
+given to their potential impact.
+Assessment of effectiveness
+84
+Risk and opportunity report
+Report on expected developments, together with associated material risks and opportunities
+The Risk Management and Internal Control System are continuously reviewed to ensure compliance with internal
+and external requirements. Regular improvements made to the system contribute to the continuous monitoring
+of the relevant risk areas within the responsible organizational units.
+4 <90% Probable
+3 <60% Likely
+2 <40% Possible
+2
+3
+4
+5
+Degree of impact
+Risk assessment matrix
+G 32
+1
+The scales used to measure these two factors (degree of impact and likelihood of occurrence) and the resulting
+risk assessment matrix are depicted in the following graph.
+Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation or hedging measures,
+but without offsetting any provisions recognized. The time periods and the measurement categories used are
+closely linked to our short- and medium-term business planning and Group targets.
+In organizational terms, the Risk and Opportunity Management System is structured in a closed-loop, multiple-stage
+process, which stipulates the manner and criteria to be applied to identify, measure, manage and report on risks
+and opportunities and defines how the system is to be monitored as a whole. Major components of the system
+are a quarterly analysis of risks and opportunities, reporting by all consolidated entities, an analysis of the overall
+situation at segment, regional and Group level, reporting to the Management Board on the risks and opportunities
+situation as well as major management measures undertaken. The Management Board, in turn, reports regularly
+to the Supervisory Board's Investment, Finance and Audit Committee. Where necessary, standard processes are
+supplemented by the ad-hoc reporting of any major risks identified between regular reporting dates.
+Responsibility for processes and systems relating to Risk and Opportunity Management rests with the Risk Manage-
+ment and Internal Control System (ICS) function within the corporate finance department and with designated
+Risk Officers working at segment, corporate function and regional levels. Responsibility for the identification, mea-
+surement, management and reporting of risks and opportunities lies with the management of the organizational
+unit concerned.
+Infineon's centralized risk management system is based on a Group-wide, management-oriented Enterprise
+Risk Management (ERM) approach, which aims to cover all relevant risks and opportunities. The approach is
+based on the "Enterprise Risk Management - Integrated Framework" developed by the Committee of Sponsoring
+Organizations of the Treadway Commission (COSO). The objective of the system is the early identification, assess-
+ment and management of risks that could have a significant influence on Infineon's ability to achieve its strategic,
+operational, financial and compliance-related targets. We therefore define risk/opportunity as the occurrence of
+future uncertainties that could result in a negative or positive variance from forecast. We incorporate all relevant
+organizational units within the Group in this analysis, thus covering all segments, significant centralized functions
+and regions.
+Risk and Opportunity Management System
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2017 fiscal year
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative and/or qualitative
+terms, based on the dimensions degree of impact on operations, liquidity, earnings, cash flows and reputation on
+the one hand and likelihood of occurrence on the other.
+1
+2
+3
+1 <10% Unlikely
+Likelihood of occurrence
+Likelihood of occurrence
+5 >€250 million Major
+4 > €100 million Significant
+3 >€60 million Moderate
+2 >€20 million Minor
+<€20 million Marginal
+1
+on Segment Result
+Degree of impact
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+High Risk
+Medium Risk
+Low Risk
+5
+4
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+(3)
+€1 bn
++19%
+Gross cash position
+Gross cash position and net cash position
+Free cash flow in the previous fiscal year amounted to €490 million. In that year, net cash provided by operating
+activities from continuing operations amounting to €1,313 million exceeded investments in property, plant and
+equipment, intangible and other assets totaling €826 million.
+Free cash flow in the 2017 fiscal year amounted to €594 million. Net cash provided by operating activities from
+continuing operations amounting to €1,728 million easily exceeded total cash outflows of €1,134 million used
+for investments in property, plant and equipment, intangible and other assets as well as for the acquisition of the
+MoTo shares.
+Net cash provided by operating activities exceeds investments
+490
+594
+Combined Management Report | Our 2017 fiscal year
+The following table reconciles the gross cash position and the net cash position (i.e. after deduction of debt).
+Since some liquid funds are held in the form of financial investments, which, for IFRS purposes, are not considered
+to be "cash and cash equivalents”, Infineon reports on its gross and net cash positions in order to provide investors
+with a better understanding of its overall liquidity. The gross and net cash positions are determined as follows from
+the Consolidated Statement of Financial Position:
+Group performance
+Review of liquidity
+Cash flow
+75
+€ in millions
+2017
+2016
+Net cash provided by operating activities from continuing operations
+Review of liquidity
+1,728
+€ in millions
+Financial investments
+17
+323
+2,240
+2,452
+1,615
+1,592
+625
+Cash and cash equivalents
+860
+30 Septem-
+30 Septem-
+ber 2017
+Net cash position
+Total debt
+Short-term debt and current maturities of long-term debt
+Long-term debt
+Less:
+Gross cash position
+ber 2016
+1,313
+Net cash used in investing activities from continuing operations
+Net cash used in financing activities from continuing operations
+(1,131)
+Net cash used in financing activities from continuing operations in the 2016 fiscal year amounted to €229 million,
+comprising mainly a cash outflow of €225 million for the dividend payment for the 2015 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Group performance
+Review of liquidity
+76
+Free cash flow
+Net cash used in financing activities from continuing operations in the 2017 fiscal year totaled €340 million and
+was mainly impacted by the payment of the dividend for the 2016 fiscal year (€248 million). In addition, long-term
+debt amounting to €119 million was repaid (see note 12 to the Consolidated Financial Statements). These outflows
+were offset by inflows of €26 million arising on the issue of shares in conjunction with the Infineon Stock Option Plan.
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in operating activities and
+net cash provided by and/or used in investing activities, both from continuing operations, after adjusting for cash
+flows related to the purchase and sale of financial investments. Free cash flow serves as an additional performance
+indicator, since Infineon holds part of its liquidity in the form of financial investments. This does not mean that
+the free cash flow calculated in this way is available to cover other disbursements, since dividend, debt-servicing
+obligations and other fixed disbursements are not deducted. Free cash flow should not be seen as a replacement or
+superior performance indicator, but rather as an additional useful item of information over and above the disclosure
+of the cash flow reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to other
+liquidity performance indicators and other performance indicators derived from the IFRS figures. Free cash flow
+only includes amounts from continuing operations, and is derived as follows from the Consolidated Statement
+of Cash Flows:
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+2017
+2016
+1,728
+1,313
+(1,131)
+€ in millions
+from continuing operations
+Dividend payment and debt repayments result in net cash used in financing activities
+Net cash used in investing activities from continuing operations in the previous fiscal year amounted to €1,098 million.
+Investments in property, plant and equipment and in intangible assets totaled €826 million. Net purchases of
+financial investments of €275 million resulted in a cash outflow as well.
+(1,098)
+(340)
+(229)
+Net change in cash and cash equivalents from discontinued operations
+Net change in cash and cash equivalents
+(5)
+(22)
+252
+(36)
+(17)
+(12)
+235
+(48)
+275
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+Net cash provided by operating activities from continuing operations significantly up on previous year
+Net cash provided by operating activities from continuing operations in the 2017 fiscal year amounted to
+€1,728 million, an improvement of €415 million on the €1,313 million reported for the previous fiscal year. Taking
+income from continuing operations before depreciation, amortization, impairment losses, interest and taxes
+amounting to €1,806 million (2016: €1,612 million) as the starting point, cash-relevant changes in trade receivables,
+trade payables, inventories, provisions, other assets and other liabilities totaling €81 million also contributed to
+the increase in net cash provided by operating activities from continuing operations. Cash outflows for interest and
+taxes totaled €191 million.
+Net cash used in investing activities from continuing operations influenced by investments in property, plant
+and equipment and acquisition of MoTo
+Net cash used in investing activities from continuing operations totaled €1,131 million in the 2017 fiscal year,
+including investments in property, plant and equipment (€874 million) and in intangible and other assets
+(€148 million). Cash used to acquire the MoTo shares amounted to €112 million, net of cash acquired.
+1,511
+2,240
+1,752
+1,769
+Increase by 6%
+12%
+Change in revenue
+performance indicators
+Growth and profitability
+performance indicators
+Supplementary
+9%
+Slight increase
+Slight decrease compared to FY 2016
+15.0%
+ROCE
+Between €500 million and €600 million
+594
+About 17% (at the mid-point of the
+planned range for revenue growth)
+17.1%
+14.9%
+About 16% (at the mid-point of the
+planned range for revenue growth)
+Between €400 million and €500 million
+compared to previous year
+36.0%
+Liquidity performance indicators
+4%
+2%
+administrative expenses
+819
+Increase below revenue growth
+791
+Gross margin
+Selling, general and
+7%
+development expenses
+776
+37.1%
+plus/minus 2 percentage points
+Slight increase compared to FY 2016
+Increase below revenue growth
+770
+Research and
+1%
+490
+Free cash flow from
+continuing operations
+15.2%
+Treasury at Infineon is based on a centralized approach in which the Group Finance & Treasury department is
+responsible for all major tasks and processes worldwide relating to financing and treasury matters.
+The Infineon treasury's stated objective is to ensure financial flexibility based on a solid capital structure. It is of
+prime importance for all companies in the semiconductor industry to ensure that sufficient cash funds are available
+to finance operating activities and planned investments throughout all phases of the business cycle. Debt should
+only constitute a modest proportion of the financing mix, so that headroom is available at all times.
+Group-wide treasury principles are in place regarding all issues relating to liquidity and financing, such as banking
+policies and strategies, execution of financing agreements, liquidity and investment management worldwide,
+currency and interest rate risk management and the handling of external and intragroup cash flows.
+Principles and structure of Infineon's treasury
+Taking into account the financial resources available to Infineon - including internal liquidity on hand, net cash
+that can be generated in future and available credit facilities (€72 million; 2016: €720 million; see note 12 to the
+Consolidated Financial Statements for further information) – we assume that we will be able to cover our planned
+capital requirements for the 2018 fiscal year. This includes fixed contractual obligations, such as investments,
+leasing arrangements, fixed service and supply agreements for commodities, input materials, electricity, gas and
+other similar items (see note 18 to the Consolidated Financial Statements for further information). Planned invest-
+ments are discussed in the chapter "Outlook".
+77
+Review of liquidity
+Group performance
+In the context of centralized liquidity management and where permitted by law and economically feasible, cash
+pooling structures are in place for liquidity management purposes in order to ensure the best possible allocation
+of liquidity within the Group and reduce external financing requirements. Liquidity accumulated at Group level is
+invested centrally by the Group Finance & Treasury department, based on a conservative approach to investments,
+in which preservation of capital is prioritized over return maximization. The Group Finance & Treasury department
+is also responsible for managing currency and interest rate risks. We employ the following derivative financial
+instruments for hedging purposes: forward foreign currency contracts to reduce exchange rate exposures (to the
+extent foreign currency cash flows are not offset within the Group) and commodity swaps to reduce price risks for
+expected purchases of gold. We do not use derivative financial instruments for trading or speculative purposes.
+Further information regarding derivative financial instruments and the management of financial risks is provided
+in notes 22 and 23 to the Consolidated Financial Statements.
+Combined Management Report | Our 2017 fiscal year
+P see page 78 ff.
+P see page 152 f.
+P see page 142 f.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Free cash flow totaling €594 million easily exceeded the dividend payment of €248 million and the repayment
+of debt amounting to €119 million. The gross cash position as of 30 September 2017 increased accordingly by
+€212 million.
+471
+618
+P see page 158 ff.
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide are arranged,
+structured and managed either directly or indirectly by the Group Finance & Treasury department in accordance
+with stipulated treasury principles.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
+Combined Management Report | Our 2017 fiscal year
+Segment Result Margin
+Outlook
+FY 2018
+Actuals
+FY 2017
+Original Outlook
+FY 2017
+Actuals
+FY 2016
+Principal performance indicators
+€ in millions, except percentages
+The following comparison of actuals and outlook for the 2017 fiscal year relates only to the original outlook made
+in November 2016, as presented in the Annual Report 2016.
+On 24 March 2017, Infineon raised its outlook for revenue, Segment Result Margin and investments. The outlook for
+revenue growth was increased at that stage from 6 percent, plus or minus 2 percentage points, to a range of between
+8 and 11 percent. At the mid-point of the revenue range, the outlook for the Segment Result Margin was raised to
+about 17 percent (previously about 16 percent). As a result of the better-than-expected growth in revenue and
+orders received, the figure for planned investments in property, plant and equipment and intangible assets (including
+capitalized development costs) was raised from about €950 million to about €1,050 million. Both figures included
+approximately €35 million for a new office building at Infineon's headquarters in Neubiberg near Munich.
+The following table and subsequent comments compare the actual and forecast values of Infineon's key performance
+indicators for the 2017 fiscal year and show the outlook for the 2018 fiscal year.
+Actual and target values for performance indicators
+Outlook
+Report on expected developments,
+together with associated material risks
+and opportunities
+Report 2016,
+page 79-83
+P see Annual
+78
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+1,834
+Psee page 142 f.
+Power
+Annual Report 2018
+17
+1,206
+17
+10
+Power Management & Multimarket
+2,318
+31
+2,148
+31
+8
+1,323
+Digital Security Solutions
+Other Operating Segments
+10
+10
+900
+708
+10
+(6)
+9
+0
+11
+664
+Industrial Power Control
+10
+42
+7
+15
+Americas
+894
+12
+881
+12
+1
+Therein: USA
+719
+9
+60
+714
+10
+1
+Revenue by segment
+7,599
+7,063
+8
+Automotive
+3,284
+43
+2,989
+3
+0
+Corporate and Eliminations
+Gross profit/Gross margin
+(1)
+1,075
+790
+36
+Segment Result/Segment Result Margin
+1,353
+17.8
+1,208
+17.1
+12
+Property, plant and equipment
+3,038
+2,659
+14
+Total assets
+10,879
+9,945
+9
+Total equity
+6,446
+5,636
+14
+Net cash provided by operating activities from continuing operations
+(143)
+463
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+791
+2,885
+38.0
+2,621
+37.1
+10
+Research and development expenses
+(836)
+11.0
+(776)
+11.0
+8
+Selling, general and administrative expenses
+(850)
+11.2
+(819)
+11.6
+4
+Operating income
+1,469
+983
+49
+Income from continuing operations
+1,218
+54
+7
+534
+Japan
+☐
+Airbus / Alibaba / Artesyn / Baidu / Boeing / Cisco/
+Dell/Delta / Ericsson / Google / Hewlett Packard
+Enterprise/HP/Huawei / Lenovo / LG Electronics/
+Lite-On / Makita / Nokia / Osram / Panasonic /
+Quanta / Samsung/ZTE
+Market position²
+#1 with a market share of 26.3%
+for standard power MOSFETs
+Source: IHS Markit, Technology Group, September 2018
+Digital Security
+Solutions
+(previously Chip Card & Security)
+Page 47
+Applications
+> Authentication
+> Automotive
+> Governmental identification documents
+> Healthcare cards
+> Internet of Things
+> Mobile communications
+> Payment system, mobile payment
+> Ticketing, access control
+> Trusted computing
+Product range
+> Contact-based security controllers
+> Contactless security controllers
+> Dual-interface security controllers
+(contact-based and contactless)
+Key customers'
+> Embedded security controllers
+> TVS (transient voltage suppressor) diode
+> RF power transistors
+Management
+& Multimarket
+Page 45
+Applications
+> Cellular infrastructure
+> Charging stations for electric vehicles
+> DC motors
+> HiRel (high-reliability components)
+> Internet of Things
+> LED and conventional lighting systems
+> Mobile devices
+> Power management (adapters, chargers,
+power supplies)
+Product range
+> Control ICs
+> Customized chips (ASICS)
+> Discrete low-voltage and high-voltage
+power MOSFETS
+> GPS low-noise amplifier
+> Low-voltage and high-voltage driver ICs
+> MEMS and ASICs for pressure sensors
+> MEMS and ASICs for silicon microphones
+> Radar sensor ICs (24 GHz, 60 GHz)
+> RF antenna switches
+> Silicon carbide diodes
+1,571
+Key customers'
+US Government Publishing Office / Watchdata
+1,171
+15
+1,094
+15
+7
+Asia-Pacific (excluding Japan, Greater China)
+1,129
+15
+1,071
+15
+5
+Greater China
+2,599
+34
+2,376
+34
+9
+Therein: China
+1,921
+25
+1,735
+25
+11
+Therein: Germany
+Gemalto / Giesecke & Devrient / Google / HP/
+Idemia/Lenovo/ Microsoft / Samsung/
+8
+2,272
+Market position²
+#1 with a market share of 24.2%
+for smart card and secure ICs
+Source: ABI Research, October 2018
+2 All figures for 2017 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment.
+The figures provided in those sections with respect to changes in market share relate to the 2017 and 2016 market share figures as calculated in 2018.
+Due to changes in the way the market is analyzed, these figures may differ from the 2016 market share figures reported in 2017.
+Infineon at a glance
+Infineon key data
+As of and for the fiscal years ended 30 September (under IFRS)'
+Fiscal year from 1 October to 30 September
+2018
+2017
+€ in
+millions
+in % of
+revenue
+€ in
+millions
+in % of
+revenue
+2018/2017
+Change
+in %
+Revenue by region
+7,599
+7,063
+8
+Europe, Middle East, Africa
+2,443
+32
+32
+1,728
+(9)
+Net cash used in investing activities from continuing operations
+Management Board and Supervisory Board
+Letter to shareholders
+3
+P see page 20 ff.
+The Segment Result increased to €1,353 million, the Segment Result margin was 17.8 percent. This makes 2018
+another one in a long series of successful fiscal years: For the fifth time in a row we were able to significantly
+increase revenue and Segment Result. Our strategy is paying off, the orientation of the company promises long-term
+success. We want our shareholders to adequately participate in this success. Therefore, for the fifth consecutive
+year, the Management Board and Supervisory Board will propose an increase in the dividend to the Annual General
+Meeting on 21 February 2019, this time to 27 cents per share.
+Our world is facing serious challenges: demographic and social change, climate change and scarcity of resources,
+urbanization and the digital transformation. Our solutions are the key to a better future because they make it
+possible to achieve more while using less resources. Infineon's current business has organically grown at an average
+rate of approximately 9 percent per year since the Company was established as an independent corporation in the
+1999 fiscal year, faster than the semiconductor market as a whole. This success is due both to the fact that we have
+grown in scale by gaining market shares in our core business, as well as the fact that we have grown in scope, i.e. we
+have continuously expanded our range of activities into adjacent markets with new products and solutions. Our
+strategic approach "Product to System" helps us continue to rigorously develop our core business. Starting with
+a comprehensive understanding of customer requirements, we develop solutions that take the overall system
+into consideration, thus providing the customer with important competitive advantages. Software is playing an
+increasingly important role here. You can read more on this topic in the chapter "Group Strategy".
+Our strategic orientation towards topics with a high relevance for society and our technological strength both point
+to a future with outstanding growth opportunities. For this reason we updated our target operating model and
+presented it to investors and analysts at our Capital Markets Day in London on 12 June 2018. For the most part, the
+structural growth drivers have horizons of several years, in some cases even of a decade or more. The same applies
+to the lifecycles of many platforms in which our products are used. This allows us to define robust, long-term targets.
+We are committed to the following targets:
+› Revenue growth of 9 percent: In the automotive sector, the increasing trend towards electro-mobility and the
+development towards the automation of more and more driving functions are the primary drivers of our growth.
+We thus expect the highest growth rate for the segment Automotive at 10 percent annually. The segments
+Industrial Power Control (8 percent expected average growth rate) and Power Management & Multimarket
+(9 percent expected average growth rate) also benefit from a large number of structural growth drivers such as
+energy storage for renewable energies, dynamically controlled electric motors in large and small devices and
+battery-powered applications. Information security is an essential success factor in many solutions. Under the
+leadership of our division Digital Security Solutions (previously Chip Card & Security) we will play a central role
+in driving market development for hardware-based security solutions. Because of the ongoing transition from
+card-based to embedded products, we expect a growth rate in the mid single-digit percent range.
+› Investment-to-sales ratio of 15 percent: During the previous fiscal year and also currently, our ability to ship is
+limited in several areas by the amount of available manufacturing capacities. This limits our customers' and our
+potential. We are therefore investing in order to take advantage of the current market opportunities. Accelerated
+revenue growth and ambitious investments go hand in hand. In the future, our investment-to-sales ratio will be
+15 percent of revenue at the target growth rate of 9 percent. The ratio of 15 percent does not include investments
+in cleanrooms and large office buildings as well as in measures to increase manufacturing flexibility, which we
+will use in the coming years to lay the foundation for participating in a possibly even larger demand dynamic
+in our target markets. By making significant investments in the expansion of our manufacturing capacities, we
+fulfill the prerequisite for working together with our customers to supply growing demands in existing and new
+markets. We continue to rely on in-house manufacturing, especially in the area of power semiconductors, since
+our know-how of the manufacturing processes represents an important competitive advantage. With the
+300-millimeter thin-wafer technology, we can manufacture cost-effectively at the highest quality levels and can
+take advantage of the lower capital intensity. In approximately three years we expect to reach the capacity limit
+of our 300-millimeter fab in Dresden (Germany), which is why we have begun construction of a similar second
+factory in Villach (Austria), paving the way for long-term growth. The highly visible investment of about €1.6 billion
+will create around 400 highly qualified jobs and will allow for an annual revenue volume of approximately
+€1.8 billion when operating at full capacity.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+Letter to shareholders
+4
+› Segment Result margin of at least 17 percent: In the 2018 fiscal year, in spite of the effects of the weak US dollar
+mentioned above, we achieved a Segment Result margin of 17.8 percent. In doing so we were able to compensate
+for the continued sharp increase in prices for raw wafers and for other materials such as copper. This result is
+thus proof of our high performance capabilities - and we continue on this path. Currently we are not expecting a
+reversal of the trend in material costs. Furthermore, increased investments will result in higher depreciation and
+amortization. These two factors thus represent additional burdens for now, but we are working on compensating
+them by progress in productivity and higher-quality product and system solutions, and will therefore be able to
+keep our gross margin stable. We see opportunities to increase the Segment Result margin through the scaling of
+certain operating expenses more slowly than revenues: Infineon's lifeblood is technological innovation. Research
+and development activities thus ensure the future viability of the company. Expenses are therefore expected to
+develop in in line with revenue growth. On the other hand, for selling, general and administrative expenses we
+leverage economies of scale and plan efficiency improvements. This allows us to gradually increase our Segment
+Result margin in spite of increased burdens in terms of cost of goods sold.
+In the short term we are even expecting an elevated growth-level. Due to the well-filled order books, we expect
+revenue growth for the Group of 11 percent plus or minus 2 percentage points for the 2019 fiscal year. At the mid-point
+of the forecast revenue range, we expect a Segment Result Margin of around 18 percent and investments of €1.6 billion
+to €1.7 billion.
+In all of our business areas we want to take on a leading position or be able to do so within the foreseeable future,
+which means growing faster than the market. In this way we can see evidence that we are on the right path and can
+be the preferred partner for our customers. Our increased business targets show that we took the right decisions
+in the past. In the 2018 fiscal year we took additional steps to make sure we can continue our growth trajectory in
+the years to come as well. I would like to point out some of them.
+Technology leadership and a broad technology portfolio are important factors for our success. We have developed
+new technologies based on silicon carbide (SiC) and gallium nitride (GaN) in our core power semiconductor business.
+These materials have properties superior to those of silicon; however, technical hurdles remain before we can
+manufacture them in high volumes and at a reasonable cost. In the still nascent SiC market we have in the meantime
+established ourselves with our CoolSiCTM MOSFET and our module manufacturing competence. We have secured
+our supply of SiC wafers under a long-term supply agreement with Cree, Inc. (USA). This means we are excellently
+positioned to drive the market penetration of silicon carbide forward: Infineon is the company that can offer the
+right power semiconductor solution for every application.
+Furthermore, we have taken a variety of steps to strengthen our position through portfolio expansion. For example,
+with the acquisition of the Danish startup company Merus Audio we complemented our portfolio of integrated
+Class D audio amplifiers. Moreover, we signed Memoranda of Understanding with the Chinese internet conglomer-
+ates Alibaba Cloud and JD providing for collaboration on Internet of Things (IoT) applications. Here, expertise from
+Dresden (Germany) will also come into play: We have built a new development center at our Dresden site that
+concentrates on solutions for automotive and power electronics as well as for Artificial Intelligence (AI). Algorithms,
+Al and the lot today already play a central role in the context of the constantly increasing interconnection of traffic
+systems. We will use this know-how to provide Al solutions for other target markets as well on a long-term basis
+under the excellent conditions offered by the eco-system in Dresden.
+Another milestone is the joint venture established in February with SAIC Motor Corporation Ltd., China's largest
+automobile manufacturer. This joint venture gives us even better access to the world's largest and fastest-growing
+market for electro-mobility. Volume manufacturing of the power semiconductor modules began in August at the
+Infineon Wuxi (China) site. The objective is to supply customers who produce in China. Customers outside of China
+will still be supplied directly by Infineon.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Source: IHS Markit, Technology Group, September 2018
+for IGBT-based power semiconductors
+#1 with a market share of 27.1%
+First, to the figures for the fiscal year under report. Compared
+to the previous year, revenue increased by 8 percent to
+€7,599 million. The unfavorable development of the US dollar
+exchange rate partly masked the underlying dynamic of our
+business. The annual average exchange rate was 1.19. If it
+had remained at the previous year's level of 1.11, our revenue
+growth in the previous fiscal year would have been 12 percent
+and as such clearly above the original forecast of 9 percent.
+Not only did we grow strongly, we also became more profitable.
+Market position²
+Infineon has added a new chapter to its success story:
+The 2018 fiscal year was very strong in economic terms and
+has given us a glimpse of the future. We have set the course
+for long-term, profitable growth of Infineon.
+2
+62 Group performance
+73 Report on expected developments, together with
+associated material risks and opportunities
+87 Overall statement of the Management Board
+with respect to Infineon's financial condition
+as of the date of this report
+88 Infineon Technologies AG
+91 Corporate Governance
+Consolidated Financial Statements
+108 Consolidated Statement of Operations
+109 Consolidated Statement of Comprehensive Income
+110 Consolidated Statement of Financial Position
+111 Consolidated Statement of Cash Flows
+112 Consolidated Statement of Changes in Equity
+114 Notes to the Consolidated Financial Statements
+Further Information
+171 Responsibility Statement by the Management Board
+172 Independent Auditor's Report
+178 List of Abbreviations
+179
+Financial calendar
+179 Imprint
+Management Board and Supervisory Board
+Letter to shareholders
+Letter to shareholders
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Dr. Reinhard Ploss
+Chief Executive Officer
+Neubiberg, November 2018
+Dear shareholders
+and business partners,
+dear Infineon colleagues,
+Our 2018 fiscal year
+ABB / Alstom / Bombardier / CRRC / Danfoss /
+Eaton/Emerson / Goldwind / Inovance / Midea /
+Nidec / Rockwell / Schneider Electric / Siemens/
+Sungrow/Toshiba / Vestas / Yaskawa
+> Silicon carbide MOSFETs and modules
+> Power ICs
+> Magnetic and pressure sensors
+> Industrial microcontrollers
+> IGBT modules
+> Discrete power semiconductors
+> 3D ToF sensors
+safety and driver assistance systems
+> 32-bit automotive microcontrollers for powertrain,
+Product range
+> Security
+> Powertrain
+> Comfort electronics
+> Assistance systems and safety systems
+Applications
+Page 40
+0=0C
+Lo-i
+Power Control
+Industrial
+Automotive
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2018 fiscal year (ending 30 September), the
+Company reported sales of approximately €7,6 billion with some 40,100 employees worldwide. Infineon is listed
+on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Infineon
+Infineon Technologies AG
+> Radar sensor ICs (77 GHz)
+Key customers'
+> Transceivers (CAN, LIN, Ethernet, FlexRay)
+Key customers¹
+> Intelligent power modules with integrated
+control unit, driver and switch
+> IGBT module solutions including IGBT stacks
+> IGBT modules (low-power, medium-power,
+high-power)
+> Driver ICs
+> Discrete IGBTs
+› Bare die business
+Product range
+› Traction
+> Renewable energy generation
+> Industrial vehicles
+> Industrial robots
+> Industrial power supplies
+> Industrial drives
+> Home appliances
+> Energy distribution
+> Charging stations for electric vehicles
+Applications
+Page 42
+Source: Strategy Analytics, April 2018
+#2 with a market share of 10.8%
+Market position²
+Denso / Hella / Hitachi / Hyundai / Keihin / Lear/
+Mando/Mitsubishi Electric / Omron / Preh /
+Valeo/Veoneer / ZF
+Aptiv / Bosch / BYD / Continental / Delphi /
+> Voltage regulators
+1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Intron, Jingchuan, Macnica, Weikeng and WPG Holding (SAC).
+60 The Infineon share
+56 Internal management system
+0.95
+0.70
+36
+Diluted earnings per share in €
+0.95
+0.70
+36
+Adjusted earnings per share in € - diluted
+0.98
+0.85
+15
+Dividend per share in €³
+0.27
+0.25
+8
+Equity ratio
+59.3%
+56.7%
+Return on equity4
+16.7%
+14.0%
+Return on assets4
+9.9%
+Basic earnings per share in €
+7.9%
+64
+1,011
+(1,163)
+(1,131)
+(3)
+Net cash used in financing activities from continuing operations
+Free cash flow²
+(542)
+(340)
+(59)
+618
+594
+4
+Depreciation and amortization
+Capital expenditure
+Gross cash position²
+Net cash position²
+861
+812
+6
+1,254
+1,022
+23
+2,543
+2,452
+4
+618
+59 Sustainability at Infineon
+Inventory intensity 4
+Debt-to-total-capital ratio5
+Infineon continued to grow during the 2018
+fiscal year. Revenue increased by 8 percent
+to €7.599 billion. Segment Result increased
+to €1.353 billion, corresponding to a margin
+of 17.8 percent. The revenue and profitability
+target, which we defined at the beginning
+of the fiscal year, has been adjusted due to
+currency effects and achieved in the course
+of the 2018 fiscal year.
+We make our customers more successful
+with leading technology and system under-
+standing. Here we benefit from long-term,
+global megatrends and develop solutions
+that make life easier, safer and greener.
+Today, our traditional core competencies
+are in greater demand than ever. At the
+same time, we continue to refine our growth
+strategy to prepare for the success of
+tomorrow. During the past fiscal year we
+have once again made strong progress
+in strategic projects.
+At Infineon, success is not only defined by
+the targets that we achieve but also by the
+way that brought us there: Sustainability
+is at the core of our thinking. Listings in the
+Dow Jones Sustainability™ Europe Index
+and in the Dow Jones Sustainability™ World
+Index are both our reward and motivation.
+Revenue
+€7.599 billion
++8 percent
+Segment Result and Margin
+€1.353 billion
+± 17.8 percent
+Rated credit-worthiness
+"S&P Global Ratings"
+"BBB"
+(outlook "stable")
+Listing in the
+Dow Jones
+Sustainability™
+Index
+Content
+Management Board and Supervisory Board
+2 Letter to shareholders
+6 The Management Board
+8 Report of the Supervisory Board
+to the Annual General Meeting
+Combined Management Report
+Our Group
+16 Finances and strategy
+40 The segments
+50 Research and development
+54 Operations
+at a glance
+Debt-to-equity ratio4
+Our year
+Today, our traditional core competencies
+are in greater demand than ever. At the
+same time, we continue to refine our growth
+strategy to prepare for the success of
+tomorrow. During the past fiscal year we
+have once again made strong progress
+in strategic projects.
+13.6%
+12.5%
+23.8%
+32.5%
+14.1%
+18.4%
+20.5%
+14.9%
+Return on Capital Employed (ROCE) 2
+Infineon employees as of 30 September
+1 Columns may not add due to rounding.
+2 See the chapter "Internal management system" for definition, P page 58 f.
+40,098
+37,479
+7
+3 A dividend per share of €0.27 for the 2018 fiscal year will be proposed to the Annual General Meeting on 21 February 2019.
+4 See the chapter "Review of financial condition" for definition, P page 67.
+5 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+Infineon at a glance
+Our year
+2018
+Infineon continued to grow during the 2018
+fiscal year. Revenue increased by 8 percent
+to €7.599 billion. Segment Result increased
+to €1.353 billion, corresponding to a margin
+of 17.8 percent. The revenue and profitability
+target, which we defined at the beginning
+of the fiscal year, has been adjusted due to
+currency effects and achieved in the course
+of the 2018 fiscal year.
+We make our customers more successful
+with leading technology and system under-
+standing. Here we benefit from long-term,
+global megatrends and develop solutions
+that make life easier, safer and greener.
+At Infineon, success is not only defined by
+the targets that we achieve but also by the
+way that brought us there: Sustainability
+is at the core of our thinking. Listings in the
+Dow Jones Sustainability™ Europe Index
+and in the Dow Jones Sustainability™ World
+Index are both our reward and motivation.
+Infineon at a glance
+93
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+881
+885
+Deferred income
+Total liabilities and shareholders' equity
+3,329
+19
+3,296
+10
+11,789
+10,792
+1 The increases in inventories and liabilities to affiliated companies were mainly attributable to a change in the accounting treatment of intragroup
+transactions in the 2018 fiscal year. Further information is provided in the Separate Financial Statements of Infineon Technologies AG.
+P see page 148 ff.
+Total assets increased by 9 percent from €10,792 million as of 30 September 2017 to €11,789 million as of 30 Sep-
+tember 2018. Current assets went up by €926 million. Cash and cash equivalents and marketable securities totaled
+€2,318 million at the end of the reporting period (30 September 2017: €2,216 million) and accounted for 50 percent
+of current assets.
+The increase in equity (€705 million) was mainly attributable to net income of €982 million for the 2018 fiscal year.
+Payment of the dividend for the 2017 fiscal year (€283 million) reduced equity accordingly.
+Provisions for pensions and similar commitments increased by €76 million as a result of the reduction in the average
+market interest rate for the past ten years used to measure obligations. Other provisions increased by a total of
+€174 million, mainly due to higher provisions for Qimonda in connection with pending legal proceedings (see note 19
+to the Consolidated Financial Statements). Liabilities increased by 1 percent from €3,296 million at the end of the
+previous fiscal year to €3,329 million as of 30 September 2018.
+1,291
+For information on own shares, please refer to the disclosures relating to section 160, paragraph 1, no. 2, German
+Stock Corporation Act (AktG) provided in the Separate Financial Statements of Infineon Technologies AG.
+@www.infineon.com/investor
+Combined Management Report | Our 2018 fiscal year
+Infineon Technologies AG
+90
+90
+Dividend
+Under the German Stock Corporation Act the amount of dividends available for distribution to shareholders is
+based on the level of unappropriated profit (Bilanzgewinn) recorded by the ultimate parent, as determined in
+accordance with the German Commercial Code (HGB).
+Infineon Technologies AG reports unappropriated profit of €491 million in its financial statements for the fiscal year
+ended 30 September 2018. Due to the strong business performance, a proposal will be made to shareholders at
+the Annual General Meeting 2019 to increase the dividend for the 2018 fiscal year by 2 cents from €0.25 to €0.27 per
+share. The disbursement of the proposed dividend is subject to approval by shareholders.
+The Company paid a dividend of €0.25 per share (€283 million in total) for the 2017 fiscal year.
+For information regarding Infineon's long-term dividend policy, see "Sustainable value creation for our shareholders"
+in the chapter "Group Strategy".
+Expected developments, together with associated material risks and opportunities
+The expected developments, together with associated material risks and opportunities of Infineon Technologies AG
+are very similar to those of Infineon. Moreover, it is assumed that the result from investments will play a major role
+in Infineon Technologies AG's earnings performance. As a general rule, Infineon Technologies AG participates in the
+risks of its subsidiaries and equity investments on the basis of the relevant shareholding. As the parent company,
+Infineon Technologies AG is integrated in Infineon's overall risk management system and internal control system. For
+more information on this topic, together with associated material risks and opportunities of Infineon Technologies AG,
+see the chapter "Risk and opportunity report".
+Most transactions within Infineon involving derivative financial instruments are handled by Infineon Technologies AG.
+The comments provided in "Principles and structure of Infineon's treasury" within the chapter "Review of liquidity"
+regarding the nature and scope of transactions with derivative financial instruments and hedged risks apply to
+Infineon Technologies AG as well. Reference is also made to the Notes to the Separate Financial Statements of
+Infineon Technologies AG.
+@www.infineon.com/investor
+P see page 30
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+P see page 76 ff.
+1,567
+376
+1,226
+3,717
+3,203
+Unappropriated profit
+491
+306
+Shareholders' equity
+7,700
+6,995
+Special reserve with an equity portion
+1
+1
+Provisions for pensions and similar commitments
+216
+316
+140
+524
+350
+Provisions
+Bonds
+Loans payable to banks
+Trade payables
+Liabilities to affiliated companies¹
+Other liabilities
+Liabilities
+740
+490
+504
+804
+1
+Other provisions
+1,230
+P see page 72
+Combined Management Report | Our 2018 fiscal year
+Even if the dilution protection regulations are applied, the conversion or option price must equal at least 80 percent
+of the arithmetic mean of the closing prices of the Company's share in XETRA trading on the Frankfurt Stock
+Exchange (or comparable successor system); further details - including the conditions under which the conversion
+or option price may be reduced - are set out in the authorization.
+The Management Board is authorized, subject to the requirements resolved by the shareholders at the Annual
+General Meeting, to determine the further details of the bond issue, including terms and conditions.
+Authorization to acquire own shares
+A resolution passed by the Annual General Meeting on 22 February 2018 authorizes Infineon Technologies AG, in
+the period through 21 February 2023, to acquire its own shares, within the statutory boundaries, in an aggregate
+amount not exceeding 10 percent of the share capital at the time the resolution was passed or - if the latter amount
+is lower- of the share capital in existence at the time the authorization is exercised. The Company may not use the
+authorization for the purposes of trading in its own shares. The Management Board decides whether own shares
+are acquired through the stock exchange, by means of a public offer to purchase addressed to all shareholders or
+a public invitation to submit offers for sale or via a bank or other entity that meets the requirements of section
+186, paragraph 5, sentence 1, AktG. The authorization includes differentiating requirements – in particular with
+regard to the permissible purchase price – for each method of acquisition.
+-
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization may - if not sold either via
+the stock exchange or by means of a public offer to purchase addressed to all shareholders - be used for all legally
+admissible purposes. The shares may also be cancelled or offered to third parties in conjunction with business
+combinations or the acquisition of companies, parts of companies or participations in companies. Under specified
+circumstances subject to the consent of the Supervisory Board, the shares may also be sold to third parties in
+return for cash payment (including by means other than through the stock exchange or through an offer to all
+shareholders), used to meet the Company's obligations under convertible bonds and bonds with warrants and
+stock option plans, offered for sale or granted as a remuneration component to members of representative bodies
+and employees within the Group, and/or used to repay securities-backed loans. The subscription right of share-
+holders is excluded in all of the above cases (except when the shares are cancelled). In addition, the subscription
+rights of shareholders are excluded in respect of fractional amounts in instances in which the shares are sold through
+a public offer addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on 22 February 2018, the acquisition of Infineon
+Technologies AG shares may also be effected using equity derivatives. The total number of shares that can be
+acquired using derivatives may not exceed 5 percent of the Company's share capital, determined both at the time of
+this authorization becoming effective and at the time of its exercise through the use of the derivatives. The shares
+acquired through the exercise of this authorization are to be counted toward the acquisition threshold for the
+shares acquired in accordance with the authorization to acquire own shares as described above. The authorization
+stipulates other restrictions when derivatives are deployed, including their execution, term, servicing and
+acquisition price.
+If own shares are acquired using derivatives in accordance with the requirements stipulated in the authorization, any
+right of the shareholders to conclude such derivative transactions with the Company will be excluded in analogous
+application of section 186, paragraph 3, sentence 4, AktG. The shareholders have no right to conclude derivative
+transactions with the Company.
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the Company is required to
+accept the shares under the derivative transactions. No other right to sell shares will apply in this connection.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB) | Corporate Governance Report |
+Declaration concerning the management of the Company
+94
+> insofar as bonds are issued in return for a capital contribution in kind, provided that the value of such capital
+contribution in kind is appropriate in relation to the market value of the bonds.
+==
+P see page 95 ff.
+The use of own shares, acquired through derivatives, is governed by the same rules as applicable for the direct
+acquisition of own shares.
+Significant agreements that are subject to the condition of a change of control as a result of a takeover
+bid and compensation agreements with members of the Management Board or with employees in the
+event of a takeover bid
+Various financing agreements with lending banks and capital market creditors (see note 12 to the Consolidated
+Financial Statements) contain defined change-of-control clauses which give creditors the right to call for early
+repayment. These clauses reflect standard market practice. In addition, one financing agreement stipulates that
+in the event of a change of control, Infineon Technologies AG may be required to provide collateral in the form of
+cash rather than a guarantee.
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy agreements and
+approvals, supply contracts, joint venture agreements and license agreements contain customary change-of-control
+clauses, according to which a change in control of Infineon Technologies AG triggers the right of the other party at
+its sole discretion to terminate the agreement or to continue the agreement as well as other rights which may,
+under certain circumstances, be unfavorable for Infineon.
+If a member of the Management Board leaves his or her position in connection with a defined change of control
+(namely, where a party holds at least 50 percent of the voting rights in Infineon Technologies AG), that member is
+currently entitled to continued payment of the relevant annual remuneration for the entire remaining contract
+term. In accordance with a special contract termination right granted to members of the Management Board, the
+period of continued payment is capped at a maximum of 36 months in the event that the member resigns, or at
+a minimum of 24 months and a maximum of 36 months in the event that the member is removed from office or
+removed from office by Infineon Technologies AG. Further details are contained in the Compensation Report.
+The change-of-control clauses agreed with the members of the Management Board correspond to the recommen-
+dation made in section 4.2.3, paragraph 5, of the German Corporate Governance Code. Such clauses are intended
+to give members of the Management Board financial security in the event of a change of control, with a view to
+preserving their independence in this situation.
+The conditions of both the Performance Share Plan (open to participation by members of the Management Board,
+managers and other selected employees of the worldwide company) and the Restricted Stock Unit Plan (additionally
+applicable to specified employees of Infineon in the USA) contain rules that are triggered in the event of a defined
+change of control (namely holding at least 30 percent of the voting rights of Infineon Technologies AG). For the most
+part, these rules specify that the vesting periods that are envisaged by the relevant plans are aborted in the event
+of a change of control. The corresponding rule in the Performance Share Plan does not, however, apply to members
+of the Management Board, given that the service contracts take precedence.
+Corporate Governance Report
+The Corporate Governance Report is publicly available.
+@www.infineon.com/corporate-governance-report
+Declaration concerning the management
+of the Company
+The Declaration on Corporate Governance in accordance with section 289f and section 315d, of the German
+Commercial Code (HGB) 1 has been made publicly accessible.
+@www.infineon.com/declaration-on-corporate-governance
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+P see page 136 f.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+> in order to exclude fractional amounts resulting from a given subscription ratio from the subscription rights of the
+shareholders to the bonds or insofar as such action is necessary in order to grant holders of conversion or option
+rights arising from bonds that have already been or will in future be issued by the Company or its subordinated
+Group companies subscription rights to that extent to which they would be entitled after exercise of their rights
+or after fulfillment of any conversion or option obligations;
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+91
+Corporate Governance
+Information pursuant to section 289a,
+paragraph 1, and section 315a, paragraph 1,
+of the German Commercial Code (HGB)
+Structure of the subscribed capital
+The share capital of Infineon Technologies AG stood at €2,273,991,668 as of 30 September 2018. This sum is divided
+into 1,136,995,834 non-par registered shares, each of which represents a notional portion of the share capital of €2.
+Each share carries one vote and gives an equal right to the profit of the Company based on the profit appropriation
+resolved by shareholders at the Annual General Meeting.
+The Company held 6 million of the above-mentioned issued shares as own shares at the end of the reporting period
+(30 September 2017: 6 million). Own shares held by the Company on the date of the Annual General Meeting do not
+carry a vote and are not entitled to participate in profit.
+Restrictions on voting rights or the transfer of shares
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regulations of the German Stock
+Corporation Act (Aktiengesetz – “AktG"). For example, pursuant to section 136 AktG shareholders are prohibited
+from voting under certain circumstances and, according to section 71b AktG, Infineon Technologies AG has no voting
+rights from its own shares. Furthermore, non-compliance with the notification requirements pursuant to section 33,
+paragraphs 1 or 2 of the German Securities Trading Act (Wertpapierhandelsgesetz - "WPHG") and to section 38,
+paragraph 1 or section 39, paragraph 1, WpHG can, pursuant to section 44 WPHG, have the effect that certain rights
+(including the right to vote) may, temporarily at least, not exist. We are not aware of any contractual restrictions on
+voting rights or the transfer of shares.
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register of Infineon Technologies AG
+are recognized as shareholders of the Company. In order to be recorded in the share register of Infineon Technologies AG,
+shareholders are required to submit to the Company the number of shares held by them and their name or company
+name, their address and, where applicable, their registered office and their date of birth. Pursuant to section 67,
+paragraph 4, AktG, Infineon Technologies AG is entitled to request information from any party listed in the share
+register regarding the extent to which shares, to which the entry in the share register relates, are actually owned by
+the registered party and, if it does not own the shares, to receive the information necessary for the maintenance of
+the share register in relation to the party for whom the party concerned holds the shares. Section 67, paragraph 2,
+AktG stipulates that the shares concerned do not confer voting rights until such time as the information requested
+has been supplied in the appropriate manner.
+Direct or indirect shareholdings exceeding 10 percent of the voting rights
+Section 33, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed or, after exceeding, fall
+below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of a listed corporation to notify such corporation
+and the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin")
+immediately. As of 30 September 2018, we have not been notified of any direct or indirect shareholdings reaching or
+exceeding 10 percent of the voting rights. The shareholdings notified to us as of 30 September 2018 are presented
+in the Notes to the Separate Financial Statements of Infineon Technologies AG under the information pursuant to
+section 160, paragraph 1, No. 8 AktG.
+Shares with special control rights
+Corporate Governance
+No shares conferring special control rights have been issued.
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+92
+2
+Psee page 143 f.
+Nature of control over voting rights when employees participate in the Company's capital
+and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise their control rights directly in
+accordance with the applicable laws and the Articles of Association, just like other shareholders.
+Statutory regulations and Articles of Association provisions governing the appointment and dismissal
+of members of the Board of Management and amendments to the Articles of Association
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board of Infineon
+Technologies AG shall consist of at least two members. The Management Board currently comprises four members.
+Members of the Management Board are appointed and dismissed by the Supervisory Board in accordance with
+section 84, paragraph 1, AktG. As Infineon Technologies AG falls within the scope of the German Co-Determination
+Act (Mitbestimmungsgesetz - "MitbestG"), the appointment or dismissal of members of the Management Board
+requires a two-thirds majority of the votes of the members of the Supervisory Board (section 31, paragraph 2,
+MitbestG). If such majority is not achieved at the first ballot, the appointment may be approved on a recommendation
+of the Mediation Committee at a second ballot by a simple majority of the votes of the members of the Supervisory
+Board (section 31, paragraph 3, MitbestG). If the required majority is still not achieved, a third ballot is held in which
+the Chairman of the Supervisory Board has two votes (section 31, paragraph 4, MitbestG). If the Management Board
+does not have the required number of members, in urgent cases, the local court (Amtsgericht of Munich) makes the
+necessary appointment upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment for members of the
+Management Board is five years. Re-appointment or extension of the term of office, in each case for a maximum of
+five years, is permitted (section 84, paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association
+and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a deputy
+chairman to the Management Board. The Supervisory Board may revoke the appointment of a member of the
+Management Board and the Chairman of the Management Board for good cause (section 84, paragraph 3, AktG).
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Association rests with the
+Annual General Meeting. However, section 10, paragraph 4, of the Articles of Association gives the Supervisory
+Board the authority to amend the Articles of Association insofar as such amendments relate merely to the wording,
+such as changes in the share capital amount resulting from a capital increase out of conditional or authorized
+capital or a capital decrease by means of cancellation of own shares. Unless the Articles of Association provide for
+another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual General Meeting regarding
+the amendment of the Articles of Association require a majority of at least three quarters of the share capital
+represented. Section 17, paragraph 1, of the Articles of Association of Infineon Technologies AG provides in principle
+for resolutions to be passed with a simple majority of the votes cast and, when a capital majority is required, with
+a simple majority of the capital unless a higher majority is required by law or in accordance with other stipulations
+contained in the Articles of Association.
+Powers of the Management Board, in particular with respect to the issuing or buying back of shares
+The powers of the Management Board to issue shares derive from section 4 of the Articles of Association, in
+conjunction with applicable legal provisions. Further information relating to the Company's existing Authorized
+and Conditional Capital can be found in note 15 to the Consolidated Financial Statements.
+Authorization to issue convertible bonds and/or bonds with warrants
+The Annual General Meeting on 22 February 2018 authorized the Management Board, in the period through
+21 February 2023, either once or in partial amounts, to issue convertible bonds and/or bonds with warrants (referred
+to collectively as "bonds") in an aggregate nominal amount of up to €4,000,000,000, to guarantee such bonds
+issued by subordinated Group companies of the Company and to grant bondholders conversion or option rights
+to up to 130,000,000 no-par-value registered Company shares, representing a notional portion of the share capital
+of up to €260,000,000, in accordance with the relevant terms of the bonds. The Management Board is authorized,
+with the approval of the Supervisory Board, to exclude the right of shareholders to subscribe to the bonds,
+> if the issue price is not substantially lower than the bonds' theoretical market value as determined in accordance
+with accepted valuation methods, in particular those based on financial mathematics; however, this right of
+exclusion only applies insofar as the shares to be issued to service the conversion or option rights established on
+this basis in aggregate do not exceed 10 percent of the share capital either at the time of this authorization
+becoming effective or at the time of its exercise;
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2,260
+The equity ratio at the end of the reporting period was 65.3 percent, compared to 64.8 percent one year earlier.
+Retained earnings
+Our growth strategy is based on three pillars: achieving economies of scale in our core business, broadening our
+scope to adjacent markets and engaging in new, long-term growth areas. Our strategic approach "product to system"
+provides an excellent basis for developing our core business. By gaining an extensive understanding of our customers'
+requirements, we are able to develop solutions that take account of all system aspects and therefore offer a com-
+petitive advantage to the customer.
+After being restrained to 8 percent in the 2018 fiscal year by adverse currency developments, we expect revenue
+growth of 11 percent, plus or minus 2 percentage points, on the back of high customer demand and assuming a
+euro/US dollar exchange rate of 1.15. For the fiscal years thereafter, Infineon assumes that revenue will grow at an
+average rate of 9 percent per year. At the mid-point of the forecast revenue range, we expect to achieve a Segment
+Result Margin of approximately 18 percent for the 2019 fiscal year. Investments in a range between €1.6 billion and
+€1.7 billion have been planned for the 2019 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Infineon Technologies AG
+Infineon Technologies AG
+88
+In addition to reporting on Infineon, in the following section we also provide information on the performance of
+Infineon Technologies AG.
+Infineon Technologies AG is the parent company of Infineon and performs the Group's management and corporate
+functions. It takes on major Group-wide responsibilities such as Finance and Accounting, Corporate Compliance,
+Human Resources, strategic and product-oriented R&D activities, and also Corporate and Marketing Communication
+worldwide. Furthermore, it manages supply chain processes throughout the Group. Infineon Technologies AG has
+its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Unlike the Consolidated Financial Statements, which are prepared in accordance with International Financial
+Reporting Standards ("IFRS"), Infineon Technologies AG's Separate Financial Statements are prepared in accordance
+with the provisions of the German Commercial Code ("HGB"). The complete Separate Financial Statements are
+published separately.
+Earnings position
+Statement of income of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+€ in millions
+We have now been able to report significant revenue growth and improved earnings for five years in a row. Revenue
+increased by 8 percent to €7,599 million compared to €7,063 million in the previous year, despite the unfavorable
+development of the US dollar exchange rate. Segment Result increased by 12 percent from €1,208 million to
+€1,353 million, giving a margin of 17.8 percent. We therefore achieved our margin target of "at least 17 percent over
+the cycle" (as raised during the 2018 fiscal year) despite the above-mentioned weakness of the US dollar and the
+continued sharp increase in prices for wafer substrates and other materials such as copper. Adjusted earnings per
+share (diluted) increased to €0.98 cents. Despite higher investments, free cash flow from continuing operations
+improved from €594 million to €618 million year-on-year. The international rating agency S&P Global Ratings (S&P)
+continues to rate Infineon's creditworthiness with an investment grade rating of "BBB" (outlook “stable”). Infineon
+therefore currently holds the highest S&P rating of any European semiconductor manufacturer. We want our
+shareholders to participate appropriately in the excellent progress that Infineon is making. Therefore, at the Annual
+General Meeting to be held on 21 February 2019, it will be proposed to raise the dividend by 2 cents to €0.27 per share.
+The 2018 fiscal year was not only extremely successful in terms of reported figures, it was also a defining year
+for Infineon's future. Our focus on topics of high relevance for society as well as our technological strength are
+expected to provide us with excellent growth opportunities in the coming years. For this reason, we have adjusted
+our long-term financial targets over the cycle and are aiming for an average revenue growth rate of 9 percent per
+year, a Segment Result Margin prospectively in excess of 17 percent and an investment-to-sales ratio of 15 percent.
+In order to enable the aforementioned growth, a number of key strategic decisions were made during the 2018 fiscal
+year. Highlighting just two of them, we announced the construction of a second 300-millimeter factory in Villach
+(Austria) and set up a manufacturing joint venture with China's largest automotive manufacturer, SAIC Motor, which
+will give us even better access to the largest and fastest growing market for electric vehicles.
+Revenue¹
+Gross profit
+Research and development expenses
+Selling expenses
+General and administrative expenses
+Other income (expense), net
+Result from investments, net
+Interest result
+Other financial result
+Income tax
+Income after taxes/net income
+Transfers to retained earnings according to section 58, paragraph 2, AktG
+Unappropriated profit at the end of year
+2018
+2017
+5,357
+Cost of goods sold¹
+87
+Overall statement of
+the Management Board
+with respect to Infineon's
+financial condition as of
+the date of this report
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Support for change in energy policies and consideration of climate change issues (OC: medium)
+Population growth and increasing industrialization in all parts of the world are resulting in ever-greater global
+demand for energy. Electric power is becoming the most important energy carrier of the 21st century and renewables
+are playing a key role in reducing carbon emissions. The long-term objective is to achieve global decarbonization
+by the end of the century, as resolved at the Climate Change Conference held in Paris (France) in December 2015.
+Infineon's semiconductors enable electric power to be generated from renewable energy sources. They offer efficiency
+gains at all stages of the energy industry's value-added chain, whether in generation, transmission, or above all in
+the use of electrical power. They form the basis for the intelligent and efficient use of electrical power, for instance
+in industrial applications, power supplies for computers, consumer electronics and vehicles.
+Digitalization (OC: medium)
+The trend towards digitalization represents a significant business opportunity for Infineon. This is reflected on one
+hand in the optimization of internal processes, for example for our interconnected manufacturing capabilities on a
+global scale. At the same time, our portfolio of sensors, microcontrollers, power semiconductors, security controllers
+and specific software puts us in an excellent position to exploit growing market potential. Thanks to our "Product
+to system" strategic approach, we are ideally placed to penetrate and develop the markets involved. Good examples
+already visible today include automated driving, voice and gesture control of devices and machines, and the
+advancing development of the Internet of Things and Big Data.
+Ability to supply due to available capacities (OC: medium)
+Our in-house manufacturing capacities, together with those of our external partners, provide us with sufficient
+flexibility to meet demand requirements. In particular, further expansion of 300-millimeter manufacturing in
+Dresden (Germany), of the second manufacturing module in Kulim (Malaysia) and the planned construction of
+a second, fully automated 300-millimeter factory at the Villach site (Austria) will help meet growing demand for
+power semiconductors.
+The availability of additional capacities, combined with the pro-active strategic and operational planning of internal
+and external resources, enable us to meet rising demand from both existing and new customers in the event of a
+market upturn. We benefited from this trend again during the previous fiscal year.
+Market access and activities in China (OC: medium)
+Infineon generates more revenue in China than in any other country. Accordingly, developments and growth oppor-
+tunities in China are of the utmost importance to the Group and relate to the following markets that we serve:
+Vehicle production in China is still expanding, albeit at a slower pace. At the same time, rapid growth in the production
+of plug-in hybrid and all-electric vehicles has turned China into the world's largest market for electro-mobility.
+For this reason, during the 2018 fiscal year Infineon and SAIC Motor (China's largest car manufacturer) established
+SIAPM, a joint venture that offers power semiconductor solutions for electric vehicles. Volume production has
+already commenced. The joint venture strengthens our position in China, whilst also offering additional potential
+for Infineon's future global business.
+China is the world's largest market for trains and, with CRRC (an Infineon customer) home to the world's largest train
+manufacturer by far. The continued expansion of the domestic rail network and a growing volume of international
+infrastructure projects both represent growing business opportunities for Infineon.
+At the G20 summit held in Hangzhou (China) in September 2016, China ratified the Paris climate agreement, thereby
+giving its formal commitment to reducing carbon emissions. As a consequence, the importance of expanding
+renewable energy sources in China has increased enormously. Our presence in this market, alongside our collaboration
+with leading companies in the wind and solar power sectors, will create further opportunities for long-term growth.
+Our success in positioning Infineon in China as an integral part of Chinese industry (and hence Chinese society)
+could well open up a multitude of new opportunities and is highly likely to have a positive impact on the growth
+and profitability of our business.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+85
+85
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Our current liquidity position, which we describe in the chapter "Review of liquidity", enables us to obtain and, if
+necessary make use of favorable refinancing conditions. This fact gives Infineon both the financial headroom and
+the entrepreneurial flexibility it needs to implement its business strategies and initiatives.
+Liquidity position (OC: medium)
+The trend towards electronic identity documents is having a positive impact on Digital Security Solutions segment
+revenue. Paper-based documents are increasingly being replaced by chip-based versions, due to the higher level
+of security they offer. New markets are also emerging in conjunction with the Internet of Things and the Industrial
+Internet ("Industry 4.0"). The authentication of devices is playing an increasingly important role in both of these
+fields, for which Infineon offers the corresponding security chips.
+Security applications (OC: medium)
+5,789
+The continued trend towards mobility is also reflected in the unbroken high demand for smartphones and tablets.
+We benefit from this development in two ways. Firstly, through the components we supply for mobile devices (sili-
+con-MEMS microphones, TVS diodes, GPS signal amplifiers, CMOS-RF switches), and secondly, through power semi-
+conductors, which form the key components for energy-efficient chargers (high-voltage and low-voltage power
+transistors, driver ICs and control ICs).
+We are also convinced that current global carbon emissions targets cannot be achieved without further electrification.
+The need for increased efforts in this field is relevant not only for electro-mobility (i.e. hybrid, plug-in hybrid and
+all-electric vehicles), but also for power units in vehicles with combustion engines. IT security within the vehicle is
+also further gaining in importance. Thanks to our expertise in the field of security controllers, we are extremely well
+positioned to exploit opportunities in this area.
+We expect semiconductor content per vehicle to continue growing. The primary driving force behind this trend is
+the rising demand for electro-mobility, active safety features and driver assistance systems.
+Further growth in semiconductor content in vehicles (OC: medium)
+P see page 70 ff.
+86
+2,262
+Growth from mobile applications (OC: medium)
+(3,896)
+Risk and opportunity report
+1,461
+Non-current assets
+Inventories¹
+753
+708
+6,331
+6,300
+7,084
+7,008
+966
+617
+Receivables and other assets
+1,378
+903
+Cash and cash equivalents, marketable securities
+Financial assets
+2,318
+Current assets
+4,662
+3,736
+Prepaid expenses
+44
+Active difference resulting from offsetting
+3
+4
+Total assets
+11,789
+10,792
+Share capital
+Capital reserves
+(4,228)
+2,216
+Intangible assets, property, plant and equipment
+40
+(172)
+1,561
+(1,003)
+(907)
+(282)
+(259)
+(200)
+150
+7
+980
+478
+(81)
+30 Septem-
+ber 2017
+24
+(43)
+(46)
+(74)
+Net assets and financial position
+30 Septem-
+ber 2018
+89
+€ in millions
+Statement of financial position of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+982
+Combined Management Report | Our 2018 fiscal year
+Infineon Technologies AG
+The gross profit margin for the 2018 fiscal year decreased by 6 percent to 27 percent year-on-year. Infineon
+Technologies AG reports net income of €982 million for the 2018 fiscal year. This includes a profit distribution
+of €744 million (2017: €337 million) from Infineon Technologies Holding B.V., Rotterdam (The Netherlands).
+After transferring a total of €491 million to retained earnings, unappropriated profit amounted to €491 million.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+306
+491
+(306)
+(491)
+612
+1 The decreases in revenue and cost of goods sold compared to the previous fiscal year were mainly attributable to a change in the accounting treatment
+of intragroup transactions. The change in accounting treatment had no impact on earnings due to the fact that the cost of goods sold was reduced by the
+same amount. Further information is provided in the Separate Financial Statements of Infineon Technologies AG.
+2017
+Fixed compensation
+Basic annual salary
+2018
+Jochen Hanebeck
+Total
+Management Board
+2018
+Member of the
+Management Board
+2017
+Fringe benefits
+183,520
+750,000
+33,500
+783,500
+685,000 3,565,000
+32,016
+180,497
+717,016 3,745,497
+3,195,000
+159,101
+3,354,101
+Variable compensation
+Single-year variable compensation (STI)
+389,980
+429,968
+in €
+1,840,935
+2,004,656
+Total fixed compensation
+1,664,836
+129,993
+932,108
+155,951
+Multi-year variable compensation
+243,040
+129,993
+172,153
+117,759
+155,951
+210,283
+143,375
+Long Term Incentive (LTI)
+1,741,460
+Performance Share Plan²
+Total variable compensation
+1,506,341
+Total compensation
+2,782,802
+315,608
+1,714,808
+2,825,962
+191,662
+1,025,148 1,202,937
+1,895,088 1,996,140
+211,838
+170,373
+190,238
+925,864
+298,168
+Mid Term Incentive (MTI)1
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+415,193
+8,136,062
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the
+plan requirements.
+2 The figures for the active members of the Management Board in the 2018 fiscal year are based on a fair market value
+per performance share amounting to €15.25 (2017: €11.25), which was calculated using a Monte-Carlo simulation model
+taking account of the value-reducing cap.
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Compensation report
+99
+99
+P see page 95 ff.
+Members of the Management Board did not receive any loans from Infineon, neither in the 2018 nor 2017 fiscal years.
+Similarly, they did not receive any benefits from third parties in the 2018 and 2017 fiscal years, whether promised or
+actually paid, for their board activities at Infineon.
+8,128,714
+Fringe benefits
+The Company also maintains accident insurance policies for members of the Board in the case of death (€3 million)
+and invalidity (€5 million).
+Other fringe benefits related mainly to statutory obligations such as the payment of inventor's compensation or to
+general benefits/discounts available to all Infineon employees.
+Share-based remuneration
+As described in the section "Management Board compensation", the contractually agreed LTI is granted to members
+of the Management Board by the Company in the form of "performance shares". The average price of the Infineon
+share relevant for the number of performance shares granted for the 2018 fiscal year was €21.48 (2017: €13.01).
+A fair market value of €15.25 (2017: €11.25) per performance share granted in the 2018 fiscal year was determined,
+taking account of the cap of 250 percent cap set on the LTI allocation amount as well as the performance hurdle.
+The following table shows the number of performance shares awarded to members of the Management Board in
+the 2018 fiscal year.
+Performance Share Plan
+Virtual
+performance
+shares
+outstanding
+at the
+beginning
+of the
+fiscal year
+Virtual
+performance
+shares newly
+Fair value
+grant date
+117,759
+In accordance with their service contracts, members of the Management Board are entitled to a chauffeur-driven
+company car, which may also be used for private purposes. Operating and maintenance costs for the company car
+and chauffeur are borne by the Company. Taxes arising on the fringe benefit related to private usage are borne by
+the members of the Management Board.
+1,649,124
+4,781,961
+4,383,217
+2016-2018 tranche
+117,759
+155,951
+549,031
+727,095
+2017-2019 tranche
+117,759
+155,951
+549,031
+2018
+2018-2020 tranche
+129,993
+613,644
+Long Term Incentive (LTI)
+Performance Share Plan 2
+170,373
+190,238
+830,576
+907,922
+Total variable compensation
+Total compensation
+925,864
+1,709,364
+932,108
+2015-2017 tranche
+172,153
+Dr. Reinhard Ploss
+Chief Executive Officer
+243,040
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI is reduced on a pro
+rata monthly basis (by one-twelfth for each full month missing from the complete STI tranche). A member of the
+Management Board is not entitled to receive an STI bonus for the fiscal year in which he/she resigns from office
+(unless the resignation is for a reason ("good cause"), for which the member is not responsible) or if the contract
+of the member of the Board is terminated by the Company for good cause.
+The mid-term incentive ("MTI") is intended to reward sustained performance by the Management Board reflecting
+Infineon's medium-term progress. In combination with the long-term incentive, the MTI therefore ensures compliance
+with the stock corporation law requirement that the structure of compensation is "oriented toward sustainable
+growth of the enterprise”. Assuming a 100 percent target achievement of the variable components, the MTI
+constitutes approximately 20 percent of target annual income.
+A new MTI tranche, each with a term of three years, commences every fiscal year. The incentive is paid in cash at
+the end of the three-year term. The amount of the payment is determined on the basis of actual ROCE and free cash
+flow figures during each three-year period. For these purposes, the target values for ROCE and free cash flow for
+each individual year of an MTI tranche correspond to the STI targets set each year in advance. The level of achieve-
+ment for both the RoCE target and the free cash flow target must reach a threshold of 50 percent in each year of
+the relevant three-year period, otherwise it is deemed - for MTI purposes - to be zero for the year concerned. If the
+thresholds are exceeded, the level of target achievement determined for the STI applies for the relevant annual
+tranche of the MTI. The MTI to be paid at the end of the three-year period is determined by calculating the arithme-
+tic mean of the three annual target achievement levels. Unlike the STI, the MTI is paid as calculated, even if the
+mean level of target achievement for the three-year period is below 50 percent. A cap of 200 percent applies, mean-
+ing that the maximum amount that can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each case by up to 50 per-
+cent, as it sees fit, based on the performance of the Management Board as a whole, Infineon's situation and any
+exceptional factors. When exercising its judgment in this respect, the Supervisory Board also takes into account the
+extent to which the three-year target for revenue growth and Segment Result (set each year by the Supervisory
+Board exclusively for this purpose) has been achieved and the degree of success achieved complementing organic
+growth through M&A activities. Unlike the STI, there is no lower limit for the amount by which the Supervisory
+Board can adjust the MTI; for the upper limit, however, the cap applies (200 percent).
+If the term of office commences during a fiscal year, the MTI tranche is reduced on a pro rata monthly basis (by 1/36
+for each full month missing from the complete MTI tranche). Upon leaving Infineon, regulations ensure as a general
+rule that the member of the Management Board can only receive an MTI payment for the number of MTI tranches
+corresponding to his/her term of office, reduced where appropriate on a pro rata basis. MTI tranches already
+started are forfeited if a mandate or service contract of a member of the Management Board comes to an end
+before the due date, for instance if a member resigns from office (unless the resignation is for good cause for which
+the member is not responsible) or if the contract of the member of the Board is terminated by the Company for
+good cause.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+96
+96
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+An STI is paid only if the levels of target achievement reach at least the 50 percent threshold for both performance
+indicators (free cash flow, ROCE). If one of the two target thresholds is not achieved, no annual bonus is paid for the
+relevant fiscal year. If the thresholds are achieved, the arithmetic mean of the two target achievements is calculated
+and used as the percentage rate to determine the actual STI amount. A cap of 250 percent applies, meaning that the
+maximum amount that can be paid is two-and-a-half times the target STI (= 100 percent), regardless of an actual
+higher achievement level. The Supervisory Board may, in addition, increase or reduce the amount to be paid in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board as a whole, Infineon's
+position, and any exceptional factors. A lower limit applies in this case such that the amount to be paid cannot be
+less than the amount that would be due given 50 percent target achievement. The upper limit for an upward adjust-
+ment is the cap of 250 percent.
+Compensation report
+P see page 104 f.
+P see page 104 f.
+The long-term incentive ("LTI") is intended to reward long-term and, similar to the MTI, sustained performance
+on the part of members of the Management Board and, additionally, to ensure that their interests are aligned with
+the interest of the Company's shareholders regarding a positive share price development. Assuming a 100 percent
+target achievement of the variable compensation components, the LTI constitutes approximately 15 percent of
+target annual income.
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share Plan. As well as being
+relevant for members of the Management Board, the new LTI also applies to Infineon managers and selected
+Infineon employees worldwide, in their case however unlike for the Management Board on a voluntarily basis and
+with minor differences attributable to specific circumstances.
+In the 2018 fiscal year, the allocation of the (virtual) performance shares - initially made on a provisional basis -
+took place for the first time as of 1 March for the fiscal year beginning on the preceding 1 October. Consequently,
+based on the four-year term of the relevant tranche, the definitive allocation of (real) Infineon shares will take place
+at the end of the month of February four years later (see "Review of the Management Board compensation system,
+compensation components and individual contracts" in this chapter).
+Performance shares are allocated provisionally on the basis of the contractually agreed "LTI allocation amount" in
+euros, agreed upon individually in the contract of each member of the Management Board. This amount is reduced
+accordingly if the member of the Management Board takes up office during a fiscal year (by one twelfth for each
+full month missing for the relevant fiscal year). The number of performance shares is determined by dividing the
+LTI allocation amount by the average price of the Infineon share (Xetra closing price) during the nine months prior
+to the allocation date. The prerequisites for the definitive allocation of the - at that stage still virtual – performance
+shares are (i) that the member of the Management Board invests 25 percent of his/her individual LTI allocation
+amount in Infineon shares and (ii) that the holding period of four years applicable both for the member's own-
+investment and for the performance shares has come to an end. 50 percent of the performance shares are also
+performance-related; they are only allocated definitely if (iii) the Infineon share outperforms the Philadelphia
+Semiconductor Index (SOX) between the date of the performance shares' provisional allocation and the end of the
+holding period. If the conditions for the definitive allocation of performance shares - either of all or of only those
+that are not performance-related - are met at the end of the holding period, the member of the Management
+Board acquires a claim against the Company for the transfer of the corresponding number of (real) Infineon shares.
+Performance shares which do not achieve the target are forfeited. The value of the performance shares definitively
+granted to the member of the Management Board per LTI tranche at the end of the holding period may not exceed
+250 percent of the relevant LTI allocation amount; the performance shares above this amount lapse (cap).
+The shares are transferred to a securities custodian account attributable to the member of the Management Board;
+thereafter he/she can freely dispose of them. The same also applies to Infineon shares acquired in conjunction with
+the own-investment requirement at the end of the holding period.
+The Supervisory Board has the right, at the end of the holding period, to make a value-equivalent cash settlement
+to the member of the Management Board rather than actually transfer Infineon shares. As in the previous year,
+the Supervisory Board resolved on 3 August 2018 that the performance shares maturing on expiry of 30 September
+2018 relating to the tranche awarded on 1 October 2014 will not be allocated in the form of Infineon shares, but
+rather - in accordance with the option specified in the Performance Share Plan - will be settled in cash.
+The rules governing situations where a member joins or leaves the Management Board during an on-going LTI
+tranche were revised during the 2018 fiscal year (see “Review of the Management Board compensation system,
+compensation components and individual contracts" in this chapter).
+The Supervisory Board is required to define suitable alternative LTI instruments of commensurate value if it is
+impossible or not desired by the Supervisory Board to offer an LTI on the basis of the Performance Share Plan.
+97
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock option plan as an LTI,
+which was resolved at the 2010 Annual General Meeting. The stock options allocated to members of the Manage-
+ment Board on the basis of the "Stock Option Plan 2010" were all exercised during the 2017 fiscal year.
+Additionally, the Supervisory Board has the option - based in all cases on its own best judgment - to grant a special
+bonus, among other things for special achievements of the Management Board or its individual members. In each
+case, however, the bonus is capped at a maximum of 30 percent of the fixed compensation of the member of the
+Management Board concerned.
+(ii) At the end of the fiscal year, the actual levels of target achievement and hence, the amount of the STI payouts, are
+determined by the Supervisory Board by reference to the levels of target achievement for free cash flow and ROCE
+as reported in the audited financial statements.
+Corporate Governance
+granted
+at the
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Compensation report
+Compensation report
+Psee page 104 f.
+P see page 56 ff.
+This Compensation Report, which forms part of the Combined Management Report, explains the principles applied
+in determining compensation for the Management Board and Supervisory Board of Infineon Technologies AG
+and the level of remuneration paid to the individual members of the Management Board and Supervisory Board
+in accordance with the applicable legal requirements and the recommendations of the German Corporate Governance
+Code in the version dated 7 February 2017 (Deutscher Corporate Governance Kodex - "DCGK"). Infineon believes
+that transparent and understandable reporting of Management Board and Supervisory Board compensation
+represents a fundamental element of good corporate governance.
+Management Board compensation
+Compensation system
+Compensation report
+The Management Board compensation system - similar to the compensation paid to the individual members of
+the Management Board - is defined and regularly reviewed by the full Supervisory Board on the basis of proposals
+made by the Executive Committee. In accordance with applicable legal requirements and the recommendations
+of the DCGK, the compensation paid to members of the Management Board is intended to reflect the typical level
+and structure of management board compensation at peer companies, as well as Infineon's economic position and
+future prospects. The duties, responsibilities and performance of each member of the Management Board are also
+to be considered, as is Infineon's wider pay structure. This includes considering Management Board compensation
+in relation to that of senior management and of the workforce as a whole, including changes in the level of com-
+pensation over time. The stated objective is that the compensation structure should be designed in such a way
+that it promotes sustainable business development, with a cap in place in the event of exceptional developments.
+Infineon aims to set compensation at a level that is competitive both nationally and internationally, so as to inspire
+and reward dedication and success in a dynamic environment.
+Components of the Management Board compensation system
+There have been no changes to the Management Board compensation system in the 2018 fiscal year compared to
+the previous fiscal year.
+All members of the Management Board receive as compensation for their service an annual income which-based
+on target achievement of 100 percent - comprises approximately 45 percent fixed compensation and approximately
+55 percent variable compensation components:
+> Fixed compensation: The fixed compensation comprises a contractually agreed basic annual salary that is not
+linked to performance and is paid in twelve equal monthly installments.
+> Variable (performance-related) compensation: The variable compensation comprises three components - an
+annual bonus (short-term incentive), a multiple-year bonus (mid-term incentive) and a long-term variable com-
+pensation component (long-term incentive).
+The short-term incentive ("STI”) is intended to reward performance over the preceding fiscal year, reflecting Infineon's
+recent progress. Assuming a 100 percent target achievement of the variable compensation components, the STI
+constitutes approximately 20 percent of target annual income. It is set by the Supervisory Board in a two-phase process:
+(i) At the beginning of each fiscal year, the target functions with respect to the two key performance indicators
+"free cash flow" and "Return on Capital Employed (ROCE)" are defined uniformly for all members of the
+Management Board. Underpinning the consistent approach taken to managing the business, the same
+target indicators - supplemented by the Segment Result - are used as the basis for determining the variable
+compensation components (bonus payments) for Infineon managers and employees. The two key performance
+indicators referred to above, which are described in more detail in the chapter "Internal Management System",
+are equally weighted for the purposes of measuring the STI.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+95
+95
+Combined Management Report | Our 2018 fiscal year
+In the 2018 fiscal year, the Supervisory Board engaged an independent external remuneration expert to perform
+the regular review of the Management Board compensation system. The expert concluded that the Company's
+compensation system complies with the requirements of the German Stock Corporation Act (Aktiengesetz)
+and the DCGK and is in line with current market conditions (for details see "Review of the Management Board
+compensation system, compensation components and individual contracts" in this chapter).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+793,203
+750,000
+65,596
+815,596
+685,000
+47,728
+732,728
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+630,850
+670,080
+430,125
+750,000
+43,203
+474,640
+429,968
+Multi-year variable compensation
+Mid Term Incentive (MTI)1
+2015-2017 tranche
+2016-2018 tranche
+2017-2019 tranche
+2018-2020 tranche
+243,040
+172,153
+183,520
+389,980
+44,940
+869,940
+36,154
+1,111,154
+36,461
+1,276,461
+Compensation report
+98
+Management Board compensation in the 2018 fiscal year in accordance with
+German Accounting Standard 17 (DRS 17)
+Total compensation
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits to the individual
+members of the Management Board - also presented in accordance with DRS 17 - are shown in the following table:
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dominik Asam
+Chief Financial Officer
+Dr. Helmut Gassel
+Member of the
+Management Board
+2018
+2017
+2018
+2017
+2018
+2017
+1,240,000
+1,075,000
+825,000
+129,993
+beginning
+727,095
+Virtual
+performance
+shares
+exercised
+in the
+fiscal year¹
+The total compensation allocated to the individual members of the Management Board for the 2018 fiscal year in
+accordance with DCGK - analyzed by component - is shown in the following table:
+in €
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dominik Asam
+Chief Financial Officer
+Dr. Helmut Gassel
+Member of the
+Management Board
+Jochen Hanebeck
+Member of the
+Management Board
+2018
+2017
+2018
+2017
+2018
+amount for the 2016-2018 MTI tranche therefore flowed to the members of the Management Board in the 2018 fiscal
+year. In accordance with the DCGK, share-based payments are deemed to be allocated on the basis of the relevant
+time and value for German tax law purposes. The performance shares awarded on 1 October 2014 which were
+settled in cash after the end of the 2018 fiscal year (see "Components of the Management Board compensation
+system" in this chapter) will not be disclosed as having flowed until the 2019 fiscal year. In line with the DCGK
+recommendations, the pension expense (meaning the service cost pursuant to IAS 19) constitutes the allocation
+amount (see previous table), even though it is not - strictly speaking - an allocation.
+2017
+2017
+Fixed compensation
+Basic annual salary
+1,240,000
+Fringe benefits
+36,461
+Total fixed compensation
+1,276,461
+1,075,000
+36,154
+1,111,154
+825,000
+44,940
+869,940
+750,000
+43,203
+793,203
+750,000
+65,596
+815,596
+2018
+685,000
+47,728
+732,728
+P see page 95 ff.
+Compensation report
+806,238
+Pension expense
+Total compensation (DCGK)
+124,723
+1,790,692
+132,853
+1,671,819
+85,186
+124,723
+1,025,505 3,070,319
+2,130,000
+124,723
+850,373
+806,238
+148,449
+162,385
+102
+85,186 600,000
+85,186 2,130,000
+148,449
+1,782,322
+1,685,639
+1,017,135
+3,061,949
+1 The figures of the active members of the Management Board in the 2018 fiscal year are based on a fair market value per performance share amounting to €15.25 (2017: €11.25),
+which was calculated using a Monte-Carlo simulation.
+2 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year.
+Allocation amount in accordance with DCGK
+Since compensation granted to members of the Management Board for the 2018 fiscal year does not coincide fully
+with amounts disbursed in a particular fiscal year, a separate table is presented - in accordance with the relevant
+DCGK recommendation - showing the amounts flowing to members of the Management Board for the 2018 fiscal
+year (the "allocation amount” (“Zufluss")).
+In line with the DCGK recommendations, the fixed compensation and the STI are required to be disclosed as the
+allocation amount for the relevant fiscal year concerned. In the case of the MTI, the DCGK recommends that this is
+disclosed as flowing to members of the Management Board in the fiscal year in which the plan term of the relevant
+MTI tranche ends. In addition to the fixed compensation and the STI granted for the 2018 fiscal year, the allocation
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+148,449
+850,373
+750,000
+33,500
+783,500
+32,016
+717,016
+1,394,245 1,505,400 671,338 429,968 671,338 429,968
+279,374 297,220 124,723 132,853 148,449 162,385
+2,543,559 2,595,823 1,611,657 1,295,549 1,603,287 1,309,369
+1 Represents 250 percent of the LTI allocated amount (cap) at the time of granting the virtual performance shares in financial year 2013.
+2 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year.
+Commitments to members of the Management Board upon termination of their Board activities
+Benefits and pension entitlements in the 2018 fiscal year
+In accordance with the Management Board compensation system in place since 2010, the members of the Management
+Board have, in the meantime, all received a defined contribution pension commitment, which is essentially identical
+to the Infineon pension plan applicable to all employees. The Company has accordingly set up a personal pension
+account (basic account) for each beneficiary and makes annual pension contributions to it. The Company adds
+annual interest to the balance in the basic account using the highest statutory interest rates valid for the insurance
+industry (guaranteed interest rates) until disbursement of the pension begins and may also award surplus credits.
+Ninety-five percent of any income earned over and above the guaranteed interest rate is credited to the pension
+account, either at the date on which disbursement of the pension begins or, at the latest, when the beneficiary reaches
+the age of 60. The balance of the basic account when disbursement of the pension begins (due to age, invalidity or
+death) - increased by an adjusting amount in the event of invalidity or death - constitutes the retirement benefit
+entitlement and is paid out to the member of the Management Board or his or her surviving dependents in twelve
+annual installments, or, if so requested by the member of the Management Board, in eight annual installments, as
+a lump sum or as a life-long pension. In addition to the defined contribution pension plan that has been in place
+for Dr. Ploss since 1 January 2016, a fully vested fixed-amount pension entitlement of €210,000 p.a. also exists for
+his Board activities up to 31 December 2015 which will not increase in future.
+If the entitlements of members of the Management Board (i) have not yet legally vested or (ii) have legally vested
+but are not protected by the state pension insurance scheme (Pensionssicherungsverein), the Company maintains
+pension reinsurance policies in favor of, and pledged to, the members of the Management Board concerned.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Compensation report
+103
+The plan rules applicable to members of the Management Board differ in terms of the initial defined component,
+the annual transfer to the pension account and the vesting period.
+> On joining the Management Board, the Company made a one-time, contractually vested initial pension contribution
+of €540,000 on behalf of Mr. Asam as compensation for the loss of vested retirement pension entitlements in
+connection with the termination agreement with his previous employer. For each fiscal year of his membership
+on the Management Board, Mr. Asam also receives a pension contribution from the Company amounting to
+between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed basic annual salary.
+As in the previous year, the pension contribution for Mr. Asam for the 2018 fiscal year has been set at 30 percent
+of his basic annual salary and therefore amounts to €247,500. The pension entitlements arising from the defined
+contributions made on behalf of Mr. Asam vested with effect from 31 December 2013.
+2,002,990 2,874,300
+318,442 321,123
+3,597,893 4,306,577
+> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result of their previous periods
+of employment in senior management positions with Infineon. The contracts appointing them to the Board
+specifically state that the amounts made available to cover their vested pension entitlements represent a
+continuation of those vested entitlements and are, therefore, not subject to any separate vesting arrangements.
+The Company makes a fixed annual pension contribution on behalf of Dr. Gassel and Mr. Hanebeck for each
+full fiscal year of service on the Board, equivalent to 30 percent of the relevant agreed basic annual salary. The
+Supervisory Board is not required to decide each time on the amount to be contributed. The pension contributions
+for the 2018 fiscal year for Dr. Gassel and Mr. Hanebeck amounted in each case to €225,000.
+The amounts credited to the pension entitlement accounts of the members of the Management Board - in line with
+the plan rules applied to Infineon employees - are paid out on or after reaching the age of 67, provided the service
+contract has also ended, or, upon request, at an earlier point in time if the service contract ends on or after reaching
+the e age of 60. If the beneficiaries elect that their pension be paid out in monthly installments, the pension amount
+is adjusted automatically each year in accordance with the Infineon pension plan.
+Alongside the annual retirement entitlements and related benefit amounts, the following table shows the present
+values of pension entitlements earned to date and the service cost in accordance with IFRS. The service cost reported
+in the table for Dr. Gassel and Mr. Hanebeck only relates to periods of current Board activities. The present value of
+pension and benefit entitlements is particularly dependent on changes in the discount rate required to be applied
+(30 September 2018: 1.7 percent, 30 September 2017: 1.8 percent).
+Pension entitlements
+in €
+Fiscal year
+Member of the Management Board
+Pension
+entitlements
+(annual) as
+of beginning
+of pension
+period
+Benefit
+amounts
+determined
+for the
+relevant
+fiscal year
+Present value
+of pension
+and benefit
+entitlement
+Original
+service cost
+(earned in the
+current year)
+Dr. Reinhard Ploss¹
+> The defined contribution pension plan in place for Dr. Ploss is also based on a fixed contribution amount of
+30 percent of the relevant agreed basic annual salary. The pension contribution made by the Company for the
+2018 fiscal year amounted to €372,000.
+685,000
+Total compensation (DCGK)
+Total variable compensation
+Variable compensation
+Single-year variable
+compensation (STI)
+630,850
+670,080
+430,125
+474,640 389,980 429,968
+389,980
+429,968
+Multi-year variable
+compensation
+Mid Term Incentive (MTI)
+Pension expense²
+2015-2017 tranche
+480,760
+2016-2018 tranche
+of the
+fiscal year
+414,120
+281,358
+281,358
+Long Term Incentive (LTI)
+Stock Option Plan 2010
+Performance Share Plan
+due in the financial
+year 2018¹
+1,525,500
+550,000
+787,500
+550,000
+678,720
+Total variable compensation
+190,238
+170,373
+937,500
+2017-2019 tranche
+2018-2020 tranche
+480,000
+550,000
+340,000
+1,100,000
+375,000
+750,000
+Long Term Incentive (LTI)
+Performance Share Plan¹
+298,168
+340,000
+315,608
+1,050,000
+191,662
+211,838
+Total variable compensation
+1,398,168
+Pension expense²
+318,442
+Total compensation (DCGK)
+2,993,071
+1,275,608
+321,123
+2,707,885
+149,084
+3,525,000
+149,084
+941,662
+375,000
+Mid Term Incentive (MTI)
+Dominik Asam
+Chief Financial Officer
+2017 2018 (min.)
+2018 (max.)
+2018
+2017 2018 (min.)
+2018 (max.)
+1,240,000
+36,461
+1,276,461
+1,075,000
+36,154
+1,111,154
+1,240,000
+36,461
+1,276,461
+1,240,000
+1,375,000
+36,461
+1,276,461
+750,000
+43,203
+793,203
+825,000
+825,000
+44,940
+44,940
+869,940
+869,940
+Variable compensation
+Single-year variable compensation (STI)
+550,000
+480,000
+Multi-year variable compensation
+825,000
+44,940
+869,940
+891,838
+318,442
+1,743,987
+318,442
+783,500
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+340,000
+308,000
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+850,000
+340,000
+308,000
+850,000
+33,500
+2017-2019 tranche
+308,000
+340,000
+308,000
+680,000
+340,000
+680,000
+Long Term Incentive (LTI)
+Performance Share Plan¹
+170,373
+190,238
+85,186
+600,000
+2018-2020 tranche
+750,000
+750,000
+33,500
+783,500
+685,000
+32,016
+717,016
+279,374
+5,119,903
+2,090,976
+675,000
+2,362,500
+297,220
+279,374
+1,982,261 1,245,145 3,511,814
+95,831
+95,831
+279,374
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+2018
+Dr. Helmut Gassel
+Member of the Management Board
+2017 2018 (min.) 2018 (max.)
+2018
+Jochen Hanebeck
+Member of the Management Board
+2017
+2018 (min.)
+2018 (max.)
+750,000
+65,596
+815,596
+685,000
+47,728
+732,728
+750,000
+65,596
+815,596
+750,000
+65,596
+815,596
+750,000
+33,500
+783,500
+2018
+372,000
+584,640
+210,000
+Stock options
+outstanding
+at the
+end of the
+fiscal year
+Stock Option Plan 2010
+Stock options
+outstanding
+at the
+beginning
+of the
+fiscal year
+100
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+1 The share price of the virtual performance shares exercised in the fiscal year 2018 amounts to €21.90.
+2 The expiration of the virtual performance shares results from the cap. The finally allocated performance shares may not exceed 250 percent
+of the respective LTI allocation amount.
+(Chief Executive Officer)
+264,778
+19,728
+Stock options
+exercised
+in the
+fiscal year¹
+61,086
+80,704
+54,464
+291,128
+210,424
+2017
+2018
+Total
+16,910
+190,238
+16,910
+2017
+Management Board)
+(Member of the
+830,576
+907,922
+28,082
+Stock options
+expired
+fiscal year
+(Chief Financial Officer)
+134,669
+2018
+Dominik Asam
+376,461
+99,300
+208,200
+307,500
+2017
+(Chief Executive Officer)
+198,986
+2018
+in the
+Dr. Reinhard Ploss
+Fiscal year
+Member of the
+Management Board
+pensation
+based com-
+Total
+expense
+for share-
+Number
+Number
+Number
+Number
+Number
+fiscal year
+Exercisable
+stock options
+outstanding
+at the end
+of the
+in €
+2017
+170,373
+16,910
+28,054
+125,136
+2017
+(Chief Executive Officer)
+125,160
+11,615
+35,967
+298,168
+19,552
+153,190
+2018
+Dr. Reinhard Ploss
+315,608
+year
+Number
+Number
+Number
+in €
+Number
+Number
+Fiscal
+Virtual
+performance
+shares
+outstanding
+at the end
+of the
+fiscal year
+fiscal year²
+shares
+expired
+in the
+Virtual
+performance
+Member of the Management Board
+11,172
+153,190
+2018
+2018
+Jochen Hanebeck
+16,910
+190,238
+16,910
+2017
+Management Board)
+(Member of the
+28,082
+170,373
+11,172
+16,910
+Dominik Asam
+2018
+104,118
+211,838
+18,830
+85,288
+2017
+(Chief Financial Officer)
+83,454
+8,113
+25,119
+191,662
+12,568
+104,118
+Dr. Helmut Gassel
+130,952
+291,128
+68,152
+225,000
+2,702,051
+148,449
+(Member of the Management Board)
+2017
+205,500
+3,361,736
+162,385
+Total
+2018
+210,000
+2017
+2018
+210,000
+13,754,757
+14,171,827
+870,988
+913,581
+1 The upper line for Dr. Ploss in the 2018 fiscal year respectively 2017 shows the contribution amount, the present value and the service cost relating to the
+defined contribution pension commitment additionally granted to him with effect from 1 January 2016. The second line shows the pension entitlement
+and the present value of his fixed amount pension plan. Income from past service cost amounting to €1,114,773 was recognized in the 2017 fiscal year.
+2 As a result of the separate allocation to pension entitlement accounts and guaranteed interest component - compared to the previous year's flat-rate
+allocation - the present value of the pension provision for Dr. Gassel and Mr. Hanebeck as of 30 September 2018 was reduced by €475,162 and €659,685
+respectively (including the effect of changes in interest rates).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Compensation report
+104
+Early termination of service contracts
+The service contracts of members of the Management Board include a change-of-control clause, which stipulates
+the terms that apply when the activities of a member of the Management Board are terminated in the event of a
+significant change in Infineon's ownership structure. A change of control for the purposes of this clause occurs
+when a third party, individually or together with another party, acquires at least 50 percent of the voting rights in
+Infineon Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover Act (Wert-
+papiererwerbs- und Übernahmegesetz - “WpÜG”). Members of the Management Board have the right to resign and
+terminate their service contracts within twelve months of the announcement of such a change of control and any
+who choose to do so are entitled to continued payment of their annual remuneration through to the end of the
+originally agreed duration of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes a
+member of the Management Board or terminates his or her contract within twelve months of the announcement of
+a change of control, the members of the Management Board concerned are entitled to continued payment of their
+annual remuneration through to the end of the originally agreed duration of their contract, subject to a minimum
+period of 24 months and a maximum period of 36 months.
+The Management Board service contracts otherwise contain no promises of severance pay for situations in which
+contracts are terminated early.
+1,069,500
+958,500
+Payments to former members of the Management Board in the 2018 fiscal year
+Jochen Hanebeck²
+2,716,822
+977,189
+5,046,826
+318,442
+2017
+322,500
+629,343
+321,123
+210,000
+4,876,940
+Dominik Asam
+2018
+247,500
+2,787,031
+132,853
+279,374
+2017
+225,000
+62,800
+297,220
+Dr. Helmut Gassel²
+2018
+225,000
+2,241,660
+124,723
+(Member of the Management Board)
+2017
+205,500
+(Chief Financial Officer)
+Total compensation (primarily pension benefits) of €1,527,437.89 (2017: €1,324,427.14) was paid to former members
+of the Management Board in the 2018 fiscal year. As of 30 September 2018, accrued pension liabilities for former
+members of the Management Board amounted to €68,838,837 (30 September 2017: €67,862,601).
+2,586,986
+Review of the Management Board compensation system
+P see page 102 ff.
+P see page 146
+1 When exercising stock options members of the Management Board may only make gains up to a pre-determined amount (cap). Where the cap has been
+reached in the previous fiscal year stock options have expired.
+851,350
+524,413
+94,858
+95,379
+94,858
+167,452
+271,000
+438,452
+2017
+Further details regarding the performance shares which vested on 30 September 2017 and to the performance
+shares awarded to the members of the Management Board on 1 March 2018 for the 2018 fiscal year are provided in
+note 17 to the Consolidated Financial Statements.
+2018
+2017
+Management Board)
+(Member of the
+Jochen Hanebeck
+2017
+Management Board)
+(Member of the
+95,379
+2018
+Dr. Helmut Gassel
+285,173
+Review of the Management Board compensation system, compensation components and
+individual contracts
+Total
+Special bonuses
+2018
+Other awards and benefits
+In accordance with section 4.2.2 DCGK, the Supervisory Board has engaged an external, independent compensation
+expert to review the Management Board compensation system in place since 1 October 2010 and conclude on its
+compliance with applicable legislation and its overall appropriateness from an objective perspective. In this context,
+the target annual incomes of each individual member of the Management Board were subjected to detailed scrutiny.
+The expert's report concluded that the Company's compensation system complies with legal requirements and
+with the recommendations contained in the German Corporate Governance Code (DCGK). In particular, the expert
+concluded that the compensation of Infineon's Management Board is commensurate with market conditions and
+that the variable compensation component is oriented towards the sustainable growth of the enterprise. The
+individual target annual incomes of the members of the Management Board are appropriate, both horizontally (i.e.
+looking at peer companies) and vertically (i.e. looking at Infineon's various employee groupings). Regardless of this,
+however, there would be scope for the compensation to be increased, especially for the Chief Executive Officer. The
+results of the compensation expert's review were discussed in detail during the Executive Committee meeting held
+on 25 October 2018 and by the full Supervisory Board on 20 November 2018. The Supervisory Board concurred with
+the conclusions reached by the external expert.
+The Supervisory Board did not award any special bonuses to members of the Management Board during the 2018
+fiscal year.
+Increase in Management Board compensation
+The increases in the compensation of the members of the Management Board resolved by the Supervisory Board in
+the 2017 fiscal year - in the case of Dr. Ploss by approximately 15 percent and in the case of Mr. Asam, Dr. Gassel and
+Mr. Hanebeck by approximately 10 percent respectively - took effect from the beginning of the 2018 fiscal year. The
+increases did not, however, change the relation of the individual compensation components or the compensation
+structure as a whole.
+Other adjustments
+On 3 August 2017, the Supervisory Board resolved to move the allocation date for granting performance shares to
+members of the Management Board for LTI purposes from 1 October to 1 March of a fiscal year, in line with the rules
+applicable for managers and employees. This amendment was applied for the first time for the LTI allocation in the
+2018 fiscal year.
+> The previous two-year minimum waiting period rule - which prevented the payment of a current LTI tranche if
+the member of the Board left office during this period - no longer applies.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Total fixed compensation
+Compensation granted to members of the Management Board in accordance with the DCGK (total compensation
+and compensation components) as well as the minimum and maximum values that can be achieved are shown in
+the following table:
+101
+Compensation report
+Corporate Governance
+In addition, following extensive discussions at the Supervisory Board meetings held on 21 November 2017,
+16 May 2018 and 3 August 2018, prepared by the Executive Committee, a new (simplified) set of rules came into
+force on 1 October 2018 for LTI purposes when a member leaves the Management Board:
+Fringe benefits
+Combined Management Report | Our 2018 fiscal year
+Management Board compensation in the 2018 fiscal year in accordance with the
+German Corporate Governance Code
+In the 2009 fiscal year, the Company entered into a restitution agreement with each of the active members of the
+Management Board at that time. Dr. Ploss is the only current member of the Management Board affected by the
+agreement. These agreements stipulate that the Company covers all costs and expenses of any legal, governmental,
+regulatory and/or parliamentary proceedings and investigations as well as arbitration proceedings, in which the
+member of the Management Board is involved in conjunction with his/her activities on behalf of the Company.
+However, the agreements specifically exclude any restitution of costs if the Company initiates proceedings against
+the member of the Management Board for a breach of the duty of care owed in conjunction with section 93,
+paragraph 2, German Stock Corporation Act (Aktiengesetz).
+Compensation granted in accordance with DCGK
+The following table shows the value of compensation granted for the 2017 and 2018 fiscal years, including fringe
+benefits, as well as the minimum and maximum values that can be achieved for the 2018 fiscal year.
+The DCGK recommends that the individual compensation components for each member of the Management Board
+be disclosed in accordance with specified criteria. It also recommends that disclosure is based on the model tables
+- in part diverging from DRS 17 – provided in the appendix to the Code.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+in €
+Fixed compensation
+Basic annual salary
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed pursuant to the DCGK at the
+target value (i.e. the value in the event of 100 percent target achievement). The MTI is required to be disclosed - in
+a deviation from DRS 17 - at the target value for an "average probability scenario" at the grant date. For these
+purposes, Infineon assumes 100 percent target achievement on a scale ranging from 0 to 200 percent. In addition,
+the pension expense, i.e. the service cost pursuant to IAS 19 (see "Commitments to members of the Management
+Board upon termination of their Board activities” in this chapter), is also required to be included in the amount of
+total compensation disclosed in accordance with the DCGK.
+32
+(1,404)
+(1)
+(283)
+(37)
+5,636
+1,075
+1,075
+27
+27
+(2)
+21
+1,071
+(2)
+1,096
+4,774
+(283)
+(4)
+5,636
+(248)
+(1)
+4
+4
+75
+908
+(49)
+2
+4
+865
+(37)
+(248)
+(13)
+26
+(13)
+(17)
+(17)
+4,774
+(1,404)
+32
+19
+(9)
+IAS 12
+6
+Effective date
+Impact on Infineon
+IAS 7
+Cash flow statements
+(Disclosure initiative - Amendments to IAS 7)
+Recognition of deferred tax assets for unrealized losses
+(Amendments to IAS 12)
+1 January 2017
+immaterial
+1 January 2017
+Standard/amendment/interpretation
+immaterial
+2014-2016
+Amendments to IFRS 12
+1 January 2017
+none
+Financial reporting rules issued not yet applied
+The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from
+today's perspective. They have not been applied in the Consolidated Financial Statements as of 30 September 2018
+since they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended
+Standards are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they
+are not applied before their effective date, even if this is permitted for certain standards.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2
+Annual IFRS improvement cycle
+4,486
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in the
+Consolidated Financial Statements for the year ended 30 September 2018:
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
+The Company's Management Board presented the Consolidated Financial Statements on 20 November 2018.
+(9)
+(333)
+59
+(3)
+(37)
+6,446
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Financial reporting rules applied for the first time
+Notes to the Consolidated Financial Statements
+114
+The Infineon Group ("Infineon") comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
+develop, manufacture and market a broad range of semiconductors and related system solutions. The focus of
+activities is on applications for automotive electronics, industrial electronics, information and communications
+infrastructure as well as hardware-based security. The product range includes standard, application-specific and
+customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
+signal applications. About two third of Infineon's revenue is generated by power semiconductors, the remaining
+revenue is attributable to high frequency components, sensors, and microcontrollers for automotive, industrial
+and security applications. Research and development sites, manufacturing facilities, investments and customers
+are located mainly in Europe, Asia and North America.
+Infineon Technologies AG is a listed company under German law and ultimate parent company of Infineon. The
+principal office of the Company is Am Campeon 1-15, 85579 Neubiberg (Germany). The Company is registered in
+the Commercial Register of the District Court of Munich (Germany) under the number HRB 126492.
+1 Basis of the Consolidated Financial Statements
+The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company for the
+year ended 30 September 2018 have been prepared in accordance with International Financial Reporting Standards
+("IFRS") and related interpretations effective as of 30 September 2018 as issued by the International Accounting
+Standards Board ("IASB") to the extent to which the IFRS and interpretations have been endorsed by the European
+Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements set out in
+section 315e, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB"). The aforementioned
+standards were complied with in full.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+The fiscal year end for both Infineon and the Company is 30 September of each year.
+The Group currency is the euro ("€").
+Notes to the Consolidated
+Financial Statements
+(49)
+26
+790
+1,592
+9
+971
+851
+10
+1,480
+1,811
+1,240
+52
+5
+366
+300
+6
+11
+5
+8
+860
+732
+as of 30 September 2018 and 2017
+€ in millions
+Notes
+30 Septem-
+ber 2018
+30 Septem-
+ber 2017
+ASSETS
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+Income tax receivable
+Other current assets
+Assets classified as held for sale
+Total current assets
+23
+5,423
+4,871
+Property, plant and equipment
+5,456
+5,074
+Total assets
+LIABILITIES AND EQUITY
+10,879
+9,945
+Short-term debt and current maturities of long-term debt
+12
+25
+323
+Trade payables
+1,181
+1,020
+Short-term provisions
+Income tax payable
+Total non-current assets
+Consolidated Statement of Financial Position
+189
+Other non-current assets
+11
+3,038
+2,659
+Goodwill and other intangible assets
+11
+1,596
+1,586
+Investments accounted for using the equity method
+4
+37
+28
+Deferred tax assets
+5
+648
+612
+137
+35
+110
+Consolidated Financial Statements
+25,000
+90,000
+2018
+Total
+compen-
+sation
+fees
+functions
+18,000
+sation
+for specific
+compen-
+year
+Allowance
+Fixed
+Fiscal
+Meeting
+attendance
+133,000
+2017
+90,000
+Dr. Herbert Diess
+146,000
+26,000
+30,000
+90,000
+2017
+148,000
+28,000
+30,000
+90,000
+2018
+Johann Dechant
+133,000
+18,000
+25,000
+Peter Bauer
+Member of the Supervisory Board
+in €
+Supervisory Board compensation
+Corporate Governance
+Combined Management Report | Our 2018 fiscal year
+4
+2
+25
+(43)
+21
+75
+1,096
+865
+Shareholders of Infineon Technologies AG
+1,096
+865
+1 Contains losses from investments accounted for using the equity method in the 2018 fiscal year of €1 million (2017: gains €1 million).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Compensation report
+Consolidated Statement of Financial Position
+105
+> In a change from the previous rules, the allocation amount will also be reduced in future proportionately in the
+case of a so-called "good leaver", i.e. a member of the Board leaving office without any fault on his/her part, for
+instance in the event of reaching the stipulated age limit. The group of “good leavers” now also includes cases
+in which a member of the Board fulfills his/her contract properly up to the end of the agreed term and leaves the
+Company only because the contract has not been extended. By contrast, if a member of the Board resigns from
+office (unless the resignation is for good cause for which the member is not responsible) or if a contract of a
+member of the Board is terminated by the Company for good cause (a so-called “bad leaver”), all performance
+shares not yet definitely allocated are forfeited when the member of the Board leaves office.
+106
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The total compensation (including meeting attendance fees) paid to the individual members of the Supervisory
+Board in the 2018 fiscal year comprises the following (these figures do not include value-added tax at 19 percent):
+Compensation of the Supervisory Board for the 2018 fiscal year
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in connection with the
+performance of their Supervisory Board duties and for any value-added tax payable by them in this connection.
+The Company also pays any value-added tax incurred on their total remuneration (including meeting attendance
+fees) for the members of the Supervisory Board.
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or one of its committees, or
+takes on a Supervisory Board function for which an allowance is paid, the relevant compensation components are
+disbursed on a pro rata basis, i.e. payment of one twelfth of the relevant annual compensation component for each
+(started) month of membership or exercise of function.
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one of its committees that is
+attended in person. The meeting attendance fee is paid only once if more than one meeting of the relevant
+committees takes place on a given day.
+› Allowances recognizing the additional work involved in performing certain functions within the Supervisory
+Board: The Chairman of the Supervisory Board receives an allowance of €90,000, each Vice-chairman receives an
+allowance of €30,000, the Chairman of the Investment, Finance and Audit Committee and the Chairman of the
+Strategy and Technology Committee each receive an allowance of €25,000 and each member of a Supervisory
+Board committee receives an allowance of €15,000 - with the exception of the Nomination Committee and the
+Mediation Committee. The additional allowance is payable only if the body to which the Supervisory Board or
+committee member belongs has convened or passed resolutions in the fiscal year concerned. A member of the
+Supervisory Board performing more than one of the functions indicated receives only the highest single additional
+allowance payable to a member performing the functions concerned. The allowance is paid to the relevant holder
+of office within one month of the end of the fiscal year.
+› A fixed compensation (basic remuneration) of €90,000. This amount applies to each member of the Supervisory
+Board and is payable within one month of the close of the fiscal year.
+The compensation due to the Supervisory Board (total compensation) is governed by section 11 of the Company's
+Articles of Association and comprises the following:
+Compensation structure
+Supervisory Board compensation
+> Instead, the LTI will be reduced in future proportionately if the length of service of a member of the Board - specifically
+in the year in which the LTI is allocated - is shorter than the fiscal year to which the LTI award relates. This situation
+usually arises when a member of the Board does not begin his duties exactly at the beginning of a fiscal year
+or does not leave office exactly at the end of a fiscal year. The allocation amount is reduced in each case by one
+twelfth for each full month missing for the fiscal year in which the LTI is allocated.
+2018
+590
+117
+Interest received
+Interest paid
+(270)
+4
+8
+2
+Change in other assets and liabilities
+11
+5
+7
+28
+10
+96
+(116)
+7
+Change in provisions
+Change in trade payables
+Change in inventories
+Income tax
+5
+193
+142
+Net interest result
+45
+56
+Losses (gains) on disposals of property, plant and equipment
+(1)
+2
+Gain from sale of RF power business
+Dividends received from joint ventures
+Impairment charges
+Other non-cash result
+Change in trade receivables
+(91)
+(251)
+(73)
+158
+(5)
+1,575
+1,723
+Purchases of financial investments
+8
+(3,277)
+(3,300)
+Proceeds from sales of financial investments
+(2)
+3,067
+3,303
+Purchases of other equity investments
+(1)
+(9)
+Acquisitions of businesses, net of cash acquired
+4
+812
+Net cash provided by (used in) operating activities from discontinued operations
+Net cash provided by operating activities
+1,571
+177
+13
+(1)
+91
+(25)
+(23)
+14
+9
+(50)
+(58)
+Income tax paid
+5
+(226)
+(142)
+Net cash provided by operating activities from continuing operations
+1,728
+422
+861
+Plus: loss (income) from discontinued operations, net of income taxes
+Adjustments to reconcile net income to net cash provided by operating activities:
+Depreciation and amortization
+5
+9
+18
+13
+46
+67
+503
+137
+2,251
+2,211
+Total liabilities
+Shareholders' equity:
+Ordinary share capital
+Additional paid-in capital
+112
+552
+14
+1,511
+103
+Other current liabilities
+269
+230
+Total current liabilities
+2,182
+2,098
+Long-term debt
+Pension plans and similar commitments
+Deferred tax liabilities
+Long-term provisions
+Other non-current liabilities
+Total non-current liabilities
+12
+1,507
+Accumulated deficit
+Other reserves
+Own shares at cost
+4,433
+Consolidated Financial Statements
+Consolidated Statement of Cash Flows
+Consolidated Statement of Cash Flows
+for the year ended 30 September 2018 and 2017
+€ in millions
+Net income
+111
+Notes
+2018
+2017
+21
+1,075
+790
+143
+1
+9,945
+11
+10,879
+Total liabilities and equity
+4,309
+15
+2,274
+2,272
+4,486
+4,774
+(333)
+(1,404)
+56
+31
+(37)
+(37)
+6,446
+5,636
+Total equity
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+(16)
+90,000
+100,000
+Selling, general and administrative expenses
+(776)
+(836)
+3
+2,621
+2,885
+3
+(4,442)
+3
+7,063
+7,599
+3
+Research and development expenses
+Gross profit
+(4,714)
+(850)
+(819)
+Other operating income
+(63)
+(68)
+Financial expenses
+10
+15
+Financial income
+983
+1,469
+Operating income
+(57)
+(62)
+Other operating expenses
+14
+332
+6
+Cost of goods sold
+Revenue
+2017
+2018
+Dr. Helmut Gassel
+Dominik Asam
+Dr. Reinhard Ploss
+Management Board
+Neubiberg, 20 November 2018
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2018 or 2017 fiscal years.
+1,973,000
+1 Joined as Member of the Supervisory Board since 22 February 2018. The compensation for 2018 therefore was awarded on a pro rata basis.
+2 Joined as Member of the Supervisory Board until 22 February 2018. The compensation for 2018 therefore was awarded on a pro rata basis.
+3 Joined as Member of the Supervisory Board since 16 February 2017. The compensation for 2017 therefore was awarded on a pro rata basis.
+4 Joined as Member of the Supervisory Board until 8 November 2016. The compensation for 2017 therefore was awarded on a pro rata basis.
+288,000
+260,000
+1,992,333
+284,000
+260,833
+1,447,500
+1,425,000
+2017
+Jochen Hanebeck
+Gain (loss) from investments accounted for using the equity method
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes
+108
+€ in millions
+for the year ended 30 September 2018 and 2017
+Consolidated Statement of Operations
+Consolidated Statement of Operations
+Consolidated Financial Statements
+107
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+114 Notes to the Consolidated Financial Statements
+112 Consolidated Statement of Changes in Equity
+111 Consolidated Statement of Cash Flows
+110 Consolidated Statement of Financial Position
+109 Consolidated Statement of Comprehensive Income
+108 Consolidated Statement of Operations
+Content
+2018
+4
+3
+Total items not expected to be reclassified to profit or loss in the future
+Currency translation effects
+Actuarial gains (losses) on pension plans and similar commitments¹
+Net income
+€ in millions
+for the year ended 30 September 2018 and 2017
+Consolidated Statement of
+Comprehensive Income
+Net change in fair value of hedging instruments
+Consolidated Statement of Comprehensive Income
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+1 The calculation of earnings per share is based on unrounded figures.
+0.70
+0.95
+7
+(0.13)
+Consolidated Financial Statements
+Net change in fair value of available-for-sale financial assets
+Total items expected to be reclassified to profit or loss in the future
+Other comprehensive income (loss) for the year, net of tax
+(49)
+27
+118
+(4)
+118
+(4)
+790
+1,075
+15
+2017
+2018
+Notes
+109
+Attributable to:
+Total comprehensive income for the year, net of tax
+7
+0.70
+1.08
+7
+791
+1,218
+Basic earnings per share (in euro) attributable to
+shareholdersof Infineon Technologies AG:¹
+Shareholders of Infineon Technologies AG
+Attributable to:
+Net income
+Loss from discontinued operations, net of income taxes
+Income from continuing operations
+(142)
+(193)
+5
+Income tax
+933
+1,411
+Income from continuing operations before income taxes
+6
+(5)
+(143)
+1,075
+Diluted earnings per share (in euro) from continuing operations
+Diluted earnings per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+0.70
+0.95
+7
+Basic earnings per share (in euro)
+(0.13)
+7
+0.70
+1.08
+7
+Basic earnings per share (in euro) from continuing operations
+Basic earnings per share (in euro) from discontinued operations
+790
+1,075
+790
+(1)
+10,000
+Total
+12,000
+90,000
+2017
+127,000
+22,000
+15,000
+90,000
+15,000
+2018
+123,000
+18,000
+15,000
+90,000
+2017
+125,000
+Hans-Ulrich Holdenried
+24,000
+129,000
+Prof. Dr. Renate Köcher
+2017
+123,000
+18,000
+15,000
+90,000
+2018
+Dr. Susanne Lachenmann
+106,000
+16,000
+90,000
+2017
+100,000
+10,000
+90,000
+2018
+20,000
+15,000
+90,000
+2018
+15,000
+90,000
+2018
+Annette Engelfried
+2017
+82,000
+12,000
+10,000
+60,000
+2018
+Dr. Wolfgang Eder¹
+96,000
+6,000
+90,000
+2017
+18,000
+90,000
+123,000
+90,000
+Gerhard Hobbach
+123,000
+18,000
+15,000
+90,000
+2017
+123,000
+18,000
+15,000
+90,000
+2018
+Peter Gruber
+125,000
+20,000
+15,000
+2017
+102,000
+15,000
+123,000
+12,000
+90,000
+2017
+104,000
+14,000
+90,000
+102,000
+2018
+123,000
+18,000
+15,000
+90,000
+2017
+125,000
+Kerstin Schulzendorf
+Dr. Eckart Sünner
+2018
+90,000
+90,000
+2017
+104,000
+14,000
+90,000
+2018
+Diana Vitale
+135,000
+20,000
+25,000
+90,000
+2017
+182,333
+24,000
+68,333
+20,000
+15,000
+90,000
+2018
+20,000
+90,000
+2018
+216,000
+36,000
+90,000
+90,000
+2017
+93,000
+18,000
+37,500
+37,500
+2018
+Géraldine Picaud³
+Wolfgang Mayrhuber²
+110,000
+18,000
+2017
+6,000
+Jürgen Scholz
+15,000
+15,000
+2017
+2018
+Prof. Dr. Doris Schmitt-Landsiedel4
+110,000
+20,000
+90,000
+2017
+90,000
+90,000
+2018
+Dr. Manfred Puffer
+66,000
+60,000
+(5)
+8
+(112)
+for the year ended 30 September 2018 and 2017
+€ in millions,
+except for number of shares.
+Balance as of 1 October 2016
+Net income
+Other comprehensive income (loss) for the period, net of tax
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Issuance of ordinary shares:
+Exercise of stock options
+Share-based compensation
+Other changes in equity
+Balance as of 30 September 2017
+Balance as of 1 October 2017
+Net income
+Other comprehensive income (loss) for the period, net of tax
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Issuance of ordinary shares:
+Exercise of stock options
+Share-based compensation
+Consolidated Statement of Changes in Equity
+112
+Consolidated Statement of Changes in Equity
+Consolidated Financial Statements
+15
+(283)
+(248)
+(542)
+(340)
+(542)
+(340)
+(130)
+Balance as of 30 September 2018
+252
+(17)
+Cash and cash equivalents at beginning of period
+Cash and cash equivalents at end of period
+860
+625
+732
+860
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2
+6
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Ordinary shares issued
+Foreign
+Securities
+Hedges
+currency
+translation
+adjustment
+113
+Own shares
+Total equity
+attributable to
+shareholders
+of Infineon
+Technologies AG
+5,016
+(2,312)
+98
+(2)
+(5)
+(37)
+5,023
+790
+Other reserves
+Accumulated
+deficit
+Additional
+paid-in capital
+Consolidated Statement of Changes in Equity
+Shares
+Amount
+15
+1,132,673,109
+2,265
+3,527,820
+7
+17
+Notes
+17
+2,272
+1,136,200,929
+2,272
+794,905
+2
+1,136,995,834
+2,274
+Consolidated Financial Statements
+1,136,200,929
+Acquisitions of shares in MoTo, net of cash acquired
+118
+12
+Repayments of long-term debt
+Change in cash deposited as collateral
+(1,163)
+(1,131)
+12
+(1)
+20
+(18)
+12
+2
+(321)
+(119)
+74
+Proceeds from issuance of ordinary shares
+Dividend payments
+Net cash used in financing activities from continuing operations
+Net cash used in financing activities from discontinued operations
+Net cash used in financing activities
+Net change in cash and cash equivalents
+Effect of foreign exchange rate changes on cash and cash equivalents
+15
+Proceeds from issuance of long-term debt
+Net change in related party financial receivables and payables
+2222
+Net cash used in investing activities
+Proceeds from sales of businesses and interests in subsidiaries, net of cash disbursed
+6
+324
+10
+Investments in related companies
+(17)
+Net change in short-term debt
+11
+(164)
+(148)
+Purchases of property, plant and equipment
+Purchases of intangible assets and other assets
+11
+(1,090)
+(874)
+Proceeds from sales of property, plant and equipment and other assets
+11
+4
+Net cash used in investing activities from continuing operations
+(1,163)
+(1,131)
+Net cash used in investing activities from discontinued operations
+Annual IFRS improvement cycle 2015-2017 - Amendments
+to IFRS 3 and IFRS 11 as well as IAS 12 and IAS 23
+1 January 2019
+none
+Revised Conceptual Framework for Financial Reporting
+1 January 2020
+In a cross-functional IFRS 9 project, divided into an analysis and design phase as well as an implementation phase,
+Infineon captured and evaluated the effect on the Consolidated Financial Statements. This company-wide investi-
+gation into the effects of the application of IFRS 9 has been completed. The future classification and measurement
+of financial assets will be based on the underlying business model of the portfolio according to which the financial
+asset is managed, as well as the specific form of the contractually agreed cash flows. A limited number of financial
+assets (debt instruments) held by Infineon, which are currently recognized at amortized cost or at fair value through
+equity, will be recognized at fair value through profit or loss. In the future, Infineon will measure all equity instruments
+held at the date of the transition at fair value through profit or loss. According to IFRS 9 the future recognition of
+the impairment of financial instruments will be based on expected losses, instead of losses already incurred as is
+the case at present under IAS 39. For this purpose, models have been developed to estimate expected credit losses
+for trade receivables (simplified impairment model) as well as cash and cash equivalents and financial investments
+(general impairment model), which will be integrated into the existing credit risk management processes. Infineon
+expects no material effects to arise from the transition to the new impairment model. The new rules for the application
+of hedge accounting, whose target is to better represent risk management strategy, will primarily result in changes
+to the documentation and effectiveness requirements for Infineon. All existing hedging arrangements fulfill the
+hedge accounting requirements as set out in IFRS 9 and will continue as before. There will be no changes to existing
+financial liabilities for Infineon. Additionally, expanded quantitative and qualitative disclosure in particular with
+regard to credit risk and expected credit losses will be required. The implementation of IFRS 9 will require changes
+to processes and systems.
+115
+IFRS 9 "Financial Instruments"
+IFRS 9 contains new rules for the classification and measurement of financial assets, as well as new regulations
+for impairments, although the requirements for financial liabilities most relevant to Infineon have largely been
+adopted from IAS 39. In addition the new standard contains comprehensive new disclosure requirements as well
+as accounting rules for hedging transactions. IFRS 9 is to be applied to fiscal years beginning on or after 1 January
+2018. Infineon will therefore apply the new standard from the fiscal year beginning on 1 October 2018. The cumulative
+effects arising from the transition to IFRS 9 will be recognized directly in the opening balance of equity, whilst
+comparative information for previous periods will be disclosed according to the old requirements (modified
+retrospective approach).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+none
+none
+1 January 2018
+12.6
+immaterial
+immaterial
+see explanations
+below the table
+see explanations
+below the table
+see explanations
+below the table
+immaterial
+1 January 2019
+1 January 2018
+Annual IFRS improvement cycle
+Uncertainty over income tax treatments
+advance consideration
+IFRIC 23
+Foreign currency transactions and
+IFRIC 22
+Consolidated Financial Statements
+2014-2016 - Amendments to IFRS 1 and IAS 28
+Notes to the Consolidated Financial Statements
+In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
+is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
+recognition purposes.
+Changes to the classification and measurement categories at 1 October 2018 will not give rise to any transitional
+effects for Infineon. Infineon expects changes to allowances for cash and cash equivalents and financial investments
+of around €2 million as a result of the implementation of IFRS 9. The portfolio of allowances for trade receivables
+will decrease by around €2 million. In total, the implementation of IFRS 9 as of 1 October 2018, including the effect
+of deferred taxes, will have no net effect on retained earnings.
+Infineon generates revenues from the sale of semiconductor products and related system solutions. Infineon's
+semiconductor products include a wide variety of chips and components used in electronic applications ranging
+from automotive electronics and industrial applications to chip cards. Infineon's products are also used in a wide
+variety of microelectronic applications, such as computer systems, telecommunications systems and consumer
+goods. Revenue is allocated to the individual segments on the basis of differences in product type and applications.
+Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods are
+transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will flow
+to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or receivable
+taking into account settlement discounts and bonuses.
+In principle, Infineon recognizes revenue on sales to distributors by using the "sell in" method, that is when a product
+is sold to the distributor. In accordance with established business practice in the semiconductor industry, under
+certain circumstances distributors can apply for price protection and ship and debit credit notes. Price protection
+allows distributors to request a credit (debit) note for unsold products held in inventory if Infineon has reduced
+(increased) the standard list price of these products. In addition, in certain cases distributors may request a ship
+and debit credit note for price adjustments. Infineon adjusts revenue for price protection and ship and debit in
+the period in which the related revenue is recorded. The ship and debit adjustment is determined based on rolling
+trends in the difference between contract prices and standard list prices to the distributors. The price protection
+adjustment is based on actual list prices and distributor inventory on hand. The availability of detailed distributor
+inventory data, the transparency of pricing for standard products and the long distributor pricing history enable
+Infineon to reliably estimate the adjustments for price protection and ship and debit credit notes at the end of the
+reporting period.
+Distributors can, subject to certain conditions, return a limited amount of inventory (stock return) or request scrap
+allowances. Stock return credit notes are accrued based on expected stock returns in accordance with the contractual
+agreement combined with historical experience. Distributor scrap allowances are accrued based on the contractual
+agreement and, upon submission of a valid claim, are granted up to a certain maximum based on turnover in a given
+period. Infineon monitors such product returns on an ongoing basis and adjusts accrual assumptions accordingly.
+Other returns are only permitted for quality defects within the ordinary warranty period.
+1 January 2019
+Cost of goods sold
+Cost of goods sold includes the manufacturing costs of products sold during the reporting period. In addition,
+among other things cost of goods sold contains idle costs, inventory risks, the cost of warranty cases as well as the
+amortization of capitalized development costs. Recognized foreign currency effects as well as changes in the fair
+value of undesignated derivative financial instruments that are connected to the operating business are recognized
+in cost of goods sold.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their fair
+value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value of
+acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary or has
+a right to such, and has the ability to influence these returns as a result of its power over the subsidiary. Power means
+that Infineon has existing rights that give Infineon the ability to direct the relevant activities of the subsidiary, that
+is the activities that significantly affect the aforementioned returns.
+The Consolidated Financial Statements presented here include the financial statements of Infineon Technologies AG
+and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity which, directly
+or indirectly, is controlled by Infineon Technologies AG.
+Basis of consolidation
+2 Summary of significant accounting policies
+P see page 167 ff.
+117
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The new standard applies to fiscal years that begin on or after 1 January 2019, accordingly Infineon will apply the
+standard from the fiscal year that begins on 1 October 2019. In a cross-functional IFRS 16 project, divided into an
+analysis and design phase as well as an implementation phase, Infineon is evaluating the expected effect on the
+Consolidated Financial Statements. As of the balance sheet date the analysis phase has progressed considerably
+but is not completed. Infineon enters into leasing contracts mainly as lessee, these are primarily for operating
+leases. The application of IFRS 16 is expected to lead to an increase in assets and financial liabilities for Infineon.
+Infineon is expected to elect to use the exemptions for short term leases and leases for low value asset. Infineon is
+expected to make use of the modified retrospective approach for the transition to IFRS 16. A reliable estimate of
+the accounting effects is not possible at this stage of the project, but only after the completion of the system imple-
+mentation of the technical concept.
+IFRS 16 introduces a standardized accounting model by which leasing contracts are to be recorded in the balance
+sheet of the lessee and replaces all previous standards and lease accounting interpretations including IAS 17,
+IFRIC 4, and SIC 15 and SIC 27. This means that in future all assets and liabilities arising from a leasing agreement
+must be recognized by the lessee, unless it is a short term leasing arrangement (duration of twelve months or less)
+or a leasing arrangement for low-value assets (each may be elected by the lessee). The distinction between finance
+and operating leases is still required in the accounts of the lessor and therefore does not differ significantly from
+IAS 17 Leases.
+IFRS 16 "Leases"
+The transition to IFRS 15 will lead to an increase of current assets of around €43 million in particular as a result of
+the recognition of the contractual assets and a reduction to inventories, so that losses carried forward will decrease
+by €31 million as of 1 October 2018 after the effect of deferred taxes.
+In a cross-functional IFRS 15 project, divided into an analysis and design phase as well as an implementation
+phase, Infineon captured and evaluated the effect on the Consolidated Financial Statements. This company-wide
+investigation into the effects of the application of IFRS 15 has been completed. It has concluded that future revenue
+under particular contract types will be recognized over a period of time instead of at a particular point in time. For
+Infineon, this affects primarily customer-specific products with no alternative use for which Infineon has sufficient
+entitlement to payment. This will tend towards an earlier recognition of revenue than has previously been the case.
+For some customers with whom Infineon holds consignment stock, revenue recognition will shift from the point of
+withdrawal of goods and products by the customer to the point of delivery into the consignment warehouse. Based
+on the analyses, Infineon does not expect any material effect on earnings or financial position as a result of these
+changes, since Infineon's customer contracts generally only contain a contractual obligation that is fulfilled either
+over a period of time or at a particular point in time. The changes will involve the separate disclosure of contract
+assets in the Consolidated Statement of Financial Position as well as expanded quantitative and qualitative disclosure
+in the Notes to the Consolidated Financial Statements. The application of IFRS 15 requires changes to IT processes
+and systems, and where necessary new processes will be implemented.
+The new standard provides a comprehensive framework for determining whether, to what extent, and at which
+point in time or over which period revenue should be recognized. It replaces all previous standards and revenue
+recognition interpretations including IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31. For this purpose, the
+standard provides a principle-based, uniform, five-step model, which is to be applied to all categories of revenue
+transactions with customers. In essence, revenue is recognized at the point control is transferred to the customer.
+The amount to be recognized as revenue is based on the value of the consideration that the entity expects to receive.
+IFRS 15 is to be applied to fiscal years beginning on or after 1 January 2018. Infineon will apply the standard from
+the fiscal year beginning on 1 October 2018. Cumulative effects that arise from the first-time application will be
+recognized directly in equity whilst comparative information for previous periods will be disclosed according to
+the old requirements (modified retrospective approach).
+IFRS 15 "Revenue from Contracts with Customers"
+116
+Leases
+1.5
+9.6
+10.4
+1.5
+1.5
+2
+764
+2
+759
+Corporate
+Total
+1 Valuation parameters as of 30 June 2018 and 2017.
+P see page 125
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the original assumptions behind the calculation of revenue growth, gross margins, the
+WACC and growth rates in the terminal value. In this way, Infineon takes account of the inherently uncertain nature
+of estimates and carries out impairment tests on goodwill based on scenarios that are less favorable than those
+considered most likely. Changes considered to be possible to the parameters identified would have had no effect
+on the value of goodwill.
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none
+of the operating segments gave rise to an impairment of goodwill in the year under report. As of the reporting date
+there was no indication that the recoverable amount of a CGU to which goodwill had been allocated could have
+fallen below the book value.
+Intangible assets and other non-current assets
+Infineon reviews non-current assets, including property, plant and equipment and intangible assets for possible
+impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
+be recoverable. Regardless of whether an indication of impairment exists, intangible assets including capitalized
+development costs not yet subject to scheduled amortization undergo an annual impairment test (see also
+"Research and development expenses").
+The recoverability of an asset is measured by comparing its carrying amount with its recoverable amount. To the
+extent it is not possible to determine the recoverable amount of an asset, the book value of the CGU to which the
+asset is allocated is compared to its recoverable amount.
+The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use. The
+value in use is calculated based on discounted future cash flows. Considerable management judgment is necessary
+to estimate future cash flows.
+If an asset or CGU is considered to be impaired, the impairment recognized is measured as the amount by which the
+carrying value exceeds the recoverable amount. If the recoverable amount of a CGU is less than the carrying value,
+the impairment is allocated pro rata to the assets therein. An impairment loss recognized in prior periods for
+an asset is reversed insofar as, since the last impairment, a change in the underlying assumptions has occurred,
+which leads to a lower impairment requirement. The maximum possible reversal of an impairment loss is that which
+would lead to the carrying amount that would have been determined (net of scheduled depreciation and amortization)
+if no impairment loss had been recognized for that asset in prior years.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+123
+Defined benefit pension plans
+The net pension obligation recognized in respect of defined benefit pension plans comprises the present value
+of the defined benefit obligation (DBO) at the end of the reporting period less the fair value of the plan assets. The
+present value of the DBO and the resulting pension expense are determined annually in accordance with IAS 19
+"Employee Benefits" for each separate plan by independent, qualified actuaries using the projected-unit-credit
+method. The calculation is subject to, among other things, assumptions on increases in salaries, future developments
+in pensions as well as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations are
+discounted using discount rates determined on the basis of market yields of high-grade, fixed-interest corporate
+bonds from issuers carrying a very high credit rating.
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result, are
+recognized on a net basis in the functional areas within the operating result. The net interest result arising from the
+multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is presented
+as financial expense. Actuarial gains and losses arising from changes to actuarial assumptions and estimates as
+well as the difference between the normalized and actual return on plan assets are recognized directly in equity
+and recorded in the Consolidated Statement of Comprehensive Income in the periods in which they arise. Past
+service costs are recognized immediately in profit or loss.
+Provisions
+Provisions are recognized for present legal and/or constructive obligations arising from past events that are likely
+to result in a future outflow of resources, the amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example, the Qimonda insolvency, Infineon regularly assesses
+the probability of an unfavorable outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which it assesses at the relevant
+reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment, there is
+compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with reason-
+able accuracy at the time of assessment. As soon as additional information is available the affected estimates are
+reviewed and, where necessary, provisions for these proceedings are revised.
+10.9
+IFRS 16
+14.1
+704
+Revenue from contracts with customers including
+clarifications to IFRS 15
+IFRS 15
+1 January 2018
+1 January 2018
+Share-based payment (classification and measurement of
+share-based payment transactions - Amendment to IFRS 2)
+Financial instruments
+IFRS 9
+IFRS 2
+none
+1 January 2019
+none
+Expected impact
+on Infineon
+1 January 2019
+Plan amendment, curtailment or settlement (Amendments to IAS 19)
+Long-term interests in associated companies and joint ventures
+(Amendments to IAS 28)
+IAS 19
+IAS 28
+Effective date
+Standard/amendment/interpretation
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+12.4
+9.4
+1.5
+Revenue recognition
+Power Management
+& Multimarket
+708
+14.4
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon, or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 18 and 19).
+1 January 2018
+P see page 147 ff.
+after-tax-WACC¹
+pre-tax WACC¹
+Book value of
+allocated goodwill
+122
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the
+valuation parameters used:
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+terminal growth rate¹
+The discount rate for future cash flows is based on the after-tax weighted average cost of capital (WACC) for the CGU
+in question. The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax
+WACC used to discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
+cash flows and the after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate
+is derived using the Svensson method taking into account risk premiums, and the beta factor and debt ratio are
+derived from a group of companies comparable to the operating segment. In this way, the discount rate derived
+reflects the current market rate of return as well as the specific risks attached to the respective segment.
+Infineon determines the recoverable amount of a particular CGU to which goodwill has been allocated on the
+basis of its value in use. The value in use is measured by estimating the present value of future cash flows that will
+be generated by the continuing operations of the CGU discounted using an appropriate discount rate.
+Acquired goodwill is only impaired if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as of 30 June and, additionally, whenever there are events or changes in
+circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the higher
+of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating segment to
+which the goodwill is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired accordingly.
+The reversal in subsequent periods of such impairments is not permitted.
+Goodwill acquired in a business combination is the excess of the consideration transferred for an interest in a business
+over the net fair value of acquired, separately identifiable assets, liabilities and contingent liabilities as of the date
+of acquisition. Goodwill is reported in the line item "Goodwill and other intangible assets" in the Consolidated
+Statement of Financial Position and is allocated to the cash-generating units (CGUS) or groups of CGUS that will
+benefit from the synergies generated by the business combination. A CGU represents the smallest identifiable
+group of assets that generates cash inflows from continuing activities and that are largely independent of other
+assets or group of assets.
+Recoverability of intangible assets and other long-lived assets
+Goodwill
+Infineon did not hold any intangible assets with indefinite useful lives in either the 2018 or 2017 fiscal years.
+2-8
+3-5
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year business plan approved in the fiscal year just ended.
+The plan is established bottom-up based on certain central assumptions applied consistently throughout Infineon.
+Average revenue growth rates used over the planning timeframe lie between 9.3 percent and 11.8 percent and
+do not exceed the historical long-term average growth rate for the sector in which the relevant segment operates.
+Investments to increase capacity for which no cash outflow has taken place are not taken into account. Cash flows
+for periods beyond the planning horizon are estimated using a terminal value.
+€ in millions
+Financial assets or liabilities measured at fair value through profit or loss
+in %
+9.3
+12.3
+12.2
+5
+5
+Automotive
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+2018
+Segment
+in %
+in %
+4-12
+9.2
+1-12
+Years
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Inventories are measured at the lower of historical acquisition or fully absorbed production cost - calculated using
+the weighted-average method - and net realizable value. Net realizable value corresponds to realizable sale proceeds
+under normal business conditions less estimated expected costs to complete and sell. Production cost comprises
+costs of material, production wages and an appropriate portion of attributable overheads, along with attributable
+depreciation and amortization on property, plant and equipment and intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Inventories
+Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs. In
+subsequent periods they are measured at amortized cost using the effective interest method. The liabilities are
+derecognized when the contractual obligations are discharged, canceled or expired.
+Other financial liabilities
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. The
+gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity are
+recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
+Property, plant and equipment
+120
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Derivative financial instruments are measured at their fair value and included in "Other current assets" or "Other
+current liabilities".
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price changes
+(such as gold prices) for expected and highly probable future transactions in order to minimize the associated risk
+(cash flow hedges).
+Designated hedging instruments (cash flow hedges)
+At Infineon financial assets or liabilities measured at fair value through profit or loss comprise entirely of derivatives
+used to hedge currency risks for which hedge accounting is not applied.
+Contingent liabilities
+Notes to the Consolidated Financial Statements
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land, property
+rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on property,
+plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+Buildings
+121
+Other intangible assets
+Licenses and similar rights
+Technologies
+Customer relationships
+Capitalized development costs
+Scheduled amortization of intangible assets is based on the following useful lives:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
+relationships, which are measured at acquisition cost, as well as capitalized development costs. These intangible
+assets have finite useful lives and are valued at their amortized acquisition or production costs with amortization
+recorded using the straight-line method over their expected economic life.
+1-10
+10-25
+3-10
+Years
+Intangible assets (excluding goodwill)
+Other plant and office equipment
+Technical equipment and machinery
+3-5
+1.5
+Consolidated Financial Statements
+Industrial Power Control
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+Assets classified as held for sale
+Property, plant and equipment
+Goodwill
+Intangible assets (except goodwill):
+ASSETS
+with definite useful life
+Loans and receivables
+Available-for-sale
+Measured at fair value through profit or loss
+Designated hedging instruments
+Remaining other assets
+LIABILITIES AND EQUITY
+Trade payables
+Debt
+Provisions:
+Other assets (current and non-current):
+Other financial assets:
+Balance sheet item
+The following table summarizes the principal measurement bases used in the preparation of the Consolidated
+Financial Statements:
+Recognition and measurement principles
+124
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+If the obligation decreases as a result of a change in the estimate, the provision is adjusted accordingly and the
+resulting income recognized in the same functional area of the Consolidated Statement of Operations in which the
+original charge was recognized.
+Where cash flows are expected to arise after more than one year and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows.
+Provisions are measured at their expected settlement amount. The amount recognized for a provision is the best
+estimate of the expenditure required to settle the present obligation. Estimates of outcomes and financial effects
+are dependent upon the judgment of management, supplemented by experience gained from similar transactions
+and, where appropriate, the assessment of independent experts. If the circumstances to be assessed encompass
+a large number of possible outcomes, the obligation is estimated by weighting all possible outcomes by their
+associated probabilities (expected value method).
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+A list of subsidiaries of Infineon Technologies AG is provided in note 26.
+Functional currency, reporting currency and foreign currency translation
+1.5
+Foreign currency transactions of subsidiaries are translated into the functional currency of the relevant entity using
+the spot rate prevailing at the transaction date. Monetary foreign currency assets and liabilities are translated at the
+spot rate prevailing at the reporting date. Exchange rate gains and losses from the translation of foreign currency
+transactions are recognized in the Consolidated Statement of Operations.
+The assets and liabilities of subsidiaries with functional currencies other than the euro are translated into euros
+using the spot rate at the end of the reporting period. Income and expenses of these entities are translated using
+the average spot rate of the reporting period. All currency translation differences resulting from the consolidation
+are recognized directly in equity and presented as “other reserves".
+The euro/US dollar exchange rate is particularly significant for the preparation of the Consolidated Financial State-
+ments. As of the reporting date 30 September 2018 it was 1.1576 (30 September 2017: 1.1806) and the average for
+the 2018 fiscal year was 1.1892 (2017: 1.1060).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Pensions
+Other provisions
+The functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
+prepared with the euro as the reporting currency.
+Other financial liabilities:
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of three
+months or less, and are measured at their nominal amount.
+Financial instruments
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the acqui-
+sition or issuance of financial instruments are only included in the carrying amount if the financial instruments are
+not measured at fair value through profit or loss.
+Regular purchases and sales of financial assets are recognized on the settlement date.
+Financial assets are derecognized when the rights to receive payments from the investments have expired, or have
+been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial liabilities are
+derecognized when they are extinguished, that is when the contractual obligation is discharged, canceled or expired.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+119
+Infineon classifies financial assets into the following categories: "Loans and receivables", "Available-for-sale financial
+assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
+(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
+were not held by Infineon.
+Infineon classifies financial liabilities into the following categories: “Financial liabilities measured at fair value
+through profit and loss” and “Other financial liabilities”. Furthermore, “Designated hedging instruments (cash flow
+hedges)" belong to financial liabilities.
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
+in an active market. At Infineon the balance sheet items "Cash and cash equivalents", "Financial investments",
+"Trade receivables" and current and non-current "Other assets" all contain financial assets which are classified in
+the category "Loans and receivables”. Loans and receivables are measured on initial recognition at their fair value
+plus incidental acquisition costs. Subsequently, they are measured at amortized cost using the effective interest
+method and are tested for impairment. They are considered to be impaired when there is objective evidence that
+Infineon will not receive all amounts contractually due at the relevant due date. Objective evidence that indicates
+that impairment should be recorded would include, for example, known financial difficulties or the insolvency of
+a debtor. The impairment is recorded as an expense in profit or loss (in a separate allowance account). When a
+payment default becomes certain, such loans and receivables are considered to be uncollectible and derecognized
+along with the previously recognized allowance.
+Available-for-sale financial assets
+Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
+or are not allocated to any of the other categories (see above). Upon acquisition they are measured at fair value
+taking into account transaction costs and are subsequently measured at their fair value at the end of the relevant
+reporting period. Transaction costs relating to the acquisition of available-for-sale financial assets with a finite term
+and fixed or determinable payments are capitalized and recognized in the Consolidated Statement of Operations
+using the effective interest method. Changes in the fair value of available-for-sale financial assets are recognized
+directly in equity. If the fair value is permanently or significantly lower than the amortized cost, then an impairment
+loss is recognized through profit or loss. For available-for-sale financial assets, a significant or prolonged decline
+in the fair value of the financial asset below its acquisition cost is considered as an indicator that the assets are
+impaired. If any such evidence exists, the cumulative loss that had been recognized directly in equity - measured
+as the difference between the acquisition cost and the current fair value, less any impairment loss previously
+recognized in profit or loss – is removed from equity and transferred to profit or loss. When financial assets classified
+as available-for-sale are sold, the accumulated fair value adjustments previously recognized in equity are reclassified
+to profit or loss.
+48
+Other liabilities (current and non-current):
+49
+Cash and cash equivalents
+118
+Loans and receivables
+Projected unit credit method
+Expected settlement amount
+Designated hedging instruments
+Fair value through profit or loss
+Fair value directly through equity
+Fair value/amortized cost
+Fair value/amortized cost
+Acquisition cost
+Measured at fair value through profit or loss
+Other financial liabilities
+Own shares
+Measurement principle
+Nominal amount
+Fair value/amortized cost
+Remaining other liabilities
+Lower of acquisition or production cost and net realizable value
+Lower of carrying amount and fair value less costs to sell
+(Amortized) Acquisition or production cost
+Fair value/amortized cost
+Fair value/amortized cost
+Fair value through profit or loss
+Fair value directly through equity
+(Amortized) Cost
+Fair value/amortized cost
+Fair value/amortized cost
+Fair value directly through equity
+(Amortized) Acquisition or production cost
+Impairment-only approach
+Technical equipment and machinery
+7,648
+437
+(127)
+215
+1,501
+(27)
+8,146
+Other plant and office equipment
+1,210
+(6)
+76
+(65)
+329
+(8)
+1,227
+Payments on account
+and construction in progress
+284
+(2)
+(274)
+(4)
+(1)
+332
+Total property, plant and equipment
+(10)
+10,237
+14
+45
+Acquisitions Disposals
+366
+874
+4
+396
+5 2
+288
+227
+18
+26
+2,462
+Cost
+1 October
+Additions
+Reclassi-
+Transfers²
+2016
+through
+fication
+business
+Foreign
+currency
+effects
+30 Septem-
+ber 2017
+combi-
+nations¹
+Property, plant and equipment
+Land, land rights and buildings
+1,095
+32
+(21)
+366
+2,306
+(14)
+589
+8,146
+Technical equipment and machinery
+1,593
+14
+(3)
+(156)
+81
+Land, land rights and buildings
+Property, plant and equipment
+nations
+combi-
+ber 2018
+currency
+effects
+1,501
+business
+266
+Other plant and office equipment
+(2)
+1,090
+11,206
+355
+332
+Total property, plant and equipment
+8,845
+and construction in progress
+1,248
+(2)
+53
+(95)
+65
+1,227
+Payments on account
+30 Septem-
+Foreign
+Transfers
+419
+749
+895
+131
+166
+ber 2017
+360
+ber 2018
+30 Septem-
+Total
+Finished goods and merchandise
+Work in progress
+Raw materials and supplies
+€ in millions
+30 Septem-
+1,480
+1,240
+Cost of goods sold consisted mainly of inventory-related expenses in the 2018 and 2017 fiscal
+Reclassi-
+fication
+Disposals
+Acquisitions
+through
+Additions
+1 October
+2017
+Cost
+134
+€ in millions
+Changes in property, plant and equipment and goodwill and other intangible assets 2018
+11 Property, plant and equipment, goodwill and other intangible assets
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Inventories as of 30 September 2018 and 2017 were stated net of write-downs of €138 million and €131 million,
+respectively.
+years.
+(333)
+(215)
+352
+(2)
+212
+19
+(11)
+18
+2,225
+148
+2
+7
+(45)
+759
+643
+(4)
+392
+(10)
+(14)
+275
+283
+(3)
+(42)
+11,206
+Goodwill and other intangible assets
+Goodwill acquired for consideration
+Capitalized development costs
+Customer relationships
+396
+Technologies
+Other intangible assets
+Total goodwill and other intangible assets
+799
+5
+517
+129
+Licenses and similar rights
+(1)
+219
+18
+275
+Technologies
+392
+Customer relationships
+(17)
+143
+8
+643
+(28)
+18
+759
+Goodwill acquired for consideration
+Goodwill and other intangible assets
+12,038
+Capitalized development costs
+Licenses and similar rights
+219
+21
+(60)
+1 For the year ended 30 September 2017, amounts shown under property, plant and equipment as "Acquisitions through business combinations" relate to assets acquired in
+connection with the acquisition of MoTo.
+2 For the year ended 30 September 2017, transfers relate to assets that were classified as held for sale.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+15
+€ in millions
+Changes in property, plant and equipment and goodwill and other intangible assets 2017
+(60)
+26
+164
+2,306
+Total goodwill and other intangible assets
+18
+Other intangible assets
+(15)
+(256)
+A summary of changes in property, plant and equipment as well as in goodwill and other intangible assets
+for the years ended 30 September 2018 and 2017 is as follows:
+764
+30 Septem-
+ber 2018
+Income taxes from continuing operations
+Income taxes from discontinued operations
+€ in millions
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax consisted of the following:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In connection with investments in subsidiaries there are taxable temporary differences of €120 million (2017:
+€668 million) for which no deferred taxes have been recognized because the timing of the reversal can be controlled
+and it is not probable that the temporary difference will reverse in the foreseeable future.
+594
+639
+(2)
+27
+(17)
+18
+613
+594
+2017
+2018
+Deferred taxes, net as of the end of the fiscal year
+Deferred taxes recognized in equity
+Deferred taxes attributable to continuing operations
+Deferred taxes, net as of the beginning of the fiscal year
+€ in millions
+The change of the net amount of deferred tax assets and liabilities can be broken down as follows:
+There are no tax loss carry-forwards for which material deferred tax assets were not recognized and which are
+subject to expiration under statutory tax regulations. Of the tax credits for which no deferred tax assets were
+recognized, €39 million (2017: €27 million) will expire in the coming five years.
+516
+Income taxes recognized directly in equity
+Income taxes
+388
+131
+2017
+(1)
+(143)
+7
+(1)
+(150)
+2017
+2018
+Others business' share of discontinued operations, net of income taxes
+Loss from discontinued operations, net of income taxes
+Qimonda's share of discontinued operations, net of income taxes
+€ in millions
+Loss from discontinued operations, net of income taxes
+The current risks and provisions relating to Qimonda's insolvency are described in detail in note 19 "Proceedings in
+relation to Qimonda".
+In the 2018 and 2017 fiscal years adjustments to individual provisions arose as a result of recent developments in
+connection with the insolvency of Qimonda, as well as subsequent income from other discontinued operations.
+These led to losses after tax as shown in the table below.
+On 23 January 2009, Qimonda AG (“Qimonda”), a majority owned company, filed an application at the Munich Local
+Court to commence insolvency proceedings. On 1 April 2009, the insolvency proceedings opened. Insolvency
+proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of these insolvency
+proceedings have already been completed. The impacts of these proceedings are reported as discontinued opera-
+tions in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency proceedings. To the extent that the
+events occurred after the commencement of insolvency proceedings, their results are reported as part of continuing
+operations.
+classified as held for sale
+6 Disposals and discontinued operations and assets
+P see page 148 ff.
+Income taxes recognized directly in equity mainly comprise taxes from actuarial gains and losses arising from the
+pension commitments.
+(148)
+(148)
+28
+(6)
+17
+(142)
+(193)
+2018
+260
+224
+1,868
+136
+Unused tax credits and excess foreign tax credits
+Other
+430
+415
+Tax loss carry-forwards
+(212)
+255
+(140)
+130
+Provisions, pension plans and similar commitments
+(40)
+122
+(23)
+142
+(210)
+35
+(183)
+38
+Property, plant and equipment
+Intangible assets
+Deferred tax
+liabilities
+Deferred tax
+assets
+Deferred tax
+liabilities
+Deferred tax
+assets
+30 September 2017
+141
+137
+(13)
+165
+1,357
+2017
+2018
+Temporary differences
+Tax credits
+Tax loss carry-forwards (corporate tax and local income tax)
+€ in millions
+No deferred taxes were recorded for the following items (gross amounts):
+Infineon assessed its deferred tax assets for the need for a valuation allowance. Based on the results of the assessment
+of deferred tax assets, considering all positive and negative factors and information relating to the foreseeable future,
+Infineon recognized deferred tax assets, after netting, of €648 million as of 30 September 2018 (30 September 2017:
+€612 million).
+In Germany, Infineon Technologies AG had corporate income tax loss carry-forwards of €1.6 billion and trade tax loss
+carry-forwards of €2.6 billion as of 30 September 2018 (30 September 2017: €1.8 billion and €2.9 billion, respectively).
+In other jurisdictions, corporate income tax loss carry-forwards amounted to €33 million (30 September 2017:
+€31 million) and local income tax loss carry-forwards amounted to €92 million (30 September 2017: €216 million).
+Additionally, there are unused tax credits and excess foreign tax credits of €360 million (30 September 2017:
+€401 million).
+(18)
+612
+Radio Frequency Power Components business
+(9)
+Total
+536
+(536)
+350
+(350)
+Netting
+(554)
+1,148
+(359)
+998
+Total deferred taxes
+(92)
+648
+30 September 2018
+On 6 March 2018, the largest part of the Radio Frequency Power Components business was sold to Cree, Inc. for
+€345 million. The assets and selected liabilities were transferred separately. Overall, net assets with a carrying
+amount of €25 million were transferred. In addition, goodwill of €28 million was disposed of. €22 million of the
+purchase price was recognized as deferred income in connection with the long-term supply agreement for LDMOS
+wafers and related components from Infineon to Cree, Inc. The pre-tax gain realized in the 2018 fiscal year arising
+from the sale amounted to €270 million and was recognized in other operating income.
+P see page 117 ff.
+Changes in the allowance for doubtful accounts for the 2018 and 2017 fiscal years were as follows:
+851
+971
+(9)
+(9)
+860
+980
+7
+860
+973
+30 Septem-
+ber 2017
+133
+Trade receivables, net
+Allowance for doubtful accounts
+Trade receivables, gross
+Trade receivables, related parties
+Trade receivables, third parties
+€ in millions
+Trade receivables due within one year as of 30 September 2018 and 2017 consist of the following:
+9 Trade receivables
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+1,592
+1,811
+56
+€ in millions
+1,070
+466
+Allowance for doubtful accounts at beginning of the fiscal year
+Allowance for doubtful accounts at end of the fiscal year
+Inventories as of 30 September 2018 and 2017 consist of the following:
+10 Inventories
+Receivables with a maturity of more than one year are presented as other non-current assets.
+With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there are
+no indications that customers, based on their past credit history and current creditworthiness assessments, are not
+able to meet their obligations.
+4
+16
+831
+851
+3
+Past due
+> 31 days
+Past due
+0-30 days
+29
+932
+964
+Third party trade receivables, net of allowances as of 30 September 2018
+Third party trade receivables, net of allowances as of 30 September 2017
+thereof not
+past due
+Carrying
+amount
+€ in millions
+Third party trade receivables, net of allowances for doubtful accounts, at the reporting date comprise the following:
+9
+9
+(2)
+11
+9
+2017
+2018
+Current year's allowance, net of reversals
+1,248
+563
+ber 2017
+30 Septem-
+1 The calculation of earnings per share is based on unrounded figures.
+Earnings per share (in euro) - basic and diluted
+Earnings per share (in euro) from discontinued operations, net of income taxes
+Earnings per share (in euro) from continuing operations
+Basic and diluted earnings per share¹ (in euro):
+Weighted-average number of shares outstanding - diluted
+- Effect of share-based compensation
+Adjustments for:
+Weighted-average number of shares outstanding - basic
+- Adjustment for own shares
+- Ordinary share capital
+Weighted-average number of shares outstanding (in millions):
+thereof from discontinued operations
+thereof from continuing operations
+Net income attributable to shareholders of Infineon Technologies AG - basic and diluted
+€ in millions (unless otherwise stated)
+Basic and diluted earnings per share are calculated as follows for the fiscal years ended 30 September 2018 and 2017:
+Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
+such as interest expense, on the other.
+7 Earnings per share
+On 30 September 2018, land and buildings as well as technical equipment and machinery with a carrying amount
+of €11 million (previous year: €23 million) were disclosed as assets classified as held for sale.
+Assets classified as held for sale
+132
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+P see page 152 ff.
+8 Financial investments
+2018
+2017
+1,075
+30 Septem-
+ber 2018
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Financial investments
+Securities
+Investment funds
+Fixed-term bank deposits and money market funds
+€ in millions
+Financial investments as of 30 September 2018 and 2017 comprise the following (for further information see also
+notes 22 and 23):
+Financial investments comprise fixed-term deposits with banks, investment funds, money market funds and
+securities. While fixed-term deposits with banks with an original term of more than three months and money
+market funds qualify as loans and receivables in accordance with IAS 39 "Financial Instruments: Recognition and
+Measurement", investment funds and securities are categorized as available-for-sale financial assets (for valuation
+see note 2).
+0.70
+0.95
+(0.13)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+0.70
+1,133.9
+1,134.1
+5.3
+3.6
+1,134.6
+(6.0)
+1,128.6
+(6.0)
+1,130.5
+1,136.5
+(1)
+(143)
+791
+1,218
+790
+1.08
+€ in millions
+Qimonda - discontinued operations
+Deferred tax assets and liabilities as of 30 September 2018 and 2017 comprise the following:
+therein: Germany
+Europe
+The average number of employees by geographic region is as follows for the 2018 and 2017 fiscal years:
+2,206
+2,347
+338
+365
+1,868
+1,982
+2017
+2018
+127
+Total (continuing and discontinued operations)
+Social insurance levies, pension plans and similar commitments
+Wages and salaries
+€ in millions
+Personnel expenses comprised the following in the 2018 and 2017 fiscal years:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+P see page 147
+2,923
+3,242
+1,426
+1,595
+1,497
+Asia-Pacific (excluding Japan, Greater China)
+1,647
+Greater China
+Japan
+Infineon has received grants and subsidies from various governmental institutions under government business
+development programs including grants for the construction of manufacturing facilities, for research and develop-
+ment activities and employee development. Grants and subsidies taken into consideration in profit or loss in the
+Consolidated Financial Statements during the 2018 and 2017 fiscal years were as follows:
+Grants and subsidies
+36,962
+39,096
+2,062
+2,022
+3,767
+3,905
+181
+191
+1,963
+1,921
+2,115
+2,076
+15,333
+16,167
+10,124
+10,980
+15,566
+16,757
+2017
+2018
+Total
+therein: USA
+Americas
+therein: China
+2017
+2018
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+P see page 120
+and page 133
+and page 129 ff.
+P see page 125
+126
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
+deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimates.
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in other comprehensive income.
+130
+Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed deferred
+tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is probable
+that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit. Infineon
+reviews deferred tax assets for impairment at every reporting date. The assessment requires management to make
+assumptions about future taxable profits as well as other positive and negative influencing factors.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward. By contrast, no deferred tax is recognized on goodwill arising
+in connection with business combinations. Similarly, deferred taxes are not recognized on the initial recognition
+of an asset or liability in connection with a transaction that is not a business combination and which, at the time
+of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit. Deferred tax assets and
+liabilities are measured using applicable tax rates and laws that have been enacted by the end of the reporting
+period or are about to be enacted, and are to be applied when the related deferred tax asset is realized or the
+deferred tax liability is settled.
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Current and deferred income taxes
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated Statement
+of Operations (see note 3).
+Grants are recognized when it is reasonably assured that Infineon will comply with the conditions attached to the
+grant, and it is reasonably assured that the grant will be received. Investment-related grants are deducted from the
+purchase and production cost of the related asset and thereby reduce depreciation and amortization expense in
+future periods.
+Grants
+Costs of research activities are expensed as incurred. Costs for development activities, the results of which lead
+to a plan or design for the production of new or substantially improved products or process improvements, are
+capitalized if the development costs can be measured reliably, the product or process is technically and commercially
+feasible, future economic benefits are probable and Infineon intends, and has sufficient resources, to complete
+development and use or sell the asset. The costs capitalized include the cost of materials, direct labor and directly
+attributable general overhead expense that serves to prepare the asset for use. Such capitalized costs are presented
+as internally generated intangible assets within "Goodwill and other intangible assets” (see note 11). Development
+costs, which do not fulfill the criteria for capitalization, are expensed as incurred. Capitalized development costs are
+stated at cost less accumulated amortization and impairment charges. After the completion of the development
+phase and following the ramp-up of production, internally generated intangible assets are generally amortized as
+part of cost of goods sold over a period of three to five years.
+Research and development expenses
+P see page 127
+P see page 134 f.
+125
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+769
+P see page 121 f.
+and page 134 ff.
+P see page 123,
+page 137 and
+page 148 ff.
+Total (continuing and discontinued operations)
+Cost of purchased services
+Cost of raw materials, supplies and purchased goods
+€ in millions
+Expenses for purchased services and materials comprised the following in the 2018 and 2017 fiscal years:
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+expenses for purchased services, materials and personnel.
+Cost of materials and purchased services as well as personnel expense
+Breakdowns of revenue by segments, product groups and geographic areas are disclosed in note 24.
+P see page 159 ff.
+Revenue
+3 Notes to the Statement of Operations
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on 20 November 2018.
+€ in millions
+> valuation of share-based compensation (see note 17).
+> recognition and valuation of provisions (see "Provisions" and notes 13 and 19),
+> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+long-lived assets" and note 11),
+> valuation of inventory (see "Inventories" and note 10),
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 5),
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations
+of Infineon.
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Estimates and assumptions
+P see page 145 ff.
+and page 138 ff.
+P see page 123
+> valuation of defined benefit pension plans (see “Defined benefit pension plans" and note 14) and
+Included in the Consolidated Statement of Operations in:
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+Research and development expenses
+49
+64
+Change in available tax credits
+(271)
+(350)
+Expected income tax expense
+2017
+2018
+€ in millions
+A reconciliation of income taxes from continuing operations for the fiscal years ended 30 September 2018 and 2017,
+using as a basis the German combined statutory income tax rate of 28 percent (2017: 29 percent) is as follows:
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax laws applicable in the relevant
+countries and is taxed based on country specific tax rates.
+Current tax expense includes an income tax expense of €23 million (2017: €4 million) relating to previous fiscal years.
+A deferred tax benefit of €37 million (2017: €51 million) results from the creation and reversal of temporary differences.
+The German combined statutory tax rate for Infineon Technologies AG is 28 percent for the 2018 fiscal year (2017:
+29 percent). This comprises a corporate income tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent and
+a trade tax rate of 12 percent.
+(142)
+(193)
+(17)
+18
+(125)
+(211)
+2017
+2018
+129
+Deferred tax income (expense)
+Income tax
+Current tax expense
+€ in millions
+Income tax from continuing operations for the fiscal years ending 30 September 2018 and 2017 is as follows:
+Tax rate differential
+35
+25
+Effects from the difference between local and functional currency (Malaysia)
+Cost of goods sold
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The utilization of tax loss carry forwards, tax credits and temporary differences for which deferred tax assets had
+not previously been recorded resulted in current tax income of €2 million in the 2018 fiscal year (2017: €13 million).
+In the 2018 fiscal year, the profit or loss effect from the valuation allowances on deferred tax assets for tax credits
+amounted to €0 million (2017: €4 million), and from temporary differences €14 million (2017: €15 million). A write-up
+of deferred tax assets for tax loss carry forwards of €81 million was recorded (2017: €76 million). For temporary
+differences the write-up amounted to €31 million in the 2018 fiscal year (2017: €17 million), for tax credits the
+write-up was €19 million (2017: €6 million).
+Effects due to changes in tax rates arise mainly from changes to current and future applicable tax rates in the USA
+and in Singapore.
+(142)
+(193)
+(1)
+(1)
+(18)
+5 Income tax
+27
+Effects due to changes in tax rate
+39
+117
+12
+(38)
+Change in valuation allowance on deferred tax assets
+Prior year taxes
+34
+(51)
+Non-deductible expenses and tax-exempt income, net
+(11)
+4
+Other
+Notes to the Consolidated Financial Statements
+Actual income taxes
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The investment in SIAPM is allocated to the Automotive segment.
+On 7 February 2018, Infineon, together with SAIC Motor Corporation Ltd., established the joint venture SAIC
+Infineon Automotive Power Modules (Shanghai) Co., Ltd. ("SIAPM"), registered in Shanghai (China). Infineon holds
+49 percent of the company's shares. SIAPM offers power semiconductor solutions for electric vehicles in China.
+Volume production has been running at Infineon's site in Wuxi (China) since August 2018.
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd.
+The investment in Bipolar is allocated to the Industrial Power Control segment.
+Infineon Technologies Bipolar GmbH & Co. KG ("Bipolar") located in Warstein (Germany) develops and manufactures
+bipolar power semiconductors. Infineon accounts for the 60 percent interest in the joint venture by using the equity
+method as Infineon lacks controlling influence due to certain contractual participation rights of co-shareholder
+Siemens AG.
+Infineon Technologies Bipolar GmbH & Co. KG
+Investments accounted for using the equity method include shares in the joint ventures Infineon Technologies
+Bipolar GmbH & Co. KG and SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd.
+4 Investments accounted for using the equity method
+128
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+For compliance with the conditions attached to the grants and subsidies received and potential repayment
+requirements in case of nonfulfillment, see note 18.
+106
+125
+1
+2
+68
+86
+37
+2017
+2018
+Total
+Consolidated Financial Statements
+Selling, general and administrative expenses
+Summarized financial information
+As of 30 September 2018 and 2017, the carrying amount of joint ventures accounted for using the equity method
+was €37 million and €28 million. The pro rata results from investments accounted for using the equity method were
+as follows for the 2018 and 2017 fiscal years:
+37
+Gain (loss) from investments accounted for using the equity method
+€ in millions
+(6)
+1
+(1)
+4
+As of 30 September 2018 and 2017, unrecognized capital contribution obligations in joint ventures amount to
+€5 million and €10 million.
+(5)
+2017
+2018
+Total comprehensive income (loss) for the year, net of tax
+Other comprehensive income (loss) for the year, net of tax
+Income (loss) for the year, net of tax
+€ in millions
+3
+Segment Industrial Power Control
+The result of the investments accounted for using the equity method is not part of the segment result (see note 24).
+For the 2018 and 2017 fiscal years, Infineon's proportion of selected items from the statement of comprehensive
+income of the joint ventures were aggregated as follows:
+Segment Automotive
+2018
+2017
+(5)
+3
+Attributable to:
+3
+3
+Psee page 161
+(8)
+Amortization of unrecognized
+(14)
+past service (cost) benefit
+Pension cost
+7
+2
+5
+10
+3
+7
+Expected return on plan assets
+(7)
+(15)
+(10)
+(19)
+(4)
+Interest cost
+(30)
+(6)
+(24)
+(30)
+(23)
+(4)
+(3)
+1 year
+1
+30 Septem-
+30 Septem-
+Total
+Current service cost
+5-10 years
+2-5 years
+1-2 years
+Less than 1 year
+€ in millions
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as of
+30 September 2018 and 2017:
+(3)
+The weighted average duration of defined benefit plans is around 17 years as of 30 September 2018 and 2017,
+respectively.
+As of 30 September 2018 and 2017, cumulative actuarial losses amounted to €400 million and €368 million, respec-
+tively. The 2018 fiscal year includes cumulative actuarial losses from deferred compensation plans of €7 Million. In
+addition, cumulative actuarial losses amounting to €1 million resulting from health care plans, are also recognized
+directly in other comprehensive income.
+Actuarial losses of €28 million for the 2018 fiscal year and actuarial gains of €115 million for the previous fiscal
+have been recognized outside profit and loss in other comprehensive income.
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees, other-
+wise they are recorded as research and development or selling, general and administrative expenses. Interest costs
+and expected return on plan assets were recorded net as part of financial expense.
+(36)
+(8)
+(28)
+(42)
+(8)
+(34)
+1
+In the 2019 fiscal year, payments of €30 million are expected to be made to plan assets which relate to benefits paid
+directly to pension recipients by the Group companies.
+plans
+15
+plans
+11
+34
+1
+34
+1
+3
+2
+7
+150
+169
+160
+2
+172
+127
+157
+Not quoted
+in an active
+market
+Quoted
+in an active
+market
+30 September 2017
+ber 2018
+Quoted
+in an active
+market
+Not quoted
+in an active
+market
+7
+3
+21
+19
+Total
+Foreign
+Domestic
+Total
+Foreign
+Domestic
+plans
+2017
+2018
+€ in millions
+The expenses and income of defined benefit plans for the years ended 30 September 2018 and 2017 comprise the
+following:
+plans
+Amounts recognized in profit or loss and in total comprehensive income
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Government and corporate bonds are traded in liquid markets and the majority of them have an investment grade
+rating. The geographical allocation of the equity component of plan assets is predominantly based on the MSCI
+World Index. As a matter of policy Infineon's pension plans do not invest in shares or debt instruments of Infineon.
+The position "Other" in the table above comprises exchange-traded commodities (ETC) and other investment funds.
+The actual return on plan assets in the fiscal year ended 30 September 2018 was €7 million (30 September 2017:
+€6 million).
+69
+468
+64
+538
+19
+24
+142
+ber 2017
+1
+26
+1
+1
+Accumulated deficit
+Total
+Unrealized gains (losses) resulting
+from securities
+1
+1
+from securities
+Realized (gains) losses resulting
+(3)
+(1)
+(2)
+(2)
+2
+(4)
+from hedge accounting
+Unrealized gains (losses) resulting
+1
+from hedge accounting
+Realized (gains) losses resulting
+6
+23
+2
+25
+(59)
+30 September 2018
+(5)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Due to the results achieved in the reporting period as well as a positive business outlook, a dividend of €0.27 for
+each share entitled to a dividend shall be proposed to be paid from the €491 million of distributable profits of
+Infineon Technologies AG for the 2018 fiscal year, an increase of €0.02 compared to the previous year. This would
+result in an expected distribution of approximately €305 million. The payment of this dividend depends on the
+approval of the Annual General Meeting on 21 February 2019.
+For the 2017 fiscal year, a cash dividend of €0.25 per share (total amount: €283 million) was paid. For the 2016 fiscal
+year, a cash dividend of €0.22 per share (total amount: €248 million) was paid.
+Dividends
+(4)
+(333)
+1,075
+(1,404)
+118
+6
+790
+Actuarial gains on pension plans and similar commitments net of tax of €25 million
+As of 30 September 2018
+Net income attributable to shareholders of Infineon Technologies AG
+As of 30 September 2017
+Actuarial losses on pension plans and similar commitments net of tax of €5 million
+Net income attributable to shareholders of Infineon Technologies AG
+As of 1 October 2016
+€ in millions
+The following table shows a reconciliation of accumulated deficit as of 30 September 2018 and 2017:
+(60)
+(1)
+(2,312)
+Deal Contingent Forward
+(66)
+(66)
+Authorized share capital
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €242 million
+in the 2017 fiscal year, of which €248 million related to the dividend paid in February 2017. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €19 million. Pro rata expenses amounting to €13 million for share-based compensation were
+recorded in the 2017 fiscal year, additional paid-in capital increased by the same amount. In addition, negative
+€26 million (net after tax) was recorded in additional paid-in capital in the 2017 fiscal year in connection with the
+settlement of the 2014 fiscal year tranche of the Performance Share Plan.
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €288 million
+in the 2018 fiscal year, of which €283 million related to the dividend paid in February 2018. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €4 million. Pro rata expenses for share-based compensation led to an increase in additional
+paid-in capital of €11 million in the 2018 fiscal year. In addition, negative €20 million (net after tax) was recorded
+in additional paid-in capital in the 2018 fiscal year mainly in connection with the settlement of the 2015 fiscal year
+tranche of the Performance Share Plan. The Management Board and the Supervisory Board decided to settle the
+tranche in cash for the 2015 fiscal year. This amount has been reclassified to other current liabilities (for details see
+note 17).
+Additional paid-in capital
+The ordinary share capital of Infineon Technologies AG increased during the 2018 fiscal year by €1,589,810. 794,905
+new shares were issued (2017: 3,527,820) as a result of the exercise of stock options by employees as well as by
+current and past members of the Management Board. As of 30 September 2018, the ordinary share capital stood at
+€2,273,991,668 divided into 1,136,995,834 no par value registered shares, each representing €2 of the Company's
+ordinary share capital and is fully paid. Each share grants the holder one vote and an equal portion of the profits in
+the form of a dividend as resolved by the Annual General Meeting. As of 30 September 2018, of the above-mentioned
+total number of issued shares the Company held 6 million own shares (30 September 2017: 6 million). Own shares held
+by the Company as of the date of the Annual General Meeting carry no voting rights and are not entitled to dividend.
+Ordinary share capital
+15 Equity
+P see page 146
+143
+Notes to the Consolidated Financial Statements
+As of 30 September 2018, the Company's Articles of Associations provide for two authorized share capitals amount-
+ing to up to €706,000,000:
+Consolidated Financial Statements
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or
+funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
+fixed contributions paid. Additionally, the Group makes contributions to government pension schemes. Expenses
+for defined contribution plans amounted to €183 million and €165 million in the fiscal years ended 30 Septem-
+ber 2018 and 2017, respectively.
+Defined contribution plans
+374
+431
+223
+269
+98
+102
+27
+28
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+32
+> Section 4, paragraph 4, of the Articles of Association provides that the Management Board is authorized, with
+the approval of the Supervisory Board, to increase the share capital in the period until its expiry on 11 February
+2020 once or in partial amounts by a total of up to €676,000,000 through the issue of new no par value registered
+shares, carrying a dividend right from the beginning of the fiscal year in which they are issued, against contribu-
+tions in cash or in kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval
+of the Supervisory Board, to exclude the subscription rights of the shareholders in certain cases. In accordance
+with German law, cash capital increases with subscription rights excluded pursuant to section 186, paragraph 3,
+sentence 4, of the AktG, are not permitted to exceed 10 percent of a company's share capital - neither at the
+time of the authorization becoming effective nor at the time of its exercise. For share capital increases against
+contributions in kind or a combination of cash contributions and contributions in kind, the authorization further
+provides an upper limit of 20 percent of the share capital, again measured either at the time the authorization
+becomes effective or, if the value is lower, at the time of its exercise.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+27
+27
+Foreign currency translation differences
+Net after tax
+Tax
+Pretax
+Net after tax
+Tax
+Pretax
+2017
+> Section 4, paragraph 7, of the Articles of Association provides that the Management Board is authorized, with the
+approval of the Supervisory Board, to increase the share capital in the period up to 17 February 2021 - either once
+or in partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against con-
+tributions in cash for the purpose of increasing the issue to employees of the Company or its Group companies
+(Authorized Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares.
+The shares may be issued in such a manner that the contribution to be paid on such shares is covered by the
+portion of the profit for the year that the Management Board and Supervisory Board could transfer to retained
+earnings in accordance with section 58, paragraph 2, AktG.
+2018
+Changes in other reserves during the 2018 and 2017 fiscal years are as follows:
+Other reserves
+› Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is conditionally increased by
+up to €260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights
+of the holders of warrants or convertible bonds, which the Company may issue at any time prior to 21 February 2023
+(Conditional Capital 2018).
+> Pursuant to section 4, paragraph 5, of the Articles of Association the share capital is conditionally increased
+by up to €7,855,198 through the issue of up to 3,927,599 new no par value registered shares in connection with
+the Company's "Infineon Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 17)
+(Conditional Capital 2010/1). During the 2018 fiscal year, a total of 794,905 new no par value shares with a
+proportionate amount of share capital of €2 per share were issued out of the Conditional Capital 2010/1 as a
+result of the exercise of share options in connection with the Stock Option Plan 2010. Conditional Capital 2010/1
+decreased accordingly by €1,589,810 to €6,265,388. The corresponding change to the Articles of Association
+was submitted after the end of the reporting period and entered into the Commercial Register as requested.
+As of 30 September 2018, the Company's Articles of Associations provide for two conditional capitals amounting to
+up to €267,855,198:
+Conditional capital
+P see page 145 ff.
+144
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+€ in millions
+Total
+(14)
+Property
+248
+72
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Amounts of debt and interest maturing in the coming years are as follows:
+€ in millions
+320
+Less than 1 year
+2-3 years
+3-4 years
+5 years and after
+Total
+137
+30 September 2018
+30 September 2017
+1-2 years
+72
+229
+301
+Available
+Aggregate
+facility
+Drawn
+Available
+Short-term
+97
+25
+72
+95
+23
+72
+Long-term
+204
+204
+225
+225
+Total
+Debt
+Interest
+Debt
+Other
+1,533
+297
+1,836
+355
+The financial result for the 2018 and 2017 fiscal year includes €45 million and €56 million, respectively, net interest
+expenses which include, in addition to borrowing costs, other interest expenses such as net interest expense for
+pension liabilities.
+13 Provisions
+Short-term and long-term provisions as of 30 September 2018 consist of the following:
+€ in millions
+1 October
+Additions
+Usage
+Reversals
+2017
+30 Septem-
+ber 2018
+Obligations to employees
+354
+303
+178
+Drawn
+1,297
+810
+Interest
+23
+46
+322
+48
+21
+44
+20
+44
+176
+41
+21
+44
+503
+40
+176
+41
+126
+Aggregate
+facility
+Term
+30 September 2017
+(720)
+1,586
+1,656
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+136
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations, mainly
+in cost of goods sold. Amortization of intangible assets is mainly presented in cost of goods sold or selling, general
+and administrative expenses. Impairments on property, plant and equipment and intangible assets are reported
+under other operating expenses.
+Property, plant and equipment of €200 million (30 September 2017: €210 million) served mainly as collateral for the
+existing financing arrangements of MoTo Objekt Campeon GmbH & Co. KG ("MoTo") as of 30 September 2018.
+(19)
+Payments due in (€ in millions)
+As of 30 September 2018
+As of 30 September 2017
+12 Debt
+Debt as of 30 September 2018 and 2017 consists of the following:
+€ in millions
+Total
+Less than
+1 year
+8
+1-5 years
+7
+12
+(5)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+759
+799
+(247)
+396
+312
+(179)
+213
+275
+2
+(109)
+166
+213
+(174)
+45
+49
+(11)
+(275)
+5 years
+99
+185
+198
+497
+496
+USPP notes US$935 million, weighted average interest rate 4.09%, due 2024 - 2028
+Long-term debt
+806
+790
+1,507
+1,511
+Total
+1,532
+1,834
+The €300 million bond due on 10 September 2018 was repaid as scheduled.
+Infineon has established further independent financing arrangements in the form of both short- and long-term
+credit facilities, in order to finance operating business requirements.
+The total lines of credit as of 30 September 2018 and 2017 are summarized in the following table:
+€ in millions
+30 September 2018
+27
+and after
+19
+Loans payable to banks:
+23
+61
+15
+96
+21
+60
+15
+Current maturities of long-term debt, weighted average interest rate: 1.65% (2017: 1.65%)
+Bond €300 million, coupon 1.00%, due 2018
+Short-term debt and current maturities of long-term debt
+30 Septem-
+ber 2018
+30 Septem-
+ber 2017
+25
+24
+299
+25
+323
+Unsecured loans, weighted average interest rate 0.95% (2017: 0.73%), due 2019-2023
+Secured term loans, weighted average interest rate 2.03% (2017: 2.03%), due 2019-2021
+Bond €500 million, coupon 1.50%, due 2022
+(8)
+374
+Warranties
+128
+8
+136
+Benefits paid by Infineon
+15
+7
+22
+14
+5
+19
+Reclassification of present value of defined
+benefit obligations'
+(62)
+662
+(62)
+Foreign currency effects
+1
+(4)
+1
+(4)
+་
+(19)
+(10)
+(4)
+(14)
+Actuarial gains (losses) for:
+Experience adjustments
+(13)
+(3)
+(16)
+(21)
+1
+(20)
+Adjustments to demographic assumptions
+(6)
+3
+(3)
+-
+Adjustments to financial assumptions
+(4)
+4
+Present value of defined benefit obligation
+at end of year
+537
+470
+62
+532
+10
+5
+2
+7
+(1)
+(1)
+(1)
+22
+14
+6
+20
+(7)
+(22)
+3318EI
+4
+56
+(15)
+(987)
+(167)
+(1,154)
+(876)
+(164)
+(1,040)
+Change in fair value of plan assets:
+Fair value of plan assets at beginning of year
+474
+63
+Expected return on plan assets
+7
+Actuarial gains (losses)
+(2)
+Contributions from Infineon
+14
+Benefits paid
+Reclassification of fair value of plan assets¹
+12
+(15)
+1
+(26)
+636
+thereof short-term
+thereof long-term
+422
+67
+590
+46
+Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
+flextime, service anniversary awards, other personnel costs and social security costs.
+Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements associated
+with products sold.
+Other provisions comprise provisions for litigations (other than those relating to Qimonda), asset retirement
+obligations, onerous contracts and miscellaneous other liabilities.
+Of the total provisions as of 30 September 2018 and 2017, a cash outflow of €590 million and €422 million,
+respectively, is expected to occur within one year. For the long-term provisions a cash outflow is expected to occur
+after more than one year. Of these, €31 million and €27 million as of 30 September 2018 and 2017, respectively, are
+attributable to length-of-service related anniversary awards.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+138
+P see page 95 ff.
+14 Pension plans
+(316)
+Defined benefit pension plans
+489
+Total provisions
+53
+14
+(9)
+(16)
+42
+Psee page 148 ff.
+Provisions related to Qimonda (see note 19)
+Other
+33
+159
+(6)
+(1)
+185
+49
+13
+(26)
+(1)
+35
+489
+Interest cost
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For Infineon, the significant
+benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to Infineon
+Technologies Austria AG.
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of
+service, others are dependent on average income over the service period. Foreign pension plans are managed
+by country-specific external pension funds or other pension schemes. The liabilities arising from foreign defined
+benefit pension plans are partly covered by plan assets. The management of existing foreign plan assets is
+performed by the respective pension scheme.
+Present value at beginning of year
+(876)
+(164)
+(1,040)
+(964)
+(172)
+Current service cost
+(23)
+(7)
+(30)
+(24)
+(6)
+(1,136)
+(30)
+Past service income (cost)
+(3)
+(3)
+1
+into account future salary increases:
+In Germany, Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. The statutory framework is provided by the Company
+Pension Act (in German: Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the Infineon
+pension plan new entrants receive a defined contribution benefit, which is funded by Infineon. Payments by
+the Infineon pension plan are generally made in twelve installments. For active employees who were entitled to
+benefits in form of an annuity before the Infineon Pension Plan came into force, this commitment was transferred
+into the Infineon Pension Plan and thereby the possibility of an annuity is guaranteed. Together with former
+employees, whose pension benefit obligations were not transferred into the Infineon Pension Plan, this group
+makes up the largest part of the obligation at this time. An appropriate provision is recorded for the German
+defined benefit pension plans, which are partly backed by plan assets. Individual agreements are in place for the
+members of the Management Board which are backed by plan assets (detailed in the chapter "Compensation
+report" in the Combined Management Report). The major portion of the plan assets is managed by a pension trust
+in the legal form of a registered association. This is composed of executives of Infineon Technologies AG and the
+investment strategy is defined by Infineon Technologies AG.
+Total
+plans
+The valuation date of both the German and foreign pension plans is 30 September.
+The Group-defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+139
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets to
+30 September 2018 and 2017 is presented in the following table:
+€ in millions
+Change in defined benefit obligations taking
+2018
+2017
+Domestic
+Foreign
+Total
+Domestic
+plans
+plans
+Foreign
+plans
+(160)
+Undiscounted future minimum lease payments to be received from operating lease arrangements for Infineon as
+lessor are as follows:
+(1)
+Projected future pension increases
+30 September 2018
+30 September 2017
+Domestic
+plans
+Foreign
+plans
+Domestic
+plans
+Foreign
+plans
+1.7
+2.8
+1.8
+2.7
+2.0
+2.1
+2.0
+2.6
+1.8
+2.0
+Rate of salary increase
+1.8
+Discount rate at the end of the fiscal year
+The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
+10
+81
+91
+Plans that are wholly or partly funded
+Total
+973
+80
+1,053
+866
+(7,069)
+83
+949
+987
+167
+1,154
+164
+1,040
+Actuarial assumptions
+in %
+101
+2.1
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2018-P tables
+were applied.
+a 50 basis points lower discount rate
+1,073
+180
+1,253
+956
+177
+1,133
+a 50 basis points higher expected
+rate of salary increase
+a 50 basis points lower expected
+rate of salary increase
+998
+172
+1,170
+887
+168
+1,055
+957
+Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high credit rating.
+153
+1,065
+Sensitivity analysis
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
+changes in one actuarial assumption while all other assumptions remain constant.
+€ in millions
+Present value of defined benefit pension
+plans with:
+30 September 2018
+30 September 2017
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+plans
+Foreign
+Total
+plans
+a 50 basis points higher discount rate
+909
+156
+804
+976
+87
+Plans that are wholly unfunded
+currency
+effects
+Foreign
+Impair-
+ments
+amor-
+tization
+Transfers
+Reclassi-
+fication
+Disposals
+Depre-
+ciation/
+2017
+1 October
+Depreciation/amortization and impairment
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+56
+Foreign currency effects
+(2)
+(2)
+30 Sep-
+tember
+Fair value of plan assets at end of year
+2018
+Carrying amount
+(569)
+2
+(6)
+144
+(540)
+(6,669)
+730
+771
+(822)
+4
+2
+3
+(60)
+(771)
+30 Sep-
+tember
+2017
+2018
+30 Sep-
+tember
+135
+14
+534
+602
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
+reported in the Consolidated Statement of Financial Position as of 30 September 2018 and 2017.
+The funding of the defined benefit obligations is as follows:
+140
+€ in millions
+30 September 2018
+30 September 2017
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+plans
+Foreign
+plans
+Total
+1 In the reporting period, net obligations from deferred compensation plans amounting to €6 million were reclassified from other liabilities. In the
+previous year, other liabilities included net obligations from deferred compensation plans in the amount of €3 million, consisting of present values
+of defined benefit obligations of €56 million and fair values of plan assets of €53 million.
+68
+(53)
+(56)
+474
+63
+537
+Net pension liability
+(453)
+(99)
+(552)
+(402)
+(101)
+(503)
+thereof: Infineon Technologies AG
+(419)
+(419)
+(373)
+(373)
+thereof: Infineon Technologies Austria AG
+(56)
+(53)
+163
+876
+866
+Disposals
+Reclassi-
+fication
+Transfers 2
+Impair-
+ments
+amor-
+tization
+Foreign
+currency
+effects
+30 Sep-
+tember
+2017
+Carrying amount
+30 Sep-
+tember
+2017
+30 Sep-
+tember
+2016
+(731)
+(60)
+15
+(1)
+Depre-
+ciation/
+2
+1 October
+2016
+29
+(5)
+(866)
+1,596
+1,586
+(247)
+(50)
+(179)
+(49)
+(109)
+(39)
+(174)
+(20)
+15
+(11)
+(1)
+(720)
+(159)
+Depreciation/amortization and impairment
+(11)
+4
+730
+2
+29
+1,139
+2,659
+2,119
+(205)
+(39)
+12
+(5)
+(121)
+(58)
+(70)
+(41)
+(163)
+(21)
+10
+(10)
+192
+(771)
+(652)
+284
+364
+(6,305)
+(498)
+113
+1
+20
+(6,669)
+1,477
+1,343
+(1,082)
+(94)
+64
+5
+(1,107)
+120
+128
+332
+(8,118)
+7
+(8,547)
+(12)
+1,184
+896
+167
+1,063
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+141
+Investment strategies
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities as
+well as real estate and reinsurance policies is targeted to maximize the total long-term return on assets for a given
+level of risk. Investment risk is monitored on an ongoing basis through periodic portfolio reviews, by coordination
+with investment managers and annual liability measurements. Investment policies and strategies are periodically
+reviewed as part of detailed studies of assets and liabilities by independent investment advisors and actuaries
+to ensure the objectives of the plans are met, taking into account any changes in benefit plan structure, market
+conditions or other material items. The aim is to optimize the risk-return portfolio of plan assets against the liabilities
+using a diversified portfolio of investments within a defined risk budget and to thereby increase the funding ratio
+in the long term.
+Plan asset allocation
+As of 30 September 2018 and 2017 the allocation of invested plan assets to the major asset categories is as follows:
+€ in millions
+Government bonds
+Corporate bonds
+Equity securities
+Cash and cash equivalents
+171
+Reinsurance policies
+1,013
+1,022
+160
+6
+1,026
+a 50 basis points higher expected
+rate of pension increase
+1,005
+172
+1,177
+170
+1,063
+a 50 basis points lower expected
+rate of pension increase
+972
+163
+1,135
+863
+159
+Increase in life expectancy by one year
+1,776
+893
+(1,107)
+(11)
+(1)
+(3)
+(1)
+EWE!
+(294)
+475
+396
+(229)
+167
+213
+137
+166
+(180)
+45
+1,477
+47
+14
+14
+(151)
+764
+759
+4
+1
+139
+(102)
+120
+(8,547)
+(702)
+(1,109)
+352
+2,659
+242
+3,038
+(9,000)
+95
+3
+4
+332
+As of 30 September 2017
+Total
+Less than
+1-5 years
+5 years
+1 year
+and after
+140
+301
+105
+60
+308
+96
+136
+In the 2017 fiscal year, Infineon introduced the Restricted Stock Unit Plan (RSUP), addressing Infineon US-employees
+and based on local market conditions. Restricted stock units are measured at the respective fair value at their grant
+dates. As of 30 September 2018, restricted stock units of €0.4 million (30 September 2017: €0.3 million) with fair values
+between €18.32 and €21.56 depending on the tranche were outstanding.
+Payments due in (€ in millions)
+The reason for the cash settlement of the tranche due in October 2018 for the 2015 fiscal year is the still open question
+about the deductibility as operating expense of the costs of the performance share plan where the settlement is
+made out of treasury shares. If the deduction of operating expenses is not accepted when the settlement is out of
+treasury shares and the intention is to settle outstanding tranches in cash, the pro rata obligations from the remaining
+tranches would have to be reclassified to liabilities and revalued through profit and loss at each balance sheet date.
+Stock Option Plan 2010
+72
+There were 1.2 million and 2.5 million stock options with an average exercise price of €7.00 and €7.08 per option
+outstanding as of 30 September 2018 and 2017, respectively. Of these, 1.2 million and 2.5 million were exercisable
+as of 30 September 2018 and 2017, respectively.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+As of 30 September 2018
+Notes to the Consolidated Financial Statements
+147
+Costs for share-based compensation
+The costs for share-based compensation amounted to €13 million in each of the 2018 and 2017 fiscal years.
+18 Other financial commitments
+In addition to provisions and liabilities, Infineon also has other financial commitments which are not recognized in
+the Consolidated Statement of Financial Position, relating in particular to lease arrangements and unconditional
+purchase commitments. These are explained in more detail below.
+Undiscounted future minimum lease payments arising from operating lease arrangements to be made by Infineon
+as lessee are the following:
+Restricted Stock Unit Plan
+Rental expenses under operating lease arrangements amounted to €59 million and €60 million in the 2018 and 2017
+fiscal years, respectively, and related mainly to minimum lease payments made.
+The insolvency administrator filed a request for declaratory judgment in an unspecified amount against Infineon
+Technologies AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies
+Investment B.V., at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to
+make good the deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of
+Qimonda began, i.e., to refund to Qimonda the difference between the latter's actual business assets when the
+insolvency proceedings began and its share capital (in German: "Unterbilanzhaftung”). The insolvency administrator
+contended that the commencement of operating activities by Qimonda amounted to what is considered in case
+law to be the activation of a shell company (in German: "Wirtschaftliche Neugründung"), and that this activation
+of a shell company was not disclosed in the correct manner. On 6 March 2012, with respect to another matter, the
+German Federal High Court issued a ruling on principle that any liability resulting from the activation of a shell
+company only depends on the situation at the date of the activation of a shell company and not, as asserted by
+the insolvency administrator, on the situation at the date on which insolvency proceedings are opened.
+In the course of its investing activities, Infineon also receives government grants related to the construction and
+financing of certain of its production facilities. Grants are also received for selected research and development projects.
+Certain of these grants have been received contingent upon Infineon complying with certain project-related
+requirements, such as creating a specified number of jobs over a defined period of time. From today's perspective,
+Infineon expects to comply with these requirements. Nevertheless, should such requirements not be met, as of
+30 September 2018, a maximum of €145 million (30 September 2017: €131 million) of subsidies already received
+could be refundable.
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so, and accordingly represent contingent liabilities that are not included in provisions. Should the alleged claims
+relating to the activation of a shell company and liability for impairment of capital prove to be valid, substantial
+financial obligations above the provisions already recorded could arise for Infineon, which could have a material
+adverse effect on its business and its financial condition, liquidity position and results of operations.
+The Management Board (for employees) and the Supervisory Board (for the Management Board) resolved to settle
+in cash the tranche for the 2015 fiscal year, which is due in October 2018. As a result, €21 million at a share price of
+€19.99 were reclassified from additional paid-in capital to other current liabilities at the same time. Accounting for
+outstanding tranches continues to be performed using the equity method.
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. In consideration of the interim report from the court-appointed expert,
+Infineon recorded provisions relating to Qimonda of €185 million in total as of 30 September 2018. This comprises
+mainly provisions for the still pending legal dispute over the alleged activation of a shell company and liability for
+impairment of capital including legal costs. As of 30 September 2017, provisions relating to Qimonda amounted to
+€33 million.
+Infineon recognizes provisions and liabilities for such obligations and risks, which it assesses at the end of each
+reporting period, are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of
+not having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory business;
+as a result certain long-standing creditors have residual liability claims against Infineon. These claims can only
+be exercised by the insolvency administrator acting in the name of the creditors concerned. In the meantime,
+settlements have been concluded with most of the major liability creditors.
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+On 21 September 2018, in consultation with the parties, the independent expert appointed by the court presented
+an interim report on his preliminary assessment of the value of the contribution in kind. The Company is in principle
+prepared to conduct discussions about an out of court settlement of the legal dispute on the basis of the interim report.
+It is not clear at this stage if the legal dispute can be resolved with an out of court settlement, and, if this is not the
+case, when a first-instance court decision would be reached.
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who are
+supporting the respective parties with assessments and opinions.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On 29 August 2013,
+the court appointed an independent expert to clarify the valuation issues raised by the insolvency administrator
+and to address technical matters.
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documentation
+for the capital increase by independent auditing companies, one of which had been engaged by Infineon and the
+other of which was acting in the capacity of a court-appointed auditor of contributions in kind and post-formation
+acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business area con-
+tributed had a value of several times the lowest issue price of the shares issued, while the court-appointed auditor
+of contributions in kind and post-formation acquisitions confirmed to the court that the lowest issue price of
+the shares issued was covered - as legally required - by the value of the contributions in kind. Additionally, in the
+course of its defense against the claims asserted by the insolvency administrator, Infineon has commissioned several
+expert opinions, all of which arrived at the same conclusion that the objections raised by the insolvency administra-
+tor against the valuation of the contribution in kind are not valid.
+149
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on 14 February 2012 the
+insolvency administrator also lodged a request for payment based on an alternative claim (in German: "Hilfsantrag"),
+as well as making other additional claims. In conjunction with this alternative claim, the insolvency administrator
+has requested the payment of at least €1.71 billion plus interest in connection with the alleged activation of a shell
+company. On 15 June 2012, the insolvency administrator increased his request for the payment of 14 February 2012
+on the grounds of activation of a shell company to at least approximately €3.35 billion plus interest. Furthermore,
+the insolvency administrator continues to base a substantial part of his alleged payment claims, as already asserted
+out of court against Infineon in August 2011 for an unspecified amount, on liability for impairment of capital (in
+German "Differenzhaftung”). This claim is based on the allegation that, from the very beginning, the carved-out
+memory products business had a negative billion euro value. The insolvency administrator therefore asserts that
+Infineon is obliged to make good the difference between this negative value and the lowest issue price (in German:
+"geringster Ausgabebetrag") of the subscribed stock. Additionally, the insolvency administrator has asserted a
+claim for repayment of allegedly unjustly charged consultancy fees in an amount of €10 million in connection with
+the flotation of Qimonda.
+Alleged activation of a shell company and liability for impairment of capital
+Infineon, through certain sales and other agreements may, in the normal course of business, be obligated to
+indemnify its counterparties under certain conditions for warranties, patent infringement or other matters. The
+maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligations are contingent on events that may or may not occur in the
+future, and depend on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+As part of an audit finding relating to the tax treatment of losses from the repurchase of convertible bonds in fiscal
+years 2011 and 2012, there is a contingent liability of €55 million for withholding tax payables. After receipt of the tax
+assessment notice, which is under suspension pending appeal proceedings, Infineon expects that there is sufficient
+likelihood of winning any potential legal action.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+148
+Contracts already entered into for commenced or planned investments in property, plant and equipment (purchase
+commitments) as of 30 September 2018 amount to €557 million (30 September 2017: €359 million).
+19 Legal risks
+Smartcard antitrust litigation
+In October 2008, the EU Commission initiated an investigation into the Company and other manufacturers of chips
+for smartcards for alleged violations of antitrust laws. In September 2014, the EU Commission imposed a fine of
+€83 million on Infineon. Infineon brought an action against the decision before the General Court of the European
+Union in November 2014. The Court dismissed Infineon's action and in February 2017 Infineon filed an appeal to
+the European Court of Justice against this decision. On 26 September 2018 the European Court of Justice referred
+the case back to the court of first instance in order to re-review the proportionality of the fine.
+Two class actions for damages of an unspecified amount in connection with the EU Commission investigative
+proceedings have been filed in Canada: The first action was filed in the state of British Columbia in July 2013, and
+the second in the state of Quebec in September 2014. The actions followed the press reports on the investigation
+and subsequent decision of the EU Commission. No dates have been set for court proceedings.
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+Proceedings in relation to Qimonda
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products)
+were carved out from Infineon and transferred to Qimonda in the form of a contribution in kind with economic
+effect from 1 May 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings
+on 23 January 2009. On 1 April 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
+given rise to various disputes between the insolvency administrator and Infineon.
+Litigation and government inquiries
+5.31
+Average share price
+of the nine months
+before grant in €
+8.49
+28 Februar 2022
+Fiscal year 2018: Employees
+End of the
+waiting period
+Tranche
+The following is an overview of the allocations made:
+The fair value of the performance shares at the date of allocation was determined by an external expert using a
+recognized financial-mathematical method (Monte Carlo simulation model for the prediction of share price and
+index developments). The fair value of the instruments granted is determined taking into account future dividends
+as well as the payment cap.
+50 percent of the performance shares are performance-related, 50 percent are not dependent on performance.
+The performance-related shares are only finally granted if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) during the period between the date of the provisional allocation and the end of the holding
+period. If at the end of the holding period the requirements for an allocation of performance shares - either all or
+only those that are not performance related – are fulfilled, then the entitlement to the transfer of the corresponding
+number of (real) Infineon shares is acquired. The value of the performance shares ultimately assigned to members of
+the Management Board may not exceed 250 percent of the respective LTI grant amount; above this cap performance
+shares are forfeited.
+Under this plan, (virtual) performance shares are initially provisionally granted on 1 March (up to the 2017 fiscal
+year: on 1 October) of the 2018 fiscal year according to a pre-determined LTI grant amount in euro. With the granting
+of a virtual performance share, the participant in the plan acquires the right to receive (real) Infineon shares once a
+personal investment in Infineon shares - depending on position and LTI grant amount – has reached a four-year
+holding period.
+146
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+A new Long Term Incentive Plan (LTI) consisting of a "performance share" plan was developed for the Management
+Board and selected senior executives as a successor to the Stock Option Plan 2010.
+Performance share plan
+The Company makes use of the Stock Option Plan 2010, from the 2014 fiscal year, the Performance Share Plan and,
+from the 2017 fiscal year, the Restricted Stock Unit Plan, in order to provide share-based compensation.
+17 Share-based compensation
+In the 2018 fiscal year Infineon was significantly above the minimum requirements of all covenants. Should
+Infineon not comply with the covenants attached to the USPP notes, then all USPP notes outstanding as of
+30 September 2018 amounting to US$935 million (see note 12) could become immediately repayable. Failure to
+comply with the covenants of financial liabilities taken over in connection with the acquisition of MoTo would
+only result in additional annual fees, but not in a repayment obligation.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+P see page 71
+P see page 144
+P see page 136
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+21.48
+145
+Infineon's main capital management objective is to ensure financial flexibility on the basis of a solid capital structure.
+As with comparable companies in the semiconductor industry, it is of prime importance that sufficient cash funds
+are available to finance operating activities and planned investments throughout all phases of the business cycle.
+On the other hand, debt should only constitute a modest portion of the financing mix.
+Based on these principles Infineon has defined key objectives for capital management. Accordingly, Infineon plans
+to maintain a liquidity level (gross cash position) of at least €1 billion plus additionally 10 to 20 percent of revenue.
+Gross debt shall amount to no more than two times EBITDA.
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+Capital management as well as the corresponding targets and definitions are based on indicators determined on
+the basis of the consolidated IFRS financial statements. Gross cash is defined as the total of cash, cash equivalents
+and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before interest and
+taxes and EBITDA as EBIT plus scheduled depreciation and amortization.
+The gross cash position increased from €2,452 million as of 30 September 2017 to €2,543 million as of 30 September
+2018 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on revenue
+of €7,599 million, the ratio of gross cash to revenue was €1 billion plus 20.3 percent of revenue as of 30 September
+2018, thereby slightly above the target range. In the previous year, the ratio of gross cash to revenue was €1 billion
+plus 20.6 percent of revenue.
+With gross debt of €1,532 million as of 30 September 2018 (30 September 2017: €1,834 million) and EBITDA of
+€2,317 million for the 2018 fiscal year (30 September 2017: €1,801 million), gross debt to EBITDA ratio was 0.7 as
+of 30 September 2018 (30 September 2017: 1.0). Infineon continues to have sufficient financial flexibility to ensure
+that in addition to financing its planned investments it is also able to pay regular dividends (see note 15).
+The USPP notes of US$935 million issued in April 2016 contain a number of standard covenants, including among
+other things change of control clauses as well as the compliance with a debt coverage ratio, which provides for
+a certain relationship between the size of debt (adjusted) and earnings (adjusted). The financial liabilities, which
+were taken over in connection with the acquisition of MoTo, also contain three standard covenants based on certain
+financial ratios (equity ratio, debt ratio and liquidity ratio).
+16 Capital management
+Number of performance
+shares outstanding as of
+30 September 2018
+689,226
+Fair value per
+performance share
+in €
+10.56
+1,112,568
+7.26
+Fiscal year 2016: Management Board
+Fiscal year 2015: Employees
+30 September 2019
+10.56
+30 September 2019
+80,964
+30 September 2018
+8.49
+956,206
+5.44
+Fiscal year 2015: Management Board
+30 September 2018
+7.07
+100,702
+Fiscal year 2016: Employees
+80,704
+15.76
+Fiscal year 2018: Management Board
+28 Februar 2022
+21.48
+54,464
+15.25
+11.25
+Fiscal year 2017: Employees
+13.01
+912,958
+11.86
+Fiscal year 2017: Management Board
+30 September 2020
+13.01
+30 September 2020
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+150
+2
+137
+Other current liabilities
+1,020
+1,020
+1,020
+326
+323
+323
+maturities of long-term debt
+Short-term debt and current
+2,910
+3
+2,894
+2
+2,899
+39
+135
+137
+Non-current liabilities:
+Long-term debt
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used in
+the determination of the fair value:
+Other non-current assets include €4 million (30 September 2017: €9 million) from an agreement related to the
+residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG (see note 19), which are
+deposited in escrow in order to secure potential claims against Infineon. A security deposit of €75 million was
+repaid to Infineon during the 2018 fiscal year.
+The fair value of current and non-current liabilities that are measured at amortized cost is based either on quoted
+prices as of the reporting date (level 1) or is determined based on expected future cash flows discounted using a
+current market interest rate (level 3).
+For assets measured at amortized cost categorized as "Loans and receivables", it is assumed that the fair values
+correspond to their carrying amounts. The same assumption applies to liabilities resulting from trade payables
+and other current liabilities categorized as "Other financial liabilities (amortized cost)".
+Psee page 148 ff.
+3,089
+39
+3,029
+3,031
+40
+40
+1,566
+1,511
+1,511
+40
+Total
+Other non-current liabilities
+2
+> Level 3: valuation parameters for assets and liabilities, which are not based on observable market data.
+39
+1,507
+153
+(cash flow
+hedges)
+Designated
+hedging
+instruments
+cost)
+(amortized
+liabilities
+profit or loss
+financial
+through
+Other
+At fair value
+Carrying
+amount
+financial liabilities
+Categories of
+Current liabilities:
+Balance as of 30 September 2018
+Financial liabilities
+Fair value
+Short-term debt and current
+maturities of long-term debt
+25
+1,507
+Current liabilities:
+Balance as of 30 September 2017
+Total
+Other non-current liabilities
+Long-term debt
+Non-current liabilities:
+147
+1,519
+3
+2
+147
+Other current liabilities
+24
+1,181
+1,181
+1,181
+Trade payables
+25
+142
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The net gain or loss on financial instruments (including interest income and expense) within continuing operations
+in the Consolidated Statement of Operations amounted to the following:
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
+market price is available, the fair value is determined by considering existing contractual arrangements based on
+externally observable dividend policy (Level 3).
+Other current assets and liabilities contain derivative financial instruments, including cash flow hedges. Their fair
+value is determined by discounting future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
+prices) drawn from reliable external sources are used (Level 2).
+2
+2
+2
+2
+21
+60
+485
+566
+21
+19
+40
+4
+4
+56
+466
+€ in millions
+Available-for-sale financial assets
+Loan and receivables
+Designated as fair value through profit and loss
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Interest income from financial instruments not measured at fair value through profit and loss in the 2018 fiscal year
+amounted to €15 million (2017: €9 million); interest expense from such financial instruments amounted to €50 million
+(2017: €49 million).
+The currency effects included within net gains and losses amount to negative €9 million (2017: positive €5 million).
+This net currency effect arose exclusively from recognized financial instruments.
+(37)
+(51)
+63
+(99)
+(2)
+522
+(5)
+(96)
+59
+(6)
+2017
+2018
+Total
+Other financial liabilities
+Held for trading
+(2)
+Total
+Other current liabilities
+Current liabilities:
+Other non-current assets
+Non-current assets:
+3
+3
+563
+563
+Other current assets
+Financial investments
+40
+Level 3
+Level 1
+Fair value
+Fair value by category
+154
+Current assets:
+30 September 2018
+€ in millions
+The allocation to the levels as of 30 September 2018 and 2017 is as follows:
+Level 2
+€ in millions
+18
+Total
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Financial investments
+Current assets:
+30 September 2017
+5
+22
+5
+5
+Total
+Other current liabilities
+Current liabilities:
+22
+3
+581
+606
+5
+Notes to the Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board
+as required by section 315e, paragraph 1, in connection with section 314, paragraph 1, no. 6a, sentences 5 to 8,
+of the German Commercial Code, is provided in the Compensation Report which is part of the Combined Manage-
+ment Report.
+As of 30 September 2018, pension liabilities for former members of the Management Board amounted to €68.8 million
+(30 September 2017: €67.9 million).
+Former members of the Management Board received payments (in particular pension payments) of €1.5 million in
+the 2018 fiscal year (2017: €1.3 million).
+The compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2018 fiscal year,
+including attendance fees, amounted to €2.0 million (2017: €2.0 million). Employee representatives in the Supervisory
+Board who are employed by Infineon also receive a salary for their activities as employees.
+Members of the Management Board active in the 2018 fiscal year received fixed non-performance-related compen-
+sation for their services of €3.7 million (2017: €3.4 million). In addition, the members of the Management Board
+received variable performance-related compensation for their services in the 2018 fiscal year of €3.6 million (2017:
+€3.8 million). This comprised a Short Term Incentive of €1.9 million (2017: €2.0 million), and a Mid Term Incentive
+of €1.7 million (2017: €1.8 million). Furthermore, the Management Board received a Long Term Incentive (LTI) which,
+since 2014, takes the form of performance shares. The expense resulting from the LTI amounted to €0.8 million
+(2017: €0.9 million). The compensation granted to active members of the Management Board amounted to
+€8.1 million in the 2018 fiscal year (2017: €8.1 million).
+Related persons
+As of 30 September 2018, sales and services relationships with related companies resulted in purchase commit-
+ments of €9 million (30 September 2017: €23 million).
+P see page 95 ff.
+17
+79
+15
+81
+2
+16
+2
+53
+Joint Other related
+ventures companies
+In the 2018 and 2017 fiscal years there were no further significant transactions between Infineon and related
+persons which fall outside of the scope of the existing employment, service or appointment terms, or of the
+contractual arrangements for their remuneration.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+152
+(321)
+1,834
+1
+Related party financial payables
+Total
+Short-term debt
+changes
+balance
+Ending
+Other
+changes
+Other related
+companies
+Currency
+effects
+Cash- Aquisitions
+Starting
+balance
+Non-cash effective changes
+The 2018 fiscal year
+€ in millions
+The reconciliation below shows changes in those financial liabilities and hedging transactions for which payments
+received and made are shown under cash provided by/used in financing activities in the statement of cash flows.
+Cash and cash equivalents reported as of 30 September 2018 and 2017 totaling €732 million and €860 million,
+respectively, include €100 million and €128 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represents cash and cash equivalents of consoli-
+dated companies located in countries where the transfer of cash is legally restricted, for example China.
+21 Supplemental cash flow information
+effective
+1
+Joint
+ventures
+2018
+€ in millions
+Related companies receivables and payables as of 30 September 2018 and 2017 consist of the following:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Infineon purchases certain raw materials and services from and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+Related companies
+Infineon has transactions in the normal course of business with joint ventures and other related companies
+(collectively, "related companies"). The related companies are disclosed in note 26. Related persons are persons
+in key management positions in particular members of the Management and Supervisory Board (see note 26)
+and their close relatives (collectively "related persons").
+20 Transactions with related companies and persons
+P see page 164 ff.
+P see page 167 ff.
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its business
+and financial condition, liquidity position and results of operations. Irrespective of the validity of the allegations
+and the success of the aforementioned claims and other matters described above, Infineon could incur significant
+costs in the defense of these matters.
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates
+are revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that a
+liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However, future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condi-
+tion, liquidity position and results of operations, particularly in the period in which reassessment is made.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
+regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
+of law committed by individual employees or third parties.
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate to products, services, patents, environmental issues and other matters.
+Other
+Trade and other receivables
+Financial receivables
+Trade and other payables
+Financial payables
+Products and services received
+Sales and service charges
+€ in millions
+Sales and service charges to and products and services received from related companies in the 2018 and 2017 fiscal
+years consist of the following:
+1
+1
+10
+1
+1
+2017
+10
+1
+18
+7
+Joint Other related
+ventures companies
+Joint Other related
+ventures companies
+30 September 2017
+30 September 2018
+151
+1
+16
+2
+1,532
+3
+101
+851
+860
+1,592
+Other current assets
+Trade receivables
+Financial investments
+3,731
+3,125
+603
+3
+3,731
+104
+64
+40
+104
+113
+860
+860
+522
+1,070
+3,567
+1
+3,001
+163
+123
+40
+562
+3
+3,567
+110
+Total
+Other non-current assets
+Non-current assets:
+101
+1
+97
+851
+851
+1,592
+163
+971
+971
+1,811
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Balance as of 30 September 2018
+Financial assets
+Other non-current assets
+€ in millions
+22 Additional disclosures on financial instruments
+1,533
+2
+16
+1
+(321)
+1,835
+1
+The following table presents the carrying amounts and the fair values of financial instruments by their respective
+classes, and a breakdown by category of financial instruments as defined by IAS 39.
+Consolidated Financial Statements
+Total
+Current assets:
+1,248
+563
+732
+732
+3
+113
+971
+1,811
+Balance as of 30 September 2017
+732
+Fair value
+Designated
+cash flow
+Loans and
+receivables
+Available
+for sale
+At fair value
+through
+profit or loss
+Carrying
+amount
+Categories of financial assets
+Cash and cash equivalents
+hedges
+Trade payables
+1,208
+Notes to the Consolidated Financial Statements
+46
+47
+3
+1
+758
+683
+173
+103
+861
+812
+30 Septem-
+ber 2018
+30 Septem-
+ber 2017
+454
+129
+397
+174
+128
+Inventories:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Digital Security Solutions
+Other Operating Segments
+112
+Corporate and Eliminations
+Entity-wide disclosures in accordance with IFRS 8
+162
+2018
+2017
+407
+350
+Total
+159
+129
+302
+2018
+2017
+2,443
+2,272
+1,171
+1,094
+Total
+1,129
+2,599
+2,376
+1,921
+1,735
+534
+463
+1,071
+therein: USA
+Americas
+Japan
+264
+49
+49
+516
+401
+1,480
+1,240
+The following is a summary of revenue in the 2018 and 2017 fiscal year and of non-current assets by geographic
+areas for the years ended 30 September 2018 and 2017:
+€ in millions
+Revenue:
+Europe, Middle East, Africa
+therein: Germany
+Asia-Pacific (excluding Japan, Greater China)
+Greater China
+therein: China
+€ in millions
+894
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+Other Operating Segments
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+€ in millions
+2018
+2017
+Segment Result:
+1,353
+1,208
+Plus/minus:
+(7)
+Impact on earnings of restructuring and closures, net
+53
+(5)
+(3)
+Share-based compensation expense
+Impairments on assets (excluding capitalized development costs) including assets classified
+as held for sale, net of reversals¹
+(13)
+1,353
+(2)
+Corporate and Eliminations
+Total
+2018
+2017
+466
+474
+(1)
+256
+532
+427
+105
+124
+(4)
+1
+183
+(13)
+Acquisition-related depreciation/amortization and other expenses
+(118)
+1,411
+933
+1 Without impairments/reversals of impairments on capitalized development costs since 1 October 2017, but impairments in connection with the sale of the
+largest part of the Radio Frequency Power Components business to Cree, Inc. are included here. Previous periods' figures were not adjusted.
+In the 2018 fiscal year, €10 million (2017: €3 million) of impairments/reversal of impairments of assets and assets
+classified as held for sale was allocated to the Power Management & Multimarket segment, €0 million (2017: €2 million)
+to the Digital Security Solutions segment and 1 million (2017: €0 million) to Other Operating Segments. Negative
+€4 million (2017: €0 million) was allocated to Corporate and Eliminations.
+Of the €118 million (2017: €153 million) “acquisition-related depreciation/amortization and other expenses"
+incurred in the 2018 fiscal year, €67 million (2017: €89 million) is attributable to cost of goods sold, €2 million (2017:
+€2 million) to research and development expenses and €49 million (2017: €62 million) to selling, general and
+administrative expenses.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+3
+Consolidated Financial Statements
+€ in millions
+Depreciation and amortization:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Digital Security Solutions
+Notes to the Consolidated Financial Statements
+(5)
+(63)
+(68)
+(153)
+Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
+272
+(15)
+Other income and expense, net
+(18)
+(36)
+Operating income
+Financial income
+1,469
+983
+15
+10
+Financial expenses
+Gain (loss) from investments accounted for using the equity method, net
+Income from continuing operations before income taxes
+Depreciation and amortization allocated to the segments
+881
+719
+714
+People's Republic of China
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (Chairman)
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+(Chairman)
+> Infineon Technologies Japan K.K., Tokyo, Japan
+(Chairman)
+> Infineon Technologies China Co., Ltd., Shanghai,
+People's Republic of China (since 1 July 2018)
+> Infineon Technologies China Co., Ltd., Shanghai,
+Member of the Supervisory Board
+Member of the Board of Directors
+> Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
+(Chairman) (until 1 November 2017)
+164
+The Supervisory Board
+The members of the Supervisory Board during the 2018 fiscal year, the Supervisory Board position held by them,
+their occupation, and their membership of other supervisory and governing bodies are as follows:
+Name
+> Infineon Technologies Austria AG, Villach, Austria
+Dr. Eckart Sünner
+Chairman
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+> Infineon Technologies Americas Corp., Wilmington,
+Chief Marketing Officer
+Jochen Hanebeck
+Chief Operations Officer
+Membership of Supervisory Boards
+and governing bodies of domestic and
+foreign companies (as of 30 September 2018)
+Delaware, USA
+Member of the Supervisory Board
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (since 5 October 2017)
+Member of the Supervisory Board
+> Infineon Technologies Austria AG, Villach, Austria
+> Zalando SE, Berlin, Germany
+Member of the Board of Directors
+> Infineon Technologies Austria AG, Villach, Austria
+(Chairman)
+Johann Dechant¹
+Deputy Chairman
+Peter Bauer
+Dr. Herbert Diess
+> SEAT S.A., Martorell, Spain (since 12 April 2018)
+(Chairman)
+> Skoda Auto a.s., Mladá Boleslav, Czech Republic
+(since 14 May 2018) (Chairman)
+> Porsche Austria GmbH, Salzburg, Austria
+> Porsche Holding GmbH, Salzburg, Austria
+> Porsche Retail GmbH, Salzburg, Austria
+> Audi AG, Ingolstadt, Deutschland (since 7 May 2018)
+(Chairman)
+Member of the Board of Directors
+People's Republic of China
+> Shanghai Volkswagen Automotive Co., Ltd., Anting,
+People's Republic of China
+Member of the Advisory Board
+> Porsche Holding GmbH, Salzburg, Austria
+Consolidated Financial Statements
+> FAW-Volkswagen Automotive Co., Ltd., Changchun,
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Wolfsburg, Germany
+Chairman of the Management Board, Member of the Supervisory Board
+Volkswagen AG,
+Occupation
+Membership of Supervisory Boards
+and comparable governing bodies of domestic
+and foreign companies (as of 30 September 2018)
+Chairman of the Supervisory Board, Member of the Supervisory Board
+Infineon Technologies AG
+(since 22 February 2018);
+Independent Attorney
+Vice-Chairman of the Joint Works
+Council and Chairman of the Works
+Council Regensburg,
+Infineon Technologies AG
+Independent
+Management Consultant
+> K+S AG, Kassel, Germany (until 15 May 2018)
+Member of the Administrative Board
+> SBK Siemens-Betriebskrankenkasse,
+Heidenheim/Brenz, Germany
+Member of the Supervisory Board
+> OSRAM Licht AG, Munich, Germany (Chairman)
+> OSRAM GmbH, Munich, Germany (Chairman)
+> Bragi GmbH, Munich, Germany
+Dr. Helmut Gassel
+Chief Financial Officer
+Dominik Asam
+Chief Executive Officer,
+Labor Director
+2,516
+2,306
+2,020
+1,727
+969
+832
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+42
+41
+41
+2
+2
+1,175
+1,118
+41
+Total
+therein: USA
+Americas
+7,599
+7,063
+Psee page 127
+The allocation of revenues from external customers to geographic areas is based on the customers' locations. The
+average number of employees by geographic region is provided in note 3.
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2018 and 2017 fiscal year.
+€ in millions
+30 Septem-
+ber 2018
+30 Septem-
+ber 2017
+Non-current assets:
+Europe
+therein: Germany
+Greater China
+therein: China
+Japan
+1,167
+Other Operating Segments
+1,110
+4,299
+In addition to the amounts described above, KPMG charged €0.1 million in the 2018 fiscal year for tax consulting
+services in connection with the assessment of individual items.
+Fees for other services
+Fees of €0.2 million were charged by KPMG to the Company in the 2018 fiscal year for other services. These included
+quality assurance during the implementation of regulatory requirements and IT system changes as well as services
+for the evaluation of IT security management and business continuity management systems.
+Management Board and Supervisory Board
+Management compensation in the 2018 fiscal year
+As required by section 314, paragraph 1, no. 6a, sentences 5 to 8, German Commercial Code, the remuneration
+of the individual members of the Management Board and the Supervisory Board is disclosed in the Compensation
+Report which is part of the Combined Management Report.
+Fees for tax advisory services
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Notes to the Consolidated Financial Statements
+Management Board
+The members of the Management Board during the 2018 fiscal year were as follows:
+Name
+Position
+Dr. Reinhard Ploss
+Consolidated Financial Statements
+In addition to the amounts described above, KPMG charged an aggregate of €0.1 million in the 2018 fiscal year for
+other audit services which include, in particular, the audit of the disclosures in the Sustainability Report, as well
+as other legally or contractually mandatory audits, e.g. audits according to the EEG, EMIR audit pursuant to section
+20 WPHG, and confirmations of compliance with contractual terms.
+Fees for other advisory services
+At the Annual General Meeting held on 22 February 2018, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2018 Separate Financial Statements and the Consolidated
+Financial Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2018 fiscal year amounted
+to €1.9 million for the audit of the Consolidated Financial Statements and various Separate Financial Statements
+including an integrated audit review of the Interim Financial Statements.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+163
+25 Significant events after the end of the reporting period
+Acquisition of 100 percent of the shares in Siltectra GmbH
+In November 2018, Infineon acquired all of the shares in Siltectra GmbH (Siltectra), which is based in Dresden
+(Germany). The preliminary purchase price is €124 million.
+Siltectra has developed a technology, that allows to cut the silicon carbide (SiC) crystal very precisely and efficiently,
+nearly without any losses especially compared to sawing. This technology can be used in two ways. One is cutting
+the boule into wafers yielding significantly more wafers than the conventional approach. The other use case is to
+lift off a very thin layer from the top of a wafer and to use the remaining wafer once more. This 2-out-of-1 concept is
+very important as the SiC wafer supply will be a limiting factor even longer-term, especially when SiC will ramp in a
+larger scale in electro-mobility. Infineon will translate the technology into volume production within the next years.
+Due to the proximity of the acquisition date to the date of the release of the Consolidated Financial Statements,
+additional disclosures as required by IFRS 3 cannot be made.
+P see page 95 ff.
+26 Additional information in accordance with HGB
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and the
+Supervisory Board and made permanently available to the public on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
+Year-end audit fees
+4,704
+Digital Security Solutions
+Asia-Pacific (excluding Japan, Greater China)
+Industrial Power Control
+561
+(6)
+21
+(25)
+21
+(26)
+1
+(1)
+Interest rate risk
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond issuances
+and debt financing. Due to the cyclical nature of its core business and the need to maintain high operational flexibility,
+Infineon holds a relatively high level of liquid financial assets that are invested in short-term fixed-interest instruments.
+These investments generally have a contract duration of between one and twelve months in order to achieve short-
+term interest rate returns. The risk to these assets of changing interest rates is not material in the current period of
+low or zero interest rates.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or loss
+and equity. Infineon prepares this using the iteration method.
+Infineon does not hold any fixed-rate financial assets or liabilities that are measured at fair value through profit or
+loss. Furthermore, Infineon did not hold any fixed-rate available for sale financial assets either in 2018 or 2017.
+Other price risk
+According to IFRS 7 "Financial Instruments: Disclosures", other price risk is defined as the risk that the fair value or
+future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
+arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
+to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in
+the market.
+In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the fair
+value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have no significant impact on the result of the 2018 and 2017 fiscal years.
+5
+4
+The following table shows the effects on profit or loss for the 2018 and 2017 fiscal year and equity as of 30 Septem-
+ber 2018 and 2017 for continuing operations of a 10 percent shift in exchange rates. The assumed exchange rate
+changes relate only to financial instruments within the meaning of IFRS 7.
+€ in millions
+30 September 2018
+Euro/US Dollar
+Other
+30 September 2017
+(5)
+Euro/US Dollar
+Profit or Loss
+Equity
++10%
+(10%)
++10%
+(10%)
+Other
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures, Infineon concluded additional financial derivative contracts
+for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk arising
+from the fluctuation of commodity prices. The change in relevant market prices as of 30 September 2018 and 2017
+had no significant impact on equity in the 2018 and 2017 fiscal years.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+2019
+2020
+2021
+2022
+2023
+Beyond 2023
+Total
+Non-derivative
+3,200
+1,406
+72
+219
+544
+35
+financial liabilities
+As of 30 September 2018
+159
+Due in the fiscal year
+Notes to the Consolidated Financial Statements
+158
+Credit risk
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, its financial investments
+and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
+lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
+base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
+credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
+Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
+are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
+However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (S&P, Moody's or Fitch) and credit
+default swap premiums. Possible breaches of stipulated investment thresholds result in immediate notification and
+the requirement to reduce the risk.
+Infineon has spread its cash investments over more than ten banks. As of 30 September 2018, no financial institution
+was responsible for more than 13 percent (30 September 2017: 12 percent) of Infineon's cash investments. This
+gives rise to a maximum risk of €199 million (30 September 2017: €181 million) in the event of the default of a single
+financial institution assuming no deposit insurance scheme is in place. Infineon also holds derivative financial
+instruments with a positive fair value of €3 million at 30 September 2018 (30 September 2017: €4 million).
+Financing and liquidity risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well as ensur-
+ing the availability of funding through adequate levels of committed credit facilities.
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before 30 September 2018. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+€ in millions
+157
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+281
+239
+1
+126
+1
+33
+129
+(3)
+1
+(2)
+2
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. In 2018 as in 2017, no foreign exchange derivatives used to hedge ongoing business were
+designated as cash flow hedges.
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps,
+which are designated as cash flow hedges. The fair value of these swaps amounted to negative €3 million as of
+30 September 2018 and positive €1 million as of 30 September 2017. €4 million of unrealized losses arose from
+these transactions in the 2018 fiscal year (2017: €2 million), these decreased other reserves by a corresponding
+amount. No significant gains or losses were realized in the 2018 fiscal year on swap transactions concluded in
+the previous year (2017: €1 million losses); this amount was transferred from other reserves into the Consolidated
+Statement of Operations. As in the previous year, no hedge ineffectiveness was recorded in the Consolidated
+Statement of Operations for these hedging relationships. As in the previous year, no gains or losses were transferred
+from other reserves to profit or loss as a result of cash flow hedges for future raw material purchases being canceled
+following the decision that the occurrence of the hedged transaction had become unlikely.
+23 Financial risk management
+33
+Fair
+value
+Nominal
+value
+Fair
+value
+155
+Power Management & Multimarket
+Infineon does not net financial instruments. Infineon conducts derivative transactions according to the global
+netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and other
+comparable national framework agreements. Under the terms of these agreements, any netting arising from the
+occurrence of certain future events would have no material effect on the balance sheet presentation of these
+financial instruments.
+Derivative financial instruments and hedging activities
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts and commodity swaps. The objective is to reduce the impact of exchange rate and commodity
+price fluctuations on future net cash flows.
+The nominal values and fair values of Infineon's derivative instruments as of 30 September 2018 and 2017 are as
+follows:
+€ in millions
+Forward exchange contracts sold
+Forward exchange contracts purchased
+Designated cash flow hedges
+Commodity swaps
+Total
+30 September 2018
+30 September 2017
+Nominal
+value
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest
+rate risk and price risk), credit risk, financing and liquidity risk. Infineon's financial risk management program seeks
+to minimize potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments
+to hedge certain risks to which it is exposed. Financial risk management is carried out by the central Finance &
+Treasury (FT) department in accordance with policies approved by the Chief Financial Officer. The FT department
+identifies, evaluates and hedges financial risks in close cooperation with the operating units. The FT department's
+policy contains principles for overall risk management as well as policies covering specific areas such as foreign
+exchange risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the
+investment of excess liquidity.
+924
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Notes to the Consolidated Financial Statements
+(119)
+(36)
+129
+(53)
+10
+Net exposure
+(17)
+As of 30 September 2017
+(101)
+Net statement of financial position exposure
+Forward exchange contracts
+101
+(229)
+Net exposure
+40
+Other
+US$
+Currency
+156
+P see page 154
+Market risk
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial
+instruments, including those related to foreign exchange rates, interest rates and other price risks.
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Foreign exchange risk
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated in
+a foreign currency that does not correspond to the functional currency, and the foreign currency represents the
+relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not risks within the
+meaning of IFRS 7.
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2018 and 2017 fiscal years.
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments.
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 22.
+Foreign exchange risk at Infineon arises predominantly from US dollar positions. The following table shows the net
+risk as of 30 September 2018 and 2017.
+€ in millions
+As of 30 September 2018
+Net statement of financial position exposure
+Forward exchange contracts
+Consolidated Financial Statements
+Derivative
+(269)
+Cash outflow
+2,111
+1,847
+599
+595
+574
+547
+2,989
+Industrial Power Control
+1,206
+1,323
+1,206
+Power Management &
+Multimarket
+2,318
+1,323
+3,284
+Automotive
+Revenue:
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+Segment information
+€ in millions
+Total
+2018
+Power
+Embedded control
+RF & Sensors
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+2,148
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+1,758
+594
+Eliminations
+3
+Total
+7,599
+7,063
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Corporate and
+Consolidated Financial Statements
+161
+There are currently limited levels of trading relationships between the operating segments. Costs are recharged in
+general without impact on profit or loss.
+€ in millions
+financial liabilities:
+Segment Result:
+Automotive
+Notes to the Consolidated Financial Statements
+9
+10
+Segments
+Digital Security Solutions
+664
+708
+664
+708
+Subtotal
+7,589
+7,051
+5,192
+4,607
+1,263
+1,303
+1,134
+1,141
+Other Operating
+560
+Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals) excluding
+capitalized development costs; impact on earnings of restructuring measures and closures; share-based com-
+pensation expense; acquisition related depreciation/amortization and other expenses; gains (losses) on sales of
+assets, businesses, or interests in subsidiaries and other income (expense), including the costs of legal proceedings.
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+1,554
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to the
+segments.
+2022
+Beyond 2022
+Non-derivative
+financial liabilities
+3,390
+1,532
+2020
+68
+246
+539
+936
+Derivative
+financial liabilities:
+Cash outflow
+69
+2019
+2018
+Total
+136
+Cash inflow¹
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating
+targets and budgets for the segments.
+136
+(134)
+(134)
+Total
+3,202
+1,408
+72
+219
+544
+35
+924
+As of 30 September 2017
+208
+208
+2021
+Other Operating Segments
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for
+the conversion of electrical energy for small, medium and high-power applications. The products are used in
+applications for generation, low loss transmission and efficient use of electrical energy.
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies, mobile devices, mobile phone network infrastructures, human-machine
+interaction as well as applications with special demands on their robustness and reliability.
+Digital Security Solutions
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities to
+the individual segments
+Effective 1 October 2018, the "Chip Card & Security" segment changed its name to "Digital Security Solutions".
+The change in name has no impact on the organizational structure, strategy or scope of business. The Digital
+Security Solutions segment designs, develops, manufactures and markets semiconductor-based security products
+for card-based applications, government documents, and security functions in networked devices.
+Other Operating Segments comprise the remaining activities of businesses that have been disposed of, and other
+business activities. Since the sale of the Wireless mobile phone business, supplies to Intel Mobile Communications
+are included in this segment. Also included are, since the sale of the major part of Infineon's Radio Frequency
+Power Components business, supplies of LDMOS wafers and related components, as well as packaging and test
+services for Cree, Inc.
+Industrial Power Control
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Notes to the Consolidated Financial Statements
+160
+Corporate and Eliminations
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+Cash inflow¹
+Similarly, certain items are included in Corporate and Eliminations, which are not allocated to the other segments.
+These include certain corporate headquarters costs and selected topics, which are not allocated to the segments
+since they arise from corporate decisions and are not within the direct control of segment management.
+Consolidated Financial Statements
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+Power Management & Multimarket
+Automotive
+Total
+(206)
+3,392
+(206)
+1,534
+68
+246
+539
+69
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+24 Segment reporting
+Identification of segments
+Infineon identifies reportable segments on the basis of the differences between the products and applications.
+During the 2018 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Digital Security Solutions. Additionally,
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+936
+Furthermore, raw materials, supplies and work in progress of the common frontend production, and raw materials
+and supplies of the common backend production, are not under the control or responsibility of the operating
+segment management and are therefore allocated to corporate functions. Only work in progress of backend
+production and finished goods are allocated to the operating segments.
+60
+60
+Warstein, Germany
+Infineon Technologies Bipolar Verwaltungs GmbH
+0
+0.41
+1.83
+Neubiberg, Germany
+7
+Coventry, Great Britain
+Hitex (UK) Limited
+n.a.
+n.a.
+60
+n.a.
+n.a.
+100
+0.03
+0.00
+7
+Berlin, Germany
+Infineon Technologies Delta GmbH
+7
+100
+0.00
+0
+100
+7
+St. John, New Brunswick, Canada
+Infineon Technologies Canada, Inc.
+0.02
+0.04
+0
+100
+Infineon Technologies Campeon Verwaltungsgesellschaft mbH Neubiberg, Germany
+0.00
+3
+Other companies (not consolidated):1
+0.06
+n.a.
+n.a.
+3
+0.00
+0.00
+0
+100
+n.a.
+Computertechnik TTX Auto Technologies AG
+n.a.
+n.a.
+25
+49
+12
+100
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd. Shanghai, People's Republic of China
+CHIL Semiconductors Corporation
+n.a.
+DICE Danube Integrated Circuit Engineering GmbH
+EPOS embedded core & power systems GmbH & Co. KG
+100
+100
+Duisburg, Germany
+7
+0.19
+0.55
+100
+100
+Duisburg, Germany
+7
+0.00
+0.11
+0
+72
+7
+Linz, Austria
+EPOS embedded core & power systems Verwaltungs GmbH
+Futurium gGmbH
+0.00
+0.02
+100
+Infineon Technologies Gamma GmbH
+9
+(0.03)
+0.07
+0
+100
+Warsaw, Poland
+0.00
+Bucharest, Romania
+0.03
+100
+Neubiberg, Germany
+8,13,14
+7,13,14
+0.00
+0.03
+100
+100
+100
+11
+0
+0.15
+1.79
+0
+11
+OOOOO
+100
+Wilmington, Delaware, USA
+100
+100
+São Paulo, Brazil
+100
+Baden, Switzerland
+100
+Moscow, Russian Federation
+0.01
+0.04
+Wilmington, Delaware, USA
+Neubiberg, Germany
+0.00
+0.04
+OSPT IP Pool GmbH
+MicroLinks Technology Corp.
+Metawave Corporation
+Merus Audio, Inc. (in liquidation)
+Merus Audio Singapore Pty. Ltd. (in liquidation)
+Merus Audio (Hong Kong) Ltd. (in liquidation)
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+7
+KAI Kompetenzzentrum Automobil- und
+Industrieelektronik GmbH
+IR International Holdings China, Inc.
+Infineon Technologies South America Ltda
+Infineon Technologies Schweiz GmbH in liquidation
+Infineon Technologies RUS LLC
+Infineon Technologies Romania s.r.l.
+Infineon Technologies Mantel 29 GmbH
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Holding GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 27 GmbH
+IR International Holdings, Inc.
+Neubiberg, Germany
+100
+100
+100
+100
+Neubiberg, Germany
+8,13,14
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+0.04
+0.15
+0
+100
+Madrid, Spain
+7
+0.00
+0.02
+0.00
+54.05
+Infineon Technologies Hong Kong Sales Limited
+60
+7
+69.11
+2,192.26
+0
+100
+Wilmington, Delaware, USA
+0.41
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+1.55
+100
+Bristol, Great Britain
+7
+1.40
+4.59
+0
+100
+0
+7
+Name of company
+Notes to the Consolidated Financial Statements
+note
+Infineon
+holdings
+Foot-
+Net result
+Equity
+thereof
+Consolidated Financial Statements
+Share-
+168
+MoTo Objekt Campeon GmbH & Co. KG
+Rectificadores Internacionales, S.A. de C.V.
+Shanghai International Rectifier Trading Ltd.
+Molstanda Vermietungsgesellschaft mbH
+International Rectifier Mauritius, Inc. (in liquidation)
+International Rectifier HiRel Denmark ApS
+International Rectifier HiRel Products, Inc.
+International Rectifier Japan Co., Ltd.
+Innoluce B.V.
+Infineon Technologies US InterCo LLC
+Infineon Technologies US Investment LLC
+Infineon Technologies
+Vermögensverwaltungsgesellschaft mbH
+Registered office
+Taipei, Taiwan
+0.43
+2.39
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies France S.A.S.
+Infineon Technologies Finance GmbH
+Infineon Technologies Epi Services, Inc.
+Infineon Technologies Dresden Verwaltungs GmbH
+Infineon Technologies Dresden GmbH & Co. KG
+Infineon Technologies Denmark ApS
+Infineon Technologies Hong Kong Ltd.
+Bucharest, Romania
+25.85
+181.58
+0
+100
+Bristol, Great Britain
+7
+0.05
+7
+Infineon Technologies India Private Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Ireland Limited
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., Ltd.
+Infineon Technologies Maasstad C.V.
+Infineon Technologies Neu-Isenburg Vertriebs GmbH
+100
+100
+7
+7
+1.08
+3.14
+0
+100
+Infineon Technologies US HoldCo Inc.
+Infineon Technologies U.K. Limited
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies Shared Service Center, Unipessoal Lda. Maia, Portugal
+Infineon Technologies Romania & Co. Societate
+in Comandita
+Infineon Technologies Reigate Limited
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Newport Holding Limited
+Infineon Technologies Nordic AB
+Techno-
+(€ in
+in %
+logies AG
+93
+Neubiberg, Germany
+7,13,14
+0.00
+133.40
+6
+100
+0
+Neubiberg, Germany
+1.85
+0
+100
+7
+Curepipe, Mauritius
+0.09
+7.27
+0.00
+76.51
+17.81
+9,18
+Warstein, Germany
+Infineon Technologies Bipolar GmbH & Co. KG
+7
+Joint ventures:
+Wilmington, Delaware, USA
+Vienna, Austria
+(0.48)
+2.69
+0
+100
+11
+Shanghai, People's Republic of China
+0.96
+10.48
+0
+100
+7
+Tijuana, Mexico
+0
+60
+100
+7
+100
+Neubiberg, Germany
+n.a.
+n.a.
+0
+100
+Wilmington, Delaware, USA
+100
+12
+1,546.38
+0
+100
+7
+Wilmington, Delaware, USA
+(€ in
+millions)
+millions)
+74.25
+125.22
+0.00
+7,13,15
+43.02
+99.58
+0
+100
+7
+Wilmington, Delaware, USA
+0.16
+1.87
+0
+100
+Herlev, Denmark
+0.14
+6.79
+0
+100
+9
+Nijmegen, The Netherlands
+Tokyo, Japan
+6
+The recognition of a provision, explanatory notes on contingent liabilities or further disclosures on risks from the
+insolvency of Qimonda AG are largely dependent upon the estimates and assumptions of the Management Board
+taking into account the interim report from the court-appointed independent expert. The same applies to the
+valuation of provisions made. Consequently, there are risks with respect to the presentation of the related risks in
+compliance with accounting standards as well as their valuation.
+0.15
+77
+2
+77
+Wilmington, Delaware, USA
+2
+77
+Wilmington, Delaware, USA
+77
+2
+2
+Suzhou, People's Republic of China
+77
+Fort Lauderdale, Florida, USA
+2
+77
+Seoul, Republic of Korea
+77
+2
+2
+2 On 23 January 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009. The
+equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency.
+Additionally, Qimonda and its subsidiaries are not included in the Company's consolidated financial statements. In addition, the list of subsidiaries held by Qimonda AG was based
+on information from 30 September 2010, since Infineon had not received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency
+or liquidation of Qimonda companies. Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial
+position and results of operations.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+18 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
+17 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and notes and from the obligations to disclose the annual
+financial statements.
+15 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from certain obligations to prepare annual financial statements and a management report pursuant
+to section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements pursuant to section 325 German Commercial Code.
+16 Pursuant to Section 285, No. 11b, German Commercial Code investments in the affiliate are not to be disclosed.
+14 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325
+German Commercial Code.
+13 Control and profit transfer agreement.
+12 The entity was founded in the 2018 fiscal year.
+77
+11 Equity and net result as of 31 December 2017.
+9 Equity and net result as of 30 September 2017 (period from 1 January 2017 until 30 September 2017).
+8 Equity and net result as of 30 September 2017 (period from 24 November 2016 until 30 September 2017).
+7 Equity and net result as of 30 September 2017.
+6 Equity and net result as of 4 July 2017 (period from 1 October 2016 until 4 July 2017).
+5 Equity and net result as of 30 June 2017.
+4 Equity and net result as of 31 March 2017.
+3 Share of not more than 5 percent.
+10 Equity and net result as of 30 September 2017 (period from 2 June 2017 until 30 September 2017).
+77
+Padua, Italy
+77
+Shanghai, People's Republic of China
+Qimonda International Trade (Shanghai) Co. Ltd.
+2
+77
+2
+Rotterdam, The Netherlands
+Qimonda Holding B.V. in insolvency
+77
+77
+Qimonda France SAS in liquidation
+2
+77
+Dresden, Germany
+2
+77
+Dresden, Germany
+St. Denis, France
+2
+Qimonda Taiwan Co. Ltd. in liquidation
+Qimonda UK Ltd. in liquidation
+2
+Suzhou, People's Republic of China
+77
+Rotterdam, The Netherlands
+High Blantyre, Scotland
+Taipei, Taiwan
+Dresden, Germany
+Qimonda Solar GmbH
+Qimonda Richmond LLC in insolvency
+Qimonda North America Corp. in insolvency
+Qimonda Memory Product Development
+Center (Suzhou) Co., in liquidation
+Qimonda Licensing LLC
+Qimonda Korea Co. Ltd. in liquidation
+Qimonda Italy s.r.l. in liquidation
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+Qimonda Investment B.V.
+1 Certain subsidiaries were not consolidated due to immateriality.
+Consolidated Financial Statements
+77
+Notes to the Consolidated Financial Statements
+Infineon Technologies AG
+of the Radio Frequency Power Business
+Accuracy of the determination of the gain on disposal from the sale of the majority
+The Management Board's assumptions are reasonable and balanced overall. The disclosures on contingent liabilities
+and other disclosures in the notes are complete and adequate.
+Our observations
+notes.
+Finally, we ascertained the completeness of disclosures on contingent liabilities as well as other disclosures in the
+Furthermore, we consulted the valuation expert commissioned by the Company regarding the opinions drawn up
+in connection with the Company's defence against the claims asserted by the insolvency administrator and
+assessed the method applied with the assistance of a valuation expert.
+Please refer to the notes to the Consolidated Financial Statements for more information on the accounting policies
+applied. Disclosures on the sale of the majority of the Radio Frequency Power Business can be found in the notes to
+the Consolidated Financial Statements in the section "Sales of company shares, discontinued operations and
+assets held for sale".
+We obtained an external legal opinion to audit the Management Board's risk assessment.
+In the course of our audit we assessed the process established by the Company to ensure the documentation,
+assessment of the outcome of proceedings and reporting of litigation in the financial statements.
+Our audit approach
+39.86
+With economic effect from 1 May 2006, all material assets and liabilities as well as business activities relating to
+memory business were spun off from Infineon Technologies AG to Qimonda AG as a non-cash contribution. On
+23 January 2009, Qimonda AG filed an application to open insolvency proceedings with the Munich District Court,
+which commenced on 1 April 2009. The insolvency of Qimonda AG resulted in various legal disputes between the
+insolvency administrator and Infineon. The focus of this litigation is on claims asserted by the insolvency adminis-
+trator with respect to valuation of the non-cash contribution to Qimonda AG. Infineon valued the non-cash contri-
+bution using an appraisal from an independent expert. On 21 September 2018 the court-appointed independent
+expert presented his preliminary valuation of the capitalised earnings value of non-cash contributions (in a range)
+in the form of an interim report.
+For the risks associated with the insolvency of Qimonda AG, provisions in the amount of EUR 185 million were
+recognised as at 30 September 2018 (as at 30 September 2017: EUR 33 million). There are also disclosures on
+contingent liabilities and further explanatory notes added to the notes to the financial statements.
+The financial statement risk
+Please refer to the notes to the Consolidated Financial Statements for more information on the accounting policies
+applied. The assessment of the underlying assumptions is presented under note 2 and disclosures on legal risks
+under note 19.
+We had regular meetings with the Management Board and legal department of the Company to gain an under-
+standing of current developments and reasons for the judgements in question. We obtained a written statement
+in this regard from the Company. We verified the assessment of the probability of utilisation undertaken by the
+Management Board by inspecting the documents underlying the Management Board's estimates, in particular the
+written statement from the court-appointed independent expert.
+Risks associated with the insolvency of Qimonda AG
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Independent Auditor's Report
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
+we are required to report that fact. We have nothing to report in this regard.
+> otherwise appears to be materially misstated.
+> is materially inconsistent with the Consolidated Financial Statements, with the Group Management Report or our
+knowledge obtained in the audit, or
+Management is responsible for the other information. The other information comprises the annual report, with the
+exception of the audited Consolidated Financial Statements and Group Management Report and our auditor's report.
+Our opinions on the Consolidated Financial Statements and on the Group Management Report do not cover the other
+information, and consequently we do not express an opinion or any other form of assurance conclusion thereon.
+In connection with our audit, our responsibility is to read the other information and, in so doing, to consider
+whether the other information
+Other Information
+The determination of the gain on disposal from the sale of the majority of the Radio Frequency Power Business and
+the determination of the underlying methods and assumptions made are appropriate.
+Further Information
+Our observations
+There is the risk for the Consolidated Financial Statements that the gain on disposal was not properly determined.
+Our audit approach
+Both the determination of the outgoing goodwill and the determination of the amount of deferred income require
+judgment.
+The net assets that were transferred had a book value of €53 million. This includes the proportional outgoing good-
+will of €28 million, which was allocated to the segment "Power Management & Multimarket". In connection with a
+long-term supply agreement concluded with the purchaser €22 million was treated as deferred income. These will
+be recognized as revenue over the contractual period.
+The gain on disposal corresponds to the difference between the purchase price and the carrying amount of the
+assets and liabilities that have been sold. Part of the net assets being disposed of also includes goodwill associated
+with the sale, which thus reduces the gain on the disposal. Furthermore, a long-term supply agreement that had
+been concluded was also taken into consideration as part of the sale. In connection to this, a portion of the obtained
+purchase price payment for future supplies from Infineon to the purchaser was treated as deferred income and thus
+reduced in addition the gain on disposal.
+In the 2018 financial year Infineon recognised a pre-tax profit resulting from the sale of the majority of the Radio
+Frequency Power Business on 6 March 2018 of €270 million under other operating income.
+The financial statement risk
+174
+The purchase price paid was reconciled with the contract and evidence of payments that were presented to us.
+Furthermore, we reviewed all relevant agreements associated with this transaction in respect of their accounting
+effects. We verified the proper and full derecognition of the net assets transferred to the purchaser and reconciled
+this with the contract. We audited the methodology and valuation underlying the assumptions regarding the
+determination of proportional outgoing goodwill. Furthermore, we also evaluated whether the relevant supply
+agreements were concluded at arm's length. We verified the determination of deferred income for future supplies
+from Infineon to the purchaser.
+Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
+of the Consolidated Financial Statements for the financial year from 1 October 2017 to 30 September 2018. These
+matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in
+forming our opinion thereon, we do not provide a separate opinion on these matters.
+Key Audit Matters in the Audit of the Consolidated Financial Statements
+173
+Dr. Reinhard Ploss
+Infineon Technologies AG
+Neubiberg, 20 November 2018
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Finan-
+cial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group,
+and the Combined Management Report includes a fair review of the development and performance of the business
+and the position of the Group, together with a description of the principal opportunities and risks associated with
+the expected development of the Group.
+171
+Responsibility Statement by the
+Management Board
+Further Information
+Dominik Asam
+Responsibility Statement by the Management Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dominik Asam
+Dr. Reinhard Ploss
+170
+Management Board
+Further Information
+Dr. Helmut Gassel
+Jochen Hanebeck
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+We conducted our audit of the Consolidated Financial Statements and of the Group Management Report in
+accordance with Section 317 HGB and the EU Audit Regulation No. 537/2014 (referred to subsequently as "EU Audit
+Regulation") and in compliance with German Generally Accepted Standards for Financial Statement Audits promul-
+gated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities
+under those requirements and principles are further described in the "Auditor's Responsibilities for the Audit of the
+Consolidated Financial Statements and of the Group Management Report" section of our auditor's report. We are
+independent of the group entities in accordance with the requirements of European law and German commercial
+and professional law, and we have fulfilled our other German professional responsibilities in accordance with these
+requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we
+have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the
+evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the Consolidated
+Financial Statements and on the Group Management Report.
+Basis for the opinions
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations relating to the
+legal compliance of the Consolidated Financial Statements and of the Group Management Report.
+> the accompanying Group Management Report as a whole provides an appropriate view of the Group's position.
+In all material respects, this Group Management Report is consistent with the Consolidated Financial Statements,
+complies with German legal requirements and appropriately presents the opportunities and risks of future
+development.
+> the accompanying Consolidated Financial Statements comply, in all material respects, with the IFRSS as adopted
+by the EU, and the additional requirements of German commercial law pursuant to Section 315e (1) HGB (Handels-
+gesetzbuch: German Commercial Code) and, in compliance with these requirements, give a true and fair view of
+the assets, liabilities, and financial position of the Group as at 30 September 2018, and of its financial performance
+for the financial year from 1 October 2017 to 30 September 2018, and
+We have audited the Consolidated Financial Statements of Infineon Technologies AG, Neubiberg, and its subsidiaries
+(the Group), which comprise the Consolidated Statement of Financial Position as at 30 September 2018 and the
+Consolidated Statement of Operations, the Consolidated Statement of Comprehensive Income, the Consolidated
+Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the financial year from 1 October
+2017 to 30 September 2018, and notes to the Consolidated Financial Statements, including a summary of significant
+accounting policies. In addition, we have audited the Combined Management Report of Infineon Technologies AG and
+the Group (hereinafter "Group Management Report”) for the financial year from 1 October 2017 to 30 September 2018.
+In our opinion, on the basis of the knowledge obtained in the audit,
+Opinions
+Report on the Audit of the Consolidated Financial Statements
+and of the Group Management Report
+To Infineon Technologies AG, Neubiberg
+Independent Auditor's Report
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified
+auditor's report. The English language text below is a translation of the auditor's report. The original German text
+shall prevail in the event of any discrepancies between the English translation and the German original. We do not
+accept any liability for the use of, or reliance on, the English translation or for any errors of misunderstandings that
+may derive from the translation.
+172
+Independent Auditor's Report
+Further Information
+Neubiberg, 20 November 2018
+0
+Wilmington, Delaware, USA
+77
+7
+n.a.
+n.a.
+0
+n.a.
+3
+Kaohsiung, Taiwan
+Neubiberg, Germany
+100
+n.a.
+0
+3
+0.00
+0.00
+0
+10
+0.01
+n.a.
+0.01
+100
+0.00
+holdings
+Foot-
+Net result
+Equity
+thereof
+Share-
+Registered office
+0.02
+169
+Schweizer Electronic AG
+Silicon Alps Cluster GmbH
+R Labco, Inc.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Name of company
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+XMOS Limited
+0
+9
+0.00
+100
+Villach, Austria
+11
+0.00
+0.00
+0
+7
+0
+7
+0.00
+0
+0.00
+0.10
+0
+11
+0.01
+0.00
+0.09
+0.00
+11
+0.00
+0
+10
+oooo
+n.a.
+Dover, Delaware, USA
+100
+100
+Singapore, Singapore
+Wilmington, Delaware, USA
+100
+of China
+Hong Kong, People's Republic
+0.15
+1.94
+24
+24
+Lippstadt, Germany
+Infineon
+2
+note
+(€ in
+Leuven, Belgium
+2
+77
+Singapore, Singapore
+2
+28
+77
+77
+Munich, Germany
+77
+Melaka, Malaysia
+2
+40
+Vila do Conde, Portugal
+2
+17
+2
+Colorado Springs, Colorado, USA
+2
+77
+Munich, Germany
+Qimonda Flash GmbH in insolvency
+Qimonda Flash Geschäftsführungs GmbH in liquidation
+Qimonda Finance LLC in insolvency
+Qimonda Europe GmbH in liquidation
+2
+77
+Munich, Germany
+Dresden, Germany
+Qimonda Dresden Verwaltungsgesellschaft mbH
+in insolvency
+77
+Dresden, Germany
+2
+77
+Bratislava, Slovakia
+2
+2
+2
+Qimonda Dresden GmbH & Co. OHG in insolvency
+Qimonda Bratislava s.r.o. in liquidation
+n.a.
+0
+n.a.
+Villach, Austria
+3
+0.00
+0.00
+n.a.
+0
+7
+Wilmington, Delaware, USA
+millions)
+millions)
+logies AG
+in %
+(€ in
+100
+11
+Schramberg, Germany
+9
+Qimonda Beteiligungs GmbH in insolvency
+Qimonda Belgium BVBA in insolvency
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda AG in insolvency
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+Qimonda AG and its subsidiaries:²
+n.a.
+n.a.
+0
+n.a.
+16
+Bristol, Great Britain
+5.11
+56.37
+9
+Techno-
+85.43
+11
+100
+Nomination Committee
+Dr. Wolfgang Eder (Chairman)
+Prof. Dr. Renate Köcher
+Dr. Manfred Puffer
+166
+The members of the Company's Supervisory Board, individually or in aggregate, do not own more than 1 percent of
+Infineon Technologies AG's outstanding share capital as of 30 September 2018.
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-15,
+D-85579 Neubiberg (Germany).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Jürgen Scholz
+Notes to the Consolidated Financial Statements
+Name of company
+Registered office
+167
+Share-
+holdings
+thereof
+Equity
+Net result
+Foot-
+Infineon
+Subsidiaries, joint ventures and other related companies as of 30 September 2018
+Dr. Susanne Lachenmann
+Hans-Ulrich Holdenried
+Peter Gruber
+Supervisory Board committees
+Mediation Committee
+Dr. Eckart Sünner (Chairman)
+Johann Dechant
+Hans-Ulrich Holdenried
+Jürgen Scholz
+Membership of Supervisory Boards
+and comparable governing bodies of domestic
+and foreign companies (as of 30 September 2018)
+Executive Committee
+Dr. Eckart Sünner (Chairman)
+Johann Dechant
+Gerhard Hobbach
+Hans-Ulrich Holdenried
+Investment, Finance and Audit Committee
+Dr. Eckart Sünner (Chairman)
+Johann Dechant
+Dr. Wolfgang Eder
+Annette Engelfried
+Strategy and Technology Committee
+Peter Bauer (Chairman)
+Dr. Wolfgang Eder
+note
+Techno-
+in %
+logies AG
+Wuxi, People's Republic of China
+11
+100
+0
+38.85
+0.31
+7
+Melaka, Malaysia
+100
+0
+36.31
+3.07
+Kulim, Malaysia
+100
+0
+205.89
+0.89
+7
+Melaka, Malaysia
+100
+0
+2.00
+Management Consultant
+16.29
+100
+(€ in
+millions)
+(€ in
+millions)
+Fully consolidated subsidiaries:
+7
+DICE Danube Integrated Circuit Engineering GmbH & Co. KG Linz, Austria
+Hitex GmbH
+72
+0
+3.66
+3.61
+Karlsruhe, Germany
+100
+100
+2.16
+0.00
+7,13,14
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co. Ltd.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Beijing, People's Republic of China
+0
+Deputy Chairwoman of the Infineon
+Works Council, Warstein,
+Infineon Technologies AG
+Occupation
+1 Employee representative
+IG Metall Regensburg
+Expert in the frontend-production,
+Infineon Technologies Dresden
+GmbH & Co. KG
+Membership of Supervisory Boards
+and comparable governing bodies of domestic
+and foreign companies (as of 30 September 2018)
+Member of the Supervisory Board
+> OBERBANK AG, Linz, Austria
+> voestalpine High Performance Metals GmbH, Vienna, Austria
+(Chairman)
+> voestalpine Metal Engineering GmbH, Leoben, Austria
+(Chairman)
+> voestalpine Metal Forming GmbH, Krems, Austria
+(Chairman)
+> voestalpine Stahl GmbH, Linz, Austria (Chairman)
+Member of the Advisory Board
+> voestalpine Personal Services GmbH, Linz, Austria
+(until 1 April 2018) (Chairman)
+> voestalpine Rohstoffbeschaffungs GmbH, Linz, Austria
+(Chairman)
+Member of the Supervisory Board
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Neubiberg, Germany
+Member of the Supervisory Board
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Neubiberg, Germany
+Member of the Board of Directors
+> Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
+(until 1 November 2017)
+First authorized agent of
+Member of the Advisory Board
+Independent
+Management Consultant
+Leading Development Engineer
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+165
+Name
+100
+(since 22 February 2018)
+Annette Engelfried1
+Peter Gruber¹
+Representative of
+Senior Management
+Gerhard Hobbach 1
+Hans-Ulrich Holdenried
+Prof. Dr. Renate Köcher
+Dr. Susanne Lachenmann'
+Géraldine Picaud
+Dr. Manfred Puffer
+Jürgen Scholz¹
+Kerstin Schulzendorf 1
+Occupation
+Chairman of the Management
+Board, voestalpine AG, Linz, Austria
+Labor union secretary
+IG Metall district management,
+Berlin-Brandenburg-Saxony
+Chief Financial Officer Operations,
+Infineon Technologies AG
+Member of the Infineon
+Works Council, Campeon,
+Infineon Technologies AG
+Independent
+Management Consultant
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach, Germany
+Chief Financial Officer,
+LafargeHolcim Ltd.,
+Jona, Switzerland
+210.19
+> Bridge imp GmbH, Grünwald, Germany
+> BMW AG, Munich, Germany
+> Athene Lebensversicherung AG, Wiesbaden, Germany
+> Bremer Kreditbank AG, Bremen, Germany
+(until 30 August 2018)
+> Bankhaus Neelmeyer, Bremen, Germany
+› Nova KBM Bank, Maribor, Slovenia
+> EVO Banco, Madrid, Spain (since 25 June 2018)
+> Oldenburgische Landesbank AG, Oldenburg, Germany
+(since 30 August 2018)
+Member of the Supervisory Board
+> Athene Holding Ltd., Pembroke, Bermuda
+Member of the Supervisory Board
+> Krones AG, Neutraubling, Germany
+Member of the Administrative Board
+> BKK of BMW AG, Dingolfing, Germany
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Name
+Diana Vitale¹
+Former members of
+the Supervisory Board
+Wolfgang Mayrhuber
+(until 22 February 2018)
+Member of the Supervisory Board
+Member of the Supervisory Board
+(since 25 April 2018)
+(since 2 July 2018)
+> Robert Bosch GmbH, Gerlingen, Germany
+> Nestlé Deutschland AG, Frankfurt/Main, Germany
+Member of the Board of Directors
+> Alstom S.A., Saint-Ouen, France (until 31 July 2018)
+> Vision Direct Group Ltd., London, Great Britain
+(until 23 November 2017)
+> Essilor India Private Limited, Bangalore, India
+(until 11 December 2017)
+> Xiamen Yarui Optical Co. Ltd., Xiamen,
+People's Republic of China (until 15 December 2017)
+› Artgri Group International Pte. Ltd., Singapore
+(until 15 December 2017)
+> Holcim Group Services Ltd, Holderbank, Switzerland
+(since 22 January 2018)
+> Holcim Technology Ltd, Jona, Switzerland
+(since 22 January 2018)
+> Lafarge Maroc SA, Casablanca, Morocco
+(since 2 July 2018)
+> LafargeHolcim Maroc SAS, Casablanca, Morocco
+(since 2 July 2018)
+> LafargeHolcim Maroc Afrique SAS, Casablanca, Morocco
+> Huaxin Cement Co., Ltd., Wuhan, People's Republic of China
+14.80
+Dr. Wolfgang Eder
+Wuxi, People's Republic of China
+Bangalore, India
+4
+100
+0
+10.60
+1.43
+Rotterdam, The Netherlands
+100
+0
+0.12
+0.00
+Dublin, Ireland
+100
+100
+0.39
+0.12
+7
+Milan, Italy
+100
+0
+2.11
+0.50
+0.77
+1.86
+100
+7
+Singapore, Singapore
+100
+0
+1,447.20
+71.96
+Rotterdam, The Netherlands
+7
+100
+100
+4,700.82
+177.60
+Hong Kong, People's Republic
+of China
+7
+100
+0
+23.88
+0.23
+Hong Kong, People's Republic
+7
+of China
+0
+0.56
+Klagenfurt, Austria
+100
+(0.25)
+5
+Bristol, Great Britain
+100
+0
+34.75
+0.00
+7
+Kista, Sweden
+100
+0
+5.16
+0.31
+7
+Muntinlupa City, Philippines
+100
+0
+0.00
+0.10
+Cheonan, Republic of Korea
+Infineon Technologies (Wuxi) Co., Ltd.
+14.05
+7
+0
+Neu-Isenburg, Germany
+0
+7.51
+4.88
+7
+Tokyo, Japan
+100
+0
+20.98
+4.60
+7
+Seoul, Republic of Korea
+100
+0
+4.64
+1.26
+Rotterdam, The Netherlands
+7
+100
+0
+23.29
+3.00
+100
+8.82
+7
+100
+293.84
+76.54
+7
+100
+0
+1.45
+0.14
+7
+100
+0.004
+917.94
+143.20
+Infineon Technologies Batam PT
+Infineon Technologies Cegléd Kft.
+100
+0
+11.75
+1.32
+7
+7
+100
+0
+0
+100
+7
+11
+100
+0
+117.08
+11.19
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd.
+Infineon Technologies Australia Pty Limited
+Infineon Technologies Austria AG
+Bayswater, Australia
+Villach, Austria
+Xi'an, People's Republic of China
+11
+100
+0
+6.97
+0
+Wilmington, Delaware, USA
+7
+100
+0
+2,504.91
+74.81
+Singapore, Singapore
+16.36
+0.36
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+224.27
+0.00
+8
+Neubiberg, Germany
+100
+0
+0.02
+0.00
+Wilmington, Delaware, USA
+100
+0
+(3.45)
+4.44
+Neubiberg, Germany
+100
+50
+369.89
+0.00
+7,13,14
+1.32
+St. Denis, France
+100
+100
+7
+7,17
+Batam, Indonesia
+Infineon Technologies China Co., Ltd.
+Dresden, Germany
+Cegléd, Hungary
+Shanghai, People's Republic of China
+11
+100
+3.14
+0.22
+Shanghai, People's Republic of China
+100
+0
+163.42
+15.42
+11
+Herlev, Denmark
+100
+0
+5.82
+11
+0
+(1.83)
+CAN
+Wirtschaftsprüfungsgesellschaft
+ASIC
+List of Abbreviations
+List of Abbreviations
+Further Information
+Wirtschaftsprüfer
+(German Public Auditor)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Pritzer
+(German Public Auditor)
+CMOS
+Wirtschaftsprüfer
+Braun
+177
+Artificial intelligence
+GPS
+Controller area network
+Integrated circuit
+IGBT
+KPMG AG
+IC
+HVDC High-voltage DC transmission
+Human machine interaction
+HMI
+Global positioning system
+Galliumnitride
+GaN
+Full hybrid electric vehicles
+FHEV
+Flexible alternating current transmission system
+FACTS
+Complementary metal-oxide-semiconductor
+Application-specific integrated circuit
+Munich, 20 November 2018
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+German Public Auditor Responsible for the Engagement
+> Identify and assess the risks of material misstatement of the Consolidated Financial Statements and of the
+Group Management Report, whether due to fraud or error, design and perform audit procedures responsive to
+those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The
+risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
+fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
+with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards
+for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material
+misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the
+aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
+these Consolidated Financial Statements and this Group Management Report.
+Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a
+whole are free from material misstatement, whether due to fraud or error, and whether the Group Management
+Report as a whole provides an appropriate view of the Group's position and, in all material respects, is consistent
+with the Consolidated Financial Statements and the knowledge obtained in the audit, complies with the German
+legal requirements and appropriately presents the opportunities and risks of future development, as well as to
+issue an auditor's report that includes our opinions on the Consolidated Financial Statements and on the Group
+Management Report.
+and of the Group Management Report
+Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+The supervisory board is responsible for overseeing the Group's financial reporting process for the preparation of
+the Consolidated Financial Statements and of the Group Management Report.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Furthermore, management is responsible for the preparation of the Group Management Report that, as a whole,
+provides an appropriate view of the Group's position and is, in all material respects, consistent with the
+Consolidated Financial Statements, complies with German legal requirements, and appropriately presents the
+opportunities and risks of future development. In addition, management is responsible for such arrangements
+and measures (systems) as they have considered necessary to enable the preparation of a Group Management
+Report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient
+appropriate evidence for the assertions in the Group Management Report.
+Management is responsible for the preparation of the Consolidated Financial Statements that comply, in all material
+respects, with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to
+Section 315e (1) HGB and that the Consolidated Financial Statements, in compliance with these requirements, give
+a true and fair view of the assets, liabilities, financial position, and financial performance of the Group. In addition,
+management is responsible for such internal control as they have determined necessary to enable the preparation
+of Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error.
+Responsibilities of Management and the Supervisory Board for the Consolidated Financial Statements
+and the Group Management Report
+175
+Independent Auditor's Report
+Further Information
+Insulated gate bipolar transistor
+In preparing the Consolidated Financial Statements, management is responsible for assessing the Group's ability to
+continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going
+concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting
+unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to
+do so.
+Further Information
+Independent Auditor's Report
+176
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the
+audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
+We were elected as group auditor by the annual general meeting on 22 February 2018. We were engaged by the
+supervisory board on 2 May 2018. We have been the group auditor of the Infineon Technologies AG, Neubiberg,
+without interruption since the financial year 1999/2000.
+Further Information pursuant to Article 10 of the EU Audit Regulation
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+From the matters communicated with those charged with governance, we determine those matters that were of
+most significance in the audit of the Consolidated Financial Statements of the current period and are therefore
+the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
+disclosure about the matter.
+We also provide those charged with governance with a statement that we have complied with the relevant indepen-
+dence requirements, and communicate with them all relationships and other matters that may reasonably be
+thought to bear on our independence, and where applicable, the related safeguards.
+We communicate with those charged with governance regarding, among other matters, the planned scope and
+timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
+identify during our audit.
+> Perform audit procedures on the prospective information presented by management in the Group Management
+Report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions
+used by management as a basis for the prospective information, and evaluate the proper derivation of the pro-
+spective information from these assumptions. We do not express a separate opinion on the prospective information
+and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ
+materially from the prospective information.
+> Evaluate the consistency of the Group Management Report with the Consolidated Financial Statements, its con-
+formity with German law, and the view of the Group's position it provides.
+› Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
+activities within the Group to express opinions on the Consolidated Financial Statements and on the Group
+Management Report. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+> Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on
+the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
+significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
+exists, we are required to draw attention in the auditor's report to the related disclosures in the Consolidated
+Financial Statements and in the Group Management Report or, if such disclosures are inadequate, to modify our
+respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
+report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
+> Evaluate the overall presentation, structure and content of the Consolidated Financial Statements, including the
+disclosures, and whether the Consolidated Financial Statements present the underlying transactions and events
+in a manner that the Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial
+position and financial performance of the Group in compliance with IFRSS as adopted by the EU and the additional
+requirements of German commercial law pursuant to Section 315e (1) HGB.
+> Evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates
+made by management and related disclosures.
+> Obtain an understanding of internal control relevant to the audit of the Consolidated Financial Statements and
+of arrangements and measures (systems) relevant to the audit of the Group Management Report in order to
+design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
+on the effectiveness of these systems.
+The German Public Auditor responsible for the engagement is Michael Pritzer.
+IPM
+ΑΙ
+LED
+Infineon Technologies AG, Neubiberg (Germany)
+Printing:
+Photography:
+Designed by:
+Independent auditors:
+Fiscal year:
+Investor Relations, Accounting, Consolidation & Reporting
+20 November 2018
+Copy deadline:
+Published by:
+TM
+in
+f
+Imprint
+Visit us on the web: www.infineon.com
+Editors:
+1 preliminary
+1 October to 30 September
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Werner Bartsch, Hamburg (Germany): page 2, 6-7
+Intelligent power module
+www.infineon.com
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+Visit us on the web:
+Contact for Investors and Analysts:
+Media Contact:
+INFINEON TECHNOLOGIES AG
+Headquarters:
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany)
+Specific disclaimer for IHS Markit reports, data and information referenced in this document:
+These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
+may therefore differ materially from what has been expected.
+This report contains forward-looking statements about the business, financial condition and earnings
+performance of the Infineon Group.
+Forward-looking statements
+The following were brand names of Infineon Technologies AG in the 2018 fiscal year: Infineon, the Infineon logo,
+AURIX™, CIPOS™, CIPURSE™, CoolGaNTM, CoolMOSTM, CoolSiCTM, Hybrid PACK™, iMOTION™, OPTIGA™, OptiMOS™,
+REAL3™M, SECORATM, XENSIV™
+Note
+G. Peschke Druckerei GmbH, Parsdorf (Germany)
+Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
+forward-looking statements.
+fiscal year 2019 results
+The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted property
+of IHS Markit Ltd. and its subsidiaries (“IHS Markit”) and represent data, research, opinions or viewpoints published by
+IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and
+not as of the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change
+without notice and neither IHS Markit nor, as a consequence, Infineon have a duty or responsibility to update the IHS Markit
+Materials or this presentation. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable,
+the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit
+and the IHS Markit globe design are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the
+property of IHS Markit or their respective owners.
+Tuesday, 12 November 20191
+Siliconcarbide
+Sic
+Radio frequency
+RF
+Plug-in hybrid electric vehicles
+PHEV
+ToF
+Near-field communication
+MOSFET Metal-oxide-semiconductor field-effect transistor
+Micro-electromechanical system
+Local interconnected network
+LIN
+Publication of fourth quarter and
+Light-emitting diode
+NFC
+Time-of-flight
+MEMS
+Trusted platform module
+TPM
+Publication of second quarter 2019 results
+Publication of third quarter 2019 results
+ICM - International Congress Center Munich
+(Germany)
+(Start 10:00 a.m. CET)
+Annual General Meeting 2019
+Thursday, 21 February 2019
+Tuesday, 7 May 2019¹
+Tuesday, 5 February 2019¹
+VSD
+Publication of first quarter 2019 results
+Variable speed drive
+Thursday, 1 August 2019¹
+178
+Financial calendar
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+10
+Financial and investment planning
+At its meeting held on 21 November 2017 and at the recommendation of the Investment, Finance and Audit
+Committee, the Supervisory Board approved the financial and investment budget (including the total investment
+budget) for the 2018 fiscal year, as presented by the Management Board. At its meeting held on 16 May 2018, again
+at the recommendation of the Investment, Finance and Audit Committee, the Supervisory Board approved an
+increase in the previously approved total investment budget.
+As in the previous year, a separate meeting of the full Supervisory Board was again held for the sole purpose of
+dealing with strategic topics. In the course of the strategy meeting, the Management Board provided information
+on global mega-trends as well as specific market and product trends, explained the external influences on the
+semiconductor industry, such as the risks arising from global trade conflicts, described Infineon's positioning in
+terms of international competition, and explained the corporate strategy it had developed, taking the framework
+parameters referred to above into account. Against this background, Infineon's strategic direction, including
+measures to expand expertise in core markets, broaden the product portfolio and optimize manufacturing strategy,
+was extensively discussed. Furthermore, the meeting dealt with the question of how far Infineon should go down
+the route of developing software for use in the hardware components it produces.
+Sustainable growth is an integral part of Infineon's corporate strategy. The corresponding growth prospects were
+also discussed at the strategy meeting and, additionally, the subject of further Supervisory Board meetings, at which
+specific decisions were put forward by the Management Board for approval. As mentioned earlier, the Supervisory
+Board deliberated in detail on the planned large-scale investment in Villach (Austria) to build a new power semi-
+conductor facility and on the modification of Infineon's target operating model to bring it in line with the expected
+rate of growth and, in both cases, approved the proposed decisions.
+Furthermore, the Supervisory Board discussed potential opportunities for mergers and acquisitions. These discus-
+sions also included a disinvestment decision, namely the sale of the RF Power product line to the US semiconductor
+company Cree, Inc. for a consideration of approximately €345 million. As technology leaders, collaboration between
+Infineon and Cree goes back a long way. The Supervisory Board agrees with the Management Board that it makes
+good commercial sense to sell this product line to Cree and that it also offers good professional prospects for the
+employees concerned. After thoroughly deliberating on these points, the Supervisory Board gave the transaction
+its approval.
+In the 2018 fiscal year, the full Supervisory Board met seven times (five ordinary and two extraordinary meetings)
+and passed one written resolution. Attendance measured in relation to these various proceedings averaged nearly
+92 percent. Dr. Diess, Ms. Engelfried and Dr. Puffer were each unable to attend two meetings and Mr. Holdenried,
+Ms. Picaud and Prof. Köcher were each unable to attend one meeting. Attendance at Supervisory Board committee
+meetings was a good 96 percent. Dr. Eder was excused from attending one meeting of the Strategy and Technology
+Committee and Mr. Holdenried from one meeting of the Executive Committee. Accordingly, all members of the
+Supervisory Board attended more than half of the meetings of the Supervisory Board and of the committees to
+which they belonged during the 2018 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+10
+Business strategy; growth prospects
+By contrast, the composition of the Management Board has not yet been subject to any specific diversity concept.
+The Supervisory Board therefore considered this matter at length and adopted a comprehensive diversity concept
+during the fiscal year under report. The Supervisory Board considers it important that any decision to appoint a
+person to a specific role on the Management Board must always be made in Infineon's best interests, taking all the
+circumstances of each individual case into account. The primary focus must be on the professional and personal
+suitability of the person concerned. Consideration must be given to ensuring that the members of the Management
+Board as a whole possess - to the fullest possible extent - the knowledge, skills and experience required to run a
+technology company. Within the framework of these requirements, the Supervisory Board also considers diversity
+aspects, particularly age, gender, education and professional background as well as internationality. In addition to
+ensuring the greatest possible personal suitability of each individual member, it is equally important that different
+perspectives on managing the corporation's business are encouraged by having a Management Board with a
+diverse composition. The various aspects of diversity are therefore an integral component of the decision-making
+process, but not an exclusive criterion. The target quota for women on the Management Board remains unchanged
+at 20 per cent.
+Extension of Management Board mandates
+In view of the successful work of the Management Board, the Supervisory Board decided to extend Mr. Asam's
+mandate, which would otherwise run until 31 December 2018, by a further five years to 31 December 2023. Further-
+more, the mandates of Dr. Gassel and Mr. Hanebeck, which run until 30 June 2019, were also extended by a further
+five years to 30 June 2024. By extending these mandates, the Supervisory Board acknowledges the excellent contri-
+butions these members of the Management Board have made to Infineon's sustainable and profitable growth and
+thanks them for their outstanding contributions.
+Diversity concept for the composition of the Management Board
+The European Corporate Social Responsibility (CSR) Directive and the German CSR Directive Implementation Act
+provide for large-sized listed companies such as Infineon to report on the diversity concepts developed in connection
+with the composition of their management and supervisory boards.
+A concept of this nature has been in place for Infineon's Supervisory Board for several years. The competency profile
+and catalog of objectives adopted by the Supervisory Board for its own composition (last updated in August 2017)
+deals not only with the general criteria for making appointments but also with diversity aspects.
+Details of the diversity concepts (for the composition of both the Management Board and the Supervisory Board),
+their objectives, the way they are implemented, and the results achieved during the year under report are provided
+in the Corporate Governance Statement, which is available on the Infineon website.
+@www.infineon.com/declaration-on-corporate-governance
+Management Board compensation
+In accordance with section 4.2.2 of the German Corporate Governance Code (DCGK), the Supervisory Board regularly
+engages an external, independent compensation expert to review Infineon's Management Board compensation
+system and to conclude on its compliance with applicable legislation as well as its overall appropriateness. The
+most recent system review was conducted in 2016. During the fiscal year under report, the Supervisory Board again
+engaged an external independent compensation expert to review the system and the target annual incomes of the
+members of the Management Board. The expert concluded that the compensation system complies with legal
+requirements and with the recommendations contained in the DCGK. In particular, the expert concluded that the
+compensation of Infineon's Management Board is commensurate with market conditions and that the variable
+compensation component is oriented towards the sustainable growth of the company. In addition, the target annual
+incomes of the members of the Management Board were found to be appropriate in all material respects. The expert
+pointed out, however, that there was scope for raising the level of compensation, particularly for the Chairman of
+the Management Board. The results of the compensation expert's review were discussed in detail at the Executive
+Committee meeting held on 25 October 2018 and by the full Supervisory Board on 20 November 2018. The Super-
+visory Board concurs with the opinion of the compensation expert.
+Already during the 2017 fiscal year, the Supervisory Board resolved to change the allocation date for granting perfor-
+mance shares to members of the Management Board for the purposes of the long-term incentive (LTI) from 1 October
+to 1 March of a fiscal year. The amendment was applied for the first time for the allocation in the 2018 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+In our capacity as Chairmen of the Supervisory Board, at first Mr. Wolfgang Mayrhuber and - following his resignation
+from the Supervisory Board on 22 February 2018 – me thereafter maintained regular contact with the Company's
+Chief Executive Officer (CEO) and Chief Financial Officer (CFO). The same applies to Mr. Peter Bauer and myself in
+our capacity as Chairmen of the Strategy and Technology Committee respectively the Investment, Finance and
+Audit Committee. I was promptly informed by the CEO of all events of significance to Infineon, when necessary
+outside of the regular Supervisory Board meetings.
+Report of the Supervisory Board to the Annual General Meeting
+Personnel matters relating to the Management Board
+The Supervisory Board was provided with written quarterly reports on Infineon's business performance, key financial
+data, risks and opportunities, major areas of litigation and other important topics. Between quarterly reports, the
+Management Board also kept us informed of current developments in the form of monthly reports.
+Jochen Hanebeck has been a member of
+the Management Board and Chief Operations
+Officer of Infineon Technologies AG since 2016.
+He is responsible for Operations, including
+Manufacturing, Logistics, Quality, Customs
+and Purchasing.
+Report of the Supervisory Board to the Annual General Meeting
+11
+Chief Executive Officer
+Reinhard Ploss has been a member of the
+Management Board of Infineon Technologies AG
+since 2007. He has been Chief Executive Officer
+since 1 October 2012, responsible for Segments,
+Group Strategy, Communications & Government
+Relations, Human Resources (Labor Director),
+Legal, Research and Development.
+Reinhard Ploss was born on 8 December 1955
+in Bamberg. He studied process engineering
+at the Technical University of Munich and in
+1986 received his doctorate. He began his
+career at Infineon (Siemens AG until 1999) in
+the same year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+6
+Management Board and Supervisory Board
+The Management Board
+Dr. Helmut Gassel
+Chief Marketing Officer
+Helmut Gassel has been a member of the
+Management Board and Chief Marketing Officer
+of Infineon Technologies AG since 2016. He is
+responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions
+and Intellectual Property.
+Helmut Gassel was born on 13 March 1964
+in Dortmund. He holds a Diploma in physics
+from the Ruhr-University in Bochum. He
+received his PhD in electrical engineering
+from the University of Duisburg. He joined
+Infineon (Siemens AG until 1999) in 1995.
+Jochen Hanebeck
+Chief Operations Officer
+Jochen Hanebeck was born on 2 February
+1968 in Dortmund. He received a degree
+in electrical engineering from RWTH Aachen
+University. He has been with Infineon since
+1994 (Siemens AG until 1999).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+7
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+8
+Report of the Supervisory Board
+to the Annual General Meeting
+Ladies and Gentlemen,
+Infineon remains firmly on course for profitable growth. Our success story
+is epitomized in particular by two public announcements made during the
+previous fiscal year. The first of these gave notice of Infineon's intention to
+build a new 300-millimeter facility for manufacturing power semiconductors
+at its site in Villach, Austria, involving a total investment of some €1.6 billion
+over a period of six years. The second announcement provided information on
+the Management Board's decision to modify Infineon's target operating model,
+which reflects targets set for revenue, segment result margin and investment
+ratio, and is now geared to achieving stronger long-term growth. Following
+extensive discussions, the Supervisory Board concurred with both of the deci-
+sions taken by the Management Board. Our support is based on the fact that
+global developments such as climate change, demographic structures and
+the trend towards digitalization will continue to drive Infineon's growth in the
+coming years. Electric vehicles, interconnected battery-powered devices,
+data centers, and the generation of electricity from renewable sources all
+require efficient, reliable power semiconductors. With its leading technologies
+and intelligent manufacturing strategies, Infineon has carved out an excellent
+position in its various core markets. Infineon will continue to exploit opportunities to achieve future sustainable
+growth. As in previous years, it is particularly important to us that you, as shareholders, participate in Infineon's
+profitable growth, not least through the payment of a commensurate dividend. Accordingly, the Management Board
+and the Supervisory Board recommend a further increase in the dividend, this year to €0.27 per share.
+Dr. Eckart Sünner
+Chairman of the Supervisory Board
+Main activities of the Supervisory Board
+During the 2018 fiscal year, the Supervisory Board again performed its duties with great diligence in accordance with
+the law, the Company's statutes and its own terms of reference. We both advised and supervised the Management
+Board in a constructive manner. Our input was mainly based on in-depth reports presented by the Management Board
+at Supervisory Board and committee meetings, dealing with current business developments, significant transac-
+tions, the quarterly financial reports and corporate planning. The Management Board discussed and coordinated
+corporate strategy as well as key operational issues in collaboration with us. The Supervisory Board was given
+ample opportunity to thoroughly examine any reports and resolutions proposed by the Management Board at all
+times. In this context, we undertook various measures to assure ourselves that the governance of Infineon's corpo-
+rate affairs was lawful, compliant and appropriate.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+9
+P see page 95 ff.
+Executive Committee
+After extensive discussions held by the full Supervisory Board and prepared by the Executive Committee, a new,
+simplified rule was adopted for the treatment of current LTI tranches in the event of a member leaving the Manage-
+ment Board. The rule came into force on 1 October 2018. Details on this are outlined in the Compensation Report.
+For the second time, a tranche of performance shares fell due for settlement at the end of the 2018 fiscal year.
+As the stipulated performance hurdle was surpassed, the tranche allocated in 2014 is required to be settled in full
+following the expiry of the four-year holding period. As in the previous fiscal year, the Supervisory Board resolved
+to settle the entitlement of members of the Management Board resulting from this tranche in cash rather than in
+shares. Equality of treatment was therefore achieved with Infineon employees, for whom the Management Board
+also decided upon cash settlement of the current tranche.
+Dr. Reinhard Ploss
+The Executive Committee held one ordinary and two extraordinary meetings during the fiscal year under report.
+The ordinary meeting focused on preparing the Supervisory Board's resolutions with respect to determining the
+level of the Management Board's variable compensation. The main aspects of this work were to determine the
+degree to which targets for the 2017 fiscal year were achieved and to set new targets for the 2018 fiscal year. Other
+matters arising were the adjustment of rules for LTI purposes when a member leaves the Management Board as
+well as decisions relating to mandate extensions.
+At the two extraordinary meetings, the LTI topic was deliberated upon in greater depth and a diversity concept for
+the composition of the Management Board was discussed. The Executive Committee also approved new business
+travel rules for the Management Board.
+Investment, Finance and Audit Committee
+The Investment, Finance and Audit Committee convened four times during the fiscal year under report.
+Its activities centered on monitoring the financial reporting process, reviewing the half-year and quarterly financial
+statements, conducting the preliminary audit of the Separate Financial Statements, Consolidated Financial State-
+ments and Combined Management Report for Infineon Technologies AG and Infineon, and discussing the audit
+reports with the auditor. In addition, the committee examined the financial and investment budget. Furthermore,
+the committee considered the effectiveness of the internal control, internal audit, risk management and compliance
+management systems. The committee's members also received reports from the Compliance Officer on a regular
+basis as well as timely updates on significant legal disputes.
+Before the committee recommended to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft
+Munich (KPMG) be proposed for election as Company and Group auditor at the Annual General Meeting 2018, a
+Declaration of Independence was obtained from KPMG. In addition, the committee carefully considered the non-
+audit services provided by KPMG. There were no indications of conflicts of interest, grounds for exclusion, or lack
+of independence on the part of the auditor. The recommendation was also based on the committee's confirmation
+that its recommendation was free from undue influence by third parties and that it had not been subject to any
+restriction regarding the selection of auditors within the meaning of section 16, paragraph 6 of the EU Statutory
+Audit Regulation. The committee also considered the fee arrangements and issued the contracts for the corres-
+ponding audit engagements. In addition, supplementary areas for audit emphasis were defined.
+The committee also dealt in detail with the CSR Directive and the CSR Directive Implementation Act as well as the
+implications for non-financial reporting. It prepared the resolution of the full Supervisory Board to engage KPMG to
+perform the non-mandatory, limited assurance review of the separate report on non-financial information.
+The auditor attended the meetings of the Investment, Finance and Audit Committee and reported in detail on its
+audit activities.
+Strategy and Technology Committee
+The Supervisory Board's Strategy and Technology Committee convened three times during the fiscal year under
+report. It was provided with in-depth reports on growth prospects, electro-mobility scenarios and Infineon's posi-
+tioning compared to that of its major competitors. Manufacturing strategies were also discussed and individual
+fields of business presented in greater detail. The committee also deliberated at great length on the topic of digitali-
+zation at Infineon.
+Separate and Consolidated Financial Statements
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements as of 30 September 2018 as well as the Combined Management Report for Infineon Technologies AG
+and the Group, and issued unqualified audit opinions thereon.
+The Half-Year Financial Report was also subject to a review. No issues were identified that might indicate that the
+abridged Interim Group Financial Statements and Interim Group Management Report had not been prepared,
+in all material respects, in accordance with the applicable provisions.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+14
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements of the Group and reviewed the Interim Financial Statements of the Group since the 1999 fiscal year
+(short fiscal year from 1 April 1999 to 30 September 1999). Mr. Karl Braun signed the auditors' report for the first
+time for the 2012 fiscal year (1 October 2011 to 30 September 2012) and Mr. Michael Pritzer for the first time for
+the 2017 fiscal year (1 October 2016 to 30 September 2017).
+At the meeting of the Investment, Finance and Audit Committee on 9 November 2018, continued in a telephone
+conference on 19 November 2018, intensive discussions were held with the auditor regarding the Separate Financial
+Statements, the Consolidated Financial Statements, the Combined Management Report, the proposed profit
+appropriation, and the auditor's findings. The committee deliberated at length on the key audit matters and on the
+related audit procedures performed by the auditor. The Investment, Finance and Audit Committee resolved to
+propose to the Supervisory Board that the financial statements drawn up by the Management Board be approved
+and the proposed profit appropriation agreed to.
+The Separate Financial Statements, the Consolidated Financial Statements, the Combined Management Report,
+the Management Board's proposal for the appropriation of unappropriated profit (all prepared by the Management
+Board) and KPMG's long-form audit reports were all made available to the Supervisory Board at the meeting held on
+20 November 2018. At this meeting, the Chairman of the Investment, Finance and Audit Committee reported in depth
+on the corresponding recommendations of the Committee. In addition, all material issues relevant to the financial
+statements and the audit, including key audit matters, were discussed in detail with the auditor and examined by
+the Supervisory Board. The examination also covered the proposal to pay a dividend of €0.27 per entitled share.
+The Supervisory Board concluded that it has no objections to the financial statements and the audits performed
+by the auditor. In its opinion, the Combined Management Report complies with legal requirements. Likewise, the
+Supervisory Board concurs with the assertions regarding Infineon's future development made therein. The Super-
+visory Board therefore concurred with the results of the audit and approved the Separate Financial Statements of
+Infineon Technologies AG and the Consolidated Financial Statements of Infineon. The Separate Financial Statements
+were accordingly adopted. The Supervisory Board also approved the Management Board's proposal for the appro-
+priation of unappropriated profit.
+In conjunction with the presentation of the sustainability report, the Investment, Finance and Audit Committee
+and the full Supervisory Board also deliberated on the separate non-financial report of Infineon Technologies AG
+(Company and Group) from 30 September 2018, which was drawn up for the first time by the Management Board.
+KPMG performed a "limited assurance" review and issued an unqualified statement thereon. The documents were
+carefully examined by the Investment, Finance and Audit Committee at its meeting held on 9 November 2018, con-
+tinued in a telephone conference on 19 November 2018, and by the Supervisory Board at its meeting on 20 November
+2018. The Supervisory Board acknowledged and approved the separate non-financial report (Company and Group)
+drawn up by the Management Board.
+The Supervisory Board wishes to thank the Management Board and the entire staff of Infineon once again for their
+great commitment and outstanding achievements during the 2018 fiscal year.
+Neubiberg, November 2018
+On behalf of the Supervisory Board
+Eckert Scanner
+Dr. Eckart Sünner
+13
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Details of Management Board compensation - in particular the amounts paid to individual members in the 2018
+fiscal year - are available in the comprehensive Compensation Report in the Annual Report.
+Litigation
+The Supervisory Board was regularly provided with detailed information regarding major legal disputes during the
+2018 fiscal year, which were then thoroughly discussed with the Management Board. These included in particular
+the Company's appeal, brought before European courts, against the antitrust fine imposed by the EU Commission in
+2014 and the dispute with the insolvency administrator of Qimonda AG pertaining to alleged residual liability claims.
+Corporate Governance
+Declaration of Compliance 2018
+The Declaration of Compliance issued in November 2017 was updated in February 2018 in view of the fact that
+I was elected Chairman of the Supervisory Board at the meeting of the Supervisory Board on 22 February 2018 in
+parallel to my function as Chairman of the Investment, Finance and Audit Committee. The Management Board and
+Supervisory Board declared a deviation from section 5.3.2, paragraph 3, sentence 3, DCGK, according to which the
+Chairman of the Supervisory Board should not additionally chair the Audit Committee. The reason given for the
+deviation was that it is in the Company's interest that I continue to contribute my financial expertise and wealth of
+experience in Audit committee matters in my capacity as Chairman of the Infineon Audit Committee.
+In the current Declaration of Compliance dated November 2018, the Management Board and the Supervisory Board
+declared that, with the exception of a deviation from section 5.3.2, paragraph 3, sentence 3, DCGK, as described
+above, Infineon complies with all other recommendations contained in the DCGK and will continue to do so in future.
+The original versions of the Declarations of Compliance are available on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+Efficiency examination for Supervisory Board activities
+The Supervisory Board examines the efficiency of its activities on an annual basis. In the previous fiscal year,
+the examination was performed with the assistance of an external, independent consultant. The examination for
+the 2018 fiscal year was based on a structured questionnaire. The examination provided a positive picture of the
+work of the Supervisory Board and its collaboration with the Management Board. No noteworthy shortcomings
+were identified.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+12
+P see page 95 ff.
+Examination of potential conflicts of interest
+Prior to members of the Management Board assuming sideline activities, particularly supervisory board mandates
+outside the Company, the DCGK requires that permission be given by the Supervisory Board. During the 2018 fiscal
+year, , the Supervisory Board and the Executive Committee gave their permission for Dr. Ploss and Dr. Gassel to assume
+mandates, given that no conflicts of interest were discernible.
+Further information on corporate governance at Infineon can be found in the joint Corporate Governance Report
+of the Management Board and the Supervisory Board and in the Corporate Governance Statement. Both of these
+documents as well as all terms of reference of the Company's boards and its committees are publicly available on
+the Infineon website.
+@www.infineon.com/corporate-governance-report
+@www.infineon.com/declaration-on-corporate-governance
+Composition of the Supervisory Board; committee work
+Composition of the Supervisory Board
+With effect from the end of the Annual General Meeting held on 22 February 2018, Mr. Mayrhuber resigned his
+mandate as member and Chairman of the Supervisory Board. On behalf of the Supervisory Board, the Management
+Board and the entire workforce, I sincerely wish to thank Mr. Mayrhuber for seven extraordinarily commendable
+and successful years at the helm of our Supervisory Board. Due to his competence and vision, combined with his
+constructive and engaging manner, Mr. Mayrhuber made a significant contribution to Infineon's success. I am
+delighted that Mr. Mayrhuber will remain closely linked to Infineon as Honorary Chairman of the Supervisory Board
+going forward.
+For this reason, it was necessary to elect a new member of the Supervisory Board to fill the vacancy. Based on the
+Nomination Committee's recommendation and the Supervisory Board's proposal, the Annual General Meeting
+elected Dr. Wolfgang Eder to the Supervisory Board on 22 February 2018.
+At the Supervisory Board meeting held immediately after the Annual General Meeting, I was elected to succeed
+Mr. Mayrhuber as the new Chairman of the Supervisory Board. In this function, I also chair the Mediation Committee
+and the Executive Committee. Dr. Eder was elected to the Investment, Finance and Audit Committee, the Strategy
+and Technology Committee as well as the Nomination Committee. Dr. Eder chairs the Nomination Committee.
+Committee work
+The committees are responsible for drawing up resolutions and preparing topics that need to be dealt with by the
+full Supervisory Board. Certain decision-making powers have been delegated to the committees, to the extent
+permitted under German law. The chairpersons of each committee routinely report on committee meetings at the
+next relevant full Supervisory Board meeting.
+Nomination and Mediation Committee
+The Nomination Committee convened once during the fiscal year under report and made a recommendation to the
+Supervisory Board that Dr. Wolfgang Eder be proposed for election to the Supervisory Board at the Annual General
+Meeting. The decision was preceded by several meetings of the Nomination Committee during the 2017 fiscal year,
+at which succession matters on the shareholder side as a whole were also discussed.
+The Mediation Committee did not need to convene.
+The members of the Management Board and the Supervisory Board are required to disclose any conflicts of interest
+to the Supervisory Board without delay. No conflicts of interest in connection with the members of the Management
+Board and the Supervisory Board have been disclosed in the 2018 fiscal year.
+Dominik Asam was born on 6 March 1969
+in Munich. He studied at the Technical
+University of Munich and the École Centrale
+in Paris. He is a graduate mechanical
+engineer and an "Ingénieur des Arts et
+Manufactures". In addition, he completed an
+MBA at INSEAD in Fontainebleau, France.
+Dominik Asam joined Infineon in 2003.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Chief Financial Officer
+Chairman of the Supervisory Board
+Management Board and Supervisory Board
+Letter to shareholders
+5
+After not closing the acquisition of Wolfspeed in 2017, we reassessed our options for radio-frequency power compo-
+nents and sold the largest part of the business to Cree, Inc. for approximately €345 million, a logical consequence.
+Without the acquisition of Wolfspeed and under the present conditions it appeared impossible to achieve a strong
+position in this market for radio-frequency power components with reasonable effort. On the other hand Cree, with
+its excellent reputation, is the ideal owner for this part of our portfolio.
+Since 1 October 2018 our security technology business bears the new name Digital Security Solutions. In addition
+to continuing established solutions for banking cards and electronic identity documents, our embedded security
+solutions have for years addressed entirely new customers with a significantly larger number of applications. As of
+the new 2019 fiscal year, we renamed the segment Digital Security Solutions, a name that describes much better
+what we already do today.
+We want to further develop the company with large and small measures like the ones mentioned here and we
+want to continue our success story. There are, however, things outside our control. We benefit from a good macro-
+economic environment and the growth of the world economy; we also benefit from open markets and low trade
+barriers. Accordingly, we observe the present protectionist tendencies with great concern. We are monitoring the
+situation closely in order to adapt our strategies quickly if and when signs of economic slow-down occur. You can
+rest assured that we will lead Infineon into the future with a great sense of responsibility and attention to detail.
+We sincerely regret that Wolfgang Mayrhuber will no longer be actively accompanying us with his wisdom and sup-
+port. He left the Supervisory Board on his own wish after the Annual General Meeting in February 2018. As chairman
+of the Supervisory Board, he has had a decisive and constructive influence on the recent history of Infineon with
+his personality and his experience. I would like to take this opportunity to thank him once again personally - and in
+your name - and to wish him all the best. The Annual General Meeting elected Dr. Wolfgang Eder to the Supervisory
+Board, therewith selecting a highly respected corporate personality. The Chairman of the Supervisory Board is now
+Dr. Eckart Sünner, who knows Infineon very well after his many years as Chairman of the Investment, Finance and
+Audit Committee.
+We achieved a lot in the 2018 fiscal year. We turned our eyes to tomorrow, without neglecting the world of today.
+We seeded, we harvested. A company can only master this challenge when it can count on qualified and dedicated
+employees. I therefore thank you, our employees, most sincerely in the name of the entire Management Board for
+the passion and commitment with which you make Infineon successful. The future offers many opportunities -
+we grasp them together.
+Dominik Asam has been the Chief Financial
+Officer of Infineon Technologies AG since
+2011, responsible for Accounting & Reporting,
+Financial Controlling, Financial Planning,
+Investor Relations, Tax, Treasury, Audit,
+Compliance, Export Control, Risk Manage-
+ment, Business Continuity and Information
+Technology.
+Reiterad of
+Dr. Reinhard Ploss
+Chief Executive Officer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+The Management Board
+The Management Board
+Dominik Asam
+Sincerely
+Combined Management Report | Our Group
+Finances and strategy
+Business focus Group strategy
+System know-how is bridging the gap between core technology and target application
+Building block
+Partial system
+functionality
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Single function
+Base technology
+Full system
+functionality
+In order for this to succeed, we have to understand the environment in which our customers' products are used,
+how they are embedded in larger systems, what other devices they interact with, what requirements they have to
+fulfill and what tasks they are intended to perform. And we also have to take into consideration which active and
+passive components they use, which algorithms they use and what capabilities our customers contribute to the
+value creation process. Equipped with this knowledge, we can leverage our competencies even better: We can
+translate what is technologically possible into a commercially viable product, thus providing the greatest possible
+benefit to our customers. Sensor systems not only capture information about the surrounding environment, but
+also interpret and process the data they gather in order to initiate a particular action; digital control loops in power
+supplies enable higher energy efficiency at both high and low load levels; and security controllers are capable of
+distinguishing authorized access from unauthorized access. In addition to the hardware components involved,
+this also requires varying degrees of software support. Thus, to a certain degree, system understanding also means:
+software understanding.
+We have established a stable foundation in recent years in order to be successful in our target markets. We have
+focused on core competencies that are in higher demand today than ever in the face of global megatrends. Over
+the
+The strategic approach "Product to System" defines our actions
+years, we have built and systematically expanded the technical expertise needed to do so. And since good ideas
+do not become innovations until they have been successful in the market, we have also developed the appropriate
+concepts for turning our strategy into entrepreneurial success and value creation. At the center of all this is our
+strategic approach "Product to System", which we apply along our entire value chain and is oriented towards the
+success of our customers. This approach is supported by additional elements: a strong innovation culture, con-
+tinuous pursuit of technology leadership, well-developed quality consciousness, differentiated manufacturing and
+tailor-made go-to-market strategies fitting the various individual markets. This puts us in a position to offer our
+customers leading products as well as the highest possible quality and supply reliability. In doing so, we achieve
+the objective of growing profitably and faster than the market.
+Factors for successful implementation
+Strategic fields of action:
+We supplement our organic growth with targeted acquisitions. These acquisitions have to meet three criteria: They
+must be strategically viable as described above, financially reasonable and culturally fitting. An acquisition thus
+has to strengthen Infineon's market position according to our strategic orientation and has to be a viable addition
+to our range of expertise. The business acquired has to increase our profit, contribute to our margin target of an
+average of at least 17 percent throughout the cycle and must earn a return at least equal to the capital costs. And
+finally the corporate culture of a potential acquisition candidate must be a good fit with Infineon's culture, ideally
+contributing valuable elements to it.
+Customer system
+Technological progress also enables completely new application areas in which broad commercialization is still
+pending. Sometimes the impulse for new applications comes from innovations in semiconductor technology
+(for example Time-of-Flight technology for 3D sensing technologies), sometimes groundbreaking concepts on the
+customer side require the development of suitable semiconductor solutions (such as the combination of various
+sensor technologies for easier Human Machine Interaction). We actively address these new business areas in order
+to secure a good starting position in highly promising future markets early on.
+22
+22
+Business focus Group strategy
+Our strategic approach "Product to System" goes well beyond thinking in terms of technologies and products.
+We want to understand what markets demand and how they are changing. Only then will we be able to understand
+how we can change the markets ourselves. Thus, we consider more than just the direct sales opportunities for our
+products: We also look at our customers' success factors and the development of end-markets. By doing so, we
+recognize at an early stage when the foundation of our business is changing. This is a prerequisite to act in time,
+guaranteeing sustainable differentiation in growth applications and increasing profit.
+Algorithms
+Technology leadership means added value for customers
+Firmware
+Apple
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+This is why innovation and system thinking ideally complement one another. We think about what the key factors
+are and how we can combine several innovative, sometimes at first sight minimal steps to form a larger whole that
+will in turn provide an additional and substantial benefit for the customer. Thus, today our claim to innovation
+covers all areas of our company: logistics, operations, technology, products, system solutions and partnership with
+the customer. Depending on particular market demands, we focus on different aspects. Several units within the
+Company act like start-ups, while others use a comprehensive approach to leverage new areas of differentiation.
+Of course, in doing so we implement the entire spectrum of possibilities and expertise that Infineon has to offer. This
+is all driven by a well-developed culture of collaboration, which is one of our permanent differentiating features.
+Innovation is one of the most fundamental success factors in the semiconductor industry and is for us an important
+basis for differentiating Infineon from competition. Infineon has shown time and again that our technological and
+product innovation lets us grow faster than the market and increase profitability. But challenges are growing as
+well: Competition is intensifying and competitive coverage of the application areas in our markets calls for a wider
+and wider technology portfolio. And development efforts are increasing disproportionally as technologies gradually
+approach physical barriers. This fact underlines the significance of economies of scale and the connection between
+technology leadership and size. Previous concepts for success are too shortsighted under these conditions and
+have to be either expanded or rethought.
+Innovation drives differentiation
+Many years ago we intentionally blazed new trails in the field of sensor technologies, anticipating the drastically
+increasing importance of environmental data in our target markets. Today we have a comprehensive portfolio of
+sensors for a wide variety of systems in the car, for mobile devices, consumer electronics and the Internet of Things.
+The example of the silicon microphone shows that we act flexibly and adapt to market demands: Today we offer
+our leading MEMS technology (Micro-Electro-Mechanical Systems) in our own package and we are working together
+with our partner XMOS to optimize hardware and software for reliable voice control.
+Based on our technology leadership in transistors, we also want to strengthen our position in solutions for power
+control and to expand our product portfolio. As the number one in MOSFETs and IGBTs, we see interesting opportu-
+nities for growing more strongly than before in this area. This approach is exemplary of the strategy outlined above
+for moving from a strong core business to penetrate adjacent markets.
+Furthermore, we make use of our technology leadership to systematically expand our abilities, strengthen our
+core business and grow in scope - for example, whenever the requirements of our markets change or when we see
+long-term growth potential in an adjacent business segment. Thus, as the market leader, we began researching
+new materials for power semiconductors at an early stage. SiC and GaN are particularly well-suited for use in the
+field of power electronics. These components are typically more expensive than silicon-based products, but thanks
+to new system architectures they also open the door to many new types of customer benefit, such as a smaller form
+factor, higher efficiency and lower system costs. The realization of these benefits implies higher research and devel-
+opment efforts on the part of our customers. Therefore, we support the introduction of these new technologies in
+two ways: On the one hand, we work together closely with our highly innovative customers, while on the other
+hand we provide less technology-oriented customers with solutions that are easy to implement. In the context of
+the increasing importance of SiC to certain power semiconductor applications, we concluded a long-term strategic
+wafer supply agreement with Cree, Inc. (USA) in February 2018. This ensures our supply of the most advanced
+150-millimeter diameter SiC wafers and prepares us for further structural growth in power semiconductors for
+automotive and industrial electronics. Now, we have established all the prerequisites for future success in the
+growing SiC market: access to high-quality wafers, leading technologies at the product level (Trench MOSFET) and
+module expertise.
+24
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+23
+Software
+Hardware
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Customers choose Infineon because we stand for competitive cutting edge technology in terms of the highest
+possible quality and reliability. Our engineers anticipate many challenges even before our customers are affected
+by them. We meet the highest quality requirements of the automotive industry, achieve the highest efficiency in
+power switching and deliver solutions for the most challenging security projects in the world. We are also capable
+of applying this specific expertise throughout the entire corporate network. One example: Since 31 March 2018, all
+new passenger car and light utility vehicle models in the EU have been required to feature an automatic emergency
+call function (eCall). This applies to approximately 20 million new cars annually. In case of an accident, eCall can
+autonomously send an emergency call via the cellular network to central emergency responders, providing for
+example location data, the exact time of the accident, the number of occupants in the vehicle and the type of fuel
+the vehicle uses. Normally, a SIM card would be needed in order to identify the vehicle in the cellular network. Now
+a permanently installed eSIM chip from Infineon does the job. In addition to the eCall, the eSIM also supports many
+additional functions that will make driving safer and more comfortable in the future – for example updating soft-
+ware over-the-air (SOTA), vehicle-to-infrastructure communication and on-board multimedia. In developing eSIMs,
+Infineon consolidates expertise from the areas security, telecommunications and automotive. Infineon already
+developed eSIM chips ten years ago and is today the leader in their automotive implementation.
+Finances and strategy
+In recent years we have intensified our activities in the area of software, both in strategic partnerships and with our
+own development activities. The progress we have made is becoming increasingly visible, benefitting our customers.
+For example, the second generation of our successful automotive microcontroller family AURIXTM can be used for
+radar signal pre-processing in combination with our radar chips. We have implemented this feature in hardware,
+but we were only able to do so because we understood the underlying algorithms.
+Technology know-how has always been the foundation of our business model, whether in the form of discrete
+components, integrated solutions or mixed-signal components. Our broad portfolio ranges from single compo-
+nents all the way to solutions with hardware-related software. This enables us to provide targeted support to our
+customers while choosing from a variety of approaches. Some customers want to differentiate themselves from
+their competitors by means of their own software and just purchase the necessary hardware from us. We go one
+step further with automotive microcontrollers and security controllers, which we supply with special firmware
+that supports the basic functionality of the hardware and cannot be modified. More extensive functions can then
+be implemented using additional program code. For example, the second generation of our digital motor control
+platform iMOTION™ was developed for use in major home appliances and comes with a development kit that meets
+the priorities of our customers in this market: lower system costs, compact design, reduced development effort,
+shorter development times and high reliability. iMOTION™ already comes with all algorithms required to control
+the electric motor. Only a small number of application-specific parameters need to be defined in order to complete
+programming. Since we think in terms of systems, we can support all of these different approaches. It is not always
+the most sophisticated solution that provides the biggest value added to the customer: Standard components may
+also be just the right fit. Nevertheless, system understanding creates a competitive advantage because it gives us
+the ability to develop better products in cooperation with our customers.
+Discrete components
+Competencies evolve over time
+Integration of analog
+and digital functionality
+System know-how
+Combined Management Report | Our Group
+18.6%
+The greatest growth potential is to be found in markets that are adjacent to our core business, which we have
+however as of yet not addressed at all or only partly. For example, here we can adapt existing technologies and
+products for additional applications with reasonable effort and can thus increase sales potentials. And in the appli-
+cation fields we have already addressed we can use our system understanding to grow the scope of our business
+with a broader portfolio of products and solutions to generate higher revenue. Thus, the core mentioned at the
+beginning is not to be regarded as a static portfolio of activities; much more the adjacent areas will in the mid-term
+become part of our core business. The core is growing and the boundaries are shifting, because when we make
+progress in particular markets in terms of technology, products and application understanding, the classification
+of these markets changes accordingly. To return to the example of power semiconductors: We are proud to cite
+"Power" as one of our original core competencies. But we are nevertheless continuously developing here, too. We
+are expanding our portfolio in order to offer our customers an increasing degree of intelligence in addition to
+"Power". This means for some time now we have been complementing our range of efficient power transistors with
+additional solutions in order to integrate them in a digital control loop. The products required for intelligent control
+of these switches tend to be more complex and higher-end because they integrate more functionalities. In the
+context of constantly more complex systems and shorter development times, many customers appreciate solutions
+in which we combine "Power" and intelligence.
+ZTE
+Toshiba
+Vivo
+Continental
+Bosch
+5.1 4.9 4.7 4.1 4.0 3.7 3.4 3.3
+5.9 5.9 5.5
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "OEM Semiconductor Spend Tracker - H1 2018," July 2018.
+Xiaomi
+Oppo
+Sony
+Panasonic
+Cisco
+HP
+G
+7.2 7.1
+8.1
+10.2 9.0
+13.0
+17.5
+Dell
+Huawei
+Lenovo
+Hitachi
+As a result of the major success of Chinese manufacturers in recent years, especially in the area of smartphones,
+the number of Chinese semiconductor purchasers increased from two in 2013 to seven in 2017: Lenovo, Huawei,
+Oppo, Xiaomi, Vivo, ZTE and TCL. With Bosch and Continental, there are two European companies represented in
+the top 20. The above-average growth rate of the automotive semiconductor market is evident in the development
+of Bosch. After a purchasing volume of US$2.7 billion and being ranked 19th in 2013, in 2017, Bosch moved up to
+position 14 with a purchasing volume of US$4.9 billion.
+Business focus
+Group strategy
+TCL
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Report," September 2018.
+4.7%
+4.9%
+5.1%
+9.0%
+Toshiba
+Mitsubishi
+STMicroelectronics
+ON Semiconductor
+Infineon
+World discrete power semiconductor and modules market share 2017
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The core business includes all those areas in which we have a comprehensive understanding of applications or
+master the base technologies, and in which we can therefore offer a differentiating product portfolio. Here, we want
+to at least grow with the market and, in doing so, to maintain or strengthen our leading positions (grow in scale).
+One example: Power semiconductors are instrumental in the generation, transmission and use of electric power.
+We understand the systems that are used for electric power conversion and we supply particularly compact and
+energy-efficient MOSFETs and IGBTs for this purpose. As the clear world market leader in this area, our broad tech-
+nology and product portfolio lets us actively shape the transition of certain applications to new semiconductor
+materials such as silicon carbide (SiC) and gallium nitride (GaN), offering our customers the ideal solutions for their
+needs. Our high-volume manufacturing offers economies of scale and makes it possible for us to provide manufac-
+turing capacities and to grow with our customers.
+Strengthening the core business and unlocking new growth markets
+Strategic guideline:
+21
+agriculture, for example, can achieve higher yields with more environmentally friendly methods. At the same
+time the digital transformation opens up new possibilities for consumers. The prerequisite for this is the protection
+of data exchange from abuse in order to ensure the acceptance of the ever-increasing degree of networking in
+our society.
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Semiconductors are essential in tapping renewable energy sources. They reduce the power consumed by electric
+devices; thanks to the developments described above, the number of these devices is constantly increasing.
+Furthermore, semiconductors enable systems that make transportation cleaner, safer and smarter, and they are the
+technological backbone of modern communication and data technologies. Answers to the challenges of our time
+would be unthinkable without the use of semiconductors. And this becomes even more true as the real and digital
+worlds converge. Digitalization and networks increase the productivity of industrial manufacturing processes.
+This development, also referred to as the Industry 4.0, reaches far beyond automation. Thanks to digitalization,
+According to the United Nations, a total of 8.6 billion people will be living on earth by 2030 - 1 billion more than
+today. Thanks to better healthcare and advances in medicine, people are living ever longer lives. At the same time,
+fossil fuels are becoming scarcer and current concepts – for example, for traffic, industry and communications
+infrastructure - are reaching their limits. Microelectronics plays a key role in providing a constantly growing popula-
+tion with energy and a higher standard of living while minimizing the impact on the environment. The key is making
+"more from less”.
+We want to continue to grow and to create value for our customers and our shareholders as well as for our employ-
+ees and for society. Therefore, our strategy follows global megatrends which are fundamentally shaping the world
+today: demographic and social change, climate change and scarce resources, urbanization and digital trans-
+formation. Our focus on energy efficiency, mobility, security, the Internet of Things (IoT) and Big Data opens up
+extraordinary growth opportunities for us that we want to leverage with innovative approaches. Our products
+and solutions contribute directly to mastering the major challenges of our time, which also makes us particularly
+attractive as an employer.
+Our Group strategy is focusing on the megatrends mentioned above and thus ensures Infineon's long-term struc-
+tural growth. Our course of action in the individual markets depends on our competitive position, which we analyze
+in terms of technologies, products and application understanding. This results in three possible categories to start
+with: Core business, adjacent business and new applications.
+Western Digital
+Samsung
+The Combined Management Report contains
+forward-looking statements about the business,
+financial condition and earnings performance
+of Infineon. These statements are based on
+assumptions and projections based on currently
+available information and present estimates. They
+are subject to a multitude of uncertainties and
+risks. Actual business development may therefore
+differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law,
+Infineon does not undertake any obligation to
+update forward-looking statements.
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Application Market Forecast Tool - Q3 2018," September 2018.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+2018 fiscal year | Business focus | Group strategy
+The 20 largest semiconductor buyers account for 44.3 percent of the entire purchasing volume, or US$191 billion.
+As with the semiconductor manufacturers, a small number of companies clearly leads the ranking list. Here, Apple
+and Samsung are by far the largest purchasers of semiconductors.
+Top 20 semiconductor consumer in 2017 calendar year
+Purchasing volume in billion US$
+40.9
+27.1
+(excluding China, excluding Japan)
+20
+Digital Security Solutions: €664 million 9%
+(6%)
+8%
+10%
+10%
+Revenue by segment in the 2018 fiscal year
+Digital Security Solutions
+Power Management & Multimarket
+Industrial Power Control
+Power Management & Multimarket:
+Automotive
+12% Europe, Middle East, Africa
+22% Asia-Pacific
+China 47%
+6.5
+6.1
+5.8
+5.2
+5.1
+Apple
+Samsung
+Intel
+SK Hynix
+0
+Micron
+Qualcomm
+Texas Instruments
+Toshiba
+Samsung, SK Hynix and Micron are the leaders in memory. Because of the boom in memory, the three companies
+also had the highest revenue growth rates of 53.6 percent, 81.2 percent and 79.7 percent, respectively. Intel is
+the leader in processors. Infineon is neither active in memory nor in processors, which means Infineon does not
+directly compete with these four companies in these product categories. Among the 20 largest semiconductor
+vendors, the following companies compete with Infineon: Samsung (only in security ICs; this revenue accounts for
+less than 1 percent of Samsung revenue), Texas Instruments, Toshiba, NXP, STMicroelectronics, Renesas and
+ON Semiconductor.
+The 20 largest vendors represented 74.4 percent (previous year: 70.5 percent) of global revenue. The remaining
+25.6 percent (previous year: 29.5 percent) are spread over more than 1,500 other semiconductor companies.
+The semiconductor industry is thus highly fragmented. The consolidation process has reached different levels,
+depending on the product category.
+In July 2018, the acquisition of NXP by Qualcomm, announced in October 2016, was cancelled. The planned
+acquisition of Qualcomm by Broadcom was also unsuccessful; it had been announced in November 2017 and was
+cancelled in March 2018.
+Looking at the regional distribution of semiconductor sales, China has been the dominant factor for many years.
+In the 2017 calendar year, 47 percent (previous year: 45 percent) of all semiconductors were absorbed by that
+market. In China, contract manufacturers - so called EMS (Electronic Manufacturing Services) - play a special role.
+These companies assemble electronic products predominantly for Western customers. The business model plays
+a significant role for durable consumer goods on the one hand and information and telecommunications sector-
+related products such as servers, PCs, notebooks and cellular phones on the other hand. A large portion of the
+semiconductors mounted in China are subsequently re-exported as part of a finished product.
+Global semiconductor sales 2017 by region (total market size US$430 billion)
+Americas 11%
+Japan 8%
+Broadcom
+6.9
+Revenue growth of the individual segments in the 2018 fiscal year compared to the previous year
+Revenue up by 8 percent; Segment Result Margin of 17.8 percent achieved
+62 Review of results of operations
+62 Group performance
+Our 2018 fiscal year
+Effective 1 October 2018, the "Chip Card & Security"
+segment changed its name to "Digital Security
+Solutions". The change in name has no impact on
+Infineon's organizational structure, strategy or
+scope of business.
+Industrial Power Control: €1,323 million 17%
+This report combines the Group Management
+Report of Infineon ("Infineon" or "Group") -
+comprising Infineon Technologies AG (hereafter
+also referred to as "the Company") and its
+consolidated subsidiaries - and the Management
+Report of Infineon Technologies AG.
+60 The Infineon share
+59 Sustainability at Infineon
+56 Internal management system
+67 Review of financial condition
+54 Operations
+45 Power Management & Multimarket
+47 Digital Security Solutions
+42 Industrial Power Control
+40 Automotive
+40 The segments
+39 Human Resources strategy
+20 Group strategy
+31 Growth drivers
+20 Business focus
+16 Finances and strategy
+16 2018 fiscal year
+Our Group
+50 Research and development
+In the 2018 fiscal year, Infineon generated revenue of €7,599 million, an increase of 8 percent over the previous
+year's figure of €7,063 million, and within the 9 percent plus or minus 2 percentage points forecast at the beginning
+of the fiscal year (see the chapter "Outlook”). With this performance, Infineon recorded significant revenue growth
+for the fifth fiscal year in succession. Revenue growth was driven above all by strong demand for semiconductors
+used in automotive, industrial, power supply, RF and sensor technology applications. Our segment with the highest
+volume, Automotive, contributed 55 percent or more than half of total revenue growth of €536 million. In contrast,
+the Digital Security Solutions segment recorded a 6 percent drop in revenue, mainly due to lower revenue from
+SIM cards for mobile communications (see the chapter "The Segments"). The underlying pace at which our business
+is growing was partly masked by the unfavorable development of the US dollar exchange rate, which averaged
+1.19 for the year. Had it remained at the previous year's level of 1.11, revenue growth in the 2018 fiscal year would
+have been 12 percent.
+70 Review of liquidity
+73 Outlook
+P see page 47
+P see page 73
+> Strong performance enables further dividend increase
+› Revenue and earnings significantly improved for the fifth year in succession
+2018 fiscal year
+16
+Finances and strategy
+2018 fiscal year
+Finances and strategy
+73 Report on expected developments, together with
+associated material risks and opportunities
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+94 Declaration concerning the management of the company
+95 Compensation report
+94 Corporate Governance Report
+section 315a, paragraph 1, of the German Commercial Code (HGB)
+91 Information pursuant to section 289a, paragraph 1, and
+91 Corporate Governance
+88 Infineon Technologies AG
+87 Overall statement of the Management Board with respect
+to Infineon's financial condition as of the date of this report
+76 Risk and opportunity report
+15
+Combined
+Management Report
+7.9
+11.9
+Infineon has not only grown strongly, it has also become more profitable. The Segment Result for the 2018 fiscal year
+totaled €1,353 million, 12 percent up on the €1,208 million reported one year earlier. The Segment Result margin of
+17.8 percent (2017: 17.1 percent) therefore exceeded the 17 percent forecast at the beginning of the fiscal year for
+the mid-point of the revenue forecast and was in line with our business targets, as revised during the course of the
+2018 fiscal year (see the chapters "Group strategy" and "Outlook").
+Improvement in key performance indicators
+Net income rose to €1,075 million due to the positive Segment Result contribution and the gain of €270 million from
+the sale of the major part of Infineon's RF power components business to Cree, Inc. on the one hand and higher
+expenses from discontinued operations and for income taxes on the other (see the section "Review of results of
+operations"). Compared to the previous year's figure of €790 million, net income improved by 36 percent.
+Earnings per share for the 2018 fiscal year amounted to €0.95 (basic and diluted), 36 percent up on €0.70 (basic and
+diluted) reported in the previous fiscal year. Adjusted earnings per share (diluted) improved from €0.85 to €0.98
+year-on-year (see the chapter "Review of results of operations" for details of the calculation of adjusted earnings
+per share).
+Free cash flow from continuing operations (see the chapter "Internal management system" for definition)
+totaled €618 million in the 2018 fiscal year, an increase of €24 million or 4 percent over the previous fiscal year's
+figure of €594 million. Investments in property, plant and equipment and intangible assets of €1,254 million (2017:
+€1,022 million) were lower than net cash provided by operating activities of €1,571 million (2017: €1,728 million).
+The Return on Capital Employed (ROCE) in the 2018 fiscal year amounted to 20.5 percent and therefore improved
+compared to previous year's 14.9 percent. The increase was mainly attributable to the year-on-year increase in
+operating income from continuing operations from €847 million to €1,263 million (for a definition of, and details
+relating to, the calculation of RoCE, see the chapters "Internal management system" and "Review of financial
+condition").
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+P see page 59
+P see page 59
+Combined Management Report | Our Group
+Finances and strategy
+Psee page 58
+P see page 69
+2018 fiscal year
+The gross cash position (see the chapter "Internal management system" for definition) totaled €2,543 million as
+of 30 September 2018, an increase of 4 percent compared to the previous year's figure of €2,452 million. The free
+cash flow from continuing operations of €618 million described above exceeded the combined total of the dividend
+payment for the 2017 fiscal year (€283 million) and long-term debt repayments (€321 million including the repay-
+ment of a €300 million bond relating to the financing of the acquisition of International Rectifier).
+The net cash position (see the chapter "Internal management system" for definition) increased by 64 percent to
+stand at €1,011 million at the end of the 2018 fiscal year (30 September 2017: €618 million).
+Planned dividend increase of 8 percent
+Our dividend policy is aimed firstly at enabling our shareholders to participate appropriately in the success of the
+business and secondly to at least keep the dividend at a constant level in times of flat or declining earnings.
+Based on the strong performance in the 2018 fiscal year, a proposal will be made to the Annual General Meeting
+(to be held on 21 February 2019) to pay a dividend of €0.27 per share, an increase of 2 cents or 8 percent.
+Dividend per share for the 2010 to 2018 fiscal years
+in € cents
+271
+25
+18
+22
+P see page 58
+P see page 62 ff.
+0
+43% Automotive: €3,284 million
+0% Other Operating Segments,
+Corporate and Eliminations:
+€10 million
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+2018 fiscal year
+China has been Infineon's most important sales market for several years now and, with €1,921 million, accounted
+for 25 percent (2017: 25 percent) of Infineon's revenue during the fiscal year under report. This is followed as
+largest single market by Germany with revenue of €1,171 million and a 15 percent share (2017: 15 percent), the
+USA with €719 million and a 9 percent share (2017: 10 percent) and Japan with €534 million and a 7 percent share
+(2017: 7 percent).
+Infineon revenue by region in the 2018 fiscal year
+P see page 66
+Americas 12%
+Greater China¹ 34%
+1 Greater China includes China and Taiwan.
+17% Europe (excluding Germany),
+Middle East, Africa
+15% Germany
+15% Asia-Pacific
+(excluding Japan, Greater China)
+17
+Psee page 29 f.
+and page 73 f.
+Japan 7%
+8.9 8.6 8.3 8.2 8.1
+20
+12
+Revenue in billion US$
+62.0
+61.4
+26.6
+22.8
+....17.8 16.9 14.5
+NXP
+nVidia
+10% market share
+Top 20 semiconductor manufacturers for 2017 calendar year
+5% market share
+ON Semiconductor
+AMD
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Competitive Landscaping Tool - 2018 (Q2 Update)," August 2018.
+Foundries and subcontractors are not included in this market research.
+STMicroelectronics
+Western Digital
+Infineon
+Media Tek
+Renesas
+Sony Semiconductor
+Analog Devices
+18
+2018 fiscal year
+Combined Management Report | Our Group
+12
+12
+10
+2010
+2011
+2012
+2013
+2014
+2015
+Finances and strategy
+2016
+2018
+1 Proposal to the Annual General Meeting to be held on 21 February 2019.
+Developments in the semiconductor industry
+Evaluation of the 2018 fiscal year (in Euro)
+Worldwide semiconductor revenues totaled €392.020 billion in the 2018 fiscal year (Source: World Semiconductor
+Trade Statistics (WSTS)). This represents an increase of 10.8 percent compared to the previous year's value of
+€353.966 billion. As in the previous year, this increase is attributable to the increase in prices in the memory product
+category. This product category, which essentially includes DRAM and flash memory products, increased by
+34 percent to €133 billion accounting for approximately 34 percent of the entire semiconductor market. The semi-
+conductor market excluding memory products increased by 1.7 percent. During the same period Infineon increased
+its revenues by 7.6 percent.
+Evaluation of the 2017 calendar year (in US dollars)
+In the 2017 calendar year, worldwide semiconductor revenues reached US$429.674 billion, an increase of 21.9 percent
+compared to US$352.597 billion in the previous year (Source: IHS Markit). Only the four largest competitors had a
+market share of more than 5 percent. Samsung had revenue of US$62.031 billion representing 14.4 percent market
+share, and Intel had revenue of US$61.406 billion representing 14.3 percent market share. Far behind them were
+the two memory manufacturers SK Hynix (revenue of US$26.638 billion; market share of 6.2 percent) and Micron
+(revenue of US$22.843 billion; market share of 5.3 percent). With revenue amounting to US$8.148 billion and a market
+share of 1.9 percent, Infineon was ranked number 13.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+19
+2017
+Content
+€2,318 million 31%
+Power supplies
+The use of renewable sources is the key to a sustainable energy supply. Infineon benefits from the fact that wind
+power turbines and solar power plants require a multiple of power semiconductors per gigawatt of power gener-
+ated as compared to conventional power plants. In contrast to coal, natural gas or nuclear power plants there is no
+synchronized turbine generating constant 50 hertz alternating current. This means that the generated electricity
+cannot be fed directly into the grid and power-electronic conversion systems are required. Infineon supplies all the
+major manufacturers of wind power turbines and solar inverters.
+Wind
+Here, two trends in particular drive the demand for semiconductors: First of all older, lower performing wind power
+turbines are being replaced by modern, high-performance ones, a process referred to as "repowering". Secondly,
+ever stronger generators are being used in new installations. While in the past primarily turbines generating up to
+1.5 megawatts were installed, today an increasing majority of turbine generators producing 2 to 3 megawatts is
+being used. Future projects will include turbines with an output of 5 megawatts.
+Solar power
+Infineon enjoys a very broad international presence and has been partnering for years with the world's leading
+manufacturers of solar inverters. Among other things, we benefit from the growth of Chinese inverter manufacturers,
+both with regard to the domestic expansion of solar power in China and to the export to other regions. Further-
+more, we work together closely with leading European manufacturers who are also very successful in the USA.
+Efficient conversion and low system costs contribute to reducing electricity generation costs in solar power plants
+and to achieving grid parity with conventionally generated electricity. This enables continued expansion of solar
+power, even without subsidies.
+Energy storage
+The use of renewable energies entails specific requirements along the entire energy supply chain. Generating
+electricity by wind and sun no longer takes place centrally in a small number of sites, but rather decentrally at many
+different locations. In addition, fluctuations in power generation cannot always be aligned with current power
+demand patterns, making temporary storage necessary. This also makes it possible to reduce costs associated with
+conventional power plants which have in the past been maintained as replacements or reserve capacity to supple-
+ment sustainable energy sources. For the period between 2017 and 2025, market researchers forecast average
+annual growth in storage capacity of 22 percent, to approximately 9,200 megawatts.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Renewable energies
+P see page 37 ff.
+Finances and strategy
+Business focus | Growth drivers
+32
+AC-DC conversion
+Growth in the area of power supplies depends on the performance and even more on the unit growth of devices.
+We see the highest unit growth in the case of servers; because of the high performance level, a correspondingly
+high number of power semiconductors is required for power supplies. Demand for computing power and storage
+capacity is currently driven by social networks and increasingly by machine learning. The Internet of Things and
+Industry 4.0 will accelerate this trend even more in the future. In addition, we see growth opportunities in business
+with compact chargers and solutions for wireless charging of smartphones, tablets and lightweight notebooks
+(or "portables").
+DC-DC conversion
+Intelligent Point-of-Load power management is becoming increasingly important in DC-DC conversion. Servers,
+PCs and communication devices are supplied with higher voltages which are then precisely stepped down to the
+required low voltages directly at the processor. Another growth driver is the digitalization of the control loop. The
+requirements for dynamics, efficiency and standby consumption continue to increase. Analog control loops are
+increasingly reaching their limits and are being replaced by digital systems.
+(Smart) Motor control and drives
+Combined Management Report | Our Group
+Energy Efficiency
+31
+There are numerous application areas with strong growth dynamics in each of the four main trends addressed
+by Infineon - Energy Efficiency, Mobility, Security and the Internet of Things together with Big Data. We achieve
+sustainable growth by addressing these applications with our solutions.
+90
+80
+17.02
+10|2017 11|2017 12|2017
+01|2018
+02|2018
+03/2018 04|2018 05|2018 06|2018
+07|2018
+08 |2018
+09|2018
+Infineon
+DAX
+■SOX
+Dow Jones US Semiconductor Index
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus | Growth drivers
+Growth drivers
+Automation
+Electric drives are at the heart of a large number of systems, for example cranes, conveyor belts and robots. They are
+used wherever something has to be moved or transported. Electric motors account for approximately 28 percent of
+worldwide electric power consumption. The savings potential is correspondingly large when efficiency is increased.
+One possibility for reducing the power consumption of an electric motor is the use of an electronic control unit for
+speed control, adapting the power supplied to the actual performance required. The market penetration of variable
+speed drive motor control units will increase. Their implementation requires a large number of the power semicon-
+ductors. Their quantity and value depend on the motor's performance class. The next level of automation will be
+achieved with Industry 4.0. This will in turn trigger a new investment cycle, including collaborative robots; see below
+in the section "Internet of Things & Big Data".
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Electric drives are at the heart of a large number
+Transition from internal combustion engine vehicles to hybrid electric vehicles increases demand for power semicon-
+ductors in the drivetrain by a factor of ~19
+in US$
+740
+Increase by a
+factor of ~19
+375
+17
+44
+314
+317
+Drivetrain power semiconductors
+109
+Drivetrain non-power semiconductors
+314
+Semiconductor value in internal
+combustion engine vehicles
+Semiconductor value
+in FHEV/PHEV
+Source: Strategy Analytics, "Automotive Semiconductor Demand Forecast 2016-2025," May 2018; Infineon
+Other features (power and
+non-power semiconductors)
+There are also what are referred to as mild-hybrid vehicles, based on 48 volt technology. These vehicles can
+recuperate a certain amount of braking energy, while at the same time emissions can be reduced by more efficient
+systems. Mechanical functions are being increasingly replaced by electric ones. The 48 volt onboard system handles
+the power supply for higher-performance systems such as the electric turbocharger, electric power-steering and
+electronic stability control and enables better braking energy recuperation. Market researchers calculate approxi-
+mately US$75 in additional power semiconductors will be necessary to power these systems as well as for the
+coupling of the two on-board power networks.
+Vehicles with electric drivetrain have a significantly
+larger semiconductor content than vehicles with
+combustion engines.
+In order to reduce the fleet average to the mandated target CO2 value, many car manufacturers add hybrid or
+electric vehicles to their product portfolio. These vehicles have a significantly higher semiconductor content than
+conventional cars. Infineon offers a wide range of corresponding power semiconductor components. While the
+current average semiconductor content of a car with a conventional combustion engine is US$375, the amount in
+full or plug-in hybrid vehicles is US$740, and for pure electric vehicles as much as US$750. Here, power semicon-
+ductors make up approximately three quarters of the additional semiconductor content.
+100
+3.
+Business focus | Growth drivers
+of systems, such as cranes, conveyor belts and robots.
+Combined Management Report | Our Group
+Finances and strategy
+Business focus | Growth drivers
+33
+Major home appliances
+The manufacturers of home appliances are also increasingly relying on variable speed drive motors using inverters.
+These motors are significantly more energy-efficient, emit less noise and have a longer service life than motors
+without speed-control. And: The value of the semiconductors they contain is increasing more than ten-fold. Examples
+are the motors in washing machines and dishwashers, the compressors in refrigerators and the fans in air condi-
+tioning systems. Only about one third of all major home appliances sold in 2017 had a speed-controlled motor. Market
+researchers predict that this ratio will double by 2022: By that time, approximately 65 percent of the machines sold
+will feature a variable speed drive.
+Battery-powered devices
+One important type of electric motor is referred to as brushless direct current (BLDC) motor. In BLDC motors the
+commutation is electronic, depending on rotor position, rotor rotation speed and torque. This calls for the appro-
+priate power semiconductors and, depending on the configuration, also for components for diagnostic and security
+functions. Because of their high level of energy efficiency and their low power-to-weight ratio, BLDC motors are
+particularly well-suited for use in battery-powered systems. Examples here are cordless home appliances such as
+robot vacuum cleaners, cordless drills and electric lawn mowers. In addition to the motors, the storage batteries are
+also becoming lighter and lighter, enabling longer operating times. This makes battery-powered devices increas-
+ingly interesting for professional craftsmen as well.
+The same applies to drones. The popularity of these remote-controlled aircraft has long gone beyond the ranks
+of amateur pilots: Drones are now being used more and more frequently for commercial purposes. Drones require
+a large number of semiconductors to control the direct current motors, from microcontrollers to sensors, drivers
+and MOSFET power transistors, all the way to radio-frequency components for navigation, collision avoidance and
+communication.
+In addition, all the examples cited above also require power semiconductor components for their charging stations.
+Mobility
+Global population growth and increasing industrialization are driving the demand for all types of transportation.
+From forms of mass transportation such as aircraft and trains to privately used vehicles like cars and pedelecs
+(pedal electric cycles). Cars are considered status symbols and are the key to individual mobility. An annual average
+growth rate of 2 percent is forecast for worldwide automobile production for the years 2017 to 2022.
+Infineon benefits from this trend in two ways: From the increased number of vehicles and, even more so, from the
+corresponding growth in the number of electronic systems per vehicle. Today, approximately 90 percent of innova-
+tions in vehicles are based on electronics. In the opinion of market experts, this share should stay at this level in the
+years to come.
+Electro-mobility
+The automotive industry is continuously working to reduce emissions. A European Commission regulation requires
+the reduction of average fleet emissions to 95 grams of CO2 per kilometer by 2021. More realistic exhaust gas testing
+procedures such as the WLTP cycle (Worldwide Harmonized Light-Duty Vehicles Test Procedure), in effect since 2017,
+mean further, implicit tightening of CO2 abatement rules. This will in turn increase demand for semiconductors. The
+optimization of the combustion engine alone will not be sufficient to fulfill legal requirements and satisfy customer
+demands for sustainable mobility. Instead, systems consuming energy in the vehicle will increasingly have to be made
+more efficient, and hydraulic or mechanical solutions will have to be replaced by more efficient electromechanical
+and thus semiconductor-based systems.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+34
+110
+120
+19.14
+Finances and strategy
+Business focus Group strategy
+27
+Psee page 31 ff.
+Strategic deployment of the segments
+Infineon is today organized in four segments with their strategic orientation being derived from the Group strategy
+described above. This structure has proven effective over many years. All activities are primarily allocated to one
+of four overarching topics. Automotive is responsible for business with semiconductors for automotive electronics.
+Industrial Power Control concentrates on power semiconductors for industrial applications, while Power Manage-
+ment & Multimarket addresses the more consumer-oriented applications and power supplies in general. Activities
+relating to traditional and new security applications are consolidated in the Digital Security Solutions segment.
+These assignments are not to be understood as rigid organizational boundaries. Since our markets continuously
+converge, we adapt our procedures accordingly and collaborate on an increasingly topic-oriented basis. Further-
+more, the digital transformation also calls for new approaches. Teams from different organizational units work
+together beyond their usual roles of authority by taking on or delegating responsibilities themselves. This also
+means that the trends and growth drivers we describe in this Annual Report (see the chapter "Growth Drivers")
+often affect multiple segments. In such cases, one segment retains global ownership of the overall application, while
+responsibility for the necessary technologies and products remains with the organizational units they originate
+from. For example, electro-mobility affects Automotive the most; thus Automotive also has system responsibility.
+Nevertheless Industrial Power Control and Power Management & Multimarket also benefit from the implementation
+of the necessary charging infrastructure.
+Automotive
+The segment Automotive has more than 40 years of experience in the field of automotive electronics.
+We focus on the core of the car: drivetrain, safety, comfort. We benefit more than other semiconductor manufacturers
+both from the trend towards electro-mobility and the development towards automated driving. Both trends are
+greatly increasing the average semiconductor content per vehicle and are expected to account for approximately
+half of our growth in the Automotive segment over the next five years. In addition, we also continue to benefit from
+new functions in the areas of lighting, comfort and safety as well as from the further electrification of conventional
+car functions.
+Our industry-wide leading portfolio of power semiconductors, sensors and microcontrollers puts us in an excellent
+position on the one hand to address the systems of today and on the other hand to actively shape the transformation
+of the automotive industry. We are the undisputed market leader in silicon-based IGBTs and IGBT modules; our
+expertise pushes the development of silicon carbide-based power semiconductors forward. As the number two in
+the area of sensors, today we already benefit greatly from the continuously increasing number of driver assistance
+systems. As the degree of automation increases, so does the number of sensors per vehicle. In the long-term radar
+systems will be enhanced by including additional sensor technologies, a development we are anticipating for
+example with the development of a Lidar (light detection and ranging) solution. And with the microcontrollers of
+the AURIX™ family we benefit from the trend towards higher levels of automation. These devices control electronic
+systems (for example steering and braking systems) and work as a host controller that ensures the functional safety
+of central computing platforms.
+Industrial Power Control
+The segment Industrial Power Control specializes in the efficient conversion of electric energy along the entire supply
+chain (generation, transmission and consumption) with a focus on electric drives. The applications range from the
+wind power turbine to high voltage direct current transmission (HVDC), energy storage systems and all the way to
+the refrigerator.
+Strategically speaking, discrete IGBTs, IGBT bare dies, which the customer develops further himself, IGBT modules
+and the associated drivers form the core business of Industrial Power Control. Infineon is the world market leader
+for IGBT-based power semiconductors (discretes and modules). We want to further expand this position and to take
+advantage of economies of scale in both research and development and in manufacturing. We are strengthening
+this core by pursuing technology leadership in silicon carbide as well and leveraging this to create an attractive
+product portfolio for our customers.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus Group strategy
+28
+Industrial Power Control uses know-how relating to the application of IGBTs to realize additional growth potentials
+in adjacent product areas. This applies on the one hand to products for digital power control, including the devel-
+opment of driver algorithms, and on the other hand to what are called Intelligent Power Modules (IPM), i.e. the
+combination of controller, driver and switch.
+Combined Management Report | Our Group
+Based on this portfolio, Industrial Power Control addresses especially high-growth application fields such as
+industrial automation, renewable energies and home appliances. At the same time, the portfolio serves emerging
+applications for power semiconductors such as the charging infrastructure for electric vehicles and electrified
+commercial and agricultural vehicles.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Going forward we will address more customers with more flexibility and innovative go-to-market strategies. Histori-
+cally, Infineon has grown through close collaboration with key customers, with whom we have successfully defined
+products that enabled us to penetrate the broad market thereafter. We reach many of our smaller customers through
+distributors. We will increase our leverage of the enormous potential of the distribution channel with standardized
+but configurable standard products for the mass market. Here we have made good progress by emphasizing short-
+term delivery reliability, continuous and tailored adjustment of the product portfolio and close partnership with
+distributors.
+Combined Management Report | Our Group
+Finances and strategy
+Business focus Group strategy
+25
+25
+Here, the digital transformation plays a crucial role, a development from which we benefit in two ways as a globally
+active semiconductor manufacturer: As both a user and provider of digital solutions. We are achieving excellent
+results in our well over one hundred digitalization projects. Thus for example we are connecting our sites and orga-
+nizing our global supply chain to form a virtual factory. In sales and marketing we are using new methods for ana-
+lyzing Big Data to improve our cross-selling and as a result we can provide more targeted solutions for our customers'
+needs. With initiatives like this we are building our digital expertise and are becoming even more competitive. We
+are following an exploratory approach in order to best utilize the potential of the digital transformation. This way
+we gather experience based on specific application cases and work towards solutions in an iterative process.
+Digitalization thus on the one hand provides the opportunity to optimize the value added. On the other hand we
+can see that digitalization creates a significant revenue potential in our markets, for example in the area of auto-
+mated driving and in voice and gesture control for devices and machines. Manufacturers are competing to address
+emerging markets as early as possible and with the most innovative solutions. This generates demand for the
+corresponding semiconductor solutions; we serve this demand with our portfolio of sensors, microcontrollers,
+power semiconductors and security controllers as well as with specific software, differentiating ourselves from
+our competitors.
+At our new development center in Dresden (Germany) we will continue to make our portfolio more attractive in the
+future. Here, the primary focus is on the development of solutions for automotive and power electronics as well
+as for Artificial Intelligence (AI). In light of the increasing degree of connectivity found in traffic systems, algorithms,
+Al and the Internet of Things already play a central role today. In the long-term we will use this know-how to offer
+Al solutions in other target markets as well. Dresden combines development, design and manufacturing. Here we
+are leveraging synergies and are in a position to develop new products and bring them to market faster.
+Strategic advantages through in-house manufacturing
+All our actions are aimed at creating value for the customer and at opening up opportunities for differentiation to
+us. This also applies to manufacturing. We manufacture in-house, provided we can thereby differentiate ourselves
+from the competition in the market through lower cost or higher performance. On the other hand, when it comes to
+standard technologies, usually in the case of highly-integrated products such as microcontrollers and chip card ICs,
+we primarily work with contract manufacturers. We thereby utilize our invested capital in the most efficient way
+possible and optimize our investments in research and development.
+In many application areas, for example, in power electronics and sensor technologies, our manufacturing methods
+and our process expertise give us a strategic advantage because we can offer components that can only be pro-
+duced using leading-edge manufacturing technologies. Several years ago we were the first company in the world
+to develop highly-integrated circuits for the 77 gigahertz frequency range based on innovative silicon germanium
+technology. This cuts the cost of radar systems, which as a result are used more widely in vehicles outside of the
+premium segment, making street traffic safer.
+In the frontend our 300-millimeter thin-wafer manufacturing for power semiconductors is a sustainable competitive
+advantage. We are successively equipping the available cleanroom space in Dresden (Germany) with additional
+tools, and benefit from the resulting higher productivity and lower capital intensity compared to manufacturing on
+200-millimeter wafers. Furthermore, on 18 May 2018 we announced the construction of a second, fully automated
+300-millimeter factory at the Villach (Austria) site. As the market leader in power semiconductors, we thereby lay
+the foundation for long-term, profitable growth. We will invest approximately €1.6 billion over a six-year period.
+Construction work began in November 2018, manufacturing is planned to start at the beginning of 2021. We expect
+the 300-millimeter manufacturing cleanroom space in Dresden to be fully used by then. The estimated additional
+potential revenue from the new factory is approximately €1.8 billion annually. In Villach we will rely on the auto-
+mation and digitalization concepts from Dresden and will develop them further in parallel in order to increase
+productivity and ensure system and process synergies at both sites. By significantly expanding our manufacturing
+capacities we are also sending a clear signal to our customers: Infineon is the ideal partner for future growth.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus Group strategy
+26
+46
+Construction of a new 300-millimeter factory at
+the Villach site is underway. It will offer an annual
+potential revenue of approximately €1.8 billion.
+In addition to innovation, delivery reliability, quality and cost reduction are essential factors in the orientation of
+our manufacturing landscape. Innovation activities with regard to manufacturing processes are centered in Europe.
+Our Asian sites focus on efficiency and will support further growth. We have increased capacity in our second pro-
+duction module in Kulim (Malaysia) as planned. This helps us ensure our delivery reliability, particularly important
+to our customers in the automotive industry. The strong expansion in the area of electro-mobility results in increased
+demand for power semiconductors. During the previous fiscal year we founded a joint venture with SAIC Motor
+Corporation Limited for the backend manufacturing of power semiconductor modules. The joint venture SIAPM
+(SAIC Infineon Automotive Power Modules (Shanghai) Co, Ltd.) provides power semiconductor solutions for electric
+vehicles in China, the world's largest and fastest-growing market for electro-mobility. Volume production has
+ramped at the Infineon Wuxi site since August 2018. As the largest automobile manufacturer in China, SAIC Motor is
+a very good partner when it comes to further strengthening and expanding Infineon's position. Consolidating our
+strengths lets us significantly increase our manufacturing capacities and supply the growing demands of the overall
+Chinese market. Together we want to expand and strengthen our businesses, with products that are tailored to the
+needs of the Chinese electric vehicle industry.
+Flexible go-to-market strategies accommodate rapidly changing markets
+Digitalization and the Internet of Things will create new business models. From the thermostat all the way to the car,
+today more and more devices are connected with the internet and as a result offer new functionality. The manufac-
+turers usually concentrate on making these devices “smart” with the best possible sensing and data processing
+capability. They are neither able nor interested in dealing with the underlying semiconductor technologies. We
+want to make our products and solutions more easily available to these vendors, for example, through optimized
+product bundles and support in the form of reference designs. Here in particular, our system understanding makes
+the difference. At the same time, we are engaging in networks consisting of distributors, development service
+providers and manufacturing service providers. These networks enable smaller companies and start-ups to jointly
+develop and manufacture electronics for new functions and new devices and thus make the Internet of Things
+a reality. This broad sales strategy lets us maximize revenues with existing technologies while at the same time
+increasing the yield of our investments in research and development.
+In addition to CO2, hazardous substances such as nitrogen oxides (or NOx) are catching more and more attention.
+They are produced when fossil fuels are burned and result in a higher level of particulate matter pollution, in addition
+to a number of other factors. In metropolitan areas, diesel engines account for the largest share of NOx emissions,
+which is why some cities have already banned older diesel vehicles. The prospect of not being able to drive at
+all in such diesel-free urban zones or only with restrictions will influence the customer's purchase decision and
+represents a medium to long-term competitive disadvantage for the diesel compared to other propulsion types.
+Power Management & Multimarket
+In power semiconductors, Power Management & Multimarket has leading technologies for low (up to 40 volts),
+medium (from 40 volts to 500 volts) and higher voltages (over 500 volts). Together with the corresponding drivers,
+the MOSFETs of the CoolMOSTM and OptiMOST families form the primary focus of the Power Management &
+Multimarket power semiconductor business. Applications with the highest growth for these products include
+battery-powered devices (usually in combination with brushless DC motors). In the worldwide MOSFET market,
+Infineon is the clear number one and benefits from economies of scale both in terms of research and development
+and in manufacturing. The portfolio of silicon-based power semiconductors is supplemented by switches based
+on gallium nitride.
+Business focus Group strategy
+30
+30
+In coming years, we also plan to invest a low triple-digit million amount in order to take advantage of possible addi-
+tional business opportunities and follow structural changes. These investments are not included in the 15 percent
+ratio described above. In addition, we have already announced investments in front-end cleanrooms and large office
+buildings, including the 300-millimeter cleanroom and the research and development building at the Villach site
+(Austria). In the 2019 fiscal year, around €200 million of this will accrue. If these measures are implemented, the
+investment rate will temporarily be significantly higher than the rate provided in the target operating model.
+The investment-to-sales ratio in the previous fiscal year was 16.5 percent.
+Capital structure targets demonstrate our reliability
+It is important to our customers that Infineon remains a dependable partner that will also be able to supply reliably
+for many years to come, thus enabling their growth. Our debt providers rely on our ability to securely service our debt
+over a long period of time. As an employer, we also want to give this kind of long-term reliability to our employees,
+even well beyond their active working lives in the form of retirement benefits. As a result we give a high priority to
+solid creditworthiness. This is reflected by our conservative capital structure targets.
+Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount of €1 billion provides a
+solid liquidity reserve for contingent liabilities and retirement fund liabilities, which are independent of revenue.
+Furthermore, 10 to 20 percent of revenue means we always have access to enough cash to be able to finance the
+operating business and development activities for the future during all phases of the business cycle.
+The upper limit on our gross financial debt is twice Earnings Before Interest, Tax, Depreciation and Amortization
+(EBITDA). Our moderate debt level and the well-balanced maturity profile reaching until 2028 allow us to reliably
+service our debt, independent of the respective capital markets environment.
+The rating agency S&P Global Ratings (S&P) continues to evaluate Infineon's creditworthiness as "BBB" (outlook
+"stable"). At present this gives Infineon the best S&P rating of any European semiconductor manufacturer.
+Sustainable value creation for our shareholders
+Our strategy has paid off: Infineon continues its path of sustainable, profitable growth. Our operating profitability
+and our sound capital structure give us the financial flexibility to invest in future growth. This continuous value
+creation has been manifested in past years in constantly increasing earnings per share as well as dividends. We also
+pursue a dividend policy aimed at letting shareholders adequately participate in Infineon's economic development
+and at paying out at least a constant dividend even in periods of slower growth.
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2018 fiscal year (daily closing prices)
+Infineon share price in €
+27.65
+30 September 2017 = 100
+130
+25.52
+23.40
+21.27
+Finances and strategy
+The Power Management & Multimarket segment covers business with power semiconductors for power supplies,
+components for cellular infrastructure and mobile devices as well as with high-reliability components for application
+in harsh environments.
+Combined Management Report | Our Group
+Our planning is oriented towards providing the necessary manufacturing capacities for the expected growth.
+The accelerated growth is in particular driven by strong demand for power semiconductors, a field in which
+Infineon's in-house manufacturing provides competitive differentiation. As a result, we have adjusted the targeted
+investment-to-sales ratio. Annual investments should be an average of 15 percent (previously 13 percent) of
+revenue. This continues to include approximately 2 percentage points for the capitalization of development
+expenses in accordance with IFRS; the bulk of the remainder is for the most part accounted for by investments
+in manufacturing facilities and IT equipment. The targets for growth and investment are closely intertwined.
+A revenue growth rate increase/reduction from the 9 percent level would entail a slightly less than proportionate
+change in the investment-to-sales ratio.
+In addition, Power Management & Multimarket continuously expands its product portfolio for (digital) power
+control and places its focus on technologically adjacent markets, for example Point-of-Load controllers for data
+centers and Class D audio amplifiers. We expanded our Class D audio amplifier portfolio in the previous fiscal 1 year
+with the acquisition of the Danish start-up company Merus Audio.
+In radio-frequency and sensor business - the second mainstay of Power Management & Multimarket besides
+power semiconductors - Infineon has a strong technological basis with MEMS (in particular silicon microphones),
+Time-of-Flight for 3D camera applications as well as radar and is today already very successful in the respective
+markets. At the same, time this expertise can be used in an increasing number of application fields that are
+expected to take off in the coming years, for example Human Machine Interaction (HMI) and facial recognition.
+Furthermore, Power Management & Multimarket offers radio-frequency components that can be used for example
+for low noise amplification in mobile telephones and for communication between mobile devices and base stations.
+Digital Security Solutions
+The segment Digital Security Solutions has 30 years of experience in the world's most demanding and largest digital
+security projects. The foundation of our activities is comprehensive expertise in traditional smartcard applications.
+We leverage the core competence for payment cards and government IDs in the high-growth area of embedded
+security applications. This is because digitalization is penetrating more and more areas of everyday life – and secu-
+rity is becoming a crucial aspect for many applications, for example in the areas of computing, automotive security,
+Industry 4.0 and the Smart Home. Unlike in the business with card-based security solutions, our customers here
+tend to have lower security expertise. This makes it particularly important to understand the customers' systems
+and to offer security solutions which are easy to integrate.
+In addition to its role as an independent business unit, the Digital Security Solutions segment has a second important
+function within the Group: Supporting the three other segments - as a kind of competence center - with the integra-
+tion of security as a function in their system solutions and in doing so creating additional potential for differentiation.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus Group strategy
+29
+29
+P see page 31 ff.
+Financial targets underline our growth ambition
+We assume that, in the upcoming years, several structural trends will continue to drive our growth, in particular
+electro-mobility, renewable energies, manufacturing automation, data centers and an increasing number of
+battery-powered, connected devices (the description of the most important growth drivers follows in the next
+chapter) - in some cases even more so than in the past. Thanks to our leading technologies, our understanding of
+applications and systems and our differentiating expertise in manufacturing, we have achieved an outstanding
+position in these markets. We want to take advantage of the resulting opportunities and to continue to outgrow the
+respective markets. We are making targeted investments for this purpose.
+In this context we have adapted our target operating model during the previous fiscal year.
+Target 1:9 percent average annual growth in revenue (previously 8 percent)
+We hold leading positions in our core markets and have systematically entered adjacent markets in the past. Our
+four segments are positioned to capitalize on the megatrends mentioned earlier, which are driving a steady and in
+some cases even an accelerating demand momentum for our products. Our strategic approach "Product to System"
+helps us develop better solutions with our broad technology and product expertise and thus to create significant
+added value for our customers who are willing to pay more for solutions that are worth more. Furthermore, we are
+using tailor-made go-to-market strategies to broaden our customer base and generate more business. In the 2018
+fiscal year, revenue increased by 8 percent compared to the previous year. Assuming a constant exchange rate for the
+US dollar, this would have been 12 percent. In the context of the high level of customer demand, we expect revenue
+to increase by 11 percent plus or minus 2 percentage points in the upcoming 2019 fiscal year. Following a period of
+such elevated growth, we expect an average annual revenue growth of 9 percent. Infineon is thus continuing its
+growth path of almost two decades: Since being established as an independent corporation in 1999, our business in
+its current perimeter has grown organically, i.e. without taking the revenue boost resulting from the acquisition of
+International Rectifier into account, with an average annual rate of approximately 9 percent.
+Target 2: 17 percent Segment Result Margin through the cycle gradually improving (previously 17 percent)
+Growth is only one prerequisite for sustainable success. Another criterion is profitability. When we work profitably on
+a sustainable basis, it means that we steer our developments to the point where they provide the highest benefit
+to our customers who are then willing to pay for them. In addition, we want to continue our development activities
+at unabated speed even in difficult market phases. We want to achieve an average Segment Result Margin of
+17 percent of sales through the cycle and plan to gradually improve it. Here, we are relying among other things on
+economies of scale and on cost advantages from the increasing share of 300-millimeter in our total manufacturing
+volume as well as on a disproportionately lower increase in operational costs. Research and development expenses
+will increase in line with revenue. Selling expenses will increase by 90 percent of revenue growth and general and
+administrative expenses by 60 percent thereof. Also, technology leadership and the strategic approach "Product to
+System" enable us to maintain a higher degree of differentiation. In the 2018 fiscal year we achieved a Segment
+Result Margin of 17.8 percent.
+Target 3: Investments amounting to 15 percent of revenue (previously 13 percent)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Digitalization is also changing the way we work together. In this context we have established successful new concepts
+that do not follow a hierarchical principle, but rather are based on the initiative of the individual employee. In the
+long-term, this calls for new processes and methods that can accommodate new working and management styles.
+> Escalators
+Home appliances, accounting for approximately 20 percent of revenue and in the meantime the second-largest
+business, also achieved revenue growth significantly above the segment average. Revenue in this business has
+more than doubled in the last three years. Primarily responsible for this success are both our IPMS (Intelligent
+Power Modules) of the CIPOSTM family and the motion control components of our iMOTION™ family. We supply
+reference designs and ready-to-use solutions for these compact modules. They are used in home appliances of
+all types, from hair dryers to washing machines all the way to air conditioning systems. The market acceptance
+for our products is also evidenced by the increase of our market share for IPMs. With almost 40 percent growth
+compared to 2016, this product category increased in the 2017 calendar year twice as fast as compared to the
+market (see the section "Market position").
+Renewable energy declined slightly. In China, by far the largest country for photovoltaics and responsible for
+approximately half of worldwide new installations, a stagnation resulted from the announcement by the Chinese
+government at the beginning of June that the new installations would be limited to approximately 50 gigawatts in
+the 2018 calendar year and that the feed-in tariff would be reduced. The impact of this effect was mitigated by the
+fact that other regions increased their expansion goals. These include Europe, the Middle East, Africa and Southeast
+Asia. In the area of wind turbines there was a noticeable drop in revenue for us in spite of the stable development.
+Lower demand for power stacks could not be compensated by the significantly higher demand for power modules.
+In energy distribution we are now benefitting from the expansion of our product portfolio over the last years,
+especially in the voltage class of 4,500 volt. The acceptance of our IGBT modules for high-voltage direct current
+transmission (HVDC), in particular for connecting offshore windparks to the power grid on land brought us very
+high growth in this area.
+As in the previous year, traction once again showed approximately 20 percent growth. Demand was at high levels
+in all quarters. Once again, the most important region was China, where there was demand for all types of traction:
+high-speed trains, urban rail systems and electric or half-electric locomotives for freight trains.
+The other business areas, among others industrial vehicles, only marginally contributed to revenue increase.
+Development of the Segment Result
+Segment Result was €256 million, representing an increase of 40 percent compared to the previous year's Segment
+Result of €183 million. Based on revenue, the Segment Result margin was 19.3 percent (previous year: 15.2 percent).
+Segment Result was positively impacted mainly by the increased result contribution from revenue growth. Further-
+more productivity improvements, among other things higher capacity utilization levels in the 300-millimeter
+manufacturing line in Dresden and a higher-margin product mix in the individual product categories had a positive
+effect on profitability.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+In the previous fiscal year, almost all areas contributed to the revenue increase. The growth rates of the businesses
+electric drives, traction systems, industrial power supplies and home appliances were significantly above the
+segment average. The largest absolute revenue increase came from the electric drives business. Electric drives
+is also the largest business in absolute terms accounting for approximately one third of segment revenue. Here,
+the revenue increased in each individual quarter and reached a new all-time high. The reason was essentially an
+increase in demand in the area of factory automation. Demand here came from all power classes.
+Industrial Power Control
+Energy generation
+> Energy storage
+> Photovoltaic systems
+> Wind power turbines
+Energy transmission
+> FACTS (Flexible AC
+Transmission Systems)
+> Offshore wind farm
+HVDC lines
+Energy consumption
+Home appliances
+> Air conditioners
+> Dishwashers
+> Induction cooktops
+> Microwave ovens
+Applications
+› Refrigerators
+> Windshield wipers
+› Sunroof
+Segment Result was positively impacted by the increased result contribution from the higher revenue as well as by
+advances in productivity. The decline in the Segment Result margin is essentially the result of very strong revenue
+growth of products for electro-mobility. Compared to a share of approximately 7 percent in the previous year, their
+share of segment revenue is in the meantime approximately 10 percent; however, due to the large investments in
+development and manufacturing, the profitability of these products is still not at the average margin level of the
+Automotive segment. In order to be able to drive further growth, during the previous fiscal year we already began
+ramping-up additional backend manufacturing lines for products in the area of electro-mobility, continuing to incur
+temporary ramp-up costs, on the one hand in Warstein (Germany) and on the other hand in the first manufacturing
+building in Wuxi (China). In addition, the positive effects were compensated by higher research and development
+costs, primarily in the area of driver assistance systems.
+Applications
+Assistance systems and
+safety systems
+> Airbag
+> Anti-blocking system
+> Automatic parking
+> Autonomous emergency
+braking system
+> Blind spot detection
+> Cruise control
+> Distance warning systems
+> Suspension
+> Electronic chassis control
+> Electronic stability control
+> Lane departure warning system
+> Tire pressure monitoring system
+Comfort electronics
+> Air conditioning
+> Door electronics
+> Electronic control units
+> Electronic seat adjustment
+> Hatch door
+> Lighting
+> Power window
+> Steering
+> Electronic power steering
+Segment Result was €466 million and thus slightly lower than the previous year's Segment Result of €474 million.
+As a percent of revenue, the Segment Result margin was 14.2 percent (previous year: 15.9 percent).
+> Vacuum cleaners
+Industrial vehicles
+Fuji Electric
+ON Semiconductor
+Semikron
+27.1%
+16.4%
+10.7%
+7.7%
+5.6%
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Database 2017," September 2018.
+An important sub-market of IGBT-based power semiconductors covers IPMS (Intelligent Power Modules). In the 2017
+calendar year we were able to increase our revenue in this area by 39.2 percent, approximately twice as much as
+the market growth of 19.9 percent. As a result, we added 1.4 percentage points of market share to reach 10.3 percent.
+For the first time we achieved a double-digit market share and thus entered the top 3 in this area.
+Mitsubishi
+World IPM market share 2017
+ON Semiconductor
+Infineon
+Fuji
+Semikron
+36.4%
+18.7%
+10.3%
+9.9%
+4.9%
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Database 2017," September 2018.
+Mitsubishi
+> Washing machines
+Infineon
+The world market for IGBT-based power semiconductors - discrete IGBT power transistors and IGBT modules -
+reached US$5.255 billion in the 2017 calendar year, an increase of 16.5 percent compared to the previous year value
+of US$4.510 billion (Source: IHS Markit). Infineon was able to further improve its leadership position with a market
+share of 27.1 percent (an increase of 1.2 percentage points). The five largest market players together accounted for
+a market share of 67.5 percent.
+> Agricultural vehicles
+› Construction vehicles
+> Electric delivery vehicles
+> Forklifts
+1 Including motors, compressors, pumps and fans.
+> Hybrid busses
+Industrial drives¹
+> Air conditioning
+technology
+> Automation technology
+› Drives
+> Elevator systems
+World IGBT-based power semiconductor market share 2017
+> Materials handling
+Traction
+> High-speed trains
+> Locomotives
+> Metro trains
+› Trams
+Charging stations
+for electric vehicles
+Industrial
+power supplies
+Robotics
+44
+Market position
+> Rolling mills
+In the category of discrete IGBTS we were able to grow our market share by 2.0 percentage points to reach 38.5 percent.
+Development of the Segment Result
+The increasing demand for radar sensor ICs came on the one hand from the increasing market penetration of
+radar-based driver assistance systems and on the other hand from the higher number of radar sensors per vehicle.
+In particular our 77 gigahertz radar solutions for driver assistance systems remained in high demand. Infineon is
+one of the leading suppliers to the most important manufacturers of radar systems in all regions.
+Security for connected vehicles
+The continuously rising degree of interconnection between vehicles opens up opportunities for many new services,
+but also increases the danger of unauthorized access to systems by a third party. This means data exchange among
+the various on-board systems as well as with other vehicles and the infrastructure has to be kept secure. Vehicle
+and personal safety on the one hand and data and IT security on the other hand can no longer be considered in
+isolation from one another. The vehicle is becoming a networked computer on four wheels and is also becoming a
+part of the Internet of Things. The demand for data and IT security in the vehicle is rising. We see our opportunity
+here with hardware-based security in the form offered by our security controllers - either as a separate component
+or integrated in our automotive microcontrollers.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus | Growth drivers
+37
+Since March 2018, all new passenger cars and light utility vehicle models in the EU have been required to feature an
+automatic emergency call function (eCall). This requires an embedded SIM card (eSIM). In addition to the eCall, the
+chip also supports several other functions which make driving safer and more comfortable, for example software
+over-the-air updates (SOTA) and vehicle-to-infrastructure communication.
+Embedded SIM cards meet the special quality
+requirements of the automotive sector:
+They are robust, durable and highly resistant
+to high temperature fluctuations.
+Internet of Things & Big Data
+The fourth Industrial Revolution is in full swing. In the era of Industry 4.0 companies are using modern technologies
+to design their manufacturing to be faster and more cost-effective, to reduce scrap rates and to minimize incidents
+and downtimes through predictive maintenance. Networking and digitalization of factories however create points
+of attack for hackers. To protect themselves, companies must therefore take security into account from the very
+beginning of Industry 4.0 projects. A combination of software and hardware-based security solutions can protect
+networked machines and communication nodes. Examples are the OPTIGA™ TPM chips from Infineon, which can be
+integrated in routers, industrial PCs and complex control units and which serve to identify devices to communica-
+tion partners in the network. They thus authenticate themselves in the network and secure data transmission.
+Collaborative robots
+Human Machine Interaction
+Human Machine Interaction is concerned with how humans and automated systems interact and communicate
+with one another. The focus has long moved past classic industrial machines and now affects computers, digital
+systems and devices for the Internet of Things, i.e. the link between the real and digital world. More and more
+devices are networked and perform their tasks automatically. Operation of all these machines, systems and devices
+has to be as intuitive as possible and must not overwhelm the user. Smooth communication between humans and
+machines requires the right interfaces. A system can for example be controlled using text entry on the keyboard or
+mouse, but touchscreens, voice and gesture control are more natural.
+Voice
+Voice control systems such as Amazon Alexa, Google Assistant, Apple Siri, Samsung Bixby and Microsoft Cortana offer
+a convenient and intuitive way of control to the user. Providing users with even more comfort will mean reducing
+the error rate in voice command processing. We are working on this together with our partner XMOS Ltd. in England.
+Infineon supplies highly sophisticated silicon microphones and XMOS speech processing modules for devices in
+the Internet of Things. As it matures, voice control will become relevant for more and more device classes and will
+become one of the most important control types.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus | Growth drivers
+38
+Gesture
+The field of robotics has been attracting special attention for several years now. In addition to the continuing devel-
+opment of conventional industrial robots, more and more industry sectors are implementing collaborative robots,
+known as "cobots". Cobots work together with humans in the manufacturing process and are no longer separated
+from their human colleagues by protective equipment, as the typical industrial robot is; the requirements regarding
+their reliability and safety are therefore very high. Cobots will relieve and support humans in difficult and dangerous
+tasks. Their further development continues the trend towards intuitive robot programming and self-learning robots.
+Infineon offers not only the necessary sensors, microcontrollers and power semiconductors, but also provides
+numerous start-ups in this market with know-how in the area of motor control, sensor systems, communications
+connections and security.
+Gesture control has several advantages over touchscreens: For example, the user doesn't have to touch the device
+and can thus issue commands from a distance. At the same time, gesture control opens up the third dimension,
+enhancing the traditional two-dimensional user interface. Google and Infineon have developed a new type of gesture
+control called "Soli", using radar technology: The radar chip from Infineon can transmit and receive waves reflected
+from the user's finger. When someone makes a hand gesture, the result is a different reflection pattern. Google
+algorithms recognize the hand or finger gesture based on the change of these reflection patterns over time and thus
+recognize the gesture. This even works in the dark and with dirty fingers in the kitchen, workshop or laboratory.
+Security for industrial applications (Smart Factories)
+Secure authentication for the Internet of Things
+Combined Management Report | Our Group
+Finances and strategy
+Business focus Growth drivers
+35
+Charging infrastructure for electro-mobility
+The steadily increasing number of electric vehicles also requires a corresponding charging infrastructure. A
+well-developed network of charging stations increases the incentive to buy an electric vehicle. In order to promote
+the acceptance level of electro-mobility, China has begun operating charging stations along the country's eight
+most important highways. This also includes the important connection between Beijing and Shanghai. By 2020,
+10,000 charging stations with 120,000 charging points are to be implemented, with an investment volume of
+approximately US$770 million. Also other countries will most likely constantly expand their networks of publicly
+accessible charging stations in the coming years. Depending on the system topology, the charging stations use
+different types of power semiconductors, as offered by our Industrial Power Control and Power Management &
+Multimarket segments.
+Automated driving
+"Vision Zero" describes one of the largest objectives of the automotive industry: Vehicles are to be made so safe
+that no serious or fatal accidents occur anymore; today approximately 90 percent of such accidents are attributable
+to human error. Active safety systems can either completely prevent an accident or at least significantly reduce
+its consequences by directly intervening in the driving process. Examples here are pedestrian detection, adaptive
+cruise control and blind spot detection. These functions are no longer reserved for luxury vehicles, as they are
+becoming commonplace in the mid-range.
+Step by step active safety systems are being enhanced to become driver assistance systems. By supporting the
+driver, they increase both driving comfort and road safety. Among other things they assist in critical situations or
+help correct a driver error when necessary, for example with automatic emergency braking maneuvers. Systems for
+partially and fully automated driving essentially consist of the sensors (for example radar, cameras in the vehicle's
+interior or exterior), together with a central high-performance computer for the evaluation of sensor data as well as
+calculation of the driving strategy (the system's intelligence). The third element is the actuators (steering, brakes,
+engine control and transmission). As a leading provider of system solutions Infineon has a comprehensive product
+portfolio for assistance systems and for automated driving.
+Traction systems
+The Internet of Things refers to devices and machines connected to the internet, thus enabling data exchange and
+device control (for example, home appliances, electricity meters, sensors, webcams). The trend towards increased
+levels of networking primarily affects the areas automotive, Industry 4.0, Smart Home and information and com-
+munication infrastructures. Here, security plays a decisive role. The rising number of hacking attacks underlines the
+importance of appropriate precautions. In order to secure electronic systems, it is important to only connect autho-
+rized and authenticated devices with one another in order to protect them against cyber-attacks and manipulation
+of data. This means security has to be integrated into as many critical end-points as possible, often referred to in
+this context as the topic of embedded security. With the OPTIGA™ product series Infineon supplies various security
+chips and security solutions for the authentication of electronic systems: From complex IT infrastructure with
+numerous servers and routers all the way down to computers and tablets.
+Sustainable and fast mobility within metropolitan areas as well as between big cities is one of the key topics of the
+21st century. Today reliable and rapid public transportation determines more than ever the quality of life and
+competitiveness in many regions and cities worldwide. Our components are used both in local public transportation
+trains, subway trains and trams as well as in high-speed trains.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus | Growth drivers
+Security
+36
+Government IDs
+Government IDs refer to passports, identity cards, driving licenses and in the broader sense also to health care
+cards. These documents are increasingly being equipped with a security chip. The market penetration of chip-based
+government IDs is constantly increasing. More and more countries are making the transition to chip-based docu-
+ments or increasing the range of such documents in use. Infineon is the leading provider of security solutions for
+ID projects in Europe. Furthermore, according to the US Government Printing Office (US GPO), Infineon is one
+of the main vendors of security technologies in the electronic passports of the USA. Infineon has been supplying
+the US GPO since the project was launched in 2005.
+Security for mobile devices
+Today payment services can be integrated into mobile devices thanks to the development of smartphones and
+wearables, the mobile internet and Near Field Communication (NFC) technologies. However, cash-free payment is
+only one of the many mobile device functions involving the storage and processing of sensitive information. For
+example, people are experiencing new forms of comfort when travelling on public transportation with mobile tickets
+instead of using coins and physical tickets. Infineon supplies the security chip, known as the Secure Element (SE),
+for all these applications. The SE can either be built into the smartphone (referred to as "embedded SE" (eSE)), inte-
+grated in a SIM card or located on a microSD card. Infineon offers the necessary solutions for all three alternatives.
+China is one of the largest rail vehicle markets in the world. We also see the reinvigoration of the market for traction
+systems in the rest of Asia, where, as a result of industrialization and urbanization, urban rail systems and regional
+trains are in high demand.
+The demand for luxury and upper mid-range vehicles - especially for SUVs (Sport Utility Vehicles) - remained on a
+high level worldwide. This vehicle type is typically equipped with significantly more safety and comfort functions.
+Virtual Reality/Augmented Reality
+Our 3D image sensor chip REAL3™ enables a three-dimensional depiction of the environment at high image quality
+and is used in both smartphones and in driver assistance systems.
+SEGMENT RESULT
+€466 million
+Automotive
+The Automotive segment in the 2018 fiscal year
+Revenue development
+In the Automotive segment, Infineon recorded revenue of €3,284 million in the 2018 fiscal year, an increase of
+10 percent compared to the €2,989 million revenue of the previous year. The segment contributed 43 percent
+of the Group revenue.
+Revenue and Segment Result of the Automotive segment
+€ in millions
+3,284
+2,989
+LL
+€3,284 million
+474
+Revenue
+Segment Result
+2017
+2018
+As in previous years, the major growth drivers were the megatrends electro-mobility and automated driving. Both
+developments resulted in a particularly strong increase in the semiconductor content per vehicle and are expected to
+ensure over half of our growth in the Automotive segment over the next five years. They are among the structural
+growth factors which fundamentally support Infineon's above-average growth. In addition, we continue to benefit
+from new functions in the areas of lighting, comfort and safety as well as from the continuing electrification of
+previously hydraulic and electro-mechanical subsystems.
+We supply powertrain solutions for all types of electric vehicles: pure electric vehicles as well as hybrid and plug-in
+hybrid vehicles including 48 volt technology. In China, the world's largest market for electro-mobility, the number
+of vehicles manufactured and registered with plug-in hybrid or pure electric drives continued to increase sharply.
+Here the number of units manufactured increased from 517,000 in the 2016 calendar year by 53.6 percent to
+794,000 units in the 2017 calendar year. Sales of electric vehicles increased in the other regions as well, especially
+due to a wider variety of models, making it possible to address a new group of buyers. In addition to the increase
+in units, this year we also saw innovative drive configurations which will further increase demand for power modules.
+For example, in order to increase performance one electric motor is used on each axle. Furthermore, the motors
+are configured for higher performance, which often requires two IGBT modules per motor. As a result of these two
+trends, each vehicle has four IGBT modules instead of one IGBT module.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+Automotive
+41
+The spread of driver assistance systems associated with automated driving led to an increase in the demand for
+our radar sensor ICs as well as for our 32-bit multi-core microcontrollers of the AURIX™ family. In particular the
+AURIX™ microcontrollers benefitted from the design-wins in the previous years in the area of safety systems, for
+example in electric power steering. Infineon traditionally holds a strong position for 32-bit microcontrollers in the
+area of powertrain. Infineon is now specifically addressing the areas of safety systems and driver assistance systems
+by developing corresponding 32-bit microcontroller derivatives, in particular the new, second generation of the
+AURIX™ family. For example, we are adding new functions for radar signal preprocessing to our radar sensor ICs.
+Our customers benefit from components which ideally fit together. We are thus expanding our range of applications
+from the powertrain to the area of safety and in doing so are entering new growth markets.
+466
+Virtual and Augmented Reality are not only used for games, they are also important in Industry 4.0. For example
+apps for Microsoft's Hololens enable virtual training for technicians. The Fraunhofer Institute for Factory Operation
+and Automation (IFF) rents its mixed-reality laboratory Elbedome out to companies. This laboratory can represent
+machines, factories and complete cities on a 360 degree projection surface using six laser projectors. This gives
+developers and customers the impression of standing in the middle of the planned factory.
+REVENUE
+40
+Virtual and Augmented Reality are also
+used in industry, for example for simulation
+and training purposes.
+Smart Home
+"Smartification" is finding its way into the home as well. While in the industrial context the primary issue is
+increasing productivity, applications in the private environment are usually focused on comfort. A Smart Home
+is capable of telling all the machines in it what to do and activating every device at just the right time. In addition
+to increased comfort, the Smart Home's better energy efficiency and higher security are additional important
+aspects. The Infineon portfolio of sensors, power semiconductors and security controllers offers the right solutions
+for a networked home.
+Mobil communications
+Mobile data traffic is constantly increasing in volume: While 15 Exabyte (i.e. 15 billion gigabytes) per month were
+transferred via cellular communications in 2017, experts expect a volume of 107 Exabyte per month for the 2023 year.
+In order to be prepared for the exponentially increasing data volumes, to achieve higher data transmission rates
+and to improve network coverage, network providers are turning to a high-performance infrastructure. The migration
+of network architecture to smaller cells enables among other things the use of higher frequency ranges and better
+exploitation of the available frequency spectrum. Radio-frequency (RF) components are required for both the
+communication between mobile devices and the base station and for wireless backhaul from local networks to the
+main network.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus | Growth drivers | Human Resources strategy
+39
+40
+Radio-frequency technologies are also used in mobile devices. Every new smartphone generation requires support
+for more frequency bands. The transition from one cellular communications standard to the next means an increase
+in the requirements on signal quality. Our components help to separate closely adjacent frequency bands and
+amplify weak signals with low noise levels. The transition to the 5G standard will mean a further increase in com-
+plexity, which presents additional potential for our high-performance components.
+Our Human Resources strategy makes an important contribution to ensuring that Infineon can achieve its growth
+and profitability targets. This includes competitive talent management, an attractive working environment and
+high-performance HR processes.
+In order to remain innovative, competitive and successful in the future, Infineon constantly searches for the most
+talented individuals. And the further increasing scarcity of experts facing a steadily growing number of vacancies
+makes this no easy task. This is particularly the case in the area of the STEM subjects, Science, Technology, Engineer-
+ing and Mathematics: exactly those fields which are of particular importance to Infineon. We are therefore review-
+ing our recruiting measures on a regular basis and are working on an integrated system for talent management.
+One of our great advantages is Infineon's positive employer image, which helps win over and retain talents. The fact
+that we make future-oriented products and create value for society makes our company very attractive to potential
+employees. We also define ourselves by the way we work together: with a well-developed culture of feedback,
+"Leadership Excellence" applied every day and an international working environment with colleagues from over
+100 nations. We are proud of this diversity. The most recent Great Place to WorkⓇ survey confirmed the satisfaction
+of the workforce - not only in Germany, but also worldwide. More than 80 percent of Infineon employees gave their
+employer an excellent evaluation: "Taking everything into account, I would say this is a great place to work."
+At the same time, we are preparing the company for the working environment of the future - also in order to remain
+attractive to new generations of employees. This entails the flexible design of working conditions (for example
+work hours, mobile working, sabbatical) as well as the ongoing development of workstations in manufacturing
+("industry 4.0"). Here we highly value constructive dialog and trust-based collaboration with Workers' Councils.
+We also orient our learning formats to future working environments, offering for example mobile learning with
+apps as well as virtual learning groups. Our objective in doing so is to continuously support our employees and
+to encourage them to try out new methods, while making use of the opportunities of digitalization.
+Furthermore, we are working on an HR infrastructure that allows the organization to react flexibly to growth and
+changing requirements, without costs increasing as fast as revenue. In order to achieve this, we constantly improve
+core processes in HR, for example performance management, the process of succession planning and organizational
+development. We use the new processes and tools to strengthen the employees in the self-directed performance of
+their responsibilities for their personal development. People are the focus of our actions: The highest level of long-
+term entrepreneurial performance can only be achieved by happy, healthy and successful employees.
+You will find further information including detailed statistics in the 2018 sustainability report and in the 2018
+Human Resources report.
+@www.infineon.com/csr_reporting
+@www.infineon.com/hrreport
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+Automotive
+The segments
+Human Resources strategy
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Psee page 44
+While market share only changed by some tenths of a percentage point for the second to fifth largest players, the
+market leader lost 1.5 percentage points, primarily through the sales of essential parts of its power semiconductor
+portfolio. Infineon increased its revenue by 15.8 percent and thus gained 0.1 percentage points of market share to
+10.8 percent. The five largest market players together accounted for a market share of 48.4 percent.
+Revenue development
+SEGMENT RESULT
+€256 million
+In the Industrial Power Control segment Infineon recorded revenue of €1,323 million in the 2018 fiscal year, an
+increase of 10 percent compared to the €1,206 million revenue of the previous year. The segment contributed
+17 percent of the Group revenue.
+Revenue and Segment Result of the Industrial Power Control segment
+€ in millions
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+1,323
+1,206
+LI
+The Industrial Power Control segment in the 2018 fiscal year
+183
+Revenue
+256
+Segment Result
+2018
+Combined Management Report | Our Group
+The segments
+Industrial Power Control
+authentication
+> Original spare parts
+2017
+Industrial Power Control
+€1,323 million
+REVENUE
+software manipulation
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+Automotive Industrial Power Control
+42
+Market position
+The world market for automotive semiconductors grew by 14.1 percent from US$30.214 billion in the 2016 calendar
+year to US$34.469 billion in the 2017 calendar year (Source: Strategy Analytics). All regions contributed to growth.
+Europe remained by far the largest region. For the first time, China displaced North America as the second largest
+region. In China during the 2017 calendar year, Infineon was able to increase its revenue with automotive semi-
+conductors by 23.6 percent and its market share by 1.1 percentage points to 12.0 percent. Our strong increase of
+18.5 percent in revenue in Japan is positive as well. In this region Infineon is increasingly perceived as a competent
+system partner who can deliver the desired quality and who is winning larger and larger orders. As a result, our
+market share in Japan has almost doubled, from 3.1 percent in 2010 to 6.1 percent in 2017.
+World automotive semiconductor market share 2017
+NXP
+Infineon
+Renesas
+Texas Instruments
+STMicroelectronics
+12.5%
+10.8%
+10.0%
+8.0%
+7.1%
+Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares," April 2018
+> Protection against
+43
+> Digital tachograph
+› Communication (car-to-car,
+car-to-infrastructure)
+Security
+> Protection against
+Powertrain
+> Alternator control
+› Battery charging control
+› Battery management
+manipulation (e.g. odometer)
+> Electric motor control
+› Generator control
+> Start-stop system
+› Transmission control
+> Combustion engine control
+2. Expansion of 200-millimeter frontend manufacturing capacities in Kulim in differentiating manufacturing
+technologies for sensors as well as discrete and integrated power semiconductors.
+1. Expansion of 300-millimeter fronted manufacturing capacities in Dresden in differentiating manufacturing
+technologies for power semiconductors such as the high-voltage MOSFETs of our CoolMOST family and
+IGBT power switches.
+Milestones and essential investment focuses in manufacturing during the 2018 fiscal year
+Investments in the 2018 fiscal year focused on the following areas:
+Infineon maintains a total of 17 manufacturing sites in 10 countries: Villach (Austria); Beijing and Wuxi (both China);
+Dresden, Regensburg and Warstein (all Germany); Cegléd (Hungary); Batam (Indonesia); Cheonan (Korea); Melaka
+and Kulim (both Malaysia); Tijuana (Mexico); Singapore; and Leominster, Mesa, San José and Temecula (all USA).
+As of 30 September 2018 there were 28,532 people employed in manufacturing at these sites (previous year:
+27,105 employees).
+By far the largest share of the amount invested in property, plant and equipment is accounted for by investments in
+manufacturing facilities. Approximately two thirds of this amount went to frontend manufacturing facilities, with
+the rest essentially going to backend manufacturing facilities.
+Investments
+Percentage of revenue
+16.5%
+2017
+H
+1,254
+1,022
+14.5%
+1 Property, plant and equipment and intangible assets
+€ in millions
+Investments
+2018
+3. Continued ramp of volume production capacity of our SiC MOSFETs and SiC diodes on 150-millimeter wafers.
+Infineon is now one of the first companies worldwide to manufacture its entire SiC portfolio on wafers with a
+150 millimeter diameter.
+REVENUE
+(previously Chip Card & Security)
+2017
+Segment Result
+105
+124
+Revenue
+664
+708
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+€ in millions
+In the Digital Security Solutions segment Infineon recorded revenue of €664 million in the 2018 fiscal year, a decrease
+of 6 percent compared to the €708 million revenue of the previous year. The segment contributed 9 percent of the
+Group revenue.
+Revenue development
+As of 1 October 2018 we changed the name of the segment "Chip Card & Security" to "Digital Security Solutions".
+The previous name is associated too strongly with the form factor chip card and hardware. However, for several
+years now our embedded security solutions have been aimed at entirely new customers with a significantly larger
+overall number of applications. The new name reflects the growing importance of security solutions in an increas-
+ingly connected world, with a chip as the highly reliable anchor for security. The name change has no effect on the
+organizational structure, the strategy or the business scope.
+The Digital Security Solutions segment in the 2018 fiscal year
+47
+SEGMENT RESULT
+€664 million
+Revenue and Segment Result of the Digital Security Solutions segment
+€105 million
+SEGMENT RESULT
+€532 million
+Ticketing, access control
+Trusted Computing
+> Industrial control
+> Game consoles
+> Brand protection
+Applications
+› Accessories
+Authentication
+Digital Security Solutions
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Segment Result was €105 million, representing a decrease of 15 percent compared to the previous year's Segment
+Result of €124 million. As a percent of revenue, the Segment Result margin was 15.8 percent (previous year:
+17.5 percent). Segment Result was negatively impacted mainly by a lower profit contribution from the declining
+revenue. Furthermore, operating costs increased on the one hand due to the strategically planned long-term
+expansion of headcount in the areas research and development, administration and sales and on the other hand
+due to higher development costs resulting from a larger number of customer projects and the expansion of the
+product portfolio. By doing this, we intend to further expand our software and system competence in particular.
+Development of the Segment Result
+In this context we are very pleased that in the meantime we achieve approximately one quarter of our revenue
+with software-related projects. Our software (for example firmware, driver software, hardware-related application
+software) and system competence puts us in a position to provide reference designs and security modules which
+are ready-to-use. We also offer support in the certification of security solutions. With these services we reduce our
+customers' development expenses and accelerate the time-to-market of their products. The investments made in
+these areas in previous years are now beginning to pay off. One example here is our SECORATM Pay security solutions
+which make it particularly easy for card manufactures to integrate dual-interface chip technologies in their product
+portfolios; they are thus able to react flexibly to regional market requirements. The high level of acceptance of the
+SECORA™ Pay brand is evident in the many projects we have already won in the 2018 fiscal year, with SECORA™ Pay
+just launched in November 2017.
+Revenue also increased in the area of authentication. Our customers rely on our security competence in order to
+protect their products, their business models and ultimately their customers. We have won designs and established
+further strategic partnerships in the areas Internet of Things, Industry 4.0 (Industrial Internet), Smart Home, Smart
+City as well as connected vehicles. Several of these projects are part of field tests or have prototype character.
+Consequently, revenue is still low during this phase. However, the potential revenue will be significant once these
+applications achieve the necessary degree of maturity. It is part of our strategic orientation to be the leading provider
+of security solutions, consisting of security chip and software. This type of security solution is the decisive success
+factor in particular for the applications mentioned above.
+We achieved another success with our Trusted Platform Module (TPM) family. Juniper, the leading provider in the
+area of automated, scalable and secure networks, now integrates our OPTIGAT TPM security solutions in its routers,
+firewalls and other devices.
+In the area of transport and ticketing we have seen increasing acceptance of the ticketing standard CIPURSE™ among
+the operators of public transportation networks, for example in Barcelona. CIPURSE™ is an open standard of OSPT
+(Open Standard for Public Transportation). Infineon has provided decisive support for the development and intro-
+duction of CIPURSE™. In the 2018 fiscal year, revenues were generated for the first time, based on several design-wins
+in recent years.
+After almost doubling in the 2017 fiscal year, revenue from embedded SIM (eSIM) once again increased slightly in
+the 2018 fiscal year. eSIMs are assembled in the customer device as a replacement for classic SIM cards and ensure
+identification with the network provider. eSIMs are also used in cars: Our certified eSIM security controllers are
+used for the emergency call (eCall) function which has been mandatory in the EU since 31 March 2018 for all of the
+approximately 17 million new cars sold. In addition to many other automobile manufacturers, Daimler also relies
+on our eSIMs. The Mercedes-Benz system "MercedesMe connect" also offers fundamental supplementary services
+such as accident management, break-down and maintenance management and remote vehicle diagnostics, in
+addition to the legally mandated emergency call function.
+48
+Digital Security Solutions
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+systems
+In the 2018 fiscal year, our investments amounted to €1,254 million, representing an increase of €232 million or
+23 percent compared to the €1,022 million invested in the previous year. Relative to revenues, the investments
+in the 2018 fiscal year increased to 16.5 percent compared to the previous year's 14.5 percent. €1,090 million of the
+overall investment volume was dedicated to property, plant and equipment (previous year: €874 million) and
+€164 million to intangible assets including capitalized research and development costs (previous year: €148 million).
+Automotive
+(e.g. eCall, car-to-car
+communications,
+car-to-infrastructure
+communications)
+> NFC-based contactless
+payment
+> Mobile payment
+Payment systems
+› Credit/debit cards
+> Embedded SIM
+(machine-to-machine
+communication)
+> High-end SIM cards
+SIM cards
+› Conventional
+communications
+Mobile
+> Smart Home
+> Smart City
+> IT
+> Industrial Internet
+(Industry 4.0)
+> Connected driving
+Internet of Things
+> Healthcare cards
+> National identity cards
+> Passports
+> Driver's licenses
+Government
+identification documents
+digital tachograph)
+(e.g. odometer,
+manipulation
+> Protection against
+> Electronic toll collection
+› Connected vehicles
+Operations
+54
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+LED and conventional
+> Submarine telecommunications
+cables
+for electric vehicles
+Charging stations
+> Multi-copters
+> Lawn mower
+2018
+Hedge trimmer
+> eScooter
+>
+FEFF
+› Communications
+Internet of Things
+Cellular infrastructure
+› Base stations
+> Consumer electronics
+> Home appliances
+> Mobile devices
+> PCs and notebooks
+lighting systems
+Power management
+> Servers
+› Sensors
+26.3%
+STMicroelectronics
+Toshiba
+Renesas
+ON Semiconductor
+Infineon
+World standard power MOSFET market share 2017
+The world market for standard MOSFET power transistors reached US$6.650 billion in the 2017 calendar year, an
+increase of 13.7 percent compared to the previous year value of US$5.851 billion (Source: IHS Markit). Infineon's
+revenue increased by 15.1 percent. Because of our expanded capacities – in particular the expansion of the
+300-millimeter manufacturing capacities in Dresden (Germany) as well as the expansion of 200-millimeter manu-
+facturing capacities in Kulim (Malaysia) - we could better cover high market demands than all our competitors
+and achieved the largest gain in market share with 0.3 percentage points.
+Market position
+> Tablets
+> Navigation devices
+> Smartphones
+> Activity trackers
+Mobile devices
+> Voice control
+> Smart Speaker
+› Telecom
+12.8%
+> Oil and natural gas exploration
+› Space systems
+HiRel
+532
+427
+LL
+2,148
+2,318
+€ in millions
+Revenue and Segment Result of the Power Management & Multimarket segment
+In the Power Management & Multimarket segment Infineon recorded revenue of €2,318 million in the 2018 fiscal
+year, an increase of 8 percent compared to the €2,148 million revenue of the previous year. The segment contributed
+31 percent of the Group revenue.
+Revenue development
+The segments
+Power Management & Multimarket
+45
+45
+Power Management
+& Multimarket
+REVENUE
+€2,318 million
+Revenue
+Segment Result
+› Commercial aviation
+> Defense technologies
+2017
+The revenue increase was essentially driven by power semiconductors. This includes AC-DC power supplies and
+DC-DC power management. Both business areas recorded strong growth and combined accounted for approxi-
+mately two-thirds of the segment revenue. Revenue was reduced by the effects of the 6 March 2018 sale of the
+largest part of our RF power component business to the US company Cree, Inc. The revenue target stated at the
+beginning of the fiscal year for the segment was nevertheless retained and achieved.
+(cordless screwdrivers,
+drills, etc.)
+> eBikes
+Battery-powered applications
+> DIY tools
+Applications
+Segment Result was positively impacted by the increased profit contribution from increased revenue. Furthermore,
+a better productivity, among other things higher capacity utilization levels in the 300-millimeter manufacturing line
+in Dresden (Germany), and a higher-margin product mix in the individual product categories had a positive effect
+on profitability.
+Segment Result was €532 million, representing an increase of 25 percent compared to the previous year's
+Segment Result of €427 million. As a percent of revenue, the Segment Result margin was 23.0 percent (previous
+year: 19.9 percent).
+Development of the Segment Result
+46
+46
+Power Management & Multimarket
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The RF and sensors business also recorded high growth. While in the first half-year of the 2017 fiscal year weak
+performance was evident in the area of smartphones, demand in the 2018 fiscal year came back. In particular, our
+silicon microphones as well as various radio-frequency components such as low-noise amplifiers, antenna switches
+and antenna tuners benefitted from this development.
+In the data centers we are present with DC-DC power management as well as with AC-DC power supplies. In DC-DC
+power management, in addition to our OptiMOSTM low-voltage power transistors, our control and driver ICs and
+thus complete solutions for digital control contributed to revenue. In the 2018 fiscal year, AC-DC power supplies in
+data centers generated the highest demand for the high-voltage power transistors of our CoolMOST family. On the one
+hand classic data centers are being expanded; on the other hand there was high demand for servers optimized for
+machine learning. These special servers often have greater computing power and as a result require stronger
+power supplies. The revenue boost in AC-DC power supplies was also rooted in a positive economic environment
+across all application areas as well as in an expansion in the model range of the CoolMOST family. The technological
+competitive edge of these products was evident among other things in the major market success for equipping
+charging stations for electric vehicles in China as well as the worldwide use of onboard chargers in electric vehicles
+and plug-in hybrid vehicles.
+Demand in DC-DC power management mainly came from two application areas: battery-powered applications
+and data centers. Our OptiMOS™ power transistors of the low-voltage and mid-voltage classes benefitted from the
+increase in the number of applications using DC motors, in particular with brushless DC motors. Examples of such
+applications are drills, screwdrivers, lawn mowers, hedge trimmers, power saws as well as multi-copters for trans-
+port, agriculture and recreation. Furthermore, we saw an increase in demand for electric two-wheelers such as
+eBikes, pedelecs (pedal electric cycles) and eScooters.
+2018
+The Power Management & Multimarket segment in the 2018 fiscal year
+9.2%
+6.8%
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+As the market player with one of the most comprehensive portfolios of power semiconductors, Infineon focuses
+on understanding the customer application. The goal is to offer our customers the solution with the best price-
+performance ratio. Such a solution can also be based on a combination of silicon and SiC components. The balance
+between cost and performance advantages of the individual components is essential to a sustainable improvement
+of the customer's system. This may apply to the efficiency, costs, size, weight or time-to-market.
+Today's main applications for SiC are solar inverters, industrial power supplies as well as the charging infrastructure
+for electro-mobility, in particular ultra-fast charging stations. We also regard auxiliary units in trains as a promising
+future application. In the medium-term, control units for variable speed drives for the widest possible range of
+motor types and operating modes (stepping motors, robotics, high RPM, high torque) also represent an interesting
+field of application. On top of that the use of SiC in electric vehicles also represents enormous potential. Possible
+applications here are initially the on-board charger, followed by the main inverter.
+In the area of RF applications we intend to provide radio-frequency solutions for smartphones and cellular
+infrastructure. In addition to today's components - essentially low-noise signal amplifiers, antenna switches and
+antenna tuners - we will introduce further products including frequency filters and 5G antenna modules.
+Manufacturing technologies and transistor architectures for power semiconductor components based on new
+materials are also an important focus area of our research and development activities. In the search for more and
+more efficient power semiconductors for more and more compact power supplies and control units, primarily silicon
+carbide (SiC, a compound of silicon and carbon) and gallium nitride (GaN, a compound of gallium and nitrogen)
+have proven to be the materials of choice. Compared to silicon-based components, these new semiconductor
+materials can switch high voltages and high currents with smaller dimensions and less loss. The material properties
+of SiC and GaN components make them suitable for different voltage classes. While the SiC technology is advan-
+tageous for voltages of over 1,000 volts, GaN technology is well suited for use with 600 volts or less.
+One focus point of our research is in the area of sensor systems. Sensors capture the real, analog world. The signals
+measured are first digitized. Then, the digital values are processed, transmitted and stored according to the require-
+ments of the target application. Sensors also play an increasingly important role in operating machines and devices,
+referred to as human machine interaction. In this area we are developing our portfolio of MEMS-based silicon
+microphones and pressure sensors as well as 3D ToF sensors and radar sensors. In addition, we are working on new
+sensor types for capturing other physical measurements. Infineon has about 40 years of experience in sensor
+design and sensor manufacturing and offers the most comprehensive portfolio of pressure and magnetic field
+sensors for automotive applications.
+Research and development expenses are not only incurred for product development, but also increasingly for
+platform developments, for new technologies and new product families and for new manufacturing technologies.
+This includes, for example, digital power management, technology platforms for low-voltage and high-voltage
+power switches, power semiconductors based on the new materials silicon carbide and gallium nitride and new
+sensor types, in particular those based on our magnetic field, radar, Lidar, infrared and MEMS technologies.
+While in the past both research and development primarily focused on technologies or components, today the
+systems in which the components are used play a decisive role. Innovative system solutions start with the
+optimization of system functionality. If savings and improvements, for example, for passive components, cooling
+systems, packages, weight and reliability create value for the customer, the customer is willing to pay a higher price
+for the semiconductor component providing these advantages. Here, digital microelectronics is often combined
+with RF components, control ICs, drivers, sensors and actuators, resulting in a significant increase in performance.
+Furthermore, hardware is increasingly being complemented by software.
+Principal research and development activities
+51
+Research and development
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In the 2018 fiscal year, the capitalized development costs totaled €143 million (previous year: €129 million). Amorti-
+zation of capitalized development costs in the 2018 fiscal year amounted to €50 million (previous year: €39 million).
+Subsidies and grants for research and development increased from €68 million in the 2017 fiscal year to €86 million
+in the 2018 fiscal year.
+At the end of the 2018 fiscal year we employed 7,161 people (18 percent of Infineon's total work force) at our
+research and development sites; at the end of the 2017 fiscal year the figure was 6,362 employees (17 percent of the
+total work force). Infineon maintains research and development departments at 35 sites in 15 countries: Graz, Linz
+and Villach (all Austria); Beijing and Xi'an (both China); Herlev (Denmark); Augsburg, Dresden, Duisburg, Erlangen,
+Karlsruhe, Neubiberg near Munich, Regensburg and Warstein (all Germany); Le Puy-Sainte-Réparade (France); Bristol
+and Reigate (both Great Britain); Bangalore (India); Padua and Pavia (both Italy); Seoul (Korea); Ipoh and Melaka
+(both Malaysia); Nijmegen (The Netherlands); Muntinlupa (Philippines); Bucharest (Romania); Singapore; Chandler,
+El Segundo, Leominster, Mesa, Milpitas, San José, Tewksbury and Warwick (all USA).
+R&D expenses
+Percentage of revenue
+11.0%
+Research and development
+2018
+52
+The focus of our future development activities in the area of SiC is on the expansion of the product portfolio, both
+in terms of additional form factors (this applies to the package and the topologies in the modules) and to higher
+voltage classes (starting with 1,200 volts up to 1,700 volt and 3,300 volts).
+Another indication of Infineon's innovative power and long-term competitive strength is the number and quality of
+our patents. In the 2018 fiscal year we applied for approximately 1,550 patents worldwide, compared to approxi-
+mately 1,800 patent applications in the previous year. At the end of the 2018 fiscal year, the worldwide patent portfolio
+consisted of approximately 26,850 patents and patent applications (previous year: approximately 27,300).
+Patents
+Activities are planned to begin at the end of the 2018 calendar year. Initially, 100 new jobs will be created, rising
+mid-term to approximately 250 jobs.
+Investigations are to determine how we can develop universal Al functions that can be integrated in a large number
+of chips for various target systems. One major challenge here is the constantly rising chip complexity. Findings on
+costs and the manufacturability of such complex chips or the partitioning of these functions on several chips is crucial.
+This is why the development center is situated at the intersection point between development, design and manu-
+facturing. Synergies are created through feedback from the manufacturing lines, making it possible to develop new
+products faster thereby shortening time-to-market.
+As traffic systems are becoming more and more connected algorithms, Al and the Internet of Things all play a
+central role. Here we expect significant growth impulses in coming years. The development center will be inten-
+sively involved in these topics as well. Advances made initially in the automotive area can also be adopted by
+other applications, for example robotics.
+In May 2018, Infineon announced the establishment of a new development center in Dresden. The development
+center is to drive the development of new products for automotive and power electronics as well as for Artificial
+Intelligence (AI). System integration becomes ever more important for the complex interaction of semiconductors
+in vehicles of continuously increasing technical complexity. In addition to chip design, modeling complex systems
+and developing highly-integrated products will be among the development center's core tasks.
+Founding of a new development center in Dresden
+Infineon is a pioneer in developing encryption algorithms. We achieved an outstanding success with encryption
+methods that are capable of withstanding the computing power of future quantum computers. In the previous year
+we were the first company in the world to demonstrate the implementation of an algorithm for what is referred to
+as post-quantum cryptography in contactless security chips. The main challenges to overcome were the small
+dimensions of the chips and the limited memory capacities to store and execute such a complex algorithm as well
+as the data transmission bandwidth. In November 2017, Infineon won the renowned industry prize "SESAMES
+Award" in two of six categories, "Cyber Security" and "eGovernment" for this achievement. The "SESAMES Award"
+is presented each year for the best innovations in the area of digital security and is regarded as one of the highest
+honors in the industry.
+53
+Combined Management Report | Our Group
+Research and development
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+We have made significant progress in the area of gallium nitride (GaN). The first products of our CoolGaN™ family,
+various 600 volt GaN power transistors based on what is called an enhancement mode (e-Mode) GaN transistor,
+are ready for volume production. The development of the next generation of our GaN transistors has already begun.
+This new architecture allows for smaller and thus more cost-efficient transistors, favoring the introduction of
+GaN technologies also in price-sensitive markets. We are also working on integrated GaN solutions in which either
+several transistors or transistors and drivers are monolithically integrated (also referred as system-on-chip) or
+assembled as system-in-package. These compact solutions can be used for example in motor control units for
+washing machines or air conditioners. In the upcoming months we will announce several of these new products at
+various trade fairs. Volume production of our GaN products takes place in Villach (Austria) in a 150-millimeter wafer
+manufacturing line. The transition to volume production on 200-millimeter wafers is currently being planned.
+In addition to the new materials, another focus area of our research and development activities is the digital
+control of power semiconductors. We are currently witnessing the transition from analog control to digital control
+of power switches. Digital control systems enable much easier adaptation to various operating conditions (for
+example, stand-by, partial load, full load) and also increase the efficiency of increasingly complex power compo-
+nents. Programmability of the control ICs enables customers to adapt the function of the control unit to the
+requirements even with shorter learning cycles. This transition already began several years ago for MOSFET-based
+control loops; the trend has now also started for IGBT-based control loops. Infineon provides components for all
+stages of the digital control loop, namely control ICs, driver ICs and power switches. In particular, the controllers
+of the IMOTION™ family are attracting great interest in the market. We will expand this successful family and will
+develop products with integrated drivers and integrated power switches.
+Power density is not only important for servers but also for extremely thin flat screen monitors and for compact
+chargers and adapters for mobile devices. However, in these very price-sensitive markets it will take quite some
+time before GaN transistors achieve widespread acceptance.
+The main applications of these GaN products are power supplies optimized for the highest efficiency for use in
+high-performance servers in data centers and telecommunication equipment. The GaN power supplies, ranging
+up to 3,000 watts, can be designed differently compared with silicon-based power supplies. Depending on the
+configuration, this can also make it possible to realize system-cost advantages. The higher efficiency reduces the
+cooling effort, thus cutting expenses for heat sinks and air conditioning. Highest efficiencies and thus a minimization
+of ongoing operating expenses is key for data center operators - Google, Facebook, Amazon Web Services and
+Microsoft, to cite just a few examples - because the power consumption of such data centers with as many as
+40,000 servers is in the double-digit megawatt range. An improvement in efficiency by 1 percentage point equals
+savings of several hundred kilowatts. In addition the compactness, i.e. the power density, measured in watts
+per cubic centimeter, can also be increased. This is important as every square meter of floor space in the air-
+conditioned server rooms is expensive.
+Compared to silicon transistors, gallium nitride (GaN) transistors also offer new and interesting properties which
+can be used in power supplies, for example. However, only entirely new power supply topologies will take full
+advantage of GaN. Then the maximum efficiency gain can be realized with an especially compact design of the
+overall power conversion system.
+52
+7.4%
+2017
+836
+EM Micro
+STMicroelectronics
+Samsung
+NXP
+Infineon
+World smart card and secure ICs market share 2017
+The world market for security ICs had a volume of US$3.260 billion in the 2017 calendar year, a decrease of
+0.2 percent compared to the previous year's value of US$3.266 billion (Source: ABI Research). Infineon's revenue
+increased by 0.6 percent. Infineon won 0.2 percentage points of the market and as new market leader has a small
+lead over its closest competitor. Our gain in market share is essentially due to changes in the two major segments
+government identification documents and payment cards. Infineon was able to expand its sales in both segments
+significantly above the market growth rate, while the previous market leader lost a rather significant share in the
+market. The five largest market players together account for a market share of 73.1 percent.
+Digital Security Solutions
+Digital Security Solutions
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+With a market share of 26.3 percent, Infineon continues to be the clear market leader (previous year: 26.0 percent).
+The distance to the number two competitor was 13.5 percentage points (previous year: 13.0 percentage points).
+The five largest market players together accounted for a market share of 62.5 percent.
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Database 2017," September 2018.
+Market position
+Source: ABI Research, "Smart Card & Secure ICS," October 2018.
+||
+24.2%
+12.9%
+776
+11.0%
+€ in millions
+R&D expenses
+Research and development expenses in the 2018 fiscal year amounted to €836 million after €776 million in the
+previous year, representing an increase of €60 million or 8 percent. Research and development expenses thus
+increased proportionally to revenue, which also increased by 8 percent. In the 2018 fiscal year we spent 11 percent
+of revenue on research and development relative to revenue, exactly the same ratio as in the previous year. With
+this ratio we are well within our target range, i.e. a percentage of revenue in the low to mid-teens. In order to retain
+our innovative strength in the future, research and development expenses should increase proportionally to revenue.
+50
+50
+Research and development
+Research and development
+Combined Management Report | Our Group
+49
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Until the previous year, our source of relevant information was IHS Markit. Since IHS Markit no longer analyzes
+the security IC market, we now refer to information from the market study by ABI Research. In contrast to our
+market observations in the past years, memory-based security ICs as well as various embedded security ICs are
+now included.
+1.8%
+10.4%
+23.8%
+The decline in revenue is primarily attributable to the area SIM cards for mobile communication. For strategic
+reasons we have only been participating selectively in invitations for project proposals for several years now.
+As a result, the revenue in this area has been continuously dropping and in the meantime accounts for only a low
+single-digit percentage of revenue. The two largest areas, government ID and payment, account combined for
+approximately two-thirds of segment revenue and were not been able to compensate for this development. For
+project-related reasons there was a decline in revenue in the area of government ID: A major project for the replace-
+ment of conventional passports with digital passports peaked during the 2017 fiscal year and has been progressing
+at a lower level since then. The payment business on the other hand recorded an increase in revenue. This was
+mainly driven by the transition from purely contact-based cards to dual-interface cards which can be used as both,
+contact-based or contactless cards. We benefit especially from this trend due to our core competence in the area
+of contactless technologies.
+Combined Management Report | Our Group
+Operations
+Loss from discontinued operations, net of income taxes
+Operating expenses as percentage of revenue continue to fall
+Operating expenses (research and development expenses and selling, general and administrative expenses)
+increased by €91 million to €1,686 million year-on-year (2017: €1,595 million), corresponding to 22.2 percent of
+revenue (2017: 22.6 percent).
+Research and development expenses (R&D expenses)
+Grants received in conjunction with R&D projects, and capitalized development costs reduce the amount of
+R&D expenses recognized.
+€ in millions, except percentages
+Research and development expenses, gross
+Minus:
+grants received
+capitalized development costs
+Research and development expenses
+Change year-on-year
+Percentage of revenue
+2018
+2017
+1,065
+973
+(86)
+(68)
+(143)
+(129)
+836
+37.1%
+776
+38.0%
+2,885
+Review of results of operations
+64
+The regional distribution of revenue is unchanged compared to the previous fiscal year. As in the previous year,
+Greater China is the largest region in revenue terms, once again accounting for 34 percent of total revenue, followed
+by the Europe, Middle East and Africa region with 32 percent.
+China accounted for €1,921 million or 25 percent of Infineon's worldwide revenue and therefore for the largest
+share at individual country level, followed by Germany at €1,171 million or 15 percent.
+Increase in gross margin
+The gross margin increased from 37.1 percent to 38.0 percent year-on-year, mainly reflecting the impact of revenue
+growth and lower ramp-up costs. Rising prices for wafer substrates and other materials such as copper had an
+offsetting effect. The line item “Cost of goods sold" still includes the earnings impact arising in conjunction with
+the purchase price allocation and acquisition-related expenses for International Rectifier (in particular higher
+depreciation/amortization of intangible assets and property, plant and equipment, which were revalued to their
+fair value as part of the purchase price allocation) amounting to €67 million (2017: €89 million).
+€ in millions, except percentages
+Cost of goods sold
+(143)
+Change year-on-year
+Percentage of revenue
+Gross profit
+Percentage of revenue (gross margin)
+2018
+2017
+4,714
+4,442
+6%
+7%
+62.0%
+62.9%
+2,621
+8%
+1%
+11.0%
+P see page 39
+P see page 91 ff.
+The internal management system at Infineon is designed to assist in implementing the Group strategy described in
+the chapter "Group strategy". Accordingly, performance indicators are used, which enable profitable growth and
+efficient employment of capital to be measured.
+Over the economic cycle, Infineon has set itself the targets of:
+> achieving a compound annual revenue growth rate of 9 percent
+> thereby achieving an average Segment Result Margin of minimum 17 percent, and
+> realizing the above-mentioned revenue growth with an investment ratio of 15 percent relative to revenue.
+In the coming years, we also plan to invest a low triple-digit million amount in total in order to take advantage of
+possible additional business opportunities and follow structural changes. These are not included in the 15 percent
+ratio described above. In addition, there are already announced investments in front-end cleanrooms and large
+office buildings, including the 300-millimeter cleanroom and the research and development building at the Villach
+site (Austria). In the 2019 fiscal year, around €200 million of this will accrue. If these measures are implemented, the
+investment rate will temporarily be significantly higher than the rate envisaged in the target operating model. In
+view of strong customer demand, Infineon expects revenue to increase by 11 percent plus or minus 2 percentage
+points in the 2019 fiscal year. The Segment Result Margin is expected to come in at 18 percent at the mid-point of
+the range for revenue growth (see the chapter "Outlook").
+Income from continuing operations
+In this context, growth, profitability and investments are all interdependent. Profitability is the prerequisite for
+being able to finance operations internally, which, put another way, means opening up potential opportunities for
+growth. Growth, in turn, requires continual investment in research and development as well as in manufacturing
+capacities. Growing at a commensurate rate allows Infineon to achieve leading market positions and to generate
+economies of scale that contribute to greater profitability. Employing financial resources efficiently is a critical factor
+in achieving these goals.
+Infineon deploys a comprehensive controlling system to manage its business with respect to the strategic targets
+it has set itself. The system involves the use of financial and operating key performance indicators. Information
+for controlling purposes is derived from annual long-term planning, quarterly outlooks, orders received per week
+and actual monthly data. This knowledge enables management to base its decisions on sound information with
+respect to the current situation and future expected financial and operational developments. Sustainable business
+practices and the consideration of forward-thinking qualitative factors are important for Infineon's long-term
+success. As an enterprise very much aware of its responsibilities towards society, Infineon also takes account of
+non-financial factors, mainly in the fields of sustainability (see report "Sustainability at Infineon" on our website
+@www.infineon.com/csr_reporting) and human resources (see the chapter "Human resources strategy"). Although these
+factors are not used to manage business performance, they nevertheless help Infineon achieve its financial targets.
+As part of the process of managing business performance, management also attaches great importance to ensuring
+that Infineon acts in strict compliance with all relevant legal requirements and, of equal importance, that its internal
+Corporate Governance Standards are complied with (see the chapter "Corporate Governance").
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Internal management system
+57
+P see page 159 ff.
+P see page 40 ff.
+and page 16 ff.
+Performance indicators
+Principal performance indicators
+In order to measure its success in implementing its strategies, Infineon uses the following three overarching
+performance indicators:
+› Segment Result and Segment Result Margin to measure the operating profitability of its various businesses and
+of the portfolio as a whole,
+> Free cash flow from continuing operations to measure the amount of cash generated or used excluding
+financing activities,
+P see page 73 ff.
+P see page 20 ff.
+56
+Internal management system
+11.0%
+P see page 50 ff.
+R&D expenses amounted to €836 million in the 2018 fiscal year, an increase of €60 million or 8 percent compared
+to the previous year's figure of €776 million. The percentage increase in R&D expenses in the 2018 fiscal year was
+in line with revenue growth. Their share as a percentage of revenue remained unchanged at 11.0 percent. Research
+and development activities were intensified, additional staff recruited, and other measures taken in order to
+broaden the basis for further growth. A total of 7,161 employees worked in research and development functions at
+the end of the reporting period (30 September 2017: 6,362 employees).
+The main R&D activities undertaken during the 2018 fiscal year are described in more detail in the chapter
+"Research and development".
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Operations
+55
+55
+4. Expansion of backend manufacturing capacities for IGBT modules for industrial and automotive applications.
+Backend manufacturing capacities were expanded to accommodate the strong demand for IGBT modules for the
+drivetrain for hybrid and pure electric vehicles. This expansion took place in Warstein for IGBT modules of the
+HybridPACK™ family as well as in Wuxi at the new joint venture with the Chinese automobile manufacturer SAIC
+Motor Corporation Ltd. The joint venture, named SIAPM (SAIC Infineon Automotive Power Modules (Shanghai)
+Co., Ltd.), was formed on 7 February 2018 and has been manufacturing since August 2018.
+5. Because of its cost position, operation of the Temecula (USA) site is planned to continue until 2021 only, and
+either to sell it before this date or close it. The products manufactured in Temecula will be transferred to other
+Infineon sites or will be outsourced to external manufacturing partners.
+Group performance
+Furthermore, during the previous fiscal year investments were made in frontend and backend sites primarily in
+the following areas:
+› Adaptation and retooling of manufacturing lines to accommodate the modified product portfolio, in particular
+due to the beginning of volume production for new technologies and products.
+> Equipment for innovative technologies and further improvements in quality.
+Infineon writes the next chapter in its growth strategy: Decision in favor of the second
+300-millimeter fab
+We have for some time now seen a rapid increase in the demand for power electronics. In order to be able to
+accommodate our customers' increasing requirements in the coming years, we decided in May 2018 to build a
+second 300-millimeter fab.
+We will build a fully automated facility for the manufacture of 300-millimeter thin wafers at the Villach (Austria) site,
+which has been for many years our competence center for power electronics. Construction started in November 2018.
+Volume manufacturing is planned to begin in early 2021, with maximum manufacturing capacity achieved as early
+as 2026. Total investments will reach approximately €1.6 billion. When operating at full capacity, the estimated
+additional revenue resulting from the fab will be approximately €1.8 billion annually.
+By significantly expanding our manufacturing capacity we are also increasing our competitive strength. Here, our
+strategy is long-term and independent of possible short-term downturns in the cycle. We want to rigorously take
+advantage of the opportunities presented to us by the forecast strong market growth.
+The new factory can be completed significantly faster at the Villach site than would be the case for a factory at a new
+site, since Villach on the one hand already has a 300-millimeter thin wafer pilot line and on the other hand has the
+know-how needed for the various manufacturing technologies. The expansion will bring us significant economies
+of scale and will thus also let us improve our efficiency.
+The expansion of silicon manufacturing capacities will also ultimately facilitate the expansion of manufacturing
+capacities for silicon carbide and gallium nitride. Existing buildings and manufacturing lines can be reused for these
+compound semiconductors. This results in capex-efficient expansion of capacities.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Internal management system
+> Further increases in the level of automation at our frontend and backend sites, for example, improvement of
+the wafer transport system.
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+With an increase of €223 million (42 percent), the Greater China region accounted for the largest portion of revenue
+growth by far followed by the Europe, Middle East and Africa region with a €171 million increase (32 percent of total
+revenue growth), Japan with a €71 million increase (13 percent of total revenue growth) and the Asia-Pacific region
+(excluding Japan, Greater China) with a €58 million increase (11 percent of total revenue growth). In terms of
+percentage, the highest revenue growth was achieved with 15 percent in Japan.
+1,323
+1,206
+2,318
+2,148
+Automotive
+Industrial
+Power Control
+Power
+Management &
+Multimarket
+Share of Group Revenue 2018
+Digital Security Solutions 9%
+Power Management & Multimarket 31%
+Industrial Power Control 17%
+664 708
+10 9
+0 3
+Digital Security Other Operating Corporate and
+Segments Elimininations
+Solutions
+43% Automotive
+0% Other Operating Segments,
+Corporate and Elimininations
+2018
+2017
+63
+2,989
+3,284
+€ in millions
+Revenue by segment
+(1)
+1,075
+790
+0.95
+0.70
+0.95
+0.70
+0.98
+0.85
+P see page 129 ff.
+P see page 131 f.
+Negative impact of currency effects on revenue growth
+P see page 66
+Net income significantly improved
+Net income improved by €285 million to €1,075 million year-on-year. Despite the unfavorable development of the
+US dollar exchange rate, revenue grew by 8 percent to €7,599 million thanks to the positive development of business
+volumes. Operating income jumped by 49 percent, or €486 million, to €1,469 million, partly on the back of revenue
+growth and partly boosted by the gain from the sale of the major part of the RF power components business to
+Cree, Inc. Higher research and development expenses as well as higher selling, general and administrative expenses
+had a dampening effect on the increase in operating income. Operating income includes acquisition-related
+depreciation, amortization and other expenses totaling €118 million (2017: €153 million), mainly for International
+Rectifier (predominantly expenses recognized in conjunction with the purchase price allocation). In addition,
+income tax (see note 5 to the Consolidated Financial Statements) and the loss from discontinued operations
+(see note 6 to the Consolidated Financial Statements) were up, also lessening the increase in net income.
+Earnings per share (basic and diluted) amounted to €0.95 per share and were therefore higher than one year earlier
+(2017: €0.70).
+Adjusted earnings per share (diluted) improved further from €0.85 to €0.98 per share (see "Further improvement in
+adjusted earnings per share" in this chapter for details of the calculation).
+Revenue growth reflects positive sales volume trends
+Revenue grew by €536 million to €7,599 million in the 2018 fiscal year (2017: €7,063 million). The segment with
+the highest volume, Automotive, contributed more than one half (55 percent) of total revenue growth, which was
+driven above all by strong demand for semiconductors used in automotive, industrial, power supply, RF and sensor
+technology applications. In contrast, the Digital Security Solutions segment recorded a 6 percent drop in revenue,
+mainly due to lower volumes of SIM cards for mobile communications. See the chapter "The Segments" for details.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of results of operations
+P see page 40 ff.
+> Return on Capital Employed (ROCE) to measure capital efficiency.
+The majority of revenue was generated in foreign currencies in the 2018 fiscal year, with revenue denominated in
+US dollars accounting for the largest share. The average euro/US dollar exchange rate changed from around 1.11
+in the previous fiscal year to 1.19 in the 2018 fiscal year. Mainly due to the unfavorable development of the US dollar
+exchange rate, currency effects across all currencies and over the fiscal year as a whole curbed revenue growth by
+approximately 4 percentage points. The year-on-year currency impact is measured by applying the previous fiscal
+year's relevant average exchange rates to 2018 fiscal year revenue.
+€ in millions, except percentages
+25%
+Japan
+534
+7%
+463
+7%
+Americas
+894
+12%
+881
+12%
+therein: USA
+719
+9%
+714
+10%
+Total
+7,599
+100%
+7,063
+100%
+1,735
+25%
+1,921
+therein: China
+2018
+2017
+Europe, Middle East, Africa
+2,443
+32%
+2,272
+32%
+therein: Germany
+1,171
+15%
+Significance of Greater China remains strong; China ahead of Germany as most important sales market
+1,094
+Asia-Pacific (excluding Japan, Greater China)
+1,129
+15%
+1,071
+15%
+Greater China
+2,599
+34%
+2,376
+34%
+15%
+Segment Result is the key figure of the Group for measuring operating performance. Expressed as a percentage of
+revenue (Segment Result Margin), it measures profitability of revenue and shows how well operations are being
+managed. The activities of Infineon's segments are managed on the basis of Segment Result. Responsibility for
+optimizing Segment Result within the framework of Group strategy (as approved by the Management Board) rests
+with the management teams of the relevant segments, acting, however, in coordination with the Management Board.
+Free cash flow from continuing operations enables us to measure how well operating profitability is being converted
+into cash inflows. This key figure also provides information on the efficient use of working capital and property,
+plant and equipment.
+Overall, reaching these financial targets gives rise to a sustainable increase in the value of the business, brought
+about by achieving a premium on the cost of capital in the long term.
+The three performance indicators described above are also the cornerstones of the system for variable compensation
+within Infineon. Most variable salary components for employees and management are directly linked to these
+performance indicators.
+06|2018
+07|2018
+08 |2018
+09|2018
+Infineon
+DAX
+-SOX
+Dow Jones US Semiconductor Index
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The Infineon share
+The Infineon share finished the 2018 fiscal year at a closing price of €19.57, a decline of 8 percent compared to the
+closing price of €21.27 at the end of the 2017 fiscal year. In general, the share's price developed positively during the
+first nine months of the previous fiscal year. The share value fluctuated between prices of approximately €21 and
+€25 and reached its highest value for the year in mid-June at €25.49. After this point a stronger share price decline
+began, with the lowest price in the previous fiscal year of €18.71 recorded in mid-September.
+The value development of comparable benchmark indices was highly varied. While the DAX also experienced a
+decline of minus 5 percent during the same period, the comparable industry benchmark indices rose considerably
+at the same time. The Philadelphia Semiconductor Index (SOX) increased by 17 percent and the Dow Jones US
+Semiconductor Index rose by 19 percent while US peers benefited from the strength of the euro. In US dollar terms,
+Infineon's performance was negatively impacted by the devaluation of the US dollar.
+Trading volumes and stock indices
+The average volume of Infineon shares traded in the Xetra system, measured in units, increased by 32 percent in the
+2018 fiscal year compared to the previous fiscal year. 5.4 million shares were traded daily in the 2018 fiscal year,
+compared to an average of 4.1 million shares traded daily in the previous fiscal year. Measured in euros the average
+daily trading volume even rose by 65 percent: In the 2017 fiscal year it was €74.3 million per day, while in the 2018
+fiscal year Infineon shares worth €122.6 million were traded daily.
+In the USA, the Infineon share is traded in the form of American Depositary Shares ("ADS") on the OTCQX Interna-
+tional over-the-counter market under the ticker symbol "IFNNY". The average daily ADS trading volume also rose in
+the 2018 fiscal year. The average daily number of ADS traded in the 2018 fiscal year increased to 165 thousand,
+compared to 98 thousand ADS per day in the previous year. The number of ADS outstanding rose from 21.8 million
+ADS as of 30 September 2017 to 31.7 million ADS at the end of the previous fiscal year.
+In the DAX ranking, Infineon improved by one place in terms of market capitalization, moving from 16th place at the
+end of the 2017 fiscal year to 15th place at the end of the 2018 fiscal year. In terms of the volume traded in euros in
+Xetra and on the Frankfurt trading floor during the last twelve months, Infineon moved up seven places: After ranking
+19th in the previous year, at the end of the 2018 fiscal year Infineon was ranked 12th. The Infineon share has been
+a part of the TecDAX since 25 September 2018 and as of 30 September 2018 was ranked 3rd, both in terms of market
+capitalization und trading volume, respectively.
+Shareholder structure
+As of 30 September 2018, three shareholders each held 3 percent or more than 3 percent of the Infineon shares
+issued. At the end of the 2017 fiscal year, the same three shareholders held more than 3 percent of shares each.
+The share capital held by retail investors increased slightly from 9.52 percent at the end of the 2017 fiscal year to
+9.81 percent at the end of the 2018 fiscal year.
+Shareholder structure
+Allianz Global Investors GmbH 5.74%
+Other 76.19%
+03/2018 04|2018 05|2018
+02|2018
+01|2018
+10|2017 11|2017 12|2017
+Dow Jones Sustainability World Index
+1 The number of shares issued includes own shares.
+2 Own shares were not taken into consideration for calculation of market capitalization.
+Bond information
+1.5% Infineon Bond from 10 March 2015
+Rating of S&P Global Ratings
+due on 10 March 2022, ISIN: XS1191116174
+since February 2016: "BBB" (outlook "stable")
+Share price development
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2018 fiscal year (daily closing prices)
+Infineon share price in €
+27.65
+5.26% BlackRock Inc.
+30 September 2017 = 100
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE) against the cost of
+capital, in order to ensure value creation.
+23.40
+21.27
+19.14
+120
+110
+100
+90
+17.02
+80
+130
+3.00% State of Norway
+9.81% Retail investors
+P see page 30
+Dividend
+(53)
+(53)
+983
+1,469
+(43)
+270
+(819)
+(850)
+(776)
+(836)
+(5)
+2,621
+7,063
+7,599
+2017
+2018
+62
+62
+Adjusted earnings per share (in euro) – diluted
+Diluted earnings per share (in euro)
+Basic earnings per share (in euro)
+Net income
+2,885
+Dow Jones Sustainability Europe Index
+3
+(142)
+In recent years Infineon has continuously increased its dividend payment. The dividend payment for the 2017 fiscal
+year was €0.25 per share. On 27 February 2018, the third business day after the Annual General Meeting, a total
+amount of €283 million was paid out to shareholders. At that point in time the number of shares entitled to a dividend
+was 1,130,200,929. As of 30 September 2018 the number of shares issued was 1,136,995,834. This figure includes
+the unchanged amount of 6 million shares owned by the Company, which are not entitled to a dividend. Based on
+Infineon's positive business development, a proposal is to be made to shareholders at the 2019 Annual General
+Meeting to increase the dividend for the 2018 fiscal year by 2 cents from €0.25 to €0.27 per share. For more information
+on Infineon's dividend policy, see "Sustainable value creation for our shareholders" in the chapter "Group strategy".
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+12
+61
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of results of operations
+Group performance
+Review of results of operations
+The consolidated statement of operations
+(193)
+€ in millions, except earnings per share
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income and expenses, net
+Operating income
+Net financial result (financial income and expenses, net)
+Income from investments accounted for using the equity method
+Income tax
+791
+1,218
+Revenue
+S&P-Europe-350
+25.52
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones Germany Titans 30
+59
+Combined Management Report | Our Group
+Internal management system | Sustainability at Infineon
+P see page 70 ff.
+P see page 73
+Liquidity performance indicators
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its disposal and an
+optimal capital structure. Liquidity is managed at Group level, not at segment level, and uses the following key
+performance indicators:
+› Gross cash position: Cash and cash equivalents plus financial investments.
+> Net cash position: Gross cash position less short-term and long-term debt.
+MSCI Germany
+> Investments: The total amount invested in property, plant and equipment and intangible assets, including
+capitalized development costs.
+For an analysis of changes in these key performance indicators during the 2018 fiscal year, see the chapter
+"Review of liquidity".
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the key operational
+figures for capacity utilization and forecast capacity requirements are analyzed. The results of this analysis are
+used in determining investment requirements.
+Actual and target values for performance indicators
+The chapter "Outlook" contains a table showing the actual values achieved in the 2018 fiscal year for the key
+performance indicators, along with expectations for the 2018 fiscal year and the 2019 fiscal year.
+Sustainability at Infineon
+59
+Sustainability activities are described in the separate report "Sustainability at Infineon".
+In accordance with the stipulations of the German CSR Directive Implementation Act, Infineon Technologies AG
+is required to publish a non-financial report at both Company and Group level for the first time for the 2018 fiscal
+year. This report is published jointly for Infineon Technologies AG and the Infineon Group as a summarized separate
+non-financial report within the sustainability report. The information required by law is marked accordingly to
+distinguish it from the voluntary reporting according to the GRI standards. The entire report "Sustainability at
+Infineon" including the chapters of the Non-Financial Report have been subjected to a limited assurance audit by
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany).
+The separate report "Sustainability at Infineon" including the summarized Non-Financial Report is available on
+Infineon's website. @www.infineon.com/csr_reporting
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+58
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Revenue growth is compared continuously with the rate of growth of relevant target markets. This ties in directly
+with our strategic target of profiting continuously from the growth of our target markets. A further indicator for
+future revenue growth is the number of design wins, whereby we regularly measure actual outcomes against targets.
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings and costs above the
+Segment Result line. This involves a review of gross profit, research and development expenses, selling, general
+administrative expenses and the ratio of these items to revenue. These performance indicators are used to manage
+the business at both Group and segment levels (for an analysis of changes in the fiscal year under report, see the
+chapter "Review of results of operations").
+Growth and profitability performance indicators
+Since all three performance indicators and especially Segment Result strongly correlate with revenue growth, the
+latter is not used as a key performance indicator in its own right, but is covered by the key indicators indirectly.
+Segment Result
+Segment Result is defined as operating income (loss) excluding the following: the net amount of asset impairments
+and reversals thereof (excluding capitalized development costs); the impact on earnings of restructuring and
+closures; share-based compensation expense; acquisition-related depreciation/amortization and other expenses;
+gains (losses) on sales of assets, businesses, or interests in subsidiaries as well as other income (expense), including
+litigation costs (see note 24 to the Consolidated Financial Statements for a computation of the relevant figures).
+Court and legal fees arising in conjunction with licensing Infineon's patents are included in Segment Result, as is
+any related income. Segment Result is the indicator that Infineon uses to evaluate the operating performance of its
+segments (for an analysis of Group and individual segment performance in the 2018 fiscal year, see the chapter
+"The segments" and the section "2018 fiscal year").
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Internal management system
+P see page 71
+Free cash flow
+An important key performance indicator for Infineon is the free cash flow figure, defined as net cash provided by
+or used in operating activities and net cash provided by or used in investing activities, both from continuing
+operations, after adjusting for cash flows related to the purchase and sale of financial investments. Free cash flow
+measures the ability to generate sufficient cash flows to finance day-to-day operations and fund required invest-
+ments out of the ongoing business. It is Infineon's stated target to sustainably generate positive free cash flow
+(see the chapter "Review of liquidity" for an analysis of free cash flow in the 2018 fiscal year).
+The main levers for generating free cash flow are profitability, the ability to manage working capital efficiently and
+the levels of investments.
+Combined Management Report | Our Group
+Infineon manages net working capital levels by focusing continuously on optimizing levels of inventories, trade
+receivables and trade payables.
+Return on Capital Employed (ROCE)
+The performance indicator RoCE measures the ability of capital to provide a return and is defined as the operating
+result after tax from continuing operations divided by capital employed. Capital employed consists of non-current
+assets and net working capital. RoCE shows the correlation between profitability and the capital resources required
+to run the business.
+ROCE =
+Operating result after tax from continuing operations
+Capital employed
+P see page 69
+Psee page 62 ff.
+This key performance indicator describes how efficiently a company manages its resources. ROCE is also analyzed
+by Infineon at Group level only and not at segment level. A comparison of a company's ROCE and its weighted
+cost of capital provides information on the extent to which returns have been generated in excess of shareholders'
+and debt holders' expectations. Thus RoCE serves as a tool for value-based management.
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets and net working capital.
+Asset intensity describes the amount of assets necessary to generate a certain level of revenue (for an analysis of
+the derivation of and the change in ROCE in the 2018 fiscal year, see the chapter "Review of financial condition").
+Other performance indicators
+The principal performance indicators described above are supplemented by others that provide information about
+growth potential, cost efficiency by functional area and liquidity.
+Effective investment management plays a key role with regard to managing free cash flow. Our stated strategy
+of managing investments systematically should be seen in this context. Free cash flow is considered by Infineon at
+Group level only and not at segment level.
+The Infineon share
+> Net working capital: Current assets less cash and cash equivalents, less financial investments, less assets
+classified as held for sale, less current liabilities excluding short-term debt, and current maturities of long-term
+debt, excluding liabilities classified as held for sale.
+60
+Trading in the USA
+Market capitalization²
+Daily average ADS traded
+Index membership (selected)
+@A full overview of other major indices in which the Infineon
+share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/
+infineon-share/index-membership/
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+€2,273,991,668 (as of 30 September 2018),
+€2,272,401,858 (as of 30 September 2017)
+1,136,995,834 (as of 30 September 2018),
+1,136,200,929 (as of 30 September 2017)
+6 million shares (as of 30 September 2018)
+DE0006231004
+623100
+IFX (share), IFNNY (ADS)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-XE
+The Infineon share
+€22,134 million (as of 30 September 2018)
+5,437,588 (in the 2018 fiscal year)
+ADS, over-the-counter trading on the OTC market (OTCQX)
+US$25,696 million (as of 30 September 2018)
+165,496 (in the 2018 fiscal year)
+DAX 30
+TecDAX
+Dow Jones STOXX Europe 600
+Daily average shares traded on Xetra
+Market capitalization²
+Shares: Frankfurt Stock Exchange (FSE)
+Listings
+(+49 89 234-26655).
+60
+@It is possible to
+participate in the
+telephone confer-
+ences via the internet
+as a webcast on
+Relations pages
+(www.infineon.com/
+investor).
+Basic information on shares
+Share types
+our Investor
+Shares issued¹
+Reuters
+Share capital
+Bloomberg
+Ticker symbol
+and by telephone
+our private share-
+holders by email
+(investor.relations
+@infineon.com)
+We are available to
+WKN
+ISIN
+Own shares
+Working capital
+Investments
+In the range of €1.9 billion to €2.7 billion
+and therefore within the target range
+of €1 billion + 10% to 20% of revenue
+Net cash position
+(gross cash position higher than debt)
+Between €1.0 billion and €1.2 billion
+Between €1.6 billion and 1.7 billion
+1,022
+Net cash position
+621
+Increase below
+revenue growth
+712
+1,254
+Increase in line
+Slight increase
++20%
+1,011
+Comparison of original outlook and actual figures for the 2018 fiscal year
+2,543
+€1 billion
+with revenue growth
+Revenue growth of 9 percent plus or minus 2 percentage points was forecast for the 2018 fiscal year. The actual
+growth figure of 8 percent was therefore within the expected range. Year-on-year growth was negatively impacted
+by the weaker US dollar. A Segment Result Margin of 17 percent was forecast at the mid-point of the planned range
+for revenue growth. Although revenue growth was slightly below the mid-point of the planned range, the Segment
+Result Margin came in at 17.8 percent.
+The world economy grew by 3.2 percent in the 2017 calendar year. In the spring of 2018, experts at the International
+Monetary Fund (IMF) initially predicted a slight increase in the global growth rate for the 2018 calendar year to
+3.4 percent. Over the summer and fall of 2018, these expectations were corrected downwards gradually, so that the
+IMF's latest prediction for economic growth in the 2018 calendar year now also stands at 3.2 percent. For the 2019
+calendar year, the experts are currently predicting global economic growth of 3.1 percent. However, the simmering
+trade dispute with the USA, increasing protectionist tendencies as well as rising interest rates and oil prices are
+seen as potential risks for future growth.
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+74
+Free cash flow totaled €618 million in the 2018 fiscal year and was therefore slightly above the expected range of
+between €500 million and €600 million. This outcome includes the proceeds from the sale of the major part of the
+RF power components business to Cree, Inc., offset in part by higher-than-expected investments and cash outflows
+in connection with the establishment of a joint venture with SAIC Motor Corporation Limited (China) and the
+acquisition of the start-up company Merus Audio (Denmark).
+The forecast for Return on Capital Employed (ROCE) had been for a level slightly higher than the previous year's
+figure of 14.9 percent. Thanks to the strong operating performance and the gain from the sale of the major part of
+the RF power components business, ROCE increased to a better-than-expected 20.5 percent.
+The gross margin improved from 37.1 percent in the 2017 fiscal year to 38.0 percent in 2018 fiscal year, in line
+with expectations. Operating expenses developed in line with or slightly better than expected. The prediction for
+research and development expenses was an increase slightly above revenue growth. The actual increase was
+limited to 8 percent, in line with revenue growth. Selling, general and administrative expenses were forecast to
+increase at a rate below revenue growth. The actual increase of 4 percent in the 2018 fiscal year was therefore in
+line with the forecast.
+Explanatory comments to the outlook for the 2019 fiscal
+Assumed euro/US dollar exchange rate
+year
+As a globally operating organization, Infineon generates revenue not only in euros, but also in foreign currencies,
+predominantly US dollars. It also incurs expenses in US dollars and, to some extent, in currencies correlated to the
+US dollar, such as the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of non-euro
+denominated revenue and expenses does not always balance out. For this reason, fluctuations in exchange rates,
+particularly between the euro and the US dollar, influence the amounts reported for revenue and earnings. A rising
+US dollar has a positive impact, whereas a falling US dollar has an adverse impact on revenue and earnings. Excluding
+the effect of currency hedging instruments, the impact of a deviation of 1 cent in the actual exchange rate of the
+US dollar against the euro compared to the forecast rate would amount to a change in Segment Result of approxi-
+mately €3 million per quarter or approximately €12 million per fiscal year compared to the forecast value. These
+figures assume, however, that the exchange rates of currencies correlated with the US dollar - in which expenses
+arise for Infineon - change in line with the euro/US dollar exchange rate. In terms of revenue, the impact of
+exchange rates is limited primarily to the euro/US dollar rate, where a deviation of 1 cent in the actual exchange
+rate compared to the forecast rate would continue to have an impact on revenue of approximately €9 million per
+quarter or approximately €36 million per fiscal year. Planning for the 2019 fiscal year is based on an assumed
+average exchange rate of US$ 1.15 against the euro.
+Growth prospects for the global economy and the semiconductor market
+The markets served by Infineon continue to benefit from the solid growth rates still being predicted for the global
+economy. The global semiconductor market relevant for Infineon (i.e. excluding memory ICs and microprocessors)
+grew by 9.7 percent in the 2017 calendar year on a US dollar basis. The market research company IHS Markit predicts
+that this market will grow by 8.6 percent in the 2018 calendar year and then by a further 6.1 percent in the 2019
+calendar year. In other words, the pace of growth of the global world semiconductor market relevant for Infineon
+is forecast to slow down, while still remaining faster than that predicted for the global semiconductor market as a
+whole (i.e. including memory ICs and microprocessors). The actual growth of this market in the 2017 calendar year
+was 21.9 percent. An increase of 15.8 percent and a decrease of 4.3 percent are predicted for the 2018 and 2019
+calendar year, respectively. These predictions mainly reflect how the market for memory ICs is expected to develop.
+After an actual growth rate of 60.7 percent in the 2017 calendar year, the market for memory ICs is predicted to
+grow by 31.8 percent and 2.4 percent in the calendar years 2018 and 2019 respectively. All growth figures are based
+on market sizes measured in US dollars.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In the range of €1.8 billion to €2.6 billion
+and therefore within the target range
+of €1 billion + 10% to 20% of revenue
+Net cash position
+(gross cash position higher than debt)
+Between €650 million and €850 million
+Between €1.1 billion and 1.2 billion
+850
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+4%
+8%
+1,571
+€ in millions
+70
+70
+Cash flow
+Review of liquidity
+Review of liquidity
+Group performance
+Combined Management Report | Our 2018 fiscal year
+69
+69
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The reported ROCE was calculated using actual capital employed, without adjustment for exceptional factors such
+as provisions recorded in connection with the Qimonda insolvency, purchase price allocations for acquisitions as
+well as changes in deferred tax assets and liabilities, each of which influences the level of capital employed.
+2018
+1 The financial result for both the 2018 and 2017 fiscal year amounted to negative €53 million, and included negative €45 million and negative
+€56 million, respectively, of net interest result.
+20.5%
+ROCE 1/②
+5,695
+6,168
+Capital employed ②
+323
+25
+Short-term debt and current maturities of long-term debt
+(2,098)
+(23)
+(11)
+(2,182)
+(1,592)
+14.9%
+(1,811)
+2017
+1,728
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Net cash used in financing activities from continuing operations in the 2017 fiscal year amounted to €340 million,
+comprising mainly a cash outflow of €248 million for the dividend payment for the 2016 fiscal year.
+Net cash used in financing activities from continuing operations in the 2018 fiscal year totaled €542 million and
+was mainly impacted by repayments of long-term debt amounting to €321 million (see note 12 to the Consolidated
+Financial Statements). In addition, the dividend for the 2017 fiscal year amounting to €283 million was paid.
+Debt repayments and dividend payment result in net cash used in financing activities
+from continuing operations
+Net cash used in investing activities from continuing operations in the previous fiscal year totaled €1,131 million.
+Investments in property, plant and equipment and in intangible assets amounted to €1,022 million.
+Net cash used in investing activities from continuing operations totaled €1,163 million in the 2018 fiscal year,
+including investments in property, plant and equipment (€1,090 million) and in intangible and other assets
+(€164 million). Net purchases of financial investments amounted to €210 million. These outflows were partly
+offset by cash received in connection with the sale of the major part of the RF components business to Cree, Inc.
+(see note 6 to the Consolidated Financial Statements) amounting to €323 million.
+Net cash used in investing activities from continuing operations influenced by investments
+in property, plant and equipment
+Net cash provided by operating activities from continuing operations down year-on-year
+Net cash provided by operating activities from continuing operations in the 2018 fiscal year amounted to
+€1,571 million, down by €157 million compared to the previous fiscal year's figure of €1,728 million. Taking income
+from continuing operations before depreciation, amortization, impairment losses, interest, income taxes and the
+gain from the sale of the major part of the RF power components business to Cree, Inc., amounting to €2,054 million
+(2017: €1,806 million) as the starting point, changes in inventories, trade receivables and trade payables totaling
+€209 million reduced net cash provided by operating activities from continuing operations (2017: increased by
+€13 million). Cash outflows for interest and income taxes totaled €262 million (2017: €191 million).
+Psee page 136
+P see page 131
+235
+Net cash provided by operating activities from continuing operations
+(128)
+2
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+252
+(130)
+(5)
+4
+Net change in cash and cash equivalents from discontinued operations
+Cash-relevant change in cash and cash equivalents
+(340)
+(542)
+(1,131)
+(1,163)
+Net cash used in investing activities from continuing operations
+Net cash used in financing activities from continuing operations
+(17)
+(860)
+(732)
+9,945
+Equity up mainly due to net income for the year
+Review of financial condition
+Group performance
+Combined Management Report | Our 2018 fiscal year
+57%
+1,532
+1,834
+806
+790
+726
+1,044
+Euro
+US dollar
+Equity increased by €810 million (14 percent) to stand at €6,446 million at the end of the reporting period (30 Sep-
+tember 2017: €5,636 million). The increase was mainly attributable to net income for the 2018 fiscal year amounting
+to €1,075 million. The payment of the dividend for the 2017 fiscal year reduced equity by €283 million.
+1,834
+2018
+2017
+€ in millions
+1,532
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+43%
+2017
+53%
+2018
+Debt by currencies
+By contrast, debt decreased overall by €302 million. This figure includes the repayment of a €300 million bond relating
+to refinancing for the acquisition of International Rectifier. Information on debt maturities is provided in note 12 to
+the Consolidated Financial Statements.
+Total liabilities stood at €4,433 million as of 30 September 2018 and were therefore €124 million (3 percent) higher
+than one year earlier (€4,309 million). Trade payables increased by €161 million, mainly as a consequence of the
+revenue growth recorded by the segments and high levels of investment. Current and non-current provisions went
+up o in total by €147 million (see note 13 to the Consolidated Financial Statements for details), while pensions plans
+and similar commitments increased by €49 million (see note 14 to the Consolidated Financial Statements for details).
+47%
+The equity ratio improved to 59.3 percent as of the end of the reporting period (30 September 2017: 56.7 percent).
+ROCE of 20.5 percent generated
+Operating income from continuing operations after tax rose by 49 percent from €847 million to €1,263 million
+year-on-year. Capital employed, however, increased by only 8 percent from €5,695 million as of 30 September 2017
+to €6,168 million as of 30 September 2018. As a result, the Return on Capital Employed (ROCE) rose sharply from
+14.9 percent to 20.5 percent. The performance again enabled Infineon to more than cover its cost of capital in the
+2018 fiscal year.
+10,879
+Total current liabilities
+Assets classified as held for sale
+Financial investments
+Cash and cash equivalents
+Plus/minus:
+Assets
+847
+1,263
+(142)
+(193)
+3
+(5)
+3
+(8)
+983
+1,469
+2017
+2018
+Operating income from continuing operations after tax ①
+Gain from investments accounted for using the equity method
+Income tax
+Financial result excluding interest result¹
+Plus/minus:
+Operating income
+38.0%
+836
+€ in millions
+ROCE for the 2018 and 2017 fiscal years is calculated as follows:
+Group performance
+Review of liquidity
+71
+Free cash flow
+Outlook
+FY 2019
+73
+FY 2018
+Actuals
+Original Outlook
+FY 2018
+Growth and profitability
+performance indicators
+Supplementary
+14.9%
+ROCE
+continuing operations
+Free cash flow from
+594
+17.1%
+FY 2017
+Actuals
+Principal performance indicators
+€ in millions, except percentages
+The following table and subsequent comments compare the actual and forecast values of Infineon's key
+performance indicators for the 2018 fiscal year and show the outlook for the 2019 fiscal year.
+Actual and target values for performance indicators
+Outlook
+Report on expected
+developments, together
+with associated material
+risks and opportunities
+Outlook
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Segment Result Margin
+About 17% (at the mid-point of the
+planned range for revenue growth)
+Between €500 million and €600 million
+17.8%
+618
+Gross cash position
+2,452
+€1 billion
++21%
+618
+9%
+Increase by 9%
+8%
+Increase by 11%
+plus/minus 2 percentage points
+Slight increase
+Increase slightly
+above revenue growth
+Increase below
+revenue growth
+plus/minus 2 percentage points
+administrative expenses
+819
+Selling, general and
+1%
+development expenses
+776
+Research and
+37.1%
+Gross margin
+compared to previous year
+Change in revenue
+performance indicators
+Moderate decrease
+20.5%
+Slight increase
+About 18% (at the mid-point of the
+planned range for revenue growth)
+Slightly positive up to €200 million
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide are arranged,
+structured and managed either directly or indirectly by the Group Finance & Treasury department in accordance
+with stipulated treasury principles.
+Increase in trade payables and provisions more than offset decrease in debt
+In the context of centralized liquidity management and where permitted by law and economically feasible, cash
+pooling structures are in place for liquidity management purposes in order to ensure the best possible allocation
+of liquidity within the Group and reduce external financing requirements. Liquidity accumulated at Group level is
+invested centrally by the Group Finance & Treasury department, based on a conservative approach to investments,
+in which preservation of capital is prioritized over return maximization. The Group Finance & Treasury department
+is also responsible for managing currency and interest rate risks. We employ the following derivative financial
+instruments for hedging purposes: forward foreign currency contracts to reduce exchange rate exposures (to the
+extent foreign currency cash flows are not offset within the Group) and commodity swaps to reduce price risks
+for expected purchases of gold. Derivative financial instruments are not used for trading or speculative purposes.
+Further information regarding derivative financial instruments and the management of financial risks is provided
+in notes 22 and 23 to the Consolidated Financial Statements.
+The Infineon treasury's stated objective is to ensure financial flexibility based on a solid capital structure. It is of
+prime importance for all companies in the semiconductor industry to ensure that sufficient cash funds are available
+to finance operating activities and planned investments throughout all phases of the business cycle. Debt should
+only constitute a modest proportion of the financing mix, so that headroom is available at all times.
+Group-wide treasury principles are in place regarding all issues relating to liquidity and financing, such as banking
+policies and strategies, execution of financing agreements, liquidity and investment management worldwide,
+currency and interest rate risk management and the handling of external and intragroup cash flows.
+Short-term debt and current maturities of long-term debt
+Minus:
+Gross cash position
+Financial investments
+Cash and cash equivalents
+€ in millions
+The following table reconciles the gross cash position and the net cash position (i.e. after deduction of debt). Since
+some liquid funds are held in the form of financial investments, which, for IFRS purposes, are not considered to be
+"cash and cash equivalents", Infineon reports on its gross and net cash positions in order to provide investors with
+a better understanding of its overall liquidity. The gross and net cash positions are determined as follows from the
+Consolidated Statement of Financial Position:
+Gross cash position and net cash position
+Free cash flow in the previous fiscal year amounted to €594 million. Net cash provided by operating activities
+from continuing operations amounting to €1,728 million easily exceeded total cash outflows of €1,134 million
+used for investments in property, plant and equipment, intangible and other assets as well as for the acquisition
+of the shares of MoTo Objekt Campeon GmbH & Co. KG.
+Free cash flow in the 2018 fiscal year amounted to €618 million. Net cash provided by operating activities from
+continuing operations amounting to €1,571 million exceeded cash outflows of €1,254 million used for investments
+in property, plant and equipment, intangible and other assets. The free cash flow includes the cash received in con-
+nection with the sale of the major part of the RF components business to Cree, Inc. (see note 6 to the Consolidated
+Financial Statements).
+Net cash provided by operating activities exceeds investments
+P see page 131
+Long-term debt
+594
+(3)
+210
+(1,131)
+(1,163)
+1,728
+1,571
+2017
+2018
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+Net cash provided by operating activities from continuing operations
+€ in millions
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in operating activities and
+net cash provided by and/or used in investing activities, both from continuing operations, after adjusting for cash
+flows related to the purchase and sale of financial investments. Free cash flow serves as an additional performance
+indicator, since Infineon holds part of its liquidity in the form of financial investments. This does not mean that
+the free cash flow calculated in this way is available to cover other disbursements, since dividend, debt-servicing
+obligations and other fixed disbursements are not deducted. Free cash flow should not be seen as a replacement
+or superior performance indicator, but rather as an additional useful item of information over and above the
+disclosure of the cash flow reported in the Consolidated Statement of Cash Flows, and as a supplementary
+disclosure to other liquidity performance indicators and other performance indicators derived from the IFRS
+figures. Free cash flow only includes amounts from continuing operations, and is derived as follows from the
+Consolidated Statement of Cash Flows:
+618
+Total debt
+Net cash position
+30 Septem-
+ber 2018
+Principles and structure of Infineon's treasury
+Taking into account the financial resources available to Infineon - including internal liquidity on hand, net cash
+that can be generated, and available credit facilities (€72 million; 2017: €72 million; see note 12 to the Consolidated
+Financial Statements for further information) - we assume that we will be able to cover our planned capital require-
+ments for the 2019 fiscal year. This includes fixed contractual obligations, such as investments, leasing arrangements,
+fixed service and supply agreements for commodities, input materials, electricity, gas and other similar items
+(see note 18 to the Consolidated Financial Statements for further information). Planned investments are discussed
+in the chapter "Outlook".
+Psee page 152 ff.
+Psee page 73 ff.
+P see page 147
+Psee page 136
+72
+Review of liquidity
+Group performance
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The gross cash position as of 30 September 2018 increased by €91 million. Free cash flow totaling €618 million
+exceeded the sum of the dividend payment (€283 million) and the repayment of debt (€321 million). The release
+of €75 million of restricted cash also had a positive effect.
+618
+1,011
+1,834
+1,532
+1,511
+1,507
+323
+25
+2,452
+2,543
+1,592
+1,811
+860
+732
+30 Septem-
+ber 2017
+Treasury at Infineon is based on a centralized approach in which the Group Finance & Treasury department is
+responsible for all major tasks and processes worldwide relating to financing and treasury matters.
+Liquidity performance indicators
+P see page 136 f.
+P see page 137
+Combined Management Report | Our 2018 fiscal year
+99
+66
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior
+performance indicator, but rather as additional information to net income and earnings per share (diluted)
+determined in accordance with IFRS. The calculation of earnings per share in accordance with IFRS is presented
+in detail in note 7 to the Consolidated Financial Statements.
+1 Without impairments/reversals of impairments on capitalized development costs since 1 October 2017, but impairments in connection with the sale
+of the largest part of the Radio Frequency Power Components business to Cree, Inc. are included here. Previous periods figures were not adjusted.
+2 The calculation of the adjusted earnings per share is based on unrounded figures.
+0.85
+0.98
+1,134
+1,134
+967
+1,116
+Group performance
+Adjusted earnings per share (in euro) - diluted²
+Adjusted net income from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+(49)
+9
+5
+36
+18
+15
+(272)
+13
+5325
+153
+Weighted-average number of shares outstanding (in million) - diluted
+118
+Review of financial condition
+€ in millions, except percentages
+ber 2017
+ber 2018
+30 Septem-
+30 Septem-
+67
+6 Calculation see following section about ROCE in this chapter
+P see page 69
+5 Inventory intensity = Inventories (net)/Total assets
+4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
+3 Return on equity = Net income/Total equity
+2 Equity ratio = Total equity/Total assets
+1 Return on assets = Net income/Total assets
+Review of financial condition
+ROCE 6
+Debt-to-equity ratio 4
+Return on equity 3
+Equity ratio 2
+Return on assets 1
+Statement of Financial Position ratios:
+Total equity
+Total liabilities
+Non-current liabilities
+Current liabilities
+Total assets
+Non-current assets
+Current assets
+Inventory intensity 5
+13
+-
+7
+The loss from discontinued operations, net of income taxes, for the 2018 fiscal year amounted to €143 million
+(2017: €1 million). The deterioration was mainly attributable to the increase in provisions for Qimonda in connection
+with pending legal proceedings. For further information on risks relating to the Qimonda insolvency see note 19
+to the Consolidated Financial Statements.
+Loss from discontinued operations
+Further details regarding income tax expense are provided in note 5 to the Consolidated Financial Statements.
+As in the previous fiscal year, income tax expense for the 2018 fiscal year was affected by foreign tax rates,
+non-deductible expenses, tax credits and changes in valuation allowances on deferred tax assets.
+Based on pre-tax income of €1,411 million and an income tax expense of €193 million, the effective tax rate for
+the 2018 fiscal year amounted to 13.7 percent. The equivalent figures for the 2017 fiscal year were an income tax
+expense of €142 million (15.2 percent) on pre-tax income of €933 million.
+Effective tax rate of 13.7 percent
+The net amount from other operating income and expenses developed positively compared to the previous fiscal
+year, turning from negative €43 million to positive €270 million. The net amount reported for the 2018 fiscal year
+includes, in particular, the gain of €270 million which arose on the sale of the major part of the RF power components
+business to Cree, Inc. (see note 6 to the Consolidated Financial Statements).
+Other operating income increased
+At 11.2 percent of revenue selling, general and administrative expenses were lower in percentage terms than in
+the previous fiscal year (11.6 percent). In absolute terms, they went up by €31 million or 4 percent to €850 million,
+and therefore at a less pronounced rate than revenue growth.
+11.6%
+11.2%
+4%
+Sharp improvement in earnings per share
+4%
+850
+2017
+2018
+Percentage of revenue
+Change year-on-year
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+Review of results of operations
+Group performance
+Combined Management Report | Our 2018 fiscal year
+P see page 131
+819
+The improvement in net income resulted in a corresponding increase in earnings per share. Compared to earnings
+per share of €0.70 (basic and diluted) in the previous fiscal year, the corresponding figures for the 2018 fiscal year
+both amounted to €0.95.
+P see page 129 ff.
+Psee page 148 ff.
+791
+1,218
+2017
+2018
+the annually updated earnings forecast
+Revaluation of deferred tax assets resulting from
+Tax effects on adjustments
+Other income and expense, net
+or interests in subsidiaries, net
+(Gains)/losses on sales of assets, businesses,
+Acquisition-related depreciation/amortization and other expenses
+Share-based compensation expense
+Impact on earnings of restructuring and closures, net
+Impairments on assets (excluding capitalized development costs) including assets classified
+as held for sale, net of reversals'
+Plus/minus:
+shareholders of Infineon Technologies AG - diluted
+Net income from continuing operations attributable to
+€ in millions (unless otherwise stated)
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase price allocations
+for acquisitions (in particular International Rectifier) as well as by other exceptional items. To enable better
+comparability of operating performance over time, Infineon computes adjusted earnings per share (diluted)
+as follows:
+Further improvement in adjusted earnings per share
+Review of results of operations
+Group performance
+Combined Management Report | Our 2018 fiscal year
+P see page 132
+99
+65
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Change
+year-on-year
+5,423
+4,871
+11%
+Debt
+Trade and other payables
+971
+2,543
+2,452
+851
+Trade and other receivables
+Gross cash position
+€ in millions
+2018
+2017
+€ in millions
+2018
+Inventories
+2017
+57%
+5%
+5%
+5%
+6%
+5%
+5%
+14%
+18%
+11%
+10%
+10,879
+59%
+1,240 1,480
+Pension plans and
+Property, plant and equipment
+9,945 10,879
+5,636 6,446
+532
+463
+636
+489
+552
+503
+1,532
+1,834
+1,181
+1,020
+2017 2018
+9,945 10,879
+Equity
+603
+545
+Other assets
+Other liabilities
+648
+612
+Deferred tax assets
+Provisions
+similar commitments
+1,586 1,596
+Intangible assets
+2,659 3,038
+9,945
+P see page 138 ff.
+Liabilities and equity
+2017
+32.5%
+23.8%
+14.0%
+16.7%
+56.7%
+59.3%
+7.9%
+9.9%
+14%
+5,636
+6,446
+3%
+13.6%
+4,309
+2%
+2,211
+2,251
+4%
+2,098
+2,182
+9%
+9,945
+10,879
+8%
+5,074
+5,456
+4,433
+12.5%
+20.5%
+14.9%
+5%
+5%
+6%
+6%
+15%
+16%
+28%
+27%
+14%
+12%
+9%
+9%
+23%
+25%
+10,879
+9,945
+Assets
+Non-current assets increased by €382 million from €5,074 million to €5,456 million over the course of fiscal year under
+report. Investments in property, plant and equipment totaling €1,090 million were higher than the depreciation and
+amortization expense of €702 million. Investments related primarily to the manufacturing sites in Dresden, Regensburg
+(both Germany), Kulim, Melaka (both Malaysia) and Villach (Austria). Investments in intangible assets (€164 million)
+were slightly higher than the corresponding amortization expense (€159 million).
+Increase in non-current assets due to higher level of investments
+68
+Review of financial condition
+Group performance
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Current assets increased by 11 percent from €4,871 million at the end of the previous fiscal year to €5,423 million as
+of 30 September 2018. Contributing to this development, inventories and trade receivables went up by €360 million
+in total, reflecting revenue growth across the segments. In addition, Infineon's gross cash position (sum total of cash
+and cash equivalents and financial investments) increased by €91 million (see "Gross cash position and net cash
+position" in the chapter "Review of liquidity" for further information).
+Current assets influenced by increase in inventories and trade receivables
+P see page 71 f.
+2018
+4%
+Working capital is forecast to finish the 2019 fiscal year at between €1.0 billion and €1.2 billion.
+Significant risks
+Product quality assurance is a key success factor for the business. Potential quality risks – for example, due to
+the high utilization levels - can affect yield fluctuations and hence our ability to supply customers. Shortfalls
+in product quality can lead to product recalls and potential costs related to liability claims. In addition, quality
+risks could also damage Infineon's reputation and thus have a significant adverse impact on future earnings.
+Product development delays (RC: medium)
+The ever-increasing complexity of technologies and products, shorter development cycles and higher customer
+expectations can cause a great deal of tension in the field of product development. Buffer times built into processes
+to compensate for potential delays are reduced accordingly. In the event of being unable to execute our development
+plans at the desired quality levels, the outcome could be development delays and increased development costs,
+which could have an adverse impact on our financial condition, liquidity, cash flows and earnings.
+Manufacturing cost trends - raw material prices, cost of materials and process costs (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost trends. In this context, measures
+aimed at optimizing manufacturing costs for raw materials and supplies, energy, labor and automation, as well as
+for bought-in services from external business partners, may not be feasible to the extent envisaged.
+Moreover, our dependence on various materials (such as wafer substrates) and raw materials (such as gold and
+copper) used in manufacturing, as well as our energy requirements expose us to substantial price risks. We are also
+dependent on supplies of the so-called rare earths required for selected manufacturing processes in conjunction
+with process integration. At the time of writing, financial instruments are in place to hedge our price risk exposure
+for gold wire during the 2019 fiscal year, based on planned volume requirements. The prices of raw materials and
+energy have recently been subject to significant fluctuation, and there is no reason to assume the situation will
+change in the near future. If we are unable to offset cost rises or pass them on to customers via price adjustments,
+it could have an adverse impact on earnings.
+Determining and adjusting manufacturing volumes (RC: medium)
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon to develop competi-
+tive and high-quality products designed to provide customized technological solutions. In view of the rapid pace of
+technological change and increasingly stringent customer requirements, coordination processes need to become
+increasingly sophisticated. Failure to continue making progress in this area could result in quality problems,
+product development or market maturity delays as well as higher R&D expenses and hence adversely impact our
+earnings performance.
+One risk that semiconductor companies operating in-house manufacturing facilities typically face is that of delays
+in the ramping-up of production volumes at new manufacturing sites, or in case of transfers of technologies. One
+good example is in the Automotive segment, where customers' product approval and testing processes can take
+place over an extended period of time, thus influencing our global manufacturing strategy as well as short- and
+medium-term capacity utilization. Failure to anticipate these changes in the manufacturing process in good time
+could result in capacity shortages and hence lower revenue on the one hand as well as costs incurred due to
+under-utilization on the other.
+Dependence on individual manufacturing sites (RC: medium)
+Our South East Asian manufacturing sites are of critical importance for our production. If, for example, political
+upheavals or natural disasters in the region were to impede our ability to manufacture at these sites on the planned
+scale or to export products manufactured at those sites, it would have an adverse impact on our financial condition,
+liquidity and earnings. Our current manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as expropriation of assets. The transfer of manufacturing capacities from these sites would,
+therefore, not only involve a great deal of time and technical effort, Infineon would also be required to bear the
+necessary cost of investment.
+Product quality trends (RC: medium)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Psee page 155 ff.
+P see page 148 ff.
+P see page 148 ff.
+Dependence on individual suppliers (RC: medium)
+We cooperate with numerous suppliers who provide us with materials and services, or who manage parts of our
+supply chain. We do not always have alternative sources for some of these suppliers and therefore depend on their
+ability to deliver products of the required quality. Failure of one or more of these suppliers to meet their obligations
+to Infineon could have an adverse impact on our earnings performance.
+Need for qualified staff (RC: medium)
+One of our key success factors is the availability of sufficient qualified employees at all times. There is, however, a
+general risk of losing qualified staff or not being able to recruit, train and retain adequately qualified staff within
+the business. A lack of technical or management staff could, among other things, restrict future growth and hence
+adversely impact our earnings performance.
+Combined Management Report | Our 2018 fiscal year
+Financial risks
+81
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+80
+60
+Cyclical market and sector development (RC: high)
+The worldwide semiconductor market is dependent on global economic growth and hence subject to fluctuations.
+Our target markets continue to be exposed to the risk of short-term market fluctuations. As a result, our own fore-
+casts of future business developments are subject to a high degree of uncertainty. It is possible, for instance, that
+future market downturns will follow another pattern, for example, an L shape. The absence of market growth or
+its decline would make it considerably more difficult to attain our own growth target. In the event that we are
+unprepared for market fluctuations, or our response to such fluctuations turns out to be inappropriate, this could
+have a sustained materially adverse impact on Infineon's operations, financial condition, liquidity, cash flows and
+earnings.
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replaceability of products. Due to the
+resulting aggressive pricing policies, we may be unable to achieve our long-term strategic goals of gaining and/or
+maintaining market share and of product pricing. Moreover, accelerating M&A (Merger and Acquisition) activity
+within the semiconductor industry could result in even tougher competition. Potential benefits for competitors
+in this market include improved cost structures and stronger sales channels. Overall, this situation could have an
+adverse impact on Infineon's earnings.
+Risk and opportunity report
+Operational risks
+The reliability and security of Infineon's information technology systems are of crucial importance. At the same
+time, the world has seen a general rise in the level of threats to data security. This applies to the deployment of
+IT systems to support business processes on the one hand and internal and external communications on the other.
+Despite the array of precautionary measures put in place, any major disruption to these systems could result
+in risks relating to the confidentiality, availability and reliability of data and systems used in development, manu-
+facturing, selling or administration functions, which, in turn, could have an adverse impact on our reputation,
+competitiveness and operations.
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present additional risks that
+could result in loss of manufacturing and supply bottlenecks.
+Increasingly dynamic markets (RC: high)
+The accelerating pace of events in the markets in which we operate, increased demands for flexibility by our
+customers and short-term changes in order volumes could result in rising costs due to the under-utilization of
+manufacturing capacities, higher inventory levels and unfulfilled commitments to suppliers.
+Thus, despite the fact that manufacturing processes and sites have become even more flexible, fluctuations in
+capacity utilization levels and purchase commitments, coupled with idle costs at manufacturing sites, nevertheless
+pose risks related to our cost position. These risks could possibly jeopardize our ability to attain growth and profit-
+ability targets that are based on cycle averages.
+The situation is exacerbated by the fact that our products are highly dependent on the degree of success achieved
+by individual customers in their own markets. Furthermore, there is a risk of losing future business and design
+wins if we are unable to deliver volumes over and above our contractual obligations if called upon by the customer
+to do so. In the case of unexpectedly high demand, we therefore face the challenge of having to deliver increased
+volumes that require an appropriate level of upfront investment. This could have an adverse impact on our planned
+investment ratio and, ultimately, on earnings.
+Dependence on the success of specific customers may also grow if they account for an above-average share of
+Infineon's revenue and earnings. This situation could be driven by an exceptionally strong performance by the
+relevant customer, resulting, for instance, from exceptional demand for its products or from consolidation trends,
+in particular those affecting our first- and second-tier customers.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Data and IT systems security (RC: high)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Currency risks (RC: medium)
+Specified currency risks are hedged Group-wide by means of derivative financial instruments. These hedges are
+based on forecasts of future cash flows, the occurrence of which is uncertain. Under these circumstances, exchange
+rate fluctuations could - despite hedging measures - also have an adverse impact on earnings.
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate these risks, we rely
+upon the advice of both in-house and external experts and provide suitable training to our employees.
+Measures to implement our risk management strategy
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor sector from
+economic and demand fluctuations and the risks related to Infineon's operations, financial condition, liquidity
+and earnings by closely monitoring changes in early warning indicators as well as by developing specific response
+strategies appropriate to the current position within the economic cycle. This can be done, for instance, by
+rigorously adjusting capacities and inventory levels at an early stage, initiating cost-saving measures and making
+flexible use of external manufacturing capacities, both at frontend and backend facilities.
+At an operational level, we have adopted various quality management strategies aimed at avoiding quality risks
+(such as "Zero Defects" and "Six Sigma"), to prevent or solve problems and to improve our business processes. Our
+Company-wide quality management system has been certified on a worldwide basis in accordance with ISO 9001
+and ISO/TS 16949 for a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying and eliminating the
+reasons for quality-related problems at an early stage.
+A structured project management system is in place to handle development projects, including customer-specific
+projects. Clear project milestones and verification procedures required to be carried out during a project as well as
+clearly defined limits of authority help us identify potential project risks at an early stage and counter these risks
+with specific measures.
+We seek to minimize procurement-related risks through appropriate purchasing strategies and techniques, including
+constant product and cost analysis ("Best Cost Country Sourcing" and "Focus-on-Value”). These programs include
+cross-functional teams of experts who are responsible for the standardization of purchasing processes with respect
+to material and technical equipment.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-compliance with anti-trust
+regulations due to lack of knowledge or failure to make the people involved in such transactions adequately aware
+of the issues. This can result in high levels of cost (e.g. significant time spent by management, assignment of
+attorneys) and fines. Infineon's reputation may also suffer under these circumstances.
+84
+We minimize legal risks relating to intellectual property rights and patents by pursuing a well-defined patent strategy,
+including thorough patent research and selective development and registration of Infineon patents as well as pre-
+cautionary protective measures in the form of agreements with major competitors. However, no such opportunities
+exist to safeguard against risks of this nature in the case of companies specializing in exploiting patent rights.
+We have established a Group-wide compliance management system with the aim of managing compliance-related
+risks on a systematic, comprehensive and sustainable basis. Under this system, major preventive procedures
+are continuously developed, other elements of the system revamped or strengthened, and appropriate responses
+established for possible or actual incidences of non-compliance with internal or external regulations. The Compliance
+Officer reports on a quarterly basis to the Chief Financial Officer and bi-annually to the Investment, Finance and
+Audit Committee of the Supervisory Board.
+In certain cases, insurance policies have been taken out to protect against potential claims and liability risks, with
+the aim of avoiding or at least minimizing any adverse impact on Infineon's financial condition and liquidity.
+Overall statement by Group Management on risk situation
+The overall risk assessment is based on a consolidated view of all significant individual risks. We are not currently
+aware of any substantial risks capable of jeopardizing Infineon's going-concern status.
+Opportunities
+The principal opportunities are described in the following section. The list is not exhaustive and represents only
+a cross-section of the opportunities available. Our assessment of these opportunities is subject to continuous
+change, reflecting the fact that our business, our markets and the technologies we deploy are continuously subject
+to new developments, bringing with them fresh opportunities, causing others to become less relevant or otherwise
+changing the significance of an opportunity from our perspective. Depending on the potential degree of impact
+and the estimated probability of occurrence, each of these opportunities is assigned to an "opportunity class” (OC)
+in the same way that risks are allocated to a risk class. These classifications are shown in parentheses (e.g. "OC:
+medium").
+New technologies and materials (OC: medium)
+We are constantly striving to develop new technologies, products and solutions and to improve on existing ones,
+both separately and in collaboration with customers. We therefore continually invest in research and development
+relating to the use of new technologies and materials. Technologies and materials in current use may well lose their
+predominance in the foreseeable future, such as silicon, which is reaching its physical limits in some applications.
+We see numerous opportunities for working with new materials, such as those associated with silicon carbide or
+gallium nitride, to develop more powerful and/or lower-cost products. These materials could well have a positive
+influence on our ability to attain our strategic growth and profitability targets.
+Strategic approach "Product to System" (OC: medium)
+In response to the general increase in threats to data security and the high degree of professionalism meanwhile
+applied in the area of cybercrime, we have initiated an information security program to further improve protection
+against hacking attacks and related risks to our IT systems, networks, products, solutions and services. Information
+security is achieved primarily with the aid of Infineon's systematically applied and global Information Security
+Management System (ISMS), the prime objectives of which are to identify and measure all potential IT risks and
+to ensure that effective processes and tools are in place to minimize and avoid risk. The ISMS covers all areas
+of Infineon's business and is certified to the globally recognized ISO/IEC 27001 norm. All relevant risk areas are
+continuously monitored and optimized in conjunction with regular internal and external audits.
+Our involvement and participation in various regional markets around the world creates cash flows in a number
+of currencies other than the euro - primarily in US dollars. A significant share of revenue on the one hand and of
+operating costs and investments on the other is denominated in US dollars and correlated currencies. For the most
+part, Infineon generates a US dollar surplus from these transactions.
+In order to develop or expand our business, we may seek to acquire other businesses or enter into various forms
+of cooperation arrangements. In the case of acquisitions, there is a risk that these activities prove to be unsuccessful,
+particularly regarding the integration of people and products in existing business structures. These issues could
+adversely impact our financial condition and earnings performance.
+Asian markets are particularly important to our long-term growth strategy. Our operations in China are influenced
+by a legal system that may be subject to change. One example is the fact that local regulations could make it
+mandatory to enter into partnerships with local companies. These circumstances could lead on the one hand to
+Infineon's intellectual property no longer being sufficiently protected and on the other to intellectual property
+developed by Infineon in China not being freely transferable to other countries and locations, thus impairing
+revenue and profitability.
+Risk of default of banking partners (RC: medium)
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the potential risk of a
+default by one or more of the banking partners with whom we do business. We mitigate this risk - which could still
+arise despite various state-insured deposit protection mechanisms - by a combination of risk avoidance analyses
+and risk-spreading measures. The failure of these measures could have a materially adverse impact on Infineon's
+financial condition and liquidity situation.
+Further information regarding the management of financial risks is provided in note 23 to the Consolidated
+Financial Statements.
+Legal and compliance risks
+Qimonda insolvency (RC: high)
+Due to the insolvency proceedings of Qimonda and the related action of the insolvency administrator, we are
+exposed to substantial risks, which are described in detail in note 19 to the Consolidated Financial Statements.
+Provisions are recognized in connection with these matters as of 30 September 2018. The provisions reflect the
+amount of those liabilities that management believes are probable and can be estimated with reasonable accuracy
+at that time. There can be no assurance that these provisions will be sufficient to cover all liabilities that may be
+incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Intellectual property rights and patents (RC: medium)
+As with many other companies in the semiconductor industry, allegations are made against us from time to
+time that we have infringed other parties' protected rights. Regardless of the prospects of success of such claims,
+substantial legal defense costs can arise.
+Acquisitions and cooperation arrangements (RC: medium)
+Whilst we often benefit from cross-licensing arrangements with major competitors, no such opportunities exist
+to safeguard against risks of this nature in the case of companies specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus resulting in significant
+claims for damages or restrictions in selling the products concerned. Any such outcome could in turn have an
+adverse impact on our earnings performance.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+82
+88
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+83
+Impact of our global operations (RC: medium)
+Our global business strategy requires the maintenance of R&D locations and manufacturing sites throughout the
+world. The location of such facilities is determined by market entry hurdles, technology and cost factors. Risks
+could, therefore, arise if adverse economic and geopolitical crises were to affect our regional markets and if country-
+specific legislation and regulations were to influence our investment activities and the ability to trade freely. Differing
+practices in the way tax, judicial and administrative regulations are interpreted could therefore also have a negative
+impact on operations. We could also be exposed to fines, sanctions and damage to reputation.
+Further information in regards to litigation and government inquiries are provided in note 19 to the Consolidated
+Financial Statements.
+We have once again achieved above-average revenue growth in China and the share of Group revenue generated
+in this region in the 2018 fiscal year remained at 25 percent like in the previous year. Our dependence on the
+Chinese market therefore remains. This risk includes the possibility of lower external demand and hence a decline
+in manufacturing capacity utilization levels. There is also a risk that an increased volume of previously imported
+semiconductors will be manufactured in China and that a greater volume of semiconductors manufactured in
+China will be exported. Regardless of our assessment of potential scenarios and outcomes within this complex set
+of risks, these developments could have an adverse impact on Infineon's operations, financial condition, liquidity,
+cash flows and earnings.
+Ten years after the onset of the global financial and economic crisis following the collapse of Lehman Brothers
+Holding Inc., the debt situation in a number of European countries remains very tense. The terms of the United
+Kingdom's exit from the European Union (Brexit) also remain unclear.
+Trade and customs disputes could constrain global trade thereby dampening global economic growth, triggered by
+political tensions and/or trade conflicts between individual countries or regions, which - as a result of short-term or
+unforeseeable decisions - could have a significant impact on Infineon's revenue and earnings performance.
+77
+Coordinated risk management and control system elements are in place that enable us to pursue our stated risk
+policy in practice. Alongside the "Risk and Opportunity Management System" and the "Internal Control System
+with respect to Financial Reporting Processes” described below, it also includes the related planning, management
+and internal reporting processes as well as the Compliance Management System.
+Risk and Opportunity Management System
+Infineon's centralized risk management system is based on a Group-wide, management-oriented Enterprise Risk
+Management (ERM) approach, which aims to cover all relevant risks and opportunities. The approach is based on
+the "Enterprise Risk Management - Integrated Framework" developed by the Committee of Sponsoring Organiza-
+tions of the Treadway Commission (COSO). The objective of the system is the early identification, assessment and
+management of risks that could have a significant influence on Infineon's ability to achieve its strategic, operational,
+financial, legal and compliance targets. We therefore define risk/opportunity as the occurrence of future uncertainties
+that could result in a negative or positive variance from plan. We incorporate all relevant organizational units within
+the Group in this analysis, thus covering all segments, significant centralized functions and regions.
+Responsibility for processes and systems relating to Risk and Opportunity Management rests with the Risk Management
+and Internal Control System (ICS) function within the corporate finance department and with designated Risk
+Officers working at segment, corporate function and regional levels. Responsibility for the identification, measure-
+ment, management and reporting of risks and opportunities lies with the management of the organizational unit
+concerned.
+In organizational terms, the Risk and Opportunity Management System is structured in a closed-loop, multiple-
+stage process, which stipulates the manner and criteria to be applied to identify, measure, manage and report on
+risks and opportunities and defines how the system is to be monitored as a whole. Major components of the system
+are a quarterly analysis of risks and opportunities, reporting by all consolidated entities, an analysis of the overall
+situation at segment, regional and Group level, reporting to the Management Board on the risks and opportunities
+situation as well as major management measures undertaken. The Management Board, in turn, reports regularly
+to the Supervisory Board's Investment, Finance and Audit Committee. Where necessary, standard processes are
+supplemented by the ad-hoc reporting of any major risks identified between regular reporting dates.
+Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation or hedging measures,
+but without offsetting any provisions recognized. The time periods and the measurement categories used are closely
+linked to our short- and medium-term business planning and entrepreneurial targets.
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative and/or qualitative terms,
+based on the dimensions degree of impact on operations, liquidity, earnings, cash flows and reputation on the one
+hand and likelihood of occurrence on the other.
+The scales used to measure these two factors (degree of impact and likelihood of occurrence) and the resulting risk
+assessment matrix are depicted in the following graph.
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Risk assessment matrix
+5
+4
+3
+2
+1
+1
+2
+3
+4
+Degree of Impact
+5
+Combined Management Report | Our 2018 fiscal year
+-
+Investments (defined by Infineon as the sum of purchases of property, plant and equipment, purchases of intangible
+assets and capitalized development costs) are expected to rise in a range between €1.6 billion and €1.7 billion in the
+2019 fiscal year. In the 2018 fiscal year, this figure amounted to €1,254 million, comprising investments in property,
+plant and equipment of €1,090 million and in capitalized development costs and other intangible assets of €164 million.
+Investments in capitalized development costs and other intangible assets in the 2019 fiscal year should reach a slightly
+lower level than one year earlier.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook | Risk and opportunity report
+76
+P see page 30
+Planned investments in manufacturing facilities during the 2019 fiscal year will focus on expanding frontend
+capacities, including further expansion of Infineon's 300-millimeter as well as its 200-millimeter manufacturing
+capacities in Dresden (Germany) and Kulim (Malaysia), respectively. Considerable funds will also be invested in the
+upgrade of existing frontend manufacturing facilities, ensuring that they remain state-of-the-art in terms of automa-
+tion, quality, innovation and infrastructure. A significant amount is also earmarked to upgrade backend facilities
+and capacities. In addition, as already announced, a low triple-digit million amount will be invested in new build-
+ings, mainly in the new 300-millimeter facility in Villach (Austria).
+Depreciation and amortization are expected to be in the region of €1,000 million. Thereof about € 90 million of that
+amount are related to depreciation and amortization resulting from purchase price allocations, mainly in connec-
+tion with the acquisition of International Rectifier.
+Free cash flow from continuing operations
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Free cash flow in the 2019 fiscal year is forecast to be slightly positive and up to €200 million.
+The gross cash position is expected to finish the 2019 fiscal year at a level between €1.9 billion and €2.7 billion.
+Hence, Infineon again expects to meet its capital structure targets in the 2019 fiscal year. See "Capital structure tar-
+gets demonstrate our reliability” in the chapter "Group strategy" for more information on capital structure targets.
+ROCE
+The Return on Capital Employed (ROCE) is expected to moderately decrease in the 2019 fiscal year. The ROCE of
+20.5 percent for the 2018 fiscal year included, among other things, the gain from the sale of the major part of the
+RF power components business to Cree, Inc. Net income is expected to decline, while capital employed will
+increase in the 2019 fiscal year.
+Overall statement on the expected development of the Group
+Based on forecasts for the global economy and the semiconductor market in the 2019 calendar year, Infineon
+expects revenue growth of 11 percent year-on-year, plus or minus 2 percentage points. On this basis, the gross
+margin should increase slightly. At the mid-point of the planned range of revenue growth, the Segment Result
+Margin is expected to be in the region of about 18 percent. Investments will rise to a range between €1.6 billion and
+€1.7 billion. Depreciation and amortization are expected to be in the region of €1,000 million. Free cash flow from
+continuing operations is expected to be slightly positive and up to €200 million. The Return on Capital Employed
+(ROCE) is predicted to decrease moderately.
+Risk and opportunity report
+P see page 20 ff.
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities and plays an important role
+in implementing the strategic targets described in the chapter "Group strategy" - namely achieving sustainable,
+profitable growth and preserving our financial resources through efficient employment of capital. Infineon's risk
+and opportunity profile is characterized by periods of rapid growth, followed by periods of significant market
+decline, a substantial need for capital investment in order to achieve and sustain our market position and
+an extraordinarily rapid pace of technological change. Gaining a leading edge through technological innovation
+also has a legal dimension. Against this background, Infineon's risk policy is aimed firstly at taking advantage of
+identified opportunities as quickly as possible in a way most appropriate to increasing the value of the business,
+and secondly at pro-actively mitigating risks – particularly those capable of posing a threat to Infineon's going-
+concern status - by adopting appropriate countermeasures. Risk management at Infineon is therefore closely
+linked to forecasting and the implementation of our business strategies. Ultimate responsibility for risk manage-
+ment lies with the Infineon Management Board.
+Gross cash position
+Low Risk
+Medium Risk
+High Risk
+The ICS is an integral part of the accounting process in all relevant legal entities and corporate functions. The
+system monitors compliance with stated principles and stipulated procedures based on preventive and detective
+controls. Among other things, we regularly check that:
+> Group-wide financial reporting, valuation and accounting guidelines are continually updated and adhered to;
+> Intragroup transactions are fully accounted for and properly eliminated;
+> Issues relevant for financial reporting and disclosures in connection with agreements entered into are recognized
+and appropriately presented;
+> Processes and controls are in place to explicitly guarantee the completeness and correctness of the year-end
+financial statements and financial reporting;
+> Processes are in place for the segregation of duties and for the dual control principle in the context of preparing
+financial statements, as well as for authorization and access rules for relevant IT accounting systems.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+The principal focus of the Internal Control System (ICS) is on the financial reporting process, with the aim of
+monitoring the proper maintenance and effectiveness of accounting systems and financial reporting. The primary
+objective of the ICS is to minimize the risk of misstatement in Infineon's internal and external reporting and to
+ensure with a reasonable amount of certainty that the Consolidated Financial Statements comply with all relevant
+regulations. Appropriate controls must therefore be in place throughout the organization to ensure such compliance.
+Clear lines of responsibility are assigned to each of the processes.
+Risk and opportunity report
+Assessment of effectiveness
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting process. An annual
+risk analysis is initially performed and the defined controls are revised, as and when required. The assessment
+involves identifying and updating significant risks relating to accounting and financial reporting in the relevant
+legal entities and corporate functions. The controls defined for identifying risks are documented in accordance with
+Group-wide guidelines. Regular random tests are performed to assess the effectiveness of the controls. These tests
+constitute the basis for an assessment of the appropriate extent and effectiveness of the controls. The results are
+documented and reported in a global IT system. Any deficiencies identified are remedied with due consideration
+given to their potential impact.
+Furthermore, in a Representation Letter, all legal entities, segments and relevant corporate functions confirm that
+all business transactions, all assets and liabilities and all income and expense items have been recognized in the
+financial statements.
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness of the ICS with
+regard to the accounting and financial reporting process. The Management Board and the Investment, Finance and
+Audit Committee of the Supervisory Board are regularly informed about any significant control deficiencies and the
+effectiveness of the internal controls.
+The Risk and Opportunities Management System as well as the Internal Control System are continuously reviewed
+to ensure compliance with internal and external requirements. Regular improvements made to the system contribute
+to the continuous monitoring of the relevant risk areas including the responsible organizational units.
+In the following section, we describe risks that could have a significant or materially adverse impact on Infineon's
+operations, liquidity, earnings, cash flows and reputation and which have therefore been allocated to the risk
+classes "high" or "medium". Depending on the potential degree of impact and the estimated likelihood of occurrence,
+the risk class is shown in parentheses for each risk (e.g. “RC: high”).
+Strategic risks
+Unsettled political and economic climate (RC: high)
+As a globally operating company, our business is highly dependent on global economic developments. A worldwide
+economic downturn – particularly in the markets we serve - may result in us not achieving our forecasted revenue.
+Risks can also arise due to political and social changes, particularly in countries in which we manufacture and/or
+sell our products.
+79
+Internal Control System with respect to the financial reporting process
+The Supervisory Board's Investment, Finance and Audit Committee oversees the effectiveness of the Risk Manage-
+ment System. As part of the statutory audit, the external Group auditor also examines our early warning system
+pursuant to section 91, paragraph 2, of the German Stock Corporation Act to ascertain its suitability to detect risks
+that could pose a threat to Infineon's going-concern status and reports annually thereon to the Chief Financial
+Officer (CFO) and the Investment, Finance and Audit Committee of the Supervisory Board.
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS departments using
+procedures incorporated in business processes. Group Internal Audit also tests compliance with legal requirements
+and Infineon guidelines and, where appropriate, rules relating to Risk and Opportunity Management and initiates
+corrective measures.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Degree of Impact
+on Segment Result
+1
+<€20 million Marginal
+2 >€20 million Minor
+3 >€60 million Moderate
+4 > €100 million Significant
+5 >€250 million Major
+Likelihood of Occurrence
+Likelihood of Occurrence
+1 <10% Unlikely
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+5 90% Certain
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+78
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and reputation as well as
+the estimated probability of occurrence, a risk is classified as “high”, “medium” or “low”.
+All reported risks and opportunities in their entirety are reviewed for Infineon for possible correlation and overlap
+factors, and are analyzed using an Infineon-specific categorization model. Risks and opportunities analysis and new
+developments in risk management culture are supplemented by interdisciplinary workshops held at segment, cor-
+porate and regional levels. Important information relevant for Infineon's Risk and Opportunity Management System
+is available to all employees via our intranet system, including access to ERM tools and ERM guidelines, containing
+job descriptions for all functions involved in the process as well as all information necessary for reporting purposes.
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage and monitor identified
+risks and opportunities, and are responsible for formally determining a set of appropriate strategies (avoidance,
+mitigation, transfer to other parties, acceptance). Working closely with corporate functions and individual managers,
+the Risk and Opportunity Manager is also responsible for defining and monitoring measures aimed at implementing
+the adopted management strategy. For our system to be successful, it is essential that risks and opportunities are
+managed and monitored pro-actively and with a great deal of commitment.
+With the "Product to System" strategic approach, we seek to identify additional benefits on a system level for our
+customers from within our broad portfolio of technologies and products. The strategy enables us to exploit further
+revenue potential and thereby achieve our growth and margin targets. This approach also enables us to reduce
+customers' development costs and shorten lead times required to bring their products to market.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Investments and depreciation/amortization
+Based on the expectations for the global economy and for the semiconductor market segments relevant for
+Infineon as described above and an assumed average exchange rate of US$1.15 against the euro, Infineon forecasts
+revenue growth of 11 percent, plus or minus 2 percentage points, for the 2019 fiscal year. Revenue growth in the
+Automotive segment is expected to be well above the Group average. The Power Management & Multimarket segment
+is predicted to grow about in line with the Group average while the Industrial Power Control segment is likely to
+report growth slightly below the Group average. Due to adverse market conditions, revenue for the Digital Security
+Solutions segment is expected to be down by a mid-single digit percentage year-on-year.
+In Germany, Infineon's current tax expense is based on the applicable "minimum taxation" rules, under which
+only 40 percent of taxable profits arising in Germany are subject to current tax due to the utilization of tax loss
+carry-forwards. This results in a current tax rate of approximately 12 percent in Germany. As of 30 September 2018,
+tax loss carry-forwards for German income tax and trade tax purposes amounted to €1.6 billion and €2.6 billion
+respectively.
+The effective current tax rate for the Group in the 2019 fiscal year is forecast to be about 15 percent. This tax rate is
+influenced in particular by tax losses available for carry-forward in Germany.
+Income taxes
+The financial result (financial income less financial expense) for the 2018 fiscal year was a net expense of €53 million.
+The €300 million bond, with a coupon of 1.0 percent, was repaid as due in mid-September. The negative financial
+result is expected to improve slightly in the 2019 fiscal year.
+Financial result
+Infineon expects the non-segment result for the 2019 fiscal year to be a loss of between €100 million and €150 million
+(2018 fiscal year: loss of €116 million) mainly due to acquisition related expenses. Approximately €90 million of the
+forecasted amount relates to non-cash-relevant depreciation and amortization arising in conjunction with purchase
+price allocation.
+Non-segment result
+Based on the forecast changes in revenue and expenses described above, in the 2019 fiscal year the Segment Result
+Margin is expected to amount to 18 percent if revenue growth were to reach the mid-point of the planned range.
+Segment Result Margin of approximately 18 percent expected
+Infineon expects operating expenses to increase in absolute terms as a result of revenue growth. Research and
+development expenses are likely to rise in line with revenue growth. Selling, general and administrative expenses
+are expected to increase at a lower rate than revenue. Acquisition-related expenses included in operating expenses
+are predicted to be slightly below the previous fiscal year's level.
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+75
+Revenue growth of 11 percent expected, plus or minus 2 percentage points, compared to
+the previous fiscal year
+Operating expenses predicted to increase
+Working capital
+Slight upward trend in gross margin expected
+If revenue growth were to reach the mid-point of the planned range, the gross margin for the 2019 fiscal year is
+expected to rise slightly compared to the previous year. The gross margin will continue to be negatively influenced
+by acquisition-related expenses.
+2,543
+Net cash used in investing activities from continuing operations
+2
+1,011
++++
+Basic earnings per share in €
+0.75
+0.95
+(21)
+(2,488)
+Diluted earnings per share in €
+0.95
+(21)
+Adjusted earnings per share in €³ - diluted
+0.89
+0.98
+(9)
+Dividend per share in €4
+0.27
+0.75
+49
+(1,163)
+from continuing operations
+3,779
+16
+1,254
+1,451
+10
+861
+945
+(94)
+Net cash provided by (used in) financing activities
+618
+2,223
+(542)
+1,167
+Net cash position²
+Gross cash position²
+Investments²
+Depreciation and amortization
+Free cash flow²
+39
++++
+> Customized chips (ASICS)
+1,571
+(21)
+1,469
+1,161
+Income from continuing operations
+Operating income
+11.2
+(850)
+10.8
+(865)
+Selling, general and administrative expenses
+13
+322
+11.0
+11.8
+(945)
+Research and development expenses
+4
+38.0
+2,885
+37.3
+2,994
+Gross profit/Gross margin
+Corporate and Eliminations
+0
+(836)
+889
+1,218
+(27)
+1,603
+Net cash provided by operating activities from continuing operations
+34
+6,446
+8,633
+Total equity
+23
+10,879
+13,412
+Total assets
+16
+3,038
+> Control ICs
+Property, plant and equipment
+(3)
+17.8
+1,353
+16.4
+1,319
+1,075
+870
+87
+(143)
+(19)
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+0.27
+Equity ratio
+64.4%
+59.3%
+203
+202 List of Abbreviations
+195 Responsibility Statement by the Management Board
+196 Independent Auditor's Report
+● Further Information
+122 Consolidated Statement of Changes in Equity
+124 Notes to the Consolidated Financial Statements
+121 Consolidated Statement of Cash Flows
+119 Consolidated Statement of Comprehensive Income
+120 Consolidated Statement of Financial Position
+118 Consolidated Statement of Operations
+Consolidated Financial Statements
+99 Corporate Governance
+96 Infineon Technologies AG
+95 Overall statement on Infineon's financial condition
+Financial calendar
+79 Report on outlook, risk and opportunity
+Our 2019 fiscal year
+65 The Infineon share
+65 Sustainability at Infineon
+62 Internal management system
+60 Operations
+56 Research and development
+39 The segments
+16 Finances and strategy
+Our Group
+Combined Management Report
+to the Annual General Meeting
+8 Report of the Supervisory Board
+68 Group performance
+6 The Management Board
+204 Imprint
+Letter to shareholders
+Together with Cypress, we will be able to address the application spectrum in our target markets in a more compre-
+hensive way. We will be able to offer system solutions needed for connecting the real with the digital world. This
+strategic rationale is mirrored by financial attractiveness, as we can accelerate our profitable growth. We expect the
+transaction to have a positive impact on the development of the Segment Result and adjusted earnings per share
+from the 2021 fiscal year onwards. This entails expected annual cost synergies of €180 million, which are expected
+to arise by the 2022 fiscal year primarily as a result of scale effects. However, more decisive for value creation are
+the revenue synergies derived from system thinking, which will be realized through cross-selling and the consolida-
+tion of the complementary portfolios into system solutions. We estimate these effects at more than €1.5 billion
+annually in the long-term. On closing of the acquisition, we will adjust our target operating model. During the inte-
+gration process, we will leverage more and more of the synergies and meet our targets: By then, we expect revenue
+growth through the cycle for the larger, combined company to be slightly above our current target rate of 9 percent.
+The Segment Result Margin is to increase through the cycle from 17 percent to 19 percent. The investment-to-sales
+ratio will drop through the cycle from 15 percent to 13 percent because of the lower capital intensity of Cypress.
+Infineon has grown tremendously in the past few years, and certainly in more respects than just revenue and profit.
+Approximately five years after buying International Rectifier, we are facing an acquisition easily more than three
+times larger. We trust that we will succeed, and the outside world puts trust in us. Right now, the Infineon and Cypress
+teams are intensively preparing the integration, and we are confident regarding pending regulatory approvals and
+the completion of the transaction around the end of this year. The fact that Infineon is appreciated as a solid trust-
+worthy company also when taking courageous actions has become visible in the steps taken to finance the acquisi-
+tion: Based on the clear principle of maintaining our investment grade rating, the credit facility for the planned
+acquisition financing was syndicated within a very short period of time to a consortium of national and international
+banks. The syndication was significantly oversubscribed, as was the case with the capital increase, where we placed
+shares with a total value of about €1.5 billion in mid-June. In September, we for the first time issued a hybrid bond,
+achieving a volume of €1.2 billion. Thus, within only a few months we were already able to refinance approximately
+one third of the entire transaction. We are very pleased about the support Infineon received from shareholders,
+bond investors and banks. Broad access to sources of financing is and will remain important to Infineon; at the
+same time, we are aware of the volatility of financial markets. We are therefore adhering to our strategic liquidity
+target, are increasing our leverage commensurate with the cash generation of the combined company and are
+maintaining our dividend policy. Accordingly, we will once again recommend to the Annual General Meeting the
+payment of a dividend of 27 euro cents per share for the fiscal year ended. Given the higher share count, the total
+amount to be disbursed would increase from €305 million for the 2018 fiscal year to €336 million.
+> The two companies also complement one another in areas other than their product portfolios. This is true of the
+geographic focus areas and sales channels: Cypress will thus bring Infineon broader market access, in particular
+in Japan and through distributors. We are expanding our position in Silicon Valley in terms of research and devel-
+opment. With regard to its manufacturing strategy, its product portfolio lets Cypress resort considerably more to
+outsourcing. The combination will help to deploy our business more broadly and make it more robust.
+> We are moving our strategic P2S approach forward, strengthening and expanding our core through growth in
+adjacent and new fields. Two examples: The consolidation of Infineon's security expertise with the connectivity
+know-how of Cypress will accelerate the entry into the field of new industrial Internet of Things applications.
+The expanded portfolio of microcontrollers and NOR flash memory offers great potential for automotive
+semiconductors, especially with regard to their growing significance for advanced driver assistance systems
+and new electronic architectures in the vehicle.
+> Together this will lead to a comprehensive portfolio of complete system solutions. Secure connectivity of
+energy-efficient devices is the key to success. A wide variety of applications is at the tipping point of growth
+phases that can be addressed with functional integration.
+How will we benefit from Cypress, what is the rationale behind the largest planned acquisition in the history of
+Infineon? What are the reasons why we intend to spend approximately €9 billion in economically unstable times?
+> The products and technologies of Infineon and Cypress are highly complementary and define standards in
+their respective fields. Our power semiconductors, sensors and our microcontrollers for automotive and
+security applications will be supplemented with connectivity, general purpose microcontrollers for industrial
+and Internet of Things applications including software, and differentiated memory.
+Ơ ||| 3 v A
+4
+Management Board and Supervisory Board
+Letter to shareholders
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Cypress Semiconductor Corporation was founded in 1982 in San José (USA) and in the years since has become a
+leading provider of products for automotive and industrial applications and for the Internet of Things. These products
+include various microcontroller families which are based on the industry-standard ArmⓇ architecture and which
+can be flexibly programmed with the associated development environment. The second mainstay of Cypress consists
+of connectivity components, more precisely WiFi and Bluetooth/Bluetooth low energy for wireless and USB/USB-C
+for wired applications. In addition to this, Cypress offers differentiated memory technologies such as NOR flash,
+SRAM and F-RAM, which for the most part address special applications. We gained conviction regarding the high
+level of technological expertise of Cypress from a joint development cooperation we started in early 2018.
+We intend to accelerate this continuous strategic evolution from a component manufacturer to a provider of system
+solutions with the planned acquisition of Cypress.
+The pillars of our strategy with its clearly defined three elements - core activities; growth in adjacent markets;
+opportunities in new business areas - provide a strong fundament. In the core element, we have mastered the
+essential technologies, offer a comprehensive product spectrum, and understand the applications of the target
+markets. A prime example is power electronics for applications in the automotive industry. The element of supple-
+mentary growth is built on this, i.e. starting with these competencies we expand into adjacent areas by transferring
+existing know-how on technologies, products and/or applications and by gaining additional expertise. One such
+example is variable motor control for industrial applications like factory automation and air conditioners. The third
+element is innovation for opportunities in new business areas. For example, we use our expertise in sensor technol-
+ogies to enable more intuitive human-machine-interactions, be it three-dimensional capture with the Time-of-Flight
+technology, context-sensitive user identification or gesture control based on radar. Our strategic "Product to System
+(P2S)" approach applies to all three elements of the strategy - core, adjacent and new. Initially the task was to build
+a deeper system understanding to offer customers components that were better suited to solving their challenges.
+In the context of shorter and shorter innovation cycles, today and in the future we are enhancing customer value
+with a complete system offering consisting of seamlessly interoperable, configurable elements, including software,
+that makes putting together the desired functionalities simple, secure and fast. The performance capabilities of
+the overall system are increased by functional integration, i.e. consolidation of previously separate sub-functions in
+a single module (system-in-package) or even on a single chip (system-on-chip), depending on the application. This
+makes it possible to use smaller form factors and often entails a reduction in power consumption. For the customer
+this means a simplified design phase, shorter time to market for new products, simplified interoperability and cost
+savings at the system level.
+Management Board and Supervisory Board
+The resilient nature of the business we developed over the last few years is also illustrated by the margin evolution.
+At 16.4 percent, the Segment Result Margin was approximately half a percentage point below the through-cycle
+target value, pretty well for a year characterized by a shrinking overall market. The challenge is not so much in the
+low level of growth itself, but rather in the process of transitioning to such reduced growth levels from the boom
+phase to which we had oriented our resources. We timely implemented countermeasures and focused on cost
+management. We put projects to the test, prudently limited increases in employee headcount and, above all, lowered
+our manufacturing output to curb rising inventory levels. These steps are all a normal part of cycle management,
+which we will continue to carefully balance with preserving mid-term and long-term growth opportunities: These
+opportunities are fully intact, and we are ideally positioned to take advantage of them.
+Ở ||| V V A
+3
+Management Board and Supervisory Board
+Letter to shareholders
+2
+Infineon always aligns its entrepreneurial actions to a long-
+term perspective. Our strategy aims at benefitting from the
+numerous structural growth drivers in our target markets and
+being successful throughout economic cycles. The previous
+fiscal year has illustrated that such cycles are inherent in our
+business: After a boom phase lasting several years, during
+which industry growth was mainly limited by available manu-
+facturing capacities, we initially forecast revenue growth of
+11 percent. However, geopolitical conflicts and trade tensions
+cast dark and lasting shadows on the economic outlook at the
+beginning of the calendar year. Many end-markets experienced
+a significant slump in demand, and growth momentum was
+lacking in markets that are important to Infineon:
+Infineon has been an independent company for 20 years now.
+During this time, we have matured into a very solid accomplished
+company with unique technology competencies, full of plans
+for shaping the future. In the 2019 fiscal year, important direc-
+tions were set - in terms of strategy, operations, finance and
+personnel. Without a doubt, the most significant event is
+the planned acquisition of Cypress, with which Infineon will
+evolve into a provider of comprehensive and integrated system
+solutions, in line with our long-term strategy. Equally forward-
+looking is the construction of our second 300-millimeter plant
+for power semiconductors in Villach (Austria), for which the
+groundbreaking took place about one year ago. The acquisition
+of Siltectra is another important element that reinforces our
+leading technology position in the area of silicon carbide.
+and business partners,
+dear Infineon colleagues,
+Dear shareholders
+Neubiberg, November 2019
+Dr. Reinhard Ploss
+Chief Executive Officer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Letter to shareholders
+The automotive industry saw a decline in vehicle sales, the manufacturing industry postponed automation projects
+and capacity expansions, data center expansions were slowed, end-users held off on purchasing major home
+appliances. Infineon is not immune to such fluctuations of the world economy, but we stayed our course in an
+increasingly difficult environment and performed robustly. In March, we had to reduce our revenue target for the
+year, which we achieved at €8.0 billion. This represents 6 percent more revenue compared to the previous year,
+which is clearly noteworthy when measured against the development of the semiconductor market as a whole.
+By way of comparison: The semiconductor association WSTS (World Semiconductor Trade Statistics) expects
+a decline of semiconductor industry revenues, excluding microprocessors and memory ICs, of 4.2 percent for the
+2019 calendar year. Infineon's stringent exposure towards structural growth drivers in the key areas Energy
+Efficiency, Mobility, the Internet of Things & Big Data as well as Security is paying off. This is particularly evident
+during weak economic phases: In the previous fiscal year, we were among the very few companies in our industry
+to increase our revenue in each quarter compared to the corresponding period of the preceding year.
+2 Letter to shareholders
+Management Board and Supervisory Board
+Δ
+4 A dividend per share of €0.27 for the 2019 fiscal year will be proposed to the Annual General Meeting on 20 February 2020.
+3
+40,098
+41,418
+3 See the chapter "Review of results of operations" for definition, P page 72.
+2 See the chapter "Internal management system" for definition, P page 63 f.
+1 Columns may not add due to rounding.
+Infineon employees as of 30 September
+20.5%
+12.2%
+Return on Capital Employed (ROCE) 2
+14.1%
+5 See the chapter "Review of financial condition" for definition, P page 73.
+11.6%
+23.8%
+18.0%
+Debt-to-equity ratio5
+13.6%
+12.7%
+Inventory intensity 5
+9.9%
+6.5%
+Return on assets5
+16.7%
+10.1%
+Return on equity5
+Debt-to-total-capital ratio
+6 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+୪
+Our year
+ƠI V
+Content
+VAL III O
+Sustainability™ Index
+Dow Jones
+LISTING IN THE
+(on CreditWatch with “negative” outlook)
+"BBB"
+RATED CREDIT-WORTHINESS
+"S&P GLOBAL RATINGS"
+± 16.4 percent
+€1.319 billion
+SEGMENT RESULT AND MARGIN
++6 percent
+€8.029 billion
+REVENUE
+At Infineon, success is not only defined by the targets
+that we achieve but also by the way that brought
+us there: Sustainability is at the core of our thinking.
+Our listings in sustainability indices, including the
+Dow Jones Sustainability™ World Index are both our
+reward and motivation.
+We are focusing on structurally strongly growing
+markets. At the same time, we continue to refine
+our growth strategy to prepare for the success
+of tomorrow.
+Today, our traditional core competencies are in greater
+demand than ever. We make our customers more
+successful with leading technology and system under-
+standing. We develop solutions that make life easier,
+safer and greener.
+Infineon continued to grow during the 2019 fiscal
+year in a difficult environment. Revenue increased by
+6 percent to €8.029 billion. Segment Result slightly
+decreased to €1.319 billion, corresponding to a margin
+of 16.4 percent. The revenue and profitability target,
+which we defined at the beginning of the fiscal year,
+has been reduced due to the economic downturn in
+the course of the 2019 fiscal year.
+at a glance
+Our year
+ΠΙΔΙΕΙΙΙΙΟ
+2019
+At Infineon, success is not only defined by the targets
+that we achieve but also by the way that brought
+us there: Sustainability is at the core of our thinking.
+Our listings in sustainability indices, including the
+Dow Jones Sustainability™ World Index are both our
+reward and motivation.
+We are focusing on structurally strongly growing
+markets. At the same time, we continue to refine
+our growth strategy to prepare for the success
+of tomorrow.
+Today, our traditional core competencies are in greater
+demand than ever. We make our customers more
+successful with leading technology and system under-
+standing. We develop solutions that make life easier,
+safer and greener.
+Infineon continued to grow during the 2019 fiscal
+year in a difficult environment. Revenue increased by
+6 percent to €8.029 billion. Segment Result slightly
+decreased to €1.319 billion, corresponding to a margin
+of 16.4 percent. The revenue and profitability target,
+which we defined at the beginning of the fiscal year,
+has been reduced due to the economic downturn in
+the course of the 2019 fiscal year.
++++
+0
+3,510
+0
+Jo-o
+1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Intron, Jingchuan, Macnica, Weikeng and WPG Holding (SAC).
+2 All figures for 2018 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment.
+The figures provided in those sections with respect to changes in market share relate to the 2018 and 2017 market share figures as calculated in 2019.
+Due to changes in the way the market is analyzed, these figures may differ from the 2017 market share figures reported in 2018.
+Source: Informa Tech (former IHS Markit Technology), September 2019
+for IGBT-based power semiconductors
+#1 with a market share of 28.6%
+Market position²
+Emerson/Goldwind / Inovance / Midea / Nidec /
+Rockwell/Schneider Electric / Semikron/Siemens/
+Sungrow/Toshiba/Vestas / Yaskawa
+Power
+ABB/Alstom/Bombardier / CRRC / Danfoss / Eaton/
+> Silicon carbide MOSFETs and modules
+control unit, driver and switch
+> Intelligent power modules with integrated
+> IGBT module solutions including IGBT stacks
+> IGBT modules (low-power, medium-power,
+high-power)
+> Driver ICs
+> Discrete IGBTS
+Key customers¹
+> Bare die business
+Management &
+Multimarket
+Applications
+35
+2,599
+34
+7
+> 3D ToF sensors
+Product range
+power supplies)
+Page 49
+> Power management (adapters, chargers,
+> LED and conventional lighting systems
+> Internet of Things
+> HiRel (high-reliability components)
+> DC motors
+> Charging stations for electric vehicles
+> Cellular infrastructure
+> Audio amplifier
+> Mobile devices
+2,769
+Product range
+> Industrial vehicles
+> Radar sensor ICs (77 GHz)
+> Power ICs
+> Magnetic and pressure sensors
+> Industrial microcontrollers
+> IGBT modules
+> Discrete power semiconductors
+> 3D ToF sensors
+> Silicon carbide diodes, MOSFETs and modules
+safety and driver assistance systems
+Product range
+> Security
+> Powertrain
+> Comfort electronics
+> Assistance systems and safety systems
+Applications
+Page 40
+> 32-bit automotive microcontrollers for powertrain,
+> Traction
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+> Voltage regulators
+> Industrial robots
+> Industrial power supplies
+> Industrial drives
+> Home appliances
+> Energy transmission
+> Energy storage
+> Energy generation
+> Transceivers (CAN, LIN, Ethernet, FlexRay)
+> Charging stations for electric vehicles
+Page 45
+Source: Strategy Analytics, April 2019
+#2 with a market share of 11.2%
+Market position²
+Denso / Hella / Hitachi / Hyundai / Keihin / Lear/
+Mando / Mitsubishi Electric / Omron / Preh/
+Valeo/Veoneer/ZF
+Aptiv / Bosch / BYD / Continental / Delphi /
+Key customers¹
+Applications
+Power Control
+Greater China
+15
+> Authentication
+> Automotive
+> Governmental identification documents
+> Healthcare cards
+> Internet of Things
+> Mobile communications
+> Payment system, mobile payment
+Applications
+> Ticketing, access control
+Product range
+> Contact-based security controllers
+> Contactless security controllers
+> Dual-interface security controllers
+(contact-based and contactless)
+> Embedded security controllers
+Key customers¹
+Giesecke & Devrient / Google / HP / Idemia /
+Lenovo/Microsoft / Thales / US Government
+Publishing Office/Watchdata
+Market position²
+> Trusted computing
+#2 with a market share of 24.3%
+Page 52
+Source: Informa Tech (former IHS Markit Technology), September 2019
+> Discrete low-voltage and high-voltage
+power MOSFETS
+> GPS low-noise amplifier
+> Low-voltage and high-voltage driver ICs
+> MEMS and ASICS for pressure sensors
+> MEMS and ASICS for silicon microphones
+> Radar sensor ICs (24 GHz, 60 GHz)
+> RF antenna switches
+Digital Security
+Solutions
+> RF power transistors
+> TVS (transient voltage suppressor) diode
+Key customers¹
+☐
+Airbus / Alibaba / Amazon / Artesyn / Baidu /
+Boeing/Cisco/Dell/Delta / Ericsson/Google/
+Hewlett Packard Enterprise / HP / Huawei /Lenovo/
+LG Electronics/Lite-On / Makita / Nokia/Osram /
+Panasonic/Quanta / Samsung/ZTE
+Market position²
+#1 with a market share of 27.7%
+for power MOSFETS
+> Silicon carbide diodes
+5
+for smart card and secure ICs
+P
+Europe, Middle East, Africa
+2,430
+30
+2,443
+32
+(1)
+therein: Germany
+6
+1,169
+1,171
+15
+(0)
+Asia-Pacific (excluding Japan, Greater China)
+1,187
+15
+1,129
+15
+Source: ABI Research, October 2019
+7,599
+Revenue by region
+ΔΙΕΥΙΙΙΟ
+Δ
+Infineon key data
+As of and for the fiscal years ended 30 September (under IFRS)'
+Fiscal year from 1 October to 30 September
+2019
+2018
+8,029
+2019/2018
+in % of
+revenue
+€ in
+millions
+in % of
+Change
+revenue
+in %
+€ in
+millions
+10
+(19)
+1,050
+719
+11
+therein: USA
+17
+12
+894
+13
+11
+7
+534
+7
+593
+Americas
+9
+Japan
+25
+1,921
+Segment Result/Segment Result Margin
+27
+2,159
+therein: China
+Annual Report 2019
+Infineon Technologies AG
+Infineon
+Infineon at a glance
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2019 fiscal year (ending 30 September), the
+Company reported sales of approximately €8.0 billion with some 41,400 employees worldwide. Infineon is listed
+on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Automotive
+Industrial
+12
+20
+862
+8,029
+21
+Other Operating Segments
+(3)
+9
+664
+8
+642
+Digital Security Solutions
+5
+31
+2,318
+Revenue by segment
+2,445
+Power Management & Multimarket
+7
+30
+1,323
+7,599
+6
+17
+3,503
+44
+3,284
+Automotive
+7
+Industrial Power Control
+1,418
+18
+43
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+> processes and controls are in place to explicitly guarantee the completeness and correctness of the year-end
+financial statements and financial reporting;
+The Risk and Opportunities Management System as well as the Internal Control System are continuously
+developed and extended to ensure compliance with internal and external requirements. Regular improvements
+made to the system contribute to the continuous monitoring of the relevant risk areas including the responsible
+organizational units.
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness of the ICS with
+regard to the accounting and financial reporting process. The Management Board and the Investment, Finance and
+Audit Committee of the Supervisory Board are regularly informed about any significant control deficiencies and
+the effectiveness of the internal controls.
+Furthermore, in a Representation Letter, all legal entities, segments and relevant corporate functions confirm that
+all business transactions, all assets and liabilities and all income and expense items have been recognized in the
+financial statements.
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting process. An annual
+risk analysis is initially performed and the defined controls are revised, as and when required. The assessment
+involves identifying and updating significant risks relating to accounting and financial reporting in the relevant
+legal entities and corporate functions. The controls defined for identifying risks are documented in accordance with
+Group-wide guidelines. Regular random tests are performed to assess the effectiveness of the controls. These tests
+constitute the basis for an assessment of the appropriateness design and effectiveness of the controls. The results
+are documented and reported in a global IT system. Any deficiencies identified are remedied with due consideration
+given to their potential impact.
+Assessment of effectiveness
+> processes are in place for the segregation of duties and for the dual control principle in the context of preparing
+financial statements, as well as for authorization and access rules for relevant IT accounting systems.
+> issues relevant for financial reporting and disclosures in connection with agreements entered into are recognized
+and appropriately presented;
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+> Group-wide financial reporting, valuation and accounting guidelines are continually updated and adhered to;
+The ICS is an integral part of the accounting process in all relevant legal entities and corporate functions. The system
+monitors compliance with stated principles and stipulated procedures based on preventive and detective controls.
+Among other things, we regularly check that:
+The principal focus of the Internal Control System (ICS) is on the financial reporting process, with the aim of
+monitoring the proper maintenance and effectiveness of accounting systems and financial reporting. The primary
+objective of the ICS is to minimize the risk of misstatement in Infineon's internal and external reporting and to
+ensure with a reasonable amount of certainty that the Consolidated Financial Statements comply with all relevant
+regulations. Appropriate controls must therefore be in place throughout the organization to ensure such compliance.
+Clear lines of responsibility are assigned to each of the processes.
+Internal Control System with respect to the financial reporting process
+85
+Risk and opportunity report
+Report on outlook, risk and opportunity
+Combined Management Report | Our 2019 fiscal year
+Combined Management Report | Our 2019 fiscal year
+> intragroup transactions are fully accounted for and properly eliminated;
+Report on outlook, risk and opportunity
+Risk and opportunity report
+98
+P see page 166 ff.
+P see page 180
+89
+Risk and opportunity report
+Report on outlook, risk and opportunity
+Combined Management Report | Our 2019 fiscal year
+888
+88
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Specified currency risks are hedged Group-wide by means of derivative financial instruments. These hedges are
+based on forecasts of future cash flows, the occurrence of which is uncertain. Under these circumstances, exchange
+rate fluctuations could - despite hedging measures - also have an adverse impact on earnings.
+Our involvement and participation in various regional markets around the world creates cash flows in a number
+of currencies other than the euro - primarily in US dollars. A significant share of revenue on the one hand and of
+operating costs and investments on the other is denominated in US dollars and correlated currencies. For the most
+part, Infineon generates a US dollar surplus from these transactions.
+Currency risks (RC: medium)
+Financial risks
+One of our key success factors is the availability of sufficient qualified employees at all times. There is, however,
+a general risk of losing qualified staff or not being able to recruit, train and retain adequately qualified staff within
+the business. A lack of technical or management staff could, among other things, restrict future growth and hence
+adversely impact our earnings performance.
+Need for qualified staff (RC: medium)
+We cooperate with numerous suppliers who provide us with materials and services, or who manage parts of our
+supply chain. We do not always have alternative sources for some of these suppliers and therefore depend on their
+ability to deliver products of the required quality. Failure of one or more of these suppliers to meet their obligations
+to Infineon could have an adverse impact on our earnings performance.
+Dependence on individual suppliers (RC: medium)
+P see page 166 ff.
+Our South East Asian manufacturing sites are of critical importance for our production. If, for example, political
+upheavals or natural disasters in the region were to impede our ability to manufacture at these sites on the planned
+scale or to export products manufactured at those sites, it would have an adverse impact on our financial condi-
+tion, liquidity and earnings. Our current manufacturing capacities in this region are, to a large extent, not insured
+against political risks such as expropriation of assets. The transfer of manufacturing capacities from these sites
+would, therefore, not only involve a great deal of time and technical effort, Infineon would also be required to bear
+the necessary cost of investment.
+Risk of default by banking partners (RC: medium)
+Further information regarding the management of financial risks is provided in note 27 to the Consolidated
+Financial Statements.
+Combined Management Report | Our 2019 fiscal year
+Report on outlook, risk and opportunity
+Acquisitions and cooperation arrangements (RC: medium)
+90
+90
+In the case of acquisitions or portfolio decisions, there is, at the same time, a risk of non-compliance with antitrust
+regulations due to lack of knowledge or failure to make the people involved in such transactions adequately
+aware of the issues. This can result in high levels of cost (e.g. significant time spent by management, assignment
+of attorneys) and fines. Infineon's reputation may also suffer under these circumstances.
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate these risks, we rely
+upon the advice of both in-house and external experts and provide suitable training to our employees.
+Our global business strategy requires the maintenance of R&D locations and manufacturing sites throughout
+the world. The location of such facilities is determined by market entry hurdles, technology and cost factors.
+Risks could, therefore, arise if adverse economic and geopolitical crises were to affect our regional markets and if
+country-specific legislation and regulations were to influence our investment activities and the ability to trade
+freely. Differing practices in the way tax, judicial and administrative regulations are interpreted could therefore also
+have a negative impact on operations. We could also be exposed to fines, sanctions and damage to reputation.
+Asian markets are particularly important to our long-term growth strategy. Our operations in China are influenced
+by a legal system that may be subject to change. One example is the fact that local regulations could make it
+mandatory to enter into partnerships with local companies. These circumstances could lead on the one hand to
+Infineon's intellectual property no longer being sufficiently protected and on the other to intellectual property
+developed by Infineon in China not being freely transferable to other countries and locations, thus impairing revenue
+and profitability.
+Impact of our global operations (RC: medium)
+Further information regarding litigation and government inquiries is provided in note 23 to the Consolidated
+Financial Statements.
+Whilst we often benefit from cross-licensing arrangements with major competitors, no such opportunities exist
+to safeguard against risks of this nature in the case of companies specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus resulting in significant
+claims for damages or restrictions in selling the products concerned. Any such outcome could in turn have an
+adverse impact on our earnings performance.
+As with many other companies in the semiconductor industry, allegations are made against us from time to time
+that we have infringed other parties' protected rights. Regardless of the prospects of success of such claims,
+substantial legal defense costs can arise.
+Intellectual property rights and patents (RC: medium)
+Provisions are recognized in connection with these matters as of 30 September 2019. The provisions reflect the
+amount of those liabilities that management believes are probable and can be estimated with reasonable accuracy
+at that time. There can be no assurance that these provisions will be sufficient to cover all liabilities that may be
+incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Due to the insolvency proceedings of Qimonda and the related action of the insolvency administrator, we are
+exposed to risks, which are described in detail in note 23 to the Consolidated Financial Statements.
+Qimonda insolvency (RC: medium)
+Legal and compliance risks
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the potential risk of a
+default by one or more of the banking partners with whom we do business. We mitigate this risk - which could still
+arise despite various state-insured deposit protection mechanisms - by a combination of risk avoidance analyses
+and risk-spreading measures. The failure of these measures could have a materially adverse impact on Infineon's
+financial condition and liquidity situation.
+In order to develop or expand our business, we may seek to acquire other businesses or enter into various forms
+of cooperation arrangements. In the case of acquisitions, there is a risk that these activities prove to be unsuccessful,
+particularly regarding the integration of people and products in existing business structures. These issues could
+adversely impact our financial condition and earnings performance.
+Dependence on individual manufacturing sites (RC: medium)
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon to develop competitive
+and high-quality products designed to provide customized technological solutions. In view of the rapid pace of
+technological change and increasingly stringent customer requirements, coordination processes need to become
+increasingly sophisticated. Failure to continue making progress in this area could result in quality problems,
+product development or market maturity delays as well as higher R&D expenses and hence adversely impact our
+earnings performance.
+Risk and opportunity report
+Report on outlook, risk and opportunity
+Combined Management Report | Our 2019 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The rapid pace of technological change in the market also results in a greater replaceability of products. Due to the
+resulting aggressive pricing policies, we may be unable to achieve our long-term strategic goals of gaining and/or
+maintaining market share and of product pricing. Moreover, accelerating M&A (Merger and Acquisition) activity
+within the semiconductor industry could result in even tougher competition. Potential benefits for competitors in
+this market include improved cost structures and stronger sales channels. Overall, this situation could have an
+adverse impact on Infineon's earnings.
+Increased market competition and commoditization of products (RC: high)
+The worldwide semiconductor market is dependent on global economic growth and hence subject to fluctuations.
+Our target markets continue to be exposed to the risk of short-term market fluctuations. As a result, our own
+forecasts of future business developments are subject to a high degree of uncertainty. It is possible, for instance,
+that future market downturns will follow another pattern, for example an L shape. The absence of market growth
+or its decline would make it considerably more difficult to attain our own growth target. In the event that we are
+unprepared for market fluctuations, or our response to such fluctuations turns out to be inappropriate, this could
+have a sustained materially adverse impact on Infineon's operations, financial condition, liquidity, cash flows
+and earnings.
+Cyclical market and sector development (RC: high)
+Trade and customs disputes could constrain global trade thereby dampening global economic growth, triggered
+by political tensions and/or trade conflicts between individual countries or regions, which - as a result of short-term
+or unforeseeable decisions - could have a significant impact on Infineon's revenue and earnings performance.
+Following the global financial and economic crisis in 2008, the debt situation in a number of European countries
+remains very tense. The terms of the United Kingdom's exit from the European Union (Brexit) also remain unclear.
+Our dependence on the Chinese market remains unchanged. This risk includes the possibility of lower external
+demand and hence a decline in manufacturing capacity utilization levels. There is also a risk that an increased
+volume of previously imported semiconductors will be manufactured in China and that a greater volume of semi-
+conductors manufactured in China will be exported. Regardless of our assessment of potential scenarios and out-
+comes within this complex set of risks, these developments could have an adverse impact on Infineon's operations,
+financial condition, liquidity, cash flows and earnings.
+As a globally operating company, our business is highly dependent on global economic developments. A worldwide
+economic downturn – particularly in the markets we serve - may result in us not achieving our forecasted revenue
+and contribution to earnings. Risks can also arise due to political and social changes, in particular when those
+changes occur in countries in which we manufacture and/or sell our products.
+Unsettled political and economic climate (RC: high)
+Strategic risks
+The following description of specific risks does not take into account the planned acquisition of Cypress. The main
+potential risks arising in connection with the planned acquisition are presented in the section "Risks arising in
+connection with the planned acquisition of Cypress".
+Significant risks
+P see page 91 f.
+▼ ▲ 4 III O
+86
+87
+One risk that semiconductor companies operating in-house manufacturing facilities typically face is that of delays
+in the ramping-up of production volumes at new manufacturing sites, or in case of transfers of technology. One
+good example is in the Automotive segment, where customers' product approval and testing processes can take
+place over an extended period of time, thus influencing our global manufacturing strategy as well as short- and
+medium-term capacity utilization. Failure to anticipate these changes in the manufacturing process in good time
+could result in capacity shortages and hence lower revenue on the one hand as well as costs incurred due to
+under-utilization on the other.
+Operational risks
+The reliability and security of Infineon's information technology systems are of crucial importance. At the same
+time, the world has seen a general rise in the level of threats to data security. This applies to the deployment of
+IT systems to support business processes on the one hand and internal and external communications on the other.
+Despite the array of precautionary measures put in place, any major disruption to these systems could result in risks
+relating to the confidentiality, availability and reliability of data and systems used in development, manufacturing,
+selling or administration functions, which, in turn, could have an adverse impact on our reputation, competitiveness
+and operations.
+Determining and adjusting manufacturing volumes (RC: medium)
+Moreover, our dependence on various materials (such as wafer substrates) and raw materials (such as gold and
+copper) used in manufacturing, as well as our energy requirements expose us to substantial price risks. We are also
+dependent on supplies of the so-called rare earths required for selected manufacturing processes in conjunction
+with production process integration. At the time of writing, financial instruments are in place to hedge our price
+risk exposure for gold wire during the 2020 fiscal year, based on planned volume requirements. The prices of raw
+materials and energy have recently been subject to significant fluctuation, and there is no reason to assume the
+situation will change in the near future. If we are unable to offset cost rises or pass them on to customers via price
+adjustments, it could have an adverse impact on earnings.
+Risk and opportunity report
+Report on outlook, risk and opportunity
+Combined Management Report | Our 2019 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Manufacturing cost trends - raw material prices, cost of materials and process costs (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost trends. In this context, measures
+aimed at optimizing manufacturing costs for raw materials and supplies, energy, labor and automation, as well as
+for bought-in services from external business partners, may not be feasible to the extent envisaged.
+The ever-increasing complexity of technologies and products, shorter development cycles and higher customer
+expectations can cause a great deal of tension in the field of product development. Buffer times built into processes
+to compensate for potential delays are reduced accordingly. In the event of being unable to execute our development
+plans at the desired quality levels, the outcome could be development delays and increased development costs,
+which could have an adverse impact on our financial condition, liquidity, cash flows and earnings.
+Product development delays (RC: medium)
+Product quality assurance is a key success factor for the business. Potential quality risks – for example due to the
+high utilization levels - can affect yield fluctuations and hence our ability to supply customers. Shortfalls in product
+quality can lead to product recalls and potential costs related to liability claims. In addition, quality risks could also
+damage Infineon's reputation and thus have a significant adverse impact on future earnings.
+Product quality trends (RC: medium)
+Dependence on the success of specific customers may also grow if they account for an above-average share of
+Infineon's revenue and earnings. This situation could be driven by an exceptionally strong performance by the
+relevant customer, resulting, for instance, from exceptional demand for its products or from consolidation trends,
+in particular those affecting our first- and second-tier customers.
+The situation is exacerbated by the fact that our products are highly dependent on the degree of success achieved
+by individual customers in their own markets. Furthermore, there is a risk of losing future business and design
+wins if we are unable to deliver volumes over and above our contractual obligations if called upon by the customer
+to do so. In the case of unexpectedly high demand, we therefore face the challenge of having to deliver increased
+volumes that require an appropriate level of upfront investment. This could have an adverse impact on our planned
+investment ratio and, ultimately, on earnings.
+Thus, despite the fact that manufacturing processes and sites have become even more flexible, fluctuations in
+capacity utilization levels and purchase commitments, coupled with idle costs at manufacturing sites, nevertheless
+pose risks related to our cost position. These risks could possibly jeopardize our ability to attain growth and
+profitability targets that are based on cycle averages.
+The accelerating pace of events in the markets in which we operate, increased demands for flexibility by our
+customers, and short-term changes in order volumes could result in rising costs due to the underutilization of
+manufacturing capacities, higher inventory levels and unfulfilled commitments to suppliers.
+Increasingly dynamic markets (RC: high)
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present additional risks that
+could result in production downtime and supply bottlenecks.
+Data and IT systems security (RC: high)
+Risk and opportunity report
+In the following section, we describe risks that could have a significant or materially adverse impact on Infineon's
+operations, liquidity, earnings, cash flows and reputation and which have therefore been allocated to the risk classes
+"high" or "medium". Depending on the potential degree of impact and the estimated likelihood of occurrence, the
+risk class is shown in parentheses for each risk (e.g. “RC: high”).
+Risks arising from the financing of the planned acquisition
+> three tranches, each amounting to US$1.1 billion, with terms of three, four and five years.
+The tranches will be drawn down upon completion of the acquisition. On 7 October 2019, the bridge financing was
+reduced to approximately €3.9 billion as a result of the issuance of a €1.2 billion hybrid bond.
+Infineon's level of indebtedness will increase significantly as a result of the syndicated credit facility in the event
+that the acquisition is completed.
+Furthermore, in conjunction with the agreement, Infineon was required to pay fees to the financing parties which
+would be lost without compensation should the acquisition not be successful.
+The credit agreement contains certain market standard undertakings, restrictions and representations which may
+limit Infineon's operational flexibility.
+The bridge financing has a maximum term of up to two years and nine months. The intention is to refinance
+the bridge financing within that period by means of capital market instruments. Infineon has already refinanced
+€2.7 billion by placing shares and issuing a hybrid bond. The remainder of the refinancing could become more
+difficult or temporarily impossible in the event of restricted access to capital markets, e.g. as a result of a general
+financial market crisis, or/and a sharp decline in Infineon's creditworthiness, e.g. as a result of a significant
+downturn in operating performance.
+Non-achievement of strategic or operational targets and integration-related risks
+The strategic and operational targets we have set with respect to the planned acquisition and integration of
+Cypress are based on assumptions and estimates that may subsequently prove to be incorrect. The assumptions
+and estimates we have applied include the financial and operational performance of Cypress, the synergy and
+innovation potential of the two companies as well as future economic developments and market changes.
+In the event of unexpected integration difficulties, weaker-than-expected growth of Cypress-related business or
+other unforeseen deviations in business development, it cannot be ruled out that we may be forced to recognize an
+impairment loss on non-current assets and/or goodwill relating to the planned acquisition of Cypress.
+Combined Management Report | Our 2019 fiscal year
+Report on outlook, risk and opportunity
+Risk and opportunity report
+92
+In particular, the possible loss of key employees could have a negative impact. As the prerequisite for a successful
+integration and implementation of a joint strategy, we need talented managers and employees from both Infineon
+and Cypress. If, for instance, we are unable to retain employees due to potential uncertainties regarding jobs,
+locations or corporate culture, the benefits of integration and the ability to exploit the respective strengths of the
+two companies may be impaired.
+Overall statement by Group Management on risk situation
+The overall risk assessment is based on a consolidated view of all significant individual risks. We are not currently
+aware of individual risks capable of jeopardizing Infineon's going-concern status.
+Opportunities
+> bridge financing of €5.1 billion with a term of up to two years and nine months from the date of the loan
+commitment, and
+The principal opportunities are described in the following section. The list is not exhaustive and represents only
+a cross-section of the opportunities available. Our assessment of these opportunities is subject to continuous
+change, reflecting the fact that our business, our markets and the technologies we deploy are continuously subject
+to new developments, bringing with them fresh opportunities, causing others to become less relevant or otherwise
+changing the significance of an opportunity from our perspective. Depending on the potential degree of impact and
+the estimated probability of occurrence, each of these opportunities is assigned to an "opportunity class” (OC) in the
+same way that risks are allocated to a risk class. These classifications are shown in parentheses (e.g. "OC: medium”).
+The following description of significant opportunities does not take into account the planned acquisition of Cypress.
+The main potential opportunities arising in connection with the planned acquisition are presented in a section
+"Opportunities arising in connection with the planned acquisition of Cypress".
+In connection with the planned acquisition of Cypress, on 3 June 2019 Infineon concluded an agreement with
+an international banking consortium for a syndicated credit facility. It is unsecured and non-subordinated and
+comprised four tranches as of 30 September 2019:
+Prerequisites for the completion of the planned acquisition
+Measures to implement our risk management strategy
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor sector from
+economic and demand fluctuations and the risks related to Infineon's operations, financial condition, liquidity
+and earnings by closely monitoring changes in early warning indicators as well as by developing specific response
+strategies appropriate to the current position within the economic cycle. This can be done, for instance, by rigorously
+adjusting capacities and inventory levels at an early stage, initiating cost-saving measures and making flexible
+use of external manufacturing capacities, both at frontend and backend facilities.
+At an operational level, we have adopted various quality management strategies aimed at avoiding quality risks
+(such as "Zero Defects” and “Six Sigma"), to prevent or solve problems and to improve our business processes.
+Our Group-wide quality management system has been certified on a worldwide basis in accordance with ISO 9001
+and ISO/TS 16949 for a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying and eliminating the
+reasons for quality-related problems at an early stage.
+A structured project management system is in place to handle development projects, including customer-specific
+projects. Clear project milestones and verification procedures required to be carried out during a project as well
+as clearly defined limits of authority help us identify potential project risks at an early stage and counter these risks
+with specific measures.
+We seek to minimize procurement-related risks through appropriate purchasing strategies and techniques, including
+constant product and cost analysis ("Best Cost Country Sourcing" and "Focus-on-Value"). These programs include
+cross-functional teams of experts who are responsible for the standardization of purchasing processes with respect
+to material and technical equipment.
+In response to the general increase in threats to data security and the high degree of professionalism meanwhile
+applied in the area of cybercrime, we have initiated an information security program to further improve protection
+against hacking attacks and related risks to our IT systems, networks, products, solutions and services. Information
+security is achieved primarily with the aid of Infineon's systematically applied and global Information Security
+Management System (ISMS), the prime objectives of which are to identify and measure all potential IT risks and to
+ensure that effective processes and tools are in place to minimize and avoid risk. The ISMS covers all areas of
+Infineon's business and is certified to the globally recognized ISO/IEC 27001 norm. All relevant risk areas are contin-
+uously monitored and optimized in conjunction with regular internal and external audits.
+We minimize legal risks relating to intellectual property rights and patents by pursuing a well-defined patent strategy,
+including thorough patent research and selective development and registration of Infineon patents as well as pre-
+cautionary protective measures in the form of agreements with major competitors. However, no such opportunities
+exist to safeguard against risks of this nature in the case of companies specializing in exploiting patent rights.
+We have established a Group-wide compliance management system with the aim of managing compliance-related
+risks on a systematic, comprehensive and sustainable basis. Under this system, major preventive procedures are
+continuously developed, other elements of the system revamped or strengthened, and appropriate responses
+established for possible or actual incidences of non-compliance with internal or external regulations. The Compliance
+Officer reports on a quarterly basis to the Chief Financial Officer and bi-annually to the Investment, Finance and
+Audit Committee of the Supervisory Board.
+In certain cases, insurance policies have been taken out to protect against potential claims and liability risks,
+with the aim of avoiding or at least minimizing any adverse impact on Infineon's financial condition and liquidity.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Report on outlook, risk and opportunity
+Risk and opportunity report
+91
+Risks arising in connection with the planned acquisition of Cypress (RC: medium)
+Due to the size and significance of the planned acquisition, the main risks that could have a negative impact on
+Infineon's current or future business, its financial position, the share price or dividend payments are described
+separately in the following section.
+As Infineon and Cypress are currently still autonomous and independent companies, the risks presented below
+were identified and assessed as part of a preparatory integration project, based on available information, and not
+in the context of the enterprise risk management procedures described above. The list of risks does not purport
+to be exhaustive. Moreover, the order in which they are presented does not imply any attribution of value to the
+risks concerned.
+At present, it cannot be ruled out that the planned acquisition may be delayed or not completed at all. The trans-
+action is still subject to customary closing conditions, including approval by relevant authorities. Necessary official
+approvals could be refused. There is a risk that stipulated measures cannot be implemented - either at all or on time
+or on reasonable conditions - potentially leading to reputational damage or financial disadvantages. For example,
+the acquisition agreement provides for a payment of US$425 million by Infineon in the event that the transaction is
+not completed ("breakup fee").
+New technologies and materials (OC: medium)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Strategic approach "Product to System" (OC: medium)
+Report on outlook, risk and opportunity
+Risk and opportunity report
+94
+==
+P see page 76 ff.
+Growth from mobile applications (OC: medium)
+The continued trend towards mobility is also reflected in the unbroken high demand for smartphones and tablets.
+We benefit from this development in two ways. Firstly, through the components we supply for mobile devices
+(silicon-MEMS microphones, TVS diodes, GPS signal amplifiers, CMOS-RF switches), and secondly, through power
+semiconductors, which form the key components for energy-efficient chargers (high-voltage and low-voltage
+power transistors, driver ICs and control ICs).
+We are constantly striving to develop new technologies, products and solutions and to improve on existing ones,
+both separately and in collaboration with customers. We therefore continually invest in research and development
+relating to the use of new technologies and materials. Technologies and materials in current use may well lose their
+predominance in the foreseeable future, such as silicon, which is reaching its physical limits in some applications.
+We see numerous opportunities for working with new materials, such as those associated with silicon carbide or
+gallium nitride, to develop more powerful and/or lower-cost products. These materials could well have a positive
+influence on our ability to attain our strategic growth and profitability targets.
+The trend towards electronic identity documents is having a positive impact on Digital Security Solutions segment
+revenue. Paper-based documents are increasingly being replaced by chip-based versions, due to the higher level
+of security they offer. New markets are also emerging in conjunction with the Internet of Things and the Industrial
+Internet ("Industry 4.0"). The authentication of devices is playing an increasingly important role in both of these
+fields, for which Infineon offers the corresponding security chips.
+Liquidity position (OC: medium)
+Our current liquidity position, which we describe in the chapter "Review of liquidity", enables us to obtain and,
+if necessary, make use of favorable refinancing conditions. This fact gives Infineon both the financial headroom and
+the entrepreneurial flexibility it needs to implement its business strategies and initiatives.
+Opportunities arising in connection with the planned acquisition of Cypress (OC: medium)
+Upon successfully integrating the Cypress business, we see in particular the following opportunities:
+The products and technologies of Infineon and Cypress complement each other ideally and set the standards in
+their respective fields. In addition to our current range of power semiconductors, sensors and microcontrollers
+for automotive and security applications, we will also be able to grow in scope to offer connectivity, multi-purpose
+industrial microcontrollers and IoT applications, together with the corresponding software, as well as high-perfor-
+mance discrete memory products.
+The resulting broadly-based portfolio will enable Infineon to offer the complete system solutions needed to link
+the real with the digital world. The key to success is our ability to provide secure connectivity for energy-efficient
+devices. Advances in functional integration mean that a whole host of relevant applications is currently in an early
+phase of growth.
+We are pushing ahead with our P2S strategy in order to strengthen and expand core business by driving growth in
+both related and new fields. To cite two examples, firstly, the combination of Infineon's security expertise with
+Cypress's connectivity know-how will accelerate entry into new loT applications in the industrial segment. Secondly,
+in the field of automotive semiconductors, the expanded portfolio of microcontrollers and NOR flash memories
+offers great potential, especially in light of their growing importance for driver assistance systems and new electronic
+architectures in vehicles.
+Quite apart from their product portfolios, the two companies also complement each other in other aspects. We also
+see an excellent match in terms of geographical focus and sales channels, with Infineon gaining wider market
+access through Cypress, particularly in Japan, and via distributors. Infineon will also be adding to its R&D presence
+in Silicon Valley. Due to its product portfolio, the manufacturing strategy of Cypress is focused to a far greater extent
+on contract manufacturing. The combination of the two companies will help our business diversify, make it more
+robust and enable us to generate additional cost synergies.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Security applications (OC: medium)
+We expect semiconductor content per vehicle to continue growing. The primary driving force behind this trend is
+the rising demand for electro-mobility, active safety features and driver assistance systems.
+We are also convinced that current global carbon emissions targets cannot be achieved without further electrification.
+The need for increased efforts in this field is relevant not only for electro-mobility (i.e. hybrid, plug-in hybrid and
+all-electric vehicles), but also for power units in vehicles with combustion engines. IT security within the vehicle is
+also further gaining in importance. Thanks to our expertise in the field of security controllers, we are extremely
+well positioned to exploit opportunities in this area.
+With the "Product to System" strategic approach, we seek to identify additional benefits on a system level for our
+customers from within our broad portfolio of technologies and products. The strategy enables us to exploit further
+revenue growth potential and thereby achieve our growth and margin targets. This approach also enables us to
+reduce customers' development costs and shorten lead times required to bring their products to market.
+Support for change in energy policies and consideration of climate change issues (OC: medium)
+Population growth and increasing industrialization in all parts of the world are resulting in ever-greater global
+demand for energy. Electric power is becoming the most important energy carrier of the 21st century and renewables
+are playing a key role in reducing carbon emissions. The long-term objective is to achieve global decarbonization
+by the end of the century, as resolved at the Climate Change Conference held in Paris (France) in December 2015.
+Infineon's semiconductors enable electric power to be generated from renewable energy sources. They offer
+efficiency gains at all stages of the energy industry's value-added chain, whether in generation, transmission, or
+above all in the use of electrical power. They form the basis for the intelligent and efficient use of electrical power,
+for instance in industrial applications, power supplies for computers, consumer electronics and vehicles.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Report on outlook, risk and opportunity
+93
+Digitalization (OC: medium)
+The trend towards digitalization represents a significant business opportunity for Infineon. This is reflected on
+one hand in the optimization of internal processes, for example for our interconnected manufacturing capabilities
+on a global scale. At the same time, our portfolio of sensors, microcontrollers, power semiconductors, security
+controllers and specific software puts us in an excellent position to exploit growing market potential. Thanks to our
+"Product to system" strategic approach, we are ideally placed to penetrate and develop the markets involved.
+Good examples already visible today include automated driving, voice and gesture control of devices and machines,
+and the advancing development of the Internet of Things & Big Data.
+Risk and opportunity report
+Ability to supply due to available capacities (OC: medium)
+At the G20 summit held in Hangzhou (China) in September 2016, China ratified the Paris climate agreement, thereby
+giving its formal commitment to reducing carbon emissions. As a consequence, the importance of expanding renew-
+able energy sources in China has increased enormously. Our presence in this market, alongside our collaboration
+with leading companies in the wind and solar power sectors, will create further opportunities for long-term growth.
+Our success in positioning Infineon in China as an integral part of Chinese industry (and hence Chinese society)
+could well open up a multitude of new opportunities and is highly likely to have a positive impact on the growth
+and profitability of our business.
+China is the world's largest market for trains and, with CRRC (an Infineon customer) home to the world's largest train
+manufacturer by far. The continued expansion of the domestic rail network and a growing volume of international
+infrastructure projects both represent growing business opportunities for Infineon.
+Infineon generates more revenue in China than in any other country. Accordingly, developments and growth
+opportunities in China are of the utmost importance to the Group and relate to the following markets that we serve:
+Vehicle production in China is still expanding, albeit at a slower pace. At the same time, rapid growth in the production
+of plug-in hybrid and all-electric vehicles has turned China into the world's largest market for electro-mobility.
+For this reason, during the 2018 fiscal year Infineon and SAIC Motor (China's largest car manufacturer) established
+SIAPM, a joint venture that offers power semiconductor solutions for electric vehicles. Volume production has
+already commenced. The joint venture strengthens our position in China, whilst also offering additional potential
+for Infineon's future global business.
+Further growth in semiconductor content in vehicles (OC: medium)
+The availability of additional capacities, combined with the pro-active strategic and operational planning of
+internal and external resources, enable us to meet rising demand from both existing and new customers in the
+event of a market upturn. We benefited from this trend again during the previous fiscal year.
+Our in-house manufacturing capacities, together with those of our external partners, provide us with sufficient
+flexibility to meet demand requirements. In particular, further expansion of 300-millimeter manufacturing in
+Dresden (Germany), of the second manufacturing module in Kulim (Malaysia) and the construction of a second,
+fully automated 300-millimeter factory at the Villach site (Austria) will help meet growing demand for power
+semiconductors.
+Market access and activities in China (OC: medium)
+Result from investments, net
+2018
+5,483
+2019
+Transfers to retained earnings according to section 58, paragraph 2, AktG
+Transfers to retained earnings according to section 58 paragraph 2a AktG
+Unappropriated profit at the end of year
+Income after taxes/net loss (previous year: net income)
+Income tax
+Other financial result
+Interest result
+Other income (expense), net
+Unlike the Consolidated Financial Statements, which are prepared in accordance with International Financial
+Reporting Standards ("IFRS"), Infineon Technologies AG's Separate Financial Statements are prepared in accordance
+with the provisions of the German Commercial Code ("HGB"). The complete Separate Financial Statements are
+published separately.
+Selling expenses
+Research and development expenses
+Gross profit
+Cost of goods sold
+Revenue
+€ in millions
+the German Commercial Code (condensed)
+Statement of income of Infineon Technologies AG in accordance with
+5,357
+Earnings position
+General and administrative expenses
+(3,802)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+1,681
+355
+Infineon Technologies AG is the parent company of Infineon and performs the Group's management and corporate
+functions. It is responsible for key Group-wide functions such as Finance and Accounting, Corporate Compliance,
+Human Resources, strategic and product-oriented R&D activities and also Corporate and Marketing Communication
+worldwide. Furthermore, it manages supply chain processes throughout the Group. Infineon Technologies AG also
+has its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+(491)
+982
+(17)
+(43)
+(16)
+(129)
+(81)
+(15)
+980
+64
+150
+(63)
+(200)
+(178)
+(282)
+(292)
+(1,003)
+(1,069)
+1,461
+(3,896)
+In addition to reporting on Infineon as a whole, in the following section we also provide information on the perfor-
+mance of Infineon Technologies AG.
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI is reduced on a pro
+rata monthly basis (by one-twelfth for each full month missing from the complete STI tranche). A member of the
+Management Board is not entitled to receive an STI bonus for the fiscal year in which he/she resigns from office
+(unless the resignation is for a reason ("good cause"), for which the member is not responsible) or if the contract of
+the member of the Board is terminated by the Company for good cause.
+Infineon attaches great importance to ensuring that its creditworthiness is based on a solid foundation. Our prudent
+medium- and long-term capital structure targets are derived from the clear objective of maintaining our investment
+grade rating. These targets will also apply during and after the planned acquisition of Cypress and are taken into
+account when structuring the related challenging financing arrangements. The planned acquisition of Cypress
+means that Infineon will exceed its gross debt target (see "Capital structure targets demonstrate our long-term
+reliability” in the chapter "Group strategy"), but only to an extent compatible with maintaining its investment grade
+rating. Infineon's medium-term target after the acquisition is to reduce debt to, or below, the maximum target
+level in accordance with the capital structure target.
+Components of the Management Board compensation system
+There have been no changes to the Management Board compensation system in the 2019 fiscal year compared to
+the previous fiscal year.
+All members of the Management Board receive as compensation for their service an annual income which - based
+on target achievement of 100 percent - comprises approximately 45 percent fixed compensation and approximately
+55 percent variable compensation components:
+> Fixed compensation: The fixed compensation comprises a contractually agreed basic annual salary that is not
+linked to performance and is paid in twelve equal monthly installments.
+> Variable (performance-related) compensation: The variable compensation comprises three components -
+an annual bonus (short-term incentive), a multiple-year bonus (mid-term incentive) and a long-term variable
+compensation component (long-term incentive).
+The short-term incentive ("STI") is intended to reward performance over the preceding fiscal year, reflecting Infineon's
+recent progress. Assuming a 100 percent target achievement for each of the variable compensation components,
+the STI constitutes approximately 20 percent of target annual income. It is set by the Supervisory Board in a two-
+phase process:
+(i) At the beginning of each fiscal year, the target functions with respect to the two key performance indicators
+"free cash flow" and "Return on Capital Employed (ROCE)" are defined uniformly for all members of the
+Management Board. Underpinning the consistent approach taken to managing the business, the same target
+indicators - supplemented by the Segment Result - are used as the basis for determining the variable com-
+pensation components (bonus payments) for Infineon managers and employees. The two key performance
+indicators referred to above, which are described in more detail in the chapter "Internal management system",
+are equally weighted for the purposes of measuring the STI.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+104
+(ii) At the end of the fiscal year, the actual levels of target achievement and hence, the amount of the STI payouts,
+are determined by the Supervisory Board by reference to the levels of target achievement for free cash flow
+and ROCE as reported in the audited financial statements.
+An STI is paid only if the levels of target achievement reach at least the 50 percent threshold for both performance
+indicators (free cash flow, ROCE). If one of the two target thresholds is not achieved, no annual bonus is paid for the
+relevant fiscal year. If the thresholds are achieved, the arithmetic mean of the two target achievements is calculated
+and used as the percentage rate to determine the actual STI amount. A cap of 250 percent applies, meaning that
+the maximum amount that can be paid is two-and-a-half times the target STI (= 100 percent), regardless of an actual
+higher achievement level. The Supervisory Board may, in addition, increase or reduce the amount to be paid in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board as a whole, Infineon's
+position, and any exceptional factors. A lower limit applies in this case such that the amount to be paid cannot
+be less than the amount that would be due given 50 percent target achievement. The upper limit for an upward
+adjustment is the сар of 250 percent.
+338
+The mid-term incentive ("MTI") is intended to reward sustained performance by the Management Board reflecting
+Infineon's medium-term progress. In combination with the long-term incentive, the MTI therefore ensures compliance
+with the stock corporation law requirement that the structure of compensation is "oriented toward sustainable
+growth of the enterprise". Assuming a 100 percent target achievement of the variable components, the MTI constitutes
+approximately 20 percent of target annual income.
+A new MTI tranche, each with a term of three years, commences every fiscal year. The incentive is paid in cash at
+the end of the three-year term. The amount of the payment is determined on the basis of actual ROCE and free
+cash flow figures during each three-year period. For these purposes, the target values for ROCE and free cash flow
+for each individual year of an MTI tranche correspond to the STI targets set each year in advance. The level of
+achievement for both the RoCE target and the free cash flow target must reach a threshold of 50 percent in each
+year of the relevant three-year period, otherwise it is deemed - for MTI purposes - to be zero for the year concerned.
+If the thresholds are exceeded, the level of target achievement determined for the STI applies for the relevant annual
+tranche of the MTI. The MTI to be paid at the end of the three-year period is determined by calculating the arith-
+metic mean of the three annual target achievement levels. Unlike the STI, the MTI is paid as calculated, even if
+the mean level of target achievement for the three-year period is below 50 percent. A cap of 200 percent applies,
+meaning that the maximum amount that can be paid is two times the target MTI (= 100 percent), regardless of the
+actual achievement level.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each case by up to 50 percent,
+as it sees fit, based on the performance of the Management Board as a whole, Infineon's situation and any excep-
+tional factors. When exercising its judgment in this respect, the Supervisory Board also takes into account the extent
+to which the three-year target for revenue growth and Segment Result (set each year by the Supervisory Board
+exclusively for this purpose) has been achieved and the degree of success achieved complementing organic growth
+through M&A activities. Unlike the STI, there is no lower limit for the amount by which the Supervisory Board can
+adjust the MTI; for the upper limit, however, the cap applies (200 percent).
+If the term of office commences during a fiscal year, the MTI tranche is reduced on a pro rata monthly basis (by 1/36
+for each full month missing from the complete MTI tranche). Upon leaving Infineon, regulations ensure as a general
+rule that the member of the Management Board can only receive an MTI payment for the number of MTI tranches
+corresponding to his/her term of office, reduced where appropriate on a pro rata basis. MTI tranches already started
+are forfeited if a mandate or service contract of a member of the Management Board comes to an end before the
+due date, for instance if a member resigns from office (unless the resignation is for good cause, for which the member
+is not responsible) or if the contract of the member of the Board is terminated by the Company for good cause.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Psee page 114
+In the 2018 fiscal year, the Supervisory Board engaged an independent external remuneration expert to perform
+the regular review of the Management Board compensation system. The review was completed during the 2019
+fiscal year, with the expert reaching the conclusion that the Company's compensation system complies with the
+requirements of the German Stock Corporation Act (Aktiengesetz) and the DCGK and is in line with current market
+conditions (for details see "Review of the Management Board compensation system, compensation components
+and individual contracts" in this chapter).
+Infineon Technologies AG
+The Management Board compensation system – similar to the compensation paid to the individual members of
+the Management Board - is defined and regularly reviewed by the full Supervisory Board on the basis of proposals
+made by the Executive Committee. In accordance with applicable legal requirements and the recommendations
+of the DCGK, the compensation paid to members of the Management Board is intended to reflect the typical level
+and structure of management board compensation at peer companies, as well as Infineon's economic position and
+future prospects. The duties, responsibilities and performance of each member of the Management Board are also
+to be considered, as is Infineon's wider pay structure. This includes considering Management Board compensation
+in relation to that of senior management and of the workforce as a whole, including changes in the level of com-
+pensation over time. The stated objective is that the compensation structure should be designed in such a way
+that it promotes sustainable business development, with a cap in place in the event of exceptional developments.
+Infineon aims to set compensation at a level that is competitive both nationally and internationally, so as to inspire
+and reward dedication and success in a dynamic environment.
+Compensation system
+P see page 36 f.
+96
+Overall statement on Infineon's financial condition | Infineon Technologies AG
+Combined Management Report | Our 2019 fiscal year
+95
+95
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+We are convinced that Infineon's structural growth drivers remain intact and will regain momentum as the global
+economy picks up. Infineon's growth strategy is based on three pillars: achieving economies of scale in its core
+business, broadening its scope to include adjacent markets, applications and products as well as engaging in new,
+long-term growth areas. Our "Product to System" strategic approach provides an excellent basis for the continuing
+development of our core business. By gaining an extensive understanding of our customers' requirements, we
+develop solutions that take all system aspects into consideration and therefore offer customers a competitive
+advantage. With the planned acquisition of Cypress, we intend to continue pursuing the evolutionary strategy of
+advancing from being a manufacturer of components to becoming a provider of systems and solutions. With Cypress,
+we will be able to serve our target markets even more comprehensively and offer system solutions that are necessary
+to strengthen the link between the real and the digital world. This strategic rationale also has financial consequences.
+We assume that the transaction will already have a positive effect on the development of the segment result and
+adjusted earnings per share from the 2021 fiscal year on. First, the anticipated yearly cost synergies of €180 million,
+which are to be created by the end of the 2022 fiscal year mainly due to economies of scale, will contribute to this.
+However, more important for the creation of value are the revenue synergies arising from cross-selling as well as
+the merger of the complementary portfolios into system solutions. We estimate these in the long term to be more
+than €1.5 billion per year. On closing of the acquisition, we will adjust our target operating model. During the inte-
+gration process, we will leverage more and more of the synergies and meet our targets: By then, we expect revenue
+growth through the cycle for the larger, combined company to be slightly above our current target rate of 9 percent.
+The Segment Result Margin is to increase through the cycle from 17 percent to 19 percent. The investment-to-sales
+ratio will drop through the cycle from 15 percent to 13 percent because of the lower capital intensity of Cypress.
+The situation for businesses remains strained in light of economic and political uncertainty. Ongoing trade
+conflicts continue to have a negative impact. Looking at the economic situation in our target markets, it seems
+unlikely that the situation will improve in the foreseeable future. Moreover, various macroeconomic indicators
+suggest that the outlook is likely to remain gloomy for the time being. We expect our markets to recover not
+before the second half of the 2020 fiscal year. Revenue for Infineon without Cypress is expected to increase by
+5 percent plus or minus 2 percentage points compared to the previous fiscal year based on an euro/US dollar
+exchange rate of 1.13. We have already implemented necessary measures during the previous fiscal year and are
+adapting them on the basis of new market developments. It is our stated goal to operate our business profitably,
+even during weak phases. We have shown in the past that we can successfully manage our business throughout
+the various cycles of the semiconductor industry.
+After a boom phase lasting several years, the global economy entered in a phase of significant and sustained
+slowdown after the turn of the 2018/2019 calendar year due to geopolitical tensions and trade conflicts. In March,
+Infineon was therefore obliged to reduce its original revenue target for the 2019 fiscal year from about €8.4 billion
+to €8 billion, plus or minus 2 percent, which was then achieved with revenue of €8.029 billion. This corresponds to
+year-on-year revenue growth of 6 percent, a performance that outperformed the semiconductor market as a whole.
+Infineon's rigorous focus on structural growth drivers in the areas of energy efficiency, mobility, the Internet of
+Things & Big Data as well as security is paying off. The fact that business has developed robustly in recent years is
+also underpinned by our margin development. At 16.4 percent, the Segment Result Margin in the 2019 fiscal year was
+only 0.6 percentage points below our average margin target throughout the cycle. Free cash flow from continuing
+operations totaled €39 million in the 2019 fiscal year. The substantial amounts invested in property, plant and
+equipment and intangible assets as well as the acquisition of Siltectra during the fiscal year under report were
+financed out of net cash provided by operating activities.
+Infineon's financial condition
+Overall statement on
+Overall statement on Infineon's financial condition
+Combined Management Report | Our 2019 fiscal year
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+103
+Compensation report
+This Compensation report, which forms part of the Combined Management Report, explains the principles applied
+in determining compensation for the Management Board and Supervisory Board of Infineon Technologies AG
+and the level of remuneration paid to the individual members of the Management Board and Supervisory Board in
+accordance with applicable legal requirements and the recommendations of the German Corporate Governance
+Code in the version dated 7 February 2017 (Deutscher Corporate Governance Kodex - "DCGK"). Infineon believes that
+transparent and understandable reporting of Management Board and Supervisory Board compensation represents
+a fundamental element of good corporate governance.
+Management Board compensation
+-
+491
+Capital reserves
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Dividend
+In accordance with the German Stock Corporation Act (Aktiengesetz), the amount of the dividend available for
+distribution to shareholders is based on the level of unappropriated profit (Bilanzgewinn) recorded by the ultimate
+parent, as determined in accordance with the German Commercial Code (HGB).
+Infineon Technologies AG reported unappropriated profit of €338 million in its financial statements for the fiscal year
+ended 30 September 2019. With regard to the 2019 fiscal year, a proposal will be made to pay an unchanged dividend
+of €0.27 per dividend-entitled share out of the unappropriated profit of Infineon Technologies AG amounting to
+€338 million. The disbursement of the proposed dividend is subject to approval by shareholders.
+The Company paid a dividend of €0.27 per share (€305 million in total) for the 2018 fiscal year.
+For information regarding Infineon's long-term dividend policy, see "Sustainable value creation for our shareholders"
+in the chapter "Group strategy".
+Expected developments, together with associated material risks and opportunities
+The expected developments, together with associated material risks and opportunities of Infineon Technologies AG
+are very similar to those of the Group. Moreover, it is assumed that the result from investments will play a major
+role in Infineon Technologies AG's earnings performance. As a general rule, Infineon Technologies AG participates in
+the risks of its subsidiaries and equity investments on the basis of the relevant shareholding. As the parent company,
+Infineon Technologies AG is integrated in Infineon's overall risk management system and internal control system.
+For more information on this topic, together with associated material risks and opportunities, see the chapter
+"Risk and opportunity report".
+Most transactions within Infineon involving derivative financial instruments are handled by Infineon Technologies AG.
+The comments provided in "Principles and structure of Infineon's treasury" within the chapter "Review of liquidity"
+regarding the nature and scope of transactions with derivative financial instruments and hedged risks apply to
+Infineon Technologies AG as well. Reference is also made to the Notes to the Separate Financial Statements of
+Infineon Technologies AG.
+@ https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+99
+99
+Corporate Governance
+Information pursuant to section 289a,
+paragraph 1, and section 315a, paragraph 1,
+of the German Commercial Code (HGB)
+Structure of the subscribed capital
+The share capital of Infineon Technologies AG stood at €2,501,368,142 as of 30 September 2019. This sum is divided
+into 1,250,684,071 non-par registered shares, each of which represents a notional portion of the share capital of €2.
+Each share carries one vote and gives an equal right to the profit of the Company based on the profit appropriation
+resolved by shareholders at the Annual General Meeting.
+The Company held 6 million of the above-mentioned issued shares as own shares as of 30 September 2019
+(30 September 2018: 6 million). Own shares held by the Company on the date of the Annual General Meeting do
+not carry a vote and are not entitled to participate in profit.
+Restrictions on voting rights or the transfer of shares
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regulations of the German Stock
+Corporation Act (Aktiengesetz - "AktG"). For example, pursuant to section 136 AktG shareholders are prohibited
+from voting under certain circumstances and, according to section 71b AktG, Infineon Technologies AG has no voting
+rights from its own shares. Furthermore, non-compliance with the notification requirements pursuant to section 33,
+paragraphs 1 or 2 of the German Securities Trading Act (Wertpapierhandelsgesetz – “WpHG") and to section 38,
+paragraph 1 or section 39, paragraph 1, WpHG can, pursuant to section 44 WPHG, have the effect that certain rights
+(including the right to vote) may, temporarily at least, not exist. We are not aware of any contractual restrictions
+on voting rights or the transfer of shares.
+P see page 78
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register of Infineon Techno-
+logies AG are recognized as shareholders of the Company. In order to be recorded in the share register of Infineon
+Technologies AG, shareholders are required to submit to the Company the number of shares held by them and
+their name or company name, their address and, where applicable, their registered office and their date of birth.
+Pursuant to section 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information from the
+party listed in the share register regarding the extent to which shares, to which the entry in the share register relates,
+are actually owned by the registered party and, if it does not own the shares, to receive the information necessary
+for the maintenance of the share register in relation to the party for whom the shares are held. Section 67, paragraph 2,
+AktG stipulates that the shares concerned do not confer voting rights until such time as the information requested
+has been supplied in the appropriate manner.
+P see page 83 ff.
+98
+400
+376
+1,131
+1,567
+1,005
+881
+3,040
+3,329
+Deferred income
+Total liabilities and shareholders' equity
+7
+19
+12,788
+11,789
+Total assets increased by 8 percent from €11,789 million as of 30 September 2018 to €12,788 million as of 30 Sep-
+tember 2019. Thereby, current assets went up by €958 million. Cash and cash equivalents and marketable securities
+totaled €3,592 million at the end of the reporting period (30 September 2018: €2,318 million) and accounted for
+64 percent of current assets.
+The increase in equity (€1,229 million) was mainly attributable to the share capital increase amounting to
+€1,545 million implemented during the 2019 fiscal year. The net loss of €17 million and the dividend payment of
+€305 million for the 2018 fiscal year had an offsetting effect.
+Provisions for pension plans and similar commitments increased by €9 million in total due to the reduction in
+the average market interest rate for the past ten years used to measure obligations. The positive development
+of the fair value of the plan assets had the opposite effect. Other provisions increased by a total of €62 million.
+Liabilities decreased by 9 percent from €3,329 million at the end of the previous fiscal year to €3,040 million as
+of 30 September 2019.
+The equity ratio at the end of the reporting period was 69.8 percent, compared to 65.3 percent one year earlier.
+For information on own shares, please refer to the comments relating to section 160, paragraph 1, no. 2 of the
+German Stock Corporation Act (AktG) provided in the Separate Financial Statements of Infineon Technologies AG.
+@ https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+40
+97
+Combined Management Report | Our 2019 fiscal year
+Infineon Technologies AG
+P see page 37
+Direct or indirect shareholdings exceeding 10 percent of the voting rights
+Section 33, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed or, after exceeding, fall
+below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of a listed corporation to notify such corporation
+and the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin")
+immediately. As of 30 September 2019, we have not been notified of any direct or indirect shareholdings reaching
+or exceeding 10 percent of the voting rights. The shareholdings notified to us as of 30 September 2019 are presented
+in the Notes to the Separate Financial Statements of Infineon Technologies AG under the information pursuant to
+section 160, paragraph 1, No. 8 AktG.
+Shares with special rights which confer control rights
+Authorization to acquire own shares
+A resolution passed by the Annual General Meeting on 22 February 2018 authorizes Infineon Technologies AG, in
+the period through 21 February 2023, to acquire its own shares, within the statutory boundaries, in an aggregate
+amount not exceeding 10 percent of the share capital at the time the resolution was passed or - if the latter amount
+is lower - of the share capital in existence at the time the authorization is exercised. The Company may not use the
+authorization for the purposes of trading in its own shares. The Management Board decides whether own shares
+are acquired through the stock exchange, by means of a public offer to purchase addressed to all shareholders or a
+public invitation to submit offers for sale or via a bank or other entity that meets the requirements of section 186,
+paragraph 5 sentence 1, AktG. The authorization includes differentiating requirements - in particular with regard to
+the permissible purchase price – for each method of acquisition.
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization may - if not sold either via
+the stock exchange or by means of a public offer to purchase addressed to all shareholders – be used for all legally
+admissible purposes. The shares may y also be cancelled or offered to third parties in conjunction with business
+combinations or the acquisition of companies, parts of companies or participations in companies. Under specified
+circumstances subject to the consent of the Supervisory Board, the shares may also be sold to third parties in return
+for cash payment (including by means other than through the stock exchange or through an offer to all shareholders),
+used to meet the Company's obligations under convertible bonds and bonds with warrants and stock option plans,
+offered for sale or granted as a remuneration component to members of representative bodies and employees
+within the Group, and/or used to repay securities-backed loans. The subscription right of shareholders is excluded
+in all of the above cases (except when the shares are cancelled). In addition, the subscription rights of shareholders
+are excluded in respect of fractional amounts in instances in which the shares are sold through a public offer
+addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on 22 February 2018, the acquisition of Infineon
+Technologies AG shares may also be effected using equity derivatives. The total number of shares that can be
+acquired using derivatives may not exceed 5 percent of the Company's share capital, determined either at the time
+of this authorization becoming effective or at the time of its exercise through the use of the derivatives. The shares
+acquired through the exercise of this authorization are to be counted toward the acquisition threshold for the shares
+acquired in accordance with the authorization to acquire own shares as described above. The authorization stipu-
+lates other restrictions when derivatives are deployed, including their execution, term, servicing and acquisition price.
+If own shares are acquired using derivatives in accordance with the requirements stipulated in the authorization,
+any right of the shareholders to conclude such derivative transactions with the Company will be excluded in
+analogous application of section 186, paragraph 3, sentence 4, AktG. The shareholders have no right to conclude
+derivative transactions with the Company.
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the Company is required to
+accept the shares under the derivative transactions. No other right to sell shares will apply in this connection.
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB) |
+Statement on Corporate Governance pursuant to sections 289f, 315d of the German Commercial Code (HGB)/Corporate Governance Report
+102
+P see page 154 f.
+P see page 103 ff.
+The use of own shares, acquired through derivatives, is governed by the same rules as applicable for the direct
+acquisition of own shares.
+Significant agreements that are subject to the condition of a change of control as a result
+of a takeover bid and compensation agreements with members of the Management Board
+or with employees in the event of a takeover bid
+Various financing agreements with lending banks and capital market creditors (see note 15 to the Consolidated
+Financial Statements) contain defined change-of-control clauses which give creditors the right to call for early
+repayment. These clauses reflect standard market practice. In addition, one financing agreement stipulates that
+in the event of a change of control, Infineon Technologies AG may be required to provide collateral in the form of
+cash rather than as a guarantee.
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy agreements and
+approvals, supply contracts, joint venture agreements and license agreements contain customary change-of-control
+clauses, according to which a change in control of Infineon Technologies AG triggers the right of the other party
+at its sole discretion to terminate the agreement or to continue the agreement as well as other rights which may,
+under certain circumstances, be unfavorable for Infineon.
+If a member of the Management Board leaves his or her position in connection with a defined change of control
+(namely, where a party holds at least 50 percent of the voting rights in Infineon Technologies AG) that member is
+currently entitled to continued payment of the relevant annual remuneration for the entire remaining contract
+term. In accordance with a special contract termination right granted to members of the Management Board, the
+period of continued payment is capped at a maximum of 36 months in the event that the member resigns, or at a
+minimum of 24 months and a maximum of 36 months in the event of dismissal/termination of contract by Infineon
+Technologies AG. Further details are contained in the Compensation report.
+The change-of-control clauses agreed with the members of the Management Board correspond to the recommen-
+dation made in section 4.2.3, paragraph 5, of the German Corporate Governance Code. Such clauses are intended
+to give members of the Management Board financial security in the event of a change of control, with a view to
+preserving their independence in this situation.
+The conditions of both the Performance Share Plan (open to participation by members of the Management Board,
+managers and other selected employees of the worldwide company) and the Restricted Stock Unit Plan (additionally
+applicable to specified employees of Infineon in the USA) contain rules that are triggered in the event of a defined
+change of control (namely holding at least 30 percent of the voting rights of Infineon Technologies AG). For the most
+part, these rules specify that the vesting periods that are envisaged by the relevant plans are aborted in the event
+of a change of control. The corresponding rule in the Performance Share Plan does not, however, apply to members
+of the Management Board, given that the service contracts take precedence.
+Statement on Corporate Governance pursuant
+to sections 289f, 315d of the German Commercial
+Code (HGB)/Corporate Governance Report
+The Statement on Corporate Governance pursuant to sections 289f and section 315d of the German Commercial
+Code (HGB) including the Corporate Governance Report has been made publicly accessible.
+The gross profit margin for the 2019 fiscal year increased by 3.4 percentage points to 30.6 percent year-on-year.
+Infineon Technologies AG reported a net loss of €17 million for the 2019 fiscal year, whereby earnings were negatively
+impacted by one-time expenses in connection with the planned acquisition of Cypress as well as by the lower
+result from investments. After transferring a total of €355 million from revenue reserves, the unappropriated profit
+amounted to €338 million.
+@www.infineon.com/declaration-on-corporate-governance
+The Management Board is authorized, subject to the requirements resolved by the shareholders at the Annual
+General Meeting, to determine the further details of the bond issue, including terms and conditions.
+Even if the dilution protection regulations are applied, the conversion or option price must equal at least 80 percent of
+the arithmetic mean of the closing prices of the Company's share in XETRA trading on the Frankfurt Stock Exchange
+(or comparable successor system); further details - including the conditions under which the conversion or option
+price may be reduced - are set out in the authorization.
+> insofar as bonds are issued in return for a capital contribution in kind, provided that the value of such capital
+contribution in kind is appropriate in relation to the market value of the bonds.
+> in order to exclude fractional amounts resulting from a given subscription ratio from the subscription rights of the
+shareholders to the bonds or insofar as such action is necessary in order to grant holders of conversion or option
+rights arising from bonds that have already been or will in future be issued by the Company or its subordinated
+Group companies subscription rights to that extent to which they would be entitled after exercise of their rights
+or after fulfillment of any conversion or option obligations;
+No shares conferring special control rights have been issued.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+100
+P see page 161 f.
+Nature of control over voting rights when employees participate in the Company's capital
+and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise their control rights directly in
+accordance with the applicable laws and the Articles of Association, just like other shareholders.
+Statutory regulations and Articles of Association provisions governing the appointment and
+dismissal of members of the Board of Management and amendments to the Articles of Association
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board of Infineon Technologies AG
+shall consist of at least two members. The Management Board currently comprises four members. Members of the
+Management Board are appointed and dismissed by the Supervisory Board in accordance with section 84, paragraph 1,
+AktG. As Infineon Technologies AG falls within the scope of the German Co-Determination Act (Mitbestimmungs-
+gesetz - "MitbestG"), the appointment or dismissal of members of the Management Board requires a two-thirds
+majority of the votes of the members of the Supervisory Board (section 31, paragraph 2, MitbestG). If such majority
+is not achieved at the first ballot, the appointment may be approved on a recommendation of the Mediation Com-
+mittee at a second ballot by a simple majority of the votes of the members of the Supervisory Board (section 31,
+paragraph 3, MitbestG). If the required majority is still not achieved, a third ballot is held in which the Chairman of
+the Supervisory Board has two votes (section 31, paragraph 4, MitbestG). If the Management Board does not have
+the required number of members, in urgent cases, the local court (Amtsgericht of Munich) makes the necessary
+appointment upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment for members of the
+Management Board is five years. Re-appointment or extension of the term of office, in each case for a maximum of
+five years, is permitted (section 84, paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of Asso-
+ciation and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a deputy
+chairman to the Management Board. The Supervisory Board may revoke the appointment of a member of the
+Management Board and the Chairman of the Management Board for good cause (section 84, paragraph 3, AktG).
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Association rests with the
+Annual General Meeting. However, section 10, paragraph 4, of the Articles of Association gives the Supervisory
+Board the authority to amend the Articles of Association insofar as such amendments relate merely to the wording,
+such as changes in the share capital amount resulting from a capital increase out of conditional or authorized
+capital or a capital decrease by means of cancellation of own shares. Unless the Articles of Association provide for
+another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual General Meeting regarding
+the amendment of the Articles of Association require a majority of at least three quarters of the share capital repre-
+sented. Section 17, paragraph 1, of the Articles of Association of Infineon Technologies AG provides in principle
+for resolutions to be passed with a simple majority of the votes cast and, when a capital majority is required, with
+a simple majority of the capital unless a higher majority is required by law or in accordance with other stipulations
+contained in the Articles of Association.
+Liabilities
+Powers of the Management Board, in particular with respect to the issuing or buying back of shares
+The powers of the Management Board to issue shares derive from section 4 of the Articles of Association, in con-
+junction with applicable legal provisions. Further information relating to the Company's existing Authorized and
+Conditional Capital can be found in note 19 to the Consolidated Financial Statements.
+The Annual General Meeting on 22 February 2018 authorized the Management Board, in the period through 21 Feb-
+ruary 2023, either once or in partial amounts, to issue convertible bonds and/or bonds with warrants (referred to
+collectively as "bonds") in an aggregate nominal amount of up to €4,000,000,000, to guarantee such bonds issued
+by subordinated Group companies of the Company and to grant bondholders conversion or option rights to up
+to 130,000,000 no-par-value registered Company shares, representing a notional portion of the share capital of up
+to €260,000,000, in accordance with the relevant terms of the bonds. The Management Board is authorized, with
+the approval of the Supervisory Board, to exclude the right of shareholders to subscribe to the bonds,
+> if the issue price is not substantially lower than the bonds' theoretical market value as determined in accordance
+with accepted valuation methods, in particular those based on financial mathematics; however, this right of
+exclusion only applies insofar as the shares to be issued to service the conversion or option rights established
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Ơ ||| |
+▼ A
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+101
+ƠI A
+on this basis in aggregate do not exceed 10 percent of the share capital either at the time of this authorization
+becoming effective or at the time of its exercise (as a result of the share capital increase executed on 17/18 June
+2019, an exclusion of subscription rights of this kind is currently not possible);
+Authorization to issue convertible bonds and/or bonds with warrants
+Other liabilities
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Trade payables
+52
+Prepaid expenses
+4,662
+5,620
+Current assets
+Net assets and financial position
+2,318
+3,592
+Cash and cash equivalents, marketable securities
+1,378
+886
+Receivables and other assets
+966
+40
+1,142
+7,115
+6,331
+6,337
+753
+778
+Inventories
+Non-current assets
+Financial assets
+Intangible assets, property, plant and equipment
+30 Septem-
+ber 2018
+ber 2019
+30 Septem-
+€ in millions
+7,084
+Statement of financial position of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+Active difference resulting from offsetting
+3
+586
+524
+Provisions
+Bonds
+225
+811
+Provisions for pensions and similar commitments
+1
+1
+Special reserve with an equity portion
+7,700
+8,929
+Shareholders' equity
+1
+491
+Unappropriated profit
+3,717
+3,549
+1,230
+2,553
+2,262
+2,489
+Retained earnings
+Psee page 62 ff.
+Share capital
+11,789
+12,788
+Total assets
+338
+Other provisions
+216
+Combined Management Report | Our 2019 fiscal year
+Infineon Technologies AG
+1
+Loans payable to banks
+504
+504
+740
+Liabilities to affiliated companies
+The total compensation allocated to the individual members of the Management Board for the 2019 fiscal year in
+accordance with DCGK - analyzed by component - is shown in the following table:
+In line with the DCGK recommendations, the fixed compensation and the STI are required to be disclosed as the
+allocation amount for the relevant fiscal year concerned. In the case of the MTI, the DCGK recommends that this is
+disclosed as flowing to members of the Management Board in the fiscal year in which the plan term of the relevant
+MTI tranche ends. In addition to the fixed compensation and the STI granted for the 2019 fiscal year, the allocation
+amount for the 2017-2019 MTI tranche therefore flowed to the members of the Management Board in the 2019 fiscal
+year. In accordance with the DCGK, share-based payments are deemed to be allocated on the basis of the relevant
+time and value for German tax law purposes. The performance shares awarded on 1 October 2015 which were
+definitively awarded to the members of the Management Board after the end of the 2019 fiscal year and transferred
+in the form of real Infineon shares (see "Components of the Management Board compensation system" in this
+chapter) will not be disclosed as having flowed until the 2020 fiscal year. In line with the DCGK recommendations,
+the pension expense (meaning the service cost pursuant to IAS 19) constitutes the allocation amount (see previous
+table), even though it is not - strictly speaking - an allocation.
+Since compensation granted to members of the Management Board for the 2019 fiscal year did not coincide fully
+with amounts disbursed in a particular fiscal year, a separate table is presented - in accordance with the relevant
+DCGK recommendation - showing the amounts flowing to members of the Management Board for the 2019 fiscal year
+(the "allocation amount" ("Zufluss")).
+Allocation amount in accordance with DCGK
+P❘ see page 105
+111
+compensation (STI)
+Corporate Governance
+in €
+Combined Management Report | Our 2019 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+With regard to compensation paid to Mr. Asam after termination of his Board activities, see “Management Board
+compensation in the 2019 fiscal year in accordance with DRS 17" in this chapter.
+P see page 107
+Compensation report
+Fixed compensation
+Dr. Sven Schneider
+Chief Financial Officer
+since 1 May 2019
+Fringe benefits
+Dr. Reinhard Ploss
+Chief Executive Officer
+2019
+2018
+2019
+2018
+Dominik Asam
+Chief Financial Officer
+until 31 March 2019
+2019
+2018
+1,240,000
+39,492
+1,279,492
+1,240,000
+36,461
+1,276,461
+343,750
+23,876
+367,626
+Basic annual salary
+1 The figures of the active members of the Management Board in the 2019 fiscal year were based
+on a fair market value per performance share amounting to €13.79 (2018: €15.25), which
+was calculated using a Monte-Carlo simulation taking into account the value-decreasing Cap.
+600,000
+2,130,000
+114,234 114,234
+982,034 3,029,377
+1,744,692 1,782,322
+Mid Term Incentive (MTI)
+compensation
+Multi-year variable
+850,000
+Fixed compensation
+Basic annual salary
+750,000
+Fringe benefits
+Total fixed compensation
+35,143
+785,143
+340,000
+750,000
+35,143 35,143
+785,143 785,143
+750,000
+Variable compensation
+Single-year variable
+2018-2020 tranche
+340,000
+340,000
+340,000
+Total compensation (DCGK)
+148,449
+114,234
+Pension expense
+82,657
+850,373
+2019 (max.)
+845,315
+Total variable compensation
+82,657
+170,373
+165,315
+Performance Share Plan¹
+Long Term Incentive (LTI)
+680,000
+2019-2021 tranche
+750,000
+33,500
+783,500
+2018 2019 (min.)
+2019
+550,000
+1,100,000 156,250
+Long Term Incentive (LTI)
+Performance Share Plan²
+Total variable compensation
+Pension expense
+Total compensation (DCGK)
+289,287 298,168
+1,389,287 1,398,168
+356,108
+318,442
+3,024,887 2,993,071
+144,643 1,050,000
+144,643 3,525,000 312,500
+356,108 356,108 114,134
+1,780,243 5,160,600 794,260
+390,625
+312,500
+703,125
+114,134
+114,134
+481,760 1,184,885
+1 In accordance with his service contract, Dr. Schneider was entitled to the LTI tranche for the 2019 fiscal year on pro rata basis, namely for the months
+May to September 2019. In view of the fact the annual allocation for the 2019 fiscal year had already taken place before the start of Dr. Schneider's term
+of office, performance shares for the 2019 fiscal year will be allocated together and in accordance with the conditions of the allocation for the 2020
+fiscal year.
+2 The figures of the active members of the Management Board in the 2019 fiscal year were based on a fair market value per performance share amounting
+to €13.79 (2018: €15.25), which was calculated using a Monte-Carlo simulation taking into account the value-decreasing Cap.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+in €
+Dominik Asam
+Chief Financial Officer until 31 March 2019
+2019
+2018
+2019 (min.) 2019 (max.)
+550,000
+2019-2021 tranche
+2018-2020 tranche
+Mid Term Incentive (MTI)
+2018 2019 (min.)
+2019 (max.)
+2019
+2018
+343,750
+23,876
+367,626
+343,750 343,750
+23,876 23,876
+367,626 367,626
+Fixed compensation
+Basic annual salary
+1,240,000
+1,240,000
+1,240,000
+1,240,000
+2019
+Fringe benefits
+Total fixed compensation
+1,279,492
+36,461
+1,276,461
+39,492 39,492
+1,279,492 1,279,492
+Variable compensation
+Single-year variable
+compensation (STI)
+550,000
+550,000
+1,375,000
+156,250
+Multi-year variable
+compensation
+39,492
+Dr. Helmut Gassel
+Member of the Management Board
+110
+340,000
+680,000
+Long Term Incentive (LTI)
+Performance Share Plan¹
+191,662
+165,315
+170,373
+82,657 600,000
+Total variable compensation
+941,662
+845,315
+850,373
+Pension expense
+340,000
+144,593
+144,593
+144,593
+98,324
+Total compensation (DCGK)
+580,149 2,090,976
+580,149
+580,149 1,763,395
+124,723
+1,790,692
+98,324
+1,000,737
+82,657 2,130,000
+98,324
+3,048,080
+in €
+Jochen Hanebeck
+Member of the Management Board
+279,374
+412,500
+23,056
+2019-2021 tranche
+Mid Term Incentive (MTI)
+2018
+2019 (min.)
+2019 (max.)
+Fixed compensation
+Basic annual salary
+412,500
+Fringe benefits
+23,056
+Total fixed compensation
+435,556
+825,000
+44,940
+869,940
+412,500
+23,056
+435,556
+412,500 750,000 750,000
+23,056 69,756 65,596
+435,556 819,756 815,596
+2018-2020 tranche
+750,000
+69,756
+69,756
+819,756
+819,756
+Variable compensation
+Single-year variable
+compensation (STI)
+375,000
+340,000
+340,000
+850,000
+Multi-year variable
+compensation
+750,000
+825,000
+576,831
+435,556
+in €
+Fiscal year
+Member of the Management Board
+Dr. Reinhard Ploss¹
+2019
+(Chief Executive Officer)
+Pension
+entitlements
+(annual) as of
+beginning of
+pension period
+Benefit amounts
+determined
+for the relevant
+fiscal year
+Present value
+of pension
+and benefit
+entitlement
+Original
+service cost
+(earned in the
+current year)
+372,000
+1,393,462
+356,108
+210,000
+5,596,191
+2018
+372,000
+977,189
+318,442
+Pension entitlements
+210,000
+The amounts credited to the pension entitlement accounts of the members of the Management Board - in line with
+the plan rules applied to Infineon employees - are paid out on or after reaching the age of 67, provided the service
+contract arrangements have also ended. Upon request, amounts can be paid out at an earlier point in time if the
+service contract arrangements end on or after reaching the age of 60, or, in the case of commitments made from 2012
+onwards, on or after reaching the age of 62. If the beneficiaries elect that their pension be paid out in monthly
+installments, the pension amount is adjusted automatically each year in accordance with the Infineon pension plan.
+Alongside the annual retirement entitlements and related benefit amounts, the following table shows the present
+values of pension entitlements earned to date and the service cost in accordance with IFRS. The present value of
+pension and benefit entitlements is particularly dependent on changes in the discount rate required to be applied
+(30 September 2019: 0.6 percent, 30 September 2018: 1.7 percent).
+> The defined contribution pension commitment in place for Dr. Ploss is also based on a fixed contribution amount
+of 30 percent of the relevant agreed basic annual salary. The pension contribution made by the Company for the
+2019 fiscal year amounted to €372,000.
+365,596
+669,556
+98,324
+1,587,636
+671,338
+124,723
+1,611,657
+669,556
+114,234
+1,568,933 1,603,287
+671,338
+148,449
+ƠI A
+P see page 107
+1 Represented 250 percent of the LTI allocated amount (cap) at the time of granting the virtual performance shares in the 2013 fiscal year.
+With regard to compensation paid to Mr. Asam after termination of his Board activities, see "Management Board
+compensation in the 2019 fiscal year in accordance with DRS 17” in this chapter.
+Commitments to members of the Management Board upon termination of their Board activities
+Benefits and pension entitlements in the 2019 fiscal year
+In accordance with the Management Board compensation system in place since 2010, the members of the Manage-
+ment Board have, in the meantime, all received a defined contribution pension commitment, which is essentially
+identical to the Infineon pension plan applicable to all employees. The Company has accordingly set up a personal
+pension account (basic account) for each beneficiary and makes annual pension contributions to it. The Company
+adds annual interest to the balance in the basic account using the highest statutory interest rates valid for the
+insurance industry (guaranteed interest rates) until disbursement of the pension begins and may also award surplus
+credits. Ninety-five percent of any income earned over and above the guaranteed interest rate is credited to the
+pension account, either at the date on which disbursement of the pension begins or, at the latest, when the bene-
+ficiary reaches the age of 60. The balance of the basic account when disbursement of the pension begins (due to age,
+invalidity or death) - increased by an adjusting amount in the event of invalidity or death - constitutes the retirement
+benefit entitlement and is paid out to the member of the Management Board or his or her surviving dependents in
+twelve annual installments, or, if so requested by the member of the Management Board, in eight annual installments,
+as a lump sum or as a life-long pension. In addition to the defined contribution pension plan that has been in place
+for Dr. Ploss since 1 January 2016, a fully vested fixed-amount pension entitlement of €210,000 p.a. also exists for his
+Board activities up to 31 December 2015 which will not increase in future.
+If the entitlements of members of the Management Board (i) have not yet legally vested or (ii) have legally vested,
+but are not protected by the state pension insurance scheme (Pensionssicherungsverein), the Company maintains
+pension reinsurance policies in favor of, and pledged to, the members of the Management Board concerned.
+The plan rules applicable to members of the Management Board differ in terms of the initial defined component,
+the annual transfer to the pension account and the vesting period.
+> On joining the Management Board, the Company made a one-time, contractually vested initial pension contribution
+of €540,000 on behalf of Mr. Asam for the loss of vested retirement pension entitlements in connection with the
+termination agreement with his previous employer. In addition, Mr. Asam received, for each fiscal year of his
+membership on the Management Board, a pension contribution from the Company amounting to between 25 and
+40 percent, as determined by the Supervisory Board, of the relevant agreed basic annual salary. The pension
+contribution for Mr. Asam for the 2019 fiscal year was set - as in the previous year - at 30 percent of his basic
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+113
+annual salary and reduced on a pro rata basis to take account of the termination of his mandate on 31 March 2019.
+The pension contribution for the 2019 fiscal year therefore amounted to €123,750. The pension entitlements
+arising from the defined contributions made on behalf of Mr. Asam vested with effect from 31 December 2013.
+> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result of their previous periods
+of employment in senior management positions with Infineon. Their service contracts specifically state that the
+amounts made available to cover their vested pension entitlements represent a continuation of those vested
+entitlements and are, therefore, not subject to any separate vesting arrangements. The Company makes a fixed
+annual pension contribution on behalf of Dr. Gassel and Mr. Hanebeck for each full fiscal year of service on the
+Board, equivalent to 30 percent of the relevant agreed basic annual salary. The Supervisory Board is not required
+to decide each time on the amount to be contributed. The pension contributions for the 2019 fiscal year for
+Dr. Gassel and Mr. Hanebeck amounted in each case to €225,000.
+> The corresponding contribution for Dr. Schneider also amounts to 30 percent of the relevant agreed basic annual
+salary. As he was appointed to the Management Board with effect from 1 May 2019, Dr. Schneider received a pro
+forma pension contribution for the 2019 fiscal year amounting to €103,125.
+365,596
+5,046,826
+2019
+Jochen Hanebeck
+2019
+225,000
+1 The upper line for Dr. Ploss in the 2019 fiscal year respectively 2018 shows the contribution amount, the present value and the service cost relating to the
+defined contribution pension commitment additionally granted to him with effect from 1 January 2016. The second line in the 2019 fiscal year respectively
+2018 shows the pension entitlement and the present value of his fixed amount pension plan. Income of €583,940 was recognized in 2019 fiscal year for
+past service, reflecting the fact that the financing period was retrospectively extended by the reappointment of Dr. Ploss through 31 December 2022.
+2 The service cost recognized for Dr. Schneider takes into account of the fact that he was appointed to the Management Board with effect from 1 May 2019
+and therefore only received a pro rata annual contribution for the 2019 fiscal year.
+870,988
+13,754,757
+827,393
+16,384,935
+1,048,875
+1,069,500
+210,000
+2018
+210,000
+2019
+Total
+148,449
+2,702,051
+225,000
+2018
+(Member of the Management Board)
+114,234
+3,219,373
+124,723
+Dr. Sven Schneider²
+2,241,660
+2018
+103,125
+125,547
+114,134
+(Chief Financial Officer since 1 May 2019)
+2018
+Dominik Asam³
+2019
+123,750
+3,475,131
+144,593
+(Chief Financial Officer until 31 March 2019)
+2018
+247,500
+2,787,031
+279,374
+Dr. Helmut Gassel
+2019
+225,000
+2,575,231
+98,324
+(Member of the Management Board)
+225,000
+281,358
+281,358
+Total compensation (DCGK)
+318,442
+114,134
+3,597,893
+621,448
+430,125
+414,120
+550,000
+576,831 1,394,245
+144,593
+279,374
+1,156,980
+2,543,559
+1 Represented 250 percent of the LTI allocated amount (cap) at the time of granting the virtual performance shares in the 2013 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+356,108
+3,556,430
+112
+Total compensation (DCGK)
+139,688
+869,940
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+491,700
+630,850
+139,688
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+2016-2018 tranche
+2017-2019 tranche
+584,640
+569,760
+Long Term Incentive (LTI)
+Performance Share Plan
+due in the 2018 fiscal year¹
+787,500
+due in the 2019 fiscal year
+Total variable compensation
+859,370
+1,920,830
+2,002,990
+Pension expense
+Dr. Helmut Gassel
+Member of the
+Management Board
+Jochen Hanebeck
+Member of the
+Management Board
+2019
+Review of the Management Board compensation system, compensation components
+and individual contracts
+Total compensation (primarily pension benefits) of €2,007,096.87 (2018: €1,527,437.89) was paid to former members
+of the Management Board (without Mr. Asam) in the 2019 fiscal year. As of 30 September 2019, accrued pension
+liabilities for former members of the Management Board amounted to €81,187,076 (2018: €68,838,837).
+Payments to former members of the Management Board in the 2019 fiscal year
+A post-employment non-competition clause was agreed with Mr. Asam for a period of 18 months. As compensation,
+Mr. Asam will receive a one-time compensation amount of €150,000, payable on 31 December 2019.
+The Management Board service contracts otherwise contain no promises of severance pay for situations in which
+contracts are terminated early.
+The service contracts of members of the Management Board include a change-of-control clause, which stipulates
+the terms that apply when the activities of a member of the Management Board are terminated in the event of
+a significant change in Infineon's ownership structure. A change of control for the purposes of this clause occurs
+when a third party, individually or together with another party, acquires at least 50 percent of the voting rights in
+Infineon Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover Act (Wert-
+papiererwerbs- und Übernahmegesetz - “WpÜG”). Members of the Management Board have the right to resign and
+terminate their service contracts within twelve months of the announcement of such a change of control and any
+who choose to do so are entitled to continued payment of their annual remuneration through to the end of the
+originally agreed duration of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes
+a member of the Management Board or terminates his or her contract within twelve months of the announcement
+of a change of control, the members of the Management Board concerned are entitled to continued payment of
+their annual remuneration through to the end of the originally agreed duration of their contract, subject to a mini-
+mum period of 24 months and a maximum period of 36 months.
+Early termination of service contracts
+114
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2019 fiscal year
+▼ A
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+3 The service cost for Mr. Asam for the 2019 fiscal year was recognized on a pro rata basis in line with the termination of his activities on the
+Infineon's Management Board with effect from 31 March 2019.
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+2016-2018 tranche
+2017-2019 tranche
+Long Term Incentive (LTI)
+Performance Share Plan
+due in the 2018 fiscal year¹
+due in the 2019 fiscal year
+Total variable compensation
+Pension expense
+Regular review of appropriateness
+In accordance with section 4.2.2 DCGK, the Supervisory Board engaged an external, independent compensation
+expert to review the Management Board compensation system in place since 1 October 2010 and conclude on its
+compliance with applicable legislation and its overall appropriateness from an objective perspective. In this context,
+the target annual incomes of each individual member of the Management Board were subjected to detailed scrutiny.
+The expert's report concluded that the Company's compensation system complies with legal requirements and
+with the recommendations contained in the German Corporate Governance Code (DCGK). In particular, the expert
+concluded that the compensation of Infineon's Management Board is commensurate with market conditions and
+that the variable compensation component is oriented towards the sustainable growth of the enterprise. The indi-
+vidual target annual incomes of the members of the Management Board are appropriate, both horizontally (i.e.
+looking at peer companies) and vertically (i.e. looking at Infineon's various employee groupings). The results of the
+compensation expert's review were discussed in detail during the Executive Committee meeting held on 25 October
+2018 and by the full Supervisory Board on 20 November 2018. The Supervisory Board concurred with the conclusions
+reached by the external expert.
+Future regulatory changes
+Management Board compensation and related reporting requirements are currently the subject of various regulatory
+projects. For instance, the draft law - currently undergoing parliamentary scrutiny - relating to the implementation
+of the second shareholder Rights Directive (ARUG II) is expected to come into force beginning of the 2020 calendar
+year. In addition, the Government Commission on the German Corporate Governance Code has adopted a new
+version of the DCGK, which is to take effect at the same time as ARUG II comes into force. The Supervisory Board
+has been observing these developments very closely over a lengthy period and is already preparing in detail for the
+expected changes. However, in the opinion of the Supervisory Board, a definitive analysis, above all of the need for
+action with regard to the existing Management Board compensation system, can only be performed once the new
+regulatory framework has been established, i.e. ARUG II has entered into force and the revised DCGK taken effect.
+The Supervisory Board therefore intends to make any necessary revisions to the Management Board remuneration
+system in the course of the 2020 calendar year and to present a revised/new Management Board compensation
+system to shareholders at the 2021 Annual General Meeting.
+2018
+2019
+2018
+750,000
+750,000
+750,000
+750,000
+69,756
+65,596
+819,756
+44,940
+815,596
+33,500
+783,500
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+303,960
+389,980
+303,960
+Dr. Reinhard Ploss
+Chief Executive Officer
+389,980
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+35,143
+785,143
+2019
+375,000
+Compensation granted to members of the Management Board in accordance with the DCGK (total compensation
+and compensation components) as well as the minimum and maximum values that can be achieved are shown in
+the following table:
+2018
+750,000
+69,756
+819,756
+750,000
+65,596
+815,596
+750,000
+35,143
+785,143
+750,000
+33,500
+783,500
+3,496,250
+191,323
+3,687,573
+3,565,000
+180,497
+3,745,497
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+303,960
+389,980
+303,960
+389,980
+2019
+2018
+Total
+Management Board
+1,895,088
+Chief Financial Officer
+until 31 March 2019
+2019
+2018
+412,500
+825,000
+23,056
+44,940
+1,239,308
+435,556
+430,125
+129,993
+129,993
+143,375
+191,662
+1,025,148
+435,556
+869,940
+Dominik Asam
+1,840,935
+Mid Term Incentive (MTI)1
+101,320
+413,103
+Long Term Incentive (LTI)
+Performance Share Plan²
+Total variable compensation
+Total compensation
+165,315
+170,373
+165,315
+170,373
+619,917
+830,576
+763,699
+925,864
+763,699
+101,320
+2019-2021 tranche
+613,644
+366,540
+2016-2018 tranche
+117,759
+117,759
+549,031
+2017-2019 tranche
+91,784
+117,759
+Multi-year variable compensation
+91,784
+326,608
+549,031
+2018-2020 tranche
+101,320
+129,993
+101,320
+129,993
+117,759
+925,864
+2019
+Jochen Hanebeck
+Member of the
+Management Board
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits to the individual
+members of the Management Board - also presented in accordance with DRS 17 - are shown in the following table:
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dr. Sven Schneider
+Chief Financial Officer
+since 1 May 2019
+2019
+2018
+2019
+2018
+1,240,000
+1,240,000
+343,750
+39,492
+Total compensation
+German Accounting Standard 17 (DRS 17)
+Management Board compensation in the 2019 fiscal year in accordance with
+Additionally, the Supervisory Board has the option - based in all cases on its own best judgment - to grant a
+special bonus, among other things for special achievements of the Management Board or its individual members.
+In each case, however, the bonus is capped at a maximum of 30 percent of the fixed compensation of the member
+of the Management Board concerned.
+in €
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+105
+The long-term incentive ("LTI") is intended to reward long-term and, similar to the MTI, sustained performance
+on the part of members of the Management Board and, additionally, to ensure that their interests are aligned with
+the interest of the Company's shareholders regarding a positive share price development. Assuming a 100 percent
+target achievement of the variable compensation components, the LTI constitutes approximately 15 percent of target
+annual income.
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share Plan. As well as being
+relevant for members of the Management Board, the LTI also applies to Infineon managers and selected Infineon
+employees worldwide, in their case however on a voluntary basis and with minor differences attributable to specific
+circumstances.
+The (virtual) performance shares are allocated as of 1 March for the fiscal year commenced on 1 October, initially on
+a provisional basis. The final allocation and transfer of (real) Infineon shares takes place four years later.
+1,279,492
+Performance shares are allocated provisionally on the basis of the contractually agreed "LTI allocation amount" in
+euros, agreed upon individually in the contract of each member of the Management Board. The number of perfor-
+mance shares is determined by dividing the LTI allocation amount by the average price of the Infineon share (Xetra
+closing price) during the nine months prior to the allocation date. The prerequisites for the definitive allocation
+of the - at that stage still virtual - performance shares are (i) that the member of the Management Board invests
+25 percent of his/her individual LTI allocation amount in Infineon shares and (ii) that the holding period of four years
+applicable both for the member's own-investment and for the performance shares has come to an end. 50 percent
+of the performance shares are also performance-related; they are only allocated definitively if (iii) the Infineon share
+outperforms the Philadelphia Semiconductor Index (SOX) between the date of the performance shares' provisional
+allocation and the end of the holding period. If the conditions for the definitive allocation of performance shares
+either of all or of only those that are not performance-related - are met at the end of the holding period, the member
+of the Management Board acquires a claim against the Company for the transfer of the corresponding number of
+(real) Infineon shares. Performance shares which do not achieve the target are forfeited. The value of the perfor-
+mance shares definitively granted to the member of the Management Board per LTI tranche at the end of the holding
+period may not exceed 250 percent of the relevant LTI allocation amount; the performance shares above this
+amount lapse (cap).
+The LTI is reduced proportionately if the length of service of a member of the Board in the year in which the LTI is
+allocated is shorter than the fiscal year to which the LTI award relates. This situation usually arises when a member
+of the Board does not begin his duties exactly at the beginning of a fiscal year or does not leave office exactly at
+the end of a fiscal year. The allocation amount is reduced in each case by one twelfth for each full month missing
+for the fiscal year in which the LTI is allocated.
+The allocation amount is also reduced proportionately in the case of a so-called "good leaver", i.e. a member of the
+Board leaving office without any fault on his/her part, for instance in the event of reaching the stipulated age limit.
+The group of "good leavers" also includes cases in which a member of the Board fulfills his/her contract properly up
+to the end of the agreed term and leaves the Company only because the contract has not been extended. By contrast,
+if a member of the Board resigns from office (unless the resignation is for good cause for which the member is not
+responsible) or if a contract of a member of the Board is terminated by the Company for good cause (a so-called "bad
+leaver"), all performance shares not yet definitely allocated are forfeited when the member of the Board leaves office.
+The Supervisory Board is required to define suitable alternative LTI instruments of commensurate value if it is
+impossible or not desired by the Supervisory Board to offer an LTI on the basis of the Performance Share Plan.
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock option plan as an LTI,
+which was resolved at the 2010 Annual General Meeting. The stock options allocated to members of the Management
+Board on the basis of the "Stock Option Plan 2010" were all exercised during the 2017 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+106
+Members of the Management Board can freely dispose of the shares transferred to them. The same also applies
+to Infineon shares acquired in conjunction with the own-investment requirement at the end of the holding period.
+The Supervisory Board has the right, at the end of the holding period, to make a value-equivalent cash settlement
+to the member of the Management Board rather than actually transfer Infineon shares.
+2018
+36,461
+1,276,461
+367,626
+Performance Share Plan 2
+289,287
+Total variable compensation
+1,251,827
+Total compensation
+2,531,319
+298,168
+1,506,341
+2,782,802
+186,251
+553,877
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Dr. Helmut Gassel
+Member of the
+Management Board
+2019
+Long Term Incentive (LTI)
+46,563
+163,900
+2019-2021 tranche
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+491,700
+630,850
+139,688
+Multi-year variable compensation
+23,876
+Mid Term Incentive (MTI)1
+183,520
+2017-2019 tranche
+143,040
+183,520
+2018-2020 tranche
+163,900
+210,283
+2016-2018 tranche
+1,583,455
+Dr. Sven Schneider¹
+Chief Financial Officer since 1 May 2019
+2019 (min.) 2019 (max.)
+1,548,842
+8,113
+83,454
+134,669
+Dr. Helmut Gassel
+2019
+28,082
+11,988
+165,315
+40,070
+107,929
+(Member of the Management Board)
+2018
+16,910
+11,172
+170,373
+28,082
+95,379
+Jochen Hanebeck
+2019
+25,119
+28,082
+191,662
+104,118
+19,552
+298,168
+35,967
+11,615
+125,160
+198,986
+Dr. Sven Schneider³
+2019
+(Chief Financial Officer
+from 1 May 2019)
+2018
+Dominik Asam
+2019
+83,454
+28,856
+54,598
+(Chief Financial Officer
+until 31 March 2019)
+2018
+12,568
+153,190
+11,988
+40,070
+3 In accordance with his service contract, Dr. Schneider was entitled to the LTI tranche for the 2019 fiscal year on pro rata basis, namely for the months May to September 2019.
+In view of the fact the annual allocation for the 2019 fiscal year had already taken place before the start of Dr. Schneider's term of office, performance shares for the 2019 fiscal year
+will be allocated together and in accordance with the conditions of the allocation for the 2020 fiscal year.
+P see page 164 f.
+Further details regarding the LTI tranche which vested on 1 October 2019 and the performance shares awarded
+to the members of the Management Board on 1 March 2019 for the 2019 fiscal year are provided in note 21 to the
+Consolidated Financial Statements.
+Special bonuses
+Other awards and benefits
+In the 2009 fiscal year, the Company entered into a restitution agreement with each of the active members of the
+Management Board at that time. Dr. Ploss is the only current member of the Management Board affected by the
+agreement. These agreements stipulate that the Company covers all costs and expenses of any legal, governmental,
+regulatory and/or parliamentary proceedings and investigations as well as arbitration proceedings, in which the
+member of the Management Board is involved in conjunction with his/her activities on behalf of the Company.
+However, the agreements specifically exclude any restitution of costs in conjunction with section 93, paragraph 2,
+German Stock Corporation (Aktiengesetz).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+109
+P see page 112 ff.
+Management Board compensation in the 2019 fiscal year in accordance with
+the German Corporate Governance Code
+The DCGK recommends that the individual compensation components for each member of the Management Board
+be disclosed in accordance with specified criteria. It also recommends that disclosure is based on the model tables
+- in part diverging from DRS 17 - provided in the appendix to the Code.
+Compensation granted in accordance with DCGK
+The following table shows the value of compensation granted for the 2018 and 2019 fiscal year, including fringe
+benefits, as well as the minimum and maximum values that can be achieved for the 2019 fiscal year.
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed pursuant to the DCGK at
+the target value (i.e. the value in the event of 100 percent target achievement). The MTI is required to be disclosed -
+in a deviation from DRS 17 - at the target value for an "average probability scenario" at the grant date. For these
+purposes, , Infineon assumes 100 percent target achievement on a scale ranging from 0 to 200 percent. In addition,
+the pension expense, i.e. the service cost pursuant to IAS 19 (see “Commitments to members of the Management
+Board upon termination of their Board activities” in this chapter) is also required to be included in the amount of
+total compensation disclosed in accordance with the DCGK.
+1,741,460
+1 The share price of the virtual performance shares exercised in the 2019 fiscal year amounts to €19.99.
+2 The expiration of the virtual performance shares results from the cap. The finally allocated performance shares may not exceed 250 percent of the respective LTI allocation amount.
+With regard to the remuneration of Mr. Asam after the end of his Management Board activity, see "Management Board compensation in the 2019 fiscal year in accordance with
+German Accounting Standard 17 (DRS 17)" in this chapter.
+165,315
+524,413
+19,728
+107,929
+(Member of the Management Board)
+2018
+16,910
+11,172
+170,373
+28,082
+95,379
+Total
+2019
+2018
+264,778
+291,128
+44,954
+54,464
+619,917
+830,576
+71,846
+61,086
+54,598
+183,288
+404,736
+264,778
+2018
+The Supervisory Board did not award any special bonuses to members of the Management Board during the 2019
+fiscal year.
+The following table shows the number of performance shares awarded to members of the Management Board in
+the 2019 fiscal year:
+outstanding
+at the begin-
+ning of the
+Virtual
+performance
+shares newly
+granted
+Fair value
+grant date
+fiscal year
+at the begin-
+ning of the
+fiscal year
+Virtual
+performance
+shares
+exercised
+in the
+fiscal year¹
+Virtual
+performance
+shares expi-
+red in the
+fiscal year²
+Virtual
+performance
+shares
+outstanding
+at the end
+of the
+shares
+fiscal year
+compen-
+sation
+Member of the Management Board
+Fiscal year
+Number
+Number
+in €
+Number
+Number
+Number
+in €
+Dr. Reinhard Ploss
+Total
+expense for
+share-based
+125,160
+Virtual
+performance
+108
+4,383,217
+8,128,714
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+2 The figures for the active members of the Management Board in the 2019 fiscal year were based on a fair market value per performance share amounting
+to €13.79 (2018: €15.25), which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap. In accordance with his
+service contract, Dr. Schneider is entitled to the LTI tranche for the 2019 fiscal year on pro rata basis, namely for the months May to September 2019. In view
+of the fact the annual allocation for the 2019 fiscal year had already taken place before the start of Dr. Schneider's term of office, performance shares for
+the 2019 fiscal year will be allocated together and in accordance with the conditions of the allocation for the 2020 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+P see page 105
+Mr. Dominik Asam resigned from the Management Board of Infineon Technologies AG in agreement with the Super-
+visory Board effective 31 March 2019 and left the Company. In accordance with his service contract, Mr. Asam's entitle-
+ment to receive the STI for the 2019 fiscal year and the MTI and LTI for uncompleted tranches forfeited. As a result,
+previously recognized provisions amounting to €901,613.67 were released. A post-employment non-competition
+clause was agreed with Mr. Asam for a period of 18 months. In return, Mr. Asam will receive a one-time compensation
+amount of €150,000, payable on 31 December 2019.
+Members of the Management Board did not receive any loans from Infineon either in the 2019 or 2018 fiscal year.
+Similarly, they did not receive any benefits from third parties in the 2019 and 2018 fiscal year, whether promised or
+actually paid, for their board activities at Infineon.
+Performance Share Plan
+Fringe benefits
+The Company also maintains accident insurance policies for members of the Board in the case of death (€3 million)
+and invalidity (€5 million).
+Other fringe benefits relate mainly to statutory obligations such as the payment of inventor's compensation or to
+general benefits/discounts available to all Infineon employees.
+Share-based remuneration
+As described in the section "Management Board compensation", the contractually agreed LTI is granted to members
+of the Management Board by the Company in the form of "performance shares". The average price of the Infineon
+share relevant for the number of performance shares granted for the 2019 fiscal year was €20.02 (2018: €21.48).
+A fair market value of €13.79 (2018: €15.25) per performance share granted in the 2019 fiscal year was determined,
+taking account of the cap of 250 percent cap set on the LTI allocation amount as well as the performance hurdle.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+107
+▼ A
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+In accordance with their service contracts, members of the Management Board are entitled to a chauffeur-driven
+company car, which may also be used for private purposes. Operating and maintenance costs for the company
+car and chauffeur are borne by the Company. Taxes arising on the fringe benefit related to private usage are borne
+by the members of the Management Board.
+20,978
+2019
+42,990
+1,709,364
+(Chief Executive Officer)
+2,965,476
+6,653,049
+289,287
+103,148
+188,878
+37,500
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+115
+Supervisory Board compensation
+Compensation structure
+The compensation due to the Supervisory Board (total compensation) is governed by section 11 of the Company's
+Articles of Association and comprises the following:
+90,000
+› A fixed compensation (basic remuneration) of €90,000. This amount applies to each member of the Supervisory
+Board and is payable within one month of the close of the fiscal year.
+› Allowances recognizing the additional work involved in performing certain functions within the Supervisory Board:
+The Chairman of the Supervisory Board receives an allowance of €90,000, each Vice-chairman receives an allow-
+ance of €30,000, the Chairman of the Investment, Finance and Audit Committee and the Chairman of the Strategy
+and Technology Committee each receive an allowance of €25,000 and each member of a Supervisory Board com-
+mittee receives an allowance of €15,000 - with the exception of the Nomination Committee and the Mediation
+Committee. The additional allowance is payable only if the body to which the Supervisory Board or committee
+member belongs has convened or passed resolutions in the fiscal year concerned. A member of the Supervisory
+Board performing more than one of the functions indicated receives only the highest single additional allowance
+payable to a member performing the functions concerned. The allowance is paid to the relevant holder of office
+within one month of the end of the fiscal year.
+Compensation report
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one of its committees that is attended
+in person. The meeting attendance fee is paid only once if more than one meeting of the relevant committees
+takes place on a given day.
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or one of its committees, or
+takes on a Supervisory Board function for which an allowance is paid, the relevant compensation components are
+disbursed on a pro rata basis, i.e. payment of one twelfth of the relevant annual compensation component for each
+(started) month of membership or exercise of function.
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in connection with the
+performance of their Supervisory Board duties and for any value-added tax payable by them in this connection.
+The Company also pays any value-added tax incurred on their total remuneration (including meeting attendance
+fees) for the members of the Supervisory Board.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Corporate Governance
+Compensation report
+116
+Compensation of the Supervisory Board for the 2019 fiscal year
+The total compensation (including meeting attendance fees) paid to the individual members of the Supervisory
+Board in the 2019 fiscal year comprises the following (these figures do not include value-added tax at 19 percent):
+Supervisory Board compensation
+15,000
+20,000
+37,500
+18,000
+Géraldine Picaud
+2018
+125,000
+131,000
+26,000
+15,000
+90,000
+2019
+Jürgen Scholz
+104,000
+14,000
+90,000
+2018
+93,000
+112,000
+90,000
+2019
+Dr. Manfred Puffer
+110,000
+20,000
+90,000
+2018
+106,000
+16,000
+90,000
+2019
+22,000
+Kerstin Schulzendorf
+15,000
+90,000
+257,083
+378,000
+2,075,083
+260,833
+308,000
+1 Joined as Member of the Supervisory Board since 22 February 2018. The compensation for 2018 therefore was awarded on a pro rata basis.
+2 Joined as Member of the Supervisory Board until 22 February 2018. The compensation for 2018 therefore was awarded on a pro rata basis.
+2,016,333
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2019 or 2018 fiscal year.
+Neubiberg, 18 November 2019
+Management Board
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+Dr. Helmut Gassel
+Jochen Hanebeck
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Content
+117
+Consolidated
+Financial Statements
+118 Consolidated Statement of Operations
+119 Consolidated Statement of Comprehensive Income
+120 Consolidated Statement of Financial Position
+121 Consolidated Statement of Cash Flows
+122 Consolidated Statement of Changes in Equity
+124 Notes to the Consolidated Financial Statements
+1,440,000
+1,447,500
+2019
+2018
+Total
+104,000
+18,000
+108,000
+2018
+90,000
+in €
+14,000
+104,000
+Dr. Eckart Sünner
+2019
+90,000
+84,583
+34,000
+2019
+208,583
+90,000
+68,333
+24,000
+182,333
+Diana Vitale
+2019
+90,000
+22,000
+112,000
+2018
+90,000
+14,000
+2018
+Fiscal year
+2019
+Peter Bauer
+Prof. Dr. Renate Köcher
+2019
+90,000
+14,000
+104,000
+2018
+90,000
+12,000
+102,000
+Dr. Susanne Lachenmann
+2019
+127,000
+90,000
+22,000
+127,000
+2018
+90,000
+15,000
+18,000
+123,000
+Wolfgang Mayrhuber²
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2019
+Peter Gruber
+15,000
+22,000
+15,000
+90,000
+90,000
+2019
+Hans-Ulrich Holdenried
+125,000
+20,000
+15,000
+90,000
+2018
+127,000
+22,000
+15,000
+90,000
+2019
+Gerhard Hobbach
+125,000
+20,000
+15,000
+90,000
+2018
+129,000
+24,000
+15,000
+90,000
+129,000
+2018
+123,000
+18,000
+15,000
+90,000
+30,000
+90,000
+2018
+152,000
+32,000
+30,000
+90,000
+2019
+Johann Dechant
+135,000
+20,000
+25,000
+90,000
+2018
+139,000
+24,000
+25,000
+90,000
+2019
+sation
+Total
+compen-
+Meeting
+attendance
+fees
+functions
+Allowance
+for specific
+Fixed
+compen-
+sation
+28,000
+Member of the Supervisory Board
+148,000
+24,000
+2018
+135,000
+30,000
+15,000
+90,000
+2019
+Annette Engelfried
+84,000
+14,000
+10,000
+60,000
+2018
+155,500
+38,000
+27,500
+90,000
+2019
+Dr. Wolfgang Eder¹
+102,000
+12,000
+90,000
+2018
+100,000
+10,000
+90,000
+Dr. Herbert Diess
+Consolidated Financial Statements
+Basic earnings per share (in euro)
+Consolidated Statement of Operations
+Other non-current assets
+145
+137
+Total non-current assets
+6,088
+5,456
+Total assets
+10,879
+LIABILITIES AND EQUITY
+Short-term debt and current maturities of long-term debt
+15
+648
+22
+Trade payables
+1,089
+1,181
+Short-term provisions
+16
+383
+590
+Income tax payable
+6
+144
+117
+25
+599
+6
+Deferred tax assets
+85
+27
+155
+(2)
+(42)
+198
+25
+45
+21
+915
+1,096
+Other comprehensive income for the year, net of tax
+Total comprehensive income for the year, net of tax
+Attributable to:
+Shareholders of Infineon Technologies AG
+915
+1,096
+1 Contains losses from investments accounted for using the equity method in the 2019 fiscal year of €2 million (2018: losses €1 million).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+119
+ব
+▼ A ↑ III O
+Consolidated Financial Statements
+29
+37
+Other current liabilities
+17
+406
+269
+888
+10
+1,811
+2,758
+9
+732
+1,021
+Total current assets
+Assets classified as held for sale
+Other current assets
+Contract assets
+Income tax receivable
+Inventories
+Trade receivables
+Financial investments
+Cash and cash equivalents
+ASSETS
+ber 2018¹
+30 Septem-
+30 Septem-
+ber 2019
+Notes
+€ in millions
+as of 30 September 2019 and 2018
+Consolidated Statement of Financial Position
+Consolidated Statement of Financial Position
+971
+(4)
+11
+1,480
+Total current liabilities
+2,044
+5
+Investments accounted for using the equity method
+1,596
+1,805
+14
+Goodwill and other intangible assets
+3,038
+3,510
+14
+Property, plant and equipment
+5,423
+7,324
+11
+12
+7
+366
+770
+13
+91
+12
+52
+83
+6
+1,701
+(153)
+(4)
+(153)
+(62)
+Operating income
+1,161
+1,469
+Financial income
+4
+26
+15
+Financial expenses
+4
+(98)
+(68)
+Gain (loss) from investments accounted for using the equity method
+5
+(6)
+(5)
+Income from continuing operations before income taxes
+1,083
+1,411
+Income tax
+6
+(194)
+(193)
+Income from continuing operations
+Loss from discontinued operations, net of income taxes
+(79)
+Net income
+Other operating expenses
+56
+for the year ended 30 September 2019 and 2018
+€ in millions
+Notes
+2019
+2018
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income
+4
+8,029
+7,599
+4
+(5,035)
+(4,714)
+2,994
+2,885
+4
+(945)
+(836)
+4
+(865)
+(850)
+332
+Consolidated Statement of Operations
+Attributable to:
+Basic earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+(0.02)
+(0.13)
+8
+0.75
+0.95
+118
+ব
+▼ A ↑ III O
+Consolidated Financial Statements
+Consolidated Statement of Comprehensive Income
+Consolidated Statement of
+Comprehensive Income
+for the year ended 30 September 2019 and 2018
+€ in millions
+Net income
+Actuarial gains (losses) on pension plans and similar commitments'
+Total items not expected to be reclassified to profit or loss in the future
+Currency translation effects
+Net change in fair value of hedging instruments
+Cost of hedging
+Total items expected to be reclassified to profit or loss in the future
+Notes
+2019
+2018
+19
+870
+1,075
+8
+Shareholders of Infineon Technologies AG
+1.08
+8
+889
+1,218
+7
+(19)
+(143)
+870
+1,075
+870
+1,075
+Basic earnings per share (in euro) from continuing operations
+80
+0.77
+1.08
+Basic earnings per share (in euro) from discontinued operations
+8
+(0.02)
+(0.13)
+8
+0.75
+0.95
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+Diluted earnings per share (in euro) from continuing operations
+Diluted earnings per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+1 The calculation of earnings per share is based on unrounded figures.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+0.77
+13,412
+2018
+Long-term debt
+Own shares
+123
+4
+(305)
+(42)
+155
+85
+717
+(42)
+Total equity
+attributable to
+shareholders
+155
+(153)
+870
+(3)
+59
+(296)
+4,486
+37
+(3)
+59
+85
+(333)
+of Infineon
+Technologies AG
+5,636
+1,525
+10
+1,299
+10
+5
+(305)
+915
+45
+870
+(37)
+6,483
+37
+6,446
+(37)
+(9)
+6
+(283)
+1,096
+21
+1,075
+(37)
+5,494
+4,486
+4
+ΔΙΕ ΙΙΙΟ
+226
+2,501
+112,773,923
+1,250,684,071
+21
+1
+914,314
+2,274
+1,136,995,834
+2,274
+Δ
+1,136,995,834
+2
+794,905
+2,272
+1,136,200,929
+19
+Amount
+Shares
+Ordinary shares issued
+Notes
+21
+(9)
+Consolidated Financial Statements
+Additional
+paid-in capital
+(283)
+(2)
+27
+1,071
+(2)
+27
+(4)
+1,075
+(1)
+Consolidated Statement of Changes in Equity
+32
+4,774
+adjustment
+translation
+Cost of hedging
+Hedges
+Foreign currency
+(accumulated
+deficit)
+Other reserves
+Retained earnings
+(1,404)
+421
+144
+152
+(3,277)
+9
+2,836
+3,067
+(1)
+(123)
+(16)
+324
+(5)
+(3,760)
+(17)
+14
+(156)
+(164)
+14
+(1,295)
+(1,090)
+15
+11
+(2,488)
+བབ
+(1,163)
+9
+1,601
+Net cash used in investing activities
+Net change in related party financial receivables and payables
+(109)
+158
+2,182
+(25)
+(1)
+(4)
+(25)
+1,575
+25
+(67)
+(50)
+6
+(125)
+(226)
+1,603
+1,571
+(2)
+4
+14
+(2,488)
+(1,163)
+15
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in the
+Consolidated Financial Statements for the year ended 30 September 2019:
+Financial reporting rules applied for the first time
+The Company's Management Board presented the Consolidated Financial Statements on 18 November 2019.
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in
+parentheses.
+The Group currency is the euro ("€").
+The fiscal year end for both Infineon and the Company is 30 September of each year.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+The Consolidated Financial Statements, prepared by Infineon Technologies AG as ultimate parent company for
+the year ended 30 September 2019, have been prepared in accordance with International Financial Reporting
+Standards ("IFRS") and related interpretations effective as of 30 September 2019 as issued by the International
+Accounting Standards Board ("IASB") to the extent to which the IFRS and interpretations have been endorsed by
+the European Union ("EU"). The Consolidated Financial Statements also comply with the supplementary require-
+ments set out in section 315e, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB").
+The aforementioned standards were complied with in full.
+1 Basis of the Consolidated Financial Statements
+Standard/amendment/interpretation
+<
+The Infineon Group ("Infineon”) comprising Infineon Technologies AG ("the Company") and its direct and indirect
+subsidiaries design, develop, manufacture and market a broad range of semiconductors and related system
+solutions. The focus of activities is on applications for automotive electronics, industrial electronics, information
+and communications infrastructure as well as hardware-based security. The product range includes standard,
+application-specific and customer-specific components as well as system solutions for power, digital, analog,
+high frequency and mixed-signal applications. About two thirds of Infineon's revenue is generated by power semi-
+conductors, the remaining revenue is attributable to high frequency components, sensors, and microcontrollers
+for automotive, industrial and security applications. Research and development sites, manufacturing facilities,
+investments and customers are located mainly in Europe, Asia and North America.
+Notes to the Consolidated Financial Statements
+124
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+8,633
+(37)
+(42)
+Infineon Technologies AG is a listed company under German law and the ultimate parent company of Infineon.
+The principal office of the Company is Am Campeon 1-15, 85579 Neubiberg (Germany). The Company is registered
+in the Commercial Register of the District Court of Munich (Germany) under the number HRB 126492.
+Effective date
+Impact on Infineon
+IFRS 2
+24
+2019
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+none
+1 January 2018
+Amendments to IFRS 1 and IAS 28
+Annual IFRS improvement cycle 2014-2016-
+none
+1 January 2018
+Foreign currency transactions and advance consideration
+IFRIC 22
+see explanations
+below the table
+see explanations
+below the table
+1 January 2018
+including clarifications to IFRS 15
+Revenue from contracts with customers
+IFRS 15
+1 January 2018
+immaterial
+1 January 2018
+Share-based payment (classification and measurement of
+share-based payment transactions - Amendment to IFRS 2)
+Financial instruments
+IFRS 9
+122
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+16
+Capital increase
+Net interest result
+Income tax
+14
+Adjustments to reconcile net income to net cash provided by operating activities:
+Depreciation and amortization
+143
+1,075
+870
+19
+25
+2018
+464
+2019
+Plus: loss from discontinued operations, net of income taxes
+Net income
+€ in millions
+for the year ended 30 September 2019 and 2018
+Consolidated Statement of Cash Flows
+Consolidated Statement of Cash Flows
+Consolidated Financial Statements
+▼ ▲ ↑ IIIO
+120
+Notes
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+945
+194
+7
+6
+8
+14,28
+-
+5
+Change in inventories
+Change in trade receivables
+Other non-cash result
+861
+Impairment charges
+(270)
+1
+Loss (gain) from sale of RF power business
+(1)
+(11)
+Gains on disposals of property, plant and equipment
+45
+36
+193
+Dividends received from joint ventures
+1 No prior period adjustments are required as a result of the new valuation and accounting methods arising from our chosen transition approach
+in accordance with IFRS 9 and IFRS 15.
+10,879
+13,412
+46
+283
+16
+9
+20
+6
+552
+733
+18
+165
+1,507
+15
+Ordinary share capital
+Shareholders' equity:
+Total liabilities
+Total non-current liabilities
+Other non-current liabilities
+Deferred tax liabilities
+Pension plans and similar commitments
+Balance as of 30 September 2019
+1,534
+137
+2,735
+2,251
+Total liabilities and equity
+Total equity
+6,446
+8,633
+(37)
+(37)
+Own shares at cost
+56
+254
+(333)
+421
+4,486
+5,494
+Other reserves
+Retained earnings (accumulated deficit)
+Additional paid-in capital
+2,274
+2,501
+19
+4,433
+4,779
+16
+7
+Long-term provisions
+71
+732
+1,021
+860
+732
+2
+9
+(130)
+280
+Cash and cash equivalents at end of period
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Cash and cash equivalents at beginning of period
+Net change in cash and cash equivalents
+(542)
+1,167
+Net cash provided by (used in) in financing activities
+(542)
+1,167
+Net cash used in investing activities from discontinued operations
+Net cash used in investing activities from continuing operations
+Proceeds from sales of property, plant and equipment and other assets
+Effect of foreign exchange rate changes on cash and cash equivalents
+Purchases of property, plant and equipment
+121
+Consolidated Financial Statements
+10
+Exercise of stock options
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Other comprehensive income (loss) for the period, net of tax
+Net income
+Balance as of 1 October 2018
+Effects from the transition to IFRS 9 and IFRS 15
+Balance as of 30 September 2018
+Share-based compensation
+▼ A ↑ III O
+Exercise of stock options
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Other comprehensive income (loss) for the period, net of tax
+Net income
+Balance as of 1 October 2017
+except for number of shares.
+€ in millions,
+for the year ended 30 September 2019 and 2018
+Consolidated Statement of Changes in Equity
+Consolidated Statement of Changes in Equity
+Issuance of ordinary shares:
+Purchases of intangible assets and other assets
+Issuance of ordinary shares:
+Acquisitions of businesses, net of cash acquired
+Dividend payments
+19
+(305)
+(283)
+Net cash provided by (used in) in financing activities from continuing operations
+Net cash used in financing activities from discontinued operations
+Net cash provided by operating activities
+Net cash provided by (used in) operating activities from discontinued operations
+Net cash provided by operating activities from continuing operations
+Income tax paid
+6
+Interest paid
+Change in other assets and liabilities
+Change in provisions
+Change in trade payables
+Net change in short-term debt
+(251)
+(239)
+11
+Proceeds from sales of businesses and interests in subsidiaries, net of cash disbursed
+Investments in related companies
+(116)
+Interest received
+1,530
+Share-based compensation
+Proceeds from issuance of ordinary shares
+19
+Proceeds from sales of financial investments
+Purchases of financial investments
+(14)
+(18)
+Proceeds from issuance of long-term debt
+15
+1
+Repayments of long-term debt
+15
+Purchases of other equity investments
+(321)
+Change in cash deposited as collateral
+(23)
+19
+4
+74
+Payments for financing-related derivatives
+4
+(41)
+Deposits for financing-related derivatives
+IFRS 15 "Revenue from Contracts with Customers"
+(5)
+2
+8,029
+(5,035)
+Net income
+Income tax
+Cost of goods sold
+Revenue
+Balances
+IFRS 15
+Adjustments
+As reported
+8,027
+(5,030)
+€ in millions
+Consolidated Statement of Operations and Consolidated Statement of Comprehensive Income
+for the fiscal year ending 30 September 2019:
+The following tables show the effects of the application of IFRS 15 to the Consolidated Statement of Operations,
+the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position and the
+Consolidated Statement of Cash Flows:
+The first-time application of IFRS 15 resulted in the recognition of contract assets of €89 million and a reduction
+in inventories of €45 million as of 1 October 2018, so that losses carried forward as of 1 October 2018, taking into
+account deferred tax effects, decreased by €37 million.
+The first-time application of IFRS 15 took place by adjusting the equity opening balance with the cumulative effect.
+The previous periods are presented in accordance with the old requirements (modified retrospective application).
+According to IFRS 15, revenues under particular contract types are recognized over time instead of, as previously,
+at a particular point in time. For Infineon, this affects primarily the sale of customer-specific products with no alter-
+native use for which Infineon has, even before delivery, an entitlement to payment for services already rendered.
+Performance progress over the period in which revenue is to be recognized is determined using an input-based
+method. For sales to some customers with whom Infineon holds consignment stock, revenue recognition has shifted
+from the point of withdrawal of finished goods and products by the customer to the point of delivery into the
+customer's consignment warehouse. Apart from these changes, there were no further material effects on Infineon's
+earnings or financial position, since Infineon's customer contracts generally only contain one contractual obligation
+that is fulfilled either over a period of time or at a particular point in time.
+IFRS 15 "Revenue from Contracts with Customers" was applied for the first time as of 1 October 2018. It replaces all
+previous standards and revenue recognition interpretations including IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and
+SIC 31. IFRS 15 provides a comprehensive framework for determining whether, to what extent, and at which point in
+time or over which period revenue should be recognized. For this purpose, the standard provides a principle-based,
+uniform, five-step model, which is to be applied to all categories of revenue transactions with customers. In essence,
+revenue is recognized when control is transferred to the customer as defined by IFRS 15, in contrast to recognition
+upon the transfer of significant risks and rewards according to IAS 18. The amount to be recognized as revenue is
+based on the value of the consideration that the entity expects to receive. According to IAS 18, the revenue to be
+recognized was based on the fair value of the consideration received or receivable.
+without
+IFRS 15
+Adjustments
+(194)
+122
+Total comprehensive income, net of tax
+128
+Total equity
+Retained earnings
+Total assets
+Deferred tax assets
+Contract assets
+Inventories
+€ in millions
+Consolidated Statement of Financial Position as of 30 September 2019:
+870
+Notes to the Consolidated Financial Statements
+VAI O
+127
+Certain other non-current financial assets that were classified as "loans and receivables" or "available for sale"
+under IAS 39 were reclassified to financial assets "at fair value through profit or loss" because their contractual cash
+flows do not represent solely payments of principal and interest. As there were no material differences between
+amortized cost and fair value of these assets, there were no effects on the opening balance of retained earnings as
+of 1 October 2018.
+917
+(2)
+872
+(2)
+(195)
+915
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Not assignable
+Notes to the Consolidated Financial Statements
+In a cross-functional IFRS 16 project, Infineon evaluated the expected effect of the first-time application of IFRS 16
+on existing processes, systems, contracts and the Consolidated Financial Statements and made adjustments
+accordingly. The following categories of leases, previously recognized as operating leases, are now recognized
+as leases according to the definition of the new standard following the transition to IFRS 16 as of 1 October 2019:
+land and buildings, technical equipment, vehicles and other leased assets. When IFRS 16 is first applied to operating
+leases, the value of the right-of-use asset is generally measured using the amount of the lease liability. The incre-
+mental borrowing rate of interest prevailing at the time of the first application of IFRS 16 is used. In the case of
+deferred lease liabilities, the value of the right-of-use asset shall be adjusted by the amount of lease payments paid
+in advance or the deferred lease liability. The valuation of the right-of-use asset at the point of first-time application
+does not take into account the initial direct costs.
+As a result of the first-time application, right-of-use assets amounting to around €255 million and leasing liabilities
+in the amount of around €262 million are recognized in the Consolidated Statement of Financial Position as of
+1 October 2019. The difference of €7 million between these two closing balances relates to advance lease payments
+as well as deferred lease liabilities.
+2 Summary of significant accounting policies
+Basis of consolidation
+The Consolidated Financial Statements presented here include the individual financial statements of Infineon
+Technologies AG and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity
+which, directly or indirectly, is controlled by Infineon Technologies AG.
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary or has
+a right to such, and has the ability to influence these returns as a result of its power over the subsidiary. Power
+means that Infineon has existing rights that give Infineon the ability to direct the relevant activities of the subsidiary,
+that is the activities that significantly affect the aforementioned returns.
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their
+fair value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value
+of acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of
+the fair value of items acquired over consideration paid is recognized as a gain.
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+The new standard applies to fiscal years that begin on or after 1 January 2019. Therefore, Infineon will apply the
+standard from the fiscal year that begins on 1 October 2019, according to the modified retrospective approach.
+Leases which were previously classified as operating leases by Infineon are mainly affected by the first-time
+application. Short-term lease agreements with a duration of not more than twelve months (unless they contain
+a purchase option) and leases in which the underlying asset is of low value are not recognized in accordance with
+the exemption allowed by IFRS 16. Contractual relationships which were not previously classified as leases under
+IAS 17 "Leases" in conjunction with IFRIC 4 "Determination of whether an agreement includes a lease" were not
+reassessed against the IFRS 16 definition of a lease.
+P see page 191 ff.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Functional currency, reporting currency and foreign currency translation
+The functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
+prepared with the euro as the reporting currency.
+Foreign currency transactions of subsidiaries are translated into the functional currency of the relevant entity using
+the spot rate prevailing at the transaction date. Monetary foreign currency assets and liabilities are translated at
+the spot rate prevailing at the reporting date. Exchange rate gains and losses from the translation of foreign currency
+transactions are recognized in the Consolidated Statement of Operations.
+As reported
+The assets and liabilities of subsidiaries with functional currencies other than the euro are translated into euros
+using the spot rate at the end of the reporting period. Income and expenses of these entities are translated using
+the average spot rate of the reporting period. All currency translation differences resulting from the consolidation
+are recognized directly in equity and presented as "Other reserves".
+The euro/US dollar exchange rate is particularly significant for the preparation of the Consolidated Financial
+Statements. As of the reporting date 30 September 2019 it was 1.0935 (30 September 2018: 1.1576) and the average
+for the 2019 fiscal year was 1.1252 (2018: 1.1892).
+A list of subsidiaries of Infineon Technologies AG is provided in note 30.
+Other non-current assets include investments in shares over which Infineon no significant influence has and which
+are held as long-term strategic investments. They are classified as fair value through profit or loss under IFRS 9.
+In accordance with IAS 39, they were classified as available for sale. There were no differences between the carrying
+amounts calculated in accordance with IAS 39 and IFRS 9. The cumulative amounts recognized in other compre-
+hensive income, which were reclassified to the opening balance of retained earnings upon first-time application of
+IFRS 9, were in total insignificant.
+129
+3
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Trade receivables and other receivables that were classified as loans and receivables under IAS 39 are now classified
+as at amortized cost. A decrease of €2 million in the impairment allowance was recognized in the opening retained
+earnings as of 1 October 2018 due to the transition to IFRS 9. This resulted on the one hand in an increase in impair-
+ments due to the impairment model implemented in accordance with IFRS 9, which takes into account expected
+credit losses. On the other hand portfolio impairments, previously recognized as of 30 September 2018 in accordance
+with IAS 39 on the basis of flat-rate percentages, were released.
+Certain investments in money market funds that are classified as cash equivalents according to IAS 7, as well as
+investments in investment funds reported under financial investments, were reclassified from "loans and receivables"
+or from "available for sale" to "fair value through profit or loss". They do not meet the cash flows criteria of IFRS 9
+because the contractual payments resulting from these financial investments do not represent solely payments of
+principal and interest. Since these funds have a stable net asset value there were no differences between amortized
+cost and fair value, which means that there were no effects on the opening balance of the retained earnings as of
+1 October 2018. Due to the implementation of the impairment model in accordance with IFRS 9, an increase of
+€2 million in the allowance for impairment of financial investments that are classified at amortized cost was recog-
+nized in the opening balance of retained earnings as of 1 October 2018.
+3,731
+3,731
+measurement
+category
+to any IFRS 9
+Total carrying amount
+At fair value through
+profit or loss
+Amortized cost
+At fair value through
+profit or loss
+36
+40
+40
+At fair value through
+profit or loss
+Available for sale
+18
+18
+46
+3
+64
+(4)
+(18)
+1,601
+Adjustments
+IFRS 9
+none
+1 January 2020
+Definition of a business (Amendments to IFRS 3)
+IFRS 3
+none
+1 January 2019
+none
+1 January 2019
+Plan amendment, curtailment or settlement (Amendments to IAS 19)
+Long-term interests in associated companies and joint ventures
+(Amendments to IAS 28)
+IAS 28
+IAS 19
+none
+1 January 2020
+and IAS 8
+Definition of Material (Amendments to IAS 1 and IAS 8)
+IAS 1
+Expected impact
+on Infineon
+Effective date
+Prepayment features with negative compensation
+(Amendments to IFRS 9)
+1 January 2019
+none
+IFRS 16
+VAL III O
+Recognition and measurement principles
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+IFRS 16 introduces a standardized accounting model by which leases are to be recorded in the balance sheet of the
+lessee and replaces all previous standards and lease accounting interpretations including IAS 17, IFRIC 4, and SIC 15
+and SIC 27. This means that in future all assets and liabilities arising from a leasing agreement must be recognized
+by the lessee, unless it is a short-term lease (duration of twelve months or less) or a lease for a low-value asset (each
+may be elected by the lessee). The distinction between finance and operating leases is still required in the accounts
+of the lessor and therefore does not differ significantly from IAS 17 "Leases".
+IFRS 16 "Leases"
+none
+1 January 2019
+Amendments to IFRS 3 and IFRS 11 as well as IAS 12 and IAS 23
+Annual IFRS improvement cycle 2015-2017 -
+Standard/amendment/interpretation
+immaterial
+1 January 2019
+Uncertainty over income tax treatments
+IFRIC 23
+1 January 2021
+Insurance Contracts
+IFRS 17
+see explanations
+below the table
+1 January 2019
+Leases
+none
+IFRS 15
+The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from today's
+perspective. They have not been applied in the Consolidated Financial Statements as of 30 September 2019 since
+they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended Standards
+are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they are not
+applied before their effective date, even if this is permitted for certain standards.
+1,601
+8,597
+36
+8,633
+385
+36
+421
+13,376
+36
+13,412
+604
+(5)
+599
+91
+91
+1,751
+(50)
+1,701
+IFRS 15
+Adjustments
+Balances
+without
+Consolidated Statement of Cash Flows for the fiscal year ending 30 September 2019:
+€ in millions
+As reported
+IFRS 15
+Net cash provided by operating activities
+(2)
+(2)
+(4)
+(244)
+5
+(239)
+195
+(1)
+Financial reporting rules issued not yet applied
+194
+(2)
+870
+Change in other assets and liabilities
+Change in inventories
+Income tax
+Net income
+IFRS 15
+Adjustments
+Balances
+without
+Adjustments
+872
+The following table summarizes the main measurement principles used in the preparation of the Consolidated
+Financial Statements:
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. The
+gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity are
+recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss, or, if the expected
+transaction subsequently results in the recognition of a non-financial asset, included in the acquisition cost upon
+initial recognition.
+ASSETS
+110
+Amortized cost
+971
+Amortized cost
+Loans and receivables
+Loans and receivables
+At fair value through
+profit and loss
+Trade receivables
+Other current assets
+563
+563
+At fair value through
+profit or loss
+1,246
+(2)
+1,248
+Amortized cost
+Loans and receivables
+Available for sale
+Financial Investments
+89
+89
+At fair value through
+profit or loss
+643
+2 1
+973
+110
+Other non-current assets
+<
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+P see page 125 ff.
+P see page 138 f.
+P see page 138 f.
+P see page 132 f.
+Recognition and measurement of financial assets according to IAS 39 (2018 fiscal year)
+In the 2018 fiscal year Infineon applied IAS 39 (see note 1). Accordingly, Infineon classified financial assets into the
+following categories: "Loans and receivables", "Available-for-sale financial assets" and "Financial assets measured
+at fair value through profit or loss”. Financial instruments in the category "Assets held-to-maturity" were not held by
+Infineon. The categories of financial assets that differ from the new classification and valuation model are explained
+in detail below:
+(89)
+Loans and receivables
+Available-for-sale financial assets
+Available-for-sale financial assets were non-derivative financial assets that were either designated as available for
+sale, or were not allocated to any of the other categories. Upon acquisition, they were measured at fair value taking
+into account transaction costs and were subsequently measured at their fair value at the end of the relevant
+reporting period. Transaction costs relating to the acquisition of available-for-sale financial assets with a finite term
+and fixed or determinable payments were capitalized and recognized in the Consolidated Statement of Operations
+using the effective interest method. Changes in the fair value of available-for-sale financial assets were recognized
+directly in equity. If the fair value was permanently or significantly lower than the amortized cost, then an impairment
+loss was recognized through profit or loss.
+Inventories
+Inventories are measured at the lower of historical acquisition or fully absorbed production cost - calculated
+using the weighted-average method - and net realizable value. Net realizable value corresponds to realizable sale
+proceeds under normal business conditions less estimated expected costs to complete and sell. Production cost
+comprises costs of material, production wages and an appropriate portion of attributable overheads, along with
+attributable depreciation and amortization on property, plant and equipment and intangible assets. Overhead
+mark-ups are determined on the basis of normal capacity utilization levels.
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Inventories include an asset resulting from sales with a right of return, representing Infineon's right to recover
+products from customers upon payment of the refund liability (see "Revenue recognition"). The valuation is made
+by reference to the previous book value of the products.
+Contract assets
+Contract assets are recognized if Infineon has fulfilled its performance obligations arising from contracts with
+customers and an unconditional entitlement to customer consideration does not yet exist. The approach is based
+on the transaction price (see "Revenue recognition"). Valuation adjustments for expected credit losses on contract
+assets are made in accordance with the measurement method for trade receivables (see "Financial instruments").
+Loans and receivables
+Loans and receivables were non-derivative financial assets with fixed or determinable payments that were not
+quoted in an active market. At Infineon, the balance sheet items "Cash and cash equivalents”, “Financial invest-
+ments", "Trade receivables" and current and non-current "Other assets" all contained financial assets which were
+classified in the category "Loans and receivables". Loans and receivables were measured on initial recognition
+at their fair value plus incidental acquisition costs. Subsequently, they were measured at amortized cost using the
+effective interest method and were tested for impairment.
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+732
+Cash and cash equivalents Loans and receivables
+Loss allowance on financial investments
+Loss allowance on trade receivables
+Adjustment on initial application of IFRS 9
+Balance at 30 September per IAS 39
+€ in millions
+According to IFRS 9, the recognition of the impairment of financial instruments is based on expected credit losses,
+instead of losses already incurred as was previously the case under IAS 39. Infineon applies the so-called simplified
+impairment model for trade receivables and contract assets, and the so-called general impairment model for cash
+and cash equivalents and financial investments. The probability-weighted models to estimate expected future
+credit losses have been integrated into the existing credit risk management process (see note 27). The balance on
+allowances for impairments based on the IAS 39 rules is reconciled to the new impairment allowance balance in
+accordance with IFRS 9 in the following table:
+The classification and measurement of financial assets are based on the underlying business model of the portfolio
+according to which the financial asset is managed, as well as the specific form of the contractually agreed cash
+flows. From now on a limited number of financial assets (debt instruments) held by Infineon are recognized at
+fair value through profit or loss; these were previously recognized at amortized cost or at fair value through other
+comprehensive income according to IAS 39. In principle, Infineon measures equity instruments at fair value through
+profit or loss.
+The first-time application was made by an adjustment of the cumulative effect to the opening balance of equity.
+The previous period is disclosed according to the old requirements (modified retrospective approach).
+IFRS 9 "Financial Instruments" replaces the existing rules contained in IAS 39 “Financial Instruments; Recognition
+and Measurement" and was applied for the first time by Infineon as of 1 October 2018. IFRS 9 contains new rules
+for the classification and measurement of financial assets, as well as new regulations for impairments, although
+the requirements for financial liabilities most relevant to Infineon had largely already been adopted under IAS 39.
+In addition, the new standard requires more comprehensive disclosure, and contains accounting rules for hedging
+transactions.
+IFRS 9 "Financial Instruments"
+P see page 180 f.
+ƠI A
+125
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+134
+VA III O
+Notes to the Consolidated Financial Statements
+Balance at 1 October per IFRS 9
+The expected credit losses for cash and cash equivalents, contract assets in accordance with IFRS 15, and other
+financial assets that are classified and measured at amortized cost are immaterial.
+2018
+9
+2018
+Carrying
+amount as of
+1 October
+ment
+Remeasure-
+Reclassi-
+fication
+Carrying
+amount as of
+30 Septem-
+ber 2018
+Classification
+under IFRS 9
+Original classification
+under IAS 39
+€ in millions
+Amortized cost
+The following table presents the classification and measurement categories of financial assets in accordance
+with IAS 39 as of 30 September 2018 and the transition to the new classification and measurement categories in
+accordance with IFRS 9 as well as the respective carrying amounts as of 1 October 2018:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+In total, the implementation of IFRS 9 as of 1 October 2018, including the effect of deferred tax, had no effect on
+retained earnings.
+The requirements for the classification and measurement of financial liabilities according to IFRS 9 correspond
+substantially to the previous requirements of IAS 39. The first application of IFRS 9 had no effect on the classification
+and measurement of financial liabilities.
+The new rules for the application of hedge accounting, whose target is to better represent risk management strategy,
+has primarily resulted in changes to the documentation and effectiveness requirements for Infineon. All existing
+hedging arrangements fulfill the hedge accounting requirements as set out in IFRS 9, and are continuing as before.
+Therefore, there was no effect on the Consolidated Statement of Financial Position arising from the first-time
+application as of 1 October 2018.
+9
+At Infineon, contract assets result from revenue arising from over time revenue recognition for certain types of
+contracts, as well as from sales to some customers for whom Infineon maintains a consignment warehouse and
+where revenue is recorded at the time of delivery to the consignment warehouse, whereas the invoice is only issued
+at the time of withdrawal of product by the customer.
+(2)
+126
+In accordance with the provisions of IFRS 9, in the case of foreign currency derivatives, the currency base spread
+(cost of hedging) is split from the designated hedging instrument and recognized separately in other comprehensive
+income as an excluded component in the reserve for costs of hedging as part of equity.
+Derivative financial instruments are measured at their fair value and included in "other current assets" or "other
+current liabilities".
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price changes
+(such as gold prices) for firm commitments as well as expected and highly probable future transactions in order to
+minimize the associated risk (cash flow hedges).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+130
+VA III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Balance sheet item
+LIABILITIES AND EQUITY
+Debt
+Trade payables
+Provisions:
+Pensions
+Other provisions
+Other liabilities (current and non-current):
+Other financial liabilities:
+Measured at fair value through profit or loss
+Designated hedging instruments
+Other financial liabilities
+Remaining other liabilities
+Own shares
+Fair value through other comprehensive income
+Amortized cost
+Fair value through profit or loss
+Fair value/amortized cost
+Amortized acquisition or production cost
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+Contract assets
+Assets classified as held for sale
+Property, plant and equipment
+Goodwill
+Intangible assets (except goodwill):
+With definite useful life
+Measurement principle
+Other assets (current and non-current):
+At amortized cost
+At fair value through profit or loss
+Designated hedging instruments
+Remaining other assets
+Measurement principle
+Fair value/nominal amount
+Fair value/amortized cost
+Transactions price/amortized cost
+Lower of acquisition or production cost and net realizable value
+Transactions price/amortized cost
+Lower of carrying amount and fair value less costs to sell
+Amortized acquisition or production cost
+Impairment-only approach
+Other financial assets:
+Fair value/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Fair value through profit or loss
+At Infineon, financial assets in the form of equity instruments are consistently measured at fair value through profit
+or loss. Net gains and losses, including interest and dividend income, from financial assets that are measured
+at fair value through profit or loss (debt and equity instruments) are recognized in the Consolidated Statement of
+Operations.
+Impairment of financial assets
+Infineon determines an impairment charge for expected credit losses for financial assets in the form of debt
+instruments that are measured at amortized cost or at fair value through equity. The calculation of the expected
+future credit losses is generally determined by multiplying the probability of default by the carrying amount of the
+financial asset (exposure at default) and the expected loss ratio (loss given default).
+Infineon recognizes impairments for expected credit losses primarily for cash and cash equivalents, financial
+investments, trade receivables, and contract assets. The expected credit losses are adjusted at each reporting date
+to reflect changes in credit risk since the instrument was first recognized.
+For cash and cash equivalents and financial investments measured at amortized cost, Infineon recognizes credit
+losses expected in the next twelve months (twelve-month credit loss) in accordance with the general approach. Due
+to their short-term maturity, this corresponds to the expected credit losses over the entire term. Infineon rates the
+counterparty risk for cash and cash equivalents and financial investments as low. Infineon assumes that a financial
+asset has a low credit risk if it has an investment grade rating or an internal rating that corresponds to the invest-
+ment grade rating as defined by the global definition. In order to assess whether there has been a significant increase
+in credit risk since initial recognition, Infineon considers appropriate and robust information that is relevant and
+available without relatively high effort. This includes both quantitative and qualitative information and analyses,
+which are based on the Company's historical experience and a sound credit assessment as well as forward-looking
+information. Macroeconomic information is taken into account in the internal rating model (information on Infineon's
+financial risk management is included in note 27). Irrespective of the above analysis, a significant increase in credit
+risk is assumed if a debtor is more than 30 days overdue with the settlement of a contractual payment.
+For trade receivables, Infineon recognizes credit losses that are expected over the entire term using a simplified
+procedure. The estimate of expected losses on trade receivables is based primarily on the results of customer financial
+data, ratings, credit default spreads, past payment behavior of customers and forward-looking Information.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+132
+▼ A ↑ III O
+Financial assets in the form of debt instruments that are measured at fair value in profit or loss include all financial
+assets at Infineon whose cash flows are not exclusively interest payments and principal repayments.
+Consolidated Financial Statements
+133
+In the case of objective indications that expected future cash flows are affected, a financial asset is classified as
+impaired (with impaired creditworthiness) and adjusted to its individual value. As a rule, this is the case for financial
+assets (unless it is a trade receivable) no later than 90 days after the due date. For trade receivables, the impaired
+creditworthiness is not determined automatically in the event of a payment overdue by more than 90 days, but
+always on the basis of the individual assessment of credit management.
+A default event occurs when Infineon concludes that the other party would most likely not be able to meet the
+payment obligations, or not in full.
+Financial assets are partly or completely written off, together with previously recognized impairments, if there is no
+reasonable expectation of repayment. This is generally the case when Infineon finds that the debtor does not have
+assets or revenue sources that could generate sufficient cash flows to repay the amounts subject to derecognition.
+Even when financial assets have been written off, Infineon will continue to take enforcement action to attempt to
+recover the outstanding amount. Insofar as repayments are made, these are recognized in profit or loss.
+Financial liabilities
+Infineon classifies financial liabilities into the following categories: “Financial liabilities measured at fair value
+through profit and loss" and "Other financial liabilities”. Furthermore, “Designated hedging instruments (cash flow
+hedges)" belong to financial liabilities.
+At Infineon financial liabilities measured at fair value through profit or loss comprise entirely of derivatives used to
+hedge currency risks for which hedge accounting is not applied.
+Upon acquisition, other financial liabilities are measured at fair value after deduction of transaction costs.
+In subsequent periods, they are measured at amortized cost using the effective interest method. The liabilities
+are derecognized when the contractual obligations are discharged, canceled or expired.
+Designated hedging instruments (cash flow hedges)
+Notes to the Consolidated Financial Statements
+Balance sheet item
+At the reporting date, Infineon did not hold any financial assets with the intention to collect contractual cash flows
+and and also to sell them. Therefore, there was no allocation of debt instruments to the category "fair value through
+other comprehensive income".
+Based on these two criteria, Infineon's financial asset valuation categories are as follows:
+Fair value through other comprehensive income
+Fair value/amortized cost
+Fair value/amortized cost
+Acquisition cost
+Cash and cash equivalents
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of three
+months or less. Cash equivalents partly include investments in money market funds. The valuation is recorded at
+amortized acquisition cost or at fair value through profit or loss.
+Financial instruments
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the acqui-
+sition or issuance of financial instruments are only included in the carrying amount if the financial instruments
+are not measured at fair value through profit or loss. Trade receivables are measured at the transaction price as
+determined in accordance with IFRS 15.
+Regular purchases and sales of financial assets are recognized on the settlement date.
+Financial assets are derecognized when the rights to receive payments from the investments have expired, or have
+been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial liabilities
+are derecognized when they are extinguished, that is when the contractual obligation is discharged, canceled or
+expired.
+Financial assets measured at amortized cost include all assets whose contractual provisions result in cash flows at
+fixed times that represent only interest and repayments of the outstanding principal amount, provided that those
+assets are held with the intention of collecting the contractual cash flows expected over their respective duration.
+In subsequent periods, financial assets measured at amortized cost are measured using the effective interest method.
+Interest income, currency gains and losses, impairments, and gains or losses from the derecognition of such financial
+assets are recognized through profit or loss.
+Financial assets
+For subsequent revaluations, financial assets are classified upon initial recognition either as at amortized cost,
+fair value through equity or fair value through profit or loss. This classification depends on the characteristics of the
+contractual cash flows of the financial assets, and Infineon's business model for managing its financial assets.
+In order for a financial asset (debt instrument) to be classified and measured at amortized cost or at fair value through
+equity, cash flows may only arise from the repayment of principal and interest payments on the outstanding
+principal amount. This assessment is referred to as a cash flow test or SPPI test ("solely payments of principal and
+interest") and is carried out at the level of the individual financial instrument.
+The classification and valuation of financial assets is based on the business model. Infineon's business model
+for managing financial asset portfolios reflects how the Company controls its financial assets in order to generate
+cash flows. Depending on the business model, cash flows arise from the receipt of contractual cash flows, the sale
+of financial assets or both.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+131
+▼ ▲ ↑ IIIO
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+P see page 177 ff.
+Classification and measurement of financial assets
+Consolidated Financial Statements
+2
+365
+Provisions are recognized for present legal and/or constructive obligations arising from past events that are likely
+to result in a future outflow of resources, the amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example those connected with the Qimonda insolvency, Infineon
+regularly assesses the probability of an unfavorable outcome. Infineon records provisions and liabilities, including
+provisions for significant legal costs, for those obligations and risks relating to legal disputes which it assesses at
+the relevant reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment,
+there is compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with
+reasonable accuracy at the time of assessment. As soon as additional information is available, the affected estimates
+are reviewed and, where necessary, provisions for these proceedings are revised.
+Provisions are measured at their expected settlement amount. The amount recognized for a provision is the best
+estimate of the expenditure required to settle the present obligation. Estimates of outcomes and financial effects
+are dependent upon the judgment of management, supplemented by experience gained from similar transactions
+and, where appropriate, the assessment of independent experts. If the circumstances to be assessed encompass
+a large number of possible outcomes, the obligation is estimated by weighting all possible outcomes by their asso-
+ciated probabilities (expected value method).
+Where cash flows are expected to arise after more than one year and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows.
+If the obligation decreases because of a change in the estimate, the provision is adjusted accordingly and the
+resulting income recognized in the same functional area of the Consolidated Statement of Operations in which the
+original charge was recognized.
+Contingent liabilities
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon, or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 22 and 23).
+Revenue recognition
+Provisions
+Infineon generates revenues mainly from the sale of semiconductor products and related system solutions. Revenue
+is recognized when control over the products is transferred to the customer in accordance with IFRS 15. Typically,
+Infineon's customer contracts only contain one performance obligation which is fulfilled either over a period of
+time or at a specific point in time. For sales of customer-specific products with no alternative use for Infineon,
+for which Infineon has a legal right to payment for services rendered prior to delivery, revenue is recognized over
+time. Performance progress is determined using an input-based method and is based on the ratio of costs already
+incurred to the estimated total cost. Where revenue from the sale of products is not realized on an over time basis,
+revenue is generally recognized upon delivery, since customers cannot derive material benefits from the products
+before this point in time. In cases of deliveries to consignment warehouses, control remains with Infineon where
+there is no contractual requirement for the customer to withdraw products. In these cases, revenue is recognized
+when products are withdrawn from the consignment warehouse by the customer.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+138
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Psee page 152 f.
+P see page 144
+Infineon recognizes revenue for deliveries to distributors by using the “sell in" method, that is when a product is sold
+to the distributor, to the extent that revenue has not already been recognized on an over time basis. In accordance
+with established business practice in the semiconductor industry, under certain circumstances distributors can
+apply for price protection. Price protection allows distributors to receive a credit (debit) note for unsold products
+held in inventory if Infineon has reduced (increased) the standard list price of certain products. In addition, in certain
+cases distributors may request a ship and debit credit note for price adjustments. Infineon adjusts revenue for price
+protection and ship and debit in the period in which the related revenue is recorded. The ship and debit adjust-
+ments are determined based on rolling trends in the difference between contract prices and standard list prices
+to the distributors. The price protection adjustments are based on current list prices and the relevant distributors'
+inventory on hand. The availability of detailed distributor inventory data, the transparency of pricing for standard
+products and the long distributor pricing history enable Infineon to reliably estimate the adjustments for price
+protection and ship and debit credit notes at the end of the reporting period. Distributors can, subject to certain
+conditions, return a limited amount of inventory (stock return) or request scrap allowances. Stock return credit
+notes are accrued based on expected stock returns in accordance with the contractual agreements combined with
+historical experience. Distributor scrap allowances are accrued based on the contractual agreements and, upon
+submission of a valid claim, are granted up to a certain maximum based on turnover in a given period. Infineon
+monitors such product returns on an ongoing basis and adjusts accrual assumptions accordingly. Other returns are
+only permitted for quality defects within the ordinary warranty period.
+Invoices for sales of product are issued at the time of delivery or withdrawal by the customer from the consignment
+warehouse, and have a short payment term. The amount of revenue corresponds to the expected transaction
+price to be received from the customer, taking into account revenue reductions such as rebates and discounts.
+Variable consideration is estimated taking into account the available historical, current and forecast information.
+The relevant estimate is based on the expected value and the most likely amount.
+P see page 165 ff.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+1 Valuation parameters as of 30 June 2019 and 2018.
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the original assumptions behind the calculation of revenue growth, gross margins, the
+WACC, and growth rates in the terminal value. In this way, Infineon takes account of the inherently uncertain nature
+of estimates and carries out impairment tests on goodwill based on scenarios that are less favorable than those
+considered most likely. Changes considered to be possible to the parameters identified would have had no effect
+on the value of goodwill.
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none
+of the operating segments gave rise to an impairment of goodwill in the year under report. As of the reporting date,
+there was no indication that the recoverable amount of a CGU to which goodwill had been allocated could have
+fallen below the book value.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+<
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Intangible assets and other non-current assets
+P see page 139
+Infineon reviews non-current assets, including property, plant and equipment and intangible assets for possible
+impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
+be recoverable. Regardless of whether an indication of impairment exists, intangible assets including capitalized
+development costs not yet subject to scheduled amortization undergo an annual impairment test (see also
+"Research and development expenses").
+The recoverability of an asset is measured by comparing its carrying amount with its recoverable amount. To the
+extent it is not possible to determine the recoverable amount of an individual asset, the book value of the CGU to
+which the asset is allocated is compared to its recoverable amount.
+The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use. The
+value in use is calculated based on discounted future cash flows. Considerable management judgment is necessary
+to estimate future cash flows.
+If an asset or CGU is considered to be impaired, the impairment recognized is measured as the amount by which
+the carrying value exceeds the recoverable amount. If the recoverable amount of a CGU is less than the carrying
+value, the impairment is allocated pro rata to the assets recorded within the scope of IAS 36 therein. An impairment
+loss recognized in prior periods for an asset is reversed insofar as, since the last impairment, a change in the under-
+lying assumptions has occurred, which leads to a lower impairment requirement. The maximum possible reversal
+of an impairment loss is that which would lead to the carrying amount that would have been determined (net of
+scheduled depreciation and amortization) if no impairment loss had been recognized for that asset in prior years.
+Defined benefit pension plans
+The net pension obligation recognized in respect of defined benefit pension plans comprises the present value
+of the defined benefit obligation (DBO) at the end of the reporting period less the fair value of the plan assets. The
+present value of the DBO and the resulting pension expense are determined annually in accordance with IAS 19
+"Employee Benefits" for each separate plan by independent, qualified actuaries using the projected-unit-credit
+method. The calculation is subject to, among other things, assumptions on increases in salaries, future developments
+in pensions as well as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations are
+discounted using discount rates determined on the basis of market yields of high-grade, fixed-interest corporate
+bonds from issuers carrying a very high credit rating.
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result, are
+recognized on a net basis in the functional areas within the operating result. The net interest result arising from the
+multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is presented
+as financial expense. Actuarial gains and losses arising from changes to actuarial assumptions and estimates as
+well as the difference between the normalized and actual return on plan assets are recognized directly in equity and
+recorded in the Consolidated Statement of Comprehensive Income in the periods in which they arise. Past service
+costs are recognized immediately in profit or loss.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+137
+ব
+VAL III O
+The additional costs of a contract initiation are immediately recognized as an expense as soon as they arise,
+providing the otherwise resulting depreciation period would not exceed one year. Costs of the performance of the
+contract are capitalized at the earliest when an expected, specifically identifiable contract exists.
+764
+Cost of goods sold
+Research and development expenses
+> over time revenue recognition (see "Revenue recognition" and note 12),
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes” and note 6),
+> valuation of inventory (see "Inventories" and note 11),
+P see page 135 ff. > recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+and page 152 ff.
+long-lived assets" and note 14),
+P see page 138,
+page 155 and
+page 166 ff.
+> recognition and valuation of provisions (see "Provisions" and notes 16 and 23),
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+140
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+Ο ΔΕ ΠΟ
+Notes to the Consolidated Financial Statements
+P see page 137
+and page 156 ff.
+P see page 164 f.
+P see page 142
+and page 175
+> valuation of defined benefit pension plans (see “Defined benefit pension plans" and note 18),
+> valuation of share-based compensation (see note 21) and
+> assessment of the high probability of the planned acquisition of Cypress and the resulting possibility of applying
+hedge accounting to the concluded transaction-dependent euro/US dollar foreign currency forward (Deal
+Contingent Forward) and the transaction-dependent euro/US dollar foreign currency option (Deal Contingent
+Option) (see notes 3 and 26).
+Consolidated Financial Statements
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations of
+Infineon.
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Costs of research activities are expensed as incurred. Costs for development activities, the results of which lead to a
+plan or design for the production of new or substantially improved products or process improvements, are capitalized
+if the development costs can be measured reliably, the product or process is technically and commercially feasible,
+future economic benefits are probable and Infineon intends, and has sufficient resources, to complete development
+and use or sell the asset. The costs capitalized include the cost of materials, direct labor and directly attributable
+general overhead expense that serves to prepare the asset for use. Such capitalized costs are presented as internally
+generated intangible assets within "Goodwill and other intangible assets" (see note 14). Development costs, which
+do not fulfill the criteria for capitalization, are expensed as incurred. Capitalized development costs are stated at
+cost less accumulated amortization and impairment charges. After the completion of the development phase and
+following the ramp-up of production, internally generated intangible assets are generally amortized as part of cost
+of goods sold over a period of three to five years.
+Grants
+Grants are recognized when it is reasonably assured that Infineon will comply with the conditions attached to the
+grant, and it is reasonably assured that the grant will be received. Investment-related grants are deducted from
+the purchase and production cost of the related asset and thereby reduce depreciation and amortization expense
+in future periods.
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
+Statement of Operations (see note 4).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+139
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+P see page 138 f.
+and page 151
+P see page 140
+and page 146 ff.
+P see page 134
+and page 151
+Current and deferred income taxes
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward and tax allowances. By contrast, no deferred tax is recognized
+on goodwill arising in connection with business combinations. Similarly, deferred taxes are not recognized on the
+initial recognition of an asset or liability in connection with a transaction that is not a business combination and
+which, at the time of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit. Deferred
+tax assets and liabilities are measured using applicable tax rates and laws that have been enacted by the end of
+the reporting period or are about to be enacted, and are to be applied when the related deferred tax asset is realized
+or the deferred tax liability is settled.
+Deferred tax assets in respect of deductible temporary differences, tax loss carry-forwards and tax allowances which
+exceed deferred tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is
+probable that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit.
+Infineon reviews deferred tax assets for impairment at every reporting date. The assessment requires management
+to make assumptions about future taxable profits as well as other positive and negative influencing factors.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in other comprehensive income.
+For uncertain tax positions a current tax liability is recorded or, in case of a tax loss carried forward or a tax allowance,
+the respective deferred tax asset is reduced accordingly. The assessment of uncertain tax positions is based on best
+estimates.
+Estimates and assumptions
+Cost of goods sold includes the manufacturing costs of products sold during the reporting period. In addition, cost
+of goods sold contains idle costs, inventory risks, the cost of warranty cases, as well as the amortization of capital-
+ized development costs. Recognized foreign currency effects as well as changes in the fair value of undesignated
+derivative financial instruments that are connected to the operating business are recognized in cost of goods sold.
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on 18 November 2019.
+2
+1.5
+3-5
+2-8
+Infineon did not hold any intangible assets with indefinite useful lives in either the 2019 or 2018 fiscal years.
+Recoverability of intangible assets and other long-lived assets
+Goodwill
+Goodwill acquired in a business combination is the excess of the consideration transferred for an interest in a busi-
+ness over the net fair value of acquired, separately identifiable, assets, liabilities and contingent liabilities as of the
+date of acquisition. Goodwill is reported in the line item “Goodwill and other intangible assets" in the Consolidated
+Statement of Financial Position and is allocated to the cash-generating units ("CGUS") or groups of CGUS that will
+benefit from the synergies generated by the business combination. A CGU represents the smallest identifiable
+group of assets that generates cash inflows from continuing activities and that are largely independent of other
+assets or group of assets.
+Acquired goodwill is only impaired if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as of 30 June and, additionally, whenever there are events or changes
+in circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the
+higher of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating
+segment to which the goodwill is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired
+accordingly. The reversal in subsequent periods of such impairments is not permitted.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+4-12
+ব
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+136
+Infineon determines the recoverable amount of a particular CGU to which goodwill has been allocated on the basis
+of its value in use. The value in use is measured by estimating the present value of future cash flows that will be
+generated by the continuing operations of the CGU discounted using an appropriate discount rate.
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year business plan approved in the fiscal year just ended.
+The plan is established bottom-up based on certain central assumptions applied consistently throughout Infineon.
+Average revenue growth rates used over the planning timeframe lie between 6.6 percent and 11.3 percent and do
+not exceed the historical long-term average growth rate for the sector in which the relevant segment operates.
+Investments to increase capacity for which no cash outflow has taken place are not taken into account. Cash flows
+for periods beyond the planning horizon are estimated using a terminal value.
+The discount rate for future cash flows is based on the after-tax weighted average cost of capital ("WACC") for the
+CGU in question. The Capital Asset Pricing Model ("CAPM") is used to calculate the cost of equity. The relevant pre-tax
+WACC used to discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax cash
+flows and the after-tax WACC using a typified tax rate for each reporting segment. The risk-free interest rate is derived
+using the Svensson method taking into account risk premiums, and the beta factor and debt ratio are derived
+from a group of companies comparable to the operating segment. In this way, the discount rate derived reflects the
+current market rate of return as well as the specific risks attached to the respective segment.
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the valuation
+parameters used:
+Book value of
+allocated goodwill
+▼ ▲ ↑ IIIO
+1-12
+3-10
+Years
+Notes to the Consolidated Financial Statements
+135
+Property, plant and equipment
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land,
+property rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on
+property, plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+Buildings
+Technical equipment and machinery
+Years
+10-25
+3-10
+Other plant and office equipment
+Intangible assets (excluding goodwill)
+1-10
+Intangible assets consist of capitalized development costs and purchased intangible assets; for example licenses,
+technologies and customer relationships. These assets have finite useful lives and are valued at their amortized
+acquisition or production costs with amortization recorded using the straight-line method over their expected
+economic life.
+Scheduled amortization of intangible assets is based on the following useful lives:
+Capitalized development costs
+Customer relationships
+Technologies
+Licenses and similar rights
+Other intangible assets
+Pre-tax WACC¹
+2
+909
+After-tax WACC¹
+€ in millions
+49
+12.1
+12.6
+9.2
+9.6
+1.5
+1.5
+Power Management
+100
+& Multimarket
+Total
+755
+708
+13.2
+14.4
+10.1
+10.9
+1.5
+Corporate
+Industrial Power Control
+1.5
+1.5
+in %
+in %
+in %
+Segment
+2019
+2018
+2019
+2018
+2019
+2018
+2019
+2018
+Automotive
+52
+5
+11.7
+12.2
+8.9
+9.3
+Terminal growth rate'
+3 Acquisitions
+Acquisition of 100 percent of the shares in Siltectra GmbH
+On 9 November 2018, Infineon acquired all of the shares in Siltectra GmbH ("Siltectra”), which is based in Dresden
+(Germany).
+191
+3,943
+3,905
+2,016
+2,022
+41,424
+39,096
+▼ A ↑ III O
+203
+Consolidated Financial Statements
+144
+P see page 139
+Grants
+Infineon has received grants from various governmental institutions under government business development
+programs including grants for the construction of manufacturing facilities, for research and development activities,
+and employee development. A grant received by Infineon for one of these funding programs in the 2019 fiscal year
+amounted to €32 million, and is conditional on the number of people employed at defined German locations through
+to the end of 2025 not being less than an agreed number, and that the grant may only be used in the European
+Economic Area. Infineon received investment grants as well as grants under the funding program. Recognition is
+in line with the principles described in note 2 under "Grants".
+Grants included directly in profit or loss in the Consolidated Financial Statements during the 2019 and 2018 fiscal
+years were as follows:
+P see page 166
+€ in millions
+Included in the Consolidated Statement of Operations in:
+Notes to the Consolidated Financial Statements
+1,921
+1,927
+2,076
+Europe
+therein: Germany
+Asia-Pacific (excluding Japan, Greater China)
+Greater China
+therein: China
+Japan
+Americas
+therein: USA
+Total
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2019
+2018
+18,365
+16,757
+11,896
+10,980
+16,826
+16,167
+2,087
+Cost of goods sold
+The average number of employees by geographic region was as follows for the 2019 and 2018 fiscal years:
+Research and development expenses
+Total
+Total
+2019
+2018
+26
+15
+26
+15
+2019
+Other financial expenses
+2018
+(60)
+(36)
+(8)
+(98)
+(68)
+P see page 161
+Other financial expenses in the 2019 fiscal year included €22 million from the acquisition or realization of financing-
+related derivatives to hedge stock market risks in connection with the capital increase carried out to finance the
+planned acquisition of Cypress (see note 19).
+P see page 174
+(62)
+Interest expenses
+€ in millions
+Financial expenses comprised the following in the 2019 and 2018 fiscal years:
+2019
+2018
+58
+37
+111
+86
+2
+2
+171
+125
+Of the grants totaling €171 million (2018: €125 million) included in the Consolidated Statement of Operations in the
+2019 fiscal year, €124 million (2018: €80 million) related to expenses from previous years.
+In the 2019 fiscal year, investment grants of €46 million (2018: €2 million) were deducted from acquisition and
+production costs for property, plant and equipment and intangible assets. In the 2019 fiscal year, Infineon received
+investment grants of €24 million (2018: €0 million).
+For compliance with the conditions attached to the grants received and potential repayment requirements in case
+of nonfulfillment, see note 22.
+Financial Income and expenses
+Financial income comprised the following in the 2019 and 2018 fiscal
+€ in millions
+Interest income
+Total
+years:
+Selling, general and administrative expenses
+2,347
+2,553
+399
+124
+Acquired cash and cash equivalents
+(1)
+Net cash outflow for the acquisition
+123
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+141
+VAL III O
+Paid in cash and cash equivalents during the twelve months ended 30 September 2019
+Consolidated Financial Statements
+142
+P see page 154 f.
+P see page 161
+Psee page 186
+P see page 175 ff.
+Goodwill of €95 million arose from the acquisition that is not deductible for tax purposes. This goodwill is mainly
+attributable to the expected cost benefits from the use and future development of the technology developed
+by Siltectra.
+Siltectra did not generate any revenue during the reporting period. From the first-time consolidation of Siltectra to
+30 September 2019 Siltectra contributed a loss of €2 million after tax to the Consolidated Statement of Comprehensive
+Income. The inclusion of Siltectra from 1 October 2018 would not have had a material effect on Infineon's earnings.
+Planned acquisition of Cypress Semiconductor Corporation
+On 3 June 2019 Infineon and Cypress Semiconductor Corporation ("Cypress"), which is based in San José (California,
+USA) signed an agreement under which Infineon will acquire Cypress for US$23.85 per share in cash, corresponding
+to an enterprise value of €9 billion.
+Notes to the Consolidated Financial Statements
+124
+Purchase price
+Goodwill
+Siltectra has developed a technology that allows silicon carbide (SiC) crystals to be very precisely and efficiently
+processed. As a result there is virtually no loss of material compared to the previous method. This technology can
+be used in two ways. Firstly by cutting the silicon carbide boule into wafers yielding significantly more wafers than
+the conventional approach. Secondly, the technology enables a very thin layer to be separated from the top of
+a wafer thereby enabling the remaining wafer to be reused. This 2-out-of-1 concept is very important as the future
+long-term supply of silicon carbide wafers could be a limiting factor, especially if the material is used to an ever-
+greater extent in the electro-mobility, photovoltaic, power supplies as well as drives sectors in the future. In the
+coming years Infineon will work on making the Siltectra technology useable in volume production.
+The consideration transferred (purchase price) for the acquired company amounted to €124 million. The purchase
+price allocation, based on the fair values of the assets and liabilities as of the acquisition date, resulted in the
+recognition of the technology as an asset, and goodwill.
+The following table shows the final allocation of the purchase price to assets and liabilities as of the acquisition date:
+€ in millions
+Other intangible assets (technology)
+Other assets
+Total assets
+Deferred tax liabilities
+Other liabilities
+35
+4
+39
+7
+3
+Total liabilities
+10
+Net assets acquired
+29
+95
+With the planned acquisition of Cypress, Infineon is strengthening its focus on structural growth drivers and serving
+an even broader range of applications. Cypress has a differentiated portfolio of microcontrollers as well as software
+and connectivity components that are complementary to Infineon's leading power semiconductors, sensors, and
+security solutions. The combination enables even more comprehensive advanced solutions for high-growth appli-
+cations such as electric drives, battery-powered devices, and power supplies. The combination of Infineon's security
+expertise and Cypress's connectivity know-how will accelerate entry into new loT applications in the industrial and
+consumer segments. In automotive semiconductors, the expanded portfolio of microcontrollers and NOR flash
+memory offers great potential, especially in view of their growing importance for driver assistance systems and new
+electronic architectures in vehicles.
+The Company's Supervisory Board and the Board of Directors of Cypress have approved the transaction. The share-
+holders of Cypress granted the required approval at the extraordinary general meeting on 27 August 2019. The
+acquisition is still subject to approval by the relevant regulatory bodies as well as the fulfillment of other customary
+conditions. The closing and execution of the transaction is expected by the end of the 2019 calendar year or early 2020.
+In order to finance the transaction, a small group of banks had initially committed to binding loans, which were
+subsequently syndicated within a larger banking consortium (see note 15). The final financing structure is designed
+to maintain the investment grade rating. Infineon therefore intends to finance around 30 percent of the transaction
+with equity. The remainder is to be financed by debt instruments and available cash. In view of the intended equity
+portion of the financing, a capital increase against cash contribution with net proceeds of approximately €1.5 billion
+was executed on 18 June 2019 (see note 19) and a hybrid bond with net proceeds of approximately €1.2 billion
+was executed on 1 October 2019 (see note 29). In order to hedge against most of the exchange rate risk associated
+with the purchase price obligation arising from the planned acquisition of Cypress, the Company concluded a
+transaction-dependent euro/US dollar foreign currency forward (Deal Contingent Forward) as well as a transaction-
+dependent euro/US dollar foreign currency option (Deal Contingent Option), each with a nominal value of €3.3 billion
+(see note 26).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Consolidated Financial Statements
+Cost of purchased services
+Total (continuing and discontinued operations)
+Personnel expenses comprised the following in the 2019 and 2018 fiscal years:
+€ in millions
+Wages and salaries
+Social insurance levies, pension plans and similar commitments
+Total (continuing and discontinued operations)
+2019
+2018
+1,816
+1,647
+1,653
+1,595
+3,469
+3,242
+2019
+2018
+2,154
+1,982
+Cost of raw materials, supplies and purchased goods
+Consolidated Financial Statements
+€ in millions
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+expenses for purchased services, materials and personnel.
+Notes to the Consolidated Financial Statements
+4 Notes to the Consolidated Statement of Operations
+143
+Revenue
+P see page 183
+and page 185
+Breakdowns of revenue by segments, product groups and geographic areas are disclosed in note 28.
+The aggregate amount of the transaction prices of the unsatisfied and partially unsatisfied performance obligations,
+arising from contracts with customers within the meaning of IFRS 15 with expected original durations of more than
+one year, was as follows as of 30 September 2019:
+Revenue expected in (€ in millions)
+As of 30 September 2019
+Total
+Less than
+1 year
+1 year
+and after
+113
+19
+94
+Infineon refrains from disclosing the remaining performance obligations arising from contracts with customers
+within the meaning of IFRS 15 with original expected durations of one year or less.
+Cost of materials and purchased services as well as personnel expense
+Expenses for purchased services and materials comprised the following in the 2019 and 2018 fiscal years:
+Further information on Infineon's financial income and expenses is contained in note 26.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+(156)
+Derivative financial instruments (see note 26)
+P see page 174 ff.
+€ in millions
+Other current assets at 30 September 2019 and 2018 consisted of the following:
+13 Other current assets
+In the 2019 fiscal year, contract assets increased by €2 million to €91 million (1 October 2018: €89 million).
+The increase results from an increase in contract assets relating to revenue recognized over time.
+12 Contract assets
+Inventory write-downs as of 30 September 2019 and 2018 amounted to €198 million and €138 million, respectively.
+As of 30 September 2019 and 2018, finished goods and merchandise contained an asset resulting from sales with
+a right of return of €7 million and €8 million, respectively.
+Cost of goods sold consisted mainly of inventory-related expenses in the 2019 and 2018 fiscal years.
+1,480
+1,701
+419
+403
+895
+1,093
+166
+205
+ber 2018
+VAT and other receivables from tax authorities
+Prepaid expenses
+ber 2019
+Grants receivables
+Total
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+VA III O
+3
+366
+770
+86
+204
+49
+88
+57
+92
+171
+171
+3
+215
+2018
+2019
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Other
+14 Property, plant and equipment, goodwill and other intangible assets
+30 Septem-
+Total
+(2)
+2
+2
+7
+7
+(2)
+9
+9
+9
+2018
+971
+888
+(9)
+(7)
+980
+895
+7
+5
+973
+VAL III O
+30 Septem-
+Consolidated Financial Statements
+Third party trade receivables, net of allowances for doubtful accounts, as of 30 September 2018 comprised
+the following:
+Finished goods and merchandise
+Work in progress
+Raw materials and supplies
+€ in millions
+Inventories as of 30 September 2019 and 2018 consisted of the following:
+11 Inventories
+With respect to trade receivables that were not overdue and not impaired as of 30 September 2018, there were
+no indications that customers, based on their past credit history and current creditworthiness assessments, were
+not able to meet their obligations.
+29
+932
+964
+>31 days
+Past due
+Past due
+0-30 days
+past due
+thereof not
+Carrying
+amount
+151
+Third party trade receivables, net of allowances
+as of 30 September 2018
+€ in millions
+Notes to the Consolidated Financial Statements
+890
+A summary of changes in property, plant and equipment as well as in goodwill and other intangible assets
+for the years ended 30 September 2019 and 2018 is as follows:
+Changes in property, plant and equipment and goodwill and other intangible assets 2019
+894
+125
+769
+909
+50
+95
+764
+Total goodwill and other intangible assets
+Other intangible assets
+Licenses and similar rights
+Technologies
+Customer relationships
+Capitalized development costs
+Goodwill acquired for consideration
+Goodwill and other intangible assets
+13,148
+25
+(191)
+1
+396
+1,275
+(1)
+406
+Changes in property, plant and equipment and goodwill and other intangible assets 2018
+1 For the year ended 30 September 2019, amounts shown under "Goodwill and other intangible assets" as "Acquisitions through business combinations"
+relate to assets acquired in connection with the acquisition of Siltectra.
+2,825
+79
+(2)
+130
+156
+2,462
+18
+18
+260
+3
+(1)
+31
+227
+338
+15
+35
+288
+11
+Cost
+12,038
+525
+(4)
+43
+1,593
+Land, land rights and buildings
+Property, plant and equipment
+nations¹
+combi-
+2019
+30 Sep-
+tember
+currency
+effects
+Foreign
+Reclassi-
+fication
+Disposals
+Acquisitions
+through
+business
+Additions
+1 October
+2018
+Cost
+152
+€ in millions
+23
+Total property, plant and equipment
+5
+Technical equipment and machinery
+1
+(329)
+(1)
+502
+352
+Payments on account and construction in progress
+1,311
+4
+24
+(68)
+103
+1,248
+Other plant and office equipment
+9,652
+15
+282
+(118)
+627
+8,845
+1,660
+1,593
+ber 2018
+30 Septem-
+ber 2019
+In the 2019 and 2018 fiscal years, adjustments to individual provisions arose as a result of recent developments in
+connection with the insolvency of Qimonda, as well as subsequent income from other discontinued operations.
+Infineon expects lengthy proceedings in respect of the alleged activation of a shell company and liability for impair-
+ment of capital. Provisions created for this purpose were adjusted accordingly in the 2019 fiscal year and partly
+reclassified from current to non-current (see note 16).
+The current risks and provisions relating to Qimonda's insolvency are described in detail in note 23 "Proceedings
+in relation to Qimonda".
+On 23 January 2009, Qimonda AG ("Qimonda"), a majority-owned company, filed an application at the Munich
+Local Court to commence insolvency proceedings. On 1 April 2009, the insolvency proceedings opened. Insolvency
+proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of these insolvency
+proceedings have already been completed. The impacts of these proceedings are reported as discontinued opera-
+tions in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency proceedings. To the extent that the
+events occurred after the commencement of insolvency proceedings, their results are reported as part of continuing
+operations.
+Qimonda - discontinued operations
+classified as held for sale
+7 Disposals and discontinued operations and assets
+P see page 155
+P see page 166 ff.
+Aside from tax effects from non-realized gains and lossed from hedges, income taxes recognized in other compre-
+hensive income mainly related to actuarial gains and losses arising from the pension commitments. Income taxes
+recognized directly in equity related to the capital increase and the first time adoption of IFRS 9 and IFRS 15.
+(148)
+(173)
+1
+(3)
+27
+18
+17
+6
+(193)
+(194)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2018
+A ↑ III O
+Psee page 172 f.
+Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares.
+8 Earnings per share
+As of 30 September 2019, land and buildings as well as technical equipment and machinery with a carrying amount
+of €12 million (2018: €11 million) were disclosed as assets classified as held for sale.
+Assets classified as held for sale
+(143)
+(19)
+7
+5
+(150)
+(24)
+2018
+2019
+149
+Others business' share of discontinued operations, net of income taxes
+Loss from discontinued operations, net of income taxes
+Qimonda's share of discontinued operations, net of income taxes
+€ in millions
+Loss from discontinued operations, net of income taxes
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Δ
+Basic and diluted earnings per share are calculated as follows for the fiscal years ended 30 September 2019 and 2018:
+2019
+Income taxes recognized in other comprehensive income
+589
+Other plant and office equipment
+1,227
+65
+Payments on account and construction in progress
+332
+355
+Total property, plant and equipment
+11,206
+1,090
+Goodwill and other intangible assets
+Goodwill acquired for consideration
+Capitalized development costs
+(3)
+(2)
+53
+(95)
+14
+266
+8,146
+Income taxes recognized directly in equity
+Income taxes
+Technical equipment and machinery
+1,501
+Income taxes from discontinued operations
+Income taxes from continuing operations
+€ in millions
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax consisted of the following:
+In connection with investments in subsidiaries there were taxable temporary differences of €610 million (2018:
+€120 million) for which no deferred taxes have been recognized because the timing of the reversal can be controlled
+and it is not probable that the temporary difference will reverse in the foreseeable future.
+1 October
+Additions
+2017
+Acquisitions
+through
+business
+Disposals
+Reclassi-
+fication
+Foreign
+currency
+effects
+30 Sep-
+tember
+2018
+combi-
+nations
+Property, plant and equipment
+Land, land rights and buildings
+81
+30 Septem-
+€ in millions (unless otherwise stated)
+thereof from continuing operations
+2019
+Information on Infineon's credit risk management is contained in note 27.
+P see page 180
+As of 30 September 2019 in accordance with IFRS 9
+Revaluation of allowances, net
+As of 1 October 2018 in accordance with IFRS 9
+Adjustment for first-time application of IFRS 9
+As of 30 September 2018 in accordance with IAS 39
+€ in millions
+The impairment losses on financial investments that are measured at amortized cost changed as follows during
+the 2019 fiscal year:
+1,811
+2,758
+563
+2,187
+1,248
+571
+ber 2018
+30 Septem-
+30 Septem-
+ber 2019
+10 Trade receivables
+150
+Trade receivables result from contracts with customers that are due within one year. As of 30 September 2019 and
+2018 they consisted of the following:
+Trade receivables, third parties
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Allowances for doubtful accounts at end of the fiscal year
+Current year's allowances, net of reversals
+Allowances for doubtful accounts at beginning of the fiscal year
+€ in millions
+Allowances in accordance with IAS 39 for the 2018 fiscal year:
+Information about Infineon's credit risk management is contained in note 27.
+P see page 181
+Balance at 30 September 2019 per IFRS 9
+Usage of loss allowances, net
+Net remeasurement of loss allowances
+Balance at 1 October 2018 per IFRS 9
+Balance at 30 September 2018 per IAS 39
+Adjustment on initial application of IFRS 9
+€ in millions
+Changes in the allowances for trade receivables in the 2019 fiscal year were as follows:
+Trade receivables, net
+Loss allowances
+Trade receivables, gross
+Trade receivables, related parties
+€ in millions
+Net income attributable to shareholders of Infineon Technologies AG - basic and diluted
+Financial investments
+Fixed-term bank deposits
+(19)
+1,218
+889
+1,075
+870
+2018
+2019
+1 The calculation of earnings per share is based on unrounded figures.
+Earnings per share (in euro) - basic and diluted
+Earnings per share (in euro) from discontinued operations, net of income taxes
+Earnings per share (in euro) from continuing operations
+Basic and diluted earnings per share¹ (in euro):
+Weighted-average number of shares outstanding - diluted
+- Effect of share-based compensation
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+- Adjustment for own shares
+- Ordinary share capital
+Weighted-average number of shares outstanding (in millions):
+thereof from discontinued operations
+(143)
+Investment funds
+1,169.4
+(6.0)
+1,163.4
+1.4
+€ in millions
+Financial investments as of 30 September 2019 and 2018 comprise the following (for further information see also
+notes 1, 2 and 26):
+page 131 ff. and
+page 171 ff.
+P see page 125 ff.,
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+VAL III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Financial investments comprise fixed-term deposits with banks and investment funds. Fixed-term deposits with
+banks are measured at amortized cost and are categorized as financial assets. Investment funds are measured at
+fair value through profit or loss and categorized as financial assets (for valuation see note 26).
+9 Financial investments
+0.95
+0.75
+(0.13)
+(0.02)
+1.08
+0.77
+1,134.1
+1,164.8
+3.6
+1,136.5
+(6.0)
+1,130.5
+8,845
+€ in millions
+22
+A reconciliation of income taxes from continuing operations for the fiscal years ended 30 September 2019 and 2018,
+using as a basis the German combined statutory income tax rate of 28 percent (2018: 28 percent) is as follows:
+€ in millions
+Expected income tax expense
+Tax rate differential
+Effects due to changes in tax rate
+Effects from the difference between local and functional currency
+Non-deductible expenses and tax-exempt income, net
+Prior year taxes
+Change in valuation allowance on deferred tax assets
+Change in available tax credits
+Other
+Actual income taxes
+2019
+2018
+(303)
+(350)
+57
+35
+27
+(11)
+4
+20
+(38)
+137
+(51)
+(53)
+117
+75
+64
+(1)
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax laws applicable in the relevant
+countries and is taxed based on country specific tax rates.
+The German combined statutory tax rate for Infineon Technologies AG was 28 percent for the 2019 and 2018
+fiscal year. This comprised a corporate income tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent and
+a trade tax rate of 12 percent.
+Included within deferred tax expense was €3 million (2018: income €37 million) from the creation and reversal of
+temporary differences.
+Current tax expense included tax income of €26 million (2018: €23 million income tax expense) relating to previous
+fiscal years.
+The result of the investments accounted for using the equity method is not part of the segment result (see note 28).
+For the 2019 and 2018 fiscal years, Infineon's proportion of selected items from the statement of comprehensive
+income of the joint ventures were aggregated as follows:
+€ in millions
+Income (loss) for the year, net of tax
+Other comprehensive income (loss) for the year, net of tax
+Total comprehensive income (loss) for the year, net of tax
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2019
+2018
+(6)
+(5)
+(2)
+(1)
+(8)
+(6)
+Consolidated Financial Statements
+(1)
+Notes to the Consolidated Financial Statements
+Income tax from continuing operations for the fiscal years ending 30 September 2019 and 2018 was as follows:
+€ in millions
+Current tax expense
+Deferred tax expense (income)
+Income tax
+146
+2019
+2018
+(135)
+(211)
+(59)
+18
+(194)
+(193)
+6 Income tax
+P see page 184
+(194)
+In the 2019 fiscal year, the profit or loss effect from the valuation allowances on deferred tax assets for tax loss carry-
+forwards amounted to €21 million (2018: €0 million), for tax credits amounted to €57 million (2018: €0 million), and
+from temporary differences €7 million (2018: €14 million). A write-up of deferred tax assets for tax loss carry-forwards
+of €8 million was recorded (2018: €81 million). For temporary differences the write-up amounted to €1 million in the
+2019 fiscal year (2018: €31 million), for tax credits the write-up was €23 million (2018: €19 million).
+143
+(39)
+137
+(13)
+Total deferred taxes
+1,011
+(432)
+998
+(359)
+Netting
+(412)
+412
+(350)
+350
+Total
+599
+(20)
+648
+(9)
+The reduction in deferred taxes of €60 million was recognized directly in equity/other comprehensive income
+in the amount of €2 million (2018: increase €27 million) relating to the following positions: intangibles assets
+of €11 million (2018: €0 million) and others of €16 million (2018: €0 million) as well as - with an opposite effect -
+provisions, pension plans and similar commitments of €15 million (2018: €25 million), loss carry-forwards of
+€10 million (2018: €0 million) and others of €0 million (2018: €2 million).
+In Germany, Infineon Technologies AG had corporate income tax loss carry-forwards of €1.5 billion and trade
+tax loss carry-forwards of €2.6 billion as of 30 September 2019 (30 September 2018: €1.6 billion and €2.6 billion,
+respectively).
+In other jurisdictions, corporate income tax loss carry-forwards amounted to €31 million (30 September 2018:
+€33 million) and local income tax loss carry-forwards amounted to €26 million (30 September 2018: €92 million).
+Additionally, there were unused tax credits and excess foreign tax credits of €413 million (30 September 2018:
+€360 million).
+Infineon assessed its deferred tax assets for the need for a valuation allowance. Based on the results of the
+assessment of deferred tax assets, considering all positive and negative factors and information relating to the
+foreseeable future, Infineon recognized deferred tax assets, after netting, of €599 million as of 30 September 2019
+(30 September 2018: €648 million).
+No deferred taxes were recorded for the following items (gross amounts):
+€ in millions
+Tax loss carry-forwards (corporate tax and local income tax)
+Tax credits
+Temporary differences
+2019
+136
+123
+Unused tax credits and excess foreign tax credits
+Other
+415
+The utilization of tax loss carry-forwards, tax credits and temporary differences for which deferred tax assets had
+not previously been recorded resulted in current tax income of €6 million in the 2019 fiscal year (2018: €2 million).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+▼ A ↑ III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Deferred tax assets and liabilities as of 30 September 2019 and 2018 comprised the following:
+€ in millions
+30 September 2019
+30 September 2018
+Deferred
+tax assets
+Deferred
+tax liabilities
+Deferred
+tax assets
+Deferred
+tax liabilities
+Intangible assets
+(193)
+Property, plant and equipment
+Tax loss carry-forwards
+39
+(206)
+38
+(183)
+152
+(17)
+142
+(23)
+161
+(170)
+130
+(140)
+393
+Provisions, pension plans and similar commitments
+2018
+3
+(8)
+(1,107)
+1,477
+1,776
+(7,069)
+2
+(6)
+144
+(540)
+(6,669)
+730
+771
+(822)
+4
+2
+3
+(60)
+(771)
+ber 2017
+30 Septem-
+ber 2018
+30 Septem-
+Carrying amount
+30 Septem-
+ber 2018
+Foreign
+currency
+effects
+Impairments
+Reclassi-
+fication
+Disposals
+Depreciation/amortization and impairment
+1,596
+(102)
+95
+4
+1
+(39)
+(109)
+213
+167
+(229)
+(1)
+(49)
+(179)
+396
+475
+(294)
+(11)
+14
+(50)
+1,805
+(247)
+764
+2,659
+3,038
+(9,000)
+3
+4
+242
+(702)
+(8,547)
+332
+352
+120
+139
+(1,109)
+759
+2
+(1,020)
+2
+3,038
+3,510
+(9,638)
+(18)
+184
+(804)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+145
+5 Investments accounted for using the equity method
+Investments accounted for using the equity method include shares in the joint ventures Infineon Technologies
+Bipolar GmbH & Co. KG and SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd.
+Infineon Technologies Bipolar GmbH & Co. KG
+Infineon Technologies Bipolar GmbH & Co. KG (“Bipolar") located in Warstein (Germany) develops and manufactures
+bipolar power semiconductors. Infineon accounts for the 60 percent interest in the joint venture by using the equity
+method as Infineon lacks controlling influence due to certain contractual participation rights of co-shareholder
+Siemens AG.
+The investment in Bipolar is allocated to the Industrial Power Control segment.
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd.
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd. ("SIAPM"), registered in Shanghai (China), offers
+power semiconductor solutions for electric vehicles in China. Volume production is running at Infineon's site in
+Wuxi (China). Infineon holds 49 percent of the company's shares.
+The investment in SIAPM is allocated to the Automotive segment.
+Summarized financial information
+As of 30 September 2019 and 2018, the carrying amount of joint ventures accounted for using the equity method
+was €29 million and €37 million, respectively. The pro rata results from investments accounted for using the equity
+method were as follows for the 2019 and 2018 fiscal years:
+€ in millions
+Gain (loss) from investments accounted for using the equity method
+Attributable to:
+Segment Automotive
+Segment Industrial Power Control
+2019
+2018
+(6)
+(5)
+(8)
+909
+764
+(294)
+(57)
+(141)
+(866)
+6
+5
+(13)
+(1)
+(12)
+47
+68
+(192)
+(1)
+1
+(12)
+(180)
+(15)
+137
+(188)
+(9)
+(28)
+(151)
+167
+130
+(276)
+(5)
+1
+(43)
+(229)
+475
+543
+(351)
+150
+(3)
+1,317
+290
+25
+Loans payable to banks:
+Unsecured loans, weighted average interest rate 1.15% (2018: 0.95%), due 2020-2023
+Secured term loans, weighted average interest rate 2.03% (2018: 2.03%), due 2020-2021
+Bond €500 million, coupon 1.50%, due 2022
+11
+19
+172
+1,357
+498
+497
+USPP notes US$935 million, weighted average interest rate 4.09%, due 2024 - 2028
+Long-term debt
+853
+806
+1,534
+1,507
+Total
+1,556
+1,532
+In addition, financing was completed for the planned acquisition of Cypress (see note 3) with various national and
+international banks. It is unsecured and non-subordinated and comprised four tranches as of 30 September 2019:
+> bridge facility of €5.1 billion with maturity of up to two years and nine months from the date of the loan
+commitment, and
+> three tranches, each amounting to US$1.1 billion, with maturities of three, four and five years.
+The tranches will be drawn upon completion of the acquisition. On 7 October 2019, the bridge facility was reduced
+to approximately €3.9 billion as a result of the issuance of a €1.2 billion hybrid bond (see note 29).
+22
+Infineon has established further independent financing arrangements in the form of short- and long-term credit
+facilities to finance its operating activities.
+25
+30 Septem-
+ber 2018
+As of 30 September 2019
+As of 30 September 2018
+P see page 186
+15 Debt
+Debt as of 30 September 2019 and 2018 consisted of the following:
+€ in millions
+Total
+Less than
+1 year
+1-5 years
+5 years
+and after
+97
+20
+62
+15
+99
+23
+61
+15
+Current maturities of long-term debt, weighted average interest rate: 1.60% (2018: 1.65%)
+Short-term debt and current maturities of long-term debt
+30 Septem-
+ber 2019
+22
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ƠI A
+ব
+Technologies
+396
+4
+392
+Customer relationships
+769
+(17)
+143
+643
+764
+15
+(28)
+18
+759
+12,038
+(2)
+(256)
+352
+(333)
+(2)
+1,248
+275
+8
+5
+288
+Depreciation/amortization and impairment
+Depreciation/
+2017 amortization
+1 October
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2,462
+26
+(60)
+26
+Payments due in (€ in millions)
+164
+Total goodwill and other intangible assets
+18
+18
+Other intangible assets
+227
+2
+(15)
+21
+219
+Licenses and similar rights
+2,306
+P see page 142
+185
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations mainly
+in cost of goods sold. Amortization of intangible assets is mainly presented in cost of goods sold or selling, general
+and administrative expenses. Impairments on property, plant and equipment and intangible assets are reported
+under other operating expenses.
+18
+1
+(6)
+(7)
+11
+27
+579
+639
+(9,000)
+352
+525
+139
+160
+(1,151)
+(3)
+67
+(106)
+(1,109)
+1,776
+2,050
+(7,602)
+(59)
+594
+639
+2018
+224
+547
+388
+There were no tax loss carry-forwards for which material deferred tax assets were not recognized and which
+were subject to expiration under statutory tax regulations. Of the tax credits for which no deferred tax assets were
+recognized, €2 million (2018: €39 million) will expire in the coming five years.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+147
+▼ A ↑ III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The change in the net amount of deferred tax assets and liabilities is broken down as follows:
+Property, plant and equipment of €186 million (30 September 2018: €200 million) served mainly as collateral for the
+existing financing arrangements of MoTo Objekt CAMPEON GmbH & Co. KG ("MoTo") as of 30 September 2019.
+Undiscounted future minimum lease payments to be received from operating lease arrangements for Infineon as
+lessor were as follows:
+€ in millions
+Deferred tax income (expense), recognized through income statement:
+From continued operations
+From discontinued operations
+Change of deferred taxes, recognized directly in equity:
+Adjustment on initial application of IFRS 9 and IFRS 15
+Deferred tax arising from business acquisitions
+Deferred taxes recognized in other comprehensive income
+Deferred taxes, net as of the end of the fiscal year
+148
+2019
+Deferred taxes, net as of the end of the previous fiscal year
+(12)
+(151)
+166
+(174)
+1 October
+Depreciation/
+(635)
+2018
+amortization
+Disposals
+Foreign
+currency
+effects
+30 Septem-
+ber 2019
+Carrying amount
+30 Septem-
+ber 2019
+30 Septem-
+ber 2018
+(822)
+(63)
+3
+(3)
+(885)
+775
+771
+(7,069)
+(20)
+15
+114
+(180)
+154
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+▼ A ↑ III O
+ব
+153
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+(1)
+1,596
+(866)
+(5)
+1,586
+29
+47
+(11)
+(11)
+(1)
+45
+6
+7
+(720)
+(159)
+(12)
+9
+85
+27
+27
+Unrealized gains (losses)
+resulting from hedge accounting'
+Cost of hedging¹
+Total
+P see page 163
+146
+155
+(4)
+(333)
+37
+(296)
+870
+(153)
+421
+The distribution for the 2018 fiscal year was made from additional paid-in capital in line with previous years, as
+there was a loss carry-forward as of 30 September 2018. From the 2020 fiscal year, the distribution will be made
+from retained earnings provided that, at the end of the fiscal year, it covers the distribution in the following year.
+Dividends
+For the 2018 fiscal year, a cash dividend of €0.27 per share (total amount: €305 million) was paid. For the 2017 fiscal
+year, a cash dividend of €0.25 per share (total amount: €283 million) was paid.
+With regard to the 2019 fiscal year, a dividend of €0.27 for each share entitled to a dividend shall be proposed to be
+paid from the €338 million of distributable profits of Infineon Technologies AG. This would result in an expected
+distribution of approximately €336 million. The payment of this dividend depends on the approval of the Annual
+General Meeting on 20 February 2020.
+1,075
+P see page 142
+Infineon's main capital management objective is to ensure financial flexibility on the basis of a solid capital structure.
+As with comparable companies in the semiconductor industry, it is of prime importance that sufficient cash funds
+are available to finance operating activities and planned investments throughout all phases of the business cycle.
+On the other hand, debt should only constitute a modest portion of the financing mix.
+Based on these principles and the clear intention to retain its investment grade rating, Infineon has derived conser-
+vative medium- and long-term key objectives for the capital management. These will remain in place over the course
+of the planned acquisition of Cypress (see note 3), and the financing required for this purpose. Infineon plans to
+maintain a liquidity level (gross cash position) of €1 billion plus additionally 10 to 20 percent of revenue. The lower
+range of this liquidity target should be maintained, even with the planned acquisition of Cypress. This was taken
+into account when devising the financing structure. Infineon's gross financial debt is capped at a maximum of twice
+the earnings before interest, taxes, depreciation and amortization (EBITDA). As a result of the planned acquisition
+of Cypress, Infineon will exceed its gross debt target, but only to an extent that is still compatible with maintaining
+the investment grade rating. Infineon's medium-term goal after the planned acquisition is a consistent reduction in
+debt to or below the maximum target level in line with its capital structure target.
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+Capital management as well as the corresponding targets and definitions are based on indicators determined on
+the basis of the consolidated IFRS financial statements. Gross cash is defined as the total of cash, cash equivalents
+and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before interest and
+taxes and EBITDA as EBIT plus scheduled depreciation and amortization.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+<
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+P see page 77
+P see page 161
+20 Capital management
+(1,404)
+Actuarial gains on pension plans and similar commitments net of tax of €16 million
+As of 30 September 2019
+Net income attributable to shareholders of Infineon Technologies AG
+(4)
+2
+(2)
+(42)
+(42)
+189
+198
+-
+23
+2
+25
+1 Of the unrealized gains (losses) resulting from hedging transactions in the 2019 fiscal year, €140 million of pre-tax gains are attributable to the Deal Contingent
+Forward and Deal Contingent Option hedging of the purchase price obligation concluded for the planned acquisition of Cypress. The cost of hedging is
+related to the Deal Contingent Forward and the Deal Contingent Option (see "Derivative financial instruments and hedging activities" in note 26).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VAI O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+163
+Retained earnings/accumulated deficit
+The following table shows a reconciliation of retained earnings (2018: accumulated deficit) as of 30 September 2019
+and 2018:
+€ in millions
+As of 1 October 2017
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial losses on pension plans and similar commitments net of tax of €25 million
+Effect from first adoption of IFRS 9 and IFRS 15
+As of 1 October 2018
+9
+As of 30 September 2018
+172
+(619)
+Adjustments to financial assumptions
+Adjustments to demographic assumptions
+(16)
+(3)
+(13)
+(3)
+(200)
+(1)
+Experience adjustments
+Actuarial gains (losses) for:
+(19)
+(4)
+(15)
+(22)
+(2)
+(26)
+Plan settlements
+Benefits paid by Infineon
+22
+7
+15
+25
+3
+(4)
+(4)
+(226)
+(3)
+3
+(6)
+(1)
+(1)
+བེཡྻུ༡༦
+19
+(5)
+(17)
+Interest cost
+(3)
+Change in defined benefit obligations taking
+Total
+Foreign
+plans
+plans
+plans
+plans
+Domestic
+Total
+Foreign
+Domestic
+2018
+2019
+157
+€ in millions
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets
+as of 30 September 2019 and 2018 is presented in the following table:
+into account future salary increases:
+Employee contributions
+Present value at beginning of year
+(167)
+(3)
+1
+1
+Past service income (cost)
+(30)
+(7)
+(23)
+(30)
+(4)
+(26)
+Current service cost
+(1,040)
+(164)
+(876)
+(1,154)
+(987)
+(6)
+(6)
+Reclassification of present value
+(6)
+(19)
+Benefits paid
+6
+6
+Employee contributions
+22
+8
+14
+23
+6
+17
+Contributions from Infineon
+(1)
+1
+(25)
+(2)
+(15)
+(22)
+Net pension liability
+602
+68
+534
+683
+83
+600
+2
+2
+Fair value of plan assets at end of year
+Foreign currency effects
+56
+56
+-
+Reclassification of fair value of plan assets¹
+(7)
+85
+63
+52
+(167)
+(987)
+(1,416)
+(197)
+(1,219)
+Present value of defined benefit obligation
+at end of year
+1
+1
+(3)
+(3)
+Foreign currency effects
+62
+(62)
+(62)
+of defined benefit obligations'
+(1,154)
+11
+Change in fair value of plan assets:
+534
+Actuarial gains (losses)
+110
+10
+3
+7
+12
+2
+10
+Expected return on plan assets
+537
+63
+63
+474
+602
+68
+Fair value of plan assets at beginning of year
+Foreign currency translation differences
+Obligations to employees
+Tax
+Plan asset allocation
+As of 30 September 2019 and 2018 the allocation of invested plan assets to the major asset categories was as follows:
+€ in millions
+Government bonds
+Corporate bonds
+Equity securities
+Cash and cash equivalents
+Reinsurance policies
+Property
+Other
+Total
+30 September 2019
+P see page 154
+Quoted
+in an active
+market
+30 September 2018
+Quoted
+in an active
+market
+Not quoted
+in an active
+market
+170
+12
+157
+141
+13
+172
+2
+209
+Not quoted
+in an active
+market
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities as
+well as real estate and reinsurance policies is targeted to maximize the total long-term return on assets for a given
+level of risk. Investment risk is monitored on an ongoing basis through periodic portfolio reviews, by coordination
+with investment managers and annual liability measurements. Investment policies and strategies are periodically
+reviewed as part of detailed studies of assets and liabilities by independent investment advisors and actuaries to
+ensure the objectives of the plans are met, taking into account any changes in benefit plan structure, market condi-
+tions or other material items. The aim is to optimize the risk-return profile of plan assets against the liabilities, using
+a diversified portfolio of investments within a defined risk budget and to thereby increase the funding ratio in the
+long term.
+Investment strategy
+159
+(572)
+(572)
+thereof: Infineon Technologies AG
+(552)
+(99)
+(453)
+(733)
+(114)
+a 50 basis points lower expected
+rate of pension increase
+1,200
+194
+1,394
+972
+163
+1,135
+Increase in life expectancy by one year
+1,250
+203
+1,453
+1,013
+171
+1,184
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ব
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+169
+12
+2
+7
+Foreign
+Total
+plans
+plans
+plans
+Current service cost
+Past service (cost) benefit
+(26)
+(4)
+(30)
+(23)
+(7)
+(30)
+1
+1
+(3)
+(3)
+Interest cost
+(17)
+(5)
+(22)
+(15)
+(4)
+(19)
+Expected return on plan assets
+10
+2
+Domestic
+(419)
+Total
+Domestic
+plans
+2
+35
+1
+34
+6
+30
+11
+7
+28
+25
+21
+19
+566
+117
+538
+64
+Government and corporate bonds are traded in liquid markets and the majority of them have an investment grade
+rating. The geographical allocation of the equity component of plan assets is predominantly based on the MSCI
+World Index. As a matter of policy Infineon's pension plans do not invest in shares or debt instruments of Infineon.
+The position "Other" in the table above comprises exchange-traded commodities (ETC) and other investment funds.
+The market value of the land and real estate leased to Group companies by the legally independent pension trust
+amounted to €30 million and €7 million respectively as of 30 September 2019 and 2018.
+The actual return on plan assets in the fiscal year ended 30 September 2019 was €74 million (30 September 2018:
+€7 million).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Amounts recognized in the Consolidated Statement of Operations and in the
+Consolidated Statement of Comprehensive Income
+The expenses and income of defined benefit plans for the 2019 and 2018 fiscal years comprised the following:
+€ in millions
+2019
+2018
+Foreign
+12
+(419)
+(70)
+909
+1,312
+185
+1,127
+a 50 basis points higher discount rate
+benefit pension plans with:
+Present value of defined
+Total
+Foreign
+plans
+Domestic
+plans
+Total
+Foreign
+plans
+156
+plans
+30 September 2018
+30 September 2019
+€ in millions
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case, they reflect the effect of
+changes in one actuarial assumption while all other assumptions remain constant.
+Sensitivity analysis
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2018-P tables
+were applied.
+Discount rates were derived from high-grade fixed interest corporate bonds from issuers carrying a very high credit
+rating.
+2.0
+1.8
+2.0
+1.8
+2.1
+Domestic
+1,065
+a 50 basis points lower discount rate
+1,322
+1,005
+1,444
+204
+1,240
+rate of pension increase
+a 50 basis points higher expected
+1,139
+163
+976
+1,399
+194
+1,205
+rate of salary increase
+a 50 basis points lower expected
+1,170
+172
+998
+1,436
+204
+1,232
+rate of salary increase
+a 50 basis points higher expected
+1,253
+180
+1,073
+1,536
+214
+2.0
+2.3
+2.0
+2.8
+14
+113
+100
+13
+Plans that are wholly unfunded
+Total
+Foreign
+plans
+Domestic
+plans
+Total
+Foreign
+plans
+Domestic
+plans
+30 September 2018
+30 September 2019
+€ in millions
+158
+The funding of the defined benefit obligations as of 30 September 2019 and 2018 was as follows:
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponded to the amounts
+reported in the Consolidated Statement of Financial Position as of 30 September 2019 and 2018.
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Δ
+A 4 III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+1 In the previous reporting period, net obligations from deferred compensation plans amounting to €6 million were reclassified from other liabilities.
+(56)
+(56)
+(70)
+87
+thereof: Infineon Technologies Austria AG
+101
+1,206
+1.7
+2.0
+0.6
+Foreign
+plans
+Domestic
+plans
+plans
+Foreign
+Domestic
+plans
+30 September 2018
+30 September 2019
+Projected future pension increases
+Rate of salary increase
+Discount rate at the end of the fiscal year
+in %
+The weighted-average assumptions used in calculating the actuarial values for the pension plans were as follows:
+Actuarial assumptions
+1,154
+167
+987
+1,416
+197
+1,219
+1,053
+80
+973
+1,303
+97
+Plans that are wholly or partly funded
+Total
+Net after tax
+7
+10
+7
+(5)
+(18)
+26
+P see page 148
+Provisions related to Qimonda (see notes 7 and 23)
+185
+26
+(4)
+(2)
+205
+and page 166 ff.
+42
+Other
+42
+(12)
+(4)
+61
+Total provisions
+636
+375
+(298)
+(47)
+666
+thereof short-term
+thereof long-term
+35
+Warranties
+374
+(23)
+41
+3
+35
+503
+40
+855
+98
+810
+126
+1,558
+264
+1,533
+297
+16 Provisions
+Short-term and long-term provisions as of 30 September 2019 consisted of the following:
+€ in millions
+1 October
+Addition
+Usage
+Reversal
+30 Septem-
+2018
+ber 2019
+1,177
+374
+300
+(277)
+590
+46
+383
+283
+Obligations to employees included, among others, costs of variable compensation, outstanding vacation and
+flextime, service anniversary awards, other personnel costs and social security costs.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+156
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+161
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+162
+P see page 165
+Supervisory Board, to exclude the subscription rights of the shareholders in certain cases. In accordance with
+German law, cash capital increases with subscription rights excluded pursuant to section 186, paragraph 3, sen-
+tence 4, of the AktG, are not permitted to exceed 10 percent of a company's share capital - either at the time of
+the authorization becoming effective or at the time of its exercise. The capital increase of 17/18 June 2019 utilized
+this framework. For share capital increases against contributions in kind or a combination of cash contributions
+and contributions in kind, the authorization further provides an upper limit of 20 percent of the share capital, again
+measured either at the time the authorization becomes effective or, if the value is lower, at the time of its exercise.
+> Section 4, paragraph 7, of the Articles of Association provides that the Management Board is authorized, with
+the approval of the Supervisory Board, to increase the share capital in the period up to 17 February 2021 - either
+once or in partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against
+contributions in cash for the purpose of increasing the issue to employees of the Company or its Group companies
+(Authorized Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares.
+The shares may be issued in such a manner that the contribution to be paid on such shares is covered by the
+portion of the profit for the year that the Management Board and Supervisory Board could transfer to retained
+earnings in accordance with section 58, paragraph 2, AktG.
+Conditional capital
+As of 30 September 2019, the Company's Articles of Associations provided for two conditional capitals amounting
+to up to €266,265,388:
+> Pursuant to section 4, paragraph 5, of the Articles of Association the share capital is conditionally increased by up
+to a nominal €6,265,388 through the issue of up to 3,132,694 new no par value registered shares in connection
+with the Company's “Infineon Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 21)
+(Conditional Capital 2010/1). During the 2019 fiscal year, a total of 914,314 new no par value shares with a propor-
+tionate amount of share capital of €2 per share were issued out of the Conditional Capital 2010/1 as a result of the
+exercise of share options in connection with the Stock Option Plan 2010. Conditional Capital 2010/1 decreased
+accordingly by €1,828,628 to €4,436,760. The corresponding change to the Articles of Association was submitted
+after the end of the reporting period and entered into the Commercial Register as requested.
+> Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is conditionally increased by up
+to €260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights of
+the holders of warrants or convertible bonds, which the Company may issue at any time prior to 21 February 2023
+(Conditional Capital 2018).
+Other reserves
+Changes in other reserves during the 2019 and 2018 fiscal years were as follows:
+P see page 175 ff.
+€ in millions
+2019
+2018
+Pretax
+Tax
+Net after tax
+Pretax
+The Group-defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+176
+The valuation date of both the German and foreign pension plans is 30 September.
+In Germany, Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. The statutory framework is provided by the Company
+Pension Act (in German: Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the Infineon
+pension plan new entrants receive a defined contribution benefit, which is funded by Infineon. Payments by the
+Infineon pension plan are generally made in twelve installments. For active employees who were entitled to benefits
+in form of an annuity before the Infineon Pension Plan came into force, this commitment was transferred into the
+Infineon Pension Plan and thereby the possibility of an annuity is guaranteed. Together with former employees,
+whose pension benefit obligations were not transferred into the Infineon Pension Plan, this
+group makes up the
+largest part of the obligation at this time. An appropriate provision is recorded for the German defined benefit
+pension plans, which are partly backed by plan assets. Individual agreements are in place for the members of the
+Management Board which are backed by plan assets (detailed in the chapter "Compensation report” in the Combined
+Management Report). The major portion of the plan assets is managed by a pension trust in the legal form of a
+registered association. This is composed of executives of Infineon Technologies AG and the investment strategy is
+defined by Infineon Technologies AG.
+Provisions for warranties mainly represented the estimated future cost of fulfilling contractual requirements
+associated with products sold.
+Other provisions comprised provisions for litigations (other than those relating to Qimonda), asset retirement
+obligations, onerous contracts and miscellaneous other liabilities.
+Of the total provisions as of 30 September 2019 and 2018, a cash outflow of €383 million and €590 million, respectively,
+was expected to occur within one year. For the long-term provisions a cash outflow was expected to occur after
+more than one year. Of these, €38 million and €31 million as of 30 September 2019 and 2018, respectively, were
+attributable to length-of-service related anniversary awards.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VA III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+17 Other Current Liabilities
+Other current liabilities as of 30 September 2019 and 2018 consisted of the following:
+€ in millions
+2019
+2018
+Payroll and similar obligations to employees
+132
+146
+P see page 171 ff.
+Other financial liabilities in connection with the planned acquisition of Cypress (see note 26)
+Other
+112
+162
+123
+Total
+406
+269
+18 Pension plans
+Psee page 103 ff.
+Defined benefit pension plans
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For Infineon, the significant
+benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to Infineon
+Technologies Austria AG.
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of
+service, others are dependent on average income over the service period. Foreign pension plans are managed by
+country-specific external pension funds or other pension schemes. The liabilities arising from foreign defined bene-
+fit pension plans are partly covered by plan assets. The management of existing foreign plan assets is performed
+by the respective pension scheme.
+3
+42
+44
+269
+459
+431
+Defined contribution plans
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or
+funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
+fixed contributions paid. Additionally, the Group makes contributions to government pension schemes. Expenses
+for defined contribution plans amounted to €203 million and €183 million in the fiscal years ended 30 Septem-
+ber 2019 and 2018, respectively.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+160
+▼ A ↑ III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+P see page 163
+19 Equity
+275
+Ordinary share capital
+Additional paid-in capital
+Additional paid-in capital reported in the Consolidated Statement of Financial Position increased by €1,008 million
+in the 2019 fiscal year. Based on gross issue proceeds of €1,545 million from the issue of 112,773,923 new shares
+on 18 June 2019 as described above, less €226 million not related to the ordinary share capital, and less €20 million
+directly attributable third party costs (net after tax) incurred in connection with the capital increase, an amount of
+€1,299 million was recognized as an increase in additional paid-in capital. As a result of employee exercise of stock
+options, additional paid-in capital increased by a further €4 million. The pro rata costs for share-based compensation
+led to an increase in additional paid-in capital of €10 million in the 2019 fiscal year. The dividend of €305 million
+paid in February 2019 (see "Retained earnings/accumulated deficit") reduced additional paid-in capital.
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €288 million
+in the 2018 fiscal year, of which €283 million related to the dividend paid in February 2018. The exercise of stock
+options by employees increased additional paid-in capital by €4 million. Pro rata expenses for share-based com-
+pensation led to an increase in additional paid-in capital of €11 million in the 2018 fiscal year. In addition, negative
+€20 million (net after tax) was recorded in additional paid-in capital in the 2018 fiscal year mainly in connection
+with the settlement of the 2015 fiscal year tranche of the Performance Share Plan. The Management Board and the
+Supervisory Board decided to settle the tranche in cash for the 2015 fiscal year. This amount has been reclassified
+to other current liabilities.
+Authorized share capital
+As of 30 September 2019, the Company's Articles of Associations provided for two authorized share capitals
+amounting to up to €480,452,154:
+> Section 4, paragraph 4, of the Articles of Association provides that the Management Board is authorized, with the
+approval of the Supervisory Board, to increase the share capital in the period until its expiry on 11 February 2020
+once or in partial amounts by a total of up to €450,452,154 through the issue of new no par value registered shares,
+carrying a dividend right from the beginning of the fiscal year in which they are issued, against contributions in
+cash or in kind (Authorized Capital 2015/1). As a result, the originally authorized capital 2015/1, of €676,000,000
+was reduced to €450,452,154, following the capital increase of €225,547,846 as decided by the Management Board
+and the Supervisory Board on 17 June 2019 and entered in the Commercial Register on 18 June 2019. Within
+the framework of the Authorized Capital 2015/1, the Management Board is authorized, with the approval of the
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VAI O
+164
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The fair value of the performance shares at the date of allocation was determined by an external expert using
+a recognized financial-mathematical method (Monte Carlo simulation model for the prediction of share price and
+index developments). The fair value of the instruments granted is determined taking into account future dividends
+as well as the payment cap.
+50 percent of the performance shares are performance-related, 50 percent are not dependent on performance.
+The performance-related shares are only finally granted if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) during the period between the date of the provisional allocation and the end of the holding
+period. If at the end of the holding period the requirements for an allocation of performance shares - either all or
+only those that are not performance related – are fulfilled, then the entitlement to the transfer of the corresponding
+number of (real) Infineon shares is acquired. The value of the performance shares ultimately assigned to members
+of the Management Board may not exceed 250 percent of the respective LTI grant amount; above this cap perfor-
+mance shares are forfeited.
+The ordinary share capital of Infineon Technologies AG increased during the 2019 fiscal year by €227,376,474. Firstly,
+the Management Board, with the approval of the Supervisory Board, decided on 17 June 2019 to increase its capital
+against cash contributions, taking advantage partly of the authorized capital. The capital increase was entered in
+the Commercial Register on 18 June 2019 and was thus effective. The share capital of the Company was thereby
+increased with the exclusion of the subscription rights of the existing shareholders by issuing 112,773,923 new
+registered no par value shares in return for cash consideration as part of an accelerated bookbuilding process. The
+shares were allocated at a placement price of €13.70 per share, and resulted in gross issue proceeds of €1,545 million.
+They are eligible to a share of profits from 1 October 2018 on. Secondly, 914,314 new shares were issued (2018: 794,905)
+as a result of the exercise of stock options by employees. As of 30 September 2019, the ordinary share capital stood at
+€2,501,368,142 divided into 1,250,684,071 no par value registered shares, each representing €2 of the Company's
+ordinary share capital and is fully paid in. Each share grants the holder one vote and an equal portion of the profits
+in the form of a dividend as resolved by the Annual General Meeting. As of 30 September 2019, of the above-men-
+tioned total number of issued shares, the Company held 6 million own shares (30 September 2018: 6 million). Own
+shares held by the Company as of the date of the Annual General Meeting carry no voting rights and are not entitled
+to dividend.
+102
+119
+28
+Curtailment gain recognized
+Pension cost
+3
+3
+(33)
+(3)
+(36)
+(34)
+(8)
+(42)
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees,
+otherwise they are recorded as research and development or selling, general and administrative expenses. Interest
+costs and expected return on plan assets were recorded net as part of financial expense.
+Actuarial losses before taxes of €167 million and €28 million for the fiscal year have 2019 and 2018 had been
+recognized outside profit and loss in other comprehensive income.
+As of 30 September 2019 and 2018, cumulative actuarial losses amounted to €567 million and €400 million,
+respectively. In addition, cumulative actuarial losses amounting to €2 million resulting from health care plans
+were also recognized directly in other comprehensive income.
+In the 2020 fiscal year, payments of €29 million are expected to be made to plan assets which relate to benefits
+paid directly to pension recipients by the Group companies.
+The weighted average duration of defined benefit plans was around 17 years as of 30 September 2019 and 2018,
+respectively.
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as of
+30 September 2019 and 2018:
+€ in millions
+Less than 1 year
+1-2 years
+2-5 years
+5-10 years
+Total
+30 Septem-
+ber 2019
+30 Septem-
+ber 2018
+32
+32
+33
+Under this plan, (virtual) performance shares are initially provisionally granted on 1 March (up to the 2017 fiscal
+year: on 1 October) of the fiscal year according to a pre-determined LTI grant amount in euro. With the granting
+of a virtual performance share, the participant in the plan acquires the right to receive (real) Infineon shares once
+a personal investment in Infineon shares – depending on position and LTI grant amount – has reached a four-year
+holding period.
+A new Long Term Incentive Plan (LTI) consisting of a “performance share" plan was developed for the Management
+Board and selected senior executives as a successor to the Stock Option Plan 2010.
+Performance share plan
+The Company makes use of the Stock Option Plan 2010, the Performance Share Plan from the 2014 fiscal year, and
+the Restricted Stock Unit Plan from the 2017 fiscal year, in order to provide share-based compensation.
+8,405
+204
+8,201
+301
+229
+72
+As of 30 September 2019 this included the credit lines to finance the planned acquisition of Cypress for the first time.
+Amounts of debt and interest maturing in the coming years were as follows:
+€ in millions
+Less than 1 year
+1-2 years
+2-3 years
+3-4 years
+5 years and after
+Total
+30 September 2019
+30 September 2018
+Debt
+Interest
+Debt
+Interest
+21
+46
+23
+46
+176
+43
+21
+204
+503
+204
+182
+21 Share-based compensation
+In the 2019 fiscal year, Infineon was significantly above the minimum requirements of all covenants. Should Infineon
+not comply with the covenants attached to the USPP notes, then all USPP notes outstanding as of 30 September 2019
+amounting to US$935 million (see note 15) could become immediately repayable. Failure to comply with the
+covenants of financial liabilities acquired in connection with the acquisition of MoTo would only result in additional
+annual fees, but not in a repayment obligation.
+The USPP notes totaling US$935 million issued in April 2016 contain a number of standard covenants, including
+change of control clauses as well as the compliance with a debt coverage ratio, which provides for a certain relation-
+ship between the size of debt (adjusted) and earnings (adjusted). The financial liabilities, which were taken over
+in connection with the acquisition of MoTo, also contain three standard covenants based on certain financial ratios
+(equity ratio, debt ratio and liquidity ratio).
+With gross debt of €1,556 million as of 30 September 2019 (30 September 2018: €1,532 million) and EBITDA of
+€2,064 million for the 2019 fiscal year (2018: €2,317 million), gross debt to EBITDA ratio was 0.8 as of 30 September
+2019 (30 September 2018: 0.7). Infineon continues to have sufficient financial flexibility to ensure that in addition
+to financing its planned investments it is also able to pay regular dividends (see note 19).
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The total lines of credit as of 30 September 2019 and 2018 are summarized in the following table:
+€ in millions
+Term
+Short-term
+Long-term
+Total
+155
+30 September 2019
+30 September 2018
+Aggregate
+facility
+Drawn
+Available
+Aggregate
+facility
+Drawn
+Available
+102
+22
+80
+97
+25
+72
+8,303
+8,121
+The gross cash position increased from €2,543 million as of 30 September 2018 to €3,779 million as of 30 September
+2019 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on revenue of
+€8,029 million, the ratio of gross cash to revenue was €1 billion plus 34.6 percent of revenue as of 30 September 2019,
+well above the target range, however it should be noted that this includes the capital increase with net proceeds
+of €1,524 million (see note 19) which was conducted in June 2019 to finance the planned acquisition of Cypress.
+In the previous year, the ratio of gross cash to revenue was €1 billion plus 20.3 percent of revenue.
+The currency effects included within net gains and losses amounted to negative €6 million (2018: negative €9 million).
+This net currency effect arose exclusively from recognized financial instruments.
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts, foreign currency options, and commodity swaps. The objective is to reduce the impact of
+exchange rate and commodity price fluctuations on future net cash flows. In the 2019 fiscal year derivatives were
+acquired in order to hedge equity market risks in connection with the June 2019 capital increase used to finance the
+planned acquisition of Cypress (see note 19). After the capital increase was completed, the derivatives were settled.
+Related persons
+Members of the Management Board active in the 2019 fiscal year received fixed non-performance-related compen-
+sation for their services of €3.7 million (2018: €3.7 million). In addition, the members of the Management Board
+received variable performance-related compensation for their services in the 2019 fiscal year of €2.3 million (2018:
+€3.6 million). This comprised a Short Term Incentive of €1.2 million (2018: €1.9 million), and a Mid Term Incentive of
+€1.1 million (2018: €1.7 million). Furthermore, the Management Board received a Long Term Incentive (LTI) which,
+since 2014, takes the form of performance shares. The expense resulting from the LTI amounted to €0.6 million (2018:
+€0.8 million). The compensation granted to active members of the Management Board amounted to €6.7 million
+in the 2019 fiscal year (2018: €8.1 million).
+With effect from the close of 31 March 2019, Mr. Dominik Asam resigned from his position as a member of the
+Management Board of Infineon Technologies AG in agreement with the Supervisory Board, and left the Company.
+In line with his service contract, Mr. Asam's entitlement to payments under the Short Term Incentive (STI) for the
+2019 fiscal year as well as from the ongoing Mid Term Incentive (MTI) and Long Term Incentive (LTI) tranches forfeited
+on his departure. A post-employment non-competition clause was agreed with Mr. Asam for a period of 18 months.
+As compensation for this non-competition obligation, Mr. Asam will receive a one-time compensation of €150,000,
+payable on 31 December 2019. The net income recorded as a result of Mr. Asam's departure (including the requisite
+adjustment to the pension obligation) amounted to approximately €1 million.
+The compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2019 fiscal year,
+including attendance fees, amounted to €2.1 million (2018: €2.0 million). Employee representatives in the Supervisory
+Board who are employed by Infineon also receive a salary for their activities as employees.
+Former members of the Management Board received payments (in particular pension payments) of €2.0 million in
+the 2019 fiscal year (2018: €1.5 million).
+As of 30 September 2019, pension obligations for former members of the Management Board amounted to
+€81.2 million (30 September 2018: €68.8 million).
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board
+as required by section 315e, paragraph 1, in connection with section 314, paragraph 1, no. 6a, sentences 5 to 8,
+P see page 103 ff. of the German Commercial Code, is provided in the Compensation report which is part of the Combined Manage-
+ment Report.
+In the 2019 and 2018 fiscal years there were no further significant transactions between Infineon and related persons
+which fall outside of the scope of the existing employment, service or appointment terms, or of the contractual
+arrangements for their remuneration.
+25 Supplemental cash flow information
+Cash and cash equivalents reported as of 30 September 2019 and 2018 totaling €1,021 million and €732 million,
+respectively, included €66 million and €100 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represented cash and cash equivalents of
+consolidated companies located in countries where the transfer of cash is legally restricted, for example China.
+The reconciliation below shows changes in those financial liabilities and hedging transactions for which payments
+received and made are shown under cash provided by/used in financing activities in the statement of cash flows.
+€ in millions
+Non-cash effective changes
+Starting
+balance
+Cash- Acquisitions
+effective
+changes
+Currency
+effects
+Other
+changes
+Ending
+47
+(23)
+1,533
+Total
+(1)
+1
+170
+1,556
+47
+(22)
+1,532
+Short-term and long-term debt
+Related party financial payables
+The 2019 fiscal year
+balance
+(1)
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Sales and service charges to and products and services received from related companies in the 2019 and 2018 fiscal
+years consisted of the following:
+1
+1
+10
+1
+10
+€ in millions
+1
+1
+32
+7
+5
+Joint Other related
+ventures companies
+Joint Other related
+ventures companies
+18
+(1)
+Sales and service charges
+2019
+As of 30 September 2019, sales and services relationships with related companies resulted in purchase commitments
+of €7 million (30 September 2018: €9 million).
+15
+81
+16
+83
+2
+Products and services received
+53
+40
+Other related
+companies
+Joint
+ventures
+Other related
+companies
+Joint
+ventures
+2018
+2
+1,556
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VA III O
+1,021
+Fair value
+Designated
+cash flow
+hedges
+cost
+At fair value At amortized
+through
+profit or loss
+Carrying
+amount
+73
+Categories of financial assets
+Other non-current assets
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Total
+Current assets:
+948
+2,758
+52
+55
+107
+558
+213
+343
+1,021
+2
+888
+888
+888
+2,758
+571
+2,187
+558
+30 September 2018
+Balance as of 30 September 2019
+€ in millions
+Short-term and long-term debt
+The 2018 fiscal year
+Ending
+balance
+Other
+changes
+Currency
+effects
+171
+Related party financial payables
+effective
+changes
+Cash-
+Starting
+balance
+Non-cash effective changes
+€ in millions
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Acquisitions
+Financial assets
+1,834
+1
+1
+Psee page 166 ff.
+Infineon adopted IFRS 9 from 1 October 2018 onwards. The first adoption effects from the revised classification and
+measurement of financial instruments as a result of the transition to IFRS 9 can be found in note 1. The following
+table presents the carrying amounts and the fair values of financial instruments by their respective classes and
+a breakdown by category of financial instruments as of 30 September 2019 according to IFRS 9, and as of 30 Sep-
+tember 2018 according to IAS 39:
+26 Additional disclosures on financial instruments
+P see page 125 ff.
+1,533
+2
+(321)
+16
+(321)
+1,835
+Total
+1,532
+2
+16
+1
+5,332
+30 September 2019
+Trade and other payables
+30 September 2020
+13.01
+61,874
+11.25
+30 September 2019
+10.56
+Fiscal year 2016: Management Board
+30 September 2019
+10.56
+1,078,852
+57,764
+7.26
+7.07
+The tranche due in October 2019 for the 2016 fiscal year was settled with shares. As the planned performance target
+was not reached as of 30 September 2019, only 50 percent of the tranche was to be settled (non-performance
+shares). In October 2019, 568,308 Infineon shares were issued to eligible directors and employees from the holding
+of own shares.
+Stock Option Plan 2010
+There were 0.3 million and 1.2 million stock options with an average exercise price of €7.00 per option outstanding
+as of 30 September 2019 and 2018, respectively. Of these, 0.3 million and 1.2 million were exercisable as of 30 Sep-
+tember 2019 and 2018, respectively.
+Restricted Stock Unit Plan
+In the 2017 fiscal year, Infineon introduced the Restricted Stock Unit Plan (RSUP), addressing Infineon US-employees
+and based on local market conditions. Restricted stock units are measured at the respective fair value at their
+grant dates. As of 30 September 2019, restricted stock units of €0.5 million (30 September 2018: €0.4 million) with
+fair values between €18.32 and €21.28 depending on the tranche were outstanding.
+250
+and after
+5 years
+1-5 years
+Less than
+1 year
+Total
+Fiscal year 2017: Management Board
+Fiscal year 2016: Employees
+As of 30 September 2018
+Payments due in (€ in millions)
+Undiscounted future minimum lease payments arising from operating lease arrangements to be made by Infineon
+as lessee were the following:
+In addition to provisions and liabilities, there were other financial commitments which were not recognized in
+the Consolidated Statement of Financial Position, relating in particular to lease arrangements and unconditional
+purchase commitments. These are explained in more detail below.
+22 Other financial commitments
+The costs for share-based compensation amounted to €11 million in the 2019 fiscal year (2018: €13 million).
+Costs for share-based compensation
+As of 30 September 2019
+11.86
+886,634
+13.01
+777,560
+20.02
+28 February 2023
+Fiscal year 2019: Employees
+in €
+Fair value per
+performance share
+14.20
+shares outstanding as of
+30 September 2019
+Average share price
+of the nine months
+before grant in €
+End of the
+waiting period
+Tranche
+The following is an overview of the allocations made:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Number of performance
+54
+Fiscal year 2019: Management Board
+20.02
+30 September 2020
+Fiscal year 2017: Employees
+15.25
+41,896
+21.48
+28 February 2022
+28 February 2023
+Fiscal year 2018: Management Board
+678,898
+21.48
+28 February 2022
+Fiscal year 2018: Employees
+13.79
+44,954
+15.76
+121
+75
+258
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that
+a liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as export control and
+other compliance regulations. Claims could also be made against Infineon in connection with these matters in the
+event of breaches of law committed by individual employees or third parties.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However, future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condition,
+liquidity position and results of operations, particularly in the period in which reassessment is made.
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate, in particular, to products, services, patents, export control and environmental
+issues and other matters.
+Other
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so,
+and accordingly represent contingent liabilities that are not included in provisions. Should the alleged claims
+relating to the activation of a shell company and liability for impairment of capital prove to be valid, substantial
+financial obligations above the provisions already recorded could arise for Infineon, which could have a material
+adverse effect on its business and its financial condition, liquidity position and results of operations.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. In consideration of the interim report from the court-appointed expert,
+Infineon recorded provisions relating to Qimonda of €205 million in total as of 30 September 2019. This comprises
+mainly provisions for the still pending legal dispute over the alleged activation of a shell company and liability for
+impairment of capital including legal costs. As of 30 September 2018, provisions relating to Qimonda amounted to
+€185 million.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory business;
+as a result certain long-standing creditors have residual liability claims against Infineon. These claims can only be
+exercised by the insolvency administrator acting in the name of the creditors concerned. In the meantime, settlements
+have been concluded with most of the major liability creditors.
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Consolidated Financial Statements
+▼ A ↑ III O
+Infineon recognizes provisions and liabilities for such obligations and risks, which it assesses at the end of each
+reporting period, are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
+having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+167
+168
+Consolidated Financial Statements
+Financial receivables
+Trade and other receivables
+€ in millions
+Infineon purchases certain raw materials and services from and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+Related companies receivables and payables as of 30 September 2019 and 2018 consisted of the following:
+Related companies
+Infineon has transactions in the normal course of business with joint ventures and other related companies
+(collectively, "related companies"). The related companies are disclosed in note 30. Related persons are persons
+in key management positions in particular members of the Management and Supervisory Board (see note 30)
+and their close relatives (collectively "related persons").
+VAL III O
+24 Transactions with related companies and persons
+P see page 191 ff.
+<
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its business
+and financial condition, liquidity position and results of operations. Irrespective of the validity of the allegations
+and the success of the aforementioned claims and other matters described above, Infineon could incur significant
+costs in the defense of these matters.
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates are
+revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+169
+Notes to the Consolidated Financial Statements
+Psee page 187 ff.
+Financial payables
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who are
+supporting the respective parties with assessments and opinions.
+As part of an audit finding relating to the tax treatment of losses from the repurchase of convertible bonds in the
+2011 and 2012 fiscal years, as of 30 September 2019, there was a contingent liability of €55 million for withholding
+tax payables (30 September 2018: €55 million). Suspension of enforcement has been granted under the current
+appeal procedure. Infineon expects that there is sufficient likelihood of winning any potential appeal or legal action.
+Infineon, through certain sales and other agreements may, in the normal course of business, be obligated to
+indemnify its counterparties under certain conditions for warranties, patent infringement or other matters. The
+maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligations are contingent on events that may or may not occur in the
+future, and depend on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+In the course of its investing activities, Infineon also receives government grants related to the construction and
+financing of certain of its production facilities. Grants are also received for selected research and development proj-
+ects. Certain of these grants have been received contingent upon Infineon complying with certain project-related
+requirements, such as creating a specified number of jobs over a defined period of time. From today's perspective,
+Infineon expects to comply with these requirements. Nevertheless, should such requirements not be met, as of
+30 September 2019, a maximum of €163 million (30 September 2018: €145 million) of subsidies already received
+could be refundable.
+166
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+23 Legal risks
+VAI O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Contracts already entered into for commenced or planned investments in property, plant and equipment (purchase
+commitments) as of 30 September 2019 amounted to €660 million (30 September 2018: €557 million).
+Rental expenses under operating lease arrangements amounted to €68 million and €59 million in the 2019 and 2018
+fiscal years, respectively, and related mainly to minimum lease payments made.
+60
+130
+68
+165
+On 21 September 2018, in consultation with the parties, the independent expert appointed by the court presented an
+interim report on his preliminary assessment of the value of the contribution in kind. The Company is in principle
+prepared to conduct discussions about an out of court settlement of the legal dispute on the basis of the interim report.
+The parties are exchanging further written submissions. It is not clear at this stage if the legal dispute can be resolved
+with an out of court settlement, and, if this is not the case, when a first-instance court decision would be reached.
+Litigation and government inquiries
+In October 2008, the EU Commission initiated an investigation into the Company and other manufacturers of chips
+for smart cards for alleged violations of antitrust laws. In September 2014, the EU Commission imposed a fine of
+€83 million on Infineon. Infineon brought an action against the decision before the General Court of the European
+Union in November 2014. The Court dismissed Infineon's action and in February 2017 Infineon filed an appeal to
+the European Court of Justice against this decision. On 26 September 2018 the European Court of Justice referred
+the case back to the court of first instance in order to re-review the proportionality of the fine.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On 29 August 2013,
+the court appointed an independent expert to clarify the valuation issues raised by the insolvency administrator
+and to address technical matters.
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documentation
+for the capital increase by independent auditing companies, one of which had been engaged by Infineon and the
+other of which was acting in the capacity of a court-appointed auditor of contributions in kind and post-formation
+acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business area contri-
+buted had a value of several times the lowest issue price of the shares issued, while the court-appointed auditor of
+contributions in kind and post-formation acquisitions confirmed to the court that the lowest issue price of the shares
+issued was covered - as legally required - by the value of the contributions in kind. Additionally, in the course of
+its defense against the claims asserted by the insolvency administrator, Infineon has commissioned several expert
+opinions, all of which arrived at the same conclusion that the objections raised by the insolvency administrator
+against the valuation of the contribution in kind are not valid.
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on 14 February
+2012 the insolvency administrator also lodged a request for payment based on an alternative claim (in German:
+"Hilfsantrag"), as well as making other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in connection with the alleged
+activation of a shell company. On 15 June 2012, the insolvency administrator increased his request for the payment
+of 14 February 2012 on the grounds of activation of a shell company to at least approximately €3.35 billion plus
+interest. Furthermore, the insolvency administrator continues to base a substantial part of his alleged payment
+claims, as already asserted out of court against Infineon in August 2011 for an unspecified amount, on liability for
+impairment of capital (in German "Differenzhaftung"). This claim is based on the allegation that, from the very
+beginning, the carved-out memory products business had a negative billion euro value. The insolvency adminis-
+trator therefore asserts that Infineon is obliged to make good the difference between this negative value and the
+lowest issue price (in German: "geringster Ausgabebetrag") of the subscribed stock. Additionally, the insolvency
+administrator has asserted a claim for repayment of allegedly unjustly charged consultancy fees in an amount of
+€10 million in connection with the flotation of Qimonda.
+The insolvency administrator filed a request for declaratory judgment in an unspecified amount against Infineon
+Technologies AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies
+Investment B.V., at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to
+make good the deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of
+Qimonda began, i.e., to refund to Qimonda the difference between the latter's actual business assets when the
+insolvency proceedings began and its share capital (in German: “Unterbilanzhaftung”). The insolvency administra-
+tor contended that the commencement of operating activities by Qimonda amounted to what is considered in case
+law to be the activation of a shell company (in German: "Wirtschaftliche Neugründung"), and that this activation
+of a shell company was not disclosed in the correct manner. On 6 March 2012, with respect to another matter, the
+German Federal High Court issued a ruling on principle that any liability resulting from the activation of a shell
+company only depends on the situation at the date of the activation of a shell company and not, as asserted by the
+insolvency administrator, on the situation at the date on which insolvency proceedings are opened.
+Alleged activation of a shell company and liability for impairment of capital
+Notes to the Consolidated Financial Statements
+Smart card chips antitrust litigation
+Consolidated Financial Statements
+<
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products) were
+carved out from Infineon and transferred to Qimonda in the form of a contribution in kind with economic effect
+from 1 May 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings on
+23 January 2009. On 1 April 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
+given rise to various disputes between the insolvency administrator and Infineon.
+Proceedings in relation to Qimonda
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+In July 2019, a direct customer filed a lawsuit against Infineon Technologies UK Limited and several Renesas
+entities in London (United Kingdom) relating to the aforementioned EU antitrust case. The Company received
+service of claim in this regard in August 2019.
+Two class actions for damages of an unspecified amount in connection with the EU Commission investigative
+proceedings have been filed in Canada: The first action was filed in the state of British Columbia in July 2013, and
+the second in the state of Quebec in September 2014. The actions followed the press reports on the investigation
+and subsequent decision of the EU Commission. No dates have been set for court proceedings.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2,317
+Notes to the Consolidated Financial Statements
+213
+Other current liabilities
+Total
+3
+3
+563
+563
+3
+3
+3
+3
+40
+18
+22
+606
+581
+3
+22
+Deal Contingent Option
+Contingent Forward and
+Flow-Hedges) - Deal
+instruments (Cash-
+Designated hedge
+Equity investments
+Current liabilities:
+€ in millions
+Other current assets and liabilities contained derivative financial instruments, including cash flow hedges. Their
+fair value was determined by discounting future cash flows according to the discounted cash flow method. Where
+possible, valuation parameters observed on the reporting date in the relevant markets (such as currency rates or
+commodity prices) drawn from reliable external sources were used (level 2). Where fair values were estimated on the
+basis of non-observable input factors, they were assigned to level 3 of the fair value category. The determination of
+the fair values of the Deal Contingent Forward and Deal Contingent Option designated as cash flow hedges for the
+partial hedging of exchange rate risks arising from the purchase price obligation relating to the planned acquisition
+of Cypress (see note 3 and hereinafter "Derivative financial instruments and hedging activities”) were based on
+factors observable in markets such as forward prices, interest rate curves and volatility. In addition, the probability
+of occurrence of the planned acquisition was taken into account as a non-observable factor.
+Cash equivalents partly included investments in money market funds.
+P see page 142
+and page 175 f.
+5
+5
+5
+5
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (level 1). For equity investments where no market price
+from an active market is available, the fair value is determined by considering existing contractual arrangements
+based on externally observable dividend policy (level 3). The following table shows the reconciliation of financial
+instruments classified as level 3:
+Total
+Other non-current assets
+Non-current assets:
+5
+215
+2,187
+2,187
+73
+73
+210
+Level 3
+Level 1
+Fair value
+Fair value by category
+173
+Other current assets
+Financial investments
+Level 2
+Total
+Non-current assets:
+55
+Other current assets
+Financial investments
+Current assets:
+30 September 2018
+Total
+Other current liabilities
+Other non-current assets
+Current liabilities:
+5
+2,298
+2,530
+Total
+17
+38
+227
+Cash and cash equivalents
+30 Sep-
+tember
+2018
+1 Oktober
+2018
+therein impairment loss
+Financial assets measured at fair value through profit and loss
+Financial liabilities measured at amortized cost
+therein interest expenses
+Financial assets or liabilities measured at fair value through profit and loss - held for trading
+Total
+2019
+149
+26
+26
+2
+(26)
+(180)
+(52)
+(5)
+(62)
+Infineon does not net financial instruments. Infineon conducts derivative transactions according to the global
+netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and other
+comparable national framework agreements. Under the terms of these agreements, any netting arising from the
+occurrence of certain future events would have had no material effect on the balance sheet presentation of these
+financial instruments.
+The following table shows net gains and losses according to IAS 39 for the 2018 fiscal year:
+2,802
+Derivative financial instruments and hedging activities
+Interest income from financial instruments not measured at fair value through profit and loss in the 2018 fiscal year
+amounted to €15 million; interest expense from such financial instruments amounted to €50 million.
+(51)
+(99)
+(5)
+therein interest income
+(6)
+59
+Total
+Other financial liabilities
+Held for trading
+Loan and receivables
+Available-for-sale financial assets
+€ in millions
+2018
+Financial assets measured at amortized cost
+€ in millions
+The net gain or loss on financial instruments (including interest income and expense) within continuing operations
+in the Consolidated Statement of Operations amounted to the following:
+17
+30 Sep-
+tember
+2019
+Profit (loss)
+recognized
+in equity
+ment of
+operations
+dated state-
+Profit (loss)
+recognized
+in the
+consoli-
+112
+18
+22
+disposals)
+additions)
+Sales
+(including
+(including
+Acquisitions
+(4)
+Effects
+from
+IFRS 9
+98
+22
+In the 2019 and 2018 fiscal years, there were no reclassifications between the categories (levels) of fair values.
+A hypothetical change in the material non-observable valuation parameters at the balance sheet date of ± 10 percent
+would have resulted in a theoretical reduction in fair values of €25 million or an increase of €25 million.
+174
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+P❘ see page 161
+210
+▼ A ↑ III O
+227
+98
+(1)
+112
+18
+(4)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Current assets:
+(1)
+€ in millions
+64
+104
+Total
+3,731
+3
+603
+3,125
+3,731
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VAL III O
+P see page 125 ff.
+Psee page 142
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The first-time application of IFRS 9 had no effect on the classification and measurement of financial liabilities
+(see note 1).
+€ in millions
+Financial liabilities
+of long-term debt
+Short-term debt and current maturities
+Current liabilities:
+Balance as of 30 September 2018
+Total
+Other non-current liabilities
+40
+Long-term debt
+Other current liabilities'
+Trade payables
+of long-term debt
+Short-term debt and current maturities
+Current liabilities:
+Balance as of 30 September 2019
+Non-current liabilities:
+104
+Other non-current assets
+Non-current assets:
+Loans and
+receivables
+for sale
+Available
+At fair value
+through
+profit or loss
+Carrying
+amount
+Categories of financial assets
+Fair value
+Current assets:
+Financial assets
+€ in millions
+1 As of 30 September 2019, other non-current assets, which are measured at amortized cost, included €1 million (previous year: €4 million) from an
+agreement related to the residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG (see note 23), which are deposited
+in escrow in order to secure potential claims against Infineon.
+5,332
+30 September 2019
+107
+Balance as of 30 September 2018
+Trade payables
+Cash and cash equivalents
+Trade receivables
+113
+110
+971
+971
+1,248
+563
+Financial investments
+732
+3
+113
+971
+1,811
+732
+Other current assets
+732
+Other current liabilities
+1,811
+Long-term debt
+2
+39
+2,899
+1,507
+147
+3
+142
+1,507
+39
+2,894
+2
+1,181
+1,181
+1,181
+24
+25
+25
+147
+3,082
+1,519
+2,910
+The allocation to the levels as of 30 September 2019 and 2018 was as follows:
+Notes to the Consolidated Financial Statements
+Non-current liabilities:
+Consolidated Financial Statements
+▼ A ↑ III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+39
+> Level 3: valuation parameters for assets and liabilities, which are not based on observable market data.
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used
+in the determination of the fair value:
+The fair value of current and non-current financial liabilities that are measured at amortized cost is based either
+on quoted prices as of the reporting date (level 1) or is determined based on expected future cash flows discounted
+using a current market interest rate (level 3).
+For the IFRS 9 category "At amortized cost", and the assets measured at amortized cost categorized as "Loans and
+receivables" according to IAS 39, it is assumed that the fair values correspond to their carrying amounts. The same
+assumption applies to liabilities resulting from trade payables and other current liabilities categorized as "Other
+financial liabilities (amortized cost)".
+In the 2019 fiscal year, there were no reclassifications between the categories of financial instruments in accor-
+dance with IFRS 9.
+1 Other current liabilities included €112 million of other financial liabilities relating to the hedging of currency risk on the purchase price obligation arising
+from the proposed acquisition of Cypress (see note 3) and the corresponding option premium from Deal Contingent Option to be paid only in the event
+of the conclusion of the acquisition of Cypress and the associated exercise of the Deal Contingent Option (see below "Derivative financial instruments and
+hedging activities").
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+3,006
+3
+3,009
+hedging
+instruments
+liabilities
+financial
+amount
+Fair value
+Designated
+(amortized
+cost)
+Other
+Carrying
+Categories of
+financial liabilities
+Other non-current liabilities
+3
+172
+Total
+At fair value
+(cash flow
+hedges)
+through
+profit or loss
+1,089
+63
+1,608
+22
+1,534
+1,534
+301
+21
+298
+63
+3
+301
+1,089
+1,089
+22
+63
+€ in millions
+30 September 2018
+Profit or Loss
+Other
+Euro/US dollar¹
+30 September 2019
+Euro/US dollar¹
+(36)
+VA III O
+179
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+10
+(119)
+Equity
+(53)
+129
+The following table shows the effects on profit or loss for the 2019 and 2018 fiscal year and equity as of 30 Septem-
+ber 2019 and 2018 for continuing operations of a 10 percent shift in exchange rates. The assumed exchange rate
+changes relate only to financial instruments within the meaning of IFRS 7.
+plus 10%
+5
+(1)
+4
+In accordance with IFRS 7, interest rate risk is defined as the risk that the fair value or future cash flows of a financial
+instrument will fluctuate because of changes in interest rates.
+Interest rate risk
+(17)
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond issu-
+ances and debt financing. Due to the cyclical nature of its core business and the need to maintain high operational
+flexibility, Infineon holds a relatively high level of liquid financial assets that are invested in short-term fixed-interest
+instruments. These investments generally have a contract duration of between one and twelve months in order
+to achieve short-term interest rate returns. The risk to these assets of changing interest rates is not material in the
+current period of low or zero interest rates.
+1 The sensitivity calculation assumes a 10 percent strengthening of the euro against the US dollar (plus 10 percent) and a 10 percent weakening of the euro
+against the US dollar (minus 10 percent)
+Other
+(6)
+1
+(5)
+4
+1
+(1)
+712
+(395)
+(6)
+5
+712
+minus 10%
+plus 10%
+(395)
+(5)
+minus 10%
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+P see page 174
+Forward exchange contracts
+In order to hedge the majority of the foreign currency risks arising from the purchase price obligation of the planned
+acquisition of Cypress, Infineon entered in the 2019 financial year into a transaction-dependent euro/US dollar foreign
+currency forward transaction (Deal Contingent Forward) and a transaction-dependent euro/US dollar foreign currency
+option transaction (Deal Contingent Option), and accounted for them as cash flow hedges (see note 26).
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments.
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2019 and 2018 fiscal years.
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated in
+a foreign currency that does not correspond to the functional currency, and the foreign currency represents the
+relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not risks within the
+meaning of IFRS 7.
+Foreign exchange risk
+178
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 26.
+P see page 175 ff.
+A 4 III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial instruments,
+including those related to foreign exchange rates, interest rates and other price risks.
+Market risk
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest
+rate risk and price risk), credit risk, financing and liquidity risk. Infineon's financial risk management program seeks
+to minimize potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments
+to hedge certain risks to which it is exposed. Financial risk management is carried out by the central Finance &
+Treasury (FT) department in accordance with policies approved by the Chief Financial Officer. The FT department
+identifies, evaluates and hedges financial risks in close cooperation with the operating units. The FT department's
+policy contains principles for overall risk management as well as policies covering specific areas such as foreign
+exchange risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the
+investment of excess liquidity.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+27 Financial risk management
+Δ
+Net exposure
+Foreign exchange risk at Infineon arises predominantly from US dollar positions. The following table shows the
+net risk as of 30 September 2019 and 2018:
+Currency
+Financial position exposure
+30 September 2018
+10
+(57)
+Net exposure
+6,600
+Designated hedging instruments (cash flow hedges)
+(6,600)
+€ in millions
+Foreign currency exposure from planned transactions
+(124)
+Forward exchange contracts
+(114)
+67
+Financial position exposure
+30 September 2019
+Others
+US$
+124
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or loss
+and equity. Infineon prepares this using the iteration method.
+22
+Infineon did not hold any fixed-rate financial assets or liabilities that are measured at fair value through profit or
+loss. Furthermore, as in the previous fiscal year, Infineon did not hold any fixed-interest financial assets that were
+measured at fair value through equity.
+Basis for the
+determination of the
+value adjustment
+At amortized cost
+none
+none
+C to B+
+BB- to BB
+BB+ to BBB-
+BBB to BBB+
+225
+A- to AAA
+high risk
+above average risk
+(caution)
+above average risk
+low risk
+average risk
+External credit rating
+Risk class
+Total
+5
+individual
+others
+4
+356
+61
+101
+2020
+Total
+30 September 2019
+€ in millions
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+186
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before 30 September 2019. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+Financing and liquidity risk
+As of 30 September 2019, expected credit losses on trade receivables amounted to approximately €1 million
+for all risk classes. The individual allowances on trade receivables (not rated) amounted to €6 million in the 2019
+fiscal year (see note 10).
+P see page 150
+ƠI A
+890
+34
+6
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well as ensuring
+the availability of funding through adequate levels of committed credit facilities.
+Changes in market interest rates affect interest income and expenses from variable-interest financial instruments.
+A change in interest rates of 100 basis points would have increased or decreased net interest expense by €22 million
+in the 2019 fiscal year (30 September 2018: €0 million).
+3
+1
+Holding Quality 1
+Infineon rating
+30 September 2019
+€ in millions
+The following table provides information on the credit risk for cash and cash equivalents measured at amortized
+cost, as well as financial investments as of 30 September 2019:
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (S&P, Moody's or Fitch) and
+credit default swap premiums. Possible breaches of stipulated investment thresholds result in immediate notification
+and the requirement to reduce the risk. This methodology is also used to identify a significant increase in credit
+risk in the context of the recognition of expected credit losses within the meaning of IFRS 9 at the balance sheet date.
+Infineon applies the so-called general impairment model in accordance with IFRS 9 for cash and cash equivalents
+as well as financial investments. Since Infineon invests exclusively in high-quality financial assets from issuers with
+a rating of at least investment grade in order to minimize default risk, Infineon assumes that its financial assets
+carry low credit risk arising from the creditworthiness of its contract parties, so that any impairment loss recorded
+at first-time recognition is limited to the twelve-month expected credit losses. Infineon considers low credit risk to
+be an internal credit rating "Holding Quality 1". A change in the internal rating from "Holding Quality 1" to "Holding
+Quality 0" indicates a significant increase in credit risk. The impairment is calculated using a weighted-probability
+method. The impairment is calculated as a measure of the probability of default based on the exposure at the balance
+sheet date, the loss ratio for that exposure, and the credit default swap spread.
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, its financial investments
+and certain financing activities. Infineon's credit risk arises primarily from cash and cash equivalents, financial
+investments, trade receivables and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Credit risk
+Holding Quality 0
+Total
+180
+Consolidated Financial Statements
+P see page 150
+VAL III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures, Infineon concluded additional financial derivative
+contracts for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk
+arising from the fluctuation of commodity prices. A change in relevant market prices of 10 percent would have
+increased or decreased equity by €3 million in the 2019 fiscal year (30 September 2018: €3 million).
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have had no significant impact on the result of the 2019 and 2018 fiscal years.
+According to IFRS 7, other price risk is defined as the risk that the fair value or future cash flows of a financial
+instrument could fluctuate because of changes in market prices (other than those arising from interest rate risk
+or currency risk), irrespective of whether those changes are caused by factors specific to the individual financial
+instrument or its issuer, or by factors affecting all similar financial instruments traded in the market.
+Other price risk
+Notes to the Consolidated Financial Statements
+2
+At amortized cost
+Basis for the
+determination of the
+loss allowance
+Infineon rating
+30 September 2019
+€ in millions
+The following table provides information about the credit risk for trade receivables from third parties as of
+30 September 2019.
+Infineon assigns trade receivables to different risk classes based on external ratings, the analysis of customer balance
+sheet figures, default probabilities (credit default swaps), payment behavior and country risks. The simplified method
+is used to determine the expected losses from trade receivables. The expected losses over the entire term of the
+trade receivables are determined. The allowance is calculated for each customer using a weighted-probability
+method. In calculating the expected credit losses, for each customer Infineon takes into account a forward-looking
+probability of default provided by a credit rating agency. Individual allowances are recorded based on case-by-case
+facts or other risk indicators.
+Infineon manages the credit risk with respect to trade receivables through comprehensive credit evaluations for
+all major customers, the use of credit limits and monitoring procedures. New customers are evaluated for credit-
+worthiness in accordance with Infineon guidelines. Credit limits are also in place for individual customers and
+creditworthiness and credit limits are constantly monitored. A further measure taken to reduce credit risk is the
+use of reservation of title clauses. However, despite continuous monitoring, Infineon cannot fully exclude the
+possibility of a loss arising from the default of one of its contract parties.
+181
+Notes to the Consolidated Financial Statements
+External rating
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Infineon had spread its cash investments over more than ten banks as of 30 September 2019. As of 30 September
+2019, no financial institution was responsible for more than 12 percent (30 September 2018: 13 percent) of Infineon's
+cash investments. This gave rise to a maximum risk of €139 million (30 September 2018: €199 million) in the event
+of the default of a single financial institution assuming no deposit insurance scheme is in place. Infineon also held
+derivative financial instruments with a positive fair value of €215 million at 30 September 2019 (30 September 2018:
+€3 million).
+The twelve-month expected credit losses as of 30 September 2019 amounted to €0 million (see note 9). Lifetime
+expected credit losses on non-impaired financial assets were negligible in the 2019 fiscal year. Infineon also had
+no financial assets that were overdue or impaired as of 30 September 2019. There was no reclassification between
+the impairment stages in the 2019 fiscal year.
+1,519
+147
+BBB
+1,372
+A to BBB
+VAI O
+3
+Average strike price (US dollar/euro)
+104
+Therein cost of hedging reserve
+Therein hedge reserve
+Other reserves
+Other current assets
+30 September 2019
+€ in millions
+The following table shows the impact of the Deal Contingent Forward and the Deal Contingent Option on items in
+the Consolidated Statement of Financial Position (before taxes):
+176
+Other current liabilities
+Notes to the Consolidated Financial Statements
+▼ A ↑ III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+In order to hedge the majority of the foreign currency risks arising from the purchase price obligation of the planned
+acquisition of Cypress, a transaction-dependent euro/US dollar foreign currency forward (Deal Contingent Forward)
+and a transaction-dependent euro/US dollar foreign currency option (Deal Contingent Option), each with a nominal
+value of €3.3 billion, were concluded and were accounted for as cash flow hedges. At the inception of the hedging
+transaction, and on a continuing basis, Infineon verifies the existence of an economic relationship between the hedged
+item and the hedging instrument (Critical Term). For the above-mentioned hedging transactions, the hedge ratio
+was 1:1. As part of the hedging, only the spot component from the Deal Contingent Forward and the intrinsic value
+of the Deal Contingent Option were designated as hedging instruments. The forward elements of the Deal Contingent
+Forward and the fair value of the Deal Contingent Option, each containing a contingency component, are excluded
+from the hedging instrument designation and are separately accounted for and reported in equity in a reserve for
+costs of hedging. No ineffectiveness was recorded in the Consolidated Statement of Operations for the Deal Contingent
+Forward or the Deal Contingent Option in the 2019 fiscal year. The causes of ineffectiveness may be the impact of
+counterparty credit risk, or, for Infineon, the fair value of the foreign currency forward or option, which is not reflected
+in the change in the fair value of hedged cash flows due to changes in exchange rates. In addition, changes in the
+timing of the hedged transaction and the contingency component included in the hedging instruments may result
+in ineffectiveness. Upon completion of the acquisition of Cypress, the effective part of the hedging transaction will
+be taken into account when determining the goodwill resulting from the transaction.
+33
+1,304
+1,364
+30
+3,300
+1.1506
+1.1199
+Consolidated Financial Statements
+3,300
+Deal
+Contingent
+Forward
+Total
+The amounts related to positions designated as hedged items were as follows as of 30 September 2019 and 2018:
+As in the previous year, no hedge ineffectiveness was recorded in the Consolidated Statement of Operations for these
+hedging relationships. As in the previous year, no gains or losses were transferred from other reserves to profit or
+loss as a result of cash flow hedges for future raw material purchases being canceled following the decision that the
+occurrence of the hedged transaction had become unlikely.
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps,
+which are designated as cash flow hedges. The designated hedged items and the hedging instruments are subject
+to the same risk. The economic connection is proven by means of a regression analysis. As Infineon carries out
+highly effective hedging transactions, the Company assumes that as a rule, no significant ineffectiveness will arise.
+Infineon applies a hedging ratio of 1:1. Ineffectiveness may arise mainly from the impact of counterparty credit risk,
+or, for Infineon, from the fair value of swap transactions that is not reflected in the change in the fair value of
+hedged cash flows due to changes in commodity prices.
+Other current liability of €112 million related to the option premium to be paid only in the event of the completion of
+the planned acquisition of Cypress and the associated exercise of the Deal Contingent Option.
+112
+112
+(42)
+(77)
+Deal
+Contingent
+Option
+35
+84
+56
+98
+7
+91
+210
+119
+91
+140
+€ in millions
+short term
+Nominal value
+129
+(3)
+134
+value
+Fair value
+Nominal
+Fair value
+Nominal
+value
+150
+30 September 2018
+Forward exchange contracts purchased
+Total
+Forward exchange contracts sold
+€ in millions
+The nominal values and fair values of Infineon's derivative instruments as of 30 September 2019 and 2018 that were
+not designated as cash flow hedges were as follows:
+175
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+2021
+30 September 2019
+Average price (US dollar/ounce)
+2
+1
+Commodity swaps
+30 September 2018
+Average price (US dollar/ounce)
+Nominal value
+Commodity swaps
+Hedging of other risks
+Nominal value
+Deal Contingent Option
+239
+Average forward rate (US dollar/euro)
+Deal Contingent Forward/Deal Contingent Option
+Hedging of foreign currency risks
+30 September 2019
+€ in millions (except exchange rates and prices)
+As of 30 September 2019, Infineon held the following instruments, which were designated as cash flow hedges and
+were used to hedge against exchange rate and commodity price changes.
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. As in the previous year, in 2019 no foreign exchange derivatives used to hedge ongoing
+business were designated as cash flow hedges.
+1
+(1)
+Nominal value
+98
+30 September 2019
+Hedging of currency risks
+Deal Contingent Option
+Commodity swaps
+Other current liabilities:
+30 September 2018
+(42)
+146
+101
+213
+Total
+Total
+cost of
+goods sold
+3
+3
+Hedging of commodity risks
+(77)
+84
+7
+119
+Deal Contingent Option
+6
+35
+(3)
+(4)
+6
+98
+(3)
+(3)
+risks
+risks
+Total
+Hedging of
+commodity
+(3)
+Hedging of
+currency
+Change in fair value
+30 September 2018
+€ in millions
+The following table shows the reconciliation for the reserve for cash flow hedges (before taxes) by risk category:
+cost of
+goods sold
+(4)
+(3)
+(3)
+30 September 2019
+Deal Contingent Forward
+56
+91
+In the 2019 and 2018 fiscal years, no balances remained in other comprehensive income for which hedge accounting
+is no longer applied.
+(3)
+3
+(42)
+143
+3
+(3)
+35
+(77)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+84
+56
+(56)
+Cost of hedge reserve
+(before taxes)
+Hedging reserve
+(before taxes)
+Change in the value
+of the hedged item
+used to determine
+ineffectiveness
+Hedging of commodity price risks
+30 September 2018
+Hedging of commodity price risks
+Total
+(67)
+91
+ƠI A
+Notes to the Consolidated Financial Statements
+by the
+reclassifi-
+cation
+Line item
+in profit or
+loss affected
+to profit
+and loss
+reserve
+Amount
+reclassified
+from hedge
+nized in
+other com-
+prehensive
+income (loss)
+Hedging
+costs recog-
+income
+Consolidated Financial Statements
+Changes in
+fair value of
+the hedging
+instrument
+recognized in
+other com-
+prehensive
+Changes in
+Carrying
+amount
+Deal Contingent Forward
+Other current assets:
+Hedging of currency risks
+30 September 2019
+€ in millions
+The relevant amounts of the derivative financial instruments designated as hedging instruments as of 30 Septem-
+ber 2019 and 2018 were as follows:
+177
+fair value for
+the measure-
+ment of the
+ineffective-
+ness in the
+reporting
+period
+Due in the fiscal year
+Share-based compensation expense
+2023
+Corporate and Eliminations
+Total
+184
+2019
+2018
+404
+466
+251
+256
+585
+532
+77
+105
+4
+(4)
+(2)
+(2)
+1,319
+1,353
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+€ in millions
+Other Operating Segments
+Segment Result:
+Digital Security Solutions
+Industrial Power Control
+1,179
+1,134
+Other Operating
+Segments
+21
+21
+10
+Corporate and
+Eliminations
+Total
+8,029
+7,599
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+A 4 III O
+Δ
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+There were limited levels of trading relationships between the operating segments during the 2019 and 2018
+fiscal years. Costs are recharged in general without impact on profit or loss.
+€ in millions
+Segment Result:
+Automotive
+Power Management & Multimarket
+1,263
+2019
+1,319
+(6)
+(5)
+1,083
+1,411
+1 Since 1 October 2018 impairments/reversal of impairments on assets are generally shown in segment result (excluding impairments for Goodwill).
+The previous period's figures were not adjusted.
+2 Without gains and losses from the disposal of assets since 1 October 2018. The previous period's figures were not adjusted.
+In the 2019 fiscal year, €6 million of impairments of assets and assets classified as held for sale was allocated to the
+Automotive segment, in the 2018 fiscal year €10 million was allocated to the Power Management & Multimarket
+segment, €1 million to Other Operating Segments and negative €4 million was allocated to Corporate and Eliminations.
+Of the €114 million (2018: €118 million) "Acquisition-related depreciation/amortization and other expenses"
+incurred in the 2019 fiscal year, €56 million (2018: €67 million) was attributable to cost of goods sold, €2 million
+(2018: €2 million) to research and development expenses, €44 million (2018: €49 million) to selling, general and
+administrative expenses and €12 million (2018: €0 million) to other operating income/expenses.
+€ in millions
+Depreciation and amortization:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+2019
+2018
+458
+407
+159
+128
+191
+174
+Digital Security Solutions
+(68)
+2018
+(98)
+26
+1,353
+Plus/minus:
+Impairments (such as on goodwill), net of reversals'
+(7)
+(11)
+(13)
+Acquisition-related depreciation/amortization and other expenses
+(114)
+(118)
+Gains (losses) on sales of businesses, or interests in subsidiaries, net²
+(1)
+272
+Other income and expense, net
+(32)
+(18)
+Operating income
+1,161
+1,469
+Financial income
+Financial expenses
+Gain (loss) from investments accounted for using the equity method
+Income from continuing operations before income taxes
+15
+1,310
+5,192
+5,519
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+Industrial Power Control
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the
+conversion of electrical energy for small, medium and high-power applications. The products are used in appli-
+cations for generation, low loss transmission and efficient use of electrical energy.
+Power Management & Multimarket
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies, mobile devices, mobile phone network infrastructures, human-machine inter-
+action as well as applications with special demands on their robustness and reliability.
+Digital Security Solutions
+The Digital Security Solutions segment designs, develops, manufactures and markets semiconductor-based security
+solutions for networked devices, card-based applications, and government documents.
+Other Operating Segments
+Other Operating Segments comprise the remaining activities of businesses that have been disposed of, and other
+business activities. Since the sale of the Wireless mobile phone business, supplies to Intel Mobile Communications
+are included in this segment. Also included are, since the sale of the major part of Infineon's Radio Frequency
+Power Components business, supplies of LDMOS wafers and related components, as well as packaging and test
+services for Cree, Inc.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+182
+VA III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+183
+Corporate and Eliminations
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+Similarly, certain items are included in Corporate and Eliminations, which are not allocated to the other segments.
+These include certain corporate headquarters costs and selected topics, which are not allocated to the segments
+since they arise from corporate decisions and are not within the direct control of segment management.
+Furthermore, raw materials, supplies and work in progress of the common frontend production, and raw materials
+and supplies of the common backend production, are not under the control or responsibility of the operating
+segment management and are therefore allocated to corporate functions. Only work in progress of backend
+production and finished goods are allocated to the operating segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities
+to the individual segments
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to the segments.
+Automotive
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating targets
+and budgets for the segments.
+During the 2019 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Digital Security Solutions. Additionally,
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+Identification of segments
+544
+35
+924
+Derivative financial liabilities:
+Cash outflow
+136
+136
+Cash inflow¹
+Total
+(134)
+3,202
+(134)
+1,408
+72
+219
+544
+35
+924
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+Psee page 171 ff.
+Future cash flows from derivative financial instruments (see note 26) may differ from the amounts shown in the table,
+since exchange rates or relevant factors are subject to change.
+28 Segment reporting
+Infineon identifies reportable segments on the basis of the differences between the products and applications.
+Segment Result is defined as operating income (loss) excluding certain impairments (such as goodwill impairments),
+impact on earnings of restructuring measures and closures, share-based compensation expense, acquisition-related
+depreciation/amortization and other expenses, gains (losses) on sales of businesses, or interests in subsidiaries and
+other income (expense), including litigation costs.
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+Industrial Power Control
+1,418
+1,323
+1,418
+1,323
+Power Management &
+Multimarket
+2,445
+2,318
+1,883
+1,758
+562
+560
+Digital Security Solutions
+642
+664
+642
+664
+Subtotal
+8,008
+7,589
+574
+617
+599
+668
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+Segment information
+€ in millions
+Total
+2019
+Power
+Embedded Control
+2018
+2019
+2018
+46
+2019
+2018
+2019
+2018
+Revenue from contracts
+with customers:
+Automotive
+3,503
+3,284
+2,218
+2,111
+RF & Sensors
+46
+Other Operating Segments
+4
+554
+242
+1,459
+3,275
+2022
+Total
+(153)
+(153)
+Cash inflow'
+156
+156
+41
+Cash outflow
+598
+381
+41
+554
+242
+1,456
+3,272
+financial liabilities
+Non-derivative
+Beyond 2024
+2024
+Derivative financial liabilities:
+219
+72
+2022
+598
+30 September 2018
+Total
+2019
+2020
+2021
+381
+2023
+Beyond 2023
+Non-derivative
+3,200
+1,406
+financial liabilities
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+3
+Depreciation and amortization allocated to the segments
+858
+VAL III O
+Depreciation and amortization not allocated to the segments
+758
+103
+Total depreciation and amortization
+945
+861
+87
+12
+Strategy and Technology Committee
+The Supervisory Board's Strategy and Technology Committee convened three times during the fiscal year under
+report. The Management Board provided it with detailed information about non-organic growth opportunities
+through M&A activities and, in this context, also about the risks regarding the necessary approvals from the antitrust
+and other authorities. Information on the operations of individual segments, such as Power Management &
+Multimarket and Digital Security Solutions, was also provided in the form of in-depth presentations. A further topic
+of discussion was the reorganization of the Human Resources function across the Group, particularly in the context
+of changing requirements for employee training and vocational qualifications. Last but not least, the strategic
+assessment of the planned Cypress acquisition was a major topic of Committee deliberations.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VA III O
+5
+Corporate Governance
+Declaration of Compliance 2019
+In the Declaration of Compliance issued in November 2018, the Management Board and Supervisory Board declared
+a deviation from section 5.3.2, paragraph 3, sentence 3 DCGK according to which the Chairman of the Supervisory
+Board should not additionally chair the Audit Committee. The reason for this deviation was that the Chairman of
+the Investment, Finance and Audit Committee, Dr. Eckart Sünner, was also elected Chairman of the Supervisory
+Board at the meeting of the Supervisory Board on 22 February 2018. The deviation was ended with his resignation
+from the position as Chairman of the Supervisory Board at the Supervisory Board meeting held on 6 August 2019.
+The Declaration of Compliance was updated accordingly in August 2019.
+In the Declaration of Compliance dated November 2019, the Management Board and the Supervisory Board jointly
+declared that Infineon Technologies AG has complied with all the recommendations made by the DCGK in the
+version dated 7 February 2017 and will continue to do so in the future.
+The original versions of the Declarations of Compliance are available on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+The Committee's recommendation to the full Supervisory Board to propose to shareholders at the 2019 Annual
+General Meeting that KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, (“KPMG”) be elected as Company and
+Group auditor was based on a Declaration of Independence obtained from KPMG as well as an analysis of the
+non-audit services provided by KPMG. There were no indications of conflicts of interest, grounds for exclusion, or
+lack of independence in any other respect on the part of the auditor. The recommendation was also based on
+the committee's confirmation that its recommendation was free from undue influence by third parties and that it
+had not been subject to any restriction regarding the selection of auditors within the meaning of section 16, para-
+graph 6 of the EU Statutory Audit Regulation. The committee also considered the fee arrangements and issued
+contracts for the relevant audit engagements. In addition, supplementary areas for audit emphasis were defined.
+The most important single project arising for the Committee during the 2019 fiscal year was the financing of the
+planned acquisition of the US-based company Cypress, in particular determining matters relating to the required
+share capital increase and the supplementary hybrid bond. Based on a corresponding authorization granted by
+the full Supervisory Board, the Committee approved the share capital increase in two extraordinary meetings on
+17 June 2019 and the placement of the hybrid bond in another extraordinary meeting on 25 September 2019.
+The auditor attended the ordinary meetings of the Investment, Finance and Audit Committee and reported in detail
+on the audit activities performed.
+Report of the Supervisory Board to the Annual General Meeting
+Its activities centered on monitoring the financial reporting process, reviewing the half-year and quarterly financial
+statements, conducting the preliminary audit of the Separate Financial Statements, Consolidated Financial State-
+ments and Combined Management Report for both Infineon Technologies AG and Infineon, and discussing the audit
+reports with the auditor. In addition, the committee examined the financial and investment budget. Furthermore,
+it considered the effectiveness of the internal control, internal audit, risk management and compliance manage-
+ment systems. The Committee's members also received reports from the Compliance Officer on a regular basis as
+well as continuous updates on significant legal disputes.
+The Nomination Committee convened twice during the 2019 fiscal year, intensively deliberating on the topic of long-
+term succession planning for the Supervisory Board. In preparation for the upcoming election of six shareholder
+representatives at the 2020 Annual General Meeting, it discussed the re-election of Supervisory Board members
+and the suitability of new candidates. In its search for and assessment of candidates, the Committee took particular
+account of the competence profile and the catalog of objectives decided on by the Supervisory Board for its own
+composition, drawing on the support of a renowned external human resources consultant to reach its decisions.
+Investment, Finance and Audit Committee
+The extraordinary meetings dealt primarily with the departure of former CFO Dominik Asam and the succession
+procedures, including the proposal to appoint Dr. Schneider.
+The ordinary meeting focused on preparing the Supervisory Board's resolutions with respect to determining
+the level of the Management Board's variable compensation. The main aspects of this work were to determine
+the degree to which targets for the 2018 fiscal year were achieved and to set new targets for the 2019 fiscal year.
+The Executive Committee held one ordinary and two extraordinary meetings during the year under report. In
+addition, it made three resolutions on the basis of written communication.
+Executive Committee
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+VAL III O
+11
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Efficiency examination for Supervisory Board activities
+Nomination Committee
+The Investment, Finance and Audit Committee held four ordinary and three extraordinary meetings during the
+2019 fiscal year.
+The Supervisory Board examines the efficiency of its activities on an annual basis. The examination for the 2017 fiscal
+year was performed with the assistance of an external, independent consultant. In both the 2018 and 2019 fiscal
+years, the examination was based on a structured questionnaire. The examination provided a positive picture of
+the work of the Supervisory Board and its collaboration with the Management Board. No noteworthy shortcomings
+were identified.
+13
+The members of the Management Board and the Supervisory Board are required to disclose any conflicts of interest
+to the Supervisory Board without delay. No conflicts of interest were disclosed by members of either the Management
+Board or the Supervisory Board in the 2019 fiscal year.
+<
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Chairman of the Supervisory Board
+Dr. Wolfgang Eder
+Wallory hum
+On behalf of the Supervisory Board
+Neubiberg, November 2019
+The Supervisory Board wishes to thank the entire staff and the Board of Management of Infineon once again for
+their great commitment and outstanding achievements during the 2019 fiscal year.
+In conjunction with the presentation of the sustainability report, the Investment, Finance and Audit Committee
+and the full Supervisory Board also deliberated on the separate non-financial report of Infineon Technologies AG
+(Company and Group) from 30 September 2019, which was drawn up by the Management Board. KPMG performed
+a "limited assurance" review of these reports and issued an unqualified statement thereon. The documents were
+carefully examined by the Investment, Finance and Audit Committee at its meeting held on 11 November 2019,
+which was continued in a telephone conference on 18 November 2019, and by the Supervisory Board at its meeting
+on 22 November 2019. The Supervisory Board acknowledged and approved the separate non-financial report
+(Company and Group) drawn up by the Management Board.
+The Separate Financial Statements, the Consolidated Financial Statements, the Combined Management Report,
+the Management Board's proposal for the appropriation of unappropriated profit (all prepared by the Management
+Board) and KPMG's long-form audit reports were all made available to the Supervisory Board at the meeting held on
+22 November 2019. At this meeting, the Chairman of the Investment, Finance and Audit Committee reported in depth
+on the corresponding recommendations of the Committee. In addition, all material issues relevant to the financial
+statements and the audit, including key audit matters, were discussed in detail with the auditor and examined by
+the Supervisory Board. The examination also covered the proposal to pay a dividend of €0.27 per entitled share.
+The Supervisory Board concluded that it has no objections to the financial statements and the audits performed
+by the auditor. In its opinion, the Combined Management Report complies with legal requirements. Likewise,
+the Supervisory Board concurs with the assertions regarding Infineon's future development made therein. The
+Supervisory Board therefore concurred with the results of the audit and approved the Separate Financial State-
+ments of Infineon Technologies AG and the Consolidated Financial Statements of Infineon. The Separate Financial
+Statements were accordingly adopted. The Supervisory Board also approved the Management Board's proposal
+for the appropriation of unappropriated profit.
+At the meeting of the Investment, Finance and Audit Committee held on 11 November 2019 and continued in a
+telephone conference on 18 November 2019, intensive discussions were held with the auditor regarding the
+Separate Financial Statements, the Consolidated Financial Statements, the Combined Management Report, the
+proposed profit appropriation, and the auditor's findings. The committee deliberated at length on the key audit
+matters and on the related audit procedures performed by the auditor. The Investment, Finance and Audit
+Committee resolved to propose to the Supervisory Board that the financial statements drawn up and presented
+by the Management Board be approved and the proposed profit appropriation agreed to.
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements of the Group and reviewed the Interim Financial Statements of the Group since the 1999 fiscal year
+(short fiscal year from 1 April 1999 to 30 September 1999). Prof. Dr. Andrejewski signed the auditors' report for the
+first time for the 2019 fiscal year (1 October 2018 to 30 September 2019) and Mr. Pritzer for the first time for the
+2017 fiscal year (1 October 2016 to 30 September 2017).
+14
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+VAL III O
+The Mediation Committee did not need to convene during the 2019 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The Half-Year Financial Report was also reviewed by KPMG. No issues were identified that might indicate that the
+abridged Interim Group Financial Statements and Interim Group Management Report had not been prepared in
+accordance with the applicable provisions in all material respects.
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements as of 30 September 2019 as well as the Combined Management Report for Infineon Technologies AG
+and the Infineon Group, and issued unqualified audit opinions thereon.
+Separate and Consolidated Financial Statements
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
+The rules of procedure for the full Supervisory Board, the Investment, Finance and Audit Committee of the Super-
+visory Board and the Management Board are available on the Infineon website.
+Rules of procedure
+@www.infineon.com/declaration-on-corporate-governance
+Further information on corporate governance can be found in the Statement on Corporate Governance, which also
+contains the Corporate Governance Report.
+Prior to members of the Management Board assuming sideline activities, particularly supervisory board mandates
+outside the Company, the DCGK requires that permission be given by the Supervisory Board. No conflicts of interest
+were discernible in the mandates assumed.
+Examination of potential conflicts of interest
+Mediation Committee
+The committees are responsible for drawing up resolutions and preparing other important projects and topics that
+need to be dealt with by the full Supervisory Board. Certain decision-making powers have been delegated to the
+committees, to the extent permitted under German law. The chairpersons of each committee routinely report on
+committee meetings at the next relevant full Supervisory Board meeting.
+Committee work
+Helmut Gassel has been a member of the Manage-
+ment Board and Chief Marketing Officer of Infineon
+Technologies AG since 2016. He is responsible for
+Sales & Marketing, Regions, Strategy Development,
+Mergers & Acquisitions and Intellectual Property.
+Helmut Gassel was born on 13 March 1964 in Dortmund.
+He holds a Diploma in physics from the Ruhr-University
+in Bochum. He received his PhD in electrical engineering
+from the University of Duisburg. He joined Infineon
+(Siemens AG until 1999) in 1995.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VA III O
+Management Board and Supervisory Board
+The Management Board
+Jochen Hanebeck
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+Dr. Helmut Gassel
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+VAL III O
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+Report of the Supervisory Board
+to the Annual General Meeting
+Ladies and Gentlemen,
+Dr. Wolfgang Eder
+Dr. Helmut Gassel
+Chief Marketing Officer
+Reinhard Ploss was born on 8 December 1955 in
+Bamberg. He studied process engineering at the
+Technical University of Munich and received his
+doctorate in 1990. He began his career at Infineon
+in 1986 (Siemens AG until 1999).
+Reinhard Ploss has been a member of the Management
+Board of Infineon Technologies AG since 2007. He has
+been Chief Executive Officer since 1 October 2012,
+responsible for Segments, Group Strategy, Communi-
+cations & Government Relations, Human Resources
+(Labor Director), Legal, Research and Development.
+Chief Executive Officer
+Continuity and change, this duo characterizes our strategy and our business. We build on what we do well and
+constantly expand our capabilities. Thus in the short term, we want to hold up well in a still challenging market
+environment, while taking advantage of medium-term and long-term growth potentials. The economic situation
+remains tense, and the yet unresolved trade conflicts are a burden. Infineon clearly supports free global trade
+with low customs tariffs and minimal trade barriers. Accordingly, we hope the protectionist tendencies will not
+ultimately win out. Until then we will manage everything under our control in order to keep costs tight and to
+be able to react flexibly when the economic situation begins to recover. However, we expect such recovery for our
+markets not before the second half of the 2020 fiscal year. This expectation is baked into our outlook, hence we
+expect revenue growth of 5 percent plus/minus 2 percentage points. At the midpoint of this growth range, the
+Segment Result Margin should be around 16 percent. We are once again planning on investments of approximately
+€1.3 billion. Cypress is not yet included in either of these planned figures.
+Continuity and change can also describe the past year's personnel developments in the Supervisory and Manage-
+ment Boards. Dr. Eckart Sünner took over as temporary Chairman of the Supervisory Board after the 2018 Annual
+General Meeting. With his extensive experience, he has supported Infineon in this capacity with vigilance and
+expertise through approximately one and a half very eventful years and has played a particularly decisive role with
+regard to the Cypress transaction. Mr. Sünner will retire from the Board at the conclusion of the 2020 Annual
+General Meeting for reasons of age. Until then he will remain chairman of the Investment, Finance and Audit Com-
+mittee and will have been a member of the Infineon Supervisory Board for a total of 13 years. I would like to take
+this opportunity to express my personal gratitude for this always very close cooperation. The Supervisory Board
+elected Dr. Wolfgang Eder as its Chairman at its meeting of 6 August 2019. Dr. Eder's entrepreneurial experience and
+high-profile personality will help shape the future strategic course of the Company, and I look forward to continuing
+to work together with him. There was also a change in the Chief Financial Officer position. Dominik Asam left the
+Infineon Management Board as of 31 March 2019 and became Chief Financial Officer at Airbus SE on 1 April 2019.
+Dominik Asam worked at Infineon in a variety of roles and as a member of the Management Board since his return
+to Infineon in 2011. With his profound understanding of financial markets, he was able to make an essential contri-
+bution to ensuring Infineon's excellent financial position today. I wish Dominik all the best in his new assignment
+and all the best for his personal future! At the same time, I am very pleased to welcome Dr. Sven Schneider as again
+a seasoned financial expert, who joined the Management Board team as of 1 May 2019 from Linde AG. Sven Schneider
+passed his trial-by-fire at Infineon by skillfully mastering the financing of the planned Cypress acquisition. His
+expertise and personality will help us shape our future path successfully. I myself am also very pleased to continue
+to help chart this course as CEO in the future. I would like to personally thank the Supervisory Board for placing its
+confidence in me and extending my contract until 2022. I will continue to serve Infineon with full dedication.
+Infineon is developing more than just technology. We have given ourselves a goal and a purpose that will lead us on
+our way into the future, a journey we have successfully pursued for quite some time. We want to have a lasting impact
+on creating a more resource-efficient, more connected and more secure future. The next technology generation has
+to help make more from less in order to make it possible for the growing number of people in the world to live a
+better life in harmony with nature and thus in harmony with one another. One element is responsible accountability
+for our actions; developing leading technologies is another. Accepting this challenge and continuing to write our
+success story is only possible thanks to the enormous dedication, enthusiasm and expertise of our employees,
+whom I would like to thank personally and in the name of the entire Management Board. Together with our new
+colleagues from Cypress, we will continue to grow successfully.
+Suicenly
+Reitrad
+Dr. Reinhard Ploss
+Chief Executive Officer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+<
+O O O
+Chairman of the Supervisory Board
+Management Board and Supervisory Board
+The Management Board
+Jochen Hanebeck
+Chief Operations Officer
+Jochen Hanebeck has been a member of the
+Management Board and Chief Operations Officer
+of Infineon Technologies AG since 2016. He is
+responsible for Operations, including Manufacturing,
+Logistics, Quality, Customs and Purchasing.
+Jochen Hanebeck was born on 2 February 1968 in
+Dortmund. He received a degree in electrical enginee-
+ring from RWTH Aachen University. He has been with
+Infineon since 1994 (Siemens AG until 1999).
+Dr. Sven Schneider
+Chief Financial Officer
+Sven Schneider has been a member of the Manage-
+ment Board and Chief Financial Officer at Infineon
+Technologies AG since 2019. He is responsible for
+Accounting & Reporting, Financial Controlling,
+Financial Planning, Investor Relations, Tax, Treasury,
+Audit, Compliance, Export Control, Risk Management,
+Business Continuity and Information Technology.
+Sven Schneider was born on 21 March 1966 in Berlin.
+After completing a banking apprenticeship, he studied
+business administration (Diplom-Kaufmann) at the
+Universities of Regensburg, Nantes (France) and Trier.
+Subsequently, he received his doctorate in political
+science from the University of Trier. In 1995, he began his
+professional career at Linde AG in the finance depart-
+ment. From 2000 to 2019, he has held leading positions
+at Linde, most recently as Spokesman of the Executive
+Board, Chief Financial Officer and Labor Director.
+Dr. Reinhard Ploss
+The Management Board
+The 2019 fiscal year was undoubtedly a special one, in which Infineon
+embarked on the largest acquisition in its corporate history, thereby sending
+out a strong strategic signal. The planned takeover of the US-based Cypress
+Semiconductor Corporation not only broadens the company's range of core
+competencies, it simultaneously opens up additional growth potential. The
+Supervisory Board is fully committed to the transaction - despite the ongoing
+macroeconomic headwinds. Like the Management Board, it is of the opinion
+that Infineon's structural growth drivers remain compelling and will gather
+renewed momentum as the global economy recovers. For Infineon, therefore,
+the right course of action is to prepare for the next upturn by implementing
+a range of measures, including strategically challenging projects such as the
+Cypress takeover, and rigorously continue pursuing its goal of sustainable,
+profitable growth.
+The past fiscal year was also marked by important decisions affecting the
+composition of Infineon's executive bodies. Firstly, Dr. Reinhard Ploss will
+remain Chairman of the Management Board for a further three years. Sec-
+ondly, Infineon has gained an acclaimed Chief Financial Officer in the person
+of Dr. Sven Schneider. Last but not least, in my new role as Chairman of the Supervisory Board, I look forward with
+pleasure to the honor of working with my colleagues on the Supervisory Board and the Management Board and
+to helping write the next chapter in Infineon's success story. At the same time, on behalf of the entire Supervisory
+Board, I wish to take this opportunity to thank my predecessor, Dr. Eckart Sünner, for his circumspect and profes-
+sional chairmanship of the Supervisory Board throughout his tenure.
+Main activities of the Supervisory Board
+New Chief Financial Officer
+Towards the end of 2018, the former Chief Financial Officer, Mr. Dominik Asam, informed the Supervisory Board of
+his intention to take up a new position at Airbus SE, also in the function of CFO, with effect from 1 April 2019. The
+Supervisory Board complied with this request with great regret. Mr. Asam had held various positions at Infineon,
+including the role of CFO since 2011. He made a significant contribution to Infineon's success, particularly due
+to his financial market expertise. On behalf of the Supervisory Board, I would like to express my sincere thanks to
+Mr. Asam for his excellent work and wish him all the best in his new professional environment.
+Immediately after Mr. Asam informed the Supervisory Board of his plans, it initiated a structured process to find a
+successor, enlisting the services of a well-known external human resources consultant. During the selection process,
+both external candidates and internal applicants were assessed. Following a number of interviews and in-depth
+discussions within both the Executive Committee and the full Supervisory Board, the decision was taken to appoint
+Dr. Sven Schneider as Chief Financial Officer with effect from 1 May 2019. The initial mandate and service contract
+were agreed upon for a term of three years. Dr. Schneider was most recently Spokesman of the Executive Board,
+Chief Financial Officer and Labor Director at Linde AG. His work to date on the planned Cypress acquisition alone
+has already proved that his expertise and wealth of experience will make a significant contribution to Infineon's
+continued success.
+Continuity in the chairmanship of the Management Board
+During the year under report, the Supervisory Board decided that Dr. Ploss, the current Chairman of the Management
+Board, should continue to head up Infineon until the end of 2022. His mandate and service contract were due to
+expire on 30 September 2020. On behalf of the Supervisory Board, I wish to thank Dr. Ploss for the decisive role he
+has played in charting Infineon's successful course in his seven years as Chairman of the Management Board to date.
+Management Board compensation
+In accordance with section 4.2.2 of the German Corporate Governance Code (DCGK), the Supervisory Board regularly
+engages an external, independent compensation expert to review Infineon's Management Board compensation
+system and examine its compliance with applicable legislation as well as its overall appropriateness. The most
+recent system review was conducted in 2016. During the 2018 fiscal year, the Supervisory Board again engaged
+an external compensation expert to assess Infineon's system as well as the target annual incomes of the members
+of the Management Board. The expert concluded that the compensation system complies both with legal require-
+ments and with the recommendations contained in the DCGK. In particular, the expert concluded that the compen-
+sation of Infineon's Management Board is commensurate with market conditions and that the variable compensation
+component is oriented towards the sustainable growth of the company. In addition, the target annual incomes
+of the members of the Management Board were deemed appropriate in all material respects, notwithstanding
+the existence of some scope for maneuverability. The results of the compensation expert's review were discussed
+in detail at the Executive Committee meeting held on 25 October 2018 and by the full Supervisory Board on
+20 November 2018. The Supervisory Board concurs with the compensation expert's assessment.
+Management Board compensation and the related reporting requirements are currently the subject of various
+regulatory initiatives. For instance, a draft law, which is currently undergoing parliamentary scrutiny, relating to the
+implementation of the second Shareholder Rights Directive (ARUG II) is expected to come into force at the beginning
+of 2020. Furthermore, the Government Commission on the German Corporate Governance Code has adopted a new
+version of the DCGK, which is to take effect to coincide with ARUG II coming into force. The Supervisory Board has
+observed these developments very closely over a lengthy period and is already making detailed preparations for
+the expected changes. However, in the opinion of the Supervisory Board, a definitive analysis, above all of the need
+for action with regard to the existing Management Board compensation system, can only be performed once the
+new regulatory framework has been definitively established, i.e. ARUG II has come into force and the revised DCGK
+taken effect. The Supervisory Board therefore intends to make any changes to the Management Board compensa-
+tion system that may be necessary in the course of 2020 and to present a revised version to shareholders at the
+2021 Annual General Meeting.
+VA III O
+Management Board and Supervisory Board
+Personnel matters relating to the Management Board
+Report of the Supervisory Board to the Annual General Meeting
+For the third time, a tranche of performance shares became due for settlement at the beginning of October 2019. As
+the specified performance hurdle was not achieved, only 50 percent of the tranche allocated in 2015 was required
+to be fulfilled at the end of the four-year holding period. Unlike in the two preceding years, the tranche was not settled
+in cash but in the form of shares, as generally stipulated in the relevant service contracts.
+Details of Management Board compensation - in particular the amounts paid to individual members in the 2019 fiscal
+year - are available in the comprehensive Compensation report, which is contained in the Annual Report.
+Litigation
+The Supervisory Board was regularly provided with detailed information regarding major legal disputes during the
+2019 fiscal year, which were then thoroughly discussed with the Management Board. These included in particular
+the Company's appeal, brought before European courts, against an antitrust fine imposed by the EU Commission
+in 2014, subsequent proceedings relating to that appeal, and the dispute with the insolvency administrator of
+Qimonda AG pertaining to alleged residual liability claims.
+Composition of the Supervisory Board; committee work
+Composition of the Supervisory Board and change in its chairmanship
+At its meeting held on 6 August 2019, the Infineon Supervisory Board elected me to succeed Dr. Eckart Sünner as
+its new Chairman. Dr. Sünner succeeded Wolfgang Mayrhuber as Chairman in February 2018. At the most recent
+Annual General Meeting, Dr. Sünner announced his intention to step down as Chairman in summer 2019. He will
+continue to serve Infineon as a regular member of the Supervisory Board and as Chairman of the Investment,
+Finance and Audit Committee until the Annual General Meeting in 2020. On behalf of the Supervisory Board, I would
+like to thank Dr. Sünner for supporting Infineon so expertly and calmly with his wealth of experience throughout his
+exciting 18-month tenure. I personally look forward to taking on my new responsibilities as Chairman of the Super-
+visory Board in this dynamic, innovative company, which has great opportunities for the future.
+The mandates of the employee representatives on the Supervisory Board are due to expire at the end of the Annual
+General Meeting to be held in February 2020. The mandates of six of the eight shareholder representatives also
+expire at the same time. New employee representatives are due to be elected by the end of December 2019. The
+election of shareholder representatives will be an item on the agenda of the 2020 Annual General Meeting.
+Psee page 103 ff.
+Management Board and Supervisory Board
+Letter to shareholders
+10
+Report of the Supervisory Board to the Annual General Meeting
+During the 2019 fiscal year, the Supervisory Board again performed its duties with the greatest of diligence in accor-
+dance with the law, the Company's statutes and its own terms of reference. It both advised and supervised the
+Management Board, mainly on the basis of detailed written and oral reports presented by the Management Board
+at Supervisory Board and committee meetings covering matters such as current business performance, significant
+transactions, macroeconomic developments, the quarterly financial reports and corporate planning. The Manage-
+ment Board discussed and coordinated corporate strategy as well as key operational issues in collaboration with
+the Supervisory Board, which was always given ample opportunity to thoroughly examine any reports and proposed
+resolutions drawn up by the Management Board. On all occasions, the Supervisory Board was able to assure itself
+that the governance of Infineon's corporate affairs was lawful, compliant and appropriate.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+8
+ব
+▼ ▲ ↑ |||O
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+6
+10
+The Supervisory Board was provided with written quarterly reports on Infineon's business performance, key
+financial data, risks and opportunities, major areas of litigation and other topics of importance. Between quarterly
+reports, the Management Board kept the Supervisory Board well informed of current developments in the form
+of monthly reports.
+In the 2019 fiscal year, the full Supervisory Board met nine times (five ordinary and four extraordinary meetings;
+the latter included three in the form of telephone conferences). One resolution was also passed on the basis of written
+communication. Measured in relation to these various proceedings for all members of the Supervisory Board, total
+attendance averaged nearly 92 percent. Dr. Herbert Diess was excused from five meetings, Prof. Renate Köcher from
+three meetings, Dr. Manfred Puffer from two meetings and Ms. Géraldine Picaud and Mr. Hans-Ulrich Holdenried
+from one meeting each. Attendance at Supervisory Board committees was just over 97 percent; Mr. Holdenried
+excused himself from one meeting of the Strategy and Technology Committee and one meeting of the Executive
+Committee. Details of the individual attendance record of Supervisory Board members is provided in the Statement
+on Corporate Governance.
+@www.infineon.com/declaration-on-corporate-governance
+Corporate strategy and the planned acquisition and financing of Cypress
+The Infineon Supervisory Board is committed to closely supporting the Management Board in the conception and
+implementation of corporate strategy. Not least due to this commitment, in addition to the periodic meetings of the
+Strategy and Technology Committee, a meeting of the full Supervisory Board was again held during the fiscal year
+under report for the exclusive purpose of dealing with strategic issues. At that meeting we discussed the general
+development of the semiconductor industry, markets and trends, external conditions, risks, the competitive environ-
+ment and potential acquisition options as well as Infineon's strategic market positioning and orientation.
+The dominant topic and the reason for several of the extraordinary meetings held during the past fiscal year was
+the planned acquisition of Cypress and the financing thereof. After comprehensively discussing and weighing up
+the opportunities and risks, the Supervisory Board concluded that the planned acquisition represents a significant
+strategic step in Infineon's further development and one that is fully in line with its long-term strategy. The product
+portfolios and competencies of Infineon and Cypress complement each other ideally and create an even stronger,
+broader base for the Group in key markets of the future. Taking all the circumstances into account, in view of the
+opportunities for Infineon arising from the planned acquisition, both the Supervisory Board and the Management
+Board consider the purchase price appropriate. The Management Board also presented the Supervisory Board with a
+solid and prudently calculated financing concept, including a range of refinancing options, all geared to maintaining
+Infineon's investment grade rating. Against this backdrop, at its meeting on 2 June 2019, the Supervisory Board
+approved the planned acquisition and the key financing parameters.
+The financing concept also includes a substantial equity component. Without delay, the Management Board pro-
+ceeded to implement two specific financing measures. Firstly, a share capital increase out of Authorized Capital
+was executed in June 2019, involving the issuance of around 113 million new shares generating net proceeds of
+approximately €1.5 billion. Secondly, in October 2019 Infineon issued a hybrid bond for €1.2 billion, significantly
+increasing the equity capital component of the financing without further diluting the shareholders' interests by
+issuing additional shares. Given the magnitude of the financing requirements, the Supervisory Board deemed it
+of utmost importance to be closely involved in these measures. For that reason, it decided not merely to leave the
+monitoring and approval of decisions regarding the share capital increase and the hybrid bond to the Investment,
+Finance and Audit Committee, which is responsible for these specific issues, but also to address them in two
+extraordinary meetings of the full Supervisory Board, which were held on 12 June and 11 September 2019, respec-
+tively. The Investment, Finance and Audit Committee then granted its definitive approval of the share capital
+increase and the hybrid bond.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+▼ ▲ ▲ III O
+Management Board and Supervisory Board
+Throughout the fiscal year under report, the Chairman of the Supervisory Board (initially Dr. Eckart Sünner and
+then myself, following the change of chairmanship in August 2019) remained in regular contact with both the Chair-
+man and the other members of the Management Board. The Chairman of the Management Board always informed
+us without delay of any events of significance for Infineon, both during and between regular Supervisory Board
+meetings.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Management Board and Supervisory Board
+1,129
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (Chairman)
+Member of the Supervisory Board
+> Infineon Technologies Austria AG, Villach, Austria
+Former members
+of the Management Board
+Dominik Asam
+People's Republic of China
+Chief Financial Officer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+187
+<
+▼ ▲ ▲ III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The Supervisory Board
+(until 31 March 2019)
+The members of the Supervisory Board during the 2019 fiscal year, the Supervisory Board position held by them,
+their occupation, and their membership of other supervisory and governing bodies are as follows:
+> Infineon Technologies China Co., Ltd., Shanghai,
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+(Chairman)
+Chief Operations Officer
+Membership of Supervisory Boards and governing bodies
+of domestic and foreign companies (as of 30 September 2019)
+Member of the Supervisory Board
+> Infineon Technologies Austria AG, Villach, Austria
+(Chairman)
+> Futurium gGmbH, Berlin, Germany
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA
+> Infineon Technologies Japan K.K., Tokyo, Japan
+(Chairman)
+Member of the Supervisory Board
+Member of the Board of Directors
+> Infineon Technologies China Co., Ltd., Shanghai,
+People's Republic of China (since 1 May 2019)
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+(since 1 July 2019)
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (since 27 September 2019)
+Member of the Board of Directors
+> Infineon Technologies Austria AG, Villach, Austria
+(since 17 May 2019)
+Name
+Dr. Wolfgang Eder
+Chairman
+Johann Dechant'
+Deputy Chairman
+> Bragi GmbH, Munich, Germany
+(until 19 December 2018)
+Member of the Supervisory Board
+> Audi AG, Ingolstadt, Germany
+(Chairman)
+> FC Bayern München AG, Munich, Germany
+> Porsche Austria GmbH, Salzburg, Austria
+> Porsche Holding GmbH, Salzburg, Austria
+> Porsche Retail GmbH, Salzburg, Austria
+> SEAT S.A., Martorell, Spain
+> OSRAM GmbH, Munich, Germany
+(Chairman)
+(Chairman)
+Member of the Board of Directors
+> FAW-Volkswagen Automotive Co., Ltd., Changchun,
+People's Republic of China
+> Shanghai Volkswagen Automotive Co., Ltd., Anting,
+People's Republic of China
+Member of the Advisory Board
+> Porsche Holding GmbH, Salzburg, Austria
+> Skoda Auto a.s., Mladá Boleslav, Czech Republic
+(Chairman)
+> OSRAM Licht AG, Munich, Germany
+(Chairman)
+Member of the Supervisory Board
+Member of the Administrative Board
+> SBK Siemens-Betriebskrankenkasse,
+Heidenheim/Brenz, Germany
+Peter Bauer
+Dr. Herbert Diess
+Annette Engelfried¹
+Peter Gruber¹
+Representative of
+Senior Management
+Gerhard Hobbach¹
+Hans-Ulrich Holdenried
+Prof. Dr. Renate Köcher
+Position
+Member of various supervisory
+and governing bodies
+Vice-Chairman of the Joint
+Works Council and Chairman
+of the Works Council Regensburg,
+Infineon Technologies AG
+Independent Management
+Consultant, Coach
+Chairman of the
+Management Board,
+Volkswagen AG,
+Wolfsburg, Germany
+Labor union secretary
+IG Metall district management,
+Berlin-Brandenburg-Saxony
+Chief Financial Officer Operations,
+Infineon Technologies AG
+Member of the Infineon
+Works Council, Campeon,
+Infineon Technologies AG
+Independent Management
+Consultant
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach, Germany
+Membership of Supervisory Boards and governing bodies
+of domestic and foreign companies (as of 30 September 2019)
+Member of the Supervisory Board
+> voestalpine AG, Linz, Austria
+Chief Marketing Officer
+Member of the Supervisory Board
+Chief Financial Officer
+Dr. Helmut Gassel
+2,020
+1,074
+969
+51
+42
+50
+41
+2,413
+2
+1,183
+1,175
+1,175
+1,167
+5,378
+4,704
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+2
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2,516
+ber 2018
+P see page 143
+The allocation of revenues from external customers to geographic areas is based on the customers' locations.
+The average number of employees by geographic region is provided in note 4.
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2019 and 2018 fiscal year.
+€ in millions
+Non-current assets:
+Europe
+therein: Germany
+3,068
+Asia-Pacific (excluding Japan, Greater China)
+therein: China
+Japan
+Americas
+therein: USA
+Total
+30 Septem-
+ber 2019
+30 Septem-
+Greater China
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+P see page 103 ff.
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged €19 thousand in the 2019 fiscal year for tax consulting
+services in connection with the assessment of individual items.
+Fees for other services
+Fees of €0.1 million were charged by KPMG to the Company in the 2019 fiscal year for other services. These mainly
+included quality assurance during the implementation of regulatory requirements, and IT system changes.
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Management compensation in the 2019 fiscal year
+Management Board
+The members of the Management Board during the 2019 fiscal year were as follows:
+Name
+Position
+Dr. Reinhard Ploss
+Chief Executive Officer,
+Labor Director
+Dr. Sven Schneider
+(since 1 May 2019)
+As required by section 314, paragraph 1, no. 6a, sentences 5 to 8, German Commercial Code, the remuneration
+of the individual members of the Management Board and the Supervisory Board is disclosed in the Compensation
+report which is part of the Combined Management Report.
+▼ A ↑ III O
+186
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+P see page 154 f.
+29 Significant events after the end of the reporting period
+Issuance of a perpetual dual-tranche hybrid bond
+Infineon Technologies AG issued a perpetual hybrid bond on 1 October 2019. The hybrid was issued as a dual-tranche
+bond with a principal amount of €600 million per tranche. Tranche 1 has a non-call period from issuance of 5.5 years
+and a fixed coupon of 2.875 percent until the first reset date. Tranche 2 has a non-call period of 8.5 years and a fixed
+coupon of 3.625 percent until the first reset date. The issue price for tranche 1 was 99.385 percent of the principal
+amount, the issue price for tranche 2 was 99.121 percent of the principal amount, each with the deduction of a
+discount. The proceeds were received by Infineon on 1 October 2019. The proceeds from the issuance will be used
+to re-finance the planned Cypress acquisition and for general corporate purposes. On 7 October 2019, the bridge
+financing for the planned Cypress acquisition (see note 15) was reduced to €3.9 billion.
+The hybrid bond is an equity instrument under IAS 32. It has a perpetual maturity and is a non-call bond. The bond
+can only be cancelled by Infineon, subject to certain conditions. The investors have no cancellation rights and
+cannot trigger a premature repayment liability for Infineon. Distributions are at Infineon's sole discretion.
+The discounts and transaction costs as well as deferred taxes will be deducted directly from equity in the 2020
+fiscal year.
+Acquisition of 15 percent of the shares in pmdtechnologies ag
+In November 2019, Infineon acquired 15 percent of the shares in pmdtechnologies ag ("pmd"), which is based
+in Siegen (Germany). The shares are included in the consolidated financial statements using the equity method.
+The purchase price was €44 million.
+pmd is a leader in the development of CMOS-based 3D time-of-flight ("ToF") image sensor technologies, the develop-
+ment of the associated algorithms and software, as well as in the calibration of the individual components of
+a ToF camera system. Infineon and pmd have been cooperating for several years in the field of ToF for automotive
+and smartphone applications. With the acquisition, Infineon strengthens its long-term cooperation with pmd.
+30 Additional information in accordance with HGB
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and the
+Supervisory Board and made permanently available to the public on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
+Year-end audit fees
+At the Annual General Meeting held on 21 February 2019, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2019 Separate Financial Statements and the Consolidated Finan-
+cial Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2019 fiscal year amounted to
+€1.9 million for the audit of the Consolidated Financial Statements and various Separate Financial Statements
+including an integrated audit review of the Interim Financial Statements.
+Fees for other advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.8 million in the 2019 fiscal year for
+other audit services which mainly included the provision of a comfort letter as well as the audit of the disclosures in
+the Sustainability Report.
+Jochen Hanebeck
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Neubiberg, Germany
+> Siemens Gamesa Renewable Energy Management GmbH,
+Hamburg, Germany
+Member of the Supervisory Board
+Fully consolidated subsidiaries:
+DICE Danube Integrated Circuit Engineering GmbH & Co. KG Linz, Austria
+Hitex GmbH
+5
+72
+0
+4.74
+4.69
+(€ in
+millions)
+Karlsruhe, Germany
+100
+2.16
+0.00
+5,11,12
+10
+IFX LLC
+IFX Merger Sub Inc.
+100
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+(€ in
+millions)
+in %
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-15,
+D-85579 Neubiberg (Germany).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+190
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Subsidiaries, joint ventures and other companies (not consolidated) as of 30 September 2019
+Techno-
+logies AG
+Name of company
+191
+Share-
+holdings
+thereof
+Infineon
+Equity
+Net result
+Foot-
+note
+Registered office
+Infineon Semiconductors (Wuxi) Co., Ltd.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+1.58
+Wuxi, People's Republic of China
+9
+100
+0
+Consolidated Financial Statements
+42.44
+15.03
+2.74
+100
+0
+40.52
+4.27
+5
+5
+Kulim, Malaysia
+Melaka, Malaysia
+0
+100
+9
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Wuxi) Co., Ltd.
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies
+2. Vermögensverwaltungsgesellschaft mbH
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd
+Infineon Technologies Australia Pty Limited
+Infineon Technologies Austria AG
+Wilmington, Delaware, USA
+100
+0
+n.a.
+n.a.
+Wilmington, Delaware, USA
+10
+100
+0
+n.a.
+n.a.
+Beijing, People's Republic of China
+The members of the Company's Supervisory Board, individually or in aggregate, do not own more than 1 percent
+of Infineon Technologies AG's outstanding share capital as of 30 September 2019.
+Dr. Manfred Puffer
+Prof. Dr. Renate Köcher
+Dr. Wolfgang Eder (Chairman)
+Kerstin Schulzendorf¹
+Dr. Eckart Sünner
+Diana Vitale¹
+Position
+Leading Development Engineer
+Chief Financial Officer,
+LafargeHolcim Ltd.,
+Jona, Switzerland
+Independent Management
+Consultant
+First authorized agent of IG Metall
+Regensburg
+Expert in the frontend-production,
+Infineon Technologies
+Dresden GmbH & Co. KG
+Independent Attorney
+Jürgen Scholz¹
+Deputy Chairwoman of the
+Member of the Board of Directors
+> Holcim Group Services Ltd, Holderbank, Switzerland
+> Holcim Technology Ltd, Jona, Switzerland
+> Lafarge Maroc SA, Casablanca, Morocco
+> LafargeHolcim Maroc SAS, Casablanca, Morocco
+> LafargeHolcim Maroc Afrique SAS, Casablanca, Morocco
+> Lafarge Africa Plc., Lagos State, Nigeria
+Membership of Supervisory Boards and governing bodies
+of domestic and foreign companies (as of 30 September 2019)
+Dr. Manfred Puffer
+Géraldine Picaud
+Dr. Susanne Lachenmann'
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Neubiberg, Germany
+Member of the Supervisory Board
+› CANCOM SE, Munich, Germany
+Member of the Advisory Board
+> Bridge imp GmbH, Grünwald, Germany
+Member of the Supervisory Board
+> BMW AG, Munich, Germany
+> Robert Bosch GmbH, Gerlingen, Germany
+> Nestlé Deutschland AG, Frankfurt/Main, Germany
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+188
+ব
+VAL III O
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+189
+Name
+> Huaxin Cement Co., Ltd., Wuhan, People's Republic of China
+7,599
+Member of the Supervisory Board
+> Nova KBM Bank, Maribor, Slovenia
+Johann Dechant
+Gerhard Hobbach
+Hans-Ulrich Holdenried
+Investment, Finance and Audit Committee
+Dr. Eckart Sünner (Chairman)
+Johann Dechant
+Dr. Wolfgang Eder
+Dr. Wolfgang Eder (Chairman)
+Annette Engelfried
+Peter Bauer (Chairman)
+Dr. Wolfgang Eder
+Peter Gruber
+Hans-Ulrich Holdenried
+Dr. Susanne Lachenmann
+Jürgen Scholz
+Nomination Committee
+Strategy and Technology Committee
+Executive Committee
+Jürgen Scholz
+Hans-Ulrich Holdenried
+> EVO Finance, Madrid, Spain
+> Oldenburgische Landesbank AG, Oldenburg, Germany
+Member of the Board of Directors
+> Athene Holding Ltd., Pembroke, Bermuda
+› Catalina Holdings (Bermuda) Ltd., Hamilton, Bermuda
+Member of the Supervisory Board
+> Krones AG, Neutraubling, Germany
+Member of the Administrative Board
+> BKK of BMW AG, Dingolfing, Germany
+1 Employee representative
+Infineon Works Council, Warstein,
+Infineon Technologies AG
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ব
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Supervisory Board committees
+Mediation Committee
+Dr. Wolfgang Eder (Chairman)
+Johann Dechant
+> Athora Lebensversicherung AG, Wiesbaden, Germany
+8,029
+719
+862
+Neubiberg, 18 November 2019
+Infineon Technologies AG
+Management Board
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+Dr. Helmut Gassel
+Jochen Hanebeck
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ব
+▼ A ↑ III O
+1,187
+1,171
+1,169
+2,443
+2,430
+194
+2018
+Consolidated Financial Statements
+△ 습
+77
+2 On 23 January 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009.
+The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's
+insolvency. In addition, the list of subsidiaries held by Qimonda AG was based on information from 30 September 2010, since Infineon had not received any further information
+from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies. Since all Qimonda-related investments were written
+down in full in previous years, this has no effect on Infineon's net assets, financial position and results of operations.
+3 Equity and net result as of 30 September 2017 (period from 2 June 2017 until 30 September 2017).
+4 Equity and net result as of 31 March 2018.
+5 Equity and net result as of 30 September 2018.
+6 Equity and net result as of 30 September 2018 (period from 1 January 2017 until 30 September 2018).
+7 Equity and net result as of 30 September 2018 (period from 1 January 2018 until 30 September 2018).
+Δ
+8 Equity and net result as of 31 December 2018 (period from 7 February 2018 until 31 December 2018).
+10 The entity was founded in the 2019 fiscal year.
+11 Control and profit transfer agreement.
+12 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325
+German Commercial Code.
+13 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the preparation of a management report and from the audit obligation pursuant to
+section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements pursuant to Section 325 German Commercial Code.
+14 Because criteria pursuant to Section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not to be disclosed.
+15 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report as well as notes and from the obligations to disclose
+the annual financial statements.
+16 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+9 Equity and net result as of 31 December 2018.
+2019
+Total
+therein: USA
+201
+454
+551
+30 Septem-
+ber 2018
+185
+30 Septem-
+ber 2019
+Entity-wide disclosures in accordance with IFRS 8
+159
+Total
+Other Operating Segments
+Digital Security Solutions
+Power Management & Multimarket
+Industrial Power Control
+Automotive
+Inventories:
+€ in millions
+Corporate and Eliminations
+338
+302
+26
+100
+Americas
+Japan
+therein: China
+Greater China
+Asia-Pacific (excluding Japan, Greater China)
+therein: Germany
+Europe, Middle East, Africa
+Revenue:
+€ in millions
+The following is a summary of revenue in the 2019 and 2018 fiscal year and of non-current assets by geographic
+areas for the years ended 30 September 2019 and 2018:
+1,480
+1,701
+516
+583
+2
+49
+2
+77
+77
+2
+2
+Munich, Germany
+77
+2
+Wilmington, Delaware, USA
+77
+2
+77
+Dresden, Germany
+2
+Dresden, Germany
+77
+2
+Qimonda France SAS in liquidation
+St. Denis, France
+77
+77
+Dresden, Germany
+2
+77
+Munich, Germany
+77
+28
+2
+Singapore, Singapore
+77
+2
+Leuven, Belgium
+77
+2
+Munich, Germany
+77
+2
+Bratislava, Slovakia
+77
+2
+Dresden, Germany
+2
+Notes to the Consolidated Financial Statements
+Qimonda Holding B.V. in insolvency
+Qimonda Investment B.V.
+2
+77
+77
+2
+77
+2
+Fort Lauderdale, Florida, USA
+77
+77
+Suzhou, People's Republic of China
+77
+2
+Wilmington, Delaware, USA
+Wilmington, Delaware, USA
+77
+2
+77
+2
+2
+FFFF
+Seoul, Republic of Korea
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+Qimonda Italy s.r.l. in liquidation
+Qimonda Korea Co. Ltd. in liquidation
+Qimonda Licensing LLC
+Qimonda Memory Product Development
+Center (Suzhou) Co in liquidation
+Qimonda North America Corp. in insolvency
+Qimonda Richmond LLC in insolvency
+Qimonda Solar GmbH
+Qimonda Taiwan Co. Ltd. in liquidation
+Qimonda UK Ltd. in liquidation
+1 Certain subsidiaries were not consolidated due to immateriality.
+Dresden, Germany
+Taipei, Taiwan
+High Blantyre, Scotland
+Rotterdam, The Netherlands
+Shanghai, People's Republic of China
+Rotterdam, The Netherlands
+Suzhou, People's Republic of China
+Padua, Italy
+77
+2
+77
+Qimonda International Trade (Shanghai) Co. Ltd.
+2,769
+2
+Melaka, Malaysia
+0.00
+0.00
+0
+100
+3
+Hong Kong, People's Republic
+of China
+9
+3
+(0.22)
+24
+24
+Lippstadt, Germany
+0.00
+0.09
+0
+100
+1.71
+Villach, Austria
+Wilmington, Delaware, USA
+0
+5
+n.a.
+n.a.
+0
+n.a.
+14
+Kaohsiung, Taiwan
+100
+MicroLinks Technology Corp.
+n.a.
+0
+n.a.
+14
+Dover, Delaware, USA
+0.00
+0.00
+n.a.
+9
+0.00
+0.00
+São Paulo, Brazil
+0.05
+0.21
+0
+100
+9
+Moscow, Russian Federation
+100
+0.01
+2,599
+2,159
+1,921
+593
+534
+1,050
+894
+0.05
+0
+0.10
+(0.01)
+0
+100
+5
+Wilmington, Delaware, USA
+0.00
+0.00
+0
+100
+5
+Wilmington, Delaware, USA
+n.a.
+n.a.
+0
+100
+10
+Hanoi, Vietnam
+9
+OSPT IP Pool GmbH
+R Labco, Inc.
+Neubiberg, Germany
+100
+Qimonda AG and its subsidiaries: 2
+n.a.
+n.a.
+0
+n.a.
+14
+Bristol, Great Britain
+Celis Semiconductor Corp.
+n.a.
+n.a.
+n.a.
+Vienna, Austria
+14
+n.a.
+n.a.
+0
+n.a.
+Itarion Solar Lda.
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Qimonda AG in insolvency
+2
+40
+Vila do Conde, Portugal
+2
+17
+Colorado Springs, Colorado, USA
+2
+Qimonda Flash GmbH in insolvency
+Qimonda Flash Geschäftsführungs GmbH in liquidation
+Qimonda Finance LLC in insolvency
+Qimonda Europe GmbH in liquidation
+Qimonda Dresden Verwaltungsgesellschaft mbH in insolvency
+Qimonda Dresden GmbH & Co. OHG in insolvency
+Qimonda Bratislava s.r.o. in liquidation
+Qimonda Beteiligungs GmbH in insolvency
+Qimonda Belgium BVBA in insolvency
+Qimonda Asia Pacific Pte. Ltd.
+n.a.
+77
+Villach, Austria
+3.09
+TTTech Auto AG
+Silicon Alps Cluster GmbH
+Schweizer Electronic AG
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Name of company
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+XMOS Limited
+0.00
+0
+100
+5
+Wilmington, Delaware, USA
+0.00
+0.02
+100
+0.00
+193
+Registered office
+Share-
+58.16
+9
+9
+Schramberg, Germany
+9
+(€ in
+millions)
+millions)
+logies AG
+in %
+(€ in
+Techno-
+Foot-
+note
+Infineon
+holdings
+Net result
+Equity
+thereof
+14
+0
+128.08
+74.41
+100
+0
+4.98
+0.31
+5
+Muntinlupa City, Philippines
+100
+0
+0.28
+0.17
+Cheonan, Republic of Korea
+100
+100
+52.22
+4.04
+5
+Bristol, Great Britain
+5
+100
+0
+182.39
+0.90
+100
+0
+3.78
+1.54
+Infineon Technologies UK Limited
+5
+0.00
+34.73
+0
+1.67
+Klagenfurt, Austria
+5
+100
+0
+9.32
+4.81
+5
+Tokyo, Japan
+100
+0
+29.85
+6.56
+Infineon Technologies US HoldCo Inc.
+5
+100
+0
+4.84
+1.28
+Rotterdam, The Netherlands
+5
+100
+0
+24.65
+4.65
+5
+Bristol, Great Britain
+100
+Seoul, Republic of Korea
+100
+100
+2.88
+Rectificadores Internacionales, S.A. de C.V.
+Siltectra GmbH
+192
+Registered office
+Share-
+thereof
+Equity
+Net result
+Foot-
+holdings
+Infineon
+note
+Techno-
+MoTo Objekt CAMPEON GmbH & Co. KG
+(€ in
+in %
+logies AG
+millions)
+millions)
+Wilmington, Delaware, USA
+5
+100
+0
+1,621.71
+94.42
+Wilmington, Delaware, USA
+5
+100
+(€ in
+3.01
+MOLSTANDA Vermietungsgesellschaft mbH
+International Rectifier HiRel Denmark ApS
+International Rectifier HiRel Products, Inc.
+International Rectifier Japan Co., Ltd.
+0.49
+5
+Taipei, Taiwan
+5
+100
+0
+5.82
+1.10
+Bristol, Great Britain
+5
+100
+0
+3.72
+International Rectifier Mauritius, Inc. (in liquidation)
+0.61
+5
+100
+0
+2,282.70
+109.77
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ΔΕ ΠΟ
+Δ
+Name of company
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Infineon Technologies US InterCo LLC
+Infineon Technologies US Investment LLC
+Infineon Technologies
+Vermögensverwaltungsgesellschaft mbH
+Innoluce B.V.
+Wilmington, Delaware, USA
+0
+100
+Milan, Italy
+16.67
+0.86
+Shanghai, People's Republic of China
+9
+100
+0
+3.40
+0.19
+9
+Shanghai, People's Republic of China
+100
+0
+177.98
+0
+10.97
+100
+0
+5.46
+(0.39)
+7
+Dresden, Germany
+100
+100
+224.27
+0.00
+5,15
+Neubiberg, Germany
+100
+Herlev, Denmark
+0
+100
+5
+0.004
+1,010.79
+236.06
+100
+0
+16.67
+3.72
+5
+Infineon Technologies Cegléd Kft.
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+Infineon Technologies China Co., Ltd.
+Infineon Technologies Denmark ApS
+Infineon Technologies Dresden GmbH & Co. KG
+Cegléd, Hungary
+Infineon Technologies Dresden Verwaltungs GmbH
+Infineon Technologies Finance GmbH
+Infineon Technologies France S.A.S.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies Hong Kong Ltd.
+Infineon Technologies Hong Kong Sales Limited
+Infineon Technologies India Private Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Ireland Limited
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., LLC
+Infineon Technologies Maasstad C.V.
+Infineon Technologies Newport Holding Limited
+Infineon Technologies Nordic AB
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Limited
+Infineon Technologies Romania & Co. Societate
+in Comandita
+Infineon Technologies Shared Service Center,
+Unipessoal Lda.
+Infineon Technologies Taiwan Co., Ltd.
+Kista, Sweden
+Bucharest, Romania
+Maia, Portugal
+Infineon Technologies Epi Services, Inc.
+0
+0.09
+5,11,12
+100
+0
+1.79
+0.37
+Hong Kong, People's Republic
+of China
+5
+100
+0
+25.70
+0.43
+4
+Bangalore, India
+100
+5
+0
+2.46
+Rotterdam, The Netherlands
+5
+0
+0.12
+(0.01)
+Dublin, Ireland
+5
+100
+100
+870.72
+0.14
+5
+14.00
+0.00
+Hong Kong, People's Republic
+of China
+424.92
+Wilmington, Delaware, USA
+100
+0
+1.17
+4.83
+Neubiberg, Germany
+100
+100
+369.89
+0.00
+5, 11, 12
+St. Denis, France
+5
+5
+100
+9.46
+0.64
+5
+Singapore, Singapore
+100
+0
+2,968.53
+1,575.48
+Rotterdam, The Netherlands
+100
+100
+3,382.16
+280.78
+0
+0.00
+100
+Neubiberg, Germany
+Merus Audio, Inc. (in liquidation)
+Neubiberg, Germany
+0.00
+Melaka, Malaysia
+100
+0
+275.32
+63.76
+Wuxi, People's Republic of China
+Xi'an, People's Republic of China
+9
+100
+0
+10.11
+9
+100
+0
+7.56
+0.44
+Infineon Technologies Batam PT
+Neubiberg, Germany
+Wilmington, Delaware, USA
+Singapore, Singapore
+Bayswater, Australia
+Villach, Austria
+Batam, Indonesia
+100
+100
+100
+100
+ooo c
+10
+0
+5
+5
+0.04
+0.15
+0
+0.07
+0.02
+Neubiberg, Germany
+100
+100
+5
+0.02
+0.00
+5
+Infineon Technologies Gamma GmbH
+Neubiberg, Germany
+100
+n.a.
+100
+0.00
+5.11
+Infineon Technologies Holding GmbH
+Neubiberg, Germany
+100
+100
+0.10
+0.00
+5
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Mantel 29 GmbH
+Madrid, Spain
+100
+0
+0.02
+n.a.
+5
+0
+100
+100
+0.03
+0.00
+5,11
+Infineon Technologies Mantel 32 GmbH
+Infineon Technologies Mantel 33 GmbH
+Neubiberg, Germany
+100
+100
+10
+n.a.
+n.a.
+10
+Neubiberg, Germany
+Neubiberg, Germany
+100
+n.a.
+n.a.
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Romania s.r.l.
+Infineon Technologies RUS LLC
+Infineon Technologies South America Ltda
+Infineon Technologies Vietnam Company Ltd.
+IR International Holdings China, Inc.
+IR International Holdings, Inc.
+KAI Kompetenzzentrum Automobil- und
+Industrieelektronik GmbH
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+Merus Audio (Hong Kong) Ltd. (in liquidation)
+100
+100
+5,11
+0.03
+2,572.03
+89.22
+5
+0
+0
+405.00
+1.55
+142.59
+5
+0.12
+5
+100
+0
+100
+0.00
+Bucharest, Romania
+0.04
+0.08
+0
+100
+6
+Warsaw, Poland
+100
+100
+0.04
+0.00
+Neubiberg, Germany
+100
+100
+9
+Neubiberg, Germany
+Metawave Corporation
+0.03
+Joint ventures:
+(3.50)
+2.79
+0
+100
+Dresden, Germany
+1.13
+11.80
+0
+100
+5
+Tijuana, Mexico
+5.16
+Infineon Technologies Bipolar GmbH & Co. KG
+34.29
+0
+93
+Neubiberg, Germany
+5,11,12
+0.00
+133.40
+6
+100
+Neubiberg, Germany
+0.00
+1.39
+0
+100
+93.75
+5
+SAIC Infineon Automotive Power Modules
+(Shanghai) Co., Ltd.
+CHIL Semiconductors Corporation
+0.00
+0.00
+0.00
+0
+100
+5
+Wilmington, Delaware, USA
+Linz, Austria
+(25.81)
+8.06
+72
+25
+49
+1.28
+Other companies (not consolidated):1
+52.33
+5
+60
+49
+60
+60
+Shanghai, People's Republic of China
+Warstein, Germany
+Infineon Technologies Delta GmbH
+Verwaltungsgesellschaft mbH
+Infineon Technologies Campeon
+Infineon Technologies Bipolar Verwaltungs GmbH
+Hitex (UK) Limited
+DICE Danube Integrated Circuit Engineering GmbH
+60
+Curepipe, Mauritius
+EPOS embedded core & power systems GmbH & Co. KG
+EPOS embedded core & power systems Verwaltungs GmbH
+Futurium gGmbH
+8.06
+Duisburg, Germany
+100
+100
+0.67
+0.30
+5
+Duisburg, Germany
+100
+100
+0.06
+0.00
+14
+Berlin, Germany
+5
+n.a.
+n.a.
+Coventry, Great Britain
+5
+100
+0
+1.70
+0.16
+Warstein, Germany
+60
+(0.01)
+60
+60
+5
+n.a.
+5
+n.a.
+0.11
+100
+5
+Tokyo, Japan
+0.00
+45.48
+140.38
+0
+100
+0
+Wilmington, Delaware, USA
+0.28
+2.15
+0
+100
+5
+5
+Herlev, Denmark
+0
+100
+125.22
+0.00
+5,11,13
+100
+5
+1.67
+Nijmegen, The Netherlands
+3.00
+0
+100
+For the risks associated with the insolvency of Qimonda AG, provisions in the amount of EUR 205 million were
+recognized as at 30 September 2019 (as at 30 September 2018: EUR 185 million). There also are disclosures on
+contingent liabilities and further explanatory notes in the notes to the financial statements.
+Risks in connection with the financial instruments for hedging USD foreign currency risks as part of
+the planned acquisition of Cypress Semiconductor Corp. ("Cypress")
+The Management Board's assumptions are reasonable and balanced overall. The disclosures on contingent liabilities
+and other disclosures in the notes are complete and adequate.
+Our observations
+Finally, we ascertained the completeness of disclosures on contingent liabilities as well as other disclosures in
+the notes.
+Furthermore, we consulted the valuation expert appointed by the Company regarding the opinions drawn up in
+connection with the Company's defence against the claims asserted by the insolvency administrator and assessed
+the appropriateness of the method applied with the assistance of a valuation expert.
+We obtained an external legal opinion to review the Management Board's risk assessment.
+We had regular meetings with the Management Board and legal department of the Company to gain an understanding
+of current developments and reasons for the judgements in question. We obtained a written statement in this regard
+from the Company. We verified the assessment of the probability of utilization undertaken by the Management Board
+by inspecting the documents underlying the Management Board's estimates, in particular the written statement
+from the court-appointed independent expert.
+Risks associated with the insolvency of Qimonda AG
+In the course of our audit we assessed the process established by the Company to ensure the documentation,
+assessment of the outcome of proceedings and reporting of litigation in the financial statements.
+Our audit approach
+Please refer to the notes to the consolidated financial statements for more information on the accounting policies
+applied. The assessment of the underlying assumptions is presented under note 2 and disclosures on legal risks
+under note 23.
+The recognition of a provision, explanatory notes on contingent liabilities or further disclosures on risks arising
+from the insolvency of Qimonda AG are largely dependent upon the estimates and assumptions of the Management
+Board taking into account the interim report from the court-appointed independent expert. The same applies to
+the valuation of provisions made. Consequently, there are risks with respect to the presentation of the related risks
+in compliance with accounting standards as well as their valuation.
+With economic effect from 1 May 2006, all material assets and liabilities as well as business activities relating to
+the memory business were spun off from Infineon Technologies AG to Qimonda AG as a non-cash contribution. On
+23 January 2009, Qimonda AG filed an application to open insolvency proceedings with the Munich District Court,
+which commenced on 1 April 2009. The insolvency of Qimonda AG resulted in various legal disputes between the
+insolvency administrator and Infineon AG. The focus of this litigation is on claims asserted by the insolvency adminis-
+trator with respect to the valuation of the non-cash contributions to Qimonda AG. Infineon had the non-cash
+contributions valued by an independent expert. On 21 September 2018 the court-appointed independent expert
+presented his preliminary valuation of the earnings value of non-cash contributions (in a range) in the form of an
+interim report.
+The financial statement risk
+Please refer to the notes to the consolidated financial statements for more information on the accounting policies
+applied. The assumptions underlying the assessment are presented under note 2. Disclosures on the planned
+acquisition are presented under note 3 and the associated financial instruments under note 26.
+There is the risk for the consolidated financial statements that the financial instruments for hedging foreign
+currency risk do not meet the requirements for designation as a cash flow hedge pursuant to IFRS 9. Furthermore,
+there is a risk that the valuation of the financial instruments, due to the associated complexity and judgement
+required, lies outside of an acceptable range. There is also the risk of incomplete and inappropriate disclosures in
+the notes.
+Further Information
+Finally, we assessed whether the disclosures in the notes regarding the planned acquisition of Cypress were
+complete and accurate.
+Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
+consolidated financial statements for the financial year from 1 October 2018 to 30 September 2019. These matters
+were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
+opinion thereon, we do not provide a separate opinion on these matters.
+We evaluated the Company's assessment underlying the designation of the financial instruments based on the
+information on the status of the acquisition available as at the date of issuing the independent auditor's report.
+As well as the financing of the total purchase price, this information also included in particular the assessment of
+the economic relationship between the hedged item and the hedging instrument, the effect of the default risk
+and the hedge ratio. Furthermore, we incorporated the approval of the extraordinary general meeting of Cypress
+as well as the interviews with management on obtaining approval from antitrust authorities in our evaluation.
+We assessed the competence, professional skills and impartiality of the independent consultant engaged by Infineon.
+The consultant prepared both the conceptual design of the currency hedges and the underlying model for the
+valuation of the derivatives in a hedge. We examined this model with regard to the accuracy of the model's approach,
+appropriate exercise of judgement and the implementation of the modelling. In the course of our audit of the
+valuation of the derivative financial instruments, we assessed the key underlying contractual parameters and other
+parameters relevant for the valuation.
+With the involvement of our in-house experts, we assessed among other matters the appropriateness of the valua-
+tion model and the designation option in general. To that end, we first gained an understanding of the planned
+acquisition by consulting management and employees of the finance department and through an evaluation of the
+relevant agreements.
+Our audit approach
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The assessment of the probability of the planned acquisition being completed as well as the evaluation of the effec-
+tiveness of the hedge and the valuation of the financial instruments require judgement. According to the relevant
+provisions, an explanation of the derivative financial instruments must be provided in the notes to the consolidated
+financial statements.
+As at 30 September 2019, Infineon reports the accounting effects of the derivative financial instruments concluded
+to partially hedge the foreign currency risks arising from the planned acquisition of Cypress under other assets
+in the amount of EUR 210 million and under other liabilities in the amount of EUR 112 million. The change in the
+fair value of the derivative financial instruments since the designation date resulted in an effect recognized directly
+in equity of EUR 98 million in financial year 2019.
+On 2/3 June 2019, Infineon Technologies AG concluded an agreement for the acquisition of Cypress. On 3 June 2019,
+the Company concluded two deal-contingent EUR/USD hedging transactions. A foreign currency forward transaction
+("deal contingent forward") and a foreign currency option ("deal contingent option") each with a nominal value in
+USD equivalent to EUR 3.3 billion were designated as cash flow hedges. The hedging transactions were recognized
+accordingly as cash flow hedges.
+The financial statement risk
+ƠI A
+198
+Independent Auditor's Report
+At the beginning and throughout the hedging transaction, the Company reviews the effectiveness of the hedge with
+regard to the existence of an economic relationship between the hedged item and the hedging instrument as well
+as the effects of the default risk on the value of the hedging instrument and the hedged item. In addition, the actual
+economic hedge ratio of the hedging relationship is continuously checked by the Company. In addition, the Company
+assesses the completion of the acquisition to be highly probable.
+Key Audit Matters in the Audit of the Consolidated Financial Statements
+Neubiberg, 22 November 2019
+197
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dr. Sven Schneider
+Dr. Reinhard Ploss
+Infineon Technologies AG
+Further Information
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial
+Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and
+the Combined Management Report includes a fair review of the development and performance of the business and
+the position of the Group, together with a description of the principal opportunities and risks associated with the
+expected development of the Group.
+Information
+Further
+195
+Responsibility Statement by the Management Board
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Responsibility Statement by the
+Management Board
+Independent Auditor's Report
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified auditor's
+report. The English language text below is a translation of the auditor's report. The original German text shall prevail
+in the event of any discrepancies between the English translation and the German original. We do not accept any
+liability for the use of, or reliance on, the English translation or for any errors of misunderstandings that may derive
+from the translation.
+Independent Auditor's Report
+Independent Auditor's Report
+Further Information
+▼ A ↑ III O
+196
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+We conducted our audit of the consolidated financial statements and of the group management report in accordance
+with Section 317 HGB and EU Audit Regulation No 537/2014 (referred to subsequently as "EU Audit Regulation")
+and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the
+Institut der Wirtschaftsprüfer (IDW) [Institute of Public Auditors in Germany]. Our responsibilities under those require-
+ments and principles are further described in the "Auditor's Responsibilities for the Audit of the Consolidated
+Financial Statements and of the Group Management Report" section of our auditor's report. We are independent of
+the group entities in accordance with the requirements of European law and German commercial and professional
+law, and we have fulfilled our other German professional responsibilities in accordance with these requirements.
+In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided
+non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the evidence we have
+obtained is sufficient and appropriate to provide a basis for our opinions on the consolidated financial statements
+and on the group management report.
+Basis for the opinions
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations relating to the
+legal compliance of the consolidated financial statements and of the group management report.
+> the accompanying group management report as a whole provides an appropriate view of the Group's position.
+In all material respects, this group management report is consistent with the consolidated financial statements,
+complies with German legal requirements and appropriately presents the opportunities and risks of future
+development.
+> the accompanying consolidated financial statements comply, in all material respects, with the IFRSS as adopted
+by the EU, and the additional requirements of German commercial law pursuant to Section 315e (1) HGB [Handels-
+gesetzbuch: German Commercial Code] and, in compliance with these requirements, give a true and fair view of
+the assets, liabilities, and financial position of the Group as at 30 September 2019, and of its financial performance
+for the financial year from 1 October 2018 to 30 September 2019, and
+We have audited the consolidated financial statements of Infineon Technologies AG, Neubiberg, and its subsidiaries
+(the Group), which comprise the consolidated statement of financial position as at 30 September 2019, and the
+consolidated income statement, the consolidated statement of comprehensive income, consolidated statement of
+changes in equity and consolidated statement of cash flows for the financial year from 1 October 2018 to 30 Septem-
+ber 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies.
+In addition, we have audited the combined management report of Infineon Technologies AG and of the Group
+(hereinafter: the “group management report") for the financial year from 1 October 2018 to 30 September 2019.
+In our opinion, on the basis of the knowledge obtained in the audit,
+Opinions
+and of the Group Management Report
+Report on the Audit of the Consolidated Financial Statements
+To Infineon Technologies AG, Neubiberg
+ƠI A
+Further Information
+Further Information
+Our observations
+Time-of-flight
+TPM
+Trusted platform module
+VSD
+Variable speed drive
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ToF
+202
+Further Information
+Financial calendar
+Financial calendar
+Wednesday, 5 February 20201
+Publication of first quarter 2020 results
+Thursday, 20 February 2020
+Γ Δ Ε ΙΙΙΟ
+Siliconcarbide
+SiC
+Radio frequency
+IGBT
+IPM
+Intelligent power module
+Independent Auditor's Report
+Light-emitting diode
+LIN
+Local interconnected network
+MEMS
+Micro-electromechanical system
+MOSFET Metal-oxide-semiconductor field-effect transistor
+NFC
+Near-field communication
+PHEV
+Plug-in hybrid electric vehicles
+RF
+Annual General Meeting 2020
+(Start 10:00 a.m. CET)
+ICM - International Congress Center Munich (Germany)
+Tuesday, 5 May 20201
+Designed by:
+Photography:
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+22 November 2019
+1 October to 30 September
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany)
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Cover: Deutscher Zukunftspreis 2015, laureate Infineon,
+photographer Ansgar Pudenz, Hamburg (Germany)
+Printing:
+Page 2, 6-7: Werner Bartsch, Hamburg (Germany)
+G. Peschke Druckerei GmbH, Parsdorf (Germany)
+Note
+The following were brand names of Infineon Technologies AG in the 2018 fiscal year:
+Infineon, das Infineon-Logo, AURIX™M, CIPOSTM, CIPURSE™M, CoolGaNTM, CoolMOSTM, CoolSIC™M,
+¡MOTION™, OPTIGA™, OptiMOST, PrimePACK™, REAL3™, SECORAT, XENSIV™.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+204
+Γ Δ Ε ΙΙΙΟ
+Independent auditors:
+Integrated circuit
+Fiscal year:
+Editors:
+Publication of second quarter 2020 results
+Tuesday, 4 August 20201
+Publication of third quarter 2020 results
+Monday, 9 November 20201
+Publication of fourth quarter and fiscal year 2020 results
+1 preliminary
+Visit us on the web: www.infineon.com
+f
+in
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+203
+Γ Δ Ε ΙΙΙΟ
+Further Information
+Imprint
+Imprint
+Published by:
+Copy deadline:
+IC
+LED
+Human machine interaction
+Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+and of the Group Management Report
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
+are free from material misstatement, whether due to fraud or error, and whether the group management report as
+a whole provides an appropriate view of the Group's position and, in all material respects, is consistent with the
+consolidated financial statements and the knowledge obtained in the audit, complies with the German legal require-
+ments and appropriately presents the opportunities and risks of future development, as well as to issue an auditor's
+report that includes our opinions on the consolidated financial statements and on the group management report.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
+with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards
+for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material
+misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the
+aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
+these consolidated financial statements and this group management report.
+We exercise professional judgement and maintain professional skepticism throughout the audit. We also:
+> Identify and assess the risks of material misstatement of the consolidated financial statements and of the group
+management report, whether due to fraud or error, design and perform audit procedures responsive to those
+risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The risk of
+not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
+may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
+> Obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of
+arrangements and measures (systems) relevant to the audit of the group management report in order to design
+audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
+the effectiveness of these systems.
+> Evaluate the appropriateness of accounting policies used by the Management Board and the reasonableness of
+estimates made by the Management Board and related disclosures.
+> Conclude on the appropriateness of the Management Board's use of the going concern basis of accounting and,
+based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
+may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material
+uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the
+consolidated financial statements and in the group management report or, if such disclosures are inadequate,
+to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of
+our auditor's report. However, future events or conditions may cause the Group to cease to be able to continue
+as a going concern.
+> Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
+disclosures in the notes, and whether the consolidated financial statements present the underlying transactions
+and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities,
+financial position and financial performance of the Group in compliance with IFRSS as adopted by the EU and the
+additional requirements of German commercial law pursuant to Section 315e (1) HGB.
+> Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
+activities within the Group to express opinions on the consolidated financial statements and on the group
+management report. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+HVDC High-voltage DC transmission
+Independent Auditor's Report
+201
+> Evaluate the consistency of the group management report with the consolidated financial statements, its
+conformity with [German] law, and the view of the Group's position it provides.
+› Perform audit procedures on the prospective information presented by the Management Board in the group
+management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the signifi-
+cant assumptions used by the Management Board as a basis for the prospective information, and evaluate the
+proper derivation of the prospective information from these assumptions. We do not express a separate opinion
+on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk
+that future events will differ materially from the prospective information.
+ƠI A
+We communicate with those charged with governance regarding, among other matters, the planned scope and tim-
+ing of the audit and significant audit findings, including any significant deficiencies in internal control that we iden-
+tify during our audit.
+200
+A L III O
+The approach used for the valuation of the derivative financial instruments is appropriate and in line with the
+applicable accounting policies. The accounting treatment and the description in the notes to the consolidated
+financial statements are complete and appropriate.
+Other Information
+The Management Board is responsible for the other information. The other information comprises the annual
+report, with the exception of the audited consolidated financial statements and group management report and
+our auditor's report.
+Our opinions on the consolidated financial statements and on the group management report do not cover the other
+information, and consequently we do not express an opinion or any other form of assurance conclusion thereon.
+In connection with our audit, our responsibility is to read the other information and, in so doing, to consider
+whether the other information
+> is materially inconsistent with the consolidated financial statements, with the group management report or
+our knowledge obtained in the audit, or
+> otherwise appears to be materially misstated.
+If, based on the work we have performed, we conclude that there is a material misstatement of this other
+information, we are required to report that fact. We have nothing to report in this regard.
+Responsibilities of Management and the Supervisory Board for the Consolidated Financial Statements
+and the Group Management Report
+The Management Board is responsible for the preparation of consolidated financial statements that comply, in all
+material respects, with IFRSS as adopted by the EU, and the additional requirements of German commercial law
+pursuant to Section 315e (1) HGB and that the consolidated financial statements, in compliance with these require-
+ments, give a true and fair view of the assets, liabilities, financial position, and financial performance of the Group.
+In addition, the Management Board is responsible for such internal control as they have determined necessary to
+enable the preparation of consolidated financial statements that are free from material misstatement, whether due
+to fraud or error.
+In preparing the consolidated financial statements, the Management Board is responsible for assessing the Group's
+ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters
+related to going concern. In addition, they are responsible for financial reporting based on the going concern basis
+of accounting unless there is an intention to liquidate the Group or to cease operations, or there is no realistic
+alternative but to do so.
+Furthermore, the Management Board is responsible for the preparation of the group management report that,
+as a whole, provides an appropriate view of the Group's position and is, in all material respects, consistent with
+the consolidated financial statements, complies with German legal requirements, and appropriately presents
+the opportunities and risks of future development. In addition, the Management Board is responsible for such
+arrangements and measures (systems) as they have considered necessary to enable the preparation of a group
+management report that is in accordance with the applicable German legal requirements, and to be able to provide
+sufficient appropriate evidence for the assertions in the group management report.
+The Supervisory Board is responsible for overseeing the Group's financial reporting process for the preparation of
+the consolidated financial statements and of the group management report.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+199
+Independent Auditor's Report
+We also provide those charged with governance with a statement that we have complied with the relevant
+independence requirements, and communicate with them all relationships and other matters that may reasonably
+be thought to bear on our independence, and where applicable, the related safeguards.
+Further Information
+Further Information pursuant to Article 10 of the EU Audit Regulation
+Application-specific integrated circuit
+Brushless direct current
+CAN
+Controller area network
+From the matters communicated with those charged with governance, we determine those matters that were of
+most significance in the audit of the consolidated financial statements of the current period and are therefore
+the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
+disclosure about the matter.
+FACTS
+Complementary metal-oxide-semiconductor
+Flexible alternating current transmission system
+FHEV
+Full hybrid electric vehicles
+GaN
+Galliumnitride
+GPS
+Global positioning system
+HMI
+Artificial intelligence
+BLDC
+CMOS
+ΑΙ
+We were elected as group auditor at the shareholders' meeting on 21 February 2019. We were engaged by the
+Supervisory Board on 9 May 2019. We have been the group auditor of Infineon Technologies AG without interruption
+since financial year 1999/2000.
+ASIC
+German Public Auditor Responsible for the Engagement
+The German Public Auditor responsible for the engagement is Michael Pritzer.
+Munich, 22 November 2019
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit
+Committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
+(German Public Auditor)
+Andrejewski
+Wirtschaftsprüfer
+List of Abbreviations
+List of Abbreviations
+Insulated gate bipolar transistor
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Wirtschaftsprüfer
+(German Public Auditor)
+Pritzer
+Further Information
+Forward-looking statements
+This report contains forward-looking statements about the business, financial condition and earnings performance of the
+Infineon Group. These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development may there-
+fore differ materially from what has been expected. Beyond disclosure requirements stipulated by law, Infineon does not
+undertake any obligation to update forward-looking statements.
+Specific disclaimer for Informa Tech - former IHS Markit Technology -
+reports, data and information referenced in this document:
+Specific disclaimer for IHS Markit - reports, data and information referenced in this document:
+The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted property of
+IHS Markit Ltd. and its subsidiaries ("IHS Markit”) and represent data, research, opinions or viewpoints published by IHS Markit,
+and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and not as of
+the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change without
+notice and neither IHS Markit nor, as a consequence, Infineon have any duty or responsibility to update the IHS Markit Materials
+or this publication. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable, the
+accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit
+and the trademarks used in the Data, if any, are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit
+Materials are the property of IHS Markit or their respective owners.
+V A L III O
+INFINEON TECHNOLOGIES AG
+Headquarters:
+Contact for Investors and Analysts:
+Media Contact:
+Visit us on the web:
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+www.infineon.com
+The Informa Tech reports, data and information referenced herein (the “Informa Tech Materials – mostly former IHS Markit
+Technology Materials") are the copyrighted property of Informa Tech Research Ltd. and its subsidiaries ("Informa Tech")
+and represent data, research, opinions or viewpoints published by Informa Tech, and are not representations of fact. The
+Informa Tech Materials speak as of the original publication date thereof and not as of the date of this document. The infor-
+mation and opinions expressed in the Informa Tech Materials are subject to change without notice and neither Informa
+Tech nor, as a consequence, Infineon have any duty or responsibility to update the Informa Tech Materials or this publication
+as a result. Informa Tech Materials are delivered on an "as-is" and "as-available" basis. No representation or warranty,
+express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and
+conclusions contained in the Informa Tech Materials. To the maximum extent permitted by law, Informa Tech and its
+affiliates, IHS Markit and its Affiliates and their respective, officers, directors, employees and agents, disclaim any liability
+(including, without limitation, any liability arising from fault or negligence) as to the accuracy or completeness or use
+of the Informa Tech Materials. Informa Tech and/or IHS Markit will not, under any circumstance whatsoever, be liable
+for any trading, investment, commercial or other decisions based on or made in reliance of the Informa Tech Materials.
+The ❝IHS Markit" brand and logo have been licensed for use by Informa Tech. The "IHS Markit" brand and logo and any
+third-party trademarks used in the IHS Markit Technology Materials are the sole property of IHS Markit Group or their
+respective third-party owners.
+NEC
+The automotive industry is continuously working to reduce pollutant emissions. A new European Commission regu-
+lation requires for example the reduction of average fleet emissions to 81 grams of CO2 per kilometer by 2025. The
+reduction goal for 2030 is 59 grams of CO2 per kilometer, a reduction of 37.5 percent compared to 95 grams of CO2
+per kilometer by 2021. More realistic exhaust gas testing procedures such as the WLTP cycle (Worldwide Harmonized
+Light-Duty Vehicles Test Procedure), in effect since 2017, mean further, implicit tightening of CO2 reduction rules.
+This will in turn increase demand for semiconductors. The optimization of the combustion engine alone will not be
+enough to fulfill legal requirements and satisfy customer demands for sustainable mobility. Instead, systems consum-
+ing energy in the vehicle will increasingly have to be made more efficient and hydraulic or mechanical solutions
+will have to be replaced by more efficient electromechanical and thus semiconductor-based systems.
+per share for the 2010 to 2019 fiscal years
+Dividend
+in € cents
+Despite lower earnings in the 2019 fiscal year, a proposal will be made to the Annual General Meeting to be held
+on 20 February 2020 to pay an unchanged dividend of €0.27 per share. The approximately 113 million new shares
+issued in conjunction with the share capital increase on 18 June 2019 are fully entitled to a dividend, bringing the
+expected dividend payment for the 2019 fiscal year to €336 million compared to €305 million for the 2018 fiscal year.
+Our dividend policy is aimed firstly at enabling our shareholders to participate appropriately in the success of the
+business and secondly to at least keep the dividend at a constant level in times of flat or declining earnings.
+Unchanged dividend payment of €0.27 per share planned
+The Return on Capital Employed (ROCE) in the 2019 fiscal year amounted to 12.2 percent, down on the previous
+year's 20.5 percent. Operating profit from continuing operations after tax fell from €1,263 million to €925 million,
+whereas capital employed increased from €6,168 million to €7,599 million (for a definition of ROCE and details
+relating to its calculation, see the chapters “Internal management system” and “Review of financial condition").
+The gross cash position (see the chapter "Internal management system" for definition) amounted to €3,779 million
+as of 30 September 2019, an increase of 49 percent compared to the previous year's figure of €2,543 million, mainly
+reflecting the impact of the share capital increase implemented on 18 June 2019, which generated net proceeds of
+€1,524 million, in conjunction with the financing of the planned acquisition of Cypress Semiconductor Corporation
+("Cypress"). The dividend payment of €305 million for the 2018 fiscal year had an offsetting effect.
+P see page 64
+P see page 64
+P see page 63 f.
+and page 75
+18
+2019 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Free cash flow from continuing operations (see the chapter "Internal management system" for definition) totaled
+€39 million in the 2019 fiscal year, a decrease of €579 million compared to the €618 million generated one year
+earlier. Free cash flow from continuing operations in the previous fiscal year included a cash inflow of €345 million
+arising on the sale of the major part of the RF power components business to Cree, Inc. Net cash provided by oper-
+ating activities from continuing operations amounting to €1,603 million (2018: €1,571 million) was used to finance
+investments in property, plant and equipment and intangible assets totaling €1,451 million (2018: €1,254 million)
+and the cash outflow for the acquisition of Siltectra GmbH ("Siltectra") amounting to €123 million.
+The resulting earnings per share for the 2019 fiscal year amounted to €0.75 (basic and diluted), 21 percent down on
+the previous fiscal year's figure of €0.95 (basic and diluted). Adjusted earnings per share (diluted) decreased from
+€0.98 to €0.89 (see the chapter "Review of results of operations" for details on the calculation of adjusted earnings
+per share).
+Net income decreased to €870 million (see the chapter "Review of results of operations"), €205 million down on
+the previous fiscal year's €1,075 million, which included a gain of €270 million arising on the sale of the major part
+of the RF power components business to Cree, Inc. In a contrasting trend, however, the loss from discontinued
+operations decreased by €124 million to €19 million year-on-year.
+Japan 7%
+Greater China' 35%
+1 Greater China includes China and Taiwan.
+15% Europe (excluding Germany),
+Middle East, Africa
+15% Germany
+27
+15% Asia-Pacific
+17
+P see page 68
+P see page 72
+Psee page 63
+The Segment Result totaled €1,319 million for the 2019 fiscal year, 3 percent down on the €1,353 million reported
+one year earlier. The Segment Result Margin of 16.4 percent (2018: 17.8 percent) was therefore in line with the
+forecast of about 16 percent, at the mid-point of the forecast revenue range, as adjusted in March 2019. Especially,
+the additional manufacturing capacity built up by investments in the previous fiscal year could not be fully utilized
+particularly during the second half of the fiscal year, resulting in idle costs that negatively impacted the margin. In
+addition, inventories were adjusted to demand in particular in the second half of the fiscal year. Productivity and
+cost-cutting measures were only partially able to offset this effect.
+Key performance indicators for Group declining
+(excluding Japan, Greater China)
+271
+25
+22
+Development in the semiconductor industry
+Evaluation of the 2019 fiscal year (in euro)
+Worldwide semiconductor revenues totaled €370.422 billion in the 2019 fiscal year (Source: World Semiconductor
+Trade Statistics (WSTS)). This represents a decrease of 5.9 percent compared to the previous year's value of
+€393.783 billion. This decrease in market revenues is attributable to the strong growth of memory chips during
+the preceding year. This product category, which essentially includes DRAM and flash memory products, decreased
+by 24.0 percent and at €101.817 billion accounted for approximately 27 percent of the entire semiconductor market.
+On the other hand, the semiconductor market excluding memory products and microprocessors managed to
+increase by 3.2 percent based on the euro. In the 2019 fiscal year, Infineon increased its revenues by 6 percent.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Finances and strategy
+▼ A
+2019 fiscal year
+In the 2018 calendar year worldwide semiconductor revenues reached US$485.009 billion, an increase of
+12.3 percent compared to US$432.051 billion in the previous year (Source: Informa Tech). The four largest semi-
+conductor companies had respective market shares of more than 5 percent each. Samsung increased revenues
+to US$74.644 billion, representing a 20.3 percent increase, and had a market share of 15.4 percent in the calendar
+year. Intel increased revenue by 13.4 percent to US$69.895 billion with a 14.4 percent market share. Lagging far
+behind as in the previous years were the two memory chip manufacturers SK Hynix (market share: 7.5 percent) and
+Micron (market share: 6.1 percent). With revenue of US$9.134 billion and an increase of 12.5 percent, Infineon's
+market share remained unchanged at 1.9 percent. Nevertheless, Infineon was able to overtake the two competitors
+NXP and Western Digital and rise from 13th to 11th place. The Chinese company HiSilicon was among the 20 largest
+semiconductor manufacturers for the first time, while Apple was no longer among the top 20.
+The 2018 calendar year was characterized by strong demand in the area of memory ICs. Accordingly, the memory
+chip manufacturers SK Hynix, Micron and Samsung had disproportionately high growth rates of 20 percent and
+more. Intel is the leader in the area of processors. Infineon is not active in these two product categories and is thus
+not in direct competition with these companies. Among the 20 largest semiconductor companies, the following
+companies compete with Infineon: Samsung (only in security ICs; this revenue accounts for less than 1 percent of
+Samsung revenue), Texas Instruments, Toshiba, STMicroelectronics, NXP, Renesas, and ON Semiconductor.
+Top 20 semiconductor manufacturers for 2018 calendar year
+Revenue in billion US$
+74.6
+69.9
+Evaluation of the 2018 calendar year (in US dollars)
+Americas 13%
+2019
+2017
+20
+18
+12
+12
+12
+10
+2018
+2010
+2012
+2013
+1 Proposal to the Annual General Meeting to be held on 20 February 2020.
+2014
+2015
+2016
+2011
+Infineon revenue by region in the 2019 fiscal year
+China has been Infineon's most important sales market for several years now and, with revenue of €2,159 million,
+accounted for 27 percent (2018: 25 percent) of Infineon's revenue during the fiscal year under report. The next
+largest single markets are Germany with revenue of €1,169 million and a 15 percent share (2018: 15 percent), the
+USA with €862 million and an 11 percent share (2018: 9 percent) and Japan with €593 million and a 7 percent share
+(2018: 7 percent).
+0% Other Operating Segments,
+Corporate and Eliminations:
+€21 million
+65 The Infineon share
+Our 2019 fiscal year
+68 Group performance
+68 Review of results of operations
+73 Review of financial condition
+76 Review of liquidity
+79 Report on outlook, risk and opportunity
+65 Sustainability at Infineon
+79 Outlook
+95 Overall statement on Infineon's financial condition
+96 Infineon Technologies AG
+99 Corporate Governance
+99 Information pursuant to section 289a, paragraph 1,
+and section 315a, paragraph 1,
+of the German Commercial Code (HGB)
+102 Statement on Corporate Governance pursuant
+to section 289f, 315d of the German Commercial
+83 Risk and opportunity report
+Code (HGB)/Corporate Governance Report
+103 Compensation report
+62 Internal management system
+56 Research and development
+Content
+Combined
+Management Report
+Our Group
+16 Finances and strategy
+16 2019 fiscal year
+21 Business focus
+60 Operations
+22 Growth drivers
+37 Human Resources strategy
+39 The segments
+40 Automotive
+45 Industrial Power Control
+49 Power Management & Multimarket
+52 Digital Security Solutions
+29 Group strategy
+36.3
+This report combines the Group Management
+Report of Infineon ("Infineon" or "Group") -
+comprising Infineon Technologies AG (hereafter
+also referred to as "the Company") and its
+consolidated subsidiaries - and the Management
+Report of Infineon Technologies AG.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+10 30 20 10
+(3%)
+16
+▼ ▲ ↑ III O
+Combined Management Report | Our Group
+Finances and strategy
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2019 fiscal year
+Digital Security Solutions: €642 million 8%
+Power Management & Multimarket:
+€2,445 million 30%
+Industrial Power Control: €1,418 million 18%
+0
+44% Automotive: €3,503 million
+Revenue by segment in the 2019 fiscal year
+The Combined Management Report contains
+forward-looking statements about the business,
+financial condition and earnings performance
+of Infineon. These statements are based on
+assumptions and projections based on currently
+available information and present estimates. They
+are subject to a multitude of uncertainties and
+risks. Actual business development may therefore
+differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law,
+Infineon does not undertake any obligation to
+update forward-looking statements.
+Digital Security Solutions
+Industrial Power Control
+15
+Combined Management Report | Our Group
+Finances and strategy
+2019 fiscal year
+Finances
+and strategy
+2019 fiscal year
+> Revenue growth achieved under difficult market conditions
+> Unchanged dividend planned despite lower earnings
+Power Management & Multimarket
+Psee page 18 ff.
+P see page 54 f.
+Psee page 69
+Revenue up by 6 percent; Segment Result Margin of 16.4 percent achieved
+Infineon generated revenue of €8,029 million in the 2019 fiscal year, representing an increase of 6 percent compared
+to the previous year's figure of €7,599 million and clearly better than the semiconductor market trend as a whole
+(see "Development in the semiconductor industry" below). At the beginning of the fiscal year under report, Infineon
+forecasted revenue growth of 11 percent plus or minus 2 percentage points. Against a background of geopolitical
+tensions and trade conflicts, however, the economy entered a phase of significant and sustained slowdown after
+the turn of the year. Demand dropped significantly in numerous end markets, particularly the automotive industry.
+The decline in vehicle production in the 2019 calendar year is the biggest since the global economic crisis of 2009.
+The 2019 fiscal year was also characterized by higher levels of inventories being held within the sales channel by
+both direct customers and distributors, most noticeably in the power semiconductor segment. In March, Infineon
+had to reduce its revenue target to €8 billion plus or minus 2 percent, the figure that was ultimately achieved (see
+the chapter "Outlook"). Automotive, our highest-revenue segment, contributed €219 million to total revenue growth
+of €430 million. The Industrial Power Control and Power Management & Multimarket segments also reported revenue
+growth of €95 million and €127 million respectively. The Digital Security Solutions segment recorded a €22 million
+drop in revenue (see the chapter “The segments”). The favorable development of the US dollar exchange rate to
+the euro, which averaged 1.13 for the year compared to 1.19 one year earlier, had a positive impact (see the chapter
+"Review of results of operations").
+Revenue growth of the individual segments in the 2019 fiscal year compared to the previous year
+Automotive
+P see page 79
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+19
+Intel
+In Germany, today, almost 40 percent of electric power comes from renewable energy sources. Infineon benefits
+from the fact that wind power turbines and photovoltaic power plants require multiples of power semiconductors
+per gigawatt of power generated than conventional power plants do. In contrast to coal-fired, natural gas or
+nuclear power plants, there is no turbine whose consistent movement can generate a constant alternating current
+of 50 hertz. This means that the electricity produced cannot be fed directly into the grid and power-electronic
+systems are required for conversion and protection. Infineon supplies all the major manufacturers of wind power
+turbines and PV inverters.
+Power generation from renewable energy sources
+A new mindset in climate protection depends entirely on a new mindset in the context of the energy transformation
+("Energiewende"). A viable energy transformation will only succeed in the future if we take sustainable and climate-
+friendly action everywhere from generation of electricity to its consumption. Microelectronics plays a decisive role
+here, helping to provide a constantly growing population with energy in an efficient and environmentally friendly
+manner. In the future, it will no longer be possible to meet the rising demand for electric energy using fossil fuels to
+the same extent as today. This makes renewable energy sources that do not emit CO2 continuously more important.
+One key here is the use of wind power and photovoltaic (PV). The fluctuating availability of energy from these sources
+can be balanced out using storage, but also calls for a holistic management of the power grid.
+Energy Efficiency
+There are numerous application areas with high growth potential for our semiconductor business in each of the
+market trends addressed above, Energy Efficiency, Mobility, the Internet of Things & Big Data, as well as Security.
+The need to generate, store, transmit and use energy more efficiently is growing along with the increasing demand
+for energy and the urgency of worldwide CO2 reduction goals. The rising level of traffic and transportation makes
+sustainable, intelligent mobility solutions indispensable. In a highly digitalized world, the number of interconnected
+objects and the requirements placed on secure processing, transmission and storage of data continue to expand.
+We service all these application areas with our solutions and systems, helping us achieve sustainable growth.
+22
+Growth drivers
+Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+In today's digital world, more and more things are connected with one another over the Internet. Forecasts for the
+coming year already estimate approximately 20 billion connected devices in households and companies worldwide,
+up from approximately 6 billion networked devices in 2016. The Internet of Things is a main driver of the digital
+transformation of households and is the foundation of the future-oriented project Industry 4.0. The number of data
+volumes that are generated, transmitted and stored is increasing every day. Correspondingly, the respective infra-
+structures are facing increasing requirements to process this data at highest speed and lowest latency.
+Humans and machines produce enormous amounts of data, at present 33 zettabytes - equivalent to
+33,000,000,000,000,000,000,000 bytes - per year, with the amount expected to be five times that by 2025.
+Big Data is an extremely valuable raw material and changes the ways we communicate: We are voluntarily
+revealing more and more sensitive information about ourselves. This makes it necessary for users to be able
+to communicate with one another securely and without the risk of misuse or theft of data. Safeguarding
+electronic devices and infrastructures thus takes on the highest priority and makes the digital transformation
+possible. Meeting this increased need for security is one of the core competencies of Infineon.
+More and more people are crowding from rural areas into cities, a trend which will continue into the future.
+According to a United Nations forecast, in 2030 there will be more than 40 "mega-cities" with populations of over
+ten million each. Current giants such as Tokyo (37 million residents in the metropolitan region), Shanghai
+(26 million) and New York City (19 million) will no longer be exceptional. In the year 2050 an expected two thirds
+of the world's population will live in urban areas. Such rapid urbanization means enormous challenges for infra-
+structure and the associated services. How should a metropolis be designed in order to guarantee adequate quality
+of life in close proximity? One possible solution is the "Smart City" model: In the cities of the future, all aspects of
+public life will intermesh and be connected with one another. An intelligent power grid (Smart Grid) can efficiently
+manage energy requirements, sustainable mobility solutions like the Smart Car can master the increasing volume
+of street traffic and digital and intelligent solutions in the Smart Home will increase quality of life. Our products
+are our contribution to the further development of energy infrastructure, traffic and transportation systems and
+residential spaces. The objective is to make metropolises more efficient, greener and more comfortable.
+According to the United Nations, a total of 9.7 billion people will be living on earth by 2050 - two billion more
+than today. And they will all want to live comfortably. In addition, the population is growing older in many industrial
+nations, both due to increases in longevity and due to sinking birth rates. Rapid population growth results in
+increased energy consumption, while rising demands push existing concepts for infrastructure, industry and com-
+munication to their limits. This all makes it necessary to generate, store, transmit and use energy more efficiently.
+Microelectronics plays a decisive role in supplying energy to the growing and evolving population and in protecting
+the environment. Our semiconductors enable systems that make our everyday lives more comfortable and at the
+same time minimize impacts on our environment. The key is making "more from less".
+We want to continue to grow and to create value for our customers and our shareholders as well as for our employees
+and for society. Therefore, our strategy focuses on global megatrends that are fundamentally shaping the world
+today: demographic and social change, climate change and scarce resources, urbanization and digital transformation.
+Our focus on energy efficiency, mobility, the Internet of Things & Big Data as well as security opens up extraordinary
+growth opportunities for us that we want to leverage with innovative approaches. In these markets, we follow
+structural drivers, areas which are expected to grow disproportionately because of the developments cited or which
+have major innovation potential.
+21
+Business focus
+Sony
+Western Digital
+HP Enterprise
+Vivo
+4.8
+4.7 4.0 4.0
+Wind
+3.8
+Alphabet
+☐
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Finances and strategy
+Business focus
+Amazon
+When it comes to energy generation from wind, two trends in particular drive demand for semiconductors. First of
+all, older, poorly performing wind power turbines are being replaced with modern, high-performance wind turbines,
+a process referred to as "repowering". Secondly, ever-stronger turbines are being used in initial installations. The
+performance of wind power turbines rose from approximately 50 kilowatts to 150 kilowatts in the 1980s, to an average
+of 1 megawatt in the early 2000s and today has reached an average of 3 megawatts for onshore turbines and 5 to
+6 megawatts for turbines used in offshore parks. The higher the power rate, the higher the value of integrated power
+semiconductors. Offshore wind parks in particular also place high requirements on the quality and reliability of
+the components used, since they require low-maintenance operation in a harsh environment, at high air humidity
+and in extremely saline air.
+Photovoltaics
+Infineon addresses a broad international basis and has been collaborating for years with the world's leading manu-
+facturers of photovoltaic inverters. We benefit from the growth of Chinese inverter manufacturers, among other
+things, both with regard to the domestic expansion of photovoltaics in China and in the export of the inverters to
+other regions. Furthermore, we work closely with leading European manufacturers and support innovative American
+companies with our products. Efficient conversion and low system costs contribute to reducing electricity generation
+costs in photovoltaic power plants and to creating grid parity compared with conventionally generated electricity.
+Using our silicon carbide transistors saves inverter manufacturers up to 20 percent in costs compared to silicon-based
+solutions. The power semiconductor content increases by two to three times.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+24
+P see page 26 f.
+Battery-powered devices
+Electric drives are at the heart of a large number of systems, for example cranes, conveyor belts and robots. We
+find them wherever something moves or is transported. According to the European Commission, electric motors
+account for almost 50 percent of the electricity consumed in Europe. The savings lever is correspondingly large
+when efficiency is increased. In the upcoming year, the EU member states could already have saved approximately
+135 terawatt-hours of electricity with more efficient motors, corresponding to the annual electricity consumption
+of Sweden. This would eliminate more than 60 million tons of CO2 emissions.
+One important electric motor model is referred to as the brushless direct current (BLDC) motor. In BLDC motors, all
+the commutation is electronic, depending on rotor position, rotor rotation speed and torque. This calls for the
+appropriate power semiconductors and, depending on the configuration, also for components for diagnostic and
+security functions. Because of their high level of energy efficiency and their low power-to-weight ratio, brushless
+direct current motors are particularly well-suited for use in battery-powered systems. Examples here are cordless
+home appliances such as robot vacuum cleaners, cordless drills and electric lawn mowers. Compared to conven-
+tional motors, this type of motor requires high-performance electronic control units. In addition to the motors,
+battery performance is also continuously increasing, enabling longer operating times. Furthermore, all the examples
+cited also require additional power semiconductor components for the chargers. With battery-powered devices,
+we benefit both from unit growth and from the higher number of semiconductor components used.
+New EU regulations will place stricter energy efficiency requirements on home appliances in the European market
+starting in 2021. For the first time, demands in terms of reparability and replacement parts are also being defined.
+The new regulations are among other things intended to create incentives for designing products with longer
+service lives. As a result, the manufacturers of major home appliances are increasingly turning to variable speed-
+controlled motors. These motors are significantly more energy-efficient, low-noise and have longer service lives
+than uncontrolled motors. And: The value of the semiconductors used is increasing by more than a factor of ten.
+Examples are the motors in washing machines and dishwashers, compressors in refrigerators and various drives
+in air conditioning systems.
+Industrial automation
+One way to reduce the energy consumption of an electric motor is to use an electronic control unit for automatic
+speed control, thus adapting performance to the respective load. Electronically controlled motors are also a central
+element in automation. Without them, it would be impossible to coordinate the various motion sequences efficiently.
+The market penetration of speed-controlled motors will increase. A speed-controlled motor control unit requires a
+large number of the power semiconductors we supply. The number and value of these power semiconductors
+depend on the power range of the motor. Industry 4.0 will trigger a new investment cycle not only for automation in
+factories, but also for global transport and handling systems as well as for collaborative robots (see the section
+"Internet of Things & Big Data" in this chapter).
+Mobility
+Global population growth and increasingly global value chains as well as urbanization are driving demand for all
+types of transportation, ranging from mass transportation such as airplanes and trains to vehicles for private use
+such as cars, eBikes and eScooters. Cities in particular are confronted with the challenge of making transportation
+cheaper, more efficient and more sustainable.
+Electro-mobility
+Major home appliances
+Continental
+Efficient drives and smart motor control
+DC-DC conversion
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+23
+Energy storage
+The demand for more computing power and storage capacity is driving the demand for DC-DC conversion. Processors,
+especially those used in artificial intelligence applications, require high power at very low voltages. In addition,
+energy requirements change considerably depending on load. As a result, the electronic systems are supplied with
+higher voltages that are then precisely stepped down to the required low voltages directly at the point of load.
+The situation is similar for PCs and communication devices, which sometimes require a large number of different
+voltages. Requirements placed on dynamics, efficiency and stand-by consumption are continuously increasing.
+Customers are looking for simple and reliable solutions, making the change to digital regulation of point of load
+systems while also driving the trend towards all-in-one solutions.
+In the course of the energy transformation, by the year 2035 Germany is to draw 55 to 60 percent of its electricity
+from renewable energies, and 80 percent by 2050. The use of renewable energies is linked with specific requirements
+on the entire energy supply chain. Electric power generation through wind and sun does not take place centrally
+in a small number of central power plants, but rather decentrally at many different locations. In addition, fluctuating
+power generation does not always match the actual demand. Conventional power plants still have to substitute
+for or supplement renewable energy sources, making temporary energy storage necessary. Market researchers
+expect the global power employed by the energy storage systems to increase from approximately 3,000 megawatts
+in 2018 to 9,000 megawatts by 2025. We estimate the value of the power semiconductor components at €3,200 per
+megawatt. Infineon provides the essential power components and subsystems for increasing the efficiency of
+energy storage.
+In the upcoming years, hydrogen will play a crucial role in energy supply. Even if many difficulties still remain to be
+overcome, we see major potential in the generation of hydrogen from renewable energy sources, as well as in the
+use of hydrogen in fuel cells. In the long-term, green hydrogen can become a fundamental growth driver for Infineon.
+Using electricity
+Current conversion
+A power supply for electric devices consists essentially of two stages. First, the power unit converts the grid alter-
+nating current (AC) to direct current (DC), a process referred to as AC-DC conversion. Depending on requirements,
+in a second step the voltage of this direct current is precisely adapted at the point of load to fit the respective
+requirements, for example for a server's processors. This second step is referred to as DC-DC conversion. The
+devices in question usually have several DC-DC converters. Growth in the area of power supplies depends on the
+power, complexity and especially on the unit growth of the devices.
+AC-DC conversion
+In the medium-term, we see the highest unit growth in the case of servers; because of the high power level, here
+a correspondingly high number of power semiconductors is required for power supplies. Demand for computing
+power and DRAM/Flash memory is currently driven by social networks and increasingly by machine learning. The
+Internet of Things and Industry 4.0 will accelerate this trend even more in the future. In addition, we see growth
+opportunities in business with compact chargers, fast-charging features and solutions for wireless charging of
+smartphones, tablets and portables.
+Hydrogen
+Oppo
+5.2
+5.2
+Infineon
+NXP
+Western Digital
+Source: Based on or includes content supplied by Informa Tech (former IHS Markit Technology), "Competitive Landscaping Tool - 2019 (Q2 Update)," August 2019.
+Foundries and subcontractors are not included in this market research.
+Media Tek
+HiSilicon
+5.7
+Renesas
+AMD
+The 20 largest semiconductor companies accounted for 75.2 percent of the worldwide semiconductor revenues
+in the 2018 calendar year. In the 2017 calendar year, the top 20 companies accounted for 74.4 percent of the overall
+market. The remaining 24.8 percent (previous year: 25.6 percent) was distributed among over 1,500 other semi-
+conductor companies. The semiconductor industry is thus highly fragmented. The consolidation process is more or
+less advanced, depending on the product category.
+Analog Devices
+ON Semiconductor
+10% market share
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Sony Semiconductor
+Δ
+6.2
+6.6
+SK Hynix
+Micron
+Broadcom
+29.7
+Qualcomm
+Texas Instruments
+6.2
+Toshiba
+STMicroelectronics
+5% market share
+17.416.6 15.4
+11.4 10.4 9.7 9.1
+9.0 8.4
+7.9 7.4 6.7
+nVidia
+Samsung
+XIII
+Finances and strategy
+Samsung
+15.3
+Lenovo
+Huawei
+Dell
+Xiaomi
+Apple
+HP
+LG
+Panasonic
+Source: Based on or includes content supplied by Informa Tech (former IHS Markit Technology), "OEM Semiconductor Spend Tracker - H1 2019," July 2019.
+Cisco
+9.2 9.2 8.8 7.9 7.5 6.8 6.2 5.9
+Bosch
+The major success of Chinese manufacturers in recent years, in particular in the area of smartphones, increased the
+number of Chinese semiconductor purchasers from two in 2013 to seven in 2018: Lenovo, Huawei, Oppo, Xiaomi,
+Vivo, ZTE and TCL. With Bosch and Continental, there are two European companies represented in the top 20. The
+disproportionately high growth rate of the market for automotive semiconductors is evident in the development of
+Bosch. After a US$2.7 billion purchasing volume and ranking 19th in 2013, in 2018 Bosch had a purchasing volume
+of US$6.8 billion and was in 11th place. With Amazon (Amazon Web Services) and Alphabet, two hyperscale data
+center operators are for the first time within the top 20.
+Combined Management Report | Our Group
+19.5 19.0
+39.6
+2019 fiscal year
+20
+20
+For years, China has played the dominant role with regard to regional semiconductors sales. 48 percent (previous
+year: 46 percent) of all semiconductors were used there in the 2018 calendar year. In China, contract manufacturers,
+so called EMS (Electronic Manufacturing Services), play a special role. These companies assemble electronic
+products predominantly for Western customers. This business model plays a significant role for durable consumer
+goods on the one hand and for information and telecommunications sector-related products such as servers, PCs,
+notebooks and cellular phones on the other. A large portion of the semiconductors mounted in China is subse-
+quently re-exported as part of a finished product.
+Global semiconductor sales 2018 by region (total market size US$485 billion)
+Americas 12%
+Japan 7%
+27.2
+China 48%
+10% Europe, Middle East, Africa
+23% Asia-Pacific
+(excluding China, excluding Japan)
+Source: Based on or includes content supplied by Informa Tech (former IHS Markit Technology), "Application Market Forecast Tool - Q3 2019," September 2019.
+In terms of purchasing volume, the 20 largest semiconductor buyers account for US$214 billion, equivalent to a
+share of 44.1 percent of the overall market (previous year: US$191 billion or 44.3 percent). As with semiconductor
+manufacturers, a few companies are clearly ahead as the leaders in the ranking list. Apple and Samsung are by
+far the largest buyers of semiconductors.
+Top 20 semiconductor consumer in 2018 calendar year
+Purchasing volume in billion US$
+0
+The net cash position (see the chapter "Internal management system" for definition) increased accordingly by
+€1,212 million to stand at €2,223 million at the end of the 2019 fiscal year (30 September 2018: €1,011 million).
+Cypress
+Group strategy
+The increasing degree of interconnection of humans, machines and devices calls for more IT security, from the
+manufacturing industry and Smart Home applications to information and communication technologies. We provide
+our customers with robust, future-oriented embedded security hardware for electronic equipment, computer
+systems, network components and industrial facilities. These security technologies make it possible to authenticate
+persons and machines, protect confidential data and detect unauthorized changes to networked machines and
+devices. At the same time, user awareness of the topic of IT security is increasing. One example: In the context of
+Smart Home, the majority of Germans is willing to accept a significant premium for improved data security. This
+means that people are attributing more importance to the protection of their personal data.
+Security
+Mobile data traffic is constantly increasing in volume with the arrival of the new wireless communications standard
+5G: While 19 exabytes - equivalent to 19,000,000,000,000,000,000 bytes - were transferred by mobile communications
+worldwide in each month of 2018, experts expect a volume of 77 exabytes per month for the year 2022. In order to
+be prepared for the exponentially increasing data volumes, to achieve higher data transmission rates and to improve
+network coverage, network providers are turning to a high-performance infrastructure. The migration of network
+architecture to smaller cell sites enables, among other things, the use of higher frequency ranges and better exploita-
+tion of the available frequency spectrum. Radio-frequency components are required for both the communication
+between mobile devices and the base station and for wireless backhaul from local networks to the main network.
+Mobile communications
+"Smartification" is finding its way into the home as well. While in an industrial context the primary issue is increasing
+productivity, applications in the private environment are usually focused on comfort. A Smart Home not only provides
+remote control of appliances and devices, it can also offer more comfort, higher energy efficiency, and a higher
+level of security by working together with the various sensors, devices and the internet. The Infineon portfolio of
+sensors, power semiconductors and security controllers offers the right solutions for a networked home.
+Smart Home
+The field of robotics has been attracting special attention for several years now. In addition to the continuing devel-
+opment of conventional industrial robots, more and more areas of industry are implementing collaborative robots,
+known as "cobots". Cobots work together with humans in the manufacturing process and are no longer separated
+from their human colleagues by protective equipment, as the typical industrial robot is; the requirements placed on
+their reliability and safety are correspondingly high since they have to be able to perceive their surroundings well
+enough to effectively work together with humans without endangering them. Cobots will relieve and support humans
+in difficult and dangerous tasks. In the long term, cobots will support elderly people in living more independently,
+helping to master the challenge of an aging population. Their further development continues the trend towards
+intuitive robot programming and self-learning robots. Infineon offers not only the necessary sensors, microcontrollers
+and power semiconductors, but also provides numerous start-ups in this market with know-how in the area of motor
+control, sensor systems, and security.
+Collaborative robots
+Human Machine Interaction is concerned with how humans and systems interact and communicate with one
+another. The focus has long moved past classic industrial machines and now affects computers, digital systems
+and devices for the Internet of Things, i.e. the connection of the real and digital worlds. More and more devices are
+connected and perform their tasks automatically. Operation of all these machines, systems and devices has to be
+as intuitive as possible, as if the user were communicating with a person. Smooth communication between human
+and machine requires the right interfaces. A system can for example be controlled using text entry on the keyboard
+or mouse, but touchscreens, voice and gesture control are more natural.
+Human Machine Interaction
+27
+Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+ƠI A
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The planned acquisition of Cypress will expand our product portfolio by several differentiating components. This
+includes microcontrollers with corresponding software eco-systems, high-performance memory components, as
+well as connectivity components such as WiFi, Bluetooth and USB-C. The additional combination of our security
+expertise with the connectivity know-how of Cypress will generate new growth potential in the area of the Internet
+of Things, especially in the industrial and consumer segment.
+Our semiconductor solutions drive the Internet of Things. Sensors transform environmental information into data;
+microcontrollers process this data and generate control signals; actuators convert the control signals into actions -
+in most cases motion but also light and heat; security solutions protect the integrity of devices and equipment. This
+is how we connect the real and digital world.
+Compute Microcontrollers Actuate Power Semiconductors Connectivity → Wi-Fi, BT, BLE, USB/USB-C
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+Our Group strategy is focusing on the megatrends mentioned already and thus ensures Infineon's long-term structural
+growth. We concentrate on markets with strong structural growth. Our course of action in the individual markets
+depends on our competitive position, which we analyze in terms of technologies, products and application under-
+standing. This results in three possible categories to start with: core, adjacent and new businesses, in terms of
+products, applications and markets.
+Strategic guideline:
+The center of this implementation is our strategic "Product to System” approach, in which we orient our entire value
+chain to the success of the customer. This strategy is supported by further elements: a solidly anchored innovation
+culture, continuous pursuit of technology leadership, pronounced quality consciousness, differentiating in-house
+production and a sales strategy custom-tailored to fit the various markets. This allows us to offer our customers
+leading products, the highest quality and supply reliability and thus to succeed in profitable growth and faster than
+the market. Our objective is a leadership position in the markets we address.
+In recent years, we have established a stable foundation for success in our target markets. Our core competencies
+are in higher demand than ever in the context of global megatrends. Our strategy aims to further strengthen our
+core business and acquire new growth markets. Over many years, we have gained and systematically expanded the
+technical expertise necessary to do so. And since good ideas do not become innovations until they are successful
+in the market, we have also developed the right concepts for implementing our strategy to create value.
+Group strategy
+P see page 22 ff.
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Sense Sensors
+The integrity of devices has to be ensured as the degree of networking increases. This integrity consists of both data
+and system integrity and means that data modification cannot go undetected. Integrity thus ensures that a system
+will function correctly. A Trusted Platform Module (TPM) can be implemented here. This special security chip can
+protect keys, passwords and digital certificates and store them separately from the CPU. Here, sensitive information
+and security-critical data are locked away in a "data safe”. At the same time, the integrity of the data can be checked,
+making it possible to detect attacks promptly.
+The constant increase in connected vehicles creates opportunities for many new services, but also entails the danger
+of unauthorized access. This makes it necessary to guarantee secure data exchange both between the various
+onboard systems and between vehicles and the infrastructure. Vehicle safety and personal safety on the one hand
+and data and IT security on the other hand can no longer be considered in isolation from one another. The vehicle
+is becoming a networked computer on four wheels and is also becoming a part of the Internet of Things. The demand
+for data and IT security in the vehicle is rising. We see our opportunity here with hardware-based security offered
+by our security controllers - either as a separate component or integrated in our automotive microcontrollers.
+Security for connected vehicles
+The fourth Industrial Revolution is in full swing. In the era of Industry 4.0, companies are using the most modern
+technologies to design their manufacturing to be faster and more cost-effective, to reduce rejection rates and to
+minimize incidents and downtimes through predictive maintenance. Networking and digitalization of factories,
+however, create points of attack for hackers. To protect themselves, companies must therefore take security into
+account from the very beginning of Industry 4.0 projects. A combination of software-based and hardware-based
+security solutions can protect connected machines and communication nodes. Examples are the OPTIGA™ TPM
+chips from Infineon, which can be integrated in routers, industrial PCs and complex control units and which serve
+to identify devices to communicating partners in the network. They thus authenticate themselves in the network
+and secure data transmission.
+Security for industrial applications (smart factories)
+Security plays a decisive role in the Internet of Things. The rising number of hacking attacks underlines the impor-
+tance of appropriate precautions. In order to secure electronic systems, it is important to only connect authorized
+and authenticated devices with one another and to protect them against cyber-attacks and manipulation. This
+means security has to be integrated into every end-point whenever possible. The electronic components central to
+security are typically assembled on the printed circuit board, which is why these components are referred to as
+embedded security.
+Secure authentication for the Internet of Things
+The development of smartphones and wearables, the mobile Internet and Near Field Communication (NFC) tech-
+nologies has made it possible to integrate payment services in today's mobile devices. Cash-free payment is just
+one of many mobile end device functions requiring the storage and processing of sensitive data. For example, users
+experience a new kind of comfort when riding in public transportation with mobile tickets instead of using coins
+and physical tickets. These application areas require special security solutions, for example a security chip known
+as a Secure Element (SE). The SE can either be built into the smartphone (referred to as an "embedded SE" (ESE)),
+integrated in the SIM card or located on a microSD card.
+Security for mobile devices
+28
+Integrity of devices
+Strategic growth model
+Infineon
+10101001010100
+China is one of the largest rail vehicle markets in the world. We also see the reinvigoration of the market for traction
+systems. As a result of industrialization and urbanization, there is demand primarily for urban rail systems and
+regional trains.
+Sustainable and optimally networked mobility within metropolitan centers as well as between metropolitan centers
+is one of the key topics of the 21st century. Today, reliable and rapid public transportation determines more than
+ever the quality of life and competitive ability in many regions and cities worldwide. Our components are used in
+public transportation, urban rail systems and trams as well as in high-speed trains.
+Traction systems
+26
+Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Active safety systems are being expanded more and more and are taking on the character of driver assistance
+systems. By supporting the driver with the tasks of driving, they increase both driving comfort and traffic safety.
+Among other things, they assist in critical situations or help correct a driver error when appropriate, for example
+with automatic emergency braking maneuvers. Systems for partially and fully automated driving essentially consist,
+firstly, of the sensors (for example radar, cameras in the vehicle's interior and exterior), and secondly, a central
+high-performance computer for the evaluation of sensor data as well as calculation of the driving strategy (to a
+certain extent, the system's intelligence). The third element is the actuators (steering, brakes, engine control and
+transmission). The importance of the functional safety of components and vehicle systems increases as more
+electronic assistance systems are used in vehicles. Functional safety and quality are thus very important, placing
+challenges on the entire industry. Infineon consolidates this topic as reliability or "dependability" and has a major
+competitive lead in this field.
+"Vision Zero" describes one of the largest objectives of the automotive industry: Vehicles are to be made so safe
+that no serious or fatal accidents occur anymore; today approximately 90 percent of such accidents are attributable
+to human error. Active safety systems can either completely prevent an accident or at least significantly reduce its
+consequences by directly intervening in the driving process. Examples here are pedestrian detection, adaptive
+cruise control and blind spot detection. These functions are no longer reserved for luxury class vehicles, but rather
+are in the meantime conventional equipment in the mid-range vehicle class.
+Safe automated driving
+The steadily increasing number of electric vehicles also requires a corresponding charging infrastructure. A well-
+developed network of charging stations increases the incentive to buy an electric vehicle. In order to promote
+the acceptance level of electro-mobility, China has begun operating charging stations along the country's eight
+most important highways. This also includes the important connection between Beijing and Shanghai. By 2020,
+10,000 charging stations with 120,000 charging points are to be implemented, with an investment volume of
+approximately US$770 million. And other countries will most likely constantly expand their networks of publicly
+accessible charging stations in the coming years, too. Depending on the system topology, the charging stations
+use different types of power semiconductors.
+Charging infrastructure for electro-mobility
+There are also what are referred to as mild-hybrid vehicles, based on 48 volt technology, which will be used in
+addition to the 12 volt onboard network. On the one hand, these vehicles can recover a certain amount of braking
+energy, while on the other hand pollutant emissions can be reduced with more efficient systems. Mechanical
+functions are being increasingly replaced with electric functions, the 48 volt partial onboard network handles the
+power supply for high-power consumers such as the electric turbocharger, electric power steering as well as
+electronic stability control. In addition, the 48 volt technology enables better recuperation while braking. Market
+researchers calculate approximately US$90 per vehicle of additional power semiconductors to control these power
+consumers as well as the coupling of the two on-board power networks.
+In order to reduce the fleet average to the mandated target CO₂ value, many vehicle manufacturers are expanding
+their product ranges to include more models such as hybrid vehicles or pure electric vehicles. These vehicles have
+a significantly higher semiconductor content than conventional ones. Infineon offers a wide range of corresponding
+power semiconductor components. While the current average semiconductor content of a car with a conventional
+combustion engine is US$417, the amount in full hybrid or plug-in hybrid vehicles is US$785, and for purely electric
+vehicles as much as US$775. Here power semiconductors make up approximately three quarters of the additional
+semiconductor content per vehicle.
+25
+Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+Internet of Things & Big Data
+The Internet of Things has the potential to radically change how companies and consumers interact with one
+another and with the infrastructure surrounding them. The Internet of Things connects the real and the digital world.
+A wide variety of physical “things” – ranging from people and places to cars and computers and even to home
+appliances and industrial equipment - are equipped with embedded electronic systems, software and sensors.
+Linking the real and the digital world
+Industrial IoT
+201010010100101001
+01010010010010100101
+0100101001001010010101
+01010101 World1010]
+01001001Digital
+0101001010010:
+10010
+Connectivity
+Security solutions
+20101010
+Actuate
+Software
+Ecosystem
+Sense
+Automotive
+5G
+Power
+supplies
+Real-world
+applications
+Drives
+Battery-powered devices
+Consumer loT
+mpute
+Markets
+Strengthening the core business and unlocking new growth markets
+Products/Technologies
+Technology leadership means added value for customers
+In recent years, we have intensified our activities in the area of software, both in strategic partnerships and with our
+own development activities. The progress we have made is becoming increasingly visible, benefitting our customers.
+For example, the second generation of our successful automotive microcontroller family AURIXTM can be used for
+radar signal pre-processing in combination with our radar sensor ICs. We have implemented this feature, referred
+to as pre-processing, in hardware, since this is substantially more effective. However, we were only able to do so
+because we understood the underlying algorithms.
+Technology know-how has always been the foundation of our business model, whether in the form of discrete
+components, integrated solutions or mixed-signal components. Our broad portfolio ranges from single compo-
+nents all the way to solutions with hardware-related software. This enables us to provide targeted support to our
+customers while choosing from a variety of approaches. Some customers want to differentiate themselves from
+their competitors by means of their own software, purchasing only the necessary hardware from us. We go one step
+further with automotive microcontrollers and security controllers, which we supply with special firmware that
+supports the basic functionality of the hardware and cannot be modified. More extensive functions can then be
+implemented using additional program code. For example, the second generation of our digital motor control
+platform iMOTION™ was developed for use in major home appliances and comes with a development kit that meets
+the priorities of our customers in this market: lower system costs, compact design, reduced development effort,
+shorter development times and high reliability. iMOTION™ already comes with all the algorithms required to control
+an electric motor. Only a small number of application-specific parameters need to be defined in order to complete
+programming. Since we think in terms of systems, we can support all of these different approaches and understand
+how value is created. In order to provide our digital age customers with even more created value, in the future the
+iMOTION™ will be expanded to include security and networking components. It is not always the most sophisticated
+solution that provides the biggest value added to the customer: Standard components may also be just the right
+fit. Nevertheless, system understanding creates a competitive advantage because it gives us the ability to develop
+better products in cooperation with our customers.
+32
+32
+Finances and strategy
+Group strategy
+Combined Management Report | Our Group
+ƠI A
+Software
+Customers choose Infineon because we stand for highest levels of quality, reliability and technological leadership.
+The satisfaction of our customers attests to the fact that we are successful with our rigorous quality strategy. In the
+2019 fiscal year, Infineon was once again honored by many leading manufacturers in the automotive industry. For
+example, Japan's largest automobile manufacturer Toyota recognized Infineon once again with an award for what
+is now five years of defect-free deliveries to its plant in Hirose (Japan). In order to fulfill the promise of technical
+leadership, our engineers already anticipate many challenges even before our customers are affected. We meet the
+high quality requirements of the automotive industry, achieve the highest efficiency levels in handling electricity
+and we deliver solutions for the world's challenging security projects. The close collaboration with our customers
+helps us make targeted use of this specific expertise and recognize future trends at an early stage. One example:
+Since May 2019, Infineon has been a partner in the Volkswagen group's strategic supplier network FAST. FAST stands
+for the "Future Automotive Supply Tracks” program and for close collaboration in central future-oriented fields. As
+a market leader in semiconductors for electro-mobility, Infineon makes an essential contribution to the drive trans-
+formation of the world's largest automotive group. Our power modules control the electric drives in Volkswagen's
+electro-mobility platform MEB, the industry's largest platform for pure electric vehicles. In the context of FAST,
+Infineon and Volkswagen will also discuss future semiconductor requirements and thus will be able to generate
+innovations that for example increase the driving range of electric cars or reduce charging times.
+Hardware
+Discrete components
+Integration of analog
+and digital functionality
+Firmware
+System know-how
+Algorithms
+Customer system
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Applications
+Single function
+Competencies evolve over time
+Building block
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Group strategy
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Here, the digital transformation plays a crucial role, a development from which we benefit in two ways as a globally
+active semiconductor manufacturer: As both a user and provider of digital solutions. We are achieving excellent
+results in our well over 100 digitalization projects. Thus, for example we are connecting our sites and organizing our
+global supply chain to form a virtual factory. In sales and marketing, we are using new methods for analyzing Big Data
+to improve our cross-selling and as a result, we can provide more targeted solutions for our customers' needs. With
+initiatives like this, we are building our digital expertise and are becoming even more competitive. We are following
+an exploratory approach in order to best utilize the potential of the digital transformation. This way we gather
+experience based on specific application cases and work towards solutions in an iterative process.
+This is why innovation and system thinking ideally complement one another. We think about what the key factors
+are and how we can combine several innovative, sometimes at first sight minimal steps to form a larger whole that
+will in turn provide an additional and substantial benefit for the customer. Thus, today our claim to innovation
+covers all areas of our company: logistics, operations, technology, products, system solutions and partnership with
+the customer. Depending on particular market demands, we focus on different aspects. The company-internal
+focus is on innovation in business and continuous improvements in order to become leaner and faster. The key to
+success is collaboration across organizational boundaries and the resulting creation of a working environment
+that helps us expand our innovative expertise. We have established successful new concepts, which are independent
+of hierarchical approaches and based on the self-motivation of our employees.
+Innovation is one of the most fundamental success factors in the semiconductor industry and is Infineon's basis
+for differentiating itself from competition. Infineon has shown time and again that our technological and product
+innovation lets us grow faster than the market and increase profitability. But challenges are growing as well:
+Competition is intensifying and competitive coverage of the application areas in our markets calls for a wider and
+wider technology portfolio. In addition, development efforts are increasing disproportionally as technologies grad-
+ually approach physical limitations. This fact underlines the significance of economies of scale and the connection
+between technology leadership and size. Previous concepts for success are too shortsighted under these conditions
+and have to be either expanded or rethought.
+Innovation drives differentiation
+In addition to innovative strength and delivery reliability, quality and costs are also essential aspects in the orienta-
+tion of our manufacturing landscape. Innovation of manufacturing processes takes place primarily in Europe. Our
+Asian sites focus on efficiency and are intended to cover further growth.
+In the frontend, our 300-millimeter thin-wafer manufacturing for power semiconductors is a sustainable competitive
+advantage. We are equipping the available cleanroom space in Dresden (Germany) with additional tools step-by-
+step, and we benefit from the resulting higher productivity and lower capital intensity compared to manufacturing
+on 200-millimeter wafers. Furthermore, in November 2018, construction of a second, fully automated 300-millimeter
+factory at the Villach (Austria) site began. Depending on the macro-economic situation, we currently plan to ramp
+the fab by the end of the 2021 calendar year. We expect the 300-millimeter manufacturing cleanroom space in
+Dresden to be fully used by then. The estimated additional potential revenue from the new factory is approximately
+€1.8 billion annually, with a necessary total investment of approximately €1.6 billion. Manufacturing in Villach and
+Dresden will use the same processes, facilities, automation and digitalization concepts, thus constituting a manu-
+facturing complex ("Verbundfertigung”). This will mean synergies as well as benefits for the customer, since we can
+rapidly shift manufacturing volumes between the sites. By expanding our manufacturing capacities, we are also
+sending a clear signal to our customers: Infineon is the ideal partner for future growth.
+34
+=4
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+Combined Management Report | Our Group
+33
+33
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Our outstanding manufacturing methods and our process expertise give us a strategic advantage in many application
+areas, for example in power electronics and sensor technologies, because we can offer components that can only
+be produced using leading-edge manufacturing technologies. Several years ago, we were the first company in the
+world to develop highly-integrated radar sensor ICs for the 77 gigahertz frequency range based on innovative silicon
+germanium technology. This cuts the cost of radar systems, which as a result are used more widely in vehicles
+outside of the premium segment, making street traffic safer.
+All our actions are aimed at creating value for the customer and at opening up opportunities for us to differentiate.
+This also applies to manufacturing. We manufacture in-house, when doing so means we can differentiate ourselves
+from the competition in the market through lower cost or higher performance. On the other hand, when it comes to
+standard technologies, usually in the case of highly integrated products such as microcontrollers and security ICs
+where design is the main concern, we primarily work with contract manufacturers. We thus utilize our invested capital
+in the most efficient way possible and optimize our investments in research and development.
+Strategic advantages through in-house manufacturing
+Many years ago, we intentionally blazed new trails in the field of sensor technologies, anticipating the drastically
+increasing importance of capturing environmental data for our target markets. Today we have a comprehensive
+portfolio of sensors for a wide variety of systems in the car, for mobile devices, consumer electronics and the Internet
+of Things. The example of the REAL3TM image sensor chip shows that we act flexibly and adapt to market demands:
+Together with LG Electronics, Infineon has developed a smartphone featuring leading Time-of-Flight (ToF) technol-
+ogies. Our ToF image sensor chip provides more exact measurements based on infrared light than other 3D tech-
+nologies that use complex algorithms to calculate the distance between an object and the camera lens. This makes
+ToF faster and more effective in difficult ambient light conditions, reducing the load on the smartphone processor
+and thus cutting electricity consumption. Our image sensor chips not only prove our expertise, they also exceed
+manufacturers' requirements.
+Furthermore, we make use of our technology leadership to systematically expand our abilities, strengthen our
+core business and grow in scope - for example, whenever the requirements of our markets change or when we see
+long-term growth potential in an adjacent business segment. Thus, as the market leader, we began researching
+new materials for power semiconductors at an early stage. Silicon carbide (SiC) and galium nitride (GaN) are
+particularly well-suited for use in the field of power electronics. Here we are advancing into new areas of performance
+and efficiency. These components are typically more expensive than silicon-based products, but thanks to new
+system architectures they also open the door to many new types of customer benefit, such as a smaller form factor,
+higher efficiency and lower system costs. The realization of these benefits implies higher research and development
+efforts on the part of our customers. Therefore, we support the introduction of these new technologies in two ways:
+On the one hand, we work together closely with our highly innovative customers, while on the other hand we provide
+less technology-oriented customers with solutions that are easy to implement. In the context of the increasing
+importance of SiC to certain power semiconductor applications, we acquired the silicon carbide specialist Siltectra
+in November 2018. The company has developed an innovative method for especially material-saving and efficient
+processing of crystals (Cold Split technology). Infineon will use the Cold Split technology to split silicon carbide (SiC)
+wafers to make two wafers out of what was originally one and thus to potentially double the number of chips har-
+vested. In addition, the efficient separation of the SiC ingots into wafers offers substantial potential. The increased
+number of SiC chips will significantly simplify the ramp-up of our SiC products, especially with regard to the further
+expansion of renewable energy sources and the increasing use of SiC in the power train of electric vehicles. We have
+now established all the prerequisites for future success in the growing SiC market: access to high-quality wafers,
+leading technologies at the product level (Trench SiC MOSFET), module expertise and system understanding.
+Based on our technology leadership in transistors, we also want to strengthen our position in solutions for their
+control and to expand our product portfolio. As the number one in MOSFETs and IGBTs, we see interesting opportu-
+nities for growing more strongly than before in this area. This approach is exemplary of the strategy outlined above
+for moving from a strong core business to penetrate adjacent markets.
+Finances and strategy
+Partial system
+functionality
+Base technology
+System know-how is bridging the gap between core technology and target application
+Infineon
+World discrete power semiconductor and modules market share 2018
+Full system
+functionality
+30
+30
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+29
+29
+grow in scope
+grow in scale
+New
+алма
+Enable
+Enable
+Adjacent
+Core
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ON Semiconductor
+STMicroelectronics
+The core business includes all those areas in which we have a comprehensive understanding of applications or
+master the base technologies, and in which we can therefore offer a differentiating product portfolio. We want to
+at least grow with the market and, in doing so, to maintain or strengthen our leading positions ("grow in scale”).
+One example: Power semiconductors are instrumental in the generation, transmission and use of electric power.
+We understand how these systems are used to convert and control electric power and we supply particularly com-
+pact and energy-efficient MOSFETs and IGBTs for this purpose. As the clear market leader in this area, our broad
+technology and product portfolio lets us actively shape the transition of certain applications to new semiconductor
+materials such as silicon carbide (SiC) and gallium nitride (GaN), offering our customers solutions ideally suited to
+their needs. Our high-volume manufacturing offers economies of scale and makes it possible for us to provide
+manufacturing capacities and to grow with our customers.
+Vishay
+Our strategic approach "From Product to System" goes well beyond thinking in terms of technologies and products.
+We want to understand what markets demand and how the markets are changing. Only then will we be able to
+understand how we can change the markets ourselves. We consider more than just the direct sales opportunities
+for our products: We also look at our customers' success factors and the development of end-markets. By doing
+so, we recognize at an early stage when the foundation of our business is changing. This is a prerequisite for timely
+action, guaranteeing sustainable differentiation in growth applications and increasing profit. In order for this to
+succeed, we have to understand the environments in which our customers' products are used, how the products
+are embedded in larger systems, what other devices they interact with, what requirements they have to fulfill and
+what tasks they are intended to perform. On the level of our products in these systems, we also have to consider
+which active and passive components they use, which control concepts they use and what capabilities our customers
+contribute to the value creation process. Equipped with this knowledge, we can leverage our competencies even
+better: We want to translate what is technologically possible into a commercially viable product that provides the
+greatest possible benefit to our customers. For example, sensor systems not only capture information about the
+surrounding environment, but also interpret and process the data they gather in order to initiate a particular
+action; digital control loops in power supplies enable higher energy efficiency at both high and low load levels; and
+security controllers are capable of distinguishing authorized access from unauthorized access. In addition to the
+hardware components involved, this also requires varying degrees of software support. Thus, to a certain degree,
+system understanding also means software understanding.
+The strategic "Product to System" approach defines our actions
+Factors for successful implementation
+Strategic fields of action:
+We also placed these criteria at the center of the planned acquisition of Cypress, which we announced on 3 June
+2019 and which we expect to have concluded by late in the 2019 calendar year or early in the 2020 calendar year. The
+combination of complementary product portfolios strengthens and expands our core power semiconductor business
+and can cover an even wider application spectrum, which means we increase our ability to differentiate and
+enlarge our potential growth. Cypress has a comprehensive portfolio of microcontrollers as well as software and
+connectivity components. The combination of our power semiconductors, sensors and security solutions lets us
+offer our customers even more comprehensive and more innovative system solutions. The consolidation of our
+security expertise with the connectivity know-how of Cypress will accelerate the introduction of new applications
+in the Internet of Things. For automotive semiconductors the expanded portfolio of microcontrollers and NOR flash
+memory has a substantial potential, in particular with regard to their growing significance for driver assistance
+systems and new electronic architectures.
+Mitsubishi
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+31
+We supplement our organic growth with targeted acquisitions. These acquisitions have to meet three criteria:
+They must be strategically compatible with our three growth categories (core, adjacent, new), financially reasonable
+and culturally fitting. An acquisition thus has to strengthen Infineon's market position according to our strategic
+orientation and has to be a viable addition to our range of expertise. The business acquired has to increase our profit,
+contribute to our margin target of an average of at least 17 percent throughout the cycle and must earn a return at
+least equal to its capital costs. Finally, the corporate culture of a potential acquisition candidate has to be a good fit
+with Infineon's culture, ideally contributing valuable elements to it.
+19.9%
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+5.4%
+4.8%
+8.9%
+Source: Based on or includes content supplied by Informa Tech (former IHS Markit Technology), "Power Semiconductor Market Share Database 2018," September 2019.
+The greatest growth potential is to be found in markets that are adjacent to our core business, which we have
+not yet addressed at all or only incompletely. For example, we can adapt existing technologies and products for
+additional applications with reasonable effort and can thus increase sales potentials. And in the application fields
+we have already addressed we can use our system understanding to increase the scope of our business with a
+broader product and solution portfolio to generate higher revenue ("grow in scope"). Thus, the core mentioned
+above is not a static portfolio of activities; much more the adjacent areas will become part of our core business
+in the mid-term. The core is growing and the boundaries are shifting, because when we make progress in particular
+markets in terms of technology, products and application understanding, the classification of these markets
+changes accordingly. To return to the example of power semiconductors: We are proud to point to "Power" as one
+of our original core competencies. Nevertheless, we continuously develop here, too. We are expanding our portfolio
+in order to offer our customers an increasing degree of "Intelligence" in addition to "Power". Specifically this means
+that for some time now we have been complementing our range of efficient power transistors with additional
+solutions in order to integrate them in digital solutions. The products required for intelligent control of these
+switches tend to be more complex and higher-end because they integrate more functionalities. In the context of
+increasingly complex systems and shorter development times, many customers appreciate solutions in which we
+combine "Power" and "Intelligence".
+Technological progress also enables completely new application areas in which broad commercialization is still
+pending. Sometimes, the impulse for new applications comes from innovations in semiconductor technology
+(for example Time-of-Flight technology for 3D sensing technologies), sometimes groundbreaking concepts on the
+customer side require the development of suitable semiconductor solutions (such as the combination of various
+sensor technologies for easier Human Machine Interaction (HMI)). We actively address these new business areas
+in order to secure a good starting position in highly promising future markets at an early stage.
+4.5%
+Combined Management Report | Our Group
+2018
+Segment Result
+2019
+43
+In contrast to previous years, growth in global vehicle manufacturing did not continue during the 2019 fiscal year.
+Market analysts expect for the 2019 calendar year that the number of vehicles manufactured worldwide will
+decrease by approximately 6 percent compared to the preceding year.
+In spite of overall lower vehicle manufacturing levels during 2019 fiscal year, Infineon's Automotive segment
+continued to grow. This is due on the one hand to Infineon's strong presence in vehicles of the premium and upper
+mid-range classes. On average, both vehicle classes contain more semiconductors than vehicles of the mid-range
+and compact classes. On the other hand, it is due to the fact that production of premium and upper mid-range
+vehicles dropped less percentage-wise than worldwide vehicle manufacturing as a whole.
+Among other things, Infineon benefits from new functions in the areas lighting systems, comfort and safety as well
+as from electrification of previously hydraulic and electro-mechanical systems. In addition, the two megatrends
+electro-mobility as well as automated driving and driver assistance systems, respectively, continue to determine
+the increase in the average semiconductor content of cars. They are among the structural growth factors for
+Infineon and are expected to account for approximately two thirds of growth in the Automotive segment over the
+next five years.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The segments
+Automotive
+In spite of the positive increase in revenue, in the previous fiscal year the Segment Result decreased. This was essen-
+tially due to the fact that revenue growth was for the most part based on the demand for electro-mobility products.
+Compared to a share of approximately 10 percent in the previous year, their share of segment revenue increased in
+the meantime to approximately 13 percent; however, due to large investments in development and manufacturing,
+the profitability of these products is still not at the average margin level of the Automotive segment. In addition,
+at the beginning of the 2019 fiscal year, a higher growth rate than the actually achieved 7 percent was expected.
+Consequently, it was not possible to fully utilize the available manufacturing capacities, especially during the second
+half of the fiscal year. This resulted in idle costs that had a negative impact on the Segment Result.
+44
+In the area of power semiconductors, Infineon is significantly better positioned than the competition when it comes
+to the future growth of electro-mobility and the associated considerable increase in demand for power semicon-
+ductors. This is because, for years, Infineon has invested significantly more than its competitors in manufacturing
+capacities. The ability of a semiconductor supplier to cover the expected strong increase in demand consistently
+and with supply reliability is an important competitive edge. Infineon's semiconductor solutions fit for all types of
+electric vehicles: Pure electric vehicles as well as hybrid and plug-in hybrid vehicles, including 48 volt technologies.
+In China, the world's largest market for electro-mobility, the robust growth in the production of vehicles continued
+with plug-in hybrid and pure electric drives by almost 60 percent in the 2018 calendar year. However, in the second
+half of the 2019 calendar year, demand dropped significantly due to the cut of subsidies by the Chinese government.
+Together with its partner Schweizer Electronic AG, in the 2019 fiscal year Infineon brought chip embedding, an
+innovative technology in the area of 48 volt technologies for mild-hybrid vehicles, onto the market. Here low-
+voltage transistors from Infineon are already put into the printed circuit board (PCB) as early as during production
+of the PCB by Schweizer Electronic AG, instead of assembling and soldering the transistors on the PCB, the tradi-
+tional technology today. Chip embedding creates substantial added values for Infineon's customers, since their
+systems are made more compact and even more efficient. For example, compared to a conventionally structured
+system, chip-embedding technology increases the performance capabilities of a 48 volt starter generator by
+about 60 percent.
+In the area of driver assistance systems, dynamic growth continued in the context of the megatrend automated
+driving. Once again, revenues from radar sensor ICs and AURIX™ microcontrollers increased substantially during
+the 2019 fiscal year. 77 gigahertz radar systems suitable for use over medium and long distances saw particularly
+strong demand.
+Growth for AURIXTM microcontrollers was driven primarily by their use as signal processors in radar systems and
+as host processors in camera systems. Demand for the use of the controller in the central gateway, in the telematics
+unit and as a gateway to the infotainment system of the vehicle also showed very positive development. The
+significance of the AURIX TM microcontroller for the sensor fusion box, the unit, which gathers all the signals for driver
+assistance, continued to increase. However, the revenue in this area was still relatively small. Demand also devel-
+oped nicely in the classic microcontroller application areas, i.e. powertrain and general safety systems, however,
+at a significantly lower growth rate compared to the area of driver assistance systems.
+Development of the Segment Result
+Segment Result was €404 million and thus lower than the previous year's Segment Result of €466 million. Based on
+revenue, the Segment Result Margin was 11.5 percent (previous year: 14.2 percent).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+404
+Finances and strategy
+#4
+466
+In addition to batteries, semiconductors are an essential component in the electro-mobility megatrend. Infineon
+currently offers the industry's widest range of power semiconductors with the corresponding assembly and
+connection technologies for chip and package: from individual chips (so called "bare die") to discrete components,
+chips embedded in printed circuit boards all the way to entire modules. Here Infineon uses both the classic
+semiconductor material silicon and the new material silicon carbide. Infineon's broad product portfolio and com-
+prehensive system know-how help Infineon react flexibly to customer requirements. Furthermore, Infineon
+offers the additional components needed for the overall system in addition to power semiconductors: control ICs,
+microcontrollers and sensor technologies. Thus, Infineon makes it possible for its customers to develop their
+products in an easy and timesaving way. The Infineon product portfolio also meets the high quality and reliability
+requirements of the automotive industry.
+ĿL
+40
+40
+Automotive
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Our markets are continuously converging, so that a strict organizational delimitation would not be
+appropriate. Technologies and products are increasingly being put to use in global applications,
+according to our strategic "Product to System" approach. The digital transformation in particular
+calls for flexible and innovative approaches. Teams from various organizational units work on an
+application-oriented and expertise-specific basis. In these cases, one segment takes on responsi-
+bility for the overall system and develops the roadmap for the application, while responsibility
+for the necessary technologies and products remains in the established organizational units.
+Similarly, the segments collaborate when it comes to technology development. Electro-mobility
+is a core topic for the Automotive segment, and accordingly this segment is responsible for the
+system. Nevertheless, the segments Industrial Power Control and Power Management & Multi-
+market also benefit from the developments in the necessary charging infrastructures as well as
+from new requirements in vehicles.
+Infineon is divided into four segments whose strategic deployment is derived from the Group
+Strategy. All activities can be allocated to one of the higher-level growth drivers: Energy Efficiency,
+Mobility, Internet of Things & Big Data, and Security. Here the segments are responsible for
+particular areas that reflect their respective core competencies. The Automotive segment is
+responsible for business with semiconductors for automotive electronics. The Industrial Power
+Control segment concentrates on power semiconductors primarily used in industrial applica-
+tions, while the Power Management & Multimarket segment addresses consumer-oriented
+applications and power supplies in general. Activities relating to classic and new security appli-
+cations are consolidated in the Digital Security Solutions segment.
+Ở ||| 7 VA
+O
+REVENUE
+€3,503 million
+The segments
+39
+Combined Management Report | Our Group
+The segments
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+@www.infineon.com/csr_reporting
+@www.infineon.com/hrreport
+You will find further information including detailed statistics in the 2019 sustainability report and in the 2019
+Human Resources report.
+Alongside its core functions, the planned acquisition of the US company Cypress is of high priority for HR. In
+the preparations to integrate the Cypress workforce of nearly 6,000 employees worldwide, HR makes a significant
+contribution to the successful implementation of the acquisition - in strategic, financial and cultural terms.
+We continue to work on designing an HR infrastructure that allows the organization to react flexibly to growth
+and changing requirements. In order to achieve this, we constantly improve core processes in HR, for example
+performance management, the process of succession planning and compensation planning. We use the new
+user-oriented processes and tools to strengthen the employees in the self-directed performance of their respon-
+sibilities for their personal development. People are the focus of our actions: The highest level of long-term
+entrepreneurial performance can only be achieved by happy, healthy and successful employees.
+The most recent Great Place to Work® survey confirmed the satisfaction of our workforce - not only in Germany,
+but also worldwide. More than 80 percent of the employees surveyed at Infineon gave their employer an excellent
+evaluation: "Taking everything into account, I would say this is a great place to work." This is yet another reason
+for us to continue preparing the Company for the working environment of the future - also in order to remain
+attractive to new generations of employees. This entails the flexible design of working conditions (for example
+work hours, mobile working, sabbatical) as well as the ongoing development of workstations in manufacturing
+("Industry 4.0"). Here we highly value constructive dialog and trust-based collaboration with Workers' Councils. We
+also orient our learning formats to take account of digitalization and future working environments. With LinkedIn
+Learning for example, our employees have on-demand access to a wide range of high-quality training courses in
+various languages.
+38
+Empower and coach your people,
+provide a framework for success and
+focus on result
+CANE ASSIST
+SEGMENT RESULT
+€404 million
+Automotive
+The Automotive segment in the 2019 fiscal year
+> Steering
+> Power window
+> Lighting
+> Hatch door
+> Electronic seat adjustment
+> Door electronics
+Revenue
+> Air conditioning
+Comfort electronics
+> ESP (Electronic Stability Program)
+> Emergency braking assistant
+> Electronic power steering
+› Electronic chassis control
+> Distance warning systems
+> Cruise control
+> Blind spot detection
+> Automatic parking
+› Airbag
+> ABS (Anti-blocking system)
+safety systems
+Assistance systems and
+Applications
+The Automotive segment provides semiconductors and semiconductor solutions for automotive applications. Its
+broad product portfolio of microcontrollers, intelligent sensors, transmitting and receiving ICs for radio-frequency
+and radar applications as well as discrete and integrated power semiconductors cover the most important application
+fields in the vehicle: powertrain & energy management, body and convenience electronics as well as safety. For
+over 40 years, this comprehensive product palette, combined with a high level of quality, innovation and long-term
+partnership-based collaboration along the value chain has made us a preferred partner in the automotive industry.
+Our technologies contribute to sustainable mobility by reducing fuel consumption, emissions and costs on the one
+hand and by increasing safety and performance on the other.
+Team success is a priority:
+> Sunroof
+Create a framework of action for
+success to achieve results
+Begin with the big picture and
+set motivating targets
+Planned Cypress acquisition: improved competitive position; modification of the target business model
+The expected acquisition of Cypress will strengthen Infineons focus on structural growth drivers. We will be able to
+cover an even more comprehensive application spectrum in our target markets and will thus accelerate our course
+of profitable growth. The strategy already illustrated will also manifest in higher financial attractiveness. We expect
+the transaction to have a positive impact on the development of the Segment Result and adjusted earnings per share
+from the 2021 fiscal year onwards. This entails expected annual cost synergies of €180 million, which are expected
+to arise by the 2022 fiscal year primarily as a result of scale effects. However, revenue synergies resulting from
+cross-selling as well as from the consolidation of the complementary portfolios to form system solutions will be
+more decisive in the creation of value. We estimate these at more than €1.5 billion annually in the long term.
+On closing of the acquisition, we will adjust our target operating model. During the integration process, we will
+leverage more and more of the synergies and meet our targets: By then, we expect revenue growth through the cycle
+for the larger, combined company to be slightly above our current target rate of 9 percent. The Segment Result
+Margin is to increase through the cycle from 17 percent to 19 percent. The investment-to-sales ratio will drop through
+the cycle from 15 percent to 13 percent because of the lower capital intensity of Cypress.
+In coming years, we also plan to invest a low triple-digit million amount in order to take advantage of possible addi-
+tional business opportunities and follow structural changes. These investments are not included in the 15 percent
+ratio described above. In addition, we have already announced investments in front-end cleanrooms and large
+office buildings, including the 300-millimeter cleanroom and the research and development building at the Villach
+site (Austria). In the 2019 fiscal year, around €200 million of this incurred. If these measures are implemented, the
+investment rate will temporarily be significantly higher than the rate provided in the target operating model.
+Our planning is oriented towards providing the necessary manufacturing capacities for the expected growth. The
+accelerated growth is in particular driven by strong demand for power semiconductors, a field in which Infineon's
+in-house manufacturing provides competitive differentiation. As a result, we reaffirm the target of an investment
+rate of 15 percent of revenue through the cycle.
+Target 3: Investments amounting to 15 percent of revenue through the cycle
+Target 2: 17 percent Segment Result Margin gradually improving through the cycle
+Growth is only one prerequisite for sustainable success. Another criterion is profitability. When we work profitably on
+a sustainable basis, it means that we steer our developments to the point where they provide the highest benefit to
+our customers who are then willing to pay for them. In addition, we want to continue our development activities at
+unabated speed even in difficult market phases. We want to achieve an average Segment Result Margin of 17 percent
+of revenue through the cycle and plan to gradually improve this margin. Here, we are relying among other things
+on economies of scale and on cost advantages from the increasing share of 300-millimeter in our total manufacturing
+volume as well as on a disproportionately lower increase in operational costs. Technology leadership and the
+strategic "Product to System" approach also enable us to maintain a higher degree of differentiation.
+36
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Capital structure targets demonstrate our long-term reliability
+We hold leading positions in our core markets and have systematically entered adjacent markets in the past. Our
+four segments are positioned to capitalize on the megatrends mentioned earlier. Our strategic "Product to System"
+approach helps us develop better solutions with our broad technology and product expertise and thus to create
+significant added value for our customers. This lets us leverage additional potential revenue. Furthermore, we are
+using tailor-made go-to-market strategies to broaden our customer base and generate more business. The struc-
+tural growth drivers of our business are intact and we therefore expect an unchanged revenue growth of 9 percent
+through the cycle.
+In the upcoming years, several structural trends will continue to drive our growth, in particular electro-mobility,
+renewable energies, manufacturing automation, data centers, Internet of Things and an increasing number of battery-
+powered devices. Thanks to our leading technologies, our understanding of applications and systems and our
+differentiating expertise in manufacturing, we have achieved an outstanding position in these markets. We want to
+take advantage of the resulting opportunities and to continue to outgrow the respective markets as well as to increase
+our profitability step by step. We are making targeted investments for this purpose. Our long-term financial targets
+reflect this claim. They are true through the cycle and are based on a stable global macro-economic environment.
+Long-term financial targets underline our growth ambitions
+At the same time, we are engaging in networks consisting of distributors, development service providers and
+manufacturing service providers. These networks enable smaller companies and start-ups to jointly develop and
+manufacture electronics for new functions and new devices. This broad sales strategy lets us maximize revenues with
+existing technologies while at the same time increasing the return of our investments in research and development.
+Digitalization and the Internet of Things create new business models. Manufacturers usually concentrate on
+making these devices “smart” with the best possible sensing and data processing capability. They are neither able
+nor interested in dealing with the underlying semiconductor technologies. We want to make our products and
+solutions more easily available to these vendors, for example through optimized product bundles and support in
+the form of reference designs. Here in particular, our system understanding makes the difference.
+Going forward we will address more customers with more flexibility and innovative go-to-market strategies. Histori-
+cally, Infineon has grown through close collaboration with key customers, with whom we have successfully defined
+products that then enabled us to penetrate the broad market. We reach many of our smaller customers through
+distributors. We will increase our leverage of the enormous potential of the distribution channel with standardized
+but configurable standard products for the mass market. Here we have made good progress by emphasizing
+short-term delivery reliability, continuous and tailored adjustment of the product portfolio and close partnership
+with distributors.
+Flexible go-to-market strategies accommodate rapidly changing markets
+The Internet of Things as well as Big Data are constantly bringing new players to the electronics marketplace and
+call for a strong partnership across a variety of knowledge areas. In this dynamic environment, joint innovation is the
+key to corporate success. One example is our Silicon Valley Innovation Center - a start-up center for innovations. It
+provides a platform for investigating new ideas and for fast learning. We also operate what are called "Co-Innovation
+Spaces", where cross-company innovation processes bring us into early contact with new and potentially ground-
+breaking end-applications. We opened the first Co-Innovation Space in Singapore. We support the typical abilities
+of start-ups to try out new technologies and applications and develop several of them to market readiness with our
+experience and expertise. This way both sides benefit. This approach also lets us accelerate our own innovation
+processes and to further penetrate adjacent and new markets.
+35
+Group strategy
+Combined Management Report | Our Group
+Target 1: An average 9 percent annual revenue growth through the cycle
+The long-term stability of the Company is of great importance from a variety of perspectives: It is important to our
+customers that Infineon remains a trusted partner that will also be able to supply reliably for many years to come.
+Our debt providers rely on our ability to securely service our debt over a long period of time. As an employer, we
+also want to give this kind of long-term reliability to our employees, even well beyond their active working lives in
+the form of retirement benefits. As a result, we give a high priority to solid creditworthiness and derive our conser-
+vative long-term and medium-term capital structure targets from the clear objective of maintaining our investment
+grade rating. This will remain the case during the course of the planned, transformative acquisition of Cypress and
+the associated demanding financial requirements.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Infineon
+Leadership
+Principles
+Integrity, trust and
+consistency are the
+basis for your actions
+Take ownership
+Leadership starts with leading yourself
+and acting as a role model
+5
+Desire to grow and motivate
+others to do so, too
+Infineon Leadership Principles
+Human Resources strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+We also define ourselves by the way we work together, for instance with a well-developed culture of feedback,
+which is actively practiced at our company. One example: our "Leadership Dialog" – a format in which employees
+provide their managers with feedback. The new Infineon Leadership Principles underpin our commitment to
+continuously improving our leadership qualities. Introduced by top management in spring 2019, these principles
+encourage both feedback and self-reflection. This approach not only helps strengthen efficiency within the organi-
+zation, it also fosters a strong team spirit across our international working environment with colleagues from over
+100 nations. We are proud of this diversity. In 2019, Infineon celebrated its first global Diversity Day, in all respects
+a highly successful event. Furthermore, we have already achieved our interim target of 15 percent women in
+leadership positions, which we set ourselves for 2020 (long-term target: 20 percent).
+In order to remain innovative, competitive and successful in the future, Infineon constantly searches for the most
+talented individuals. This is not an easy task, given the increasing scarcity of experts. Talent management also
+includes successfully integrating new colleagues. We do this with a combination of systematic and individually
+tailored onboarding measures. One of our great advantages is Infineon's positive employer image, which helps
+win over and retain talents. The fact that we make future-oriented products and create value for society makes
+our company very attractive to potential employees.
+Our Human Resources strategy makes an important contribution to ensuring that Infineon can achieve its growth
+and profitability targets and navigate smoothly through different economic phases. The strategy is therefore
+designed to enable our employees to be successful in the long term. Successful in the sense that they enjoy doing
+what they do and are motivated to take on even the most challenging tasks. And long-term in that we prepare
+together for the working conditions of tomorrow and thereby help safeguard each individual employee's ability to
+work on a sustainable basis. Therefore, we need to ensure an attractive working environment, competitive talent
+management and high-performance HR processes.
+Human Resources strategy
+Our strategy has paid off: Infineon continues its path of sustainable, profitable growth. We also pursue a dividend
+policy aimed at letting shareholders adequately participate in Infineon's economic development and at paying out
+at least an unchanged dividend even in periods of slower growth.
+Sustainable value creation for our shareholders
+The rating agency S&P Global Ratings (S&P) currently rates Infineon's creditworthiness as "BBB" and, following the
+announcement of the planned acquisition of Cypress, placed us on "CreditWatch" with a negative outlook. This is
+however typical for transactions of this type and means that, after an inspection of the actually achieved financial
+circumstances by S&P following the completion of the acquisition, a possible reduction of the rating by a maximum
+of one grade could occur, which would still correspond to the investment grade.
+Because of the planned acquisition of Cypress, we will exceed the limit on our gross financial debt, however only to
+a degree that is compatible with the retention of the investment grade rating. Infineon's medium-term target after
+the acquisition is a rigorous reduction of debt either to or below the maximum target value in accordance with our
+capital structure target.
+Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount of €1 billion provides
+a solid liquidity reserve for contingent liabilities and retirement fund liabilities, which are independent of revenue.
+Furthermore, 10 to 20 percent of revenue means we always have access to enough cash to be able to finance the
+operative business and development activities for the future during all phases of the business cycle. The lower end
+of this liquidity target is also to be maintained during the planned acquisition of Cypress, a factor that we took into
+consideration when designing the financing structure. The upper limit on our gross financial debt is twice Earnings
+Before Interest, Tax, Depreciation and Amortization (EBITDA).
+37
+Group strategy | Human Resources strategy
+Finances and strategy
+Our leadership model:
+Our people are the key
+for success
+› Suspension
+› Body control units
+Powertrain
+ƠI A
+42
+The segments
+Automotive
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+In the area of power electronics, we are the unchallenged market leader in automotive when it comes to silicon-
+based semiconductor solutions. New materials such as silicon carbide and gallium nitride are well suited for use in
+power electronics and open up additional potential improvements in efficiency and power density. Today we are
+the only manufacturer in the automotive power electronics sector who can offer the entire portfolio of technologies
+and package form factors - from the unpackaged chip all the way to the highly-integrated module - and can thus
+offer the right solution for the widest possible variety of customer requirements. On the way to automated driving,
+as the number two in sensor chips today we already benefit greatly from the constantly growing number of driver
+assistance systems. These systems make an enormous contribution to increasing traffic safety and preventing
+accidents. In the long-term, the number of radar systems in the vehicle will rise and they will be complemented
+by additional sensor technologies more so than they are today. Infineon will not only profit from this development
+when it comes to sensor chips. Our AURIX™ family microcontrollers handle an essential part of signal processing
+for example in radar and camera-based driver assistance systems.
+ƠI A
+Sources: Strategy Analytics, "Automotive Semiconductor Content," August 2019; IHS Markit, Automotive Group, "Alternative propulsion forecast," September 2019; Infineon
+1 Refers to the defined degree of automatization.
+Automated driving: additional semiconductor demand per vehicle
+Standard vehicle
+Furthermore, they take on additional importance as the degree of automation in vehicles rises together with
+the associated requirements for secure, reliable control systems in the automobile. The microcontrollers of our
+AURIX™ family take control of systems (for example steering and brakes) and function as host controllers that
+ensure the functional safety of central control units.
+Electro-mobility: additional semiconductor demand per vehicle
+Level 3¹
+Level 2+1
+> Windshield wipers
+417
+417
+630
+970
+977
+1,047
+1,387
+Level 4
+and
+Level 51
+vehicle
+Essential elements in our success are partnership-based customer relationships, our rigorous quality strategy
+and the continuous further development from product thinking to system understanding. We want to understand
+the systems and applications of our customers and their success factors and to offer them decisive added value
+with products oriented to the requirements of the future. This close collaboration along the entire value chain
+enables targeted innovation and generates new possibilities for us to differentiate from our competition and to
+achieve permanent profitable growth. As described in the Group strategy, with our integration in the Volkswagen
+group's strategic supplier network FAST we are one of Volkswagen's most important partners in the area of electro-
+mobility. Together with our customers, we want to help bring electro-mobility to everyday life. Our rigorous quality
+strategy is highly appreciated. Toyota, Japan's largest automobile manufacturer, has already honored us several
+times with awards for defect-free deliveries to its Hirose (Japan) plant; in 2019 we received an award for what is in
+the meantime five years of absolutely defect-free quality. This quality strategy empowers us to grow faster than
+the market, for example in Japan. And we were the first semiconductor manufacturer ever to be honored by the
+Korean car manufacturer Hyundai Kia as "Partner of the Year" in recognition of our quality and innovation.
+Continental, one of the world's largest automobile component suppliers, chose Infineon as "2018 Supplier of the
+Year" in the category "Electronics".
+The world market for automotive semiconductors expanded by 9.3 percent from US$34.469 billion in the 2017
+calendar year to US$37.668 billion in the 2018 calendar year (Source: Strategy Analytics). All regions contributed
+to growth. Europe remained by far the largest region, at about US$13 billion, followed by China and North America
+with revenue volumes of about US$7 billion each. With a market size of about US$6 billion, Japan is only negligibly
+smaller than these two regions. Infineon achieved record growth in Japan last year with a revenue increase of
+24.7 percent and an increase in market share of 1.1 percentage points. Infineon is further gaining momentum in
+Japan. With a market share of 7.3 percent Infineon already achieved number four in the market. This means there
+is still disproportionally high growth potential in the future. Infineon was also able to achieve double-digit
+increases in revenue in China (growth of 19.2 percent) and Europe (growth of 13.0 percent). In the other regions,
+Infineon's growth was in the single-digit percentage range.
+3,284
+3,503
+€ in millions
+Revenue and Segment Result of the Automotive segment
+In the Automotive segment, Infineon recorded revenue of €3,503 million in the 2019 fiscal year, an increase of
+7 percent compared to the €3,284 million revenue of the previous year. The segment contributed 44 percent
+of the Group revenue.
+Revenue development
+The segments
+Automotive
+Combined Management Report | Our Group
+7.6%
+8.2%
+Market position
+8.9%
+12.0%
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares," April 2019.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+STMicroelectronics
+Texas Instruments
+Renesas
+Infineon
+NXP
+World automotive semiconductor market share 2018
+Infineon further strengthened its position as number two in the overall automotive semiconductor market.
+While the market leader lost 0.4 percentage points market share to land at 12.0 percent, Infineon increased its
+market share by 0.4 percentage points to 11.2 percent. The market share of the third-largest company dropped
+by 1.1 percentage points to 8.9 percent. The five largest market players together account for a market share
+of 47.9 percent.
+11.2%
+hybrid vehicle
+Level 21
+electric
+Combined Management Report | Our Group
+▼ A ↑ III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The automotive industry is facing a structural transformation. We can expect to see more change over the next
+five years than in the last 20 years. The reasons for this are the desire for more and more intelligent cars and the
+need to comply with continuously more demanding emission standards and with calls for sustainable mobility.
+Strategic deployment
+> Tire pressure monitoring system
+vehicle
+software manipulation
+> Tachograph
+> Protection against
+manipulation (e.g. odometer)
+The segments
+Automotive
+> Protection against
+> Original spare parts
+> Communication (car-to-car,
+car-to-infrastructure)
+Security
+› Transmission control
+> Start-stop system
+› Generator control
+> Electric motor control
+> Combustion engine control
+› Battery management
+> Battery charging control
+authentication
+41
+> Lane departure warning system
+Our products are ideally suitable not only both for classical applications in the vehicle - drivetrain, comfort, safety -
+but also for keeping up with the megatrends of the industry such as electro-mobility and automated driving. In the
+case of classic applications, our growth is driven on the one hand by new functions in the area of lighting technologies,
+comfort and safety and, on the other hand, by the further electrification of various vehicle functions. This means an
+increase in the number of electronic components and thus in the semiconductors required for each vehicle. The
+two megatrends electro-mobility and automated driving further raise the average semiconductor demand per vehicle.
+While it will take some time before autonomous driving is introduced and becomes widespread, driver assistance
+systems are in high demand among customers and will continue their already robust growth tendency into the years
+to come. By contrast, electro-mobility is still at the beginning of the market penetration phase.
+Pure
+Full hybrid
+and plug-in
+engine vehicle mild hybrid
+When it comes to driver assistance systems, whether in partially autonomous vehicles or the autonomous taxis and
+busses of the future, demands dictate that these vehicles do not make a single mistake while driving (in contrast to
+their human counterparts) and that they always work perfectly. And after an error or defect, these vehicles are also
+expected to continue functioning reliably until they come to a stop in a situation which is safe for all pedestrians
+and motorists. This degree of error-tolerant behavior requires extremely high reliability of the overall system "car"
+and thus of all the car's control units and their components. They all have to be error-tolerant and highly reliable,
+i.e. protected against failure, and must remain so for the entire lifetime of the vehicle. For quite some time, Infineon
+has offered concepts and solutions for reliability on the component and subsystem level. The Company's semicon-
+ductor solutions make it possible to build systems that meet the high requirements of functional safety defined in
+ISO 26262. They also secure data communication both within the car and with the outside world. Here, the focus is
+on the provision of reliable sensors, reliable microcontrollers, reliable power electronics, reliable vehicle communi-
+cations and reliable power supplies.
+Combustion
+417
+417
+417
+417
+417
+417
+48 V and
+114
+160
+Additional semiconductor demand per vehicle raised by electro-mobility and automated driving
+in US$
+785
+577
+531
+775
+417
+368
+358
+560
+Industrial vehicles
+> Agricultural vehicles
+> Air conditioning
+technology
+> Washing machines
+› Construction vehicles
+> Electric delivery vehicles
+> Forklifts
+> Hybrid busses
+Industrial drives¹
+> Automation technology
+> Oil derricks
+> Elevator systems
+> Escalators
+> Materials handling
+> Pipelines
+> Rolling mills
+Traction
+> High-speed trains
+> Vacuum cleaners
+> Drives technologies
+> Refrigerators
+Revenues in the area of SIM cards for mobile communication continued to decline as planned in the 2019 fiscal
+year. For strategic reasons Infineon has only participated selectively in project biddings for several years now.
+Due to the effects of projects, revenues also dropped in the area of governmental identification documents.
+On the other hand, revenue increased in the payment cards area. The transition from purely contact-based
+cards to dual interface cards, i.e. cards that can be used both contactless and contact-based, continued.
+> Induction cooktops
+> Locomotives
+10-0
+Combined Management Report | Our Group
+The segments
+Industrial Power Control
+45
+45
+REVENUE
+> Microwave ovens
+€1,418 million
+Industrial Power Control
+The Industrial Power Control segment in the 2019 fiscal year
+The Industrial Power Control segment specializes in the efficient conversion of electric energy along the entire
+supply chain (generation, storage, transmission and consumption) with a focus on efficient drives, intelligent motor
+control units and renewable energies. The comprehensive product portfolio consists mainly of IGBT power tran-
+sistors, driver ICs for their control, and silicon carbide-based components. We offer the products in various form
+factors, such as discrete components and modules with different levels of functionality, and cover almost the entire
+power range from a few hundred watts up to several megawatts. The application fields range from wind power
+and photovoltaic systems to energy storage systems, high-voltage direct current transmission (HVDC), traction,
+industrial drives, all the way to major home appliances.
+Applications
+Energy consumption
+Home appliances
+> Air conditioners
+> Dishwashers
+SEGMENT RESULT
+€251 million
+> Metro trains
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Industrial
+power supplies
+› Trams
+› Sensors
+› Communications
+Internet of Things
+telecommunications
+> Oil and gas exploration
+› Submarine
+> Defense technologies
+> Aviation technologies
+> Aerospace systems
+HiRel
+for electric vehicles
+Charging stations
+> Voice control
+› Base stations
+> Multicopters
+> eScooters
+> eBikes
+> Battery-powered power tools
+(e.g. cordless screwdrivers,
+drills, power saws)
+appliances (e.g. vacuum cleaners)
+> Battery-powered home
+trimmers, lawn mowers)
+> Battery-powered gardening
+equipment (e.g. hedge
+BLDC motor
+> Smart speakers
+> Battery-powered loudspeakers
+Applications
+Cellular communications
+infrastructure
+LED and conventional
+lighting systems
+Mobile devices
+› Activity trackers
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The world market for standard MOSFET power transistors reached US$7.581 billion in the 2018 calendar year, an
+increase of 16.8 percent compared to the previous year value of US$6.492 billion (Source: Informa Tech). Infineon's
+revenue increased by 19.7 percent. The high growth level was made possible by the continuation of capacity expan-
+sion, especially the expansion of 300-millimeter manufacturing capacities in Dresden (Germany) and of 200-millimeter
+manufacturing capacities in Kulim (Malaysia). This resulted in a market share increase of 0.7 percentage points. A
+27.7 percent market share keeps Infineon clearly in the lead in this market (previous year: 27.0 percent). The number-
+two competitor trails far behind at 14.6 percent (previous year: 13.9 percent). The five largest market players
+together have a market share of 62.8 percent.
+Market position
+In the radio-frequency and sensor technologies businesses - the second mainstay of the Power Management &
+Multimarket segment, next to power semiconductors - Infineon has a strong foundation due to technologies such
+as radar, Time-of-Flight (TOF) for 3D camera applications and MEMS (in particular silicon microphones). Silicon
+microphones are no longer used exclusively in smartphones, demand also benefits from connecting of intelligent
+devices in new application fields such as smart speakers, smart home and wearables. Furthermore, the Company
+offers radio-frequency components that for example are used for signal amplification in mobile telephones and
+for communication between mobile devices and base stations.
+In research and development as well as in manufacturing we benefit from scale effects which we reinforce with
+our market position. This way we can expand our core portfolio of silicon-based power semiconductors to include
+switches based on new materials such as gallium nitride (GaN). We began volume manufacturing of CoolGaN™
+products in the 2019 fiscal year.
+Battery-powered devices are among the strongest-growing applications in this MOSFET product group, usually
+in connection with brushless direct current (BLDC) motors. Here we have shown that we can use existing products
+to cover new applications like eScooters. Furthermore, Infineon continuously expands its product portfolio for
+digital load control and focuses on technologically adjacent markets, for example point of load controllers for data
+centers and Class D audio amplifiers.
+Building on our deep understanding of customer applications, we continuously develop new modifications of
+existing products in order to penetrate adjacent and new fields of application. One example is the further develop-
+ment of the OptiMOSTM basis technology. The new OptiMOSTM Linear FET technology fulfills two requirements that
+were mutually exclusive in the past: On the one hand, the power transistors of this innovative product family have a
+very low on-state resistance, and on the other hand they can be operated in wide operating ranges. Thanks to this
+innovation, this product family can capture new application fields, for example battery management systems for
+cellular base stations.
+The power transistors of the CoolMOSTM and OptiMOSTM families, together with corresponding drivers form the core
+of the Power Management & Multimarket segment's power semiconductor business. Infineon's leading technologies
+for low voltages (up to 40 volts), medium voltages (40 volts to 500 volts) and higher voltages (over 500 volts) allow
+us to cover a broad power semiconductor application spectrum. Examples of application areas are power conversion
+for data centers, battery-powered devices as well as cellular infrastructure.
+High efficiency, increasing performance and small form factors: The trend for power supplies continues unabated.
+Power density in particular is becoming a decisive parameter. Our concepts in the area of "Digital Power Manage-
+ment" - the transformation from analog to digital regulation of power supplies - are in line with this trend, with
+technology that does more, consumes less and is available for all.
+Strategic deployment
+50
+50
+Power Management & Multimarket
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+› Telecommunication
+technology
+› Servers
+> PCs and notebooks
+> Mobile devices
+> Home appliances
+› Consumer electronics
+Power management
+> Smartphones
+> Tablets
+› Navigation devices
+Our power semiconductors and radio-frequency components service the cellular infrastructure sector. We also cover
+the market for mobile devices with additional radio-frequency components which differ from those for cellular
+communications in terms of performance and frequency. Furthermore, we see an enormous growth potential for
+our sensors in this application area: MEMS-based microphones and pressure sensors, 24-gigahertz and 60-giga-
+hertz radar sensor ICs as well as 3D sensors.
+The Power Management & Multimarket segment covers business with power semiconductors for energy manage-
+ment, components for cellular infrastructure and mobile devices as well as high-reliability components for harsh
+environments. Infineon is the clear market leader in the MOSFET market. Our leading basis technologies allows
+us to offer a broad product portfolio of drivers, controllers and MOSFET power transistors. Our power management
+products set standards in terms of the two most important requirements of the market: efficiency in conversion
+and power density.
+The Power Management & Multimarket segment in the 2019 fiscal year
+Power Management & Multimarket
+251
+2019
+256
+2018
+LL
+1,323
+1,418
+€ in millions
+Revenue and Segment Result of the Industrial Power Control segment
+In the Industrial Power Control segment Infineon recorded revenue of €1,418 million in the 2019 fiscal year,
+an increase of 7 percent compared to the €1,323 million revenue of the previous year. The segment contributed
+18 percent of the Group revenue.
+Revenue development
+Source: Based on or includes content supplied by Informa Tech (former IHS Markit Technology), "Power Semiconductor Market Share Database 2018," September 2019.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.8%
+10.0%
+12.0%
+18.9%
+32.3%
+Fuji Electric
+Semikron
+Infineon
+ON Semiconductor
+Mitsubishi
+World IPM market share 2018
+A fast growing sub-market of IGBT-based power semiconductors are IPMs. In the 2018 calendar year, we were
+able to increase our revenue in this area by 24.2 percent and were thus significantly above the market growth
+of 7.6 percent. As a result, we gained 1.6 percentage points in market shares and further improved our top-3
+position. The Infineon market share for IPMS is now 12.0 percent.
+Source: Based on or includes content supplied by Informa Tech (former IHS Markit Technology), "Power Semiconductor Market Share Database 2018," September 2019.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.7%
+7.2%
+9.7%
+Revenue
+Segment Result
+Power Management & Multimarket
+In the previous fiscal year, almost all areas contributed to the revenue increase. The growth rates of the business
+areas wind energy, industrial power supplies, traction and energy transmission were above the segment average.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Audio amplifiers
+€585 million
+SEGMENT RESULT
+€2,445 million
+REVENUE
+49
+Power Management & Multimarket
+The segments
+Combined Management Report | Our Group
+Ơ ||| V V A
+49
+▼ A
+48
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Segment Result was €251 million, representing a slight decrease compared to the previous year's Segment Result
+of €256 million. Based on revenue, the Segment Result Margin was 17.7 percent (previous year: 19.3 percent).
+Segment Result was positively impacted by the higher contribution from the increased revenue. However, the costs
+for input factors in manufacturing (raw materials, auxiliary materials and operational materials, silicon and silicon
+carbide raw wafers) increased significantly compared to the previous year. During the second half of the fiscal year
+in particular, partly lower market demand in individual areas resulted in underutilization of available capacities in
+parts of the manufacturing landscape, leading to increased idle costs.
+Development of the Segment Result
+In the 2019 fiscal year Infineon further expanded its portfolio of silicon carbide transistors, adding 12 discrete products
+as well as seven more derivatives in Easy module packages for the silicon carbide MOSFETs of the 1200 volt voltage
+class, already very well established in the industrial market. A product family with 650 volt CoolSIC™M MOSFETs was
+also introduced. This expanded the previous spectrum, which principally addressed industrial switched-mode
+power supplies and PV inverters, to include battery-charging infrastructure, energy storage solutions, motor drives,
+auxiliary inverters for traction systems, switched-mode power supplies for servers and telecom applications as
+well as industrial power supplies. This wide variety of possible application fields results in the industrial sector in a
+justified potential revenue of around €1 billion in the upcoming years. Thanks to its leading position in the relevant
+chip and package technologies, Infineon is ideally positioned to leverage the market potential. Thus, for example,
+revenue from silicon carbide MOSFETs in industrial applications increased by more than a factor of four compared
+to the previous fiscal year.
+Areas with smaller revenue shares also contributed to revenue growth. The connection of wind and solar parks
+remained the growth driver in the area of energy transmission. In addition, there was demand from major infra-
+structure projects in high-voltage direct current transmission (HVDC) in China, the USA and India. Revenue in the
+area of industrial power supplies increased by approximately 15 percent, while revenue for industrial vehicles
+dropped, mainly for hybrid busses, in particular as a result of modified subsidy policies in China.
+Revenue growth in the area of traction systems was around 10 percent, with the focus remaining on China, where
+there was demand for all traction variants: high-speed trains, urban rail systems as well as electric and partially
+electric locomotives for freight trains.
+The area of renewable energies showed very nice growth. The Industrial Power Control segment generates
+almost 10 percent of its revenue with wind energy products. Here revenues increased by more than 35 percent
+and provided the highest absolute revenue increase within the segment. This was on the one hand due to the
+robust global expansion of wind energy, which is expected to increase by more than 65 gigawatts of newly installed
+output worldwide in the 2019 calendar year. On the other hand, Infineon landed important customer orders with
+the PrimePACK™ IGBT5 .XT. However, during the previous fiscal year, the situation in photovoltaics was somewhat
+different. The first half of the fiscal year was characterized by reticence stemming from political uncertainties.
+The Chinese government's May announcement that it would keep the expansion of photovoltaic systems stable in
+the 2019 calendar year compared to the year before and that it would increase reliance on auction-based models
+created a substantial catch-up effect in the second half of the 2019 calendar year, resulting in total in revenue
+growth of 4 percent. In the coming years, global expansion of photovoltaics is expected to continue to grow. This
+expansion is driven by Europe, the Middle East, Africa and Southeast Asia. The area of photovoltaics contributed
+approximately 10 percent to the segment revenue.
+The home appliances business segment, accounting for approximately one fifth of revenue, is the second-largest
+area in the segment. Following a period of growth, this area did not grow in the previous fiscal year. Because
+of new efficiency regulations on energy consumption, for example in China, demand for inverterized home appli-
+ances - for example air conditioners and washing machines – is expected to remain at a high level. Mainly our
+CIPOSTM family IPMS as well as iMOTION TM family motor control solutions will benefit from this. The positive market
+acceptance of our products can also be seen in the increase of our IPM market share (see the section "Market
+position" in this chapter).
+-
+P see page 47
+Industrial Power Control
+The segments
+Combined Management Report | Our Group
+47
+The second-largest absolute revenue increase came from the drives business, the segment's largest, accounting
+for approximately one third of segment revenue. The reason for the revenue increase was essentially the further
+increase of the automation level in factories and industrial manufacturing systems. This was particularly evident
+in the first half of the fiscal year and affected all power classes of the product portfolio.
+World power MOSFET market share 2018
+Infineon
+ON Semiconductor
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Part of Infineon's strategic deployment is to be the leading provider of security solutions consisting of security chips
+and software. This means it is particularly positive to see that Infineon makes more than one fourth of the segment's
+revenue with products in which the security controller is bundled with software, for example firmware, driver
+software and hardware-related application software. Infineon's software and system expertise mean it can provide
+reference designs and easily integrated security modules. The partners in the Infineon Security Partner Network
+(ISPN), for example, play an active and important role in completing the Infineon service range with application and
+product-specific software services.
+For smartcard applications, the central application areas of our security chips are cash-free payment as well as mobile
+communication, electronic identification and ticketing. For example, the SECORATM Pay portfolio includes easily
+integrated solutions for contactless payment cards and mobile devices. SECORATM Connect expands our product
+family to include a solution for battery-powered, connected smart wearables such as smart watches. The solution
+combines a security module (Secure Element) with a system-in-package NFC antenna and lets device manufacturers
+easily integrate and administer payment applications as well as ticket and access solutions. Here the basis is the
+secure digitalization of credit and debit cards – referred to as "tokenization” – in the smartphone or smart watch.
+Embedded security applications open up a variety of possibilities to address structural growth drivers and to
+penetrate new application fields, including for example the authentication of devices in the Internet of Things and
+connecting vehicles, as well as protecting smart factories in industry. Growth in this sector is driven by increases
+in data traffic. For example, cars transmit real-time road traffic information to the cloud or receive updates from the
+manufacturer "over the air", so that software can be updated quickly and cost-effectively. The senders and receivers
+of this data - whether car manufacturers or individual systems in the car - are authenticated using cryptographic
+keys. OPTIGA™ TPM can store this sensitive information much like a physical safe does, providing particularly high
+levels of protection against data-technical and physical attacks. OPTIGA™ TPM can thus be regarded as a successful
+example of our strategic "Product to System" approach.
+Our core competencies in the Digital Security Solutions segment are divided into the two areas of classical smartcard
+applications and Embedded Security solutions. We transfer our core competencies for payment cards and govern-
+mental identification documents to the high-growth area of embedded security applications. Our business is thus
+transforming from these classical applications to security solutions featuring a chip as a high-reliability anchor for
+security. The significance of software as a part of the solutions offered continues to increase. This means we can
+offer our customers solutions for secure authentication, encryption and protection against unauthorized access as
+a function all the way to complete system solutions, for example in payment.
+Digital transformation is affecting more and more facets of everyday life - and at the same time, security is becoming
+a central aspect of many applications. The integration of security solutions is thus indispensable for intelligent
+devices, connected vehicles, companies and Industry 4.0 factories in order to defend against all kinds of attacks,
+whether theft, fraud or manipulation.
+Strategic deployment
+com/ispn
+@www.infineon.
+For more informa-
+tion on ISPN:
+53
+Trusted Computing
+Ticketing, access control
+> NFC-based contactless
+payment
+> Mobile payment
+Payment systems
+> Credit/debit cards
+> SIM cards
+> Embedded SIM
+(machine-to-machine
+communication)
+communications
+Mobile
+> Smart Home
+> Smart City
+> Industry 4.0
+> IT
+Internet of Things
+> Social insurance cards
+> Passports
+> National identity cards
+The segments
+> Healthcare cards
+Digital Security Solutions
+In addition to its role as an independent division, the Digital Security Solutions segment also has a second
+important function within the Group: The segment supports the other three segments as a kind of competence
+center when it comes to integrating security as a function in their system solutions. This also creates additional
+areas for differentiation from the competition. For example, Infineon offers automobile manufacturers and
+industrial companies the extensive security expertise of the Digital Security Solutions segment together with the
+detailed system expertise and application know-how of the Automotive and Industrial Power Control segments.
+2019
+2018
+Segment Result
+77
+105
+Revenue
+642
+664
+€ in millions
+Revenue and Segment Result of the Digital Security Solutions segment
+In the Digital Security Solutions segment Infineon recorded revenue of €642 million in the 2019 fiscal year, a
+decrease of 3 percent compared to the €664 million revenue of the previous year. The segment contributed
+8 percent of the Group revenue.
+Revenue development
+8.5%
+10.1%
+17.4%
+24.3%
+24.8%
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+Source: ABI Research, "Smart Card & Secure ICs," September 2019.
+CEC Huada
+STMicroelectronics
+Samsung
+Infineon
+NXP
+World smart card and secure ICs market share 2018
+The size of the world market for security ICs was US$3.190 billion in the 2018 calendar year. Compared to the previous
+year value of US$3.260 billion it shrank by 2.1 percent (Source: ABI Research). Infineon's revenues in this market
+segment also dropped slightly by 2.0 percent. Compared to the previous year Infineon was able to improve market
+share by 0.1 percentage point. Growth in authentication and dual-interface payment cards was not sufficient to
+compensate for the expected revenue drops in the area of SIM cards for mobile communication and for contact-
+based payment cards. The five largest market players accounted for a total market share of 85.1 percent in the 2018
+calendar year.
+Market position
+54
+15.2%
+> Driver's licenses
+(e.g. tachograph)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Many applications use products both from the AC-DC power supply area and from DC-DC power supply. In DC-DC
+power supply, our control and driver ICs and thus complete solutions for digital control also contributed to revenue
+in addition to our OptiMOSTM low-voltage power transistors.
+Revenue development was very positive with power supplies for the next generation of cellular infrastructure.
+The DC-DC power supply area profits in particular from the sharp increase in semiconductor content in systems
+for the new 5G technologies compared to 4G technology.
+Battery-powered devices use OptiMOS™ power transistors of the low voltage and mid voltage classes. Demand
+for these transistors continued to benefit from the rising demand for devices with BLDC motors, such as cordless
+screwdrivers, drills, hedge trimmers, power saws, lawn mowers and robot vacuum cleaners. Furthermore, the
+demand for electric two-wheelers such as eBikes, eScooters and Pedelecs also rose.
+The demand dynamics in the DC-DC power supply business were significantly lower in the previous fiscal year as
+compared to the previous year and there was only a slight increase in revenue. Important demand was primarily
+driven by the three application fields battery-powered devices, cellular infrastructure and data centers.
+Demand for high-voltage power transistors of the CoolMOSTM family in AC-DC power supplies stayed very positive
+across all application areas, continuing the dynamic growth of the previous year. The highest revenue share was
+attributed to products for use in data centers. Demand rose primarily because of the ongoing expansion of hyper-
+scale data centers by cloud computing providers. Increased revenues also came from high-voltage power transistors
+for use in on-board chargers for electric and plug-in hybrid vehicles in all regions. Similarly, Infineon saw higher
+growth linked to equipping charging stations for electric vehicles, here primarily in China.
+Revenue
+Segment Result
+2019
+2018
+585
+532
+LL
+2,318
+2,445
+€ in millions
+Revenue and Segment Result of the Power Management & Multimarket segment
+In the Power Management & Multimarket segment Infineon recorded revenue of €2,445 million in the 2019
+fiscal year, an increase of 5 percent compared to the €2,318 million revenue of the previous year. The segment
+contributed 30 percent of the Group revenue.
+Revenue development
+Source: Based on or includes content supplied by Informa Tech (former IHS Markit Technology), "Power Semiconductor Market Share Database 2018," September 2019.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+7.0%
+7.0%
+8.0%
+13.1%
+27.7%
+Renesas
+Toshiba
+STMicroelectronics
+51
+Government
+identification documents
+Combined Management Report | Our Group
+Power Management & Multimarket | Digital Security Solutions
+> Protection against
+manipulation
+(Toll Collect)
+> Electronic toll collection
+(e.g. eCall, car-to-car
+communications,
+car-to-infrastructure
+communications)
+› Connected vehicles
+Automotive
+systems
+> Industrial control
+› Game consoles
+> Brand protection
+Applications
+› Accessories
+Authentication
+Digital Security Solutions
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The Digital Security Solutions Segment specializes in hardware-based IT security solutions. The focus areas are
+divided into classic smartcard and embedded security applications. These products are based on our core compe-
+tencies in the areas security, contactless communication, software and embedded security controller solutions.
+Modern forms of communication and the rising degree of connected objects increasingly require companies to
+integrate security solutions in their products. With more than 30 years of experience and expertise we understand
+the requirements of our customers with regard to fast and tailor-made integration and short time-to-market.
+The Digital Security Solutions segment in the 2019 fiscal year
+SEGMENT RESULT
+€77 million
+REVENUE
+€642 million
+Digital Security
+Solutions
+52
+The increase in Segment Result was a result of increased revenue compared to the previous year, higher average
+selling prices for power semiconductors and a positive development of the US dollar exchange rate for the euro
+with regard to revenue and development of earnings.
+Segment Result was €585 million, representing an increase of 10 percent compared to the previous year's Segment
+Result of €532 million. As a percent of revenue, the Segment Result Margin was 23.9 percent (previous year:
+23.0 percent).
+Development of the Segment Result
+The area of sensor technologies also experienced excellent demand, with revenue increases driven by silicon
+microphone business. Although the smartphone market remained stagnant, Infineon benefited from additional
+design wins in this area and from an increase in the number or products featuring voice control, which also need
+silicon microphones. Examples here are headphones, smart speakers and remote controls for smart home devices.
+Initial revenues were also achieved with 3D ToF sensors for 3-dimensional image recognition in smartphones.
+In May 2019, the XENSIVT REAL3TM ToF sensor from Infineon was honored as Product of the Year in the category
+"Sensors" by the Embedded Vision Alliance. In addition, our 24-gigahertz radar sensors also saw an increase in
+revenue. With these sensors already in successful use in automotive areas, they are now being used in applications
+for presence detection and gesture control in smart home devices. As a whole, the sensor solutions made a
+significant contribution to revenue growth, while revenue from products for the radio-frequency area dropped
+during the previous fiscal year.
+The segments
+28.6%
+> Smart speakers
+Combined Management Report | Our Group
+Market position
+Based on this portfolio the Industrial Power Control segment addresses long-term high-growth application fields
+such as industrial automation, renewable energies and home appliances, while at the same time covering emerging
+power semiconductor applications such as charging infrastructures for electric vehicles and electric utility vehicles.
+The Industrial Power Control segment uses the expertise gained in the application of discrete IGBTs and IGBT
+modules to grow in adjacent product categories, for example with Intelligent Power Modules (IPMs). By a higher
+level of functional integration, i.e. integrating drivers and switches, our CIPOST IPMS provide higher efficiency for
+drives for smaller motors and thus help our customers meet new energy efficiency standards for home appliances
+and for industrial applications. Furthermore, these integrated products enable a significant reduction in system
+size and development effort. The products of the iMOTION™ family, in principle application-optimized microcon-
+trollers, enable easy-to-implement intelligent motor control. Infineon offers reference designs and ready-to-use
+solutions for these compact products. With Infineon's special algorithms for motor control drivers, customers only
+need to adjust a few parameters in order to receive a high-performance motor control solution suited to their
+challenges. IMOTION™ products are used in home appliances of all types, from hair dryers and washing machines
+to air conditioners.
+We strengthen and expand our product core based on new materials. We have also successfully ramped our silicon
+carbide (SiC) MOSFET technology and reached series manufacturing readiness. The Easy module family is a central
+success factor here, offering our customers a flexible and easily scalable module solution. This has given the family
+a key position in applications such as photovoltaics, industrial automation and charging infrastructures for electric
+vehicles. In addition to the modules, we are now strengthening series manufacturing of our comprehensive discrete
+SiC MOSFET product portfolio. Our SiC products guarantee our customers the reliability Infineon is known for and
+the support in developing systems based on this new material. This gives us a leading role in the area of silicon carbide
+for industrial applications.
+Power semiconductors are a central element in the products and systems of our customers, determining the basic
+function, efficiency, size, weight and costs of the systems. The Industrial Power Control segment products form the
+foundation for the efficient generation, storage and almost completely lossless transmission of electric energy, as
+well as for reducing the losses during consumption. The core business consists of discrete IGBTs, unpackaged IGBT
+chips that the customer then assembles into modules, IGBT modules and the respective associated driver ICs.
+We intend to further strengthen this core. We continuously develop our existing products, leveraging our economies
+of scale in both research and development as well as in manufacturing in order to achieve a broad portfolio opti-
+mized for both cost and performance. In addition, we develop products with long-term potential for differentiation.
+One example here is the PrimePACKTM module, which combines the IGBT5 chip technology with the .XT bonding
+and connection technology. While the IGBT5 chip technology allows higher power densities with lower static and
+dynamic losses, the .XT bonding and connection technologies in the module provide a longer service life through
+improved thermal load cycle capability. This provides our customers with significant added value for high-power
+inverters in wind and photovoltaic applications as well as in industrial drives.
+Strategic deployment
+P see page 57
+46
+46
+Industrial Power Control
+The segments
+Combined Management Report | Our Group
+VAL III O
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+> Overland HVDC
+transmission lines
+> Offshore wind farm
+HVDC transmission lines
+> FACTS (Flexible AC
+Transmission Systems)
+The world market for IGBT-based power semiconductors - discrete IGBT power transistors and IGBT modules -
+reached US$6.224 billion in the 2018 calendar year, an increase of 17.4 percent compared to the previous year's
+value of US$5.303 billion (Source: Informa Tech). Infineon was able to further improve its leadership position with
+a market share of 28.6 percent (an increase of 1.8 percentage points). The five largest market players together
+accounted for a market share of 66.4 percent.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+1 Including motors, compressors, pumps and fans.
+Industrial Power Control
+The segments
+> Auxiliary power
+supplies
+› Charging stations for
+electric vehicles
+> Home energy storage
+> Uninterruptable
+power supplies
+Industrial Robotics
+Energy generation
+> Energy storage
+> Battery chargers
+> Wind power turbines
+Energy transmission
+Semikron
+ON Semiconductor
+Fuji Electric
+Mitsubishi
+Infineon
+> Photovoltaic systems
+World IGBT-based power semiconductor market share 2018
+› Segment Result and Segment Result Margin to measure the operating profitability of its various businesses
+and of the portfolio as a whole,
+> Free cash flow from continuing operations to measure the amount of cash generated or used excluding
+financing activities,
+› Return on Capital Employed (ROCE) to measure capital efficiency.
+Segment Result is the key figure of the Group for measuring operating performance. Expressed as a percentage
+of revenue (Segment Result Margin), it measures profitability of revenue and shows how well operations are being
+managed. The activities of Infineon's segments are managed on the basis of Segment Result. Responsibility for
+optimizing Segment Result within the framework of Group strategy (as approved by the Management Board) rests
+with the management teams of the relevant segments, acting, however, in coordination with the Management Board.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+P see page 182 ff.
+63
+ƠI A
+P see page 39 ff.
+and page 16 ff.
+P see page 77
+Free cash flow from continuing operations enables us to measure how well operating profitability is being converted
+into cash inflows. This key figure also provides information on the efficient use of working capital and property,
+plant and equipment.
+In order to measure its success in implementing its strategies, Infineon uses the following three overarching
+performance indicators:
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE) against the cost of
+capital, in order to ensure value creation.
+Internal management system
+Principal performance indicators
+62
+Infineon deploys a comprehensive controlling system to manage its business with respect to the strategic targets
+it has set itself. The system involves the use of financial and operating key performance indicators. Information
+for controlling purposes is derived from annual long-term planning, quarterly outlooks, orders received per week
+and actual monthly data. This knowledge enables management to base its decisions on sound information with
+respect to the current situation and future expected financial and operational developments. Sustainable business
+practices and the consideration of forward-thinking qualitative factors are important for Infineon's long-term
+success. As an enterprise very much aware of its responsibilities towards society, Infineon also takes account of
+non-financial factors, mainly in the fields of sustainability (see the report "Sustainability at Infineon” on our website
+@www.infineon.com/csr_reporting) and human resources (see the chapter “Human Resources strategy"). Although these
+factors are not used to manage business performance, they nevertheless help Infineon achieve its financial targets.
+As part of the process of managing business performance, management also attaches great importance to ensuring
+that Infineon acts in strict compliance with all relevant legal requirements and, of equal importance, that its internal
+Corporate Governance Standards are complied with (see the chapter "Corporate Governance").
+The three performance indicators described above are also the cornerstones of the system for variable compen-
+sation within Infineon. Most variable salary components for employees and management are directly linked to
+these performance indicators.
+> adaptation and retooling of manufacturing lines to accommodate the modified product portfolio, in particular
+due to the beginning of volume production for new technologies and products;
+> equipment for innovative technologies and further improvements in quality.
+In order to optimize use of capital and to increase flexibility, in addition to in-house manufacturing in frontend
+in differentiating technologies such as discrete power semiconductors and sensors, we are increasingly using
+external manufacturing partners for CMOS and CMOS derivate technologies. This applies primarily for technology
+nodes smaller than 90 nanometer as well as for older generations of power semiconductors. In backend, i.e.
+assembly and testing, we are making increasing use of manufacturing partners for standardized package types,
+with an emphasis on stable partnerships.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+61
+Performance indicators
+Combined Management Report | Our Group
+Internal management system
+62
+P see page 29 ff.
+and page 35 f.
+P see page 37 f.
+P see page 99 ff.
+The internal management system at Infineon is designed to assist in implementing the Group strategy and related
+long-term financial targets described in the chapter "Group strategy” and “Long-term financial targets underline
+our growth ambitions". Accordingly, performance indicators are used, which enable profitable growth and efficient
+employment of capital to be measured. Overall, reaching our long-term financial targets gives rise to a sustainable
+increase in the value of the business, brought about by achieving a premium on the cost of capital in the long term.
+In this context, growth, profitability and investments are all interdependent. Profitability is the prerequisite for
+being able to finance operations internally, which, put another way, means opening up potential opportunities for
+growth. Growth, in turn, requires continual investment in research and development as well as in manufacturing
+capacities. Growing at a commensurate rate allows Infineon to achieve leading market positions and to generate
+economies of scale that contribute to greater profitability. Employing financial resources efficiently is a critical
+factor in achieving these goals.
+Internal management system
+Since all three performance indicators and especially Segment Result strongly correlate with revenue growth,
+the latter is not used as a key performance indicator in its own right but is covered by the three performance
+indicators indirectly.
+This key performance indicator describes how efficiently a company manages its resources. ROCE is also analyzed
+by Infineon at Group level only and not at segment level. A comparison of a company's ROCE and its weighted
+cost of capital provides information on the extent to which returns have been generated in excess of shareholders'
+and debt holders' expectations. Thus, ROCE serves as a tool for value-based management.
+Segment Result is defined as operating income (loss) excluding certain impairments (such as goodwill impairments),
+impact on earnings of restructuring measures and closures, share-based compensation expense, acquisition related
+depreciation/amortization and other expenses, gains (losses) on sales of businesses, or interests in subsidiaries
+and other income (expense), including litigation costs (see note 28 to the Consolidated Financial Statements for a
+computation of the relevant figures). Court and legal fees arising in conjunction with licensing Infineon's patents
+are included in Segment Result, as is any related income. Segment Result is the indicator that Infineon uses to eval-
+uate the operating performance of its segments (for an analysis of Group and individual segment performance in
+the 2019 fiscal year, see the chapters "The segments" and "2019 fiscal year").
+Other performance indicators
+The principal performance indicators described above are supplemented by others that provide information about
+growth potential, cost efficiency by functional area and liquidity.
+Growth and profitability performance indicators
+Revenue growth is compared continuously with the rate of growth of relevant target markets. This ties in directly
+with our strategic target of profiting continuously from the growth of our target markets. A further indicator for
+future revenue growth is the number of design wins, whereby we regularly measure actual outcomes against targets.
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings and costs above the
+Segment Result line. This involves a review of gross profit, research and development expenses, selling, general
+administrative expenses and the ratio of these items to revenue. These performance indicators are used to manage
+the business at both Group and segment levels (for an analysis of changes in the fiscal year under report, see the
+chapter "Review of results of operations").
+Liquidity performance indicators
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its disposal and an
+optimal capital structure. Liquidity is managed at Group level, not at segment level, using the following key
+performance indicators:
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets and net working capital.
+Asset intensity describes the amount of assets necessary to generate a certain level of revenue (for an analysis of
+the derivation of and change in ROCE in the 2019 fiscal year, see the chapter "Review of financial condition").
+> Gross cash position: Cash and cash equivalents plus financial investments.
+> Net working capital: Current assets less cash and cash equivalents, less financial investments, less assets
+classified as held for sale, less current liabilities excluding short-term debt, and current maturities of long-term
+debt, excluding liabilities classified as held for sale.
+> Investments: The total amount invested in property, plant and equipment and intangible assets, including
+capitalized development costs.
+For an analysis of changes in these key performance indicators during the 2019 fiscal year, see the chapter
+"Review of liquidity".
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the key operational
+figures for capacity utilization and forecast capacity requirements are analyzed. The results of this analysis are
+used in determining investment requirements.
+Actual and target values for performance indicators
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+> Net cash position: Gross cash position less short-term and long-term debt.
+> further increases in the level of automation at our frontend and backend sites, for example, improvement
+of the wafer transport system;
+P see page 79
+P see page 76 ff.
+Free cash flow
+An important key performance indicator for Infineon is the free cash flow figure, defined as net cash provided
+by or used in operating activities and net cash provided by or used in investing activities, both from continuing
+operations, after adjusting for cash flows related to the purchase and sale of financial investments. Free cash flow
+measures the ability to generate sufficient cash flows to finance day-to-day operations and fund required invest-
+ments out of the ongoing business. It is Infineon's stated target to sustainably generate positive free cash flow
+(see the chapter "Review of liquidity" for an analysis of free cash flow in the 2019 fiscal year).
+The main levers for generating free cash flow are profitability, the ability to manage working capital efficiently
+and the levels of investments.
+Infineon manages net working capital levels by focusing continuously on optimizing levels of inventories, trade
+receivables and trade payables.
+Effective investment management plays a key role with regard to managing free cash flow. Our stated strategy of
+managing investments systematically should be seen in this context. Free cash flow is managed by Infineon at
+Group level only and not at segment level.
+Return on Capital Employed (ROCE)
+The performance indicator RoCE measures the ability of capital to provide a return and is defined as the operating
+result after tax from continuing operations divided by capital employed. Capital employed consists of non-current
+assets and net working capital. RoCE shows the correlation between profitability and the capital resources required
+to run the business.
+ROCE =
+Operating result after tax from continuing operations
+Capital employed
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Internal management system
+64
+P see page 75
+P see page 68 ff.
+Segment Result
+Furthermore, during the 2019 fiscal year investments were made in frontend and backend sites primarily in
+the following areas:
+The chapter "Outlook" contains a table showing the actual values achieved in the 2019 fiscal year for the key
+performance indicators, along with expectations for the 2019 fiscal year and the 2020 fiscal year.
+4. Expansion of the backend IGBT module manufacturing capacities for industrial and automotive applications.
+Based on the expected strong demand for IGBT modules for drive trains in hybrid and pure electric vehicles,
+the corresponding backend manufacturing capacities are being expanded at the Warstein and Wuxi sites. Further-
+more, the groundbreaking for a new module manufacturing facility took place in Cegléd in September 2019.
+R&D expenses
+Percentage of revenue
+At the end of the 2019 fiscal year we employed 7,755 people (19 percent of Infineon's total workforce) at our research
+and development sites; at the end of the 2018 fiscal year the figure was 7,161 employees (18 percent of the total
+workforce). Infineon maintains research and development departments at 37 sites in 16 countries: Graz, Linz and
+Villach (all Austria); Beijing and Xi'an (both China); Herlev (Denmark); Le Puy-Sainte-Réparade (France); Augsburg,
+Dresden, Duisburg, Erlangen, Karlsruhe, Neubiberg near Munich, Regensburg and Warstein (all Germany); Bristol
+and Reigate (both Great Britain); Bangalore (India); Padua and Pavia (both Italy); Tokyo (Japan); Seoul (Korea);
+Kulim, Ipoh and Melaka (all Malaysia); Nijmegen (The Netherlands); Muntinlupa (Philippines); Bucharest (Romania);
+Singapore; Andover, Chandler, El Segundo, Leominster, Milpitas, Morrisville, San Jose, and Warwick (all USA).
+In the 2019 fiscal year, the capitalized development costs totaled €125 million (previous year: €143 million). Amorti-
+zation of capitalized development costs in the 2019 fiscal year amounted to €57 million (previous year: €50 million).
+Subsidies and grants for research and development increased from €86 million in the 2018 fiscal year to €111 million
+in the 2019 fiscal year.
+Principal research and development activities
+Research and development expenses are incurred in the area of components as well as for platforms, manufactur-
+ing technologies and, increasingly, for software. We earn approximately two thirds of our revenue with power
+semiconductors, and our research and development activities focus on this area accordingly. Activities include the
+development of individual components and modules, technology platforms for low-voltage and high-voltage
+power switches, power semiconductors based on the new materials silicon carbide and gallium nitride as well as
+digital controls for power supplies and complete motor control units.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+56
+▼ ▲ ↑ III O
+Combined Management Report | Our Group
+Research and development
+57
+40
+The Infineon strategic "Product to System" approach is also of central importance here. While in the past both
+research and development primarily focused on technologies or components, today the systems in which the
+components are used play a decisive role. The development of the associated software for such systems is also
+becoming more and more important. Innovative system solutions start with the optimization of system functionality.
+If savings and improvements, for example, for passive components, cooling systems, packages, weight and
+reliability create value for the customer, the customer is willing to pay a higher price for the semiconductor compo-
+nent providing these advantages. Here, digital microelectronics is often combined with RF components, control
+ICs, drivers, sensors and actuators, resulting in a significant increase in performance. Furthermore, hardware is
+increasingly being complemented by software to offer turnkey solutions to our customers.
+Power semiconductors
+As the market player with probably the most comprehensive portfolio of power semiconductors, Infineon focuses
+on understanding the customer's application. Examples of products we have successfully introduced are firstly
+the highly efficient and robust PrimePACKTM modules for offshore wind turbines, secondly, our latest generation of
+80 volt MOSFETs for mild-hybrid vehicles based on 48 volt technology and thirdly, our new discrete IGBTs with
+additional safety features for rice cookers and induction cooktops. The goal is to offer our customers the solution
+with the best price-performance ratio. Such a solution can also be based on a combination of silicon and silicon
+carbide (SiC) components. The balance between cost and performance advantages of the individual components
+is essential to a sustainable improvement of the customer's system. This may apply to the efficiency, costs, size,
+weight or time-to-market.
+New materials
+Manufacturing technologies and transistor architectures for power semiconductor components based on new
+materials are also an important focus area of our research and development activities. Silicon carbide (SiC), a
+combination of silicon and carbon, and gallium nitride (GaN), a combination of gallium and nitrogen, permit higher
+power densities and efficiency in power semiconductors. This makes products more compact while reducing
+switching losses at the same time. The material properties of SiC and GaN components make them suitable for
+different voltage classes. While the SiC technology is advantageous for voltages of over 1,000 volts, GaN technology
+is well suited for use with 600 volts or lower.
+Silicon carbide
+The main areas of application for SiC have up to now been photovoltaic systems, industry power supplies and
+charging infrastructure for electric vehicles, where the system advantages of SiC are clearly evident. A penetration
+of industrial applications is currently beginning, primarily uninterrupted power supplies; there are also initial
+designs in the significant market for variable speed drives (servo-motors, robotics) which also benefit from the
+special properties of the new technology, allowing a very cost-effective, high-performance implementation from
+a system point of view. We also regard auxiliary units in trains as a promising future application. In the mid and
+long term, vehicles with hybrid or pure electric drive trains also promise enormous potential. Applications here
+are for example main inverters for the drive train and the on-board charger. In total Infineon achieved cumulated
+design-in-potential of about €1.8 billion over lifetime. About two thirds of that refer to industrial applications,
+about one third refers to automotive. Among other automakers, Korea-based Hyundai has chosen products of our
+CoolSiCTM family for their next-generation electric vehicles.
+In 2017, Infineon was one of the first manufacturers to introduce to the market a SiC MOSFET with trench technology.
+Trench architecture offers significantly more freedom in the realization of efficient and at the same time, more
+robust transistors compared to less demanding planar architectures. It put Infineon well ahead of the competition
+in terms of development. The focus of our future development activities in the area of SiC is on expanding the
+product portfolio. Research and development activities center on technologies for higher voltages (1,700 volts and
+3,300 volts) and appropriate packages to make most use of the performance capabilities of SiC technology.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+2019
+2018
+H
+11.8%
+5. Because of its cost position, operation of the Temecula site is planned to continue until 2021 only, and either
+to sell it before this date or close it. The products manufactured in Temecula will be transferred to other Infineon
+sites or will be outsourced to external manufacturing partners.
+Combined Management Report | Our Group
+The segments
+Digital Security Solutions
+55
+Infineon benefits from this trend in particular due to its core expertise in the area of contactless technologies.
+Security solutions such as SECORA™ Pay also saw an increase in revenue. This product gives the customer complete
+payment solutions, i.e. the security chip together with the associated software. SECORA™ Pay was introduced in
+the early 2019 fiscal year and immediately enjoyed very good user acceptance. Small regional customers in particular
+prefer complete solutions.
+In the area of transport and ticketing, we have seen increasing acceptance of the CIPURSE™ ticketing standard
+among the operators of public transportation networks, especially in Europe, Eastern Europe and South America.
+CIPURSE™ is the open standard of OSPT (Open Standard for Public Transportation) for collecting fares in the area
+of public transportation. Infineon has provided decisive support for the development and introduction of CIPURSE™.
+Revenue from embedded SIM (eSIM) once again increased in the previous fiscal year. eSIMs are installed in the
+customer device as a replacement for classic SIM cards and ensure identification with the telecommunications
+operator. eSIMs are also used for the emergency call (eCall) function, which has been mandatory in the EU since
+March 2018 for all new cars sold. As a result, revenue for eSIMs used in vehicles continued to rise. Demand for
+eSIMs is also increasing in the industry sector, driven especially by progress in Industry 4.0 production machines,
+tools and other technical devices are becoming more and more connected and can thus be remotely restocked
+and maintained.
+Infineon customers rely on the Company's security expertise to protect their products, their business models and
+ultimately their own customers. Infineon offers a wide spectrum of security products in the area of authentication,
+for example Trusted Platform Modules (TPMS), OPTIGATM Trust security chips and USB tokens. These are used in
+applications for example in the Internet of Things, Industry 4.0, Smart Home, Smart City and connected vehicles.
+Infineon is the first company to offer a TPM with automotive qualification. The Volkswagen group is among the
+first customers to purchase this product. The TPM secures all the important communication channels in the car
+such as the central gateway, the telematics unit and access to the infotainment system. The heightened awareness
+in the area of security for companies is visible in the clearly increased revenues from USB tokens (USB sticks)
+containing security elements, which can be used for identification purposes.
+In the previous fiscal year, Infineon scored an impressive number of design wins in the area of authentication,
+although the individual projects are relatively small. The high number of potential applications means, however,
+that the products are required in a large number of projects, making advice and support for the customer together
+with partners in this area particularly practical. The Infineon Security Partner Network (ISPN) was launched in
+October 2015 and currently has more than 50 partners in industry that help provide individual security solutions.
+Development of the Segment Result
+ƠI A
+The Segment Result was €77 million, equivalent to a decline of 27 percent compared with the €105 million
+Segment Result of the previous year. The Segment Result Margin was 12.0 percent, compared to 15.8 percent
+in the previous year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Research
+and development
+NV
+Research and development expenses in the 2019 fiscal year amounted to €945 million after €836 million in the
+previous year, representing an increase of €109 million or 13 percent. Research and development expenses thus
+increased disproportionally to revenue, which increased by 6 percent. In the 2019 fiscal year, we spent 11.8 percent
+of revenue on research and development compared to 11.0 percent in the previous year. The effects of the adjust-
+ments both to the increase in the number of employees and the R&D projects to the economic downturn in the
+course of the 2019 fiscal year have a certain time lag. The reduced revenue growth led to an increase in the ratio.
+R&D expenses
+€ in millions
+11.0%
+836
+945
+The Segment Result was in essence negatively impacted by the lower contribution from declining revenue. In
+addition, some idle costs from production occurred, resulting from a temporary drop in demand due to inventory
+adjustments. Despite the increase in headcount, especially in the area of software and system expertise, operating
+expenses remained almost constant. This can be attributed to the cost optimization measures implemented in the
+context of the expected revenue decline.
+Combined Management Report | Our Group
+Combined Management Report | Our Group
+Research and development
+58
+Investments
+€ in millions
+1 Property, plant and equipment and intangible assets.
+1,451
+16.5%
+1,254
+H
+2018
+2019
+18.1%
+In the 2019 fiscal year, our investments amounted to €1,451 million, representing an increase of €197 million or
+16 percent compared to the €1,254 million invested in the previous year. Relative to revenues, the investments in
+the 2019 fiscal year increased to 18.1 percent compared to the previous year's 16.5 percent. €1,295 million of the
+overall investment volume was dedicated to property, plant and equipment (previous year: €1,090 million) and
+€156 million to intangible assets including capitalized research and development costs (previous year: €164 million).
+Investments
+By far the largest share of the amount invested in property, plant and equipment is accounted for by investments in
+manufacturing facilities. Approximately two thirds of this amount went to frontend manufacturing facilities, with
+the rest essentially going to backend manufacturing facilities.
+Milestones and essential investment focuses in manufacturing during the 2019 fiscal year
+Based on customer demand, at the beginning of the fiscal year we planned for high growth, but had to correct our
+plans downward during the course of the fiscal year. Since the investments have lead times between order and
+initial implementation of the manufacturing facilities of nine to twelve months in frontend and three to six months
+in backend manufacturing, we were only able to adapt to the changing market with some delay. One result is that
+significant idle costs arose in the area of in-house manufacturing, in particular in the second half of the fiscal year,
+and we were only able to reduce our investment budget slowly. Since our long-term growth drivers are intact, we
+expect that all these investments will be viable when seen in the mid to long term. With regard to the investment
+budget we are following the target business model and will compensate the increased budget of the previous fiscal
+year during later periods. Our strategy remains oriented to the long-term and is less affected by cyclical downturns.
+We want to rigorously leverage the opportunities arising from the forecast strong market growth.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our Group
+Operations
+Investment focus areas in the 2019 fiscal year:
+1. We began the construction of a fully automated 300-millimeter thin-wafer manufacturing facility in November
+2018 at the Villach site, our competence center for power electronics. Depending on the macro-economic
+situation, we currently plan to ramp the fab by late 2021 calendar year. The planned investments for the fully
+equipped building and cleanroom facilities amount to approximately €1.6 billion. The estimated additional
+potential revenue associated with this factory is approximately €1.8 billion annually. The expansion will provide
+us with significant effects of scale at the Villach site and thus will increase our efficiency. The expansion of
+manufacturing capacities for silicon also makes it possible to increase capacities for silicon carbide and gallium
+nitride technologies. Existing buildings and manufacturing lines can be refunctioned for these compound
+semiconductors. This means a capital-efficient capacity expansion.
+2. Moderate expansion of the 300-millimeter frontend manufacturing capacities in Dresden and Kulim in
+differentiating manufacturing technologies for power semiconductors and sensors.
+Research and development
+3. Further ramp-up of volume production of our silicon carbide (SiC) MOSFETs in trench technology and
+SiC diodes on 150-millimeter wafers.
+Percentage of revenue
+60
+Infineon maintains a total of 17 manufacturing sites in 10 countries: Villach (Austria); Beijing and Wuxi (both China);
+Dresden, Regensburg and Warstein (all Germany); Cegléd (Hungary); Batam (Indonesia); Cheonan (Korea); Melaka
+and Kulim (both Malaysia); Tijuana (Mexico); Singapore; and Leominster, Mesa, San José and Temecula (all USA).
+As of 30 September 2019, there were 28,981 people employed in manufacturing at these sites (previous year:
+28,532 employees).
+Operations
+Infineon is the only company in the world to have already been manufacturing power semiconductors on 300-milli-
+meter silicon thin-wafers on an industrial scale for several years. This experience puts Infineon in an excellent
+position to transfer thin-wafer technology to SiC. The continuing development of Cold Split technology will take
+place in Villach and at the Siltectra site in Dresden. The implementation in our manufacturing process is expected
+within the next few years.
+60
+In November 2018, Infineon acquired the Dresden-based start-up Siltectra GmbH. Siltectra was founded in 2010
+and has a portfolio of more than 50 patent families. The core of the portfolio is referred to as Cold Split technology,
+which is used to split crystalline materials with a minimum of material loss compared to conventional sawing
+techniques. Among other things, these technologies can be used with the semiconductor material silicon carbide
+(SiC), which is expected to generate strongly increasing demand in the years to come. Cold Split technology can
+double the number of chips yielded by a single wafer. Infineon's goal is to use the Cold Split technology to ensure
+SiC product supplies on a long-term basis. Increased availability of SiC wafers resulting from Cold Split technology
+will significantly simplify the ramp-up of our SiC products, in particular with regard to the further expansion of
+renewable energies and the increasing use of SiC in the drive train for electric vehicles.
+Gallium nitride
+Compared to silicon-based transistors, gallium nitride transistors offer entirely new and interesting properties
+that can be used for example for power supplies. Lower losses when switching as well as when in on-state can
+enable significantly more compact and more efficient devices. The first products of our CoolGaNTM family, various
+600-volt GaN power transistors based on an enhancement mode (e-Mode) GaN transistor, have already reached
+volume production readiness. The development of the next generation of our GaN transistors has already begun.
+This new architecture makes it possible to substantially increase performance even further. This will make GaN
+the first-choice technology for applications with the highest requirements on energy efficiency and power density,
+for example in data centers. GaN's properties, which are very different from those of silicon, make it possible to
+integrate high-voltage systems on a chip, resulting in compact solutions for example for motor control units in robots.
+In the coming months we will be presenting several of these new products at a variety of trade fairs. Volume pro-
+duction of our GaN products will take place in Villach on a 150-millimeter wafer manufacturing line. The transition
+to volume production on 200-millimeter wafers is currently in planning.
+In May 2019, the European research project UltimateGaN was launched under the leadership of Infineon Technologies
+Austria AG. With a size over lifetime of approximately €48 million, the project is one of the largest European GaN
+research projects. It is financed by investments from industry, funding by the individual countries involved as well
+as from the ECSEL (Electronic Components and Systems for European Leadership) Joint Undertaking. The objective
+is to develop innovative power and radio-frequency electronics using the new semiconductor material GaN. Many
+applications will benefit from the results of the project. The research project will give new boost to electro-mobility
+and intelligent power supplies: Small, integrated on-board charging devices with GaN components will make charging
+an electric car at home three times faster than in the past. These efficient power semiconductors will also make
+the integration of renewable energy sources such as solar and wind power in the power grid easier and faster.
+Digitalization of products and systems
+In addition to the new materials, another focus area of our research and development activities is the digital control
+of power semiconductors. We are currently witnessing the transition from analog control to digital control of
+power switches. Digital control systems enable much easier adaptation to various operating conditions (for example,
+stand-by, partial load, full load) and also increase the efficiency of increasingly complex power components. Pro-
+grammability of the control ICs enables customers to adapt the function of the control unit to the requirements
+even with shorter learning cycles. This transition already began several years ago for MOSFET-based control loops;
+the trend has now also started for IGBT-based control loops. Infineon provides components for all stages of the
+digital control loop, namely control ICs, driver ICs and power switches. In particular, the controllers of the iMOTION™
+family are attracting great interest in the market. We will expand this successful family and will develop products
+with integrated drivers and integrated power switches.
+Combined Management Report | Our Group
+Research and development
+Sensor technologies and radio-frequency applications
+Sensors capture the real, analog world. The signals measured are first digitalized. Then, the digital values are
+processed, transmitted and stored according to the requirements of the target application. Sensors also play
+an increasingly important role in operating machines and devices, referred to as human machine interaction.
+In this area we are developing our portfolio of MEMS-based silicon microphones and pressure sensors as well as
+3D ToF sensors and radar sensors. In addition, we are working on new sensor types for capturing other physical
+measurements. Infineon has about 40 years of experience in sensor design and sensor manufacturing and offers
+the most comprehensive portfolio of pressure and magnetic field sensors for automotive applications.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Infineon is expanding its research and development expertise for radio-frequency components at the Linz site.
+The groundbreaking took place in April 2019; by summer 2020, the new construction can house up to 400 employees,
+including in the medium term 220 new workstations on top of the 180 that already exist. Solutions for important
+future markets are developed in Linz, where development focuses on 77 gigahertz radar sensor ICs for driver assis-
+tance systems and on radio-frequency components for smartphones, tablets and navigation applications.
+Combined Management Report | Our Group
+Operations
+The expansion of the new development center in Dresden is proceeding according to plan. The preparation phase
+was completed late in the 2018 calendar year and in the meantime, the development center employs more than
+20 new employees. Mid-term, a total of 250 jobs are to be created here. The Dresden development center intends to
+facilitate the development of new products for automotive and power electronics as well as solutions for artificial
+intelligence. System integration is growing in importance for the complex interaction of semiconductors in vehicles
+with increasingly complex technology. The core tasks of the development center are modelling complex systems
+and the development of highly-integrated products, in addition to chip design.
+Dresden was also the site of the June 2019 launch of the European research project "Power2Power". Until mid 2022,
+43 partners from eight countries will jointly research and develop innovative power semiconductors with highest
+power densities and energy efficiencies using silicon-based IGBT technology. Universities, research institutes, small
+and medium-sized companies and international corporations are participating in this partnership, which is being
+coordinated by Infineon Dresden. The project size totals approximately €74 million and is being funded by industry,
+grants from the participating countries and by ECSEL Joint Undertaking.
+Patents
+Another indication of Infineon's innovative power and long-term competitive strength is the number and quality
+of our patents. In the 2019 fiscal year we applied for approximately 1,760 patents worldwide, compared to approxi-
+mately 1,550 patent applications in the previous year. The portfolio did also change due to acquisition or sale
+of business units and as a result of regular strategic patent portfolio reviews. At the end of the 2019 fiscal year, the
+worldwide patent portfolio consisted of approximately 26,570 patents and patent applications (previous year:
+approximately 26,850).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+In the area of RF applications, we intend to provide radio-frequency solutions for smartphones and cellular
+infrastructure. In addition to today's components - essentially low-noise signal amplifiers, antenna switches and
+antenna tuners - we will introduce further products including 5G millimeter-wave products and antenna modules.
+Infineon continues to develop its development sites
+59
+59
+€ in millions, except percentages
+Review of financial condition
+Review of financial condition
+Group performance
+Combined Management Report | Our 2019 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+1 Since 1 October 2018 impairments/reversal of impairments on assets are generally shown in segment result (excluding impairments for Goodwill).
+The previous period's figures were not adjusted.
+2 Without gains and losses from the disposal of assets since 1 October 2018. The previous period's figures were not adjusted.
+3 The calculation of the adjusted earnings per share is based on unrounded figures.
+0.98
+1,116
+Current assets
+0.89
+1,134
+1,165
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior
+performance indicator, but rather as additional information to net income and earnings per share (diluted)
+determined in accordance with IFRS. The calculation of earnings per share in accordance with IFRS is presented
+in detail in note 8 to the Consolidated Financial Statements.
+Non-current assets
+Debt-to-equity ratio 4
+Current liabilities
+P see page 75
+5 Inventory intensity = Inventories (net)/Total assets
+4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
+1,041
+3 Return on equity = Net income/Total equity
+2 Equity ratio = Total equity/Total assets
+1 Return on assets = Net income/Total assets
+Total assets
+ROCE 6
+Return on equity³
+Equity ratio 2
+Return on assets¹
+Statement of Financial Position ratios:
+Total equity
+Total liabilities
+Non-current liabilities
+Inventory intensity 5
+Adjusted earnings per share (in euro) - diluted³
+Acquisition-related depreciation/amortization and other expenses
+shareholders of Infineon Technologies AG - diluted
+ཌ་
+Share-based compensation expense
+Impairments (such as on goodwill), net of reversals'
+Plus/minus:
+1,218
+889
+2018
+2019
+Net income from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+€ in millions (unless otherwise stated)
+P see page 149
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase price allocations for
+acquisitions (in particular International Rectifier), by one-time expenses recorded within the financial result in
+conjunction with the planned acquisition of Cypress and by other exceptional items. To enable better comparability
+of operating performance over time, Infineon computes adjusted earnings per share (diluted) as follows:
+Decrease in adjusted earnings per share
+6 Calculation see following section about ROCE in this chapter
+The lower net income reported for the 2019 fiscal year resulted in a corresponding decrease in earnings per share.
+Earnings per share amounted to €0.75 (diluted and undiluted), compared to €0.95 respectively in the previous
+fiscal year.
+Losses (gains) on sales of businesses, or interests in subsidiaries, net²
+Other income and expense, net
+Acquisition-related expenses within financial result
+7
+Adjusted net income from continuing operations attributable to
+5
+(3)
+Revaluation of deferred tax assets resulting from the annually updated earnings forecast
+9
+(30)
+Tax effects on adjustments
+Weighted-average number of shares outstanding (in million) - diluted
+27
+32
+(272)
+1
+118
+114
+13
+11
+18
+30 Septem-
+P see page 60 f.
+Change
+Total liabilities stood at €4,779 million as of 30 September 2019 and were therefore €346 million (8 percent) higher
+than one year earlier (€4,433 million). Hereby, liabilities for pension plans and similar commitments increased in
+particular by €181 million, mainly as a result of the lower discount factor applied (see note 18 to the Consolidated
+Financial Statements for details). Other current liabilities increased by €137 million compared to the end of the
+previous fiscal year. The figure includes €112 million relating to the so-called "Deal Contingent Option" concluded
+to partially hedge exchange rate risks arising in conjunction with the planned acquisition of Cypress and which is
+only required to be paid if the acquisition of Cypress is completed, and the related Deal Contingent Option is exercised
+(see notes 3 and 26 to the Consolidated Financial Statements).
+Increase in liabilities driven by higher pension plans and similar commitments
+Increase in non-current assets due to higher level of investments and acquisition of Siltectra
+Non-current assets increased by €632 million from €5,456 million to €6,088 million over the course of the fiscal
+year under report. Additions to property, plant and equipment totaling €1,276 million exceeded the depreciation
+and amortization expense of €804 million. Investments related primarily to the production sites in Villach (Austria),
+Dresden and Regensburg (both Germany) as well as Kulim and Melaka (both Malaysia) (see also the chapter
+"Operations"). Additions in intangible assets (€156 million) were higher than the corresponding amortization
+expense (€141 million). The acquisition of 100 percent of the shares in Siltectra resulted in an increase in goodwill
+and other intangible assets of €130 million (see note 3 to the Consolidated Financial Statements). Goodwill and
+other intangible assets went up by €64 million due to exchange rate factors.
+Psee page 154 f.
+Psee page 142
+and page 174 ff.
+Psee page 156 ff.
+P see page 141 f.
+74
+Review of financial condition
+Group performance
+Combined Management Report | Our 2019 fiscal year
+Ο ΔΕ ΠΟ
+73
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Current assets increased by €1,901 million (35 percent) to stand at €7,324 million as of 30 September 2019, compared
+to €5,423 million one year earlier, mainly due to the €1,236 million increase in the gross cash position (sum total of
+cash and cash equivalents and financial investment) (see "Gross cash position and net cash position" in the chapter
+"Review of liquidity" for further information). The increase in inventories and the first-time recognition of contract
+assets in connection with the adoption of IFRS 15 increased current assets by €312 million. Fair value measurement
+gains amounting to €210 million on hedging transactions concluded to hedge the foreign currency risk in connection
+with the planned acquisition of Cypress (see note 3 to the Consolidated Financial Statements and the section
+"Derivative financial instruments and hedging activities" within note 26 to the Consolidated Financial Statements)
+also contributed to the increase in current assets.
+Debt also increased slightly by €24 million in total. Information on debt maturities is provided in note 15 to the
+Consolidated Financial Statements.
+Debt by currencies
+€ in millions
+2018
+Earnings per share down
+Minus:
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The equity ratio improved to 64.4 percent as of the end of the reporting period (30 September 2018: 59.3 percent).
+Equity increased by €2,187 million (34 percent) to stand at €8,633 million at the end of the reporting period
+(30 September 2018: €6,446 million). The higher amount was mainly attributable to the share capital increase
+implemented in June 2019, which resulted in increases of €226 million and €1,299 million to ordinary share capital
+and additional paid-in capital, respectively (see note 19 to the Consolidated Financial Statements). Net income
+generated in the 2019 fiscal year amounting to €870 million also increased equity. The payment of the dividend for
+the 2018 fiscal year reduced equity by €305 million.
+Equity up mainly due to share capital increase
+P see page 161
+Current assets influenced primarily by increase in gross cash position
+Euro
+55%
+US dollar
+1,556
+2019
+47%
+53%
+1,532
+45%
+30 Septem-
+P see page 142
+Psee page 174 ff.
+20.5%
+(6%)
+2,182
+2,044
+23%
+10,879
+13,412
+12%
+5,456
+6,088
+35%
+5,423
+7,324
+year-on-year
+ber 2018
+ber 2019
+2,735
+2,251
+22%
+4,779
+12.2%
+13.6%
+12.7%
+23.8%
+18.0%
+16.7%
+10.1%
+P see page 77 f.
+59.3%
+9.9%
+6.5%
+34%
+6,446
+8,633
+8%
+4,433
+64.4%
+The loss from discontinued operations, net of income taxes, for the 2019 fiscal year amounted to €19 million (2018:
+loss of €143 million). The higher loss reported in the previous fiscal year was mainly attributable to the increase
+in provisions for Qimonda in connection with pending legal proceedings. For further information on risks relating
+to the Qimonda insolvency see note 23 to the Consolidated Financial Statements.
+Research and development expenses, gross
+As in the previous fiscal year, income tax expense for the 2019 fiscal year was affected by foreign tax rates, non-
+deductible expenses, tax-exempt income, tax credits and changes in valuation allowances on deferred tax assets.
+Further details regarding income tax expense are provided in note 6 to the Consolidated Financial Statements.
+Revenue growth despite difficult market conditions
+P see page 39 ff.
+Review of results of operations
+Group performance
+Combined Management Report | Our 2019 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+P see page 72
+Similarly, adjusted earnings per share (diluted) decreased from €0.98 to €0.89 per share (see the section "Decrease
+in adjusted earnings per share” in this chapter).
+Revenue grew by €430 million to €8,029 million in the 2019 fiscal year (2018: €7,599 million). Automotive, the segment
+with the highest volume, contributed 51 percent, hence slightly more than half of total revenue growth. The segment
+continued to grow despite lower overall vehicle production during the 2019 fiscal year. The two megatrends - electro-
+mobility and automated driving on the one hand and driver assistance systems on the other - will continue to
+determine the increasing semiconductor content in vehicles. The Industrial Power Control segment contributed
+22 percent of Group revenue growth during the fiscal year under report performing well in the areas of wind
+power, industrial power supplies, traction systems, energy distribution and in particular electric drives. The Power
+Management & Multimarket segment contributed 30 percent to revenue growth. In contrast, the Digital Security
+Solutions segment recorded a 3 percent drop in revenue, mainly due to lower revenue from SIM cards for mobile
+communications. For details see the chapter "The segments".
+Earnings per share (basic and diluted) amounted to €0.75 and were therefore lower than one year earlier (2018:
+€0.95 respectively).
+Net income lower due to exceptional factors
+0.98
+0.89
+Adjusted earnings per share (in euro) – diluted
+0.95
+0.75
+Diluted earnings per share (in euro)
+0.95
+At €870 million, net income for the 2019 fiscal year was €205 million lower year-on-year (2018: €1,075 million).
+Despite difficult market conditions, revenue grew by €430 million or 6 percent to €8,029 million (2018: €7,599 million).
+The favorable development of the US dollar exchange rate to the euro also had a positive impact. At €1,161 million,
+operating income fell well short of the previous year's figure (2018: €1,469 million). It should be noted, however,
+that operating income in the 2018 fiscal year included a gain of €270 million arising on the sale of the major part of
+the RF power components business to Cree, Inc. In addition, increases in research and development expenses on
+the one hand and selling, general and administrative expenses on the other had a negative impact on operating
+income. As in the previous fiscal year, acquisition-related depreciation and amortization as well as other expenses,
+mainly relating to the earlier acquisition of International Rectifier, totaling €114 million were included in operating
+income reported for the 2019 fiscal year (2018: €118 million).
+Revenue by segment
+€ in millions
+3,503
+2018
+0% Other Operating Segments,
+Corporate and Eliminations
+44% Automotive
+0
+Industrial Power Control 18%
+Power Management & Multimarket 30%
+Digital Security Solutions 8%
+Revenue by segment in the 2019 fiscal year
+Segments
+Digital Security Other Operating
+Solutions
+10 21
+664 642
+Power
+Management &
+Multimarket
+Industrial
+Power Control
+Automotive
+IT.
+2,318 2,445
+1,323 1,418
+3,284
+0.75
+Basic earnings per share (in euro)
+1,075
+870
+(865)
+(836)
+(945)
+2,885
+2,994
+7,599
+8,029
+2018
+2019
+Selling, general and administrative expenses
+Research and development expenses
+Grants received
+Revenue
+€ in millions, except earnings per share
+The consolidated statement of operations
+880
+68
+Review of results of operations
+Group performance
+(850)
+2019
+Other operating income and expenses, net
+270
+Net income
+(143)
+(19)
+Loss from discontinued operations, net of income taxes
+1,218
+889
+Income from continuing operations
+(193)
+(194)
+Income tax
+(5)
+(6)
+Income from investments accounted for using the equity method
+(53)
+(72)
+Net financial result (financial income and expenses, net)
+1,469
+1,161
+Operating income
+(23)
+Positive impact of currency effects on revenue growth
+The majority of revenue was generated in foreign currencies in the 2019 fiscal year, with revenue denominated
+in US dollars accounting for the largest share. The average euro/US dollar exchange rate changed from around 1.19
+in the previous fiscal year to 1.13 in the 2019 fiscal year. Approximately 3 percentage points of the increase in revenue
+were attributable to positive currency factors. The year-on-year currency impact is measured by applying the
+previous fiscal year's relevant average exchange rates to the current fiscal year revenue.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Percentage of revenue
+Change year-on-year
+Cost of goods sold
+€ in millions, except percentages
+The gross margin decreased to 37.3 percent year-on-year (2018: 38.0 percent). In particular, the additional manu-
+facturing capacity built up through investments in the previous fiscal year could not be fully utilized during the
+second half of the fiscal year, resulting in idle costs that negatively impacted the margin. Furthermore, higher prices
+for materials, in particular for wafer substrates, caused costs to rise and therefore the gross margin to decline.
+Productivity and cost-cutting measures were only partially able to offset these effects. The line item “Cost of goods
+sold" includes the earnings impact arising in conjunction with the purchase price allocation and acquisition-related
+expenses for International Rectifier (in particular higher depreciation/amortization on intangible assets and property,
+plant and equipment, which were revalued to their fair value as part of the purchase price allocation) amounting
+to €55 million (2018: €67 million).
+Gross margin lower
+China accounted for €2,159 million or 27 percent of Infineon's worldwide revenue and therefore for the largest
+share at individual country level, followed by Germany at €1,169 million or 15 percent.
+The distribution of revenue by region remains more or less unchanged compared to the 2018 fiscal year. As in the
+previous year, Greater China was the largest region in revenue terms, accounting for 35 percent of total revenue
+generated, followed by the Europe, Middle East, Africa region with 30 percent.
+With an increase of €170 million (40 percent), the Greater China region accounted for the largest proportion of revenue
+growth by far, followed by the Americas region with a €156 million increase (equals 36 percent of total revenue
+growth), Japan with a €59 million increase (equals 14 percent of total revenue growth) and the Asia-Pacific region
+(excluding Japan and Greater China) with a €58 million increase (13 percent of total revenue growth). China has
+been Infineon's most important sales market for several years now and, with a figure of €2,159 million, accounted
+for 27 percent (2018: 25 percent) of Infineon's revenue during the fiscal year under report. Overall, 55 percent of
+year-on-year revenue growth was achieved in China.
+100%
+7,599
+100%
+8,029
+9%
+719
+11%
+862
+12%
+894
+Gross profit
+13%
+Loss from discontinued operations reduced
+2019
+€ in millions, except percentages
+Grants received in conjunction with R&D projects and capitalized development costs reduce the amount of
+R&D expenses recognized:
+Research and development expenses (R&D expenses)
+Review of results of operations
+Group performance
+Combined Management Report | Our 2019 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Operating expenses (research and development expenses and selling, general and administrative expenses)
+increased by €124 million to €1,810 million year-on-year (2018: €1,686 million), corresponding to 22.5 percent of
+revenue (2018: 22.2 percent).
+38.0%
+37.3%
+2,885
+2,994
+62.0%
+62.7%
+6%
+7%
+4,714
+5,035
+2018
+Operating expenses stable as percentage of revenue
+Review of results of operations
+1,050
+534
+2019
+Total
+therein: USA
+Americas
+Japan
+therein: China
+Greater China
+Asia-Pacific (excluding Japan, Greater China)
+therein: Germany
+Europe, Middle East, Africa
+€ in millions, except percentages
+Significance of Greater China remains strong; China ahead of Germany as most important sales market
+70
+10
+Review of results of operations
+Group performance
+Combined Management Report | Our 2019 fiscal year
+69
+69
+2018
+7%
+2,430
+2,443
+7%
+593
+25%
+1,921
+27%
+2,159
+34%
+2,599
+35%
+2,769
+15%
+1,129
+15%
+1,187
+15%
+1,171
+15%
+1,169
+32%
+30%
+Group performance
+Percentage of revenue (gross margin)
+Ơ ||| |
+Share capital
+Share types
+Basic information on shares
+Infineon website
+@ Interested parties
+may participate in
+telephone confer-
+ences via a webcast
+broadcast in the
+Investor Relations
+section of the
+The Infineon share
+The separate report "Sustainability at Infineon" including the summarized Non-Financial Report is available on
+Infineon's website. @www.infineon.com/csr_reporting
+In accordance with the stipulations of the German CSR Directive Implementation Act, Infineon Technologies AG
+is required to publish a non-financial report at both Company and Group level for the 2019 fiscal year. This report
+is published jointly for Infineon Technologies AG and the Infineon Group as a summarized separate non-financial
+report within the sustainability report. The information required by law is marked accordingly to distinguish it
+from the voluntary reporting according to the GRI standards. The entire report "Sustainability at Infineon" including
+the chapters of the Non-Financial Report have been subjected to a limited assurance audit by KPMG AG Wirtschafts-
+prüfungsgesellschaft, Munich (Germany), and has been certified without restrictions.
+Sustainability activities are described in the separate report "Sustainability at Infineon".
+55
+65
+Sustainability at Infineon
+Sustainability at Infineon | The Infineon share
+Combined Management Report | Our Group
+Capitalized development costs
+Research and development expenses
+Change year-on-year
+Percentage of revenue
+71
+(www.infineon.com/
+2019
+investor).
+Own shares
+infineon-share/index-membership/
+@A full overview of other major indices in which the Infineon
+share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/
+Index membership (selected)
+Daily average ADS traded
+Market capitalization²
+Trading in the USA
+Daily average shares traded on Xetra
+Market capitalization²
+Listings
+Reuters
+Ticker symbol
+Bloomberg
+(+49 89 234-26655).
+and by telephone
+@infineon.com)
+(investor.relations
+Retail investors can
+WKN
+contact us by email
+ISIN
+Shares issued¹
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+2018
+1,065
+4%
+10.8%
+11.2%
+P see page 161
+At 10.8 percent of revenue, selling, general and administrative expenses were lower in percentage terms than in
+the previous fiscal year (11.2 percent). In absolute terms, they went up by €15 million or 2 percent to €865 million,
+and therefore at a less pronounced rate than revenue growth. This reported figure also includes the earnings impact
+arising in conjunction with the purchase price allocation and acquisition-related expenses for International Rectifier
+totaling €44 million (2018: €49 million).
+Net amount of other operating income and expenses decreased
+The net amount from other operating income and expenses deteriorated from a positive amount of €270 million to
+negative €23 million year-on-year. It should be noted, however, that the net amount reported in the 2018 fiscal year
+included a gain of €270 million arising on the sale of the major part of the RF power components business to Cree,
+Inc. Moreover, expenses were incurred during the 2019 fiscal year in connection with the planned acquisition of
+Cypress totaling €12 million, which are included in the net amount of other operating income and expenses.
+Financial result negatively impacted by Cypress financing costs
+The financial result for the 2019 fiscal year was a negative amount of €72 million, a deterioration of €19 million
+compared to the previous fiscal year (2018: net negative amount of €53 million). This includes expenses totaling
+€22 million incurred to hedge equity market risks in connection with the share capital increase implemented in
+June 2019 to finance the planned acquisition of Cypress (see note 19 to the Consolidated Financial Statements).
+Effective tax rate up to 17.9 percent
+Based on pre-tax income of €1,083 million and an income tax expense of €194 million, the effective tax rate for
+the 2019 fiscal year amounted to 17.9 percent. The equivalent figures for the 2018 fiscal year were a tax expense of
+€193 million or 13.7 percent on pre-tax income of €1,411 million.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Group performance
+Review of results of operations
+72
+P see page 146 ff.
+Combined Management Report | Our 2019 fiscal year
+P see page 166 ff.
+2%
+1,181
+850
+2018
+(111)
+(86)
+(125)
+(143)
+945
+836
+13%
+8%
+11.8%
+11.0%
+P see page 56 ff.
+R&D expenses amounted to €945 million in the 2019 fiscal year, an increase of €109 million or 13 percent compared
+to the previous year's figure of €836 million, mainly reflecting the increased number of employees. A total of
+7,755 employees were employed in research and development functions at the end of the reporting period (30 Sep-
+tember 2018: 7,161 employees). The reduced scale of revenue growth meant that R&D expenses as a percentage
+of revenue increased from 11.0 percent to 11.8 percent year-on-year.
+The main R&D activities undertaken during the 2019 fiscal year are described in more detail in the chapter
+"Research and development".
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+Change year-on-year
+Percentage of revenue
+2019
+865
+of €2 each (ADS: shares = 1:1)
+Gross profit
+6 million shares (as of 30 September 2019)
+6 million shares (as of 30 September 2018)
+90
+100
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+09|2019
+08 2019
+06|2019 07 | 2019
+02|2019 03|2019 04|2019 05|2019
+■Dow Jones US Semiconductor Index
+-SOX
+■DAX
+Infineon
+01| 2019
+12|2018
+11| 2018
+10 | 2018
+13.70
+110
+15.66
+17.61
+19.57
+90
+21.53
+80
+70
+In recent years, Infineon has continuously increased the amount of dividend paid. The dividend payment for the
+2018 fiscal year was €0.27 per share. On 26 February 2019, the third business day after the Annual General Meeting, a
+total of €305 million was paid out to shareholders. At that point in time the number of shares entitled to a dividend
+stood at 1,130,995,834. As of 30 September 2019, the number of shares entitled to a dividend was 1,244,684,071.
+In October 2019, some of these shares were transferred to eligible members of the Management Board and employees
+in conjunction with the settlement of the performance share plan tranche for the 2016 fiscal year (see note 21 to
+the Consolidated Financial Statements). As a result, the dividend entitlement attached to the transferred shares has
+been revived. A proposal is to be made to shareholders at the 2020 Annual General Meeting to pay an unchanged
+dividend of €0.27 per share for the 2019 fiscal year. The approximately 113 million new shares issued as part of the
+capital increase on 18 June 2019 are fully entitled to dividends, which increases the anticipated dividend distribution
+for the 2019 fiscal year to €336 million, compared to €305 million for the 2018 fiscal year. For more information on
+Infineon's dividend policy, see "Sustainable value creation for our shareholders” in the chapter "Group strategy".
+€2,501,368,142 (as of 30 September 2019),
+€2,273,991,668 (as of 30 September 2018)
+1,250,684,071 (as of 30 September 2019),
+1,136,995,834 (as of 30 September 2018)
+Dividend
+P see page 37
+P see page 164 f.
+4.82% Allianz Global Investors GmbH
+9.96% Retail investors
+Other 75.01%
+BlackRock Inc. 5.36%
+Shareholder structure as of end 2019 fiscal year
+As of 30 September 2019, three shareholders each held more than 3 percent of the Infineon shares issued. Also at
+the end of the 2018 fiscal year, the same three shareholders each held more than 3 percent of the Company's
+shares. The share capital held by retail investors increased slightly from 9.81 percent at the end of the 2018 fiscal
+year to 9.96 percent at the end of the 2019 fiscal year.
+Shareholder structure
+In the DAX ranking, Infineon ranked place 15th in terms of market capitalization as of end of the 2019 fiscal year,
+unchanged compared to the previous year. In terms of the volume traded in euros on Xetra and on the Frankfurt
+trading floor during the last twelve months Infineon dropped by one place, moving from 12th place at the end of
+the 2018 fiscal year to 13th place at the end of the 2019 fiscal year. The Infineon share has been listed in the TecDAX
+since 25 September 2018. Compared to the end of the previous fiscal year, it remained in 3rd place in terms of
+market capitalization as of 30 September 2019 and dropped one place in the ranking from 3rd to 4th in terms
+of volume traded.
+In the USA, the Infineon share is traded in the form of American Depositary Shares ("ADS") on the OTCQX Interna-
+tional over-the-counter market under the ticker symbol "IFNNY”. The average daily ADS trading volume also rose
+in the 2019 fiscal year. The average daily number of ADS traded in the 2019 fiscal year increased to 307 thousand,
+compared to 165 thousand per day one year earlier. The number of ADS outstanding rose as well from 31.7 million
+as of 30 September 2018 to 38.9 million at the end of the 2019 fiscal year.
+Measured in units, the average volume of Xetra-traded Infineon shares increased by 35 percent in the 2019 fiscal
+year compared to one year earlier. 7.3 million shares were traded daily in the 2019 fiscal year, compared to an
+average of 5.4 million in the previous comparable period. Measured in euros, the average daily trading volume
+rose by 4 percent, based on a daily average of €126.9 million and €122.6 million during the 2019 and 2018 fiscal
+year, respectively.
+Trading volumes and stock indices
+20
+67
+The Infineon share
+Combined Management Report | Our Group
+70
+120
+4.85% Kingdom of Norway
+23.48
+2 Own shares were not taken into consideration for calculation of market capitalization.
+1 The number of shares issued includes own shares.
+Dow Jones Sustainability World Index
+S&P-Europe-350
+MSCI Germany
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones Germany Titans 30
+Dow Jones STOXX Europe 600
+TecDAX
+DAX 30
+307,476 (in the 2019 fiscal year)
+US$22,417 million (as of September 2019)
+ADS, over-the-counter trading on the OTC market (OTCQX)
+7,252,990 (in the 2019 fiscal year)
+€20,552 million (as of 30 September 2019)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-XE
+IFX (share), IFNNY (ADS)
+DE0006231004
+30 September 2018 = 100
+623100
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+▼ ▲ 4 III O
+Shares: Frankfurt Stock Exchange (FSE)
+Basic information on bonds
+Combined Management Report | Our Group
+The Infineon share
+On 3 June 2019, Infineon announced the planned acquisition of Cypress. On that day, the share closed 8 percent
+down on the previous day's price. In connection with the planned acquisition, Infineon placed approximately
+113 million new shares on the stock market on 17 June 2019 by way of an accelerated book building process. The
+share capital increase was completed on 18 June 2019, at which stage the share's low for the fiscal year was
+recorded at €14.07. The Infineon share recovered appreciably thereafter, with significant volatility, before closing
+the fiscal year at €16.51.
+The Infineon share finished the 2019 fiscal year at a closing price of €16.51, a decline of 16 percent compared to
+the closing price of €19.57 at the end of the 2018 fiscal year.
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2019 fiscal year (daily closing prices)
+Infineon share price in €
+Share price development
+0
+▼ A
+since June 2019: “BBB” (CreditWatch: "negative" due to the
+planned acquisition of Cypress Semiconductor Corporation)
+tranche with maturity 5 April 2028
+During the first half of the 2019 fiscal year, the price of the Infineon share tended mostly sideways, albeit with some
+significant volatility. The share reached its high for the twelve-month period in mid-April at €21.48. A continuing
+intensification of the trade tensions between the USA and China subsequently resulted in a sharp drop in stock market
+prices, and the Infineon share price too.
+due on 10 March 2022, ISIN: XS1191116174
+first reset date 1 April 2025, ISIN: XS2056730323
+first reset date 1 April 2028, ISIN: XS2056730679
+tranche with maturity 5 April 2024
+1.500% Infineon Bond from 10 March 2015
+2.875% Hybrid Bond from 1 October 2019
+3.625% Hybrid Bond from 1 October 2019
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+Rating of S&P Global Ratings
+€500 million
+tranche with maturity 5 April 2026
+€600 million
+€600 million
+US$350 million
+US$350 million
+The weak performance of the Infineon share between mid-April 2019 and mid-June 2019 meant that it was
+significantly outperformed by the benchmark indices over the entire 2019 fiscal year. The DAX, the Dow Jones US
+Semiconductor Index and the Philadelphia Semiconductor Index (SOX) recorded gains of 1 percent, 5 percent
+and 14 percent, respectively.
+66
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+US$235 million
+66
+The following table reconciles the gross cash position and the net cash position (i.e. after deduction of debt). Since
+some liquid funds are held in the form of financial investments, which, for IFRS purposes, are not considered to be
+"cash and cash equivalents”, Infineon reports on its gross and net cash positions in order to provide investors with
+a better understanding of its overall liquidity. The gross and net cash positions are determined as follows from the
+Consolidated Statement of Financial Position:
+€ in millions
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+2019
+2018
+1,603
+1,571
+(2,488)
+(1,163)
+210
+618
+Investments and acquisition of Siltectra financed by net cash provided by operating activities
+Free cash flow in the 2019 fiscal year amounted to €39 million. Net cash provided by operating activities from
+continuing operations amounting to €1,603 million exceeded the combined amount of cash used for investments
+in property, plant and equipment and intangible and other assets (€1,451 million) and for the acquisition of Siltectra
+(€123 million). Payments in connection with the planned acquisition of Cypress reduced the free cash flow by
+€23 million.
+Free cash flow in the previous fiscal year amounted to €618 million. Net cash provided by operating activities
+from continuing operations amounting to €1,571 million exceeded investments in property, plant and equipment,
+intangible and other assets totaling €1,254 million. Free cash flow of the previous fiscal year included proceeds
+from the sale of the major part of the RF components business to Cree, Inc.
+Gross cash position and net cash position
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in operating activities and
+net cash provided by and/or used in investing activities, both from continuing operations, after adjusting for cash
+flows related to the purchase and sale of financial investments. Free cash flow serves as an additional performance
+indicator, since Infineon holds part of its liquidity in the form of financial investments. This does not mean that
+the free cash flow calculated in this way is available to cover other disbursements, since dividend, debt-servicing
+obligations and other fixed disbursements are not deducted. Free cash flow should not be seen as a replacement or
+superior performance indicator, but rather as an additional useful item of information over and above the disclosure
+of the cash flow reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to other
+liquidity performance indicators and other performance indicators derived from the IFRS figures. Free cash flow
+only includes amounts from continuing operations, and is derived as follows from the Consolidated Statement of
+Cash Flows:
+924
+39
+Share capital increase results in net cash provided by financing activities from continuing operations
+Net cash used in financing activities from continuing operations in the 2019 fiscal year totaled €1,167 million and
+was mainly impacted by the net proceeds from the share capital increase implemented in June 2019 amounting
+to €1,524 million (see note 19 to the Consolidated Financial Statements). The main offsetting effect resulted from
+the disbursement of the dividend for the 2018 fiscal year amounting to €305 million.
+77
+P see page 141 f.
+€ in millions
+P see page 77
+P see page 161
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+Increase in net cash provided by operating activities from continuing operations
+Net cash provided by operating activities from continuing operations in the 2019 fiscal year amounted to
+€1,603 million, an increase of €32 million compared to the previous fiscal year's figure of €1,571 million. Taking
+income from continuing operations before depreciation, amortization, impairment losses, interest and taxes
+amounting to €2,070 million as the starting point, changes in inventories, trade receivables and trade payables
+totaling €277 million were the main items reducing net cash provided by operating activities from continuing
+operations. Cash outflows for interest and income taxes totaled €167 million.
+Free cash flow
+In the previous fiscal year, net cash provided by operating activities from continuing operations totaled €1,571 million.
+Taking income from continuing operations before depreciation and amortization, impairment losses, interest,
+taxes and the gain on the sale of the major part of Infineon's RF components business amounting to €2,054 million
+as the starting point, changes in trade receivables, trade payables and inventories totaling €209 million were the
+main items reducing cash and cash equivalents. Cash outflows for interest and income taxes totaled €262 million.
+Net cash used in investing activities from continuing operations influenced by investments
+and purchase of financial investments
+In the previous fiscal year, net cash used in investing activities from continuing operations totaled €1,163 million.
+Investments in property, plant and equipment and in intangible assets amounted to €1,254 million. Cash received
+in connection with the sale of the major part of the RF components business to Cree, Inc. amounting to €323 million
+had an offsetting effect.
+In the previous fiscal year, net cash used in financing activities from continuing operations totaled €542 million
+and was mainly impacted by repayments of long-term debt amounting to €321 million. In addition, the dividend for
+the 2017 fiscal year amounting to €283 million was disbursed.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Group performance
+Review of liquidity
+Net cash used in investing activities from continuing operations totaled €2,488 million in the 2019 fiscal year,
+including €1,295 million invested in property, plant and equipment. €156 million invested in intangible and
+other assets, and €123 million used for the acquisition of 100 percent of the shares in Siltectra (see note 3 to
+the Consolidated Financial Statements). A net amount of €924 million relates to cash used to purchase financial
+investments that are part of the gross cash position and which are not included in free cash flow (see the section
+"Free cash flow" below).
+Cash and cash equivalents
+1,556
+Gross cash position
+The gross cash position as of 30 September 2019 increased by €1,236 million, mainly due to the net proceeds
+of €1,524 million arising on the share capital increase implemented in June 2019. Free cash flow amounted to
+€39 million. The dividend payment reduced cash by €305 million.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Group performance
+Review of liquidity
+78
+Psee page 155
+1,011
+P see page 186
+P see page 81 f.
+P see page 154 f.
+P see page 174 ff.
+and page 178 f.
+Taking into account the financial resources available to Infineon - including internal liquidity on hand, net cash that
+can be generated, and available credit facilities (€8,201 million; 2018: €72 million, see note 15 to the Consolidated
+Financial Statements for further information) – Infineon assumes that it will be able to cover those capital require-
+ments for the 2020 fiscal year that are currently expected. These include the financing of the planned acquisition of
+Cypress, for which binding credit commitments are in place and for which the first material steps towards re-financing
+were taken in the form of the share capital increase implemented in June 2019 and the issue of a perpetual hybrid
+bond with a nominal volume of €1.2 billion on 1 October 2019 (see note 29 to the Consolidated Financial Statements).
+Forecasted capital requirements also include fixed contractual obligations, such as leasing arrangements, fixed
+service and supply agreements for commodities, input materials, electricity, gas and other similar items (see note 22
+to the Consolidated Financial Statements for further information). Planned investments are discussed in the
+chapter "Outlook".
+Principles and structure of Infineon's treasury
+The Infineon treasury's stated objective is to ensure financial flexibility based on a solid capital structure. It is the
+primary goal to ensure that sufficient cash funds are available to finance operating activities and planned investments
+throughout all phases of the business cycle. Debt should only constitute a modest proportion of the financing mix,
+so that headroom is available at all times. Further information on the nature, maturity, currency and interest rate
+structure of financial liabilities is provided in note 15 to the Consolidated Financial Statements.
+(128)
+P see page 165 f.
+2,223
+1,532
+1,507
+Minus:
+Short-term debt and current maturities of long-term debt
+Long-term debt
+Total debt
+Net cash position
+30 Septem-
+ber 2019
+30 Septem-
+ber 2018
+1,021
+732
+2,758
+1,811
+3,779
+2,543
+22
+25
+1,534
+Financial investments
+289
+(732)
+9
+(194)
+(193)
+Operating income from continuing operations after tax :①LCD_
+925
+1,263
+Assets
+13,412
+Income tax
+10,879
+Plus/minus:
+Cash and cash equivalents
+Financial investments
+Assets classified as held for sale
+Total current liabilities
+(1,021)
+Group-wide treasury principles are in place regarding all issues relating to liquidity and financing, such as banking
+policies and strategies, execution of financing agreements, liquidity and investment management worldwide,
+currency and interest rate risk management and the handling of external and intragroup cash flows.
+Treasury at Infineon is based on a centralized approach in which the Group Finance & Treasury department is
+responsible for all major tasks and processes worldwide relating to financing and treasury matters.
+ƠI A
+(2,758)
+(5)
+Gain from investments accounted for using the equity method
+Combined Management Report | Our 2019 fiscal year
+Group performance
+Review of financial condition
+75
+ROCE of 12.2 percent generated
+Operating income from continuing operations after tax fell by 27 percent from €1,263 million to €925 million in the
+2019 fiscal year. By contrast, capital employed rose by 23 percent from €6,168 million to €7,599 million year-on-year.
+As a result, the Return on Capital Employed (ROCE) decreased from 20.5 percent to 12.2 percent.
+ROCE for the 2019 and 2018 fiscal years is calculated as follows:
+€ in millions
+(6)
+Operating income
+2019
+2018
+1,161
+1,469
+Financial result excluding interest result¹
+(36)
+(8)
+Plus/minus:
+(1,811)
+(12)
+(11)
+2018
+Net cash provided by operating activities from continuing operations
+1,603
+1,571
+Net cash used in investing activities from continuing operations
+(2,488)
+(1,163)
+2019
+Net cash provided by (used in) in financing activities from continuing operations
+(542)
+Net change in cash and cash equivalents from discontinued operations
+(2)
+4
+Cash-relevant change in cash and cash equivalents
+280
+(130)
+1,167
+€ in millions
+76
+Cash flow
+(2,044)
+(2,182)
+Short-term debt and current maturities of long-term debt
+22
+25
+Capital employed ②
+7,599
+6,168
+ROCE 1/②
+12.2%
+20.5%
+1 The financial result for the 2019 and 2018 fiscal year amounted to negative €72 million and negative €53 million, respectively, and included
+negative €36 million and negative €45 million, respectively, of net interest result.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Group performance
+Review of liquidity
+Review of liquidity
+2
+In the context of centralized liquidity management and where permitted by law and economically feasible, cash
+pooling structures are in place for liquidity management purposes in order to ensure the best possible allocation
+of liquidity within the Group and reduce external financing requirements. Liquidity accumulated at Group level is
+invested centrally by the Group Finance & Treasury department, based on a conservative approach to investments,
+in which preservation of capital is prioritized over return maximization. The Group Finance & Treasury department
+is also responsible for managing currency and interest rate risks. We employ the following derivative financial
+instruments for hedging purposes: forward foreign currency contracts to reduce exchange rate exposures (to the
+extent foreign currency cash flows are not offset within the Group) and commodity swaps to reduce price risks for
+expected purchases of gold. In order to hedge against most of the exchange rate risk associated with the purchase
+price obligation arising from the planned acquisition of Cypress, the Company concluded a euro/US dollar forward
+currency contract (Deal Contingent Forward) as well as a euro/US dollar foreign currency option (Deal Contingent
+Option), both of which are contingent on the acquisition deal. Derivative financial instruments are not used for
+trading or speculation purposes. Further information regarding derivative financial instruments and the manage-
+ment of financial risks is provided in notes 26 and 27 to the Consolidated Financial Statements.
+2,543
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+The Return on Capital Employed (ROCE) is expected to decrease sharply in the 2020 fiscal year. In particular, the
+purchase price allocation and the related depreciation and amortization will lead to a reduction in operating result
+after tax from continuing operations and an increase in capital employed.
+Approximately 70 percent of the planned acquisition is to be financed in the form of debt capital, which will
+result in a significant increase in financial liabilities and therefore in interest expense.
+The outlook for Infineon including Cypress, as described above, was prepared prior to conclusion of the acquisition,
+at which stage Infineon had no control over Cypress and information was therefore only available to a very limited
+extent. The outlook is therefore primarily based on externally available information (for example, from financial
+data drawn up in accordance with US GAAP and already published by Cypress) and on information made available
+by Cypress in the course of the due diligence phase in May 2019. The forecasts take into account initial indicative
+assumptions, in particular with regard to the purchase price allocation. Once the acquisition is completed and more
+reliable data is available, the outlook for Infineon including Cypress will be adjusted. The acquisition is expected
+to be completed towards the end of the 2019 calendar year or early in 2020.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+ƠI A
+Combined Management Report | Our 2019 fiscal year
+Report on outlook, risk and opportunity
+In the 2020 fiscal year, the payment of the purchase price of US$23.85 per share and other costs in connection
+with the planned Cypress acquisition will significantly impact free cash flow, which will therefore be clearly
+negative despite the positive contribution that Cypress is expected to make, particularly to net cash provided by
+operating activities.
+Risk and opportunity report
+P see page 29 ff.
+Risk and opportunity report
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities and plays an important role
+in implementing the strategic targets described in the chapter “Group strategy” – namely achieving sustainable,
+profitable growth and preserving our financial resources through efficient employment of capital. Infineon's risk
+and opportunity profile is characterized by periods of rapid growth, followed by periods of significant market decline,
+a substantial need for capital investment in order to achieve and sustain our market position and an extraordinarily
+rapid pace of technological change. Gaining a leading edge through technological innovation also has a legal
+dimension. Against this background, Infineon's risk policy is aimed firstly at taking advantage of identified oppor-
+tunities as quickly as possible in a way most appropriate to increasing the value of the business, and secondly at
+pro-actively mitigating risks – particularly those capable of posing a threat to Infineon's going-concern status - by
+adopting appropriate countermeasures. Risk management at Infineon is therefore closely linked to forecasting
+and the implementation of our business strategy. Ultimate responsibility for risk management lies with the Infineon
+Management Board.
+Coordinated risk management and control system elements are in place that enable us to pursue our stated risk
+policy in practice. Alongside the "Risk and Opportunity Management System" and the "Internal Control System with
+respect to Financial Reporting Processes” described below, it also includes the related forecasting, management
+and internal reporting processes as well as the Compliance Management System.
+Risk and Opportunity Management System
+Infineon's centralized risk management system is based on a Group-wide, management-oriented Enterprise Risk
+Management (ERM) approach, which aims to cover all relevant risks and opportunities. The approach is based
+on the "Enterprise Risk Management - Integrated Framework" developed by the Committee of Sponsoring Organi-
+zations of the Treadway Commission (COSO). The objective of the system is the early identification, assessment
+and management of risks that could have a significant influence on Infineon's ability to achieve its strategic, opera-
+tional, financial, legal and compliance targets. We therefore define risk/opportunity as the occurrence of future
+uncertainties that could result in a negative or positive variance from plan. We incorporate all relevant organizational
+units within the Group in this analysis, thus covering all segments, significant centralized functions and regions.
+Responsibility for processes and systems relating to Risk and Opportunity Management rests with the Risk
+Management and Internal Control System (ICS) function within the corporate finance department and with desig-
+nated Risk Officers working at segment, corporate function and regional levels. Responsibility for the identification,
+measurement, management and reporting of risks and opportunities lies with the management of the organizational
+unit concerned.
+83
+In organizational terms, the Risk and Opportunity Management System is structured in a closed-loop, multiple-stage
+process, which stipulates the manner and criteria to be applied to identify, measure, manage and report on risks
+and opportunities and defines how the system is to be monitored as a whole. Major components of the system
+are a quarterly analysis of risks and opportunities, reporting by all consolidated entities, an analysis of the overall
+situation at segment, regional and Group level, reporting to the Management Board on the risks and opportunities
+situation as well as major management measures undertaken. The Management Board, in turn, reports regularly
+to the Supervisory Board's Investment, Finance and Audit Committee. Where necessary, standard processes are
+supplemented by the ad-hoc reporting of any major risks identified between regular reporting dates.
+We assume the Segment Result Margin to be approximately at the level of the previous year.
+Investments of around €1.3 billion and depreciation and amortization of approximately €1.0 billion are planned.
+Expected development of Infineon including Cypress
+Gross cash position
+The gross cash position is expected to finish the 2020 fiscal year at a level of between €2.1 billion and €2.7 billion.
+Hence, Infineon again expects to meet its capital structure targets in the 2020 fiscal year. See "Capital structure
+targets demonstrate our long-term reliability” in the chapter "Group strategy" for more information on capital
+structure targets.
+Investments and depreciation/amortization
+Investments (defined by Infineon as the sum of investments in property, plant and equipment, investments in
+intangible assets and capitalized research and development costs) are expected to be around €1.3 billion in the 2020
+fiscal year. About one third of this amount is attributable to manufacturing buildings including their infrastructure
+as well as office buildings to create the conditions to profit from the next market upturn and to make full use of
+structural growth potential. In the 2019 fiscal year, the actual figure amounted to €1,451 million, comprising invest-
+ments in property, plant and equipment of €1,295 million and in capitalized development costs and other intangible
+assets of €156 million. In the 2020 fiscal year, investments in capitalized development costs and other intangible
+assets are expected to be slightly higher than one year earlier.
+Planned investments in manufacturing facilities during the 2020 fiscal year will focus on improving the structural
+and quality-related aspects of production as well as expanding frontend capacities on a moderate scale. Investments
+in the existing 200-millimeter and 300-millimeter manufacturing plants will mainly focus on ensuring that they
+remain state-of-the-art in terms of automation, quality, innovation and infrastructure. The largest single project
+remains the continued construction of the cleanroom for the new 300-millimeter manufacturing facility in Villach
+(Austria). Depending on the macro-economic situation, we currently plan to ramp the fab by late 2021 calendar
+year. Investments in upgrades and capacity expansions for backend facilities will be significantly lower than the
+amount being invested in frontend facilities.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Report on outlook, risk and opportunity
+Outlook
+Taking into account the additional Cypress revenue that is expected to accrue to the Group following completion
+of the planned acquisition, Infineon anticipates a significant increase in Group revenue in the 2020 fiscal year.
+82
+Depreciation and amortization are expected to be in the region of €1.0 billion. Approximately €60 million of that
+amount relates to depreciation and amortization resulting from purchase price allocations, mainly in connection
+with the acquisition of International Rectifier.
+Overall statement on the expected development
+Expected development of Infineon excluding Cypress
+Based on forecasts for the global economy and the semiconductor market in the 2020 calendar year, excluding
+Cypress, Infineon expects revenue growth of 5 percent year-on-year, plus or minus 2 percentage points.
+At the mid-point of the planned range of revenue growth, the Segment Result Margin is expected to be around
+16 percent.
+Free cash flow from continuing operations should amount to between €500 million and €700 million.
+The Return on Capital Employed (ROCE) is expected to reach the previous fiscal year's level.
+82
+Risks and opportunities are measured cumulatively over the multi-year planning horizon on a net basis, i.e. after
+taking into account any existing risk mitigation or hedging measures. The time periods and the measurement
+categories used are closely linked to our short- and medium-term business planning and entrepreneurial targets.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Degree of Impact
+on Segment Result
+1
+<€60 million Marginal
+2 >€60 million Minor
+3 > €100 million Moderate
+4 > €250 million Significant
+5 > €500 million Major
+High Risk
+Likelihood of Occurrence
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+5 >90% Certain
+Likelihood of Occurrence
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and reputation as well as the
+estimated probability of occurrence, a risk is classified as "high", "medium" or "low".
+All reported risks and opportunities for Infineon are aggregated and reviewed for possible correlation and cumulative
+effects, and are analyzed using an Infineon-specific categorization model. Risks and opportunities analysis and new
+developments in risk management culture are supplemented by interdisciplinary workshops held at segment, cor-
+porate and regional levels. Important information relevant for Infineon's Risk and Opportunity Management System
+is available to all employees via our intranet system, including access to ERM tools and ERM guidelines, containing
+job descriptions for all functions involved in the process as well as all information necessary for reporting purposes.
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage and monitor identified
+risks and opportunities, and are responsible for formally determining a set of appropriate strategies (avoidance,
+mitigation, transfer to other parties, acceptance). Working closely with corporate functions and individual managers,
+the Risk and Opportunity Manager is also responsible for defining and monitoring measures aimed at implementing
+the adopted management strategy. For our system to be successful, it is essential that risks and opportunities are
+managed and monitored pro-actively and with a great deal of commitment.
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS departments using
+procedures incorporated in business processes. Group Internal Audit also tests compliance with legal requirements
+and Infineon guidelines and, where appropriate, rules relating to Risk and Opportunity Management and initiates
+corrective measures.
+1 <10% Unlikely
+Medium Risk
+Low Risk
+5
+Report on outlook, risk and opportunity
+Risk and opportunity report
+84
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative and/or qualitative
+terms, based on the dimensions degree of impact on operations, liquidity, earnings, cash flows and reputation on
+the one hand and likelihood of occurrence on the other.
+In light of Infineon's strong growth in recent years, the degree of impact was reviewed at the beginning of the 2019
+calendar year and adjusted to take account of revenue and Segment Result developments. The reference value
+for the highest degree of impact (Level 5) was increased from a Segment Result impact of greater than €250 million
+to one of greater than €500 million and all other gradations were adjusted accordingly.
+The scales used to measure these two factors (degree of impact and likelihood of occurrence) and the resulting
+risk assessment matrix are depicted in the following graph.
+Risk assessment matrix
+Degree of Impact
+5
+4
+3
+2
+1
+1
+2
+3
+4
+The Return on Capital Employed (ROCE) in the 2019 fiscal year amounted to 12.2 percent and is forecast to remain
+at a similar level in the 2020 fiscal year.
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide are arranged,
+structured and managed either directly or indirectly by the Group Finance & Treasury department in accordance
+with stipulated treasury principles.
+ROCE
+Free cash flow from continuing operations
+16.4%
+39
+Around 16% (at the mid-point of
+the planned range for revenue growth)
+Between €500 million and €700 million
+Moderate decrease
+12.2%
+On similar level as in previous year
+Free cash flow from
+About 18% (at the mid-point of
+the planned range for revenue growth)
+Slightly positive up to €200 million
+continuing operations
+20.5%
+3,779
+€1 billion
+Increase by 5%
+plus/minus 2 percentage points
+Around €1.3 billion
+In the range of €2.1 to €2.7 billion
+and therefore within the target range
+of €1 billion + 10% to 20% of revenue²
+Selected supplementary
+performance indicators
+Change in revenue compared
+ROCE
+8%
+618
+FY 2020
+Combined Management Report | Our 2019 fiscal year
+Report on outlook, risk and opportunity
+Outlook
+Report on outlook, risk
+and opportunity
+Outlook
+12
+79
+17.8%
+Actual and target values for performance indicators
+€ in millions, except percentages
+Principal performance indicators
+Segment Result Margin
+Actuals
+FY 2018
+Original outlook
+FY 2019¹
+Actuals
+FY 2019
+Outlook
+The following table and subsequent explanatory comments compare the actual and forecast values of Infineon's
+key performance indicators for the 2019 fiscal year and show the outlook for the 2020 fiscal year excluding the
+planned acquisition of Cypress. Only certain costs incurred in connection with the transaction were included.
+The outlook for Infineon's principal performance indicators as well as for selected supplementary performance
+indicators including the planned acquisition of Cypress is presented in a separate section within the overall
+statement on the expected development.
+Increase by 11%
+to previous year
+Investments
+The following forecasts are based on current business developments and Infineon's internal forecasts. The planned
+acquisition of Cypress is not yet included in the figures presented. The outlook for Infineon's principal performance
+indicators as well as for selected supplementary performance indicators including the planned acquisition of Cypress
+is discussed in a separate section within the overall statement on the expected development.
+Assumed euro/US dollar exchange rate
+As a globally operating organization, Infineon generates revenue not only in euros, but also in foreign currencies,
+predominantly US dollars. It also incurs expenses in US dollars and, to some extent, in currencies correlated to the
+US dollar, such as the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of non-euro
+denominated revenue and expenses does not always balance out. For this reason, fluctuations in exchange rates,
+particularly between the euro and the US dollar, influence the amounts reported for revenue and earnings. A stronger
+US dollar against the euro has a positive impact, whereas a weaker US dollar against the euro has an adverse
+impact on revenue and earnings. Excluding the effect of currency hedging instruments, the impact of a deviation of
+1 cent in the actual exchange rate of the US dollar against the euro compared to the forecast rate would amount
+to a change in Segment Result of approximately €3 million per quarter or approximately €12 million per fiscal year
+compared to the forecast value. These figures assume, however, that the exchange rates of currencies correlated
+with the US dollar - in which costs arise for Infineon - change in line with the euro/US dollar exchange rate. In terms
+of revenue, the impact of exchange rates is limited primarily to the euro/US dollar exchange rate, where a deviation
+of 1 cent in the actual exchange rate compared to the forecast rate would continue to have an impact on revenue
+of approximately €9 million per quarter or approximately €36 million per fiscal year. Planning for the 2020 fiscal year
+is based on an assumed average exchange rate of US$1.13 to the euro. This corresponds to the average exchange
+rate achieved in the 2019 fiscal year.
+Growth prospects for the global economy and the semiconductor market
+The world economy grew by 3.1 percent in the 2018 calendar year. For the 2019 calendar year, in spring 2019 experts
+at the International Monetary Fund (IMF) had forecast that the growth rate would slow to 2.7 percent. In its October
+2019 forecast, however, the IMF further lowered its prediction for the 2019 calendar year to 2.5 percent. For the 2020
+calendar year, the experts forecast a slight recovery in global economic growth, predicting in their October 2019
+forecast a growth rate of 2.7 percent for the 2020 calendar year. The rise in trade barriers and unresolved geopolitical
+conflicts are cited as the main reasons for the global economic slowdown. According to the IMF, the slight increase
+predicted for the 2020 calendar year is not broadly based and therefore remains uncertain.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+88
+Explanatory comments on the outlook for the 2020 fiscal year excluding Cypress
+80
+Report on outlook, risk and opportunity
+Outlook
+81
+P see page 36 f.
+The markets to which Infineon supplies its products are also impacted by the effects of the slowdown in global eco-
+nomic growth. On a US dollar basis, the global semiconductor market relevant for Infineon (i.e. excluding memory
+ICs and microprocessors) grew by 5.7 percent in the 2018 calendar year. Informa Tech now predicts that this market
+will contract by 4.2 percent in the 2019 calendar year, before growing again by 3.7 percent in the 2020 calendar year.
+Revenue growth of 5 percent expected, plus or minus 2 percentage points year-on-year
+Based on our expectations for the growth of the global economy and for the semiconductor market segments
+relevant for Infineon as described above and an assumed average exchange rate of US$1.13 to the euro, the Group
+forecasts revenue growth of 5 percent, plus or minus 2 percentage points, for the 2020 fiscal year. Revenue growth
+in the Automotive segment is expected to be slightly above the Group average. The Power Management & Multimarket
+segment revenue growth is expected to be in line with the Group average. The Industrial Power Control segment
+is likely to report a slightly lower growth than the Group average while for the Digital Security Solutions segment
+a stagnant to only slightly growing revenue is expected.
+Segment Result Margin around 16 percent expected
+Based on the forecast changes in revenue described above, in the 2020 fiscal year the Segment Result Margin is
+expected to come it at around 16 percent at the mid-point of the planned range for revenue growth.
+Combined Management Report | Our 2019 fiscal year
+At €1,451 million, investments were both below the originally forecast range of between €1.6 billion and €1.7 billion
+and slightly below the adjusted forecast of €1.5 billion.
+The targeted range for the gross cash position was between €1.9 billion and €2.7 billion. This range was substantially
+exceeded, with the actual gross cash position finishing at €3,779 million. Excluding the net proceeds from the
+capital increase of €1,524 million implemented in June 2019 to finance the planned Cypress acquisition, which are
+included in the gross cash position, a value within the forecast range would have been achieved.
+The forecast for Return on Capital Employed (ROCE) initially predicted a moderate decline and, following the
+adjusted forecast, a significant decline. At 12.2 percent, actual ROCE in the 2019 fiscal year was well below the
+previous year's figure of 20.5 percent. In addition to lower revenue growth, this was also due to higher idle costs.
+Capital employed increased primarily as a result of investments and the increase in working capital, in particular
+due to higher inventories. The previous year's figure was also positively impacted by the gain of €270 million arising
+on the sale of the major part of the RF power components business to Cree, Inc.
+1,254
+Gross cash position
+€1 billion
++20%
+plus/minus 2 percentage points
+Between €1.6 billion and €1.7 billion
+In the range of €1.9 billion to €2.7 billion
+and therefore within the target range
+of €1 billion +10% to 20% of revenue
+6%
+1,451
++35%
+1 The original forecast was adjusted in the context of the ad hoc announcement of 27 March 2019.
+2 The cash inflows from the capital increase implemented in June 2019 are not included.
+Comparison of original outlook and actual figures for the 2019 fiscal year
+Revenue growth for the 2019 fiscal year was originally forecast at 11 percent, plus or minus 2 percentage points.
+In view of the adverse economic environment, the forecast was adjusted in the ad hoc announcement dated
+27 March 2019 to an expected revenue of €8 billion, plus or minus 2 percent. With actual revenue of €8.029 billion,
+the reduced revenue forecast was achieved. Revenue grew by 6 percent year-on-year. In conjunction with the lower
+estimate made for revenue, the expected Segment Result Margin was also adjusted downward from 18 percent to
+16 percent at the mid-point of the planned range for revenue growth. The actual Segment Result Margin recorded
+in the 2019 fiscal year came in at 16.4 percent.
+Free cash flow generated in the 2019 fiscal year amounted to €39 million and was thus within the originally forecast
+range of "slightly positive up to €200 million" and above the later adjusted forecast of “between break-even and
+negative €150 million". This includes the payment of €123 million for the acquisition of Siltectra.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+Combined Management Report | Our 2019 fiscal year
+Report on outlook, risk and opportunity
+Outlook
+Psee page 82
+The Company expects to achieve a free cash flow of between €500 million and €700 million in the 2020 fiscal year.
+Combined Management Report | Our 2019 fiscal year
+The Supervisory Board's Investment, Finance and Audit Committee oversees the effectiveness of the Risk Manage-
+ment System. As part of the statutory audit, the external Group auditor also examines our early warning system
+pursuant to section 91, paragraph 2, of the German Stock Corporation Act to ascertain its suitability to detect risks
+that could pose a threat to Infineon's going-concern status and reports annually thereon to the Chief Financial
+Officer (CFO) and the Investment, Finance and Audit Committee of the Supervisory Board.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2019
+(945)
+Investments²
+1,099
+1,451
+(24)
+845
+10
+862
+11
+(2)
+Gross cash position²
+3,227
+3,779
+(3)
+(15)
+(3,806)
+2,223
+(271)
+Revenue by segment
+8,567
+8,029
+7
+Basic earnings per share in €
+0.26
+0.75
+(65)
+Automotive
+3,542
+Net cash position²
+41
+13
+12
+35
+15
+from continuing operations
+6,274
+1,167
+438
+therein: Mainland China, Hong Kong
+2,472
+29
+2,159
+27
+14
+Free cash flow²
+1,050
+(6,727)
+Japan
+765
+9
+593
+7
+29
+Depreciation and amortization
+1,260
+945
+(17,349)
+33
+Americas
+therein: USA
+1,015
+39
+3,503
+44
+1
+63.6%
+Other Operating Segments
+16
+0
+21
+0
+(24)
+Return on equity5
+3.6%
+10.1%
+Corporate and Eliminations
+Return on assets 5
+Inventory intensity
+46.5%
+1.7%
+5
+9.3%
+12.5%
+Gross profit/Gross margin
+2,776
+32.4
+2,994
+37.3
+(7)
+Debt-to-equity ratio5
+68.8%
+18.0%
+Research and development expenses
+6.4%
+2,769
+Equity ratio
+8
+Diluted earnings per share in €
+0.26
+0.75
+(65)
+Industrial Power Control
+1,406
+17
+1,418
+18
+(1)
+Adjusted earnings per share in € - diluted³
+0.64
+0.89
+48
+(28)
+2,650
+31
+2,445
+30
+8
+Dividend per share in €4
+0.22
+0.27
+(19)
+Connected Secure Systems
+953
+11
+642
+Power & Sensor Systems
+37
+3,174
+Greater China
+€ in
+2020/2019
+2019
+2020
+Fiscal year from 1 October to 30 September
+2020/2019
+Change
+in % of
+€ in
+millions
+revenue
+millions
+in % of
+€ in
+2019
+2020
+Fiscal year from 1 October to 30 September
+As of and for the fiscal years ended 30 September (under IFRS)¹
+Infineon key data
+← Q = < 2 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+This interactive pdf is optimized for use
+with Adobe Acrobat.
+Reference to external document
+Chart reference
+Page reference
+€ in
+Change
+revenue
+in %
+(2,488)
+(7,172)
+from continuing operations
+(10)
+15
+1,169
+12
+1,056
+therein: Germany
+Net cash used in investing activities
+13
+1,603
+1,817
+Further information
+from continuing operations
+30
+2,430
+27
+2,322
+Europe, Middle East, Africa
+Net cash provided by operating activities
+7
+8,029
+8,567
+Revenue by region
+in %
+millions
+millions
+(4)
+Next page
+>
+Previous page
+76 Research and development
+84 Manufacturing
+Business model and finances
+The segments
+Our Group
+21 Business focus and strategy
+12 Report of the Supervisory Board
+to the Annual General Meeting
+The Management Board
+11
+6 Letter to shareholders
+53
+6 Management Board and
+Supervisory Board
+46
+5 Our year at a glance
+4 The segments
+89 Internal management system
+92 Sustainability at Infineon
+93 The Infineon share
+45 Combined
+Management Report
+2 Infineon key data
+= <1>
+Content
+Infineon Technologies | Geschäftsbericht 2020
+Infineon
+Infineon Technologies AG
+Annual Report 2020
+1,291
+15
+1,187
+15
+9
+Net cash provided by financing activities
+3 Infineon at a glance
+(1,113)
+Our 2020 fiscal year
+96
+<
+Main table of contents
+=
+Q Search
+Last page viewed
+Navigation in the report per mouse click
+242 Imprint
+Financial calendar
+241
+List of abbreviations
+241
+240 Chart overview
+236 Applications and product range
+21 Business focus
+229 Independent Auditor's Report
+of Comprehensive Income
+145 Consolidated Statement
+of Financial Position
+146 Consolidated Statement
+of Cash Flows
+147 Consolidated Statement
+of Changes in Equity
+148 Notes to the Consolidated
+Financial Statements
+Financial Statements
+144 Consolidated Statement
+of Profit or Loss
+144 Consolidated Statement
+143 Consolidated
+Infineon Technologies AG
+Corporate Governance
+126
+124
+123 Overall statement on Infineon's
+financial condition
+43 Human Resources strategy
+Report on outlook, risk
+and opportunity
+33 Group strategy
+107
+23 Growth drivers
+Group performance
+228 Further information
+228 Responsibility Statement by the
+Management Board
+13.0
+Asia-Pacific (excluding Japan, Greater China)
+11.8
+Our year at a glance
+O
+REVENUE
+€ 8.567
+billion
++7
+percent
+1 More information is available
+in our sustainability report.
+www.infineon.com/csr_reporting
+TARGET
+Carbon-
+neutral
+by 2030'
+SEGMENT RESULT AND MARGIN
+€ 1.170
+billion
+± 13.7
+percent
+The 2020 fiscal year was shaped by two major events: the outbreak of the
+coronavirus pandemic in the middle of our fiscal year and the completion of
+our acquisition of Cypress in April 2020.
+With the largest acquisition in our corporate history, we have become the
+eighth largest semiconductor company in the world and number one in Europe.
+We are continuing to focus on structurally fast-growing markets. With Cypress,
+we have significantly increased our expertise in system solutions, especially
+for the IoT.
+At Infineon, we define success not only by the targets we achieve, but by the
+path we take to get there. Sustainability plays a key role in our thoughts and
+actions. We have therefore set ourselves the target of becoming carbon-neutral
+by 2030. Our interim goal is to reduce our carbon emissions by 70 percent
+by 2025, compared with 2019. Our high sustainability ratings and our inclusion
+in sustainability indices are both our reward and our motivation.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Q = < 5 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Market position²
+#1 with a market share of 24.6%
+for power MOSFETS
+Source: Omdia: Power Semiconductor Market Share Database 2020.
+September 2020
+#1 with a market share of 43.5%
+for MEMS microphones
+Source: Omdia, October 2020
+p. 70
+Key customers¹
+Bang & Olufsen / Brother / Fitbit /
+Giesecke & Devrient / Google / HP / Idemia /
+Lenovo/Microsoft/ Nintendo / Raspberry Pi /
+Thales / US Government Publishing Office/
+Watchdata
+Market position²
+Letter to shareholders
+#1 with a market share of 26.3%
+for secure ICs (excluding NFC controller and
+NFC embedded Secure Element)
+188
+for Wi-Fi ICs (standalone ICs only)
+Source: ABI Research, July 2020
+Major distributions customers¹
+Arrow / Avnet / Intron / Jingchuan / Macnica / Nexty / Rutronik / Weikeng / WPG Holding (SAC)
+Please find a detailed presentation of the segments' target applications and product range in the chapter "Applications and product range", p. 236 ff.
+1 In alphabetical order.
+2 All figures for 2019 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment. The figures provided in those sections with respect to changes in market share
+relate to the 2019 and 2018 market share figures as calculated in 2020. Due to changes in the way the market is analyzed, these figures may differ from the 2018 market share figures reported in 2019.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Source: ABI Research, October 2020
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Without taking into account the effects of the acquisition of Cypress, our free cash
+flow was in excess of €900 million. In addition to concentrating on the here and now,
+our clear objective was to implement our forward-looking projects successfully
+despite our comprehensive hiring freeze, which we have managed to do because of
+the focus and outstanding commitment of our teams.
+In the second half of the fiscal year, the former Cypress businesses were already
+making significant contributions to revenue development, safeguarding profitability
+and generating cash flow. However, Cypress is more than the expected short-term
+financial success. Rather, Cypress is an important step in our strategic "Product to
+System" approach (P2S). As a result, we can offer our customers complete solutions.
+With our leading products, comprehensive portfolio and application expertise, now
+enhanced significantly by software, we enable our customers to develop successful
+products in a short period of time.
+At the beginning of June 2019, we signed the purchase agreement for Cypress.
+On 16 April 2020, just under a year later, we were able to close the transaction, having
+obtained all the regulatory approvals. It is now up to us to make the biggest acquisi-
+tion in our company's history a success. There is enormous potential in the merging
+of the portfolios and skills of the Cypress and Infineon teams. From the combination
+of microcontrollers, sensors, connectivity components, power semiconductors,
+memories for specific applications, and security solutions together with software
+and the appropriate development environment for all programmable components
+emerges an extensive joint portfolio for the loT and for automated driving, and also to
+develop products that consume less energy. We are seeing many “things” becoming
+ever smarter and more connected, while completely new applications with consider-
+able additional benefits are emerging. What we are seeing today is just the beginning.
+Enthusiasm for creating something that solves problems and makes life better,
+connecting the real world and the digital world, is a key factor in the successful inte-
+gration of the two companies "at a distance". It is impressive to see how, within just a
+few weeks, roadmaps have been agreed in video conferences and the first synergy
+projects have been launched.
+Our success also comes from good preparation undertaken in the period between
+signing and closing of the transaction and from our experience in the past with
+the integration of International Rectifier. The individual steps have been meticulously
+planned. At the beginning, we slowed down things a little, as business continuity
+and our customers remain the priority. Nevertheless, Cypress' production sites were
+included from Day 1 in Infineon's manufacturing cluster, and the other parts of the
+organization followed or are now following gradually. Certainly, the coronavirus
+pandemic is not making things any easier, but, in a year's time, it will no longer be
+possible to identify whose roots are where. In contrast, the full integration of the
+IT systems will take some time, as is normal and to be expected.
+Despite the challenging constraints, we are on track with the targets we set ourselves
+in relation to the Cypress acquisition. On the cost side, we want to achieve annual cost
+synergies of €180 million within three years of the business combination. A number
+of specific potential cost savings have been identified and some have already been
+implemented. However, the real financial attractiveness of the combination will come
+from revenue synergies, which we estimate will be more than €1.5 billion per year in
+the long-term. In the short-term, we are counting on broader customer access and on
+cross-selling, and we are already seeing the first encouraging results:
+> One of Infineon's longstanding automotive customers is now using NOR Flash
+memory ICs from Cypress for their electronic steering systems.
+› A customer opted for a system solution for a new generation of home appliances
+comprising a microcontroller from the PSOC™ family of Cypress and an intelligent
+power semiconductor module from Infineon.
+> In an IoT wireless charging device for cell phones, tablets or laptops, which
+already contains MOSFETs, drivers and security ICs from Infineon, Bluetooth
+and USB components from Cypress are now also being used.
+The opportunities are great, but so are the challenges. Today, Infineon's segments
+are organized by market. Even before the acquisition of Cypress, the boundaries
+between the segments were beginning to dissolve. With this major step towards
+systems orientation, we will need to come to grips with a complex world in the future.
+Infineon Technologies | Annual Report 2020
+← Q = < 8 >
+Management Board and
+Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 9 >
+In addition to product and market orientation, we will be working together across
+segments on applications. We are convinced that we will master this and that it will
+turn into a success factor for us, just as our corporate culture already is today.
+The organizational integration of Cypress is taking place based on the market and
+product focus of the segments: Automotive has expanded to include microcontrollers
+for automotive applications and memories for specific applications; USB components
+have been included in the renamed Power & Sensor Systems segment; Wi-Fi and
+Bluetooth products for wireless communication and microcontrollers for general
+applications have been combined with our security solutions in the greatly expanded
+Connected Secure Systems segment, also renamed. As is already the case today, the
+application areas will be managed across segments.
+As the integration progresses and as we generate synergies, we want to reach the
+target set out in our updated target operating model, which is to achieve average
+revenue growth over the cycle of more than 9 percent per year with a Segment Result
+Margin of 19 percent. Capital intensity will decrease as a result of the high share of
+contract manufacturing at Cypress. Our target for the invest-to-sales ratio is 13 percent.
+Infineon is not only able to carry out a long-term strategy successfully, but also to
+complete projects in task force mode. Our finance team has demonstrated this,
+executing two major transactions in quick succession in a capital markets environment
+strongly impacted by pandemic uncertainty, and thereby swiftly implementing the
+previously announced refinancing plan for the acquisition of Cypress. At the end of
+May 2020, we generated proceeds of just over €1.0 billion from an increase in share
+capital, which taken together with the two equity measures carried out in the 2019
+calendar year, a first increase in share capital and the issue of a hybrid bond, form the
+basis for our investment grade rating. In June 2020, we repaid in full the bridge loan
+used to finance the acquisition by issuing €2.9 billion of bonds with maturities of up
+to twelve years. Infineon now has a balanced maturity profile for its financial debt
+until 2032, with low financing costs. While maintaining our strategic liquidity target,
+we are determined to reduce our debt over the next few years. In September 2020,
+we therefore repaid US$555 million of the long-term bank loans from the acquisition
+financing early and in October 2020 we repaid the remaining amount of our Campeon
+financing of €171 million. We also want to continue our dividend payments. At the
+same time, we want to take a prudent approach, considering the serious economic
+impact and ongoing risks of the coronavirus pandemic and maintaining appropriate
+financial headroom. In addition, the number of shares entitled to receive a dividend
+has increased by around 4 percent as a result of the capital increase mentioned.
+Therefore, we will propose to the Annual General Meeting the payment of a dividend
+of 22 cents per share for the coronavirus year 2020, a reduction of 5 cents. The per-
+centage decline of the total dividend amount, which would go to €286 million after
+€336 million for the previous year, would therefore be lower than the percentage
+reduction of the dividend per share.
+Let us now venture a glimpse into the future. The virus has made us aware of the
+vulnerability of the globally networked world, but also of the opportunities of digital
+technologies. Currently we are at a stage where we have all been deeply affected by
+the pandemic. It has resulted in sudden and profound upheavals, human tragedies
+and economic disruptions, but the call for reconstruction, for making a new start, is
+loud. Linking that new start with greater sustainability makes sense. We must look
+to the future in the way we invest. Sustainability has long been a guiding principle
+at Infineon. Our goal is to use our technologies to help make more with less and to
+shape a more resource-efficient and livable future. We do not know what the future
+will look like, but some things are clear. The shift towards electric vehicles is accelerat-
+ing; the proportion of renewables in the energy mix will continue to increase, partly
+because during the crisis many people have come to appreciate the value of better
+air quality; digitalization has been given a tremendous boost in all areas of life,
+because much of what we started in a hurry has proved to be unexpectedly good.
+Working from home, for example, has triggered one of the biggest changes to the
+world of work since industrialization. The basis for digital transformation is an acceler-
+ated expansion of communications infrastructure and data center capacity, thus
+enabling, in turn, a far wider range of useful new applications in the Internet of Things.
+However, demand for the protection of application-critical and personal data is also
+increasing as a result.
+Infineon Technologies | Annual Report 2020
+Business focus and strategy
+Key customers¹
+Airbus / Alibaba / Amazon / Artesyn / Baidu /
+Boeing Cisco/Dell/ Delta / Ericsson /
+Google / Hewlett Packard Enterprise / HP/
+Lenovo / LG Electronics / Lite-On / Makita /
+Nokia/Osram / Panasonic / Quanta /
+Samsung/ZTE
+Further information
+Combined Management Report
+Further information
+Q = < 6 >
+Letter to shareholders
+Neubiberg, November 2020
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dear shareholders and business partners,
+dear Infineon colleagues,
+2020 will go down in history as the year of the coronavirus. The pandemic has
+unleashed an unprecedented crisis. Our company has successfully weathered the
+storm with the combined forces of all our employees – and so I would like to take
+the opportunity right here, in the name of the entire Management Board, to express
+a huge THANK YOU to our team, who have done a great job. Despite considerable
+hurdles, we have stood together to keep Infineon on track! The year of the coronavirus
+has been a milestone for us in many ways. Not only did we cope well in operational
+terms with the downturn, achieving a respectable result in an extremely challenging
+environment due to our solid starting position. We were also able, with the comple-
+tion of the acquisition of Cypress and its largely completed refinancing, to set our
+course for the future; a future, which the coronavirus pandemic has caused to move
+significantly closer to the present in terms of digitalization. We believe we are well-
+equipped to shape this future, not only for Infineon, but also for society at large. We
+want to contribute to a future which has humans and their environment at its heart.
+The pandemic struck the semiconductor industry at a time when we were beginning
+to see signs of improvement in the economic situation after a difficult 2019. There
+were no pre-formulated action plans to deal with the global threat of the novel
+SARS-CoV-2 virus. Also at Infineon, we had no such plans, nor do we need them, as
+everyone in the company has shouldered the responsibility of doing the right thing,
+taking rapid and independent action, and that is just how we are organizing our-
+selves, so that the key issues can be managed centrally. The top priority was and is
+protecting the health of our employees and business partners. We have succeeded
+in keeping the infection rate in our global workforce very low through numerous
+health and safety measures, continuous information and communication, an almost
+complete cessation of business travel since March, and extensive hygiene plans.
+For office workers, the transition to working from home happened virtually overnight.
+Our IT specialists managed to set up the necessary infrastructure in a few days.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Letter to shareholders
+Consolidated Financial Statements
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q = < 7 >
+For weeks, we had up to 23,000 colleagues worldwide working from home, with up
+to 60,000 telephone and video conferences and up to 36,000 accesses to the network
+daily. We quickly had to learn new ways of working together. It soon became clear
+that many things functioned at least as efficiently online and digitally as they did in
+physical meetings, although some did not. Based on this experience, we are currently
+devising a new way of working, but we are aware that we still have much to learn. The
+situation is of course different for our factory workers. We are proud that we have been
+able to keep operations going at all our major manufacturing sites almost without
+interruption. Even in countries hit particularly hard by the pandemic, such as China,
+Malaysia, Mexico and the Philippines, we have been able to comply with the strict
+official regulations, which were necessary for us to maintain operations. Inter-
+disciplinary optimization and flexibility were the key success factors in keeping tabs
+on idle costs and achieving our potential revenue: constant reassessment of demand
+scenarios, adjustments to the manufacturing program across segments and sites, new
+routes along the logistics chains. Customer satisfaction is crucial for us even in this
+difficult phase and we are pleased with the feedback we have received that customers
+value our prudent and proactive actions. In addition to protecting the health of our
+employees and continuing our business operations, it is important for Infineon to
+contribute to the society and so to be part of it. We have supported or launched more
+than 20 projects to alleviate the impact of the pandemic, donating several hundred
+thousand euros. Supplying power electronics for ventilators is one of the ways in
+which we have been able to provide support through our products.
+Of course, our business is not immune to a profound crisis of historic dimensions.
+Yet the efforts described above have resulted in us being able to limit the decline in
+revenue and profit seen in some of our core areas. In the previous fiscal year, we
+generated revenue of almost €8.6 billion. This includes around €850 million from the
+consolidation of Cypress from mid-April. If we look at our former Infineon business,
+we generated a bit above €300 million less revenue than in the 2019 fiscal year. The
+automotive industry in particular has been hit hard by the impact of the coronavirus
+pandemic. In the spring, the number of vehicles produced in all regions plummeted,
+the result of a simultaneous shock to supply and demand. Although there were
+noticeable signs of recovery only a few months later and in some countries such as
+China even a V-shaped recovery to levels above pre-crisis became apparent, market
+researchers are nevertheless predicting that 2020 will see a reduction in global
+vehicle production of around 20 percent. However, even in the crisis, it is true that
+the semiconductor content per vehicle is continuing to rise, which implies that the
+reduction in the number of vehicles produced had less impact on semiconductor
+manufacturers. This will help the future development of our business, even in case
+of a weak evolution of the automotive production. Our industrial business proved
+quite stable. Here, we were able to offset declining demand for industrial drives and
+traction with our unique product expertise in emerging application areas, such as
+the generation of renewable energy from solar and wind power. Our products for
+data centers and communication networks, in turn, even benefitted from some of
+the effects of the pandemic or, to put it another way, they became part of the arsenal
+used to combat the crisis. Work, education, entertainment and shopping all moved
+into the virtual world, stimulating growth. Certain security-related applications, such
+as contactless payment, also saw an increase in demand.
+All in all, we were quite successful at defying the very severe economic downturn,
+which has led in many countries to the worst recession in post-war history. Infineon's
+business is very robust thanks to our consistent focus on the structural growth drivers
+in the areas of energy efficiency, mobility, security, and IoT & big data. This is also
+clear if we look at our earnings situation. With a Segment Result Margin of 13.7 percent,
+we were able to safeguard our profitability despite the particular challenges of 2020.
+In every single quarter, we were able to generate a positive Segment Result. This is also
+due to the numerous measures we implemented immediately. Of crucial importance
+was rigorous production management in order to optimize delivery to customers and
+inventory levels while minimizing underutilization charges. The measures introduced
+included short-time work, postponing salary increases or suspending them in the case
+of the Management Board and top management, and adjusting our levels of invest-
+ment. We were therefore also able to generate a strong cash inflow from our business.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Letter to shareholders
+Business focus and strategy
+Combined Management Report
+☐
+#5 with a market share of 9.8%
+Source: Omdia: Power Semiconductor Market Share Database 2020.
+September 2020
+79
+1 Columns may not add due to rounding.
+2 See the chapter "Internal management system" for definition,
+p. 90 f.
+Net income
+368
+870
+(58)
+3 See the chapter "Review of results of operations" for definition,
+p. 65
+4 A dividend per share of €0.22 for the 2020 fiscal year will be proposed to the Annual General Meeting on 25 February 2021.
+(19)
+Segment Result/Segment Result Margin
+13.7
+1,319
+16.4
+(11)
+5 See the chapter "Review of financial condition" for definition, p. 101.
+Property, plant and equipment
+4,110
+3,510
+17
+6 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+Total assets
+1,170
+21,999
+(4)
+13
+18
+Debt-to-total-capital ratio
+32.0%
+11.5%
+Selling, general and administrative expenses
+(1,042)
+12.2
+(865)
+10.8
+20
+Return on Capital Employed (ROCE) 2
+Gain (loss) from discontinued operations,
+net of income taxes
+3.0%
+Operating income
+581
+1,161
+(50)
+Income from continuing operations
+372
+889
+(58)
+Infineon employees as of 30 September
+46,665
+41,418
+12.2%
+13,581
+p. 100.
+Total equity
+← Q = < 4 >
+The segments
+Automotive
+Industrial Power Control
+Power & Sensor Systems
+Connected Secure Systems
+p. 55
+Key customers¹
+Aptiv / Bosch / BYD / Continental / Delphi /
+Denso / Hella / Hitachi / Hyundai / Keihin /
+Lear/Mando / Mitsubishi Electric / Preh /
+Valeo/Veoneer / Vitesco/ZF
+Market position²
+#1 with a market share of 13.4%
+for automotive semiconductors
+Further information
+(including contribution from Cypress)
+#3 with a market share of 19.5%
+62
+p. 60
+Key customers¹
+ABB / Alstom / Bombardier / CRRC / Danfoss /
+Eaton / Emerson / Goldwind / Inovance /
+Midea / Nidec / Rockwell / Schneider Electric /
+Semikron/Siemens / Sungrow / Toshiba /
+Vestas / Yaskawa
+Market position²
+#1 with a market share of 35.6%
+for IGBT modules
+Source: Omdia: Power Semiconductor Market Share Database 2020.
+September 2020
+#3 with a market share of 11.5%
+for IPMS
+Source: Strategy Analytics, April 2020
+Consolidated Financial Statements
+for NOR Flash memory ICS
+Source: Omdia, March 2020
+Business focus and strategy
+Combined Management Report
+10,219
+8,633
+18
+Infineon Technologies | Annual Report 2020
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+< Q = < 3 >
+Infineon
+at a glance
+#8
+Management Board and
+Supervisory Board
+Source: Omdia, March 2020.
+Management Board and
+Supervisory Board
+in the entire semiconductor market
+Clea
+Infineon Technologies | Annual Report 2020
+employees
+Part of your life.
+Part of tomorrow.
+46,700
+Source: Omdia, March 2020.
+in microcontrollers
+#3
+Infineon Technologies AG is a world leader in semicon-
+ductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better
+future. In the 2020 fiscal year (ending 30 September), the
+Company reported sales of approximately €8.6 billion
+with some 46,700 employees worldwide. Infineon is listed
+on the Frankfurt Stock Exchange (ticker symbol: IFX)
+and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Management Board and
+Supervisory Board
+Operating result after tax from continuing operations
+Capital employed
+Infineon Technologies | Annual Report 2020
+ROCE =
+Business focus and strategy
+Apart from profitability, RoCE is also influenced by asset intensity, of both non-
+current assets and net working capital. Asset intensity describes the amount of
+assets necessary to generate a certain level of revenue (for an analysis of the
+derivation of and change in ROCE in the 2020 fiscal year, see the chapter "Review
+of financial condition", p. 102 f.).
+Consolidated Financial Statements
+Q = < 91 >
+This key performance indicator describes how efficiently a company manages its
+resources. ROCE is also analyzed by Infineon at Group level only and not at segment
+level. A comparison of a company's ROCE and its weighted cost of capital provides
+information on the extent to which returns have been generated in excess of share-
+holders' and debt holders' expectations. Thus, ROCE serves as a tool for value-based
+management.
+The principal performance indicators described above are supplemented by others
+that provide information about growth potential, cost efficiency by functional area
+and liquidity.
+Other performance indicators
+The performance indicator ROCE measures the ability of capital to provide a return
+and is defined as the operating result after tax from continuing operations divided by
+capital employed. Capital employed consists of non-current assets and net working
+capital. ROCE shows the correlation between profitability and the capital resources
+required to run the business.
+Combined Management Report
+Internal management system
+Return on Capital Employed (ROCE)
+Further information
+Infineon manages net working capital levels by focusing continuously on optimizing
+levels of inventories, trade receivables and trade payables.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Internal management system
+Consolidated Financial Statements
+Q = < 90 >
+Infineon also compares the actual as well as the planned Return on Capital Employed
+(ROCE) against the cost of capital in order to ensure value creation.
+Effective investment management plays a key role with regard to managing free cash
+flow. Our stated strategy of managing investments systematically should be seen
+in this context. Free cash flow is managed by Infineon at Group level only and not at
+segment level.
+The three performance indicators described above are also the cornerstones of the
+system for variable compensation within Infineon. Most variable salary components
+for employees and management are directly linked to these performance indicators.
+Segment Result
+Segment Result is defined as operating income (loss) excluding certain impairment
+losses (such as in particular impairment losses on goodwill), impact on earnings of
+restructuring and closures, share-based compensation expense, acquisition-related
+depreciation/amortization and other expenses, gains (losses) on sales of businesses,
+or interests in subsidiaries and other income (expense), including litigation costs
+(for a computation of the relevant figures see note 30 to the Consolidated Financial
+Statements, p. 213 ff.). Court and legal fees arising in conjunction with licensing
+Infineon's patents are included in Segment Result, as is any related income. Segment
+Result is the indicator that Infineon uses to evaluate the operating performance of its
+segments (for an analysis of Group and individual segment performance in the 2020
+fiscal year, see the chapters "The segments", ☐ p. 53 ff., and "2020 fiscal year", ☐ p. 50 ff.).
+Free cash flow
+An important key performance indicator for Infineon is the free cash flow figure,
+defined as net cash provided by or used in operating activities and net cash provided
+by or used in investing activities, both from continuing operations, after adjusting for
+cash flows related to the purchase and sale of financial investments. Free cash flow
+measures the ability to generate sufficient cash flows to finance day-to-day operations
+and fund required investments out of the ongoing business. It is Infineon's stated target
+to sustainably generate positive free cash flow. The consistent generation of free cash
+flow is of increasing importance in view of the significantly increased debt following
+the acquisition of Cypress (for an explanation of the development of free cash flow
+during the 2020 fiscal year, see the chapter "Review of liquidity", □ p. 104 f.).
+The main levers for generating free cash flow are profitability, the ability to manage
+working capital efficiently and the levels of investments.
+Since all three performance indicators and especially Segment Result strongly correlate
+with revenue growth, the latter is not used as a key performance indicator in its own
+right but is covered by the three performance indicators indirectly.
+Growth and profitability performance indicators
+Further information
+Further details regarding income tax expense are provided in note 6 to the Consolidated
+Financial Statements. ☐ p. 168 ff.
+-SOX
+Trading volumes and stock indices
+160
+150
+140
+130
+120
+110
+100
+DAX
+90
+80
+70
+60
+Measured in units, the average volume of Xetra-traded Infineon shares increased by
+5 percent in the 2020 fiscal year compared to one year earlier. An average of 7.7 million
+shares were traded daily in the 2020 fiscal year, compared to 7.3 million in the previous
+12-month period. Measured in euros, the average daily trading volume rose by
+13 percent, based on a daily average of €126.9 million in the 2019 fiscal year and
+€143.5 million during the year under report.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The Infineon share
+90
+Consolidated Financial Statements
+10|2019 11|2019 12|2019 01 | 2020 02 | 2020 03|2020 04|2020 05|2020 06|2020 07|2020 08|2020 09|2020
+Infineon
+Dow Jones US Semiconductor Index
+9.91
+Combined Management Report
+The Infineon share
+Consolidated Financial Statements
+Further information
+Q = < 94 >
+Share price development
+The Infineon share finished the 2020 fiscal year at a closing price of €24.12, up
+46 percent on the €16.51 recorded one year earlier.
+The price of the Infineon share developed favorably during the first months of the
+2020 fiscal year. Despite the far-reaching measures taken in China in January in
+response to the coronavirus pandemic, the value of the Infineon share initially con-
+tinued to rise in January and through to mid-February, albeit subject to considerable
+fluctuation. The high of €22.86 during the first half-year was reached on 13 February.
+The rapid global spread of coronavirus, especially in northern Italy and many other
+European countries, caused a significant decline on stock markets around the world.
+The Infineon share price was also impacted by this development, falling in mid-March
+to a low of €10.68 for the 2020 fiscal year. The decline was, however, followed by a
+dynamic recovery that continued throughout the remainder of the period under report.
+The high of €24.67 for the 2020 fiscal year was reached on 14 September. Over the
+fiscal year as a whole, the price of the Infineon share rose in total by 46 percent.
+During the same period, the DAX rose by 3 percent, the Philadelphia Semiconductor
+Index (SOX) by 44 percent and the Dow Jones US Semiconductor Index by 45 per-
+cent. Infineon's share market capitalization also increased sharply by 53 percent
+from €20,552 million on 30 September 2019 to €31,366 million at the end of the
+2020 fiscal year.
+Following receipt of all the necessary approvals for Infineon's acquisition of Cypress
+Semiconductor Corporation in April 2020, the transaction was closed on 16 April. In
+conjunction with the refinancing of the acquisition, Infineon took advantage of the
+share price recovery after its low in mid-March and placed 55 million new shares with
+institutional investors on 26 May 2020 by way of an accelerated bookbuilding process.
+The number of shares in issue increased to 1,305,921,137 as of 30 September 2020,
+including 5,251,391 own shares.
+C35 Development of the Infineon Technologies AG share compared to Germany's DAX Index,
+the Philadelphia Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index
+for the 2020 fiscal year (daily closing prices)
+30 September 2019 = 100
+Infineon share price in €
+24.77
+23.12
+21.47
+19.81
+18.16
+16.51
+14.86
+13.21
+11.56
+26.42
+Further information
+Q = < 95 >
+In the USA, the Infineon share is traded in the form of American Depositary Shares
+("ADS") on the OTCQX International over-the-counter market under the ticker symbol
+"IFNNY”. About 235,000 ADS were traded daily in this market in the 2020 fiscal year
+(previous year: approximately 307,000 daily). The number of ADS outstanding increased
+slightly from 38.9 million as of 30 September 2019 to 39.2 million at the end of the
+2020 fiscal year.
+Review of results of operations
+The consolidated statement of Profit or Loss
+C37 Revenue by segment
+€ in millions
+3,503 3,542
+€ in millions, except earnings per share
+Revenue
+Gross profit
+Research and development expenses
+Group performance
+Selling, general and administrative expenses
+2020
+2019
+8,567
+8,029
+2,445 2,650
+1,418 1,406
+2,776
+2,994
+953
+Other operating income and expenses, net
+Review of results of operations
+Group performance
+Q = < 96 >
+In the DAX ranking, Infineon improved from 15th place in the previous fiscal year
+to 13th place, measured by market capitalization. In terms of the volume traded in
+euros on Xetra and on the Frankfurt trading floor during the last twelve months,
+Infineon also improved by two places from 13th at the end of the previous fiscal year
+to 11th place as of 30 September 2020. The Infineon share has been listed in the
+TecDAX since 25 September 2018. Compared to the end of the previous fiscal year, it
+remained in 3rd place measured by market capitalization as of 30 September 2020
+and improved by one place from 4th to 3rd place in terms of volume traded.
+Shareholder structure
+As of 30 September 2020, four shareholders each held more than 3 percent of the
+Infineon shares issued. At the end of the 2019 fiscal year, three shareholders each
+held more than 3 percent of the Company's shares. The share capital held by retail
+shareholders amounted to 8.82 percent at the end of the 2020 fiscal year, compared
+with 9.96 percent one year earlier.
+C36 Shareholder structure as of end 2020 fiscal year
+O
+5.36% BlackRock Inc.
+4.85% Kingdom of Norway
+4.82% Allianz Global Investors GmbH
+3.92% DWS Investment GmbH
+8.82% Retail investors
+72.23% Other
+Dividend
+Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
+economic development and, in general, at paying out at least an unchanged dividend
+even in the event of stagnating or declining earnings. However, the serious economic
+impact of and the ongoing risks posed by the coronavirus pandemic need to be taken
+into account and appropriate financial headroom should be maintained. In addition,
+the number of shares entitled to receive a dividend has increased by around 4 percent
+as a result of the capital increase undertaken in May 2020. A proposal will therefore
+be put forward to the forthcoming Annual General Meeting to distribute a dividend
+of €0.22 per share for the 2020 fiscal year, €0.05 less than for the previous year. The
+55 million new shares issued in May 2020 are fully entitled to receive a dividend.
+The total dividend amount would therefore sum up to €286 million, compared with
+€336 million for 2019. Hence, the percentage decline of the total dividend amount is
+lower - compared with the percentage reduction of the dividend per share. At the
+Annual General Meeting held on 20 February 2020, a resolution was taken to pay a
+dividend €0.27 per share for the 2019 fiscal year, unchanged from the previous year.
+With the number of shares entitled to a dividend standing at 1,245,252,379 due to the
+capital increase in June 2019, a total amount of €336 million was distributed. In the
+previous fiscal year, the number of shares entitled to a dividend stood at 1,130,995,834
+and the total sum transferred to shareholders amounted to €305 million.
+Interested parties may participate in telephone conferences via a webcast broadcast in the Investor Relations section
+of the Infineon website. www.infineon.com/investor
+This reference is not part of the audited management report.
+Retail investors can contact us by email (investor.relations@infineon.com)
+and by telephone (+49 89 234-26655).
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Business focus and strategy
+Management Board and
+Supervisory Board
+"BBB-", CreditWatch: "stable"
+since 16 April 2020:
+Combined Management Report
+The Infineon share
+Consolidated Financial Statements
+Further information
+Q = < 93 >
+The Infineon share
+Basic information on shares
+Basic information on bonds and other financing instruments
+As part of the process of analyzing operating profitability in detail, Infineon considers
+earnings and costs above the Segment Result line. This involves a review of gross profit,
+research and development expenses, selling, general administrative expenses and
+the ratio of these items to revenue. These performance indicators are used to manage
+the business at both Group and segment levels (for an analysis of changes in the
+fiscal year under report, see the chapter “Review of results of operations”, □ p. 98 f.).
+Share types
+Business focus and strategy
+Share capital
+Own shares
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+€2,611,842,274 (as of 30 September 2020),
+€2,501,368,142 (as of 30 September 2019)
+1,305,921,137 (as of 30 September 2020),
+1,250,684,071 (as of 30 September 2019)
+5,251,391 shares (as of 30 September 2020),
+6,000,000 shares (as of 30 September 2019)
+DE0006231004
+623100
+IFX (share), IFNNY (ADS)
+2.875% Hybrid Bond
+from 1 October 2019
+3.625% Hybrid Bond
+from 1 October 2019
+1.500% Bond from 10 March 2015
+0.750% Bond from 24 June 2020
+1.125% Bond from 24 June 2020
+Shares issued¹
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+The separate report "Sustainability at Infineon" including the summarized
+Non-Financial Report is available on Infineon's website.
+www.infineon.com/csr_reporting.
+Revenue growth is compared continuously with the rate of growth of relevant target
+markets. This ties in directly with our strategic target of profiting continuously from
+the growth of our target markets. A further indicator for future revenue growth is the
+number of design wins, whereby we regularly measure actual outcomes against targets.
+Liquidity performance indicators
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of
+liquidity at its disposal and an optimal capital structure. Liquidity is managed at
+Group level, not at segment level, using the following key performance indicators:
+› Gross cash position: Cash and cash equivalents plus financial investments.
+> Net cash position: Gross cash position less short-term and long-term financial debt.
+> Net working capital: Current assets less cash and cash equivalents, less financial
+investments, less assets classified as held for sale, less current liabilities excluding
+short-term financial debt, and current maturities of long-term financial debt,
+excluding liabilities classified as held for sale.
+› Investments: The total amount invested in property, plant and equipment and
+other intangible assets, including capitalized development costs.
+For an analysis of changes in these key performance indicators during the 2020
+fiscal year, see the chapter "Review of liquidity". ☐ p. 103 ff.
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity
+bottlenecks, the key operational figures for capacity utilization and forecast capacity
+requirements are analyzed. The results of this analysis are used in determining
+investment requirements.
+Actual and target values for performance indicators
+The chapter "Outlook" contains a table showing the actual values achieved in the
+2020 fiscal year for the key performance indicators, along with expectations for
+the 2020 and 2021 fiscal years. p. 107.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Sustainability at Infineon
+Consolidated Financial Statements
+Further information
+Q = < 92 >
+Sustainability at Infineon
+Sustainability activities are described in the separate report "Sustainability
+at Infineon".
+In accordance with the stipulations of the German CSR Directive Implementation
+Act, Infineon Technologies AG is required to publish a non-financial report at
+both Company and Group level for the 2020 fiscal year. This report is published
+jointly for Infineon Technologies AG and the Group as a summarized separate
+non-financial report within the sustainability report. The information required by
+law is marked accordingly to distinguish it from the voluntary reporting according
+to the GRI standards. The entire report "Sustainability at Infineon" including the
+chapters of the Non-Financial Report have been subjected to a limited assurance
+audit by KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany), and has
+been certified without restrictions.
+1.625% Bond from 24 June 2020
+2019
+2.000% Bond from 24 June 2020
+€600 million
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones Germany Titans 30
+MSCI Germany
+S&P-Europe-350
+Dow Jones Sustainability World Index
+US Private Placement from 5 April 2016
+Term loan from 3 June 2019
+Term loan from 3 June 2019
+Term loan from 3 June 2019
+4.500% Convertible Bond
+from 23 June 2016
+Rating of S&P Global Ratings
+US$216 million
+1 The number of shares issued includes own shares.
+Dow Jones STOXX Europe 600
+2 Own shares were not taken into consideration for calculation of market capitalization.
+This reference is not part of the audited management report.
+Infineon Technologies | Annual Report 2020
+due on 10 March 2022, ISIN: XS1191116174
+due on 24 June 2023, ISIN: XS2194282948
+due on 24 June 2026, ISIN: XS2194283672
+due on 24 June 2029, ISIN: XS2194283839
+due on 24 June 2032, ISIN: XS2194192527
+first reset date 1 January 2025,
+ISIN: XS2056730323
+first reset date 1 January 2028,
+ISIN: XS2056730679
+tranche with maturity 5 April 2024
+tranche with maturity 5 April 2026
+tranche with maturity 5 April 2028
+tranche with maturity 3 September 2022
+tranche with maturity 3 September 2023
+tranche with maturity 3 June 2024
+due on 15 January 2022,
+ISIN: US232806AM17
+A full overview of other major indices in which the Infineon share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/infineon-share/#5
+TecDAX
+DAX 30
+235,205 (in the 2020 fiscal year)
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-PK
+US$350 million
+US$350 million
+US$235 million
+US$555 million
+US$1,110 million
+US$1,110 million
+ISIN
+WKN
+Ticker symbol
+Bloomberg
+Nasdaq IR Insight
+Listings
+Market capitalization²
+Daily average shares traded on Xetra
+Trading in the USA
+Market capitalization²
+Daily average ADS traded
+Index membership (selected)
+Shares: Frankfurt Stock Exchange (FSE)
+€31,366 million (as of 30 September 2020)
+7,697,741 (in the 2020 fiscal year)
+ADS, over-the-counter trading on the OTC market (OTCQX)
+US$36,731 million (as of 30 September 2020)
+€500 million
+€750 million
+€750 million
+€750 million
+€650 million
+€600 million
+642
+Infineon Technologies | Annual Report 2020
+(945)
+Gross profit (revenue less cost of goods sold) amounted to €2,776 million, 7 percent
+down on the €2,994 million recorded one year earlier.
+The gross margin fell accordingly from 37.3 percent in the 2019 fiscal year to
+32.4 percent in the 2020 fiscal year.
+€ in millions, except percentages
+Cost of goods sold
+Change year-on-year
+Percentage of revenue
+Gross profit
+Percentage of revenue (gross margin)
+2020
+2019
+Working in the opposite direction, the cost of goods sold was reduced by a non-recurring
+amount of €36 million resulting from a more differentiated allocation of centralized,
+manufacturing-related overheads across the entire value chain.
+5,791
+15%
+7%
+67.6%
+62.7%
+2,776
+2,994
+€ in millions, except percentages
+37.3%
+Operating expenses as percentage of revenue higher
+Operating expenses (research and development expenses, selling, general and
+administrative expenses) increased by €345 million to €2,155 million year-over-year
+(2019: €1,810 million), corresponding to 25.2 percent of revenue (2019: 22.5 percent).
+5,035
+Research and development expenses
+Besides this, the cost of goods sold included expenses for the purchase price allocations
+relating to the acquisitions of International Rectifier (in the 2015 fiscal year) and
+Cypress totaling €288 million (2019: €42 million). The amount includes in particular
+higher depreciation and amortization on property, plant and equipment and other
+intangible assets, respectively, which were revalued to their fair value as part of the
+purchase price allocations as well as expenses arising on the consumption of inven-
+tories, which had also been revalued to their fair value. In addition, acquisition-related
+expenses amounting to €28 million (2019: €13 million) were included in the cost of
+goods sold.
+Gross margin declining due to effects of the purchase
+price allocation and idle costs
+862
+11%
+8,567
+100%
+8,029
+100%
+Americas
+therein: USA
+Total
+At €5,791 million, cost of goods sold during the fiscal year under report was €756 million
+or 15 percent higher than the previous year's figure of €5,035 million. Already at the
+beginning of the 2020 fiscal year, existing manufacturing capacities were not being fully
+utilized. During the second half of the fiscal year under report, the pandemic-related
+drop in revenue led to a significant increase in idle costs. Furthermore, additional
+costs were incurred in the 2020 fiscal year in connection with manufacturing capacity
+restrictions caused by the impact of the coronavirus pandemic. To minimize under-
+utilization costs, a careful balancing act was undertaken in terms of supplying custom-
+ers and managing inventory levels, for instance by continuously reassessing demand
+scenarios and adjusting the production program across the various segments and
+locations. Furthermore, short-time work was introduced at the German and Austrian
+sites. The raft of productivity and cost optimization measures initiated during the
+previous fiscal year were additionally stepped up over the course of the 2020 fiscal year.
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+China (comprising Mainland China and Hong Kong) accounted for €2,472 million or
+29 percent of Infineon's global revenue and therefore the largest share at individual
+country level, followed by Germany at €1,056 million or 12 percent.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Consolidated Financial Statements
+Further information
+Q = < 98 >
+Review of results of operations
+The distribution of revenue by region remains more or less unchanged compared to
+the 2019 fiscal year. As in the previous fiscal year, Greater China was the largest region
+in revenue terms, accounting for 37 percent of total revenue generated, followed by
+the Europe, Middle East, Africa region with 27 percent.
+Research and development expenses, net of grants received for research and
+development projects and capitalized development costs, arose as follows:
+€ in millions, except percentages
+Research and development expenses, gross
+Q = < 99 >
+Research and development expenses amounted to €1,113 million in the 2020 fiscal
+year, an increase of €168 million or 18 percent compared to the previous year's figure
+of €945 million, mainly reflecting the increased number of employees. A total of
+9,262 people were employed in research and development functions at the end of
+the fiscal year under report (30 September 2019: 7,755 employees). The year-over-year
+increase was primarily due to the acquisition of Cypress. In addition, acquisition-
+related expenses amounting to €18 million are included in research and development
+expenses (2019: €2 million). As a percentage of revenue, research and development
+expenses increased from 11.8 percent to 13.0 percent year-over-year, influenced
+primarily by the first-time consolidation of Cypress, which spent proportionately
+more on research and development than Infineon.
+The income tax expense for the 2020 fiscal year fell to €52 million (2019: €194 million),
+mainly attributable to the lower level of pre-tax income. Based on the income before
+tax amounting to €424 million (2019: €1,083 million), the effective tax rate for the
+reporting period was at 12.3 percent (2019: 17.9 percent).
+Effective tax rate down to 12.3 percent
+Financial result negatively impacted by Cypress financing costs
+The change in the financial result from negative €72 million to negative €148 million
+mainly reflects the higher interest expense incurred as well as the amortization of
+transaction costs relating to the financing of the acquisition of Cypress (see notes 3
+and 17 to the Consolidated Financial Statements, □ p. 162 ff. and p. 179 ff.). Further-
+more, the financial result includes expenses arising on the fair-value measurement of
+interest rate hedges (see note 28 to the Consolidated Financial Statements, ☐ p. 203 f.).
+The main research and development activities undertaken during the 2020 fiscal year
+are described in more detail in the chapter "Research and development”. p. 76 ff.
+The net amount of other operating income and expenses for the 2020 fiscal year
+finished at a negative amount of €40 million (2019: negative €23 million) and includes
+one-off income of €20 million arising on the sale of non-current assets. Other
+operating expenses include, among others, acquisition related expenses amounting
+to €45 million (2019: €12 million).
+Net amount of other operating income and expenses lower
+Selling, general and administrative expenses increased by €177 million or 20 percent
+to €1,042 million year-over-year. Also included in this figure are the earnings impact
+of the purchase price allocations and acquisition-related expenses relating to Inter-
+national Rectifier and Cypress, totaling €161 million (2019: €44 million). Furthermore,
+the number of employees rose by 1,429 to 6,111 during the fiscal year under report
+(30 September 2019: 4,682), primarily due to the acquisition of Cypress. The increase
+in selling, general and administrative expenses was held down by cost optimization
+measures initiated during the previous fiscal year.
+Further information
+10.8%
+2%
+20%
+865
+1,042
+2019
+2020
+Percentage of revenue
+Change year-on-year
+Selling, general and administrative expenses
+12.2%
+Consolidated Financial Statements
+Combined Management Report
+Group performance
+Review of results of operations
+Business focus and strategy
+Minus:
+Grants received
+Capitalized development costs
+Research and development expenses
+Change year-on-year
+Percentage of revenue
+2020
+2019
+1,379
+1,181
+(108)
+(111)
+(158)
+(125)
+1,113
+945
+18%
+As in the previous fiscal year, income tax expense for the 2020 fiscal year was affected
+by foreign tax rates, non-deductible expenses, tax-exempt income, tax credits and
+changes in valuation allowances on deferred tax assets.
+(1,113)
+13%
+13.0%
+11.8%
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+10%
+845
+32.4%
+1,050
+372
+889
+Loss from discontinued operations, net of income taxes
+(4)
+(19)
+Net income
+368
+13%
+870
+Income from continuing operations
+Basic earnings per share (in euro)
+0.75
+Diluted earnings per share (in euro)
+0.26
+0.75
+41% Automotive
+● 17% Industrial Power Control
+31% Power & Sensor Systems
+11% Connected Secure Systems
+0% Other Operating Segments,
+Corporate and Eliminations
+Adjusted earnings per share (in euro) - diluted
+0.64
+0.89
+0.26
+C38 Revenue by segment in the 2020 fiscal year
+(194)
+(52)
+2020
+21 16
+(1,042)
+(865)
+Automotive
+(40)
+(23)
+Industrial
+Power Control
+Power & Sensor
+Systems
+Connected
+Secure Systems
+Other Operating
+Segments
+Operating income
+581
+1,161
+Net financial result (financial income and expenses, net)
+(148)
+(72)
+Income from investments accounted for using the equity method
+(9)
+(6)
+Income tax
+Revenue growth due to contribution from Cypress
+Revenue grew by €538 million or 7 percent to €8,567 million in the 2020 fiscal year
+(2019: €8,029 million). The figure includes €857 million recognized for Cypress in the
+period since its first-time consolidation in mid-April 2020. Excluding the contribution
+from Cypress, revenue would have fallen by €319 million. This decline was primarily
+due to the effects of the coronavirus pandemic, which hit particularly the automotive
+industry hard.
+Automotive remained Infineon's highest-selling segment. Based on segment revenue
+of €3,542 million (2019: €3,503 million), the Automotive segment accounted for
+41 percent of Infineon's total revenue. However, despite the first-time consolidation
+of Cypress, the year-over-year revenue increase only amounted to 1 percent. The 2020
+calendar year has seen the sharpest slump in automobile production ever recorded.
+Nevertheless, the two megatrends - electro-mobility as well as automated driving
+and driver assistance systems continued to determine the increasing average value
+of semiconductor content per vehicle, cushioning the impact of decline in demand.
+Selling, general and administrative expenses
+Management Board and
+Supervisory Board
+35%
+2,769
+37%
+3,174
+Greater China¹
+15%
+1,187
+15%
+1,291
+Asia-Pacific (excluding Japan, Greater China)
+15%
+12%
+1,056
+therein: Germany
+30%
+2020
+2,430
+27%
+2,322
+2019
+Infineon Technologies | Annual Report 2020
+therein: Mainland China, Hong Kong
+2,472
+1,169
+2,159
+Consolidated Financial Statements
+Further information
+29%
+Business focus and strategy
+Q = < 97 >
+Supported by the contribution from Cypress, the Power & Sensor Systems segment
+achieved revenue of €2,650 million (2019: €2,445 million), corresponding to a growth
+rate of 8 percent. The expansion of data centers and 5G mobile phone infrastructure
+continued during the period under report, also benefiting Infineon.
+Revenue generated by the Connected Secure Systems segment rose by almost
+50 percent to €953 million (2019: €642 million) on the back of the Cypress acquisition.
+However, based on Infineons' previous scope of business, revenue fell.
+For further details on the performance of the various segments see the chapter
+"The segments". p. 53 ff.
+Positive impact of currency development on revenue growth
+The majority of revenue in the 2020 fiscal year was generated in foreign currencies,
+with revenue denominated in US dollars accounting for the largest share. The average
+euro/US dollar exchange rate changed from around 1.13 in the previous fiscal year
+to 1.12 in the 2020 fiscal year, giving rise to positive currency effects.
+Revenue generated by the Industrial Power Control segment totaled €1,406 million
+and was therefore at a similar level to the previous year (2019: €1,418 million). The
+target markets addressed by this segment were affected in different ways by the
+coronavirus pandemic and it fared relatively well in the crisis in total. In particular,
+renewable energy-related business developed positively, whereas revenue generated
+in the areas of electric drives, traction systems and household appliances declined.
+9%
+27%
+Japan
+765
+Regional distribution of revenue largely unchanged compared to
+previous fiscal year
+593
+Combined Management Report
+Group performance
+Review of results of operations
+7%
+1,015
+12%
+€ in millions, except percentages
+Europe, Middle East, Africa
+814
+Adjusted net income from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+(3)
+(35)
+(30)
+(126)
+27
+49
+32
+27
+1
+1,041
+889
+114
+540
+11
+14
+20
+(11)
+337
+(35)
+889
+372
+2019
+Weighted-average number of shares outstanding (in million) - diluted
+Adjusted earnings per share (in euro) - diluted²
+(1)
+1,266
+2 The calculation of the adjusted earnings per share is based on unrounded figures.
+0.64
+3,450
+2,213
+56%
+8,330
+2,735
+205%
+11,780
+4,948
+138%
+10,219
+8,633
+18%
+62%
+Current liabilities
+Total liabilities
+Total equity
+Statement of Financial Position ratios:
+Return on assets¹
+1.7%
+6.4%
+Equity ratio 2
+46.5%
+63.6%
+Return on equity 3
+3.6%
+10.1%
+Non-current liabilities
+1,165
+13,581
+6,088
+0.89
+Acquisition-related expenses within financial result
+Tax effects on adjustments
+Revaluation of deferred tax assets resulting from
+the annually updated earnings forecast
+Infineon Technologies | Annual Report 2020
+1 Including the cumulative tax effects.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Consolidated Financial Statements
+Further information
+Q = < 101 >
+Review of financial condition
+143%
+Review of financial condition
+Current assets
+Non-current assets
+Total assets
+30 Septem-
+30 Septem-
+ber 2020
+ber 2019
+Change
+year-on-year
+7,179
+7,493
+(4%)
+14,820
+€ in millions, except percentages
+21,999
+Further information
+Acquisition-related depreciation/amortization and other expenses
+Losses (gains) on sales of businesses, or interests in subsidiaries, net
+Other income and expense, net
+The following forecasts are based on current business developments and Infineon's
+internal forecasts.
+Explanatory comments to the outlook for the 2021 fiscal year
+At €1.1 billion, investments were below both the original outlook figure of around
+€1.3 billion (without Cypress) and below the figure forecasted at the beginning of
+August 2020 (including Cypress), which had been scaled down in a number of steps
+to around €1.2 billion.
+Excluding Cypress, the Return on Capital Employed (ROCE) was forecasted to remain
+at a similar level to the 2019 fiscal year. Including Cypress it was expected to decrease
+sharply. This outlook was not subsequently adjusted during the 2020 fiscal year. The
+actual ROCE for the 2020 fiscal year was 3.0 percent, mainly reflecting the effects of
+the purchase price allocation. In line with expectations, it was therefore significantly
+lower than the previous year's figure of 12.2 percent.
+Q = < 108 >
+68.8%
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+of €6,727 million. Excluding cash used in conjunction with the Cypress acquisition,
+free cash flow was a positive amount of €911 million.
+Free cash flow was originally expected to be in the range of €500 million to €700 million,
+excluding Cypress. Including the payment of the purchase price and other costs in
+connection with the acquisition of Cypress, it was forecasted that free cash flow would
+be clearly negative. In the outlook adjusted in May 2020, it was forecasted that free cash
+flow - excluding cash outflows related to the Cypress acquisition - would be between
+€100 million and €300 million. At the beginning of August, this outlook was adjusted
+to "more than €600 million". In the final analysis, free cash flow was a negative amount
+In conjunction with the adjustment to the revenue outlook, the expected Segment
+Result Margin was also adjusted at the beginning of May. Originally, a Segment Result
+Margin of 16 percent was forecasted (excluding Cypress). Including Cypress, it was
+assumed that the Segment Result Margin would be approximately at the level of the
+2019 fiscal year. At the beginning of May, the outlook was initially reduced to 12 percent
+at the mid-point of the planned range of revenue (including Cypress). The figure was
+then adjusted upward to 13 percent at the beginning of August. In the end, this out-
+look was slightly exceeded, with the Segment Result Margin for the 2020 fiscal year
+coming in at 13.7 percent.
+Comparison of original outlook and actual figures for the 2020 fiscal year
+Revenue growth for the 2020 fiscal year was originally forecasted at 5 percent, plus
+or minus 2 percentage points, (excluding the revenue contribution from Cypress).
+Including Cypress revenue, Infineon predicted a significant increase in Group revenue
+for the 2020 fiscal year. In light of the outbreak of the coronavirus pandemic and
+the fact that its impact could not, at that stage, be reliably assessed, the outlook was
+withdrawn on 26 March 2020 and adjusted to €8.4 billion, plus or minus 5 percent,
+in conjunction with the announcement of the results for the second quarter on 4 May
+2020. This outlook included the contribution from Cypress, as the acquisition had
+been completed in the meantime. In its announcement of the results for the third
+quarter at the beginning of August, Infineon put a more precise figure of €8.5 billion on
+its expected revenue for the 2020 fiscal year. The actual amount of revenue generated
+was €8,567 million.
+2 The cash inflows from the capital increase implemented in June 2019 are not included and without consideration of Cypress.
+1 In the ad hoc announcement of 26 March 2020, the original forecast for the 2020 fiscal year was withdrawn. The adjusted forecast was
+published with the announcement of the results for the second quarter of 2020 and concretized in the course of the announcement
+of the results for the third quarter. The forecast presented here corresponds to the forecast last concretized in the third quarter of the
+previous fiscal year.
+In the range of
+€2.9 to €3.6 billion and
+therefore within the
+target range of €1 billion
+plus at least 10% of revenue
+and €1.5 billion
+Between €1.4 billion
+Revenue increase to
+around €10.5 billion
+(plus or minus 5 percent)
+Assumed euro/US dollar exchange rate
+As a globally operating organization, Infineon generates revenue not only in euros,
+but also in foreign currencies, predominantly US dollars. It also incurs expenses in
+US dollars and, to some extent, in currencies correlated to the US dollar, such as
+the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of
+non-euro-denominated revenue and expenses does not entirely balance out. For this
+reason, fluctuations in exchange rates, particularly between the euro and the US dollar,
+influence the amounts reported for revenue and earnings. A stronger US dollar against
+the euro has a positive effect, whereas a weaker US dollar against the euro has an
+adverse effect on revenue and earnings. Excluding the effect of currency hedging
+instruments, the impact of a deviation of 1 cent in the actual exchange rate of the
+US dollar against the euro compared to the forecast rate would amount to a change
+in Segment Result of approximately €4 million per quarter or approximately €16 mil-
+lion per fiscal year compared to the forecast value. These figures are calculated on
+the assumption that the exchange rates of currencies correlated with the US dollar
+- in which costs arise for Infineon - change in line with the euro/US dollar exchange
+rate. In terms of revenue, the impact of exchange rates is limited primarily to the
+euro/US dollar rate, where a deviation of 1 cent in the actual exchange rate compared
+to the forecast rate would continue to have an impact on revenue of approximately
+€13 million per quarter or approximately €50 million per fiscal year. Planning for the
+2021 fiscal year is based on an assumed average exchange rate of US$1.15 against
+the euro.
+Growth prospects for the global economy and the semiconductor market
+The world economy grew by 2.4 percent in the 2019 calendar year. For the 2020
+calendar year, in October 2019 experts at the International Monetary Fund (IMF) had
+forecasted that the growth rate would rise slightly to 2.7 percent. In light of the corona-
+virus pandemic and its negative consequences for the world economy, however,
+the IMF has revised its forecast and now expects the world economy to contract by
+4.7 percent in the 2020 calendar year. For the 2021 calendar year, the experts predict
+that growth will resume and pick up by 4.8 percent. The assumption of economic
+recovery in the 2021 calendar is subject in particular to uncertainties surrounding
+the progression of the coronavirus pandemic, but also to various unresolved geo-
+political conflicts.
+Infineon Technologies | Annual Report 2020
+In the 2020 fiscal year, investments totaled €1,099 million, comprising €915 million
+for property, plant and equipment and €184 million for capitalized development
+costs and other intangible assets. In the 2021 fiscal year, investments in capitalized
+development costs and other intangible assets are expected to be slightly higher than
+in the year under report.
+Investments (defined by Infineon as the sum of investments in property, plant and
+equipment, and other intangible assets including capitalized development costs) are
+expected to total between €1.4 billion and €1.5 billion in the 2021 fiscal year. About
+one quarter of this amount will be attributable to buildings for manufacturing pur-
+poses, including their infrastructure as well as office buildings, in order to create the
+conditions to profit from the next market upturn and make full use of structural growth
+potential. In the 2021 fiscal year, investments planned for frontend manufacturing
+will address structural adjustments as well as quality and innovation issues. In addition,
+300-millimeter capacities will be further expanded in order to continue meeting the
+expected growth in demand from our customers in the medium term. The largest
+single project remains the construction of the cleanroom for the new 300-millimeter
+manufacturing facility in Villach (Austria). Depending on the macroeconomic situa-
+tion, manufacturing at the facility is currently expected to start towards the end of
+the 2021 calendar year. Investments in structural measures and capacity expansions
+for backend facilities will be significantly lower than the amount being invested in
+frontend facilities.
+Investments and depreciation/amortization
+holders of such bonds; therefore the timing of redemptions cannot be influenced
+by Infineon. The upper limit for gross financial debt has been set at a maximum of
+twice the level of operating income before interest, tax, depreciation and amortization
+(EBITDA). The acquisition of Cypress has caused Infineon to exceed its gross debt
+target, but only to an extent compatible with maintaining its investment-grade rating.
+Infineon's medium-term target after the acquisition is to reduce financial debt to, or
+below, the maximum target level.
+The gross cash position is expected to finish the 2021 fiscal year at a level between
+€2.9 billion and €3.6 billion. This excludes potential further pre-payments of term
+loans incurred for the acquisition of Cypress. The redemption of convertible bonds
+that were originally issued by Cypress depends on conversions initiated by the
+Gross cash position
+Return on Capital Employed (ROCE) decreased in the 2020 fiscal year to 3.0 percent
+mainly due to effects of the purchase price allocation after the acquisition of Cypress.
+For the 2021 fiscal year it is forecast the ROCE to be at around 6 percent.
+ROCE
+Infineon expects to achieve free cash flow of more than €700 in the 2021 fiscal year.
+Around 6%
+Free cash flow from continuing operations
+Segment Result Margin of around 16.5 percent expected
+Revenue growth to around €10.5 billion, plus or minus 5 percent
+Based on forecasts for the world economy and the semiconductor market segments
+relevant for Infineon, as described above, and an assumed average exchange rate
+of US$1.15 to the euro, the Group forecasts revenue to reach around €10.5 billion,
+plus or minus 5 percent, for the 2021 fiscal year. The forecast includes Cypress figures
+for the first time for a full fiscal year. At the mid-point of the guided revenue range,
+year-on-year revenue growth would then amount to around €2 billion. The Automotive
+segment is expected to contribute more than 50 percent to this revenue growth. The
+Power & Sensor Systems and Connected Secure Systems segments are forecast to
+contribute the remaining part of the additional revenue growth with an equal share
+each. Industrial Power Control revenue is expected to increase slightly.
+Q = < 109 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Despite the global economic downturn, market analysts at Omdia expect the Infineon
+Reference Market (defined as the semiconductor market excluding DRAM and NAND
+flash memory chips and microprocessors) to develop relatively robustly and grow
+by 2.5 percent in US dollar terms in the 2020 calendar year, following a decline of
+2.2 percent in the 2019 calendar year. Demand for semiconductors was positively
+impacted by the increase in data traffic and data volume, driven by the trend towards
+working from home and holding video conferences instead of taking business trips.
+This has resulted in growing demand for data and telecommunications servers as
+well as for computers and other electronic equipment. It has also contributed to the
+accelerated expansion of 5G networks. Based on the predicted recovery of the world
+economy, market analysts expect growth in the semiconductor market to accelerate
+to 5.4 percent in the course of the 2021 calendar year.
+Based on the forecast changes in revenue described above, in the 2021 fiscal year the
+Segment Result Margin is expected to come in at around 16.5 percent at the mid-point
+of the planned range for revenue growth.
+2020
+Around 16.5%
+(at a revenue level of
+€10.5 billion)
+3,227
+€1 billion
++26%
+Principal performance
+indicators
+Actuals
+FY 2020
+FY 2020¹
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Consolidated Financial Statements
+Further information
+Q =
+< 100 >
+Review of results of operations
+Net income and earnings per share down on previous year
+After deducting income taxes and the result from discontinued operations, Infineon
+recorded net income of €368 million for the 2020 fiscal year (2019: €870 million).
+The lower net income resulted in a corresponding decrease in earnings per share.
+Both basic and diluted earnings per share for the 2020 fiscal year amounted to €0.26
+(2019: €0.75).
+The calculation of earnings per share in accordance with IFRS is presented in detail
+in note 8 to the Consolidated Financial Statements. □ p. 171
+Decrease in adjusted earnings per share
+Earnings per share in accordance with IFRS are influenced by amounts relating to
+purchase price allocations for acquisitions (in particular Cypress and International
+Rectifier), by one-time expenses recorded within the financial result in conjunction
+with the acquisition of Cypress, and by other exceptional items. To enable better
+comparability of operating performance over time, Infineon computes the adjusted
+earnings per share (diluted). Adjusted net income and adjusted earnings per share
+(diluted) should not be seen as a replacement or superior performance indicator, but
+rather as additional information to the net income and earnings per share (diluted)
+determined in accordance with IFRS.
+Adjusted earnings per share (diluted) decreased from €0.89 to €0.64 per share and
+were calculated as follows:
+€ in millions (unless otherwise stated)
+Income from continuing operations - diluted
+Compensation claims of hybrid capital investors (after taxes)
+Income from continuing operations, attributable to shareholders
+of Infineon Technologies AG - diluted
+Plus/minus:
+Impairments (reversal of impairments) (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Share-based compensation
+Segment Result Margin
+16.4%
+Free cash flow from
+continuing operations
+ROCE
+39
++35%
+3,779
+€1 billion
+Gross cash position
+1,099
+Around €1.2 billion
+1,451
+Investments
+previous year
+compared to
+change in revenue
+In the range of
+€2.1 to €2.7 billion and
+therefore within the
+target range of €1 billion
+plus at least 10% of revenue²
+7%
+6%
+Revenue respectively
+Selected supplementary
+performance indicators
+3.0%
+Significantly declining
+12.2%
+More than €700 million
+(6,727)
+13.7%
+Around 13%
+(at a revenue level of
+€8.5 billion)
+Significantly negative
+Around €8.5 billion
+18.0%
+(2,488)
+12.5%
+1,817
+1,603
+(7,172)
+(2,488)
+(1,372)
+924
+(6,727)
+39
+Free cash flow negatively impacted by acquisition of Cypress
+Free cash flow for the 2020 fiscal year finished at a negative amount of €6,727 million.
+The figure reported was influenced primarily by the net payment (i.e. net of cash and
+cash equivalents acquired) amounting to €7,433 million used to acquire Cypress.
+Excluding cash outflows in conjunction with the Cypress acquisition, free cash flow
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+2019
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q = < 105 >
+was a positive amount of €911 million. Cash outflows in conjunction with the Cypress
+acquisition include the purchase price payment of €8,222 million already made as of
+30 September 2020, less the acquired cash and cash equivalents of €789 million and
+other payments in connection with the acquisition totaling €205 million. Investments
+in property, plant and equipment as well as in other intangible assets and other assets
+resulted in cash outflows totaling €1,099 million.
+Free cash flow in the previous fiscal year was a positive amount of €39 million. Net
+cash provided by operating activities from continuing operations amounting to
+€1,603 million exceeded the combined amount of cash used for investments in property,
+plant and equipment, other intangible assets and other assets (€1,451 million) and
+for the acquisition of Siltectra (€123 million). Payments in connection with the planned
+acquisition of Cypress reduced the free cash flow by €23 million.
+Gross cash position and net cash position
+The following table reconciles the gross cash position and the net cash position
+(i.e. after deduction of financial debt). Since some liquid funds are held in the form
+of financial investments, which, for IFRS purposes, are not considered to be "cash
+and cash equivalents”, Infineon reports on its gross and net cash positions in order
+to provide investors with a better understanding of its overall liquidity situation.
+The gross and net cash positions are determined as follows from the Consolidated
+Statement of Financial Position:
+€ in millions
+Cash and cash equivalents
+Financial investments
+Gross cash position
+Combined Management Report
+Group performance
+Review of liquidity
+Minus:
+2020
+€ in millions
+505
+22
+15,827
+7,599
+ROCE 1/②
+3.0%
+12.2%
+1 The financial result for the 2020 and 2019 fiscal year amounted to negative €148 million and negative €72 million, respectively, and
+included negative €101 million and negative €36 million, respectively, of net interest result.
+Increase in net cash provided by operating activities from continuing operations
+Net cash provided by operating activities from continuing operations in the 2020
+fiscal year amounted to €1,817 million, an increase of €214 million compared to the
+previous fiscal year's figure of €1,603 million. Taking income from continuing operations
+before depreciation, amortization, impairment losses, interest and taxes amounting
+to €1,797 million as the starting point, changes in inventories, trade receivables and
+trade payables totaling €99 million were the main items contributing to the increase in
+net cash provided by operating activities from continuing operations. Cash outflows
+for interest and taxes totaled €180 million. The remaining change resulted from changes
+in provisions, other non-cash result and gains on the disposal of property, plant and
+equipment.
+In the 2019 fiscal year, net cash provided by operating activities from continuing
+operations totaled €1,603 million. Taking income from continuing operations before
+depreciation, amortization, impairment losses, interest and taxes amounting to
+€2,070 million as the starting point, changes in inventories, trade receivables and
+trade payables totaling €277 million were the main items reducing net cash provided
+by operating activities from continuing operations. Cash outflows for interest and
+taxes totaled €167 million.
+Infineon Technologies | Annual Report 2020
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+Management Board and
+Supervisory Board
+Combined Management Report
+Group performance
+Review of liquidity
+Consolidated Financial Statements
+Further information
+Q = < 104 >
+Net cash used in investing activities from continuing operations influenced
+by payment of purchase price for Cypress
+Net cash used in investing activities from continuing operations totaled €7,172 million
+in the 2020 fiscal year. The figure includes the net payment (i.e. net of cash and cash
+equivalents acquired) amounting to €7,433 million used to acquire Cypress. The net
+amount arising from the purchases and sales of financial investments resulted in a
+cash inflow of €1,372 million. In addition, a cash outflow resulted from investments in
+property, plant and equipment amounting to €915 million as well as investments of
+€184 million in other intangible and other assets.
+In the previous fiscal year, net cash used in investing activities from continuing
+operations totaled €2,488 million, including €1,295 million invested in property, plant
+and equipment, €156 million in other intangible and other assets, and €123 million
+used for the acquisition of 100 percent of the shares in Siltectra. A further net amount
+of €924 million was used to purchase financial investments.
+New financial debt, share capital increase and issuance of hybrid bond resulted
+in net cash provided by financing activities from continuing operations
+Net cash provided by financing activities from continuing operations totaled
+€6,274 million in the 2020 fiscal year. The figure includes net cash inflows of €4,443 mil-
+lion relating to new financial debt. In connection with the acquisition of Cypress,
+term loans totaling US$3.3 billion were taken out in April 2020. A part of these loans
+(US$555 million) had already been repaid before the end of the fiscal year under report.
+On 24 June 2020, Infineon also issued non-subordinated, unsecured bonds in four
+tranches with a total nominal value of €2.9 billion under the EMTN program (European
+Medium Term Notes) which was established for this purpose (see note 17 to the Con-
+solidated Financial Statements, □ p. 179 f.). The repayment of financial debt taken over
+from Cypress resulted in a cash outflow of €978 million. Besides this, a share capital
+increase implemented in May 2020 generated a net cash inflow of €1,040 million. The
+issue of a hybrid bond in two tranches in October 2019 resulted in a net cash inflow
+amounting to €1,184 million (see note 21 to the Consolidated Financial Statements,
+p. 188 f.). An offsetting effect resulted from the disbursement of the dividend for the
+2019 fiscal year amounting to €336 million.
+In the 2019 fiscal year, net cash provided by financing activities from continuing oper-
+ations totaled €1,167 million and was mainly influenced by net proceeds from the share
+capital increase implemented in June 2019 amounting to €1,524 million. Offsetting
+was the payment of dividends for the 2018 fiscal year amounting to €305 million.
+Free cash flow
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used
+in operating activities and net cash provided by and/or used in investing activities,
+both from continuing operations, after adjusting for cash flows related to the purchase
+and sale of financial investments. Free cash flow serves as an additional performance
+indicator since Infineon holds part of its liquidity in the form of financial investments.
+This does not mean, however, that the free cash flow calculated in this way is avail-
+able to cover other disbursements, as dividends, debt-servicing obligations and
+other fixed disbursements are not deducted. Free cash flow should not be seen as
+a replacement or superior performance indicator, but rather as an additional useful
+item of information over and above the disclosure of the cash flow reported in the
+Consolidated Statement of Cash Flows, and as a supplementary disclosure to other
+liquidity performance indicators and other performance indicators derived from the
+IFRS figures. Free cash flow only includes amounts from continuing operations and
+is derived as follows from the Consolidated Statement of Cash Flows:
+Business focus and strategy
+Short-term financial debt and current maturities of long-term financial debt
+Capital employed ②
+Short-term financial debt and current portion of long-term financial debt
+Long-term financial debt
+Net cash position
+As a general rule, debt should only constitute a modest proportion of the financing
+mix to ensure that sufficient headroom is available at all times. The key objective
+is to maintain an investment grade rating. Infineon, which is currently rated by S&P
+Global Ratings as “BBB –” with stable outlook, has set itself the target of reducing the
+financial debt taken out in connection with the acquisition of Cypress to a maximum
+of twice the EBITDA over the mid-term. For further information on the nature, maturity,
+currency and interest rate structure of financial debt, see note 17 to the Consolidated
+Financial Statements, p. 179 ff.
+The treasury principles referred to are in place regarding all issues relating to liquidity
+and financing, such as banking policies and strategies, execution of financing agree-
+ments, liquidity and investment management worldwide, currency and interest rate
+risk management and the handling of external and intragroup cash flows.
+In accordance with our treasury principles, we follow a centralized approach in which
+the Group Finance & Treasury department is responsible for all major tasks and
+processes worldwide relating to financing and treasury matters.
+In the context of centralized liquidity management and where permitted by law and
+economically feasible, cash pooling structures are in place for liquidity management
+purposes in order to ensure the best possible allocation of liquidity within the Group
+and reduce external financing requirements. Liquidity accumulated at Group level
+is invested centrally by the Group Finance & Treasury department, based on a conser-
+vative approach to investments, in which preservation of capital is prioritized over
+return maximization. The Group Finance & Treasury department is also responsible for
+managing currency, interest rate and commodity price risks. We employ the following
+derivative financial instruments in our continuous operations for hedging purposes:
+forward foreign currency contracts to reduce exchange rate exposures (to the extent
+foreign currency cash flows are not offset within the Group) and commodity swaps to
+reduce price risks for expected purchases of gold. In order to hedge against most of
+the exchange rate risk associated with the purchase price obligation arising from the
+acquisition of Cypress completed on 16 April 2020, a transaction-dependent euro/US
+dollar foreign currency forward transaction ("Deal Contingent Forward") and a trans-
+action-dependent euro/US dollar foreign currency option transaction ("Deal Contingent
+Option") were concluded in the 2019 fiscal year, which were used and closed out
+upon completion of the acquisition. In addition, transaction-dependent interest rate
+hedges ("Deal Contingent Forward Starting Interest Rate Swaps") in euros and US dollars
+were concluded in the first quarter of the 2020 fiscal year in order to be at least par-
+tially hedged against the risk of rising interest rates in the event of the acquisition
+of Cypress being completed and associated planned refinancing arrangements.
+Some of these hedges were used in connection with the issue of bonds in June 2020.
+Derivative financial instruments are not used for trading or speculation purposes.
+Further information regarding derivative financial instruments and the management
+of financial risks is provided in notes 28 and 29 to the Consolidated Financial State-
+ments. p. 202 ff. and p. 207 ff.
+Furthermore, to the extent permitted by law, all financing activities and credit lines
+worldwide are arranged, structured and managed either directly or indirectly by the
+Group Finance & Treasury department in accordance with stipulated treasury principles.
+A Treasury Committee has been established to consider current financial market
+developments and their potential impact on Infineon, and to coordinate key liquidity,
+hedging, and financing issues. The committee, which meets on a quarterly basis,
+comprises the CFO and representatives from the Finance & Treasury, Accounting and
+Financial Reporting, Controlling, and Tax departments.
+Following the acquisition completion on 16 April 2020, the process was begun to
+integrate Cypress' financing and treasury activities into Infineon's core structures.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Q = < 106 >
+Combined Management Report
+Further information
+Q =
+< 107 >
+Report on outlook, risk and opportunity
+Outlook
+Report on outlook, risk and opportunity
+Outlook
+Actual and target values for performance indicators
+The following table and subsequent comments compare the actual and forecast
+values of Infineon's key performance indicators for the 2020 fiscal year and show the
+outlook for the 2021 fiscal year.
+€ in millions,
+Outlook
+FY 2021
+except percentages
+Consolidated Financial Statements
+Gross financial debt
+Further information
+Combined Management Report
+Group performance
+Review of liquidity
+30 Septem-
+ber 2020
+30 Septem-
+ber 2019
+1,851
+1,021
+1,376
+2,758
+3,779
+505
+22
+6,528
+Consolidated Financial Statements
+1,534
+1,556
+(3,806)
+2,223
+The
+gross cash position as of 30 September 2020 decreased by €552 million to
+€3,227 million. The change related primarily to the payment of the purchase price
+for Cypress and the related financing measures, including the issue of a hybrid bond
+in two tranches in October 2019, the capital increase implemented in May 2020,
+and financial debt raised. Cash used for investments, to pay the dividend for the
+2019 fiscal year and the premature repayment of a part of bank loans from the
+acquisition financing contributed to the decrease in the gross cash position.
+Taking into account the financial resources available to Infineon - including internal
+liquidity on hand, net cash that can be generated, and available credit facilities
+(€69 million; 2019: €8,201 million; see note 17 to the Consolidated Financial State-
+ments, p. 180) - Infineon assumes that it will be able to cover those capital require-
+ments for the 2021 fiscal year that are currently expected. This includes the repay-
+ment of financial debt. Forecasted capital requirements also include other financial
+obligations, such as orders already placed for started or planned investments in
+property, plant and equipment (see note 24 to the Consolidated Financial Statements,
+p. 192). Investments planned for the 2021 fiscal year are discussed in the chapter
+"Outlook". p. 107 ff.
+Infineon is party to a financing agreement that contains a number of customary
+market conditions, including change-of-control clauses and a debt coverage ratio
+stipulation that provides for a specific ratio of debt (adjusted) to earnings (adjusted)
+(see note 22 to the Consolidated Financial Statements, p. 190).
+Principles and structure of Infineon's treasury
+The Infineon treasury's stated objective is to ensure financial flexibility based on
+a solid capital structure. Its primary goal is to ensure that sufficient cash funds are
+available to finance operating activities and planned investments throughout all
+phases of the business cycle. After the acquisition of Cypress, we continue to target
+a gross liquidity level of €1 billion, plus at least 10 percent of revenue.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+7,033
+9.3%
+(2,213)
+Total current liabilities
+C39 Financial debt by currencies
+€ in millions
+2019
+1,556
+55%
+45%
+7,033
+50%
+US dollar
+Euro
+2020
+50%
+Information on the composition and maturities of gross financial debt is provided in
+note 17 to the Consolidated Financial Statements. p. 179 ff.
+Other current liabilities increased by €375 million to €950 million compared to one
+year earlier (30 September 2019: €575 million), whereby a number of items had an
+offsetting effect. On the one hand, a financial liability which had arisen in connection
+with the foreign currency hedging of the acquisition of Cypress (option premium) was
+initially built up further in installments in the 2020 fiscal year and paid upon comple-
+tion of the acquisition on 16 April 2020. This resulted in a decrease in current liabilities
+of €112 million compared with the previous year's reporting date (see note 28 to the
+Consolidated Financial Statements, p. 199). On the other hand, financial liabilities
+The first-time application of the new standard for leases, IFRS 16, resulted in the
+recognition of non-current lease liabilities with a carrying amount of €235 million as
+of 30 September 2020.
+Shareholders' equity up, mainly due to hybrid bond issue
+and share capital increase
+Equity increased by €1,586 million to stand at €10,219 million at the end of the
+reporting period (30 September 2019: €8,633 million). One of the reasons for the
+increase was the issue of a perpetual hybrid bond to refinance the acquisition of
+Cypress. The hybrid bond was issued in two tranches with no fixed maturity date,
+each tranche with a nominal amount of €600 million (see note 21 to the Consolidated
+Financial Statements, ☐ p. 188 f.). In addition, a share capital increase against cash
+contributions upon the partial utilization of Authorized Capital was resolved during
+the 2020 fiscal year, which subsequently resulted in additional share capital and
+additional paid-in capital of €1,062 million (gross proceeds). Net income generated in
+the 2020 fiscal year amounting to €368 million also increased equity. These increases
+in equity were offset in particular by the dividend of €336 million paid for the 2019
+fiscal year as well as negative currency effects of €543 million, which were recognized
+in other reserves.
+The equity ratio as of 30 September 2020, based on total assets amounting to
+€21,999 million, was 46.5 percent (30 September 2019: 63.6 percent based on total
+assets amounting to €13,581 million).
+ROCE pulled down by effects of purchase price allocation
+For the 2020 fiscal year, operating income from continuing operations after tax decreased
+by €452 million to €473 million (2019: €925 million). Operating income fell mainly
+as a consequence of higher idle costs and increased depreciation and amortization
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+amounting to €66 million were recognized for interest rate hedges (negative fair values)
+relating to future refinancing measures. In addition, reimbursement obligations to
+customers increased by €236 million compared to the end of the previous fiscal year
+mainly due to the acquisition of Cypress.
+Consolidated Financial Statements
+Gross financial debt up due to financing of acquisition of Cypress
+Total liabilities stood at €11,780 million as of 30 September 2020 and were thus
+€6,832 million higher than one year earlier (30 September 2019: €4,948 million).
+The change was mainly due to the increase in gross financial debt, which went up by
+€5,477 million to €7,033 million (30 September 2019: €1,556 million). In connection
+with the acquisition of Cypress, term loans totaling US$3.3 billion were taken out in
+April 2020. Part of these loans (US$555 million) had already been repaid before the
+end of the fiscal year under report. On 24 June 2020, Infineon also issued non-sub-
+ordinated, unsecured bonds in four tranches with a total nominal value of €2.9 billion
+under the EMTN program (European Medium Term Notes), which was established
+for this purpose. In addition, current financial debt included €329 million relating to
+convertible bonds taken over in conjunction with the Cypress acquisition.
+Further information
+3.0%
+12.2%
+Debt-to-equity ratio 4
+Inventory intensity
+ROCE 6
+5
+1 Return on assets = Net income/Total assets
+3 Return on equity = Net income/Total equity
+4 Debt-to-equity ratio = (Long-term and short-term financial debt)/Total equity
+5 Inventory intensity = Inventories (net)/Total assets
+6 Calculation see following section about ROCE in this chapter, p. 102 f.
+2 Equity ratio = Total equity/Total assets
+Q = < 102 >
+Current assets influenced by sale of financial investments
+Current assets went down by €314 million to stand at €7,179 million as of 30 Septem-
+ber 2020, compared to €7,493 million one year earlier. Among others, this decrease
+was influenced by financial investments, which fell by €1,382 million to €1,376 million
+(30 September 2019: €2,758 million) due to disposals, whose proceeds were mainly
+used for paying the purchase price for Cypress. For further comments on the change
+in cash and cash equivalents see the chapter "Review of liquidity”. □ p. 103 ff.
+Inventories developed in the opposite direction, increasing by €351 million to €2,052 mil-
+lion (30 September 2019: €1,701 million) due to the contribution from Cypress. Other
+current assets decreased by €240 million to €530 million compared to one year earlier.
+It should be noted that the previous year's figure included €210 million of positive
+fair values relating to hedging transactions concluded to hedge foreign currency risks
+in connection with the planned acquisition of Cypress.
+Increase in non-current assets mainly due to purchase
+price allocation effects
+Non-current assets increased by €8,732 million to stand at €14,820 million at the
+end of the reporting period (30 September 2019: €6,088 million). The change related
+primarily to goodwill, the carrying amount of which rose by €4,988 million compared
+to one year earlier. The purchase price allocation performed in connection with the
+acquisition of Cypress resulted in goodwill of €5,430 million as of the acquisition date
+(see note 3 to the Consolidated Financial Statements, ☐ p. 163). At the same time,
+other intangible assets increased by €2,725 million to €3,621 million, mainly due to
+the effects of the purchase price allocation. Both of these balance sheet line items
+were reduced by negative currency effects as of 30 September 2020.
+Additions to property, plant and equipment comprised capital investments amounting
+to €924 million on the one hand and items acquired in conjunction with the Cypress
+acquisition amounting to €588 million on the other. Investments related primarily
+to the manufacturing sites in Villach (Austria), Cegléd (Hungary) as well as Kulim and
+Melaka (both Malaysia) (see also the chapter "Manufacturing”, p. 84 ff.). On the contrary,
+depreciation and amortization amounted to €863 million.
+A further reason for the increase in non-current assets was the first-time application
+of the new standard for leases, IFRS 16, with effect from 1 October 2019. The first-time
+application of this standard resulted in the recognition of right-of-use assets, the
+carrying amount of which amounted to €286 million as of 30 September 2020.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Review of financial condition
+Consolidated Financial Statements
+and payment of purchase price for Cypress
+(3,450)
+Further information
+Review of financial condition | Review of liquidity
+(83)
+9
+830
+289
+(47)
+(36)
+Gain from investments accounted for using the equity method
+Income tax
+(9)
+(6)
+(52)
+(194)
+280
+Operating income from continuing operations after tax ①
+925
+21,999
+13,581
+Assets
+Plus/minus:
+Cash and cash equivalents
+Financial investments
+(1,851)
+(1,376)
+(1,021)
+(2,758)
+Assets classified as held for sale
+(12)
+473
+Q = < 103 >
+913
+(6)
+as well as expenses for assets measured at fair value, which have been taken over
+in conjunction with the acquisition of Cypress (see the chapter "Review of results of
+operations", p. 98 f.).
+Capital employed also rose by €8,228 million to €15,827 million as of 30 September
+2020 (30 September 2019: €7,599 million), mainly due to the recognition of fair value
+adjustments and goodwill.
+As a result, the Return on Capital Employed (ROCE) fell from 12.2 percent to 3.0 percent.
+ROCE for the 2020 and 2019 fiscal years is calculated as follows:
+€ in millions, except percentage
+Operating income
+Plus/minus:
+Financial result excluding interest result¹
+Review of liquidity
+Cash flow
+€ in millions
+(2)
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Net cash provided by financing activities from continuing operations
+Net change in cash and cash equivalents from discontinued operations
+Cash-relevant change in cash and cash equivalents
+2019
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+581
+1,161
+2020
+2019
+1,817
+1,603
+(7,172)
+6,274
+1,167
+2020
+3,227
+Original outlook
+Actuals
+FY 2019
+The list of risks highlighted below does not purport to be exhaustive. Moreover, the
+order in which they are presented does not imply any attribution of value to the risks
+concerned.
+Risks arising from financing the acquisition
+In connection with the Cypress acquisition, on 3 June 2019 Infineon entered into an
+agreement for a syndicated credit facility with various international banks in two
+currencies with a volume of €6.6 billion bridge facility and US$3.3 billion term loan.
+Following Infineon's capital increase on 18 June 2019 and the issuance of a hybrid
+bond in two tranches on 1 October 2019, a total amount of €2.7 billion out of the
+syndicated loans previously agreed by Infineon were canceled. On completion of the
+acquisition on 16 April 2020, the remaining amounts of €3.9 billion and US$3.3 billion
+were fully drawn down. Further important refinancing measures were then imple-
+mented within two months. Initially, in May 2020, a capital increase with a volume of
+a bit more than €1.0 billion took place as part of an accelerated bookbuilding process,
+whereby the entire planned equity portion of the refinancing of the Cypress takeover
+could be completed. In June 2020, Infineon issued corporate bonds in four tranches
+with a volume of €2.9 billion in total under the newly established EMTN program
+(European Medium Term Notes). With the proceeds from both measures, the bridge
+facility for acquisition financing could be completely replaced. In addition, early partial
+repayment of the term loan with an amount of US$555 million from available liquidity
+took place in September 2020. As of 30 September 2020, term loans totaling just under
+US$2.8 billion with staggered maturities in 2022, 2023 and 2024 years are still out-
+standing under the credit facility agreement.
+The credit facility agreement contains certain obligations, restrictions and covenants
+that are based on customary market conditions and which may limit Infineon's
+operational flexibility.
+Non-achievement of strategic or operational targets and integration-related risks
+The strategic and operational targets we have set with respect to the acquisition and
+integration of Cypress are based on assumptions and estimates that may subsequently
+prove to be incorrect. These include the financial and operational performance of
+Cypress and the synergy and innovation potential of the two companies as well as
+future economic developments and market changes.
+In the event of unexpected integration difficulties, the weaker-than-expected growth
+of Cypress-related business or other unforeseen deviations in business development,
+we could possibly be forced to recognize an impairment loss on non-current assets
+and/or on goodwill arising on the acquisition of Cypress.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q =
+< 119 >
+In particular, the possible loss of key employees could also have a negative impact.
+As a prerequisite for the successful integration and implementation of a joint strategy,
+we need managers and talented employees from both Infineon and Cypress. If, for
+instance, we are unable to retain employees due to potential uncertainties regarding
+jobs, locations or culture, the benefits of integration and the ability to exploit the
+respective strengths of the two companies may be impaired.
+Measures to implement our risk management strategy
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the
+semiconductor sector due to economic and demand fluctuations and the risks
+related to Infineon's operations, financial condition, liquidity and earnings by closely
+monitoring changes in early warning indicators as well as by developing specific
+response strategies appropriate to the current position within the economic cycle.
+This can be done, for instance, by rigorously adjusting capacities and inventory levels
+at an early stage, initiating cost-saving measures and making flexible use of external
+manufacturing capacities at both frontend and backend facilities.
+At an operational level, we have adopted various quality management strategies
+aimed at avoiding quality risks (such as "Zero Defects" and "Six Sigma”) in order to
+prevent or solve problems and to improve our business processes. Our Group-wide
+quality management system has been certified on a worldwide basis in accordance
+with ISO 9001 and ISO/TS 16949 for a number of years and also encompasses supplier
+development. Our processes and initiatives to ensure continuous quality improve-
+ment in corporate procedures are aimed at identifying and eliminating the reasons
+for quality-related problems at an early stage.
+A structured project management system is in place to handle development projects,
+including customer-specific projects. Clear project milestones and verification pro-
+cedures required to be carried out during a project as well as clearly defined limits of
+authority help us identify potential project risks at an early stage and counter these
+risks with specific measures.
+We seek to minimize procurement-related risks through appropriate purchasing
+strategies and techniques, including constant product and cost analysis ("Best Cost
+Country Sourcing" and "Focus-on-Value"). These programs include cross-functional
+teams of experts who are responsible for standardizing purchasing processes with
+respect to materials and technical equipment.
+In response to the general increase in threats to data security and the high degree
+of professionalism meanwhile applied in the area of cybercrime, we have initiated an
+information security program to further improve protection against hacking attacks
+and related risks to our IT systems, networks, products, solutions and services. Infor-
+mation security is achieved primarily with the aid of Infineon's systematically applied
+global Information Security Management System (ISMS), the prime objectives of
+which are to identify and measure all potential IT risks and to ensure that effective
+processes and tools are in place to minimize and avoid risk. The ISMS covers all areas
+of Infineon's business and is certified to the globally recognized ISO/IEC 27001 norm.
+All relevant risk areas are continuously monitored and optimized in conjunction with
+regular internal and external audits.
+We minimize legal risks relating to intellectual property rights and patents by pursuing
+a well-defined patent strategy, including thorough patent research and the selective
+development and registration of Infineon patents as well as precautionary protective
+measures in the form of agreements with major competitors. However, no such
+opportunities exist to safeguard against risks of this nature in the case of companies
+that specialize in exploiting patent rights.
+Due to the size and significance of the Cypress acquisition, the main risks that could
+have a negative impact on Infineon's current or future business, liquidity and share
+price or dividend payments are described below.
+We have established a Group-wide compliance management system with the aim of
+managing compliance-related risks on a systematic, comprehensive and sustainable
+basis. Under this system, major preventive procedures are continuously developed,
+other elements of the system revamped or strengthened, and appropriate responses
+established for possible or actual incidences of non-compliance with internal or
+external regulations. The Compliance Officer reports to the Chief Financial Officer
+and to the Investment, Finance and Audit Committee of the Supervisory Board on
+a quarterly basis.
+Risks arising in connection with the acquisition and integration of
+Cypress (RC: medium)
+In the case of acquisitions or portfolio decisions, there is a risk of non-compliance
+with antitrust regulations due to lack of knowledge or failure to make the people
+involved in such transactions adequately aware of the issues. This could result in high
+levels of cost (e.g. significant time spent by management, assignment of attorneys)
+and fines. Infineon's reputation could also suffer under these circumstances.
+The relatively high level of our holdings of liquid funds (gross cash position) exposes
+us to the potential risk of a default by one or more of the banking partners with
+whom we do business. We mitigate this risk - which could still arise despite various
+state-insured deposit protection mechanisms - by a combination of risk avoidance
+analyses and risk-spreading measures. The failure of these measures could have
+a materially adverse impact on Infineon's financial condition and liquidity situation.
+Further information regarding the management of financial risks is provided in note 29
+to the Consolidated Financial Statements. p. 207 ff.
+Legal and compliance risks
+Qimonda insolvency (RC: medium)
+Due to the insolvency proceedings of Qimonda and the related action of the insolvency
+administrator, we are exposed to potential risks, which are described in detail in
+note 25 to the Consolidated Financial Statements. p. 193 f.
+Provisions are recognized in connection with these matters as of 30 September 2020.
+The provisions reflect the amount of those liabilities that management believes are
+probable and can be estimated with reasonable accuracy at that time. There can be
+no assurance that these provisions will be sufficient to cover all liabilities that may
+be incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Intellectual property rights and patents (RC: medium)
+As with many other companies in the semiconductor industry, from time to time
+allegations are made against us that we have infringed other parties' protected rights.
+Regardless of the prospects of success of such claims, substantial legal defense costs
+can arise.
+Whilst we often benefit from cross-licensing arrangements with major competitors,
+no such opportunities exist to safeguard against risks of this nature in the case of
+companies specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law,
+thus resulting in significant claims for damages or restrictions in selling the products
+concerned. Any such outcome could in turn have an adverse impact on Infineon's
+financial condition, liquidity and earnings.
+Further information regarding litigation and government inquiries is provided in
+note 25 to the Consolidated Financial Statements. p. 192 ff.
+Impact of our global operations (RC: medium)
+Our global business strategy requires the maintenance of R&D locations and manu-
+facturing sites throughout the world. The location of such facilities is determined
+by market entry hurdles, technology and cost factors. Risks could, therefore, arise if
+adverse economic and geopolitical crises were to affect our regional markets and
+if country-specific legislation and regulations were to influence investment activities
+and the ability to trade freely. Differing practices in the way tax, judicial and adminis-
+trative regulations are interpreted could have a negative impact on operations.
+We could also be exposed to the risk of fines, sanctions and reputational damage.
+Asian markets are particularly important to our long-term growth strategy. Our
+operations in China are influenced by a legal system that may be subject to change.
+One example is the fact that local regulations could make it mandatory to enter
+into partnerships with local companies. These circumstances could lead on the one
+hand to Infineon's intellectual property no longer being sufficiently protected and on
+the other to intellectual property developed by Infineon in China not being freely
+transferable to other countries and locations, thus impairing our financial condition
+and earnings performance.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 118 >
+Acquisitions and cooperation arrangements (RC: medium)
+In order to develop or expand our business, we may seek to acquire other businesses
+or enter into various forms of cooperation arrangements. In the case of acquisitions,
+there is a risk that these activities prove to be unsuccessful, particularly regarding the
+integration of people and products in existing business structures. These issues could
+adversely impact our financial condition and earnings performance.
+Tax, fair trade and capital market regulations can all entail additional risks. In order
+to mitigate these risks, we rely upon the advice of both in-house and external experts
+and provide suitable training to our employees.
+Infineon Technologies | Annual Report 2020
+Likelihood of occurrence
+5
+Responsibility for processes and systems relating to Risk and Opportunity Manage-
+ment rests with the Risk Management and Internal Control System (ICS) function
+within the Corporate Finance department and with designated Risk Officers working
+at segment, corporate function and regional levels. Responsibility for the identification,
+measurement, management and reporting of risks and opportunities lies with the
+management of the organizational unit concerned.
+Infineon's centralized risk management system is based on a Group-wide, manage-
+ment-oriented Enterprise Risk Management (ERM) approach, which aims to cover
+all relevant risks and opportunities. The approach is based on the “Enterprise Risk
+Management - Integrated Framework" developed by the Committee of Sponsoring
+Organizations of the Treadway Commission (COSO). The objective of the system is the
+early identification, assessment and management of risks that could have a signifi-
+cant influence on Infineon's ability to achieve its strategic, operational, financial,
+legal and compliance targets. We therefore define risk/opportunity as the occurrence
+of future uncertainties that could result in either a negative or a positive variance
+from plan. We incorporate all relevant organizational units within the Group in this
+analysis, thus covering all segments, significant centralized functions and regions.
+Risk and Opportunity Management System
+Q = < 111 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities
+and supports the implementation of our strategic goals and growth drivers. The
+spread of the coronavirus pandemic led to a significant deterioration in global growth
+and thus to a new significant risk for Infineon. Infineon's risk and opportunity profile
+is still characterized by periods of rapid growth, followed by periods of significant
+market decline, a substantial need for capital investment in order to achieve and sus-
+tain our market position and an extraordinarily rapid pace of technological change.
+Gaining a leading edge through technological innovation also has a legal dimension.
+Against this background, Infineon's risk policy is aimed firstly at taking advantage of
+identified opportunities as quickly as possible in a way most appropriate to growing
+the value of the business, and secondly at pro-actively mitigating risks – particularly
+those capable of posing a threat to Infineon's going-concern status - by adopting
+appropriate countermeasures. Risk management at Infineon is therefore closely linked
+to corporate planning and the implementation of our business strategies. Ultimate
+responsibility for risk management lies with the Infineon Management Board.
+Coordinated risk management and control system elements are in place that enable
+us to pursue our stated risk policy in practice. Alongside the "Risk and Opportunity
+Management System" and the "Internal Control System with respect to Financial
+Reporting Processes” described below, it also includes the related forecasting, manage-
+ment and internal reporting processes as well as the Compliance Management System.
+Risk and opportunity report
+Based on forecasts for the world economy and the semiconductor market in the 2021
+calendar year, Infineon expects revenue increase to around €10.5 billion, plus or minus
+5 percent. At the mid-point of the planned range of revenue growth, the Segment
+Result Margin is expected to be around 16.5 percent. Investments are set to increase
+to an amount between €1.4 billion to €1.5 billion. Depreciation and amortization are
+expected to total between €1.5 billion and €1.6 billion. Free cash flow from continuing
+operations should amount to more than €700. The Return on Capital Employed
+(ROCE) is predicted to reach around 6 percent.
+Overall statement on the expected development
+Depreciation and amortization are predicted to be between €1.5 billion and €1.6 billion.
+Approximately €500 million of that amount relates to depreciation and amortization
+resulting from purchase price allocations, mainly in connection with the acquisition
+of Cypress and, on a smaller scale, the acquisition of International Rectifier.
+Report on outlook, risk and opportunity
+Outlook Risk and opportunity report
+< 110 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+In organizational terms, the Risk and Opportunity Management System is structured
+in a closed-loop, multiple-stage process, which stipulates the manner and criteria
+to be applied to identify, measure, manage and report on risks and opportunities
+and defines how the system is to be monitored as a whole. Major components of the
+system are a quarterly analysis of risks and opportunities, reporting by all consoli-
+dated entities, an analysis of the overall situation at segment, regional and Group
+level, reporting to the Management Board on the risks and opportunities situation as
+well as major management measures undertaken. The Management Board, in turn,
+reports regularly to the Supervisory Board's Investment, Finance and Audit Committee.
+Where necessary, standard processes are supplemented by the ad-hoc reporting of
+any major risks identified between regular reporting dates.
+Risks and opportunities are measured cumulatively over the multi-year planning
+horizon on a net basis, i.e. after taking into account any existing risk mitigation or
+hedging measures. The time periods and the measurement categories used are closely
+linked to our short- and medium-term business planning and entrepreneurial targets.
+All relevant risks and opportunities are assessed uniformly across the Group in quanti-
+tative or qualitative terms, based on the dimensions degree of impact on operations,
+liquidity, earnings, cash flows and reputation on the one hand and likelihood of
+occurrence on the other.
+The scales used to measure these two factors (degree of impact and likelihood of
+occurrence, measured cumulatively over the multi-year planning horizon) and the
+resulting risk assessment matrix are depicted in graph C40.
+4
+3
+2
+1
+1
+2
+3
+4
+5
+5 90% Certain
+4 <90% Probable
+Risk of default by banking partners (RC: medium)
+3 <60% Likely
+1 <10% Unlikely
+Likelihood of occurrence
+5 >€500 million Major
+4 > €250 million Significant
+3 > €100 million Moderate
+2 >€60 million Minor
+1 <€60 million Marginal
+on Segment Result
+Degree of impact
+C40 Risk assessment matrix
+Degree of impact
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows
+and reputation as well as the estimated probability of occurrence, a risk is classified
+as "high", "medium" or "low".
+2 <40% Possible
+High risk
+Moreover, our dependence on various components (such as wafer substrates) and raw
+materials (such as gold and copper) used in manufacturing, as well as our energy
+requirements expose us to substantial price risks. We are also dependent on supplies
+of the so-called rare earths required for selected manufacturing processes in conjunc-
+tion with production process integration. At the time of writing, financial instruments
+are in place to hedge our price risk exposure for gold wire during the 2021 fiscal year,
+Q =
+We systematically assess the effectiveness of the ICS with regard to the corporate
+accounting process. An annual risk analysis is initially performed and the defined
+controls are revised, as and when required. The assessment involves identifying and
+updating significant risks relating to accounting and financial reporting in the relevant
+legal entities and corporate functions. The controls defined for identifying risks are
+documented in accordance with Group-wide guidelines. Regular random tests are
+performed to assess the effectiveness of these controls. The tests constitute the basis
+for assessing the appropriateness of design and the effectiveness of the controls. The
+results are documented and reported in a global IT system. Any deficiencies identified
+are remedied with due consideration given to their potential impact.
+Furthermore, in a Representation Letter, all legal entities, segments and relevant
+corporate functions confirm that all business transactions, all assets and liabilities
+and all income and expense items have been recognized in the financial statements.
+At the end of the annual cycle, the material legal entities review and confirm the
+effectiveness of the ICS with regard to the accounting and financial reporting process.
+The Management Board and the Investment, Finance and Audit Committee of the
+Supervisory Board are regularly informed about any significant control deficiencies
+and the effectiveness of the internal controls.
+Both the Risk and Opportunity Management System and the Internal Control System
+are continuously developed and expanded to ensure compliance with internal and
+external requirements. Regular improvements made to these systems contribute to
+the continuous monitoring of the relevant risk areas including the responsible organ-
+izational units.
+Since the acquisition of Cypress in April 2020, the integration of Cypress' internal
+control procedures into the Infineon ICS has proceeded in the course of amalgamating
+the legal entities and processes.
+Significant risks
+In the following section, we describe risks that could have a significant or materially
+impact on Infineon's operations, liquidity, earnings, cash flows and reputation and
+which have therefore been allocated to the risk classes "high" or "medium". Unless
+otherwise stated, the risks described apply to all segments. Depending on the potential
+degree of impact and the estimated likelihood of occurrence, the risk class is shown
+in parentheses for each risk (e.g. “RC: high”).
+Cypress-related risks have been integrated in the significant risks described and
+only the potential risks arising in connection with the acquisition and integration are
+presented separately in the section “Risks arising in connection with the acquisition
+and integration of Cypress”. p. 118 f.
+Strategic risks
+Risks arising from the coronavirus pandemic (RC: high)
+The rapid spread of the coronavirus pandemic and the associated COVID 19 disease
+has led to a significant deterioration in conditions for the global economy and also
+had a negative impact on Infineon's business and earnings during the fiscal year
+under report. The coronavirus pandemic poses significant risks to supply chains as
+well as to the production and sale of Infineon's products. These risks are caused,
+for instance, by restrictions on the business activities of suppliers, customers, and
+Infineon itself, by restrictions imposed by authorities due to regional, national, or
+international regulations, and by the lack of availability of key employees. For example,
+Infineon experienced the temporary stoppage of production by various authorities
+around the world, which affected not only Infineon's production facilities, but also
+those of its international suppliers and customers. This turn of events has had and
+continues to have an impact on the availability of raw materials and components and
+on Infineon's sales volume, with the situation potentially worsening the longer the
+pandemic lasts.
+Furthermore, the travel restrictions imposed worldwide due to the pandemic could
+delay the integration of Cypress or make it more difficult and costly than Infineon
+had hitherto expected. The coronavirus pandemic as well as any other pandemic,
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 114 >
+epidemic or outbreak of infectious disease could have a materially adverse effect
+on business operations, financial condition, liquidity, cash flows and earnings of
+the Group.
+Unsettled political and economic climate (RC: high)
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn - particularly in the markets we
+serve – may result in us not achieving our forecasted revenue and contribution to
+earnings. Risks can also arise due to political and social changes, in particular when
+those changes occur in countries in which we manufacture and/or sell our products.
+Trade and customs disputes as well as trade restrictions, particularly those imposed
+by the US government, could constrain global trade, thereby dampening global eco-
+nomic growth. Such developments can be triggered by political tensions and/or trade
+conflicts between individual countries or regions, which - as a result of short-term
+and sometimes unforeseeable decisions - could have a significant impact on Infineon's
+revenue and earnings.
+Assessment of effectiveness
+Our dependence on the Chinese market remains unchanged. This risk includes the
+possibility of lower external demand and hence a decline in manufacturing capacity
+utilization levels. There is also a risk that an increased volume of previously imported
+semiconductors will be manufactured in China and that a greater volume of those
+manufactured in China will be exported.
+Q = < 113 >
+Consolidated Financial Statements
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 112 >
+All risks and opportunities reported for Infineon are reviewed for possible correlation
+and cumulative effects, and analyzed using an Infineon-specific categorization model.
+Risk and opportunity analysis and new developments in risk management culture
+are supplemented by interdisciplinary workshops held at segment, corporate and
+regional levels. Important information relevant for Infineon's Risk and Opportunity
+Management System is available to all employees via our intranet system, including
+access to ERM tools and ERM guidelines, containing job descriptions for all functions
+involved in the process as well as all information necessary for reporting purposes.
+Risk and Opportunity Managers are designated at appropriate hierarchical levels
+to manage and monitor identified risks and opportunities. They are responsible
+for formally determining a set of appropriate strategies (in case of risk avoidance,
+mitigation, transfer to other parties or acceptance). Working closely with corporate
+functions and individual managers, the Risk and Opportunity Managers are also
+responsible for defining and monitoring measures aimed at implementing the adopted
+management strategy. In order for our system to be successful, it is essential that
+risks and opportunities are managed and monitored pro-actively and with a great
+deal of commitment.
+Compliance with the ERM approach is monitored by the corporate Risk Management
+and ICS departments using procedures incorporated in business processes. Group
+Internal Audit also performs tests for compliance with legal requirements and Infineon
+guidelines and, where appropriate, rules relating to Risk and Opportunity Manage-
+ment and recommends corrective measures.
+The Supervisory Board's Investment, Finance and Audit Committee oversees the
+effectiveness of the Risk Management System. As part of the statutory audit, the
+external Group auditor also examines our early warning system pursuant to section 91,
+paragraph 2, of the German Stock Corporation Act to ascertain its suitability to detect
+risks that could pose a threat to Infineon's going-concern status and reports thereon
+annually to the Chief Financial Officer (CFO) and the Investment, Finance and Audit
+Committee of the Supervisory Board.
+Internal Control System with respect to the financial reporting process
+The principal focus of the Internal Control System (ICS) is on the financial reporting
+process, with the aim of monitoring the proper maintenance and effectiveness of
+accounting systems and financial reporting. The primary objective of the ICS is to
+minimize the risk of misstatement in Infineon's internal and external reporting and to
+ensure with a reasonable amount of certainty that the Consolidated Financial State-
+ments comply with all relevant regulations. Appropriate controls must therefore be in
+place throughout the organization to ensure compliance. Clear lines of responsibility
+are assigned to each of the processes.
+The ICS is based on the "Internal Control - Integrated Framework" developed by
+the "Committee of Sponsoring Organizations of the Treadway Commission (COSO)"
+and is an integral part of the accounting process in all relevant legal entities and
+corporate functions.
+The system monitors compliance with stated principles and stipulated procedures
+based on preventive and detective controls. Among other things, we regularly
+check that:
+> Group-wide financial reporting, measurement and accounting guidelines are
+continually updated and adhered to,
+› intragroup transactions are fully accounted for and properly eliminated,
+› issues relevant for financial reporting and disclosures in connection with agreements
+entered into are recognized and appropriately presented,
+> processes and controls are in place to explicitly guarantee the completeness and
+correctness of the year-end financial statements and financial reporting,
+> processes are in place for the segregation of duties and for the dual control principle
+in the context of preparing financial statements, as well as for authorization and
+access rules for relevant IT accounting systems.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Further information
+The government debt situation worldwide has worsened considerably as a result
+of the economic stimulus programs launched to mitigate the consequences of the
+coronavirus pandemic. The final terms of the United Kingdom's exit from the European
+Union (Brexit) also remain unclear.
+Regardless of our assessment of potential scenarios and outcomes within this
+complex set of risks, these developments could have an adverse impact on Infineon's
+business operations, financial condition, liquidity, cash flows and earnings.
+Cyclical market and sector development (RC: high)
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 116 >
+based on planned volume requirements. The prices of raw materials and energy have
+recently been subject to significant fluctuation and there is no reason to assume the
+situation will change in the near future. If we are unable to offset cost rises or pass them
+on to customers via price adjustments, it could have an adverse impact on earnings.
+Determining and adjusting manufacturing volumes (RC: medium)
+Frontend and backend manufacturing processes need to be optimally synchronized
+to enable Infineon to develop competitive, high-quality products designed to provide
+customized technological solutions. In view of the rapid pace of technological change
+and increasingly stringent customer requirements, coordination processes need to
+become increasingly sophisticated. Failure to continue making progress in this area
+could result in quality problems, product development or market maturity delays as
+well as higher R&D expenses and hence adversely impact Infineon's earnings.
+One risk that semiconductor companies operating in-house manufacturing facilities
+typically face is that of delays in the ramping-up of production volumes at new
+manufacturing sites or in the transfer of technology. One good example is in the
+Automotive segment, where customers' product approval and testing processes can
+be conducted over an extended period of time, thus influencing our global manu-
+facturing strategy as well as short- and medium-term capacity utilization. Failure
+to anticipate these changes in the manufacturing process in good time could result
+in capacity shortages and hence lower revenue on the one hand as well as costs
+incurred due to underutilization on the other.
+Dependence on individual manufacturing sites (RC: medium)
+Our South East Asian manufacturing sites are of critical importance for our production.
+If, for example, political upheavals or natural disasters in the region were to impede
+our ability to manufacture at these sites on the planned scale or to export products
+manufactured at those sites, it would have an adverse impact on our financial
+condition, liquidity and earnings. Our current manufacturing capacities in this
+region are, to a large extent, not insured against political risks such as expropriation
+of assets. The transfer of manufacturing capacities from these sites would, therefore,
+not only involve a great deal of time and technical effort, Infineon would also be
+required to bear the necessary cost of investment.
+Dependence on individual suppliers (RC: medium)
+We cooperate with numerous suppliers who provide us with materials and services,
+or who manage parts of our supply chain. We do not always have alternative sources
+for some of these suppliers and therefore depend on their ability to deliver products of
+the required quality. The acquired Cypress business relies significantly on independent
+contractors and subcontractors to manufacture its products, which includes wafer
+fabrication, assembly, packaging and testing. Failure of one or more these suppliers
+to meet their obligations to Infineon could have an adverse impact on Infineon's
+operations, liquidity and earnings.
+Need for qualified staff (RC: medium)
+One of the key factors in our success is the availability of sufficient numbers of
+qualified employees at all times. There is, however, a general risk of losing qualified
+staff or not being able to recruit, train and retain adequately qualified staff within
+the business. A lack of technical or management staff could, among other things,
+restrict future growth and hence adversely impact Infineon's liquidity and earnings.
+Financial risks
+Currency risks (RC: medium)
+Our involvement and participation in various regional markets around the world creates
+cash flows in a number of currencies other than the euro – primarily in US dollars.
+A significant share of revenue on the one hand and of operating costs and investments
+on the other is denominated in US dollars and correlated currencies. For the most
+part, Infineon generates a US dollar surplus from these transactions. The integration
+of Cypress-related business will increase this surplus.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Low risk
+The worldwide semiconductor market is dependent on global economic growth and
+hence subject to fluctuations. Our target markets are exposed to the risk of short-term
+market fluctuations. As a result, our own forecasts of future business developments
+are subject to a high degree of uncertainty. It is possible, for instance, that future
+market downturns will follow another pattern, for example an L-shape with longer
+periods of stagnant growth. The absence of market growth or its decline would make
+it considerably more difficult to attain our own growth targets. In the event that we
+are unprepared for market fluctuations, or our response to any such fluctuations
+turns out to be inappropriate, this could have a sustained materially adverse impact
+on Infineon's operations, financial condition, liquidity, cash flows and earnings.
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replace-
+ability of products. Due to the resulting aggressive pricing policies, we may be unable
+to achieve our long-term strategic goals of gaining and/or maintaining market share
+and of product pricing. Moreover, accelerating M&A (Merger and Acquisition) activity
+within the semiconductor industry could result in even tougher competition. Potential
+benefits for competitors in this market include improved cost structures and more
+effective sales channels. Overall, this situation could have an adverse impact on
+Infineon's earnings.
+Operational risks
+Data and IT systems security (RC: high)
+The reliability and security of Infineon's information technology systems are of crucial
+importance. At the same time, the world has seen a general rise in the level of threats
+to data security. This applies to the deployment of IT systems to support business
+processes on the one hand and internal and external communications on the other.
+Despite the array of precautionary measures put in place, any major disruption to
+these systems could result in risks relating to the confidentiality, availability and reli-
+ability of data and systems used in development, manufacturing, selling or adminis-
+tration functions, which, in turn, could have an adverse impact on our reputation,
+competitiveness and operations.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 115 >
+< 117 >
+Potential virus attacks, in particular on IT systems used in manufacturing processes,
+present additional risks that could result in production downtime and supply
+bottlenecks.
+The accelerating pace of events in the markets in which we operate, increased
+demands for flexibility by our customers, and short-term changes in order volumes
+could result in rising costs due to the underutilization of manufacturing capacities,
+higher inventory levels and unfulfilled commitments to suppliers.
+Thus, despite the fact that manufacturing processes and sites have become even
+more flexible, fluctuations in capacity utilization levels and purchase commitments,
+coupled with idle costs at manufacturing sites, nevertheless pose risks related to
+our cost position. These risks could possibly jeopardize our ability to achieve growth
+and profitability targets that are based on cycle averages.
+The situation is exacerbated by the fact that our products are highly dependent on the
+degree of success achieved by individual customers in their own markets. Furthermore,
+there is a risk of losing future business and design wins if we are unable to deliver
+volumes over and above our contractual obligations if called upon by customers
+to do so. In the case of unexpectedly high demand, we therefore face the challenge
+of having to deliver increased volumes that require an appropriate level of upfront
+investment. This could have an adverse impact on our planned investment ratio and,
+ultimately, on Infineon's financial condition and earnings.
+Dependence on the success of specific customers may also grow if they account for
+an above-average share of Infineon's revenue and earnings. This situation could be
+driven by an exceptionally strong performance by a particular customer, resulting,
+for instance, from exceptional demand for its products or from consolidation trends,
+in particular those affecting our first- and second-tier customers.
+Product quality trends (RC: medium)
+Product quality assurance is a key success factor for our business. Potential quality
+risks - for example due to high utilization levels - can affect yield fluctuations and
+hence our ability to supply customers. Shortfalls in product quality can lead to
+product recalls and potential costs related to liability claims. In addition, quality
+risks could also damage Infineon's reputation and thus have an adverse impact
+on future earnings.
+Product development delays (RC: medium)
+The ever-increasing complexity of technologies and products, shorter development
+cycles and higher customer expectations can cause a great deal of tension in the
+field of product development. Buffer times built into processes to compensate for
+potential delays are reduced accordingly. In the event of being unable to execute
+our development plans at the desired quality levels, the outcome could be develop-
+ment delays and increased development costs, which could have an adverse impact
+on Infineon's operations, financial condition, liquidity, cash flows and earnings.
+-
+Manufacturing cost trends – raw material prices, cost of materials
+and process costs (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost
+trends. In this context, measures aimed at optimizing manufacturing costs for raw
+materials and supplies, energy, labor and automation, as well as for bought-in services
+from external business partners, may not be feasible to the extent envisaged.
+Increasingly dynamic markets (RC: high)
+Specified currency risks are hedged Group-wide by means of derivative financial
+instruments. These hedges are based on forecasts of future cash flows, the occurrence
+of which is uncertain. Under these circumstances, exchange rate fluctuations could
+- despite hedging measures - also have an adverse impact on earnings.
+Medium risk
+Other liabilities
+(17)
+437
+355
+287
+338
+Infineon Technologies | Annual Report 2020
+The gross profit decreased by 4.8 percent year-on-year, resulting in a gross margin
+of 29.9 percent for the 2020 fiscal year. Infineon Technologies AG reported a net loss
+of €150 million for the 2020 fiscal year, whereby earnings were negatively impacted
+by non-recurring interest and financial expenses incurred in connection with the
+acquisition of Cypress and, working in the opposite direction, by a rise in the result
+from investments. After transferring a total of €437 million from revenue reserves,
+unappropriated profit amounted to €287 million.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Infineon Technologies AG
+Consolidated Financial Statements
+Further information
+Q = < 125 >
+Net assets and financial position
+Statement of financial position of Infineon Technologies AG in accordance
+with the German Commercial Code (condensed)
+€ in millions
+Intangible assets, property, plant and equipment
+Financial assets
+Non-current assets
+Inventories
+Share capital
+(150)
+(16)
+(3)
+(129)
+Unappropriated profit at the end of year
+2020
+2019
+5,346
+5,483
+(3,745)
+(3,802)
+1,601
+1,681
+(1,091)
+Capital reserves
+(1,069)
+(292)
+(198)
+(178)
+(2)
+(63)
+270
+64
+(141)
+(15)
+(216)
+(370)
+Retained earnings
+778
+6,337
+12,788
+2,601
+2,489
+3,515
+2,553
+3,116
+3,549
+Unappropriated profit
+287
+338
+18,529
+Shareholders' equity
+Special reserve with an equity portion
+1
+Provisions for pensions and similar commitments
+304
+1
+225
+Other provisions
+725
+586
+Provisions
+1,029
+9,519
+Transfers from retained earnings
+Total assets
+2
+30 Septem-
+ber 2020
+30 Septem-
+ber 2019
+692
+12,266
+12,958
+7,115
+1,207
+1,142
+Receivables and other assets
+1
+1,659
+Cash and cash equivalents, marketable securities
+2,587
+3,592
+Current assets
+5,453
+5,620
+Prepaid expenses
+116
+52
+Active difference resulting from offsetting
+886
+Income after taxes/net loss
+Income tax
+Other financial result
+Q =
+< 121 >
+We see numerous opportunities for working with new materials, such as those
+associated with SiC or GaN, to develop more powerful and/or lower-cost products.
+These materials could well have a positive influence on our ability to attain our
+strategic growth and profitability targets.
+Strategic approach "Product to System” (OC: medium)
+With the "Product to System" strategic approach, we seek to identify additional bene-
+fits for our customers on a system level from within our broad portfolio of technologies
+and products. This strategy enables us to exploit further revenue growth potential
+and thereby achieve our growth and margin targets. This approach also enables us to
+reduce customers' development costs and shorten the lead times required to bring
+their products to market.
+Support for change in energy policies and consideration
+of climate change issues (OC: medium)
+Population growth and increasing industrialization in all parts of the world are
+resulting in an ever-greater global demand for energy. Electric power is becoming
+the most important energy carrier of the 21st century and renewables are playing
+a key role in reducing carbon emissions. The long-term objective is to achieve global
+decarbonization by the end of the century, as resolved at the Climate Change Con-
+ference held in Paris (France) in December 2015. As part of its Green Deal concept, the
+European Union is planning to become climate-neutral by 2050.
+Infineon's semiconductors enable electric power to be generated from renewable
+energy sources. They offer efficiency gains at all stages of the energy industry's value-
+added chain, whether in generation, transmission, or above all in the use of electric
+power. They form the basis for the intelligent and efficient use of electric power, for
+instance in industrial applications, power supplies for computers, consumer electronics
+and vehicles.
+Digitalization (OC: medium)
+Further information
+The trend towards digitalization offers substantial business potential for Infineon.
+This is partially reflected in the optimization of internal processes, for example for
+our interconnected manufacturing capabilities on a global scale. At the same time,
+our portfolio of sensors, microcontrollers, power semiconductors, security controllers
+and specific software puts us in an excellent position to exploit growing market
+potential. Our "Product to System" strategic approach makes us ideally placed to
+penetrate and develop the markets involved. Good examples already visible today
+include automated driving, voice and gesture control for devices and machines, the
+advancing development of the loT and "big data".
+The availability of additional capacities, combined with the pro-active strategic
+and operational planning of internal and external resources, enable us to meet rising
+demand from both existing and new customers in the event of a market upturn.
+In the 2020 fiscal year, we benefited from our strategy of differentiating in-house
+production and were able to meet the strong demand for MOSFETs for data centers
+and for 5G mobile communications infrastructure as well as for MEMS microphones
+for ear buds at short notice.
+Market access and activities in China (OC: medium)
+Infineon generates more revenue in China than in any other country. Accordingly,
+developments and growth opportunities in China are of the utmost importance to
+the Group and relate to the following markets that we serve:
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q =
+Ability to meet supply requirements with available capacities (OC: medium)
+Our in-house manufacturing capacities, together with those of our external partners,
+provide us with sufficient flexibility to meet demand. In particular, the further
+expansion of 300-millimeter manufacturing in Dresden (Germany), the second
+manufacturing module in Kulim (Malaysia) and the construction of a second, fully
+automated 300-millimeter factory at the Villach site (Austria) will help meet growing
+demand for power semiconductors.
+< 122 >
+Consolidated Financial Statements
+Business focus and strategy
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q =
+< 120 >
+In certain cases, insurance policies have been taken out to protect against potential
+claims and liability risks, with the aim of avoiding or at least minimizing any adverse
+impact on Infineon's financial condition and liquidity.
+Overall statement by Group management on the risk situation
+The overall risk assessment is based on a consolidated view of all significant individual
+risks. The overall risk situation is essentially unchanged from the previous year.
+We are not currently aware of any individual risks capable of jeopardizing Infineon's
+going-concern status.
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Opportunities
+The main potential opportunities arising in connection with the acquisition of Cypress
+are outlined below at "Opportunities arising in connection with the acquisition and
+integration of Cypress".
+Opportunities arising in connection with the acquisition and
+integration of Cypress (OC: medium)
+The products and technologies of Infineon and Cypress complement each other
+excellently and set standards in their respective fields. In addition to our current range
+of power semiconductors, sensors and microcontrollers for automotive and security
+applications, we will be able to offer connectivity, multi-purpose microcontrollers
+for industrial and IoT applications, together with software, as well as memories for
+specialty applications ("grow in scope”).
+The resulting comprehensive portfolio enables Infineon to offer the complete system
+solutions that are needed to link the real with the digital world. The key to success
+is ensuring secure connectivity for energy-efficient devices. Advances in functional
+integration mean that a whole host of relevant applications is currently in an early
+phase of growth.
+We are pushing ahead with our "Product to System" strategy in order to strengthen
+and expand core business by growing in both related and new fields. To cite two
+examples, firstly, the combination of Infineon's security expertise with Cypress's
+connectivity know-how will accelerate entry into new loT applications in the industrial
+segment. Secondly, in the field of automotive semiconductors, the expanded port-
+folio of microcontrollers and NOR flash memories offers great potential, especially
+in light of their growing importance for driver assistance systems and new electronic
+architectures in vehicles.
+Quite apart from their product portfolios, the two companies also complement each
+other in further aspects. We also see an excellent match in terms of geographical
+focus and sales channels, with Infineon gaining wider market access through Cypress,
+particularly in Japan, as well as via distributors. Infineon will also be adding to its
+R&D presence in Silicon Valley. Due to its product portfolio, the manufacturing strategy
+of Cypress is focused to a far greater extent on contract manufacturing. The combi-
+nation of the two companies will help our business diversify, make it more robust and
+enable us to generate additional cost synergies.
+New technologies and materials (OC: medium)
+We are constantly striving to develop new technologies, products and solutions and
+to improve on existing ones, both separately and in collaboration with customers. We
+therefore continually invest in research and development relating to the use of new
+technologies and materials. Those in current use may well lose their predominance
+in the foreseeable future, such as Si, which is reaching its physical limits in some
+applications.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+The principal opportunities are described in the following section. The list is not
+exhaustive and represents only a cross-section of the opportunities available. Our
+assessment of these opportunities is subject to continuous change, reflecting the
+fact that our business, our markets and the technologies we deploy are continuously
+subject to new developments, bringing with them fresh opportunities, causing others
+to become less relevant or otherwise changing the significance of an opportunity
+from our perspective. Depending on the potential degree of impact and the estimated
+probability of occurrence, each of these opportunities is assigned to an "opportunity
+class" (OC) in the same way that risks are allocated to a risk class. These classifications
+are shown in parentheses (e.g. "OC: medium”).
+811
+Vehicle production in China is still expanding, albeit at a slower pace. At the same
+time, rapid growth in the production of plug-in hybrid and all-electric vehicles has
+turned China into the world's largest market for electro-mobility. For this reason,
+during the 2018 fiscal year Infineon and SAIC Motor (China's largest car manufacturer)
+established SIAPM, a joint venture that offers power semiconductor solutions for
+electric vehicles. Volume production has already commenced. The joint venture
+strengthens our position in China, whilst also offering additional potential for Infineon's
+future global business.
+At the G20 summit held in Hangzhou (People's Republic of China) in September 2016,
+China ratified the Paris Agreement, thereby giving its formal commitment to reducing
+carbon emissions. As a consequence, the importance of expanding renewable energy
+sources in China increased enormously. Our presence in this market, alongside our
+collaboration with leading companies in the wind and solar power sectors, will create
+further opportunities for long-term growth.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Infineon Technologies AG
+Consolidated Financial Statements
+Further information
+Q = < 124 >
+Infineon Technologies AG
+In addition to reporting on Infineon as a whole, in the following section we also provide
+information on the performance of Infineon Technologies AG.
+Infineon Technologies AG is the parent company of Infineon and performs the Group's
+management and corporate functions. It is responsible for key functions such as
+Group-wide Finance and Treasury, Investor Relations, Tax and Accounting, Corporate
+Compliance, Human Resources, strategic and product-oriented research and devel-
+opment activities and also Corporate and Marketing Communication worldwide.
+Furthermore, it manages supply chain processes throughout the Group. Infineon
+Technologies AG also has its own manufacturing facilities, located in Regensburg and
+Warstein (both in Germany).
+Following the acquisition of Cypress, an exciting "Year 1" lies ahead of us. We are
+seeing signs of recovery in some of our target markets, but no broad upturn until now.
+Market conditions remain challenging and reflect a high degree of macroeconomic
+uncertainty. For the 2021 calendar year, the experts at the International Monetary
+Fund (IMF) predict a growth in the global economy of 4.8 percent. The assumption
+of economic recovery in the 2021 calendar is subject, in particular, to uncertainties
+surrounding the progression of the coronavirus pandemic, but also to various still
+unresolved geopolitical conflicts. Market analysts at Omdia expect the Infineon refer-
+ence market (defined as the semiconductor market excluding DRAM and NAND flash
+memory chips and microprocessors) to grow by 5.4 percent in the course of the 2021
+calendar year. Based on these expectations, and an assumed average exchange rate
+of US$1.15 to the euro, we forecast revenue to grow to around €10.5 billion, plus or
+minus 5 percent, for the 2021 fiscal year. At this level of revenue, we expect a Segment
+Result Margin of around 16.5 percent at the mid-point of the planned range for revenue
+growth (see chapter "Outlook", p. 107 ff.).
+Unlike the Consolidated Financial Statements, which are prepared in accordance
+with International Financial Reporting Standards ("IFRS"), Infineon Technologies AG's
+Separate Financial Statements are prepared in accordance with the provisions of
+the German Commercial Code ("HGB"). The complete Separate Financial Statements
+are published separately.
+Statement of income of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+€ in millions
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+Selling expenses
+General and administrative expenses
+Other income (expense), net
+Result from investments, net
+Interest result
+Earnings position
+China is the world's largest market for trains and, with CRRC (an Infineon customer)
+home to the world's largest train manufacturer by far. The continued expansion
+of the country's rail network and the growing volume of international infrastructure
+projects both represent growing business opportunities for Infineon.
+The Return on Capital Employed (ROCE) decreased from 12.2 percent to 3.0 percent
+year-on-year. Operating income fell, mainly as a consequence of higher idle costs and
+increased depreciation and amortization and expenses resulting from the recognition
+of fair value adjustments identified in conjunction with the purchase price allocation
+performed for the acquisition of Cypress. Capital employed also increased, mainly
+due to the recognition of fair value adjustments and goodwill.
+Revenue generated in the 2020 fiscal year totaled €8,567 million, 7 percent up year-
+on-year. The Segment Result totaled €1,170 million for the 2020 fiscal year, 11 percent
+down on the €1,319 million reported one year earlier. The Segment Result Margin for
+the 2020 fiscal year came in at 13.7 percent.
+Our success in positioning Infineon in China as an integral part of Chinese industry
+(and hence of Chinese society) could well open up a multitude of new opportunities
+that is highly likely to have a positive impact on the growth and profitability of our
+business.
+Further growth of semiconductor content in vehicles (OC: medium)
+We expect semiconductor content per vehicle to continue growing. The primary
+driving force behind this trend is the rising demand for electro-mobility, active safety
+features and driver assistance systems.
+We are also convinced that current global carbon emissions targets cannot be achieved
+without further electrification. The need for increased efforts in this field is relevant
+not only for electro-mobility (i.e. hybrid, plug-in hybrid and all-electric vehicles), but
+also for power units in vehicles with combustion engines. IT security within the vehicle
+is also further gaining in importance. Our expertise in the field of security controllers
+makes us extremely well positioned to exploit opportunities in this area.
+Growth from mobile applications (OC: medium)
+The ongoing trend towards increased mobility is also reflected in the unbroken high
+demand for smartphones and tablets. We benefit from this development in two ways.
+Firstly, through the components we supply for mobile devices (MEMS microphones,
+TVS diodes, GPS signal amplifiers, CMOS-RF switches) and secondly, through power
+semiconductors, which form the key components for energy-efficient chargers (high-
+voltage and low-voltage power transistors, driver ICs and control ICs).
+Security applications (OC: medium)
+The trend towards electronic identity documents continues to have a positive
+impact on Connected Secure Systems segment revenue. Paper-based documents
+are increasingly being replaced by chip-based versions, due to the higher level of
+security they offer. New markets are also emerging in conjunction with the lot and
+the Industrial Internet (“Industry 4.0"). The authentication of devices is playing
+an increasingly important role in both of these fields, for which Infineon offers the
+corresponding security chips.
+Liquidity position (OC: medium)
+Our current liquidity position, which we describe in the chapter "Review of liquidity",
+p. 103 ff., enables us to obtain and, if necessary make use of favorable refinancing
+conditions.
+As expected, the acquisition of Cypress had a major impact on free cash flow, causing
+it to deteriorate to a negative amount of €6,727 million. Excluding cash used in con-
+junction with the acquisition of Cypress, however, free cash flow was a positive amount
+of €911 million.
+Infineon Technologies | Annual Report 2020
+Business focus and strategy
+Combined Management Report
+Overall statement on Infineon's financial condition
+Consolidated Financial Statements
+Further information
+Q = < 123 >
+Overall statement on Infineon's financial condition
+The 2020 fiscal year was marked by two significant events: the outbreak of the
+coronavirus pandemic just before the end of the six-month period and the comple-
+tion of the acquisition of Cypress in April 2020.
+The ongoing pandemic has triggered an unprecedented crisis. For the semiconductor
+industry, it came just as the first signs of improved economic conditions were emerging
+after a difficult 2019 fiscal year. Infineon has stood up well as the crisis has unfolded
+and, thanks to its solid underlying strength, has achieved a highly respectable result
+within an extremely challenging environment.
+The acquisition of Cypress, which was completed on 16 April 2020, has also contributed
+to this. Bringing the product portfolios and areas of expertise of Cypress and Infineon
+together opens up a great deal of potential. The combination of microcontrollers,
+sensors, connectivity devices, power semiconductors, specialty application memories
+and security solutions including software as well as a suitable development environ-
+ment for all programmable components has created a comprehensive portfolio for
+IoT applications, for automated driving and for the development of products that
+consume less energy. Moreover, during the second half of the 2020 fiscal year, the
+former Cypress lines of business already made significant contributions in terms of
+securing revenue and profitability as well as generating cash flows for the Group.
+Taking all factors into account, we have successfully weathered the impact of a severe
+economic slump that in many countries has given rise to the worst recession in the
+post-war era. Infineon's business proved to be very resilient thanks to its consistent
+focus on the structural growth drivers in the areas of energy efficiency, mobility,
+security, IoT and "big data”. The success of this strategy is also apparent in the results
+of operations we are able to report.
+Management Board and
+Supervisory Board
+Liabilities to affiliated companies
+4,634
+341
+2,125
+Authorization to issue convertible bonds and/or bonds with warrants
+The Annual General Meeting held on 20 February 2020 authorized the Management
+Board, in the period through 19 February 2025, either once or in partial amounts,
+to issue convertible bonds and/or bonds with warrants (referred to collectively as
+"bonds") of an aggregate nominal amount of up to €4,000,000,000, to guarantee such
+bonds issued by subordinated Group companies of the Company and to grant bond
+creditors and/or bondholders conversion or option rights to up to 130,000,000 no-par-
+value registered Company shares, representing a notional portion of the share capital
+of up to €260,000,000 in accordance with the relevant terms of the bonds. With the
+approval of the Supervisory Board, the Management Board is authorized to exclude
+the right of shareholders to subscribe to the bonds,
+The power of the Management Board to issue shares derives from section 4 of the
+Articles of Association, in conjunction with applicable legal provisions. Further infor-
+mation relating to the Company's existing Authorized and Conditional Capital can
+be found in note 21 to the Consolidated Financial Statements. p. 188
+Powers of the Management Board, in particular with respect to
+the issuing or buying back of shares
+conditional or authorized capital or a capital decrease by means of cancellation of own
+shares. Unless the Articles of Association provide for another majority, section 179,
+paragraph 2, AktG stipulates that resolutions of the Annual General Meeting regarding
+the amendment of the Articles of Association require a majority of at least three
+quarters of the share capital represented. Section 17, paragraph 1, of the Articles of
+Association of Infineon Technologies AG provides in principle for resolutions to be
+passed with a simple majority of the votes cast and, when a capital majority is required,
+with a simple majority of the capital unless a higher majority is required by law or in
+accordance with other stipulations contained in the Articles of Association.
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Combined Management Report
+Q = <128>
+Further information
+Consolidated Financial Statements
+Business focus and strategy
+› if the issue price is not substantially lower than the bonds' theoretical market value
+as determined in accordance with accepted valuation methods, in particular those
+based on financial mathematics. However, this right of exclusion only applies
+insofar as the aggregate value of the shares to be issued to service the conversion
+or option rights established on this basis does not exceed 10 percent of the share
+Management Board and
+Supervisory Board
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of
+Association rests with the Annual General Meeting. However, section 10, paragraph 4,
+of the Articles of Association gives the Supervisory Board the authority to amend the
+Articles of Association insofar as any such amendment relates merely to the wording,
+such as changes in the share capital amount resulting from a capital increase out of
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appoint-
+ment for Management Board members is five years. Re-appointment or an extension
+of the term of office, in each case for a maximum of five years, is permitted (section 84,
+paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association
+and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint
+a chairman and a deputy chairman to the Management Board. The Supervisory Board
+may revoke the appointment of a Management Board member and the Chairman of
+the Management Board for good cause (section 84, paragraph 3, AktG).
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management
+Board of Infineon Technologies AG shall consist of at least two members. The Manage-
+ment Board currently comprises four members. Management Board members are
+appointed and dismissed by the Supervisory Board in accordance with section 84,
+paragraph 1, AktG. As Infineon Technologies AG falls within the scope of the German
+Co-Determination Act (Mitbestimmungsgesetz – “MitbestG"), the appointment or
+dismissal of Management Board members requires a two-thirds majority of the votes
+of the Supervisory Board members (section 31, paragraph 2, MitbestG). If the required
+majority is not achieved at the first ballot, the appointment may be approved on a
+recommendation of the Mediation Committee at a second ballot by a simple majority
+of the votes of the Supervisory Board members (section 31, paragraph 3, MitbestG). If
+the required majority is still not achieved, a third ballot is held in which the Chairman
+of the Supervisory Board has two votes (section 31, paragraph 4, MitbestG). If the
+Management Board does not have the required number of members, in urgent cases,
+the local court ("Amtsgericht" of Munich) makes the necessary appointment upon
+petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Statutory regulations and Articles of Association provisions governing
+the appointment and dismissal of Management Board members and
+amendments to the Articles of Association
+Nature of control over voting rights when employees participate in the
+Company's capital and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise
+their control rights directly in accordance with the applicable laws and the Articles
+of Association, just like other shareholders.
+Shares with special rights which confer control rights
+No shares conferring special control rights have been issued.
+Direct or indirect shareholdings exceeding 10 percent of the voting rights
+Section 33, paragraph 1, WpHG requires each shareholder whose voting rights reach,
+exceed or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the
+voting rights of a listed corporation to notify such corporation and the German Federal
+Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht -
+"BaFin") immediately. As of 30 September 2020, we have not been notified of any
+direct or indirect shareholdings reaching or exceeding 10 percent of the voting rights.
+The shareholdings notified to us as of 30 September 2020 are presented in the Notes to
+the Separate Financial Statements of Infineon Technologies AG under the information
+pursuant to section 160, paragraph 1, No. 8 AktG.
+held by them and their name or company name, their postal and electronic address
+and, where applicable, their registered office and their date of birth. Pursuant to sec-
+tion 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information
+from the party listed in the share register regarding the extent to which shares, to
+which the entry in the share register relates, are actually owned by the registered
+party and, if it does not own the shares, to receive the information necessary for the
+maintenance of the share register in relation to the party for whom the shares are
+held. Section 67, paragraph 2, AktG stipulates that the shares concerned do not confer
+voting rights until such time as the information requested has been supplied in the
+appropriate manner.
+Information pursuant to the German Commercial Code (HGB)
+Corporate Governance
+Infineon Technologies | Annual Report 2020
+capital, either at the time the resolution concerning this authorization was passed
+by the Annual General Meeting, at the time of this authorization becoming effective,
+or at the time it is exercised;
+> in order to exclude fractional amounts resulting from a given subscription ratio
+from the subscription rights of the shareholders to the bonds, or insofar as any such
+action is necessary in order to grant holders of conversion or option rights arising
+from bonds that have already been or will in future be issued by the Company
+or its subordinated Group companies subscription rights to that extent to which
+they would be entitled after exercising their rights, or after the fulfillment of any
+conversion or option obligations;
+> insofar as bonds are issued in return for a capital contribution in kind, provided
+that the value of any such capital contribution in kind is appropriate in relation to
+the market value of the bonds.
+Infineon Technologies | Annual Report 2020
+504
+Significant agreements that are subject to the condition of a change of
+control as a result of a takeover bid and compensation agreements with
+Management Board members or employees in the event of a takeover bid
+Various financing agreements with lending banks and capital market creditors contain
+defined change-of-control clauses that give creditors the right to demand early repay-
+ment. These clauses reflect standard market practice. In addition, one financing
+agreement stipulates that in the event of a change of control, Infineon Technologies AG
+may be required to provide collateral in the form of a guarantee or, optionally, as cash.
+Furthermore, certain patent cross-licensing agreements, development agreements,
+subsidy agreements and approvals, supply contracts, joint venture agreements, and
+license agreements contain customary change-of-control clauses, which, in the event
+of a change of control at Infineon Technologies AG, make the continuation of the
+agreement dependent on the consent of the contracting party, grant special rights
+to the contracting party that may be unfavorable for Infineon, or even entitle the
+contracting party to terminate the agreement.
+The use of own shares, acquired through derivatives, is governed by the same rules
+as those applicable for the direct acquisition of own shares.
+Shareholders have a right to sell their Infineon shares in this connection only insofar
+as the Company is required to accept the shares under the derivative transactions.
+No other right to sell shares shall apply in this connection.
+If own shares are acquired using derivatives in accordance with the requirements
+stipulated in the authorization, any right of the shareholders to conclude such
+derivative transactions with the Company will be excluded in analogous application
+of section 186, paragraph 3, sentence 4, AktG. The shareholders have no right to
+conclude derivative transactions with the Company.
+According to a resolution passed by the Annual General Meeting on 22 February 2018,
+the acquisition of Infineon Technologies AG shares may also be effected using equity
+derivatives. The total number of shares that can be acquired using derivatives may
+not exceed 5 percent of the Company's share capital, determined either at the time
+of this authorization becoming effective or at the time of its exercise through the use
+of the derivatives. The shares acquired through the exercise of this authorization are
+to be counted toward the acquisition threshold for the shares acquired in accordance
+with the authorization to acquire own shares as described above. The authorization
+stipulates other restrictions when derivatives are deployed, including their execution,
+term, servicing and acquisition price.
+Infineon shares acquired or being acquired on the basis of this or an earlier autho-
+rization may
+– if not sold either via the stock exchange or by means of a public offer
+to purchase addressed to all shareholders – be used for all legally admissible pur-
+poses. The shares may also be canceled or offered to third parties in conjunction
+with business combinations or the acquisition of companies, parts of companies or
+participations in companies. Subject to the consent of the Supervisory Board, under
+specified circumstances the shares may also be sold to third parties in return for cash
+payment (including by means other than through the stock exchange or through an
+offer to all shareholders), used to meet the Company's obligations under convertible
+bonds and bonds with warrants and stock option plans, offered for sale or granted
+as a remuneration component to members of representative bodies and employees
+within the Group, and/or used to repay securities-backed loans. The subscription
+right of shareholders is excluded in all of the above cases (except when the shares are
+canceled). In addition, the subscription rights of shareholders are excluded in respect
+of fractional amounts in instances in which the shares are sold through a public offer
+addressed to all shareholders.
+-
+The Management Board decides whether own shares are acquired through the stock
+exchange, by means of a public offer to purchase addressed to all shareholders,
+a public invitation to submit offers for sale, or via a bank or other entity that meets the
+requirements of section 186, paragraph 5 sentence 1, AktG. The authorization includes
+differentiating requirements - in particular with regard to the permissible purchase
+price for each method of acquisition.
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Combined Management Report
+< 129 >
+Q =
+Further information
+Consolidated Financial Statements
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+A resolution passed by the Annual General Meeting on 22 February 2018 authorizes
+Infineon Technologies AG, in the period through 21 February 2023, to acquire its own
+shares, within the statutory boundaries, in an aggregate amount not exceeding
+10 percent of the share capital at the time the resolution was passed or - if the latter
+amount is lower - of the share capital in existence at the time the authorization is
+exercised. The Company may not use the authorization for the purposes of trading in
+its own shares.
+Authorization to acquire own shares
+Subject to the requirements resolved by the shareholders at the Annual General
+Meeting, the Management Board is authorized to determine the further details of the
+bond issue, including terms and conditions.
+Even if the dilution protection regulations are applied, the conversion or option price
+must equal at least 80 percent of the arithmetic mean of the closing prices of the
+Company's share in XETRA trading on the Frankfurt Stock Exchange (or comparable
+successor system). Further details - including the conditions under which the conver-
+sion or option price may be reduced - are set out in the authorization.
+Combined Management Report
+< 127 >
+Q =
+Further information
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+https://www.infineon.com/cms/en/about-infineon/investor/reports-and-presentations/#annual-reports
+For information on own shares, please refer to the comments relating to section 160,
+paragraph 1, no. 2 of the German Stock Corporation Act (AktG) provided in the Separate
+Financial Statements of Infineon Technologies AG.
+The equity ratio compared to the end of the reporting period was 51.4 percent,
+compared to 69.8 percent one year earlier.
+Provisions for pensions and similar commitments increased by a total of €79 million
+due to the reduction in the average market interest rate for the past ten years used
+to measure obligations. The positive development of the fair value of the plan assets
+had an offsetting effect. Other provisions increased by a total of €139 million, relating
+mainly to provisions for unrealized fair value measurement losses on interest rate
+hedging contracts amounting to €66 million (2019: €0 million) and for reimbursement
+obligations to customers amounting to €64 million (2019: €0 million). Liabilities
+rose by €4,938 million from €3,040 million at the end of the previous fiscal year to
+€7,978 million as of 30 September 2020. The increase resulted from the transfer of the
+corporate finance and liquidity management function to the Company following the
+merger with Infineon Technologies Finance GmbH and from two hybrid bonds totaling
+€1,200 million as well as four bonds totaling €2,900 million.
+The increase in equity (€590 million) was mainly attributable to the share capital
+increase amounting to €1,062 million implemented during the 2020 fiscal year. The net
+loss of €150 million and the dividend payment of €336 million for the 2019 fiscal year
+had an offsetting effect.
+year-on-year due to a share capital increase at an affiliated company. By contrast,
+current assets decreased by €167 million. Cash and cash equivalents and marketable
+securities totaled €2,587 million at the end of the reporting period (30 September 2019:
+€3,592 million) and accounted for 47.4 percent of current assets. Receivables and
+other assets increased by a total of €773 million due to the internalization of the
+corporate finance and liquidity management function from Infineon Technologies
+Finance GmbH, Neubiberg (Germany), following that entity's merger with Infineon
+Technologies AG.
+Total assets increased by 44.9 percent from €12,788 million as of 30 September 2019
+to €18,529 million as of 30 September 2020. Non-current assets went up €5,843 million
+7
+1,005
+3,040
+8,929
+Total liabilities and shareholders' equity
+Deferred income
+Liabilities
+12,788
+18,529
+2
+7,978
+878
+1,131
+400
+Dividend
+Trade payables
+Combined Management Report
+Corporate Governance
+Consolidated Financial Statements
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Restrictions on the voting rights of shares may, in particular, arise as a result of the
+regulations of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example,
+pursuant to section 136 AktG shareholders are prohibited from voting under certain
+circumstances and, pursuant to section 71b AktG, Infineon Technologies AG has no
+voting rights from its own shares. Furthermore, non-compliance with the notification
+requirements pursuant to section 33, paragraphs 1 or 2 of the German Securities
+Trading Act (Wertpapierhandelsgesetz - "WpHG") and to section 38, paragraph 1 or
+section 39, paragraph 1, WpHG can, pursuant to section 44 WpHG, have the effect
+that certain rights (including the right to vote) may, at least temporarily, not exist. We
+are not aware of any contractual restrictions on voting rights or the transfer of shares.
+Pursuant to section 67, paragraph 2, AktG, rights and obligations arising from shares
+in relation to Infineon Technologies AG exist only for and from the parties entered in the
+share register. In order to be recorded in the share register of Infineon Technologies AG,
+shareholders are required to submit to Infineon Technologies AG the number of shares
+Restrictions on voting rights or the transfer of shares
+The Company held 5,251,391 of the above-mentioned issued shares as own shares
+as of 30 September 2020 (30 September 2019: 6 million shares). Own shares held by
+the Company on the date of the Annual General Meeting do not carry a vote and are
+not entitled to participate in profit.
+The share capital of Infineon Technologies AG stood at €2,611,842,274 as of 30 Sep-
+tember 2020. This sum is divided into 1,305,921,137 non-par registered shares, each
+of which represents a notional portion of the share capital of €2 per share. Each share
+carries one vote and gives an equal right to the profit of the Company based on the
+profit appropriation resolved by shareholders at the Annual General Meeting.
+Structure of the subscribed capital
+section 289a, paragraph 1, and
+section 315a, paragraph 1, of the
+German Commercial Code (HGB)
+Information pursuant to
+Corporate Governance
+Most transactions within Infineon involving derivative financial instruments are handled
+by Infineon Technologies AG. The comments provided in "Principles and structure
+of Infineon's treasury" within the chapter "Review of liquidity”, □ p. 105 f., regarding the
+nature and scope of transactions involving derivative financial instruments and hedged
+risks also apply to Infineon Technologies AG. Reference is also made to the Notes to
+the Separate Financial Statements of Infineon Technologies AG.
+https://www.infineon.com/cms/en/about-infineon/investor/reports-and-presentations/#annual-reports
+The expected developments, together with the associated material risks and opportu-
+nities of Infineon Technologies AG, are very similar to those of the Group. Moreover, it is
+assumed that the result from investments will play a major role in Infineon Technologies
+AG's earnings performance. As a general rule, Infineon Technologies AG participates
+in the risks of its subsidiaries and equity investments on the basis of the relevant share-
+holding. As the parent company, Infineon Technologies AG is integrated in Infineon's
+overall risk management system and internal control system. For more information on
+this topic, together with the associated material risks and opportunities of Infineon
+Technologies AG, see the chapter “Risk and opportunity report”. □ p. 110 ff.
+Expected developments, together with associated material risks
+and opportunities
+For information regarding Infineon's long-term dividend policy, see "Dividend" in the
+chapter “The Infineon Share”. □ p. 95
+The Company paid a dividend of €0.27 per share (€336 million in total) for the 2019
+fiscal year.
+Infineon Technologies AG reported unappropriated profit of €287 million in its financial
+statements for the 2020 fiscal year. With regards to the 2020 fiscal year, a pro-
+posal will be made to use €287 million out of the unappropriated profit of Infineon
+Technologies AG for paying a dividend of €0.22 per dividend-entitled share. The
+disbursement of the proposed dividend is subject to approval by the shareholders.
+In accordance with the German Stock Corporation Act (Aktiengesetz), the amount
+of the dividend available for distribution to shareholders is based on the level of
+unappropriated profit (Bilanzgewinn) recorded by the ultimate parent, as determined
+in accordance with the German Commercial Code (HGB).
+Information pursuant to the German Commercial Code (HGB)
+Q = < 126 >
+Further information
+Consolidated Financial Statements
+Infineon Technologies AG
+Bonds
+The plan rules applicable to Management Board members are as follows:
+> The corresponding contribution for Dr. Schneider also amounts to 30 percent
+of the relevant agreed basic annual salary. The pension contribution made by the
+Company for the 2020 fiscal year amounted to €247,500.
+343,750
+37,211
+1,277,211
+39,492
+1,279,492
+55,750
+880,750
+23,876
+367,626
+750,000
+70,893
+820,893
+750,000
+69,756
+819,756
+750,000
+34,476
+784,476
+750,000
+35,143
+785,143
+Total fixed compensation
+Variable compensation
+Single-year variable compensation (STI)
+477,950
+491,700
+325,875
+139,688
+295,460
+303,960
+295,460
+303,960
+825,000
+Multi-year variable compensation
+1,240,000
+2019
+Combined Management Report
+Corporate Governance
+Compensation report
+Consolidated Financial Statements
+Further information
+Q = < 138 >
+The total compensation received by individual members of the Management Board
+for the 2020 fiscal year - analyzed by component - is shown in the following table:
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Dr. Reinhard Ploss
+Chief Executive Officer
+2020
+Dr. Sven Schneider
+Chief Financial Officer
+Dr. Helmut Gassel
+Management Board member
+since 1 May 2019
+2019
+2020
+2019
+2020
+Jochen Hanebeck
+Management Board member
+2019
+2020
+1,240,000
+The amounts credited to the pension entitlement accounts of Management Board
+members - in line with the plan rules applied to Infineon employees – are paid out on
+or after reaching the age of 67, provided the service contract arrangements have also
+ended. Upon request, amounts can be paid out at an earlier time if the service contract
+arrangements end on or after reaching the age of 60 or, in the case of commitments
+made from 2012 onwards, on or after reaching the age of 62. If the beneficiaries
+elect to have their pension paid out in monthly installments, the pension amount is
+adjusted automatically each year in accordance with the Infineon pension plan.
+Mid Term Incentive (MTI)
+2018-2020 tranche
+356,108
+3,556,430
+294,037
+1,500,662
+114,134
+621,448
+106,961
+1,553,114
+98,324
+1,587,636
+129,139
+1,538,875
+114,234
+1,568,933
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Consolidated Financial Statements
+Further information
+Q = < 139 >
+Compensation report
+Commitments to Management Board members upon termination
+of their Board activities
+Benefits and pension entitlements in the 2020 fiscal year
+In accordance with the Management Board compensation system in place since 2010,
+the Management Board members have, in the meantime, all received a defined con-
+tribution pension commitment, which is essentially identical to the Infineon pension
+plan applicable to all employees. The Company has accordingly set up a personal
+pension account (basic account) for each beneficiary and makes annual pension con-
+tributions to it. The Company adds annual interest to the balance in the basic account
+using the highest statutory interest rates valid for the insurance industry (guaranteed
+interest rates) until disbursement of the pension begins and may also award surplus
+credits. Ninety-five percent of any income earned over and above the guaranteed
+interest rate is credited to the pension account, either at the date on which disburse-
+ment of the pension begins or, at the latest, when the beneficiary reaches the age of 60.
+The balance of the basic account when disbursement of the pension begins (due to
+age, invalidity or death) – increased by an adjusting amount in the event of invalidity
+or death - constitutes the retirement benefit entitlement and is paid out to the Manage-
+ment Board member or his or her surviving dependents in twelve annual installments,
+or, if so requested by the Management Board member, in eight annual installments,
+as a lump sum or as a life-long pension. In addition to the defined contribution pension
+plan that has been in place for Dr. Ploss since 1 January 2016, a fully vested fixed-
+amount pension entitlement of €210,000 p.a. also exists for his Board activities up
+to 31 December 2015, which will not increase in future.
+If the entitlements of Management Board members (i) have not yet legally vested or
+(ii) have legally vested, but are not protected by the state pension insurance scheme
+(Pensionssicherungsverein), the Company maintains pension reinsurance policies in
+favor of, and pledged to, the Management Board members concerned.
+› Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as
+a result of their previous periods of employment in senior management positions
+with Infineon. Their service contracts specifically state that the amounts made
+available to cover their vested pension entitlements represent a continuation of
+those vested entitlements and are, therefore, not subject to any separate vesting
+arrangements. The Company makes a fixed annual pension contribution on behalf
+of Dr. Gassel and Mr. Hanebeck for each full fiscal year of service on the Board,
+equivalent to 30 percent of the relevant agreed basic annual salary. The Supervisory
+Board is not required to decide each time on the amount to be contributed. The
+pension contributions for the 2020 fiscal year for Dr. Gassel and Mr. Hanebeck
+amounted in each case to €225,000.
+> The defined contribution pension commitment in place for Dr. Ploss is also based
+on a fixed contribution amount of 30 percent of the relevant agreed basic annual
+salary. The pension contribution made by the Company for the 2020 fiscal year
+amounted to €372,000.
+2,928,368
+2017-2019 tranche
+368,802
+Pension expense
+569,760
+533,500
+365,596
+365,596
+329,800
+329,800
+Long Term Incentive (LTI)
+Performance Share Plan
+due in the 2019 fiscal year
+859,370
+due in the 2020 fiscal year
+270,905
+Total variable compensation
+1,282,355
+1,920,830
+325,875
+139,688
+625,260
+669,556
+625,260
+669,556
+Total compensation (DCGK)
+Infineon Technologies | Annual Report 2020
+disclosed as received by Management Board members for the 2020 fiscal year. Share-
+based payments are disclosed as received by Management Board members on the
+basis of the relevant time and value for German tax law purposes. The performance
+shares awarded on 1 October 2016, which were definitively granted to Management
+Board members after the end of the 2020 fiscal year and transferred in the form of real
+Infineon shares (see "Components of the Management Board compensation system"
+in this chapter, ☐ p. 131 ff.) are not disclosed as received until the 2021 fiscal year. The
+amount disclosed as received for the pension expense (i.e. the service cost pursuant
+to IAS 19) corresponds to the amounts granted (see previous table), even though it
+does not constitute an actual receipt in the strict sense of the word.
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+Pension expense
+2019-2021 tranche
+2020-2022 tranche
+Long Term Incentive (LTI)
+Performance Share Plan¹
+Total variable compensation
+Variable compensation
+Single-year variable compensation (STI)
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Total fixed compensation
+in €
+Compensation granted to Management Board members (total compensation and
+compensation components), as well as the minimum and maximum values that can
+be achieved are shown in the following table:
+the pension expense, i.e. the service cost pursuant to IAS 19 (see "Commitments
+to Management Board members upon termination of their Board activities" in this
+chapter, p. 139 f.) is included in total compensation.
+Unlike in the disclosures in accordance with DRS 17, the STI is disclosed in the following
+table at the target value (i.e. the value in the event of 100 percent target achievement).
+In a deviation from DRS 17, the MTI is disclosed at the target value for an "average
+probability scenario” at the grant date. For these purposes, Infineon assumes 100 per-
+cent target achievement on a scale ranging from 0 to 200 percent. In addition,
+The following table shows the value of compensation granted for the 2019 and 2020
+fiscal years, including fringe benefits, as well as the minimum and maximum values
+that can be achieved for the 2020 fiscal year.
+Compensation of the Management Board in the 2020 fiscal year
+in accordance with DCGK 2017 (voluntary disclosure)
+Compensation granted
+In the 2009 fiscal year, the Company entered into a restitution agreement with
+each of the then active Management Board members. Dr. Ploss is the only current
+Management Board member affected by the agreement. These agreements stipulate
+that the Company covers all costs and expenses of any legal, governmental, regula-
+tory and/or parliamentary proceedings and investigations as well as arbitration
+proceedings in which Management Board members are involved in conjunction with
+their activities on behalf of the Company. However, the agreements specifically
+exclude any restitution of costs in conjunction with section 93, paragraph 2, AktG.
+Other awards and benefits
+The Supervisory Board did not award any special bonuses to Management Board
+members during the 2020 fiscal year.
+Special bonuses
+Further details regarding the LTI tranche, which vested on 1 October 2020 and the
+performance shares awarded to Management Board members on 1 March 2020 for
+the 2020 fiscal year are provided in note 23 to the Consolidated Financial Statements.
+p. 191
+Q = < 136 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Compensation report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+2 The expiration of the virtual performance shares in the 2020 fiscal year resulted from the cap. The finally allocated performance shares may not exceed 250 percent of the respective LTI allocation amount.
+3 In view of the fact the annual allocation for the 2019 fiscal year had already taken place before the start of Dr. Schneider's term of office, performance shares for the 2019 fiscal year were allocated together and in accordance with
+the conditions of the allocation for the 2020 fiscal year. 6,214 performance shares were allocated to Dr. Schneider on 1 March 2020 for the months May to September 2019.
+4 The previous year's figure was adjusted for the remuneration of Dominik Asam. For further details, see "Payments to former Management Board members in the 2020 fiscal year". p. 140
+1 The share price of the virtual performance shares exercised on 1st October 2019 amounted to €15.68.
+Dr. Reinhard Ploss
+Chief Executive Officer
+404,736
+2020
+2020 (min.)
+1 The figures of the active Management Board members in the 2020 fiscal year were based on a fair market value per performance share
+amounting to €12.50 (2019: €13.79), which was calculated using a Monte-Carlo simulation taking into account the value-decreasing cap.
+5,171,013
+1,791,038
+368,802
+368,802
+3,024,887
+356,108
+368,802
+3,036,063
+1,050,000
+3,525,000
+145,025
+145,025
+289,287
+1,389,287
+1,390,050
+290,050
+1,100,000
+1,375,000
+550,000
+550,000
+550,000
+550,000
+1,240,000
+37,211
+1,277,211
+1,240,000
+37,211
+1,277,211
+1,240,000
+39,492
+1,279,492
+1,240,000
+37,211
+1,277,211
+2020 (max.)
+2019
+183,288
+451,035
+219,574
+104,328
+53,328
+165,725
+13,258
+40,070
+2020
+Dr. Helmut Gassel
+2019
+Chief Financial Officer from 1 May 2019
+59,802
+21,130
+264,125
+21,130
+2020
+Dr. Sven Schneider³
+188,878
+103,148
+182,577
+Business focus and strategy
+17,282
+17,282
+42,990
+289,287
+20,978
+125,160
+2019
+Management Board member
+2019
+28,082
+11,988
+17,282
+17,282
+42,990
+885,625
+619,917
+44,954
+70,850
+183,288
+181,324
+20194
+2020
+Total
+107,929
+40,070
+165,315
+Infineon Technologies | Annual Report 2020
+11,988
+2019
+Management Board member
+104,328
+53,328
+165,725
+13,258
+40,070
+2020
+Jochen Hanebeck
+107,929
+40,070
+165,315
+28,082
+Management Board and
+Supervisory Board
+in €
+Business focus and strategy
+600,000
+82,862
+165,315
+165,725
+600,000
+82,862
+165,315
+845,315
+845,725
+165,725
+956,250
+2,643,750
+132,062
+132,062
+312,500
+1,014,125
+Total variable compensation
+264,125
+Performance Share Plan²
+Long Term Incentive (LTI)
+680,000
+340,000
+680,000
+340,000
+340,000
+750,000
+340,000
+375,000
+82,862
+2,130,000
+845,725
+845,315
+Accordingly, the fixed compensation and the STI are disclosed as amounts received
+by Management Board members for the relevant fiscal year concerned. The MTI is
+disclosed as received by Management Board members in the fiscal year, in which the
+plan term of the relevant MTI tranche ends. Accordingly - in addition to the fixed
+compensation granted for 2020 and the STI - the MTI tranche for 2018-2020 is also
+Compensation received by Management Board members ("Zufluss")
+Since the compensation granted to Management Board members for the 2020
+fiscal year did not coincide fully with amounts disbursed in a particular fiscal year,
+the following separate table shows the amounts flowing to (i.e. received by)
+Management Board members for the 2020 fiscal year ("Zufluss”).
+1 In view of the fact the annual allocation for the 2019 fiscal year had already taken place before the start of Dr. Schneider's term of office, performance shares for the 2019 fiscal year were allocated together and in accordance with the conditions of the allocation
+for the 2020 fiscal year. 6,214 performance shares were allocated to Dr. Schneider on 1 March 2020 for the months May to September 2019. This was taken into account accordingly when determining the maximum compensation.
+2 The figures of the active Management Board members in the 2020 fiscal year were based on a fair market value per performance share amounting to €12.50 (2019: €13.79), which was calculated using a Monte-Carlo simulation taking into account the value-decreasing cap.
+3,043,615
+996,477
+1,744,692
+129,139
+129,139
+114,234
+1,759,340
+129,139
+3,057,854
+156,250
+106,961
+106,961
+98,324
+1,763,395
+1,773,579
+106,961
+294,037
+3,818,537
+294,037
+1,306,849
+114,134
+794,260
+294,037
+2,188,912
+Total compensation (DCGK)
+Pension expense
+2,130,000
+82,862
+1,010,716
+Chief Executive Officer
+2020-2022 tranche
+Mid Term Incentive (MTI)
+825,000
+825,000
+343,750
+825,000
+Basic annual salary
+Fixed compensation
+2020 (max.)
+2019 2020 (min.)
+Jochen Hanebeck
+Management Board member
+2020
+2020 (max.)
+2019 2020 (min.)
+2020
+2020 (max.)
+Dr. Helmut Gassel
+Management Board member
+2020 (min.)
+2019
+Chief Financial Officer since 1 May 2019
+Dr. Sven Schneider¹
+Compensation report
+2020
+Q = < 137 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Fringe benefits
+55,750
+Total fixed compensation
+880,750
+Multi-year variable compensation
+850,000
+340,000
+340,000
+850,000
+340,000
+340,000
+937,500
+156,250
+375,000
+Single-year variable compensation
+(STI)
+Variable compensation
+2019-2021 tranche
+34,476
+784,476
+750,000
+34,476
+784,476
+750,000
+35,143
+785,143
+750,000
+34,476
+784,476
+750,000
+70,893
+820,893
+70,893
+820,893
+69,756
+819,756
+750,000
+750,000
+750,000
+70,893
+820,893
+55,750
+880,750
+55,750
+880,750
+23,876
+367,626
+750,000
+Infineon Technologies | Annual Report 2020
+290,050
+103,148
+in €
+Total
+Management Board
+Jochen Hanebeck
+Management Board member
+Dr. Helmut Gassel
+Management Board member
+Dr. Sven Schneider
+Chief Financial Officer
+since 1 May 2019
+Chief Executive Officer
+Dr. Reinhard Ploss
+Total compensation to Management Board members pursuant to DRS 17 and benefits to
+individual members of the Management Board - also presented pursuant to DRS 17 -
+are shown in the following table:
+Total compensation
+Management Board compensation in the 2020 fiscal year in accordance
+with German Accounting Standard 17 (DRS 17)
+Q = < 134 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Compensation report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Additionally, the Supervisory Board has the option - always based on its own best
+judgment - to grant a special bonus, among other things for exceptional achieve-
+ments of the Management Board or its individual members. In each case, however,
+the bonus is capped at a maximum of 30 percent of the fixed compensation of the
+Management Board member concerned.
+The Supervisory Board is required to define suitable alternative LTI instruments
+of commensurate value if it is impossible or not desired by the Supervisory Board to
+offer an LTI on the basis of the Performance Share Plan.
+The allocation amount is also reduced proportionately in the case of a so-called
+"good leaver", i.e. a Management Board member leaving office without any fault on
+their part, for instance in the event of reaching the stipulated age limit. The group
+of "good leavers" also includes cases in which a Management Board member fulfills
+their contract properly up to the end of the agreed term and leaves the Company
+only because the contract has not been extended. By contrast, if a Management
+Board member resigns from office (unless the resignation is for good cause for which
+the member is not responsible) or if a contract of a Management Board member is
+terminated by the Company for good cause (a so-called “bad leaver”), all performance
+shares not yet definitively allocated are forfeited when the Management Board
+member leaves office.
+The LTI is reduced proportionately if the length of service of a Management Board
+member in the year in which the LTI is allocated is shorter than the fiscal year to which
+the LTI award relates. This situation usually arises when a Management Board member
+does not join the Board exactly at the beginning of a fiscal year or leave office exactly
+at the end of a fiscal year. The allocation amount is reduced in each case by one
+twelfth for each full month missing for the fiscal year in which the LTI is allocated.
+At the end of the holding period, the Supervisory Board has the right to provide
+a value-equivalent cash settlement to the Management Board member rather than
+actually transferring Infineon shares.
+Management Board members may freely dispose of the shares transferred to them.
+The same also applies to Infineon shares acquired in conjunction with the own-invest-
+ment requirement at the end of the holding period.
+=
+Performance shares are allocated provisionally on the basis of the contractually
+agreed "LTI allocation amount" in euros, agreed upon individually in the contract of
+each Management Board member. The number of performance shares is determined
+by dividing the LTI allocation amount by the average price of the Infineon share (Xetra
+closing price) during the nine months prior to the allocation date. The prerequisites
+for the definitive allocation of the - at that stage still virtual – performance shares
+are (i) that the Management Board member invests 25 percent of their individual LTI
+allocation amount in Infineon shares and (ii) that the holding period of four years
+applicable both for the member's own-investment and for the performance shares has
+come to an end. 50 percent of the performance shares are also performance-related;
+they are only allocated definitively if (iii) the Infineon share outperforms the Phila-
+delphia Semiconductor Index (SOX) between the date of the performance shares'
+provisional allocation and the end of the holding period. If the conditions for the
+definitive allocation of performance shares - either of all or of only those that are not
+performance-related – are met at the end of the holding period, the Management Board
+member acquires a claim against the Company for the transfer of the corresponding
+number of (real) Infineon shares. Performance shares, which do not achieve the
+target, are forfeited. The value of the performance shares definitively granted to the
+Management Board member per LTI tranche at the end of the holding period may not
+exceed 250 percent of the relevant LTI allocation amount; the performance shares
+above this amount lapse (cap).
+Fixed compensation
+-
+Basic annual salary
+2020
+Single-year variable compensation (STI)
+Variable compensation
+3,083,750
+168,267
+3,252,017
+3,565,000
+198,330
+3,763,330
+750,000
+35,143
+785,143
+750,000
+34,476
+784,476
+750,000
+69,756
+819,756
+750,000
+70,893
+820,893
+343,750
+23,876
+367,626
+55,750
+880,750
+39,492
+1,279,492
+37,211
+1,277,211
+825,000
+1,240,000
+1,240,000
+Total fixed compensation
+20193
+2020
+2019
+2020
+2019
+2020
+2019
+2020
+2019
+Fringe benefits
+The (virtual) performance shares are allocated as of 1 March for the fiscal year com-
+menced on 1 October, initially on a provisional basis. The final allocation and transfer
+of (real) Infineon shares takes place four years later.
+With effect from the 2014 fiscal year, the LTI has been awarded in the form of per-
+formance shares. As well as being relevant for Management Board members, the LTI
+also applies to Infineon managers and selected Infineon employees worldwide.
+In their case, however, it is awarded on a voluntary basis and with minor differences
+attributable to specific circumstances.
+Q = < 133 >
+Components of the Management Board compensation system
+The Management Board compensation system - similar to the compensation paid
+to individual Management Board members – is defined and regularly reviewed by the
+full Supervisory Board on the basis of proposals made by the Executive Committee.
+In accordance with applicable legal requirements and the recommendations of the
+DCGK, the compensation paid to Management Board members is intended to reflect
+the typical level and structure of management board compensation at peer com-
+panies, as well as Infineon's economic position and future prospects. The duties,
+responsibilities and performance of each Management Board member are also to be
+considered, as is Infineon's wider pay structure. This includes considering Management
+Board compensation in relation to that of senior management and the workforce as
+a whole, including changes in the level of compensation over time. The compensation
+structure should be oriented towards furthering Infineon's sustainable, long-term
+development. The level of compensation should be set in a way that promotes
+the corporate strategy and the company's long-term development, with the option
+to impose a cap in the event of exceptional developments. Infineon aims to set com-
+pensation at a level that is competitive both nationally and internationally, so as to
+inspire and reward dedication and success in a dynamic environment.
+Management Board compensation
+Compensation system
+< 131 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Compensation report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+This compensation report, which forms part of the Combined Management Report,
+explains the principles of the compensation system for the Management Board and
+Supervisory Board of Infineon Technologies AG as well as the level of compensation paid
+to the individual Management Board members and the Supervisory Board members.
+In addition to statutory requirements, the compensation report is based primarily on
+the German Accounting Standard on Reporting on the Remuneration of Members of
+Governing Bodies (DRS 17). The compensation report also contains the model tables
+recommended by the German Corporate Governance Code (Deutscher Corporate
+Governance Kodex - "DCGK") in the version dated 7 February 2017 (DCGK 2017). This
+information is provided despite the fact that the DCGK was revised with effect from
+20 March 2020 and accordingly, the recommendation to disclose the model tables
+no longer applies. For reasons of consistency and transparency, the model tables are
+to be continued until the changeover to the new compensation report stipulated in
+Section 162 of the German Stock Corporation Act and introduced in accordance with
+the Act Implementing the Second Shareholder Rights Directive (ARUG II). The new
+report becomes binding for Infineon Technologies AG for the first time for the fiscal
+year beginning on 1 October 2021.
+Compensation report
+The Statement on Corporate Governance pursuant to sections 289f and section 315d
+of the German Commercial Code (HGB) including the Corporate Governance Report
+has been made publicly accessible. www.infineon.com/declaration-on-corporate-governance
+Statement on Corporate Governance
+pursuant to sections 289f and 315d
+of the German Commercial Code (HGB)/
+Corporate Governance Report
+The conditions of both the Performance Share Plan (open to participation by Manage-
+ment Board members, managers and other selected employees worldwide) and the
+Restricted Stock Unit Plan (additionally applicable to specified employees of Infineon)
+contain rules that are triggered in the event of a defined change of control. For the
+most part, these rules specify that the vesting periods that are envisaged by the relevant
+plans are aborted in the event of a change of control. The corresponding rule in the
+Performance Share Plan does not, however, apply to Management Board members,
+given that the service contracts take precedence.
+The change-of-control clauses agreed with the Management Board members are
+intended to provide financial security to those members in the event of a change of
+control, with a view to preserving their independence in this situation.
+If a Management Board member leaves their position in connection with a defined
+change of control, that member is currently entitled to continued payment of the
+relevant annual remuneration for the entire remaining contract term. In accordance
+with a special contract termination right granted to Management Board members,
+the period of continued payment is capped at a maximum of 36 months in the event
+that the member resigns, or at a minimum of 24 months and a maximum of 36 months
+in the event of dismissal/termination of contract by Infineon Technologies AG. Further
+details are contained in the Compensation Report. p. 130 ff.
+Information pursuant to the German Commercial Code (HGB)
+Statement on Corporate Governance/Corporate Governance Report
+Compensation report
+Q = < 130 >
+Further information
+Consolidated Financial Statements
+Corporate Governance
+Combined Management Report
+Business focus and strategy
+There were no changes to the Management Board compensation system in the 2020
+fiscal year compared to the previous fiscal year.
+As compensation for their services, all Management Board members receive a target
+annual income, which – based on target achievement of 100 percent - comprises
+approximately 45 percent fixed compensation and approximately 55 percent variable
+compensation components:
+> Fixed compensation: The fixed compensation comprises a contractually agreed
+basic annual salary that is not linked to performance and is paid in twelve equal
+monthly installments.
+› Variable (performance-related) compensation: The variable compensation com-
+prises three components - an annual bonus (short-term incentive), a multiple-year
+bonus (mid-term incentive) and a long-term variable compensation component
+(long-term incentive).
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Compensation report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+The long-term incentive ("LTI”) is intended to reward long-term and, similar to
+the MTI, sustained performance on the part of Management Board members and
+additionally to ensure that their interests are in line with those of the Company's
+shareholders regarding positive share price development. Assuming a 100 percent
+target achievement of the variable compensation components, the LTI constitutes
+approximately 15 percent of target annual income.
+If the term of office commences during a fiscal year, the MTI tranche is reduced on
+a pro rata monthly basis (by 1/36 for each full month missing from the complete MTI
+tranche). Upon leaving Infineon, as a general rule, regulations ensure that Manage-
+ment Board members can only receive an MTI payment for the number of MTI tranches
+corresponding to their term of office, reduced on a pro rata basis as appropriate. MTI
+tranches already started are forfeited if the mandate or service contract of a Manage-
+ment Board member comes to an end before the due date, for instance if a member
+resigns from office (unless the resignation is for good cause for which the member is
+not responsible) or if the contract of the Board member is terminated by the Company
+for good cause.
+The Supervisory Board may increase or reduce the amount to be paid under the
+MTI in each case by up to 50 percent as it sees fit, based on the performance of the
+Management Board as a whole, Infineon's situation and any exceptional factors.
+When exercising its judgment in this respect, the Supervisory Board also takes into
+account the extent to which the three-year target for revenue growth and Segment
+Result (set each year by the Supervisory Board exclusively for this purpose) has been
+achieved and the degree of success achieved in complementing organic growth
+through M&A activities. Unlike the STI, there is no lower limit for the amount by which
+the Supervisory Board can adjust the MTI; for the upper limit, however, the cap
+applies (200 percent).
+three annual target achievement levels. Unlike the STI, the MTI is paid as calculated,
+even if the mean level of target achievement for the three-year period is below
+50 percent. A cap of 200 percent applies, meaning that the maximum amount that
+can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+A new MTI tranche, each with a term of three years, commences every fiscal year.
+The incentive is paid in cash at the end of the three-year term. The amount of the
+payment is determined on the basis of actual ROCE and free cash flow figures during
+each three-year period. For these purposes, the target values for ROCE and free cash
+flow for each individual year of an MTI tranche correspond to the STI targets set each
+year in advance. The level of achievement for both the RoCE target and the free cash
+flow target must reach a threshold of 50 percent in each year of the relevant three-year
+period, otherwise it is deemed - for MTI purposes - to be zero for the year concerned.
+If the thresholds are exceeded, the level of target achievement determined for the
+STI applies for the relevant annual tranche of the MTI. The MTI to be paid at the end
+of the three-year period is determined by calculating the arithmetic mean of the
+The mid-term incentive (“MTI”) is intended to reward sustained performance by the
+Management Board that reflects Infineon's medium-term progress. In combination
+with the long-term incentive, the MTI therefore ensures compliance with the stock
+corporation law requirement that the structure of compensation is "oriented towards
+the company's sustainable development”. Assuming a 100 percent target achievement
+of the variable components, the MTI constitutes approximately 20 percent of target
+annual income.
+477,950
+If the term of office on the Management Board begins or ends during a fiscal year,
+the entitlement to STI is reduced on a pro rata monthly basis (by one twelfth for each
+full month missing from the complete STI tranche). Management Board members
+are not entitled to receive an STI bonus for the fiscal year in which they resign from
+office (unless the resignation is for a reason ("good cause") for which the member
+is not responsible) or if the contract of the member of the Board is terminated by the
+Company for good cause.
+< 132 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Compensation report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+An STI is paid only if the levels of target achievement reach at least the 50 percent
+threshold for both performance indicators (free cash flow, RoCE). If one of the two
+target thresholds is not achieved, no annual bonus is paid for the relevant fiscal year.
+If the thresholds are achieved, the arithmetic mean of the two target achievements
+is calculated and used as the percentage rate to determine the actual STI amount.
+A cap of 250 percent applies, meaning that the maximum amount that can be paid is
+two-and-a-half times the target STI (= 100 percent), regardless of an actual higher
+(ii) At the end of the fiscal year, the actual levels of target achievement and hence
+the amount of the STI payouts, are determined by the Supervisory Board by
+reference to the levels of target achievement for free cash flow and ROCE as
+reported in the audited financial statements.
+(i) At the beginning of each fiscal year, the target functions with respect to the two
+key performance indicators "free cash flow” and “Return on Capital Employed
+(ROCE)" are defined uniformly for all Management Board members. Underpinning
+the consistent approach taken to managing the business, the same target indi-
+cators - supplemented by the Segment Result Margin - are also used as the basis
+for determining the variable compensation components (bonus payments) for
+Infineon managers and employees. The two key performance indicators referred
+to above, which are described in more detail in the chapter "Internal management
+system", are equally weighted for the purposes of measuring the STI. p. 89 ff.
+The short-term incentive ("STI") is intended to reward performance over the
+preceding fiscal year, reflecting Infineon's recent progress. Assuming a 100 percent
+target achievement of the variable compensation components, the STI constitutes
+approximately 20 percent of target annual income. It is set by the Supervisory Board
+in a two-phase process:
+achievement level. In addition, the Supervisory Board may increase or reduce the
+amount to be paid in each case by up to 50 percent as it sees fit, based on the perfor-
+mance of the Management Board as a whole, Infineon's position, and any exceptional
+factors. A lower limit applies in this case such that the amount to be paid cannot be
+less than the amount that would be due given 50 percent target achievement. The
+upper limit for an upward adjustment is the cap of 250 percent.
+491,700
+325,875
+139,688
+Q = < 135 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Compensation report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+or actually paid, for their board activities at Infineon.
+or benefits from third parties in the 2020 and 2019 fiscal years, whether promised
+Management Board members did not to receive any loans from the Company
+3 The previous year's figure was adjusted for the remuneration of Dominik Asam. For further details, see "Payments to former Management Board members in the 2020 fiscal year". p. 140
+2 The figures for the active Management Board members in the 2020 fiscal year were based on a fair market value per performance share amounting to €12.50 (2019: €13.79), which was calculated using a Monte-Carlo simulation model
+taking account of the value-reducing cap. In view of the fact the annual allocation for the 2019 fiscal year had already taken place before the start of Dr. Schneider's term of office, performance shares for the 2019 fiscal year were allocated together
+and in accordance with the conditions of the allocation for the 2020 fiscal year. 6,214 performance shares were allocated to Dr. Schneider on 1 March 2020 for the months May to September 2019.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+6,217,493
+7,329,823
+1,548,842
+1,541,122
+1,583,455
+1,577,539
+553,877
+1,688,000
+2,531,319
+2,523,162
+Total compensation
+619,917
+2,965,476
+Fringe benefits
+In accordance with their service contracts, Management Board members are entitled
+to a chauffeur-driven company car, which may also be used for private purposes.
+Operating and maintenance costs for the company car and chauffeur are borne by
+the Company. Any taxes arising on the fringe benefit related to private usage are
+borne by the individual Management Board members themselves.
+The Company also maintains accident insurance policies for Management Board
+members in the case of death (€3 million) and invalidity (€5 million).
+Other fringe benefits relate mainly to statutory obligations such as the payment
+of inventor's compensation or general benefits and/or discounts available to all
+Infineon employees.
+2020
+Dr. Reinhard Ploss
+in €
+Number
+Number
+Number
+in €
+Number
+Number
+Fiscal year
+Management Board member
+Total expense
+for share-based
+compensation
+3,566,493
+Virtual performance
+shares outstanding
+at the end
+of the fiscal year
+Virtual performance
+shares expired
+Performance Share Plan
+Virtual performance
+shares exercised
+in the fiscal year¹
+in the fiscal year
+Fair value grant date
+Virtual performance
+shares newly granted
+at the beginning
+of the fiscal year
+Virtual performance
+shares outstanding
+The following table shows the number of performance shares awarded to Management
+Board members in the 2020 fiscal year:
+A fair market value of €12.50 (2019: €13.79) per performance share granted in the
+2020 fiscal year was determined, taking account of the 250 percent cap set on the LTI
+allocation amount as well as the performance hurdle.
+As described in the section "Management Board compensation", the contractually
+agreed LTI is granted to Management Board members by the Company in the form of
+performance shares, p. 132 f. The average price of the Infineon share relevant for
+the number of performance shares granted for the 2020 fiscal year was €18.10 (2019:
+€20.02).
+Share-based compensation
+in the fiscal year²
+23,204
+763,699
+763,699
+163,900
+159,317
+2019 2021 tranche
+366,540
+356,291
+101,320
+98,487
+101,320
+98,487
+163,900
+159,317
+326,608
+91,784
+91,784
+143,040
+2018-2020 tranche
+2017-2019 tranche
+Mid Term Incentive (MTI)1
+Multi-year variable compensation
+1,239,308
+1,394,745
+303,960
+295,460
+303,960
+295,460
+108,625
+46,563
+98,487
+101,320
+756,646
+186,251
+807,250
+1,251,827
+1,245,951
+Total variable compensation
+885,625
+165,315
+165,725
+165,315
+165,725
+264,125
+756,646
+289,287
+Performance Share Plan²
+Long Term Incentive (LTI)
+464,916
+98,487
+98,487
+108,625
+159,317
+2020-2022 tranche
+413,103
+464,916
+101,320
+98,487
+290,050
+Total compensation (DCGK)
+91,788
+870
+Management Board member
+2020
+Jochen Hanebeck
+2019
+Management Board member
+368,802
+2,474,927
+5,279,415
+1,393,462
+5,596,191
+393,029
+125,547
+2,653,885
+103,125
+225,000
+2020
+Dr. Helmut Gassel
+2019
+Chief Financial Officer since 1 May 2019
+247,500
+2020
+Dr. Sven Schneider
+210,000
+372,000
+2019
+2019
+Total
+210,000
+210,000
+Supervisory Board compensation
+Revision of the Management Board compensation system
+The Act Implementing the Second Shareholder Rights Directive (ARUG II) came into
+force on 1 January 2020. Furthermore, the Government Commission on the German
+Corporate Governance Code adopted a new version of the DCGK, which became
+effective on 20 March 2020. The Supervisory Board deliberated on this matter at
+length with the support of an external independent compensation expert. Based on
+the preparatory work of its Executive Committee and its recommendation, the Super-
+visory Board intends to resolve on a new Management Board compensation system
+at its meeting on 20 November 2020, which will be submitted to the 2021 Annual
+General Meeting for approval in accordance with Section 120a, German Stock Corpor-
+ation. It is intended to convert the compensation of active Management Board
+members to the new compensation system over the course of the 2021 calendar year.
+The service contracts will then be adjusted accordingly.
+Q = < 141 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Compensation report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Since Mr. Asam was no longer a Management Board member during the 2020 fiscal year,
+his total compensation was no longer included in the total compensation of Manage-
+ment Board members in accordance with German Accounting Standard 17 (DRS 17).
+Mr. Asam received a fixed compensation of €412,500 and fringe benefits of €23,056 in
+the 2019 fiscal year. Additionally a post-employment non-competition clause was
+agreed with Mr. Asam for a period of 18 months. As compensation, Mr. Asam received
+a one-time amount of €150,000 in the 2020 fiscal year.
+Payments to former Management Board members in the 2020 fiscal year
+Total compensation (primarily pension benefits) of €2,211,263.52 (2019: €2,007,096.87)
+was paid to former Management Board members in the 2020 fiscal year. As of 30 Sep-
+tember 2020, accrued pension liabilities for former Management Board members
+amounted to €76,593,563 (2019: €81,187,076).
+The Management Board service contracts otherwise contain no promises of severance
+pay for situations in which contracts are terminated early.
+The service contracts of Management Board members include a change-of-control
+clause, which stipulates the terms that apply when the activities of a Management
+Board member are terminated in the event of a significant change in Infineon's
+ownership structure. A change of control for the purposes of this clause occurs when
+a third party, individually or together with another party, holds at least 50 percent of
+the voting rights in Infineon Technologies AG as defined in section 30 of the German
+Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz –
+“WpÜG”). Management Board members have the right to resign and terminate
+their service contracts within twelve months of the announcement of such a change
+of control and any who choose to do so are entitled to continued payment of their
+annual remuneration through to the end of the originally agreed duration of their
+contract for a maximum of 36 months. If Infineon Technologies AG removes a Manage-
+ment Board member or terminates their contract within twelve months of the
+announcement of a change of control, the Management Board members concerned
+are entitled to continued payment of their annual remuneration through to the end
+of the originally agreed duration of their contract, subject to a minimum period of
+24 months and a maximum period of 36 months.
+Early termination of service contracts
+1 The upper line for Dr. Ploss in the 2020 fiscal year respectively 2019 shows the contribution amount, the present value and the service
+cost relating to the defined contribution pension commitment additionally granted to him with effect from 1 January 2016. The second
+line in the 2020 fiscal year respectively 2019 shows the pension entitlement and the present value of his fixed amount pension plan.
+2 The previous year's figure was adjusted for the remuneration of Dominik Asam. For further details, see "Payments to former Management
+Board members in the 2020 fiscal year". p. 140
+294,037
+114,134
+106,961
+98,324
+129,139
+114,234
+898,939
+682,800
+225,000 2,575,231
+225,000 3,279,840
+225,000 3,219,373
+1,069,500 14,081,096
+925,125 12,909,804
+2020
+20192
+Compensation structure
+210,000
+372,000
+505
+222
+22
+9
+1,376
+2,758
+Trade payables
+1,160
+1,089
+10
+1,196
+1,057
+Current provisions
+18
+436
+383
+11
+Short-term financial debt and current portion
+Chief Executive Officer
+Management Board and
+Supervisory Board
+Combined Management Report
+Corporate Governance
+Compensation report
+2020
+Dr. Reinhard Ploss¹
+Present
+value of
+pension
+and benefit
+entitlement
+for the
+relevant
+fiscal year
+period
+of pension
+Benefit
+amounts
+determined
+Pension
+entitlements
+(annual) as
+of beginning
+Fiscal year
+356,108
+Original
+service cost
+(earned in
+the current
+year)
+in €
+Pension entitlements
+Alongside the annual retirement entitlements and related benefit amounts, the
+following table shows the present values of pension entitlements earned to date and
+the service cost in accordance with IFRS. The present value of pension and benefit
+entitlements is particularly dependent on changes in the discount rate required to be
+applied (30 September 2020: 0.95 percent, 30 September 2019: 0.59 percent).
+Q = < 140 >
+Further information
+Consolidated Financial Statements
+Business focus and strategy
+The compensation due to the Supervisory Board (total compensation) is governed
+by section 11 of the Company's Articles of Association and comprises the following:
+› A fixed compensation (basic remuneration) of €90,000. This amount applies
+to each Supervisory Board member and is payable within one month of the end
+of each fiscal year.
+› Allowances in recognition of the additional work involved in performing certain
+functions within the Supervisory Board: The Chairman of the Supervisory Board
+receives an allowance of €90,000, each Vice chairman receives an allowance of
+€30,000, the Chairman of the Investment, Finance and Audit Committee and the
+Chairman of the Strategy and Technology Committee each receive an allowance of
+€25,000 and each member of a Supervisory Board committee receives an allowance
+of €15,000 - with the exception of the Nomination Committee and the Mediation
+Committee. The allowance is payable only if the body to which the Supervisory
+2020
+Kerstin Schulzendorf
+Total com-
+pensation
+Meeting
+attendance
+Allowance
+for specific
+functions
+Xiaoqun Clever 2,3
+Peter Bauer¹
+Supervisory Board member, in €
+Fixed com-
+pensation
+Fiscal year
+131,000
+26,000
+15,000
+90,000
+2019
+127,000
+22,000
+90,000
+15,000
+16,000
+2019
+6,000
+24,000
+25,000
+90,000
+2019
+10,417
+37,500
+2020
+84,667
+8,000
+16,667
+60,000
+2020
+Dr. Ulrich Spiesshofer 2,3
+fees
+108,000
+18,000
+90,000
+106,000
+90,000
+2020
+Jürgen Scholz
+Supervisory Board compensation
+The total compensation (including meeting attendance fees) paid to the individual
+members of the Supervisory Board in the 2020 fiscal year comprises the following
+(these figures do not include value-added tax at 16 percent or – in case of members
+being located outside of Germany - the withholding tax, the solidarity surtax as well
+as other taxes):
+Compensation of the Supervisory Board for the 2020 fiscal year
+Compensation report
+Q = < 142 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+In light of the changes brought about by ARUG II, Section 113, paragraph 3, AktG also
+requires the Supervisory Board compensation system to be submitted for approval
+at the Annual General Meeting. The Management Board and Supervisory Board have
+come to the conclusion that the current Supervisory Board compensation system is
+no longer in line with the market in some respects and will therefore propose changes
+at the 2021 Annual General Meeting.
+Review of the Supervisory Board compensation system
+Moreover, Supervisory Board members are reimbursed for all expenses incurred in
+connection with the performance of their Supervisory Board duties and for any
+value-added tax payable by them in this connection. The Company also pays Super-
+visory Board members any value-added tax incurred on their total compensation
+(including meeting attendance fees).
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory
+Board or one of its committees, or takes on a Supervisory Board function for which
+an allowance is paid, the relevant compensation components are disbursed on
+a pro rata basis, i.e. payment of one twelfth of the relevant annual compensation
+component for each (started) month of membership or exercise of function.
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one
+of its committees that is attended in person. The meeting attendance fee is paid
+only once if more than one meeting of the relevant committees takes place on
+a given day.
+Board or committee member belongs has convened or passed resolutions in the
+fiscal year concerned. A Supervisory Board member performing more than one of
+the functions indicated receives only the highest single allowance payable to a
+member performing the functions concerned. The allowance is paid to the relevant
+holder of office within one month of the end of the fiscal year.
+Dr. Manfred Puffer ³
+Melanie Riedl²
+Fiscal year
+Fixed com-
+pensation
+2019
+76,000
+16,000
+60,000
+2020
+112,000
+22,000
+90,000
+2,052
+2019
+18,000
+90,000
+2020
+fees
+Total com-
+pensation
+Meeting
+attendance
+Allowance
+for specific
+functions
+Supervisory Board member, in €
+108,000
+1,701
+Current income tax payables
+6
+Total assets
+Own shares
+Total equity
+21,999
+13,581
+Total liabilities and equity
+21,999
+13,581
+(33)
+(37)
+10,219
+8,633
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+254
+Further information
+(460)
+421
+Other non-current assets
+28
+191
+145
+Ordinary share capital
+2,612
+2,501
+Total non-current assets
+14,820
+6,088
+Additional paid-in capital
+6,462
+5,494
+Hybrid capital
+1,203
+Retained earnings
+435
+Other reserves
+Q =
+< 146 >
+Consolidated Statement of Cash Flows
+Dividends received
+Impairment charges/reversals of impairments
+Other non-cash result
+Change in trade receivables
+Change in inventories
+Change in trade payables
+Change in provisions
+368
+870
+Proceeds from sales of financial investments
+9
+7,417
+2,836
+4
+19
+Acquisitions of businesses, net of cash acquired
+3
+Loss from sale of RF power business
+Gains on disposals of property, plant and equipment
+Net interest result
+Income tax
+for the fiscal years ended 30 September 2020 and 2019
+€ in millions
+Notes
+2020
+2019
+€ in millions
+Notes
+2020
+21
+2019
+Purchases of financial investments
+9
+(6,045)
+(3,760)
+Net income
+Plus: loss from discontinued operations, net of income taxes
+Adjustments to reconcile net income to net cash
+provided by operating activities:
+Depreciation and amortization
+27
+2020
+Equity:
+627
+3,450
+2,213
+Assets classified as held for sale
+12
+Long-term financial debt
+17
+6,528
+1,534
+Total current assets
+7,179
+7,493
+Pension plans and similar commitments
+20
+739
+733
+Property, plant and equipment
+14
+Total current liabilities
+4,110
+770
+575
+340
+144
+6
+77
+83
+12
+Other current assets
+13
+23
+Current leasing liabilities
+16
+59
+97
+91
+Other current liabilities
+19
+950
+530
+3,510
+Deferred tax liabilities
+6
+222
+165
+Investments accounted for using the equity method
+5
+87
+29
+Total non-current liabilities
+8,330
+2,735
+Non-current income tax receivables
+6
+1
+Total liabilities
+11,780
+4,948
+Deferred tax assets
+6
+28
+Other non-current liabilities
+286
+16
+293
+20
+Goodwill
+15
+5,897
+909
+Other intangible assets
+14
+599
+3,621
+Non-current provisions
+18
+313
+283
+Non-current leasing liabilities
+16
+235
+Right-of-use assets
+896
+(7,433)
+60,000
+8,000
+(79)
+(116)
+Other operating expenses
+155
+(213)
+Net change in fair value of hedging instruments
+56
+76
+Other operating income
+85
+(543)
+(153)
+21
+(153)
+21
+Actuarial gains (losses) on pension plans and similar commitments¹
+Total items not expected to be reclassified to profit or loss in the future
+Currency translation effects
+(865)
+Cost of hedging
+(1,042)
+42
+Operating income
+Loss from investments accounted for using the equity method
+(98)
+(177)
+4
+Financial expenses
+45
+(693)
+Other comprehensive income (loss), net of tax
+26
+29
+4
+Financial income
+198
+(714)
+Total items expected to be reclassified to profit or loss in the future
+1,161
+581
+(42)
+5
+4
+(945)
+€ in millions
+2019
+2020
+Notes
+€ in millions
+for the fiscal years ended 30 September 2020 and 2019
+of Comprehensive Income
+Consolidated Statement
+for the fiscal years ended 30 September 2020 and 2019
+of Profit or Loss
+Consolidated Statement
+Q = < 144 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Notes
+Selling, general and administrative expenses
+2020
+Revenue
+(1,113)
+4
+Research and development expenses
+2,994
+2,776
+17
+368
+Net income
+(5,035)
+(5,791)
+4
+21
+8,029
+8,567
+4
+Gross profit
+Cost of goods sold
+2019
+(9)
+(6)
+Total comprehensive income (loss), net of tax
+Attributable to:
+Consolidated Statement
+< 145 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+1 The calculation of earnings per share is based on unrounded figures.
+870
+368
+(19)
+(4)
+7
+889
+372
+of Financial Position
+1 Contains gains from investments accounted for using the equity method in the 2020 fiscal year of €0 miillion (2019: losses €2 million).
+as of 30 September 2020 and 2019
+€ in millions
+1,021
+1,851
+LIABILITIES AND EQUITY
+30 Septem-
+ber 2019
+30 Septem-
+ber 2020
+Notes
+€ in millions
+ber 2019
+30 Septem-
+30 Septem-
+ber 2020
+Contract assets
+Current income tax receivables
+Inventories
+Trade receivables
+Financial investments
+Cash and cash equivalents
+ASSETS
+Notes
+(194)
+(52)
+6
+Basic earnings (loss) per share (in euro) from discontinued operations
+0.77
+0.26
+8
+Basic earnings per share (in euro) from continuing operations
+shareholders of Infineon Technologies AG:1
+870
+368
+Shareholders and hybrid capital investors of Infineon Technologies AG
+Basic earnings per share (in euro) attributable to
+Attributable to:
+Net income
+Loss from discontinued operations, net of income taxes
+Income from continuing operations
+Income tax
+Income from continuing operations before income taxes
+915
+(325)
+8
+(0.02)
+Basic earnings per share (in euro)
+8
+915
+(325)
+Shareholders and hybrid capital investors of Infineon Technologies AG
+1,083
+424
+0.75
+0.26
+8
+148 Notes to the Consolidated Financial Statements
+(0.02)
+Diluted earnings (loss) per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+0.77
+0.26
+8
+Diluted earnings per share (in euro) from continuing operations
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:¹
+0.75
+0.26
+8
+Consolidated Statement of Changes in Equity
+147
+Consolidated Statement of Cash Flows
+275,418
+1,477,500
+2020
+Total
+112,000
+22,000
+90,000
+2019
+128,000
+28,000
+10,000
+90,000
+2020
+Diana Vitale
+208,583
+34,000
+84,583
+334,000
+90,000
+2,086,918
+1,440,000
+15,000
+90,000
+2019
+15,000
+90,000
+2020
+Annette Engelfried
+2019
+84,667
+8,000
+16,667
+60,000
+2020
+Dr. Friedrich Eichiner 2,3
+2,075,083
+378,000
+257,083
+2019
+2019
+158,000
+152,000
+41,500
+100,000
+210,000
+155,500
+38,000
+2020
+Johann Dechant
+55,917
+8,000
+10,417
+37,500
+2020
+Dr. Eckart Sünner¹
+2019
+2019
+70,000
+10,000
+60,000
+2020
+Margret Suckale 2,3
+2019
+53,917
+139,000
+78,000
+90,000
+30,000
+38,000
+2019
+27,500
+90,000
+2019
+30,000
+90,000
+90,000
+2020
+Dr. Wolfgang Eder3
+30,000
+30,000
+10,000
+2019
+4,000
+37,500
+2020
+Dr. Herbert Diess¹
+32,000
+30,000
+90,000
+90,000
+10,000
+Peter Gruber
+90,000
+90,000
+2019
+100,000
+10,000
+90,000
+2020
+Géraldine Picaud³
+127,000
+22,000
+15,000
+90,000
+2019
+Management Board
+Neubiberg, 20 November 2020
+41,500
+104,000
+125,000
+20,000
+15,000
+16,000
+90,000
+106,000
+Dr. Sven Schneider
+146
+145 Consolidated Statement of Financial Position
+144 Consolidated Statement of Comprehensive Income
+Consolidated Statement of Profit or Loss
+144
+Consolidated
+Financial
+Statements
+Infineon Technologies | Annual Report 2020
+< 143 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dr. Reinhard Ploss
+2020
+Dr. Susanne Lachenmann
+4,000
+14,000
+49,750
+6,000
+6,250
+37,500
+2020
+Gerhard Hobbach¹
+129,000
+24,000
+15,000
+90,000
+2019
+3 The shareholder representatives on the Supervisory Board have waived their entitlement to attendance fees for certain meetings.
+The Company will donate the attendance fee saved to a charitable institution.
+2 Joined as Supervisory Board member since 20 February 2020. The compensation for the 2020 fiscal year therefore was awarded
+on a pro rata basis.
+1 Joined as Supervisory Board member until 20 February 2020. The compensation for the 2020 fiscal year therefore was awarded
+on a pro rata basis.
+135,000
+135,000
+127,000
+22,000
+15,000
+2019
+90,000
+15,000
+22,000
+90,000
+2019
+37,500
+2020
+Prof. Dr. Renate Köcher¹
+129,000
+24,000
+15,000
+2020
+90,000
+127,000
+22,000
+15,000
+90,000
+2020
+Hans-Ulrich Holdenried ³
+Supervisory Board members did not receive any loans from Infineon in either the
+2020 or 2019 fiscal years.
+127,000
+2019
+(123)
+of long-term financial debt
+(1)
+IAS 19
+Plan amendment, curtailment or settlement
+(Amendments to IAS 19)
+1 January 2019
+none
+IAS 28
+IFRS 9
+Long-term interests in associated companies
+and joint ventures (Amendments to IAS 28)
+Prepayment features with negative compensation
+(Amendments to IFRS 9)
+1 January 2019
+Impact on Infineon
+none
+Leases
+1 January 2019
+IFRIC 23
+1 January 2019
+Annual IFRS improvement cycle 2015 - 2017 - Amendments
+to IFRS 3 and IFRS 11 as well as IAS 12 and IAS 23
+1 January 2019
+none
+Uncertainty over Income Tax Treatments
+1 January 2019
+IFRS 16 "Leases"
+Effective date
+none
+Business focus and strategy
+Combined Management Report
+45
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 148 >
+Notes to the Consolidated Financial Statements
+The Infineon Group ("Infineon”) comprising Infineon Technologies AG ("the Company")
+and its direct and indirect subsidiaries design, develop, manufacture and market a
+broad range of semiconductors and related system solutions. The focus of activities
+is on applications for automotive electronics, industrial electronics, entertainment
+and household electronics, information and communications infrastructure as well as
+hardware-based security. The product range includes standard, application-specific
+and customer-specific components as well as system solutions for power, digital,
+analog, high frequency and mixed-signal applications. Research and development
+sites, manufacturing facilities, investments and customers are located mainly in
+Europe, Asia and North America.
+Standard/amendment/interpretation
+Infineon Technologies AG is a listed company under German law and the ultimate
+parent company of Infineon. The principal office of the Company is Am Campeon 1-15,
+85579 Neubiberg (Germany). The Company is registered in the Commercial Register
+of the District Court of Munich (Germany) under the number HRB 126492.
+The Consolidated Financial Statements, prepared by Infineon Technologies AG as
+ultimate parent company for the year ended 30 September 2020, have been prepared
+in accordance with International Financial Reporting Standards ("IFRS") and related
+interpretations effective as of 30 September 2020 as issued by the International
+Accounting Standards Board ("IASB") to the extent to which the IFRS and interpretations
+have been endorsed by the European Union (“EU"). The Consolidated Financial
+Statements also comply with the supplementary requirements set out in section 315e,
+paragraph 1, of the German Commercial Code ("Handelsgesetzbuch” or “HGB”).
+The aforementioned standards were complied with in full.
+The Consolidated Statement of Profit or Loss is presented using the cost of sales method.
+The fiscal year end for both Infineon and the Company is 30 September of each year.
+The Group's reporting currency is the euro ("€").
+Deviations between amounts presented are possible due to rounding. Negative
+amounts are presented in parentheses.
+The Company's Management Board presented the Consolidated Financial Statements
+on 20 November 2020.
+Financial reporting rules applied for the first time
+The IASB has issued the following Standards or amendments to Standards, which are
+required to be applied in the Consolidated Financial Statements for the year ended
+30 September 2020:
+1 Basis of the Consolidated Financial Statements
+see explanations
+below the table
+immaterial
+IFRS 16 "Leases" introduced a standardized accounting model by which leases are to
+be recorded in the balance sheet of the lessee. IFRS 16 replaces all previous standards
+and lease accounting interpretations including IAS 17, IFRIC 4, and SIC 15 and SIC 27.
+This means that in future all assets and liabilities arising from a leasing agreement
+must be recognized by the lessee, unless it is a short-term lease (duration of twelve
+months or less) or a lease for a low-value asset (each may be elected by the lessee).
+Infineon Technologies | Annual Report 2020
+(22)
+(1)
+62
+284
+(22)
+262
+The following new or amended Standards have been issued by the IASB and will be
+relevant to Infineon from today's perspective. They have not been applied in the
+Consolidated Financial Statements as of 30 September 2020 since they are not yet
+mandatory or, alternatively, have not yet been endorsed by the EU. The new or
+amended Standards are applicable for fiscal years beginning on or after their respec-
+tive effective date. As a general rule, they are not applied before their effective date,
+even if this is permitted for certain standards.
+Infineon Technologies | Annual Report 2020
+(1)
+(42)
+85
+(153)
+870
+870
+6,483
+(37)
+(3)
+59
+155
+(4)
+250
+Total
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 149 >
+The distinction between finance and operating leases is still required in the accounts
+of the lessor and therefore does not differ significantly from IAS 17 “Leases”. Infineon
+applies the new standard since 1 October 2019 using the modified retrospective
+approach. Accordingly, the previous periods were not adjusted.
+At Infineon leases which were previously classified as operating leases were mainly
+affected by the first-time application. Short-term lease agreements with a duration of
+not more than twelve months (unless they did contain a purchase option) and leases
+in which the underlying asset was of low value are not recognized in accordance with
+the exemption allowed by IFRS 16. As a general rule, leased assets with a value of up
+to €5,000 were defined as a low-value asset. Contractual relationships which were
+not previously classified as leases under IAS 17 “Leases” in conjunction with IFRIC 4
+"Determining whether an agreement contains a lease” were not reassessed against the
+IFRS 16 definition of a lease. After 1 October 2019, all new leasing contracts were
+subject to IFRS 16.
+Infineon recognized as leases the following categories of leases, previously recognized
+as operating leases, according to the definition of the new standard following the
+transition to IFRS 16 as of 1 October 2019: real estate, technical equipment, vehicles
+and other leased assets. When IFRS 16 is first applied to operating leases, the value
+of the right-of-use asset is generally measured using the amount of the discounted
+lease liability. The average incremental borrowing rate (1.7 percent) prevailing at
+the time of the first application of IFRS 16 has been used. In the case of deferred lease
+liabilities, the value of the right-of-use asset shall be adjusted by the amount of lease
+payments paid in advance or the deferred lease liability. The valuation of the right-of-
+use asset at the point of first-time application does not take into account the initial
+direct costs.
+As a result of the first-time application, right-of-use assets amounting to €255 million
+and lease liabilities in the amount of €262 million were recognized in the Consolidated
+Statement of Financial Position as of 1 October 2019 (see note 16, p. 178). The
+difference of €7 million between these two closing balances relates to advance lease
+payments as well as deferred lease liabilities.
+The following table represents the reconciliation to lease liabilities as of 1 October 2019:
+€ in millions
+Non-discounted minimum lease payments from operating leases as of 30 September 2019
+Short-term leases with a term of twelve months or less (short-term leases)
+Leases of low-value assets (low-value leases)
+Leases that were concluded but not started as of 1 October 2019
+Variable lease payments
+Sufficiently secure extension and termination options
+Gross lease liabilities as of 1 October 2019
+Discounting
+Present value of lease liabilities due to first time application of IFRS 16 as of 1 October 2019
+Financial reporting rules issued not yet applied
+Management Board and
+Supervisory Board
+(296)
+Infineon Technologies | Annual Report 2020
+(33)
+42
+(213)
+Proceeds from sales of businesses and interests in subsidiaries,
+net of cash disbursed
+(543)
+350
+39
+42
+(213)
+(336)
+(543)
+329
+39
+37
+(37)
+(42)
+152
+144
+421
+21
+5,494
+8,633
+(693)
+1,184
+2
+11
+934
+110
+55,000,000
+Capital increase
+23
+Share-based compensation
+368
+(20)
+1,184
+Emission hybrid capital
+1
+1
+237,066
+Exercise of stock options
+(336)
+(325)
+Compensations to hybrid capital investors
+2,501
+1,250,684,071
+8,633
+717
+(20)
+11
+1,044
+Purchase of own shares
+4
+4
+Other changes in equity
+85
+22
+Balance as of 30 September 2020
+1,305,921,137
+2,612
+6,462
+1,203
+435
+(399)
+(61)
+22
+155
+(42)
+(305)
+(37)
+(42)
+152
+144
+421
+1,525
+10
+5,494
+2,501
+1,299
+226
+112,773,923
+1,250,684,071
+10
+23
+4
+1
+914,314
+5
+915
+(305)
+10,219
+4,486
+IFRS 16
+1,136,995,834
+4
+Payments for financing-related derivatives
+(25)
+(63)
+16
+Payments for leasing liabilities
+(109)
+(71)
+(41)
+(23)
+17
+Repayments of long-term financial debt
+(239)
+1
+9,815
+17
+(14)
+26
+(5,372)
+Net change in related party financial receivables and payables
+Proceeds from issuance of long-term financial debt
+Change in other assets and liabilities
+Deposits for financing-related derivatives
+Income tax paid
+(2)
+Cash outflows due to changes of non-controlling interests
+(67)
+(129)
+4
+Interest paid
+1,530
+(4)
+1,043
+Proceeds from issuance of ordinary shares
+25
+17
+4
+Interest received
+19
+25
+4
+21
+71
+16
+(2,488)
+Purchases of property, plant and equipment
+36
+101
+4
+(156)
+(184)
+14
+Purchases of other intangible assets and other assets
+14
+194
+6
+(5)
+(44)
+3
+Investments in related companies
+945
+1,260
+14,16
+52
+(915)
+(1,295)
+(22)
+(7,172)
+Net cash used in investing activities
+6
+8བྱེཧྰུྃཆེ$ཥུ
+18
+124
+11
+10
+2,274
+14, 15, 30
+5
+(2,488)
+(7,172)
+Net cash used in investing activities from continuing operations
+1
+15
+33
+Proceeds from sales of property, plant and equipment and other assets
+(11)
+6
+(68)
+Net cash used in investing activities from discontinued operations
+Dividend payments
+Ordinary shares issued
+Notes
+Issuance of ordinary shares:
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Dividends
+Net income
+Balance as of 1 October 2019
+Balance as of 30 September 2019
+Capital increase
+Shares
+Share-based compensation
+Issuance of ordinary shares:
+Total comprehensive income (loss), net of tax
+Dividends
+Other comprehensive income (loss), net of tax
+Net income
+Effects from the transition to IFRS 9 and IFRS 15
+Balance as of 1 October 2018
+Balance as of 30 September 2018
+€ in millions, except for number of shares
+for the fiscal years ended 30 September 2020 and 2019
+Exercise of stock options
+Amount
+Additional Hybrid capital
+paid-in
+capital
+Retained
+earnings
+(accumulated
+deficit)
+(125)
+37
+37
+6,446
+(37)
+(3)
+59
+(333)
+4,486
+2,274
+1,136,995,834
+21
+Cost of
+hedging
+Hedges
+Total equity
+Own shares
+Other reserves
+currency
+Foreign
+Consolidated Statement of Changes in Equity
+< 147 >
+translation
+adjustment
+Further information
+Net cash provided by financing activities from continuing operations
+Net cash provided by financing activities from discontinued operations
+1,601
+1,811
+(20)
+21
+1,184
+21
+(305)
+6,274
+21
+Cash outflow to hybrid capital investors
+(2)
+Proceeds from hybrid capital
+1,603
+1,817
+(6)
+Net cash used in operating activities from discontinued operations
+Net cash provided by operating activities
+Q =
+Net cash provided by operating activities from continuing operations
+222
+1,167
+(336)
+6,274
+Combined Management Report
+Net cash provided by financing activities
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+1,021
+Cash and cash equivalents at end of period
+732
+1,021
+1,851
+Consolidated Financial Statements
+9
+(83)
+Effect of foreign exchange rate changes on cash and cash equivalents
+280
+913
+Cash and cash equivalents at beginning of period
+Net change in cash and cash equivalents
+1,167
+Other intangible assets
+Other plant and office equipment
+Technical equipment and machinery
+Buildings
+Business focus and strategy
+Q = < 156 >
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and
+Supervisory Board
+Years
+Combined Management Report
+Depreciation on property, plant and equipment is recorded using the straight-line
+method. Land, property rights and construction in progress are not depreciated on
+a scheduled basis. Depreciation on property, plant and equipment is based on the
+following useful lives, as applied consistently throughout Infineon:
+Further information
+Licenses and similar rights
+1-10
+Other intangible assets consist of capitalized development costs and purchased
+intangible assets; for example licenses, technologies and customer relationships.
+These assets have finite useful lives and are valued at their amortized acquisition or
+production costs with amortization recorded using the straight-line method over
+their expected economic life.
+Amortization of other intangible assets is based on the following useful lives:
+Capitalized development costs
+Customer relationships
+Technologies
+Other intangible assets
+Years
+3-10
+1-12
+1-12
+3-5
+Recoverability of property, plant and equipment and other intangible assets
+Infineon reviews non-current assets, including property, plant and equipment and
+other intangible assets for possible impairment whenever events or changes in
+circumstances indicate that the carrying amount of an asset may not be recoverable.
+Regardless of whether an indication of impairment exists, other intangible assets
+including capitalized development costs not yet subject to amortization undergo an
+annual impairment test (see also "Research and development expenses”, □ p. 160).
+Infineon Technologies | Annual Report 2020
+3-12
+25
+3-10
+Property, plant and equipment are measured at amortized acquisition or construc-
+tion cost, and its value is reduced by depreciation and considering any impairment.
+Business focus and strategy
+Valuation adjustments for expected credit losses on contract assets are determined
+in accordance with the measurement method for trade receivables (see "Financial
+instruments", p. 152 ff.).
+Designated hedging instruments (cash flow hedges)
+The recoverability of an asset is measured by comparing its carrying amount with its
+recoverable amount. To the extent it is not possible to determine the recoverable
+amount of an individual asset, the book value of the cash generating unit to which
+the asset is allocated is compared to its recoverable amount.
+Certain derivative financial instruments are used to hedge foreign currency and interest
+risks or risks of commodity price changes (such as gold prices) for firm commitments
+as well as expected and highly probable future transactions in order to minimize the
+associated risk (cash flow hedges).
+Derivative financial instruments are measured at their fair value and included in
+"other current assets" or "other current liabilities".
+The effective portion of changes in the fair value of derivative financial instruments,
+determined in accordance with IFRS 9, that are designated as cash flow hedges
+and are part of hedging relationships that meet the criteria for hedge accounting is
+recognized directly in equity. The gain or loss relating to the ineffective portion is
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 155 >
+Property, plant and equipment
+recognized in profit or loss. Amounts accumulated in equity are recycled in profit or
+loss in the periods in which the underlying hedged item affects profit or loss, or, if the
+expected transaction subsequently results in the recognition of a non-financial asset,
+included in the acquisition cost upon initial recognition.
+When a hedging instrument expires or is sold, or when a hedging relationship no longer
+meets the criteria for hedge accounting, any cumulative gain or loss existing at that
+time remains in equity until the underlying transaction actually occurs. When a fore-
+casted transaction is no longer expected to occur, the cumulative gain or loss that
+was reported in equity is immediately transferred to profit or loss.
+Hybrid bonds
+The recognition of a hybrid bond depends on the specific form of the instrument.
+A hybrid bond is measured and recognized in equity when certain conditions are
+jointly met. These include, but are not limited to, the fact that the hybrid bond has no
+final maturity date, that investors have no rights of termination, and that distribu-
+tions are made at Infineon's discretion. In this case, discounts, transaction costs, tax
+effects and the remuneration of hybrid investors are deducted directly from equity.
+Inventories
+Inventories are measured at the lower of historical acquisition or fully absorbed
+production cost - calculated using the weighted-average method - and net realizable
+value. Net realizable value corresponds to realizable sale proceeds under normal
+business conditions less estimated expected costs to complete and sell. Production
+cost comprises costs of material, production wages and an appropriate portion of
+attributable overheads, along with attributable depreciation and amortization on
+property, plant and equipment and other intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Write-downs to net realizable value are recorded on inventories using a consistent
+approach throughout Infineon and are determined at product level for technically
+obsolete and slow-moving inventories on the basis of the amount of revenues
+expected to be generated by the relevant product.
+Inventories include an asset resulting from sales with a right of return, representing
+Infineon's right to recover products from customers upon payment of the reimburse-
+ment obligation (see "Revenue recognition”, ☐ p. 159 f.). The valuation is made by
+reference to the previous book value of the products.
+Contract assets
+Contract assets are recognized if Infineon has fulfilled its performance obligations
+arising from contracts with customers and an unconditional entitlement to customer
+consideration does not yet exist.
+At Infineon, contract assets result from revenue arising from over time revenue recog-
+nition for certain types of contracts, as well as from sales to some customers for
+whom Infineon maintains a consignment warehouse and where revenue is recorded
+at the time of delivery to the consignment warehouse, whereas the invoice is only
+issued at the time of withdrawal of product by the customer.
+In accordance with the provisions of IFRS 9, in the case of foreign currency derivatives,
+the currency base spread (cost of hedging) is split from the designated hedging
+instrument and recognized in equity as a separate component within "other reserves".
+A cash generating unit ("CGU”) represents the smallest identifiable group of assets
+that generates cash inflows from continuing activities and that are largely independent
+of the cash inflows from other assets or group of assets.
+Business focus and strategy
+If an asset or CGU is considered to be impaired, the impairment recognized is measured
+as the amount by which the carrying value exceeds the recoverable amount.
+All items of income and expense relating to defined benefit plans, with the exception
+of the net interest result, are recognized on a net basis in the functional costs within
+the operating result. The net interest result arising from the multiplication of the
+net pension obligation (pension obligation less plan assets) by the discount rate is
+presented as financial expense. Actuarial gains and losses arising from changes to
+actuarial assumptions and estimates as well as the difference between the normalized
+and actual return on plan assets are recognized directly in equity and recorded in
+the Consolidated Statement of Comprehensive Income in the periods in which they
+arise. Past service costs are recognized immediately in profit or loss.
+Provisions
+Provisions are recognized for present legal and/or constructive obligations arising
+from past events that are likely to result in a future outflow of resources, the amount
+of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example those connected with the
+Qimonda insolvency, Infineon regularly assesses the probability of an unfavorable
+outcome. Infineon records provisions and liabilities, including provisions for significant
+legal costs, for those obligations and risks relating to legal disputes which it assesses
+at the relevant reporting date are likely to occur. That is where, from Infineon's per-
+spective at the date of assessment, there is compelling evidence which indicates an
+obligation or risk, and the obligation or risk can be quantified with reasonable accuracy
+at the time of assessment. As soon as additional information is available, the affected
+estimates are reviewed and, where necessary, provisions for these proceedings
+are revised.
+Provisions are measured at their expected settlement amount. The amount recog-
+nized for a provision is the best estimate of the expenditure required to settle the
+present obligation. Estimates of outcomes and financial effects are dependent upon
+the judgment of management, supplemented by experience gained from similar
+transactions and, where appropriate, the assessment of independent experts. If the
+circumstances to be assessed encompass a large number of possible outcomes,
+the obligation is estimated by weighting all possible outcomes by their associated
+probabilities (expected value method).
+Where cash flows are expected to arise after the next twelve months, the expected
+settlement amount corresponds to the present value of the expected cash outflows.
+Discounting is only carried out if the interest effect is significant.
+If the obligation decreases because of a change in the estimate, the provision is
+adjusted accordingly and the resulting income recognized in the same functional
+area of the Consolidated Statement of Profit or Loss in which the original charge was
+recognized.
+Contingent liabilities
+Contingent liabilities are either possible obligations whose actual existence is depen-
+dent on the occurrence of one or more uncertain future events not wholly within the
+control of Infineon, or they are present obligations that will probably not result in
+the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position,
+instead they are disclosed and described in the Notes to the Consolidated Financial
+Statements (see note 24, p. 192, and note 25, □ p. 192 ff.).
+Infineon Technologies | Annual Report 2020
+"Employee Benefits" for each separate plan by independent, qualified actuaries using
+the projected-unit-credit method. The calculation is subject to, among other things,
+assumptions on increases in salaries, future developments in pensions as well as the
+life expectancy of the beneficiaries. As of the balance sheet date, the obligations are
+discounted using discount rates determined on the basis of market yields of high-grade,
+fixed-interest corporate bonds from issuers carrying a very high credit rating.
+Management Board and
+Supervisory Board
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 159 >
+Revenue recognition
+Infineon generates revenues mainly from the sale of semiconductor products and
+related system solutions. Revenue is recognized when control over the products is
+transferred to the customers in accordance with IFRS 15 (power of disposal), and
+where the receipt of consideration from the customer is probable. Typically, Infineon's
+customer contracts only contain one performance obligation which is fulfilled either
+over a period of time or at a specific point in time. For sales of customer-specific
+products with no alternative use for Infineon, for which Infineon has a legal right
+to payment for services rendered prior to delivery, revenue is recognized over time.
+Performance progress is determined using an input-based method and is based on
+the ratio of costs already incurred to the estimated total cost. Where revenue from the
+sale of products is not realized on an over time basis, revenue is generally recognized
+upon delivery, since customers cannot derive material benefits from the products
+before this point in time. The recognition of revenue for deliveries into consignment
+warehouses depends on the individual contractual arrangement. If, due to the lack
+of a contractual obligation on the part of the customer, the power of control initially
+remains with Infineon, revenue is recognized when the products are taken from the
+consignment warehouse by the customer. Earlier revenue recognition at the point
+of delivery into the consignment warehouse takes place in cases where the customers
+have contractual power of control over the products at the point of delivery. Accord-
+ingly, in such cases a contract asset is recorded.
+Invoices for sales of product are issued at the time of delivery or withdrawal by the
+customer from the consignment warehouse, and have a short payment term. The
+amount of revenue corresponds to the expected transaction price to be received by
+the customer.
+The transaction price can include variable components such as rebates or discounts.
+Infineon can reliably estimate these in accordance with the contractual agreements
+and historical experience. Variable consideration is only taken into account in so far as
+it is highly probable that there will be no significant reversal of the revenue.
+If Infineon expects that the consideration received from the customer is to be
+reimbursed due to subsequent discounts, a reimbursement obligation is recognized,
+which is disclosed as other current liabilities.
+Infineon recognizes revenue for deliveries to distributors by using the “sell in" method,
+that is when a product is sold to the distributor, to the extent that revenue has not
+already been recognized on an over time basis. The transaction price for sales to dis-
+tributors in particular contains variable components. Distributors can, in accordance
+with established business practices in the semiconductor industry, under certain
+circumstances apply for price protection. This allows distributors to receive a credit
+(debit) note for unsold products held in inventory, where Infineon has reduced
+(increased) the standard list price of certain products. In addition, in certain cases
+and for certain products, distributors may request a ship and debit credit note for
+price adjustments. As with all product sales, Infineon recognizes revenue based on
+the transaction price and, in the period in which relevant sales are realized, records
+a reimbursement obligation for the consideration to be reimbursed to the customer,
+which is included in other current liabilities. The determination of the transaction price
+in the case of ship and debit is based on rolling historical price trends in the difference
+between contract prices and standard list prices to the distributors. The determination
+of the transaction price in the case of price protection takes into account current list
+prices and the relevant distributors' inventory on hand. The availability of detailed
+distributor inventory data, the transparency of pricing for standard products and the
+long distributor pricing history enable Infineon to reliably estimate the adjustments
+for price protection and ship and debit credit notes at the end of the reporting period.
+Distributors can, subject to certain conditions, return a limited amount of inventory
+(stock return) or request scrap allowances. The estimation of the transaction price
+is based on the expected stock returns in accordance with the contractual agreement,
+combined with historical experience. Distributor scrap allowances are taken into
+account when determining the transaction price based on the contractual agreement
+and, upon submission of a valid claim, are granted up to a certain maximum based
+Infineon Technologies | Annual Report 2020
+Upon acquisition, other financial liabilities are measured at fair value after deduction
+of transaction costs. In subsequent periods, they are measured at amortized cost
+using the effective interest method. The liabilities are derecognized when the con-
+tractual obligations are discharged, canceled or expired.
+Combined Management Report
+Q = < 158 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Infineon did not hold any intangible assets with indefinite useful lives in either the
+2020 or the 2019 fiscal year.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 157 >
+If the recoverable amount of a CGU is less than the carrying value, the impairment
+is allocated pro rata to the assets recorded within the scope of IAS 36 therein. An
+impairment loss recognized in prior periods for an asset is reversed insofar as, since
+the last impairment, a change in the underlying assumptions has occurred, which
+leads to a lower impairment requirement. The maximum possible reversal of an
+impairment loss is that which would lead to the carrying amount that would have
+been determined (net of scheduled depreciation and amortization) if no impairment
+loss had been recognized for that asset in prior years.
+Goodwill
+Goodwill acquired in a business combination is the excess of the consideration
+transferred for the acquisition of control over the business over the net fair value
+of acquired, separately identifiable, assets and assumed liabilities as of the date
+of acquisition. Goodwill is allocated to the CGUS or groups of CGUs that will benefit
+from the synergies generated by the business combination.
+Acquired goodwill is only impaired if there is evidence of impairment. Its value is
+tested at Infineon at the operating segment level for possible impairment annually as
+of 30 June and, additionally, whenever there are events or changes in circumstances
+that indicate that the carrying amount may not be recoverable. The recoverable amount
+is the higher of the fair value less costs to sell and the value in use. If the carrying
+amount of the respective operating segment to which the goodwill is allocated
+exceeds the recoverable amount of this CGU, the goodwill is impaired accordingly.
+The reversal in subsequent periods of such impairments is not permitted.
+Leases (IAS 17; relevant until 30 September 2019)
+Infineon is a lessee of property, plant and equipment that was classified as operating
+and finance leases according to IAS 17 “Leases”. In the case of operating lease con-
+tracts, rental costs were allocated on a straight-line basis over the term of the lease.
+Leases (IFRS 16; relevant since 1 October 2019)
+IFRS 16 defines a lease as a contract that conveys the right to use an identifiable asset
+over a specified period of time in exchange for consideration.
+At the beginning of a lease Infineon capitalizes a right of use and recognizes as a
+liability a corresponding leasing liability, each using the present value of the out-
+standing lease payments. Rights of use are amortized on a straight-line basis over
+the expected useful life (see “Property, plant and equipment"), or over the duration
+of the contract if shorter. In subsequent valuations, leasing liabilities are measured
+at the current value of the outstanding lease payments using the effective interest
+method and are presented as lease liabilities (short and long-term).
+The costs associated with leasing agreements with a term of not more than twelve
+months (provided they do not contain an option to purchase), as well as leasing
+agreements in which the value of the underlying asset in the leasing contract is small,
+are recorded in the profit or loss on a straight-line basis in the functional costs. As a
+general rule, leased assets with a value of up to €5,000 are defined as a low-value asset.
+Defined benefit pension plans
+The net pension obligation recognized in respect of defined benefit pension plans
+comprises the present value of the defined benefit obligation (DBO) at the end of the
+reporting period less the fair value of the plan assets. The present value of the DBO
+and the resulting pension expense are determined annually in accordance with IAS 19
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The recoverable amount of an asset is defined as the higher of its fair value less costs
+to sell and its value in use. The value in use is calculated based on discounted future
+cash flows. Considerable management judgment is necessary to estimate future
+cash flows.
+Liabilities measured at fair value through profit or loss by Infineon include derivatives
+to hedge currency risks for which hedge accounting is not applied, as well as conver-
+sion rights from convertible bonds that were acquired in the course of the acquisition
+of Cypress (see note 3, ☐ p. 162 ff.).
+1 January 2020
+Financial liabilities
+The balance sheet effects of intragroup transactions as well as gains and losses arising
+from intragroup business relationships are eliminated on consolidation.
+The financial statements of entities included in the Consolidated Financial Statements
+are prepared using uniform valuation and accounting policies.
+An entity is included in the Consolidated Financial Statements from the date on which
+Infineon acquires control. Upon first-time consolidation of an entity, the acquired
+assets and assumed liabilities are basically measured on the basis of their fair value
+at the acquisition date. Any excess of consideration paid (purchase price) over the
+share of the fair value of acquired assets, liabilities and contingent liabilities is recog-
+nized as goodwill. Any excess of Infineon's share of the fair value of items acquired
+over consideration paid is recognized as a gain.
+Control exists when Infineon is subjected to variable returns arising from its engage-
+ment with the subsidiary or has a right to such, and has the ability to influence these
+returns as a result of its power over the subsidiary. Power means that Infineon has
+existing rights that give Infineon the ability to direct the relevant activities of the sub-
+sidiary, that is the activities that significantly affect the aforementioned returns.
+immaterial
+immaterial
+Q = < 150 >
+Further information
+A list of subsidiaries of Infineon Technologies AG is provided in note 31. □ p. 220 ff.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+none
+1 January 2022
+none
+1 January 2021
+none
+1 January 2021
+and amendments to references to the
+conceptual framework in IFRS Standards
+Revision to the conceptual framework
+none
+In the absence of control over an entity, but the entity is a joint venture or an associated
+company, these entities are included in the consolidated financial statements using
+the equity method (see note 5, ☐ p. 166 f.).
+2 Summary of significant accounting policies
+Basis of consolidation
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+ASSETS
+Balance sheet item
+The following table summarizes the main measurement principles used in the
+preparation of the Consolidated Financial Statements:
+Recognition and measurement principles
+The euro/US dollar exchange rate is particularly significant for the preparation of
+the Consolidated Financial Statements. As of 30 September 2020, this was 1.1708
+(previous year: 1.0935) and the average for the 2020 fiscal year was 1.1238
+(previous year: 1.1252).
+The assets and liabilities of subsidiaries with functional currencies other than the
+euro are translated into euros using the spot rate at the end of the reporting period.
+Income and expenses of these entities are translated using the average spot rate of
+the reporting period. All currency translation differences resulting from the consoli-
+dation are recognized directly in equity and presented as "Other reserves".
+Foreign currency transactions of subsidiaries are translated into the functional currency
+of the relevant entity using the spot rate prevailing at the transaction date. Monetary
+foreign currency assets and liabilities are translated at the spot rate prevailing at the
+reporting date. Exchange rate gains and losses from the translation of foreign currency
+transactions are recognized in the Consolidated Statement of Profit or Loss.
+The functional currency of Infineon Technologies AG is the euro.
+Functional currency and foreign currency translation
+Q = < 151 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Infineon classifies financial liabilities into the following categories: "Financial
+liabilities measured at fair value through profit and loss" and "Other financial
+liabilities”. Furthermore, “Designated hedging instruments (cash flow hedges)”
+belong to financial liabilities.
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+a consolidated basis. A subsidiary is defined as an entity which, directly or indirectly,
+is controlled by Infineon Technologies AG.
+The Consolidated Financial Statements presented here include the individual financial
+statements of Infineon Technologies AG and its direct and indirect subsidiaries on
+Interest rate benchmark reform (amendments to
+IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) - Phase 2
+Annual IFRS improvement cycle 2018-2020
+Contract assets
+from applying IFRS 9 (amendments to IFRS 4)
+IFRS 4
+Classification of liabilities as current or non-current
+(amendments to IAS 1)
+IAS 1
+(amendments to IAS 1 and IAS 8)
+and IAS 8
+none
+1 January 2020
+income before intended use (changes to IAS 16)
+Definition of material
+IAS 1
+1 January 2023
+immaterial
+Expected impact
+on Infineon
+Effective date
+Property, plant and equipment-
+Standard/amendment/interpretation
+IAS 16
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+1 January 2022
+none
+IAS 37
+Onerous contracts - costs of fulfilling a contract
+none
+1 January 2023
+Insurance contracts including amendments to IFRS 17
+IFRS 17
+(Amendment to IFRS 16)
+1 June 2020
+COVID-19-related rent concessions
+IFRS 16
+none
+1 January 2022
+References to the conceptual framework
+IFRS 3
+(amendments to IFRS 3)
+none
+1 January 2020
+Definition of a business
+IFRS 3
+(amendments to IAS 37)
+1 January 2022
+Extension to the temporary exemption
+Property, plant and equipment
+Goodwill
+Business focus and strategy
+Other assets (current and non-current):
+Other financial assets:
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Other intangible assets
+Right-of-use assets
+Infineon Technologies | Annual Report 2020
+In order for a financial asset in the form of a debt instrument to be classified and
+measured at amortized cost or at fair value through other comprehensive income,
+cash flows may only arise from the repayment of principal and interest payments on
+the outstanding principal amount. This assessment is referred to as a cash flow-or
+SPPI test ("solely payments of principal and interest") and is carried out at the level
+of the individual financial instrument.
+Infineon's business model for managing financial asset portfolios reflects how the
+Company controls its financial assets in order to generate cash flows. Depending
+on the business model, cash flows arise from the receipt of contractual cash flows,
+the sale of financial assets or both.
+Upon initial recognition, financial assets are classified for subsequent measurement
+either as at amortized cost, fair value through other comprehensive income or fair
+value through profit or loss. This classification depends on the characteristics of
+the contractual cash flows of the financial assets, and Infineon's business model for
+managing its financial assets.
+› Classification and measurement of financial assets
+Financial assets
+Financial assets are derecognized when the rights to receive payments from the
+investments have expired, or have been transferred and Infineon has transferred all
+risks and rewards associated with ownership. Financial liabilities are derecognized
+when they are extinguished, that is when the contractual obligation is discharged,
+canceled or expired.
+Purchases and sales of financial assets are recognized on the settlement date.
+Trade receivables are recognized based on the amount to which Infineon has an
+unconditional right to receive. With the exception of matters which result in a partial
+refund of the purchase price to the customer, this corresponds to the transaction
+price determined in accordance with IFRS 15. The subsequent measurement of trade
+receivables is carried out at amortized cost.
+Financial instruments are initially recognized at their fair value. Transaction costs
+directly attributable to the acquisition or issuance of financial instruments are only
+included in the carrying amount if the financial instruments are not measured at
+fair value through profit or loss.
+Financial instruments
+Cash and cash equivalents represent cash and all financial resources with a maturity
+at acquisition date of three months or less. Cash equivalents partly include invest-
+ments in money market funds. The valuation is recorded at amortized cost or at fair
+value through profit or loss.
+Acquisition cost
+Acquisition cost
+Fair value/amortized cost
+Q = < 153 >
+Fair value through other comprehensive income
+Fair value/amortized cost
+On this basis, Infineon's financial asset measurement categories are as follows:
+At the reporting date, Infineon did not hold any financial assets with the intention to
+collect contractual cash flows and also to sell them. Therefore, there was no allocation
+of financial assets in the form of debt instruments to the category "fair value through
+other comprehensive income".
+Financial assets are partly or completely written off, together with previously recognized
+impairments, if there is no reasonable expectation of repayment. This is generally
+the case when Infineon finds that the debtor does not have assets or revenue sources
+that could generate sufficient cash flows to repay the amounts subject to derecog-
+nition. Even when financial assets are written off, Infineon continues to conduct
+enforcement measures to recover them. Amounts recovered are recognized in profit
+or loss.
+A default event occurs when Infineon concludes that the other party would most
+likely not be able to meet the payment obligations, or not in full.
+In the case of objective indications that expected future cash flows are affected,
+a financial asset is classified as impaired (with impaired creditworthiness) and
+adjusted to its individual value. As a rule, this is the case for financial assets (unless it
+is a trade receivable) no later than 90 days after the due date. For trade receivables,
+the impaired creditworthiness is not determined automatically in the event of a
+payment overdue by more than 90 days, but always on the basis of the individual
+assessment of credit management.
+For trade receivables and contract assets, Infineon recognizes credit losses that are
+expected over the entire term using a simplified procedure. The estimate of expected
+credit losses on trade receivables and contract assets is based primarily on the analysis
+of customer financial data, ratings, credit default spreads, past payment behavior
+of customers and forward-looking Information.
+Q = < 154 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+For cash and cash equivalents and financial investments measured at amortized cost,
+Infineon determines credit losses expected in the next twelve months (twelve-month
+credit loss) in accordance with the general approach. Due to their short-term maturity,
+this corresponds to the expected credit losses over the entire term. Infineon rates the
+credit risk for cash and cash equivalents and financial investments as low. Infineon
+assumes that a financial asset has a low credit risk if it has an investment grade
+rating or a corresponding internal investment grade rating. In order to assess whether
+there has been a significant increase in credit risk since initial recognition, Infineon
+considers appropriate and robust information that is relevant and available without
+disproportionately high levels of effort. This includes both quantitative and qualitative
+information and analyses, which are based on the Company's historical experience
+and a sound credit assessment as well as forward-looking information. Macroeco-
+nomic information is taken into account in the internal rating model (information
+on Infineon's financial risk management is included in note 29, p. 207 ff.). Irrespective
+of the above analysis, a significant increase in credit risk is assumed if a debtor is
+more than 30 days overdue with the settlement of a contractual payment.
+Infineon determines impairments for expected credit losses primarily for cash and
+cash equivalents, financial investments, trade receivables, and contract assets. The
+expected credit losses are adjusted at each reporting date to reflect changes in credit
+risk since the instrument was first recognized.
+Infineon determines an impairment charge for expected credit losses for financial
+assets in the form of debt instruments that are measured at amortized cost or at fair
+value through other comprehensive income. The calculation of the expected future
+credit losses is generally determined by multiplying the probability of default by the
+carrying amount of the financial asset (exposure at default) and the expected loss
+ratio (loss given default).
+> Impairment of financial assets
+"Designated hedging instruments (cash flow hedges)" also belong to financial assets.
+Net gains and losses, including interest and dividend income, from financial assets
+that are measured at fair value through profit or loss (debt and equity instruments) are
+recognized in the Consolidated Statement of Profit or Loss.
+At Infineon, financial assets in the form of equity instruments are consistently measured
+at fair value through profit or loss.
+Financial assets in the form of debt instruments that are measured at fair value
+through profit or loss include all financial assets at Infineon whose cash flows are not
+exclusively interest payments and principal repayments.
+Financial assets measured at amortized cost include all assets whose contractual
+provisions result in cash flows at fixed times that represent only interest and principal
+repayments of the outstanding principal amount, provided that those assets are
+held with the intention of collecting the contractual cash flows expected over their
+respective duration. In subsequent periods, financial assets measured at amortized
+cost are measured using the effective interest method. Interest income, currency
+gains and losses, impairments, and gains or losses from the derecognition of such
+financial assets are recognized through profit or loss.
+Fair value through profit or loss
+Management Board and
+Supervisory Board
+Fair value/amortized cost
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Fair value through other comprehensive income
+Amortized cost
+Fair value through profit or loss
+Fair value/amortized cost
+Amortized acquisition or production cost
+Amortized present value of outstanding lease payments
+Impairment-only approach
+Amortized acquisition or production cost
+in accordance with IFRS 9
+Right to consideration/impairment
+and net realizable value
+Lower of acquisition or production cost
+Unconditional right to consideration/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Amortized present value of outstanding lease payments
+Measurement principle
+Designated hedging instruments
+Remaining other assets
+At fair value through profit or loss
+At amortized cost
+Business focus and strategy
+Combined Management Report
+Fair value/amortized cost
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Cash and cash equivalents
+Hybrid bonds
+Remaining other liabilities
+Other financial liabilities
+Designated hedging instruments
+Measured at fair value through profit or loss
+Other financial liabilities:
+Other provisions (current and non-current)
+Leasing liabilities (current and non-current)
+Other liabilities (current and non-current):
+Own shares
+Provisions:
+Trade payables
+Fair value/amortized cost
+Financial debt (short-term and long-term)
+LIABILITIES AND EQUITY
+Measurement principle
+Balance sheet item
+Pensions
+Q = < 152 >
+(20)
+599
+(293)
+627
+Total
+corporate tax-like loss carry-forwards)
+(803)
+(412)
+803
+Netting
+Tax loss carry-forwards (corporate tax and
+42
+(245)
+(245)
+412
+42
+412
+2020
+(432)
+Infineon Technologies | Annual Report 2020
+Of the corporate tax-like loss carry-forwards, for which no deferred tax assets were
+recognized, €18 million (2019: €0 million), of the local income tax loss carry-forwards
+€5 million (2019: €0 million) and of tax credits €0 million (2019: €2 million) will expire
+in the next five years.
+In other jurisdictions, corporate income tax loss carry-forwards amounted to €717 mil-
+lion (30 September 2019: €31 million) and local income tax loss carry-forwards
+amounted to €287 million (30 September 2019: €26 million). Additionally, there were
+In Germany, Infineon Technologies AG accumulated corporate income tax loss
+carry-forwards of €1.5 billion and trade tax loss carry-forwards of €2.7 billion as of
+30 September 2020 (30 September 2019: €1.5 billion and €2.6 billion, respectively).
+547
+651
+290
+1,219
+1,129
+Temporary differences
+Tax loss carry-forwards (local income tax,
+particularly German trade tax and US state taxes)
+Tax credits
+98
+58
+2019
+No deferred taxes were recorded for the following items (gross amounts):
+1,011
+Current tax expense included tax income of €46 million (2019: €26 million tax income)
+relating to prior fiscal years.
+1,430
+1 year
+and after
+216
+113
+55
+19
+161
+94
+Infineon refrains from disclosing the remaining performance obligations arising
+from contracts with customers within the meaning of IFRS 15 with original expected
+durations of one year or less.
+Cost of materials and purchased services as well as personnel expense
+The Consolidated Statement of Profit or Loss (continuing and discontinued operations)
+includes the following expenses for purchased services, materials and personnel.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Less than
+1 year
+Q = < 165 >
+€ in millions
+Cost of raw materials, supplies and purchased goods
+Cost of purchased services
+Total (continuing and discontinued operations)
+Grants
+Infineon has received grants from various governmental institutions under govern-
+ment business development programs including grants for the construction of
+manufacturing facilities, for research and development activities, and employee
+development. Grants included directly in profit or loss in the Consolidated Financial
+Statements during the 2020 and 2019 fiscal years were as follows:
+2020
+2019
+1,712
+1,816
+1,975
+1,653
+3,687
+Expenses for materials and purchased services comprised the following in the 2020
+and 2019 fiscal years:
+Total
+As of 30 September 2019
+Revenue expected in (€ in millions)
+As of 30 September 2020
+Consideration transferred (purchase price)
+8,254
+Paid in cash as of 30 September 2020
+8,222
+Other current liabilities
+Pension plans and similar commitments
+Deferred tax liabilities
+Non-current provisions
+Non-current leasing liabilities
+Cypress's revenue and earnings, which have been included in the Consolidated
+Statement of Profit or Loss for the reporting period since the date of acquisition,
+were as follows:
+857
+(189)
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 164 >
+Cypress' result after tax was significantly impacted by acquisition-related depreciation
+and amortization, in particular of other intangible assets identified as part of the
+purchase price allocation, and other expenses (see also segment reporting in note 30,
+□ p. 215).
+If Cypress had already been acquired and consolidated as of 1 October 2019, Infineon
+would have recorded revenue of €9,596 million in the Consolidated Statement of
+Profit or Loss for the 2020 fiscal year. Net income would have been €230 million.
+This includes in particular, amortization of other intangible assets identified as part
+of the purchase price allocation, which, according to assumptions, would have also
+been effective as of 1 October 2019, and acquisition-related financing costs were also
+taken into account.
+Cypress' business units have been fully integrated into the existing Automotive,
+Power & Sensor Systems and Connected Secure Systems segments.
+Acquisition of 15 percent of the shares in pmdtechnologies ag
+On 12 November 2019, Infineon acquired 15 percent of the shares in pmdtechnologies ag
+(pmd), which is based in Siegen (Germany). The shares are accounted for using the
+equity method in the consolidated financial statements (see note 5, p. 166 ff.). The
+purchase price was €44 million.
+pmd develops CMOS-based 3D time-of-flight (ToF) image sensor technologies and
+associated algorithms and software. In addition, pmd provides engineering services
+for the coordination of the individual components of ToF camera systems. Infineon
+and pmd have already been cooperating for several years in the field of ToF for
+automotive and smartphone applications. With the acquisition of shares, Infineon
+strengthens its long-term cooperation with pmd.
+4 Notes to the Consolidated Statement of Profit or Loss
+Revenue
+Breakdowns of revenue by segments, product groups and geographic areas are
+disclosed in note 30. p. 214 and p. 216
+The aggregate amount of the transaction prices of the unsatisfied and partially
+unsatisfied performance obligations, arising from contracts with customers within
+the meaning of IFRS 15 with expected original durations of more than one year, was
+as follows as of 30 September 2020 and 2019:
+3,469
+5,430
+€ in millions
+2019
+18,365
+12,201
+11,896
+17,818
+16,826
+2,218
+2,087
+1,967
+1,927
+Japan
+432
+203
+Americas
+18,894
+4,438
+therein: USA
+2,877
+2,016
+Total
+43,800
+41,424
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+Of the grants totaling €152 million (2019: €171 million) included in the Consolidated
+Statement of Profit or Loss in the 2020 fiscal year, €132 million (2019: €124 million)
+related to expenses from previous years.
+In the 2020 fiscal year, investment grants of €21 million (2019: €46 million) were
+deducted from acquisition or construction costs for property, plant and equipment
+and intangible assets. In the 2020 fiscal year, Infineon received investment grants
+of €30 million (2019: €24 million).
+For compliance with the conditions attached to the grants received and potential
+repayment requirements in case of nonfulfillment, see note 24. ☐ p. 192
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+3,943
+2019
+2020
+therein: Mainland China, Hong Kong
+Personnel expenses comprised the following in the 2020 and 2019 fiscal years:
+€ in millions
+Wages and salaries
+Social insurance levies, pension plans and similar commitments
+Included in the Consolidated Statement of Profit or Loss in:
+Cost of goods sold
+Research and development expenses
+2020
+2019
+Selling, general and administrative expenses
+2,476
+440
+2,916
+2,154
+399
+Total
+2,553
+40
+58
+108
+111
+4
+2
+152
+171
+Total (continuing and discontinued operations)
+The average number of employees by geographic region was as follows for the 2020
+and 2019 fiscal years:
+Europe
+therein: Germany
+Asia-Pacific (excluding Japan, Greater China)
+Greater China¹
+2020
+Goodwill
+2,824
+Net assets acquired
+Although these estimates and assumptions are applied by management to the best
+of its knowledge based on current events and circumstances, actual events may result
+in deviations from these estimates. This applies in particular against the background
+of the coronavirus pandemic, which is causing distortions in global supply chains,
+markets and general economic trends. Developments in the wake of the pandemic
+are dynamic, so it cannot be ruled out that the actual results deviate significantly
+from the estimates and assumptions made in the preparation of these Consolidated
+Financial Statements, or that the estimates and assumptions made will have to be
+adjusted in future periods and this will have a significant impact on Infineon's financial
+position, results of operations and cash flows.
+Areas containing estimates and assumptions and that are consequently most likely
+to be affected when actual results vary from estimates and assumptions are:
+› Recognition and measurement at fair value of acquired assets resulting from the
+Cypress purchase price allocation (see note 3, p. 162 ff.),
+> recognition and recoverability of deferred tax assets as well as uncertain tax
+positions (see "Current and deferred taxes”, ☐ p. 160 f., and note 6, ☐ p. 168 ff.),
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 162 >
+> valuation of inventory (see "Inventories", p. 155, and note 11, □ p. 173),
+> revenue recognized over time as well as revenue where the transaction price
+includes a variable component (see “Revenue recognition”, p. 159 f., and note 12,
+p. 173),
+Estimates and assumptions undergo regular review and must be adjusted where
+appropriate.
+> the recoverability of non-financial assets, in particular goodwill (see note 14,
+p. 174 ff., and note 15, □ p. 176 f.),
+> valuation of defined benefit pension plans (see “Defined benefit pension plans",
+p. 157 f., and note 20, ☐ p. 182 ff.).
+All assumptions and estimates are based on the circumstances and assessments
+as of the balance sheet date, and taking into account knowledge gained up to the
+approval by the Management Board of the Consolidated Financial Statements on
+20 November 2020.
+as software and connectivity solutions that are complementary to Infineon's existing
+portfolio of power semiconductors, sensors, and security solutions. The combination
+enables totally new solutions for high-growth applications such as electric drives,
+battery-powered devices, power supplies and household devices. In automotive
+semiconductors, the expanded portfolio of microcontrollers and NOR flash memory
+ICS offers great potential, particularly in the areas of driver assistance systems, digital
+display systems and infotainment. The combination of Infineon's security expertise
+and Cypress' connectivity know-how will accelerate entry into new IoT applications in
+the industrial and consumer segments.
+The fair values of each major class of considerations at the acquisition date are
+summarized below:
+€ in millions
+Cash
+8,219
+Obligation from the conversion of granted share-based payments into fix cash-settled grants
+Realized gains from hedging transactions (see note 28, p. 203)
+172
+(137)
+8,254
+Total consideration transferred (purchase price)
+3 Acquisitions
+> recognition and valuation of provisions (see "Provisions", ☐ p. 158, note 18, ☐ p. 181,
+and note 25, p. 192 ff.) and
+The preparation of financial statements in accordance with IFRS requires manage-
+ment to make estimates and assumptions that have an impact on the presented
+amounts and the associated disclosures.
+is not significant. Recognition assumes that the tax authorities investigate the matters
+in question and that they have all relevant information.
+Estimates and assumptions
+Tax liabilities are recognized as short-term in accordance with IAS 1.69(d), as they
+are due immediately and Infineon generally has no option of deferring their due date.
+For uncertain tax positions a current tax liability is recorded or, in case of a tax loss
+carried forward or a tax allowance, the respective deferred tax asset is reduced
+accordingly. IFRIC 23 clarifies the recognition and valuation requirements of IAS 12
+where there is uncertainty about tax treatment. Estimates and assumptions must be
+made for the recognition and valuation, for example whether an assessment is made
+separately or together with other uncertainties, whether a probable or expected
+value is used for the uncertainty, and whether changes have occurred compared to
+the previous period. The detection risk for the recognition of uncertain tax positions
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 160 >
+on turnover in a given period. Infineon monitors such product returns on an ongoing
+basis and adjusts estimate assumptions accordingly. In the case of both stock return
+and scrap allowances, the consideration to be refunded to the customer is recognized
+as a reimbursement obligation within other current liabilities. Other returns are only
+permitted for quality defects within the ordinary warranty period.
+The additional costs of a contract initiation are immediately recognized as an expense
+as soon as they arise, providing the otherwise resulting depreciation period would
+not exceed one year. Costs of the performance of the contract are capitalized at the
+earliest when an expected, specifically identifiable contract exists.
+Cost of goods sold
+Cost of goods sold includes the manufacturing costs of products sold during the
+reporting period. In addition, cost of goods sold contains idle costs, inventory risks,
+the cost of warranty cases, as well as the amortization of capitalized development
+costs. Recognized foreign currency effects as well as changes in the fair value of
+undesignated derivative financial instruments that are connected to the operating
+business are recognized in cost of goods sold.
+Research and development expenses
+Costs of research activities are expensed as incurred. Costs for development activities,
+the results of which lead to a plan or design for the production of new or substantially
+improved products or process improvements, are capitalized if the development
+costs can be measured reliably, the product or process is technically and commer-
+cially feasible, future economic benefits are probable and Infineon intends, and has
+sufficient resources, to complete development and use or sell the asset. The costs
+capitalized include the cost of materials, direct labor and directly attributable general
+overhead expense that serves to prepare the asset for use. Such capitalized costs
+are presented as internally generated intangible assets within "Other intangible
+assets" (see note 14, p. 174 ff.). Development costs, which do not fulfill the criteria
+for capitalization, are expensed as incurred. Capitalized development costs are stated
+at cost less accumulated amortization and impairment charges. After the completion
+of the development phase and following the ramp-up of production, internally
+generated intangible assets are amortized as part of cost of goods sold over a period
+of three to ten years.
+Grants
+Grants are recognized when it is reasonably assured that Infineon will comply with the
+conditions attached to the grant, and it is reasonably assured that the grant will be
+received. Investment-related grants are deducted from the purchase and production
+cost of the related asset and thereby reduce depreciation and amortization expense
+in future periods.
+Grants that are related to expenses are presented as a reduction of the related expense
+in the Consolidated Statement of Profit or Loss (see note 4, ☐ p. 165).
+Current and deferred taxes
+The current tax expense is calculated in accordance with taxation provisions in force
+at the end of the reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and the
+book value of assets and liabilities, and on tax losses available for carry-forward and
+tax allowances. By contrast, no deferred tax is recognized on initial recognition of
+goodwill arising in connection with a business combination. Similarly, deferred taxes
+are not recognized on the initial recognition of an asset or liability in connection
+with a transaction that is not a business combination and which, at the time of the
+transaction, affects neither the pre-tax income according to IFRS nor taxable profit.
+Deferred tax assets and liabilities are measured using applicable tax rates and laws
+that have been enacted by the end of the reporting period or are about to be enacted,
+and are to be applied when the related deferred tax asset is realized or the deferred
+tax liability is settled.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 161 >
+Deferred tax assets in respect of deductible temporary differences, tax loss carry-
+forwards and tax allowances which exceed deferred tax liabilities in respect of taxable
+temporary differences, are only recognized to the extent that it is probable that the
+relevant Group entity can generate sufficient taxable profit to realize the corresponding
+benefit. Infineon reviews deferred tax assets for impairment at every reporting date.
+The assessment requires management to make assumptions about future taxable
+profits as well as other positive and negative influencing factors. This assessment also
+takes into account insights from the company five-year plan as approved in the
+most recent fiscal year.
+Deferred tax assets and liabilities are netted to the extent they relate to the same
+tax authority and to the same taxpayer or a group of different taxpayers who are
+jointly assessed for income tax purposes.
+Taxes are recognized in the Consolidated Statement of Profit or Loss, with the
+exception of income taxes relating to items recognized directly in equity or in other
+comprehensive income.
+Acquisition of 100 percent of the shares in
+Cypress Semiconductor Corporation
+On 16 April 2020 Infineon acquired 100 percent of the shares of Cypress Semiconductor
+Corporation (Cypress) based in San José, California (USA).
+With the acquisition of Cypress, Infineon is strengthening its focus on structural
+growth drivers and serving an even broader range of applications. Cypress has a
+differentiated portfolio of microcontrollers, memories for specific applications as well
+As a result of the purchase price allocation which, is for the most part based on the
+fair values of the assets acquired and liabilities assumed, besides inventories and
+property, plant and equipment, especially intangible assets such as technologies,
+customer relations and brands as well as a goodwill were recognized. The main
+assumptions made in the context of the purchase price allocation concerned the
+development of revenue and margins in the business planning of the acquired busi-
+ness, the expected synergies and the cost of capital.
+32
+13
+9
+Other non-current assets
+67
+Total assets
+5,455
+Short-term financial debt and current portion of long-term financial debt
+1,335
+Trade payables
+162
+Current provisions
+24
+Current income tax payables
+215
+Current leasing liabilities
+10
+427
+20
+361
+6
+€ in millions
+30
+Revenue
+Other non-current liabilities
+41
+Income after tax
+Total liabilities
+2,631
+The gross carrying amount of trade receivables acquired at the date of acquisition
+was €189 million and was essentially in line with fair value.
+Combined Management Report
+The costs associated with the acquisition for the implementation of the business
+combination, mainly legal expenses, bank commissions and other consulting
+expenses, were recognized in other operating expenses and amounted to €41 million.
+The transaction costs directly attributable to the loans contracted on completion
+of the Cypress acquisition (see note 17, ☐ p. 179 f.) amounted to €32 million. These are
+allocated over the term of the loans using the effective interest method and were
+recognized in financial expenses in the amount of €22 million in the 2020 fiscal year.
+The goodwill of €5,430 million arising from the Cypress acquisition, which is originally
+denominated in US dollars, is primarily attributable to synergies, expected cost
+benefits from economies of scale, revenues from the future technology and customer
+portfolio, and the know-how of the workforce. Goodwill is not deductible for tax
+purposes.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 163 >
+The following table shows the preliminary allocation of the purchase price to
+acquired assets and assumed liabilities as of the acquisition date:
+Cash and cash equivalents
+Trade receivables
+Inventories
+Current income tax receivables
+Contract assets
+Other current assets
+Property, plant and equipment
+Other intangible assets
+Right-of-use assets
+Investments accounted for using the equity method
+Non-current income tax receivables
+Deferred tax assets
+789
+189
+525
+8
+1
+87
+588
+3,108
+39
+Due to the on-going operational integration of Cypress into the existing Group and
+any possible resulting findings about circumstances that already existed at the date
+of acquisition, with regard to property, plant and equipment, other intangible assets,
+current and deferred tax and contingent liabilities the amounts initially recognized
+may be subject to adjustments and should be considered to be provisional.
+(1,096)
+Consolidated Financial Statements
+Q = < 166 >
+47
+75
+(18)
+(1)
+(52)
+(194)
+Included within deferred tax income was an amount of €63 million (2019: €3 million
+tax expense) from the creation and reversal of temporary differences.
+The German combined statutory tax rate for Infineon Technologies AG was 28 percent
+for the 2020 and 2019 fiscal years. This is based on a corporate income tax rate of
+15 percent, plus a solidarity surcharge of 5.5 percent and a trade tax rate of 12 percent.
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax
+laws applicable in the relevant countries and is taxed based on the respective country
+specific tax rates.
+Other
+Actual income taxes
+(53)
+"Effects due to changes in tax rates” resulted from a change in the applicable tax rate
+in Singapore.
+In the 2020 fiscal year, the tax expense from the valuation allowances or non-recogni-
+tion of deferred tax assets for tax loss carry-forwards amounted to €1 million (2019:
+€21 million), for tax credits to €46 million (2019: €57 million), and from temporary
+differences to €0 million (2019: €7 million). A write-up of deferred tax assets for tax
+loss carry-forwards of €37 million was recorded (2019: €8 million). With respect to the
+deferred tax assets for temporary differences the write-up amounted to €0 million in
+the 2020 fiscal year (2019: €1 million) and for tax credits €0 million (2019: €23 million).
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 169 >
+The utilization of tax loss carry-forwards, tax credits and temporary differences for
+which deferred tax assets had not previously been recorded resulted in current tax
+income of €5 million in the 2020 fiscal year (2019: €6 million).
+Deferred tax assets and liabilities as of 30 September 2020 and 2019 comprised the
+following:
+unused tax credits and excess foreign tax credits of €596 million (30 September 2019:
+€413 million).
+The category "Other" includes a deferred tax expense of €20 million (2019: €0 million)
+as a result of outside basis differences in shares of subsidiaries.
+(10)
+Change in valuation allowance on deferred tax assets
+Change in available tax credits
+7
+(94)
+(135)
+Tax rate differential
+33
+57
+42
+(59)
+Effects due to changes in tax rates
+(5)
+(52)
+Further information
+(194)
+Effects from the difference between local and functional currency
+Prior year taxes
+(14)
+(11)
+50
+20
+Non-deductible expenses
+(27)
+(22)
+Tax-exempt income
+33
+37
+Change in permanent balance sheet effects
+(23)
+Infineon assessed the need for a valuation allowance of its deferred tax assets. Based
+on the results of such assessment, considering all positive and negative factors and
+information relating to the foreseeable future based on business plans, Infineon
+recognized deferred tax assets, after netting, of €627 million as of 30 September 2020
+(30 September 2019: €599 million).
+Deferred tax assets in the amount of €408 million were recognized for legal entities
+which have incurred tax losses this fiscal year. In the prior fiscal year, those entities
+recorded deferred tax assets in the amount of €345 million. Such tax losses primarily
+incurred due to extraordinary items with respect to the acquisition of Cypress this
+fiscal year. It is expected that these legal entities based on company forecast incur
+positive taxable results in the next years. Special considerations are given to unfore-
+seen items that could impact these results.
+30 September 2020
+30 September 2019
+(173)
+161
+(170)
+109
+33
+Tax loss carry-forwards
+606
+393
+213
+19
+Unused tax credits and
+excess foreign tax credits
+184
+123
+61
+(11)
+Other
+166
+(54)
+143
+(39)
+8
+13
+€ in millions
+Total deferred taxes
+273
+(303)
+and similar commitments
+(34)
+Change
+Deferred
+tax
+assets
+Deferred
+tax
+liabilities
+Deferred
+tax
+assets
+Deferred
+tax
+Total
+liabilities
+€ in millions
+therein
+through
+profit or
+loss
+Intangible assets
+39
+(740)
+39
+(206)
+(534)
+22
+Property, plant
+and equipment
+162
+(129)
+152
+(17)
+(102)
+Provisions, pension plans
+(118)
+€ in millions
+2019
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+(6)
+(8)
+2
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+(8)
+2019
+2020
+Infineon Technologies | Annual Report 2020
+Total gain (loss) from joint ventures accounted for using the equity method
+Segment Industrial Power Control
+Segment Automotive
+(8)
+€ in millions
+Further information
+< 167 >
+(8)
+(8)
+The investment in SkyHigh is allocated to the Automotive segment.
+(2)
+(6)
+(8)
+Q =
+2019
+SkyHigh Memory Limited (SkyHigh), based in Hong Kong (People's Republic of China),
+designs, develops and markets high-performance non-volatile flash memory for the
+core markets of automotive, communications, digital consumers, as well as industry
+since the
+and medical. Infineon has held 40 percent of the shares of the company
+acquisition of Cypress on 16 April 2020.
+SkyHigh Memory Limited
+Other comprehensive income (loss) for the year, net of tax
+Total comprehensive income (loss) for the year, net of tax
+Income (loss) for the year, net of tax
+€ in millions
+For the 2020 and 2019 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the joint ventures accounted for using the
+equity method were aggregated as follows:
+2020
+The investments accounted for using the equity method comprise the shares in the
+joint ventures and associated companies listed below.
+5 Investments accounted for using the equity method
+As of 30 September 2020 and 2019, the carrying amount of joint ventures accounted
+for using the equity method was €21 million and €29 million, respectively. The pro
+rata results from joint ventures accounted for using the equity method were allocated
+to the segments as follows for the 2020 and 2019 fiscal years:
+€ in millions
+Financial expenses comprised the following in the 2020 and 2019 fiscal years:
+26
+29
+26
+29
+Interest expenses
+2019
+Total
+Interest income
+€ in millions
+Financial income comprised the following in the 2020 and 2019 fiscal years:
+Financial Income and expenses
+Notes to the Consolidated Financial Statements
+2020
+Other financial expenses
+Total
+2020
+Summarized financial information
+The investment in SIAPM is allocated to the Automotive segment.
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd.
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd. (SIAPM), registered in
+Shanghai (People's Republic of China), offers power semiconductor solutions for
+electric vehicles in Mainland China. Volume production is running at Infineon's site in
+Wuxi (People's Republic of China). Infineon holds 49 percent of the company's shares.
+The investment in Bipolar is allocated to the Industrial Power Control segment.
+Infineon Technologies Bipolar GmbH & Co. KG (Bipolar) located in Warstein (Germany)
+develops and manufactures bipolar power semiconductors. Infineon accounts for
+the 60 percent interest using the equity method as Infineon lacks controlling influence
+due to certain contractual participation rights of the co-shareholder.
+Infineon Technologies Bipolar GmbH & Co. KG
+Joint Ventures
+Further information on Infineon's financial income and expenses is contained in
+note 28. p. 202
+Financial expenses included other financial expenses of €25 million in the 2020
+fiscal year, as well as interest expenses of €1 million in connection with interest rate
+derivatives concluded to hedge future refinancing measures.
+(98)
+(177)
+(62)
+(36)
+(47)
+(130)
+2019
+Summarized financial information
+The result of the joint ventures accounted for using the equity method is not part of
+the segment result (see note 30, p. 215).
+Associates
+pmdtechnologies ag
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+2019
+2020
+€ in millions
+Income tax
+Deferred tax income (expense)
+Current tax expense
+€ in millions
+Expected income tax expense
+The reconciliation of income taxes from continuing operations for the fiscal years
+ended 30 September 2020 and 2019, based on the German combined statutory income
+tax rate of 28 percent (2019: 28 percent) is as follows:
+Income tax from continuing operations for the fiscal years ending 30 September 2020
+and 2019 amounts to:
+6 Income tax
+Q = < 168 >
+Infineon Technologies | Annual Report 2020
+Due to the acquisition of the associates during the fiscal year, information for the
+previous year is not applicable. The result of the associates accounted for using the
+equity method is not part of the segment result (see note 30, □ p. 215).
+2020
+(1)
+pmdtechnologies ag (pmd) which is based in Siegen (Germany) develops CMOS-based
+3D time-of-flight (ToF) image sensor technologies and associated algorithms and
+software. In addition, pmd provides engineering services for the coordination of the
+individual components of ToF camera systems.
+The 15 percent stake held by Infineon since 12 November 2019 is accounted for
+by using the equity method, because Infineon has significant influence over pmd
+due to the right to hold a supervisory board position in combination with compre-
+hensive minority rights and certain contractual rights in the context of development
+cooperation.
+The investment in pmd is assigned to the Power & Sensor Systems segment.
+Deca Technologies Inc.
+Deca Technologies Inc. (Deca), based in George Town (Cayman Islands), licenses its
+intellectual property (IP) to customers and provides engineering services. Infineon
+has held 43 percent of the shares of the company since the acquisition of Cypress on
+16 April 2020.
+(1)
+As of 30 September 2020, the carrying amount of associates accounted for using
+the equity method was €66 million. The pro rata results from associates accounted
+for using the equity method were allocated to the segments as follows for the 2020
+fiscal year:
+€ in millions
+Segment Automotive
+The investment in Deca is allocated to the Automotive segment.
+Total gain (loss) from associates accounted for using the equity method
+2020
+(1)
+(1)
+For the 2020 fiscal year, Infineon's proportion of selected items from the statement of
+comprehensive income of the associates accounted for using the equity method were
+aggregated as follows:
+€ in millions
+Income (loss) for the year, net of tax
+Other comprehensive income (loss) for the year, net of tax
+Total comprehensive income (loss) for the year, net of tax
+Segment Power & Sensor Systems
+2020
+Deferred taxes, net as of the end of the previous fiscal year
+€ in millions
+The change in the net amount of deferred tax assets and liabilities is as follows:
+Business focus and strategy
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+2020
+Q = < 170 >
+2019
+Adjustment on initial application of IFRS 9 and IFRS 15
+Deferred taxes, net as of the end of the fiscal year
+639
+Management Board and
+Supervisory Board
+(3)
+21
+11
+20
+27
+(352)
+E
+Foreign currency translation
+Deferred taxes recognized in other comprehensive income
+Deferred taxes recognized directly in equity
+Deferred tax arising from business acquisitions
+Change of deferred taxes, recognized directly in equity:
+From discontinued operations
+(59)
+42
+From continuing operations
+Deferred tax income (expense), recognized through income statement:
+1
+579
+Further information
+> a bridge facility of €6,600 million with maturity of up to two years and nine months
+from the date of the loan commitment, and
+(6)
+(13)
+5
+6
+Other intangible assets
+1,698
+156
+35
+(2)
+יי
+29
+1,916
+(866)
+(141)
+2
+(15)
+(1,020)
+896
+832
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+-
+Further information
+(1)
+18
+15
+338
+(151)
+(28)
+(9)
+(188)
+150
+137
+Licenses and similar rights
+227
+31
+(1)
+3
+260
+(180)
+(12)
+1
+(1)
+(192)
+68
+47
+Remaining other intangible assets
+18
+(12)
+35
+Q = < 176 >
+Property, plant and equipment of €182 million as of 30 September 2020 (30 Sep-
+tember 2019: €186 million) served mainly as collateral for the existing financing
+arrangements of MoTo Objekt CAMPEON GmbH & Co. KG ("MoTo”), which were repaid
+on 16 October 2020 (see note 17, ☐ p. 180).
+Infineon carried out the annual goodwill impairment test at the operating segment
+level as of 30 June 2020.
+Infineon determines the recoverable amount of a particular cash generating unit to
+which goodwill has been allocated on the basis of its value in use. The value in use is
+measured by estimating the present value of future cash flows that will be generated
+by the continuing operations of the CGU discounted using an appropriate discount rate.
+Cash flows, including the underlying parameters such as revenue growth and gross
+margin, are projected based on past experience, current operating results and the
+five-year business plan approved in the fiscal year just ended. The plan is calculated
+bottom-up based on certain central assumptions applied consistently throughout
+Infineon. The average revenue growth rates over the planning period are between
+8.0 percent and 21.7 percent, which is partly higher than the average historical growth
+rates of the sectors in which the relevant segments operate, in particular because
+the segments benefit to varying degrees from the businesses acquired along with
+Cypress and the related revenue and costs synergies. Investments to increase capacity
+for which no cash outflow has taken place are not taken into account. Cash flows for
+periods beyond the planning horizon are estimated using a terminal value.
+The discount rate for future cash flows is based on the after-tax weighted average
+cost of capital ("WACC") for the CGU in question. The Capital Asset Pricing Model
+("CAPM") is used to calculate the cost of equity. The relevant pre-tax WACC used to
+discount future pre-tax cash flows in line with IAS 36, is derived from estimated future
+after-tax cash flows and the after-tax WACC using a typical tax rate for each reporting
+segment. The risk-free interest rate is derived using the Svensson method taking into
+account risk premiums, and the beta factor and debt ratio are derived from a group
+of companies comparable to the operating segment. In this way the discount rate
+derived reflects the current market rate of return as well as the specific risks attached
+to the respective operating segment.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 177 >
+The following table shows the allocation of the carrying amount of goodwill to the
+segments, as well as the valuation parameters used:
+Segment
+Automotive
+Industrial Power Control
+Power & Sensor Systems
+Connected Secure Systems
+Corporate
+Total
+1 Valuation parameters as of 30 June 2020 and 2019.
+Book value of allocated goodwill
+€ in millions
+Pre-tax WACC1
+in %
+After-tax WACC¹
+909
+Depreciation on property, plant and equipment is presented in the Consolidated
+Statement of Profit or Loss mainly in cost of goods sold. Amortization of intangible
+assets is mainly presented in cost of goods sold or selling, general and administrative
+expenses. Impairments on property, plant and equipment and other intangible assets
+are reported under other operating expenses.
+764
+The amounts shown in the 2020 fiscal year under "acquisitions through business
+combinations" resulted exclusively from the acquisition of Cypress.
+15 Goodwill
+Changes in goodwill during the 2020 and 2019 fiscal years were as follows:
+€ in millions
+Cost
+Balance at the beginning of the fiscal year
+Foreign currency effects
+2020
+2019
+Additions through business combinations
+909
+5,430
+764
+95
+(442)
+50
+Balance at the end of the fiscal year
+5,897
+909
+Accumulated impairments and other changes
+Balance at the beginning of the fiscal year
+Balance at the end of the fiscal year
+Carrying amount
+Balance at the beginning of the fiscal year
+Balance at the end of the fiscal year
+909
+5,897
+288
+Technologies
+167
+775
+771
+Technical equipment
+and machinery
+8,845
+627
+1
+(118)
+282
+15
+9,652
+(7,069)
+(635)
+114
+(12)
+(7,602)
+2,050
+1,776
+Other plant and office equipment
+1,248
+103
+(68)
+24
+(885)
+4
+(3)
+(63)
+1 October
+Additions
+2018
+Additions Disposals
+through
+Reclassi-
+fication
+business
+Foreign
+currency
+effects
+30 Sep-
+tember
+2019
+1 October
+2018
+Depre- Disposals
+ciation/
+combi-
+amor-
+tization
+nations
+Property, plant and equipment
+Land, land rights and buildings
+1,593
+43
+(4)
+23
+5
+1,660
+(822)
+3
+1,311
+(1,109)
+(106)
+3,510
+3,038
+Other intangible assets
+Capitalized development costs
+769
+125
+894
+(294)
+(57)
+(351)
+543
+475
+Customer relationships
+396
+(1)
+11
+406
+(229)
+(43)
+1
+(5)
+(276)
+130
+(9,638)
+(18)
+184
+(804)
+67
+(3)
+(1,151)
+160
+139
+Payments on account and
+construction in progress
+352
+502
+(1)
+(329)
+in %
+1
+525
+352
+Total property, plant
+and equipment
+12,038
+1,275
+1
+(191)
+25
+13,148
+(9,000)
+525
+Cost
+Terminal growth rate¹
+in %
+2019
+76
+85
+Due within one year
+294
+317
+Due after one year to five years
+Due after more than five years
+Total
+Payments
+for not
+reasonably
+certain
+renewal
+options
+1
+11
+58
+70
+Management Board and
+Supervisory Board
+> three term loan tranches, each amounting to US$1,110 million, with maturities of
+three, four and five years.
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 179 >
+In addition, there are future payment obligations for leases that have not been started
+but have already been contracted, as well as for short-term leases with a term of
+twelve months or less, which are immaterial.
+The leasing contracts concluded relate mainly to the rental of office and storage
+space, IT equipment, other operating and office equipment as well as vehicles for
+selected employees.
+€ in millions
+Infineon's leases have no material impact on covenants connected to debt financing
+instruments. In addition, lease liabilities are not part of the net cash position measure
+used for capital market reporting purposes.
+172
+60
+(27)
+286
+Payments for leasing liabilities
+1 The amounts shown under "Additions through business combinations" resulted exclusively from the acquisition of Cypress.
+2 Other changes for land, land rights and buildings include impairments amounting to €11 million.
+Interest payments
+Total
+2020
+2
+63
+4
+69
+The allocation of discounted and undiscounted lease liabilities by maturity as of
+30 September 2020 was as follows:
+Due to the requirements of IFRS 16, the following future lease payments have not been
+included in the valuation of lease liabilities:
+€ in millions
+Due within one year
+Due after one year to five years
+Due after more than five years
+Total
+Infineon Technologies | Annual Report 2020
+Discounted
+Undiscounted
+lease liabilities
+lease liabilities
+59
+159
+(56)
+The leasing contracts, in which Infineon subleases and acts as a lessor, are not material
+from the Group's point of view.
+17 Financial debt
+30 Septem-
+30 Septem-
+weighted average interest rate 1.66%, due 2022-2024
+2,361
+ber 2020
+ber 2019
+USPP notes US$935 million,
+19
+20
+60
+62
+weighted average interest rate 4.09%, due 2024-2028
+Long-term financial debt
+797
+853
+6,528
+1,534
+2
+15
+81
+97
+7,033
+1,556
+In June 2019 Infineon Technologies AG concluded the financing for the acquisition of
+Cypress (see note 3, p. 162 ff.) with various national and international banks. It was
+unsecured, non-subordinated and comprised:
+Infineon Technologies | Annual Report 2020
+The expected future minimum non-discounted lease payments from operating leases
+for land and buildings owned by Infineon and in which Infineon acts as lessor are
+as follows:
+Due after more than five years
+Total
+Due within one year
+Financial debt as of 30 September 2020 and 2019 consisted of the following:
+€ in millions
+Short-term financial debt and current portion of long-term financial debt,
+weighted average interest rate: 2.01% (2019: 1.60%)
+Convertible bonds, weighted average interest rate 4.50%
+Short-term financial debt and current portion of long-term financial debt
+Loans payable to banks:
+Unsecured loans, weighted average interest rate 1.06% (2019: 1.15%),
+due 2021-2023
+Secured term loans, weighted average interest rate 2019: 2.03%, due 2020
+Bond €500 million, coupon 1.50%, due 2022
+Bond €750 million, coupon 0.75%, due 2023
+Bond €750 million, coupon 1.125%, due 2026
+Bond €750 million, coupon 1.625%, due 2029
+Bond €650 million, coupon 2.00%, due 2032
+Term loans US$2,775 million,
+30 Septem-
+ber 2020
+30 Septem-
+ber 2019
+176
+22
+329
+505
+22
+6
+11
+172
+499
+498
+746
+743
+740
+636
+€ in millions
+Due after one year to five years
+39
+Payments for short-term leases and low-value leases
+10
+10.1
+1.5
+1.5
+2,588
+n/a
+10.7
+n/a
+8.7
+n/a
+1.5
+n/a
+2
+2
+5,897
+909
+As a result of the impairment tests carried out, Infineon concluded that none of the
+operating segments gave rise to an impairment of goodwill in the
+year under report.
+Business planning is affected, among other things, by uncertainties regarding the
+assessment of markets and the macroeconomic environment and is based to a large
+extent on the assumption that the revenue and cost synergies expected from the
+acquisition of Cypress will be successfully realized. Therefore, sensitivity analyses
+were carried out at segment level, taking into account changes considered possible
+in the main assumptions. Even taking these changes into account, no impairment on
+goodwill was observed as a result of the sensitivity analyses at segment level.
+In addition, as of the reporting date, there was no indication that the recoverable
+amount of a segment to which goodwill had been allocated could have fallen below
+the book value.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+9.5
+Further information
+13.2
+755
+2020
+2019
+2020
+2019
+2020
+2019
+1,402
+52
+10.9
+11.7
+8.6
+8.9
+1.5
+1.5
+226
+100
+11.9
+12.1
+9.1
+9.2
+1.5
+1.5
+1,679
+12.3
+Q = < 178 >
+16 Leases
+Infineon has applied the new IFRS 16 "Leases" standard since 1 October 2019. For
+information on the effects of the first-time application of IFRS 16 on the Group's
+financial position, results of operations and cash flows as of the first-time application
+date as well as in the 2020 fiscal year, please refer to note 1. ☐ p. 148 ff.
+240
+66
+32
+(48)
+(23)
+267
+The Consolidated Statement of Cash Flows includes the following amounts in the
+2020 fiscal year, which are attributable to leases:
+Technical equipment
+and machinery
+5
+7
+(2)
+(1)
+9
+€ in millions
+Other plant and
+office equipment
+10
+Total
+255
+9
+75
+(6)
+(3)
+and buildings
+Land, land rights
+€ in millions
+nations¹
+The change in the rights of use in the 2020 fiscal year was as follows:
+The Consolidated Statement of Profit or Loss includes the following amounts in the
+2020 fiscal year, which are attributable to leases:
+€ in millions
+Depreciation
+Impairment
+Interest expenses
+Expenses for short-term leases with a term of twelve month or less
+Expenses for low-value leases
+2020
+56
+11
+2020
+5
+1
+74
+1 October
+2019
+Additions
+Additions
+Depreciation
+through
+Other
+changes 2
+30 Septem-
+ber 2020
+Total
+business
+combi-
+1
+ments
+Business focus and strategy
+30 Sep-
+tember
+2018
+600
+777
+1,377
+571
+2,187
+2,758
+(1)
+1,376
+2,758
+The impairment losses on financial investments that are measured at amortized cost
+changed as follows during the 2020 and 2019 fiscal years:
+In conjunction with the integration of Cypress, the presentation of reimbursement
+obligations to customers was aligned with the approach previously used by Cypress.
+Instead of netting reimbursement obligations against trade receivables, they are
+now reported within other current liabilities (see note 19, ☐ p. 181 f.). For better com-
+parability, the previous year's figures were adjusted.
+Changes in the allowances for trade receivables in the 2020 and 2019 fiscal year were
+as follows:
+€ in millions
+Allowances at beginning of the fiscal year
+Revaluation of allowances, net
+Allowances at end of the fiscal year
+2020
+2019
+2
+€ in millions
+1
+(2)
+Allowances at beginning of the fiscal year
+1
+Current year's allowance, net of reversals
+Usage of loss allowances, net
+Allowances at end of the fiscal year
+Information on Infineon's credit risk management is contained in note 29. p. 210 f.
+Trade receivables, net
+Infineon Technologies | Annual Report 2020
+ber 2019
+30 Septem-
+ber 2020
+Trade receivables, third parties
+Trade receivables, related parties
+Trade receivables, gross
+Loss allowances
+30 Septem-
+30 Septem-
+ber 2020
+ber 2019
+1,192
+1,059
+9
+5
+1,201
+1,064
+(5)
+(7)
+1,196
+1,057
+€ in millions
+Fixed-term bank deposits
+Investment funds
+Financial investments, gross
+Loss allowances
+Financial investments, net
+30 Septem-
+2020
+2019
+7
+(2)
+13 Other current assets
+403
+1,701
+Other current assets as of 30 September 2020 and 2019 consisted of the following:
+€ in millions
+VAT and other receivables from tax authorities
+Prepaid expenses
+2020
+2019
+167
+171
+92
+92
+71
+88
+Derivative financial instruments (see note 28, p. 202 ff.)
+Other
+3
+215
+197
+204
+530
+770
+Cost of goods sold consisted mainly of inventory-related expenses in the 2020 and
+2019 fiscal years.
+As of 30 September 2020 and 2019 finished goods and merchandise contained an asset
+resulting from sales with a right of return of €13 million and €7 million, respectively.
+1,093
+205
+215
+1,341
+496
+2,052
+ber 2019
+7
+5
+7
+Information about Infineon's credit risk management is contained in note 29. p. 211
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 173 >
+€ in millions
+Notes to the Consolidated Financial Statements
+Inventories as of 30 September 2020 and 2019 consisted of the following:
+€ in millions
+Raw materials and supplies
+Work in progress
+Finished goods and merchandise
+Total
+12 Contract assets
+In the 2020 fiscal year, contract assets increased by €6 million to €97 million
+(1 October 2019: €91 million). The increase resulted from an increase in contract
+assets relating to revenue recognized over time.
+30 Septem-
+ber 2020
+30 Septem-
+11 Inventories
+Inventory write-downs as of 30 September 2020 and 2019 amounted to €252 million
+and €198 million, respectively.
+Trade receivables result from contracts with customers that are due within one year.
+As of 30 September 2020 and 2019 they consisted of the following:
+Financial investments as of 30 September 2020 and 2019 comprised the following
+(see note 2, p. 152 ff., and note 28, p. 198):
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 171 >
+Notes to the Consolidated Financial Statements
+Loss from discontinued operations, net of income taxes
+Basic and diluted earnings per share are calculated as follows for the fiscal years
+ended 30 September 2020 and 2019:
+€ in millions
+Qimonda's share of discontinued operations, net of income taxes
+Loss from discontinued operations, net of income taxes
+2020
+2019
+(4)
+(24)
+€ in millions (unless otherwise stated)
+Others business' share of discontinued operations, net of income taxes
+5
+Net income - basic and diluted
+(4)
+In the 2020 and 2019 fiscal years, adjustments to individual provisions arose as a result
+of recent developments in connection with the insolvency of Qimonda, as well as
+subsequent income from other discontinued operations.
+(19)
+The current risks and provisions relating to Qimonda's insolvency are described in
+note 25 "Proceedings in relation to Qimonda”. □ p. 193 f.
+Qimonda - discontinued operations
+of impair-
+579
+334
+In connection with investments in subsidiaries there were taxable temporary differ-
+ences of €544 million (2019: €610 million) for which no deferred taxes have been
+recognized because the timing of the reversal can be controlled and it is not probable
+that the temporary differences will reverse in the foreseeable future.
+Including the items recognized directly in equity, in other comprehensive income and
+the expense/benefit from continuing and discontinued operations, the income tax
+consisted of the following:
+€ in millions
+Income taxes from continuing operations
+Income taxes from discontinued operations
+Income taxes recognized directly in equity
+Income taxes recognized in other comprehensive income
+Income taxes
+-
+2019
+2020
+(52)
+(194)
+6
+225
+21
+(3)
+(6)
+18
+(173)
+The increase of income taxes recognized in other comprehensive income mainly
+resulted from tax effects of €27 million (2019: €7 million) from realized and non-realized
+gains and losses from hedges offset by taxes on actuarial gains and losses arising
+from pension commitments of €6 million (2019: increase €15 million). Income taxes
+recognized directly in equity were the result of tax effects in connection with the capital
+increase, the issuance and compensation in connection with hybrid capital as well as
+tax effects from reversal of valuation allowances on deferred tax assets resulting from
+capital measures in prior years.
+7 Disposals and discontinued operations
+On 23 January 2009, Qimonda AG (“Qimonda”), a majority-owned company, filed
+an application at the Munich Local Court to commence insolvency proceedings. On
+1 April 2009, the insolvency proceedings formally opened. Insolvency proceedings
+were also opened for further domestic and foreign subsidiaries of Qimonda. Some
+of these insolvency proceedings have already been completed. The impacts of these
+proceedings are reported as discontinued operations in Infineon's Consolidated
+Statement of Profit or Loss and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency
+proceedings.
+Remuneration entitlement of hybrid capital investors
+2020
+2019
+1.0
+1.4
+1,265.5
+1,164.8
+Earnings per share (in euro) from continuing operations
+0.26
+0.77
+Earnings per share (in euro) from discontinued operations, net of income taxes
+Earnings per share (in euro) - basic and diluted
+(0.02)
+0.26
+0.75
+Infineon Technologies | Annual Report 2020
+1 Including the cumulative tax effect.
+2 The calculation of earnings per share is based on unrounded figures.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 172 >
+9 Financial investments
+Financial investments comprise fixed-term deposits with banks and investment funds.
+Fixed-term deposits with banks are measured at amortized cost and are categorized
+as financial assets. Investment funds are measured at fair value through profit or loss
+and categorized as financial assets (for valuation see note 28, □ p. 198).
+Basic and diluted earnings per share² (in euro):
+Weighted-average number of shares outstanding - diluted
+- Effect of share-based compensation
+- Adjustment for own shares
+368
+870
+35
+Net income attributable to shareholders
+of Infineon Technologies AG - basic and diluted
+thereof from continuing operations
+thereof from discontinued operations
+333
+870
+337
+889
+10 Trade receivables
+(4)
+Weighted-average number of shares outstanding (in millions):
+1,269.8
+(5.3)
+1,169.4
+(6.0)
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+1,264.5
+1,163.4
+8 Earnings per share
+Basic earnings per share are calculated by dividing net income by the weighted aver-
+age number of shares outstanding during the reporting period. The calculation of the
+diluted earnings per share is based on the assumption that all potentially dilutive
+instruments are converted into ordinary shares, resulting in a corresponding increase
+in the number of shares.
+The hybrid bond issued in the 2020 fiscal year is classified as equity (see note 21,
+p. 188 f.). The related hybrid investors' remuneration entitlement (after tax) represents
+payments for a component of equity that reduces the earnings available to share-
+holders for distribution and was therefore taken into account in determining earnings
+per share (undiluted and diluted).
+- Ordinary share capital
+(19)
+Grants receivables
+Total
+Infineon Technologies | Annual Report 2020
+338
+2,011
+(159)
+2,190
+(188)
+(125)
+Licenses and similar rights
+260
+26
+3
+(12)
+(1)
+276
+(192)
+(23)
+12
+Remaining other intangible assets
+18
+96
+(9)
+105
+(13)
+(6)
+Technologies
+གྱིད། ད། ད ་
+(131)
+1,321
+14,426
+(9,638)
+(863)
+135
+9
+41
+(10,316)
+4,110
+3,510
+Other intangible assets
+Capitalized development costs
+894
+158
+(18)
+(1)
+1,033
+(351)
+(56)
+18
+Customer relationships
+406
+998
+(83)
+(276)
+(4)
+(393)
+640
+31
+(1,304)
+3,621
+896
+1 The amounts shown under "Additions through business combinations" resulted exclusively from the acquisition of Cypress.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 175 >
+Notes to the Consolidated Financial Statements
+€ in millions
+Depreciation/amortization
+Carrying amount
+Impair-
+ments/ currency
+reversals
+Foreign
+30 Sep-
+effects
+tember
+2019
+30 Sep-
+tember
+Total
+2019
+(4)
+30
+(341)
+(1,020)
+543
+11
+(396)
+925
+130
+17
+(296)
+1,894
+150
+2
+(201)
+(98)
+75
+1
+(18)
+87
+5
+Other intangible assets
+1,916
+184
+3,108
+(30)
+(253)
+4,925
+68
+(136)
+Business focus and strategy
+924
+Carrying amount
+30 Sep-
+tember
+Impair-
+Foreign
+ments/
+currency
+30 Sep-
+tember
+30 Sep-
+tember
+reversals
+effects
+2020
+2020
+of impair-
+ments
+2019
+Property, plant and equipment
+Land, land rights and buildings
+1,660
+54
+278
+(1)
+36
+(31)
+nations'
+1,996
+Disposals
+combi-
+Business focus and strategy
+588
+Management Board and
+Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 174 >
+Notes to the Consolidated Financial Statements
+14 Property, plant and equipment and
+other intangible assets
+for the years ended 30 September 2020 and 2019 was as follows:
+€ in millions
+Cost
+Depreciation/amortization
+1 October
+2019
+Additions
+Additions Disposals
+through
+Reclassi-
+fication
+business
+Foreign
+currency
+effects
+30 Sep-
+tember
+2020
+1 October
+2019
+Depre-
+ciation/
+amor-
+tization
+(885)
+The development of property, plant and equipment as well as other intangible assets
+1
+(1,151)
+(110)
+50
+7
+(1,204)
+145
+160
+Payments on account and
+construction in progress
+525
+507
+11
+(1)
+(283)
+(6)
+753
+(2)
+751
+525
+13,148
+(55)
+Total property, plant
+and equipment
+1,349
+(9)
+(2)
+(50)
+7
+19
+1,075
+11
+775
+(921)
+and machinery
+9,652
+285
+299
+(84)
+228
+Technical equipment
+10,328
+(52)
+2,050
+1,311
+(8,189)
+27
+2,139
+84
+(698)
+(7,602)
+78
+Other plant and office equipment
+higher expected rate
+12
+Corporate bonds
+117
+141
+13
+of pension increase
+1,341
+75
+15
+1,240
+204
+1,444
+Equity securities
+213
+a 50 basis points
+209
+1,266
+170
+of salary increase
+208
+Not quoted
+Quoted
+lower expected rate
+Not quoted
+lower expected rate
+€ in millions
+in an active
+market
+in an active
+market
+in an active
+1
+in an active
+market
+1,206
+127
+1,333
+1,205
+194
+1,399
+a 50 basis points
+Government bonds
+market
+Cash and cash equivalents
+1,250
+12
+Other
+44
+26
+28
+25
+Total
+606
+93
+566
+117
+Investment strategy
+The pension plans' assets are invested with several fund managers. The investment
+guidelines require a mix of active and passive investment management programs
+covering different asset classes. Taking the duration of the underlying liabilities into
+account, a portfolio of investments of plan assets in equity, debt and other securities
+Government and corporate bonds are traded in liquid markets and the majority
+of them have an investment grade rating. The geographical allocation of the equity
+component of plan assets is predominantly based on the MSCI World Index. As a
+matter of policy Infineon's pension plans do not invest in shares or debt instruments
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Quoted
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+1,453
+19
+203
+136
+2
+of pension increase
+1,169
+65
+1,234
+1,200
+194
+1,394
+Reinsurance policies
+36
+35
+Increase in life
+Property
+5
+30
+6
+30
+expectancy by one year
+1,258
+1,394
+a 50 basis points
+In order to determine the present value as of the balance sheet date, the calculation
+of the discount factor was adjusted as the Willis Towers Watson RATE:Link approach
+was applied for the first time as of 30 June 2020. The RATE:Link method continues
+to be based on high-grade fixed-interest corporate bonds from issuers carrying a very
+high credit rating, with the same maturity and in the same currency as the pension
+obligations to be assessed.
+204
+100
+113
+Plans that are wholly
+or partly funded
+1,208
+117
+1,325
+1,206
+Total
+1,217
+221
+1,438
+1,219
+97
+197
+1,303
+1,416
+Infineon Technologies | Annual Report 2020
+The effect of the adjustment to the estimation procedure as of 30 September 2020
+was €75 million, which was recognized as actuarial gain in the Consolidated Statement
+of Comprehensive Income.
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany as in the
+previous year, and for Austria the AVÖ 2018-P tables were applied.
+Management Board and
+Supervisory Board
+13
+113
+104
+9
+Further information
+4.6
+2.0
+4.0
+1.8
+2.1
+1.8
+2.0
+€ in millions
+Business focus and strategy
+30 September 2020
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+plans
+Foreign
+plans
+Total
+Plans that are wholly
+unfunded
+30 September 2019
+1,436
+Combined Management Report
+Further information
+Present value of defined
+30 September 2020
+30 September 2019
+Total
+Domestic
+plans
+Foreign
+plans
+Total
+as well as real estate and reinsurance policies is targeted to maximize the total
+long-term return on assets for a given level of risk. Investment risk is monitored on
+an ongoing basis through periodic portfolio reviews, by coordination with investment
+managers and annual liability measurements. Investment policies and strategies are
+periodically reviewed as part of detailed studies of assets and liabilities by indepen-
+dent investment advisors and actuaries to ensure the objectives of the plans are met,
+taking into account any changes in benefit plan structure, market conditions or other
+material items. The aim is to optimize the risk-return profile of plan assets against
+the liabilities, using a diversified portfolio of investments within a defined risk budget
+and to thereby increase the funding ratio in the long term.
+Plan asset allocation
+As of 30 September 2020 and 2019 the allocation of invested plan assets to the major
+asset categories was as follows:
+a 50 basis points
+higher expected rate
+30 September 2020
+30 September 2019
+of salary increase
+1,224
+138
+1,362
+1,232
+€ in millions
+The following sensitivity analysis table shows how the present value of all defined
+benefit pension obligations would be affected by changes in the aforementioned
+actuarial assumptions. In each case, they reflect the effect of changes in one actuarial
+assumption while all other assumptions remain constant.
+Sensitivity analysis
+1,536
+Q = < 185 >
+Domestic
+plans
+Foreign
+plans
+benefit pension plans with:
+a 50 basis points
+higher discount rate
+1,116
+206
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+1,322
+185
+1,312
+a 50 basis points
+lower discount rate
+1,333
+236
+1,569
+1,322
+214
+1,127
+Q = < 186 >
+Hybrid capital
+The market value of the land and real estate leased to Group companies by the legally
+independent pension trust amounted to €30 million as of both 30 September 2020
+and 2019.
+Since the 2020 fiscal year, the distribution was made from retained earnings pro-
+vided that, at the end of the fiscal year, to the extent it covers the distribution in the
+following year.
+Dividends
+For the 2019 fiscal year, a cash dividend of €0.27 per share (total amount: €336 million)
+was paid. For the 2018 fiscal year, a cash dividend of €0.27 per share (total amount:
+€305 million) was paid.
+With regard to the 2020 fiscal year, a dividend of €0.22 for each share entitled to a
+dividend shall be proposed to be paid from the €287 million of distributable profits
+of Infineon Technologies AG. This would result in an expected distribution of approxi-
+mately €286 million. The payment of this dividend depends on the approval of the
+Annual General Meeting on 25 February 2021.
+Other reserves
+Changes in other reserves during the 2020 and 2019 fiscal years were as follows:
+2020
+2019
+Pre-tax
+Tax
+Net of tax
+Pre-tax
+Tax
+Net of tax
+€ in millions
+As of 1 October 2018
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial losses on pension plans and similar commitments net of tax of €16 million
+As of 30 September 2019
+Net income attributable to shareholders of Infineon Technologies AG
+The following table shows a reconciliation of retained earnings as of 30 September 2020
+and 2019:
+Dividends to shareholders of Infineon Technologies AG
+Retained earnings
+The hybrid bond is an equity instrument under IAS 32. The term is not contractually
+limited; the bond has no final maturity date. The hybrid bond can only be canceled
+by Infineon subject to certain conditions. The investors have no cancellation rights
+and cannot trigger a premature repayment liability for Infineon. Distributions are at
+Infineon's sole discretion.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 188 >
+Authorized share capital
+As of 30 September 2020, the Company's Articles of Associations provided for two
+authorized share capitals amounting to up to €670,000,000:
+> Section 4 paragraph 4 of the Articles of Association provides that the Management
+Board is authorized, with the approval of the Supervisory Board, to increase the
+share capital in the period until 19 February 2025 once or in several partial amounts
+by a total of up to €640,000,000 through the issue of new no par value registered
+shares, against contributions in cash or in kind (Authorized Capital 2020/1). The
+new shares participate in profits from the beginning of the fiscal year of their
+issue. To the extent legally permissible, the Management Board may, with the
+approval of the Supervisory Board, and contrary to section 60 paragraph 2 of the
+German Stock Corporation Act, stipulate that the new shares participate in the
+profits from the beginning of an already ended fiscal year for which no resolution
+of the Annual General Meeting on the use of the distributable profit has yet been
+made at the time of their issue. The originally authorized capital 2020/1, of
+€750,000,000 was reduced to €640,000,000 by the capital increase of €110,000,000
+as decided by the Management Board and the Supervisory Board on 26 May 2020
+and entered in the Commercial Register on 27 May 2020. Within the framework
+of the Authorized Capital 2020/1, the Management Board is authorized, with the
+approval of the Supervisory Board, to exclude the subscription rights of the share-
+holders in certain cases. In accordance with German law, cash capital increases
+with subscription rights excluded pursuant to section 186, paragraph 3, sentence 4,
+of the AktG, are not permitted to exceed 10 percent of a company's share capital -
+either at the time of the resolution of the authorization in the Annual General
+Meeting, or at the effective date of the authorization, or its exercise. The capital
+increase of 26/27 May 2020 utilized around 4 percent of this framework. For share
+capital increases against contributions in kind or a combination of cash contri-
+butions and contributions in kind, the authorization further provides an upper limit
+of 10 percent of the share capital in place at the date of the authorization in the
+Annual General Meeting.
+> Section 4, paragraph 7, of the Articles of Association provides that the Manage-
+ment Board is authorized, with the approval of the Supervisory Board, to increase
+the share capital in the period up to 17 February 2021 - either once or in partial
+amounts - by a total of up to €30,000,000 by issuing new no par value registered
+shares against contributions in cash for the purpose of increasing the issue to
+employees of the Company or its Group companies (Authorized Capital 2016/1).
+The subscription rights of the shareholders are excluded in relation to these shares.
+The shares may be issued in such a manner that the contribution to be paid on
+such shares is covered by the portion of the profit for the year that the Management
+Board and Supervisory Board could transfer to retained earnings in accordance
+with section 58, paragraph 2, AktG.
+Conditional capital
+As of 30 September 2020, the Company's Articles of Associations provided for a
+conditional capital amounting to up to €260,000,000:
+Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is
+conditionally increased by up to €260,000,000 through the issue of up to 130,000,000
+new no par value registered shares for the granting of shares to creditors or of the
+holders of warrants or convertible bonds, which due to the authorization by the Annual
+General Meeting on 20 February 2020 are issued by the Company or a subsidiary
+company (Conditional Capital 2020/1).
+2.0
+Infineon Technologies AG issued a perpetual hybrid bond on 1 October 2019 to
+refinance the acquisition of Cypress (see note 3, □ p. 162 ff.). The hybrid was issued as
+a dual-tranche bond with a principal amount of €600 million per tranche. Tranche 1
+has a non-call period from issuance of 5.25 years and a fixed coupon of 2.875 percent
+until the first reset date. Tranche 2 has a non-call period from issuance of 8.25 years
+and a fixed coupon of 3.625 percent until the first reset date. The issue price for
+tranche 1 was 99.385 percent of the principal amount, the issue price for tranche 2
+was 99.121 percent of the principal amount, each with the deduction of a discount.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 189 >
+The proceeds of €1,184 million were received by Infineon on 1 October 2019. The
+discounts and transaction costs totaling €16 million as well as any related income
+taxes of €2 million were recognized directly in equity. Hybrid capital investors' remu-
+neration rights amounted to €39 million in the 2020 fiscal year. Of this amount,
+€20 million was paid to hybrid capital investors on 1 April 2020 (see "retained earnings"
+below). For the purpose of calculating earnings per share, net income €368 million
+attributable to the shareholders of Infineon Technologies AG were reduced by the
+remuneration entitlement of hybrid capital investors of €35 million (net of tax) to
+€333 million (see note 8, ☐ p. 171).
+Compensations to hybrid capital investors
+Accrued compensations to hybrid capital investors
+Actuarial gains on pension plans and similar commitments net of tax of €6 million
+As of 30 September 2020
+hedge accounting'
+(170)
+28
+(142)
+(20)
+Cost of hedging¹
+42
+42
+(42)
+Total
+(742)
+28
+(714)
+189
+9
+(42)
+198
+(19)
+21
+(336)
+resulting from
+368
+Realized gains (losses)
+Infineon Technologies | Annual Report 2020
+€ in millions
+Foreign currency
+(296)
+translation differences
+(543)
+(543)
+85
+85
+Combined Management Report
+870
+(153)
+resulting from
+hedge accounting
+(71)
+(71)
+146
+9
+155
+421
+Unrealized gains (losses)
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+(32)
+(6)
+(38)
+(26)
+(4)
+(30)
+Past service (cost) benefit
+1
+1
+Interest cost
+(7)
+(4)
+(11)
+(17)
+(5)
+(22)
+€ in millions
+Expected return
+on plan assets
+Current service cost
+plans
+plans
+plans
+The actual return on plan assets in the fiscal year ended 30 September 2020 was
+€17 million (30 September 2019: €74 million).
+Amounts recognized in the Consolidated Statement of Profit or Loss and
+in the Consolidated Statement of Comprehensive Income
+The expenses and income of defined benefit plans for the 2020 and 2019 fiscal y
+comprised the following:
+years
+Service costs were recorded within cost of goods sold to the extent that they relate to
+production employees, otherwise they are recorded as research and development
+or selling, general and administrative expenses. Interest costs and expected return
+on plan assets were recorded net as part of financial expense.
+Actuarial gains before taxes of €25 million and losses of €167 million for the 2020 and
+2019 fiscal years, respectively, had been recognized outside profit and loss in other
+comprehensive income.
+As of 30 September 2020 and 2019, cumulative actuarial losses amounted to
+€542 million and €567 million, respectively.
+In the 2021 fiscal year, payments of €33 million are expected to be made to plan assets
+which relate to benefits paid directly to pension recipients by the Group companies.
+The weighted average duration of defined benefit plans was around 18 and 17 years
+as of 30 September 2020 and 2019, respectively.
+4
+The following table shows the expected disbursements for defined benefit plans for
+the next ten fiscal years as of 30 September 2020 and 2019:
+2019
+Domestic
+Foreign
+Total
+Domestic
+Foreign
+Total
+€ in millions
+plans
+2020
+of Infineon. The position “Other” in the table above comprises exchange-traded
+commodities (ETC) and other investment funds. The market value of the ETC held
+domestically was €33 million as of 30 September 2020 (previous year: €28 million).
+2
+10
+520
+459
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 187 >
+Defined contribution plans
+In connection with defined contribution plans, fixed contributions are made to exter-
+nal insurance providers or funds. Infineon has no further performance obligations
+or risks with regard to these pension plans in excess of the fixed contributions paid.
+Additionally, the Group makes contributions to government pension schemes.
+Expenses for defined contribution plans amounted to €212 million and €203 million
+in the fiscal years ended 30 September 2020 and 2019, respectively.
+21 Equity
+Ordinary share capital
+The ordinary share capital of Infineon Technologies AG increased during the 2020
+fiscal year by €110,474,132. Firstly, the Management Board, with the approval of the
+Supervisory Board, decided on 26 May 2020 to increase capital against cash contri-
+butions, taking advantage partly of the authorized capital. The capital increase was
+entered in the Commercial Register on 27 May 2020 and was thus effective. The share
+capital of the Company was thereby increased with the exclusion of the subscription
+rights of the existing shareholders by issuing 55,000,000 new registered no par value
+shares in return for cash consideration as part of an accelerated bookbuilding process.
+The shares were allocated at a placement price of €19.30 per share, and resulted
+in gross issue proceeds of €1,062 million. They are eligible to a share of profits from
+1 October 2019 on. Secondly, 237,066 new shares were issued (2019: 914,314) as a
+result of the final exercise of stock options by employees as part of the Stock Option
+Plan 2010 (see note 23, ☐ p. 191 f.). As part of the Performance Share Plan and Restricted
+Stock Unit Plan (see note 23, p. 191 f.), Infineon transferred a total of 748,609 own
+shares to employees and members of the Management Board in the first half of the 2020
+fiscal year. As of 30 September 2020, the share capital amounted to €2,611,842,274
+and was fully paid in. It was divided into 1,305,921,137 no par value registered shares,
+each representing €2 of the Company's ordinary share capital. Each share grants the
+holder one vote and an equal portion of the profits in the form of a dividend as resolved
+by the Annual General Meeting. As of 30 September 2020, of the above-mentioned
+total number of issued shares, the Company held 5,251,391 own shares (30 September
+2019: 6 million). Own shares held by the Company as of the date of the Annual General
+Meeting carry no voting rights and are not entitled to dividend.
+Additional paid-in capital
+Additional paid-in capital increased by €968 million in the 2020 fiscal year. Based on
+gross issue proceeds of €1,062 million from the issue of 55,000,000 new shares on
+27 May 2020 as described above, less €110 million related to the ordinary share capital,
+and less €18 million directly attributable third party costs (net of tax) incurred in
+connection with the capital increase, an amount of €934 million was recognized
+as an increase in additional paid-in capital. Tax effects of €22 million increased the
+additional paid-in capital. The pro rata costs for share-based compensation led
+to an increase in additional paid-in capital of €14 million in the 2020 fiscal year. The
+exercise of stock options by employees increased additional paid-in capital by €1 mil-
+lion. Due to the transfer of own shares to employees and members of the Management
+Board, additional paid-in capital was reduced by €4 million.
+Additional paid-in capital reported in the Consolidated Statement of Financial Position
+increased by €1,008 million in the 2019 fiscal year. Based on gross issue proceeds of
+€1,545 million from the issue of 112,773,923 new shares on 18 June 2019 as described
+above, less €226 million not related to the ordinary share capital, and less €20 million
+directly attributable third party costs (net of tax) incurred in connection with the
+capital increase, an amount of €1,299 million was recognized as an increase in add-
+itional paid-in capital. As a result of employee exercise of stock options, additional
+paid-in capital increased by a further €4 million. The pro rata costs for share-based
+compensation led to an increase in additional paid-in capital of €10 million in the 2019
+fiscal year. The dividend of €305 million paid in February 2019 reduced additional
+paid-in capital.
+275
+303
+152
+177
+2
+12
+Due within one year
+Curtailment gain recognized
+Pension cost
+3
+3
+Due after more than one year to five years
+(35)
+(8)
+6
+(43)
+(3)
+(36)
+Due after more than five years up to ten years
+Total
+30 Septem-
+ber 2020
+30 Septem-
+ber 2019
+40
+32
+(33)
+2.0
+6
+2.0
+2020
+2019
+Qimonda (see note 7, ☐ p. 170 f.,
+and note 25, p. 194)
+205
+6
+(5)
+206
+Reimbursement obligations
+405
+169
+Other
+61
+27
+6
+(9)
+(2)
+83
+Payroll and similar obligations to employees
+€ in millions
+221
+Provisions related to
+(3)
+nations'
+374
+332
+19
+26
+19
+95
+Obligations to employees included, among others, costs of variable compensation,
+outstanding vacation and flextime, service anniversary awards, other personnel costs
+and social security costs.
+Provisions for warranties mainly represented the estimated future cost of fulfilling
+contractual requirements associated with products sold.
+Other provisions comprised provisions for litigations (other than those relating
+to Qimonda), restructuring, asset retirement obligations and miscellaneous other
+liabilities.
+Of the total provisions as of 30 September 2020 and 2019, a cash outflow of €436 mil-
+lion and €383 million, respectively, was expected to occur within one year. For the
+non-current provisions a cash outflow was expected to occur after more than one
+year. Besides the provisions in connection with Qimonda, €44 million and €38 million
+as of 30 September 2020 and 2019, respectively, of non-current provisions were
+attributable to length-of-service related anniversary awards.
+19 Other Current Liabilities
+Obligations to employees
+(288)
+(17)
+420
+Other current liabilities as of 30 September 2020 and 2019 consisted of the following:
+Warranties
+(7)
+40
+132
+Total provisions
+666
+141
+950
+575
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 182 >
+In the course of the integration of Cypress, the balance sheet treatment of reimburse-
+ment obligations to customers was aligned with the Cypress approach (see note 10,
+p. 172). Reimbursement obligations are now disclosed as part of other current
+liabilities. For better comparability, the previous year's figures were adjusted.
+20 Pension plans
+Defined benefit pension plans
+Infineon's employee benefit plans consist of domestic and foreign defined benefit
+and defined contribution pension plans providing retirement, disability and sur-
+viving dependents' benefits. For Infineon, the significant benefit plans in Germany
+pertain to Infineon Technologies AG, and among the foreign benefit plans to Infineon
+Technologies Austria AG.
+In Germany, Infineon primarily offers defined contribution benefits which provide
+for the employees when they reach retirement age, or in the event of disability or
+death. The statutory framework is provided by the Company Pension Act (in German:
+Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the
+Infineon pension plan new entrants receive a defined contribution benefit, which
+is funded by Infineon. Payments by the Infineon pension plan are generally made in
+twelve annual installments. For active employees who were entitled to benefits in the
+form of an annuity before the Infineon Pension Plan came into force, this commitment
+was transferred into the Infineon Pension Plan and thereby the possibility of an annuity
+is guaranteed. Together with former employees whose pension benefit obligations
+were not transferred into the Infineon Pension Plan, this group makes up the
+largest part of the obligation at this time. A corresponding provision is recorded for
+the German defined benefit pension plans, which are partly backed by plan assets.
+Individual agreements are in place for the members of the Management Board, which
+are backed by plan assets (detailed in the chapter "Compensation report" in the
+Combined Management Report, ☐ p. 130 ff.). The major portion of the plan assets is
+managed by a pension trust in the legal form of a registered association. This is
+composed of executives of Infineon Technologies AG and the investment strategy is
+defined by Infineon Technologies AG.
+The benefit obligation of some foreign plans is measured according to the income
+in the last month or year of service, others are dependent on average income over
+the service period. Foreign pension plans are managed by country-specific external
+pension funds or other pension schemes. The liabilities arising from foreign defined
+benefit pension plans are partly covered by plan assets. The management of existing
+foreign plan assets is performed by the respective pension scheme.
+The valuation date of both the German and foreign pension plans is 30 September.
+The Group-defined benefit pension plans are exposed to risks arising from changes
+to actuarial assumptions such as interest rates, salary and pension trends, investment
+risks and longevity risks. A lower discount rate leads to higher pension liabilities.
+Equally lower than expected growth in plan assets could lead to a deterioration of the
+funded status, or require the payment of additional contributions.
+162
+112
+Total
+Other
+384
+30
+(309)
+(22)
+749
+Accrued interest expense
+96
+21
+thereof current
+combi-
+383
+Other financial liabilities relating to interest hedging
+thereof non-current
+283
+313
+of future refinancing measures (see note 28, □ p. 203 f.)
+66
+Other financial liabilities in connection with foreign currency hedging
+1 The amounts shown under "Additions through business combinations" resulted exclusively from the acquisition of Cypress.
+of the acquisition of Cypress (see note 28, p. 199)
+436
+Infineon Technologies | Annual Report 2020
+business
+30 Sep-
+tember
+Drawn
+Available
+Aggregate
+facility
+Drawn
+Available
+245
+176
+69
+102
+22
+2,376
+2,376
+8,303
+182
+80
+8,121
+Total
+2,621
+2,552
+69
+Aggregate
+facility
+8,405
+Term, € in millions
+Short-term
+Long-term
+30 September 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 180 >
+As a result of the capital increase with a volume of €1,545 million in June 2019 and
+the issue of a hybrid bond with two tranches and a total nominal value of €1,200 mil-
+lion in October 2019 (see note 21, p. 188 f.), the bridge financing was reduced to
+€3,893 million.
+After the acquisition of Cypress was completed in April 2020 the remaining credit
+lines were drawn. Shortly thereafter the bridge financing was fully repaid by the
+proceeds of the accelerated capital increase in May 2020 (see note 21, p. 187) and
+the bonds issue described below.
+On 24 June 2020, Infineon Technologies AG issued non-subordinated, unsecured
+bonds with four tranches and a total face value of €2,900 million under its EMTN
+program (European Medium Term Notes), which was established for this purpose on
+10 June 2020:
+> a tranche with a nominal value of €750 million, a coupon of 0.75 percent per year
+and due in 2023;
+> a tranche with a nominal value of €750 million, a coupon of 1.125 percent per year
+and due in 2026;
+> a tranche with a nominal value of €750 million, a coupon of 1.625 percent per year
+and due in 2029 as well as
+> a tranche with a nominal value of €650 million, a coupon of 2.00 percent per year
+and due in 2032.
+The bonds are listed on the Luxembourg Stock Exchange.
+On 28 September 2020, a portion of the term loan tranche relating to the acquisition
+of Cypress of US$555 million, which was due in 2022 was repaid. As of 30 September
+2020, there were term loan tranches totaling US$2,775 million still outstanding.
+The bonds with a nominal amount of €2,900 million and the term loan tranches with
+a total nominal value of US$2,775 million are recognized at amortized cost after the
+deduction of directly attributable transaction costs.
+In addition, the short-term financial debt included €329 million of convertible bonds
+acquired as a result of the Cypress acquisition, which are still outstanding and for
+which the holders of the bonds can determine the date of conversion. The conversion
+rights of these bonds can only be exercised against cash payment. The convertible
+bonds minus conversion rights are recorded at amortized cost. The conversion rights
+are measured at fair value through profit or loss (see note 28, □ p. 201).
+On 16 October 2020, the secured loans of MoTo Objekt CAMPEON GmbH & Co. KG,
+reported as short-term financial debt as of 30 September 2020 in the amount of
+€171 million, were repaid.
+The total lines of credit as of 30 September 2020 and 2019 are summarized in the
+following table:
+30 September 2019
+204
+8,201
+As of 30 September 2019 this included the credit lines to finance the acquisition
+of Cypress.
+155
+Due after more than five years
+Total
+2,650
+203
+535
+63
+7,080
+654
+1,558
+264
+18 Provisions
+Current and non-current provisions as of 30 September 2020 consisted of the following:
+€ in millions
+1 October
+Addition
+2019
+Acquisi-
+tions
+through
+Usage
+Reversal
+1,002
+330
+3,925
+Due after one year to five years
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 181 >
+Amounts of financial debt and interest maturing in the coming years were as follows:
+30 September 2020
+2020
+30 September 2019
+Financial
+debt
+Interest
+Financial
+debt
+Interest
+Due within one year
+505
+121
+21
+46
+€ in millions
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+18
+8
+26
+17
+6
+23
+4
+4
+6
+6
+(22)
+(9)
+(31)
+(19)
+(6)
+(25)
+(3)
+(3)
+2
+3
+2
+3
+11
+Benefits paid
+Foreign currency effects
+Fair value of plan assets at end of year
+600
+83
+683
+534
+68
+602
+4
+2
+6
+10
+2
+12
+10
+1
+11
+52
+63
+614
+85
+699
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 184 >
+Pension obligations are reported in the Consolidated Statement of Financial Position
+under "Pension plans and similar commitments". p. 145
+Since no asset ceilings applied, the funded status of the Infineon pension plans
+corresponded to the amounts reported in the Consolidated Statement of Financial
+Position as of 30 September 2020 and 2019.
+Actuarial assumptions
+The weighted-average assumptions used in calculating the actuarial values for the
+pension plans were as follows:
+in %
+The funding of the defined benefit obligations as of 30 September 2020 and 2019
+was as follows:
+Discount rate at the end of the fiscal year
+Rate of salary increase
+Projected future pension increases
+30 September 2020
+30 September 2019
+Domestic
+plans
+Foreign
+plans
+Domestic
+plans
+Foreign
+plans
+1.0
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+600
+83
+683
+Net pension liability
+(603)
+(136)
+(739)
+(619)
+(114)
+Employee contributions
+(733)
+(552)
+(552)
+(572)
+(572)
+thereof: Infineon Technologies Austria AG
+(64)
+(64)
+(70)
+(70)
+thereof: Infineon Technologies AG
+Contributions from Infineon
+Acquisitions
+Actuarial gains (losses)
+(1,416)
+(987)
+(167)
+(1,154)
+(32)
+(6)
+(38)
+(26)
+(4)
+(30)
+1
+1
+(7)
+(4)
+(11)
+(17)
+(5)
+(22)
+(58)
+(197)
+(1,219)
+Total
+Foreign plans
+Consolidated Financial Statements
+Further information
+Q = < 183 >
+Notes to the Consolidated Financial Statements
+The development of Infineon's German (domestic) and non-German (foreign)
+pension plans and the plan assets as of 30 September 2020 and 2019 is presented
+in the following table:
+€ in millions
+Change in defined benefit obligations taking into account future salary increases:
+Present value at beginning of year
+Current service cost
+Past service income (cost)
+81
+Interest cost
+Experience adjustments
+Adjustments to demographic assumptions
+Adjustments to financial assumptions
+2020
+2019
+Domestic plans
+Foreign plans
+Total
+Domestic plans
+Actuarial gains (losses) for:
+0.6
+(20)
+(5)
+Employee contributions
+(4)
+(4)
+(6)
+(6)
+Foreign currency effects
+6
+(3)
+(3)
+Present value of defined benefit obligation at end of year
+(1,217)
+(221)
+(1,438)
+(1,219)
+(197)
+(1,416)
+Change in fair value of plan assets:
+Fair value of plan assets at beginning of year
+Expected return on plan assets
+25
+6
+19
+31
+(63)
+(2)
+(1)
+(3)
+1
+(5)
+- ཎྜ8
+(1)
+(1)
+ཧེ - ཧེ ༔ ༠
+76
+(26)
+(226)
+(20)
+Effects from acquisitions
+Plan settlements
+3
+3
+Benefits paid by Infineon
+22
+(200)
+99
+1 In the 2020 fiscal year, realized gains from the deal contingent forward and the deal contingent option, after deducting the costs of the
+hedge, were recognized in the amount of €137 million (before taxes) when measuring the consideration transferred in connection with the
+acquisition of Cypress (see "Derivative financial instruments and hedging" in note 28, ☐ p. 203 ff.).
+435
+Main activities of the Supervisory Board
+Mediation Committee
+The Mediation Committee did not need to convene during the 2020 fiscal year.
+Nomination Committee
+The Nomination Committee convened four times during the 2020 fiscal year, during
+which it deliberated extensively on succession planning for the Supervisory Board,
+including long-term aspects. In preparation for the election of six shareholder repre-
+sentatives at the Annual General Meeting 2020, the Nomination Committee held
+in-depth discussions concerning the re-election of Supervisory Board members and
+the suitability of new candidates. In its search for and assessment of new members,
+the Nomination Committee referred to the competency profile and the catalog of
+objectives decided on by the Supervisory Board for its own composition as a basis.
+It also drew on the support of a well-known external human resources consultant
+to reach its decisions.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 17 >
+Supervisory Board
+Report of the Supervisory Board
+Executive Committee
+The Executive Committee held one ordinary and five extraordinary meetings during
+the fiscal year under report.
+At the ordinary meeting, the Executive Committee focused primarily on preparing the
+Supervisory Board's resolution to determine the level of variable compensation for
+Management Board members. The work performed involved in particular determining
+the degree to which targets for the 2019 fiscal year had been achieved and setting
+new targets for the 2020 fiscal year.
+The main subject of the extraordinary meetings was the revision of the compensation
+system for Management Board members, the key elements of which are described
+above.
+Investment, Finance and Audit Committee
+The Investment, Finance and Audit Committee held four ordinary and two extra-
+ordinary meetings during the 2020 fiscal year.
+Its activities centered on monitoring the financial reporting process, reviewing the
+half-year and quarterly financial statements, conducting the preliminary audit of
+the Separate Financial Statements, Consolidated Financial Statements and Combined
+Management Report for Infineon Technologies AG and the Infineon Group, and
+discussing the audit reports with the auditor. The Committee also examined the
+financial and investment budget. Moreover, it received regular reports on Infineon's
+internal control, internal audit, risk management and compliance management
+systems and deliberated in depth on their overall effectiveness. The Committee was
+also provided with continuous updates concerning significant legal disputes.
+The Committee's recommendation to the full Supervisory Board to propose to share-
+holders at the Annual General Meeting that KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich, (“KPMG”) be elected as Company and Group auditor was based on a Declara-
+tion of Independence obtained from KPMG as well as an analysis of the non-audit
+The committees are responsible for drawing up resolutions and preparing other
+major projects and topics that need to be dealt with by the full Supervisory Board.
+Moreover, the Supervisory Board has delegated certain decision-making powers to
+its committees, to the extent permitted by German law. The chairpersons of each
+committee are required to report on committee meetings at the next meeting of the
+full Supervisory Board.
+Committee work
+Also at its meeting held in August 2020, the Supervisory Board approved new
+guidelines for its communication with investors. In accordance with the DCGK, the
+Supervisory Board's rules of procedure already provided for the Chairman of the
+Supervisory Board to be able to hold discussions with investors on topics specific
+to the Supervisory Board. Now, however, the guidelines set out more specific
+rules regarding the format of discussions, parties with whom discussions may be
+held and the selection of topics.
+Dialog with investors
+With the implementation of the new compensation system, the Supervisory Board,
+on Infineon's behalf, intends to agree corresponding modifications to the service
+contracts of the current Management Board members. In this context, it is also
+planned not only to reflect the new compensation structure, but also – for the first
+time in several years - to adjust the amount of compensation that Management Board
+members receive. In doing so, the Supervisory Board will take into account the require-
+ments of stock corporation law, according to which the amounts must be deemed
+appropriate in relation to the Management Board member's duties and performance
+as well as to the company's overall situation when determining each individual
+Management Board member's total compensation, and may not exceed the usual
+level of compensation without specific reasons.
+Other compensation-related topics
+A tranche of performance shares became due for settlement again at the beginning of
+October 2020. As the specified performance hurdle was not achieved, only 50 percent
+of the tranche allocated in the 2016 fiscal year needed to be fulfilled at the end of the
+four-year holding period. As planned, shares were allocated to settle this obligation.
+Own shares held by the Company were allocated for this purpose.
+Further details of Management Board compensation - particularly the amounts paid
+to each individual member in the 2020 fiscal year - are available in the detailed
+Compensation Report. p. 130 ff.
+Litigation
+The Supervisory Board was regularly provided with detailed information regarding
+major legal disputes during the 2020 fiscal year, which it then discussed at length
+with the Management Board. These included in particular Infineon's appeal, brought
+before European courts, against the antitrust fine imposed by the EU Commission
+in 2014, subsequent proceedings relating to that appeal and the dispute with the
+insolvency administrator of Qimonda AG pertaining to alleged residual liability claims
+("Differenzhaftungsansprüche").
+Infineon Technologies | Annual Report 2020
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 16 >
+Supervisory Board
+Report of the Supervisory Board
+Supervisory Board topics
+New composition of the Supervisory Board; onboarding;
+competency profile and catalog of objectives
+The Supervisory Board mandates of all employee representatives and six of the eight
+shareholder representatives expired at the close of the last Annual General Meeting,
+which was held on 20 February 2020. The (partial) new composition of the Supervisory
+Board since that date strikes a good balance between continuity and renewal, reflects
+a well-balanced competency profile (further strengthened by the members elected,
+particularly in the areas of finance and digitalization) and, with an equal number of
+women and men on the Supervisory Board, sets a clear signal in terms of diversity.
+Following the Annual General Meeting 2020, the composition of the Supervisory
+Board's committees was changed. The election of Dr. Eichiner as Chairman of the Audit
+Committee and of Dr. Spiesshofer as Chairman of the Strategy and Technology Com-
+mittee are especially worth mentioning. The composition of the various committees
+is described in detail in the Statement on Corporate Governance.
+www.infineon.com/declaration-on-corporate-governance
+New members of the Supervisory Board receive support in the form of an onboarding
+process, which includes a series of workshops covering a broad range of topics such
+as the individual segments of Infineon, the underlying and key elements of corporate
+strategy, the target business model and investment planning as well as Infineon's
+manufacturing strategy and life cycle management.
+The basis for the activities of the Supervisory Board's Nomination Committee, and
+therefore the proposals for election at the Annual General Meeting, are the competency
+profile and the catalog of objectives for the composition of the Supervisory Board.
+With respect to the new version of the German Corporate Governance Code (DCGK),
+which came into effect in March 2020, the Supervisory Board resolved to adjust its
+competency profile and catalog of objectives at its meeting in August 2020. In partic-
+ular, the requirements for the independence of shareholder representatives on the
+Supervisory Board were revised in line with the new version of the Code.
+services provided by KPMG. There were no indications of conflicts of interest, grounds
+for exclusion, or other lack of independence on the part of the auditor. The recommen-
+dation was also based on the Committee's confirmation that it was free from undue
+influence by third parties and that it had not been subject to any restriction regarding
+the selection of auditors within the meaning of section 16, paragraph 6 of the EU
+Statutory Audit Regulation. The Committee also considered the fee arrangements
+and issued contracts for the relevant audit engagements. Supplementary areas for
+audit emphasis were also defined.
+The most important single project arising for the Committee during the 2020 fiscal
+year involved monitoring the step-by-step refinancing arrangements made for the
+acquisition of Cypress, in particular the discussion of a possible further share capital
+increase, which the Committee ultimately approved on 26 May 2020 after holding
+two extraordinary meetings on the topic.
+The representatives of the auditor attended all the ordinary meetings of the Invest-
+ment, Finance and Audit Committee and reported in detail on the audit procedures
+performed.
+Strategy and Technology Committee
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 19 >
+Supervisory Board
+Report of the Supervisory Board
+Prior to members of the Management Board assuming sideline activities, particularly
+supervisory board mandates outside the company, the DCGK requires that permission
+be given by the Supervisory Board. No conflicts of interest were discernible in the
+mandates assumed. In fact, they were all in the interests of Infineon.
+Further information on the topic of corporate governance is available in the Statement
+on Corporate Governance, which also includes the Corporate Governance Report.
+www.infineon.com/declaration-on-corporate-governance
+Rules of procedure for the Supervisory Board and
+the Management Board
+In August 2020, prompted by the coming into force of ARUG II and the revised version
+of the DCGK, the Supervisory Board resolved to revise the rules of procedure for the
+Supervisory Board, its Investment, Finance and Audit Committee and the Manage-
+ment Board. The revision was also used to modernize the lists of measures requiring
+approval. Firstly, the role of the Investment, Finance and Audit Committee was
+enhanced in the area of debt-related measures. Secondly, the thresholds for approvals,
+which date back to 2011, were partially raised to take into account the significantly
+increased size of the company, not least due to the acquisition of Cypress.
+All rules of procedure are available on the Infineon website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
+Related party transactions
+A further consequence of ARUG II is the introduction of new requirements with respect
+to related party transactions. Among other things, publicly listed companies such as
+Infineon now require the approval of the Supervisory Board or one of its committees
+before entering into certain transactions with related parties. ARUG II stipulates that
+a suitable internal procedure be put in place to identify related party transactions
+requiring prior approval in order to deal with them in line with current legislation.
+Infineon has implemented a suitable procedure in the form of mandatory guidelines
+that apply worldwide throughout the Group. Particularly for any resolutions requiring
+approval, the Supervisory Board has delegated responsibility in this area to its Invest-
+ment, Finance and Audit Committee.
+Separate and Consolidated Financial Statements
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and the
+Consolidated Financial Statements as of 30 September 2020 as well as the Combined
+Management Report for Infineon Technologies AG and the Infineon Group, and issued
+unqualified audit opinions thereon.
+The Half-Year Financial Report was also reviewed by KPMG. No issues were identified
+that might indicate that the condensed Interim Group Financial Statements and Interim
+Group Management Report were not prepared in accordance with the applicable
+provisions in all material respects.
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG and
+the Consolidated Financial Statements of the Group and reviewed the Interim Financial
+Statements of the Group since the 1999 fiscal year (short fiscal year from 1 April 1999
+to 30 September 1999). Prof. Dr. Andrejewski signed the auditors' report for the first
+time for the 2019 fiscal year (1 October 2018 to 30 September 2019) and Mr. Pritzer for
+the first time for the 2017 fiscal year (1 October 2016 to 30 September 2017).
+At the meeting of the Investment, Finance and Audit Committee held on 6 November
+2020 and continued in a conference call on 16 November 2020, thorough discussions
+were held with the auditor regarding the Separate Financial Statements, the Con-
+solidated Financial Statements, the Combined Management Report, the appropriation
+of profit, and the auditor's findings. The Committee deliberated at considerable
+length on the key audit matters presented in the auditor's report as well as on the
+related audit procedures performed by the auditor. Based on the insights gained
+in the course of these deliberations, the Investment, Finance and Audit Committee
+resolved to propose to the Supervisory Board that the financial statements drawn
+up and presented by the Management Board be approved and the proposed appro-
+priation of profit agreed to.
+Infineon Technologies | Annual Report 2020
+Infineon Technologies | Annual Report 2020
+The new compensation system will apply to all members of Infineon's Management
+Board who are appointed to their functions subsequent to the resolution passed by the
+Supervisory Board on 20 November 2020. For the members of the Management Board
+already in office at that time, the compensation system will, in principle, apply with
+effect from 1 October 2021 (and thus from the 2022 fiscal year). The regulations relat-
+ing to the LTI, on the other hand, are to be applied as soon as the next allocation is
+made on 1 April 2021 (and thus for the 2021 fiscal year). The rationale for the early
+implementation of the new LTI regulations is, firstly, that the PSP for employees is
+to be converted with effect from 1 April 2021 and that it is therefore desirable to syn-
+chronize that change with the Management Board's LTI. Secondly, this procedure
+ensures that no further MTI tranche will need to be allocated in the 2021 fiscal year,
+as the MTI is no longer a component of the revised compensation system and is
+now incorporated in the LTI.
+The members of the Management Board and the Supervisory Board are required to
+disclose any conflicts of interest to the Supervisory Board without delay. No conflicts
+of interest were disclosed by members of either the Management Board or the Super-
+visory Board during the 2020 fiscal year.
+The Supervisory Board regularly assesses how effectively it, as a corporate body,
+and its related committees perform their duties. The most recent comprehensive
+self-assessment took place in summer 2019. The Supervisory Board subsequently
+discussed the results in customary detail. No noteworthy shortcomings were identi-
+fied and no indications in this respect have emerged in the meantime. The next
+assessment is scheduled for summer 2021.
+The Supervisory Board's Strategy and Technology Committee convened twice during
+the fiscal year under report. It received detailed reports from the Management Board
+regarding the acquisition and integration of Cypress. Other topics included life cycle
+management, the development of the Chinese market and the transformation of the
+automotive sector.
+Supervisory Board compensation
+Infineon Technologies | Annual Report 2020
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 18 >
+Supervisory Board
+Report of the Supervisory Board
+and came to the conclusion that its structure, which dates from 2016, is no longer in
+line with the market in some respects and needs to be revised. In particular, the
+proposed changes are intended to take account of the recommendation contained
+in the DCGK, according to which the additional time commitment required for certain
+special functions on the Supervisory Board should be adequately reflected in the level
+of compensation. The Management Board and the Supervisory Board will therefore
+present a revised Supervisory Board compensation system for approval at the Annual
+General Meeting 2021, whereby the principal changes compared to the current system
+are as follows:
+> Whereas the fixed basic compensation and the function-based allowance for the
+Chairman of the Supervisory Board are to be increased only slightly, it is planned
+to raise the function-based allowance for the committees and for the Chairs of
+the Investment, Finance and Audit Committee and the Strategy and Technology
+Committee more significantly to a level in line with today's market.
+> The current threshold clause, according to which only the highest function-based
+allowance is paid if more than one function is performed, is to be deleted. The
+rationale for the change is that working on several committees results in an add-
+itional time commitment, which should be compensated accordingly. Conversely,
+only paying a function-based allowance if at least three committee meetings have
+taken place during a fiscal year ensures that only relevant additional time commit-
+ments are compensated. In addition, the function-based allowances for work on
+committees are capped at 100 percent of the fixed basic compensation. As a result,
+the compensation for a member of the Supervisory Board will be limited in future
+to €200,000, that of the Chair of the Supervisory Board to €300,000 and that of the
+Chair's deputy to €230,000.
+> It is also planned to reduce the attendance fee for extraordinary meetings held in
+the form of telephone or video conference calls from €2,000 to €1,000.
+The changes are due to take effect from the beginning of the 2022 fiscal year.
+Corporate Governance
+Declaration of Compliance 2020
+In the Declaration of Compliance issued in November 2020, the Management Board
+and the Supervisory Board jointly declared that all recommendations of the DCGK
+contained in the version dated 7 February 2017 were being complied with in the period
+since the previous Declaration of Compliance issued in November 2019 and that
+currently all recommendations of the DCGK in the version dated 16 December 2019
+have been complied with and will continue to be complied with in future. As a pre-
+cautionary measure, the Management Board and the Supervisory Board additionally
+declared that until the Supervisory Board's resolution on the new Management
+Board compensation system on 20 November 2020, the new Code recommendations
+on management board compensation in force since 20 March 2020 have not been
+fully complied with. However, all recommendations will be complied with as soon as
+the new compensation system comes into effect.
+The actual wording of the Declaration of Compliance 2020 as well as all previous
+Declarations of Compliance are available on the Infineon website.
+www.infineon.com/declaration-of-compliance
+Self-assessment by the Supervisory Board
+Examination of potential conflicts of interest
+The details of the new Management Board compensation system will be set out in a
+proposed resolution to the Annual General Meeting 2021 for approval in accordance
+with Section 120a of the German Stock Corporation Act.
+In addition to the resolution on the Management Board compensation system, the
+Act Implementing the Second Shareholder Rights Directive (ARUG II) also requires
+a resolution on the Supervisory Board compensation system to be submitted to
+shareholders at the Annual General Meeting 2021. In view of this fact, the Supervisory
+Board deliberated at length on the current Supervisory Board compensation system
+> The Management Board compensation system will also include "Share Ownership
+Guidelines", which will require Management Board members to build up a minimum
+holding of Infineon shares over a period of generally five years and keep them for up
+to two years after leaving office. The minimum holding is equivalent to 150 percent
+of fixed basic compensation for the Chairman and 100 percent of fixed basic annual
+compensation for the other members of the Management Board.
+Reinhard Ploss has been a member of
+the Management Board of Infineon
+Technologies AG since 2007. He has been
+Chief Executive Officer since 1 October 2012,
+responsible for Segments, Group Strategy,
+Communications & Government Relations,
+Human Resources (Labor Director), Legal,
+Research and Development.
+Reinhard Ploss was born on 8 December 1955
+in Bamberg. He studied process engineering
+at the Technical University of Munich and
+received his doctorate in 1990. He began his
+career at Infineon in 1986 (Siemens AG
+until 1999).
+Dr. Helmut Gassel
+Chief Marketing Officer
+Helmut Gassel has been a member of the
+Management Board and Chief Marketing
+Officer of Infineon Technologies AG since 2016.
+He is responsible for Sales & Marketing,
+Regions, Strategy Development, Mergers &
+Acquisitions and Intellectual Property.
+Helmut Gassel was born on 13 March 1964
+in Dortmund. He holds a Diploma in physics
+from the Ruhr-University in Bochum. He
+received his PhD in electrical engineering from
+the University of Duisburg. He joined Infineon
+(Siemens AG until 1999) in 1995.
+Jochen Hanebeck
+Chief Operations Officer
+Jochen Hanebeck has been a member of
+the Management Board and Chief Opera-
+tions Officer of Infineon Technologies AG
+since 2016. He is responsible for Operations,
+including Manufacturing, Logistics, Quality,
+Customs and Purchasing.
+Jochen Hanebeck was born on 2 February
+1968 in Dortmund. He received a degree in
+electrical engineering from RWTH Aachen
+University. He has been with Infineon since
+1994 (Siemens AG until 1999).
+Dr. Sven Schneider
+Chief Financial Officer
+Sven Schneider has been a member of the
+Management Board and Chief Financial Officer
+at Infineon Technologies AG since 2019. He
+is responsible for Accounting & Reporting,
+Financial Controlling, Financial Planning,
+Investor Relations, Tax, Treasury, Audit,
+Compliance, Export Control, Risk Manage-
+ment, Business Continuity and Information
+Technology.
+Sven Schneider was born on 21 March 1966
+in Berlin. After completing a banking appren-
+ticeship, he studied business administration
+(Diplom-Kaufmann) at the Universities of
+Regensburg, Nantes (France) and Trier. Subse-
+quently, he received his doctorate in political
+science from the University of Trier. In 1995, he
+began his professional career at Linde AG in
+the finance department. From 2000 to 2019,
+he has held leading positions at Linde, most
+recently as Spokesman of the Executive Board,
+Chief Financial Officer and Labor Director.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 12 >
+Chief Executive Officer
+Report of the Supervisory Board
+Dr. Reinhard Ploss
+Further information
+› As a final point, the new Management Board compensation system will introduce
+market-standard malus and clawback clauses that allow the Supervisory Board to
+withhold or reclaim variable compensation components in certain cases.
+Management Board and
+Supervisory Board
+Letter to shareholders
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 10 >
+The acquisition of Cypress will greatly strengthen us on our road to success. We are
+also working hard on continuing to develop our core competence, power semicon-
+ductors. This is one of the main pillars of our economic success and likely to remain
+so for a long time to come. Compound semiconductors made from SiC and GaN are
+an important topic for the future. In the previous fiscal year, we expanded our range
+of MOSFETs based on SiC to include additional voltage classes and launched the
+new types of the 650 volt and 1,700 volt CoolSiCTM MOSFET family. We expect to take
+a major step forward with this technology when we introduce Siltectra splitting
+technology into volume production. We are making good progress on this front. Our
+revenue from SiC products has risen rapidly over the past few years to over €80 million
+and we are expecting this strong momentum to continue. In addition to our tech-
+nology, we differentiate ourselves from the competition through our manufacturing
+technology. A significant milestone here is our second 300-millimeter factory for
+power semiconductors in Villach (Austria). Despite the unfavorable constraints, we
+have made good progress with construction and are planning to start production at
+the end of the 2021 calendar year, depending on market developments. In conjunction
+with our Dresden (Germany) factory and based on our "One Virtual Fab❞ concept,
+we will create a unit, which can offer greater flexibility and better economies of scale.
+A win-win situation for us and for our customers.
+In front of us is an exciting “Year 1” following our acquisition of Cypress. We can see
+recovery trends in some of our target markets, but no broadly-based upturn yet. The
+market environment remains challenging and associated with great macroeconomic
+uncertainty. Even if we have found ways to live with the pandemic, there may still
+be negative repercussions, as exemplified by the recent weeks in Europe. In any case,
+the essential thing will be to recognize and adapt to very fast-moving market devel-
+opments. Currently, we expect to generate annual revenue in the 2021 fiscal year of
+€10.5 billion, plus or minus 5 percent. At that level of revenue, we expect to achieve a
+Segment Result Margin of around 16.5 percent; a higher utilization of our manufac-
+turing capacities and progress with the integration of various functional areas will help
+us increase our profitability. We plan to make investments of between €1.4 billion
+and €1.5 billion and we assume that momentum will continue to be positive in the
+following year, as our growth drivers are intact. In the long-term, we see risks in an
+intensification of international trade conflicts, especially the technology dispute
+between the USA and China, which are already having a negative impact today.
+They have the potential to change the competitive landscape significantly. As a com-
+pany with global operations, we are greatly concerned about the tilt towards isola-
+tionism, unilateral protectionism and unilaterally strengthening domestic industries.
+In light of this, Europe must find an independent way to shape the digital transforma-
+tion in accordance with its democratic values. To do so, it needs to have the courage
+to forge ahead, try things out and learn. Our team show us every day that innovation is
+possible in Europe and in Germany, just as they show us that innovation is of benefit
+to us and to society.
+Our business activity is based on long-term benefit and evolutionary development.
+This also applies to the sustainability of our own value creation. Our products already
+make a significant contribution to CO2 efficiency. Now we have also set ourselves the
+goal of becoming carbon-neutral by 2030. Our primary aim is to avoid emissions from
+our manufacturing operations and our energy supply. By 2025, we already want to
+have implemented 70 percent of the steps required. The targets relate to our own foot-
+print and include not only all direct emissions, but also indirect emissions from elec-
+tricity and heat. Regarding direct emissions, we will achieve the greatest own savings
+from PFC exhaust air abatement in our factories, for indirect emissions the biggest
+reduction will come from purchasing green electricity. To a lesser extent, we will offset
+emissions by purchasing certificates, which support development projects with an
+environmental and social benefit. Taking this action is in line with our corporate prin-
+ciples, but its importance will be underlined through the redesigned remuneration
+system for the Management Board devised by the Supervisory Board, which will be
+presented at the forthcoming Annual General Meeting. If we want to achieve sustain-
+able success, we must actively shape change in every dimension.
+Stay healthy and look to the future with confidence,
+Sincerely
+Reitrad
+P
+Dr. Reinhard Ploss
+Chief Executive Officer
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+The Management Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Q = < 11 >
+Report of the Supervisory Board
+to the Annual General Meeting
+The Management Board
+Dr. Wolfgang Eder
+Chairman of the Supervisory Board
+Consolidated Financial Statements
+Further information
+← Q = < 14 >
+Supervisory Board
+Report of the Supervisory Board
+Management Board matters
+New Management Board compensation system
+The Act Implementing the Second Shareholder Rights Directive (ARUG II) came into
+force on 1 January 2020. Furthermore, the Government Commission on the German
+Corporate Governance Code adopted a new version of the Code (DCGK), which became
+effective in March 2020. These two factors have resulted in changed requirements
+with regard to Management Board compensation. In this context, supported by an
+external, independent compensation expert, the Supervisory Board deliberated on
+the new regulatory framework at great length. Based on the preparatory work and
+recommendation of its Executive Committee, the Supervisory Board resolved to
+introduce a new system of compensation for the Management Board at its meeting
+held on 20 November 2020. The new system will be submitted to the Annual General
+Meeting 2021 for approval in accordance with Section 120a of the German Stock
+Corporation Act.
+> In addition to the fixed basic compensation and company pension plan, in future
+the system will comprise only a short-term incentive (STI) and a long-term incentive
+(LTI) component for variable compensation; the previous mid-term incentive (MTI)
+will no longer apply. This change will ensure that the proportion of long-term vari-
+able compensation (generally settled in the form of shares) is increased and exceeds
+that of short-term variable compensation. The option of the Supervisory Board to
+award a "special bonus” amounting to up to 30 percent of the fixed basic compen-
+sation of Management Board members has been removed and will not be replaced.
+Fringe benefits, however, remain largely unchanged.
+> In the case of the STI, the existing financial targets Return on Capital Employed
+(ROCE) and Free Cash Flow (FCF) are to be supplemented by the addition of a third
+target, namely the Segment Result Margin (SRM), which already serves as a key
+performance indicator for Infineon. The SRM was also previously taken into
+account in the STI target structure relevant for employees. The Supervisory Board's
+option to raise or lower the amounts paid out for the STI at its discretion by up
+to 50 percent is being replaced by a “criteria-based STI modifier". Accordingly, the
+Supervisory Board will define criteria for assessing the collective performance
+of the Management Board each fiscal year on the basis of a fixed catalog. At the end
+of each fiscal year, the Supervisory Board can then either reduce or increase the
+degree of target achievement for the STI by up to 30 percent - depending on the
+performance of the Management Board and also to take account of any excep-
+tional, unforeseeable developments.
+> The LTI will be converted into an exclusively performance-based "Performance
+Share Plan" (PSP); the previous allocation of half of the performance shares not
+based on actual performance will be discontinued. The previous financial perfor-
+mance criterion, i.e. the outperformance of the Philadelphia Semiconductor Index
+by the Infineon share price, will be replaced by the criterion of a relative Total
+Shareholder Return (TSR), which is defined as Infineon's share price performance
+over a four-year period, as compared to a predefined peer group consisting of
+Infineon's major international competitors. The TSR target accounts for 80 percent
+of the overall target achievement. It will be supplemented by non-financial envi-
+ronmental, social and governance (ESG) targets, which will account for the other
+20 percent of LTI target achievement. ESG targets may include, for example, con-
+tributions to global climate protection or the furthering of diversity at Infineon that
+have a positive impact on innovation, employee commitment and financial perfor-
+mance. The transparent linking of ESG targets to business strategy and current
+market requirements will help create incentives to manage Infineon on a sustain-
+able basis in the best interests of its stakeholders. The ESG targets are therefore
+important in that they align the interests of both the Management Board and other
+stakeholders and contribute to the long-term sustainable success of the Group
+as a whole.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 15 >
+Supervisory Board
+dundies and Gentlemen,
+Report of the Supervisory Board
+Combined Management Report
+Business focus and strategy
+Apart from taking into account the new regulatory requirements, the revised com-
+pensation system is designed to reflect Infineon's strategic objectives even more
+strongly than previously in the structure of Management Board compensation, to
+integrate sustainability targets, to continue to ensure commensurate and at the same
+time motivating compensation, and finally to synchronize the target structures of
+the Management Board with those of the workforce. The main changes can be sum-
+marized as follows:
+Combined Management Report
+Management Board and
+During the 2020 fiscal year, the Supervisory Board once again performed its duties
+with the utmost diligence in accordance with the law, Infineon's statutes and the
+Supervisory Board's own terms of reference. It advised and monitored the Manage-
+ment Board in equal measure, soundly based on detailed written and oral reports
+presented by the Management Board at Supervisory Board and committee meetings
+regarding all issues relevant to the company, particularly corporate strategy and
+planning, business performance, financial position, risk profile, risk management
+and compliance. The Management Board also addressed variances from business
+planning arising in the course of the twelve-month period under report. In the 2020
+fiscal year, these variances were largely attributable to the pandemic and its impact
+on the economy. In view of the fast-moving dynamics of the situation and to ensure
+that the Supervisory Board was kept informed on a timely basis, extraordinary
+meetings were held at frequent intervals between the ordinary meetings, at which
+the Management Board provided the latest information on the current business
+situation. The Supervisory Board always had ample opportunity to critically examine
+the reports presented and resolutions proposed by the Management Board and
+was thus able to satisfy itself that the governance of Infineon's corporate affairs was
+lawful, compliant and appropriate.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q = < 13 >
+Board and the entire Infineon workforce have so far been outstanding in their swift
+and convincing response to the challenges of the pandemic, but also to those arising
+in connection with geopolitical issues. Our optimism as we move forward is also
+reinforced by the fact that we successfully managed to get the strategically crucial
+acquisition of Cypress over the line despite the global health crisis. Although it
+makes absolute sense to steer a prudent course in the current conditions, it is also
+essential to continue taking forward-looking strategic decisions that will have a bene-
+ficial impact in the medium and long term. In any event, you can rest assured that
+Infineon's course for the future is being carefully charted.
+Report of the Supervisory Board
+Supervisory Board
+The Supervisory Board was provided with written quarterly reports on Infineon's
+business performance, key financial data, risks and opportunities and major areas of
+litigation as well as other individual topics of importance. Between quarterly reports,
+the Management Board also provided additional information in the form of monthly
+reports on current business performance and developments.
+As Chairman of the Supervisory Board, I was also in regular contact with both the
+Chairman (CEO) and the other members of the Management Board between meet-
+ings in order to discuss issues such as strategy, business performance and liquidity.
+The CEO kept me informed of events of significance for Infineon whenever the need
+arose, including outside of the regular Supervisory Board meetings.
+In the 2020 fiscal year, the full Supervisory Board convened nine times (five ordinary
+and four extraordinary meetings). Five of these meetings were held in the form of
+conference calls. Two resolutions were passed on the basis of written communication.
+Overall, the attendance rate at Supervisory Board meetings was just under 100 percent;
+Dr. Eichiner was excused from attending one meeting. The attendance rate at the
+Supervisory Board's committee meetings was also close to 100 percent; Ms. Engelfried
+was excused from attending one meeting of the Investment, Finance and Audit Com-
+mittee. Details of the individual attendance record of Supervisory Board members
+are provided in the Statement on Corporate Governance.
+www.infineon.com/declaration-on-corporate-governance
+In preparation for ordinary Supervisory Board meetings, separate preliminary meetings
+were held for both the shareholder representatives and the employee representatives.
+The Supervisory Board also convened regularly without the presence of Management
+Board members.
+Corporate strategy; coronavirus pandemic; Cypress acquisition
+and (re-)financing
+The Infineon Supervisory Board remains committed to providing the Management
+Board with intensive support in the development and implementation of corporate
+strategy. For this reason, in addition to the regular meetings of the Strategy and
+Technology Committee, a meeting of the full Supervisory Board was again held during
+the fiscal year under report for the exclusive purpose of discussing strategic topics –
+this time at Infineon's Villach site in Austria. Discussions at this strategy meeting
+covered a broad range of topics, including the changed market and geopolitical
+conditions, Infineon's core strategy, the significance of the acquisition and integration
+of Cypress, Infineon's financial resilience and its dividend strategy.
+As mentioned above, the wide-ranging impact of the coronavirus pandemic called
+for additional extraordinary meetings of the full Supervisory Board. These meetings
+not only focused on the current business situation and development, but also on the
+longer-term strategic implications of the pandemic for the world economy, the semi-
+conductor market, and, above all, Infineon's target markets.
+In addition to the pandemic, the 2020 fiscal year was largely shaped by the successful
+completion of the strategically crucial acquisition of the US semiconductor company
+Cypress Semiconductor Corporation, which had been announced back in early June
+2019. This acquisition has enabled Infineon to further strengthen its focus on key growth
+drivers and global mega-trends, significantly expand its technology and product port-
+folio, and move into the top ten of the world's largest semiconductor manufacturers.
+A major component of the acquisition was to negotiate precisely tailored financing
+arrangements that provided sufficient flexibility for long-term refinancing measures.
+Altogether, some 30 percent of the acquisition was to be financed by an injection
+of fresh equity. With the placement of new shares and the issuance of a hybrid bond
+during the 2019 fiscal year, Infineon had already achieved its principal financing
+goals prior to the closing of the acquisition. During the 2020 fiscal year, the targeted
+percentage of equity was reached by means of another highly successful share
+capital increase. The stronger resulting capital structure, alongside the confirmation
+of Infineon's investment-grade rating, provided the basis for covering Infineon's
+remaining refinancing requirements in the form of debt instruments. An important
+milestone in this respect was the first Eurobond issue under the newly established
+European Medium Term Notes (EMTN) bond program. The clear display of support
+from investors in implementing these equity and debt capital measures demon-
+strates the confidence of the capital markets in Infineon's prospects going forward.
+The Supervisory Board closely monitored the implementation of these refinancing
+measures, primarily via its Investment, Finance and Audit Committee.
+Infineon Technologies | Annual Report 2020
+The past fiscal year, and particularly the second half of it, was largely overshadowed
+by the impact of the coronavirus pandemic. Against this backdrop, above and beyond
+the prevailing corporate challenges, our foremost concern has always been to protect
+the health and the lives of everyone working for, and involved with, Infineon to the
+greatest possible extent. With this principle in mind, the Management Board has there-
+fore attached particular importance to the well-being of the Infineon workforce from
+the outset and both initiated and promoted numerous projects aimed at mitigating
+the consequences of the pandemic. Ultimately, the actions of Infineon's management
+team are determined by the need to guide the company, in all its dimensions, safely
+through these extremely challenging times. Despite the difficult situation we currently
+find ourselves in, I am firmly convinced that Infineon is very well positioned. Indeed,
+there is much to suggest that we will emerge even stronger from this global health and
+economic crisis. This conviction is not only based on the fact that the Management
+Other current liabilities'
+470
+3
+22
+1,089
+6,528
+Non-current liabilities:
+Long-term financial debt
+Other non-current liabilities
+1,089
+1,534
+467
+Trade payables
+77
+of long-term financial debt
+Short-term financial debt and current portion
+Current liabilities:
+As of 30 September 2019
+8,908
+141
+9,409
+77
+235
+6,528
+63
+22
+Total
+Combined Management Report
+3
+Infineon Technologies | Annual Report 2020
+845
+Management Board and
+Supervisory Board
+Business focus and strategy
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 194 >
+The legal dispute has, in the meantime, focused on the claims asserted for alleged
+lack of value. On 29 August 2013, the court appointed an independent expert to
+clarify the valuation issues raised by the insolvency administrator and to address
+technical matters.
+Infineon Technologies | Annual Report 2020
+3,251
+3,178
+63
+1,608
+1,089
+470
+21
+9,374
+294
+66
+99
+77
+235
+6,783
+1,534
+63
+3,175
+1 In conjunction with the integration of Cypress, the presentation of reimbursement obligations to customers was aligned with the approach previously used by Cypress (see note 10, ☐ p. 181 f.). Instead of netting reimbursement obligations
+against trade receivables, they are now reported within other current liabilities. For better comparability, the previous year's figures were adjusted. In the 2019 fiscal year, other current liabilities included €112 million in option premiums
+to be paid upon completion of the acquisition of Cypress as other financial liabilities (see "Derivative financial instruments and hedging activities" below, p. 202 ff.). This liability was built up in installments in the 2020 fiscal year
+and a total of €141 million was paid upon completion of the acquisition on 16 April 2020.
+66
+52
+2
+Current liabilities:
+As of 30 September 2020
+Financial liabilities, € in millions
+Notes to the Consolidated Financial Statements
+Q = < 199 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Short-term financial debt and current portion
+2 In conjunction with the integration of Cypress, the presentation of reimbursement obligations to customers was aligned with the approach previously used by Cypress (see note 10, p. 172). Instead of netting reimbursement obligations against trade receivables,
+they are now reported within other current liabilities. For better comparability, the previous year's figures were adjusted.
+5,501
+213
+2,971
+2,317
+107
+55
+107
+5,501
+Total
+Other non-current assets 1
+558
+The alleged impairment of capital runs contrary to two valuations prepared as part
+of the preparatory documentation for the capital increase by independent auditing
+companies, one of which had been engaged by Infineon and the other of which was
+acting in the capacity of a court-appointed auditor of contributions in kind and
+post-formation acquisitions. The auditing company engaged by Infineon concluded
+in its valuation that the business area contributed had a value of several times the
+lowest issue price of the shares issued, while the court-appointed auditor of contribu-
+tions in kind and post-formation acquisitions confirmed to the court that the lowest
+issue price of the shares issued was covered - as legally required - by the value of the
+contributions in kind. Additionally, in the course of its defense against the claims
+asserted by the insolvency administrator, Infineon has commissioned several expert
+opinions, all of which arrived at the same conclusion that the objections raised by the
+insolvency administrator against the valuation of the contribution in kind are not valid.
+1 As of 30 September 2020, other non-current assets, which are measured at amortized cost, included €1 million (previous year: €1 million) from an agreement related to the residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+(see note 25, p. 194), which are deposited in escrow in order to secure potential claims against Infineon.
+777
+of long-term financial debt
+Current leasing liabilities
+845
+59
+59
+509
+1,160
+1,160
+1,160
+366
+139
+505
+Fair value
+(cash flow hedges)
+Trade payables
+Others
+Other
+financial liabilities
+(amortized cost
+profit or loss
+At fair value through
+Not assignable to any
+IFRS 9 measurement category
+Categories of financial liabilities
+Carrying amount
+Other non-current liabilities
+Total
+Non-current leasing liabilities
+Long-term financial debt
+Non-current liabilities:
+Other current liabilities
+Designated hedging
+instruments
+In addition to the request for declaratory judgment against Infineon in an unspecified
+amount, on 14 February 2012 the insolvency administrator also lodged a request for
+payment based on an alternative claim (in German: “Hilfsantrag”), as well as making
+other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in con-
+nection with the alleged activation of a shell company. On 15 June 2012, the insolvency
+administrator increased his request for the payment of 14 February 2012 on the grounds
+of activation of a shell company to at least approximately €3.35 billion plus interest.
+Furthermore, the insolvency administrator continues to base a substantial part of his
+alleged payment claims, as already asserted out of court against Infineon in August
+2011 for an unspecified amount, on liability for impairment of capital (in German
+"Differenzhaftung"). This claim is based on the allegation that, from the very beginning,
+the carved-out memory products business had a negative billion euro value. The
+insolvency administrator therefore asserts that Infineon is obliged to make good the
+difference between this negative value and the lowest issue price (in German: "gerings-
+ter Ausgabebetrag") of the subscribed stock. Additionally, the insolvency administrator
+has asserted a claim for repayment of allegedly unjustly charged consultancy fees in
+an amount of €10 million in connection with the flotation of Qimonda.
+The gross cash position decreased from €3,779 million as of 30 September 2019,
+to €3,227 million as of 30 September 2020 (for details see the chapter "Review of
+liquidity" in the Combined Management Report, □ p. 105). Based on revenues of
+€8,567 million, the ratio of gross cash to revenue as of 30 September 2020 was
+€1 billion, plus an additional 26.0 percent of revenue. Cypress has been included in
+the revenues of the 2020 fiscal year since 16 April 2020 (see note 3, ☐ p. 163 f.). For the
+previous year, the ratio of gross cash to revenue was €1 billion plus an additional
+34.6 percent of revenue, including the net proceeds of the capital increase in June 2019
+to finance the Cypress acquisition of €1,524 million.
+Alleged activation of a shell company and liability for impairment of capital
+-
+50 percent of the performance shares are performance-related, 50 percent are not
+dependent on performance. The performance-related shares are only finally granted
+if the Infineon share outperforms the Philadelphia Semiconductor Index (SOX) during
+the period between the date of the provisional allocation and the end of the holding
+period. If at the end of the holding period the requirements for an allocation of perfor-
+mance shares – either all or only those that are not performance related - are fulfilled,
+then the entitlement to the transfer of the corresponding number of (real) Infineon
+shares is acquired. The value of the performance shares ultimately assigned to members
+of the Management Board may not exceed 250 percent of the respective LTI grant
+amount; above this cap performance shares are forfeited.
+-
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of share price and index developments). The fair
+value of the instruments granted is determined taking into account future dividends
+as well as the payment cap.
+The following is an overview of the allocations made:
+Tranche
+Fiscal year 2020: Employees
+Fiscal year 2020: Management Board
+Fiscal year 2019: Employees
+Fiscal year 2019: Management Board
+Fiscal year 2018: Employees
+Fiscal year 2018: Management Board
+Fiscal year 2017: Employees
+Fiscal year 2017: Management Board
+End of the
+waiting period
+Average share
+price of the
+nine months
+before grant
+in €
+Under this plan, (virtual) performance shares are initially provisionally granted on
+1 March (up to the 2017 fiscal year: on 1 October) of the fiscal year according to a
+pre-determined LTI grant amount in euro. With the granting of a virtual performance
+share, the participant in the plan acquires the right to receive (real) Infineon shares
+once a personal investment in Infineon shares – depending on position and LTI grant
+amount - has reached a four-year holding period.
+Number of
+performance
+shares out-
+standing as
+Fair value per
+performance
+share in €
+ber 2020
+29 February 2024
+18.10
+1,044,146
+12.95
+29 February 2024
+18.10
+70,850
+12.50
+of 30 Septem-
+28 February 2023
+A new Long Term Incentive Plan (LTI) consisting of a “performance share” plan was
+developed for the Management Board and selected senior executives as a successor
+to the Stock Option Plan 2010.
+The Company makes use of the Stock Option Plan 2010, the Performance Share Plan
+from the 2014 fiscal year, and the Restricted Stock Unit Plan from the 2017 fiscal year,
+in order to provide share-based compensation.
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 190 >
+22 Capital management
+Infineon's main capital management objective is to ensure financial flexibility on
+the basis of a solid capital structure. As with comparable companies in the semi-
+conductor industry, it is of prime importance that sufficient cash funds are available
+to finance operating activities and planned investments throughout all phases of
+the business cycle. On the other hand, debt should only constitute a modest portion
+of the financing mix.
+Based on these principles and the intention to retain its investment grade rating,
+Infineon has derived medium- and long-term key objectives for capital management.
+These will remain in place even after the acquisition of Cypress (see note 3, □ p. 162 ff.),
+and the financing required for this purpose. Infineon plans to maintain a liquidity
+target level (gross cash position) of €1 billion plus at least 10 percent of revenue.
+Infineon's gross financial debt is capped at a maximum of twice the earnings before
+interest, taxes, depreciation and amortization (EBITDA). As a result of the acquisition
+of Cypress, Infineon has exceeded its gross debt target, but only to an extent that is
+still compatible with maintaining the investment grade rating. Infineon's medium-term
+goal after the acquisition is a consistent reduction in debt to or below the maximum
+target level in line with its capital structure target.
+Infineon is not subject to any statutory capital requirements, nor are any such defined
+in the Articles of Association.
+Capital management as well as the corresponding targets and definitions are based
+on indicators determined on the basis of the consolidated IFRS financial statements.
+Gross cash is defined as the total of cash, cash equivalents and financial investments.
+Gross financial debt comprises short-term and long-term financial debt. Infineon
+defines EBITDA as earnings (loss) from continuing operations before interest, taxes
+and depreciation and amortization.
+Performance share plan
+213
+The USPP notes totaling US$935 million issued in April 2016 contain a number of
+standard covenants, including change of control clauses as well as the compliance
+with a debt coverage ratio, which provides for a certain relationship between the
+size of debt (adjusted) and earnings (adjusted).
+In the 2020 fiscal year Infineon has met the minimum requirements of all covenants.
+Should Infineon not comply with the covenants attached to the USPP notes, then
+all USPP notes outstanding as of 30 September 2020 amounting to US$935 million
+(see note 17, p. 179) could become immediately repayable.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 191 >
+23 Share-based compensation
+With gross financial debt of €7,033 million as of 30 September 2020 (30 September
+2019: €1,556 million) following the financing of the Cypress acquisition, and EBITDA
+of €1,785 million for the 2020 fiscal year (2019: €2,064 million), the gross debt to
+EBITDA ratio was 3.9 as of 30 September 2020 (30 September 2019: 0.8). Cypress has
+been included in the EBITDA of the 2020 fiscal year since 16 April 2020. Infineon
+continues to have sufficient financial flexibility to ensure that in addition to financing
+its planned investments it is also able to pay regular dividends (see note 21, ☐ p. 189).
+20.02
+749,482
+14.20
+Costs for share-based compensation
+The costs for share-based compensation amounted to €14 million in the 2020 fiscal year
+(2019: €11 million).
+24 Other financial commitments
+In addition to provisions and liabilities, there were other financial obligations that
+were not recognized in the Consolidated Statement of Financial Position. These
+result in particular from unconditional purchase commitments, which are explained
+in more detail below.
+Contracts already entered into for commenced or planned investments in property,
+plant and equipment (purchase commitments) as of 30 September 2020 amounted
+to €435 million (30 September 2019: €660 million).
+In the course of its investing activities, Infineon also receives government grants related
+to the construction and financing of certain of its manufacturing facilities. Grants
+are also received for selected research and development projects. Certain of these
+grants have been received contingent upon Infineon complying with certain project-
+related requirements, such as creating a specified number of jobs over a defined
+period of time. From today's perspective, Infineon expects to comply with these
+requirements. Nevertheless, should such requirements not be met, as of 30 Septem-
+ber 2020, a maximum of €200 million (30 September 2019: €163 million) of subsidies
+already received could be refundable.
+Infineon, through certain sales and other agreements may, in the normal course of
+business, be obligated to indemnify its counterparties under certain conditions for
+warranties, patent infringement or other matters. The maximum amount of potential
+future payments under these types of agreements is not predictable with any degree
+of certainty, since the potential obligations are contingent on events that may or
+may not occur in the future, and depend on certain facts and circumstances specific
+to each agreement. Historically, payments made by Infineon under these types of
+agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+25 Legal risks
+Litigation and government inquiries
+Smart card chips antitrust litigation
+In October 2008, the EU Commission initiated an investigation into the Company and
+other manufacturers of chips for smart cards for alleged violations of antitrust laws.
+In September 2014, the EU Commission imposed a fine of €83 million on Infineon,
+which in July 2020 was reduced to €76.9 million by the General Court of the European
+Union.
+In the 2017 fiscal year, Infineon introduced the Restricted Stock Unit Plan (RSUP),
+addressing Infineon US employees and based on local market conditions. Restricted
+stock units are measured at the respective fair value at their grant dates. As of 30 Sep-
+tember 2020, 0.7 million restricted stock units (30 September 2019: 0.5 million) with
+fair values between €17.31 and €20.99 depending on the tranche were outstanding.
+The tranches due in February and March 2020, respectively, were fulfilled in shares.
+180,301 Infineon shares were issued to eligible employees from the holding of
+own shares.
+Two class actions for damages of an unspecified amount in connection with the
+EU Commission investigative proceedings have been filed in Canada: The first action
+was filed in the state of British Columbia in July 2013, and the second in the state
+of Quebec in September 2014. The actions followed the press reports on the investi-
+gation and subsequent decision of the EU Commission. No dates have been set for
+court proceedings.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 193 >
+In July 2019, a direct customer filed a lawsuit against Infineon Technologies UK Limited
+and several Renesas entities in London (United Kingdom) relating to the aforemen-
+tioned EU antitrust case. In August 2020, an indirect customer has also informed the
+Company of alleged damages relating to the aforementioned EU antitrust case.
+Any further statements about these matters by the Company could seriously com-
+promise the Company's position in these disputes.
+Proceedings in relation to Qimonda
+All significant assets, liabilities and business activities attributable to the memory
+business (Memory Products) were carved out from Infineon and transferred to
+Qimonda in the form of a contribution in kind with economic effect from 1 May 2006.
+Qimonda filed an application at the Munich Local Court to commence insolvency
+proceedings on 23 January 2009. On 1 April 2009, the insolvency proceedings formally
+opened. The insolvency of Qimonda has given rise to various disputes between the
+insolvency administrator and Infineon.
+Infineon Technologies | Annual Report 2020
+Restricted Stock Unit Plan
+Q = < 192 >
+Further information
+28 February 2023
+20.02
+44,954
+13.79
+28 February 2022
+21.48
+657,434
+15.76
+28 February 2022
+21.48
+41,896
+15.25
+30 September 2020
+30 September 2020
+13.01
+13.01
+864,358
+61,874
+11.86
+11.25
+The tranche due in October 2020 for the 2017 fiscal year was settled with shares.
+As the planned performance target was not reached as of 30 September 2020, only
+50 percent of the tranche was to be settled (non-performance shares). In October 2020,
+460,985 Infineon shares were issued to eligible Management Board members and
+employees from the holding of own shares.
+Stock Option Plan 2010
+The 2010 stock option plan expired in December 2019.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The insolvency administrator filed a request for declaratory judgment in an unspecified
+amount against Infineon Technologies AG and, by way of third party notice, Infineon
+Technologies Holding B.V. and Infineon Technologies Investment B.V., at Regional
+Court Munich I in November 2010. This requested that Infineon be deemed liable to
+make good the deficit balance of Qimonda as it stood when the insolvency proceedings
+in respect of the assets of Qimonda began, i.e., to refund to Qimonda the difference
+between the latter's actual business assets when the insolvency proceedings began
+and its share capital (in German: “Unterbilanzhaftung"). The insolvency administrator
+contended that the commencement of operating activities by Qimonda amounted
+to what is considered in case law to be the activation of a shell company (in German:
+"Wirtschaftliche Neugründung"), and that this activation of a shell company was not
+disclosed in the correct manner. On 6 March 2012, with respect to another matter,
+the German Federal High Court issued a ruling on principle that any liability resulting
+from the activation of a shell company only depends on the situation at the date of
+the activation of a shell company and not, as asserted by the insolvency administrator,
+on the situation at the date on which insolvency proceedings are opened.
+343
+Other
+558
+1
+Sales and service charges to and products and services received from related
+companies in the 2020 and 2019 fiscal years consisted of the following:
+2020
+2019
+Joint Associates
+ventures
+€ in millions
+Other
+related
+companies
+Joint Associates
+ventures
+Other
+related
+companies
+Sales and service charges
+Products and services
+received
+29
+1
+5
+40
+2
+75
+17
+83
+As of 30 September 2020, sales and services relationships with related companies
+resulted in purchase commitments of €4 million (30 September 2019: €7 million).
+16
+Related persons
+Members of the Management Board active in the 2020 fiscal year received fixed non-
+performance-related compensation for their services of €3.8 million (2019: €3.7 million).
+In addition, the members of the Management Board received variable performance-
+related compensation for their services in the 2020 fiscal year of €3.6 million (2019:
+€2.3 million). This comprised a Short Term Incentive of €1.4 million (2019: €1.2 million),
+and a Mid Term Incentive of €1.3 million (2019: €1.1 million). Furthermore, the Manage-
+ment Board received a Long Term Incentive (LTI) which, since 2014, takes the form
+of performance shares. The expense resulting from the LTI amounted to €0.9 million
+(2019: €0.6 million). The compensation granted to active members of the Manage-
+ment Board amounted to €7.3 million in the 2020 fiscal year (2019: €6.7 million).
+The compensation of the members of the Supervisory Board of Infineon Technologies AG
+in the 2020 fiscal year, including attendance fees, amounted to €2.1 million (2019:
+€2.1 million). Employee representatives in the Supervisory Board who are employed
+by Infineon also receive a salary for their activities as employees.
+Former members of the Management Board received payments (in particular pension
+payments) of €2.2 million in the 2020 fiscal year (2019: €2.0 million).
+2
+As of 30 September 2020, pension obligations for former members amounted to
+€76.6 million (30 September 2019: €81.2 million).
+10
+1
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 196 >
+Related companies receivables and payables as of 30 September 2020 and 2019
+consisted of the following:
+€ in millions
+Joint
+ventures
+30 September 2020
+Associates
+30 September 2019
+Other
+related
+companies
+Joint
+ventures
+1
+Associates
+4
+5
+Financial receivables
+32
+Trade and other payables
+9
+Financial payables
+Other
+related
+companies
+5
+1
+32
+Trade and other receivables
+Combined Management Report
+Disclosure of the individual remuneration of the members of the Management Board
+and the Supervisory Board as required by section 315e, paragraph 1, in connection
+with section 314, paragraph 1, no. 6a, sentences 5 to 8, of the German Commercial
+Code (version before ARUG II), is provided in the Compensation report which is part
+of the Combined Management Report. p. 130 ff.
+Infineon Technologies | Annual Report 2020
+5
+7,033
+1
+1
+262
+(63)
+40
+(8)
+63
+294
+1,818
+(306)
+4,381
+(314)
+63
+5
+7,328
+The 2019 fiscal year
+Short-term and long-term financial debt
+Related party financial payables
+Total
+1,532
+(22)
+1
+1,375
+In the 2020 and 2019 fiscal years there were no significant transactions between
+Infineon and related persons which fall outside of the scope of the existing employ-
+ment, service or appointment terms, or of the contractual arrangements for their
+remuneration.
+1,335
+1,556
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 197 >
+27 Supplemental cash flow information
+Cash and cash equivalents reported as of 30 September 2020 and 2019 totaling
+€1,851 million and €1,021 million, respectively, included €77 million and €66 million,
+respectively, which were subject to legal transfer restrictions and so were not avail-
+able for general use by Infineon. This amount represented cash and cash equivalents
+of consolidated companies located in countries where the transfer of cash is legally
+restricted, for example China.
+The reconciliation below shows changes in those financial liabilities and hedging
+transactions for which payments received and made are shown under cash flows
+from financing activities in the statement of cash flows.
+€ in millions
+4,443
+The 2020 fiscal year
+Related party financial payables
+Leasing liabilities 2
+Total
+Starting balance
+Cash-effective
+changes
+Non-cash effective changes
+Ending balance
+Acquisitions¹
+Currency effects
+New leases
+Other changes
+Short-term and long-term financial debt
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+1,196
+1,376
+599
+777
+1,376
+1,851
+327
+1,524
+1,851
+Fair value
+Designated hedging
+instruments
+(cash flow hedges)
+1,196
+At amortized cost
+Categories of financial assets
+Carrying amount
+Non-current assets:
+Other current assets
+Trade receivables²
+Financial investments
+Cash and cash equivalents
+Current assets:
+As of 30 September 2019
+Total
+Other non-current assets¹
+At fair value through
+profit or loss
+Non-current assets:
+1,196
+2
+1,057
+1,057
+1,057
+2,758
+1,021
+☐ ☐
+571
+2,187
+2,758
+948
+73
+257
+1,021
+1
+2,432
+2,401
+4,834
+154
+56
+98
+154
+257
+1
+254
+4,834
+Other current assets
+Trade receivables
+Financial investments
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon recognizes provisions and liabilities for such obligations and risks, which it
+assesses at the end of each reporting period, are more likely than not to be incurred
+(that is where, from Infineon's perspective at the end of each reporting period, the
+probability of having to settle an obligation or risk is greater than the probability of
+not having to) and the obligation or risk can be estimated with reasonable accuracy
+at this time.
+As described above, Infineon faces certain risks in connection with the insolvency
+proceedings relating to the assets of Qimonda and that entity's subsidiaries. In con-
+sideration of the interim report from the court-appointed expert, Infineon recorded
+provisions relating to Qimonda of €206 million in total as of 30 September 2020. This
+comprises mainly provisions for the still pending legal dispute over the alleged activa-
+tion of a shell company and liability for impairment of capital including legal costs.
+As of 30 September 2019, provisions relating to Qimonda amounted to €205 million.
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to
+cover all of the liabilities that could ultimately be incurred in relation to the insolvency
+of Qimonda and, in particular, the matters discussed above. In addition, it is possible
+that liabilities and risks materialize that are currently considered to be unlikely to do
+so, and accordingly represent contingent liabilities that are not included in provisions.
+Should the alleged claims relating to the activation of a shell company and liability
+for impairment of capital prove to be valid, substantial financial obligations above
+the provisions already recorded could arise for Infineon, which could have a material
+adverse effect on its business and its financial condition, liquidity position and
+results of operations.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 195 >
+Infineon was a shareholder with personal liability of Qimonda Dresden until the
+carve-out of the memory business; as a result certain long-standing creditors have
+residual liability claims against Infineon. These claims can only be exercised by the
+insolvency administrator acting in the name of the creditors concerned. In the mean-
+time, settlements have been concluded with most of the major liability creditors.
+Management Board and
+Supervisory Board
+Based on its current knowledge, Infineon does not believe that the ultimate resolution
+of these other pending legal disputes and proceedings will have a material adverse
+effect on Infineon's financial condition, liquidity position and results of operations.
+However, future revisions to this assessment cannot be ruled out and any reassess-
+ment of the miscellaneous legal disputes and proceedings could have a material
+adverse effect on the financial condition, liquidity position and results of operations,
+particularly in the period in which reassessment is made.
+Furthermore, in connection with its existing or previous business operations, Infineon
+is also exposed to numerous legal risks which have until now not resulted in legal
+disputes. These include risks related to product liability, environment, capital market,
+anti-corruption, competition and antitrust legislation as well as export control and
+other compliance regulations. Claims could also be made against Infineon in connec-
+tion with these matters in the event of breaches of law committed by individual
+employees or third parties.
+As part of an audit finding relating to the tax treatment of losses from the repurchase
+of convertible bonds in the 2011 and 2012 fiscal years, as of 30 September 2020 and
+2019, there was a contingent liability of €55 million for withholding tax payables.
+Suspension of enforcement has been granted under the current appeal procedure.
+Infineon expects that there is sufficient likelihood of winning any potential appeal or
+legal action.
+Provisions and contingent liabilities for legal proceedings and
+other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded
+when it is probable that a liability has been incurred and the associated amount can
+be reasonably estimated. To the extent that liabilities arising from legal disputes and
+other uncertain legal positions are not probable or cannot be reliably estimated, then
+they qualify as contingent liabilities.
+Any potential liability is reviewed again as soon as additional information becomes
+available and the estimates are revised if necessary. Provisions with respect to these
+matters are subject to future developments or changes in circumstances in each
+of the matters, which could have a material adverse effect on Infineon's financial
+condition, liquidity position and results of operations.
+A settlement or adverse judicial decision in any of the matters described above could
+result in significant financial liabilities for Infineon and other adverse effects, and these
+in turn could have a material adverse effect on its business and financial condition,
+liquidity position and results of operations. Irrespective of the validity of the allega-
+tions and the success of the aforementioned claims and other matters described
+above, Infineon could incur significant costs in the defense of these matters.
+26 Transactions with related companies and persons
+Infineon has transactions in the normal course of business with joint ventures, asso-
+ciates and other related companies (collectively "related companies”). The related
+companies are disclosed in note 31, ☐ p. 220 ff. Related persons are persons in key
+management positions, in particular members of the Management and Supervisory
+Board (see note 31, □ p. 217 f.) and their close relatives (collectively "related persons”).
+Related companies
+Infineon purchases certain raw materials and services from and sells certain products
+and services to related companies. These purchases from and sales to related com-
+panies are generally effected at arm's length.
+Infineon is also involved in various other legal disputes and proceedings in connection
+with its existing or previous business activities. These can relate, in particular, to
+products, services, patents, export control and environmental issues and other matters.
+Qimonda Dresden GmbH & Co. OHG
+Residual liability of Infineon as former shareholder of
+The parties are exchanging further written submissions. It is not clear at this stage
+if the legal dispute can be resolved with an out of court settlement, and, if this is not
+the case, when a first-instance court decision would be reached.
+Cash and cash equivalents
+Current assets:
+As of 30 September 2020
+Financial assets, € in millions
+The following tables present the carrying amounts and the fair values of financial
+instruments by their respective classes and a breakdown by category of financial
+instruments as of 30 September 2020 and 2019 according to IFRS 9:
+28 Additional disclosures on financial instruments
+< 198 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+1,556
+(1)
+1,556
+(1)
+47
+-
+47
+Infineon Technologies | Annual Report 2020
+1 Amounts shown for the 2020 fiscal year as "Acquisitions" related to financial debt acquired in connection with the acquisition of Cypress.
+2 Starting balance adjusted in connection with first time application of IFRS 16 "Leases" (see note 1, p. 149).
+(23)
+The legal dispute is being pursued with great effort by both parties, and many
+extensive written submissions have already been exchanged between the parties.
+Both sides have engaged numerous specialists and experts who are supporting the
+respective parties with assessments and opinions.
+On 21 September 2018, in consultation with the parties, the independent expert
+appointed by the court presented an interim report on his preliminary assessment
+of the value of the contribution in kind. The Company is in principle prepared to
+conduct discussions about an out of court settlement of the legal dispute on the basis
+of the interim report.
+2
+(1)
+1,533
+3
+210
+98
+ཋ- ་ E-
+112
+Other current liabilities
+35
+Therein cost of hedging reserve
+56
+Therein hedge reserve
+91
+Other reserves
+119
+140
+91
+26
+26
+66
+66
+(98)
+(98)
+(98)
+(98)
+1
+1
+Total
+Other current assets
+Forward
+Starting
+Interest Rate
+Swaps
+(77)
+112
+Deal Contingent Option
+Deal Contingent Forward
+30 September 2019
+Hedging of foreign exchange
+Infineon Technologies | Annual Report 2020
+(97)
+1
+(1)
+(98)
+99
+(98)
+(75)
+Cost of
+hedging reserve
+(before taxes)
+(42)
+Hedge reserve
+(before taxes)
+Forward Starting Interest Rate Swaps
+Hedging of commodity price risks
+Total
+30 September 2020
+Hedging of foreign exchange
+Deal Contingent Forward
+Deal Contingent Option
+Hedging of interest risks
+€ in millions
+The amounts related to positions designated as hedged items were as follows as of
+30 September 2020 and 2019:
+To hedge the price risks of highly probable gold purchases in the 2021 fiscal year,
+Infineon entered into swaps, which are designated as cash flow hedges. The desig-
+nated hedged items and the hedging instruments were subject to the same risk.
+The economic connection was proven by means of a regression analysis. Due to the
+execution of only highly effective hedging transactions, Infineon assumes that signifi-
+cant ineffective elements will normally not be generated. Infineon applies a hedging
+ratio of 1:1. Ineffectiveness can be caused mainly from the impact of the credit risks
+arising from the counter-party and the Company on the fair value of the swap, that
+is not reflected in the change in the fair value of hedged cash flows attributable to
+changes in raw material prices. As in the previous year, no hedge ineffectiveness was
+recorded in the Consolidated Statement of Profit or Loss for these hedging relation-
+ships. As in the previous year, no gains or losses were transferred from other reserves
+to profit or loss as a result of cash flow hedges for future raw material purchases
+being canceled following the decision that the occurrence of the hedged transaction
+had become unlikely.
+Q = < 205 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Change in the value
+of the hedged item
+used to determine
+ineffectiveness
+Hedging of commodity price risks
+Deal
+Contingent
+Option
+Infineon Technologies | Annual Report 2020
+1,364
+30
+Average price (US dollar/ounce)
+Nominal value
+Commodity swaps
+Hedging of other risks
+1.1506
+Average forward rate (Euro/US dollar)
+3,300
+Nominal value
+Deal Contingent Option
+In order to hedge the majority of the foreign currency risks arising from the purchase
+price obligation of the acquisition of Cypress, a transaction-dependent euro/US dollar
+foreign currency forward (deal contingent forward) and a transaction-dependent
+euro/US dollar foreign currency option (deal contingent option), each with a nominal
+value of €3.3 billion, were concluded in the previous year and were accounted for as
+cash flow hedges. With the completion of the acquisition of Cypress on 16 April 2020,
+the deal contingent forward and deal contingent option became due. The amounts
+from these hedging relationships previously included in other reserves of €137 million
+were taken into account in full in the calculation of the consideration transferred
+(see note 3, p. 162 ff.). This amount includes the option premium of €141 million paid
+in connection with the exercise of the deal contingent option. No hedge ineffective-
+ness was recorded in the Consolidated Statement of Profit or Loss for these hedging
+relationships.
+1.1199
+3,300
+Nominal value
+Deal Contingent Forward
+Hedging of foreign exchange risks
+1,765
+15
+1.9548%
+750
+Short term
+30 September 2019
+Average price (US dollar/ounce)
+Average forward rate (Euro/US dollar)
+Deal
+Contingent
+Forward
+In view of planned future refinancing measures, in December 2019 Infineon partially
+hedged against the risk of rising interest rates with transaction-dependent interest
+rate hedging transactions (deal contingent forward starting interest rate swaps) with
+a total nominal volume of €2,025 million and US$750 million, which were accounted
+for as cash flow hedges. At the inception of the hedging transaction, and on a con-
+tinuing basis, Infineon verified the existence of an economic relationship between the
+hedged item and the hedging instrument (critical term). For the above-mentioned
+hedging transactions, the hedge ratio was 1:1. As part of the hedging, the swap rates
+were designated in their volume to 100 percent. On the other hand, the deal contin-
+gency component implied in the swap rates was excluded from the designation of
+the hedging instrument and was recognized directly in the Consolidated Statement
+of Profit or Loss over the term of the hedges until the date of the planned refinancing
+measures. In the 2020 fiscal year no material ineffectiveness was recognized in the
+Consolidated Statement of Profit or Loss from the aforementioned interest rate swaps.
+Ineffectiveness is caused mainly from adjustments for the default risk arising from
+the counter-party and the Company, which are not offset by the changes in value of the
+secured future refinancing measures. When the refinancing measures are concluded,
+the effective part of the hedge will be recognized as interest expense over the term of
+the instruments.
+Management Board and
+Supervisory Board
+30 September 2019
+Therein hedge reserve
+Other current liabilities
+Financial expense
+Other reserves
+When the bonds were issued on 24 June 2020 (see note 17, ☐ p. 179 f.), interest rate
+swaps with a nominal value of €1,525 million were due. The amount of minus €36 mil-
+lion from this hedge, previously recognized in the other reserves, are recognized in
+interest expense over the term of the individual tranches of the bonds.
+Other current assets
+1
+30 September 2020
+(10)
+11
+€ in millions
+Reversal through profit or loss in the period
+Balance as of 30 September 2020
+Infineon Technologies | Annual Report 2020
+Addition from new transactions
+€ in millions
+The following table shows the effects of the deal contingent forward, the deal con-
+tingent option, and the deal contingent forward starting interest rate swaps as of
+30 September 2020 and 2019 on the items in the Consolidated Statement of Financial
+Position and the Consolidated Statement of Profit or Loss (before tax):
+As a result of developments in the capital markets resulting from the coronavirus
+pandemic, interest rate swaps with a nominal value of €500 million were no longer
+designated as cash flow hedges, since the occurrence of the hedged transaction
+was considered unlikely. In this context, losses of €11 million were reclassified from
+other reserves into the Consolidated Statement of Profit or Loss.
+The development of the day one loss was as follows:
+The interest rate swaps were, upon initial recognition, each recorded at market price,
+calculated using the valuation model on the transaction date. The transaction price
+of the interest rate swaps deviated from the market price, since they were concluded
+with a premium to market price due to their dependence on the conclusion of the
+acquisition of Cypress. The deviations of the market price from the transaction price
+were capitalized as a so-called “day one loss” and were recognized directly in the
+Consolidated Statement of Profit or Loss over the term of the hedges until the date
+of the planned refinancing measures.
+< 204 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Balance as of 1 October 2019
+Nominal value
+(56)
+35
+7
+119
+Deal Contingent Option
+35
+56
+91
+91
+Deal Contingent Forward
+Hedging of foreign exchange
+Other current assets:
+30 September 2019
+84
+(114)
+(11)
+(1)
+42
+(240)
+39
+67
+Financial expense
+(11)
+(1)
+(98)
+(99)
+246
+66
+(77)
+3
+Hedging of
+foreign
+exchange risk
+30 September 2020
+to non-financial items
+Amount reclassified
+Consolidated Statement of Profit or Loss
+Amount reclassified to the
+Change in fair value
+30 September 2019
+€ in millions
+The following table shows the reconciliation for the reserve for cash flow hedges
+(before taxes) by risk category:
+Q = < 207 >
+Hedging of commodity price risks
+Further information
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+(42)
+146
+101
+213
+Total
+6
+3
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+56
+Total
+Other current liabilities
+Changes in
+fair value of the
+hedging instrument
+recognized in other
+comprehensive
+of the ineffective-
+ness in the
+reporting period
+fair value for the
+measurement
+Changes in
+Carrying amount
+Hedging of foreign exchange
+Other current assets:
+30 September 2020
+€ in millions
+The relevant amounts of the derivative financial instruments designated as hedging
+instruments as of 30 September 2020 and 2019 (before tax) were as follows:
+Notes to the Consolidated Financial Statements
+income
+< 206 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+In the 2020 and 2019 fiscal years, no balances remained in other comprehensive
+income for which hedge accounting is no longer applied.
+3
+(3)
+(77)
+84
+(67)
+Q =
+Hedging of interest risks
+Changes in
+Amount
+reclassified from
+hedge reserve
+Goodwill
+Inventories
+98
+Goodwill
+28
+(142)
+70
+181
+(2)
+1
+1
+Hedging of commodity price risks
+77
+(84)
+fair value of
+cost of hedging
+recognized in other
+comprehensive
+income (loss)
+39
+(35)
+(56)
+98
+Deal Contingent Forward
+Line item of
+the Statement of
+Financial Position
+or the Statement
+of Profit or Loss
+affected by the
+reclassification
+to the cost
+of non-financial
+assets
+Amount reclassified
+from the cost of
+hedging reserve
+assets
+Amount reclassified
+from the hedge
+reserve to the cost
+of non-financial
+Amount reclassified
+from the hedge
+reserve to the State-
+ment of Profit or
+Loss from hedging
+relationships for
+which the underlying
+transaction is no
+longer expected
+to the Statement
+of Profit or Loss
+Deal Contingent Option
+Commodity swaps
+Hedging of other risks
+Average interest rate
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Cash equivalents partly included investments in money market funds.
+3
+3
+3
+3
+Total
+Other current liabilities
+Q = < 201 >
+Current liabilities:
+17
+15
+2,298
+2,530
+Total
+38
+55
+Other non-current assets
+Non-current assets:
+210
+5
+227
+215
+Other current assets and liabilities contained derivative financial instruments,
+including cash flow hedges. Their fair value was determined by discounting future
+cash flows according to the discounted cash flow method. Where possible, valuation
+parameters observed on the reporting date in the relevant markets (such as currency
+rates, interest rates, or commodity prices) drawn from reliable external sources were
+used (level 2). In case fair values were estimated on the basis of non-observable input
+factors, they were assigned to level 3 of the fair value category.
+The determination of the fair values of the Deal Contingent Forward Starting Interest
+Rate Swaps connected with the planned refinancing measures (see hereinafter
+"Derivative financial instruments and heging activities”, p. 202 ff.) were based on factors
+17
+17
+2020
+30 September
+Reclassification
+to Level 2
+Gains (losses)
+recognized
+in equity
+Realized losses
+recognized in
+profit or loss²
+Unrealized losses
+recognized in
+profit or loss²
+disposals)
+additions)
+Deal Contingent Option¹
+The determination of the fair values of the Deal Contingent Forward and Deal Con-
+tingent Option designated as cash flow hedges to partly hedged exchange rate risks
+arising from the purchase price obligation relating to the acquisition of Cypress
+(see note 3, p. 162 ff., and hereinafter “Derivative financial instruments and hedging
+activities", p. 202 ff.) were based on factors observable in markets such as forward
+prices, interest rate curves and volatilities. In addition, the probability of occurrence
+of the planned acquisition was taken into account as a non-observable factor.
+Deal Contingent Forward
+€ in millions
+(including
+(including
+2019
+Sales
+Acquisitions
+30 September
+The following table shows the reconciliation of financial instruments classified as
+level 3 (before tax):
+Other non-current assets include equity investments and investments in funds. Where
+these are traded on an active market, the fair value is based on the actual market
+price (level 1). For equity investments where no market price from an active market is
+available, the fair value is determined by considering existing contractual arrange-
+ments based on externally observable dividend policy (level 3).
+Short-term financial debt included the conversion rights from convertible bonds
+acquired in the course of the Cypress acquisition (see note 17, p. 179 ff.), which can be
+exercised against cash payment by bondholders until the maturity of the instruments.
+The fair value of the conversion rights was determined by discounting future cash
+flows according to the discounted cash flow method. Valuation parameters observed
+on the reporting date in the relevant markets such as interest rates and US dollar spot
+rate were used from reliable external sources (level 2).
+observable in markets such as interest rate curves and US dollar spot rate. In addition,
+the probability of occurrence of the planned acquisition was taken into account as a
+non-observable factor.
+Equity investments
+91
+Other current assets
+2,187
+2,402
+17
+81
+98
+Total
+Other non-current assets
+3
+3
+1,524
+777
+1,524
+777
+Cash and cash equivalents
+Financial investments
+Other current assets
+Non-current assets:
+2,382
+Level 3
+Level 1
+Fair value by category
+Fair value
+The allocation to the levels as of 30 September 2020 and 2019 was as follows:
+< 200 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Level 2
+2,187
+3
+Current liabilities:
+Financial investments
+73
+73
+Cash and cash equivalents
+Current assets:
+30 September 2019
+Infineon Technologies | Annual Report 2020
+30 September 2020
+Current assets:
+€ in millions
+› Level 3: valuation parameters for assets and liabilities, which are not based on
+observable market data.
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1,
+but which can be observed either directly or indirectly for the assets or
+liabilities,
+17
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+The fair value of current and non-current financial debt that are measured at amor-
+tized cost is based either on quoted prices as of the reporting date (level 1) or is
+determined based on expected future cash flows discounted using a current market
+interest rate (level 2). As of 30 September 2020 and 2019 respectively fair values of
+non-current financial debt, which were allocated to level 1, amounted to €3,521 mil-
+lion and €518 million, respectively. Fair values for level 2 were €3,262 million and
+€1,089 million.
+For assets allocated to the category "At amortized cost", which are measured at amor-
+tized cost, it is assumed that the fair values correspond to their carrying amounts.
+The same assumption applies to liabilities resulting from trade payables and other
+current liabilities categorized as "Other financial liabilities (amortized cost)".
+In the 2020 and 2019 fiscal years, there were no reclassifications between the
+categories of financial instruments.
+207
+207
+Total
+68
+68
+139
+139
+Short-term financial debt and current
+portion of long-term financial debt
+Other current liabilities
+Financial instruments measured at fair value are allocated to the following measure-
+ment levels in accordance with IFRS 13. The allocation to the different levels is based
+on the market proximity of the valuation parameters used in the determination of the
+fair values:
+(98)
+7
+119
+30 September 2019
+30 September 2020
+Infineon Technologies | Annual Report 2020
+Interest expense on financial liabilities measured at amortized cost mainly included
+interest on financial debt and effects from using the effective interest method.
+(62)
+(118)
+Total
+(5)
+(40)
+thereof foreign currency exchange
+(5)
+Nominal
+(40)
+(3)
+Financial liabilities at fair value through profit or loss
+(5)
+(5)
+thereof other financial expenses
+(123)
+107
+thereof foreign currency exchange
+Total
+Forward exchange contracts purchased
+Forward exchange contracts sold
+Financial assets or liabilities measured at fair value
+through profit and loss - held for trading
+(52)
+value
+Nominal
+value
+Nominal value (US dollar)
+Forward Starting Interest Rate Swaps
+Hedging of interest risks
+30 September 2020
+€ in millions (except otherwise stated, exchange rates, interest rates and prices)
+As of 30 September 2020 and 2019, Infineon held the following instruments, which
+were designated as cash flow hedges and were used to hedge against exchange rate,
+interest and commodity price changes.
+The economic connection was proven by means of a regression analysis. These foreign
+currency derivatives expired in full as of 30 September 2020.
+Q = < 203 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Fair
+value
+Business focus and strategy
+Foreign exchange derivatives are entered into by Infineon to offset the exchange
+risk from anticipated cash receipts from operating activities. In connection with the
+acquisition of Cypress, foreign currency derivatives were acquired in the 2020 fiscal
+year to hedge the current business, which have been redesignated as cash-flow hedges.
+As part of the hedging, only the spot element of the forward exchange contracts was
+designated as a hedging instrument. The forward elements of a forward exchange
+contract were excluded from the designation of the hedging instrument.
+(1)
+2
+150
+2
+(3)
+134
+(2)
+144
+151
+value
+Fair
+Management Board and
+Supervisory Board
+(120)
+therein interest expenses
+(180)
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+1 The additions to the deal contingent option are due to the subsequent valuation of the option premium to be paid upon completion of the Cypress acquisition and the associated exercise of the option.
+2 These are gains within financial income or losses within financial expenses.
+17
+113
+(58)
+1
+Q =
+113
+(10)
+(10)
+5
+(274)
+18
+227
+Total
+(11)
+Deal Contingent Forward Starting Interest Rate Swaps
+32
+1
+(181)
+29
+(97)
+< 202 >
+With the completion of the acquisition of Cypress and the lapse of the commencement
+conditions, the deal contingent forward starting interest rate swaps classified in level 3
+were continued as forward starting interest rate swaps and accordingly reclassified
+to level 2.
+A hypothetical change in the material non-observable valuation parameters at the
+balance sheet date of ± 10 percent would have resulted in a theoretical reduction in
+fair values of €1 million or an increase of €1 million (previous year: €25 million).
+(18)
+Financial liabilities measured at amortized cost
+(26)
+(15)
+Financial assets measured at fair value through profit and loss
+€ in millions
+122
+(70)
+thereof foreign currency exchange
+2
+(1)
+therein impairment losses (2019: gains)
+26
+28
+therein interest income
+149
+(42)
+2019
+2020
+The nominal values and fair values of Infineon's derivative instruments as of 30 Sep-
+tember 2020 and 2019 that were not designated as cash flow hedges were as follows:
+Derivative financial instruments and hedging activities
+Infineon holds derivative financial instruments exclusively for hedging purposes. This
+includes the use of forward exchange contracts, foreign currency options, interest- and
+commodity swaps. The objective is to reduce the impact of exchange rate, interest
+and commodity price fluctuations on future net cash flows.
+Infineon does not net financial instruments. Infineon conducts derivative transactions
+according to the global netting agreement (Master Agreement) of the International
+Swaps and Derivatives Association (ISDA) and other comparable national framework
+agreements. Under the terms of these agreements, any netting arising from the
+occurrence of certain future events would have had no material effect on the balance
+sheet presentation of these financial instruments.
+Financial assets measured at amortized cost
+€ in millions
+The net gain or loss on financial instruments (including interest income and expense)
+within continuing operations in the Consolidated Statement of Profit or Loss amounted
+to the following as of 30 September 2020 and 2019:
+Hedging of
+interest
+risks
+Hedging of
+commodity
+price risks
+(5)
+Infineon Technologies | Annual Report 2020
+30 September 2020
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+1
+(1)
+Euro/Malaysian ringgit
+(5)
+4
+(6)
+5
+(7)
+6
+(12)
+10
+(7)
+6
+(22)
+minus 10%
+plus 10%
+minus 10%
+plus 10%
+Equity
+Profit or Loss
+€ in millions
+The following table shows the effects on profit or loss for the 2020 and 2019 fiscal year
+and equity as of 30 September 2020 and 2019 of a ± 10 percent shift in exchange
+rates. The assumed exchange rate changes relate only to financial instruments within
+the meaning of IAS 32.
+(47)
+(194)
+(17)
+2
+30 September 2019
+Euro/US dollar
+Other
+56
+45
+(5)
+Total
+Infineon Technologies | Annual Report 2020
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which
+it is dependent. Infineon seeks to minimize these risks through its procurement policy
+(including the use of multiple sources, where possible) and its operating procedures.
+In line with these measures, Infineon concluded additional financial derivative contracts
+for certain commodity supplies (gold) for the following fiscal year in order to mitigate
+the remaining risk arising from the fluctuation of commodity prices (see note 28,
+p. 205). A change in relevant market prices of ± 10 percent would have increased or
+decreased equity by €2 million in the 2020 fiscal year (30 September 2019: €3 million).
+In the 2020 fiscal year Infineon held financial instruments that are exposed to market
+price risks. A change in the relevant market prices would have had no significant
+impact on the result of the 2020 and 2019 fiscal years.
+According to IFRS 7, other price risk is defined as the risk that the fair value or future
+cash flows of a financial instrument could fluctuate because of changes in market
+prices (other than those arising from interest rate risk or currency risk), irrespective
+of whether those changes are caused by factors specific to the individual financial
+instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+Other price risk
+As in the previous year, Infineon did not hold any fixed-rate financial assets that are
+measured at fair value through profit or loss. Furthermore, as in the previous fiscal
+year, Infineon did not hold any fixed-interest financial assets that were measured at
+fair value through equity.
+(previous year: €22 million), based on net holdings of minus €288 million (2019:
+€2,187 million). The effect from the hedge accounting designated hedging instru-
+ments (see note 28, p. 203 f.) would have increased equity as of 30 September 2020
+by €53 million (30 September 2019: €0 million), or decreased by €59 million (30 Sep-
+tember 2019: €0 million).
+Changes in market interest rates affect interest income and expenses from variable-
+yield financial instruments as well as from fixed-yield financial instruments that are
+measured at fair value through profit or loss, and also affect equity due to the hedge
+accounting designated interest-rate hedging instruments. An increase or decrease in
+interest rates of 100 basis points would have increased net interest expense by €0 mil-
+lion in the 2020 fiscal year (previous year: €22 million), or decreased by €18 million
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market
+interest rates on profit or loss and equity. Infineon prepares this using the iteration
+method.
+Interest rate risks related to planned future refinancing measures were partially hedged
+by interest rate derivatives designated as cash flow hedges (see note 28, □ p. 203 f.).
+To reduce the net remaining risks caused by changes in interest rates, Infineon is
+able to make use of interest rate derivatives in order to align the fixed interest periods
+of assets and liabilities.
+Infineon is exposed to interest rate risk through its financial assets and debt instru-
+ments resulting from bond issuances and debt financing. Due to the cyclical nature
+of its core business and the need to maintain high operational flexibility, Infineon
+holds a relatively high level of liquid financial assets that are invested in short-term
+fixed-interest instruments. These investments generally have a contract duration of
+between one and twelve months in order to achieve short-term interest rate returns.
+The risk to these assets of changing interest rates is not material in the current period
+of low or zero interest rates.
+9
+In accordance with IFRS 7, interest rate risk is defined as the risk that the fair value
+or future cash flows of a financial instrument will fluctuate because of changes in
+interest rates.
+Q = < 209 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+1
+(1)
+712
+(395)
+(6)
+712
+(395)
+Interest rate risk
+64
+18
+32
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying
+but significant portion of its revenue as well as cost of goods sold, research and devel-
+opment and product distribution costs are denominated in currencies other than the
+euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2020 and 2019
+fiscal years.
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes
+to foreign exchange rates. Accordingly, foreign exchange risks are associated with
+financial instruments that are denominated in a foreign currency that does not corre-
+spond to the functional currency, and the foreign currency represents the relevant
+risk variable. Risks arising from the translation into Infineon's reporting currency are
+not risks within the meaning of IFRS 7.
+Foreign exchange risk
+Infineon is exposed to various market risks in the ordinary course of business, primarily
+resulting from changes in foreign exchange rates and interest rates. Infineon enters
+into a range of derivative financial transactions with various counterparties to limit
+such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+57
+Market risk
+The coronavirus pandemic and the related measures to contain the virus can have a
+direct and indirect effect on financial risks. The course of the spread of the coronavirus
+and the impact on Infineon's risk position is continually monitored and is taken into
+account in the methods, models and processes used to control financial risks. Possible
+longer-term effects on Infineon as a consequence of the spread of the coronavirus
+and the associated volatility in the financial markets are currently not foreseeable.
+Infineon's activities are exposed to a variety of financial risks: market risk (including for-
+eign exchange risk, interest rate risk and price risk), credit risk, financing and liquidity
+risk. Infineon's financial risk management seeks to minimize potential adverse effects
+on its profitability and liquidity. Infineon uses derivative financial instruments to hedge
+certain risks to which it is exposed. Financial risk management is carried out by the
+central Finance & Treasury (FT) department in accordance with policies approved by
+the Chief Financial Officer. The FT department identifies, evaluates and hedges finan-
+cial risks in close cooperation with the operating units. The FT department's policies
+contain principles for overall risk management as well as guidance covering specific
+areas such as foreign exchange risk, interest rate risk, credit risk, the use of derivative
+and non-derivative financial instruments, and the investment of excess liquidity.
+29 Financial risk management
+(97)
+1
+(98)
+(132)
+5
+(137)
+1
+1
+(67)
+(7)
+(99)
+39
+101
+< 208 >
+The Management Board has established policies that require Infineon's individual
+legal entities to manage the foreign exchange risk with respect to their functional
+currency. Group entities prepare a monthly rolling cash flow forecast by currency in
+order to determine foreign exchange risks. The net foreign exchange positions deter-
+mined in these forecasts are required to be hedged, usually by entering into internal
+hedging contracts. Infineon's policy with respect to limiting short-term foreign currency
+exposure is to hedge at least 75 percent of its estimated net cash flow for the following
+two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods
+thereafter. Part of the foreign currency risk cannot be mitigated due to differences
+between actual and forecasted amounts. Infineon calculates this remaining risk
+based on net cash flows considering items in the Statement of Financial Position,
+actual orders received or placed and all other planned cash receipts and payments.
+Market risk is defined as the risk of losses resulting from adverse changes in the market
+prices of financial instruments, including those related to foreign exchange rates,
+interest rates and other price risks.
+(7)
+In order to hedge the majority of the foreign currency risks arising from the purchase
+price obligation of the acquisition of Cypress, Infineon entered into a transaction-
+dependent euro/US dollar foreign currency forward transaction (Deal Contingent
+Forward) and a transaction-dependent euro/US dollar foreign currency option trans-
+action (Deal Contingent Option) in the 2019 fiscal year, and accounted for them as
+cash flow hedges. With the completion of the acquisition of Cypress on 16 April 2020,
+the deal contingent forward and deal contingent option became due (see note 28,
+p. 198 ff.).
+26
+37
+(124)
+(144)
+(47)
+(177)
+(2)
+(37)
+(48)
+(15)
+24
+(60)
+(70)
+67
+For the net result related to foreign currency derivatives and foreign currency
+transactions included within net income see note 28. ☐ p. 202
+Foreign exchange risk at Infineon arises predominantly from US dollar positions.
+The following table shows the net risk as of 30 September 2020 and 2019:
+€ in millions
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+(86)
+Financial position exposure
+Euro/US dollar
+Euro/Japanese yen
+Euro/British pound
+Forward exchange contracts
+Net exposure
+30 Septem-
+ber 2020
+30 Septem-
+ber 2019
+34
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+Euro/British pound
+Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
+Year-end audit fees
+Fees for tax advisory services
+At the Annual General Meeting held on 20 February 2020, the shareholders elected
+KPMG AG Wirtschaftsprüfungsgesellschaft (“KPMG”), Munich, as auditor for the 2020
+Separate Financial Statements and the Consolidated Financial Statements of Infineon
+Technologies AG. The audit fees charged by KPMG in the 2020 fiscal year amounted
+to €3.4 million for the audit of the Consolidated Financial Statements and various
+Separate Financial Statements including an integrated audit review of the Interim
+Financial Statements.
+Fees for other advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.5 million
+in the 2020 fiscal year for other audit services which mainly included the provision
+of a comfort letter as well as the audit of the disclosures in the Sustainability Report.
+In addition to the amounts described above, KPMG charged €21 thousand in the
+2020 fiscal year for tax consulting services in connection with the assessment of indi-
+vidual items.
+Total
+Fees of €0.1 million were charged by KPMG to the Company in the 2020 fiscal year for
+other services. These mainly included quality assurance during the implementation
+of regulatory requirements, and IT system changes.
+Management Board and Supervisory Board
+Management compensation in the 2020 fiscal year
+As required by section 314, paragraph 1, no. 6a, sentences 5 to 8, German Commercial
+Code (version before ARUG II), the remuneration of the individual members of the
+Management Board and the Supervisory Board is disclosed in the Compensation
+report, p. 130 ff., which is part of the Combined Management Report.
+Management Board
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#corporate-governance
+Fees for other services
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the
+Management Board and the Supervisory Board and made permanently available to
+the public on Infineon's website.
+14,033
+Q = < 217 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Non-current assets do not include financial instruments, deferred tax assets and assets
+from employee benefits.
+In the course of the 2020 fiscal year, Infineon adjusted its reporting to reflect the
+common geographical names for the sub-regions of China. Accordingly, instead of
+the former term "China", the term "Mainland China, Hong Kong" is now used.
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+5,378
+The Management Board members during the 2020 fiscal year were as follows:
+31 Additional information in accordance with HGB
+Name
+(11)
+Dr. Reinhard Ploss
+8,029
+Supervisory Board member
+(Chairman)
+> Infineon Technologies Americas Corp., USA
+People's Republic of China
+> Infineon Technologies China Co., Ltd.,
+> Infineon Technologies Japan K.K., Japan (Chairman)
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore (Chairman)
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., USA
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+People's Republic of China
+> Infineon Technologies China Co., Ltd.,
+Position
+Member of the Board of Directors
+Supervisory Board member
+> Infineon Technologies Americas Corp., USA
+Member of the Board of Directors
+> Futurium gGmbH, Germany
+> Infineon Technologies Austria AG, Austria
+(Chairman)
+Supervisory Board member
+Membership of Supervisory Boards and other comparable
+governing bodies of domestic and foreign companies
+(as of 30 September 2020)
+Chief Operations Officer
+Jochen Hanebeck
+Chief Marketing Officer
+Dr. Helmut Gassel
+Chief Financial Officer
+Dr. Sven Schneider
+> Infineon Technologies Austria AG, Austria
+8,567
+48
+9,124
+Expected 12-month credit losses for cash and cash equivalents and financial invest-
+ments amounted to €1 million as of 30 September 2020 (previous year: €0 million).
+Expected lifetime credit losses on non-impaired financial assets totaled €0 million in
+the 2020 fiscal year (previous year: €0 million). As in the previous year Infineon had
+no financial assets that were overdue or impaired as of 30 September 2020. There was
+no reclassification between the impairment levels in the 2020 and 2019 fiscal years.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 211 >
+As in the previous year, Infineon spread its cash investments over more than ten
+banks as of 30 September 2020. As of 30 September 2020, no financial institution was
+responsible for more than 22 percent (30 September 2019: 12 percent) of Infineon's
+cash investments. This gave rise to a maximum risk of €160 million (30 September
+2019: €139 million) in the event of the default of a single financial institution assuming
+no deposit insurance scheme is in place. Infineon also held derivative financial instru-
+ments with a positive fair value of €2 million at 30 September 2020 (30 September 2019:
+€215 million). In addition, to spread the risk of investment, investments were made
+in money market funds with the best rating, and in money market investment funds.
+Infineon manages the credit risk with respect to trade receivables through a compre-
+hensive credit evaluation for all major customers, the use of credit limits and monitor-
+ing procedures. New customers are evaluated for creditworthiness in accordance
+with Infineon guidelines. Credit limits are also in place for individual customers and
+creditworthiness and credit limits are constantly monitored. A further measure taken to
+reduce credit risk is the use of reservation of title clauses. However, despite continuous
+monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+Infineon assigns trade receivables to different risk classes based on external ratings,
+the analysis of customer balance sheet figures, default probabilities (credit default
+swaps), customer payment behavior and country risks. The simplified method is used
+to determine the expected losses from trade receivables. The expected losses over
+the entire term of the trade receivables are determined. The allowance is calculated
+for each customer using a weighted-probability method. In calculating the expected
+credit losses, for each customer Infineon takes into account a forward-looking proba-
+bility of default provided by a credit rating agency. Individual allowances are recorded
+based on case-by-case facts or other risk indicators.
+The following table provides information about the credit risk for trade receivables
+from third parties as of 30 September 2020 and 2019:
+€ in millions
+At amortized cost
+1,519
+Infineon rating
+External credit rating
+Basis for the determination
+of the value adjustment
+30 September 2020
+30 September 2019¹
+256
+273
+470
+422
+296
+223
+109
+75
+> Infineon Technologies Austria AG, Austria
+Risk class
+147
+BBB
+1,372
+therein: USA
+862
+845
+1,183
+9,137
+Americas
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 210 >
+Credit risk
+Credit risk arises when a customer or other counterparty of a financial instrument fails
+to discharge its contractual obligations. Infineon is exposed to this risk as a consequence
+of its ongoing operations, its financial investments and certain financing activities.
+Infineon's credit risk arises primarily from cash and cash equivalents, financial invest-
+ments, trade receivables and derivative financial instruments. Excluding the impact
+of any collateral received, the carrying amount of financial investments, cash and cash
+equivalents and trade receivables corresponds to the maximum credit risk.
+Worldwide foreign exchange and interest hedging contracts as well as the investment
+of liquid assets in cash equivalents and financial investments are entered into with
+major financial institutions worldwide that have high credit ratings. Infineon assesses
+the creditworthiness of banks using a methodology that establishes investment limits
+for individual banks that are updated on a daily basis based on current ratings (S&P,
+Moody's or Fitch) and credit default swap premiums. Possible breaches of stipulated
+investment thresholds result in immediate notification and the requirement to reduce
+the risk. This methodology is also used to identify a significant increase in credit risk
+in the context of the recognition of expected credit losses within the meaning of IFRS 9
+at the balance sheet date.
+Infineon applies the general impairment model in accordance with IFRS 9 for cash and
+cash equivalents as well as financial investments. Since Infineon invests exclusively
+in high-quality financial assets from issuers with a rating of at least investment grade
+in order to minimize default risk, Infineon assumes that its financial assets carry low
+credit risk arising from the creditworthiness of its contract parties, so that any impair-
+ment loss recorded at first-time recognition is limited to the twelve-month expected
+credit losses. Infineon considers low credit risk to be an internal credit rating "Holding
+Quality 1". A change in the internal rating from "Holding Quality 1" to "Holding Qual-
+ity 0" indicates a significant increase in credit risk. The impairment is calculated using
+a weighted-probability method. The impairment is calculated as a measure of the
+probability of default based on the exposure at the balance sheet date, the loss ratio
+for that exposure, and the credit default swap spread.
+The following table provides information on the credit risk for cash and cash equiva-
+lents measured at amortized cost, as well as financial investments as of 30 September
+2020 and 2019:
+€ in millions
+Infineon rating
+30 September 2020
+Holding Quality 1
+Holding Quality 0
+Total
+30 September 2019
+Holding Quality 1
+Holding Quality 0
+Total
+At amortized cost
+External rating
+Basis for the determina-
+tion of the loss allowance
+A to BBB
+926
+926
+A to BBB
+1,175
+Infineon Technologies | Annual Report 2020
+> Holcim Technology Ltd, Switzerland
+Business focus and strategy
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+> DWS Group GmbH & Co. KGaA, Germany
+> Deutsche Telekom AG, Germany
+> HeidelbergCement AG, Germany
+Supervisory Board member
+Deputy Chairwoman
+of the Infineon Works
+Council, Warstein,
+Infineon Technologies AG
+Member of various
+supervisory bodies
+Expert in the
+frontend-manufacturing,
+Infineon Technologies
+Dresden GmbH & Co. KG
+Manager and Investor
+1 Employee representative
+Diana Vitale¹
+Consolidated Financial Statements
+Margret Suckale
+Kerstin Schulzendorf¹
+> BKK of BMW AG, Germany
+Member of the Administrative Board
+> Krones AG, Germany
+Supervisory Board member
+› Catalina Holdings (Bermuda) Ltd., Bermuda
+> Athene Holding Ltd., Bermuda
+Member of the Board of Directors
+> Oldenburgische Landesbank AG, Germany
+> EVO Finance, Spain
+> Nova KBM Bank, Slovenia
+> Athora Lebensversicherung AG, Germany
+Supervisory Board member
+Dr. Ulrich Spiesshofer
+Further information
+Q =
+< 219 >
+The business address of each member of the Supervisory Board is:
+Margret Suckale
+Dr. Manfred Puffer
+Dr. Wolfgang Eder (Chairman)
+Nomination Committee
+Jürgen Scholz
+Dr. Susanne Lachenmann
+Peter Gruber
+Dr. Wolfgang Eder
+Xiaoqun Clever
+Dr. Ulrich Spiesshofer (Chairman)
+Strategy and Technology Committee
+Annette Engelfried
+Dr. Wolfgang Eder
+Johann Dechant
+Dr. Friedrich Eichiner (Chairman)
+Investment, Finance and Audit Committee
+Diana Vitale
+Hans-Ulrich Holdenried
+Johann Dechant
+Dr. Wolfgang Eder (Chairman)
+Executive Committee
+Jürgen Scholz
+Hans-Ulrich Holdenried
+Johann Dechant
+Dr. Wolfgang Eder (Chairman)
+Mediation Committee
+Supervisory Board committees
+Notes to the Consolidated Financial Statements
+> Huaxin Cement Co., Ltd., People's Republic of China
+Management Board and
+Supervisory Board
+> LafargeHolcim Maroc Afrique SAS, Morocco
+> Lafarge Maroc SA, Morocco
+Member of the Advisory Board
+Management Consultant
+Infineon Technologies AG
+Independent
+Chief Financial Officer
+Operations,
+Labor union secretary
+IG Metall district
+management, Berlin-
+Brandenburg-Saxony
+Member of various
+supervisory bodies
+Peter Gruber¹
+Representative of
+Senior Management
+Hans-Ulrich Holdenried
+Annette Engelfried¹
+› Amadeus IT Group SA, Spain
+› Capgemini SE, France
+Dr. Friedrich Eichiner
+Supervisory Board member
+> SBK Siemens-Betriebskrankenkasse, Germany
+> Maxingvest AG, Germany
+Member of the Administrative Board
+Supervisory Board member
+Membership of other Supervisory Boards and other
+comparable governing bodies of domestic and foreign
+companies (as of 30 September 2020)
+Member of various
+supervisory bodies
+Vice-Chairman of the
+Joint Works Council and
+Chairman of the Works
+Council Regensburg,
+Infineon Technologies AG
+Management Consultant -
+LuxNova Suisse GmbH
+Xiaoqun Clever
+Dr. Wolfgang Eder
+Chairman
+Johann Dechant¹
+Deputy Chairman
+Position
+Name
+The Supervisory Board members during the 2020 fiscal year, the Supervisory Board
+position held by them, their occupation, and their membership of other supervisory
+and governing bodies are as follows:
+The Supervisory Board
+Q = < 218 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+> voestalpine AG, Austria
+Member of the Administrative Board
+> Cornelsen Group, Germany
+Member of the Board of Directors
+26
+> Holcim Group Services Ltd, Switzerland
+Member of the Board of Directors
+comparable governing bodies of domestic and foreign
+companies (as of 30 September 2020)
+Membership of other Supervisory Boards and other
+Analysis Engineer and
+Vice Chairwoman of the
+Works Council Campeon
+First authorized agent
+of IG Metall Regensburg
+Management Consultant
+Independent
+Chief Financial Officer,
+LafargeHolcim Ltd.,
+Switzerland
+Jürgen Scholz¹
+Melanie Riedl¹
+Dr. Manfred Puffer
+Géraldine Picaud
+Dr. Susanne Lachenmann' Leading Development
+Engineer
+Position
+Name
+> Bridge imp GmbH, Germany
+Member of the Advisory Board
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Supervisory Board member
+Management GmbH, Germany
+> Siemens Gamesa Renewable Energy
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Supervisory Board member
+> Allianz SE, Germany
+> Festo Management SE, Germany (Chairman)
+> Festo AG, Germany (Chairman)
+Supervisory Board member
+> BHP Group Plc., Australia
+> LafargeHolcim Maroc SAS, Morocco
+Acquisition-related depreciation/amortization and other expenses
+Gains (losses) on sales of businesses, or interests in subsidiaries, net
+Other income and expense, net
+4
+9
+424
+1,083
+Infineon Technologies | Annual Report 2020
+2020
+2019
+495
+458
+181
+159
+226
+191
+62
+46
+3
+4
+967
+858
+293
+87
+(6)
+(9)
+(98)
+(177)
+3,542
+(540)
+(114)
+Power & Sensor Systems
+1
+(1)
+Connected Secure Systems
+(27)
+(32)
+1,260
+Other Operating Segments
+Operating income
+581
+1,161
+Total
+Financial income
+29
+26
+Financial expenses
+Gain (loss) from investments accounted for using the equity method
+Income from continuing operations before income taxes
+Corporate and Eliminations
+945
+30 Septem-
+ber 2020
+30 Septem-
+ber 2019
+€ in millions
+Revenue:
+The allocation of revenues from external customers to geographic areas is based on
+the customers' locations. The average number of employees by geographic region is
+provided in note 4. p. 165
+No single customer accounted for more than 10 percent of Infineon's revenue during
+the 2020 and 2019 fiscal year.
+Non-current assets as of 30 September 2020 and 2019, by region, were as follows:
+30 Septem-
+ber 2020
+30 Septem-
+ber 2019
+2020
+Revenue for the 2020 and 2019 fiscal years by region were as follows:
+2019
+Non-current assets:
+Europe, Middle East, Africa
+2,322
+2,430
+Europe
+3,627
+3,068
+therein: Germany
+1,056
+€ in millions
+3,503
+Entity-wide disclosures in accordance with IFRS 8
+< 216 >
+975
+551
+251
+201
+449
+338
+190
+26
+3
+Impairment losses on assets in the 2020 fiscal year amounted to €5 million (2019:
+€6 million) in the Automotive segment, €5 million (2019: €0 million) in the Power &
+Sensor Systems segment, and €13 million (2019: €0 million) in Corporate and
+Eliminations. Also allocated to Corporate and Eliminations in the 2020 fiscal year
+was €11 million (2019: €0 million) of reversal of impairments to assets.
+2
+583
+2,052
+1,701
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+184
+1,864
+2,218
+876
+Industrial Power Control
+4
+3
+Automotive
+77
+122
+Depreciation and amortization:
+585
+636
+(2)
+251
+€ in millions
+404
+155
+Connected Secure Systems
+Other Operating Segments
+Corporate and Eliminations
+Total
+Power & Sensor Systems
+Industrial Power Control
+Automotive
+Segment Result:
+€ in millions
+256
+Of the €540 million (2019: €114 million) “Acquisition-related depreciation/amortization
+and other expenses" incurred in the 2020 fiscal year, €316 million (2019: €56 million)
+was attributable to cost of goods sold, €18 million (2019: €2 million) to research
+and development expenses, €161 million (2019: €44 million) to selling, general and
+administrative expenses and €45 million (2019: €12 million) to other operating
+income/expenses.
+(2)
+1,170
+(14)
+Industrial Power Control
+(20)
+Automotive
+Inventories:
+11
+€ in millions
+1,319
+1,170
+Power & Sensor Systems
+2019
+Reversal of impairments (impairments) (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Share-based compensation
+Plus/minus:
+Segment Result:
+€ in millions
+Depreciation and amortization allocated to the segments
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+Other Operating Segments
+The following table provides the reconciliation of Segment Result to income from
+continuing operations before income taxes:
+Connected Secure Systems
+1,319
+2020
+1,169
+2019
+There were limited levels of trading relationships between the operating segments
+during the 2020 and 2019 fiscal years. Costs are recharged in general without impact
+on profit or loss.
+Other Operating Segments
+Corporate and Eliminations
+Total
+Subtotal
+Connected Secure Systems
+562
+630
+99
+1,883
+1,921
+2,445
+953
+2,650
+1,418
+1,406
+1,418
+1,406
+Industrial Power Control
+251
+617
+551
+668
+Power & Sensor Systems
+2020
+642
+642
+Q = < 215 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+8,029
+8,567
+953
+21
+251
+1,179
+1,181
+1,310
+1,928
+5,519
+5,191
+8,008
+8,551
+16
+Asia-Pacific (excluding Japan, Greater China)
+1,291
+1,187
+2020
+Total
+2,965
+92
+1,362
+1,846
+1,165
+2,692
+10,122
+2021
+(161)
+229
+229
+2,965
+92
+1,362
+1,846
+1,165
+2,624
+10,054
+(161)
+Beyond 2025
+2022
+2024
+1,459
+3,275
+(153)
+(153)
+156
+156
+598
+381
+41
+2023
+554
+1,456
+3,272
+Total
+Cash inflow¹
+Cash outflow
+Derivative financial liabilities:
+Non-derivative financial liabilities
+30 September 2019
+Beyond 2024
+242
+242
+2025
+2023
+1 In conjunction with the integration of Cypress, the presentation of reimbursement obligations to customers was aligned with the
+approach previously used by Cypress (see note 10, ☐ p. 172). Instead of netting reimbursement obligations against trade receivables, they
+are now reported within other current liabilities. For better comparability, the previous year's figures were adjusted.
+none
+none
+Total
+4
+C to B+
+high risk
+individual
+others
+5
+BB- to BB
+As of 30 September 2020, expected credit losses on trade receivables (see note 10,
+p. 172) amounted to €1 million for all risk classes (30 September 2019: €1 million).
+The individual allowances on trade receivables (no rating) amounted to €4 million
+in the 2020 fiscal year (2019: €6 million).
+increased risk
+BBB to BBB+
+A- to AAA
+low risk
+average risk
+above average risk
+3
+2
+1
+1,059
+1,192
+34
+BB+ to BBB-
+2024
+Developments in the wake of the coronavirus pandemic are very dynamic, so it cannot
+be ruled out that the actual credit losses deviate significantly from the expected credit
+losses recognized based on current estimates and assumptions, or that the affected
+estimates and assumptions will have to be adjusted in future periods and this could
+have a significant impact on Infineon's expected credit losses.
+Management Board and
+Supervisory Board
+2022
+2021
+Total
+Due in the fiscal year
+Total
+Cash inflow¹
+Cash outflow
+Derivative financial liabilities:
+Non-derivative financial liabilities
+Infineon Technologies | Annual Report 2020
+30 September 2020
+The following table discloses the maturity profile for non-derivative financial liabilities
+and a cash flow analysis for derivative financial instruments with negative fair values.
+The table shows the undiscounted contractually agreed cash flows that result from
+the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign cur-
+rencies were translated using the closing rate at the reporting date. The value of
+financial instruments with variable interest payments is determined using the interest
+rate from the last interest fixing date before 30 September 2020 and 2019. The cash
+outflows of financial liabilities that can be repaid at any time are assigned to the period
+in which the earliest redemption is possible.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing
+financial obligations. Infineon's liquidity management provides that sufficient levels
+of cash and other liquid assets are available as well as ensuring the availability of
+funding through adequate levels of committed credit facilities.
+Financing and liquidity risk is the risk that an entity will encounter difficulties in
+meeting obligations associated with financial liabilities.
+Financing and liquidity risk
+Q = < 212 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+€ in millions
+6
+554
+381
+Americas
+therein: USA
+Total
+1,015
+1,050
+Automotive
+Revenue from contracts with customers:
+2020
+2019
+2
+2020
+2019
+2020
+2019
+Memories for
+specific applications
+2020
+2019
+2020
+2019
+Connectivity
+€ in millions
+RF & sensors
+14
+593
+therein: Germany
+2,495
+2,413
+Asia-Pacific (excluding Japan, Greater China)
+1,182
+1,074
+Greater China¹
+3,174
+2,769
+Japan
+Greater China'
+51
+therein: Mainland China, Hong Kong
+2,472
+2,159
+therein: Mainland China, Hong Kong
+67
+50
+Japan
+765
+73
+41
+Embedded Control &
+Power semiconductors
+Connected Secure Systems
+With effect from 1 April 2020, the name of the Power Management & Multimarket
+segment changed to Power & Sensor Systems. The name change has no impact on the
+structure of the organization, the strategy or the scope of business. The Power & Sensor
+Systems segment designs, develops, manufactures and markets semiconductors for
+energy-efficient power supplies, mobile devices, mobile phone network infrastructures,
+human-machine interaction as well as applications with special demands on their
+robustness and reliability.
+Power & Sensor Systems
+The Industrial Power Control segment designs, develops, manufactures and markets
+semiconductor products for the conversion of electrical energy for small, medium
+and high-power applications. The products are used in the manufacturing, the low-loss
+transmission, the storage and the efficient use of electrical energy.
+Industrial Power Control
+The Automotive segment designs, develops, manufactures and markets semiconductor
+products use in the automotive industry, and also memory products for specific
+applications for automotive, industrial, information, telecommunications and con-
+sumer electronics.
+Automotive
+The basis for identifying the reporting segments is the differences between the
+products and applications. In the 2020 fiscal year Infineon's business was structured
+into the four operating segments Automotive, Industrial Power Control, Power &
+Sensor Systems and Connected Secure Systems. In addition, Infineon differentiates
+Other Operating Segments as well as Corporate and Eliminations. Cypress's businesses
+have been fully allocated to the existing segments. The Automotive and Connected
+Secure Systems segments accounted for the largest share of contribution of revenue
+from Cypress, with around 50 percent and around 40 percent respectively. Around
+10 percent was allocated to the Power & Sensor Systems segment. No contribution
+of revenue was allocated to the Industrial Power Control segment by the first-time
+consolidation of Cypress.
+Identification of segments
+With effect from 1 August 2020, the name of the Digital Security Solutions segment
+changed to Connected Secure Systems. The name change reflects the integration
+of Cypress' lot, Compute & Wireless business unit, and the associated expansion of
+its product portfolio and business scope. The Connected Secure Systems segment
+designs, develops, manufactures and markets semiconductor-based security solu-
+tions for networked devices, card-based applications, and government documents;
+microcontrollers for industrial, entertainment, and household applications; com-
+ponents for connectivity solutions; and a customer support ecosystem consisting of
+software, services, and development platforms.
+30 Segment reporting
+Q = < 213 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+598
+Future cash flows from derivative financial instruments (see note 28, p. 202 ff.) may
+differ from the amounts shown in the table, since exchange rates or relevant factors are
+subject to change.
+Product category
+Other Operating Segments
+Corporate and Eliminations
+Total
+Segment information
+The exception to this approach is certain inventory information which is regularly
+analyzed at a segment level. Infineon also allocates depreciation and amortization
+expense to the operating segments based on production volume and products
+produced using standard costs.
+Neither assets, liabilities nor cash flows per segment are reported to the Management
+Board, nor is segment performance assessed on this basis.
+Decisions relating to financing and the investment of cash funds are taken at a Group
+level and not at a segment level. For this reason, financial income and financial
+expense (including interest income and expense) are not allocated to the segments.
+Segment Result is defined as operating income (loss) excluding certain impairment
+losses (in particular goodwill impairments), impact on earnings of restructuring mea-
+sures and closures, share-based compensation, acquisition-related depreciation/
+amortization and other expenses, gains (losses) on sales of businesses, or interests in
+subsidiaries and other income (expense), including litigation costs.
+Based on revenue and Segment Result, the Management Board assesses performance
+and defines operating targets and budgets for the segments.
+The Management Board, as joint Chief Operating Decision Maker, decides how resources
+are allocated to the segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation
+of assets and liabilities to the individual segments
+Other Operating Segments comprise the remaining activities of divested businesses,
+and other business activities. Since the sale of the Wireless mobile phone business,
+supplies to Intel Mobile Communications are included in this segment. Also included
+are supplies of LDMOS wafers and related components, as well as packaging and test
+services for Cree, Inc., since the sale of the major part of Infineon's Radio Frequency
+Power Components business.
+Furthermore, raw materials and supplies are not under the control or responsibility of
+the operating segment management and are therefore allocated to corporate functions.
+Work in progress and finished goods are allocated to the operating segments.
+< 214 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Corporate and Eliminations reflects the elimination of intragroup revenue and
+profits/losses to the extent that these arise between the segments.
+Similarly, certain items are included in Corporate and Eliminations, which are not
+allocated to the other segments. These include certain corporate headquarters costs
+and selected topics, which are not allocated to the segments since they arise from
+corporate decisions and are not within the direct control of segment management.
+Chief Executive Officer,
+Labor Director
+Infineon Technologies | Annual Report 2020
+Infineon Technologies AG, Am Campeon 1-15, D-85579 Neubiberg (Germany).
+60
+Infineon Technologies Memory Solutions Holdings Inc.
+Infineon Technologies Memory Solutions Israel Ltd.
+Infineon Technologies Memory Solutions Japan G.K.
+Infineon Technologies Memory Solutions Malaysia Sdn. Bhd.
+Infineon Technologies Newport Holding Limited
+Infineon Technologies Nordic AB
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Limited
+Infineon Technologies Romania & Co. Societate in Comandita
+Infineon Technologies Shared Service Center, Unipessoal Lda.
+Infineon Technologies Taiwan Co., Ltd.
+Hong Kong, People's Republic of China
+Bangalore, India
+Rotterdam, The Netherlands
+Dublin, Ireland
+Milan, Italy
+Taipei, Taiwan
+Share-holdings
+in %
+thereof Infineon
+Technologies AG
+Registered office
+Infineon Technologies Maasstad C.V.
+Infineon Technologies LLC
+Infineon Technologies Linz GmbH & Co KG
+100
+4,418.34
+434.76
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Equity
+(€ in millions)
+Further information
+Notes to the Consolidated Financial Statements
+Name of company
+Infineon Technologies Hong Kong Ltd.
+Infineon Technologies India Private Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Ireland Limited
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., LLC
+Q = < 222 >
+100
+Net result
+(€ in millions)
+9
+2.06
+9
+Klagenfurt, Austria
+100
+0
+9.98
+5.35
+9
+5.07
+Tokyo, Japan
+0
+36.12
+7.60
+9
+Seoul, Republic of Korea
+100
+0
+9.53
+100
+0
+100
+9
+100
+0
+2.13
+0.38
+8
+100
+0
+11.63
+2.47
+100
+0
+0.12
+(0.01)
+5
+9
+100
+100
+14.07
+30.56
+Footnote
+9
+Rotterdam, The Netherlands
+8.16
+0
+16.11
+0.80
+Shanghai, People's Republic of China
+100
+0
+3.41
+0.09
+100
+15
+15
+100
+0
+187.30
+12.68
+Infineon Technologies Denmark ApS
+Herlev, Denmark
+100
+Shanghai, People's Republic of China
+Cegléd, Hungary
+Infineon Technologies China Co., Ltd.
+Infineon Technologies Center of Competence (Shanghai) Co., Ltd.
+Singapore, Singapore
+100
+0
+Bayswater, Australia
+100
+0
+568.53
+1.30
+149.71
+9
+0.06
+9
+Infineon Technologies Austria AG
+Villach, Austria
+100
+0.004
+1,022.87
+248.14
+9
+Infineon Technologies Cegléd Kft.
+0
+4.89
+4.50
+9
+3.76
+17
+Rotterdam, The Netherlands
+100
+100
+n.a.
+n.a.
+St. Denis, France
+4.86
+100
+9.20
+9
+0.73
+9
+Singapore, Singapore
+100
+0
+2,922.54
+0
+0
+100
+Wilmington, Delaware, USA
+Infineon Technologies Dresden GmbH & Co. KG
+Infineon Technologies Dresden Verwaltungs GmbH
+Infineon Technologies Epi Services, Inc.
+Infineon Technologies Finance B.V.
+Infineon Technologies France S.A.S.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Dresden, Germany
+100
+100
+9, 22
+237.82
+13.55
+9, 18, 19
+Neubiberg, Germany
+100
+0
+0.09
+0.00
+9
+(0.98)
+9
+Linz, Austria
+100
+Q = < 229 >
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified auditor's report.
+The English language text below is a translation of the auditor's report. The original German text shall prevail in the event of any discrepancies
+between the English translation and the German original. We do not accept any liability for the use of, or reliance on, the English translation
+or for any errors of misunderstandings that may derive from the translation.
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Q = < 228 >
+Independent Auditor's Report
+Further information
+Responsibility Statement
+by the Management Board
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dr. Sven Schneider
+Dr. Reinhard Ploss
+Infineon Technologies AG
+Neubiberg, 20 November 2020
+To the best of our knowledge, and in accordance with the applicable reporting
+principles, the Consolidated Financial Statements give a true and fair view of the
+assets, liabilities, financial position and profit or loss of the Group, and the Combined
+Management Report includes a fair review of the development and performance of
+the business and the position of the Group, together with a description of the principal
+opportunities and risks associated with the expected development of the Group.
+Responsibility Statement
+by the Management Board
+Infineon Technologies | Annual Report 2020
+To Infineon Technologies AG, Neubiberg
+Report on the Audit of the Consolidated Financial
+Statements and of the Group Management Report
+Opinions
+We have audited the consolidated financial statements of Infineon Technologies AG,
+Neubiberg, and its subsidiaries (the Group), which comprise the consolidated state-
+ment of financial position as at 30 September 2020, and the consolidated statement
+of operations, consolidated statement of comprehensive income, consolidated state-
+ment of changes in equity and consolidated statement of cash flows for the financial
+year from 1 October 2019 to 30 September 2020, and notes to the consolidated financial
+statements, including a summary of significant accounting policies. In addition, we
+have audited the combined management report of Infineon Technologies AG and of
+the Group (hereinafter: the "group management report") for the financial year from
+1 October 2019 to 30 September 2020. In accordance with German legal requirements,
+we have not audited the content of those components of the group management
+report specified in the "Other Information" section of our auditor's report.
+Bristol, Great Britain
+100
+0
+4.45
+1.12
+9
+Wilmington, Delaware, USA
+100
+0
+2,205.60
+146.91
+9
+Infineon Technologies | Annual Report 2020
+We conducted our audit of the consolidated financial statements and of the group
+management report in accordance with Section 317 HGB and EU Audit Regulation
+No 537/2014 (referred to subsequently as "EU Audit Regulation") and in compliance
+with German Generally Accepted Standards for Financial Statement Audits promul-
+gated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany]
+(IDW). Our responsibilities under those requirements and principles are further
+described in the "Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements and of the Group Management Report” section of our auditor's report.
+We are independent of the group entities in accordance with the requirements of
+European law and German commercial and professional law, and we have fulfilled our
+other German professional responsibilities in accordance with these requirements.
+In addition, in accordance with Article 10 (2) (f) of the EU Audit Regulation, we declare
+that we have not provided non-audit services prohibited under Article 5 (1) of the
+EU Audit Regulation. We believe that the evidence we have obtained is sufficient and
+appropriate to provide a basis for our opinions on the consolidated financial state-
+ments and on the group management report.
+Basis for the opinions
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led
+to any reservations relating to the legal compliance of the consolidated financial
+statements and of the group management report.
+> the accompanying group management report as a whole provides an appropriate
+view of the Group's position. In all material respects, this group management report
+is consistent with the consolidated financial statements, complies with German
+legal requirements and appropriately presents the opportunities and risks of future
+development. Our opinion on the group management report does not cover the
+content of those components of the group management report specified in the
+"Other Information" section of the auditor's report.
+> the accompanying consolidated financial statements comply, in all material respects,
+with the IFRSS as adopted by the EU, and the additional requirements of German
+commercial law pursuant to Section 315e (1) HGB [Handelsgesetzbuch: German
+Commercial Code] and, in compliance with these requirements, give a true and
+fair view of the assets, liabilities, and financial position of the Group as at 30 Sep-
+tember 2020, and of its financial performance for the fiscal year from 1 October 2019
+to 30 September 2020, and
+In our opinion, on the basis of the knowledge obtained in the audit,
+Further information
+Infineon Technologies US InterCo LLC
+Consolidated Financial Statements
+Business focus and strategy
+17 The entity was founded in the 2020 fiscal year.
+16 Equity and net result as of 31 December 2019 (period from 14 December 2018 until 31 December 2019).
+15 Equity and net result as of 31 December 2019.
+14 Equity and net result as of 29 December 2019.
+13 Equity and net result as of 30 September 2019 (period from 22 May 2019 until 30 September 2019).
+12 Equity and net result as of 30 September 2019 (period from 12 April 2019 until 30 September 2019).
+11 Equity and net result as of 30 September 2019 (period from 11 January 2019 until 30 September 2019).
+10 Equity and net result as of 30 September 2019 (period from 1 January 2019 until 30 September 2019).
+18 Control and profit transfer agreement.
+9 Equity and net result as of 30 September 2019.
+7 Equity and net result as of 31 December 2018.
+6 Equity and net result as of 30 December 2018.
+5 Equity and net result as of 30 September 2018.
+4 Equity and net result as of 30 September 2017 (period from 2 June 2017 until 30 September 2017).
+3 Equity and net result as of 31 December 2016.
+2 On 23 January 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceed-ings were formally opened on 1 April 2009. The equity and earnings of Qimonda AG and its subsidiaries
+are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency. Additionally, Qimonda and its subsidiaries are not included in the Company's consolidated financial statements.
+In addition, the list of subsidiaries held by Qimonda AG was based on information from 30 September 2010, since Infineon had not received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency
+or liquidation of Qimonda companies. Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and results of operations.
+0.00
+0.00
+8 Equity and net result as of 31 March 2019.
+19 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325 German Commercial Code.
+20 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the preparation of a management report and from the audit obligation pursuant to section 264 et seq. German Commercial Code and from the obligations to disclose
+the annual financial statements pursuant to Section 325 German Commercial Code.
+21 Because criteria pursuant to Section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not dis-closed.
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dr. Sven Schneider
+Dr. Reinhard Ploss
+Infineon Technologies AG
+Neubiberg, 20 November 2020
+Notes to the Consolidated Financial Statements
+< 227 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+24 Non-stock entity. Concept of ownership in percent does not apply.
+23 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to dis-close the annual financial statements.
+22 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report as well as notes and from the obligations to disclose the annual financial statements.
+Combined Management Report
+9
+Infineon Technologies US HoldCo Inc.
+9
+100
+0
+55.42
+4.13
+17
+Kawasaki, Japan
+100
+0
+6
+n.a.
+17
+Kuala Lumpur, Malaysia
+100
+0
+n.a.
+n.a.
+9
+Bristol, Great Britain
+n.a.
+Netanya, Israel
+n.a.
+n.a.
+0
+5.36
+5.32
+17
+Wilmington, Delaware, USA
+100
+0
+n.a.
+n.a.
+9
+Rotterdam, The Netherlands
+100
+0
+24.73
+4.73
+17
+Wilmington, Delaware, USA
+100
+0
+100
+Infineon Technologies UK Limited
+0
+83.24
+7.34
+9
+Bucharest, Romania
+100
+0
+4.45
+1.79
+9
+15.27
+Maia, Portugal
+100
+3.50
+0.62
+9
+100
+0
+7.17
+1.09
+100
+0
+100
+Bristol, Great Britain
+9
+Kista, Sweden
+100
+0
+4.95
+0.22
+9
+Muntinlupa City, Philippines
+100
+0
+0.39
+0.21
+9
+Cheonan, Republic of Korea
+100
+100
+53.17
+3.17
+9
+18.39
+350.50
+2,562.39
+0
+100
+0
+0.20
+(1.03)
+8
+15
+Stockholm, Sweden
+100
+Ebène, Mauritius
+0
+0.11
+7
+Lausanne, Switzerland
+100
+0
+23.20
+1.68
+Nonthaburi, Thailand
+0.68
+Bristol, Great Britain
+0.66
+0
+0
+58.56
+2.09
+Kanata, Ontario, Canada
+100
+0
+(0.02)
+14
+6.35
+0.02
+Boulogne-Billancourt, France
+100
+0
+4.13
+0.13
+15
+Melaka, Malaysia
+100
+7
+100
+0
+80.72
+0.53
+14
+Hong Kong, People's Republic of China
+100
+0
+0.40
+0.05
+7
+7.27
+Amsterdam, The Netherlands
+0
+5.97
+0.06
+14
+Wilmington, Delaware, USA
+100
+0
+349.15
+100
+0
+100
+Munich, Germany
+(1.74)
+15
+6
+100
+0
+4.90
+0.24
+14
+Wilmington, Delaware, USA
+100
+0
+1,793.86
+34.53
+3
+100
+0
+0.13
+0.00
+7
+100
+George Town, Cayman Islands
+14
+n.a.
+Cypress Semiconductor (Malaysia) Sdn. Bhd.
+Cypress Semiconductor (Mauritius) LLC
+Cypress Semiconductor (Scandinavia) AB
+Cypress Semiconductor (Switzerland) Sàrl
+Cypress Semiconductor (Thailand) Limited
+Cypress Semiconductor (UK) Limited
+Registered office
+GRI 102-45
+Cypress Semiconductor (France) SAS
+Share-holdings
+thereof Infineon
+Technologies AG
+Equity
+Net result
+Footnote
+(€ in millions)
+(€ in millions)
+14, 24
+Austin, Texas, USA
+in %
+Cypress Semiconductor (Canada), Inc.
+Cypress Manufacturing, Ltd.
+Cypress International, LLC
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 220 >
+Notes to the Consolidated Financial Statements
+Subsidiaries, joint ventures and other companies (not consolidated)
+as of 30 September 2020
+Name of company
+Fully consolidated subsidiaries:
+5200 Ben White Condominiums Association, Inc.
+AgigA Tech (Chengdu) LLC
+AgigA Tech (Mauritius) LLC
+AgigA Tech, Inc.
+Cirrent, LLC
+CYLand Corp.
+Cypress Innovates G.K.
+n.a.
+(33.27)
+0
+n.a.
+n.a.
+General Trias, Philippines
+40
+0
+1.47
+(0.04)
+15
+15
+n.a.
+Kawasaki, Japan
+0
+27.51
+1.32
+14
+Wilmington, Delaware, USA
+100
+0
+n.a.
+100
+0
+100
+Wilmington, Delaware, USA
+Chengdu, People's Republic of China
+100
+0
+(0.02)
+(0.05)
+15
+Ebène, Mauritius
+100
+0
+1.73
+(0.02)
+8
+Wilmington, Delaware, USA
+100
+0
+8.16
+(2.34)
+14
+14
+n.a.
+7
+Cork, Ireland
+100
+15
+100
+0
+16.56
+1.87
+Shenzhen, People's Republic of China
+17
+100
+Beijing, People's Republic of China
+0
+n.a.
+Wuxi, People's Republic of China
+15
+100
+0
+42.03
+0.53
+9
+n.a.
+0.00
+0.00
+0
+0
+1.36
+0.13
+15
+14
+George Town, Cayman Islands
+100
+0
+n.a.
+n.a.
+Karlsruhe, Germany
+100
+100
+2.16
+0.00
+9, 18, 19
+9
+Wilmington, Delaware, USA
+100
+Melaka, Malaysia
+100
+100
+36.35
+Infineon Technologies Asia Pacific Pte Ltd
+Infineon Technologies Australia Pty Limited
+Xi'an, People's Republic of China
+100
+0
+7.76
+0.37
+15
+Infineon Technologies Americas Corp.
+11
+Neubiberg, Germany
+100
+0
+0.02
+0.00
+9
+Wilmington, Delaware, USA
+100
+Infineon Technologies 2. Vermögensverwaltungsgesellschaft mbH
+Infineon Technologies (Xi'an) Co., Ltd.
+11.46
+134.28
+4.62
+9
+Kulim, Malaysia
+100
+0
+304.51
+52.30
+9
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Wuxi) Co., Ltd.
+Melaka, Malaysia
+100
+0
+296.77
+50.96
+15
+Wuxi, People's Republic of China
+100
+0
+0
+0
+Lviv, Ukraine
+186.30
+100
+0
+5.69
+0.01
+Cypress Semiconductor Corporation
+Cypress Semiconductor Gebze Teknoloji ve Gelistirme (in liquidation)
+Cypress Semiconductor GmbH
+Cypress Semiconductor Hong Kong Private Limited
+George Town, Cayman Islands
+Gebze, Turkey
+Cypress Semiconductor International, Inc.
+Cypress Semiconductor Ireland Limited
+Cypress Semiconductor Italia S.r.l.
+Cypress Semiconductor Korea Ltd.
+Cypress Semiconductor México, S. de R.L. de C.V.
+Cypress Semiconductor Philippines Headquarters, Ltd.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Cypress Semiconductor International Sales B.V.
+14
+15
+(0.02)
+0
+2.75
+0.73
+7
+Basiglio (Milan), Italy
+100
+0
+0.34
+0.09
+15
+Seoul, Republic of Korea
+100
+0
+3.50
+0.28
+Guadalajara, Mexico
+100
+0
+(0.02)
+Business focus and strategy
+0.30
+Combined Management Report
+Further information
+0
+5.25
+0.51
+Shanghai, People's Republic of China
+Bangalore, India
+100
+0
+3.92
+1.34
+100
+15
+100
+0
+27.04
+3.34
+14
+George Town, Cayman Islands
+100
+0
+8
+15
+Footnote
+Net result
+(€ in millions)
+Q = < 221 >
+Notes to the Consolidated Financial Statements
+Name of company
+Cypress Semiconductor Singapore Pte. Ltd.
+Cypress Semiconductor Technology (Shanghai) Co. Ltd.
+Cypress Semiconductor Technology India Private Limited
+Cypress Semiconductor Technology Ltd.
+Cypress Semiconductor Ukraine LLC
+Cypress Semiconductor World Trade Corp.
+Hitex GmbH
+IFX LLC
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Shenzhen) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co., Ltd.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Registered office
+Singapore, Singapore
+Share-holdings
+in %
+thereof Infineon
+Technologies AG
+Equity
+(€ in millions)
+Consolidated Financial Statements
+2
+0.00
+0.00
+9
+0.00
+0.03
+60
+60
+Warstein, Germany
+5
+0.32
+Neubiberg, Germany
+1.97
+100
+9
+Coventry, Great Britain
+n.a.
+n.a.
+n.a.
+n.a.
+Berlin, Germany
+0
+21
+100
+0.09
+9, 18
+0.13
+100
+100
+Neubiberg, Germany
+9
+(0.01)
+0.01
+0
+100
+Neubiberg, Germany
+9
+(0.01)
+0.02
+100
+100
+Neubiberg, Germany
+0.02
+100
+0.00
+0.07
+100
+(€ in millions)
+Equity
+thereof Infineon
+Technologies AG
+in %
+Share-holdings
+Registered office
+Infineon Technologies | Annual Report 2020
+MOTEON GmbH
+Net result
+(€ in millions)
+MicroLinks Technology Corp.
+Merus Audio (Hong Kong) Ltd. (in liquidation)
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+KAI Kompetenzzentrum Automobil- und Industrieelektronik GmbH
+IR International Holdings, Inc.
+IR International Holdings China, Inc.
+Inventek LLC
+Infineon Technologies Vietnam Company Ltd.
+Infineon Technologies South America Ltda
+Metawave Corporation
+Footnote
+Wilmington, Delaware, USA
+100
+100
+Duisburg, Germany
+9
+0.36
+1.04
+100
+100
+Duisburg, Germany
+9
+n.a.
+n.a.
+0
+n.a.
+Wilmington, Delaware, USA
+21
+9
+0.00
+0.00
+0
+0.00
+9
+Madrid, Spain
+100
+12
+(0.02)
+0.06
+0
+100
+Hanoi, Vietnam
+0.00
+0.07
+21
+0
+São Paulo, Brasil
+15
+0.02
+0.18
+0
+100
+15
+Moscow, Russian Federation
+100
+Billerica, Massachusetts, USA
+n.a.
+0
+0.28
+0
+100
+15
+Villach, Austria
+0.00
+0.00
+0
+100
+Wilmington, Delaware, USA
+9
+9
+0.00
+0.00
+0
+100
+Wilmington, Delaware, USA
+n.a.
+n.a.
+0.01
+Infineon Technologies RUS LLC
+0.05
+100
+100
+100
+Neubiberg, Germany
+9
+(0.01)
+0.04
+100
+100
+0.03
+Neubiberg, Germany
+0.12
+0
+100
+Linz, Austria
+9
+0.04
+0.14
+0
+0.00
+0.00
+9, 18
+Neubiberg, Germany
+15
+Bucharest, Romania
+0.02
+0.09
+0
+100
+Warsaw, Poland
+9
+13
+0.00
+0.02
+100
+100
+Neubiberg, Germany
+9, 18
+0.00
+0.03
+100
+100
+0
+Infineon Technologies Romania s.r.l.
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Memory Solutions Germany GmbH
+Spansion International IP, Inc.
+Spansion International Trading, Inc.
+Spansion LLC
+Associated companies:
+Deca Technologies Inc.
+pmdtechnologies ag
+SkyHigh Memory Limited
+Dresden, Germany
+100
+Spansion International AM, Inc.
+0
+0.16
+14
+Wilmington, Delaware, USA
+100
+0
+2,623.33
+0.00
+14
+2.95
+Spansion Inc.
+SILTECTRA GmbH
+0.90
+2.61
+9
+Batam, Indonesia
+100
+0
+17.90
+2.83
+14
+Wilmington, Delaware, USA
+100
+0
+33.27
+(4.46)
+9
+Rectificadores Internacionales, S.A. de C.V.
+Tijuana, Mexico
+100
+0
+9.67
+Wilmington, Delaware, USA
+19.23
+100
+117.40
+15
+15
+15
+42.38
+(10.12)
+15
+16
+Hong Kong, People's Republic of China
+(16.11)
+40
+8.89
+3.75
+Joint ventures:
+Infineon Technologies Bipolar GmbH & Co. KG
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd
+Infineon Technologies | Annual Report 2020
+5
+Warstein, Germany
+0
+41.39
+0
+42.5
+0.09
+George Town, Cayman Islands
+100
+0
+42.48
+(75.06)
+14
+14
+Wilmington, Delaware, USA
+100
+0
+Wilmington, Delaware, USA
+100
+0
+(44.91)
+2,276.73
+0.50
+14
+25.91
+George Town, Cayman Islands
+Siegen, Germany
+0
+0.19
+0
+Kawasaki, Japan
+Business focus and strategy
+Management Board and
+Supervisory Board
+15
+1.28
+(18.30)
+(0.38)
+25
+25
+49
+Combined Management Report
+Shanghai, People's Republic of China
+International Rectifier Japan Co., Ltd.
+International Rectifier Mauritius, Inc. (in liquidation)
+MOLSTANDA Vermietungsgesellschaft mbH
+MoTo Objekt CAMPEON GmbH & Co. KG
+Nihon Cypress G.K.
+PT Infineon Technologies Batam
+Ramtron International Corporation
+Registered office
+52.33
+Consolidated Financial Statements
+Further information
+Q =
+Infineon Technologies Mantel 29 GmbH
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Linz Verwaltungs GmbH
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Holding GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Delta GmbH
+Infineon Technologies Campeon Verwaltungsgesellschaft mbH
+Infineon Technologies Bipolar Verwaltungs GmbH
+Hitex (UK) Limited
+EPOS embedded core & power systems Verwaltungs GmbH
+Futurium gGmbH
+EPOS embedded core & power systems GmbH & Co. KG
+Enovix Corporation
+CHIL Semiconductors Corporation
+Other companies (not consolidated):1
+Name of company
+Notes to the Consolidated Financial Statements
+< 224 >
+Herlev, Denmark
+100
+Wilmington, Delaware, USA
+Curepipe, Mauritius
+9
+100
+0
+0.00
+0.00
+Neubiberg, Germany
+100
+6
+(0.08)
+133.40
+9, 18, 19
+Neubiberg, Germany
+93
+0
+100.52
+9, 23
+23.82
+15
+0.00
+7.62
+0
+100
+Share-holdings
+in %
+thereof Infineon
+Technologies AG
+Equity
+Net result
+Footnote
+(€ in millions)
+(€ in millions)
+9
+100
+0
+1.07
+0.25
+9
+100
+0
+118.05
+55.25
+9
+Tokyo, Japan
+Lippstadt, Germany
+24
+24
+Dresden, Germany
+2
+0.00
+0.00
+0
+77
+Dresden, Germany
+2
+77
+0.00
+0
+77
+Wilmington, Delaware, USA
+2
+0.00
+0.00
+0
+77
+0.00
+0
+0.00
+0.00
+0
+77
+Shanghai, People's Republic of China
+Qimonda International Trade (Shanghai) Co. Ltd.
+Qimonda Investment B.V.
+2
+0.00
+0.00
+0
+77
+Rotterdam, The Netherlands
+Qimonda Holding B.V. (in insolvency)
+2
+0.00
+0.00
+0
+77
+St. Denis, France
+Qimonda France SAS (in liquidation)
+2
+Munich, Germany
+0.00
+2
+0.00
+77
+2
+0.00
+0.00
+0
+77
+2
+0.00
+0
+0.00
+77
+Bratislava, Slovakia
+Munich, Germany
+Leuven, Belgium
+Singapore, Singapore
+Munich, Germany
+2
+0.00
+28
+0.00
+0.00
+2
+0
+77
+Dresden, Germany
+2
+0.00
+0.00
+0
+77
+Dresden, Germany
+2
+0.00
+0.00
+0
+77
+2
+0.00
+0.00
+0
+77
+0.00
+0.00
+0.00
+Rotterdam, The Netherlands
+0.00
+0.00
+0
+77
+Suzhou, People's Republic of China
+2
+2
+0.00
+2
+0.00
+77
+0.00
+0.00
+0
+77
+2
+Footnote
+Net result
+(€ in millions)
+0
+Wilmington, Delaware, USA
+77
+0
+0
+77
+77
+High Blantyre, Scotland
+2
+0.00
+0.00
+0
+77
+Taipei, Taiwan
+Dresden, Germany
+2
+0.00
+0.00
+0
+77
+Wilmington, Delaware, USA
+2
+0.00
+0.00
+(€ in millions)
+2
+Equity
+in %
+0.00
+0.00
+0
+77
+Padua, Italy
+2
+0.00
+0.00
+Infineon Technologies | Annual Report 2020
+0
+Suzhou, People's Republic of China
+Qimonda Italy s.r.l. (in liquidation)
+Qimonda IT (Suzhou) Co., Ltd. (in liquidation)
+2
+0.00
+0.00
+0
+77
+77
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Share-holdings
+Fort Lauderdale, Florida, USA
+Seoul, Republic of Korea
+Registered office
+1 Certain subsidiaries were not consolidated due to immateriality.
+Qimonda UK Ltd. (in liquidation)
+Qimonda Taiwan Co. Ltd. (in liquidation)
+Qimonda Solar GmbH
+Qimonda Richmond LLC (in insolvency)
+Qimonda North America Corp. (in insolvency)
+Qimonda Memory Product Development Center (Suzhou) Co. (in liquidation)
+Qimonda Licensing LLC
+Qimonda Korea Co. Ltd. (in liquidation)
+Name of company
+Notes to the Consolidated Financial Statements
+< 226 >
+Q =
+Further information
+Consolidated Financial Statements
+thereof Infineon
+Technologies AG
+60
+0
+Melaka, Malaysia
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 223 >
+Notes to the Consolidated Financial Statements
+Name of company
+International Rectifier HiRel Denmark ApS
+Management Board and
+Supervisory Board
+International Rectifier HiRel Products, Inc.
+Footnote
+Net result
+(€ in millions)
+Equity
+(€ in millions)
+thereof Infineon
+Technologies AG
+in %
+Share-holdings
+Neubiberg, Germany
+Registered office
+100
+Infineon Technologies | Annual Report 2020
+1.67
+3.00
+136.15
+Infineon Technologies US Investment LLC
+Infineon Technologies Vermögensverwaltungsgesellschaft mbH
+Innoluce B.V.
+Wilmington, Delaware, USA
+100
+0
+(0.05)
+(0.05)
+9
+9, 18, 20
+Neubiberg, Germany
+100
+100
+125.22
+0.00
+Nijmegen, The Netherlands
+5
+100
+0
+XMOS Limited
+1,503.88
+Virtual Vehicle Research GmbH
+Silicon Alps Cluster GmbH
+n.a.
+Kaohsiung, Taiwan
+21
+n.a.
+n.a.
+0
+n.a.
+Dover, Delaware, USA
+0
+21
+0.00
+0
+100
+Hong Kong, People's Republic of China
+4
+15
+(0.39)
+1.33
+0.00
+n.a.
+n.a.
+13
+Schweizer Electronic AG
+Schiltron Corporation
+Rapt Touch Ireland Ltd.
+R Labco, Inc.
+PT Infineon Technologies Indonesia
+OSPT IP Pool GmbH
+Name of company
+Notes to the Consolidated Financial Statements
+Q = < 225 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+0.00
+0.02
+100
+100
+Neubiberg, Germany
+TTTech Auto AG
+77
+0
+Wilmington, Delaware, USA
+Qimonda AG (in insolvency)
+Qimonda (Malaysia) Sdn. Bhd. (in liquidation)
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+Qimonda AG and its subsidiaries: 2
+n.a.
+n.a.
+0
+Qimonda Asia Pacific Pte. Ltd.
+n.a.
+Bristol, Great Britain
+n.a.
+n.a.
+n.a.
+n.a.
+Graz, Austria
+21
+n.a.
+21
+Qimonda Belgium BVBA (in insolvency)
+Qimonda Beteiligungs GmbH (in insolvency)
+Qimonda Bratislava s.r.o. (in liquidation)
+2
+0.00
+0.00
+0
+40
+Vila do Conde, Portugal
+2
+0.00
+0.00
+0
+17
+Colorado Springs, Colorado, USA
+2
+Qimonda Flash GmbH (in insolvency)
+Qimonda Flash Geschäftsführungs GmbH (in liquidation)
+Qimonda Finance LLC (in insolvency)
+Qimonda Europe GmbH (in liquidation)
+Qimonda Dresden Verwaltungsgesellschaft mbH (in insolvency)
+Qimonda Dresden GmbH & Co. OHG (in insolvency)
+n.a.
+100
+n.a.
+Vienna, Austria
+21
+Dublin, Ireland
+0.00
+0.00
+0
+100
+Wilmington, Delaware, USA
+9
+n.a.
+n.a.
+0
+17
+100
+Jakarta, Indonesia
+9
+(0.01)
+0.01
+100
+n.a.
+0
+n.a.
+n.a.
+21
+n.a.
+n.a.
+0
+n.a.
+21
+Villach, Austria
+15
+(2.76)
+55.43
+9
+9
+Schramberg, Germany
+n.a.
+n.a.
+0
+n.a.
+Wilmington, Delaware, USA
+21
+n.a.
+10
+Q =
+< 233 >
+Infineon Technologies | Annual Report 2020
+› USB controller
+> TVS (transient voltage suppressor) diode
+> SiC diodes, SiC MOSFETS
+› RF power transistors
+› RF antenna switches
+› Radar sensor ICs (24 GHz, 60 GHz)
+> Low-voltage and high-voltage driver ICS
+› GPS low-noise amplifier
+Management Board and
+Supervisory Board
+› GaN power switches
+› Discrete low-voltage, mid-voltage and high-voltage
+› Customized chips (ASICS)
+› Control ICs for power switches
+› Chips for pressure sensors
+› Chips for MEMS microphones
+› Chips for gas sensors
+> 3D ToF sensors
+Product range
+› Telecommunication technology
+power MOSFETs (Si-based)
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+› Smart watches and fitness trackers
+Consumer electronics
+› Protection against manipulation (e.g. tachograph)
+> In-cabin infotainment
+> Electronic toll collection (Toll Collect)
+-Car-to-infrastructure communications
+-
+-Car-to-car communications
+- eCall
+› Connected vehicles, e.g.
+Automotive
+› Printer cartridges
+> Industrial control systems
+› Game consoles
+› Brand protection
+› Accessories
+Authentication
+Applications
+Connected Secure Systems
+Q = < 239 >
+Further information
+Applications and product range
+Connected Secure Systems
+› Servers
+› Game consoles
+> PCs and notebooks
+› Home appliances
+› eScooters
+> eBikes
+- Power saws
+- Drills
+- Cordless screwdrivers
+-
+› Battery-powered power tools, e.g.
+- Vacuum cleaners
+› Battery-powered home appliances, e.g.
+› Multi-copters
+Lawn mowers
+- Hedge trimmers
+› Battery-powered gardening equipment, e.g.
+BLDC motor
+> Power train for low-speed electric vehicles
+> Onboard charger
+> In-cabin USB PD charging
+› Blind spot detection
+Automotive electronics
+› Smart speakers
+-
+Cellular communications infrastructure
+› Base stations
+Charging stations for electric vehicles
+› Data centers
+› Consumer electronics
+Power management
+> Wearables for health
+› Tablets
+› Smartphones
+› Navigation devices
+› Activity trackers
+Mobile devices
+LED and conventional lighting systems
+> Voice control
+› Smart speakers
+› Sensors
+› Communications
+Internet of Things
+Human-machine interaction
+> Submarine telecommunications
+› Oil and gas exploration
+› Defense technologies
+› Aerospace systems
+› Aviation technologies
+HiRel
+> Mobile devices
+› Remote control
+Government identification documents
+› Driver's licenses
+Finally, we assessed whether the disclosures in the notes regarding the acquisition of
+Cypress are complete and appropriate.
+Our observations
+The approach used for identifying and measuring the assets acquired and liabilities
+assumed is appropriate and in line with the accounting policies to be applied. The
+key assumptions and data are appropriate and they are completely and properly
+presented in the notes to the consolidated financial statements.
+Impairment testing of goodwill
+Please refer to note 2 in the notes to the consolidated financial statements for infor-
+mation on the accounting policies applied and the assumptions used. Information on
+the value of goodwill can be found under note 15. Please refer to note 3 for information
+on the acquisition of Cypress Semiconductor Corporation.
+The financial statement risk
+The consolidated financial statements of Infineon Technologies AG reported goodwill
+in the amount of EUR 5,897 million as at 30 September 2020. At 27% of the balance
+sheet total, goodwill accounts for a considerable share of total assets. Goodwill rose
+by EUR 5,430 million in the 2020 fiscal year upon completion of the acquisition of
+Cypress Semiconductor Corporation. In accordance with IAS 36, acquired goodwill is
+to be assigned to cash-generating units and was allocated to the existing operating
+segments Automotive (ATV), Industrial Power Control (IPC), Power & Sensor Systems
+(PSS) and Connected Secure Systems (CSS). This allocation requires judgement.
+Infineon tests goodwill for impairment in accordance with IAS 36 at the operating
+segment level annually as at 30 June, as well as in cases where events or changes to
+the prevailing conditions provide indications that the recoverable amount may have
+fallen below the carrying amount. The recoverable amount is the higher of fair value
+less costs of disposal and value in use. Goodwill is impaired if the carrying amount
+of the operating segment to which the goodwill is allocated exceeds the recoverable
+amount of this unit. Infineon determines the recoverable amount of the respective
+cash-generating unit to which goodwill was allocated according to value in use.
+Impairment testing of goodwill is complex and based on a range of assumptions that
+require judgement. Such judgement includes, among other elements, the assumptions
+found in the adopted corporate planning for a period of five years, such as revenue
+growth and gross margins, assumed long-term growth rates in perpetuity and the
+underlying discount rates.
+Q = < 231 >
+Considering the sharp rise in goodwill and the discretionary judgement of the
+assumptions underlying impairment testing, there is the risk for the consolidated
+financial statements that a required impairment was not recognized. There is also
+the risk that the related disclosures in the notes are not appropriate.
+We verified the allocation of goodwill from the acquisition of Cypress Semiconductor
+Corporation to the Automotive (ATV), Industrial Power Control (IPC), Power & Sensor
+Systems (PSS) and Connected Secure Systems (CSS) operating segments and, based
+on the expected synergy effects from acquisition for the operating segments to
+which goodwill was allocated, we assessed this allocation with the involvement of
+our valuation specialists.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q = < 232 >
+When assessing the impairment test, we also assessed the appropriateness of key
+assumptions. We assessed the Company's calculation method and selected assump-
+tions in terms of their appropriateness with the help of our valuation specialists.
+For this purpose, we checked that corporate planning was updated for the next five
+years and adopted by the Management Board. Using elements selected on the basis
+of risk, we had the staff responsible for preparing corporate planning explain to us
+in particular revenue and gross margin performance, as well as the long-term growth
+rates assumed in perpetuity. In this context, revenue performance in particular was
+critically reviewed and assessed based on publicly available market estimates and
+information to determine whether the revenue performance used for measurement is
+within a reasonable range. We also confirmed the accuracy of the Company's previous
+forecasts by comparing the budgets of previous fiscal years with actual results and by
+analysing deviations.
+Our audit approach
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+The other information does not include the consolidated financial statements, the
+group management report information audited for content and our auditor's report
+thereon.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q = < 230 >
+Key Audit Matters in the Audit of the Consolidated Financial Statements
+Key audit matters are those matters that, in our professional judgement, were of
+most significance in our audit of the consolidated financial statements for the fiscal
+year from 1 October 2019 to 30 September 2020. These matters were addressed in
+the context of our audit of the consolidated financial statements as a whole, and in
+forming our opinion thereon, we do not provide a separate opinion on these matters.
+Identification and measurement of the assets acquired and liabilities assumed
+in the course of acquiring Cypress Semiconductor Corporation (“Cypress”)
+Please refer to note 2 in the notes to the consolidated financial statements for
+information on the accounting policies applied. Information on the acquisition of
+Cypress can be found under note 3.
+The financial statement risk
+The Infineon Group acquired all outstanding shares in Cypress on 16 April 2020. The
+total consideration transferred equaled EUR 8,254 million. Taking into account the
+acquired net assets of EUR 2,824 million, goodwill amounted to EUR 5,430 million.
+The identifiable assets acquired and liabilities assumed in the context of the purchase
+price allocation were generally recognized at fair value pursuant to IFRS 3 on the
+date of acquisition. The identified assets include especially intangible assets such as
+technologies, customer relationships and trademarks, as well as property, plant
+and equipment and inventories. The Company engaged an external expert to identify
+and measure the assets acquired and the liabilities assumed.
+The identification and measurement of assets acquired and liabilities assumed is
+complex and based on assumptions of the Management Board that require judgement.
+The significant assumptions include revenue and margin performance in the acquired
+operation's corporate planning, synergy expectations and the cost of capital.
+There is the risk for the consolidated financial statements that the assets acquired
+and liabilities assumed are identified improperly or measured inaccurately. There is
+also the risk that the disclosures in the notes to the consolidated financial statements
+are not complete and appropriate.
+Our audit approach
+With the involvement of our own valuation specialists, we assessed the appropriate-
+ness of key assumptions as well as the identification procedures and valuation
+methods. To that end, we first gained an understanding of the acquisition by consult-
+ing employees of Infineon's finance department and through an evaluation of the
+relevant agreements.
+We assessed the competency, skills and objectivity of the independent expert engaged
+by the Company. Furthermore, we assessed the process of the identification of the
+assets acquired and liabilities assumed in terms of conformity with the requirements
+of IFRS 3 using our knowledge of Cypress's business model. We investigated the valu-
+ation methods used for their compliance with the accounting policies.
+We discussed the expected revenue and margin performance with the external expert
+engaged by the Company as well as with Infineon's finance department. We also
+examined the consistency of assumptions with external market assessments for peer
+group companies. The synergy expectations were discussed by the external expert
+with the Infineon staff responsible for planning, and it was assessed as to what extent
+the regular market participants could also achieve these results. We assessed these
+estimates and the corresponding rationales. We compared the assumptions and data
+underlying the cost of capital, in particular the risk-free rate, the market risk premium
+and the beta factor with our own assumptions and publicly available data. The royalty
+rates and terms used to appraise intangible assets were examined in terms of their
+appropriateness by interviewing the external expert and comparing these with our
+own analyses. To assess computational accuracy, we verified selected calculations
+based on risk criteria and compared these with the results of our own calculations.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+We checked how the discount rates used were derived and their amounts. For this
+purpose, we compared the assumptions and data underlying the discount rates,
+in particular the risk-free interest rate, the market risk premium and the beta factor
+with our own assumptions and publicly available data.
+To ensure the computational accuracy of the valuation method used, we verified the
+Company's calculations on the basis of selected risk-based elements.
+In order to take account of the existing forecast uncertainty and the earlier cut-off
+date selected for impairment testing, the Company examined the effects of possible
+changes in the discount rates, revenue and gross margin performance and the long-
+term growth rate in perpetuity on the value in use by calculating alternative scenarios
+and comparing these with its own reported figures (sensitivity analysis). We have
+assessed this analysis. In order to take into account the earlier cut-off date for impair-
+ment testing, we also assessed the impact of events until 30 September 2020 on
+impairment testing.
+Finally, we assessed whether the disclosures in the notes regarding impairment testing
+of goodwill are appropriate.
+Product range
+Trusted Computing
+Ticketing, access control
+› NFC-based contactless payment
+› Mobile payment
+› Credit/debit cards
+Payment systems
+› SIM cards
+- IoT applications
+- Consumer applications
+(machine-to-machine communication)
+> Embedded SIM
+Mobile communications
+> Smart Home
+› Smart City
+> IT equipment
+> Industry 4.0
+Internet of Things
+› Passports
+› National identity cards
+> Healthcare cards
+› Connectivity solutions (Wi-Fi, Bluetooth, BLE)
+› Battery-powered loudspeakers
+> Embedded security controllers
+› Security controllers (contact-based,
+Our observations
+The allocation of goodwill from the acquisition of Cypress Semiconductor Corporation
+to the Automotive (ATV), Industrial Power Control (IPC), Power & Sensor Systems (PSS)
+and Connected Secure Systems (CSS) operating segments is appropriate.
+The calculation method used for impairment testing of goodwill is appropriate and
+in line with the accounting policies to be applied.
+The Company's assumptions used for measurement are appropriate.
+The related disclosures in the notes are appropriate.
+Other Information
+The Management Board and the Supervisory Board, respectively, are responsible for
+the other information. The other information comprises the following components of
+the group management report, whose content was not audited:
+> the separate combined non-financial report of the Company and the Group, which
+is referred to in the group management report,
+> the combined corporate governance statement for the Company and the Group
+referred to in the group management report, and
+> information extraneous to management reports and marked as unaudited.
+The other information also includes the remaining parts of the annual report.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q =
+Infineon Technologies | Annual Report 2020
+› Social insurance cards
+contactless, dual-interface)
+› Microcontroller for consumer electronics
+Audio amplifiers
+and industrial applications
+Power & Sensor Systems
+> Electronic chassis control
+› Distance control
+› Cruise control
+› Blind spot detection
+› Automatic parking
+› Airbag
+› ABS (Anti-blocking system)
+Assistance systems and safety systems
+Applications
+> Electronic power steering
+Automotive
+< 236 >
+Q =
+Further information
+Applications and product range
+Automotive
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Wirtschaftsprüfer
+(German Public Auditor)
+Applications and product range
+› Emergency braking assistant
+> ESP (Electronic Stability Program)
+› Lane departure warning system
+> Electric motor control
+› Combustion engine control
+› Battery management
+› Battery charging control
+Powertrain
+› Digital instrument cluster
+› Connectivity for in-cabin infotainment
+Infotainment
+> Windshield wipers
+› Suspension
+› Sunroof
+› Steering
+> Power window
+› Lighting
+> Hatch door
+> Electronic seat adjustment
+› Door electronics
+› Body control units
+> Air conditioning
+Comfort electronics
+> Tire pressure monitoring system
+Pritzer
+› Generator control
+(German Public Auditor)
+Wirtschaftsprüfungsgesellschaft
+Q = < 234 >
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Our objectives are to obtain reasonable assurance about whether the consolidated
+financial statements as a whole are free from material misstatement, whether due
+to fraud or error, and whether the group management report as a whole provides an
+appropriate view of the Group's position and, in all material respects, is consistent
+with the consolidated financial statements and the knowledge obtained in the audit,
+complies with the German legal requirements and appropriately presents the oppor-
+tunities and risks of future development, as well as to issue an auditor's report that
+includes our opinions on the consolidated financial statements and on the group
+management report.
+Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements and of the Group Management Report
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
+conducted in accordance with Section 317 HGB and the EU Audit Regulation and in
+compliance with German Generally Accepted Standards for Financial Statement Audits
+promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material
+misstatement. Misstatements can arise from fraud or error and are considered material
+if, individually or in the aggregate, they could reasonably be expected to influence
+the economic decisions of users taken on the basis of these consolidated financial
+statements and this group management report.
+The Supervisory Board is responsible for overseeing the Group's financial reporting
+process for the preparation of the consolidated financial statements and of the group
+management report.
+In preparing the consolidated financial statements, the Management Board is respon-
+sible for assessing the Group's ability to continue as a going concern. They also have
+the responsibility for disclosing, as applicable, matters related to going concern.
+In addition, they are responsible for financial reporting based on the going concern
+basis of accounting unless there is an intention to liquidate the Group or to cease
+operations, or there is no realistic alternative but to do so.
+The Management Board is responsible for the preparation of consolidated financial
+statements that comply, in all material respects, with IFRSS as adopted by the EU, and
+the additional requirements of German commercial law pursuant to Section 315e (1)
+HGB and that the consolidated financial statements, in compliance with these require-
+ments, give a true and fair view of the assets, liabilities, financial position, and financial
+performance of the Group. In addition, the Management Board is responsible for
+such internal control as they have determined necessary to enable the preparation of
+consolidated financial statements that are free from material misstatement, whether
+due to fraud or error.
+Responsibilities of Management and the Supervisory Board for the Consolidated
+Financial Statements and the Group Management Report
+If, based on the work we have performed, we conclude that there is a material
+misstatement of this other information, we are required to report that fact. We have
+nothing to report in this regard.
+> otherwise appears to be materially misstated.
+> is materially inconsistent with the consolidated financial statements, with the
+group management report information audited for content or our knowledge
+obtained in the audit, or
+In connection with our audit, our responsibility is to read the other information and,
+in doing so, to consider whether the other information
+Our opinions on the consolidated financial statements and on the group management
+report do not cover the other information, and consequently we do not express an
+opinion or any other form of assurance conclusion thereon.
+Applications
+Furthermore, the Management Board is responsible for the preparation of the group
+management report that, as a whole, provides an appropriate view of the Group's
+position and is, in all material respects, consistent with the consolidated financial
+statements, complies with German legal requirements, and appropriately presents
+the opportunities and risks of future development. In addition, the Management
+Board is responsible for such arrangements and measures (systems) as they have
+considered necessary to enable the preparation of the group management report
+that is in accordance with the applicable German legal requirements, and to be able
+to provide sufficient appropriate evidence for the assertions in the group manage-
+ment report.
+We exercise professional judgement and maintain professional scepticism throughout
+the audit. We also:
+> identify and assess the risks of material misstatement of the consolidated financial
+statements and of the group management report, whether due to fraud or error,
+design and perform audit procedures responsive to those risks, and obtain audit
+evidence that is sufficient and appropriate to provide a basis for our opinions. The
+risk of not detecting a material misstatement resulting from fraud is higher than
+for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal controls.
+> obtain an understanding of internal control relevant to the audit of the consolidated
+financial statements and of arrangements and measures (systems) relevant to the
+audit of the group management report in order to design audit procedures that are
+appropriate in the circumstances, but not for the purpose of expressing an opinion
+on the effectiveness of these systems.
+KPMG AG
+Munich, 20 November 2020
+German Public Auditor Responsible for the Engagement
+The German Public Auditor responsible for the engagement is Michael Pritzer.
+We declare that the opinions expressed in this auditor's report are consistent with
+the additional report to the Audit Committee pursuant to Article 11 of the EU Audit
+Regulation (long-form audit report).
+We were appointed as group auditors at the shareholders' meeting held on 20 Febru-
+ary 2020. We were engaged by the Supervisory Board on 4 May 2020. We have been the
+group auditor of Infineon Technologies AG without interruption since fiscal year 2000.
+Further Information pursuant to Article 10
+of the EU Audit Regulation
+From the matters communicated with those charged with governance, we determine
+those matters that were of most significance in the audit of the consolidated financial
+statements of the current period and are therefore the key audit matters. We describe
+these matters in our auditor's report unless law or regulation precludes public disclo-
+sure about the matter.
+We also provide those charged with governance with a statement that we have
+complied with the relevant independence requirements, and communicate with
+them all relationships and other matters that may reasonably be thought to bear on
+our independence, and where applicable, the related safeguards.
+> perform audit procedures on the prospective information presented by the
+Management Board in the group management report. On the basis of sufficient
+appropriate audit evidence we evaluate, in particular, the significant assumptions
+used by the Management Board as a basis for the prospective information, and
+evaluate the proper derivation of the prospective information from these assump-
+tions. We do not express a separate opinion on the prospective information and
+on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+Q = < 235 >
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+> evaluate the consistency of the group management report with the consolidated
+financial statements, its conformity with [German] law, and the view of the Group's
+position it provides.
+> obtain sufficient appropriate audit evidence regarding the financial information
+of the entities or business activities within the Group to express opinions on the
+consolidated financial statements and on the group management report. We are
+responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+> evaluate the overall presentation, structure and content of the consolidated financial
+statements, including the disclosures, and whether the consolidated financial
+statements present the underlying transactions and events in a manner that the
+consolidated financial statements give a true and fair view of the assets, liabilities,
+financial position and financial performance of the Group in compliance with
+IFRSS as adopted by the EU and the additional requirements of German commercial
+law pursuant to Section 315e (1) HGB.
+> conclude on the appropriateness of the Management Board's use of the going
+concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast signifi-
+cant doubt on the Group's ability to continue as a going concern. If we conclude that
+a material uncertainty exists, we are required to draw attention in the auditor's
+report to the related disclosures in the consolidated financial statements and in
+the group management report or, if such disclosures are inadequate, to modify our
+respective opinions. Our conclusions are based on the audit evidence obtained up
+to the date of our auditor's report. However, future events or conditions may cause
+the Group to cease to be able to continue as a going concern.
+> evaluate the appropriateness of accounting policies used by the Management
+Board and the reasonableness of estimates made by the Management Board and
+related disclosures.
+Andrejewski
+Wirtschaftsprüfer
+› Start-stop system
+We communicate with those charged with governance regarding, among other matters,
+the planned scope and timing of the audit and significant audit findings, including
+any significant deficiencies in internal control that we identify during our audit.
+Security
+› Construction vehicles
+› Agricultural vehicles
+Industrial vehicles
+Industrial robotics
+› Uninterruptable power supplies
+> Home energy storage
+› Charging stations for electric vehicles
+› Battery chargers
+› Auxiliary power supplies
+Industrial power supplies
+> Rolling mills
+› Pipelines
+› Oil derricks
+> Materials handling
+› Escalators
+> Elevator systems
+> Drives technologies
+> Automation technology
+› Air conditioning technology
+Industrial drives¹
+> Washing machines
+> Electric delivery vehicles
+> Vacuum cleaners
+> Forklifts
+Traction
+Q = < 238 >
+Further information
+Applications and product range
+Power & Sensor Systems
+› Transmission control
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+> SIC diodes, SiC MOSFETs, SiC modules
+control unit, driver and switch
+> Intelligent IGBT modules with integrated
+> IGBT module solutions including IGBT stacks
+> IGBT modules (low-power, medium-power,
+high-power)
+› Driver ICs
+› Discrete IGBTs
+› Bare die business
+Product range
+1 Including motors, compressors, pumps and fans.
+› Trams
+› Metro trains
+› High-speed trains
+› Hybrid busses
+› Refrigerators
+› Locomotives
+> Induction cooktops
+› Voltage regulators
+› Transceivers (CAN, CAN FD, LIN, Ethernet, FlexRay™)
+› SiC diodes, SiC MOSFETs and SiC modules
+› Radar sensor ICs (77 GHz)
+› Power ICs
+› Memories (NOR-flash, SRAM, nvSRAM, F-RAM)
+› Magnetic and pressure sensors
+> Industrial microcontrollers
+> IGBT modules
+> 3D ToF sensors
+safety and driver assistance systems
+> 32-bit automotive microcontrollers for powertrain,
+Product range
+› Protection against software manipulation
+> Tachograph
+(e.g. odometer)
+› Protection against manipulation
+› Original spare parts authentication
+› Microwave ovens
+-Car-to-infrastructure
+- Car-to-car
+› Communication
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+› Discrete power semiconductors
+> Wall box
+> Overland HVDC transmission lines
+Business focus and strategy
+> Air conditioners
+> Offshore wind farm HVDC transmission lines
+> FACTS (Flexible AC Transmission Systems)
+Energy transmission
+> Urban district
+› Grid stability
+› Home usage
+Energy storage
+Home appliances
+Energy generation
+Applications
+Industrial Power Control
+< 237 >
+Q =
+Further information
+Applications and product range
+Industrial Power Control
+› Photovoltaic systems
+> Wind power turbines
+› Dishwashers
+Consolidated Financial Statements
+Combined Management Report
+BLDC
+HMI
+GPU
+GaN
+FPGA
+CPU
+DC-DC
+CMOS
+BT
+HVDC
+BLE
+FHEV
+Sic
+NFC
+IGBT
+IoT
+IPM
+LED
+MEMS
+MOSFET
+PHEV
+PMIC
+PSOC
+RF
+ToF
+ASIL
+Si
+IC
+ASIC
+58
+AC-DC
+49
+Infineon Technologies | Annual Report 2020
+TPM
+49
+50
+C36 Shareholder structure as of end 2020 fiscal year
+52
+C37 Revenue by segment
+54
+C38 Revenue by segment in the 2020 fiscal year
+C39 Financial debt by currencies
+58
+C40 Risk assessment matrix
+58
+59
+95
+96
+96
+$$ 88 སྦུཌ
+102
+111
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+List of abbreviations
+Financial calendar
+List of abbreviations
+ΑΙ
+USB (USB-PD)
+Q =
+alternating current to direct current conversion
+artifical intelligence
+Thursday, 4 February 20211
+Publication of first quarter 2021 results
+Thursday, 25 February 2021
+Annual General Meeting 2021 (virtual)
+(Start 10:00 a.m. CET)
+Tuesday, 4 May 20211
+Publication of second quarter 2021 results
+Tuesday, 3 August 20211
+Publication of third quarter 2021 results
+Wednesday, 10 November 20211
+Publication of fourth quarter and fiscal year 2021 results
+1 preliminary
+Visit us on the web: www.infineon.com
+in
+Infineon Technologies | Annual Report 2020
+< 241 >
+Management Board and
+Supervisory Board
+Imprint
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Imprint
+Q = < 242 >
+Published by:
+Editors:
+Copy deadline:
+Fiscal year:
+Independent auditors:
+Designed by:
+C20 Revenue and Segment Result of the Automotive segment
+Photography:
+Financial calendar
+wireless fidelity
+universal serial bus (universal serial bus standard power delivery)
+trusted platform module
+application-specific integrated circuit
+automotive safety integrity level
+brushless direct current
+Bluetooth Low Energy
+Bluetooth
+complementary metal-oxide-semiconductor
+central processing unit
+direct current to direct current conversion
+full hybrid electric vehicles
+field programmable gate array
+gallium nitride
+graphics processing unit
+human-machine interaction
+high-voltage DC transmission
+Wi-Fi
+integrated circuit
+Internet of Things
+intelligent power module
+light-emitting diode
+micro-electromechanical system
+metal-oxide-semiconductor field-effect transistor
+near-field communication
+plug-in hybrid electric vehicles
+power management IC
+programmable system-on-chip
+radio frequency
+silicon
+silicon carbide
+time-of-flight
+insulated gate bipolar transistor
+C17 World market for automotive semiconductors in 2019
+C18 Market share for automotive semiconductors in 2019
+C19 Market share of Infineon for automotive semiconductors
+by region in 2019
+This report contains forward-looking statements about the business, financial condition and earnings performance
+of the Infineon Group. These statements are based on assumptions and projections resting on currently available
+information and present estimates. They are subject to a multitude of uncertainties and risks. Actual business
+development may therefore differ materially from what has been expected. Beyond disclosure requirements
+stipulated by law, Infineon does not undertake any obligation to update forward-looking statements.
+C15 Dividend per share for the 2010 to 2020 fiscal years
+Q =
+< 240 >
+Chart overview
+C01 Our growth areas and growth drivers are derived
+from megatrends in society
+C02 Additional semiconductor demand per vehicle
+C16 Core competencies in the segments
+C03 Automated driving: Additional semiconductor demand per vehicle
+by level of automation at the given years
+Further information
+Chart overview
+28
+w
+C26 Market share for power ICs in 2019
+31
+C05 Strategic growth model
+33
+Page
+23
+88
+28
+C04 We are linking the real and the digital world
+C21 Market share for discrete IGBTs in 2019
+Consolidated Financial Statements
+Business focus and strategy
+Note
+www.infineon.com
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+Visit us on the web:
+Contact for Investors and Analysts:
+Media Contact:
+Headquarters:
+Infineon Technologies AG
+Infineon Technologies | Annual Report 2020
+The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted
+property of IHS Markit Ltd. and its subsidiaries ("IHS Markit") and represent data, research, opinions or viewpoints
+published by IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original
+publication date thereof and not as of the date of this document. The information and opinions expressed in the
+IHS Markit Materials are subject to change without notice and neither IHS Markit nor, as a consequence, Infineon
+have any duty or responsibility to update the IHS Markit Materials or this publication. Moreover, while the IHS
+Markit Materials reproduced herein are from sources considered reliable, the accuracy and completeness thereof
+are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit and the trademarks
+used in the Data, if any, are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are
+the property of IHS Markit or their respective owners.
+Combined Management Report
+Specific disclaimer for IHS Markit - reports, data and information referenced in this document:
+reports, data and information referenced in this document:
+Specific disclaimer for Informa Tech - former IHS Markit Technology -
+Forward-looking statements:
+The following were brand names of Infineon Technologies AG in the 2019 fiscal year:
+Infineon, the Infineon logo, AURIX™, CIPOSTM, CoolGaNTM, CoolMOS™, CoolSIC™,
+EZ-PDT, IMOTION™, ModusToolbox™, OPTIGAT, OptiMOST, PrimePACK™, PSOC™,
+SECORATM, SEMPERTM, TRAVEOTM, XENSIVT
+Page 6, 11: Werner Bartsch, Hamburg (Germany)
+HGB Hamburger Geschäftsberichte GmbH & Co. KG,
+Hamburg (Germany)
+KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich (Germany)
+1 October to 30 September
+Management Board and
+Supervisory Board
+The Informa Tech reports, data and information referenced herein (the "Informa Tech Materials - mostly former
+IHS Markit Technology Materials") are the copyrighted property of Informa Tech Research Ltd. and its subsidiaries
+("Informa Tech") and represent data, research, opinions or viewpoints published by Informa Tech, and are not
+representations of fact. The Informa Tech Materials speak as of the original publication date thereof and not as of
+the date of this document. The information and opinions expressed in the Informa Tech Materials are subject to
+change without notice and neither Informa Tech nor, as a consequence, Infineon have any duty or responsibility
+to update the Informa Tech Materials or this publication as a result. Informa Tech Materials are delivered on
+an “as-is” and “as-available" basis. No representation or warranty, express or implied, is made as to the fairness,
+accuracy, completeness or correctness of the information, opinions and conclusions contained in the Informa
+Tech Materials. To the maximum extent permitted by law, Informa Tech and its affiliates, IHS Markit and its Affiliates
+and their respective, officers, directors, employees and agents, disclaim any liability (including, without limitation,
+any liability arising from fault or negligence) as to the accuracy or completeness or use of the Informa Tech Materials.
+Informa Tech and/or IHS Markit will not, under any circumstance whatsoever, be liable for any trading, investment,
+commercial or other decisions based on or made in reliance of the Informa Tech Materials. The "IHS Markit"
+brand and logo have been licensed for use by Informa Tech. The “IHS Markit” brand and logo and any third-party
+trademarks used in the IHS Markit Technology Materials are the sole property of IHS Markit Group or their
+respective third-party owners.
+C22 Market share for IPMS in 2019
+raised by electro-mobility
+C24 Revenue and Segment Result of the Industrial Power Control segment
+C25 Market share for MOSFETs in 2019
+C23 Market share in IGBT modules in 2019
+C32 Revenue and Segment Result of the Connected Secure Systems segment
+C33 R&D expenses
+C34 Investments
+1 2 2 W W w
+76
+84
+74
+73
+73
+47
+73
+48
+C12 Global semiconductor sales 2019 by region
+C35 Development of the Infineon Technologies AG share compared
+to Germany's DAX Index, the Philadelphia Semiconductor
+Index (SOX) and the Dow Jones US Semiconductor Index
+for the 2020 fiscal year (daily closing prices)
+(total market size US$428 billion)
+C13 Top 20 semiconductor consumer in 2019 calendar year
+C14 Revenue by segment in the 2020 fiscal year
+C11 Top 20 semiconductor manufacturers for 2019 calendar year
+C10 Allocation of Cypress business units into the segments of Infineon
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+20 November 2020
+C09 Infineon Leadership Principles
+C07 System know-how and services are becoming more
+34
+and modules market share 2019
+C27 Market share of MEMS microphones die suppliers in 2019 (by units)
+C28 Revenue and Segment Result of the Power & Sensor Systems segment
+C29 Market share for security ICs (excl. NFC controller;
+C06 Worldwide discrete power semiconductors
+44
+69
+3 % % % %
+68
+68
+64
+63
+63
+63
+Page
+and more a differentiating factor
+35
+68
+C08 Worldwide microcontroller market share 2019
+40
+excl. NFC embedded Secure Element) in 2019
+C30 Market share for security ICs for payment in 2019
+C31 Market share for Wi-Fi ICs in 2019 (standalone ICs only)
+Security plays a key role in the lot. The rising number of hacking attacks underlines
+the need for appropriate precautions. In order to secure electronic systems, it is
+important only to connect authorized and authenticated devices with one another
+and to protect them against cyber-attacks and manipulation. This means that security
+must be integrated into every end-point whenever possible. The electronic compo-
+nents central to security are typically assembled on the printed circuit board, which
+is why these components are referred to as embedded security.
+834
+Secure authentication for the Internet of Things
+The development of smartphones and wearables, the mobile internet and Near
+Field Communication (NFC) technology has made it possible to integrate payment
+services into today's mobile devices. In times of the coronavirus pandemic, people
+are particularly valuing this function. Cashless payment is just one of many of the
+functions of mobile end devices requiring the storage and processing of sensitive
+data. Travelers on public transportation, for example, enjoy the convenience of using
+mobile tickets instead of coins or physical tickets. These applications require special
+security solutions such as a security chip called a Secure Element (SE). The SE can
+either be built into the smartphone (which is referred to as an embedded SE (ESE)) or
+integrated into the SIM card.
+Q = < 29 >
+The increasing degree of interconnection between humans, machines and devices
+demands greater IT security: from the manufacturing industry and Smart Home
+applications to information and communication technologies. We provide our cus-
+tomers with robust, future-oriented embedded security hardware for electronic
+devices, computer systems, network components and industrial facilities. These
+security technologies make it possible to authenticate people and machines, protect
+confidential data and detect unauthorized changes to networked machines and
+devices. In industry, this trend is already evident. With increasing digitalization, the
+desire for reliable IT security, which is easy to use, is growing.
+Security
+7112
+Sustainable and optimally networked mobility within metropolitan areas as well as
+between large cities is one of the key topics of the 21st century. Today more than ever,
+rapid and reliable public transportation determines the quality of life in many regions
+and cities worldwide and the ability of those regions and cities to compete with
+others. The trend towards electric trains has been with us for some time and is set to
+continue. Our components are used not only in local passenger trains, metro trains
+and trams, but also in high-speed trains. Electrification is also becoming increasingly
+common for the locomotives of freight trains, as well as for buses, trucks, construction
+equipment and farm machinery. Power electronics also play a key role here.
+Passenger and freight transportation
+Unlike humans, they are expected to be 100 percent reliable. Functional safety and
+the quality of products, software and systems are therefore very important, placing
+challenges on the entire industry. For Infineon, this falls under the umbrella of reliabil-
+ity or "dependability” and the company has a significant competitive lead in this field.
+Infineon Technologies | Annual Report 2020
+Security for mobile devices
+Consolidated Financial Statements
+US$
+280-350
+US$
+1,150-1,250
+value per vehicle
+Combustion
+engine vehicle
+Mild-hybrid
+vehicle
+Full hybrid
+and plug-in hybrid
+and pure
+electric vehicle
+Sources: Infineon; IHS Markit, Automotive Group: Alternative Propulsion Forecast. July 2020;
+Strategy Analytics: Automotive Semiconductor Demand Forecast 2018-2027 and Automotive Sensor Demand 2018-2027. July 2020.
+Source: Strategy Analytics: Automated Driving Semiconductor Market Estimate. August 2020.
+Infineon Technologies | Annual Report 2020
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Further information
+Management Board and
+Supervisory Board
+Level 2 (2020)
+renewable energy sources
+Urbanization
+Climate change and scarce resources
+Usage of electricity
+>
+› Energy storage
+› Energy transfer
+Profiting segments
+>
+>
+› Power generation from
+Growth drivers
+Energy Efficiency
+Demographic and social change
+Growth areas
+Megatrends
+C01 Our growth areas and growth drivers are derived from megatrends in society
+A new mindset on climate protection depends entirely on a new mindset on energy
+transformation. An energy transformation will only be viable if we take sustainable
+and climate-friendly action everywhere, from the generation of electricity to its con-
+sumption. Microelectronics play a decisive role here, helping to provide a constantly
+growing population with energy in an efficient and environmentally friendly manner.
+For environmental reasons, it will no longer be possible in the future to meet the
+rising demand for electric energy using fossil fuels to the same extent as today. This
+means that renewable energy sources, which do not emit CO2 into the environment,
+are becoming more and more important. One important thing here is the use of wind
+power and photovoltaic (PV) energy. The fluctuating availability of energy from
+these sources can be balanced out by using storage facilities, but calls for holistic
+management of the power grid.
+Energy efficiency
+In each of the growth areas we address in the semiconductor market – energy
+efficiency, mobility, security, and the loT & big data - there are numerous application
+fields with high growth potential for our semiconductor business. Driven by increas-
+ing demand for energy and the setting of global CO2 reduction goals, the need to
+generate, transmit, store and use energy more efficiently is growing. The rising level
+of traffic and transportation makes sustainable, intelligent mobility solutions indis-
+pensable. In a highly digitalized world, the number of interconnected objects is
+increasing and the demand for secure processing, transmission and storage of data
+is rising. We serve all these application areas with our solutions and systems, helping
+us achieve sustainable growth.
+Growth drivers
+Q = < 23 >
+Further information
+Consolidated Financial Statements
+Digital transformation
+Mobility
+Security
+IoT & Big Data
+Automotive
+Connected Secure Systems,
+Infineon Technologies | Annual Report 2020
+Automotive, Industrial Power Control,
+Power & Sensor Systems
+Industrial Power Control,
+Power & Sensor Systems
+> Mobile communications
+› Data center
+› Smart home
+› Collaborative robots
+> Human-machine interaction
+Integrity of devices
+Combined Management Report
+>
+>
+(smart factories)
+Security for industrial applications
+>
+› Secure authentication for the loT
+Security for mobile devices
+<
+› Passenger and freight transport
+> Safe automated driving
+Charging infrastructure for
+electro-mobility
+Electro-mobility
+Security for connected vehicles
+Business focus and strategy
+Growth drivers
+Supervisory Board
+Management Board and
+Dr. Wolfgang Eder
+Chairman of the Supervisory Board
+Wallory hum
+Лиш
+Supervisory Board
+On behalf of the
+Neubiberg, November 2020
+The Supervisory Board wishes to thank the entire staff and the Board of Management
+of Infineon once again for their tremendous commitment and outstanding achieve-
+ments during a fiscal year that has been challenging in all respects.
+assurance" review and issued an unqualified statement thereon. The documents were
+carefully examined by the Investment, Finance and Audit Committee at its meeting
+held on 6 November 2020, which was continued in a conference call on 16 November
+2020, and by the Supervisory Board at its meeting held on 20 November 2020. The
+Supervisory Board acknowledged and approved the combined separate Non-Financial
+Report drawn up by the Management Board.
+The Investment, Finance and Audit Committee and the full Supervisory Board also
+deliberated on the combined separate Non-Financial Report for the year ended
+30 September 2020 drawn up by the Management Board. KPMG performed a “limited
+The Supervisory Board concluded that it has no objections to the financial statements
+and the audits performed by the auditor. In its opinion, the Combined Management
+Report complies fully with legal requirements. The Supervisory Board also concurs
+with the assertions regarding Infineon's future development contained therein. The
+Supervisory Board therefore concurred with the results of the audit and approved
+the Separate Financial Statements of Infineon Technologies AG and the Consolidated
+Financial Statements of Infineon. The Separate Financial Statements were accordingly
+adopted. The Supervisory Board also approved the Management Board's proposal
+for the appropriation of unappropriated profit.
+The Separate Financial Statements, the Consolidated Financial Statements, the
+Combined Management Report, the Management Board's proposal for the appropria-
+tion of unappropriated profit (all prepared by the Management Board) and KPMG's
+long-form audit reports were all made available to the Supervisory Board at the
+meeting held on 20 November 2020. At this meeting, the Chairman of the Investment,
+Finance and Audit Committee reported in considerable depth on the corresponding
+recommendations of the Committee. In addition, all material issues relevant to the
+financial statements and the audit, including the key audit matters, were exhaustively
+discussed with the auditor and closely examined by the Supervisory Board. The
+examination also included the proposal to pay a dividend of €0.22 per entitled share.
+Infineon Technologies | Annual Report 2020
+Report of the Supervisory Board
+Q = <20>
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Level 2+ (2025)
+Level 4/Level 5 (2030)
+Additional semiconductor demand
+raised by electro-mobility
+Standard vehicle
+Additional
+Supervisory Board
+Power & Sensor Systems,
+Connected Secure Systems
+Management Board and
+Supervisory Board
+Combined Management Report
+Infineon Technologies | Annual Report 2020
+Digitalization is permeating more and more of our lives and the coronavirus pandemic
+has accelerated this trend. New digital communication technologies have an impact
+on our everyday life, alter our lifestyle and give rise to new patterns of behavior. The
+digital transformation also allows for better use of resources. Resource use can be
+monitored and tracked and thus optimized. Meanwhile, humans and machines are
+producing enormous amounts of data. Big data is an extremely valuable raw material.
+We are voluntarily revealing more and more sensitive information about ourselves. This
+makes it necessary for users to be able to communicate with one another securely
+and without the risk of misuse or theft of data. Safeguarding electronic devices and
+infrastructures thus takes the highest priority and makes the digital transformation
+possible. Meeting this increased need for security represents one of the core compe-
+tencies of Infineon.
+Digital transformation
+More and more people are crowding into the cities from rural areas. In the short-term,
+the coronavirus pandemic has the potential to interrupt this trend. However, in the long
+term, major cities and metropolitan regions will continue to grow and act as magnets
+for migration, with the result that the trend towards urbanization will resume. Rapid
+urbanization places huge demands on infrastructure and on related services. How
+should a major city be designed in order to guarantee an adequate quality of life for
+everyone when people are living in such close proximity? One possible solution is the
+"Smart City" model. In the cities of the future, all aspects of public life will be intermeshed
+and connected with one another. This will also be true of suburban areas. An intelligent
+power grid (Smart Grid) can efficiently manage energy requirements, sustainable
+mobility solutions like the Smart Car and expansion of the rail network will help manage
+the increasing volume of traffic, and digital and intelligent solutions in the Smart Home
+can enhance the quality of life. Our products are our contribution to the further devel-
+opment of energy infrastructure, traffic and transportation systems and residential
+spaces. The objective is to make metropolises more efficient, greener and more livable.
+Urbanization
+Climate change is looming ever larger
+in the public consciousness. Our actions
+have a significant impact on our environ-
+ment. Efficient use of resources is
+therefore of fundamental importance.
+Developing energy-efficient products
+is one of the key elements to saving
+energy and tackling climate change. Our
+goal is to make "more from less". Our
+semiconductors feed renewable energy
+into electricity grids with minimum
+loss, reduce electricity consumption
+in computers, secure our digital data
+traffic and power our cars in a more
+energy-efficient way. They make our
+everyday lives more comfortable,
+while at the same time minimizing the
+environmental impact of our energy
+consumption.
+Climate change and scarce resources
+According to the United Nations, around 9.7 billion people will be living on our planet
+by 2050, two billion more than today. Rapid population growth and the desire for
+a good life are two of the factors leading to an increase in energy consumption.
+This makes it necessary to produce, store, transmit and use energy more efficiently.
+Rising demand for resources is also pushing existing concepts for infrastructure,
+industry and communication to their limits. Microelectronics play a decisive role in
+supplying energy to the growing and evolving population and in creating comfort-
+able spaces in which to live.
+Demographic and social change
+Q = < 22 >
+Further information
+Business focus and strategy
+Business focus
+Consolidated Financial Statements
+Business focus and strategy
+Business focus
+Supervisory Board
+Management Board and
+Infineon Technologies | Annual Report 2020
+on the following growth areas: energy efficiency, mobility, security and the loT &
+big data. In these markets, we orient ourselves to structural drivers; areas which are
+expected to see disproportionate growth in the long term as a result of these trends
+or which have major innovation potential. The coronavirus has not altered the under-
+lying assumptions. Partially it is acting as a catalyst that will speed up changes in
+society and in the economy.
+We want to continue to develop, grow and to create value for our customers and our
+shareholders as well as for our employees and for society. The coronavirus pandemic
+has put the brakes on for the moment, but cannot stop us. In the past few years, our
+strategy has been guided by global megatrends, which will continue to shape the world
+in the future: demographic and social change, climate change and scarce resources,
+urbanization and digital transformation. From these megatrends, we derive our focus
+Business focus
+Business focus
+and strategy
+Q = < 21 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+semiconductor
+US$
+160-180
+Combined Management Report
+Hydrogen
+Over the course of the next decade, hydrogen will play a crucial role in energy supply.
+In the "National Hydrogen Strategy" unveiled this year by the German Federal
+Government, very specific targets have been set for the first time for the expansion
+of capacity by 2030. Even if many problems are still to be solved, we see great
+potential in the production of hydrogen from renewable energy, as well as in the
+use of hydrogen in fuel cells and the conversion of hydrogen into synthetic fuels.
+In the long term, green hydrogen has the potential to become a key growth driver
+for Infineon.
+Using electrical energy
+Power supply
+A power supply for electric devices consists essentially of two stages. First, the power
+unit converts the grid alternating current (AC) into generally much lower direct current
+(DC), a process referred to as AC-DC conversion. Depending on usage, in a second
+step the voltage of this direct current is precisely adapted at the point of load to fit
+the respective requirements, for example for a server's processors. This second stage
+is referred to as DC-DC conversion. The devices in question usually have several
+DC-DC converters. Growth in the area of power supply depends on the power and
+complexity of the devices and, above all, on an increase in the number of units.
+AC-DC conversion
+In the medium term, we expect the highest unit growth in the area of AC-DC conversion
+to come from servers and telecommunications infrastructure. The high level of power
+required here means that the number of power semiconductors needed for power
+supplies is similarly high. Demand for computing power and DRAM/Flash memory has
+been boosted substantially by the coronavirus pandemic. Demand will remain high
+due to people working from home and on the move, video streaming, social networks
+and, increasingly, machine learning. IoT and Industry 4.0 will accelerate this trend
+in the future. In addition, we see growth opportunities for our business in the follow-
+ing areas: compact chargers, fast-charging features, and solutions for the wireless
+charging of smartphones, tablets and light laptops (portables).
+> Wireless charging
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 26 >
+User acceptance will continue to increase as the opportunities for fast charging grow.
+Wireless charging has advantages in terms of space and design, especially for small
+devices, as there is no need for a charging port. Following on from the smartphone,
+wireless charging will also apply to many other devices. Using electromagnetic fields,
+energy will be transported from the charging station to the device and the battery
+will be recharged without requiring a physical connection. In practice, the process is
+much less efficient than charging with a cable, but in the last few years wireless
+recharging has continued to improve so that it is now closer to the efficiency rate of
+cable charging.
+> USB power delivery (USB PD)
+USB ports are widely used around the world: for example, in laptops, planes, and in
+numerous public places as wall sockets. They are used primarily for the transmission
+of data, but can also supply power to a limited extent to connected devices. The
+USB PD standard was created to increase significantly the maximum power that can
+be transmitted. Behind the standard lies the idea of a universal power supply for
+various devices, in which the power supply on offer is more flexible, while allowing
+data to be transmitted through the cable at the same time. This means that devices
+such as laptops, which require more power than a smartphone, can be supplied with
+power and charged via this interface. USB PD has the potential to become the new
+universal charging standard.
+DC-DC conversion
+As a result of the energy transformation, 55 percent to 60 percent of Germany's
+electricity should come from renewable energy by 2035 and 80 percent by 2050. The
+use of renewable energies is linked with specific requirements on the entire energy
+supply chain. Electric power generation through wind and sun does not take place
+centrally in a small number of power plants, but rather decentrally at many different
+locations. In addition, fluctuating power generation does not always match the
+demand. Conventional power plants still have to substitute or supplement renewable
+energy sources. This makes temporary energy storage necessary in the long run.
+With its semiconductors, Infineon provides the essential power components and
+subsystems for efficient energy storage.
+As with AC-DC conversion, rising demand for more computing power and storage
+capacity is also driving demand for DC-DC conversion. Special processors such as
+Kl accelerators, FPGAs, ASICS and GPUs require high power at very low voltages.
+In addition, energy requirements change considerably depending on load and at
+extremely short notice. As a result, the electronic systems are supplied with higher
+voltages, which are then precisely stepped down to the required low voltage directly
+in the processor. The same applies to PCs and communication devices, which some-
+times require a large number of different voltages. This voltage conversion system is
+known as point of load. Requirements placed on dynamics, efficiency and stand-by
+consumption are increasing all the time. Customers are looking for simple, reliable
+Energy storage
+Further information
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 24 >
+Power generation from renewable energy sources
+In Germany, over 40 percent of electric power comes from renewable energy. In the
+context of the European support measures put in place as a result of the coronavirus
+pandemic, this percentage is expected to increase significantly over the next few
+years, not only in Germany, but throughout Europe. Germany has, for example,
+increased its target for offshore wind farms to 20 gigawatts. Infineon benefits from
+the fact that wind turbines and photovoltaic power plants require multiple power
+semiconductors per gigawatt of electricity generated, compared with conventional
+power plants. In contrast to coal-fired, gas or nuclear power plants, there is no
+turbine whose consistent movement can generate a constant alternating current
+of 50 hertz. Therefore, the electricity generated cannot be fed directly into the grid.
+Instead, power electronic systems are required for conversion and protection.
+Infineon supplies all major manufacturers of wind power turbines and PV inverters.
+Wind
+When it comes to energy generation from wind, two trends in particular drive
+demand for semiconductors. First of all, older low-performance wind power turbines
+are being replaced by modern high-performance ones, a process referred to as
+"repowering". Secondly, ever-stronger turbines are being used in initial installations.
+The performance of wind power turbines rose from around 50 kilowatts to up to
+150 kilowatts in the 1980s, to an average of 1 megawatt in the early 2000s, and today
+has reached an average of 3 megawatts for onshore turbines and 5 to 6 megawatts
+for turbines in offshore wind farms. Recently, a project for an offshore wind turbine
+with a record power rate of 14 megawatts was launched. This is due to be connected
+to the grid in 2024. The higher the power rate, the higher the value of integrated
+power semiconductors. Offshore wind farms in particular present major challenges
+for the robustness and reliability of the components used, since they have to function
+in a harsh environment, at high humidity levels and in saline air, as well as needing
+to be low-maintenance.
+Photovoltaics
+In photovoltaics, Infineon is broadly-based internationally and has been cooperating
+for years with the world's leading manufacturers of PV inverters. We are benefiting,
+for example, from the growth of Chinese inverter manufacturers, both with regard to
+domestic expansion of photovoltaics in China and to the export of PV inverters to
+other regions. We are also working closely with leading European manufacturers and
+we support innovative American companies with our products. Efficient conversion
+and low system costs contribute to reducing electricity generation costs in open-
+space photovoltaic plants and to creating grid parity compared with conventionally
+generated electricity. Using our SiC transistors enables manufacturers of PV inverters
+to achieve better systems performance in terms of efficiency, size and cost when
+compared with Si-based solutions.
+High-voltage direct current transmission (HVDC)
+HVDC systems are playing a key role globally by providing reliable low-loss energy
+transmission over long distances. They are also used for the grid connection of
+offshore wind farms. It is to be expected that future growth in the use of renewable
+energy will result in a rise in demand for efficient transmission routes. The semicon-
+ductor products for HVDC applications must satisfy particular requirements:
+robustness, short-circuit resistance and dynamic performance. We have developed
+an IGBT/diode chipset specifically for this purpose.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Consolidated Financial Statements
+Q = < 25 >
+high-performance solutions, necessitating the change to digital regulation of point of
+load systems and driving the trend towards all-in-one solutions.
+The number of devices, which can be charged wirelessly, is constantly increasing.
+Wireless charging gives users the chance to charge their devices almost on the side,
+wherever they are, in the car, at home or in a public place. A charging station can
+also be used for the wireless recharging of several devices at a time.
+Electric drives are at the heart of a large number of systems, such as cranes, conveyor
+belts, automation systems and robots. We find them wherever something moves
+or is transported. According to the European Commission, electric motors account for
+almost 50 percent of the electricity consumed in Europe. Accordingly, there is great
+potential for savings if efficiency is improved. More efficient motors will bring up to
+57 terawatt-hours of annual energy savings in the EU by 2020.
+Consolidated Financial Statements
+Further information
+Q = < 28 >
+Also of interest are vehicles known as mild-hybrid vehicles, which use 48 volt tech-
+nology in addition to the 12 volt onboard network. On the one hand, these vehicles
+can recover a certain amount of braking energy. On the other hand, pollutant emissions
+can be reduced by more efficient systems. Mechanical functions are increasingly
+being replaced by electric functions. The 48 volt part of the onboard network handles
+the power supply for high-power consumers such as the electric turbocharger, electric
+power steering and electronic stability control.
+Charging infrastructure for electro-mobility
+The steadily increasing number of electric vehicles also makes an appropriate charging
+infrastructure necessary. A well-developed network of charging stations increases
+the incentive to buy an electric vehicle. To promote acceptance of electro-mobility,
+most countries are continuing to expand their networks of publicly accessible charging
+stations. In Germany, for example, within the next few years all service stations
+should be equipped with fast charging stations. Depending on the system topology,
+the charging stations use different types of power semiconductors.
+C02 Additional semiconductor demand per vehicle raised by electro-mobility
+in US$
+Safe automated driving
+Drives and automation
+Active safety systems are increasingly developing into driver assistance systems.
+By supporting the driver with the tasks of driving, they increase both comfort and
+road safety. Among other things, they assist in critical situations or help correct
+a driver error when appropriate: for example, with automatic emergency braking
+maneuvers. The main systems for partially and fully automated driving comprise,
+firstly, sensors (such as radar, and interior and exterior cameras), secondly, a central
+high-performance computer to evaluate sensor data and determine the driving
+strategy (in a sense, the system's intelligence). The third element is the actuators
+(steering, brakes, engine control and transmission). A high level of reliability is
+required of these electronic assistance systems in vehicles. Il C03
+C03 Automated driving: Additional semiconductor demand per vehicle
+by level of automation at the given years
+572
+377
+457
+115
+457
+457
+457
+Combined Management Report
+Business focus and strategy
+Growth drivers
+"Vision Zero" describes one of the major objectives of the automotive industry:
+vehicles should become so safe that there are no longer any serious or fatal accidents.
+Around 90 percent of such accidents today are attributable to human error. Active
+safety systems can either completely prevent an accident or at least significantly
+reduce its consequences by directly intervening in the driving process. Examples of
+such systems include pedestrian detection, adaptive cruise control and blind spot
+detection. These functions are no longer reserved for luxury cars, but have become
+standard features in mid-range vehicles.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+> Industrial automation
+One way to reduce the energy consumption of an electric motor is to use an electronic
+control unit for speed control, which adapts performance to the load required at that
+time. Electronically controlled motors are also a key element in automation. Without
+them, it would be impossible to coordinate the various motion sequences efficiently.
+The market penetration of speed-controlled motors will increase. A respective motor
+control unit requires a large number of the power semiconductors we supply. The
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Consolidated Financial Statements
+Further information
+Q = < 27 >
+number and value of these power semiconductors depend on the power range of
+the motor. Industry 4.0 will trigger a new investment cycle, not only for automation in
+factories, but also for general transport and handling systems as well as for collabora-
+tive robots (see "Internet of Things & big data” in this chapter, □ p. 30 ff.).
+Combined Management Report
+New EU regulations will place stricter energy efficiency requirements on home appli-
+ances in the European market from 2021. The new rules are intended, among other
+things, to create incentives to design products which are more efficient and have
+longer service lives. As a result, the manufacturers of major home appliances are
+turning to highly-efficient motors with modern variable-speed control. These motors
+are significantly more energy-efficient, low-noise and have longer service lives than
+uncontrolled motors. Examples include washing machines (drums and water pumps),
+dishwashers, refrigerators (compressors) and air-conditioning systems (fans, com-
+pressors).
+› Battery-powered devices
+In battery-powered devices, efficiency is particularly important so that a battery
+charge lasts a long time. As a result, more and more brushless direct current (BLDC)
+motors are being used. In BLDC motors, all the commutation is electronic, depending
+on rotor position, rotor rotation speed and torque. This calls for the appropriate
+power semiconductors and also, depending on the configuration, for components
+for diagnostic and security functions. This type of motor requires high-performance
+electronic control units, compared with conventional motors. In addition to their
+high levels of energy efficiency, BLDC motors are particularly well-suited for use in
+battery-powered systems due to their low power-to-weight ratio. Examples include
+cordless home appliances such as robot vacuum cleaners, cordless screwdrivers and
+electronic lawnmowers. In addition to the motors, batteries are also becoming more
+and more efficient, enabling longer operating times, which is continuing to drive
+forward the transition from wired devices to battery-powered devices. Furthermore,
+all the examples cited also require additional power semiconductor components
+for the chargers. With battery-powered devices, we benefit both from unit growth
+and from the higher number of semiconductor components used.
+Mobility
+Global population growth and increasingly global value chains as well as urbanization
+are driving demand for all types of transportation, ranging from mass transportation,
+such as buses and trains, to vehicles for private use, such as cars, eBikes and eScooters.
+Cities in particular are confronted with the challenge of making transportation
+cheaper, more efficient and more sustainable.
+Electro-mobility
+The automotive industry is working continuously to reduce pollutant emissions.
+European Commission rules require, for example, a reduction in average fleet emis-
+sions from new cars to 81 grams of CO2 per kilometer by 2025. The reduction target
+for 2030 is 59 grams of CO2 per kilometer, a reduction of 37.5 percent compared
+with 95 grams of CO2 per kilometer in 2021. This will increase demand for semicon-
+ductors. The optimization of the combustion engine alone will not be enough to
+fulfill legal requirements and to satisfy customer demand for sustainable mobility.
+Instead, systems consuming energy in the vehicle will increasingly have to be made
+more efficient, while hydraulic or mechanical solutions will need to be replaced by
+more efficient electromechanical systems based on semiconductors.
+› Home appliances
+In order to reduce the fleet average to the mandated CO2 target value, many vehicle
+manufacturers are expanding their product ranges to include models such as hybrid
+vehicles or pure electric vehicles. These vehicles have a significantly higher semicon-
+ductor content than conventional ones. Infineon offers a wide range of power semi-
+conductor components for these vehicles. While the current average semiconductor
+content of a car with a conventional combustion engine is US$457, the amount in
+mild-hybrid vehicles is US$572 and for full or plug-in hybrid vehicles as well as pure
+electric vehicles, it is US$834. Here, power semiconductors make up approximately
+three-quarters of the additional semiconductor content per vehicle. Il co2
+data are locked away in a "data vault". At the same time, the integrity of the data can
+be checked, making it possible to detect attacks promptly and ensure the correct
+functioning of a system.
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Internet of Things & big data
+Infineon Technologies | Annual Report 2020
+The lot has the potential to change radically the way in which companies and
+consumers interact with one another and with the infrastructure surrounding them.
+The lot connects the real and the digital world. A wide variety of physical things –
+ranging from smartphones, watches and cameras to cars and computers and even
+to home appliances and industrial equipment – are equipped with embedded
+electronic systems, software and sensors. The possibilities are huge: greater conve-
+nience and security in the smart home, higher productivity together with better
+ecology in farming, higher productivity in manufacturing, new services and support
+for older people. It is clear from these examples that the loT and big data can be
+useful to humans and for the future of our planet.
+The integrity of devices has to be ensured as they become increasingly interconnected.
+In principle, this means that no unauthorized modifications can be made to programs
+and data by third parties. A Trusted Platform Module (TPM) can be implemented here.
+This special security chip can protect keys, passwords and digital certificates and store
+them separately from the CPU. In this way, sensitive information and security-critical
+Q = < 31 >
+Management Board and
+Supervisory Board
+Our semiconductor solutions drive the lot. Sensors record mostly analog environ-
+mental information and transform it into digital data, microcontrollers process this
+data and generate control signals, actuators convert the control signals into actions
+(in most cases motion, but also light or heat), security solutions protect the integrity
+of devices and data, and connectivity components are the link between the real and
+the digital world.
+Consumer IoT
+Human-machine interaction is concerned with how humans and systems interact and
+communicate with one another. For a long time now, the focus has no longer been
+on traditional industrial machines but on computers, digital systems and devices
+for the loT: i.e. the connection between the real and the digital world. More and more
+devices are connected and perform their tasks automatically. The operation of all
+these machines, systems and devices has to be as intuitive as possible, as if the user
+were communicating with a person.
+C04 We are linking the real and the digital world
+Coin cell-powered devices
+Battery-powered devices
+Power supplies
+Industrial IoT
+Drives
+Real-world applications
+Smart home
+5G
+Integrity of devices
+Automotive
+Human-machine interaction
+The ever-increasing connectedness of vehicles creates opportunities for many new
+services, but also carries the risk of unauthorized access. This makes it necessary to
+guarantee the secure exchange of data both between the various onboard systems
+and with other vehicles and the infrastructure. Vehicle safety and personal safety on
+the one hand and data security and IT security on the other hand can no longer be
+considered in isolation from each other. The vehicle is becoming a networked com-
+puter on four wheels and part of the lot. The demand for data security and IT security
+in the vehicle is rising. We see our opportunity here in the hardware-based security
+provided by our security controllers – either as a separate component or integrated
+into our automotive microcontrollers.
+advantages, but it also benefits the customer, as we can rapidly shift production
+volumes between the sites. By expanding our manufacturing capacity, we are
+sending a strong signal to our customers that Infineon is the ideal partner for future
+growth.
+In the era of Industry 4.0, companies are using the latest technologies to make their
+manufacturing faster and more cost-effective, to reduce rejection rates or to minimize
+disruptions and downtime through predictive maintenance. The networking and
+digitalization of factories, however, create points of attack for hackers. To protect
+themselves, companies must therefore take security into account from the very
+beginning of Industry 4.0 projects. A combination of software-based and hardware-
+based security solutions can protect connected machines and communication nodes.
+Examples are the OPTIGA™ TPM chips from Infineon, which can be integrated into
+routers, industrial PCs or complex control units and which serve to identify devices to
+communicating partners in the network. They thus authenticate themselves in the
+network while securing transmission of the data. At the same time, they also help to
+protect the devices against manipulation, for example by helping to secure software
+updates. They act in a way like vaults for the encryption certificates.
+Sense
+Infineon Technologies | Annual Report 2020
+At the same time, we are engaging in networks consisting of distributors, develop-
+ment service providers and manufacturing service providers. These networks enable
+smaller companies and start-ups to develop jointly and to manufacture electronics
+for new functions and new end devices. This broad sales strategy lets us maximize
+revenue from existing technologies, while at the same time increasing the return on
+our investment in research and development.
+Digitalization and the loT are creating new business models. Manufacturers generally
+concentrate on making devices smart with the best possible sensing and data pro-
+cessing capability. They have neither the ability nor the desire to deal with the under-
+lying semiconductor technology. For these customers, we offer “make it easy" solutions
+using, for example, optimized product combinations, reference designs and basic
+software. Here, in particular, our system understanding makes a difference.
+To reach more customers, we will be even more flexible in the future and we will
+develop new approaches. Historically, Infineon has grown through close collaboration
+with key customers. With these customers, we have successfully defined products
+that then enabled us to penetrate the wider market. We reach many of our smaller
+customers through distributors. We will further exploit the great potential of the
+distribution channel with standardized but configurable products for the wider market.
+Here, we have made good progress in recent years, because we have focused on
+short-notice availability, continuous targeted adjustment of the product portfolio and
+close partnership with distributors.
+Flexible marketing approaches enable Infineon to adapt
+to rapidly changing markets
+aim is to jointly develop a wearable, non-invasive blood pressure sensor based on
+the XENSIV™ 60 gigahertz radar chipset. This enables continuous and precise
+measurements for the first time. The new technology has the potential to change
+the market for wearable cardiovascular monitoring devices in the long term.
+The lot and big data are constantly bringing new players to the electronics market-
+place and they call for a strong partnership across a variety of competence areas.
+In this dynamic environment, joint innovation is the key to corporate success. One
+example is our Silicon Valley Innovation Center, a start-up center for innovations.
+It provides a platform on site for investigating new ideas and fast learning. We also
+operate co-innovation spaces, the first of which we opened in Singapore. With our
+experience and expertise, we support the typical skill set of start-ups trying out new
+technologies and applications and bringing some of them to the market. This way,
+both sides benefit. This approach also lets us accelerate our own innovation pro-
+cesses and penetrate further into new and adjacent markets. One example of this is
+our collaboration on the development of a radar-based blood pressure sensor. The
+The digital transformation plays a crucial role here. As a global semiconductor manu-
+facturer, we benefit from the digital transformation in two ways: as a user and as a
+provider of digital solutions. We are making good progress in well over 100 digitization
+projects. We are, for example, connecting our sites and organizing our global supply
+chains in accordance with Industry 4.0 in a virtual manufacturing network. In sales
+and marketing, we are using new methods for analyzing big data to improve our
+cross-selling and, as a result, we can provide more targeted solutions for our custom-
+ers' needs. With initiatives such as these, we are building our digital expertise and
+becoming even more competitive. We are taking an exploratory approach to make
+best use of the potential of the digital transformation. This way, we gather experience
+based on specific use cases and work towards solutions in an iterative process.
+of becoming leaner and faster. The key to success is collaboration across organiza-
+tional boundaries and the resultant creation of a working environment that helps
+us expand our innovative expertise. In parallel with a structured innovation process,
+we have successfully established new concepts which do not take a hierarchical
+approach but are based on the initiative of our employees and therefore provide the
+necessary freedom to act.
+Q = < 39 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+This is why innovation and system thinking ideally complement one another. We
+consider what the key factors are and how we can combine several innovative steps,
+which may sometimes appear rather small, to form a greater whole that will in turn
+provide an additional and noticeable benefit to the customer. Our commitment to
+innovation today covers all areas of our company: logistics, operations, technology,
+products, system solutions and cooperation with our customers. We focus on differ-
+ent aspects, depending on market demands. Within the company, the focus is on
+innovation in our business activities and on continuous improvement, with the aim
+Innovation is one of the fundamental success factors in the semiconductor industry
+and is the basis on which we differentiate ourselves from the competition. Infineon
+has shown time and again that our technological and product innovation enables us
+to grow faster than the market. However, the challenges are becoming greater. In
+the attractive markets we address, competition is increasing and we require an ever-
+broader technology portfolio to remain competitive in these markets in all applications.
+In addition, development costs are increasing disproportionately with each further
+step, as the technologies gradually approach physical limits. This fact underlines the
+importance of economies of scale and the relationship between technology leadership
+and size. Previous formulas for success fall short under these conditions and have
+to be either expanded or replaced.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Security for industrial applications (smart factories)
+Security for connected vehicles
+Software
+Ecosystem
+Actuate
+Compute
+Customer system
+Ecosystem
+Development environment
+Full system functionality
+(algorithms, Al)
+Partial system functionality
+(firmware)
+Building block (integration of
+analog and digital functionality)
+Software
+Single function
+(discrete components)
+Base technology
+System know-how
+Competencies evolve over time
+Services
+For this to succeed, we have to understand the environment in which our customers'
+products are used, how those products are embedded in larger systems, with which
+other devices the products interact, what requirements they have to fulfill and what
+function they are intended to perform. Looking at our products in these systems, we
+have to consider which other active and passive components and control concepts
+they use and what capabilities our customers contribute to the value creation process.
+Equipped with this knowledge, we can make the most of our competencies. We
+want to translate the technologically possible into marketable products that provide
+the greatest possible benefit to our customers. Sensor systems, for example, not
+only capture information about their surroundings, but also interpret and process
+the data they gather in order to initiate a particular action. Digital control loops in
+power supplies enable higher energy efficiency at both high and low load levels.
+Hardware
+Services
+C07 System know-how and services are becoming more and more a differentiating factor
+Our strategic "Product to system” approach goes well beyond thinking in terms of
+technologies and products. This approach was also a key element in developing the
+strategic guideline on strengthening our core business and tapping into new and
+adjacent growth markets described above. We want to understand what the markets
+are demanding and how they are changing. Only then will we be able to understand
+how we in turn can change the markets ourselves. We therefore look not only at the
+direct sales opportunities for our products, but also at our customers' success factors
+and at trends in the end markets. We want to recognize at an early stage when the
+foundation of our business is changing. Only then can we take appropriate action,
+ensure sustainable differentiation in growth applications and increase earnings.
+application fields we are already active in, we can also use our system understanding
+to increase revenue with a broader portfolio of products and solutions ("grow in
+scope"). The core business mentioned above should not therefore be seen as a static
+portfolio of activities. Instead, the adjacent business becomes part of our core busi-
+ness in the medium term, the core grows and the boundaries shift, because when we
+make progress in specific markets in terms of technology, products and application
+understanding, the classification of these markets changes accordingly. To return to the
+example of power semiconductors: “Power” is one of our original core competencies,
+but here too we continue to develop. We are expanding our portfolio so that we can
+offer our customers an increasing degree of “Intelligence” in addition to power
+semiconductors. Specifically, this means that we have focused on complementing
+our range of efficient power transistors with additional components, increasingly
+using digital solutions. The products required for intelligent control of switches tend
+to be more complex and higher-end because they incorporate greater functionality.
+In the context of increasingly complex systems and shorter development times, many
+customers appreciate this greatly, as it enables them to reduce their development
+costs and development risk significantly.
+Technological progress also paves the way for completely new application areas for
+which commercialization has not yet started on a wide scale. Sometimes innovations
+in semiconductor technology provide the momentum for new applications, while
+sometimes groundbreaking concepts on the customer side require the development
+of suitable semiconductor solutions. By becoming involved in these new business areas
+at an early stage, we want to secure a good starting position in highly promising future
+markets. Take the example of smart buildings: Sensors are the sensing organs of a
+building. They actively perceive their surroundings by “hearing”, “seeing", "smelling"
+and "feeling". Our sensors can be used in new applications, such as predictive main-
+tenance of smart buildings. To identify system failures, such as in an air-conditioning
+system, before they occur, our sensors measure various parameters and data points.
+These measurements provide information about whether the relevant system is
+operating properly or whether it might break down soon. The ability to monitor the
+Source: Based on or includes content supplied by Omdia: Power Semiconductor Market Share Database 2020. September 2020.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 35 >
+state of these devices and systems and to predict outages before they actually occur,
+but also not to replace the devices or systems too early, means that smart buildings
+offer significant potential for cost savings and greater convenience for residents.
+Intelligent control and monitoring of systems can of course also be used in many
+other areas, especially in industry.
+We will continue to supplement our organic growth in the future with selective acqui-
+sitions. These need to fulfill three criteria. The acquisitions must be a) strategically
+beneficial across our three growth categories (core business, adjacent business, new
+options), b) financially sound and c) a good cultural fit. A purchase must strengthen
+Infineon's market position in accordance with our strategic focus, usefully comple-
+menting our range of competencies. The corporate culture of any potential acquisition
+target must be a good fit with Infineon's culture, possibly adding valuable elements.
+Following the transformational acquisition of Cypress, we are currently not planning
+any more major acquisitions.
+Strategic guidelines:
+Factors for successful implementation
+Our strategic "Product to System" approach
+shapes our actions
+Infineon Technologies | Annual Report 2020
+19.0%
+Management Board and
+Supervisory Board
+Combined Management Report
+The increased number of SiC chips will significantly simplify the ramp-up of our
+SiC production, especially with regard to the further expansion of renewable energy
+sources and the increasing use of SiC in the power train of electric vehicles. We have
+now established all the prerequisites for future success in the growing SiC market:
+access to high-quality wafers, leading technology at the product level (Trench SiC
+MOSFET), module expertise and system understanding.
+Based on our technology leadership in transistors, we also want to strengthen our
+position in solutions for their control and to expand our product portfolio. As the
+number one in MOSFETs and IGBTs, we see interesting opportunities for growing at a
+faster rate than before in this area. This approach is exemplary of the strategy outlined
+above - that of starting from a strong core business to penetrate adjacent markets.
+Many years ago, we deliberately blazed new trails in the field of sensor technologies,
+in the knowledge that capturing environmental data would become increasingly
+important in our target markets. Today we have a comprehensive portfolio of sensors
+for a wide variety of systems in the car, for mobile end devices, consumer electronics
+and the IoT. MEMS microphones in particular are experiencing a boom. Wireless
+headphones are current trends. Traditionally, audio quality and comfort were key
+factors in customers' purchasing decisions. Now, the focus is increasingly on noise
+cancellation. This is where our MEMS microphones come into play. To achieve high-
+performance noise cancellation, in-ear headphones use one microphone for speech
+and two microphones for ambient noise. Up to six microphones are therefore used
+for a stereo in-ear headset. That is the reason for the rapid growth of the market for
+compact, highly functional MEMS microphones.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Furthermore, we systematically use our strong technological position to expand our
+expertise, strengthen our core business and grow in scope: for example, whenever
+the requirements of our markets change or when we see long-term growth potential
+in an adjacent business area. As one of the market leading companies, we began
+researching new materials for power semiconductors at an early stage. SiC and GaN
+are particularly well suited for use in power electronics. Here we are advancing into
+new areas of performance and efficiency. These components are typically more
+expensive than Si-based products, but thanks to new system architectures, they also
+open the door to many new types of customer benefit, such as a smaller form factor,
+greater efficiency and lower system costs. Realizing these benefits often goes hand
+in hand with higher research and development costs for our customers. Therefore,
+we support the introduction of these new technologies in two ways. On the one hand,
+we work closely together with our highly innovative customers, while on the other
+hand we provide less technology-oriented customers with appropriate solutions that
+make the switch easy to implement: for example, compatible control components.
+Given the increasing relevance of SiC to certain power semiconductor applications,
+we acquired SiC specialist Siltectra in November 2018. The company has developed
+an innovative method known as Cold Split technology to process crystal material
+efficiently and with minimal loss of material. Infineon will use the Cold Split technology
+for the efficient separation of SiC boules and to split SiC wafers.
+Business focus and strategy
+Group strategy
+Consolidated Financial Statements
+Further information
+Q = < 38 >
+Strategic differentiation through in-house manufacturing
+All our actions are designed to create, on the one hand, value added for the customer
+and, on the other hand, differentiation for us. This also applies to manufacturing. We
+manufacture in-house when doing so means we can differentiate ourselves from the
+competition through lower cost and/or higher performance. Typically, this is the case
+for power components and sensors. On the other hand, when it comes to standard
+technologies where the intellectual property right lies in the design and software,
+we work primarily with contract manufacturers. This is predominantly the case for
+highly integrated products, such as microcontrollers, connectivity components,
+security ICs and memory ICs. This enables us to make the most effective use of our
+capital employed and to optimize our investment in research and development.
+Our outstanding manufacturing methods and our process and manufacturing expertise
+give us a strategic advantage in many application areas, such as power electronics
+and sensor technologies, enabling us to offer differentiating components. This applies
+to the MEMS microphones mentioned above. MEMS microphones consist of two
+semiconductors: a MEMS membrane and an ASIC. To manufacture a microphone
+module, these two chips are mounted in a housing with an opening through which
+the acoustic signal enters. To date, Infineon was a leader in highly-functional MEMS
+microphones with “dual backplate" technology. Now, with our "sealed dual mem-
+brane" technology, we have taken another revolutionary innovative step.
+With our 300-millimeter thin-wafer manufacturing technology for power semicon-
+ductors, we have achieved a breakthrough. As pioneers of this technology, the scale
+of manufacturing we have now reached is enabling us to achieve significant econo-
+mies of scale. Compared with manufacturing on 200-millimeter wafers, we benefit
+here from lower cost with equal productivity and a lower capital outlay. We have
+taken a further step to extend our lead. The new factory on the Villach (Austria) site is
+cooperating with the 300-millimeter manufacturing facility in Dresden (Germany) to
+create virtual manufacturing across the two sites with synergies and flexibility. In line
+with our "One Virtual Fab" concept, we plan to use the same processes, equipment,
+and automation and digitization concepts in Villach and Dresden. This creates cost
+Combined Management Report
+In order to fulfill the promise of technological leadership, our engineers anticipate
+many challenges before our customers are affected by them. We meet the high quality
+requirements of the automotive industry and we are constantly improving efficiency
+when dealing with electricity. We also deliver solutions for the world's challenging
+security projects. Cooperating closely with our customers helps us make targeted use
+of this specific expertise and identify future trends at an early stage.
+Q = < 37 >
+Further information
+Consolidated Financial Statements
+Further information
+Q = < 36 >
+Connectivity enables devices to be connected. Security controllers must be capable
+of distinguishing between authorized and unauthorized access. In addition to the
+hardware components involved, software is also always required to a greater or lesser
+extent. System understanding therefore also means software understanding. As the
+range of services provided is increasingly becoming a differentiating factor, we have
+expanded our range to include a respective ecosystem. For many small customers
+without expertise in mounting semiconductor components, an ecosystem offers crucial
+value added, as it can significantly reduce their development time.
+The basic idea is that we continue to expand our competence portfolio, thereby
+increasing our potential for differentiation and helping shape semiconductor trends
+and, however, it is best to always be one-step ahead. Technology know-how has
+invariably been the foundation of our business model, whether in the form of discrete
+components, integrated solutions or mixed-signal components, which combine analog
+and digital functionality. Our broad portfolio ranges from individual components to
+solutions with basic firmware and driver software. This enables us to provide targeted
+support to our customers using totally different approaches. Some customers want to
+differentiate themselves from their competitors by using their own software, purchas-
+ing only the necessary hardware from us. We go one step further with automotive
+microcontrollers and security controllers, which we supply with special firmware
+that supports the basic functionality of the hardware and cannot be modified. More
+extensive functions can then be implemented using additional program code. The
+second generation of our iMOTION™ digital motor control platform was developed,
+for example, for use in household appliances and comes with a development kit as
+standard that reflects the priorities of our customers in this market: lower system
+costs, compact design, reduced development costs, shorter development time and a
+high level of reliability. The iMOTION™ component already contains all the algorithms
+required to control an electric motor. Only a small number of application-specific
+parameters need to be defined in order to complete the programming. Since we think
+in terms of systems, we can support all these different approaches and understand
+how to create added value. To generate even more of it for our customers in the digital
+age, in the future iMOTION™ will be expanded to include security and connectivity
+components. It is not always the most sophisticated solution that provides the greatest
+value added to the customer. Sometimes standard components may be the
+right fit. Nevertheless, system understanding creates a competitive advantage
+because it gives us the ability to cooperate with our customers and develop
+better products.
+In recent years, we have intensified our activities in the area of software, not only in
+strategic partnerships and our own software development, but also as a result of the
+acquisition of Cypress. The acquisition means that now, for the first time, we have an
+entire ecosystem comprising software components and a development environment
+as well as reference designs, product support, blogs, a developer community and
+online tutorials. A key element of this successful ecosystem is the ModusToolbox™M
+development environment. This includes reusable firmware, which makes it signifi-
+cantly easier for engineers to program Wi-Fi and Bluetooth components.
+Our own progress in the area of software is also becoming increasingly visible, bene-
+fiting our customers. We combine our software with our hardware expertise. The
+second generation of our successful automotive microcontroller family AURIX™ can,
+for example, be used for radar signal pre-processing in combination with our radar
+sensor ICs. We have implemented this digital pre-processing of data in hardware, as
+this is considerably more effective. However, we were only able to do this because
+we mastered and integrated the underlying algorithms.
+Quality leadership and technology leadership create
+added value for customers
+Customers choose Infineon because we stand for the highest levels of quality, for
+reliability and for technological leadership. The satisfaction of our customers attests
+to the fact that this rigorous approach to quality is a successful strategy. In the 2020
+fiscal year, Infineon was once again recognized by many leading manufacturers in the
+automotive industry. For the sixth year in a row, we achieved an impeccable quality
+record for our deliveries to Toyota's Hirose plant. As a result, the car manufacturer
+presented us for the third consecutive time with the Honor Quality Award, the plant's
+highest award for quality. Infineon is the first non-Japanese semiconductor company
+to achieve this.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Consolidated Financial Statements
+Business focus and strategy
+Group strategy
+Key aspects of the focus of our manufacturing landscape include not only innovative
+strength and delivery capability, but also quality and productivity. Leading manufac-
+turing technologies and process expertise in in-house manufacturing as well as
+outsourcing in areas with little differentiation. Our manufacturing strategy ensures
+growth, competitiveness and flexibility.
+4.5%
+5.8%
+Smart home
+"Smartification" is also finding its way into the home. While the primary issue in an
+industrial setting is increasing productivity, applications in a private setting are usually
+focused on convenience. Controlling devices remotely is not the only feature of a smart
+home. Various devices also work with the internet to provide greater convenience,
+better energy efficiency and a higher level of security. The Infineon portfolio of micro-
+controllers, sensors, power semiconductors, connectivity solutions and security
+controllers offers the right solutions for a connected home.
+Mobile communication infrastructure
+18°
+180€
+Potential applications are increasing significantly as a result of the advent of the new
+mobile phone standard 5G. The network providers are expanding their infrastructure
+so that they are prepared for the increase in data volume and so that they can offer
+their customers good network coverage, high data transmission rates and short latency
+periods. The migration of network architecture to smaller and more numerous cell
+sites enables, among other things, the use of higher frequency ranges and better
+exploitation of available frequency spectrum. Our radio-frequency components are
+used both for communication between mobile devices and the base station and for
+wireless backhaul from local networks to the core network.
+The field of robotics has been attracting attention for some years. In addition to the
+continuing development of conventional industrial robots, more and more areas of
+industry are using collaborative robots (cobots). Cobots work together with humans
+in the manufacturing process and are no longer separated from their human colleagues
+by protective equipment as the typical industrial robot is. They are therefore required
+to meet high standards of safety and reliability given that they have to be able to
+perceive their surroundings well enough to work effectively together with humans
+without endangering them. Cobots will be able to relieve and support humans
+performing hard and dangerous tasks. In the long term, cobots will support elderly
+people in living more independent lives, helping to master the challenge of an aging
+population. As cobots develop, the trend will be towards intuitive robot programming
+and self-learning robots. Infineon offers not only the necessary sensors, micro-
+controllers, connectivity solutions and power semiconductors, but also provides
+numerous start-ups in this market with know-how in the area of motor control,
+sensor systems and security.
+Infineon Technologies | Annual Report 2020
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 33 >
+Management Board and
+Collaborative robots
+Q = < 32 >
+Further information
+Security solutions
+Sense Sensors
+Compute Microcontrollers, Memories
+Actuate Power semiconductors
+Connectivity Wi-Fi, BT, BLE, USB/USB-C
+Infineon Technologies | Annual Report 2020
+Information and data
+about the real world
+Connectivity
+Value addition and
+optimized use of resources
+001010010010
+1010100101001
+101001 Digital world
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Group strategy
+5.5%
+In recent years, we have established a stable foundation for success in our target
+markets. Our strategy is to further strengthen our core business and to tap into new
+growth markets. We have built and systematically expanded the technical expertise
+required over many years. Since good ideas do not turn into innovations until they
+are successful in the market, we have also developed the right concepts for imple-
+menting our value-creation strategy.
+Within these strategic guidelines, the acquisition of Cypress is enabling us to grow
+faster than we would organically. Our primary objective is to broaden our scope. By
+combining complementary product portfolios, we are strengthening and expanding
+our core business and can service an even wider range of applications. Thus, we can
+differentiate ourselves more from our competitors and increase our growth potential.
+Cypress has an extensive portfolio of microcontrollers, as well as software and connec-
+tivity solutions. By combining these with our power semiconductors, sensors and
+security solutions, we can offer our customers comprehensive system solutions with
+better performance and ensure a faster time to market.
+Business focus and strategy
+Group strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 34 >
+Our core business includes all those areas in which we have a full understanding
+of the applications or where we master the underlying technologies and in which we
+can therefore offer an extensive differentiating product portfolio. In our core business,
+we want at least to grow with the market and thereby maintain or even strengthen
+our leading positions ("grow in scale”). One example is our power semiconductors,
+which are used in the generation, transmission, storage and use of electric power.
+We understand how these systems are used to convert and control electric power
+and we supply particularly compact and energy-efficient MOSFETs and IGBTs for this
+purpose. As the undisputed global market leader in this area, our broad technology
+and product portfolio lets us actively shape the transition of certain applications
+to new semiconductor materials such as SiC and GaN, offering our customers the
+optimal solution and showing them new ways of being successful. Our high-volume
+manufacturing means that we can achieve economies of scale and enables us to
+provide manufacturing capacity for individual customer projects and to grow together
+with our customers. Il C06
+Management Board and
+Supervisory Board
+The greatest growth potential is to be found in markets that are adjacent to our
+core business which we have not yet addressed at all or which we have only partly
+been active in. We can, for example, adapt existing technologies and products for
+additional applications at a reasonable effort and thus increase potential sales. In the
+Infineon
+ON Semiconductor
+STMicroelectronics
+Mitsubishi
+Toshiba
+8.4%
+C06 Worldwide discrete power semiconductors and modules market share 2019
+grow in scope
+Innovation drives differentiation
+New
+Thinking and acting long term not only extends to our direct business. In addition to
+a greater understanding of our customers' systems, the optimization of our products
+and solutions, and achieving an adequate return in line with our objectives, it is also
+crucial that we incorporate sustainability into the management of our business and
+engage responsibly with society. Making life greener is part of our mission. Therefore,
+this year we have set ourselves the target of becoming carbon-neutral by 2030.
+Strategic guideline: Strengthening our core business
+and tapping into new growth markets
+With our strategic focus on the megatrends referred to above, we are ensuring long-
+term growth for Infineon, p. 23 ff. We concentrate on markets with strong structural
+growth. The way we act in the individual markets depends on our competitive position,
+which we analyze in terms of technologies, products and application understanding.
+Here we look at three categories: firstly, our core business, secondly adjacent, com-
+plementary business, and thirdly new options both in terms of products and applica-
+tions as well as in terms of markets.
+C05 Strategic growth model
+Markets
+Applications
+Products/
+Technologies
+grow in scale
+Core
+Adjacent
+Enable
+Drive
+Enable
+Drive
+At the heart of our implementation is our strategic "Product to System” approach,
+through which we focus our entire value chain on achieving success for the customer.
+This approach is supported by other elements: a broad-based culture of innovation,
+constant pursuit of technology leadership, a high level of quality awareness, in-house
+production that differentiates us from our competitors and a sales strategy tailored
+to the various markets. We are therefore able to offer our customers leading products
+with the highest quality and delivery reliability, enabling us to achieve profitable
+growth and to grow faster than the market. All this promotes our goal of achieving and
+securing a leading position in the markets and applications we are active in, while at
+the same time successfully addressing issues relating to the future.
+Infineon Technologies | Annual Report 2020
+NXP
+50 2020 fiscal year
+Our 2020 fiscal year
+96 Group performance
+96 Review of results of operations
+101 Review of financial condition
+103 Review of liquidity
+107 Report on outlook, risk and opportunity
+123
+124
+107 Outlook
+110 Risk and opportunity report
+Infineon Technologies | Annual Report 2020
+Source: Based on or includes content supplied by Omdia: OEM Semiconductor Spend Tracker - World + Regions - H1 2020. July 2020.
+Hitachi
+NEC
+Denso
+Vivo
+Overall statement on Infineon's financial condition
+Infineon Technologies AG
+Samsung
+Lenovo
+Dell
+Xiaomi
+hp
+Cisco
+93 The Infineon share
+LG
+Panasonic
+Bosch
+Continental
+Alphabet
+Amazon
+Sony
+Oppo
+92 Sustainability at Infineon
+89 Internal management system
+88 Manufacturing sites
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+www.infineon.com/hrreport
+Further information
+www.infineon.com/csr_reporting
+People are the main focus of our activities, as dedicated, healthy, successful employees
+are key to maintaining and improving our market-leading position, thereby creating
+a successful future for us all.
+In addition to all the above-mentioned topics, the successful integration of Cypress
+remains a high priority. HR is playing a significant role in integrating more than
+6,000 employees worldwide - strategically, financially and culturally.
+Empower and coach your people,
+provide a framework for success and
+focus on result
+Team success is a priority:
+Our leadership model:
+Our people are the key
+for success
+Begin with the big picture
+and set motivating targets
+Further information, including detailed statistics, is available in the 2020 Sustainability
+Report and in the 2020 Human Resources Report.
+Apple
+Huawei
+Q = < 45 >
+Combined
+84 Manufacturing
+83 R&D sites
+76 Research and development
+65 Power & Sensor Systems
+70 Connected Secure Systems
+60 Industrial Power Control
+55 Automotive
+Infineon Technologies | Geschäftsbericht 2020
+53 The segments
+48 Review of the semiconductor industry
+46 Business model
+46 Business model and finances
+Our Group
+Report
+Management
+Q = < 49 >
+35 33 6.8 6.7 6.3 5.7 5.4 5.4 4.7 4.0 3.8 3.6 3.3 3.2 3.1
+11.8
+17.4
+Business model
+-0.65
+AVGO
+SIRI
+TSLA
+AMZN
+PRTO
+With 46,665 employees worldwide, Infineon is a leading global provider of semicon-
+ductors (source: Based on or includes research from Omdia: Annual 2001 - 2019
+Semiconductor Market Share Competitive Landscaping Tool – Q4 2019 v2. March 2020).
+Semiconductors connect the real world and the digital world: They enable intelligent
+mobility, efficient energy management and the secure collection and transmission
+of data.
++2.59
+0.02 +02
+CHK
+-1.01 -1.89%
+-0.23 -2.34%
+0.45 +0.45
+CTMX
+FTR
+CSCO
+AAPL
+60%
+Infineon designs, develops, manufactures and markets a large number of semicon-
+ductor and system solutions, focusing on automotive, industrial and consumer
+electronics as well as on radio-frequency applications, mobile devices and hardware-
+based security. Its products range from standard components to customer-specific
+solutions for components and systems, all the way to special components for digital,
+analog and mixed-signal applications.
+Management Board and
+Supervisory Board
+Infineon
+USB Controller
+Automotive
+Microcontroller
+Business Unit
+"Memory Products"
+EMBEDDED IN TOMORROW"
+Business Unit "Microcontroller and Connectivity"
+Infineon Technologies | Annual Report 2020
+CYPRESS
+On 16 April 2020, Infineon acquired Cypress Semiconductor Corporation (Cypress)
+based in San José, California (USA) for €8,254 million. Cypress is an US-american
+semiconductor company. In the 2019 fiscal year (year ended 30 December 2019),
+Cypress generated revenue of US$2,205 million. At the end of the 2019 fiscal year,
+Cypress had 5,871 employees. As a result of the acquisition, Infineon's product
+spectrum was expanded to include an additional differentiated portfolio of micro-
+controllers, memory products, software and connectivity solutions. The various
+product lines were integrated into Infineon's segments as follows:
+Q = < 47 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model and finances
+Business model
+Business focus and strategy
+C10 Allocation of Cypress business units into the segments of Infineon
+Leadership starts with leading yourself
+and acting as a role model
+85%
+< 46 >
+In September 2020, US graphics processor manufacturer nVidia announced that
+it was to acquire microprocessor core chip designer Arm from the Japanese group
+Softbank for around US$40 billion. Completion of the transaction is expected
+to take place at the end of the 2021 calendar year. nVidia is not a competitor of
+Infineon. Infineon is a licensee of Arm.
+In October 2020, US server processor and graphics processor manufacturer AMD
+announced that it was to acquire US manufacturer of programmable logic chips
+Xilinx in an all-stock transaction for around US$35 billion. Completion of the trans-
+action is expected to take place at the end of the 2021 calendar year. Neither of the
+two companies is a competitor of Infineon.
+In October 2020 Intel and SK Hynix have announced that SK Hynix will acquire
+Intel's NAND memory business for US$9 billion. This transaction has no effect on
+Infineon.
+In terms of purchasing volume, the 20 largest semiconductor buyers accounted for
+US$189 billion, equivalent to a share of 44.1 percent (2018: US$209 billion with a
+share of 43.1 percent). For most companies, the purchasing volume fell in 2019, but
+Chinese company Huawei bucked the trend and purchased significantly more.
+Consequently, Huawei replaced Samsung from position 2 in the ranking. Despite the
+substantial reduction in vehicle production in the 2019 calendar year, Continental
+remained in 13th position and Bosch remained in 12th position. In contrast, there was
+no decline in investment from data centers. This is reflected in the purchasing vol-
+umes of data center operators Alphabet and Amazon, which stayed the same or
+increased. Alphabet rose from 18th position to 14th, while Amazon rose from 19th
+to 15th place. C13
+The 20 largest semiconductor companies accounted for 73.1 percent of global
+semiconductor revenue in the 2019 calendar year (2018: 75.1 percent). The remaining
+26.9 percent (2018: 24.9 percent) was spread over more than 1,500 other semicon-
+ductor companies. The semiconductor industry is therefore highly fragmented. The
+consolidation process is more or less advanced, depending on the product category.
+C12 Global semiconductor sales 2019 by region (total market size US$428 billion)
+the transaction is expected at the end of the 2021 calendar year. Infineon is only in
+competition with the two companies in a few product categories.
+10% Europe, Middle East, Africa
+22% Asia-Pacific (excluding China, excluding Japan)
+7% Japan
+11% Americas
+Source: Based on or includes content supplied by Omdia: Application Market Forecast Tool. September 2020.
+China has played the dominant role for years in terms of regional semiconductor
+sales. In the 2019 calendar year, China increased its share of the global semiconductor
+market still further to 50 percent, compared with 48 percent in 2018 and 47 percent
+in the 2017 calendar year. In China, contract manufacturers known as EMS (Electronic
+Manufacturing Services) play a special role. These companies assemble electronic
+products predominantly for Western customers. This business model applies particu-
+larly to consumer durables and to IT and telecommunications products such as servers,
+PCs, laptops, tablets and mobile telephones. Most of the semiconductors delivered
+to and mounted in China are re-exported as part of a finished product. C12
+C13 Top 20 semiconductor consumer in 2019 calendar year
+Purchasing volume in billion US$
+37.0
+21.3 20.9
+● 50% China
+Business model
+and finances
+Combined Management Report
+Business model and finances
+Review of the semiconductor industry
+Management Board and
+Supervisory Board
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model and finances
+Business model
+Business focus and strategy
+Management Board and
+Supervisory Board
+Business focus and strategy
+As a result of the acquisition of Cypress, we have not only substantially expanded our product portfolio and the number of applications we address, but also significantly broadened
+our competence and know-how. As a result, the name of the segment was changed with effect from 1 August 2020 from "Digital Security Solutions" to "Connected Secure Systems".
+The Combined Management Report contains forward-looking statements about the business, financial condition and earnings performance of Infineon. These statements
+are based on assumptions and projections based on currently available information and present estimates. They are subject to a multitude of uncertainties and risks.
+Actual business development may therefore differ materially from what has been expected. Beyond disclosure requirements stipulated by law, Infineon does not undertake
+any obligation to update forward-looking statements.
+This report combines the Group Management Report of Infineon ("Infineon" or "Group") - comprising Infineon Technologies AG (hereafter also referred to as "the Company")
+and its consolidated subsidiaries - and the Management Report of Infineon Technologies AG.
+130 Statement on Corporate Governance pursuant
+to section 289f, 315d of the German Commercial
+Code (HGB)/Corporate Governance Report
+130 Compensation report
+of the German Commercial Code (HGB)
+126 Information pursuant to section 289a, paragraph 1,
+and section 315a, paragraph 1,
+126 Corporate Governance
+With effect from 1 April 2020, the name of the segment changed from "Power Management & Multimarket" to "Power & Sensor Systems". The name change had no impact on
+our organizational structure or strategy, or on the scope of our business.
+1000
+Infineon
+Leadership
+Principles
+المند.
+Review of the semiconductor industry
+Q = < 48 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model and finances
+Review of the semiconductor industry
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Our manufacturing landscape covers both phases of semiconductor manufacturing:
+frontend and backend. In frontend manufacturing, the Si disks, also known as wafers,
+are processed. Optical, physical and chemical methods are used to implement
+transistors and their connections with each other, thus determining the function of
+the chip. The wafers are dispatched from the frontend site to a backend site, where
+the remaining processing steps take place in backend manufacturing. These steps
+include sawing the wafer into individual chips, testing and packaging. Finally, the
+chips are dispatched to the distribution centers. At the end of the 2020 fiscal year,
+Infineon operated eight frontend sites and 14 backend sites.
+Infineon divides its activities into four segments, each of which derive their strategic
+focus from the Group strategy. All the Group's activities relate to one of the higher-
+level growth drivers - energy efficiency, mobility, security and loT & big data. The
+segments are each responsible for particular areas that reflect their core competencies.
+The Automotive segment is responsible for the semiconductor business for automotive
+electronics and for activities with memory products. The Industrial Power Control
+segment concentrates on power semiconductors primarily used in industrial applica-
+tions, while the Power & Sensor Systems segment addresses more consumer-oriented
+applications and power supplies in general. In addition, activities in the area of
+radio frequency and sensor-based applications (including the recording of sensor
+data and interaction with machines and devices) fall within the sphere of respon-
+sibility of the Power & Sensor Systems segment. Activities relating to traditional
+and new security applications, microcontrollers for non-automotive electronic
+applications and connectivity solutions are bundled in the Connected Secure
+Systems segment.
+Connected
+Secure Systems
+Industry Microcontroller,
+Connectivity Solutions
+Systems
+Power & Sensor
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Infineon
+NXP
+Renesas
+C08 Worldwide microcontroller market share 2019
+With the acquisition, we are further strengthening our market position. We have
+become the eighth largest semiconductor manufacturer. A leading market position
+is the prerequisite for profitability and innovation and thus for continuing growth.
+In the area of microcontrollers, we are now the third largest vendor (cos), while we
+are the market leader for semiconductors in automotive applications with a market
+share of 13.4 percent (see the chapter "The segments”, □ p. 58). Given the increasing
+importance of driver assistance systems and new electronic architectures in particular,
+our expanded portfolio of microcontrollers and NOR flash memory ICs, which are
+used as program memory, offers great potential. Other areas of application are in the
+field of infotainment. We can offer products for new applications such as digital display
+systems, human-machine interaction and connectivity solutions for home entertain-
+ment. These are areas that will grow very fast over the next few years.
+With the combination of the two companies, the market we can address has expanded.
+We are accelerating our growth in markets adjacent to our core business and we are
+advancing into new areas of application. One example of this is household appliances.
+Traditionally, Infineon has produced semiconductors for this market to drive motors.
+Innovative new products can connect to the internet to enable intelligent energy
+management. Here, the product portfolios of Infineon and Cypress complement each
+other perfectly, as demonstrated by two examples. The first is that IGBTs and driver
+ICs from Infineon and microcontrollers from Cypress can be used to control motors.
+The second is where MEMS microphones from Infineon are used for the voice control,
+for instance, of smart speakers, while microcontrollers and connectivity from Cypress
+are used for the connection to the internet.
+Review of the semiconductor industry in the 2020 fiscal year (in euros)
+Global semiconductor revenue in the 2020 fiscal year was €383.194 billion (source:
+WSTS, (World Semiconductor Trade Statistics): Semiconductor Industry Blue Book
+History. 27 October 2020). This is an increase of 3.3 percent compared with the figure
+for the previous fiscal year of €371.030 billion. Semiconductor revenue therefore
+proved very resilient, despite the coronavirus pandemic and the resulting economic
+decline. Demand for microprocessors saw a particularly positive trend. Following
+the sharp decline in revenue in the 2019 calendar year, revenue from memory chips
+(mainly from DRAM and flash memory products) also increased somewhat faster
+than the market relevant for Infineon excluding DRAM and NAND flash memory chips
+and microprocessors, which improved by 2 percent in the previous fiscal year.
+Infineon's revenue in the previous fiscal year rose by 7 percent, taking into account
+the acquisition of Cypress. Without consideration of Cypress, the revenue would
+have declined by 4 percent.
+Over the years, Cypress has established an efficient ecosystem of software compo-
+nents, a development environment, reference designs and a broad-based marketing
+structure, which we are now broadening further with Infineon's products and
+solutions. Ecosystems have a strong networking effect and through them, we learn
+to understand our customers better. As a result, we better understand their needs,
+recognize trends and can continue to develop our products and services on this basis.
+The complementary nature of our product ranges means that we can differentiate
+ourselves even more strongly from the competition in our core applications with our
+strategic "Product to System" approach and we can thus service adjacent business
+areas. The advantage of our system solutions to the customer is that the relevant
+parts come from a single source. They are compatible with each other and rounded
+off with software solutions. For our customers, this means shorter product develop-
+ment times and a good cost-benefit ratio for their products.
+The acquisition of Cypress is a major groundbreaking step in Infineon's strategic
+approach. Our focus on structural growth drivers is strengthened and the base of
+our business model widened. By combining complementary product portfolios,
+we can offer our customers comprehensive solutions to connect the real world with
+the digital world, thus tapping into new growth markets. Cypress has an extensive
+portfolio of microcontrollers, memories, connectivity solutions and software.
+When these are combined with our power semiconductors, sensors and security
+solutions, we are able to offer our customers even more extensive and forward-
+looking system solutions in the areas of automotive, industrial, communication
+and IoT applications.
+Strategic development and ensuring long-term growth potential -
+acquisition of Cypress
+Q = < 40 >
+Further information
+Consolidated Financial Statements
+Progress in microelectronics and the increasing networking of devices are driving
+the rapid growth of the lot. This market differs radically from the markets in which
+Infineon grew historically, due to its high level of fragmentation of customers and
+solutions. The challenge is to be able to offer this wide-ranging clientele the service
+it expects and to do so with an effective capital outlay. The new way to acquire
+customers is digitally, with a global support structure.
+Review of the semiconductor industry in the
+2019 calendar year (in US dollars)
+In the 2019 calendar year, global semiconductor revenue was US$428.397 billion.
+Compared with the figure for 2018, of US$485.052 billion, this was a decrease of
+11.7 percent (source: Omdia: Annual Competitive Landscaping Market Share Tool,
+Q2 2020. August 2020). The decrease in revenue was mainly the result of significantly
+lower revenue in the area of memory chips, especially DRAM and NAND flash,
+markets in which Infineon is not active. The DRAM market saw a decline in revenue
+of 37.2 percent and the NAND flash market a decline of 24.6 percent, whereas
+semiconductor revenue in the NOR flash market, a product category we serve as
+a result of our acquisition of Cypress, fell by only 7.1 percent.
+As a consequence of the sharp decline in revenue from DRAM and NAND flash memory
+chips, Intel replaced Samsung as leader in the list of the biggest semiconductor
+companies again in the 2019 calendar year. Intel's revenue increased by 1.3 percent
+from US$69.895 billion to US$70.785 billion. Its share of the total market was
+16.5 percent. At Samsung, on the other hand, revenue fell by 29.7 percent,
+nVidia
+Kioxia
+Sony
+MediaTek
+HiSilicon
+Renesas
+Infineon
+STMicroelectronics
+AMD
+Analog Devices
+Apple
+Source: Based on or includes content supplied by Omdia: Annual Competitive Landscaping Market Share Tool, Q2 2020. August 2020.
+Foundries and subcontractors are not included in this market research.
+In July 2020, Analog Devices, an American company specializing in analog and mixed
+signal components, announced its acquisition of American competitor Maxim Integrated
+by way of a share exchange agreement for around US$21 billion. The completion of
+Consolidated Financial Statements
+Further information
+Western Digital
+Microchip
+5% market share
+Qualcomm
+Infineon Technologies | Annual Report 2020
+from US$74.644 billion to US$52.511 billion. This represents a market share of
+12.3 percent. The order of the companies ranked 3 to 7 remained unchanged:
+SK Hynix, Micron Technology, Broadcom, Qualcomm and Texas Instruments.
+For Infineon, the revenue figure calculated by Omdia for the 2019 calendar year
+was US$8.891 billion. As a result of the contribution to revenue made by Cypress
+(US$2.164 billion), aggregated revenue was US$11.055 billion. This means that
+Infineon rose from 11th place in the 2018 calendar year to 8th place in 2019. Of
+the 20 largest semiconductor companies, the following are direct competitors
+of Infineon: Samsung (only in security ICs; the revenue from those accounts for
+about 1 percent of Samsung's revenue), Texas Instruments, STMicroelectronics,
+NXP, Renesas and Analog Devices. Apple was included for the first time in the top 20
+semiconductor manufacturers, replacing ON Semiconductor, a direct competitor
+of Infineon. Due to the acquisition of Cypress and its connectivity business, Broad-
+com and Qualcomm are now also Infineon's competitors.
+C11 Top 20 semiconductor manufacturers for 2019 calendar year
+Revenue in billion US$
+Intel
+70.8
+Texas Instruments
+52.5
+10% market share
+■ 95 8.7 8.7 8.7 8.0 8.0 6.8 6.4 6.4 5.8 5.4
+Samsung
+SK Hynix
+Micron
+Broadcom
+22.9 19.9 17.9-14.4-14.1-11.1 9.6
+Automotive
+STMicroelectronics
+17.6%
+The coronavirus pandemic has necessitated swift but well-considered action in
+the field of HR. The health of our employees takes the highest priority. At the same
+time, however, we need to ensure business continuity. With this mind, wide-ranging
+flexibility concepts already in place at Infineon are being put to good use and will
+continue to be developed with a view to tackling the challenges that are likely to
+arise in the "new normal” after the pandemic. The digitalized solutions we have
+introduced over the past few years are helping us to take the next steps forward,
+together with our employees.
+Our Human Resources strategy makes a decisive contribution to ensuring Infineon's
+ability to achieve its growth and profitability targets and successfully navigate through
+varying economic phases and challenges. We also see it as our responsibility to
+contribute to solve the major challenges currently facing society. During the previous
+fiscal year, Infineon continued to evolutionary develop and roll out its HR strategy
+on a worldwide basis. Accordingly, our HR understanding is "People create value.
+HR fosters people engagement”. Our overriding objective is to foster our employees'
+engagement and to take the necessary measures to achieve this. When employees
+are enthusiastic about their job and possess the required skillsets and opportunities
+for further development, they not only display higher levels of work performance,
+creativity, productivity and innovation, it also enhances their personal sense of
+achievement.
+Human Resources strategy
+Further refinancing steps will relate to the term loans, which were deliberately
+raised in US dollars as part of the acquisition financing, as Cypress is a US company
+with US dollars as its functional currency and will be included in the Group statement
+of financial position of Infineon. In September 2020, Infineon repaid a portion
+(US$555 million) of the term loans due 2022 early.
+Further to the refinancing steps taken in the 2019 fiscal year (with the capital increase
+in June and the issue of a €1.2 billion hybrid bond in two tranches in October) and
+within two months of the completion of the acquisition, we completed further key
+refinancing measures. First was a capital increase of a bit more than €1.0 billion in
+May 2020 by way of an accelerated bookbuilding process. The entire planned equity
+portion of the refinancing of the Cypress acquisition was thus completed. In June
+2020, Infineon issued corporate bonds with a volume of €2.9 billion under its newly
+established EMTN program (European Medium Term Notes). The bonds were issued
+in four tranches with maturities of three, six, nine and twelve years at attractive
+financing conditions. As a result, the bridge facility of the acquisition financing could
+be fully repaid and the maturity profile was improved significantly.
+The upper limit on our gross financial debt is two times Earnings Before Interest,
+Tax, Depreciation and Amortization (EBITDA). As a result of the acquisition of Cypress,
+we exceeded our gross debt target, but only to the extent that this was compatible
+with retaining our investment grade rating. Infineon's medium-term target after the
+acquisition is to de-lever to or below the target upper limit.
+In order to remain innovative, competitive and successful going forward, Infineon is
+in constant search of the most highly talented individuals. This is a challenge in itself,
+as talented people in the STEM fields (science, technology, engineering and mathe-
+matics) are in great demand on the labor market. One of Infineon's great advantages
+is its positive brand and employer image, which helps us in our efforts to recruit
+and retain talents. The fact that we manufacture future-oriented products and create
+value for society makes our company highly attractive to potential employees.
+Group strategy | Human Resources strategy
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Q = < 43 >
+Infineon's capital structure targets consist of a gross cash target and a gross debt target.
+Our gross cash target is €1 billion plus at least 10 percent of revenue. The fixed base
+amount of €1 billion provides a solid liquidity reserve for contingent liabilities and
+pension liabilities, unrelated to revenue. The additional amount of at least 10 percent
+of revenue means that we always have access to sufficient cash to be able to finance
+our operating business and investments throughout all phases of the semiconductor
+cycle. We have retained the cash target after the acquisition of Cypress and took it
+into account when we devised the financing structure.
+Infineon Technologies | Annual Report 2020
+Business focus and strategy
+Human Resources strategy
+Create a framework of action for
+success to achieve results
+Integrity, trust and
+consistency are the
+basis for your actions
+Take ownership
+others to do so, too
+Desire to grow and motivate
+C09 Infineon Leadership Principles
+Management Board and
+Supervisory Board
+Ease of use, efficiency and a pro-active approach to development are key points of
+focus in ongoing HR services and support work. The expectations of the younger
+generation differ significantly from those of previous generations and present us with
+new challenges. The digital transformation of HR at Infineon has enabled us to take
+a decisive step towards meeting these expectations. During the 2020 fiscal year, we
+successfully completed a project involving the comprehensive global transformation
+of HR. It included for example a continuous, flexible target management, succession
+planning for key positions, offering of a basic range of opportunities to acquire new
+skills in the context of digitalization, and a globally harmonized, simplified salary
+planning process. We are deploying these innovative, user-oriented processes and
+tools with the aim of encouraging our employees to take responsibility for their own
+personal development. At the same time, in their capacity as coaches and supporters
+of their employees, our managers are continuously guided by the leadership principles
+rolled out during the 2019 fiscal year.
+To strengthen a positive employee experience and the resulting high level of engage-
+ment, it is also important to continuously develop employees and managers. We
+have geared our learning methods towards digitalization and offer the right formats
+for the relevant content. We provide our employees with a wide range of high-quality
+training courses in various languages, many of which are virtual and can be accessed
+from anywhere and at any time.
+< 44 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+We also define ourselves through a motivating working environment and in the way
+we cooperate with each other, embracing a distinctive feedback culture, actively
+practiced leadership principles and worldwide interaction with colleagues from over
+100 nations. We are proud of this diversity and will continue to cultivate it with the aim
+of taking in additional dimensions of diversity going forward. We see diversity as the
+natural participation of everyone concerned and a key factor for our enduring success.
+The perception that skills and behavior complement each other is an essential part
+of our recruitment and organizational development strategy. Our interim target of
+having 15 percent women in leadership positions, which we set for the 2020 fiscal
+year, has already been accomplished one year earlier than planned. Ensuring we
+achieve continual progress in this respect will remain a key focus of our HR work.
+Regularly conducted pulse checks of our employees worldwide enable us to keep our
+finger on the pulse of their needs and introduce the necessary measures as required.
+18.1%
+The long-term stability of Infineon is of great importance from a variety of perspectives.
+It is important to our customers that we remain a trusted partner and reliable sup-
+plier for many years to come. Our debt providers need to be certain that we can repay
+principal and interest over a long period of time, while our shareholders want to
+achieve an attractive return over the long term. As an employer, we want to offer also
+our employees this kind of long-term reliability, even well beyond their working lives
+through retirement benefits. We therefore attach great importance to solid credit-
+worthiness. An investment grade rating is and remains a key element of Infineon's
+conservative financial policy. From our desire to maintain this rating, we derive our
+medium-term and long-term capital structure targets, even after the transformative
+acquisition of Cypress. Following the transaction, the rating agency S&P Global
+Ratings (S&P) lowered Infineon's rating by one notch to its current level of BBB- with
+a stable outlook, still representing an investment grade rating.
+Our planning is geared towards providing the necessary manufacturing capacity
+for our expected growth. In the area of power semiconductors, one of the factors
+differentiating Infineon from the competition is that we manufacture our own products.
+To generate growth in this field, we are planning to expand our 300-millimeter pro-
+duction. In the area of microcontrollers, connectivity components, security ICs and
+memory ICs from the Infineon and Cypress portfolios, we will continue to work
+together in the future primarily with our manufacturing partners. Together, we can now
+set our investment rate target at 13 percent of revenue over the cycle. In addition to
+this, we will be making investments we have previously announced in manufacturing
+and research facilities and office buildings, including the new 300-millimeter manu-
+facturing facility on the Villach site in Austria.
+To be successful in the long term, economic success must go hand in hand with
+environmental and social commitment. Our "making more from less" approach has
+shaped our actions for a long time. A key factor in arriving at greater sustainability
+and solving climate challenges is technologies that achieve more with fewer resources
+and save emissions at the same time. By fully adopting this approach, also in our
+manufacturing, Infineon excluding Cypress has consumed 31 percent less water and
+53 percent less electricity and produced 66 percent less waste in its frontend factories
+than the global average of semiconductor companies organized in the World Semi-
+conductor Council. We work constantly on avoiding direct emissions and on continuing
+to reduce the energy requirements of our facilities and processes.
+Sustainable growth: Optimized manufacturing processes, efficient
+products and binding carbon emissions targets
+The strategy we have described is also reflected in the financial attractiveness. We
+anticipate the Cypress transaction will already start to be accretive to the adjusted
+earnings per share from the 2021 fiscal year onwards. Contributing to this, first of all,
+will be expected cost synergies of around €180 million per year, which should be
+generated until the middle of the 2023 fiscal year. More significant in terms of value
+creation, however, will be revenue synergies resulting from our strategic "Product to
+System" approach. From fiscal 2028 onwards, we estimate that these will amount to
+more than €1.5 billion per year. The revenue synergies will have built up continuously
+up to this point. As Cypress is less capital-intensive due to its higher proportion of
+external manufacturing, there will also be an improvement in free cash flow generation.
+Q = < 41 >
+Further information
+Consolidated Financial Statements
+Through good resource management, our products and solutions make an active
+contribution to climate protection. During their service life, they contribute to savings
+of around 56 million tons of CO2 equivalents (excluding Cypress). We know, however,
+that we can do even more. This is why, this year for the first time, we have set binding
+CO2 reduction targets for our company. We aim to become carbon-neutral by 2030.
+This target relates to Infineon's own footprint for greenhouse gases and includes not
+only direct emissions, but also indirect emissions from electricity and heat.
+Combined Management Report
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Source: Based on or includes content supplied by Omdia: Annual 2001 - 2019 Semiconductor Market Share Competitive Landscaping Tool -
+Q4 2019 v2. March 2020.
+12.0%
+12.4%
+16.0%
+Business focus and strategy
+Group strategy
+Capital structure targets demonstrate
+our long-term reliability
+Long-term financial targets underline our
+In the coming years, structural trends will drive our growth, in particular electro-
+mobility, automated driving, renewable energy, manufacturing automation, mobile
+phone standard 5G, data centers, loT and a steadily increasing number of battery-
+powered devices. Thanks to our leading technologies, our understanding of applica-
+tions and systems, and our differentiating expertise in manufacturing, we have
+achieved an outstanding position in these markets. We want to take advantage of the
+resulting opportunities and continue to outgrow the respective markets, increasing
+our profitability step by step. We make consistent investments for this purpose. Our
+long-term financial targets reflect this aspiration. They apply through the cycle and
+are based on a stable macroeconomic environment.
+Target 3: Investments amounting to 13 percent of revenue
+over the cycle
+The integration of Cypress and the related cost synergies will sustainably improve our
+profitability. We are setting ourselves the target of achieving a Segment Result Margin
+of 19 percent over the cycle.
+of scale and the cost advantages from the increasing share of 300-millimeter wafers in
+our total manufacturing volume, and also on a disproportionately lower increase in
+functional costs. Last but not least, technology leadership and our strategic "Product
+to System" approach also enable us to maintain a higher degree of differentiation.
+Q = < 42 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Target 2: 19 percent Segment Result Margin over the cycle
+Growth is only one prerequisite for sustainable success. Another criterion is profit-
+ability. When we work profitably on a sustainable basis, it means that our development
+focus is on designs, which will be of the greatest use to our customers, who in turn
+will adequately honor them. Even in difficult market phases, we want to continue to
+drive our development tasks at the same pace. Here, we are relying on economies
+We hold leading positions in our core markets and have expanded systematically over
+the years into adjacent markets. Our four segments focus on the megatrends referred
+to above. Our strategic "Product to System" approach is gaining even greater impetus
+due to our integration of Cypress' product portfolio. As a result, we can use our exten-
+sive technological and product expertise to develop better solutions and thus create
+significant added value for our customers. We expect to achieve revenue growth in
+the future of more than 9 percent (9%+) over the cycle.
+9 percent over the cycle
+Target 1: Average annual revenue growth of more than
+growth ambitions
+Industrial
+Power Control
+13.4%
+Selepa
+8.7%
+Revenue
+404
+3,542
+3,503
+€ in millions
+C20 Revenue and Segment Result of the Automotive segment
+Our system understanding, commitment to quality, and excellent support add value
+to our customers and help grow their business. Thus, in August 2020, Japanese car
+automotive supplier Denso presented Infineon with two awards. The first was a prize
+for top-quality products that advance automotive innovation and the mobility of the
+future. The second award was received by Infineon in America for being Business
+Partner of the Year, delivering exceptional quality, performance, design support and
+partnership activities in that region.
+We want to benefit even more strongly from the growth in electro-mobility in the
+future. In the previous year, we expanded our product range for electric vehicles to
+include for example a new sensing and balancing IC for battery management systems.
+This IC can be used not only in high-voltage battery systems in plug-in hybrid and
+pure electric vehicles, but also in 48-volt battery systems in mild-hybrid vehicles.
+number of plug-in hybrid and pure electric vehicles sold there increased significantly.
+Therefore, in the first nine months of 2020, these types of vehicles comprised around
+7 percent of all registered vehicles. This represents more than double the number of
+such vehicles registered in the prior-year period. The picture was different for electric
+vehicles in China. There, following reductions in promotional measures from July 2019,
+there was a substantial decline in production. This continued during the beginning
+of the 2020 fiscal year. The market for electric vehicles in China recovered only in
+the second half of the 2020 fiscal year. As a result of these developments, Europe was
+gaining in importance. This trend is likely to continue in the 2021 calendar year due
+to the EU's 95 gram CO2 per kilometer emissions regulation.
+Car production has seen the worst slump in its history in the 2020 calendar year. Global
+vehicle production fell by around 20 percent compared with the prior-year period
+(source: IHS Markit). However, this decline was compensated by a higher demand for
+semiconductors due to the trend towards driver assistance systems, increasing electri-
+fication and more comfort features. This was reflected in the increase in the average
+value of the semiconductor content per vehicle from US$417 in the 2019 calendar year
+to US$457 in the 2020 calendar year, C02 on ☐ p. 28. Despite the significant decrease
+in global vehicle production, our revenue from 77 gigahertz radar sensor ICs, for exam-
+ple, remained stable. This underlines the fact that more vehicles are being fitted with
+driver assistance systems (in this case, emergency brake assistants and distance control).
+Initially, the production of electric vehicles was affected by the decline in vehicle
+production in general. However, in the middle of the year, this trend reversed. Due to
+purchase incentive schemes in many European countries, which came into force
+towards the middle of the year and which particularly promote electric vehicles, the
+155
+Even at the beginning of the fiscal year, available manufacturing capacity was not
+being fully utilized. The slump in revenue caused by the coronavirus pandemic in the
+second half of the fiscal year exacerbated the situation, resulting in significant idle
+costs, which had a negative impact on the Segment Result. The business activities of
+Cypress made a positive contribution to the Segment Result.
+In the Automotive segment, Infineon generated revenue in the 2020 fiscal year of
+€3,542 million (including the contribution to revenue made by Cypress from 16 April
+2020 onwards), an increase of 1.1 percent compared with the figure for the previous
+fiscal year of €3,503 million. The segment contributed 41 percent of Infineon's
+Group revenue.
+in the 2020 fiscal year
+Review of the Automotive segment
+Q = < 59 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+In the 2020 fiscal year, the Segment Result was €155 million, a decrease of 61.6 per-
+cent compared with the Segment Result for the previous fiscal year of €404 million.
+Based on revenue, the Segment Result Margin was 4.4 percent (previous year:
+11.5 percent). C20
+Segment Result
+2019
+2020
+8.1%
+7.6%
+Source: Strategy Analytics: Automotive Semiconductor Vendor Market Shares. April 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+C19 Market share of Infineon for automotive semiconductors by region in 2019
+Position
+#1
+#3
+#3
+#1
+#1
+#1
+16.5%
+15.8%
+13.4%
+13.8%
+11.7%
+10.6%
+World
+North America
+Europe
+China
+Source: Strategy Analytics: Automotive Semiconductor Vendor Market Shares. April 2020.
+Infineon Technologies | Annual Report 2020
+11.3%
+Consolidated Financial Statements
+Japan
+› Revenue increased due to contribution from Cypress
+> Dividend of 22 cents per share planned
+Further information
+Q = < 55 >
+Automotive
+The Automotive segment shapes the future of
+mobility with products and solutions to make cars
+clean, safe and smart. We cover all application
+areas in the vehicle: powertrain and energy manage-
+ment, connectivity and infotainment, body and
+comfort electronics, safety and security. Our range
+of products and solutions helps navigating the
+transition from internal combustion engines to
+hybrid or electric drives, as well as enabling an
+ever-increasing degree of automated driving,
+electric-electronic (E/E) vehicle architecture and
+greater connectivity, digitization and higher level
+of security in vehicles. We also offer our customers
+innovative solutions in the areas of safety, the
+digital cockpit, infotainment, comfort and lighting
+technology. In addition to sensors, microcontrollers,
+high-performance memory for specific applications
+and power semiconductors based on Si and SiC, our
+product portfolio also comprises components for
+human-machine interaction and vehicle connectivity.
+Infineon is the world market leader in semicon-
+ductor solutions for cars (source: Strategy Analytics:
+Automotive Semiconductor Vendor Market Shares.
+April 2020).
+Applications p. 236
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Automotive
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+Further information
+Strategic focus
+The automotive industry is currently experiencing a profound upheaval. The car of
+the future will be a pure electric vehicle and autonomous, fully connected and always
+online. Even if this will not yet apply to every newly produced car by the end of the
+current decade, we are still seeing an acceleration in structural change compared
+with previous decades. The reasons for this are the desire for cars, which are ever-safer,
+ever-smarter and increasingly connected and the need for compliance with ever-
+stricter emission standards and therefore for sustainable mobility. This is evident
+from automotive megatrends: electro-mobility, automated driving, connectivity and
+security. The greatest contribution to this process will come from vehicle electronics
+and consequently from semiconductor solutions. We are contributing to the change
+and want to benefit disproportionately from this trend. Our acquisition of Cypress
+will support this aspiration. We now have a broad product portfolio of automotive
+semiconductor solutions. With a high level of system expertise, Infineon can handle
+a wide range of automotive applications. These now also include digital instrument
+clusters and infotainment applications, which complement our existing range of
+powertrain, assistance systems, safety, comfort electronics and security. Infineon has
+an extensive portfolio of microcontrollers for the automotive industry. In addition,
+it has a leading position in memory ICs for specific applications, which are indispens-
+able for the data processing for driver assistance systems and automated driving as
+well as for digital instrument clusters and infotainment applications. Infineon sup-
+ports the trend towards increasing connectivity. This includes both the communication
+between various control units within the vehicle (for example, via CAN, CAN FD and
+FlexRayTM) as well as the communication with other vehicles (vehicle-to-vehicle) and
+with the cloud (vehicle-to-infrastructure). This furthermore includes the connection
+of mobile devices via Wi-Fi and Bluetooth for in-cabin infotainment. In the area of
+human-machine interaction, switches and knobs will increasingly be replaced by
+touch pads. Human-machine interaction also includes head-up displays.
+In the traditional applications, our growth will be driven by new functions in the
+areas of connectivity, lighting technology, comfort and safety on the one hand, and
+on the other by continuing electrification of various vehicle functions. This means
+that the number of electronic components per vehicle and therefore the value of the
+semiconductor content per vehicle will increase. The two megatrends electro-mobility
+and automated driving have the effect of further increasing the average semiconductor
+demand per vehicle. Even if it will take some time for autonomous driving to be
+introduced and to become widespread, driver assistance systems are in high demand
+and the strong growth they have already shown looks set to continue in the coming
+years. Driver assistance systems not only ensure greater driving comfort, but also
+contribute to the implementation of "Vision Zero", the global project that seeks one
+day to achieve its aim of road traffic without fatalities.
+Infineon
+RXS8156PLA
+We are benefiting from the trend towards automated driving with, on the one hand,
+our 77 gigahertz radar sensor ICs, which are used in emergency braking systems and
+increasingly in lane change assistance systems. On the other hand, we also provide
+dedicated microcontrollers, which under-
+take a significant part of the radar signal
+processing. Our optimized radar system
+solutions enable faster time-to-market for
+our customers. Our microcontrollers are
+not only used in radar-based, but also in
+camera-based driver assistance systems
+and in sensor fusion systems up to Level 2+.
+The intermediate level 2+, which was retro-
+spectively defined, includes those functions
+which are part of Level 3 except for the
+function of the complex hand-over of vehicle
+control between the vehicle and the driver.
+Our 77 gigahertz radar sensor IC RXS8156PLA
+is used primarily in emergency braking assistance
+systems and lane change assistance systems.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Q = < 56 >
+Combined Management Report
+The segments
+Automotive
+Business focus and strategy
+Consolidated Financial Statements
+The Segment Result (for definition see the chapter "Internal management system",
+p. 90) totaled €1,170 million for the 2020 fiscal year, 11 percent down on the
+€1,319 million reported one year earlier. During the second half of the 2020 fiscal
+year, the pandemic-related revenue downturn led to a significant increase in idle costs.
+Furthermore, additional costs were incurred in the 2020 fiscal year in connection with
+manufacturing capacity restrictions in the wake of the coronavirus pandemic. With
+the aim of minimizing under-utilization costs, a careful balancing act was undertaken
+in terms of supplying customers and managing inventory levels, for instance by
+continuously reassessing demand scenarios and adjusting the production program
+across the various segments and locations. Furthermore, short-time work was intro-
+duced at the German and Austrian sites. The raft of productivity and cost optimization
+measures initiated during the previous fiscal year were additionally stepped up over
+the course of the 2020 fiscal year.
+The favorable development of the US dollar exchange rate to the euro, which
+averaged 1.12 for the year compared to 1.13 one year earlier, had a positive impact
+(see the chapter "Review of results of operations”, p. 97).
+Q = < 51 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model and finances
+2020 fiscal year
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+● 17% €1,406 million Industrial Power Control
+● 31% €2,650 million Power & Sensor Systems
+● 11% €953 million Connected Secure Systems
+0% €16 million Other Operating Segments,
+Corporate and Eliminations
+Combined Management Report
+Business model and finances
+2020 fiscal year
+● 41% €3,542 million Automotive
+The various segments developed at differing rates, with Automotive remaining the
+highest-selling segment. Based on segment revenue of €3,542 million (2019:
+€3,503 million), it contributed 41 percent of Infineon's total revenue. Compared to
+previous year's figures, however, revenue only grew by 1 percent. The Power & Sensor
+Systems segment recorded revenue of €2,650 million (2019: €2,445 million), corres-
+ponding to a growth rate of 8 percent. Both segments included revenue contributions
+from Cypress. Revenue generated by the Industrial Power Control segment totaled
+€1,406 million and was therefore at a similar level to the previous year (2019:
+€1,418 million). The revenue of the segment Connected Secure Systems was signifi-
+cantly impacted by the acquisition of Cypress and increased by almost 50 percent,
+amounting to €953 million (2019: €642 million). Further details on the performance
+of the segments can be found in the chapter "The segments”. p. 53 ff.
+The acquisition of Cypress was completed on 16 April 2020. At that stage, revenue for
+the 2020 fiscal year and the combined company was estimated at €8.4 billion, plus or
+minus 5 percent. Within a few months, however, perceptible signs of recovery emerged,
+with some countries, such as China, even experiencing a V-shaped upswing, causing
+the growth rate to rise above pre-crisis levels. In conjunction with the publication
+of results for the third quarter, the outlook was therefore adjusted slightly upwards.
+At that stage, revenue for the full 2020 fiscal year was estimated at around €8.5 billion.
+At that level, the Segment Result Margin was expected to come in at about 13 percent.
+In the final analysis these figures were even slightly exceeded.
+In the original outlook, Infineon's revenue growth in the 2020 fiscal year (excluding
+Cypress) was forecast at 5 percent, plus or minus 2 percentage points (see the
+chapter "Outlook”, p. 107). After a difficult 2019 fiscal year, early positive signs at the
+beginning of the 2020 fiscal year seemed to point to an improvement in the economic
+environment. However, following the outbreak of the coronavirus pandemic, the
+original outlook was withdrawn in March 2020 as the specific impact on revenue and
+earnings in the 2020 fiscal year could neither be reliably estimated nor quantified
+with sufficient accuracy. In many of Infineon's markets, especially the automotive
+industry, business was hampered by production stops and supply chain disruptions
+as well as by a significant decline in demand. In spring 2020, the number of vehicles
+produced fell drastically across all regions, driven by the simultaneous shock to both
+the supply and the demand side.
+Infineon generated revenue of €8,567 million in the 2020 fiscal year, an increase of
+7 percent compared to the previous year's figure of €8,029 million. The revenue figure
+for the 2020 fiscal year includes €857 million recognized for Cypress in the period
+since its the first-time consolidation in mid-April. Excluding the contribution from
+Cypress, revenue would have fallen by €319 million. This decline was primarily due
+to the effects of the coronavirus pandemic, which hit particularly the automotive
+industry hard.
+Revenue up by 7 percent; Segment Result Margin
+of 13.7 percent achieved
+› Business performance impacted by
+coronavirus pandemic
+2020 fiscal year
+Q = < 50 >
+Further information
+C14 Revenue by segment in the 2020 fiscal year
+The Segment Result Margin of 13.7 percent was therefore down on the previous year's
+figure of 16.4 percent, but still slightly higher than the most recent forecast of around
+13 percent, as adjusted in the third quarter.
+Consolidated Financial Statements
+Q = < 57 >
+by region
+0
+◆34.7% Europe
+18.6% North America
+18.1% China
+● 15.6% Japan
+⚫ 7.2% Korea
+5.8% Other
+by product category
+O
+Source: Strategy Analytics: Automotive Semiconductor Vendor Market Shares. April 2020.
+C17 World market for automotive semiconductors in 2019
+US$37.186 billion (minus 1.28% compared with 2018)
+C18 Market share for automotive semiconductors in 2019
+NXP
+Renesas
+Texas Instruments
+STMicroelectronics
+● 26.5% Power
+23.2% Processors
+15.2% Sensors
+5.6% Memory
+29.5% Others
+Korea
+Infineon
+Further information
+In all regions, Infineon (including Cypress) was in at least third position, ■ C19.
+Infineon was the market leader in Europe, the most important region, and in China,
+the fastest-growing region in the past seven years, as well as in Korea. In Japan,
+Infineon was able to buck the trend and grow, increasing its market share (excluding
+Cypress) from 7.3 percent to 8.0 percent. Cypress' market share remained stable at
+3.7 percent. With a combined market share of 11.7 percent, Infineon overtook Toshiba
+and moved into third position for the first time.
+C17.
+Power semiconductors and controllers are the two largest product categories. Together
+they account for around half of all semiconductors in the automotive sector. Infineon
+is the market leader for power semiconductors, with a market share of 25.5 percent.
+In the case of controllers, Infineon grew organically by one percentage point, and
+additionally a contribution of 6.1 percentage points from Cypress. Infineon therefore
+now has a market share of 16.2 percent and is in third position. The gap between
+Infineon and the two frontrunners NXP (with a market share of 27.2 percent) and
+Renesas (with a market share of 27.0 percent) was reduced, while the gap between
+Infineon and Texas Instruments (with a market share of 9.8 percent) increased. In
+the case of sensors, Infineon remains the second largest manufacturer behind Bosch.
+The gap between them of 3.0 percentage points in 2018 was reduced in the 2019
+calendar year to 0.6 percentage points.
+Infineon
+TLE9012AQU
+For electro-mobility, Infineon has an
+extensive range of power semiconductors
+and control ICs with the corresponding
+packaging and connection technologies.
+Infineon also offers battery management
+solutions for the efficient charging and
+monitoring of battery systems. Infineon's
+semiconductor solutions are suitable for
+all types of electric vehicles: pure electric
+vehicles, plug-in hybrid vehicles and mild-
+hybrid vehicles with 48-volt technology.
+Our portfolio also covers semiconductor
+solutions for electric vehicles based on
+emerging hydrogen technology. In the area
+of power electronics, we are the undisputed
+market leader for Si-based semiconductor
+solutions in the automotive market. We are
+also expanding our portfolio to include semiconductors based on SiC and GaN,
+which offer additional potential for improvements in efficiency and power density.
+The sensing and balancing IC TLE9012AQU
+supports battery management systems
+for all types of electric vehicles.
+Our product portfolio meets the high quality and reliability requirements of the
+automotive industry. In the case of automated driving, the greater the trust in the tech-
+nological innovations, which are replacing the driver of the vehicle, the greater the
+acceptance and the earlier higher levels of automation will be achieved in vehicles -
+in private vehicles, taxis and buses, in utility and construction vehicles, in agricultural
+machinery and in public transport such as trains and trams. The prerequisite for
+gaining that trust is the reliability of the vehicles and thus the reliability of the systems,
+components and semiconductor solutions built into them. They must all be fault-
+tolerant, must not fail and must ensure a minimum function if there are unexpected
+disruptions, and all this must apply for the service life of the vehicle. For some time
+now, Infineon has provided concepts and solutions for reliability at the component
+and subsystem level and pursues an integrated approach here: our semiconductor
+solutions - sensors, microcontrollers, memory, power electronics, power management
+ICs and security ICs - enable systems to meet the high functional safety requirements
+set out in ISO 26262. The microcontrollers of our AURIXTM family are used in, for example,
+steering and brakes and as host controllers that contribute towards the functional
+safety of central control units. Other semiconductor solutions ensure both internal and
+external data communication.
++ How Cypress brings us forward
+> Microcontrollers in the TRAVEO™ family are designed for
+digital instrument clusters and head-up displays.
+> The SEMPERT NOR Flash memory ICs are suitable for data
+and event logging in the area of automated driving.
+> In the area of human-machine interaction,
+For the first time and with a market share of 13.4 percent (11.2 percentage points
+contributed by Infineon; 2.2 percentage points contributed by Cypress), Infineon was
+the world's largest automotive semiconductor manufacturer, C18. The five largest
+market players together accounted for 49.1 percent of the market (2018: 47.7 percent).
+we are replacing switches and knobs
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Automotive
+Consolidated Financial Statements
+Further information
+Q = < 58 >
+Market position
+In the 2019 calendar year, vehicle production slumped by about 6 percent (source:
+IHS Markit: Light Vehicle Production Forecast. October 2020). This led to a decline in
+the automotive semiconductor market of 1.3 percent, from US$37.668 billion in 2018
+to US$37.186 billion in the 2019 calendar year (source: Strategy Analytics). All regions
+saw a decrease in production except North America (plus 0.2 percent compared with
+2018). The biggest falls in production were to be seen in China (minus 2.5 percent) and
+Japan (minus 3.9 percent). Europe remained by far the most important region, with a
+market size of US$12.892 billion and share of 34.7 percent of the global market,
+with touch pads.
+Key performance indicators for Group down on previous year
+Net income decreased to €368 million (see the chapter "Review of results of opera-
+tions", p. 100), representing a decline of €502 million compared to previous fiscal
+year's figure of €870 million. The resulting earnings per share for the 2020 fiscal year
+amounted to €0.26 (basic and diluted), 65 percent lower than the previous fiscal year's
+figure of €0.75 (basic and diluted). Adjusted earnings per share (diluted) for the
+period under report amounted to €0.64 (2019: €0.89). For details of the calculation of
+adjusted earnings per share, see the chapter "Review of results of operations”, p. 100.
+Business focus and strategy
+Infineon Technologies | Annual Report 2020
+✓
+Embedded control
+✓
+✓
+Power & Sensor
+Systems
+Industrial
+Power Control
+Automotive
+☐
+Sensor technologies
+Radio frequency
+✓
+Core competencies
+Our markets are converging more and more, so that a strict organizational demarcation
+is not appropriate. Technologies and products are increasingly being used across the
+segments in line with our strategic "Product to System" approach. Digital transfor-
+mation in particular requires flexible and innovative approaches. Teams from various
+organizational units work together on an application-oriented and expertise-specific
+basis. In such cases, one segment takes responsibility for the overall system and
+develops the roadmap for the application, while responsibility for the technologies
+and products required remains in the established organizational units. Similarly,
+the segments collaborate on technology development. High-voltage power semicon-
+ductors for electro-mobility are, for example, a core topic in the area of automotive
+electronics, so it follows that the Automotive segment assumes the responsibility
+here. On the other hand, it is the Industrial Power Control segment that takes on
+responsibility for fundamental developments in IGBT technology, IGBT module
+housing technology and SiC technology.
+In the areas of power semiconductors, hardware-based security, radio frequency
+and embedded control, Infineon has always continually developed and deepened its
+knowledge of its traditional core competencies, enhancing them by adding adjacent
+areas such as sensor technologies. As a result of the acquisition of Cypress, we have
+greatly strengthened our position in the area of embedded control. Contributing to
+this are the extensive portfolio of microcontrollers and different types of memory for
+specific applications. Furthermore, with connectivity we have acquired a new compe-
+tence, which is indispensable for the loT growth market. Combining this in turn with
+our security know-how takes us to a new level.
+Q = < 54 >
+The Return on Capital Employed (ROCE) decreased from 12.2 percent to 3.0 percent
+year-over-year. Operating income from continuing operations after tax fell by
+€452 million to €473 million (2019: €925 million). The decline in operating income
+was mainly due to higher idle costs and increased depreciation and amortization
+as well as expenses arising from the recognition of fair value adjustments identified
+in conjunction with the purchase price allocation relating to the acquisition of
+Cypress (see the chapter "Review of results of operations”, ☐ p. 98). At the same time,
+capital employed increased by €8,228 million to €15,827 million as of 30 September
+2020 (30 September 2019: €7,599 million), also driven by the recognition of fair value
+adjustments as well as goodwill. For a definition of, and details relating to, the
+calculation of RoCE, see the chapters "Internal management system”, □ p. 90 f., and
+"Review of financial condition", p. 103.
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+C16 Core competencies in the segments
+✓
+Memories for
+specific applications
+Connectivity
+✓
+Combined Management Report
+The segments
+Automotive
+Infineon Technologies | Annual Report 2020
+million
+€155
+SEGMENT RESULT
+million
+€3,542
+REVENUE
+Business focus and strategy
+Management Board and
+Supervisory Board
+Connected
+Secure Systems
+<< <
+Infineon Technologies | Annual Report 2020
+✓
+Differentiating
+in-house manufacturing
+✓
+✓
+Software
+Security
+power semiconductors
+Power semiconductors
+Control of
+while the Power & Sensor Systems segment addresses more consumer-oriented
+applications and power supplies in general. In addition, activities in the area of radio
+frequency and sensor-based applications (including the recording of sensor data
+and interaction with machines and devices) fall within the sphere of responsibility
+of the Power & Sensor Systems segment. Activities relating to traditional and new
+security applications, microcontrollers for non-automotive electronic applications
+and connectivity solutions are bundled in the Connected Secure Systems segment.
+Infineon comprises four segments, each of which derive their strategic focus from the
+Group strategy. All the Group's activities relate to one of four key growth areas - energy
+efficiency, mobility, security and loT & big data. The segments are each responsible
+for particular areas that reflect their core competencies. The Automotive segment is
+responsible for the semiconductor business for automotive electronics and for activi-
+ties with memory products. The Industrial Power Control segment concentrates on
+power semiconductors primarily used in industrial applications and renewable energy,
+Further information
+Q = < 53 >
+221
+22
+25
+27
+27
+The segments
+C15 Dividend per share for the 2010 to 2020 fiscal years
+Our dividend policy is aimed at allowing our shareholders to participate appropriately
+in the success of the business and even in the event of flat or declining earnings, the
+aim as a matter of principle is to pay at least an unchanged dividend. However, in
+view of the serious impact and ongoing risks of the coronavirus pandemic and with
+a view to retaining Infineon's financial flexibility, it is intended in these exceptional
+circumstances to deviate from the aforementioned principle: a proposal will be put
+forward at the coming Annual General Meeting to pay a dividend of €0.22 per share
+for the 2020 fiscal year, €0.05 per share less than one year earlier.
+Dividend payment of €0.22 per share planned
+The net cash position (for definition see the chapter "Internal management system",
+p. 91) decreased year-over-year by €6,029 million to stand at negative €3,806 million
+at the end of the 2020 fiscal year (30 September 2019: €2,223 million).
+gross cash position (for definition see the chapter "Internal management
+system", p. 91) decreased by €552 million compared to previous year's figure, coming
+in at €3,227 million at the end of the reporting period. The change related primarily
+to the payment of the purchase price for Cypress and the related financing measures,
+including the issue of a hybrid bond in October 2019, the share capital increase
+implemented in May 2020, and financial debt raised. Cash used for investments and
+to pay the dividend for the 2019 fiscal year and the premature repayment of a part
+of bank loans from the acquisition financing also contributed to the decline of the
+gross cash position.
+The
+Free cash flow from continuing operations (for definition see the chapter “Internal
+management system", ☐ p. 90) was a negative amount of €6,727 million (2019:
+positive €39 million). The figure reported for the 2020 fiscal year was influenced
+primarily by the net purchase price payment (i.e. net of cash and cash equivalents
+acquired) amounting to €7,433 million used to acquire Cypress. Excluding cash used
+in conjunction with the acquisition of Cypress, free cash flow was a positive amount
+of €911 million. Investments in property, plant, and equipment, in other intangible
+assets and in other assets resulted in cash outflows totaling €1,099 million.
+Q = < 52 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model and finances
+2020 fiscal year
+Business focus and strategy
+Management Board and
+Supervisory Board
+20
+18
+in € cents
+12
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+12
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+1 Proposal to the Annual General Meeting to be held on 25 February 2021.
+2020
+2019
+2018
+Business focus and strategy
+2016
+2017
+12
+10
+2011
+2010
+2013
+2014
+2015
+2012
+Business focus and strategy
+Management Board and
+Supervisory Board
+Strategic focus
+Combined Management Report
+The segments
+Industrial Power Control
+Consolidated Financial Statements
+Further information
+Q = < 61 >
+Power semiconductors are a key element in the products and systems of our customers,
+largely determining the function, efficiency, size, weight and cost of the systems.
+The products in our Industrial Power Control segment provide the foundation for the
+efficient generation, storage and almost lossless transmission of electric energy
+on the one hand and the reduction of losses on consumption on the other. Our core
+business consists of discrete IGBTS and IGBT modules and the driver ICs associated
+with them. We want to continue to strengthen this core. We are constantly refining
+our existing products, complementing them to create complete solutions for the
+customer. We leverage our economies of scale in research and development as well
+as in manufacturing and are therefore able to achieve a broad portfolio optimized
+for both cost and performance. In addition, we develop products, which provide the
+opportunity for long-term differentiation.
+> The products in the iMOTION™ family - which are basically application-optimized
+microcontrollers - enable easy-to-implement intelligent motor control. Infineon
+offers reference designs for these compact products, including connectivity
+solutions and components for human-machine interaction.
+The PrimePACK™ module is used in high-power inverters
+in wind turbines and in central inverters for photovoltaic plants.
+Two examples of this:
+> The PrimePACK™ module, which combines IGBT5 chip technology with the .XT
+bonding technology. While the IGBT5 chip technology allows higher power
+densities with lower static and dynamic losses, the .XT bonding and connection
+technology in the modules ensures a longer service life through improved
+thermal load cycling capability. This provides our customers with significant
+added value for high-power inverters in wind and photovoltaic applications
+and in industrial drives.
+We are strengthening our core products by using new materials (see the chapter
+"Research and development”, p. 78 f.). The Easy module family is an important
+success factor here for fast market entry.
+It offers our customers a flexible, easily
+scalable module solution, which is particu-
+larly effective in applications such as
+photovoltaics, industrial automation and
+the charging infrastructure for electric
+vehicles. In addition to the modules, we
+are strengthening the volume production
+of our extensive product portfolio of
+discrete SiC MOSFET components. With
+our SiC products, customers can count
+on Infineon delivering the reliability for
+which it is known, as well as providing
+support to develop systems based on this
+new material.
+Infineon
+million
+ALAR
+€256
+Industrial Power Control
+million
+CoolSIC MOSFET Easy 28
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Consolidated Financial Statements
+Further information
+Q =
+< 60 >
+Industrial Power Control
+Industrial
+Power Control
+The Industrial Power Control segment specializes in
+semiconductor solutions for the intelligent manage-
+ment and efficient conversion of electric energy
+along the entire conversion chain: generation, trans-
+mission, storage and use. The product portfolio
+comprises mainly IGBT power transistors, driver ICs
+to control them, and components based on SiC.
+We offer the products in various form factors and with
+different levels of functionality. The segment's broad
+application spectrum includes motor control units
+for industrial manufacturing and building technology,
+inverters for photovoltaic and wind power systems,
+home appliances, traction, electric utility vehicles
+such as buses, construction and agricultural vehicles,
+systems for high-voltage direct current transmission
+and energy storage, industrial power supplies and the
+charging infrastructure for electric vehicles. Our focus
+is on integration and digitization. Wireless communi-
+cation solutions are also enabling us to implement
+numerous innovative applications in the growth area
+of Industry 4.0.
+Applications p. 237
+10-0
+Jo-o
+REVENUE
+€ 1,406
+SEGMENT RESULT
+Q = < 64 >
+The CoolSIC™ MOSFET Easy 2B module offers
+a scalable solution for PV inverters and for the
+charging infrastructure for electric vehicles.
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+O
+Infineon
+IM69D130
+In the area of radio frequency, the company offers components that can be used, for
+example, to amplify the signal in cell phones or to communicate between the cell
+phone and the base station. New requirements regarding beam forming to improve
+data transmission are opening up new opportunities here.
+In addition to smartphones and their accessories, we are also benefiting from
+the networking of intelligent devices such as smart speakers, smart homes and
+wearables. These devices are controlled by voice or gesture.
+Infineon has a strong foundation in the sensor technologies business due to technol-
+ogies such as radar, time-of-flight for 3D camera applications and MEMS. MEMS
+microphones are no longer used exclusively in smartphones. In the previous fiscal
+year, we generated significant revenue for the first time from special MEMS micro-
+phones for wireless earphones. These "sealed dual membrane” microphones allow
+active noise cancellation in earbuds.
+Both in research and development and in manufacturing, we benefit from economies
+of scale, strengthening our market position. One way we do this is to supplement
+our core portfolio of Si-based power semiconductors with switches based on the new
+materials SiC and GaN.
+Q = < 67 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Power & Sensor Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+With the EZ-PD™ CCG4 controller, we support the new USB TYPE-C Power Delivery standard,
+which has the potential to become the universal worldwide charging plug for small devices.
+w
+EZ-PDTM CCG4
+USB TYPE
+-C
+Controller
+with 
+Power
+Delivery
+The power transistors in the CoolMOST and
+OptiMOST families cover the full voltage
+range: low voltages (up to 40 volts), medium
+voltages (40 to 500 volts) and higher volt-
+ages (over 500 volts). Together with the rele-
+vant control ICs and drivers, they form the
+core of the power semiconductor business
+in this segment.
+With USB controllers from Cypress, we are not only expanding our communications
+expertise, we are also significantly strengthening our position in the area of chargers
+and adapters. We are now able to offer complete solutions comprising USB controllers
+and AC-DC conversion. In particular, the new USB PD standard, which allows the
+charging of devices up to 100 watts, has the potential to become the universal world-
+wide charging plug for small devices.
+in power supplies in data centers and base stations.
+Power transistors in the CoolMOST family are
+designed for voltages in excess of 500 volts and are used
+is becoming a decisive factor. Our concepts
+in the area of digital power management -
+the shift from analog control loop to
+digital control loop in power supplies -
+take this trend into account, with technol-
+ogy that does more, consumes less and is
+available to all.
+650 V
+Further information
+Infineon
+Our MEMS microphones are used for active noise cancellation
+in wireless earphones due to their high sensitivity.
+CFD7A
+650 V
++ How Cypress brings us forward
+> We combine microcontrollers and connectivity solutions with
+sensors and power semiconductors, taking products from our
+different segments to create new system solutions.
+C26 Market share for power ICs in 2019
+Source: Based on or includes research from Omdia: Power Semiconductor Market Share Database 2020. September 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.6%
+7.3%
+9.5%
+12.8%
+24.6%
+Renesas
+Toshiba
+STMicroelectronics
+ON Semiconductor
+Infineon
+C25 Market share for MOSFETs in 2019
+Contributing to the increase in units sold was the launch of the new and highly
+successful "sealed dual membrane” technology in autumn 2019. The first application
+for our microphones based on this technology was wireless earphones with active
+noise cancellation. Our other MEMS microphones were mainly used in smartphones
+and tablets.
+The world market for MEMS microphones reached 5.374 billion units in the 2019
+calendar year (source: Omdia). This was an increase of 16.3 percent compared with
+the figure for 2018 of 4.619 billion units. Units sold by Infineon rose by 36.8 percent.
+With a market share of 43.5 percent, Infineon was in first position for the first time
+ever (2018: second position with a market share of 37.0 percent), C27. The five
+largest market players together accounted for 95.8 percent of the market (2018:
+93.7 percent).
+The world market for power semiconductor ICs, comprising power management ICs,
+voltage monitoring ICs, drivers and voltage regulators, as well as controllers for
+switch-mode power supplies, power factor correction and battery management,
+reached US$24.409 billion in the 2019 calendar year (source: Omdia). This was a
+decrease of 4.0 percent compared with the figure for 2018 of US$25.438 billion.
+Infineon's revenue in this area fell by 9.3 percent. With a market share of 7.7 percent,
+Infineon was in second position (2018: second position with a market share of
+8.1 percent), C26. The five largest market players together accounted for 42.8 per-
+cent of the market (2018: 44.3 percent).
+The world market for MOSFET power semiconductors, comprising standard MOSFETs,
+protected MOSFETs, SiC MOSFETs and GaN transistors, reached US$8.097 billion in
+the 2019 calendar year. This was a decrease of 3.5 percent compared with the figure
+for 2018 of US$8.391 billion (source: Omdia). Infineon's revenue in this area declined
+by 10.6 percent. With a market share of 24.6 percent, Infineon continued to be the
+clear market leader (2018: 26.5 percent), C25. The five largest market players together
+accounted for 59.8 percent of the market (2018: 59.5 percent).
+Market position
+Q = < 68 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Power & Sensor Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+> Mobile devices such as fitness trackers, smart watches,
+smart speakers and other battery-powered devices will
+benefit from our expanded product portfolio.
+> With our USB controllers and power semiconductors for
+AC-DC and DC-DC conversion, we can offer our customers new
+and extensive solutions for adapters and chargers.
+Texas Instruments
+CoolMOS
+C
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+2020
+2019
+Infineon Technologies | Annual Report 2020
+On the product side, we have continued to expand our portfolio of SiC components.
+Among these additions was the first product family of 1,700 volt CoolSiCTM MOSFETS.
+They are targeting auxiliary power supplies in three-phase conversion systems such
+as motor drives, renewables, charging infrastructure and HVDC systems.
+Revenue from traction remained virtually unchanged until the middle of the year, after
+which there was a growing downward trend. Passengers are using public transport
+significantly less than usual due to the coronavirus pandemic. In many regions, plans
+to increase transport capacity were postponed. Infrastructure projects were put on
+hold, especially in the key region of China.
+In home appliances, the trend towards inverterized motor control systems continues.
+As a result of energy efficiency regulations, we expect demand for inverterized home
+appliances, especially air conditioning units and washing machines, to remain high
+over the coming years. However, in China, our most important market in this area, the
+coronavirus pandemic has led to a decline in construction activity, which has tempo-
+rarily dampened demand. As a result, we saw a slight decrease in revenue from home
+appliances.
+We again saw encouraging growth in the area of renewable energy, which accounts
+for over 20 percent of the segment's revenue. This growth compensated for the
+decline in revenue from drives. Revenue from products for PV inverters increased
+by around 37 percent, while revenue from wind power products rose by more than
+13 percent.
+The drives business, the segment's largest field of application, was adversely affected
+by the crisis in several ways. First, there was no motivation to boost investment in
+factory automation. Secondly, the significant drop in the price of oil in the middle of
+the fiscal year led to a near halt in investment in the oil and gas industry.
+The target markets that are relevant to us were affected differently by the coronavirus
+pandemic. Accordingly, the Industrial Power Control segment weathered the crisis
+fairly well.
+Segment Result
+256
+251
+Revenue
+1,406
+1,418
+€ in millions
+C24 Revenue and Segment Result of the Industrial Power Control segment
+In contrast, Infineon was able to reduce operating expenses as a result of cost-saving
+measures introduced at the beginning of the fiscal year and intensified as a result
+of the coronavirus pandemic. In all, the Segment Result increased by €5 million with
+revenue virtually unchanged.
+The decrease in market demand in some areas led over the course of the full fiscal year
+to underutilization of available capacity in parts of the manufacturing landscape,
+which resulted in an increase in idle costs compared with the previous fiscal year.
+In the 2020 fiscal year, the Segment Result was €256 million. This was an increase
+of 2.0 percent compared with the figure for the previous fiscal year of €251 million.
+Based on revenue, the Segment Result Margin was 18.2 percent, compared with
+17.7 percent in the 2019 fiscal year.
+In the Industrial Power Control segment, Infineon generated revenue in the 2020
+fiscal year of €1,406 million. The acquisition of Cypress had no effect on revenue in
+this segment. With a decrease of 0.8 percent, the revenue figure remained virtually
+unchanged from the figure for the previous fiscal year of €1,418 million. The segment
+contributed 17 percent to Infineon's Group revenue.
+Review of the Industrial Power Control segment
+in the 2020 fiscal year
+Consolidated Financial Statements
+Infineon
+Further information
+Power & Sensor Systems
+Infineon
+CFDTA
+650 V
+Infineon
+CoolMOS
+The trend for all types of power supplies continues unabatedly: high efficiency
+levels, increasing performance and smaller form factor. Power density in particular
+Battery-powered devices are also among the fastest-growing applications for this
+product group of MOSFET power transistors. Of particular interest are applications
+with brushless direct current (BLDC) motors, which are increasingly replacing con-
+ventional motors. Here we have shown that we can use existing products to serve new
+applications such as eScooters. In addition, Infineon is continually expanding its
+product portfolio for digital load control and is focusing on technologically adjacent
+markets, such as point-of-load controllers for data centers and Class D audio amplifiers.
+Examples of application areas are power conversion for data centers, telecommuni-
+cation facilities, cellular infrastructure and battery-powered devices.
+Strategic focus
+With effect from 1 April 2020, the name of the segment changed from "Power Manage-
+ment & Multimarket" to "Power & Sensor Systems". The change of name signifies
+the increasing importance of our sensor portfolio, since megatrends such as digitali-
+zation, "smart everything" and the loT are driving demand for our sensors. For some
+years now, we have also been evolving from being a leading provider of components
+into a leading provider of system solutions, which is very much in line with our
+strategic "Product to System" approach. The new name reflects our aspiration to
+offer customers an integrated portfolio as well as systems expertise. The name
+change had no impact on our organizational structure or strategy, or on the scope
+of our business.
+Q = < 66 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Power & Sensor Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+million
+€636
+SEGMENT RESULT
+million
+€2,650
+REVENUE
+(0
+Applications p. 238
+for smart speakers and other audio applications that
+demand excellent sound performance.
+The Power & Sensor Systems segment encompasses
+a large selection of technologies relating to power
+semiconductors, radio frequency and sensors. We use
+these technologies to make electronic devices like
+power supplies, power tools, lighting systems, mobile
+devices and industrial and consumer applications
+smaller, lighter and more energy-efficient, as well as
+to develop new functionalities. We are drawing on the
+next generation of new, innovative solutions based
+on Si, SiC and GaN for applications in the areas
+of 5G, big data and renewable energy. Our portfolio
+of products for power supplies, comprising control ICs,
+drivers and MOSFET power transistors, addresses
+the two key requirements of the market: conversion
+efficiency and power density. Infineon is the clear
+market leader in the global MOSFET market, LC25.
+Our high-precision sensor solutions give loT devices
+“human senses”, enabling them to react intuitively to
+their surroundings. Our product portfolio is rounded
+off with audio amplifiers, which serve as a basis
+Power & Sensor
+Systems
+Q = < 65 >
+Infineon Technologies | Annual Report 2020
+Infineon
+Qualcomm
+11.7%
+ON Semiconductor
+7.9%
+Toshiba
+6.1%
+Mitsubishi
+5.7%
+Source: Based on or includes research from Omdia: Power Semiconductor Market Share Database 2020. September 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+C22 Market share for IPMS in 2019
+Mitsubishi
+ON Semiconductor
+Infineon
+Fuji Electric
+Semikron
+32.7%
+17.9%
+11.5%
+7.8%
+7.0%
+Source: Based on or includes research from Omdia: Power Semiconductor Market Share Database 2020. September 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+C23 Market share in IGBT modules in 2019
+Infineon Technologies | Annual Report 2020
+Infineon
+Mitsubishi
+35.6%
+11.9%
+Fuji Electric
+32.5%
+10.5%
+Infineon
+Fuji Electric
+The world market for IGBT modules reached US$3.305 billion in the 2019 calendar
+year (source: Omdia). This was an increase of 6.3 percent compared with the figure
+for 2018 of US$3.108 billion. Infineon's revenue in this area increased by 8.0 percent.
+With a market share of 35.6 percent, Infineon continued to be the clear market leader
+(2018: 35.1 percent), C23. The five largest market players together accounted for
+68.8 percent of the market (2018: 68.1 percent).
+Business focus and strategy
+Combined Management Report
+The segments
+Industrial Power Control
+Consolidated Financial Statements
+Further information
+Q = < 62 >
+The Industrial Power Control segment uses the expertise acquired in the application
+of discrete IGBTs and IGBT modules to unlock additional growth potential in adjacent
+product areas, such as Intelligent Power Modules (IPMs). The functional integration
+of drivers and power switches into our CIPOST IPMS helps our customers increase the
+efficiency of drives for small motors and therefore meet new energy efficiency stand-
+ards for home appliances and for industrial applications. These integrated products
+also enable a significant reduction in system size and development cost. We develop
+special control algorithms for the products in the iMOTION™ family mentioned above.
+Customers only need to adjust a few parameters within the algorithms to find efficient
+solutions to their problems. Products in the iMOTION™ family are used in all types
+of home appliances, from hairdryers and washing machines to air conditioning units.
+Looking across the segments, the Industrial Power Control segment benefits from
+the range of microcontrollers and connectivity and security solutions on offer in
+the Connected Secure Systems segment. This opens the door to new markets and
+additional growth potential in the application areas for which the Industrial Power
+Control segment is responsible.
+With this expanded range, we can address a larger proportion of the semiconductor
+value in an application, which will enable us to continue to grow in our existing markets,
+while we can also offer our customers easy-to-use applications. Understanding the
+newly acquired products and markets also enables us to expand the scope of our
+operations. We can see potential for synergies, particularly in the areas of home
+appliances and factory automation (and here especially in robotics and driverless
+transport systems).
++ How Cypress brings us forward
+> We combine microcontrollers and connectivity solutions
+with
+power components, taking products from our different
+segments to create new system solutions.
+> Automated guided vehicles, collaborative robots,
+air conditioning systems and home appliances will benefit
+from our expanded product portfolio.
+› We want to address a larger part of the semiconductor
+value in an application and offer our customers
+ready-to-use solutions.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Consolidated Financial Statements
+Further information
+Q = < 63 >
+Industrial Power Control
+Market position
+Following a sharp rise in the 2018 calendar year, the global power semiconductor
+market saw a correction in the 2019 calendar year. Whereas Infineon was able to
+win market share in virtually all product categories in the 2018 calendar year, there
+was something of a counterreaction in the 2019 calendar year. Infineon's revenue
+in some product categories fell faster than the market.
+The world market for discrete IGBT power transistors reached US$1.439 billion in the
+2019 calendar year (source: Omdia). This was an increase of 3.1 percent compared
+with the figure for 2018 of US$1.396 billion. Infineon's revenue in this area fell by
+4.5 percent. With a market share of 32.5 percent, Infineon continued to be the clear
+market leader (2018: 35.1 percent), C21. The five largest market players together
+accounted for 63.9 percent of the market (2018: 63.2 percent).
+The world market for Intelligent Power Modules (IPMs) reached US$1.586 billion in the
+2019 calendar year (source: Omdia). This was a decrease of 4.6 percent compared
+with the figure for 2018 of US$1.661 billion. Infineon's revenue in this area fell by
+9.4 percent. With a market share of 11.5 percent, Infineon remained in third position
+(2018: 12.1 percent), C22. The five largest market players together accounted for
+76.9 percent of the market (2018: 79.7 percent).
+C21 Market share for discrete IGBTs in 2019
+Analog Devices
+Semikron
+Vincotech
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+Source: Based on or includes research from Omdia: MEMS Microphone Dice Market Shares 2020; preliminary v1.1. October 2020.
+Comparability limited due to differing reporting period (fiscal year-end).
+Infineon Technologies | Annual Report 2020
+39.8%
+43.5%
+2.5%
+NJRC
+4.1%
+Further information
+Omron
+MEMSensing
+Knowles
+Infineon
+C27 Market share of MEMS microphones die suppliers in 2019 (by units)
+Source: Based on or includes research from Omdia: Power Semiconductor Market Share Database 2020. September 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.6%
+6.3%
+7.2%
+7.7%
+16.0%
+STMicroelectronics
+5.9%
+7.3%
+Q = < 69 >
+Review of the Power & Sensor Systems segment
+in the 2020 fiscal year
+3.5%
+Source: Based on or includes research from Omdia: Power Semiconductor Market Share Database 2020. September 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Consolidated Financial Statements
+2020
+2019
+Infineon Technologies | Annual Report 2020
+In the course of the fiscal year, we significantly expanded our portfolio of SiC products.
+The 650 volt CoolSiCTM power switch is responding to the desire of our customers
+for energy efficiency, power density and robustness in a large number of applications.
+Areas which will benefit from the new components launched in February are switch-
+mode power supplies used in servers, telecommunications and industry, as well as
+solar energy systems, energy storage systems, motor drives and charging systems for
+electric cars.
+Our business with battery-powered devices did well while the business with LED and
+conventional lighting systems saw weaker performance than in the previous year.
+Our 3D time-of-flight sensors were in greater demand with smartphone and auto-
+motive customers. In contrast, our 24 gigahertz radar sensor ICs generated less revenue
+than in the prior year. These are used mainly in blind spot detection systems and
+were impacted by the decline in car production.
+Power & Sensor Systems
+In the area of sensor technologies, we also saw an encouraging demand trend. Our
+MEMS microphone business ensured revenue growth. Although sales of smartphones
+declined, we benefited from additional applications and from the increase in voice-
+controlled applications, which also require MEMS microphones. Examples of this are
+smart speakers and remote controls for smart home devices. However, the biggest
+contributor to revenue growth was wireless earphones with active noise cancellation.
+■ Segment Result
+Revenue
+636
+585
+2,445
+2,650
+€ in millions
+C28 Revenue and Segment Result of the Power & Sensor Systems segment
+A fall in market demand in some areas led over the course of the fiscal year to under-
+utilization of available capacity in parts of the manufacturing landscape, which resulted
+in an increase in idle costs compared with the previous fiscal year. However, cost-
+saving measures introduced at the beginning of the fiscal year and intensified as a
+result of the coronavirus pandemic could compensate this effect.
+In the 2020 fiscal year, the Segment Result was €636 million, an increase of 8.7 percent
+compared with the figure for the previous fiscal year of €585 million. The Segment
+Result Margin in relation to revenue remained virtually unchanged at 24.0 percent
+(previous year: 23.9 percent).
+In the Power & Sensor Systems segment, Infineon generated revenue in the 2020
+fiscal year of €2,650 million (including the contribution to revenue made by Cypress
+from 16 April 2020 onwards), an increase of 8.4 percent compared with the figure
+for the previous fiscal year of €2,445 million. The segment contributed 31 percent of
+Infineon's Group revenue.
+The expansion of data centers and the 5G cellular infrastructure continued during
+the previous fiscal year. In the area of data centers, there was strong demand especially
+in the second half of the fiscal year as a result of the lockdowns imposed to fight the
+coronavirus pandemic. Many data center operators adjusted their computing and
+storage capacity to meet the increase in demand for digital services, such as video
+streaming, virtual conferences, online shopping, working from home and home-
+schooling. In the area of 5G cellular infrastructure, the expansion, which had started
+in the previous year, continued. 5G base stations were installed above all in China
+and also in the USA, Korea and Japan. Our components for the power stages benefited
+from both trends.
+CoolMOS
+Source: ABI Research: Wireless Connectivity Technology Segmentation and Addressable Markets Q3 2020 Update. July 2020.
+Comparability limited due to differing reporting period (fiscal year-end).
+Infineon Technologies | Annual Report 2020
+Q = < 75 >
+For coin cell-powered devices we are focusing on the smooth interaction
+between embedded control and connectivity as well as on low power consumption
+and hence long operating time.
+00000
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Further information
+Q = < 76 >
+Research and
+development
+Research and development expenses were €1,113 million in the 2020 fiscal year
+compared with €945 million in the previous year. This increase of €168 million or
+18 percent was disproportionate to revenue, which increased by 7 percent. In the
+2020 fiscal year, we invested 13.0 percent of revenue in research and development,
+compared with 11.8 percent in the previous year. The first-time consolidation of
+Cypress contributed significantly to the increase in the research and development
+ratio, as Cypress invested proportionately more in research and development than
+Infineon. Capitalized development costs in the 2020 fiscal year were €158 million
+(previous year: €125 million).
+C33 R&D expenses
+€ in millions
+Infineon Technologies | Annual Report 2020
+11.8%
+1,113
+945
+H
+13.0%
+R&D expenses
+Percentage of revenue
+2019
+2020
+Jun 16 Thu
+Cloudy 24C/752F
+J.
+1983
+10.08
+the Segment Result in the segment's original business activities fell due to a decrease
+in economies of scale, which could not be fully offset by savings made in operating
+expenses.
+Due to the crisis, international travel declined worldwide in the second half of the
+fiscal year. Consequently, there was a significant slowdown in demand for passports.
+However, this decline was offset by the rolling out of other national identity docu-
+ments, with the result that in the area of governmental identification documents
+there was even a slight increase in revenue.
+Due to the many local lockdowns and the switch to working from home, the use of
+public transport fell in many cities around the world. Therefore, we saw weaker
+demand for products in our transport and ticketing business.
+There was growing acceptance of contact-
+less payment, as many payment service
+providers raised their limit for payment with-
+out a PIN. Members of the public increas-
+ingly favored contactless payment to avoid
+infection at the point-of-sale terminal. The
+shift from purely contact-based cards to
+dual interface cards, accelerated by corona,
+meant that from the middle of the third
+quarter of the fiscal year there was a push
+for these cards in the area of payment
+systems, which led to supply bottlenecks,
+meaning that the full impact of this situa-
+tion did not transpire.
+Infineon
+明
+1234 5678 6699 996b
+OL/2024
+06/2020
+SURNAME NAME
+Cashless payment is becoming more popular,
+not least because of coronavirus. The next step
+is the biometric card, which remains in the
+cardholder's hand throughout the transaction.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+The next step in the development of contactless payment is the biometric card, which
+we announced in August. With these cards with an integrated fingerprint sensor,
+contactless payment will become even more convenient, secure and hygienic. During
+the entire contactless payment transaction, the card remains in the cardholder's
+hand. Even larger payment amounts will no longer require confirmation by entering
+a PIN or by means of a signature.
+Revenue from embedded SIMS (eSIMs), which are used in vehicles to make automatic
+emergency calls, continued to increase. Demand for eSIMs in industry is also growing
+stronger, driven in particular by progress with Industry 4.0. Manufacturing machinery,
+tools and other technical devices are increasingly connected and can therefore be
+monitored or serviced and maintained remotely.
+The businesses we took over on the acquisition of Cypress saw steady trends. Connec-
+tivity solutions in particular generated increased revenue. On the one hand, this
+was due to people spending more time at home, boosting sales of games consoles,
+consumer electronics, smart speakers,
+surveillance cameras, remote control door
+locks, PC accessories and office equipment.
+On the other hand, it was due to vehicles
+increasingly being equipped with Wi-Fi to
+connect mobile devices for in-cabin enter-
+tainment and for the retrieval of information
+during the journey. The level of business
+here was not as good as we would have
+expected before the outbreak of the coro-
+navirus pandemic, but in the second half
+of the 2020 fiscal year we were able to
+achieve a slight increase in revenue in this
+business line despite the decline in vehicle
+production.
+Our connectivity solutions are used in
+many different applications; for example for remote
+control via Bluetooth in consumer electronics.
+The microcontroller business also saw various market trends. The areas of factory
+automation and home appliances performed worse than expected, but due to shelter-
+in-place in many countries led to people investing more in equipment for their
+homes. As far as our microcontrollers are concerned, there was increased demand
+for health monitoring devices, remote control door locks, fitness trackers and also
+for the applications mentioned above. We are focusing in particular on those loT
+applications, which require both microcontrollers and connectivity, not only because
+they offer growth prospects, but also because it is here that the smooth interaction
+between embedded control and Wi-Fi or Bluetooth connectivity comes into its own.
+10:08
+●0000
+12
+Combined Management Report
+The segments
+Connected Secure Systems
+Business focus and strategy
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+At the beginning of the 2019 fiscal year, we
+acquired Siltectra to address the high cost
+of the base material, the SiC wafer. An
+industrial scale-up of Siltectra's Cold Split
+technology is progressing according to
+plan. This technology enables crystalline
+materials to be split with minimum loss
+of material compared with conventional
+sawing techniques, which will make it
+possible to achieve a significant increase
+in yield related to the raw material of the
+wafers. The continuing development of
+the Cold Split technology is taking place in
+Villach (Austria) and at the Siltectra site
+in Dresden (Germany).
+GaN
+400 kilowatts charging station with
+CoolSIC™ allows for ultra-fast charging.
+Compared to Si-based transistors, GaN
+transistors also have entirely new properties
+that can be used for example for power
+supplies. Devices, which are more efficient
+and much more compact, can be built due to lower losses both when switching and
+when in the on-state. GaN's properties, which are very different from those of Si,
+make it possible to integrate high-voltage systems on a chip, which represents
+another step towards more compact solutions. These can be used, for example, for
+motor control units in robots. Another field of application is data centers, which
+have very high requirements in terms of energy efficiency and power density. Another
+promising area of application are DC-DC converter for medium voltage, where GaN
+excels with its low switching losses.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Further information
+← Q = < 79 >
+At the same time, we are expanding our product portfolio to include additional voltage
+classes. In the 2020 fiscal year, SiC MOSFETs with breakdown voltage of 650 volts
+and 1,700 volts were launched, and other products with higher breakdown voltages
+of up to 3,300 volts will gradually follow. In addition, there will be suitable packages,
+so that the SiC technology can achieve its best performance.
+In the previous fiscal year, we expanded our CoolGaN™ family, comprising various
+600-volt GaN power transistors, to include a 400-volt GaN power transistor. The new
+CoolGaNTM 400-volt component is designed for Class D amplifiers in premium Hi-Fi
+audio systems. It features an integrated, very fast-switching diode and ultra-linear
+amplification. End consumers benefit from a fuller, more natural sound experience.
+Digitalization of products and systems
+Another focus of our research and development activities, in addition to raw materials,
+is the digital control of power semiconductors. For MOSFET-based systems in the
+field of AC-DC and DC-DC applications, the
+transition began several years ago. The
+TRAVEOTM
+Family
+TRAVEO™-family with its main focus on
+infotainment and body functions.
+same trend can now also be seen for IGBT-
+based applications. Infineon provides
+components for all stages of the digital
+control loop: microcontrollers, control ICs,
+driver ICs and power switches.
+TRAVEO™-family with their focus on infotainment and body functions. For industrial
+applications, Cypress' PSOC™ family is added. Both TRAVEO™ and PSOC™ are product
+families, which build on ARM processor architecture and therefore reach a wide
+developer community. The success of the PSOC™ family is also due to extensive soft-
+ware support and the efficient development environment of the Modus Toolbox™.
+Sensor technologies and radio-frequency applications
+Sensors capture the real, analog world. The signals measured are first digitalized.
+Then, the digital values are processed, transmitted and stored according to the
+requirements of the target application. Sensors also play an increasingly important
+role in operating machines and devices, referred to as human-machine interaction.
+Our MEMS microphones are an example of a highly successful market launch.
+Revenue from MEMS microphones increased significantly despite the pressures of
+the coronavirus pandemic, mainly due to the "sealed dual membrane❞ microphone,
+which was only launched onto the market in the 2019 fiscal year. This high-end
+microphone has a superb signal-to-noise ratio given its very small size and is used
+particularly in wireless headphones in the upper price range.
+Microcontrollers
+Microcontrollers are key elements of every
+system. In the automotive sector, the highly
+successful microcontrollers of the AURIX™
+family with their focus on the drive train and
+ADAS (advanced driver assistance systems)
+have been supplemented by the Cypress'
+Building on our successful development work, we were able to strengthen our market-
+leading position for 77 gigahertz radar sensor ICs for use in cars (source: Yole, Status
+of the Radar Industry, Market and Technology Report 2020). The next generation, based
+on 28 nanometer CMOS technology, is already in the development phase.
+Also in the field of radar, our 60 gigahertz radar chipset enables us to devise new
+consumer applications. Infineon has entered into an agreement with U.S. startup
+Blumio in San Francisco to co-develop a wearable, non-invasive blood pressure
+sensor in the 2021 calendar year. The new chipset enables continuous and precise
+measurements to be taken for the first time without an annoying cuff or cable.
+Infineon Technologies | Annual Report 2020
+The development of the next generation of our GaN transistors has already started.
+This new architecture will enable more significant improvements in performance.
+Volume production of our GaN products will take place in Villach on a 150-millimeter
+wafer manufacturing line. The transition to volume production on 200-millimeter
+wafers is in the course of preparation.
+Segment Result
+In the 2017 calendar year, Infineon was one of the first manufacturers to bring a SiC
+MOSFET with trench technology to market. The trench architecture offers significantly
+more degrees of freedom in the realization of efficient, more robust transistors than
+technically less demanding planar architectures. It gave Infineon a competitive edge
+on the development front, which we want to sharpen with the second generation
+currently in development.
+Sic
+Further information
+Q = < 77 >
+Amortization of capitalized development costs in the 2020 fiscal year was €56 million
+(previous year: €57 million). Subsidies and grants received for research and develop-
+ment decreased from €111 million in the 2019 fiscal year to €108 million in the
+2020 fiscal year.
+At the end of the 2020 fiscal year, we employed 9,262 people (20 percent of Infineon's
+total workforce) in research and development. At the end of the 2019 fiscal year, the
+corresponding figure was 7,755 (19 percent of the workforce). The increase was mainly
+due to the integration of Cypress. The number of research and development sites
+rose to 54 in 20 countries, compared with 37 research and development sites in
+16 countries at the end of the 2019 fiscal year.
+Principal research and development activities
+The strategic "Product to System” approach is of crucial importance here once again,
+and in more than one respect. It helps us better adapt our components to require-
+ments. We understand new trends early on and can develop innovative approaches,
+suggesting new approaches to our customers or presenting them with totally new
+possibilities. Particularly important is the opportunity to offer customers complete
+solutions and benefits in terms of system performance, system costs and development
+time. It also means that we are increasingly focusing on and building more expertise
+in software and system solutions. This strategy is receiving a tremendous boost
+by the integration of Cypress. Infineon is strengthened by complementary products,
+including a microcontroller portfolio, connectivity solutions and memory ICs for
+specific applications as well as a large software ecosystem.
+Infineon's research and development activities accord with its strategy of securing
+and strengthening its core business and expanding its business in adjacent areas.
+They therefore concentrate on the one hand on continuing improvements to its
+power semiconductors, with a particular focus on the use of new materials such as
+SiC and GaN, and on the other on the digitization of products and systems. The main
+products here are microcontrollers, connectivity solutions and software and, to an
+increasing extent, artificial intelligence in edge computing. The ongoing development
+and expansion of our sensor range is a key factor in the area of the lot. We address
+longer-term future-related topics in the fields of quantum computing and post-
+quantum cryptography.
+Patents
+Another indication of Infineon's innovative power and long-term competitiveness is
+the number of our patents. In the 2020 fiscal year, we applied for around 1,700 patents
+worldwide, compared with around 1,800 patent applications in the previous year. As
+a result of our acquisition of Cypress, we have significantly expanded our portfolio in
+forward-looking areas by around 3,000 patents. We regularly review and streamline our
+patent portfolio. At the end of the 2020 fiscal year, the worldwide patent portfolio com-
+prised around 29,000 patents and patent applications (previous year: around 27,000).
+Research and development fields at Infineon¹
+The previous main applications for SiC were mostly photovoltaic inverters, industrial
+power supplies and the charging infrastructure for electric vehicles, where the system
+advantages of SiC are very evident. Now we are starting to see a much broader pene-
+tration of industrial applications, primarily in uninterruptible power supplies. There
+are also initial designs in the important market of variable-speed drives (servo motors,
+robotics), which benefit from the special properties of the new technology, allowing
+a cost-effective, high-performance implementation from a system point of view. The
+same applies to auxiliary units in trains. In the medium and long term, electric vehicles,
+i.e. passenger cars and delivery vehicles, offer huge potential. Applications here
+include main inverters for the drive train and onboard chargers.
+Power semiconductors
+We see it as a clear advantage that our very broad portfolio of power components
+enables us to offer our customers the optimal solutions for their problems: Si, SiC,
+and GaN or combinations thereof.
+1 The content of this section is voluntary, unaudited information, which was critically read by the auditor.
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Further information
+Q = < 78 >
+New materials
+Manufacturing technologies and transistor architectures for power semiconductor
+components based on new materials are a key focus of our research and development
+activities. SiC, a compound of Si and carbon, and GaN, a compound of gallium and
+nitrogen, allow higher power densities and reduced switching losses, both leading
+to increased efficiency of power semiconductors and thus reduced losses.
+Development of power semiconductors is not restricted to individual components,
+but also encompasses power systems and therefore control components as well as
+software and complete solution for selected applications. Infineon covers a very wide
+range in the field of power electronics technologies and designs, with low-voltage
+and high-voltage power switches and power semiconductors based on Si or the new
+materials SiC and GaN. The high performance of our components is complemented
+by a constantly expanding platform of digital microcontrollers. Coordinated port-
+folios like this enable the customer to develop solutions within a short space of time
+with outstanding cost performance.
+2020
+BIOMETRICS BY
+FINGERPRINTS
+77
+Infineon
+C29 Market share for security ICs (excl. NFC controller; excl. NFC embedded Secure Element)
+in 2019
+The world market for Wi-Fi ICs (only standalone ICs) reached 978 million units in the
+2019 calendar year (source: ABI Research). This was a decrease of 1.4 percent compared
+with the figure for 2018 of 992 million units. Infineon could increase its sales in units in
+this business by 3.7 percent. This market is currently still determined by the end markets
+for routers, PCs, laptops and tablets. Infineon is either not represented or hardly
+represented in these markets, but focuses on loT applications. With a market share of
+9.8 percent, Infineon is in fifth position (2018: fifth position with 9.4 percent), LC31.
+The five largest market players together accounted for 66.5 percent of the market
+(2018: 66.0 percent).
+In the 2019 calendar year, 3.51 billion security ICs for payment cards were sold (source:
+ABI Research). Infineon was the market leader, with a market share of 47.6 percent
+(previous year: market leader with 44.1 percent), C30. The four largest competitors
+together accounted for 91.4 percent of the market (2018: 90.8 percent). (The only
+statistics available for this market are by unit, not by value. Only the four largest com-
+petitors are disclosed.)
+Infineon was the market leader, with a market share of 26.3 percent (no figures are
+available for the previous year), C29. The five largest market players together
+accounted for 87.5 percent of the market (likewise no figures are available for the
+previous year).
+The world market for security ICs (excluding NFC controller and excluding NFC
+embedded Secure Element) reached US$2.77 billion in the 2019 calendar year (source:
+ABI Research: Smart Card and Embedded Security IC Technologies. October 2020). This
+was a decrease of 3.3 percent compared with the figure for 2018 of US$2.87 billion.
+The trends in the three largest submarkets were very different: Security ICs for payment
+cards (US$982 million; plus 2.5 percent); security ICs for SIM cards (US$534 million;
+minus 9.9 percent); security ICs for governmental identification documents (US$509 mil-
+lion; virtually unchanged).
+Market position
+Q = < 73 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Connected Secure Systems
+NXP
+Business focus and strategy
+Infineon Technologies | Annual Report 2020
+a key component of which is the ModusToolbox™M
+development environment.
+> We now have access to a large developer community,
+locks and security cameras will benefit from our
+expanded product portfolio.
+> Mobile health monitoring devices, remote control door
+2019
++ How Cypress brings us forward
+Cypress has had years of experience in software development and system know-how
+and it is precisely this that enables us to develop reference designs even more quickly
+for easy-to-use and plug-and-play applications. This approach is important because
+in the future more and more customers will be from areas outside electronics and
+their expertise will not be in connecting their products to the internet. We want to be
+able to offer these customers turnkey reference designs, which are tailor-made for
+their specific projects. As far as possible, we provide all the necessary semiconductor
+components needed and the software required to control our components. The
+application software remains the customer's responsibility.
+Our product range now also includes hardware and software for connectivity solu-
+tions, developed by Cypress specifically for loT applications. The portfolio comprises
+components for Wi-Fi, Bluetooth and Bluetooth Low Energy transmission standards.
+Together with industrial microcontrollers, these can be included in complete
+solutions for customers in the Industrial Power Control and Power & Sensor Systems
+segments. In combination with our portfolio of security solutions, we are also able
+to provide customer-specific security functions for the controllers and connectivity
+components. We offer tailor-made solutions to achieve the level of security required
+in the best way possible with the least complex system and the fastest implementa-
+tion. In addition, our solutions are more compact.
+Following the acquisition of Cypress and the expansion of our product and compe-
+tence portfolio, new opportunities for growth are opening up, especially in IoT.
+In line with our strategic "Product to System" approach, we are for example incor-
+porating security functions into special microcontrollers. This means that we are
+expanding our portfolio of what have until now been specialized security ICs to
+include microcontrollers enhanced with security functions. These are not quite at
+the same level as dedicated security ICs, but they are cheaper and meet the
+security requirements of many applications. This enables us to adapt even more
+specifically to the level of security desired by the customer. These are new features
+that differentiate us from our competitors and therefore provide us with growth
+opportunities.
+One of the aims of Infineon's strategy is to be the leading provider of security solutions.
+The segment generates a significant proportion of its revenue from products in which
+the security controller is bundled with software, such as firmware, driver software or
+hardware-near application software. Infineon's software and system expertise means
+that it can provide reference designs and easy-to-integrate security modules.
+Management Board and
+Supervisory Board
+Q = < 72 >
+Samsung
+CEC Huada
+9.8%
+10.0%
+14.5%
+15.9%
+16.3%
+Infineon
+Qualcomm
+Broadcom
+NXP
+MediaTek
+C31 Market share for Wi-Fi ICs in 2019 (standalone ICs only)
+Source: ABI Research: Smart Card and Embedded Security IC Technologies. October 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+STMicroelectronics
+7.2%
+18.6%
+18.0%
+NXP
+47.6%
+Infineon
+Samsung
+C30 Market share for security ICs for payment in 2019
+Source: ABI Research: Smart Card and Embedded Security IC Technologies. October 2020.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+9.2%
+12.7%
+17.8%
+21.5%
+26.3%
+STMicroelectronics
+Further information
+> We combine microcontrollers and connectivity components
+with security expertise to create new system solutions for the
+accelerated entrance into the loT growth market.
+Combined Management Report
+The segments
+Connected Secure Systems
+€953
+REVENUE
+Business focus and strategy
+2
+1
+Management Board and
+Supervisory Board
+Consolidated Financial Statements
+Business focus and strategy
+Combined Management Report
+The segments
+Consolidated Financial Statements
+Further information
+Q = < 74 >
+Connected Secure Systems
+Review of the Connected Secure Systems segment
+in the 2020 fiscal year
+In the Connected Secure Systems segment, Infineon generated revenue in the 2020
+fiscal year of €953 million, an increase of 48.4 percent compared with the figure for
+the previous fiscal year of €642 million, including the contribution to revenue made
+by Cypress from 16 April 2020 onwards. The segment contributed 11 percent of
+Infineon's Group revenue.
+In the 2020 fiscal year, the Segment Result was €122 million, an increase of 58.4 per-
+cent compared with the figure for the previous fiscal year of €77 million. Based on
+revenue, the Segment Result Margin was 12.8 percent (previous year: 12.0 percent).
+The Connected Secure Systems segment saw the greatest percentage increase in
+revenue of all the segments from the acquisition of Cypress, compared with its original
+business. The Segment Result was similarly affected, with the business activities of
+Cypress making a positive contribution to earnings. In contrast to this positive effect,
+C32 Revenue and Segment Result of the Connected Secure Systems segment
+€ in millions
+642
+953
+Revenue
+122
+million
+Combined Management Report
+The segments
+Management Board and
+Supervisory Board
+A
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Embedded security applications open up the possibility of addressing structural
+growth drivers and advancing into new application areas, including for example
+authenticating loT devices and connecting vehicles, but also protecting smart factories
+in industry. Growth in this area is being driven by increasing data exchange. Cars,
+for example, send real-time traffic information to the cloud or receive updates from
+the manufacturer “over the air”, meaning that the software can be updated quickly
+and cost-effectively. The senders and recipients of these data, whether these are the
+car manufacturers or individual systems in the car, are authenticated using cryp-
+tographic keys. OPTIGA™ TPM stores this sensitive information much in the same way
+as a physical safe would, providing particularly high levels of protection against
+data-technical and physical attacks. The Trusted Platform Module (TPM) secures all
+the major communication channels in the car, such as the central gateway, the
+telematic unit and access to the infotainment system. The OPTIGA™ TPM can there-
+fore be regarded as a successful example of our strategic "Product to System"
+approach and of collaboration across segment boundaries.
+We carry over our core competence in traditional smartcard applications, payment
+cards and governmental identification documents into the fast-growing area of
+embedded security applications. Our business is therefore changing from these
+traditional applications to security solutions with a chip, which functions as a highly
+reliable anchor for security. Software is becoming an increasingly important element
+of the solution we provide. We offer our customers solutions for secure authentication,
+encryption and protection against unauthorized access, all the way to complete
+system solutions in the area of payment. For example, the SECORA™ Pay portfolio
+comprises easy-to-integrate solutions for contactless payment cards and mobile
+devices. With SECORA™ Connect, the product family is expanded to include a solution
+for coin cell-powered, connected smart wearables such as smart watches. The solution
+combines a security module (Secure Element) with a system-in-package NFC antenna
+and lets device manufacturers easily integrate and manage payment applications
+as well as ticketing and access solutions. The basis for this is the secure digitization of
+credit or debit cards, referred to as tokenization, in the smartphone or smart watch.
+Connected Secure Systems
+Strategic focus
+In addition to its role as an independent business unit, the Connected Secure Systems
+segment fulfills a second important function within the Group. As a competence
+center it is supporting the other three segments to integrate security and connectivity
+as functions in their system solutions and thus to create additional potential differen-
+tiation between them and their competitors. The segment provides the portfolio of
+industrial microcontrollers and software, so that the other segments can offer com-
+plete solutions.
+As a result of the acquisition of Cypress, we have not only substantially expanded our
+product portfolio and the number of applications thereby possible, but also signifi-
+cantly broadened our competence and know-how. As a result, the name of the segment
+was changed with effect from 1 August 2020 from “Digital Security Solutions" to
+"Connected Secure Systems". The expertise we now have on board in the areas of
+security, embedded control and connectivity provides us with the essential building
+blocks we need to be successful in the area of IoT.
+Increasing digitalization unlocks new opportunities, but increases the risk of hacker
+attacks if suitable countermeasures are not taken. With our expanded product port-
+folio, we have strengthened our position and confirm our strategy, which is to support
+our customers in the best way we can by providing easy-to-use solutions for system
+integration and ensuring a short time-to-market.
+Q = < 71 >
+Further information
+The digital transformation covers more and more areas of our daily lives and not
+only as a result of the coronavirus pandemic – security is becoming a key aspect of
+many applications. The integration of security solutions therefore become an indis-
+pensable feature of intelligent devices, connected vehicles, companies and Industry
+4.0 factories in order to defend them against attacks - whether that is theft, fraud
+or manipulation.
+Combined Management Report
+The segments
+Connected Secure Systems
+Consolidated Financial Statements
+SEGMENT RESULT
+€122
+million
+Consolidated Financial Statements
+Q = < 70 >
+Connected
+Secure Systems
+Further information
+The Connected Secure Systems segment provides
+comprehensive systems for a secure, connected world,
+based on reliable, game-changing microcontrollers,
+and wireless connectivity solutions and security
+solutions. In particular, microcontroller solutions,
+Wi-Fi and Bluetooth solutions, and combined connec-
+tivity solutions (known as combo chips) have been
+developed, along with hardware-based security
+technologies and an efficient software environment
+for the programming and configuration of the micro-
+controllers and connectivity components, which
+cover many application areas: credit and debit cards,
+electronic passports, national identity cards, consumer
+electronics, IoT and connected home appliances,
+IT equipment, cloud security and connected vehicles.
+With our technologies in the areas of computing,
+connectivity and security, we are contributing sig-
+nificantly towards ensuring that current and future
+connected systems are reliably protected, since
+communication and data security are two sides of
+the same coin.
+Applications p. 239
+Management Board and
+Supervisory Board
+Business focus and strategy
+Backend manufacturing
+> Free cash flow from continuing operations to measure the amount of cash generated
+or used excluding financing activities,
+Segment Result is the key figure of the Group for measuring operating performance.
+Expressed as a percentage of revenue (Segment Result Margin), it measures profit-
+ability of revenue and shows how well operations are being managed. The activities
+of Infineon's segments are managed on the basis of Segment Result. Responsibility
+for optimizing Segment Result within the framework of Group strategy (as approved by
+the Management Board) rests with the management teams of the relevant segments,
+acting, however, in coordination with the Management Board.
+Free cash flow from continuing operations enables us to measure how well operating
+profitability is being converted into cash inflows. This key figure also provides infor-
+mation on the efficient use of working capital and property, plant and equipment.
+Infineon Technologies | Annual Report 2020
+> Wuxi
+› Return on Capital Employed (ROCE) to measure capital efficiency.
+> Beijing 2
+Thailand
+› Shanghai
+Greater China
+Backend manufacturing
+› Bangkok
+Backend manufacturing
+› Segment Result and Segment Result Margin to measure the operating profitability
+of its various businesses and of the portfolio as a whole,
+› Cavite
+Regional headquaters
+In order to measure its success in implementing its strategies, Infineon uses the
+following three overarching performance indicators:
+Business focus and strategy
+Performance indicators
+Philippines
+> Tokyo
+Regional headquaters
+Infineon Technologies | Annual Report 2020
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Internal management system
+Principal performance indicators
+Consolidated Financial Statements
+Q = < 89 >
+Internal management system
+The internal management system at Infineon is designed to assist in implementing
+the Group strategy, p. 33 ff., and related long-term financial targets, p. 41 f. Accord-
+ingly, performance indicators are used, which enable profitable growth and efficient
+employment of capital to be measured.
+Overall, reaching our long-term financial targets gives rise to a sustainable increase
+in the value of the business, brought about by achieving a premium on the cost of
+capital in the long term.
+In this context, growth, profitability and investments are all interdependent. Profit-
+ability is the prerequisite for being able to finance operations internally, which,
+put another way, means opening up potential opportunities for growth. Growth,
+in turn, requires continual investment in research and development as well as in
+manufacturing capacities. Growing at a commensurate rate allows Infineon to achieve
+leading market positions and to generate economies of scale that contribute to
+greater profitability. Employing financial resources efficiently is a critical factor in
+achieving these goals.
+Infineon deploys a comprehensive controlling system to manage its business with
+respect to the strategic targets it has set itself. The system involves the use of financial
+and operating key performance indicators. Information for controlling purposes is
+derived from annual long-term planning, quarterly outlooks, actual monthly data and
+orders received per week. This knowledge enables management to base its decisions
+on sound information with respect to the current situation and future expected financial
+and operational developments. Sustainable business practices and the consideration
+of forward-thinking qualitative factors are important for Infineon's long-term success.
+As an enterprise very much aware of its responsibilities towards society, Infineon also
+takes account of non-financial factors, mainly in the fields of sustainability (see the
+report "Sustainability at Infineon" on our website www.infineon.com/csr_reporting) and
+human resources. Although these factors are not used to manage business performance,
+they nevertheless help Infineon achieve its financial targets.
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with all relevant
+legal requirements and, of equal importance, that its internal Corporate Governance
+Standards are complied with (see the chapter "Corporate Governance", p. 126 ff.).
+Further information
+Management Board and
+Supervisory Board
+Frontend manufacturing
+Backend manufacturing
+> San Diego, CA
+› Bucharest
+> Neubiberg
+> Milpitas, CA
+> Colorado Springs, CO
+> Martinsried
+> Herlev
+> Lynnwood, WA
+› Langen
+Denmark
+> Lexington, KY
+> Irvine, CA
+> Hazlet, NJ
+> Regensburg
+> El Segundo, CA
+› Beaverton, OR
+› Erlangen
+› Padua
+> Leominster, MA
+> Andover, MA
+> Duisburg
+> Villach
+USA
+› Dresden
+› Linz
+› Graz
+Romania
+› Pavia
+› Chandler, AZ
+Italy
+> San José, CA
+> Warstein
+Japan
+› Chengdu
+› Shanghai
+> Xi'an
+Greater China
+› Taipeh
+> Hsinchu
+Singapore
+Taiwan
+> Muntinlupa
+Philippines
+› Penang
+> Melaka
+> Kulim
+> Ipoh
+Malaysia
+> Warwick, RI
+› Seoul
+› Bangalore
+Asia Pacific
+India
+› Lviv
+Ukraine
+› Reigate
+UK
+› Dublin
+› Cork
+Ireland
+Réparade
+> Le Puy-Sainte-
+France
+> Bristol
+Korea
+> Netanya
+Israel
+› Augsburg
+First prototype of an ion-trap chip for quantum computers
+developed and manufactured at the Villach site.
+Infineon
+1.0
+The active use and precise manipulation of quantum mechanical effects in a few or
+individual particles is a basis for innovative components, which may be significant for
+future industrial products. Above all, the field of quantum computing is thought to
+have disruptive potential, as this new computing architecture will enable the solution
+of types of problems, which have until now hardly been accessible. Problems of such
+complexity occur, for example, in materials research, drug development, weather
+forecasting and logistics optimization. Infineon is a sought-after partner in this highly
+innovative field, bringing to the table in research networks both within and outside
+Germany, primarily, its expertise in planning, design and the manufacture of special
+Quantum computers and post-quantum cryptography
+< 81 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+technologies and/or special components. Various approaches are currently being
+adopted due to the fact we are at an early stage of development. We expect universal
+quantum computers only to become available in 10 to 15 years. Infineon is participat-
+ing both in the development of ion-trap quantum computers and in the investigation
+of electron spin qubits in semiconductor systems. The first prototypes have been
+developed and manufactured at our Villach (Austria) site; see photo.
+Through its acquisition of Cypress, Infineon gained additional expertise in various
+memory technologies. The most important of these for Infineon are NOR Flash
+memory ICs, which have a wide range of potential applications in the automotive
+sector, industry and the communication infrastructure. A NOR Flash memory IC is
+used primarily as program memory and is therefore clearly distinguished from NAND
+Flash memory, which is used for (multimedia) data. Infineon's NOR Flash memory ICs
+offer immediate availability in the systems used, a sort of "instant on". In the previous
+fiscal year, SEMPER™ Secure was added to the SEMPER™ NOR Flash memory product
+family. SEMPER™ Secure is based on an intelligent memory architecture and is the
+first memory solution to combine security against unauthorized memory access with
+the necessary functional security of the ASIL-B category (ASIL = Automotive Safety
+Integrity Level) set out in ISO 26262 in a single NOR flash component. The product
+family offers the level of security and reliability required by networked automotive,
+industrial and communications systems.
+Our future development efforts under the umbrella of the Connected Secure Systems
+segment are focusing, on the one hand, on the next generation of integrated Wi-Fi,
+Bluetooth and Bluetooth Low-Energy (BLE) products and, on the other hand, on the
+incorporation of these new connectivity capabilities into our existing and future range
+of products and systems in the markets and applications we address.
+Cypress' Wi-Fi and Bluetooth solutions are already widely established in the different
+markets. The current main applications are in consumer products and lot, including
+for example intelligent loudspeakers (smart speakers), fitness bracelets and printers,
+as well as in the automotive sector.
+Customers' needs in many applications are met in particular as a result of our ability
+to integrate Wi-Fi and Bluetooth technologies on "combo chips" and due to the possi-
+bility of fulfilling complex system requirements with highly-integrated dual stream
+2x2 Wi-Fi components.
+Items added to our product portfolio as a result of the acquisition of Cypress include
+wireless connectivity solutions based on Wi-Fi and Bluetooth. This puts Infineon
+in a position to offer customers complete solutions for networked systems based on
+our strategic "Product to System” approach. Here the individual components are
+inter-operable and optimized.
+Connectivity solutions
+In the area of radio-frequency applications, we offer solutions for smartphones and
+cellular infrastructure. In addition to today's components (essentially, low-noise
+signal amplifiers, antenna switches and antenna tuners), we will introduce further
+products, including frontend antenna modules and 5G millimeter-wave products.
+An application for the 60 gigahertz tech-
+nology, which is ready for the market, is
+human presence detection. We offer a com-
+plete system with radar sensors, micro-
+controllers and above all software, which
+makes it easy for our customers to integrate
+it into their end products. Examples of
+applications include controlling an air
+conditioning system so that it takes
+account of the number of people present
+and the use of access controls based on
+numbers. This latter application is already
+being used in Infineon's canteen at its
+headquarters in Neubiberg (Germany),
+so that the company can comply with the
+social distancing rules, which apply as a
+result of the coronavirus. The advantage
+of radar compared with a camera is that
+it preserves anonymity.
+or company premises.
+Precise, anonymous, contactless:
+radar-based access control for public
+buildings, retail shops, restaurants
+Q = < 80 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Innovative memory solutions
+Even if quantum computers are only available in some years' time, this already has
+practical consequences today. The service life of major systems or products, such as
+passports, industrial facilities, medical technology and cars, will potentially extend into
+the era of quantum computers, and these systems and products will still need to be
+secure then. Established encryption technologies such as RSA (Rivest Shamir Adleman
+Cryptography) and ECC (Elliptic Curve Cryptography) could be attacked with quantum
+computers. For this reason, Infineon is focusing on post-quantum cryptography, to
+start developing solutions now, which will be able to resist the compute power of
+quantum computers.
+Software and system support
+Software development is playing an increasingly important role in Infineon's
+research and development. It is a significant part of our strategic "Product to System"
+approach, which involves presenting the customer with comprehensive and easy-
+to-use solutions. Traditionally, we develop hardware-near software like firmware or
+drivers. In addition, for more and more applications we are now offering application-
+related program code. The second generation of our digital motor control platform
+iMOTION™, for example, includes a development kit which enables customers to
+achieve low system costs and short development times at high levels of reliability.
+Meanwhile, in some areas such as payment systems, we have acquired the expertise
+to provide all the software elements to build a software stack, from the operating
+system to the application software. The dynamic loT market also offers great poten-
+tial. Here especially, aspects which are important to the customer, such as short
+development times and low cost, are combined with a high level of IT security. To
+achieve this, you need not only individual software elements, but also a comprehen-
+sive software development environment.
+Germany
+Austria
+Europe, Middle East, Africa
+Canada
+America
+< 83 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+R&D sites
+Business focus and strategy
+R&D sites
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+In this context, we are also of course concerned with the trustworthiness of Al-based
+solutions. Human well-being lies at the heart of all action. Respect of universal
+human rights, the rule of law and democratic freedoms in compliance with the
+OECD Al Principles provides the foundation for artificial intelligence based on ethical
+principles. These principles must be observed in all development and application
+stages. This is the only way to ensure that Al products are not detrimental to humans.
+Infineon is involved in various cross-company and politically coordinated initiatives,
+such as the "Learning Systems. Platform for Artificial Intelligence” launched by
+the German Federal Ministry for Education and Research (BMBF). Our colleague
+Wolfgang Ecker has been appointed to serve on the German Federal Parliament's
+"Artificial Intelligence” Enquete Commission. We are aware that today we do not
+know enough to do everything right. Therefore we will further adapt our actions as
+we learn more and more.
+Al methods are also used to improve functionality in components. These allow rapid
+and efficient implementation of adaptive control loops for the most diverse applica-
+tions. Al is a key area of our software expertise.
+consumption. These are used in the areas of keyword detection and gesture detection,
+object identification and classification as well as sensor fusion. Edge Al makes data
+processing with Al possible close to the sensor without communicating with the Cloud.
+The prerequisite for this is an understanding of the algorithms of neural networks,
+so that these can be implemented directly in special semiconductor components in
+integrated circuits: i.e. in hardware. This provides an enormous speed advantage
+at the same time as reduced electricity consumption when compared with a software-
+based solution. Our aim is to develop complete solutions based on our know-how in
+the area of sensors, Al accelerators, microcontrollers, chip design and software.
+The expansion of the new development center in Dresden with its focus on artificial
+intelligence (AI) is proceeding according to plan. The number of employees there
+increased from 20 in the 2019 fiscal year to around 50 at the end of the 2020 fiscal
+year. One of its current development projects is looking at smart chips with embed-
+ded Al, intuitive sensor solutions and Al accelerators with extremely low electricity
+Artificial intelligence in edge computing
+Developing our own software has other advantages. We can ensure the software and
+hardware are a perfect match, thus optimizing performance, energy efficiency and
+data security at the system level. We can generally differentiate our solutions from
+those of our competitors not only through our hardware but also through software
+we have written ourselves.
+Another aspect of software development is the evaluation of sensor data. Our 60 giga-
+hertz radar sensor IC is able, for example, to detect gestures or the number of people
+in a room. Our software pre-processes the raw data and provides the user with the
+desired analysis. In this and other processes, we also use artificial intelligence elements
+to train the systems and to derive greater insight from the measurements recorded
+by the individual sensors.
+The acquisition of Cypress means that for the first time we have acquired a complete
+ecosystem including the ModusToolboxTM development environment, software com-
+ponents and an active developer community. The ModusToolbox™ comprises, among
+other things, reusable firmware, which makes programming Wi-Fi and Bluetooth
+components significantly easier for the engineers. Whether a customer chooses
+a particular hardware manufacturer or not is increasingly dependent on the accom-
+panying software on offer.
+Q = < 82 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+› Nagoya
+> Sendai
+> Tokyo
+Infineon Technologies | Annual Report 2020
+Backend manufacturing
+> San José, CA
+Frontend manufacturing
+› Mesa, AZ
+Backend manufacturing
+> Leominster, MA
+Frontend manufacturing
+> Austin, TX
+Regional headquaters
+> Milpitas, CA
+Regional headquaters
+> El Segundo, CA
+USA
+> Temecula, CA
+Backend manufacturing
+Mexico
+AMERICA
+Manufacturing sites
+Q = < 88 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Manufacturing sites
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+In order to optimize the use of capital and increase flexibility, and in addition to our
+in-house frontend manufacturing in differentiating technologies, such as discrete
+power semiconductors and sensors, we are increasingly using external manufactur-
+ing partners for CMOS and CMOS derivate technologies. This applies primarily to
+technology nodes of 65 nanometers or smaller and to older generations of power
+semiconductors. The manufacturing of microcontrollers and connectivity chips
+from Cypress is mainly outsourced. In the backend area, particularly in assembly and
+testing, we are making increasing use of manufacturing partners for standardized
+package types, with an emphasis on stable partnerships.
+As a result of the cost position, it is planned to continue to operate the site in Temecula
+(USA) only until September 2021 and then to close it or sell it in the meantime. The
+products manufactured there will be transferred to other Infineon sites or outsourced
+to external partners.
+Site expansion in Villach: Construction of the 300 millimeter module is well-advanced
+(see centre of photo). On the right-hand side you see the newly-occupied R&D building.
+> Tijuana
+Frontend manufacturing
+Europe, Middle East, Africa
+Austria
+> Melaka
+Frontend manufacturing
+> Kulim
+Malaysia
+Backend manufacturing
+) Cheonan
+Korea
+Backend manufacturing
+› Batam
+> Regional headquaters;
+Backend manufacturing
+(test only)
+Indonesia
+Asia Pacific
+Singapore
+Backend manufacturing
+› Cegléd
+Ungarn
+2 The site in Beijing will be closed by end of 2020 calendar year.
+1 Penang is assigned to the Austin site. The Known Good Die (KGD) test takes place in Penang.
+For definition frontend/backend manufacturing p. 47
+■Corporate headquarters • Regional headquaters • Frontend and backend manufacturing
+Backend manufacturing
+› Warstein
+Frontend and backend
+manufacturing
+› Regensburg
+Frontend manufacturing
+› Dresden
+Corporate headquarters
+> Neubiberg
+Germany
+Frontend manufacturing
+› Villach
+> increases in the level of automation, for example to improve wafer transport within
+the factory.
+› Penang¹
+> equipment for innovative technologies and further improvements in quality;
+As in prior years, investments were also made in the previous fiscal year in frontend
+and backend sites primarily in the following areas:
+By far the largest share of investments in property, plant and equipment was dedicated
+to manufacturing. Of this in turn, the largest part was made in frontend operations
+and the smaller part in backend operations.
+Q = < 85 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Business focus and strategy
+Management Board and
+Supervisory Board
+Percentage of revenue
+Investments
+12.8%
+MESTN
+2020
+1 Property, plant and equipment and other intangible assets.
+In the second half of the 2020 fiscal year, Infineon integrated the Cypress sites into
+its manufacturing landscape: Austin (Texas, USA), which manages the testing facilities
+in Penang (Malaysia), Bangkok (Thailand) and Cavite (Philippines). As of 30 Septem-
+ber 2020, there were 31,292 people employed in manufacturing-related functions
+(previous year: 28,981 employees). The increase was due mainly to the integration
+of Cypress.
+2019
+1,451
+18.1%
+Infineon Technologies | Annual Report 2020
+€ in millions
+C34 Investments¹
+In the 2020 fiscal year, our investments amounted to €1,099 million. This was a
+decrease of €352 million or 24 percent compared with the €1,451 million invested
+in the previous year. This decline was due mainly to weak demand as a result of
+the coronavirus pandemic. Investments as a proportion of revenue decreased from
+18.1 percent in the 2019 fiscal year to 12.8 percent in the 2020 fiscal year. Of the total
+investments, €915 million related to property, plant and equipment (previous year:
+€1,295 million) and €184 million to other intangible assets including capitalized
+development costs (previous year: €156 million).
+Manufacturing
+Q = < 84 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Business focus and strategy
+Management Board and
+Supervisory Board
+1,099
+Impact of the coronavirus pandemic on supply
+and manufacturing chains
+The spread of the coronavirus pandemic presented great challenges for our supply
+and manufacturing chains. These included the restrictions imposed as a result of full
+or partial lockdowns, especially at our sites in Indonesia, Malaysia, the Philippines,
+Singapore, Mexico and the USA. Thanks to the introduction of comprehensive hygiene
+plans and, in part, to the classification as a systemically relevant industry we were
+given permission to continue our manufacturing or to resume operations after a short
+interruption. One of the reasons we were able to do so was that manufacturing in
+cleanrooms is very safe. In the end, however, it was thanks to the outstanding commit-
+ment of our workforce that we were able to maintain our manufacturing at such a
+high level. Logistics presented another challenge. Border closures and the slump in air
+traffic made transportation much more difficult and expensive. Overall, we managed
+to overcome the challenges of the pandemic and, for the most part, to avoid any
+impact on our customers.
+The indirect impact of the coronavirus pandemic is more serious for us. The decline
+in global economic activity led to temporarily weak demand and as a result to
+underutilization of our manufacturing capacity. We were addressing this issue by,
+among others, introducing short-time work in Germany and Austria and reducing
+our investment budget.
+4. Investment in our Malaysian frontend site in Kulim is focusing on MEMS microphone
+technology and our wafer backside processing technology.
+3. Expansion of the backend manufacturing capacity for IGBT modules. Based on
+the expected strong demand for IGBT modules for, among other things, hybrid
+and battery electric vehicles the groundbreaking took place in September 2019
+for a new module manufacturing facility in Cegléd (Hungary). In February 2020,
+construction started on our new manufacturing facility at our largest backend site
+in Melaka (Malaysia).
+2. Further ramp-up of volume production of our SiC MOSFETs in trench technology
+and SiC diodes on 150-millimeter wafers.
+In Villach, we began the construction of the building in 2018 and, depending on
+the macroeconomic situation, we currently plan to start manufacturing towards
+the end of the 2021 calendar year. The planned investments for the fully-equipped
+building and cleanroom facilities are around €1.6 billion. The expansion will generate
+significant economies of scale at the Villach site, improving our efficiency. Finally,
+the expansion of the manufacturing capacity for Si also makes it possible to increase
+the capacity for SiC and GaN technologies. Existing buildings and manufacturing
+lines can be reused for these compound semiconductors. This enables us to
+achieve capital-efficient capacity expansion.
+Q = < 87 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+Clean room of the future 300-millimeter manufacturing in Villach, status September 2020.
+1. One Virtual Fab: With the new factory on the Villach (Austria) site, we are establishing,
+in conjunction with our 300-millimeter manufacturing in Dresden (Germany), the
+concept of virtual manufacturing control spread over different locations. Villach
+and Dresden will use the same processes and plants, and automation and digitiza-
+tion concepts. The aim is to be able to move manufacturing volumes across the two
+sites in a flexible manner. Both Infineon and our customers will benefit, especially
+in phases of rapid growth.
+Investment focus areas in manufacturing in the 2020 fiscal year
+For years, Infineon has been investing in the automation and digitalization of its
+manufacturing sites. These efforts were recognized in the previous fiscal year when
+our factory in Singapore was included in the World Economic Forum's Global Light-
+house Network. The members of this network stand out because they have adopted
+advanced manufacturing technologies on an industrial scale. The implementation
+of Industry 4.0, with the digital, horizontal and vertical integration of the value chain
+came within the start of the Smart Factory Pioneer initiative in March 2017. The
+smart factory is a fast and agile manufacturing enterprise connecting and managing
+the 4M (Man, Machine, Material, Method) through solutions based on automation,
+IoT and big data technologies.
+By using data analytics in conjunction with Al components, Infineon is not only
+optimizing the manufacturing processes, but is also ensuring the constant improve-
+ment of its own products. Artificial intelligence will thereby become another feature
+which will differentiate Infineon from its competitors in the market.
+> Real-time process data acquisition for each individual wafer or chip during the
+manufacturing process enables rapid improvements in productivity and quality
+using data analytics. Data analytics is also used for Al solutions in predictive
+maintenance. Time series evaluations can be used to predict machine downtime
+and to produce error analyses.
+› Optimized production control: Infineon uses Al components to improve the pro-
+duction process. We apply mathematical optimization to the manufacturing
+sequence and develop advanced techniques, including simulations where Al agents
+assume control of the factory and independently test various processes. From
+the positive or negative feedback received, the agents learn which strategies are
+the most successful and are therefore able to optimize the stages of the process.
+Q = < 86 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2020
+› Digital twin: Simulations can realistically reproduce the dynamics of both electronic
+circuits and manufacturing plants. This makes it possible to predict the variation
+of critical parameters in their effect on the function of a chip or a production plant
+in the computer. Furthermore, Infineon uses Al components in the development
+of electronic components and their simulation, which continuously improve the
+parameter set of future simulations.
+As a user of Al solutions, Infineon incorporates various methods of machine learning
+into the process of product development and manufacturing:
+Artificial intelligence and Industry 4.0
+Use of robots for storage and retrieval of the heavy
+and fragile burn-in boards.
+> adaptation and retooling of manufacturing lines in accordance with the modified
+product portfolio, in particular due to the start of volume production of new
+technologies and products;
+> Richmond, BC
+Backend manufacturing
+Japan
+6
+3.0%
+8.4%
+Return on Capital Employed (ROCE)³
+30
+12.2
+(1,042)
+12.2
+(1,354)
+Selling, general and administrative expenses
+32.0%
+28.2%
+68.8%
+57.8%
+9.3%
+9.3%
+1.7%
+5.0%
+Debt-to-total-capital ratio?
+6
+Debt-to-equity ratio
+Inventory intensity
+Return on assets6
+30
+13.0
+(1,113)
+13.1
+(1,448)
+Operating profit
+1,470
+581
+153
+Property, plant and equipment
+4 See the chapter "Review of results of operations" for definition, p. 103.
+77
+13.7
+1,170
+18.7
+2,072
+Segment Result/Segment Result Margin
+3 See the chapter "Internal management system" for definition, p. 93 f.
+2 The business with the XMC™ family of industrial microcontrollers was transferred from the Automotive segment to the Connected Secure
+Systems segment with effect from 1 October 2020. The previous year's figures have been adjusted accordingly.
+218
+368
+1,169
+Research and development expenses
+Profit (loss) for the period
+(50)
+(4)
+(6)
+net of income taxes
+Profit (loss) from discontinued operations,
+8
+46,665
+50,288
+Infineon employees as of 30 September
+216
+372
+1,175
+Profit (loss) from continuing operations
+1 Columns may not add due to rounding.
+Annual Report 2021
+Infineon Technologies AG
+www
+of Comprehensive Income
+154 Consolidated Statement
+>
+Next page
+6 Letter to shareholders
+88 Manufacturing
+10
+The Management Board
+92
+Internal management system
+12 Report of the Supervisory Board
+to the Annual General Meeting
+20 Business focus and strategy
+95 Sustainability at Infineon
+96
+Research and development
+The Infineon share
+22 Growth drivers
+35 Group strategy
+47 Human Resources strategy
+128
+99 Group performance
+109
+Report on outlook, risk
+and opportunity
+124 Overall statement on Infineon's
+financial condition
+125 Infineon Technologies AG
+53
+Corporate Governance
+151 List of references
+of Financial Position
+155 Consolidated Statement
+of Cash Flows
+156 Consolidated Statement
+of Changes in Equity
+158 Notes to the Consolidated
+Financial Statements
+20 Business focus
+80
+Supervisory Board
+The segments
+SITE
+Infineon
+Contents
+= < 1 >
+2 Infineon key data
+3 Infineon at a glance
+49 Combined
+152 Consolidated
+Navigation in the report per mouse click
+Management Report
+4 The segments
+50 Business model
+153
+5 Our year at a glance
+52
+Review of the semiconductor industry
+Financial Statements
+Consolidated Statement
+of Profit or Loss
+Last page viewed
+Q
+Search
+=
+Main table of contents
+55
+2021 fiscal year
+153 Consolidated Statement
+<
+Previous page
+6 Management Board and
+58
+4,443
+4,110
+8
+5 A dividend per share of €0.27 for the 2021 fiscal year will be proposed to the Annual General Meeting on 21 February 2022.
+6 See the chapter "Review of financial condition" for definition, p. 103.
+Key customers¹
+Aptiv / BorgWarner / Bosch / BYD /
+Continental/Denso / Hella / Hitachi /
+Hyundai / Lear/ Mando / Mitsubishi Electric /
+Nidec / Preh/Valeo / Veoneer / Vitesco/ZF
+Market position²
+Key customers¹
+ABB / Alstom / CRRC / Danfoss / Goldwind/
+Inovance / LG Electronics / Midea / Rockwell /
+Schneider Electric / Semikron / Siemens/
+SMA/Sungrow/Vestas / Yaskawa
+Market position²
+#1 with a market share of 36.5%
+for IGBT modules, R03
+#1 with a market share of 13.2%
+for automotive semiconductors,
+#4 with a market share of 15.1%
+for NOR Flash memory ICs, R01
+R023
+#3 with a market share of 11.6%
+for IPMS, R03
+Key customers¹
+Airbus Alibaba / Amazon / Baidu / Boeing/
+Cisco/Dell/Delta / Ericsson / Goertek /
+Google/Lenovo/ Lite-On / Makita / Nokia /
+Osram / Quanta / Samsung / SolarEdge / ZTE
+Market position²
+#1 with a market share of 24.4%
+for power MOSFETs, R03
+#1 with a market share of 44.2%
+for MEMS microphones, R04
+p. 75
+Key customers¹
+#1 with a market share of 24.6%
+for secure ICs (excluding NFC), R05
+#3 with a market share of 14.7%
+for microcontrollers, R01
+Major distributions customers¹
+Arrow / Avnet / Future / Hakuto / Intron / Jingchuan / Macnica / Nexty / Rutronik / Weikeng / WPG Holding (SAC)
+Please find a detailed presentation of the segments' target applications and product range in the chapter “Applications and product range", p. 240 ff.
+1 In alphabetical order.
+2 All figures for the 2020 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment. The figures provided in those sections with respect to changes in market share
+relate to the 2020 and 2019 market share figures as calculated in 2021. Due to changes in the way the market is analyzed, these figures may differ from the 2019 market share figures reported in 2020.
+3 A list of references can be found on p. 151.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+CPI Card Group / Fitbit / Giesecke & Devrient /
+Harman/HP/Idemia / Lenovo / Microsoft/
+Nintendo / Perfect Plastic / Seiko Epson / Sony/
+Thales / US Government Publishing Office
+Market position²
+Q = < 5 >
+☐
+p. 65
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 3 >
+Infineon Technologies | Annual Report 2021
+Infineon
+at a glance
+Infineon Technologies AG is a world leader in semicon-
+ductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better
+future. In the 2021 fiscal year (ending 30 September), the
+Company reported sales of approximately €11.1 billion
+with some 50,280 employees worldwide. Infineon is listed
+on the Frankfurt Stock Exchange (ticker symbol: IFX)
+and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Part of your life.
+Part of tomorrow.
+50,280
+employees
+#9
+in the entire semiconductor market R01
+p. 70
+#3
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 4 >
+The segments
+Automotive
+□ p. 60
+Industrial Power Control
+Power & Sensor Systems
+Connected Secure Systems
+in microcontrollers R01
+232 Further information
+Our year at a glance
+€11.060 bn
++29%
+In the area of digitalization, we are benefiting more and more from the synergies
+arising from the combined portfolio of Infineon and Cypress. Integration is progressing
+well, and we can see that the acquisition is delivering on its promises. We provided
+detailed explanations of the resulting growth opportunities for Infineon at our Investor
+Day (IFX Day 2021) in October. In particular, we described how we have acquired
+leading positions in markets of the future by investing early and consistently strength-
+ening our success factors.
+-
+The effects of the coronavirus pandemic and the lessons learned
+Both trends - electrification and digitalization – have been reinforced still further by
+the coronavirus pandemic in the past eighteen months. There was a veritable boom
+in some industry sectors, such as hardware for remote working, home schooling and
+games consoles, and battery-powered DIY tools.
+At the beginning of the pandemic, it still looked as if large sections of the global
+economy would grind to a halt, whereas manufacturers in the area of IoT and digital
+interaction and infrastructure saw a strong upturn. The auto industry in particular
+slashed its forecasts and cut back its orders, with the overall result being weak
+revenue for Infineon. Our experience from the last crisis prompted us to scale back
+our manufacturing to a significant extent, but to make only moderate reductions in
+our inventory and investment. Some industry observers and investors were skeptical
+of this approach, but it turned out to be the right one. Already in the second half of
+the 2020 calendar year, some severely affected economic sectors picked up speed
+again. In the automotive market, a catch-up effect started to be seen, while at the
+same time, the trend towards electromobility continued to accelerate. The result was
+a chip shortage that persists to this day, caused in part by the shifting of production
+capacity at our contract chip manufacturers towards supplies for use in laptops,
+tablets and servers. The situation was exacerbated by production stoppages due to
+pandemic-related lockdowns, especially in Asia, and by environmental disasters
+and accidents affecting several semiconductor manufacturers' plants.
+Without such constraints, we would have generated significantly higher revenue
+in the previous fiscal year, because demand in almost all our markets has been and
+remains very high. Even though we are currently still not able to fully satisfy the
+high levels of demand, our customers have expressed their great appreciation of our
+efforts. They realize and acknowledge that we do everything in our power to meet
+their needs. The feedback we have from our customers, especially those in the auto-
+motive sector, is that our reliability and commitment set us apart, when compared
+with other experiences they have had in the market.
+Current issues with allocation have only strengthened our view that we also need to
+champion our own manufacturing. The most critical bottlenecks arose for products
+that come from foundries - in some product categories, we are dependent on their
+supplies, as well. However, we are less dependent on foundries than competitors
+with fabless business models and, if we look across our entire portfolio, we are more
+resistant to supply problems. We have continued to develop our collaboration with
+contract manufacturers and have broadened our supplier base, so that in the future
+we will be even better equipped to deal with fluctuations in the supply situation.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Letter to shareholders
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+A key aspect of our strategy is P2S: from product thinking to system understanding.
+We adopted this approach years ago, laying the foundations for our present success.
+Thanks to P2S, we are able today to provide our customers in many areas with com-
+plete system solutions, including the related software. Why is that so important?
+Many of our target applications are becoming increasingly complex - the best example
+of this is the car: digitalization and electrification are shaping the vehicles of tomorrow.
+The number of electronic systems due to driver assistance, infotainment and comfort
+applications is constantly rising. Battery-powered electric motors are increasingly
+used in power trains. We understand the car as a system and can offer solutions that
+contribute towards enabling transformation and mastering ever greater complexity.
+Understanding the target application also means developing components that solve
+the problem most effectively. P2S is one of our great strengths and has brought us
+success in the market.
+Further information
+It is important now to draw the correct conclusions from the tense supply situation,
+and to do so across all industry sectors. More complex technologies, applications and
+supply chains are becoming part of the new normal. As a company, we need to adapt.
+Today, even isolated events that are primarily regional can rapidly have an impact on
+global supply chains. The just-in-time model needs updating. There is the need for an
+approach that encompasses available capacity, inventories and supply management
+and that is proactive, changing the focus according to each situation and across
+individual company boundaries. The first step in such an approach is intelligent
+inventory management. Moreover, all partners along the value chain need to under-
+stand the new dynamic in the market and provide appropriate flexibility.
+The serious consequences of the chip shortage have demonstrated the relevance
+of the semiconductor industry to almost all other industry sectors. The industry is
+increasingly becoming the focus of economic and geopolitical competition in all
+regions of the world. Turning the clock back on globalization is not a viable solution.
+However, Europe must decide in which areas and to what extent it is prepared to
+accept technological dependence on other continents – as well as the areas and
+extent to which such dependence is not acceptable.
+Looking back, we can say that, as a company, we have dealt well with the pandemic
+to date. This is thanks to the great commitment of our employees. Infineon has
+performed well due to their exceptional dedication and has at the same time been
+pressing ahead with the evolution and implementation of its long-term strategy.
+Success factors and evolution of our company
+Infineon Technologies | Annual Report 2021
+12
+10,219
+11,401
+Total equity
+7 Debt-to-total-capital ratio = long-term and short-term financial debt divided by total assets.
+21,999
+23,334
+Total assets
+Q = < 8 >
+REVENUE
+← Q = < 7 >
+Consolidated Financial Statements
+INCLUSION IN THE
+EURO
+STOXX 50Ⓡ
+SEGMENT RESULT
+AND MARGIN
+€2.072 bn
+± 18.7%
+The coronavirus pandemic continued to have an
+impact in the 2021 fiscal year. The unexpectedly
+strong recovery of the global economy by the end
+of the 2020 calendar year led to a boom in demand
+in many sectors and a resultant shortage of semi-
+conductor components.
+We are continuing to focus on the structurally fast-
+growing themes of electrification and digitalization.
+With Cypress, we have significantly increased our
+expertise in system solutions, especially with regard
+to the loT.
+The integration of Cypress and the refinancing of
+this acquisition are proceeding on schedule. In
+March 2021, capital market confidence in Infineon's
+economic prospects resulted in the inclusion of our
+shares in Europe's most prestigious stock market
+index, the EURO STOXX 50®.
+Sustainability plays a key role for Infineon. At the
+beginning of 2020, we had already set ourselves
+the goal of becoming carbon-neutral by 2030.
+Our high sustainability ratings and our inclusion
+in sustainability indices are both our reward and
+our motivation.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Letter to shareholders
+Business focus and strategy
+Combined Management Report
+Further information
+Consolidated Financial Statements
+← Q = < 6 >
+Letter to shareholders
+Dr. Reinhard Ploss
+Chief Executive Officer
+Neubiberg, November 2021
+Dear readers,
+Many of you have been following Infineon's progress for a number of years. You know
+that one really important factor in the success of the Company is our deep conviction
+that we can use innovative technology to contribute towards solving major challenges.
+Whether we are talking about the climate crisis, dwindling resources or population
+growth, the urgent issues of our time require intelligent concepts and solutions that
+enable us to lead a sustainable and secure life. Infineon, which acts as a link between
+the real world and the digital world, is more in demand than ever, and we have never
+been in a better position than we are today.
+Strategic focus on electrification and digitalization trends
+Our portfolio is firmly focused on the two major trends of the coming decade: electri-
+fication and digitalization. Both trends and the interplay between them will accelerate
+structural semiconductor growth. Tomorrow's energy-efficient, connected world is
+built on semiconductors. In the Internet of Things (IoT), our products and solutions
+enable new functions and services. IoT devices capture their surroundings and process
+the data and, in doing so, they interact with the cloud and perform actions. A good
+example is the fully automatic vacuum cleaner, which also works in a very energy-
+efficient way. Key elements in IoT are sensors, microcontrollers and power semicon-
+ductors, as well as connectivity and security solutions, supplemented by software.
+Infineon offers all of these elements and makes leading-edge applications possible -
+from electric cars that drive autonomously to home solar systems with buffer batteries,
+and much more. Thus, we are able to live up to our claim that we make life easier, safer
+and greener. Our contribution to climate protection is not limited to the contribution
+made by our products: As a company, we want to become carbon-neutral by 2030.
+Management Board and
+Supervisory Board
+Letter to shareholders
+Business focus and strategy
+Combined Management Report
+Further information
+232 Responsibility Statement by the
+Management Board
+233 Independent Auditor's Report
+240 Applications and product range
+244 Chart overview
+1,406
+14
+1,542
+Industrial Power Control
+235
+0.26
+0.87
+Diluted earnings per share in €
+37
+41
+3,521
+44
+4,841
+Automotive²
+235
+0.26
+0.87
+Basic earnings per share in €
+29
+8,567
+11,060
+Revenue by segment
+30
+17
+(3,806)
+10
+1.20
+Net cash provided by (used in) financing activities
+Greater China
+4,195
+38
+3,174
+37
+32
+from continuing operations
+(885)
+6,274
+(114)
+therein: Mainland China, Hong Kong
+3,178
+29
+2,472
+29
+29
+Business focus and strategy
+1,574
+(6,727)
+123
+Japan
+1,094
+Adjusted earnings per share in € - diluted 4
+(2,663)
+Net cash position³
+22
+our undisputed leading position in power semiconductors, in light of the trend
+towards electrification. Our concept for expanding manufacturing capacity involves
+initially preparing the clean room and then ramping this up over time in response
+to demand. Production at the new Villach factory will be increased gradually based
+on this principle.
+We differentiate ourselves clearly from our competitors not only because we have
+our own manufacturing facilities, but also because of our technological expertise,
+for example, in the area of compound semiconductors based on silicon carbide (SiC)
+and gallium nitride (GaN). In many applications, silicon-based power semiconductors
+are the optimal solution in technical and economic terms, especially for low switching
+frequencies. Power semiconductors based on SiC and GaN, on the other hand, enable
+faster switching speeds and significantly higher power density. We see rapidly growing
+demand for SiC-based power semiconductors above all in the automotive market
+but also in industrial applications and are therefore expanding our CoolSiC™ portfolio
+in particular, both in the area of discrete components and that of modules. We are
+also expanding our GaN product range. In addition, we are investing increasingly in
+the expansion of our manufacturing capacity for SiC and GaN to maintain our leading
+role across the entire range of power semiconductors, paving the way for further
+enhancements in energy efficiency. This is significant, as the world of the future is
+electric.
+As I explained at the beginning, digitalization is a key growth driver for our business.
+It also offers huge opportunities for the evolution of our company. Growth, global-
+ization, the focus on system solutions - we will be able to deal better with all these
+issues by applying digital solutions. In terms of our offering, this means, for example,
+that we are working increasingly on delivering our solutions inclusive of software and
+on expanding our solutions to include services. In our interaction with customers, we
+can also, in many cases, become faster and more efficient by using digital channels
+and platforms. The digital transformation also offers great opportunities for enhancing
+our internal processes and working practices.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Letter to shareholders
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 9 >
+The Management Board was expanded in April in order to coordinate these activities
+across the whole company and a post was created for the transformation of Infineon
+in the digital context. Innovative strength, our focus on applications and our global
+presence in growth markets are the basis of our success. We need to strengthen the
+digital links between the major organizational units such as Technology Development
+and Manufacturing or Sales and Marketing and to make knowledge available across
+the whole company in order to continue our dynamic evolution in these areas, despite
+our increasing size and complexity. The Management Board and the Supervisory
+Board have together devised a structure that highlights Infineon's current strengths
+and enables targeted further development of our digital expertise. We are delighted
+that Constanze Hufenbecher has strengthened our Management Board team and will
+address these topics on behalf of our company. With her wealth and breadth of expe-
+rience, she is the ideal manager for this role.
+Capital market successes and outlook
+As we look back at the 2021 fiscal year, the mentioned challenges we faced and the
+major milestones we achieved stand out in particular. In addition, there were a number
+of other important events and developments that I would like to touch on briefly here.
+With a US$1.3 billion private placement of bonds, we successfully pressed ahead
+with the refinancing of the acquisition of Cypress. In September, thanks to the positive
+trend in our Free Cash Flow, we were also able to repay early US$365 million of the
+term loans raised to acquire Cypress. Here, too, what counts for us is long-term plan-
+ning security, stability and reliability. In this context, the rating agency S&P Global
+assigned a positive outlook to our "BBB-” rating this spring.
+On 22 March 2021, Infineon moved up into the EURO STOXX 50. We are proud of this
+achievement, which reflects the success of the whole Infineon team. We have made it
+into the Champions League of stock markets - and now that we are there, we intend
+to stay.
+Dear readers, the variety and nature of the developments I have outlined above
+make it clear that the fiscal year just ended was neither normal nor easy. So I would
+like to thank our employees all around the world most warmly on behalf of the
+entire Management Board. You have shown great commitment in conditions that
+were sometimes very difficult, you have supported each other, and you have been
+tireless in your efforts to help our customers. Thank you so much!
+I would also like to thank you, our shareholders, because your continuing confidence
+has given us the space to concentrate on the important issues relating to the future.
+At our forthcoming Annual General Meeting, we will propose the payment of a divi-
+dend of €0.27 per share. Thus, we want to ensure appropriate participation for you in
+our success as well as giving us financial room for maneuver to respond to future
+opportunities, for which Infineon is superbly positioned.
+Stay healthy and look to the future with confidence.
+Suricenty
+Reitrad
+D
+Dr. Reinhard Ploss
+Chief Executive Officer
+Infineon Technologies | Annual Report 2021
+A significant element of our strategic evolution is the expansion of our own manufac-
+turing landscape. Without a doubt, the most important milestone was the opening
+of our new 300-millimeter semiconductor manufacturing facility in Villach (Austria)
+on 17 September. We will operate the new factory, together with our factory in
+Dresden (Germany), as one unit based on the One Virtual Fab concept, which gives
+us more flexibility and greater economies of scale. As a result, we are strengthening
+10
+765
+9
+3,227
+3,922
+Gross cash position³
+22
+10
+845
+9
+1,027
+therein: USA
+36
+1,099
+35
+1,497
+24
+12
+1,015
+11
+1,254
+Americas
+20
+1,260
+1,513
+Depreciation and amortization
+43
+Investments 3
+15
+Free Cash Flow³
+16
+Dividend per share in €5
+23
+31
+2,650
+29
+3,268
+1,291
+88
+0.64
+246
+List of abbreviations
+Financial calendar 2022
+247 Imprint
+Page reference
+Chart reference
+(Chart overview on p. 244)
+Reference
+(List of references on p. 151)
+Reference to external document
+This interactive pdf is optimized for use
+with Adobe Acrobat.
+Further information
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+0.27
+0.22
+23
+Connected Secure Systems²
+245
+32.4
+2,776
+38.5
+4,260
+Gross profit/Gross margin
+Corporate and Eliminations
+3.6%
+10.3%
+Return on equity
+(25)
+Consolidated Financial Statements
+0
+0
+12
+Other Operating Segments
+46.5%
+48.9%
+Equity ratio
+43
+11
+974
+13
+1,397
+16
+Further information
+Power & Sensor Systems
+Infineon key data¹
+← Q = < 2 >
+Europe, Middle East, Africa
+2,773
+25
+2,322
+27
+19
+from continuing operations
+3,063
+1,817
+69
+Net cash provided by operating activities
+therein: Germany
+1,278
+12
+1,056
+12
+21
+from continuing operations
+(2,284)
+(7,172)
+68
+Asia-Pacific (excluding Japan, Greater China)
+1,744
+Net cash used in investing activities
+29
+Management Board and
+Supervisory Board
+11,060
+in %
+millions
+millions
+Change
+€ in
+€ in
+Revenue by region
+2021/2020
+2021
+in %
+revenue
+2020
+in % of
+Fiscal year from 1 October to 30 September
+2021
+Change
+2021/2020
+Fiscal year from 1 October to 30 September
+2020
+in % of
+millions
+revenue
+€ in
+millions
+€ in
+8,567
+The coronavirus pandemic caused a sharp decline in share prices on global stock
+markets at the beginning of the 2020 calendar year. The share price then began to
+recover in mid-March 2020 and continued to increase during the 2021 fiscal year. Thus
+the share price rose more or less steadily between October 2020 and September 2021.
+1 October 2019
+33.34
+35.64
+37.95
+40.25
+C35 Development of the Infineon Technologies AG share compared to Germany's DAX Index,
+the Philadelphia Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index
+for the 2021 fiscal year (daily closing prices)
+Infineon share price in €
+The Infineon share finished the 2021 fiscal year at a closing price of €35.53, up
+47 percent on the €24.12 recorded one year earlier.
+Q = < 97 >
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+Term loan from 3 June 2019
+4.500% Convertible Bond from
+23 June 2016
+Rating of S&P Global Ratings
+1.625% Bond from 24 June 2020
+€500 million
+€750 million
+€750 million
+€750 million
+2.000% Bond from 24 June 2020
+€650 million
+2.875% Hybrid Bond from
+€600 million
+1 October 2019
+due on 10 March 2022, ISIN: XS1191116174
+due on 24 June 2023, ISIN: XS2194282948
+due on 24 June 2026, ISIN: XS2194283672
+due on 24 June 2029, ISIN: XS2194283839
+due on 24 June 2032, ISIN: XS2194192527
+first reset date 1 January 2025,
+ISIN: XS2056730323
+3.625% Hybrid Bond from
+€600 million
+first reset date 1 January 2028,
+Share price development
+ISIN: XS2056730679
+due on 5 April 2024
+US$350 million
+US$235 million
+US$350 million
+US$350 million
+US$350 million
+US$250 million
+US$1,110 million
+US$216 million
+due on 5 April 2028
+due on 16 June 2027
+due on 16 June 2029
+due on 16 June 2031
+due on 16 June 2033
+due on 3 June 2024
+due on 15 January 2022,
+ISIN: US232806AM17
+since 11 February 2021:
+"BBB-" Outlook: "positive"
+1 The number of shares issued includes own shares.
+2 Own shares were not taken into consideration for calculation of market capitalization.
+A full overview of other major indices in which the Infineon share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/infineon-share/#5].
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The Infineon share
+Consolidated Financial Statements
+Further information
+US$350 million
+due on 5 April 2026
+1.125% Bond from 24 June 2020
+S&P-Europe-350
+> Return on Capital Employed (ROCE)
+> Free Cash Flow from continuing operations and
+> Segment Result and Segment Result Margin
+In order to measure its success in implementing its strategies, Infineon uses the
+following three principal performance indicators:
+Principal performance indicators
+Performance indicators
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with all relevant
+legal requirements and, of equal importance, that its internal Corporate Governance
+Standards are complied with (see the chapter "Corporate Governance", p. 128 ff.).
+Infineon deploys a comprehensive controlling system to manage its business with
+respect to the strategic targets it has set itself. The system involves the use of finan-
+cial and operating performance indicators. Information for controlling purposes is
+derived from annual long-term planning, quarterly outlooks, actual monthly data
+and information available on a weekly basis, such as the volume of orders received.
+This knowledge enables management to base its decisions on sound information
+with respect to the current situation and future expected financial and operational
+developments. Sustainable business practices and the consideration of forward-
+thinking qualitative factors are important for Infineon's long-term success. As an
+enterprise very much aware of its responsibilities towards society, Infineon also takes
+account of non-financial factors, mainly in the field of environment and regarding
+diversity of employees. See the report "Sustainability at Infineon" on our website
+www.infineon.com/csr_reporting| Although these factors are not used to manage
+business performance, they nevertheless help Infineon achieve its financial targets.
+In this context, growth, profitability and investments are all interdependent. Profit-
+ability is the prerequisite for being able to finance operations internally, which,
+put another way, means opening up potential opportunities for growth. Growth,
+in turn, requires continual investment in research and development as well as in
+manufacturing capacities. Growing at a commensurate rate enables Infineon to
+achieve leading market positions and generate economies of scale that contribute
+to greater profitability. Employing financial resources efficiently is a critical factor
+in achieving these goals.
+Overall, the achievement of our long-term financial targets will lead to a sustainable
+increase in the value of the Company by generating a permanent premium on the
+cost of capital.
+The three performance indicators described above are also the cornerstones of the
+system for variable remuneration. Most of the variable salary components pertaining
+to employees and management are directly linked to these performance indicators.
+The internal management system at Infineon is designed to help implement Group
+strategy, p. 35 ff., and the related long-term financial targets, p. 45 f. Accordingly,
+performance indicators are used that enable profitable growth and efficient
+employment of capital to be measured.
+Q = < 92 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Internal management system
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Regional headquarters
+> Tokyo
+Japan
+Internal management system
+Backend manufacturing
+Segment Result
+Infineon Technologies | Annual Report 2021
++ Net cash provided by (used in) investing activities from continuing operations
+Net cash provided by (used in) operating activities from continuing operations
+Free Cash Flow at Infineon is defined as follows:
+The main factors influencing Free Cash Flow are a positive earnings trend combined
+with effective management of inventories, trade accounts receivable and payable,
+and capital expenditures.
+Free Cash Flow measures the ability to generate sufficient cash flows to finance day-
+to-day operations and fund required investments out of the ongoing business. It is
+Infineon's stated target to sustainably generate positive Free Cash Flow. The consistent
+generation of Free Cash Flow is of growing importance in view of the significantly
+increased debt following the acquisition of Cypress (for an explanation of the devel-
+opment of Free Cash Flow during the 2021 fiscal year, see the chapter "Review of
+liquidity", p. 106 f.). Free Cash Flow is managed by Infineon at Group level only and
+not at segment level.
+Free Cash Flow
+= Segment Result
+Net of other income and expense
+Impact on earnings of sales of businesses, or interests in subsidiaries
+Other expenses
+Segment Result is the key figure of the Group for measuring operating performance
+(for an analysis of the development of Segment Result of Infineon and the individual
+segments in the 2021 fiscal year, see the chapters "The segments", p. 58 ff., and
+"2021 fiscal year”, p. 56). Expressed as a percentage of revenue (Segment Result
+Margin), it measures the profitability of revenue and shows how well operations are
+being managed. The activities of Infineon's segments are managed on the basis of
+Segment Result. Responsibility for optimizing Segment Result within the framework
+of Group strategy (as approved by the Management Board) rests with the manage-
+ment teams of the relevant segments, acting, however, in close coordination with
+the Management Board.
+Acquisition-related depreciation/amortization and other expense
+Net of certain reversal of impairments and impairments (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Operating profit, adjusted for:
+Segment Result is defined as follows:
+< 93 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Internal management system
+Business focus and strategy
+Management Board and
+Supervisory Board
+Share-based payment
++ Cash flows from the purchase and sale of financial investments
+> Wuxi
+> Shanghai
+1 Penang is assigned to the Austin site. The Known Good Die (KGD) test takes place in Penang.
+For definition frontend/backend manufacturing p. 51
+• Regional headquarters • Frontend and backend manufacturing
+■Corporate headquarters
+Backend manufacturing
+> Warstein
+Frontend and backend
+manufacturing
+› Regensburg
+Frontend manufacturing
+› Dresden
+2 The site in Temecula will be closed in the 2022 fiscal year.
+Corporate headquarters
+Germany
+Frontend manufacturing
+> Villach
+Austria
+Europe, Middle East, Africa
+Frontend manufacturing
+› Temecula, CA 2
+> San José, CA
+Frontend manufacturing
+› Mesa, AZ
+> Neubiberg
+Regional headquarters
+Hungary
+Backend manufacturing
+Greater China
+Backend manufacturing
+› Bangkok
+Thailand
+Backend manufacturing
+› Cavite
+Philippines
+Frontend manufacturing
+› Penang¹
+Backend manufacturing
+› Cegléd
+> Melaka
+> Kulim
+Backend manufacturing
+Malaysia
+) Cheonan
+Korea
+Backend manufacturing
+> Batam
+Indonesia
+> Regional headquarters;
+Backend manufacturing
+(test only)
+Singapore
+Asia-Pacific
+Frontend manufacturing
+= Free Cash Flow
+Return on Capital Employed (ROCE)
+The performance indicator RoCE measures the return on capital and shows the cor-
+relation between profitability and the capital resources required to run the business
+(for the mathematical derivation and development of the ROCE in the 2021 fiscal year,
+see the chapter "Review of financial condition", ☐ p. 105). ROCE describes how effi-
+ciently a company uses its resources and serves as an instrument for value-based cor-
+porate management. It is also analyzed by Infineon at Group level only and not at
+segment level.
+Bloomberg
+Ticker symbol
+WKN
+ISIN
+Own shares
+Shares issued¹
+Share capital
+31.03
+0.750% Bond from 24 June 2020
+1.500% Bond from 10 March 2015
+Nasdaq IR Insight
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+Basic information on bonds and other financing instruments
+Basic information on shares
+The Infineon share
+Q = < 96 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The Infineon share
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon
+Share types
+TER
+Listings
+Daily average shares traded on Xetra
+MSCI Germany
+Dow Jones Germany Titans 30
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones STOXX Europe 600
+EURO STOXX 50
+TecDAX
+DAX 40
+180,128 (in the 2021 fiscal year)
+US$53,539 million (as of 30 September 2021)
+ADS, over-the-counter trading on the OTC market (OTCQX)
+Market capitalization²
+4,884,416 (in the 2021 fiscal year)
+Shares: Frankfurt Stock Exchange (FSE)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-PK
+IFX (share), IFNNY (ADS)
+623100
+DE0006231004
+€2,611,842,274 (as of 30 September 2021),
+€2,611,842,274 (as of 30 September 2020)
+1,305,921,137 (as of 30 September 2021),
+1,305,921,137 (as of 30 September 2020)
+4,545,602 shares (as of 30 September 2021),
+5,251,391 shares (as of 30 September 2020)
+Index membership (selected)
+Daily average ADS traded
+Market capitalization²
+Trading in the USA
+€46,231 million (as of 30 September 2021)
+Infineon Technologies | Annual Report 2021
+Supplementing the Annual Report 2021
+Sustainability at Infineon
+The principal performance indicators are supplemented by the following additional
+performance indicators.
+Selected supplementary performance indicators
+Q = < 94 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Internal management system
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+ROCE 1/②
+Growth and profitability indicators
+= Capital employed ②
+Total current liabilities
+Assets classified as held for sale
+Financial investments
+Cash and cash equivalents
+Assets
+= Operating profit from continuing operations after tax ①
+Share of profit (loss) of associates and joint ventures accounted for using the equity method
+Income tax
+Financial result excluding interest result
+Operating profit, adjusted for:
+ROCE is defined as follows:
++ Short-term financial debt and current maturities of long-term financial debt
++ Liabilities classified as held for sale
+Since the three principal performance indicators and especially Segment Result posi-
+tively correlate with revenue growth, the latter is not used as a principal performance
+indicator in its own right but is covered by the three above-stated performance indi-
+cators indirectly.
+In order to analyze the operating profitability in detail, the result and cost block
+components of the Segment Result are considered. These are the gross profit,
+research and development costs, selling, general and administrative expenses,
+as well as their relation to revenue.
+These indicators are analyzed as well at Group level as at segment level (for the
+development of these indicators in the 2021 fiscal year, see the chapter "Review of
+results of operations", p. 99 ff.).
+The separate report "Sustainability at Infineon",
+including the summarized Non-Financial Report,
+is available on Infineon's website at
+www.infineon.com/csr_reporting.
+In accordance with the stipulations of the German CSR
+Directive Implementation Act, Infineon Technologies AG
+is required to publish a non-financial report at both
+Company and Group level for the 2021 fiscal year. This
+report is published jointly for Infineon Technologies
+AG and the Group as a summarized separate non-
+financial report within the sustainability report. The
+information required by law is marked accordingly
+to distinguish it from the voluntary reporting accord-
+ing to GRI standards. The entire report "Sustainability
+at Infineon", including the chapters of the Non-Financial
+Report, have been subjected to a limited assurance
+audit by KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich (Germany), and has been certified without
+restrictions. In addition, selected indicators were sub-
+jected to a reasonable assurance audit and certified
+without restrictions.
+Sustainability activities are described in the separate
+report "Sustainability at Infineon".
+Sustainability at Infineon
+Q = < 95 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Sustainability at Infineon
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The chapter "Outlook”, p. 109, contains a table comparing the actual values
+achieved in the 2021 fiscal year for principal and selected supplementary perfor-
+mance indicators with the values forecasted as well as the expectations for the
+2022 fiscal year.
+Actual and target values for performance indicators
+These goals are also reflected in the remuneration of the Management Board
+(see the chapter "Remuneration report”, □ p. 132 ff.).
+Already at the 2020 Annual General Meeting, Infineon announced that it wanted to
+become CO2 neutral by 2030. By 2025, Infineon would like to reduce its CO2 emissions
+by 70 percent compared to the 2019 calendar year.
+The non-financial performance indicators at Infineon include CO2 emissions and
+indicators from the area of diversity.
+Non-financial performance indicators
+For an analysis of changes in these performance indicators during the 2021 fiscal
+year, see the chapter "Review of liquidity”. p. 106 f.
+> Investments: The total amount invested in property, plant and equipment and
+other intangible assets, including capitalized development costs.
+› Net cash position: Gross cash position less short-term and long-term
+financial debt.
+> Gross cash position: Cash and cash equivalents plus financial investments.
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of
+liquidity at its disposal and an optimal capital structure. Liquidity is managed at
+Group level, not at segment level, using the following performance indicators:
+Liquidity performance indicators
+Dow Jones Sustainability World Index
+28.72
+Backend manufacturing
+24.11
+0.26
+Diluted earnings per share (in euro)
+0.87
+0.26
+Adjusted earnings per share (in euro) - diluted
+1.20
+0.64
+accounted for using the equity method
+Strong business performance and first full-year inclusion
+of Cypress drive revenue growth
+Revenue grew by €2,493 million or 29 percent to €11,060 million in the 2021 fiscal year
+(2020: €8,567 million). The increase was mainly attributable to favorable volume and
+pricing factors in light of continued high demand for semiconductors in conjunction
+with the related expansion of manufacturing capacities. On the other hand, Cypress
+contributed to Group revenue for a full fiscal year for the first time, whereas in the
+previous fiscal year Cypress' revenue was only included for the period from April to
+September. Pandemic-related constraints, for example, on manufacturing capacity
+in Melaka (Malaysia) and on contract manufacturers, and the aftermath of the winter
+storm in Austin (Texas, USA) had an offsetting effect.
+Automotive remained Infineon's highest-selling segment. Based on segment revenue
+of €4,841 million (2020: €3,521 million), it contributed 44 percent of Infineon's total
+revenue. The 37 percent year-on-year increase in revenue was primarily due to
+the recovery in the automotive sector and the twelve-month revenue contribution
+from Cypress.
+Revenue generated by the Industrial Power Control segment totaled €1,542 million
+and was therefore 10 percent above the previous year's figure of €1,406 million.
+The segment contributed 14 percent to Group revenue.
+The Power & Sensor Systems segment recorded revenue of €3,268 million (2020:
+€2,650 million), corresponding to a 23 percent growth rate and a 29 percent contribu-
+tion to Group revenue. The main reason for the sharp rise was the ever-increasing
+demand for semiconductors in a wide range of applications. Growth was also driven by
+the first-time consolidation of Cypress' USB components business for a full fiscal year.
+The Connected Secure Systems segment recorded revenue of €1,397 million in the
+2021 fiscal year (2020: €974 million), with the twelve-month Cypress revenue figure
+making a substantial contribution to the year-on-year growth of 43 percent besides
+an improved product mix. The segment contributed 13 percent to Group revenue.
+0.87
+Further details on the performance of the segments can be found in the chapter
+"The segments". p. 58 ff.
+Basic earnings per share (in euro)
+1,169
+(160)
+(148)
+Share of profit (loss) of associates and joint ventures
+9
+(9)
+Income tax
+(144)
+(52)
+Profit (loss) from continuing operations
+1,175
+372
+Profit (loss) from discontinued operations, net of income taxes
+(6)
+(4)
+Profit (loss) for the period
+368
+Infineon Technologies | Annual Report 2021
+Backend manufacturing
+> Leominster, MA
+The spread of the coronavirus pandemic is still presenting challenges for our supply
+and manufacturing chains. In the fiscal year just ended, we had production losses
+in our backend manufacturing in Malaysia in particular, as a result of flare-ups of
+coronavirus infections. Thanks to the use of extensive hygiene protocols and the
+administering of vaccinations to employees, as well as our classification as a system-
+relevant industry, we were given permission to continue, for the most part, with our
+manufacturing.
+Impact of the coronavirus pandemic, the winter storm in
+Austin (Texas, USA) and the power cut in Dresden on supply
+and manufacturing chains
+The planned sale or closure of the site in Temecula (California, USA) has been post-
+poned to the end of the 2022 fiscal year so that we can respond to current demand
+as far as possible. The products manufactured there will be transferred to other
+Infineon sites or outsourced for manufacturing to external partners.
+In Cegléd (Hungary), the construction of the building for a new module manufactur-
+ing facility was completed and “ready for equipment”. Moreover, in February 2020,
+construction started on the new manufacturing facility at our largest backend site, in
+Melaka (Malaysia), which will focus on automotive power semiconductors.
+The 300-millimeter factory in Dresden is continuing to be fitted with production
+facilities. Investment in our Malaysian frontend site in Kulim is focusing on MEMS
+microphone technology and our power semiconductors.
+The Villach site in Austria with the new 300-millimeter chip factory (large building, back left)
+and the new research and development building (front center).
+Other investment focus areas in manufacturing in the 2021 fiscal year
+Capacity for SiC and GaN continues to be expanded on the Villach site. Existing build-
+ings and manufacturing lines can be reused for these compound semiconductors,
+enabling us to achieve capital-efficient capacity expansion. This makes it possible for
+the further ramp-up of volume production of our SiC MOSFETs in trench technology
+and SiC diodes on 150-millimeter SiC wafers.
+With the new 300-millimeter factory on the Villach site in Austria in conjunction with
+our manufacturing facility in Dresden (Germany), we are establishing the concept of
+manufacturing control spread over different locations. Villach and Dresden will use the
+same processes and plants and the same automation and digitalization concepts. As a
+result, we will achieve greater manufacturing flexibility and shorter development times.
+Furthermore, shared learning will enable a fast and seamless transfer of technology
+between sites and have a positive impact on productivity and on the stability of our
+manufacturing.
+Q = < 90 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Business focus and strategy
+Management Board and
+Supervisory Board
+26.42
+In February 2021, a severe winter storm in Austin resulted in power outages and
+interruptions to gas and water supplies. Following a pause in manufacturing,
+production increased over the following months, and the facility was back to full
+capacity by July.
+In September 2021, a 20-minute power cut in Dresden led to an interruption in
+production. Manufacturing was ramped up again in the following weeks.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+> Austin, TX
+Regional headquarters
+> Milpitas, CA
+Regional headquarters
+> El Segundo, CA
+USA
+Backend manufacturing
+Net financial result (financial income and expenses, net)
+> Tijuana
+AMERICA
+Manufacturing sites
+Q = < 91 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Manufacturing sites
+Business focus and strategy
+Mexico
+581
+Frontend manufacturing
+Operating profit
+DAX
+■SOX
+Dow Jones US Semiconductor Index
+Infineon Technologies | Annual Report 2021
+80
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The Infineon share
+Consolidated Financial Statements
+Further information
+Q = < 98 >
+Infineon has been listed in the EURO STOXX 50 index since 22 March 2021. On 20 Sep-
+tember 2021, the size of the German stock exchange index (DAX) was increased from
+30 to 40 stocks. At the same time, the rules determining the DAX ranking list were also
+changed. With effect from September 2021, only market capitalization is taken into
+account for these purposes, whereas trading volume no longer plays a role. Measured
+by market capitalization, Infineon ranked 11th in September 2021, moving up two
+places year-on-year. As in the previous year, Infineon achieved the 3rd position in the
+TecDAX at the end of the 2021 fiscal year in terms of market capitalization.
+Shareholder structure
+As of 30 September 2021, similar to the previous year, four shareholders each held
+more than three percent of the Infineon shares issued. The share capital held by retail
+shareholders amounted to 8.54 percent at the end of the 2021 fiscal year, compared
+with 8.82 percent one year earlier.
+C36 Shareholder structure as of the end of the 2021 fiscal year
+10|2020 11|2020 12|2020 01|2021 02|2021 03|2021 04|2021 05|2021 06|2021 07|2021 08|2021 09|2021
+Dividend
+19.46
+Measured in units, the average daily trading volume of the Infineon share on Xetra
+during the 2021 fiscal year was 4.9 million shares. Compared with the previous year's
+figure of 7.7 million shares, the figure represents a decrease of 36 percent. On the
+other hand, due to the significant rise in the Infineon share price, the average daily
+trading volume measured in euros increased by 11 percent from €143.5 million in
+the previous year to €158.0 million in the 2021 fiscal year.
+21.81
+1,470
+30 September 2020=100
+170
+160
+150
+140
+130
+120
+110
+100
+90
+The low for the 2021 fiscal year was recorded right away at the end of October 2020.
+At €23.69, the share price at that stage was only marginally lower than the €24.12
+quoted at the beginning of the fiscal year. The high for the fiscal year of €37.92 was
+recorded in mid-September 2021, shortly before the end of the fiscal year. With a
+price increase of 47 percent, the Infineon share significantly outperformed the DAX,
+which improved by 20 percent over the same period. The US benchmark indices were
+also unable to match Infineon's performance. The Dow Jones US Semiconductor Index
+rose by 39 percent over the twelve-month period and the Philadelphia Semiconductor
+Index (SOX) was up by 45 percent.
+Driven by the share's strong performance, Infineon's market capitalization grew
+from €31,366 million at 30 September 2020 to €46,231 million at the end of the 2021
+fiscal year.
+Trading volumes and stock indices
+In the USA, the Infineon share is traded in the form of American Depositary Shares
+("ADS") on the OTCQX International over-the-counter market under the ticker symbol
+"IFNNY". About 180,000 ADS were traded daily on this market in the 2021 fiscal year
+(previous year: approximately 235,000 daily). The number of ADS outstanding
+decreased from 39.2 million as of 30 September 2020 to 33.0 million at the end of
+the 2021 fiscal year.
+Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
+economic development and, in general, at paying out at least an unchanged dividend
+even in the event of stagnating or declining earnings. However, due to the negative
+economic impact of the coronavirus pandemic, the risks that existed at the time of
+the payout, and in order to maintain sufficient financial flexibility, a dividend of €0.22
+was paid for the 2020 fiscal year, i.e., €0.05 lower than the amount distributed for the
+2019 fiscal year. Due to Infineon's good economic performance in the 2022 fiscal year
+and the positive outlook for the current fiscal year, the dividend is now to be increased
+again by €0.05. Accordingly, a proposal is planned to be put forward at the Annual
+General Meeting in February 2022 to distribute a dividend of €0.27 per share for the
+2021 fiscal year. The number of shares issued totaled 1,305,921,137 as of 30 Septem-
+ber 2021. The figure includes 4,545,602 shares owned by the Company that are
+not entitled to a dividend. The total dividend amount would therefore increase to
+€351 million, compared with €286 million one year earlier.
+■Infineon
+6.82% BlackRock Inc.
+Revenue
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+2021
+11,060
+8,567
+€ in millions, except earnings per share
+4,260
+(1,448)
+(1,354)
+(1,113)
+(1,042)
+Other operating income and expenses, net
+Infineon Technologies | Annual Report 2021
+12
+(40)
+2,776
+The consolidated statement of profit or loss
+2020
+4.85% Kingdom of Norway
+Review of results of operations
+4.82% Allianz Global Investors GmbH
+3.01% DWS Investment GmbH
+8.54% Retail investors
+71.96% Other
+Interested parties may participate in telephone conferences via a webcast broadcast in the Investor Relations section of the Infineon website.
+www.infineon.com/investor|
+and by telephone (+49 89 234-26655).
+Management Board and
+Supervisory Board
+Retail investors can contact us by email (investor.relations@infineon.com)
+Combined Management Report
+Group performance
+Consolidated Financial Statements
+Further information
+Q = < 99 >
+Review of results of operations
+Group performance
+Business focus and strategy
+In the context of centralized liquidity management and where permitted by law
+and economically feasible, cash pooling structures are in place in order to ensure the
+best possible allocation of liquidity within the Group and reduce external financing
+requirements. Liquidity accumulated at Group level is invested centrally by the Group
+Finance & Treasury department based on a conservative approach to investments,
+in which preservation of capital is prioritized over return maximization. The Group
+Finance & Treasury department is also responsible for managing currency and interest
+rate risks and for the execution of the commodity price hedging. We employ the
+Management Board and
+Supervisory Board
+following derivative financial instruments in our continuous operations for hedging
+purposes: forward foreign currency contracts to reduce the impact of exchange rate
+exposures (to the extent foreign currency cash flows are not offset within the Group)
+and commodity swaps to reduce price risks for expected purchases of gold. Derivative
+financial instruments are not used for trading or speculation purposes. Further infor-
+mation regarding derivative financial instruments and the management of financial
+risks is provided in note 26, p. 203 ff., and note 27 to the Consolidated Financial
+Statements, p. 211 ff.
+Furthermore, to the extent permitted by law, all financing activities and credit lines
+worldwide are arranged, structured and managed either directly or indirectly by the
+Group Finance & Treasury department in accordance with stipulated treasury principles.
+A Treasury Committee is in place to deliberate on current financial market develop-
+ments and their potential impact on Infineon and coordinate key liquidity, hedging,
+and financing issues. The Committee, which meets on a quarterly basis, comprises
+the CFO and representatives from the Finance & Treasury, Accounting and Financial
+Reporting, Controlling, and Tax departments.
+Following the acquisition of Cypress, the financing and treasury activities of Cypress
+are being successively integrated into Infineon's core structures. Significant further
+progress was made in this respect during the 2021 fiscal year.
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Outlook
+The following table and subsequent comments compare the actual and forecast
+values of Infineon's key performance indicators for the 2021 fiscal year and show the
+outlook for the 2022 fiscal year.
+Consolidated Financial Statements
+Further information
+Q = < 109 >
+Actual and target values for performance indicators
+Report on outlook, risk and opportunity
+Outlook
+Report on outlook, risk and opportunity
+In accordance with our treasury principles, we follow a centralized approach in which
+the Group Finance & Treasury department is responsible for all major tasks and
+processes worldwide relating to financing and treasury matters.
+Combined Management Report
+The treasury principles referred to are in place regarding all issues relating to liquidity
+and financing, such as banking policies and strategies, execution of financing agree-
+ments, liquidity and investment management worldwide, currency and interest rate
+risk management and the handling of external and intragroup cash flows.
+Business focus and strategy
+Q = < 108 >
+Infineon Technologies | Annual Report 2021
+Gross profit (revenue less cost of goods sold) amounted to €4,260 million, 53 percent
+up on the €2,776 million recorded one year earlier. The gross margin improved
+accordingly from 32.4 percent in the 2020 fiscal year to 38.5 percent in the 2021
+fiscal year.
+€ in millions,
+Management Board and
+Supervisory Board
+Combined Management Report
+Group performance
+Review of results of operations
+Consolidated Financial Statements
+Further information
+Q =
+< 101 >
+2021
+At €6,800 million, the cost of goods sold during the fiscal year under report was
+€1,009 million or 17 percent higher than the previous year's figure of €5,791 million.
+The increase was therefore less pronounced than that of revenue. Factors contributing
+to this strong earnings performance included lower idle costs compared to one year
+earlier and favorable revenue-related pricing effects. Conversely, the pandemic-related
+restrictions on manufacturing in Melaka (Malaysia) worked in the opposite direction.
+Cost of goods sold also include expenses in connection with the shutdown of the fabri-
+cation plant in Austin (Texas, USA), which was ordered by the relevant authorities fol-
+lowing a severe winter storm that resulted in prolonged power outages in the region.
+Cost of goods sold also includes expenses arising in connection with the acquisition
+of Cypress and, to a lesser extent, with the acquisition of International Rectifier (in the
+2015 fiscal year) totaling €295 million (2020: €288 million). This amount comprised
+the income statement impact of amortization and depreciation of fair value adjust-
+ments recognized in conjunction with the respective purchase price allocations
+as well as €17 million (2020: €28 million) of other acquisition-related expenses. The
+figure reported for the previous fiscal year also included expenses arising on the
+consumption of inventories measured at their fair value in conjunction with the
+acquisition of Cypress.
+€ in millions, except percentages
+Business focus and strategy
+Combined Management Report
+Group performance
+Review of liquidity
+Consolidated Financial Statements
+Further information
+As a general rule, debt should only constitute a modest proportion of the financing
+mix to ensure that sufficient headroom is available at all times. The key objective
+is to maintain an investment grade rating. Infineon is currently rated by S&P Global
+Ratings as "BBB-" with positive outlook. The originally medium-term objective of
+Infineon to reduce its debt level to or below the maximum target value of twice the
+gross financial debt to EBITDA after the closing of the Cypress transaction is expected
+to be achieved already in the 2022 fiscal year. For further information on the nature,
+maturity, currency and interest rate structure of gross financial debt, see note 15 to
+the Consolidated Financial Statements, ☐ p. 184 f.
+Actuals
+Comparison of original outlook and actual figures
+for the 2021 fiscal year
+FY 2020
+1,099
+Gross cash position
+3,227
+Around €1.6 billion
+In the range of €2.9 billion to
+€3.6 billion and therefore
+within the target range of
+€1 billion plus at least 10%
+of revenue
+1,497
+3,922
+Outlook for
+FY 2022
+Around 21%
+(at a revenue level
+of €12.7 billion)
+Around €1 billion
+Minimum 10%
+Revenue increase
+to around €12.7 billion
+plus or minus €500 million
+Around €2.4 billion
+Around €4 billion and
+therefore within the
+target range of €1 billion plus
+at least 10% of revenue
+1 The forecast presented here corresponds to the forecast last finalized in the third quarter of the 2021 fiscal year.
+Revenue for the 2021 fiscal year was originally forecast in November 2020 at an amount
+of €10.5 billion, plus or minus 5 percent. In light of the positive business performance,
+the outlook was raised at a number of points over the following quarters to an expected
+revenue of around €11 billion. The actual amount of revenue generated in the 2021
+fiscal year was €11,060 million. This figure was in line with the most recent outlook
+dated 3 August 2021 and slightly above the range stated in the original outlook from
+November 2020.
+In conjunction with the adjustments to the revenue forecast, the expected Segment
+Result Margin was also adjusted in each quarter. Originally, a Segment Result Margin of
+16.5 percent was forecast for the 2021 fiscal year. After initially raising the outlook to
+17.5 percent with the publication of first-quarter figures of the 2021 fiscal year and
+subsequently to around 18 percent with the publication of second-quarter figures, the
+most recent outlook, published in August 2021, forecast the Segment Result Margin
+at above 18 percent. In the final analysis, this outlook was achieved with an actual
+Segment Result Margin of 18.7 percent.
+Free Cash Flow was originally expected to exceed €700 million. Here, too, the outlook
+was raised in stages. Initially, the outlook was raised in February 2021 and predicted
+to exceed €800 million. In August 2021, Free Cash Flow was anticipated to come in
+at around €1.5 billion. Free Cash Flow generated in the 2021 fiscal year ultimately
+amounted to €1,574 million and was therefore in line with the forecast.
+China (comprising Mainland China and Hong Kong) accounted for €3,178 million,
+or 29 percent of Infineon's global revenue, and therefore had the largest share at
+the individual country level, followed by Germany with €1,278 million or 12 percent.
+Gross margin significantly improved
+A Return on Capital Employed (ROCE) of about 6 percent was originally forecast in
+November 2020 for the 2021 fiscal year. With the publication of the figures for the
+first half of the 2021 fiscal year, this forecast was raised to 7.5 percent. The actual
+ROCE for the 2021 fiscal year came in at 8.4 percent, a significant improvement on that
+reported for the 2020 fiscal year, mainly due to the good operating profit from con-
+tinuing operations.
+11,060
+except percentages
+Revenue increase
+to around €11 billion
+8,567
+Outlook for
+FY 2021¹
+Actuals
+FY 2021
+Principal performance
+indicators
+Segment Result Margin
+13.7%
+Above 18%
+(at a revenue level
+18.7%
+Free Cash Flow from
+continuing operations
+ROCE
+(6,727)
+of €11 billion)
+Around €1.5 billion
+1,574
+3.0%
+Around 7.5%
+8.4%
+Selected supplementary
+performance indicators
+Revenue respectively
+change in revenue com-
+pared to previous year
+Investments
+The distribution of revenue by region remained more or less unchanged compared to
+the 2020 fiscal year. As in the previous year, Greater China was the largest region in
+revenue terms, accounting for 38 percent of total revenue generated in the 2021 fiscal
+year worldwide, followed by the Europe, Middle East, Africa region with 25 percent.
+C37 Revenue by segment
+13% Connected Secure Systems
+0% Other Operating Segments,
+Corporate and Eliminations
+2,650
+1,406 1,542
+therein: Germany
+1,278
+12%
+1,056
+12%
+Asia-Pacific (excluding Japan, Greater China)
+1,744
+16%
+1,291
+15%
+1,397
+974
+2020
+Greater China¹
+4,195
+3,268
+38%
+27%
+25%
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Review of results of operations
+Consolidated Financial Statements
+Further information
+Q =
+< 100 >
+€ in millions
+Regional distribution of revenue largely unchanged year-on-year
+€ in millions, except percentages
+2021
+2020
+4,841
+3,521
+Europe, Middle East, Africa
+2,773
+2,322
+Negative impact of currency developments on revenue growth
+The majority of revenue was generated in foreign currencies in the 2021 fiscal year,
+with revenue denominated in US dollars accounting for the largest share. The average
+euro/US dollar exchange rate changed from around 1.12 in the previous fiscal year
+to 1.19 in the 2021 fiscal year, giving rise to negative currency effects.
+3,174
+2021
+12%
+therein: USA
+1,027
+9%
+845
+10%
+Total
+11,060
+100%
+8,567
+100%
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+C38 Revenue by segment in the 2021 fiscal year
+0
+● 44% Automotive
+14% Industrial Power Control
+● 29% Power & Sensor Systems
+1,015
+37%
+11%
+Americas
+16 12
+therein: Mainland China, Hong Kong
+3,178
+29%
+2,472
+29%
+Japan
+1,094
+10%
+765
+9%
+Automotive
+Industrial
+Power Control
+Power & Sensor
+Systems
+Connected
+Secure Systems
+Other Operating
+Segments
+1,254
+Cost of goods sold
+2020
+5.0%
+2%
+23,334
+21,999
+6%
+4,443
+3,450
+2020
+7,033
+50%
+50%
+6,585
+US dollar
+51%
+14,820
+Euro
+49%
+Pensions and similar commitments decreased by €122 million, primarily due to an
+actuarial gain of €128 million after tax arising on the measurement of net pension
+obligations and as a consequence of interest rate and credit spread developments on
+financial markets during the fiscal year just ended (see note 18 to the Consolidated
+Financial Statements, ☐ p. 187 ff.).
+Shareholders' equity up mainly due to profit for the period
+Equity increased by €1,182 million to stand at €11,401 million at the end of the
+reporting period (30 September 2020: €10,219 million), mostly due to the profit for
+the period for the 2021 fiscal year amounting to €1,169 million. Actuarial gains arising
+on the measurement of pensions and similar commitments totaling €128 million
+after tax recognized through other comprehensive income also had a positive impact
+on equity. Positive currency effects amounting to €90 million, which were recognized
+in other reserves, also contributed to the higher figure. These increases in equity
+were offset mainly by the dividend of €286 million paid out for the 2020 fiscal year.
+The equity ratio as of 30 September 2021, based on total assets amounting to
+€23,334 million, was 48.9 percent (30 September 2020: 46.5 percent, based on total
+assets amounting to €21,999 million).
+ROCE significantly improved due to higher operating profit
+In the 2021 fiscal year, operating profit from continuing operations after tax increased
+sharply by €852 million to €1,325 million (2020: €473 million).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Review of financial condition | Review of liquidity
+2021
+Consolidated Financial Statements
+15,082
+7,179
+Further information
+Q = < 103 >
+Combined Management Report
+Group performance
+Review of results of operations | Review of financial condition
+comparability of operating performance over time, Infineon computes the adjusted
+earnings per share (diluted). Adjusted profit (loss) for the period and adjusted earn-
+ings per share (diluted) should not be seen as a replacement or superior performance
+indicator, but rather as additional information to the profit (loss) for the period and
+earnings per share (diluted) determined in accordance with IFRS.
+Adjusted earnings per share (diluted) increased from €0.64 to €1.20 per share and
+were calculated as follows:
+Review of financial condition
+€ in millions, except percentages
+Current assets
+Non-current assets
+Total assets
+€ in millions (unless otherwise stated)
+Profit (loss) from continuing operations - diluted
+Compensation of hybrid capital investors'
+15%
+Current liabilities
+2021
+2020
+Non-current liabilities
+Total liabilities
+1,175
+372
+(26)
+(35)
+Total equity
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+Change
+year-on-year
+8,252
+ROCE 6
+Consolidated Financial Statements
+Further information
+< 105 >
+1,470
+581
+(10)
+(47)
+Share of profit (loss) of associates and joint ventures
+accounted for using the equity method
+9
+(9)
+Income tax
+(144)
+(52)
+Operating profit from continuing operations after tax ①
+1,325
+830
+473
+Sharp increase in net cash provided by operating activities
+from continuing operations
+Net cash provided by operating activities from continuing operations in the 2021
+fiscal year amounted to €3,063 million, an increase of €1,246 million compared to the
+previous fiscal year's figure of €1,817 million. The main reason for the higher figure
+was the improvement of €1,197 million in profit from continuing operations before
+depreciation, amortization, impairment losses, interest and tax, which rose in total
+to €2,994 million. The increase in trade payables and provisions exceeded the higher
+amount tied up in trade receivables and inventories, contributing a net amount of
+€379 million to the improvement in cash provided by operating activities from con-
+tinuing operations. Cash outflows for income taxes and interest had an offsetting
+effect totaling €325 million.
+In the 2020 fiscal year, net cash provided by operating activities from continuing
+operations totaled €1,817 million. Taking profit from continuing operations before
+depreciation, amortization, impairment losses, interest and taxes amounting to
+€1,797 million as the starting point, changes in inventories, trade receivables and
+trade payables totaling €99 million were the main items with a positive impact on net
+cash provided by operating activities from continuing operations. Net cash outflows
+Assets
+23,334
+4 Debt-to-equity ratio = (Long-term and short-term financial debt)/Total equity
+29%
+7,490
+8,330
+(10%)
+11,933
+11,780
+1%
+3.0%
+Q =
+(102)
+2
+The higher level of operating profit was mainly due to the significant revenue growth
+in connection with the resulting good utilization (see the chapter "Review of results
+of operations", ☐ p. 99 f.).
+At €15,793 million, however, capital employed was almost identical to one year ear-
+lier (30 September 2020: €15,827 million).
+As a result, the Return on Capital Employed (ROCE) rose sharply from 3.0 percent
+to 8.4 percent.
+ROCE for the 2021 and 2020 fiscal years is calculated as follows:
+€ in millions, except percentage
+Operating profit
+Plus/minus:
+Financial result excluding interest result¹
+Review of liquidity
+Cash flow
+€ in millions
+Net cash provided by operating activities from continuing operations
+2021
+(83)
+2020
+1,817
+Net cash used in investing activities from continuing operations
+Net cash used in (provided by) financing activities from continuing operations
+Net change in cash and cash equivalents from discontinued operations
+Cash-relevant change in cash and cash equivalents
+(2,284)
+(7,172)
+(885)
+6,274
+2
+(6)
+(104)
+913
+2021
+2020
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+3,063
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+3 Return on equity = Profit (loss) for the period/Total equity
+2 Equity ratio = Total equity/Total assets
+49
+7
+Acquisition-related expenses within financial result
+1 Return on assets = Profit (loss) for the period/Total assets
+27
+31
+Other income and expense, net
+3.0%
+8.4%
+9.3%
+9.3%
+Tax effects on adjustments
+68.8%
+3.6%
+10.3%
+46.5%
+48.9%
+1.7%
+6,800
+5,791
+Change year-on-year
+17%
+15%
+Percentage of revenue
+61.5%
+67.6%
+57.8%
+Gross profit
+the annually updated earnings forecast
+(126)
+5 Inventory intensity = Inventories (net)/Total assets
+6 Calculation see following section about ROCE in this chapter, p. 104 f.
+Adjusted profit (loss) for the period from continuing operations
+attributable to shareholders of Infineon Technologies AG - diluted
+Weighted-average number of shares outstanding (in millions) - diluted
+Adjusted earnings per share (in euro) - diluted²
+1,563
+814
+1,304
+1,266
+1.20
+0.64
+1 Including the cumulative tax effect.
+2 The calculation of the adjusted earnings per share is based on unrounded figures.
+Significant increase in current assets mostly due to gross cash position
+Current assets went up by €1,073 million to stand at €8,252 million as of 30 Septem-
+ber 2021, compared to €7,179 million one year earlier. The increase resulted mainly
+from the gross cash position, which improved by €695 million to €3,922 million (30 Sep-
+tember 2020: €3,227 million). For comments on the change of the gross cash position,
+Infineon Technologies | Annual Report 2021
+(131)
+Management Board and
+Supervisory Board
+Combined Management Report
+Group performance
+Review of financial condition
+Consolidated Financial Statements
+Further information
+Q = < 104 >
+see the chapter "Review of liquidity", p. 107 Trade receivables also increased by
+€287 million due to the significant rise in revenue. Inventories went up by €129 mil-
+lion to keep pace with continued high demand at this especially unfinished goods.
+Slight increase in non-current assets mainly due to investments
+in property, plant and equipment
+Non-current assets increased by €262 million to stand at €15,082 million at the end
+of the reporting period (30 September 2020: €14,820 million). The increase was
+primarily due to the higher level of property, plant and equipment, which went up by
+€333 million to €4,443 million compared to €4,110 million as of 30 September 2020,
+with additions exceeding depreciation. Investments related primarily to the manu-
+facturing sites in Villach (Austria), Dresden and Regensburg (both Germany), Kulim
+and Melaka (both Malaysia), Singapore and Cegléd (Hungary). Goodwill increased by
+€65 million to €5,962 million due to currency factors. Besides this, deferred tax assets
+increased by €68 million and right-of-use assets by €50 million. By contrast, other
+intangible assets decreased by €272 million to €3,349 million, mainly due to the
+amortization of technologies acquired in the course of the acquisition of Cypress.
+Liabilities slightly higher
+Total liabilities stood at €11,933 million as of 30 September 2021 and were therefore
+€153 million higher than one year earlier (30 September 2020: €11,780 million). Trade
+payables increased by €409 million from €1,160 million to stand at €1,569 million
+at the end of the reporting period due to high utilization of production, on the one
+hand, and even more to higher investments. Provisions went up by €385 million to
+€1,134 million, as the recognition of the performance-related employee remuneration
+for the reporting period exceeded the payments made for the previous year.
+At the same time, gross financial debt decreased by €448 million to €6,585 million
+(30 September 2020: €7,033 million), partly due to the early repayment of €310 million
+of financial debt raised in connection with the acquisition of Cypress. Information
+on the composition and maturities of gross financial debt is provided in note 15 to the
+Consolidated Financial Statements. ☐ p. 184 f.
+C39 Financial debt by currencies
+€ in millions
+(64)
+Revaluation of deferred tax assets resulting from
+Business focus and strategy
+4,260
+2,776
+Percentage of revenue (gross margin)
+Review of results of operations
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+Change year-on-year
+Percentage of revenue
+2021
+2020
+1,354
+1,042
+30%
+20%
+12.2%
+Q = < 102 >
+12.2%
+Increase in net amount of other operating income and expenses
+The net amount of other operating income and expenses improved to a positive
+amount of €12 million (2020: negative €40 million). Other operating income fell by
+€12 million, whereby it should be noted that the previous year's figure included one-off
+income of €20 million arising on the sale of non-current assets. Other operating
+expenses went down by €64 million, mainly due to the €31 million decrease in acqui-
+sition-related expenses to €14 million (2020: €45 million).
+Slight deterioration in financial result
+The financial result deteriorated from a negative amount of €148 million in the
+previous year to negative €160 million. Of this, negative €150 million relates to net
+interest result. Further details are provided in note 3 to the Consolidated Financial
+Statements. p. 172
+Effective tax rate down to 10.9 percent
+The income tax expense for the 2021 fiscal year increased to €144 million (2020:
+€52 million), mainly due to the higher level of pre-tax income. Based on profit from
+continuing operations before income taxes of €1,319 million (2020: €424 million),
+the effective tax rate for the reporting period was 10.9 percent (2020: 12.3 percent).
+As in the previous fiscal year, the income tax expense for the 2021 fiscal year was
+affected by foreign tax rates, non-deductible expenses, tax-exempt income, tax credits
+and changes in valuation allowances on deferred tax assets.
+Further details regarding income tax expense are provided in note 5 to the Consoli-
+dated Financial Statements. p. 173 ff.
+Profit for the period and earnings per share up on previous year
+After deducting income taxes and the loss from discontinued operations, Infineon
+recorded profit for the period of €1,169 million for the 2021 fiscal year (2020:
+€368 million).
+The higher profit for the period resulted in a corresponding increase in earnings
+per share.
+Both basic and diluted earnings per share amounted to €0.87 (2020: €0.26) for the
+2021 fiscal year.
+The calculation of earnings per share in accordance with IFRS is presented in detail
+in note 7 to the Consolidated Financial Statements. □ p. 176 f.
+Increase in adjusted earnings per share
+Earnings per share in accordance with IFRS are influenced by amounts relating to
+purchase price allocations for acquisitions (in particular Cypress and International
+Rectifier), by one-time expenses recorded within the financial result in conjunction
+with the acquisition of Cypress and other exceptional items. To enable better
+Selling, general and administrative expenses increased by €312 million or 30 percent
+to €1,354 million year-on-year. The figure also includes the twelve-month contribution
+from Cypress, higher earnings effects from purchase price allocations and acquisi-
+tion-related expenses for the acquisition of Cypress and International Rectifier totaling
+€219 million (2020: €161 million). As a percentage of revenue, selling, general and
+administrative expenses amounted to 12.2 percent in the 2021 fiscal year and were
+therefore at the same level as one year earlier (2020: 12.2 percent).
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group performance
+38.5%
+32.4%
+Operating expenses stable as percentage of revenue
+Operating expenses (research and development expenses, selling, general and
+administrative expenses) increased by €647 million to €2,802 million year-on-year
+(2020: €2,155 million), corresponding to 25.3 percent of revenue (2020: 25.2 percent).
+Research and development expenses
+€ in millions, except percentages
+Research and development expenses, gross
+Minus:
+Grants received
+Capitalized development costs
+Research and development expenses
+Change year-on-year
+Percentage of revenue
+2021
+2020
+1,770
+1,379
+(123)
+(108)
+(199)
+(158)
+1,448
+1,113
+30%
+18%
+13.1%
+13.0%
+Research and development expenses amounted to €1,448 million in the 2021 fiscal
+year, an increase of €335 million or 30 percent compared to the previous year's figure
+of €1,113 million. The principal reasons for the higher figure were the inclusion of
+Cypress for the full twelve-month period compared to the previous year, a further
+increase in research and development activities, and the recruitment of additional
+staff. In this context, the number of people employed in research and development
+functions rose by 12 percent to 10,372 employees (30 September 2020: 9,262 employ-
+ees). Moreover, acquisition-related expenses amounting to €15 million were included
+in research and development expenses (2020: €18 million).
+As a percentage of revenue, research and development expenses amounted to
+13.1 percent in the 2021 fiscal year, roughly at the same level as one year earlier
+(13.0 percent).
+The main research and development activities undertaken during the 2021 fiscal year
+are described in more detail in the chapter "Research and development”. ▷ p. 81 ff.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+11,401
+10,219
+(35)
+Profit (loss) from continuing operations, attributable to
+shareholders of Infineon Technologies AG - diluted
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Review of liquidity
+Consolidated Financial Statements
+Further information
+Q =
+< 106 >
+for interest and taxes totaled €180 million. Changes in provisions, other non-cash
+income/expense and gains on the disposal of property, plant and equipment
+accounted for the remainder.
+Net cash used in investing activities from continuing operations dominated by
+investments in property, plant and equipment
+Return on equity ³
+20
+8.4%
+Net cash used in investing activities from continuing operations totaled €2,284 mil-
+lion in the 2021 fiscal year, including €1,268 million invested in property, plant and
+equipment and €229 million in intangible and other assets (see the chapter "Review
+of financial condition”, p. 104). Furthermore, a net cash outflow of €795 million
+arose in conjunction with the purchase and sale of financial investments deemed to
+be part of the gross cash position and which are therefore not included in Free Cash
+Flow (see below the chapter "Free Cash Flow").
+Repayment of financial debt and payment of dividend result in net cash
+used in financing activities from continuing operations
+Net cash used in financing activities from continuing operations totaled €885 million
+in the 2021 fiscal year. This included net outflows of €486 million for the repayment of
+financial debt (see the chapter "Review of financial condition", p. 104, and note 15 to
+the Consolidated Financial Statements, ☐ p. 184 f.). The payment of the dividend
+for the 2020 fiscal year amounting to €286 million, payments for leasing liabilities
+amounting to €76 million and cash outflows to hybrid capital investors amounting to
+€39 million also had the effect of reducing cash and cash equivalents.
+In the 2020 fiscal year, net cash provided by financing activities from continuing
+operations totaled €6,274 million. This included net cash inflows of €4,443 million
+relating to new financial debt, net proceeds of €1,040 million from the share capital
+increase executed in May 2020 and net proceeds of €1,184 million from the issuance
+of a hybrid bond in two tranches in October 2019. An offsetting effect resulted from
+the payment of the dividend for the 2019 fiscal year amounting to €336 million and
+payments to hybrid capital investors amounting to €20 million.
+Free Cash Flow
+Infineon reports the Free Cash Flow figure, defined as net cash provided by and/or used
+in operating activities and net cash provided by and/or used in investing activities,
+both from continuing operations, after adjusting for cash flows related to the purchase
+and sale of financial investments. Free Cash Flow serves as an additional performance
+indicator, since Infineon holds part of its liquidity in the form of financial investments.
+This does not mean that the Free Cash Flow calculated in this way is available to cover
+other disbursements, since dividends, debt-servicing obligations and other fixed dis-
+bursements are not deducted. Free Cash Flow should not be seen as a replacement or
+superior performance indicator, but rather as an additional useful item of information
+over and above the disclosure of the cash flow reported in the Consolidated State-
+ment of Cash Flows, and as a supplementary disclosure to other liquidity performance
+indicators and other performance indicators derived from the IFRS figures. Free Cash
+Flow only includes amounts from continuing operations and is derived as follows
+from the Consolidated Statement of Cash Flows:
+€ in millions
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free Cash Flow
+2021
+2020
+3,063
+1,817
+(2,284)
+In the 2020 fiscal year, net cash used in investing activities from continuing
+operations totaled €7,172 million, including net cash outflows of €7,433 million for
+the acquisition of Cypress. The net amount arising on purchases and sales of financial
+investments resulted in a net cash inflow of €1,372 million. In addition, €915 million
+was invested in property, plant and equipment and €184 million in intangible and
+other assets.
+(7,172)
+ROCE 1/②
+15,793
+12%
+27
+14
+Acquisition-related depreciation/amortization and other expenses
+544
+540
+Debt-to-equity ratio 4
+Inventory intensity
+5
+Losses (gains) on sales of businesses, or interests in subsidiaries, net
+1
+(1)
+505
+15,827
+21,999
+Cash and cash equivalents
+(1,749)
+Financial investments
+(2,173)
+(1,851)
+(1,376)
+Assets classified as held for sale
+(9)
+Total current liabilities
+(4,443)
+(3,450)
+Short-term financial debt and current maturities of long-term financial debt
+Capital employed ②
+833
+Plus/minus:
+795
+1 The financial result for the 2021 and 2020 fiscal year amounted to negative €160 million and negative €148 million, respectively,
+and included negative €150 million and negative €101 million, respectively, of net interest result.
+1,574
+1,376
+3,922
+3,227
+833
+505
+5,752
+6,528
+6,585
+7,033
+(2,663)
+The gross cash position as of 30 September 2021 increased by €695 million to
+€3,922 million, with most of the increase reflecting the high Free Cash Flow amounting
+to €1,574 million. An offsetting effect resulted from net repayments of financial debt
+amounting to €486 million, the dividend payment for the 2020 fiscal year amounting
+to €286 million and payments for leasing liabilities amounting to €76 million.
+The net cash position, which is defined as the gross cash position less short-term and
+long-term financial debt, improved accordingly by €1,143 million to stand at a nega-
+tive amount of €2,663 million at the end of the reporting period (30 September 2020:
+negative €3,806 million).
+Taking into account the financial resources available to Infineon - including internal
+liquidity on hand, net cash that will be generated, and currently available credit
+facilities amounting to €69 million (2020: €69 million, see note 15 to the Consolidated
+Financial Statements, p. 185) - Infineon assumes that it will be able to cover those
+capital requirements for the 2022 fiscal year that are currently expected. These include
+the repayment of financial debt. Forecasted capital requirements also include other
+financial obligations, such as orders already placed for initiated or planned investments
+in property, plant and equipment (see note 22 to the Consolidated Financial State-
+ments, p. 197). Investments planned for the 2022 fiscal year are discussed in the
+chapter "Outlook". p. 109 ff.
+Infineon is party to two financing agreements that contain a number of standard
+covenants, including a debt coverage ratio that provides for a certain relationship
+between the size of debt (adjusted) and earnings (adjusted) (see note 20 to the
+Consolidated Financial Statements, p. 195).
+Principles and structure of Infineon's treasury
+The Infineon treasury's stated objective is to ensure financial flexibility based on
+a solid capital structure. Its primary goal is to ensure that sufficient cash funds are
+available to finance operating activities and planned investments throughout all
+phases of the business cycle. We aim to achieve a gross liquidity level of €1 billion,
+plus at least 10 percent of revenue.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+(11)
+(1)
+Impairments (reversal of impairments) (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Share-based payment
+Return on assets 1
+Plus/minus:
+Statement of Financial Position ratios:
+337
+(1,372)
+1,149
+2,173
+1,851
+(3,806)
+Infineon Technologies | Annual Report 2021
+(6,727)
+1,749
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Group performance
+Review of liquidity
+Consolidated Financial Statements
+Further information
+Q =
+Significant increase in Free Cash Flow
+Free Cash Flow in the 2021 fiscal year amounted to €1,574 million, with net cash pro-
+vided by operating activities from continuing operations amounting to €3,063 million
+easily exceeding investments in property, plant and equipment and other intangible
+and other assets totaling €1,497 million.
+Free Cash Flow in the previous fiscal year was a negative amount of €6,727 million,
+influenced primarily by the net payment (i.e., net of cash and cash equivalents
+acquired) amounting to €7,433 million used to acquire Cypress as well as by other
+cash outflows in connection with the acquisition totaling €205 million. Excluding cash
+used in conjunction with the acquisition of Cypress, Free Cash Flow in the 2020 fiscal
+year would have been a positive amount of €911 million. Investments in property,
+plant and equipment as well as in intangible assets and other assets resulted in cash
+outflows totaling €1,099 million.
+Gross cash position and net cash position
+Equity ratio 2
+< 107 >
+€ in millions
+ber 2021
+The following table reconciles the gross cash position and the net cash position
+(i.e., after deduction of financial debt). Since some liquid funds are held in the form
+of financial investments, which, for IFRS purposes, are not considered to be cash
+and cash equivalents, Infineon reports on its gross and net cash positions in order
+to provide investors with a better understanding of its overall liquidity situation.
+The gross and net cash positions are determined as follows from the Consolidated
+Statement of Financial Position:
+30 Septem-
+ber 2020
+Net cash position
+Gross financial debt
+Short-term financial debt and current portion of long-term financial debt
+Long-term financial debt
+30 Septem-
+Gross cash position
+Financial investments
+Cash and cash equivalents
+Minus:
+Consolidated Financial Statements
+> processes are in place for the segregation of duties and for the dual control principle
+in the context of preparing financial statements, as well as for authorization and
+access rules for relevant IT accounting systems.
+> processes and controls are in place to explicitly guarantee the completeness and
+correctness of the year-end financial statements and financial reporting; and
+> issues relevant for financial reporting and disclosures in connection with agreements
+entered into are recognized and appropriately presented;
+> intragroup transactions are fully accounted for and properly eliminated;
+> Group-wide financial reporting, measurement and accounting guidelines are
+continually updated and adhered to;
+The ICS is based on the "Internal Control - Integrated Framework" developed by
+the "Committee of Sponsoring Organizations of the Treadway Commission (COSO)"
+and is an integral part of the accounting process in all relevant legal entities and
+corporate functions.
+Q = < 114 >
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Further information
+Assessment of effectiveness
+The system monitors compliance with stated principles and stipulated procedures
+based on preventive and detective controls. Among other things, we regularly
+check that:
+We systematically assess the effectiveness of the ICS with regard to the corporate
+accounting process. An annual risk analysis is initially performed, and the defined
+controls are revised, as and when required. The assessment involves identifying and
+updating significant risks relating to accounting and financial reporting in the relevant
+legal entities and corporate functions. The controls defined for identifying risks are
+documented in accordance with Group-wide guidelines. Regular random tests are
+Consolidated Financial Statements
+Furthermore, in a Representation Letter, all legal entities, segments and relevant
+corporate functions confirm that all business transactions, all assets and liabilities
+and all income and expense items have been recognized in the financial statements.
+At the end of the annual cycle, the material legal entities review and confirm the
+effectiveness of the ICS with regard to the accounting and financial reporting process.
+The Management Board and the Investment, Finance and Audit Committee of the
+Supervisory Board are regularly informed about any significant control deficiencies
+and the effectiveness of the internal controls.
+Both the Risk and Opportunity Management System and the Internal Control System
+are continuously developed and expanded to ensure compliance with internal and
+external requirements. Regular improvements made to these systems contribute
+to the continuous monitoring of the relevant risk areas, including the responsible
+organizational units.
+Cypress' ICS is being continuously integrated into the Group's ICS in conjunction with
+the merger of legal entities and
+processes.
+Significant risks
+In the following section, we describe risks that could have a significant or material
+adverse impact on the Segment Result and/or business objectives, reputation, or
+compliance, and which have therefore been allocated to the risk classes "high" or
+"medium". Unless otherwise stated, the risks described apply to all segments.
+Depending on the potential degree of impact and the estimated likelihood of
+occurrence, the risk class is shown in parentheses for each risk (e.g., “RC: high”).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Further information
+Business focus and strategy
+performed to assess the effectiveness of these controls. The tests constitute the basis
+for assessing the appropriateness of design and the effectiveness of the controls.
+The results are documented and reported in a global IT system. Any deficiencies
+identified are remedied, with due consideration given to their potential impact.
+Management Board and
+Supervisory Board
+<€60 million Marginal
+Internal Control System with respect to the financial reporting process
+The principal focus of the Internal Control System (ICS) is on the financial reporting
+process, with the aim of monitoring the proper maintenance and effectiveness of
+accounting systems and financial reporting. The primary objective of the ICS is to
+minimize the risk of misstatement in Infineon's internal and external reporting and to
+ensure with a reasonable amount of certainty that the Consolidated Financial State-
+ments comply with all relevant regulations. Appropriate controls must therefore be in
+place throughout the organization to ensure compliance. Clear lines of responsibility
+are assigned to each of the processes.
+1
+Q = < 115 >
+2 >€60 million Minor
+3 > €100 million Moderate
+4 > €250 million Significant
+5
+4
+3
+2
+1
+1
+2 3
+4
+Infineon Technologies | Annual Report 2021
+5
+Low risk
+Medium risk
+High risk
+5 > €500 million Major
+Likelihood of occurrence
+1 <10% Unlikely
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+5 >90% Certain
+Risk and Opportunity Managers are designated at appropriate hierarchical levels
+to manage and monitor identified risks and opportunities. They are responsible for
+formally determining a set of appropriate strategies (in the case of risk avoidance,
+mitigation, transfer to other parties or acceptance). Working closely with corporate
+functions and individual managers, the Risk and Opportunity Managers are also
+responsible for defining and monitoring measures aimed at implementing the
+adopted management strategy. In order for our system to operate successfully, it is
+essential that risks and opportunities are managed and monitored pro-actively and
+with a great deal of commitment.
+Compliance with the ERM approach is monitored by the corporate function responsible
+for risk management and ICS using procedures incorporated in business processes.
+Group Internal Audit also performs tests for compliance with legal requirements and
+Infineon guidelines and, where appropriate, rules relating to risk and opportunity
+management and recommends corrective measures.
+The Supervisory Board's Investment, Finance and Audit Committee oversees the
+effectiveness of the Risk Management System. As part of the statutory audit, the
+external Group auditor also examines our early warning system pursuant to section
+91, paragraph 2, of the German Stock Corporation Act to ascertain its suitability to
+detect risks that could pose a threat to Infineon's going-concern status and reports
+thereon annually to the Chief Financial Officer (CFO) and the Investment, Finance and
+Audit Committee of the Supervisory Board.
+Likelihood of occurrence
+Strategic risks
+Business focus and strategy
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn - particularly in the markets we
+serve - may result in us not achieving our forecasted revenue and contribution to
+earnings. Risks can also arise due to political and social changes, in particular when
+those changes occur in countries in which we manufacture and/or sell our products.
+Explanatory comments to the outlook for the 2022 fiscal year
+The following outlook is based on current business developments and internal forecasts.
+Assumed euro/US dollar exchange rate
+As a globally operating organization, Infineon generates revenue not only in euros,
+but also in foreign currencies, predominantly US dollars. It also incurs expenses in
+US dollars and, to some extent, in currencies correlated to the US dollar, such as
+the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of
+non-euro-denominated revenue and expenses does not always balance out. For this
+reason, fluctuations in exchange rates, particularly between the euro and the US dollar,
+influence the amounts reported for revenue and earnings. A stronger US dollar against
+the euro has a positive effect, whereas a weaker US dollar against the euro has an
+adverse effect on revenue and earnings. Excluding the effect of currency hedging instru-
+ments, the impact of a deviation of 1 US cent in the actual exchange rate of the US dollar
+against the euro compared to the forecast rate would amount to a change in Segment
+Result of approximately €5 million per quarter or approximately €20 million per fiscal
+year compared to the forecast value. These figures are calculated on the assumption
+that the exchange rates of currencies correlated with the US dollar - in which costs
+arise for Infineon – change in line with the euro/US dollar exchange rate. In terms of
+revenue, the impact of exchange rates is limited primarily to the euro/US dollar rate,
+where a deviation of 1 US cent in the actual exchange rate compared to the forecast
+rate would continue to have an impact on revenue of approximately €15 million per
+quarter or approximately €60 million per fiscal year. Planning for the 2022 fiscal year
+is based on an assumed average exchange rate of US$1.20 to the euro.
+Growth prospects for the global economy and the semiconductor market
+The world economy contracted by 3.5 percent in the 2020 calendar year as a con-
+sequence of the coronavirus pandemic. A strong recovery is expected in the 2021
+calendar year, with experts at the International Monetary Fund (IMF) projecting
+growth of 4.8 percent back in October 2020. In view of the improved growth prospects
+over the course of the 2021 calendar year, the IMF revised its projection upwards to
+5.7 percent in October 2021, R11. The rapid development and approval of effective
+vaccines to combat the coronavirus as well as extensive stimulus measures by many
+governments have contributed to the stronger recovery. However, vaccination rates
+remain low in some emerging and developing countries, posing a risk to the scale of
+the upturn going forward. Should further outbreaks or mutations of the coronavirus
+occur, they could result in value chain disruptions with negative consequences for the
+further growth of the world economy. The current shortage of certain raw materials
+and components caused by supply difficulties, as well as a variety of geopolitical con-
+flicts, also pose additional risks.
+The recovery of the world economy in the 2021 calendar year, after a slump in the
+previous year, combined with the ongoing trend towards digitalization and electrifi-
+cation, have driven up demand for semiconductors quite significantly in the 2021
+calendar year. Market analysts at Omdia expect Infineon's reference market (i.e., the
+semiconductor market excluding DRAM and NAND flash memory chips and micro-
+processors) to grow by 18 percent in US dollar terms in the 2021 calendar year, R09.
+Despite the pandemic and the resulting lockdowns, this market grew by 8 percent in
+the previous year, driven by the sharp hike in demand for data and telecommunica-
+tions servers, computers and other electronic and electrical devices. In particular,
+demand for semiconductor chips in the automotive sector has risen sharply during
+the 2021 calendar year. Given the high capacity utilization rate at semiconductor
+fabrication plants for the aforementioned product groups, supply bottlenecks have
+arisen that cannot be remedied in the short term. For the 2022 calendar year, market
+analysts at Omdia expect the world economy to continue recovering and the Infineon
+reference market to grow at a rate of 5 percent, R09.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+In February 2021, in light of rising revenue expectations, the forecast for investments
+for the 2021 fiscal year was increased to around €1.6 billion. The original intention
+had been to invest between €1.4 billion and €1.5 billion. At €1.5 billion, investments
+were below the most recent outlook, but at the upper end of the original outlook
+from November 2020.
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q = < 111 >
+Revenue forecasted to grow to €12.7 billion plus or minus €500 million
+Based on the forecasts for the growth of the world economy and the semiconductor
+market segments relevant for Infineon described above and an assumed average
+exchange rate of US$1.20 to the euro, Infineon forecasts that revenue will grow in the
+2022 fiscal year to €12.7 billion plus or minus €500 million. Automotive and Connected
+Secure Systems segment revenue is expected to increase at a higher percentage rate
+than Group revenue overall. The revenue growth rate in the Power & Sensor Systems
+segment is forecast to be at a similar level to that of the Group. Industrial Power Control
+segment revenue is expected to increase by a mid-to-high single-digit percentage.
+Segment Result Margin of about 21 percent expected
+If the middle of the range for the revenue forecast is reached, the Segment Result
+Margin is expected to be around 21 percent in the 2022 fiscal year.
+Free Cash Flow from continuing operations
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+< 110 >
+Q =
+Further information
+Risk of default by banking and financing partners (RC: medium)
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us
+to the potential risk of a default by one or more of the banking and financing partners
+with whom we do business. We mitigate this risk - which could still arise despite various
+state-insured deposit protection mechanisms – by a combination of risk avoidance
+analyses and risk-spreading measures. The failure of these measures could have
+a materially adverse impact on Infineon's financial condition and liquidity situation.
+Further information regarding the management of financial risks is provided in note 27
+to the Consolidated Financial Statements. ☐ p. 211 ff.
+Legal and compliance risks
+Qimonda insolvency (RC: medium)
+The insolvency proceedings relating to Qimonda and the resulting actions of the
+insolvency administrator expose Infineon to potential risks, which are described in
+detail in note 23 to the Consolidated Financial Statements. p. 198 f.
+Provisions are recognized in connection with these matters as of 30 September 2021.
+The provisions reflect the amount of those liabilities that management believes are
+probable and can be estimated with reasonable accuracy as of that date. There can
+be no assurance that these provisions will be sufficient to cover all liabilities that may
+be incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Intellectual property rights and patents (RC: medium)
+As with many other companies in the semiconductor industry, from time to time
+allegations are made against us that we have infringed other parties' protected rights.
+Regardless of the prospects of success of such claims, substantial legal defense costs
+can arise.
+Whilst we often benefit from cross-licensing arrangements with major competitors,
+no such opportunities exist to safeguard against risks of this nature in the case of
+companies specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law,
+thus resulting in significant claims for damages or restrictions in selling the products
+concerned. Any such outcome could, in turn, have an adverse impact on Infineon's
+financial condition, liquidity and earnings.
+Further information regarding litigation and government inquiries is provided in
+note 23 to the Consolidated Financial Statements. p. 198 ff.
+Impact of our global operations (RC: medium)
+Our global business strategy requires the maintenance of research and development
+locations and manufacturing sites throughout the world. The location of such facilities
+is determined by market entry hurdles, technology and cost factors. Risks could,
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Consolidated Financial Statements
+For the 2022 fiscal year, Infineon forecasts Free Cash Flow of around €1 billion.
+ROCE
+For the 2022 fiscal year, Return on Capital Employed (ROCE) is forecast to reach
+minimum 10 percent.
+Gross cash position
+Risks and opportunities are measured cumulatively over the multi-year planning
+horizon on a net basis, i.e., after taking into account any existing risk mitigation or
+hedging measures. The time periods and the measurement categories used are closely
+linked to our short- and medium-term business planning and entrepreneurial targets.
+All relevant risks and opportunities are assessed uniformly across the Group in quan-
+titative and/or qualitative terms, based on the factors degree of impact on segment
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 113 >
+result and/or business objectives, reputation, compliance, on the one hand, and
+likelihood of occurrence, on the other.
+The scales used to measure these two factors (degree of impact and likelihood of
+occurrence, measured cumulatively over the multi-year planning horizon) and the
+resulting risk assessment matrix are depicted in chart C40.
+Based on the potential degree of impact as well as the estimated probability of
+occurrence, a risk is classified as "high", "medium" or "low".
+All risks and opportunities reported for Infineon are reviewed for possible cumulative
+effects and analyzed using an Infineon-specific categorization model. Risk and oppor-
+tunity analysis and new developments in risk management culture are supplemented
+by interdisciplinary workshops held at segment, corporate and regional levels. Import-
+ant information relevant for Infineon's Risk and Opportunity Management System is
+available to all employees via our intranet system, including access to ERM tools and
+ERM guidelines containing job descriptions for all functions involved in the process
+as well as all information necessary for reporting purposes.
+C40 Risk assessment matrix
+Degree of impact
+Degree of impact
+on Segment Result
+In organizational terms, the Risk and Opportunity Management System is structured
+in a closed-loop, multiple-stage process, which stipulates the manner and criteria
+to be applied to identify, measure, manage and report on risks and opportunities and
+defines how the system is to be monitored as a whole. Major components of the sys-
+tem are a quarterly analysis of risks and opportunities, reporting by all consolidated
+entities, an analysis of the overall situation at segment, regional and Group level,
+reporting to the Management Board on the risks and opportunities situation as well
+as major management measures undertaken. The Management Board, in turn, reports
+regularly to the Supervisory Board's Investment, Finance and Audit Committee. Where
+necessary, standard processes are supplemented by the ad-hoc reporting of any
+major risks identified between regular reporting dates.
+Specified currencies are hedged Group-wide by means of derivative financial instru-
+ments. These hedges are based on forecasts of future cash flows, the occurrence
+of which is uncertain. Under these circumstances, exchange rate fluctuations could
+- despite hedging measures - also have an adverse impact on earnings.
+Responsibility for processes and systems relating to risk and opportunity management
+rests with the Risk Management and Internal Control System (ICS) function within
+the Group Finance department as well as with designated Risk Officers working at
+segment, corporate function and regional levels. Responsibility for the identification,
+measurement, management and reporting of risks and opportunities lies with the
+management of the organizational unit concerned.
+Infineon's centralized risk management system is based on a Group-wide, manage-
+ment-oriented Enterprise Risk Management (ERM) approach, which aims to cover
+all relevant risks and opportunities. The approach is based on the "Enterprise Risk
+Management - Integrated Framework" developed by the Committee of Sponsoring
+Organizations of the Treadway Commission (COSO). The objective of the system
+is the early identification, assessment and management of risks and opportunities
+The gross cash position is expected to finish the 2022 fiscal year at a level of around
+€4 billion. The original medium-term target of reducing debt to or below the maximum
+target value of twice gross financial debt to EBITDA following the closing of the Cypress
+transaction is expected to be achieved as early as the 2022 fiscal year.
+Investments and depreciation/amortization
+Investments (defined by Infineon as the sum of investments in property, plant and
+equipment, investments in other intangible assets and capitalized development
+costs) are planned at around €2.4 billion for the 2022 fiscal year. The main focus is on
+expanding frontend manufacturing capacities that will enable Infineon to continue
+meeting the expected growth in demand in the medium term. Further investments
+in frontend facilities will be used to implement structural measures, optimize product
+quality, increase the degree of automation and promote innovation. A significant
+amount is also planned for investments at backend facilities, albeit at a much lower
+level than for frontend facilities. The majority of investment in buildings will be used
+to expand Infineon's frontend locations.
+In the 2021 fiscal year, investments totaled €1,497 million, comprising €1,268 million
+for property, plant and equipment and €229 million for capitalized development
+costs and other intangible assets. In the 2022 fiscal year, investments in capitalized
+development costs and other intangible assets are expected to be at about the same
+level than in the 2021 fiscal year.
+Overall statement on the expected development
+Based on forecasts for the development of the global economy and the semicon-
+ductor market in the 2022 calendar year, Infineon expects Group revenue to grow
+to €12.7 billion plus or minus €500 million. The Segment Result Margin is forecast
+to come in at the middle of the range for the revenue forecast at around 21 percent
+of revenue. Investments are expected to be in the region of €2.4 billion. Deprecia-
+tion and amortization are expected to total between €1.6 billion and €1.7 billion.
+Free Cash Flow from continuing operations should reach around €1 billion. The Return
+on Capital Employed (ROCE) is forecast to reach minimum 10 percent.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 112 >
+Risk and opportunity report
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities
+and supports the implementation of our strategic goals and growth drivers. Infineon's
+risk and opportunity profile is still characterized by periods of rapid growth, followed
+by periods of significant market decline, a substantial need for capital investment
+in order to achieve and sustain our market position and an extraordinarily rapid pace
+of technological change. Gaining a leading edge through technological innovation also
+has a legal dimension. Against this background, Infineon's risk policy is aimed firstly
+at taking advantage of identified opportunities as quickly as possible in a way most
+appropriate to growing the enterprise value, and secondly at pro-actively mitigating
+risks - particularly those capable of posing a threat to Infineon's going-concern
+status - by adopting appropriate countermeasures. Risk management at Infineon
+is therefore closely linked to corporate planning and the implementation of our busi-
+ness strategies. Ultimate responsibility for risk management lies with the Infineon
+Management Board.
+Coordinated risk management and control system elements are in place that
+enable us to pursue our stated risk policy in practice. Alongside the “Risk and
+Opportunity Management System” and the “Internal Control System with respect
+to financial reporting processes” described below, these elements also includes
+the related forecasting, management and internal reporting processes as well as
+the Compliance Management System.
+Risk and Opportunity Management System
+that could have a significant influence on Infineon's ability to achieve its strategic,
+operational, financial, legal and compliance targets. We therefore define risk/
+opportunity as the occurrence of future uncertainties that could result in either
+a negative or a positive variance from plan. We incorporate all relevant organiza-
+tional units within the Group in this analysis, thus covering all segments, significant
+central functions and regions.
+Our involvement and participation in various regional markets around the world creates
+cash flows in a number of currencies other than the euro - primarily in US dollars.
+A significant share of revenue, on the one hand, and of operating costs and investments,
+on the other, is denominated in US dollars and correlated currencies. For the most
+part, Infineon generates a US dollar surplus from these transactions. The integration
+of Cypress has increased this surplus.
+Currency risks (RC: medium)
+Financial risks
+Infineon Technologies | Annual Report 2021
+Our relative dependence on the Chinese market in relation to the total group revenue
+of business remains essentially unchanged. This includes the risk of a decline in
+external demand from a Chinese perspective and hence a decline in manufacturing
+capacity utilization levels in China. There is also a risk that an increased volume of
+previously imported semiconductors will be manufactured in China and that a greater
+volume of those made in that country will be exported.
+The government debt situation has worsened considerably as a result of the eco-
+nomic stimulus programs launched to mitigate the consequences of the coronavirus
+pandemic. Regardless of our assessment of potential scenarios and outcomes within
+this complex set of risks, these developments could have an adverse impact on
+Infineon's business operations, financial condition, liquidity, cash flows and earnings.
+Cyclical market and sector development (RC: high)
+The worldwide semiconductor market is dependent on global economic growth and
+hence subject to fluctuations. Our target markets are exposed to the risk of short-term
+market fluctuations. As a result, our own forecasts of future business developments
+are subject to a high degree of uncertainty. It is possible, for instance, that future
+market downturns will follow another pattern, for example, an L-shape with longer
+periods of flat growth. The absence of market growth or its decline would make it
+considerably more difficult to attain our own growth targets. In the event that we are
+unprepared for market fluctuations, or our response to any such fluctuations turns
+out to be inappropriate, this could have a sustained materially adverse impact on
+Infineon's operations, financial condition, liquidity, cash flows and earnings.
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replace-
+ability of products. Due to the resulting aggressive pricing policies, we may be unable
+to achieve our long-term strategic goals of gaining and/or maintaining market share
+and of product pricing. Moreover, accelerating M&A (Merger & Acquisition) activity
+within the semiconductor industry could result in even tougher competition. Potential
+benefits for competitors in this market include improved cost structures and more
+effective sales channels. Overall, this situation could have an adverse impact on
+Infineon's earnings.
+Risks arising from the coronavirus pandemic (RC: medium)
+In the 2020 fiscal year, the rapid spread of the coronavirus pandemic led to a signifi-
+cant deterioration in global economic conditions and also had an adverse effect
+on Infineon's operations and earnings. By the second half of the 2020 calendar year,
+the global economy had recovered unexpectedly quickly, leading to a massive
+increase in demand for semiconductors and significantly mitigating the impact of the
+coronavirus pandemic in the 2021 fiscal year. However, the pandemic continued to
+disrupt manufacturing output in certain countries, affecting not only Infineon's sites,
+but also those of its international suppliers and customers, which continues to nega-
+tively impact the availability of raw materials and components as well as Infineon's
+revenue. These risks could be exacerbated if the coronavirus pandemic were to flare
+up again. The coronavirus pandemic and indeed any other pandemic, epidemic or
+outbreak of infectious disease could have a materially adverse effect on the business
+operations, earnings, liquidity and cash flows of the Group.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 116 >
+Operational risks
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the
+semiconductor sector due to economic and demand fluctuations and the risks
+related to Infineon's operations, financial condition, liquidity and earnings by closely
+monitoring changes in early warning indicators as well as by developing specific
+response strategies appropriate to the current position within the economic cycle.
+This can be done, for instance, by rigorously adjusting capacities and inventory levels
+at an early stage, initiating cost-saving measures and making flexible use of external
+manufacturing capacities at both frontend and backend facilities.
+Dependence on individual suppliers (RC: high)
+Measures to implement our risk management strategy
+In the event of unexpected difficulties in terms of integration, the weaker-than-fore-
+cast growth of Cypress-related business or other unforeseen deviations in business
+development could potentially force us to recognize an impairment loss on non-
+current assets and/or on goodwill arising from the acquisition of Cypress.
+Trade and customs disputes as well as trade restrictions, for instance between the
+USA and China, could constrain global trade, thereby dampening global economic
+growth. Such developments can be triggered by political tensions and/or trade con-
+flicts between individual countries or regions, which - as a result of short-term and
+sometimes unforeseeable decisions – could have a significant impact on Infineon's
+revenue and earnings.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 119 >
+Report on outlook, risk and opportunity
+Risk and opportunity report
+therefore, arise if adverse economic and geopolitical crises were to affect our
+regional markets and if country-specific legislation and regulations were to influence
+investment activities and the ability to trade freely. Differing practices in the way tax,
+judicial and administrative regulations are interpreted could also have a negative
+impact on operations. We could also be exposed to the risk of fines, sanctions and
+reputational damage.
+Asian markets are particularly important to our long-term growth strategy. Our
+operations in China are influenced by a legal system that may be subject to change.
+One example is the fact that local regulations could make it mandatory to enter
+into partnerships with local companies. These circumstances could lead, on the one
+hand, to Infineon's intellectual property no longer being sufficiently protected and,
+on the other, to intellectual property developed by Infineon in China not being freely
+transferable to other countries and locations, thus impairing Infineon's financial
+condition and earnings.
+Acquisitions and cooperation arrangements (RC: medium)
+In order to develop or expand our business, we may seek to acquire other businesses
+or enter into various forms of cooperation arrangements. In the case of acquisitions,
+there is a risk that these activities prove to be unsuccessful, particularly regarding the
+integration of people and products in existing business structures. These issues could
+adversely impact our financial condition and earnings performance.
+In the case of acquisitions or portfolio decisions, there is a risk of non-compliance
+with antitrust regulations due to lack of knowledge or failure to make the people
+involved in such transactions adequately aware of the issues. This could result in high
+levels of cost (e.g., significant time spent by management, assignment of attorneys)
+and fines. Infineon's reputation could also suffer under these circumstances.
+Tax, fair trade and capital market regulations can all entail additional risks. In order
+to mitigate these risks, we rely upon the advice of both in-house and external experts
+and provide suitable training to our employees.
+Non-achievement of strategic or operational targets and risks
+relating to the integration of Cypress (RC: medium)
+The strategic and operational targets we have set with respect to the acquisition and
+integration of Cypress are based on assumptions and estimates that may subsequently
+prove to be incorrect. These include the financial and operational performance of
+Cypress and the synergy and innovation potential of the two companies as well as
+future economic developments and market changes.
+In particular, the possible loss of key employees could also have a negative impact.
+As a prerequisite for the successful integration and implementation of a joint strategy,
+we need talented managers and employees from both Infineon and Cypress. If, for
+instance, we are unable to retain employees due to potential uncertainties regarding
+jobs, locations or corporate culture, the benefits of integration and the ability to
+exploit the respective strengths of the two companies may be impaired.
+Unsettled political and economic climate (RC: high)
+-
+Data and IT systems security (RC: high)
+Manufacturing cost trends - raw materials prices, cost of materials
+and process costs (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost
+trends. In this context, measures aimed at optimizing manufacturing costs for raw
+materials and supplies, energy, labor and automation, as well as for bought-in services
+from external business partners, may not be feasible to the extent envisaged.
+Moreover, our dependence on various components (such as wafer substrates) and
+raw materials (such as gold and copper) used in manufacturing, as well as our energy
+requirements expose us to substantial price risks. We are also dependent on supplies
+of the so-called rare earths required for selected manufacturing processes in conjunc-
+tion with production process integration. At the time of writing, financial instruments
+are in place to hedge our price risk exposure for gold wire during the 2022 fiscal year,
+based on the planned volume requirements. The prices of raw materials and energy
+have recently been subject to significant fluctuation and there is no reason to assume
+the situation will change in the near future. If we are unable to offset cost rises or
+pass them on to customers via price adjustments, it could have an adverse impact
+on earnings.
+Determining and adjusting manufacturing volumes (RC: medium)
+Frontend and backend manufacturing processes need to be optimally synchronized
+to enable Infineon to develop competitive, high-quality products designed to provide
+customized technological solutions. In view of the rapid pace of technological change
+and increasingly stringent customer requirements, coordination processes need to
+become increasingly sophisticated. Failure to continue making progress in this area
+could result in quality problems, product development or market maturity delays
+as well as higher research and development expenses and hence adversely impact
+Infineon's earnings.
+One risk that semiconductor companies operating in-house manufacturing facilities
+typically face is that of delays in the ramping up of production volumes at new manu-
+facturing sites or in the transfer of technology. One good example is in the Automotive
+segment, where customers' product approval and testing processes can be conducted
+over an extended period of time, thus influencing our global manufacturing strategy
+as well as short- and medium-term capacity utilization. Failure to anticipate these
+changes in the manufacturing process in good time could result in capacity shortages
+and hence lower revenue, on the one hand, as well as costs incurred due to underutili-
+zation, on the other.
+Dependence on individual manufacturing sites (RC: medium)
+Our South-East Asian manufacturing sites are of critical importance for our production.
+If, for example, political upheavals, natural disasters or pandemic outbreaks in the
+region were to restrict or completely obstruct our ability to manufacture at these
+sites on the planned scale or to export products manufactured at those sites, it would
+have an adverse impact on our financial condition, liquidity and earnings. Our current
+manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as the expropriation of assets. The transfer of manufacturing
+capacities from these sites would, therefore, not only involve a great deal of time
+and technical effort, but Infineon would also be required to bear the necessary
+cost of investment.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 118 >
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Need for qualified staff (RC: medium)
+One of the key factors in our success is the availability of sufficient numbers of qualified
+employees at all times. There is, however, a general risk of losing qualified staff or not
+being able to recruit, train and retain adequately qualified people within the business.
+A lack of technical or management staff could, among other things, restrict future
+growth and hence adversely impact Infineon's liquidity and earnings.
+The ever-increasing complexity of technologies and products, shorter development
+cycles and higher customer expectations can cause a great deal of tension in the
+field of product development. Buffer times built into processes to compensate for
+potential delays are reduced accordingly. In the event of being unable to execute our
+development plans at the desired quality levels, the outcome could be development
+delays and increased development costs, which could have an adverse impact on
+Infineon's operations, financial condition, liquidity, cash flows and earnings.
+We cooperate with numerous suppliers who provide us with materials and services
+or manage parts of our supply chain. We do not always have alternative sources for
+some of these suppliers and therefore depend on their ability to deliver products and
+services of the required quality. The unexpectedly high demand for semiconductor
+products in the 2021 fiscal year – particularly for the automotive market, renewable
+energy applications, data centers, the expansion of mobile communications infra-
+structure, many aspects of digitalization and the electronics used at work and in
+homes in general - continues to cause supply problems, particularly for our contract
+manufacturers. The situation has not only led to delays in supplying our customers, but
+also resulted in an actual loss of revenue during the period under report. At the same
+time, we are currently confronted with price increases from suppliers and there is a risk
+that it will not be possible to fully pass on these increases to our customers. Cypress'
+business operations, in particular, rely heavily on independent contract manufacturers
+and subcontractors to manufacture its products, including wafer fabrication, assembly,
+packaging and testing. Any failure of one or more of these suppliers to meet their
+obligations to Infineon could have an adverse impact on Infineon's business operations,
+liquidity and earnings.
+Product development delays (RC: medium)
+< 117 >
+The reliability and security of Infineon's IT systems are of crucial importance. At the
+same time, the world has seen a general rise in the level of threats to data security.
+This applies to the deployment of IT systems to support business processes, on the
+one hand, and internal and external communications, on the other. Despite the array
+of precautionary measures put in place, any major disruption to these systems could
+result in risks relating to the confidentiality, availability and reliability of data and
+systems used in development, manufacturing, selling or administration functions,
+which, in turn, could have an adverse impact on our reputation, competitiveness and
+operations.
+Potential cyber-attacks on IT systems used in manufacturing processes, present
+risks that could result in production downtime and supply bottlenecks. In addition,
+cyber-attacks with industrial espionage intent and any related potential loss of
+intellectual property or patents pose risks that could jeopardize our investment in
+research and development and impair our long-term competitiveness.
+Increasingly dynamic markets (RC: high)
+The accelerating pace of events in the markets in which we operate, increased
+demands for flexibility by our customers, and short-term changes in order volumes
+could result in rising costs due to the underutilization of manufacturing capacities,
+higher inventory levels and unfulfilled commitments to suppliers.
+Thus, despite the fact that manufacturing processes and sites have become even
+more flexible, fluctuations in capacity utilization levels and purchase commitments,
+coupled with idle costs at manufacturing sites, nevertheless pose risks related to
+our cost position. These risks could possibly jeopardize our ability to achieve growth
+and profitability targets that are based on cycle averages.
+This situation is exacerbated by the fact that some of our products are highly depen-
+dent on the degree of success achieved by individual customers in their own markets.
+Furthermore, there is a risk of losing future business and design wins if we are unable
+to deliver volumes over and above our contractual obligations if called upon by cus-
+tomers to do so. These factors could have an adverse impact on Infineon's liquidity
+and earnings.
+Dependence on the success of specific customers may also grow if they account for
+an above-average share of Infineon's revenue and earnings. This situation could be
+driven by the exceptionally strong performance of a particular customer, resulting,
+for instance, from exceptional demand for its products or from consolidation trends,
+in particular those affecting our first- and second-tier customers.
+Product quality trends (RC: medium)
+Product quality assurance is a key success factor for our business. Potential quality
+risks - for example due to high capacity utilization levels - can affect yield fluctuations
+and hence our ability to supply customers. Shortfalls in product quality can lead
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q =
+to product recalls at our customers and related potential costs for liability claims.
+In addition, quality risks could also damage Infineon's reputation and thus have
+a significant adverse impact on future earnings.
+Depreciation and amortization are predicted to be between €1.6 billion and €1.7 billion.
+Approximately €400 million of that amount relates to depreciation and amortization
+resulting from purchase price allocations, mainly in connection with the acquisition
+of Cypress and, to a lesser degree, the acquisition of International Rectifier.
+Combined Management Report
+Infineon Technologies AG
+Business focus and strategy
+4,634
+4,634
+2
+1
+378
+341
+3,430
+2,125
+883
+878
+9,328
+7,978
+1
+2
+19,946
+1,029
+1,129
+725
+808
+9,488
+9,519
+Special reserve with an equity portion
+The unchanged high demand for semiconductor products, which resulted in positive
+volume and price effects, led to an increase in revenue of Infineon Technologies AG
+of 18 percent to €6,311 million (2020: €5,346 million) and an increase in gross profit
+of 36.0 percent year-on-year to €2,178 million (2020: €1,601 million). The gross profit
+margin amounted to 34.5 percent in the 2021 fiscal year (2020: 29.9 percent). This
+development led to an increase in functional costs of €217 million to €1,876 million
+in the 2021 fiscal year (2020: €1,659 million), amounting to 29.7 percent of revenue
+(2020: 31.0 percent). Infineon Technologies AG reports net profit of €239 million for
+the 2021 fiscal year after a net loss of €150 million for the 2020 fiscal year. Besides an
+increase in gross profit, a decrease in financial expenses related to the acquisition
+of Cypress was recorded. This was offset by a declining income from investments and
+an increase of expenses by function. After transferring a total of €114 million from
+retained earnings, unappropriated profit amounted to €353 million.
+Other provisions
+Provisions
+Bonds
+Loans payable to banks
+18,529
+Advance payments received
+Trade payables
+Other liabilities
+Liabilities
+Deferred income
+Total liabilities and shareholders' equity
+Provisions for pensions and similar commitments
+321
+304
+Liabilities to affiliated companies
+Shareholders' equity
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Further information
+Q =
+<128>
+Infineon Technologies AG | Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Expected developments, together with associated material risks
+and opportunities
+The expected developments, together with the associated material risks and
+opportunities of Infineon Technologies AG, are very similar to those of the Group
+as a whole. Moreover, it is assumed that the result from investments will play a major
+role in Infineon Technologies AG's earnings performance. As a general rule, Infineon
+Technologies AG participates in the risks of its subsidiaries and equity investments on
+the basis of the relevant shareholding. As the parent company, Infineon Technologies
+AG is integrated into Infineon's overall risk management system and internal control
+system. For more information on this topic, together with the associated material
+risks and opportunities of Infineon Technologies AG, see the chapter "Risk and
+opportunity report". p. 112 ff.
+Most transactions within Infineon involving derivative financial instruments are han-
+dled by Infineon Technologies AG. The comments provided in "Principles and structure
+of Infineon's treasury” within the chapter "Review of liquidity”, p. 107 f., regarding
+the nature and scope of transactions involving derivative financial instruments and
+hedged risks also apply to Infineon Technologies AG. Reference is also made to the
+Notes to the Separate Financial Statements of Infineon Technologies AG.
+https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+Corporate Governance
+Information pursuant to
+section 289a, paragraph 1, and
+section 315a, paragraph 1, of the
+German Commercial Code (HGB)
+Structure of the subscribed capital
+The share capital of Infineon Technologies AG stood at €2,611,842,274 as of 30 Sep-
+tember 2021. This sum is divided into 1,305,921,137 no par value registered shares,
+each of which represents a notional portion of the share capital of €2 per share. Each
+share carries one vote and gives an equal right to the profit of the Company based
+on the profit appropriation resolved by shareholders at the Annual General Meeting.
+The Company held 4,545,602 of the above-mentioned issued shares as own shares
+as of 30 September 2021 (30 September 2020: 5,251,391 shares). Own shares held by
+the Company on the date of the Annual General Meeting do not carry a vote and are
+not entitled to participate in profit.
+Restrictions on voting rights or the transfer of shares
+Restrictions on the voting rights of shares may, in particular, arise as a result of the
+regulations of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example,
+pursuant to section 136 AktG shareholders are prohibited from voting under certain
+circumstances and, pursuant to section 71b AktG, Infineon Technologies AG has no
+voting rights from its own shares. Furthermore, non-compliance with the notification
+requirements pursuant to section 33, paragraphs 1 or 2 of the German Securities
+Trading Act (Wertpapierhandelsgesetz - "WpHG") and to section 38, paragraph 1 as
+well as section 39, paragraph 1, WpHG can, pursuant to section 44 WpHG, have the
+effect that certain rights (including the right to vote) may, at least temporarily, not
+exist. We are not aware of any contractual restrictions on voting rights or the transfer
+of shares.
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Combined Management Report
+Infineon Technologies AG
+Consolidated Financial Statements
+Further information
+Q =
+< 127 >
+Total assets increased by 7.6 percent from €18,529 million as of 30 September 2020
+to €19,946 million as of 30 September 2021. Non-current assets went up by €80 million
+year-on-year due to capital contributions at the level of affiliated companies while
+intangible assets and property, plant and equipment decreased. Current assets
+increased by €1,332 million, mainly due to an increase of cash and cash equivalents
+and marketable securities by €1,069 million to €3,656 million at the end of the report-
+ing period (30 September 2020: €2,587 million). Cash and cash equivalents and
+marketable securities accounted for 53.9 percent of current assets. Receivables and
+other assets increased in total by €213 million due to the higher volume of business.
+The decrease in equity (€31 million) was mainly due to the dividend paid out for
+the 2020 fiscal year amounting to €286 million and, with an offsetting effect, the net
+profit for the 2021 fiscal year amounting to €239 million.
+Management Board and
+Supervisory Board
+Provisions for pensions and similar commitments increased by a total of €17 million,
+mainly due to the reduction in the average market interest rate for the past ten years
+used to measure obligations. The positive development of the fair value of the plan
+assets had an offsetting effect. Other provisions increased by a total of €83 million,
+relating mainly to provisions for obligations to employees amounting to €315 million
+(2020: €171 million) while provisions for unrealized fair value measurement losses on
+interest rate hedging contracts could be derecognized (2020: €66 million). Liabilities
+went up by €1,350 million from €7,978 million at the end of the 2020 fiscal year to
+€9,328 million as of 30 September 2021. The increase resulted from the higher
+amount of payables to affiliated companies, mainly in connection with intragroup
+financing management.
+For information on Infineon's own shares, please see the comments relating to
+section 160, paragraph 1, no. 2 of the German Stock Corporation Act (AktG) provided
+in the Separate Financial Statements of Infineon Technologies AG.
+https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+Dividend
+In accordance with the German Stock Corporation Act (AktG), the amount of the
+dividend available for distribution to shareholders is based on the level of unappro-
+priated profit (Bilanzgewinn) recorded by the ultimate parent, as determined in
+accordance with the German Commercial Code (HGB).
+Infineon Technologies AG reported unappropriated profit of €353 million in its financial
+statements for the fiscal year ended 30 September 2021. With regard to the 2021 fiscal
+year, a proposal will be made to pay a dividend of €0.27 per dividend-entitled share out
+of the unappropriated profit of Infineon Technologies AG, amounting to €353 million.
+The disbursement of the proposed dividend is subject to approval by the shareholders.
+The Company paid a dividend of €0.22 per share (€286 million in total) for the 2020
+fiscal year.
+For information regarding Infineon's long-term dividend policy, see "Dividend” in the
+chapter "The Infineon share”. □ p. 98 ff.
+Infineon Technologies | Annual Report 2021
+At the end of the reporting period, the equity ratio stood at 47.6 percent, compared
+to 51.4 percent one year earlier.
+Infineon Technologies | Annual Report 2021
+287
+Unappropriated profit
+12,958
+(1,203)
+(1,091)
+Inventories
+1,257
+1,207
+(444)
+(370)
+Receivables and other assets
+1,872
+1,659
+(229)
+(198)
+Cash and cash equivalents, marketable securities
+3,656
+13,038
+Non-current assets
+1,601
+2,178
+2021
+2020
+€ in millions
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+6,311
+2,587
+5,346
+592
+692
+(4,133)
+(3,745)
+Financial assets
+12,446
+12,266
+Intangible assets, property, plant and equipment
+353
+26
+Current assets
+2,603
+2,601
+239
+(150)
+Capital reserves
+3,525
+3,515
+114
+437
+Retained earnings
+3,007
+3,116
+Unappropriated profit at the end of year
+353
+287
+Share capital
+(3)
+(42)
+18,529
+6,785
+5,453
+64
+270
+Prepaid expenses
+121
+116
+(2)
+(147)
+Active difference resulting from offsetting
+2
+2
+36
+(216)
+Total assets
+19,946
+(141)
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+Consolidated Financial Statements
+Market access and activities in China (OC: medium)
+Ability to meet supply requirements with available capacities (OC: medium)
+Our in-house manufacturing capacities, together with those of our external partners,
+provide us with a degree of flexibility to meet demand. In particular, the further
+expansion of 300-millimeter production in Dresden (Germany), the second manufac-
+turing module in Kulim (Malaysia), and the recent start of production of a second,
+fully automated 300-millimeter factory at the Villach site (Austria) will strengthen our
+ability to meet the growing demand for power semiconductors.
+The trend towards digitalization offers substantial business potential for Infineon.
+This is partially reflected in the optimization of internal processes, such as for our
+interconnected manufacturing capabilities on a global scale. At the same time, our
+portfolio of sensors, microcontrollers, power semiconductors, security controllers
+and specific software puts us in an excellent position to exploit growing market
+potential. Our strategic approach "Product to System” makes us ideally placed to
+penetrate and develop the markets involved. Good examples already visible today
+include automated driving, voice and gesture control for devices and machines, the
+advancing development of the lot and big data.
+Digitalization (OC: medium)
+Infineon's semiconductors enable electric power to be generated from renewable
+energy sources. They offer efficiency gains at all stages of the energy industry's
+value chain, whether in generation, transmission or, above all, in the use of electric
+power. They form the basis for the intelligent and efficient use of electric power,
+for instance, in industrial applications, power supplies for computers, consumer elec-
+tronics and vehicles.
+Population growth and increasing industrialization in all parts of the world are
+resulting in an ever-greater global demand for energy. Electric power is becoming
+the most important energy carrier of the 21st century and renewables are playing
+a key role in reducing carbon emissions. The long-term objective is to achieve global
+decarbonization by the end of the century, as resolved at the Climate Change Con-
+ference held in Paris (France) in December 2015. As part of its Green Deal concept,
+the European Union intends to become carbon-neutral by 2050.
+Support for change in energy policies and consideration
+of climate change issues (OC: medium)
+With the strategic approach "Product to System" we seek to identify additional
+benefits for our customers at a system level from within our broad portfolio of tech-
+nologies and products. This strategy enables us to exploit further revenue growth
+potential and thereby achieve our growth and margin targets. This approach also
+enables us to reduce customers' development costs and shorten the lead times
+required to bring their products to market.
+Strategic approach "Product to System" (OC: medium)
+We see numerous opportunities for working with new materials, such as those asso-
+ciated with SiC or GaN, to develop more powerful and/or lower-cost products. These
+materials could well have a positive influence on our ability to attain our strategic
+growth and profitability targets.
+< 122 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Infineon generates more revenue in China than in any other country. Accordingly,
+developments and growth opportunities in China are of the utmost importance to
+the Group and relate to the following markets that we serve:
+China is the world's largest automotive market, with growth rates still at a high level.
+In particular, the rapid growth in the production of plug-in hybrid and all-electric
+vehicles means that China has been the world's largest market for electromobility
+for a number of years. For this reason, during the 2018 fiscal year, Infineon and SAIC
+Motor (China's largest car manufacturer) established SIAPM, a joint venture that offers
+power semiconductor solutions for electric vehicles. Volume production has already
+commenced. The joint venture strengthens our position in China, whilst also offering
+additional potential for Infineon's global business going forward.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Security applications (OC: medium)
+The ongoing trend towards increased mobility is also reflected in the unbroken high
+demand for smartphones and tablets. We benefit from this development in two ways.
+Firstly, through the components we supply for mobile devices (MEMS microphones,
+TVS diodes, GPS signal amplifiers, CMOS-RF switches), and secondly, through power
+semiconductors, which form the key components for energy-efficient chargers
+(high-voltage and low-voltage power transistors, driver ICs and control ICs).
+Growth from mobile applications (OC: medium)
+We are also convinced that current global carbon emissions targets cannot be achieved
+without further electrification. The need for increased efforts in this field is relevant
+not only for electromobility (i.e., hybrid, plug-in hybrid and all-electric vehicles), but
+also for power units in vehicles with combustion engines. IT security within the vehicle
+is also further gaining in importance. Our expertise in the field of security controllers
+makes us extremely well positioned to exploit opportunities in this area.
+We expect semiconductor content per vehicle to continue growing. The primary
+driving force behind this trend is the rising demand for electromobility, active safety
+features and driver assistance systems.
+Further growth of semiconductor content in vehicles (OC: medium)
+Our success in positioning Infineon in China as an integral part of Chinese industry
+(and hence of Chinese society) could well open up a multitude of new opportunities
+that is highly likely to have a positive impact on the growth and profitability of our
+business.
+Business focus and strategy
+At the G20 summit held in Hangzhou (People's Republic of China) in September 2016,
+China ratified the Paris Agreement, thereby giving its formal commitment to reducing
+carbon emissions. As a consequence, the importance of expanding renewable energy
+sources in China increased enormously. Our presence in this market, alongside our
+collaboration with leading companies in the wind and solar power sectors, will create
+further opportunities for long-term growth.
+Report on outlook, risk and opportunity
+Risk and opportunity report
+< 123 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+China is the world's largest market for trains and, with CRRC (an Infineon customer),
+the country is home to the world's largest train manufacturer by far. The continued
+expansion of China's rail network and the growing volume of international infra-
+structure projects both represent growing business opportunities for Infineon.
+The trend towards electronic identity documents continues to have a positive impact
+on Connected Secure Systems segment revenue. Paper-based documents are increas-
+ingly being replaced by chip-based versions, due to the higher level of security they
+offer. New markets are also emerging in conjunction with the loT and the Industrial
+Internet ("Industry 4.0"). The authentication of devices is playing an increasingly
+important role in both of these fields, for which Infineon offers the corresponding
+security chips.
+Management Board and
+Supervisory Board
+We are constantly striving to develop new technologies, products and solutions and
+to improve on existing ones, both separately and in collaboration with customers. We
+therefore continually invest in research and development relating to the use of new
+technologies and materials. Those in current use may well lose their predominance
+in the foreseeable future, such as Si, which is reaching its physical limits in some
+applications.
+Infineon Technologies | Annual Report 2021
+In certain cases, insurance policies have been taken out to protect against potential
+claims and liability risks, with the aim of avoiding or at least minimizing any adverse
+impact on Infineon's financial condition and liquidity.
+We have implemented a Group-wide Compliance Management System (CMS) with
+the aim of managing Compliance-related risks in a systematic, comprehensive and
+sustainable manner. We are continuously enhancing the seven elements of our
+CMS to prevent, detect and respond to Compliance-related incidents. The Corporate
+Compliance Officer reports to the Chief Financial Officer and, on a quarterly basis,
+to the Management Board and to the Investment, Finance and Audit Committee of
+the Supervisory Board. At entities or sites formerly operated by Cypress, we have
+appointed Compliance Contacts, who are responsible for the implementation of the
+CMS at the entities or sites.
+We minimize legal risks relating to intellectual property rights and patents by pursuing
+a well-defined patent strategy, including thorough patent research and the selective
+development and registration of Infineon patents, as well as precautionary protective
+measures in the form of agreements with major competitors. However, no such
+opportunities exist to safeguard against risks of this nature in the case of companies
+that specialize in exploiting patent rights.
+information security program to further improve protection against hacking attacks
+and related risks to our IT systems, networks, products, solutions and services.
+Information security is achieved primarily with the aid of Infineon's systematically
+applied global Information Security Management System (ISMS), the prime objectives
+of which are to identify and measure all potential IT risks and to ensure that effective
+processes and tools are in place to minimize and avoid risk. The ISMS covers all
+areas of Infineon's business and is certified in line with the globally recognized
+ISO/IEC 27001 standard. All relevant risk areas are continuously monitored and
+optimized in conjunction with regular internal and external audits.
+In response to the general increase in threats to data security and the high degree of
+professionalism meanwhile applied in the area of cybercrime, we have initiated an
+In order to take the growing importance of Infineon's ecosystem partners into account,
+a partner risk evaluation system for Go2Market and IP/R&D partners has been devel-
+oped and integrated. This partner risk assessment focuses on the dependency of
+Infineon from its ecosystem partners. As a result, the high risk ecosystem partners
+throughout the group are now identified, continuously assessed and corrective risk
+mitigation measures are implemented to avoid an adverse impact on the Segment
+Result and/or business objectives, reputation, compliance.
+We seek to minimize procurement-related risks through appropriate purchasing
+strategies and techniques, including constant product and cost analysis ("Best Cost
+Country Sourcing” and “Focus-on-Value”). These programs include cross-functional
+teams of experts who are responsible for standardizing purchasing processes with
+respect to materials and technical equipment.
+A structured project management system is in place to handle development projects,
+including those of a customer-specific nature. Clear project milestones and verifica-
+tion procedures required to be carried out during a project, as well as clearly defined
+limits of authority, help us identify potential project risks at an early stage and counter
+these risks with specific measures.
+At an operational level, we have adopted various quality management strategies
+aimed at avoiding quality risks (such as "Zero Defects” and “Six Sigma") in order to
+prevent or solve problems and to improve our business processes. Our Group-wide
+quality management system has been certified on a worldwide basis in accordance
+with ISO 9001 and ISO/TS 16949 for a number of years and also encompasses supplier
+development. Our processes and initiatives to ensure continuous quality improve-
+ment in corporate procedures are aimed at identifying and eliminating the causes of
+quality-related problems at an early stage.
+< 120 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+New technologies and materials (OC: medium)
+Quite apart from their product portfolios, the two companies also complement each
+other in further aspects. We also see an excellent match in terms of geographical
+focus and sales channels, with Infineon gaining wider market access through Cypress,
+particularly in Japan, as well as via distributors. Infineon will also be adding to its
+research and development presence in Silicon Valley. On account of its product port-
+folio, the manufacturing strategy of Cypress focuses to a much greater extent on con-
+tract manufacturing. The combination of the two companies will help our business
+diversify, make it more robust and enable us to generate additional synergies.
+We are pushing ahead with our strategic approach "Product to System" in order
+to strengthen and expand core business by growing in both related and new fields.
+To cite two examples, firstly, the combination of Infineon's security expertise with
+Cypress' connectivity knowhow will accelerate entry into new loT applications in
+the industrial segment. Secondly, in the field of automotive semiconductors, the
+expanded portfolio of microcontrollers and NOR flash memories offers great potential,
+especially in light of their growing importance for driver assistance systems and new
+electronic architectures in vehicles.
+The resulting comprehensive portfolio enables Infineon to offer complete system
+solutions that are needed to link the real with the digital world. The key to success
+is ensuring secure connectivity for energy-efficient devices. Advances in functional
+integration mean that a whole host of relevant applications are currently in an early
+phase of growth.
+The products and technologies of Infineon and Cypress complement one another in
+an outstanding manner. The previous focus on power semiconductors, sensors and
+microcontrollers for automotive and security applications has now been broadened
+to include connectivity-related products, multi-purpose microcontrollers for industrial
+and IoT applications together with the related software, as well as memories for
+specialty applications ("grow in scope").
+and integration of Cypress (OC: medium)
+Opportunities arising in connection with the acquisition
+Infineon Technologies | Annual Report 2021
+The worldwide high demand for semiconductor products is predicted to continue in
+the 2022 fiscal year and gives us the opportunity to increase our sales prices. This
+may have a positive impact on Infineon's business operations, liquidity and earnings.
+The principal opportunities are described in the following section. The list is not
+exhaustive and represents only a cross-section of the opportunities available. Our
+assessment of these opportunities is subject to continuous change, reflecting the
+fact that our business, our markets and the technologies we deploy are continuously
+subject to new developments, bringing with them fresh opportunities, causing others
+to become less relevant or otherwise changing the significance of an opportunity
+from our perspective. Depending on the potential degree of impact and the estimated
+probability of occurrence, each of these opportunities is assigned to an "opportunity
+class" (OC) in the same way that risks are allocated to a risk class. These classifications
+are shown in parentheses (e.g., “OC: medium”).
+Opportunities
+The overall risk assessment is based on a consolidated view of all significant individual
+risks. The risk situation as a whole remains essentially unchanged from the previous
+year. We are not currently aware of any individual risks capable of jeopardizing
+Infineon's going-concern status.
+Overall statement by Group management on the risk situation
+< 121 >
+Q =
+Further information
+High demand for semiconductors allows price increases (OC: high)
+Business focus and strategy
+Liquidity position (OC: medium)
+Infineon Technologies | Annual Report 2021
+Other income (expense), net
+General and administrative expenses
+Selling expenses
+Research and development expenses
+Gross profit
+Cost of goods sold
+Revenue
+€ in millions
+in accordance with the German Commercial Code (condensed)
+Statement of financial position of Infineon Technologies AG
+Net assets and financial position
+Statement of income of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+Earnings position
+< 126 >
+Q =
+Result from investments, net
+Interest result
+Other financial result
+Income tax
+Further information
+Q =
+< 129 >
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Pursuant to section 67, paragraph 2, AktG, rights and obligations arising from shares in
+relation to Infineon Technologies AG exist only for and from the parties entered in the
+share register. In order to be recorded in the share register of Infineon Technologies AG,
+shareholders are required to submit to Infineon Technologies AG the number of shares
+held by them and their name or company name, their postal and electronic address
+and, where applicable, their registered office and their date of birth. Pursuant to sec-
+tion 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information
+from the party listed in the share register regarding the extent to which shares to which
+the entry in the share register relates are actually owned by the registered party and,
+if it does not own the shares, to receive the information necessary for the maintenance
+of the share register in relation to the party for whom the shares are held. Section 67,
+paragraph 2, AktG stipulates that the shares concerned do not confer voting rights until
+such time as the information requested has been supplied in the appropriate manner.
+Direct or indirect shareholdings exceeding 10 percent of the voting rights
+Section 33, paragraph 1, WpHG requires each shareholder whose voting rights reach,
+exceed or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the
+voting rights of a listed corporation to notify such corporation and the German Federal
+Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht -
+"BaFin") immediately. As of 30 September 2021, we have not been notified of any
+direct or indirect shareholdings reaching or exceeding 10 percent of the voting rights.
+The shareholdings notified to us as of 30 September 2021 are presented in the Notes
+to the Separate Financial Statements of Infineon Technologies AG under the infor-
+mation pursuant to section 160, paragraph 1, No. 8 AktG.
+Shares with special rights that confer control rights
+No shares conferring special control rights have been issued.
+Further information
+Nature of control over voting rights when employees participate in the
+Company's capital and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise their
+control rights directly in accordance with the applicable laws and the Articles of
+Association, just like other shareholders.
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management
+Board of Infineon Technologies AG is required to consist of at least two members.
+With effect from 15 April 2021, the Management Board comprises five members (pre-
+viously four members). Management Board members are appointed and dismissed
+by the Supervisory Board pursuant to section 84, paragraph 1, AktG. As Infineon
+Technologies AG falls within the scope of the German Co-Determination Act (Mitbe-
+stimmungsgesetz - "MitbestG"), the appointment or dismissal of Management Board
+members requires a two-thirds majority of the votes of the Supervisory Board members
+(section 31, paragraph 2, MitbestG). If the required majority is not achieved at the
+first ballot, the appointment may be approved on a recommendation of the Mediation
+Committee at a second ballot by a simple majority of the votes of the Supervisory
+Board members (section 31, paragraph 3, MitbestG). If the required majority is still
+not achieved, a third ballot is held in which the Chairman of the Supervisory Board
+has two votes (section 31, paragraph 4, MitbestG).
+If the Management Board does not have the required number of members, in urgent
+cases, the local court ("Amtsgericht” of Munich) makes the necessary appointment
+upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appoint-
+ment for Management Board members is five years. Re-appointment or an extension
+of the term of office, in each case for a maximum of five years, is permitted (section 84,
+paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association
+and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint
+a chairman and a deputy chairman to the Management Board. The Supervisory Board
+may revoke the appointment of a Management Board member and the Chairman of
+the Management Board for good cause (section 84, paragraph 3, AktG).
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of
+Association rests with the Annual General Meeting. However, section 10, paragraph 4,
+of the Articles of Association gives the Supervisory Board the authority to amend
+the Articles of Association insofar as any such amendment relates merely to the
+Infineon Technologies | Annual Report 2021
+Transfers from retained earnings
+Income after taxes/net profit (previous year: net loss)
+Statutory regulations and Articles of Association provisions governing
+the appointment and dismissal of members of the Management Board
+and amendments to the Articles of Association
+Our current liquidity position, which we describe in the chapter "Review of liquidity",
+I p. 105 ff., enables us to obtain and, if necessary, make use of favorable refinancing
+conditions.
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+Infineon generated revenue of €11,060 million in the 2021 fiscal year, an increase of
+29 percent compared to the previous year's figure of €8,567 million.
+We are continuing the process of aligning our product portfolio with the two key
+trends of the current and the next decade; namely, electrification and digitalization.
+Both trends and the interplay between them will accelerate structural semiconductor
+growth. The general market picture and our business situation continue to look very
+positive. This is reflected in our recent numbers:
+A significant element of our strategic evolution is the expansion of our own manu-
+facturing landscape. Without a doubt, the most important milestone was the opening
+of our new 300-millimeter semiconductor manufacturing facility in Villach (Austria)
+on 17 September 2021. We will operate the new factory, together with our factory in
+Dresden (Germany), as one unit, based on the One Virtual Fab concept, which gives
+us more flexibility and greater economies of scale.
+Current issues with allocation have only strengthened our view that we also need to
+champion our own manufacturing. The most critical bottlenecks arose for products
+that come from foundries – in some product categories, we are dependent on their
+supplies, as well. However, we are less dependent on foundries than competitors
+with fabless business models and, if we look across our entire portfolio, we are more
+resistant to supply problems. We have continued to develop our collaboration with
+contract manufacturers and have broadened our supplier base, so that in the future
+we will be even better equipped to deal with fluctuations in the supply situation.
+-
+For the time being, supply constraints remain pervasive, and demand is strong across
+a large majority of product categories and end markets. Supply is bound to catch
+up with demand eventually, but we do not see this happening on a broader scale
+within 2022.
+And that picture remains valid today: demand is by far outstripping supply. Near-term
+indicators tell us that the positive momentum in our key markets is intact, whereas,
+in a few applications with lower relevance for us, we see some normalization. Overall,
+the speed of growth is determined by the speed by which additional capacity is
+becoming available.
+Signs of an economic recovery following the outbreak of the coronavirus pandemic
+began to appear about one year ago. These indications quickly gathered steam
+across many markets and geographies, soon leading to a stronger-than-expected
+economic rebound and an unprecedented global chip shortage. Manufacturing
+capacities became, and continue to be, the limiting factor, even more so as natural
+disasters and regional Covid spikes caused specific disruptions. In this challenging
+environment, we rapidly switched our operational mode from managing the under-
+utilization to handling severe allocation.
+Overall statement on Infineon's financial condition
+Combined Management Report
+Overall statement on Infineon's financial condition
+Q = < 124 >
+Further information
+Consolidated Financial Statements
+Business focus and strategy
+Management Board and
+Supervisory Board
+The Segment Result totaled €2,072 million for the 2021 fiscal year, 77 percent up
+on the €1,170 million reported one year earlier. The Segment Result Margin rose
+accordingly, coming in at 18.7 percent compared to 13.7 percent one year earlier.
+Investments during the 2021 fiscal year totaled €1,497 million, up €398 million or
+36 percent on the previous year's figure of €1,099 million. The increase was slightly
+more pronounced than revenue growth, reflecting the strong upturn in demand.
+Investments as a percentage of revenue edged up from 12.8 percent to 13.5 percent
+year-on-year.
+Free Cash Flow from continuing operations in the 2021 fiscal year was a positive
+amount of €1,574 million (2020: negative €6,727 million) and arose mainly due to the
+high level of net cash provided by operating activities from continuing operations
+totaling €3,063 million (2020: €1,817 million). The figure reported for the previous fiscal
+year was influenced primarily by the net payment (i.e., net of cash and cash equivalents
+acquired) amounting to €7,433 million used to acquire Cypress.
+Infineon Technologies | Annual Report 2021
+Infineon Technologies | Annual Report 2021
+Unlike the Consolidated Financial Statements, which are prepared in accordance
+with International Financial Reporting Standards ("IFRS”), Infineon Technologies AG's
+Separate Financial Statements are prepared in accordance with the provisions of
+the German Commercial Code ("HGB"). The complete Separate Financial Statements
+are published separately.
+Infineon Technologies AG is the parent company of Infineon and performs the Group's
+management and corporate functions. It is responsible for key Group-wide functions
+such as Finance and Accounting, Treasury Management, Investor Relations, Corporate
+Compliance, Internal Audit, Business Continuity, Business Excellence, Information
+Technology, Strategy, Mergers and Acquisitions, Legal and Patent Department, Human
+Resources, strategic and product-oriented research and development activities and
+also Corporate and Marketing Communication worldwide. Furthermore, it manages
+supply chain processes throughout the Group. Infineon Technologies AG also has its
+own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+In addition to reporting on Infineon as a whole, in the following section, we also
+provide information on the performance of Infineon Technologies AG.
+Infineon Technologies AG
+Based on the forecasts for the development of the global economy and the semi-
+conductor market in the 2022 calendar year, the company expects an increase in
+Group revenue to around €12.7 billion plus or minus €500 million. The Segment
+Result Margin is forecast to come in at the middle of the range for the revenue fore-
+cast at around 21 percent of revenue. Investments are expected to be in the region of
+€2.4 billion. Depreciation and amortization are expected to total between €1.6 billion
+and €1.7 billion. Free Cash Flow from continuing operations should reach around
+€1 billion. The Return on Capital Employed (ROCE) is forecast to reach minimum
+10 percent.
+For around three quarters now, we have been talking about the imbalance between
+supply and demand, caused by the pandemic, cyclical tailwinds and structural factors.
+In general terms, a stabilization of this boom phase is occurring at present. In the
+majority of markets, capacities are tight and inventories are lower-than-healthy.
+Demand is outstripping supply but not accelerating further from elevated levels.
+Stock levels in some areas are going slightly up, while staying considerably below
+long-term averages. Of course, dynamics are different in the various sub-markets; in
+some, a supply-demand equilibrium will be reached sooner than in others. For our
+target applications, however, we do not see this happening in the near future. Supply
+limitations for automotive, industrial, data center, IoT and other areas will persist
+well into 2022. As a consequence, our outlook for the 2022 fiscal year is determined
+from the supply side, that is, by the extent by which we can expand capacities, both
+in-house as well as from external manufacturing partners.
+Business focus and strategy
+Outlook
+< 125 >
+Q =
+Further information
+Consolidated Financial Statements
+Overall statement on Infineon's financial condition | Infineon Technologies AG
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+The Return on Capital Employed (ROCE) improved from 3.0 percent to 8.4 percent
+year-on-year, mainly reflecting the sharp rise in operating profit from continuing
+operations after tax from €473 million to €1,325 million compared with one year
+earlier. Capital employed stood at €15,793 million as of 30 September 2021 and was
+therefore similar to the amount reported one year earlier (30 September 2020:
+€15,827 million).
+> Siemens AG
+Business focus and strategy
+Based on its own best judgment, the Supervisory Board has the option to grant a
+special bonus, such as for exceptional achievements of the Management Board or its
+individual members. In each case, however, the bonus is capped at a maximum of
+30 percent of the fixed remuneration of the Management Board member concerned.
+Under the new Management Board remuneration system, the option to grant a special
+bonus has been removed without replacement.
+Q = < 130 >
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+wording, such as changes in the share capital amount resulting from a capital increase
+out of conditional or authorized capital or a capital decrease by means of cancellation
+of own shares. Unless the Articles of Association provide for another majority, sec-
+tion 179, paragraph 2, AktG stipulates that resolutions of the Annual General Meeting
+regarding the amendment of the Articles of Association require a majority of at least
+three quarters of the share capital represented. Section 17, paragraph 1, of the Articles
+of Association of Infineon Technologies AG provides in principle for resolutions to be
+passed with a simple majority of the votes cast and, when a capital majority is required,
+with a simple majority of the capital unless a higher majority is required by law or in
+accordance with other stipulations contained in the Articles of Association.
+Powers of the Management Board, in particular with respect to
+the issuing or buying back of shares
+The power of the Management Board to issue shares derives from section 4 of the
+Articles of Association, in conjunction with applicable legal provisions. Further infor-
+mation relating to the Company's existing Authorized and Conditional Capital can
+be found in note 19 to the Consolidated Financial Statements. p. 192 f.
+Authorization to issue convertible bonds and/or bonds with warrants
+The Annual General Meeting held on 20 February 2020 authorized the Management
+Board, in the period through 19 February 2025, either once or in partial amounts, to
+issue convertible bonds and/or bonds with warrants (referred to collectively as "bonds")
+of an aggregate nominal amount of up to €4,000,000,000, to guarantee such bonds
+issued by subordinated Group companies of the Company and to grant bond creditors
+and/or bondholders conversion or option rights to up to 130,000,000 no par value
+registered Company shares, representing a notional portion of the share capital of up
+to €260,000,000 in accordance with the relevant terms of the bonds. With the approval
+of the Supervisory Board, the Management Board is authorized to exclude the right
+of shareholders to subscribe to the bonds
+> if the issue price is not substantially lower than the bonds' theoretical market
+value as determined in accordance with accepted valuation methods, in particular
+those based on financial mathematics. However, this right of exclusion only
+applies insofar as the aggregate value of the shares to be issued to service the
+conversion or option rights established on this basis does not exceed 10 percent
+of the share capital, neither at the time the resolution concerning this authorization
+was passed by the Annual General Meeting, at the time of this authorization
+becoming effective, nor at the time it is exercised;
+> in order to exclude fractional amounts resulting from a given subscription ratio
+from the subscription rights of the shareholders to the bonds, or insofar as any
+such action is necessary in order to grant holders of conversion or option rights
+arising from bonds that have already been or will in future be issued by the Com-
+pany or its subordinated Group companies subscription rights to that extent to
+which they would be entitled after exercising their rights, or after the fulfillment of
+any conversion or option obligations; and
+> insofar as bonds are issued in return for a capital contribution in kind, provided
+that the value of any such capital contribution in kind is appropriate in relation to
+the market value of the bonds.
+Even if the dilution protection regulations are applied, the conversion or option price
+must equal at least 80 percent of the arithmetic mean of the closing prices of the
+Company's share in Xetra trading on the Frankfurt Stock Exchange (or comparable
+successor system). Further details - including the conditions under which the con-
+version or option price may be reduced - are set out in the authorization.
+Subject to the requirements resolved by the shareholders at the Annual General
+Meeting, the Management Board is authorized to determine the further details of the
+bond issue, including its terms and conditions.
+Authorization to acquire own shares
+A resolution passed by the Annual General Meeting on 22 February 2018 authorizes
+Infineon Technologies AG, in the period through 21 February 2023, to acquire its
+own shares, within the statutory boundaries, in an aggregate amount not exceeding
+10 percent of the share capital at the time the resolution was passed or - if the latter
+amount is lower - of the share capital in existence at the time the authorization is
+exercised. The Company may not use the authorization for the purposes of trading in
+its own shares. The Management Board decides whether own shares are acquired
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q =
+< 131 >
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+through the stock exchange, by means of a public offer to purchase addressed to
+all shareholders, a public invitation to submit offers for sale, or via a bank or other
+entity that meets the requirements of section 186, paragraph 5 sentence 1, AktG.
+The authorization includes differentiating requirements – in particular with regard
+to the permissible purchase price – for each method of acquisition.
+Infineon shares acquired or being acquired on the basis of this or an earlier autho-
+rization may - if not sold either via the stock exchange or by means of a public
+offer to purchase addressed to all shareholders - be used for all legally admissible
+purposes. The shares may also be canceled or offered to third parties in conjunction
+with business combinations or the acquisition of companies, parts of companies or
+participations in companies. Subject to the approval of the Supervisory Board, under
+specified circumstances the shares may also be sold to third parties in return for cash
+payment (including by means other than through the stock exchange or through an
+offer to all shareholders), used to meet the Company's obligations under convertible
+bonds and bonds with warrants and stock option plans, offered for sale or granted
+as a remuneration component to members of corporate bodies and employees within
+the Group, and/or used to repay securities-backed loans. The subscription right of
+shareholders is excluded in all of the above cases (except when the shares are can-
+celed). In addition, the subscription rights of shareholders are excluded in respect
+of fractional amounts in instances in which the shares are sold through a public offer
+addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on 22 February 2018,
+the acquisition of Infineon Technologies AG shares may also be effected using equity
+derivatives. The total number of shares that can be acquired using derivatives may
+not exceed 5 percent of the Company's share capital, determined either at the time of
+this authorization becoming effective or at the time of its exercise through the use of
+the derivatives. The shares acquired through the exercise of this authorization are
+to be counted toward the acquisition threshold for the shares acquired in accordance
+with the authorization to acquire own shares as described above. The authorization
+stipulates other restrictions when derivatives are deployed, including their execution,
+term, servicing and acquisition price.
+If own shares are acquired using derivatives in accordance with the requirements
+stipulated in the authorization, any right of the shareholders to conclude such deriva-
+tive transactions with the Company will be excluded in analogous application of
+section 186, paragraph 3, sentence 4, AktG. Shareholders have no right to conclude
+derivative transactions with the Company.
+Shareholders have a right to sell their Infineon shares in this connection only insofar
+as the Company is required to accept the shares under the derivative transactions.
+No other right to sell shares shall apply in this connection.
+Further information
+The use of own shares acquired through derivatives is governed by the same rules as
+those applicable for the direct acquisition of own shares.
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+With regard to the performance indicator RoCE for the 2021 fiscal year, the Supervisory
+Board had set a threshold of 3.0 percent (0 percent target achievement), a target of
+9.0 percent (100 percent target achievement) and a maximum of 17.5 percent (250 per-
+cent target achievement).
+Free Cash Flow recorded for the 2021 fiscal year amounts to €1,574 million, corre-
+sponding to a target achievement level of 250 percent.
+With regard to the performance indicator Free Cash Flow for the 2021 fiscal year, the
+Supervisory Board had set a threshold of €347 million (0 percent target achieve-
+ment), a target of €770 million (100 percent target achievement) and a maximum of
+€1,232 million (250 percent target achievement).
+If a member's term of office on the Management Board begins or ends during a fiscal
+year, that member's entitlement to the STI is reduced on a pro rata monthly basis
+(by one twelfth for each full month missing from the complete STI tranche). A Manage-
+ment Board member is not entitled to receive an STI bonus for the fiscal year in which
+he/she resigns from office (unless the resignation is for a reason ("good cause") for
+which the member is not responsible or if the Management Board member's service
+contract is terminated by the Company for good cause.
+on the performance of the Management Board as a whole, Infineon's position, and
+any exceptional factors that may be relevant. A lower limit applies in this case, such
+that the amount payable may not be less than the amount that would be due given
+50 percent target achievement. The upper limit for an upward adjustment is the cap
+of 250 percent.
+Q = < 135 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+An STI is paid out only if the levels of target achievement reach at least the 50 percent
+threshold for both performance indicators (Free Cash Flow and RoCE). If one of the
+two target thresholds is not achieved, no annual bonus is paid for the relevant fiscal
+year. If the thresholds are achieved, the arithmetic mean of the two target achieve-
+ments is calculated and used as the percentage rate to determine the actual amount
+of the STI. A cap of 250 percent applies, meaning that the maximum amount that can
+be paid out is two-and-a-half times the target STI (= 100 percent), regardless of an
+actual higher level of achievement. Moreover, the Supervisory Board may increase or
+reduce the amount payable in each case by up to 50 percent as it sees fit, based
+(ii) At the end of the fiscal year, the actual levels of target achievement, and hence
+the amount of the STI payouts, are determined by the Supervisory Board by
+reference to the levels of target achievement for Free Cash Flow and RoCE as
+reported in the audited financial statements.
+(i) At the beginning of each fiscal year, the target functions with respect to the two
+key performance indicators Free Cash Flow and Return on Capital Employed
+(ROCE) are defined uniformly for all Management Board members. Underpinning
+the consistent approach taken to managing the business, the same target indi-
+cators - supplemented by the Segment Result Margin – serve as the basis for
+determining the variable remuneration components (bonus payments) for
+Infineon managers and employees. The two key performance indicators referred
+to above, which are described in more detail in the chapter "Internal Management
+System", are equally weighted for the purposes of measuring the STI. p. 93.
+With the conversion of the current service contracts to the new Management
+Board remuneration system with effect from 1 October 2021 (i.e., for the 2022
+fiscal year) all three performance indicators (Free Cash Flow, Return on Capital
+Employed and Segment Result Margin) are also relevant for the Executive Board.
+The short-term incentive (“STI”) is intended to reward performance over the fiscal
+year just ending, reflecting Infineon's recent progress. Assuming 100 percent target
+achievement of the variable remuneration components, the STI constitutes approxi-
+mately 18 percent of target annual income. It is set by the Supervisory Board in
+a two-phase process:
+With the conversion of the current service contracts to the new Management Board
+remuneration system with effect from 1 October 2021 (i.e., for the 2022 fiscal year)
+and, in the case of the LTI with effect from 1 October 2020 (i.e., with the grant made
+on 1 April 2021 for the 2021 fiscal year), the previous multi-year variable bonus (Mid-
+Term Incentive - MTI) was discontinued. The allocation amount previously awarded
+for the MTI has now been largely added to the LTI. This change has the effect of
+increasing the weighting of long-term variable remuneration.
+> Variable (= performance-related) remuneration: Comprises two components - an
+annual bonus (short-term incentive – STI) and a long-term variable remuneration
+component (long-term incentive - LTI).
+> Fixed remuneration: Comprises a contractually agreed basic annual salary that is
+not linked to performance and paid in twelve equal monthly installments.
+As remuneration for their service, all Management Board members receive a target
+annual income which - based on 100 percent target achievement - comprises
+approximately 40 percent fixed remuneration and approximately 60 percent variable
+remuneration components:
+Components of the Management Board remuneration system
+In addition to the horizontal comparison, a vertical view is also taken, whereby
+Infineon's internal remuneration structure is assessed by comparing the remunera-
+tion of the Management Board with that of senior management (senior executives
+in Germany and those performing internationally comparable functions) and the
+workforce as a whole. Apart from the current status, changes in the level of remuner-
+ation over time are also considered.
+Q = < 134 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Business focus and strategy
+Significant agreements that are subject to the condition of a change of
+control as a result of a takeover bid and compensation agreements with
+Management Board members or employees in the event of a takeover bid
+Various financing agreements with lending banks and capital market creditors contain
+defined change-of-control clauses that give creditors the right to demand early
+repayment. These clauses reflect standard market practice.
+Furthermore, certain patent cross-licensing agreements, development agreements,
+subsidy agreements and approvals, supply contracts, joint venture agreements and
+license agreements contain customary change-of-control clauses, which, in the event
+of a change of control at Infineon Technologies AG, make the continuation of the
+agreement dependent on the consent of the contracting party, grant special rights to
+the contracting party that may be unfavorable for Infineon, or even entitle the con-
+tracting party to terminate the agreement.
+If a Management Board member leaves their position in connection with a defined
+change of control, that member is entitled to continued payment of the relevant
+annual remuneration for the entire remaining contract term. In accordance with
+a special contract termination right granted to Management Board members, the
+period of continued payment is capped at a maximum of 36 months in the event that
+the member resigns, or at a minimum of 24 months and a maximum of 36 months in
+The aforementioned amendments to the Management Board remuneration system,
+which already apply for the 2021 fiscal year, are described in detail in this remuneration
+report. The other adjustments, which will only be relevant from the 2022 fiscal year,
+are outlined hereinafter in "Revision of the Management Board remuneration system”,
+p. 147 ff. They are included in full and in detail in the notice of the Annual General
+Meeting held on 25 February 2021 and also presented on the website of Infineon.
+https://www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#equity-
+based-compensation
+Appropriateness of Management Board remuneration
+In accordance with applicable legal requirements and the recommendations of the
+DCGK, the remuneration paid to Management Board members is intended to reflect
+the typical level and structure of management board remuneration at peer com-
+panies, as well as Infineon's economic position and future prospects. The duties,
+responsibilities and performance of each Management Board member are also to be
+considered, as is Infineon's wider pay structure. This includes considering Management
+Board remuneration in relation to that of senior management and the workforce
+as a whole, including changes in the level of remuneration over time. The stated
+objective is that the remuneration structure should be designed in such a way that it
+promotes sustainable and long-term business development. The level of remuneration
+should contribute towards achieving Infineon's business strategies, with a cap in
+place in the event of exceptional developments. Infineon sets remuneration at a level
+that is competitive both nationally and internationally, with the aim of inspiring and
+rewarding dedication and success in a dynamic environment.
+To ensure appropriateness, the Supervisory Board performs both horizontal and
+vertical comparisons at regular intervals.
+The horizontal view compares the remuneration of Infineon's Management Board
+members with that of similar companies. In its most recent review of the appropriate-
+ness of Management Board remuneration, the Supervisory Board used a peer group
+of comparable DAX-listed companies (as of 31 December 2019, but excluding Linde
+plc and Wirecard AG, as no annual reports were available for these companies at the
+time of the comparison for 2019), comprising the following:
+> Adidas AG
+> Allianz SE
+> BASF SE
+› Bayer AG
+> Beiersdorf AG
+> BMW AG
+› Continental AG
+> Daimler AG
+> Deutsche Bank AG
+> Deutsche Börse AG
+> Deutsche Lufthansa AG
+> E.ON SE
+> Fresenius Medical Care AG & Co. KGaA
+> Fresenius SE & Co. KGaA
+> HeidelbergCement AG
+> Henkel AG & Co. KGaA
+> Merck KGaA
+> MTU Aero Engines AG
+> Münchener Rückversicherungs-Gesellschaft AG
+› RWE AG
+› SAP SE
+However, the amended rules governing the variable remuneration component relating
+to the Long-Term Incentive (LTI) have been applied taking into account the grant made
+on 1 April 2021 (and thus retrospectively from 1 October 2020 for the 2021 fiscal year).
+The rationale for the early implementation of the new LTI rules was, firstly, that the
+Performance Share Plan (PSP) for employees, which had been designed as an LTI plan,
+was amended with effect from 1 April 2021, and it was desirable to synchronize that
+plan with the Management Board's LTI. Secondly, this procedure obviated the need to
+grant a further tranche of the variable remuneration component relating to the Mid-
+Term Incentive (MTI) in the 2021 fiscal year, reflecting the fact that the new remunera-
+tion system no longer includes an MTI component, the latter having been incorporated
+in the LTI with a view to strengthening long-term variable remuneration.
+< 133 >
+Q =
+Further information
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Consolidated Financial Statements
+Further information
+Q =
+< 132 >
+Information pursuant to the German Commercial Code (HGB)
+Statement on Corporate Governance of the German Commercial Code (HGB)/Corporate Governance Report
+Remuneration report
+the event of dismissal/termination of contract by Infineon Technologies AG. All service
+contracts have since been adapted to the new Management Board remuneration
+system, so that the maximum period of continued payment has been reduced to
+24 months for all Management Board members with effect from 1 October 2021.
+Further details are contained in the remuneration report.
+The change-of-control clauses agreed with Management Board members are intended
+to provide financial security to those members in the event of a change of control,
+with a view to preserving their independence in this situation.
+The conditions of both the Performance Share Plan and the Restricted Stock Unit Plan,
+in which Infineon managers and other selected employees worldwide participate,
+contain rules that are triggered in the event of a defined change of control. For the most
+part, these rules specify that the vesting periods that are envisaged by the relevant
+plans are aborted in the event of a change of control. Although Management Board
+members also participate in the Performance Share Plan, the rules therein relating
+to a change of control do not apply to Management Board members, given that their
+service contracts take precedence.
+When calculating the ROCE relevant for determining the level of target achievement,
+those factors which cannot be influenced by the relevant decision-makers are adjusted
+in the earnings figure (operating profit from continuing operations after taxes). This
+applies in particular to earnings components which are not directly segment-related.
+The RoCE determined in this way for the 2021 fiscal year came in at 11.7 percent,
+corresponding to a target achievement level of 138.5 percent.
+Statement on Corporate Governance
+pursuant to sections 289f and 315d
+of the German Commercial Code (HGB)/
+Corporate Governance Report
+☑www.infineon.com/declaration-on-corporate-governance
+Remuneration report
+This remuneration report, which forms part of the Combined Management Report,
+explains the principles of the remuneration system for the Management Board and
+Supervisory Board of Infineon Technologies AG as well as the level of remuneration
+paid to the individual Management Board and Supervisory Board members.
+In addition to statutory requirements, the remuneration report is based primarily on
+the German Accounting Standard on Reporting on the Remuneration of Members of
+Governing Bodies (DRS 17). The remuneration report also contains the model tables
+recommended by the German Corporate Governance Code (Deutsche Corporate
+Governance Kodex - "DCGK") in the version dated 7 February 2017 (DCGK 2017). This
+information is provided despite the fact that the DCGK was revised with effect from
+20 March 2020 and accordingly, the recommendation to disclose the model tables
+no longer applies. For reasons of consistency and transparency, the model tables are
+to be continued until the changeover to the new remuneration report stipulated in
+Section 162 of the German Stock Corporation Act and introduced in accordance with
+the Act Implementing the Second Shareholder Rights Directive (ARUG II). The new
+report becomes binding for Infineon Technologies AG for the first time for the fiscal
+year beginning on 1 October 2021.
+Management Board remuneration
+Remuneration system
+Similar to the remuneration paid to individual Management Board members, the
+Management Board remuneration system is defined and regularly reviewed by
+the full Supervisory Board on the basis of recommendations made by the Executive
+Committee.
+On 20 November 2020, the Supervisory Board adopted a new Management Board
+remuneration system based on the recommendation of the Executive Committee.
+The new system was approved by the Annual General Meeting on 25 February 2021 in
+accordance with Section 120a of the German Stock Corporation Act and will apply as
+a general rule for incumbent Management Board members effective 1 October 2021.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+The Statement on Corporate Governance pursuant to sections 289f and 315d of
+the German Commercial Code (HGB), including the Corporate Governance Report,
+is publicly available.
+Infineon Technologies | Annual Report 2021
+If both targets (Free Cash Flow and ROCE) end up with the same weighting, the
+arithmetic (mean) target achievement level for the 2021 fiscal year is 194.2 percent.
+Exceptional factors not covered by the definitions of RoCE and Free Cash Flow that
+have a (positive or negative) impact on target achievement are taken into account
+by the Supervisory Board as it sees fit for the purposes of determining the target
+achievement level, provided that such factors are significant and were not already
+included in the forecast.
+From the 2022 fiscal year onwards, the STI will - alongside the aforementioned finan-
+cial performance criteria and Segment Result Margin – also include a criteria-based
+modifier that enables the Supervisory Board to assess the Management Board's
+collective performance and take appropriate account of extraordinary developments
+that were not adequately reflected in the targets set at an earlier stage. After the
+end of the respective fiscal year, the Supervisory Board applies a factor of between
+0.7 and 1.3 to determine the overall level of target achievement. The collective per-
+formance of the Management Board rewards the extent to which the Management
+Board contributes to the sustainable development of the Company as a whole - in
+strategic, technical or structural terms. Prior to the beginning of each fiscal year, the
+Supervisory Board selects the criteria that it has determined are relevant for the fiscal
+year in question, based on the following categories:
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The aim is to increase the percentage of women in GG (Global Grade) 13+ positions to
+within a target range between 18 percent and 20 percent by the 2030 fiscal year. Target
+achievement for the diversity target can range between 0 percent and 150 percent. A
+100 percent target achievement corresponds to an increase of between 1.2 percentage
+points and 1.8 percentage points at the end of the performance period. The baseline
+is 15.2 percent as of 30 September 2020. If the proportion of women is increased by up
+to 0.3 percentage points during the performance period, this results in a target achieve-
+ment of 0 percent, while an increase in the proportion of women by more than 2.3 per-
+centage points would result in a target achievement of 150 percent. Target achieve-
+ments between the defined target achievement points are interpolated linearly. The
+diversity target contributes 10 percent to the overall target achievement of the LTI.
+The Supervisory Board has also defined a further ESG target in the area of social
+matters. In the light of this diversity target, gender diversity is taken into account,
+i.e., the proportion of women in management positions as well as other diversity
+factors. A target range has been defined for the percentage of women in management
+positions.
+sions are reduced by 100,000 tons, target achievement is 100 percent. If they are
+reduced by 150,000 tons or more, target achievement is 150 percent. Target achieve-
+ments between the defined target achievement points are interpolated linearly. If
+carbon neutrality is not achieved, the target achievement is 0 percent regardless of the
+aforementioned linear component. The environmental target contributes 10 percent
+to the overall target achievement of the LTI.
+The environmental target is to achieve 50 percent carbon neutrality in the 2024 fiscal
+year. The base period for these purposes is the 2019 calendar year. The target is to
+be achieved by reducing PFC emissions, energy efficiency measures or development
+assistance measures linked to decarbonization. The aim is to achieve a total reduc-
+tion of 100,000 tons of carbon emissions by the end of the 2024 fiscal year. Target
+achievement can range between 0 percent and 150 percent. If carbon emissions are
+reduced by less than 25,000 tons, target achievement is 0 percent. If carbon emis-
+For the LTI tranche allocated on 1 April 2021, the Supervisory Board has defined
+two ESG targets: one relating to environment and the other to social matters.
+The specific ESG targets to be used for a particular tranche are determined and defin-
+itively resolved by the Supervisory Board prior to the beginning of the performance
+period. The Supervisory Board defines up to three specific ESG targets, which are
+weighted equally. At the end of the performance period, target achievement is deter-
+mined on the basis of a target/actual comparison and, as in the case of the LTI financial
+performance criterion, can range between 0 percent and 150 percent. The specific
+ESG targets, target achievement curves and target achievements are disclosed ex post
+in the remuneration report. The Supervisory Board is entitled to determine further
+ESG targets and their relative weightings.
+are therefore important in that they align the interests of both the Management
+Board and other stakeholders and contribute to the long-term sustainable success
+of the Group as a whole.
+Q = < 138 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+ESG targets are defined as non-financial, quantitative and qualitative performance
+criteria relating to environmental, social and governance (ESG) matters. These include,
+for example, contributions to global climate protection (such as carbon neutrality
+by 2030) or the furthering of diversity at Infineon that has a positive impact on inno-
+vation, employee commitment and financial performance. Establishing a clear link
+between ESG targets and Infineon's business and sustainability strategies, on the one
+hand, and current market requirements, on the other, creates incentives for managing
+the company on a sustainable basis in the best interest of stakeholders. The ESG targets
+Beginning Stock Price
+(Change in Stock Price + Dividends Paid)
+TSR =
+ESG
+The TSR target achievement can range between 0 percent and 150 percent. If Infineon's
+TSR is positioned at the 60th percentile, the target achievement is 100 percent. A posi-
+tion at or below the 25th percentile results in a target achievement of 0 percent, while
+a position at or above the 75th percentile results in a target achievement of 150 percent.
+Target achievements between the defined target achievement points are interpolated
+linearly. The TSR includes all cash dividends paid out during the performance period
+by all companies in the peer group (including Infineon) and is calculated as follows:
+The target achievement for Infineon's TSR performance criterion is determined
+using the ranking method. In this context, the TSR is calculated for Infineon and all
+companies in the sector peer group and ranked according to size. This ranking results
+in a percentile rank that indicates where Infineon's TSR is positioned.
+Only companies that exist (and remain) as a legally independent entity throughout
+the performance period are considered part of the peer group. The Supervisory
+Board may adjust the peer group as it sees fit prior to the beginning of a new perfor-
+mance period.
+1 Dialog Semiconductor PLC was acquired by Renesas Electronics Corporation in August 2021.
+> Nuvoton Technology Corp.
+> Mitsubishi Electric Corp.
+Business focus and strategy
+> Wolfspeed, Inc.
+Combined Management Report
+Corporate Governance
+Remuneration report
+Further information
+The (virtual) performance shares were allocated as of 1 March for the fiscal year that
+began on 1 October, initially on a provisional basis. The final allocation and transfer
+of (real) Infineon shares took place four years later. Performance shares were allo-
+cated provisionally on the basis of the contractually agreed "LTI allocation amount"
+in euros and agreed upon individually in the service contract of each Management
+Board member. The number of performance shares was determined by dividing the
+LTI allocation amount by the average price of the Infineon share (Xetra closing price)
+during the nine months prior to the allocation date. The prerequisites for the defini-
+tive allocation of the - at that stage still virtual – performance shares are (i) that the
+Management Board member invests 25 percent of his/her individual LTI allocation
+amount in Infineon shares and (ii) that the holding period of four years applicable
+both for the member's own investment and for the performance shares has come to
+an end. 50 percent of the performance shares are also performance-related; they are
+only allocated definitively if (iii) the Infineon share outperforms the Philadelphia
+Semiconductor Index (SOX) between the date of the performance shares' provisional
+allocation and the end of the holding period. If the conditions for the definitive allo-
+cation of performance shares - either all or only those that are not performance-
+related - are met at the end of the holding period, the Management Board member
+acquires an entitlement against the Company for the transfer of the corresponding
+number of (real) Infineon shares. Any performance shares that do not achieve the
+target are forfeited. The value of the performance shares definitively granted to the
+Management Board member per LTI tranche at the end of the holding period may not
+exceed 250 percent of the relevant LTI allocation amount; any performance shares
+above this amount lapse (cap).
+-
+The LTI tranches already allocated prior to the changeover to the new remuneration
+system will continue to be subject to the old rules described below.
+LTI rules prior to the changeover to the new remuneration system
+After the final fiscal year of the four-year performance period has ended, the Super-
+visory Board determines the number of performance shares that will be definitively
+allocated. The Supervisory Board reserves the right to make a cash settlement rather
+than actually transferring Infineon shares. The Supervisory Board is required to make
+the decision prior to the end of the four-year vesting period; otherwise the right to
+make a cash settlement lapses. If the Supervisory Board decides to settle in cash, the
+amount to be paid out is calculated by multiplying the number of performance shares
+definitively allocated by the average share price over the last 60 trading days prior
+to the end of the four-year performance period. Payment must be made within one
+month after the end of the vesting period. Here too, the definitive LTI payout amount
+is limited to 250 percent of the individual allocation amount.
+Final allocation
+Target achievement
+150%
+125%
+110%
+100%
+90%
+80%
+50%
+0%
+15.0%
+15.5%
+16.0%
+16.5%
+17.0%
+17.5%
+Diversity target for the 2021 fiscal year
+18.0%
+Diversity
+C41 Diversity target
+< 139 >
+Q =
+Consolidated Financial Statements
+> Winbond Electronics Corp.
+> Vishay Intertechnology, Inc.
+> Toshiba Corp.
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The LTI tranche is allocated on 1 April in the first fiscal year of the performance
+period (allocation date). The vesting period begins on the allocation date. Unlike
+the performance period, the vesting period ends four years after the allocation date,
+i.e., on 31 March. In order to determine the number of performance shares to be
+provisionally awarded on the allocation date, at the beginning of the performance
+period, the individual allocation amount is divided by the average share price over
+the last 60 trading days prior to the beginning of the performance period. The extent
+of target achievement is determined at the end of the four-year performance period.
+The definitive number of performance shares to be allocated after the end of the
+vesting period is calculated by multiplying the number of provisionally allocated
+performance shares by the total target achievement of the two performance criteria
+applied during the performance period. The definitive allocation of performance
+shares in an LTI tranche may not result in the Management Board member's gain
+(before taxes) exceeding 250 percent of the respective LTI allocation amount. Above
+this cap, any performance shares that could still theoretically be allocated will lapse.
+The performance period begins on 1 October of the first fiscal year of the performance
+period and ends on 30 September four years later. During this period, performance is
+measured on the basis of two criteria, namely a financial performance criterion based
+on relative Total Shareholder Return (TSR) as compared to a selected sector peer group
+and a non-financial performance criterion derived from strategic Environmental,
+Social & Governance (ESG) targets. The TSR and the ESG targets contribute 80 percent
+and 20 percent to overall target achievement respectively.
+The LTI is a Performance Share Plan with a four-year performance period. Assuming
+100 percent target achievement of the variable remuneration components, the LTI
+constitutes approximately 42 percent of target annual income.
+The Long-Term Incentive ("LTI") was adjusted with retrospective effect from 1 Octo-
+ber 2020.
+As the previous MTI allocation amount has now been added to the LTI with a four-year
+performance period, a temporary payout shortfall arises, which will be compensated
+by temporarily increasing the STI allocation amount for the Management Board
+members concerned in the 2022, 2023 and 2024 fiscal years. Therefore, a maximum
+remuneration of €8,200,000 (Chief Executive Officer) and €4,800,000 (ordinary member
+of the Executive Board) applies to current service contracts for fiscal years 2022, 2023
+and 2024.
+The Mid-Term Incentive ("MTI") was intended to reward sustained performance by
+the Management Board that reflected Infineon's medium-term progress. As explained
+above, the MTI has been discontinued as a remuneration component with effect from
+1 October 2020. In concrete terms, this means that no new three-year MTI tranches
+have been granted since 1 October 2020, i.e., for the 2021 fiscal year. The two MTI
+tranches allocated for the 2019 and 2020 fiscal years continued to be valid but will
+not be supplemented with additional annual tranches. Accordingly, after the end of
+the 2021 fiscal year, the tranche allocated for the 2019 fiscal year was paid out in two
+annual installments (for the 2019 and 2020 fiscal years). After the end of the 2022 fiscal
+year, the tranche allocated for the 2020 fiscal year will be paid out with only one annual
+tranche (for the 2020 fiscal year). The Supervisory Board may increase or reduce the
+amount to be paid under the MTI in each case by up to 50 percent as it sees fit, based
+on the performance of the Management Board as a whole, Infineon's position and
+any exceptional factors.
+> Secondly, the development of key technologies and innovations and, in this context,
+the corresponding market growth for SiC and GaN products, which is strategically
+vital for Infineon.
+> Firstly, the performance of the Management Board should be measured in terms
+of its implementation of the digital transformation strategy.
+For the 2022 fiscal year, the Supervisory Board has defined two specific criteria at the
+recommendation of the Executive Committee:
+Q = < 136 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> progress in Environmental, Social & Governance (ESG) matters.
+› improved innovative strength and delivery capabilities;
+> successful completion of key projects;
+> optimizations, efficiency improvement programs, restructuring;
+> successful development of new growth markets, improvement of market position;
+> portfolio-related measures, particularly successful mergers and acquisitions as
+well as corresponding integration measures;
+> sustainable strategic, technical or structural development of the business;
+Consolidated Financial Statements
+Further information
+Q =
+< 137 >
+> Texas Instruments Inc.
+> STMicroelectronics N.V.
+> Silicon Laboratories, Inc.
+> Shanghai Fudan Microelectronics
+Group Co., Ltd.
+> Rohm CO., LTD.
+> Renesas Electronics Corp.
+› Qualcomm Technologies, Inc.
+> Power Integrations Inc.
+> ON Semiconductor Corp.
+> Omron Corp.
+> NXP Semiconductors N.V.
+> Micron Technology, Inc.
+> Microchip Technology Inc.
+-
+› MediaTek Inc.
+> Knowles Corp.
+(Beijing) Inc.
+› GigaDevice Semiconductor
+> Fuji Electric CO., LTD.
+> Elmos Semiconductor SE
+› Dialog Semiconductor PLC1
+> China Electronics Huada
+Technology Company Ltd.
+> Broadcom Inc.
+› Analog Devices Inc.
+The TSR is defined as Infineon's share price performance over the performance period,
+including any dividends per share paid during that period (cumulative and notionally
+reinvested) compared to a pre-defined peer group. The TSR measures the total share-
+holder return, reflects the overall success of an investment, and is used as an indicator
+to determine the increase in market or company value. Target achievement for the
+TSR is based on a comparison with Infineon's main international competitors (sector
+peer group):
+TSR
+Performance criteria and measuring success
+If the service contract of a Management Board member begins and/or ends during the
+fiscal year, the LTI grant amount for the fiscal year shall be reduced pro rata temporis
+on a monthly basis (by one twelfth for each missing full month).
+> Macronix International Co., Ltd.
+Infineon Technologies | Annual Report 2021
+294,037
+Management Board and
+Supervisory Board
+477,950
+728,250
+325,875
+660,280
+295,460
+660,280
+295,460
+302,628
+Multi-year variable remuneration
+Mid-Term Incentive (MTI)
+2019-2021 tranche
+2018-2020 tranche
+323,400
+156,188
+533,500
+199,920
+199,920
+1,068,100
+Single-year variable remuneration (STI)
+Variable remuneration
+34,140
+380,731
+2021
+Jochen Hanebeck
+Management Board member
+2020
+2021
+2020
+Constanze Hufenbecher
+Management Board member
+since 15 April 20211
+2021
+1,240,000
+329,800
+1,240,000
+37,211
+1,277,211
+825,000
+55,337
+880,337
+825,000
+55,750
+880,750
+750,000
+32,188
+782,188
+750,000
+70,893
+820,893
+750,000
+28,329
+778,329
+750,000
+34,476
+784,476
+346,591
+35,238
+1,275,238
+2020
+329,800
+Performance Share Plan
+Moreover, Supervisory Board members are reimbursed for all expenses incurred in
+connection with the performance of their Supervisory Board duties as well as for any
+value-added tax payable by them in this connection. The Company also pays Super-
+visory Board members any value-added tax incurred on their total remuneration
+(including meeting attendance fees).
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory
+Board or one of its committees, or takes on a Supervisory Board function for which
+an allowance is payable, the relevant remuneration components are disbursed
+on a pro rata basis, i.e., payment of one twelfth of the relevant annual remuneration
+component for each (started) month of membership or exercise of function.
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one
+of its committees that is attended in person. The meeting attendance fee is paid
+only once if more than one meeting of the relevant committees takes place on
+a given day.
+> Allowances in recognition of additional work involved in performing certain
+functions within the Supervisory Board: The Chairman of the Supervisory Board
+receives an allowance of €90,000, each deputy receives an allowance of €30,000,
+the Chairman of the Investment, Finance and Audit Committee and the Chairman
+of the Strategy and Technology Committee each receive an allowance of €25,000,
+and each member of a Supervisory Board committee receives an allowance of
+€15,000 – with the exception of the Nomination Committee and the Mediation
+Committee. The additional allowance is payable only if the body to which the
+Supervisory Board or committee member belongs has convened or passed resolu-
+tions in the fiscal year concerned. A Supervisory Board member performing more
+than one of the functions indicated receives only the highest single additional
+allowance payable to a member performing the functions concerned. The allow-
+ance is payable to the relevant holder of office within one month of the end of
+each fiscal year.
+› A fixed remuneration (basic remuneration) of €90,000. This amount applies to
+each Supervisory Board member and is payable within one month of the end of
+each fiscal year.
+The remuneration of the members of the Supervisory Board (total remuneration)
+is governed by section 11 of the Company's Articles of Association and comprises
+the following:
+Remuneration structure
+Remuneration report
+< 149 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+compensation
+Review of the Supervisory Board remuneration system
+In light of the changes brought about by ARUG II, Section 113, paragraph 3, AktG also
+required the Supervisory Board remuneration system to be submitted for approval
+at the Annual General Meeting. The Management Board and Supervisory Board came
+to the conclusion that the current Supervisory Board remuneration system is no
+longer in line with the market in some respects and therefore proposed changes at the
+Annual General Meeting held on 25 February 2021, which were adopted accordingly.
+The main changes compared with the current Supervisory Board remuneration system
+are as follows:
+> Whereas the fixed basic remuneration and the function-based allowances for the
+Chairman of the Supervisory Board were increased only slightly, the function-based
+allowances for the committees and the Chairs of the Investment, Finance and
+Audit Committee and the Strategy and Technology Committee were raised more
+significantly to a level in line with the market.
+> The previous threshold clause, according to which only the highest function-based
+allowance is paid if more than one function is performed, was deleted. The rationale
+for the change is that working on several committees involves an additional time
+commitment, which should be remunerated accordingly. Conversely, the payment
+of a function-based allowance solely on the condition that at least three committee
+meetings have taken place during a fiscal year ensures that only relevant additional
+time commitments are remunerated. In addition, the function-based allowances
+for work on committees are capped at 100 percent of the fixed basic remuneration.
+As a result, the remuneration for a Supervisory Board member will in the future be
+limited to €200,000, that of the Chair of the Supervisory Board to €300,000 and that
+of his/her deputy to €230,000.
+due in the 2021 fiscal year
+due in the 2020 fiscal year
+Total variable remuneration
+357,656
+215,583
+215,583
+1,749,156
+270,905
+1,282,355
+884,438
+325,875
+Long-Term Incentive (LTI)
+625,260
+625,260
+302,628
+Pension expense
+Total remuneration (DCGK)
+72,298
+3,096,692
+368,802
+2,928,368
+Infineon Technologies | Annual Report 2021
+› Furthermore, the attendance fee for extraordinary meetings held in the form of
+telephone or video conference calls was reduced from €2,000 to €1,000.
+1,075,783
+On 25 February 2021, the Annual General Meeting resolved amendments to the Articles
+of Association regarding Supervisory Board remuneration and approved the Super-
+visory Board remuneration system in accordance with Section 113, AktG. The amend-
+ments apply with effect from 1 October 2021. A brief summary of these amendments
+is provided below. The complete wording of the amendments is available in the notice
+of the Annual General Meeting held on 25 February 2021 and on the Infineon website.
+https://www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#equity-based-
+Dr. Helmut Gassel
+Management Board member
+2020
+2020-2022 tranche
+340,000
+Long-Term Incentive (LTI)
+Performance Share Plan'
+976,672
+165,725
+Total variable remuneration
+1,316,672
+845,725
+850,000
+155,833
+1,930,000
+2,780,000
+447,629
+603,462
+2020
+2021 (min.)
+2021 (max.)
+346,591
+Mid-Term Incentive (MTI)
+Multi-year variable remuneration
+340,000
+340,000
+Basic annual salary
+750,000
+750,000
+750,000
+750,000
+346,591
+Fringe benefits
+28,329
+346,591
+Total fixed remuneration
+34,476
+784,476
+28,329
+778,329
+28,329
+778,329
+34,140
+380,731
+Variable remuneration
+Single-year variable
+remuneration (STI)
+778,329
+2021
+34,140
+380,731
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q =
+< 144 >
+The total remuneration received by individual members of the Management Board
+for the 2021 fiscal year - analyzed by component - is shown in the following table:
+in €
+Fixed remuneration
+Basic annual salary
+Fringe benefits
+Total fixed remuneration
+Dr. Reinhard Ploss
+Chief Executive Officer
+2021
+Dr. Sven Schneider
+Chief Financial Officer
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+tranche allocated for the 2019 fiscal year was paid and included two annual install-
+ments (for the 2019 and 2020 fiscal years). In addition to the fixed remuneration and
+the STI granted for the 2021 fiscal year, the Management Board members therefore
+received the 2019-2021 MTI tranche, reduced by the amount of the tranche for the
+2021 fiscal year. Share-based payments are disclosed as received by Management
+Board members on the basis of the relevant time and value for German tax law
+purposes. The amount disclosed as received for the pension expense (i.e., the service
+cost in accordance with IAS 19) corresponds to the amounts granted (see previous
+table), even though it does not strictly constitute an actual receipt.
+Accordingly, the fixed remuneration and the STI are disclosed as amounts received by
+Management Board members for the relevant fiscal year. The MTI was disclosed as
+received by Management Board members in the fiscal year in which the plan term of
+the relevant MTI tranche ends. However, due to the discontinuation of the MTI, the
+380,731
+389,583
+884,583
+1,274,166
+Pension expense
+120,148
+Total remuneration (DCGK)
+2,215,149
+129,139
+1,759,340
+34,140
+120,148
+898,477
+3,678,477
+131,044
+1,115,237
+131,044
+511,775
+131,044
+1,785,941
+1 The figures of the active Management Board members in the 2021
+fiscal year were based on a fair market value per performance share
+amounting to €28.87 (2020: €12.50), which was calculated using
+a Monte Carlo simulation.
+2 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI
+or LTI grant amount for the month of April 2021, and thus to a total
+of 11 twenty-fourths for the entry fiscal year.
+Remuneration received by Management members ("Zufluss")
+Since the remuneration granted to Management Board members for the 2021 fiscal
+year did not coincide fully with amounts disbursed in a particular fiscal year, a
+separate table is presented below showing the amounts flowing to (i.e., received by)
+Management Board members for the 2021 fiscal year ("Zufluss").
+120,148
+Fixed remuneration
+Supervisory Board remuneration
+A detailed presentation of the new Management Board remuneration system is
+available in the notice of the Annual General Meeting held on 25 February 2021 and
+on the Infineon website. https://www.infineon.com/cms/en/about-infineon/investor/corporate-
+Chief Financial Officer
+2021
+Dr. Sven Schneider
+210,000
+372,000
+2020
+210,000
+Chief Executive Officer
+372,000
+2021
+Dr. Reinhard Ploss¹
+of pension
+and benefit
+entitlement
+Present value
+Benefit
+amounts
+determined
+for the
+relevant
+fiscal year
+period
+in €
+of pension
+2020
+247,500
+247,500
+Dr. Helmut Gassel
+2021
+Management Board member
+278,244
+294,037
+98,884
+106,961
+120,148
+129,139
+131,044
+2,653,885
+2,995,017
+3,279,840
+131,044
+225,000
+112,500
+2021
+Constanze Hufenbecher²
+2020
+Management Board member
+Pension
+entitlements
+(annual) as
+of beginning
+225,000
+Jochen Hanebeck
+225,000
+2020
+Management Board member
+368,802
+72,298
+2,290,395
+5,114,761
+2,474,927
+5,279,415
+554,907
+393,029
+2,414,767
+225,000
+2021
+since 15 April 2021
+Fiscal year
+Pension entitlements
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+2020
+Infineon Technologies | Annual Report 2021
+1 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI or LTI grant amount for the month of April 2021, and thus to a total of 11 twenty-fourths for the entry fiscal year.
+814,403
+131,044
+129,139
+1,538,875
+120,148
+1,974,260
+1,553,114
+106,961
+1,956,855
+98,884
+1,500,662
+Q =
+< 145 >
+Commitments to Management Board members upon termination
+of their Board activities
+Benefits and pension entitlements in the 2021 fiscal year
+Alongside the annual retirement entitlements and related benefit amounts, the
+following table shows the present values of pension entitlements earned to date and
+the service cost in accordance with IFRS. The present value of pension and benefit
+entitlements is particularly dependent on changes in the discount rate that is required
+to be applied (30 September 2021: 1.25 percent; 30 September 2020: 0.95 percent).
+commitments made from 2012 onwards, on or after reaching the age of 62. If the
+beneficiaries elect to have their pension paid out in monthly installments, the
+pension amount is adjusted automatically each year in accordance with the Infineon
+pension plan.
+< 146 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Original
+service cost
+(earned in
+the current
+year)
+Management Board and
+Supervisory Board
+The amounts credited to the pension entitlement accounts of Management Board
+members - in line with the plan rules applied to Infineon employees – are paid out on
+or after reaching the age of 67, provided the service contract arrangements have also
+ended. Upon request, amounts can also be paid out at an earlier point in time if the
+service contract arrangements end on or after reaching the age of 60 or, in the case of
+> The corresponding contribution for Dr. Schneider also amounts to 30 percent
+of the relevant agreed basic annual salary. The pension contribution made by the
+Company for the 2021 fiscal year amounted to €247,500.
+> The defined contribution pension commitment in place for Dr. Ploss is also based
+on a fixed contribution amount of 30 percent of the relevant agreed basic annual
+salary. The pension contribution made by the Company for the 2021 fiscal year
+amounted to €372,000.
+> The pension contribution made for Ms. Hufenbecher also amounts to 30 percent
+of the relevant agreed basic annual salary. Due to the entry during the fiscal year,
+the pension contribution made by the Company for the 2021 fiscal year amounted
+to €112,500.
+> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result
+of their previous periods of employment in senior management positions with
+Infineon. Their service contracts specifically state that the amounts made available
+to cover their vested pension entitlements represent a continuation of those vested
+entitlements and are, therefore, not subject to any separate vesting arrangements.
+The Company makes a fixed annual pension contribution on behalf of Dr. Gassel
+and Mr. Hanebeck for each full fiscal year of service on the Management Board,
+equivalent to 30 percent of the relevant agreed basic annual salary. The Supervisory
+Board is not required to decide each time on the amount to be contributed. The
+pension contributions for the 2021 fiscal year for Dr. Gassel and Mr. Hanebeck
+amounted to €225,000 in each case.
+The plan rules applicable to Management Board members are as follows:
+If the entitlements of Management Board members (i) have not yet legally vested or
+(ii) have legally vested but are not protected by the state pension insurance scheme
+(Pensionssicherungsverein), the Company maintains pension reinsurance policies
+in favor of, and pledged to, the Management Board members concerned.
+Based on the amendment to the Executive Board compensation system in 2010,
+all Management Board members have received a defined contribution pension
+commitment that is essentially identical to the Infineon pension plan applicable to
+all employees. Accordingly, the Company has set up a personal pension account
+(basic account) for each beneficiary, to which it makes annual pension contributions.
+The Company adds annual interest to the balance in the basic account using the
+highest statutory interest rates valid for the insurance industry (guaranteed interest
+rates) until disbursement of the pension begins and may also award surplus credits.
+95 percent of any income earned over and above the guaranteed interest rate is
+credited to the pension account, either at the date on which disbursement of the
+pension begins or, at the latest, when the beneficiary reaches the age of 60. The
+balance of the basic account when disbursement of the pension begins (due to age,
+invalidity or death) - increased by an adjusting amount in the event of invalidity or
+death - constitutes the retirement benefit entitlement and is paid out to the Manage-
+ment Board member or his or her surviving dependents in twelve annual installments,
+or, if so requested by the Management Board member, in eight annual installments,
+as a lump sum, or as a life-long pension. In addition to the defined contribution
+pension plan that has been in place for Dr. Ploss since 1 January 2016, a fully vested
+fixed-amount pension entitlement of €210,000 p.a. also exists for his Board activities
+up to 31 December 2015, which will not increase in the future.
+Infineon Technologies | Annual Report 2021
+governance/#equity-based-compensation
+2020
+2021
+2020
+In cash, after performance period ends
+250% of the allocation amount
+One year
+> Extraordinary developments
+› Collective performance of the Management Board
+> 1/3 Segment Result Margin (SRM) as planned
+1/3 Free Cash Flow (FCF) as planned
+> 1/3 Return on Capital Employed (ROCE) as planned
+>
+Primarily a company car with chauffeur (also for private use)
+and an allowance for health and nursing care insurance
+as well as various insurance and general employee benefits
+Defined contribution plan that provides an annual pension
+contribution and capital market-oriented interest
+Fixed, non-performance-related remuneration paid in
+twelve equal monthly installments
+Waiting period
+Limitation/cap
+Payment
+Performance period
+Performance criteria
+Plan type
+Long-Term Incentive (LTI)
+Performance period
+Limitation/cap
+Payment
+Performance Share Plan
+> 80% relative Total Shareholder Return (TSR)
+> 20% ESG targets
+Four years
+In the event of a change of control, right of extraordinary
+termination within limited period of time and with restricted
+severance pay regulation
+€4,200,000
+Change-of-control clause
+Full member of the Board
+Chairman of the Management Board (CEO) €7,200,000
+Maximum remuneration payable to the Management Board
+capped in accordance with section 87a, paragraph 1,
+number 1, AktG (including fringe benefits and expenses for
+company pension plans)
+100% of gross annual basic salary
+Generally five years
+Maximum remuneration
+Modifier (0.7 to 1.3)
+Full member of the Board
+Accumulation phase
+Mandatory personal investment in Infineon shares
+variable remuneration components
+Partial or complete reduction or reclamation of
+Share Ownership Guidelines (SOG)
+Other contractual elements
+Malus and clawback
+Generally in shares, after waiting period expires
+250% of the allocation amount
+Four years
+Chairman of the Management Board (CEO) 150% of gross annual basic salary
+Total
+Performance criteria
+Variable (i.e., performance-related)
+remuneration
+Q = < 147 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Payments to former Management Board members in the 2021 fiscal year
+Total remuneration (primarily pension benefits) of €2,609,306.24 (2020: €2,211,263.52)
+was paid to former Management Board members in the 2021 fiscal year. As of 30 Sep-
+tember 2021, accrued pension liabilities for former Management Board members
+amounted €72,369,256 (2020: €76,593,563).
+Under the new Management Board remuneration system, the maximum period of
+continued payment of fixed and variable remuneration is reduced to 24 months in
+any case. The service contracts of the incumbent Management Board members were
+adjusted accordingly with effect from 1 October 2021. For Ms. Hufenbecher, on the
+other hand, the new regulations have already applied since she took office.
+The Management Board service contracts otherwise contain no promises of severance
+pay for situations in which contracts are prematurely terminated.
+The service contracts of Management Board members include a change-of-control
+clause, which stipulates the terms that apply when the activities of a Management
+Board member are terminated in the event of a significant change in Infineon's owner-
+ship structure. A change of control for the purposes of this clause occurs when a
+third party, individually or together with another party, acquires at least 50 percent of
+the voting rights in Infineon Technologies AG as defined in section 30 of the German
+Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz –
+“WpÜG”). Management Board members have the right to resign and terminate their
+service contracts within twelve months of the announcement of any such change of
+control and any who choose to do so are entitled to continued payment of their annual
+remuneration through to the end of the originally agreed duration of their contract
+for a maximum of 36 months. If Infineon Technologies AG removes a Management
+Board member or terminates their service contract within twelve months of the
+announcement of a change of control, the Management Board members concerned
+are entitled to continued payment of their annual remuneration through to the end
+of the originally agreed duration of their contract, subject to a minimum period of
+24 months and a maximum period of 36 months.
+Premature termination of the service contract
+1 The upper line for Dr. Ploss in the 2021 fiscal year respectively 2020 shows the contribution amount, the present value and the service cost
+relating to the defined contribution pension commitment additionally granted to him with effect from 1 January 2016. The second line
+in the 2021 fiscal year respectively 2020 shows the pension entitlement and the present value of his fixed-amount pension plan.
+2 The service cost for Ms. Hufenbecher takes into account that she was appointed to the Management Board during the year on 15 April 2021,
+and therefore was not in the office for the entire 2021 fiscal year.
+700,618
+898,939
+1,182,000 13,500,891
+1,069,500 14,081,096
+210,000
+210,000
+Revision of the Management Board remuneration system
+The Act Implementing the Second Shareholder Rights Directive (ARUG II) came into
+force on 1 January 2020. Furthermore, the Government Commission on the German
+Corporate Governance Code adopted a new version of the DCGK, which became
+effective on 20 March 2020. The Supervisory Board deliberated on this matter at
+length with the support of an external independent remuneration expert. Based on
+the preparatory work of the Executive Committee and its recommendation, the
+Supervisory Board adopted a new Management Board remuneration system at its
+meeting on 20 November 2020, which was approved by the Annual General Meeting
+on 25 February 2021 in accordance with section 120a, AktG.
+In addition to the changes already relevant for the 2021 fiscal year and described above
+(i.e., the incorporation of the MTI into the LTI and the new LTI rule), the remaining
+parts of the new Management Board remuneration system for the incumbent Manage-
+ment Board members apply from 1 October 2021. The main additional changes can
+be summarized as follows:
+> The option of the Supervisory Board to award a “special bonus” amounting to up
+to 30 percent of the fixed basic remuneration of Management Board members has
+been removed without replacement.
+Company pension plan
+Fringe benefits
+Basic annual salary
+Fixed remuneration
+Overview of the various components of the remuneration system
+The structure of the new Management Board remuneration system can be summarized
+as follows:
+< 148 >
+Q =
+Short-Term Incentive (STI)
+Further information
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> As a final point, a malus and clawback clause has been introduced that allows
+the Supervisory Board to withhold or reclaim variable remuneration components
+in certain cases.
+> The Management Board remuneration system now includes Share Ownership
+Guidelines that require Management Board members to build up a minimum
+holding of Infineon shares over a period of generally five years and to hold them
+for
+up to two years after leaving office. This minimum holding has been set at the
+equivalent to 150 percent of the fixed basic annual salary for the Chairman and
+at 100 percent of the basic annual salary for other Management Board members.
+> The option of the Supervisory Board to reduce or increase the STI payout amounts
+by up to 30 percent at its discretion has been replaced by a criteria-based STI
+modifier. Accordingly, the Supervisory Board defines criteria for assessing the
+collective performance of the Management Board each fiscal year on the basis of
+a fixed catalog (see also above in the section “Components of the Management Board
+remuneration system”, p. 134 ff.). After the end of the fiscal year, the Supervisory
+Board can then reduce or increase the target achievement level for the STI by up
+to 30 percent - depending on the performance of the Management Board and also
+to take account of any exceptional, unforeseeable developments.
+> In the case of the STI, the existing financial targets ROCE and Free Cash Flow will
+be supplemented by the addition of a third target, namely the Segment Result
+Margin (SRM), which already serves as a key performance indicator for Infineon.
+The SRM was also previously taken into account in the STI target structure appli-
+cable to employees.
+Consolidated Financial Statements
+278,244
+2,043,019
+2021
+2020 2021 (min.)
+2 The figures for the active Management Board members in the 2021 fiscal year were based on a fair market value per performance share amounting to €28.87 (2020: €12.50), which was calculated using a Monte Carlo simulation model.
+3 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI or LTI grant amount for the month of April 2021, and thus to a total of 11 twenty-fourths for the entry fiscal year.
+Infineon Technologies | Annual Report 2021
+12,661,370
+7,329,823
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q = < 141 >
+The fringe benefits of Ms. Hufenbecher include a one-time lump sum of €25,000 for
+the reimbursement of start-up costs.
+Other fringe benefits relate mainly to statutory obligations such as the payment of
+inventor's remuneration or general benefits available to all Infineon employees.
+Share-based payment
+As described in the section "Management Board remuneration", the contractually
+agreed LTI is granted to Management Board members by Infineon in the form of
+performance shares, p. 136. The average price of the Infineon share relevant for
+the number of performance shares granted for the 2021 fiscal year was €22.82
+(2020: €18.10).
+A fair market value of €28.87 (2020: €12.50) per performance share granted in the
+2021 fiscal year was determined, taking account of the cap of 250 percent cap set on
+the LTI allocation amount as well as the performance hurdle.
+The following table shows the number of performance shares awarded to Management
+Board members in the 2021 fiscal year.
+Further details regarding the LTI tranche that vested on 1 October 2021 and the
+performance shares awarded to Management Board members on 1 April 2021 for
+the 2021 fiscal year are provided in note 21 to the Consolidated Financial Statements.
+p. 195 f.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfillment of the plan requirements.
+1,130,988
+1,541,122
+2,415,281
+264,125
+807,250
+976,672
+1,636,952
+165,725
+756,646
+976,672
+1,636,952
+165,725
+447,629
+756,646
+750,257
+Virtual performance
+shares outstanding
+at the beginning
+of the fiscal year
+5,145,009
+8,564,547
+3,566,493
+Total remuneration
+4,110,702
+2,523,162
+2,585,259
+1,688,000
+2,419,140
+1,577,539
+885,625
+976,672
+1,704,922
+Virtual performance
+shares newly granted
+in the fiscal year
+14,027
+124,952
+523,916
+2020
+103,148
+23,204
+290,050
+17,282
+17,282
+91,788
+182,577
+Dr. Sven Schneider
+Chief Financial Officer
+Dr. Helmut Gassel
+Management Board member
+2021
+21,130
+14,027
+1,767,364
+61,218
+91,788
+Virtual performance
+shares due
+in the fiscal year¹
+Performance Share Plan
+Virtual performance
+shares expired
+in the fiscal year²
+Virtual performance
+shares outstanding
+at the end
+of the fiscal year
+Total expense
+for share-based
+payment
+Management Board member
+Fiscal year
+Fair value grant date
+Number
+in €
+Number
+Number
+Number
+in €
+Dr. Reinhard Ploss
+Chief Executive Officer
+2021
+Number
+33,830
+290,050
+1,245,951
+Total variable remuneration
+Total
+Management Board
+2020
+2021
+2020
+2021
+2020
+2021
+2021
+2020
+2021
+2020
+2021
+1,240,000
+35,238
+1,275,238
+1,240,000
+37,211
+1,277,211
+825,000
+55,337
+880,337
+825,000
+55,750
+880,750
+Constanze Hufenbecher
+Management Board member
+since 15 April 20213
+Jochen Hanebeck
+Management Board member
+Dr. Helmut Gassel
+Management Board member
+Dr. Sven Schneider
+Chief Financial Officer
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q = < 140 >
+Management Board remuneration in the 2021 fiscal year in accordance
+with German Accounting Standard 17 (DRS 17)
+Total remuneration
+Total remuneration to Management Board members in accordance with DRS 17 and
+benefits to individual Management Board members - also presented in accordance
+with DRS 17 - are shown in the table below.
+750,000
+32,188
+782,188
+Management Board members did not receive any loans from Infineon or benefits from
+third parties in the 2021 and 2020 fiscal years, whether promised or actually paid,
+for their board activities at Infineon.
+In accordance with their service contracts, Management Board members are entitled
+to a chauffeur-driven company car, which may also be used for private purposes.
+Operating and maintenance costs for the company car and chauffeur are borne by
+the Company. Any taxes arising on the fringe benefit related to private usage are
+borne by the individual Management Board members themselves.
+The Company also maintains accident insurance policies for Management Board
+members in the case of death (€3 million) and invalidity (€5 million).
+in €
+Fixed remuneration
+Basic annual salary
+Fringe benefits
+Total fixed remuneration
+Dr. Reinhard Ploss
+Chief Executive Officer
+Fringe benefits
+2,835,464
+750,000
+70,893
+820,893
+750,000
+34,476
+784,476
+159,317
+159,317
+108,625
+108,625
+98,487
+98,487
+98,487
+98,487
+98,487
+98,487
+464,916
+464,916
+356,291
+2018-2020 tranche
+Long-Term Incentive (LTI)
+Performance Share Plan²
+1,767,364
+159,317
+2019-2021 tranche
+2020-2022 tranche
+Mid-Term Incentive (MTI)1
+346,591
+34,140
+380,731
+2020
+3,911,591
+185,232
+4,096,823
+3,565,000
+198,330
+3,763,330
+Variable remuneration
+Single-year variable remuneration (STI)
+1,068,100
+477,950
+750,000
+28,329
+778,329
+728,250
+660,280
+295,460
+660,280
+295,460
+302,628
+3,419,538
+1,394,745
+Multi-year variable remuneration
+325,875
+2021 (max.)
+976,672
+276,840
+550,000
+Mid-Term Incentive (MTI)
+2020-2022 tranche
+550,000
+Long-Term Incentive (LTI)
+Performance Share Plan¹
+1,767,364
+290,050
+Total variable remuneration
+2,317,364
+1,390,050
+Pension expense
+Total remuneration (DCGK)
+72,298
+3,664,900
+368,802
+3,036,063
+72,298
+1,347,536
+1,375,000
+550,000
+Multi-year variable remuneration
+remuneration (STI)
+Single-year variable
+Basic annual salary
+Fringe benefits
+1,240,000
+35,238
+Total fixed remuneration
+1,275,238
+1,240,000
+37,211
+1,277,211
+1,240,000
+35,238
+1,275,238
+1,240,000
+35,238
+1,275,238
+375,000
+825,000
+55,337
+880,337
+825,000
+55,337
+880,337
+825,000
+55,337
+880,337
+750,000
+32,188
+782,188
+750,000
+70,893
+820,893
+750,000
+32,188
+782,188
+750,000
+32,188
+782,188
+Variable remuneration
+825,000
+55,750
+880,750
+2021 (max.)
+375,000
+3,492,500
+4,867,500
+1,773,579
+98,884
+881,072
+98,884
+3,661,072
+1 The figures of the active Management Board members in the 2021 fiscal year were based on a fair market value per performance share amounting to €28.87 (2020: €12.50), which was calculated using a Monte Carlo simulation.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q =
+< 143 >
+Jochen Hanebeck
+Management Board member
+Constanze Hufenbecher
+Management Board member since 15 April 20212
+in €
+2021
+2,197,744
+106,961
+98,884
+4,026,081
+976,672
+1,351,672
+264,125
+1,014,125
+72,298
+6,215,036
+278,244
+2,510,253
+294,037
+2,188,912
+278,244
+1,158,581
+937,500
+340,000
+375,000
+340,000
+340,000
+1,930,000
+2,867,500
+976,672
+1,316,672
+165,725
+845,725
+1,930,000
+2,780,000
+278,244
+850,000
+54,960
+2020 2021 (min.)
+2021 (max.)
+33,830
+976,672
+8,455
+8,455
+70,248
+291,991
+Management Board member
+2020
+40,070
+13,258
+165,725
+53,328
+104,328
+Constanze Hufenbecher
+2021
+15,505
+447,629
+53,328
+2021
+Jochen Hanebeck
+104,328
+2020
+21,130
+264,125
+21,130
+59,802
+2021
+53,328
+33,830
+15,505
+976,672
+8,455
+70,248
+291,991
+2020
+40,070
+13,258
+165,725
+53,328
+8,455
+2021
+99,473
+2020
+Other awards and benefits
+In the 2009 fiscal year, the Company entered into a restitution agreement with each
+of the then active Management Board members. Dr. Ploss is the only current Manage-
+ment Board member affected by the agreement. The agreements stipulate that the
+Company covers all costs and expenses of any legal, governmental, regulatory and/or
+parliamentary proceedings and investigations as well as arbitration proceedings in
+which Management Board members are involved in conjunction with their activities on
+behalf of the Company. However, the agreements specifically exclude any restitution
+of costs incurred in conjunction with section 93, paragraph 2, AktG.
+Remuneration of the Management Board in the 2021 fiscal year
+in accordance with DCGK 2017 (voluntary disclosure)
+Remuneration granted ("gewährte Zuwendungen")
+The following table shows the value of remuneration granted for the 2020 and 2021
+fiscal years, including fringe benefits, as well as the minimum and maximum values
+that can be achieved for the 2021 fiscal year.
+Unlike the disclosures in accordance with DRS 17, the STI is disclosed in the following
+table at the target value (i.e., the value in the event of 100 percent target achievement).
+In a deviation from DRS 17, the MTI was disclosed at the target value for an "average
+probability scenario” at the grant date. For these purposes, Infineon assumes 100 per-
+cent target achievement on a scale ranging from 0 percent to 200 percent. In addition,
+the pension expense, i.e., the service cost in accordance with IAS 19 (see “Commitments
+to Management Board members upon termination of their Board activities" in this
+chapter, p. 145 f.), is included in total remuneration.
+in €
+Fixed remuneration
+2021
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dr. Sven Schneider
+Chief Financial Officer
+Dr. Helmut Gassel
+Management Board member
+2020
+2021 (min.)
+2021 (max.)
+2021
+2020 2021 (min.)
+The Supervisory Board did not award any special bonuses to Management Board
+members during the 2021 fiscal year.
+Special bonuses
+Q = < 142 >
+Further information
+Total
+2021
+2020
+219,574
+183,288
+178,213
+70,850
+5,145,009
+885,625
+30,937
+17,282
+30,937
+17,282
+Management Board member since 15 April 20213
+335,913
+219,574
+1 The share price of the virtual performance shares exercised on 1st October 2020 amounted to €25.50.
+2 In the 2021 and 2020 fiscal years, virtual performance shares expired because the performance hurdle had not been met.
+3 Despite taking office on 15th April 2021, Ms. Hufenbecher was granted virtual performance shares retroactively as of 1st April 2021. Ms. Hufenbecher is entitled to one twenty-fourth of the individual LTI grant amount for the month of April 2021,
+and thus to a total of 11 twenty-fourths for the entry fiscal year.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+1,484,211
+451,035
+1,075,783
+Management Board and
+Supervisory Board
+Combined Management Report
+Shareholders and hybrid capital investors of Infineon Technologies AG
+(9)
+9
+4
+accounted for using the equity method
+Attributable to:
+Share of profit (loss) of associates and joint ventures
+(325)
+1,451
+Total comprehensive income (loss), net of tax
+(177)
+(182)
+3
+Financial expenses
+1,451
+(693)
+Other comprehensive income (loss), net of tax
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q =
+< 150 >
+Remuneration of the Supervisory Board for the 2021 fiscal year
+The total remuneration paid to Supervisory Board members for the 2021 fiscal year
+(including meeting attendance fees) is presented below. The amounts disclosed do
+not take into account value-added tax at 19 percent or - in the case of Supervisory
+Board members resident abroad – withholding tax, solidarity surcharges or any other
+taxes arising:
+Dr. Susanne Lachenmann
+Fiscal year
+Supervisory Board member, in €
+Fixed
+remuner-
+ation
+Allowance
+282
+for specific
+functions
+(325)
+1,319
+0.87
+7
+Basic earnings per share (in euro)
+(0.01)
+7
+Basic earnings (loss) per share (in euro) from discontinued operations
+0.26
+0.88
+7
+Basic earnings per share (in euro) from continuing operations
+shareholders of Infineon Technologies AG:¹
+Basic earnings per share (in euro) attributable to
+368
+1,169
+Profit (loss) from continuing operations before income taxes
+Shareholders and hybrid capital investors of Infineon Technologies AG
+368
+1,169
+(4)
+(6)
+6
+Profit (loss) from discontinued operations, net of income taxes
+Profit (loss) for the period
+372
+1,175
+Profit (loss) from continuing operations
+(52)
+(144)
+5
+Income tax
+424
+Attributable to:
+0.26
+Meeting
+attendance
+fees
+remuner-
+ation
+108,000
+remuner-
+Melanie Riedl²
+2021
+90,000
+12,000
+102,000
+ation
+2020
+60,000
+16,000
+76,000
+2021
+Jürgen Scholz
+18,000
+2021
+15,000
+14,000
+119,000
+2020
+37,500
+10,417
+6,000
+Xiaoqun Clever 2,3
+2021
+90,000
+15,000
+18,000
+2020
+60,000
+90,000
+Total
+90,000
+Total
+2021
+90,000
+15,000
+18,000
+123,000
+2020
+90,000
+15,000
+20,000
+125,000
+Géraldine Picaud 3
+2021
+90,000
+12,000
+2020
+102,000
+90,000
+10,000
+100,000
+Dr. Manfred Puffer ³
+2021
+90,000
+12,000
+102,000
+Fiscal year
+Fixed
+Supervisory Board member, in €
+Peter Bauer¹
+remuner-
+ation
+Allowance
+for specific
+functions
+Meeting
+attendance
+fees
+2020
+10,000
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:¹
+7
+2324
+14
+Right-of-use assets
+12
+Other intangible assets
+Goodwill
+12
+Property, plant and equipment
+18
+Pensions and similar commitments
+7,179
+8,252
+Total current assets
+15
+4,443
+Long-term financial debt
+Assets classified as held for sale
+3,450
+4,443
+Total current liabilities
+530
+518
+11
+Other current assets
+950
+872
+59
+66
+340
+288
+9
+436
+4,110
+5,962
+55
+Deferred tax assets
+Non-current income tax receivables
+87
+71
+4
+Investments accounted for using the equity method
+222
+213
+235
+265
+313
+319
+293
+Deferred tax liabilities
+324
+617
+6,528
+5,752
+8རེད ག ཆཡ
+26
+Other non-current liabilities
+286
+336
+14
+Non-current leasing liabilities
+3,621
+3,349
+Other non-current provisions
+5,897
+739
+Diluted earnings per share (in euro) from continuing operations
+815
+Other current liabilities
+€ in millions
+ber 2020
+30 Septem-
+30 Septem-
+ber 2021
+Notes
+Inventories
+Trade receivables
+Financial investments
+Cash and cash equivalents
+ASSETS
+€ in millions
+of Financial Position
+Consolidated Statement
+< 154 >
+Notes
+Q =
+Consolidated Financial Statements
+Business focus and strategy
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+1 The calculation of earnings per share is based on unrounded figures.
+0.26
+0.87
+7
+(0.01)
+7
+Diluted earnings (loss) per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+0.26
+0.88
+Further information
+6517
+30 Septem-
+ber 2021
+ber 2020
+97
+82
+Contract assets
+14
+Current leasing liabilities
+77
+57
+Current income tax payables
+2,052
+2,181
+Current provisions
+1,196
+1,483
+9
+30 Septem-
+1,160
+Trade payables
+1,376
+2,173
+8165
+Current income tax receivables
+10
+505
+833
+15
+of long-term financial debt
+Short-term financial debt and current portion
+1,851
+1,749
+LIABILITIES AND EQUITY
+1,569
+1
+8,000
+2020
+Other operating income
+Selling, general and administrative expenses
+Research and development expenses
+Gross profit
+Cost of goods sold
+Revenue
+€ in millions
+of Comprehensive Income
+Consolidated Statement
+of Profit or Loss
+Consolidated Statement
+< 153 >
+Q =
+Further information
+Other operating expenses
+37,500
+6,000
+Hans-Ulrich Holdenried ³
+2021
+90,000
+15,000
+30,000
+49,750
+135,000
+2020
+90,000
+15,000
+22,000
+127,000
+Prof. Dr. Renate Köcher¹
+2021
+6,250
+2020
+Operating profit
+Notes
+Foreign currency translation differences
+(1,042)
+(1,354)
+21
+128
+Total items that will not be reclassified subsequently to profit or loss
+(1,113)
+(1,448)
+33
+21
+128
+Actuarial gains (losses) on pensions and similar commitments
+2,776
+4,260
+Financial income
+368
+Profit (loss) for the period
+(5,791)
+(6,800)
+3
+19
+8,567
+11,060
+3
+2020
+2021
+Notes
+€ in millions
+2020
+2021
+1,169
+90
+37,500
+41,500
+Forecast 2019-2028. July 2021; Infineon. | 1
+R07 Strategy Analytics: Automated Driving Semiconductor Market Estimate.
+August 2021; Infineon.
+R08
+World Semiconductor Trade Statistics (WSTS): Semiconductor
+Industry Blue Book History. October 2021.
+R09
+Based on or includes research from Omdia: Application Market
+Forecast Tool Q3 2021 Update. September 2021.
+R10
+R11
+Based on or includes research from Omdia: OEM Semiconductor
+Spend Tracker - World + Regions - H1 2021. August 2021.
+International Monetary Fund: World Economic Outlook. October 2021.
+1 Not part of the audited combined Management Report.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Strategy Analytics: Automotive Semiconductor Demand
+Combined Management Report
+Further information
+Q = < 152 >
+Consolidated
+Financial Statements
+153 Consolidated Statement of Profit or Loss
+153
+154
+Consolidated Statement of Comprehensive Income
+Consolidated Statement of Financial Position
+155 Consolidated Statement of Cash Flows
+156
+158
+Consolidated Statement of Changes in Equity
+Notes to the Consolidated Financial Statements
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Consolidated Financial Statements
+4,000
+Alternative Propulsion Forecast. August 2021;
+Consolidated Financial Statements
+1 Joined as Supervisory Board member until 20 February 2020. The remuneration for the 2020 fiscal year therefore was awarded
+on a pro rata basis.
+2 Joined as Supervisory Board member since 20 February 2020. The remuneration for the 2020 fiscal year therefore was awarded
+on a pro rata basis.
+3 The shareholder representatives on the Supervisory Board have waived their entitlement to attendance fees for certain meetings.
+The Company will donate the attendance fee saved to a charitable institution.
+Supervisory Board members did not receive any loans from Infineon in either the
+2021 or 2020 fiscal year.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+List of references
+Consolidated Financial Statements
+Further information
+Q = < 151 >
+List of references
+R01
+R02
+Based on or includes content supplied by IHS Markit, Automotive Group:
+Based on or includes research from Omdia: Annual 2001 - 2020
+Semiconductor Market Share Competitive Landscaping Tool - Q2 2021.
+August 2021.
+Neubiberg, 25 November 2021
+Management Board
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+Dr. Helmut Gassel
+R03
+Based on or includes research from Omdia: Power Semiconductor
+Market Share Database 2020. September 2021.
+R04
+Based on or includes research from Omdia: MEMS Microphones Dice
+Market Shares 2021. July 2021.
+Jochen Hanebeck
+Constanze Hufenbecher
+R05
+ABI Research: Smart Card and Embedded Security IC Technologies.
+September 2021.
+R06
+Strategy Analytics: Automotive Semiconductor Vendor Market Shares.
+April 2021.
+53,917
+123,000
+78,000
+(543)
+76
+Dr. Herbert Diess¹
+2021
+Margret Suckale 2,3
+2021
+90,000
+2,500
+26,000
+118,500
+2020
+37,500
+Dr. Wolfgang Eder³
+2021
+90,000
+90,000
+84,667
+4,000
+42,000
+90,000
+90,000
+30,000
+41,500
+222,000
+210,000
+2020
+60,000
+10,000
+70,000
+Dr. Eckart Sünner¹
+2021
+2020
+37,500
+10,417
+8,000
+2020
+55,917
+8,000
+60,000
+90,000
+15,000
+22,000
+127,000
+Kerstin Schulzendorf
+2021
+90,000
+12,000
+102,000
+2020
+90,000
+16,000
+106,000
+Johann Dechant
+16,667
+2021
+30,000
+36,000
+2020
+90,000
+30,000
+38,000
+156,000
+158,000
+Dr. Ulrich Spiesshofer 2,3
+2021
+90,000
+25,000
+18,000
+133,000
+2020
+90,000
+64
+Dr. Friedrich Eichiner 2,3
+90,000
+28,000
+128,000
+Total
+2021
+2020
+1,440,000
+1,477,500
+277,500
+350,000
+2,067,500
+275,418
+334,000
+2,086,918
+Gerhard Hobbach¹
+2021
+10,000
+2020
+22
+3
+(714)
+154
+Total items that may be reclassified subsequently to profit or loss
+581
+1,470
+42
+Cost of hedging
+(116)
+(52)
+(213)
+64
+Net change in fair value of hedging instruments
+29
+2021
+90,000
+135,000
+25,000
+22,000
+2020
+60,000
+16,667
+8,000
+Annette Engelfried
+2021
+90,000
+15,000
+30,000
+2020
+90,000
+15,000
+2020
+30,000
+2021
+90,000
+15,000
+18,000
+2020
+90,000
+15,000
+22,000
+137,000
+84,667
+135,000
+135,000
+123,000
+127,000
+Diana Vitale
+2021
+90,000
+15,000
+30,000
+Peter Gruber
+1
+Combined Management Report
+7,490
+90
+128
+1,130
+(61)
+(399)
+435
+6,462
+2,612
+Cost of
+hedging
+currency
+translation
+differences
+Hedges
+Foreign
+Other reserves
+Retained
+earnings
+Capital
+reserves
+Share capital
+Notes
+Transactions with owners
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+Balance as of 1 October 2020
+€ in millions
+for the fiscal year ended 30 September 2021
+Consolidated Statement of Changes in Equity
+< 157 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+64
+1,258
+90
+64
+AG
+hybrid capital
+investors
+Total equity
+Equity
+attributable to
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+Own shares
+Infineon Technologies | Annual Report 2021
+Balance as of 30 September 2021
+Total transactions with hybrid capital investors
+19
+Compensations to hybrid capital investors
+Total non-current liabilities
+Total liabilities
+(286)
+51
+Business focus and strategy
+Total transactions with owners
+51
+Total contributions by and distributions to owners
+27
+19
+Other contributions and distributions
+19
+Disposal (purchase) of own shares
+24
+21
+(286)
+19
+Share-based payment
+Dividends
+Contributions by and distributions to owners
+(286)
+Management Board and
+Supervisory Board
+10,219
+1,203
+Balance as of 30 September 2020
+Total transactions with hybrid capital investors
+19
+Compensations to hybrid capital investors
+19
+Emission hybrid capital
+Transactions with hybrid capital investors
+(336)
+968
+111
+Total transactions with owners
+(336)
+968
+111
+Infineon Technologies | Annual Report 2021
+Total contributions by and distributions to owners
+19
+Other contributions and distributions
+19
+Disposal (purchase) of own shares
+1
+1
+19
+Exercise of stock options
+11
+21
+(336)
+19
+934
+110
+22
+(33)
+1,044
+(336)
+9,016
+(33)
+(61)
+(399)
+435
+6,462
+2,612
+1,164
+1,164
+(20)
+(20)
+1,184
+1,184
+747
+1,044
+747
+22
+མ་ཝ
+747
+4
+747
+4
+4
+4
+4
+2
+2
+11
+(336)
+11
+22
+9,016
+1,203
+10,219
+1 January 2022
+Onerous contracts - costs of fulfilling a contract
+(amendments to IAS 37)
+IAS 37
+none
+1 January 2022
+References to the conceptual framework
+IFRS 3
+none
+1 January 2023
+income before intended use (amendments to IAS 16)
+Classification of liabilities as current or non-current
+(amendments to IAS 1)
+IAS 1
+none
+1 January 2022
+IAS 16
+IFRS 17
+Effective date
+Impact on Infineon
+Property, plant and equipment -
+Standard/amendment/interpretation
+The following new or amended Standards have been issued by the IASB and will be
+relevant to Infineon from today's perspective. They have not been applied in the
+Consolidated Financial Statements as of 30 September 2021 since they are not yet
+mandatory or, alternatively, have not yet been endorsed by the EU. The new or
+amended Standards are applicable for fiscal years beginning on or after their respective
+effective date. As a general rule, they are not applied before their effective date, even
+if this is permitted for certain Standards.
+Financial reporting rules issued not yet applied
+Q = < 159 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+none
+none
+immaterial
+immaterial
+Insurance contracts including amendments to IFRS 17
+none
+Infineon Technologies | Annual Report 2021
+The balance sheet effects of intragroup transactions as well as gains and losses arising
+from intragroup business relationships are eliminated on consolidation.
+The financial statements of entities included in the Consolidated Financial Statements
+are prepared using uniform valuation and accounting policies.
+Control exists when Infineon is subjected to variable returns arising from its engage-
+ment with the subsidiary or has a right to such, and has the ability to influence these
+returns as a result of its power over the subsidiary. Power means that Infineon has
+existing rights that give Infineon the ability to direct the relevant activities of the
+subsidiary, that is the activities that significantly affect the aforementioned returns.
+An entity is included in the Consolidated Financial Statements from the date on
+which Infineon acquires control. Upon first-time consolidation of an entity, the
+acquired assets and assumed liabilities are basically measured on the basis of their
+fair value at the acquisition date. Any excess of consideration paid (purchase price)
+over the share of the fair value of acquired assets, liabilities and contingent liabilities
+is recognized as goodwill. After re-examination, any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+The Consolidated Financial Statements presented here include the individual financial
+statements of Infineon Technologies AG and its direct and indirect subsidiaries on
+a consolidated basis. A subsidiary is defined as an entity which, directly or indirectly,
+is controlled by Infineon Technologies AG.
+Basis of consolidation
+2 Summary of significant accounting policies
+Definition of accounting estimates (amendments to IAS 8)
+Rent concessions related to the Coronavirus pandemic
+(amendment to IFRS 16) - extension
+Disclosure of accounting policies (amendments to IAS 1
+and IFRS Practice Statement 2)
+Deferred tax relating to assets and liabilities arising from
+a single transaction (amendments to IAS 12)
+Interest rate benchmark reform (amendments to IFRS 9,
+IAS 39, IFRS 7, IFRS 4 and IFRS 16) - Phase 2
+Annual IFRS improvement cycle 2018-2020
+Extension to the temporary exemption from
+applying IFRS 9 (amendments to IFRS 4)
+IFRS 16
+IAS 8
+1 January 2023
+IAS 1
+immaterial
+1 April 2021
+none
+1 January 2023
+immaterial
+1 January 2023
+none
+none
+1 January 2022
+1 January 2023
+none
+1 January 2021
+none
+1 January 2021
+IFRS 4
+IAS 12
+19
+none
+1 January 2020
+1 June 2020
+1 January 2020
+6,513
+2,612
+(39)
+(39)
+(39)
+(39)
+(230)
+(230)
+5
+(230)
+(230)
+5
+S S
+27
+1,407
+27
+5
+5
+24
+(286)
+24
+(286)
+1,451
+39
+1,412
+282
+282
+1,169
+39
+1,130
+5
+1 January 2020
+(309)
+(28)
+none
+1 January 2020
+Impact on Infineon
+Effective date
+Revision to the conceptual framework and amendments to
+references to the conceptual framework in IFRS Standards
+Definition of a business (amendments to IFRS 3)
+COVID-19-related rent concessions (amendment to IFRS 16)
+Interest rate benchmark reform (amendments to IFRS 9,
+IAS 39 and IFRS 7) - Phase 1
+Definition of material (amendments to IAS 1 and IAS 8)
+IAS 1
+and IAS 8
+IFRS 3
+IFRS 16
+Standard/amendment/interpretation
+The IASB has issued the following Standards or amendments to Standards, which are
+required to be applied in the Consolidated Financial Statements for the year ended
+30 September 2021:
+Financial reporting rules applied for the first time
+The Company's Management Board presented the Consolidated Financial Statements
+on 25 November 2021.
+Deviations between amounts presented are possible due to rounding. Negative
+amounts are presented in parentheses.
+The Group's reporting currency is the euro ("€").
+3
+The fiscal year-end for both Infineon and the Company is 30 September of each year.
+The Consolidated Financial Statements, prepared by Infineon Technologies AG as the
+ultimate parent company for the year ended 30 September 2021, have been prepared
+in accordance with International Financial Reporting Standards ("IFRS") and related
+interpretations effective as of 30 September 2021 as issued by the International
+Accounting Standards Board (“IASB") to the extent to which the IFRS and interpretations
+have been endorsed by the European Union ("EU"). The Consolidated Financial
+Statements also comply with the supplementary requirements set out in section 315e,
+paragraph 1, of the German Commercial Code ("Handelsgesetzbuch” or “HGB”).
+The aforementioned standards were complied with in full.
+1 Basis of the Consolidated Financial Statements
+Infineon Technologies AG is a listed company under German law and the ultimate
+parent company of Infineon. The principal office of the Company is Am Campeon 1–1
+-15,
+85579 Neubiberg (Germany). The Company is registered in the Commercial Register
+of the District Court of Munich (Germany) under the number HRB 126492.
+The Infineon Group ("Infineon"), comprising Infineon Technologies AG (hereafter
+also referred to as "the Company”) and its direct and indirect subsidiaries, design,
+develop, manufacture and market a broad range of semiconductors and related sys-
+tem solutions. The focus of activities is on applications for automotive electronics,
+industrial electronics, entertainment and household electronics, information and
+communications infrastructure as well as hardware-based security. The product
+range includes standard, application-specific and customer-specific components as
+well as system solutions for power, digital, analog, high frequency and mixed-signal
+applications. Research and development sites, manufacturing facilities, investments
+and customers are located mainly in Europe, Asia and North America.
+Notes to the Consolidated Financial Statements
+Q = < 158 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+11,401
+1,203
+10,198
+The Consolidated Statement of Profit or Loss is presented using the cost of sales method.
+Share-based payment
+Transactions with hybrid capital investors
+Contributions by and distributions to owners
+Capital increase
+(1)
+13
+Proceeds from sales of businesses and interests in subsidiaries,
+net of cash disbursed
+(7,433)
+7,417
+3,480
+(19)
+Acquisitions of businesses, net of cash acquired
+4
+8
+Proceeds from sales of financial investments
+(6,045)
+(4,275)
+8
+2020
+12
+2021
+€ in millions
+6
+368
+1,169
+25
+2020
+2021
+Notes
+Infineon Technologies | Annual Report 2021
+Net cash provided by operating activities
+from discontinued operations
+Net cash provided by (used in) operating activities
+Net cash provided by operating activities from continuing operations
+Income tax paid
+Purchases of financial investments
+Interest paid
+1,513
+Investments in related companies
+(7,172)
+(2,284)
+Net cash used in investing activities from continuing operations
+Net cash used in investing activities from discontinued operations
+12
+12
+12, 13, 28
+2
+4
+4
+33
+14
+Proceeds from sales of property, plant and equipment and other assets
+(22)
+(5)
+1,260
+(915)
+12
+(184)
+(229)
+12
+22
+Purchases of property, plant and equipment
+101
+150
+3
+Purchases of other intangible assets and other assets
+52
+144
+5
+(44)
+(1,268)
+5
+Interest received
+Change in provisions
+627
+Equity:
+19
+19
+Other non-current assets
+26
+225
+Total non-current assets
+15,082
+191
+14,820
+Ordinary share capital
+Additional paid-in capital
+Retained earnings
+Other reserves
+Total assets
+695
+Own shares
+Dividends
+Total equity
+23,334
+21,999
+Total liabilities and equity
+23,334
+21,999
+2,612
+2,612
+6,513
+6,462
+1,407
+435
+(306)
+Hybrid capital
+Change in other assets and other liabilities
+11,780
+8,330
+Change in trade payables
+Change in inventories
+Change in trade receivables
+Other non-cash result
+Impairment charges/reversals of impairments
+Dividends received
+Gains on disposals of property, plant and equipment
+Net interest result
+Income tax
+Depreciation and amortization
+to net cash provided by operating activities:
+Adjustments to reconcile profit (loss) for the period
+Plus: profit (loss) from discontinued operations, net of income taxes
+Profit (loss) for the period
+11,933
+€ in millions
+Q = < 155 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+10,219
+11,401
+1,203
+1,203
+(33)
+(28)
+(460)
+Consolidated Statement of Cash Flows
+56
+Notes
+(2,284)
+2,501
+translation
+differences
+hedging
+currency
+Cost of
+Hedges
+Foreign
+Other reserves
+Retained
+earnings
+Capital
+reserves
+Share capital
+Notes
+Balance as of 1 October 2019
+€ in millions
+5,494
+for the fiscal year ended 30 September 2020
+< 156 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+1,851
+1,749
+Cash and cash equivalents at end of period
+1,021
+1,851
+Cash and cash equivalents at beginning of period
+(83)
+Consolidated Statement of Changes in Equity
+2
+421
+152
+Transactions with owners
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+(325)
+39
+(364)
+42
+(213)
+(543)
+350
+(693)
+(693)
+42
+(213)
+144
+(543)
+368
+39
+329
+329
+8,633
+Total equity
+Equity
+attributable to
+hybrid capital
+investors
+8,633
+(37)
+(42)
+AG
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+Own shares
+43
+Net cash used in investing activities
+Effect of foreign exchange rate changes on cash and cash equivalents
+21
+(104)
+25
+3
+Deposits for financing-related derivatives
+11
+(63)
+(76)
+14
+Payments for leasing liabilities
+65
+372
+16
+(5,372)
+(1,570)
+15
+335
+Repayments of long-term financial debt
+407
+9,815
+1,084
+15
+2
+Net change in related party financial receivables and payables
+Proceeds from issuance of long-term financial debt
+124
+(121)
+10
+46
+(279)
+9
+913
+(7,172)
+(71)
+3
+24
+Proceeds from issuance of ordinary shares
+6,274
+Net change in cash and cash equivalents
+17
+(885)
+Net cash provided by (used in) financing activities
+Net cash provided by (used in) financing activities
+from discontinued operations
+(885)
+Net cash provided by (used in) financing activities
+from continuing operations
+(6)
+1,811
+3,065
+2
+(20)
+(39)
+19
+Cash outflow to hybrid capital investors
+6,274
+1,184
+1,043
+19
+(129)
+(180)
+3,063
+Cash outflows due to changes of non-controlling interests
+Dividend payments
+(2)
+(68)
+(286)
+(336)
+1,817
+Proceeds from hybrid capital
+19
+19
+(148)
+A cash generating unit (“CGU”) represents the smallest identifiable group of assets
+that generates cash inflows from continuing activities and that are largely independent
+of the cash inflows from other assets or group of assets.
+Goodwill arising in connection with a business combination is allocated to the CGUS
+or groups of CGUs that will benefit from the synergies generated by the business
+combination.
+Further information
+The recoverable amount of an asset is defined as the higher of its fair value less
+costs to sell and its value in use. The value in use is calculated based on discounted
+future cash flows. Considerable management judgment is necessary to estimate
+future cash flows.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Leased assets
+If an asset or CGU is considered to be impaired, the impairment recognized is measured
+as the amount by which the carrying value exceeds the recoverable amount.
+Goodwill is impaired when the carrying amount of the operating segment to which
+goodwill is allocated exceeds the recoverable amount of that unit.
+If the carrying amount of the respective operating segment to which goodwill
+is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired
+accordingly.
+In the case of property, plant and equipment or other intangible assets, if the recov-
+erable amount of a CGU is less than the carrying value, the impairment is allocated
+pro rata to the assets recorded within the scope of IAS 36 therein. An impairment loss
+recognized in prior periods for property, plant and equipment or other intangible
+assets is reversed insofar as, since the last impairment, a change in the underlying
+assumptions has occurred, which leads to a lower impairment requirement. The
+maximum possible reversal of an impairment loss is that which would lead to the
+carrying amount that would have been determined (net of scheduled depreciation
+and amortization) if no impairment loss had been recognized for that asset in prior
+years. The reversal of impairments recognized on goodwill in subsequent periods is
+not permitted.
+The net pension obligation recognized in respect of defined benefit pension plans
+comprises the present value of the defined benefit obligation (DBO) at the end of the
+reporting period less the fair value of the plan assets. The present value of the DBO
+and the resulting pension expense are determined annually in accordance with IAS 19
+"Employee Benefits" for each separate plan by independent, qualified actuaries
+using the projected unit credit method. The calculation is subject to, among other
+things, assumptions on increases in salaries, future developments in pensions as well
+as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations
+are discounted using discount rates determined on the basis of market yields of high-
+grade, fixed-interest corporate bonds from issuers carrying a very high credit rating.
+IFRS 16 defines a lease as a contract that conveys the right to use an identifiable asset
+over a specified period of time in exchange for consideration.
+At the beginning of a lease, Infineon capitalizes a right of use at amortized acquisition
+cost and recognizes as a liability a corresponding leasing liability, using the present
+value of the outstanding lease payments. Rights of use are amortized on a straight-line
+basis over the expected useful life (see “Property, plant and equipment", p. 164 f.), or
+over the duration of the contract if shorter. In subsequent valuations, leasing liabilities
+are measured at the current value of the outstanding lease payments using the
+effective interest method and are presented as lease liabilities (short- and long-term).
+The costs associated with leasing agreements with a term of not more than twelve
+months (provided they do not contain an option to purchase), as well as leasing
+agreements in which the value of the underlying asset in the leasing contract is small,
+are recorded in the profit or loss on a straight-line basis in the functional costs. As a
+general rule, leased assets with a value of up to €5,000 are defined as a low-value asset.
+The recoverability of an asset is measured by comparing its carrying amount with
+its recoverable amount. To the extent it is not possible to determine the recoverable
+amount of an individual asset, the book value of the cash generating unit to which
+the asset is allocated is compared to its recoverable amount.
+Defined benefit pension plans
+Q = < 166 >
+Infineon reviews non-current assets, including property, plant and equipment, good-
+will and other intangible assets for possible impairment whenever events or changes
+in circumstances indicate that the carrying amount of an asset may not be recover-
+able. Regardless of whether an indication of impairment exists, goodwill and other
+intangible assets, including capitalized development costs not yet subject to amorti-
+zation, undergo an annual impairment test (see also "Research and development
+expenses", p. 169). The impairment test for goodwill is carried out at the operating
+segment level annually on 30 June.
+Other intangible assets
+Infineon did not hold any intangible assets with indefinite useful lives in either the
+2021 or the 2020 fiscal year.
+Business focus and strategy
+All items of income and expense relating to defined benefit plans, with the exception
+of the net interest result, are recognized on a net basis in the functional costs within
+the operating result. The net interest result arising from the multiplication of the
+net pension obligation (pension obligation less plan assets) by the discount rate is
+presented as a financial expense. Actuarial gains and losses arising from changes to
+actuarial assumptions and estimates as well as the difference between the normalized
+and actual return on plan assets are recognized directly in equity and recorded in the
+Consolidated Statement of Comprehensive Income in the periods in which they arise.
+Past service costs are recognized immediately in profit or loss.
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 165 >
+Depreciation on property, plant and equipment is recorded using the straight-line
+method. Land, property rights and construction in progress are not depreciated on
+a scheduled basis. Depreciation on property, plant and equipment is based on the
+following useful lives, as applied consistently throughout Infineon:
+Buildings
+Technical equipment and machinery
+Other plant and office equipment
+Years
+25
+3-10
+1-10
+Other intangible assets consist of capitalized development costs and purchased
+intangible assets; for example, licenses, technologies and customer relationships.
+These assets have finite useful lives and are valued at their amortized acquisition or
+production costs with amortization recorded using the straight-line method over
+their expected economic life.
+Amortization of other intangible assets is based on the following useful lives:
+Capitalized development costs
+Customer relationships
+Technologies
+Licenses and similar rights
+Other intangible assets
+Years
+3-10
+1-12
+1-12
+3-5
+3-12
+Recoverability of property, plant and equipment and intangible assets
+(including goodwill)
+Infineon Technologies | Annual Report 2021
+Cost of goods sold includes the manufacturing costs of products sold during the
+reporting period. In addition, cost of goods sold contains idle costs, inventory risks,
+the cost of warranty cases, as well as the amortization of capitalized development
+costs. Recognized foreign currency effects, as well as changes in the fair value of
+undesignated derivative financial instruments that are connected to the operating
+business, are recognized in cost of goods sold.
+Business focus and strategy
+Distributors can, subject to certain conditions, return a limited amount of inventory
+(stock return) or request scrap allowances. The estimation of the transaction price
+is based on the expected stock returns in accordance with the contractual agreement,
+combined with historical experience. Distributor scrap allowances are taken into
+account when determining the transaction price based on the contractual agreement
+and, upon submission of a valid claim, are granted up to a certain maximum based
+on turnover in a given period. Infineon monitors such product returns on an ongoing
+basis and adjusts estimate assumptions accordingly. In the case of both stock return
+and scrap allowances, the consideration to be refunded to the customer is recognized
+as a reimbursement obligation within other current liabilities. Other returns are only
+permitted for quality defects within the ordinary warranty period.
+The additional costs to obtain a contract are immediately recognized as an expense
+as soon as they arise, providing the otherwise resulting depreciation period would
+not exceed one year. Costs to fulfill a contract are capitalized at the earliest when an
+expected, specifically identifiable contract exists.
+Cost of goods sold
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 169 >
+Research and development expenses
+Costs of research activities are expensed as incurred. Costs for development activities
+are capitalized if the results lead to a plan or design for the production of new or sub-
+stantially improved products or process improvements. Capitalization requires that
+the development costs can be measured reliably, the product or process is technically
+and commercially feasible, and future economic benefits are probable. In addition,
+Infineon must intend, and have sufficient resources, to complete development and use
+or sell the asset. The costs capitalized include the cost of materials, direct labor and
+directly attributable general overhead expense that serves to prepare the asset for use.
+Such capitalized costs are presented as internally generated intangible assets within
+"Other intangible assets" (see note 12, □ p. 179 f.). Development costs, which do not
+fulfill the criteria for capitalization, are expensed as incurred. Capitalized development
+costs are stated at cost less accumulated amortization and impairment charges.
+Grants
+Grants are recognized when it is reasonably assured that Infineon will comply with the
+conditions attached to the grant, and it is reasonably assured that the grant will be
+received. Investment-related grants are deducted from the purchase and production
+cost of the related asset and thereby reduce depreciation and amortization expense
+in future periods.
+Grants that are related to expenses are presented as a reduction of the related expense
+in the Consolidated Statement of Profit or Loss (see note 3, □ p. 172).
+Current and deferred taxes
+The current tax expense is calculated in accordance with taxation provisions in force
+at the end of the reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and
+the book value of assets and liabilities, and on tax losses available for carry-forward
+and tax allowances. By contrast, no deferred tax is recognized on initial recognition
+of goodwill arising in connection with a business combination. Similarly, deferred
+taxes are not recognized on the initial recognition of an asset or liability in connection
+with a transaction that is not a business combination and which, at the time of the
+transaction, affects neither the pre-tax income according to IFRS nor taxable profit.
+Deferred tax assets and liabilities are measured using applicable tax rates and laws
+that have been enacted by the end of the reporting period or are about to be enacted,
+and are to be applied when the related deferred tax asset is realized or the deferred
+tax liability is settled.
+Deferred tax assets in respect of deductible temporary differences, tax loss carry-
+forwards and tax allowances which exceed deferred tax liabilities in respect of taxable
+temporary differences, are only recognized to the extent that it is probable that the
+relevant Group entity can generate sufficient taxable profit to realize the corresponding
+benefit. Infineon reviews deferred tax assets for impairment at every reporting date.
+The assessment requires management to make assumptions about future taxable
+profits as well as other positive and negative influencing factors. This assessment
+also takes into account insights from the Company's five-year plan as approved in the
+fiscal year just ended.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax
+authority and to the same taxpayer or a group of different taxpayers who are jointly
+assessed for income tax purposes.
+Taxes are recognized in the Consolidated Statement of Profit or Loss, with the
+exception of income taxes relating to items recognized directly in equity or in other
+comprehensive income.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+rolling historical price trends in the difference between contract prices and standard
+list prices to the distributors. The determination of the transaction price in the case
+of price protection takes into account current list prices and the relevant distributors'
+inventory on hand. The availability of detailed distributor inventory data, the trans-
+parency of pricing for standard products and the long distributor pricing history
+enable Infineon to reliably estimate the adjustments for price protection and ship
+and debit credit notes at the end of the reporting period.
+Management Board and
+Supervisory Board
+Infineon recognizes revenue for deliveries to distributors by using the "sell in" method,
+that is when a product is sold to the distributor, to the extent that revenue has not
+already been recognized on an over-time basis. The transaction price for sales to dis-
+tributors, in particular, contains variable components. Distributors can, in accordance
+with established business practices in the semiconductor industry, under certain
+circumstances apply for price protection. This allows distributors to receive a credit
+(debit) note for unsold products held in inventory, where Infineon has reduced
+(increased) the standard list price of certain products. In addition, in certain cases
+and for certain products, distributors may request a so-called ship and debit credit
+note for price adjustments. As with all product sales, Infineon recognizes revenue based
+on the transaction price and records an obligation for the estimated consideration to
+be reimbursed to the customer during the period in which the relevant revenue is
+recognized. The reimbursement obligation is reported within other current liabilities.
+The determination of the transaction price in the case of ship and debit is based on
+Invoices for sales of products are issued at the time of delivery or withdrawal by the
+customer from the consignment warehouse and have a short payment term. The
+amount of revenue corresponds to the expected transaction price to be received by
+the customer.
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 167 >
+Other provisions
+Other provisions are recognized for present legal and/or constructive obligations
+arising from past events that are likely to result in a future outflow of resources, the
+amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example those connected with
+the Qimonda insolvency, Infineon regularly assesses the probability of an unfavor-
+able outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which
+it assesses at the relevant reporting date are likely to occur. That is where, from
+Infineon's perspective at the date of assessment, there is compelling evidence which
+indicates an obligation or risk, and the obligation or risk can be quantified with
+reasonable accuracy at the time of assessment. As soon as additional information is
+available, the affected estimates are reviewed and, where necessary, provisions for
+these proceedings are revised.
+Other provisions are measured at their expected settlement amount. The amount
+recognized for a provision is the best estimate of the expenditure required to settle
+the present obligation. Estimates of outcomes and financial effects are dependent
+upon the judgment of management, supplemented by experience gained from similar
+transactions and, where appropriate, the assessment of independent experts. If the
+circumstances to be assessed encompass a large number of possible outcomes,
+the obligation is estimated by weighting all possible outcomes by their associated
+probabilities (expected value method).
+Where cash flows are expected to arise after the next twelve months, the expected
+settlement amount corresponds to the present value of the expected cash outflows.
+Discounting is only carried out if the interest effect is significant.
+If the obligation decreases because of a change in the estimate, the provision is
+adjusted accordingly and the resulting income recognized in the same functional
+area of the Consolidated Statement of Profit or Loss in which the original charge
+was recognized.
+Contingent liabilities
+Contingent liabilities are either possible obligations whose actual existence is depen-
+dent on the occurrence of one or more uncertain future events not wholly within
+Infineon's control, or they are present obligations that will probably not result in
+the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position,
+instead they are disclosed and described in the Notes to the Consolidated Financial
+Statements (see note 22, p. 197, and note 23, □ p. 198 ff.).
+Revenue recognition
+Infineon generates revenues mainly from the sale of semiconductor products and
+related system solutions. Revenue is recognized when control over the products is
+transferred to the customers in accordance with IFRS 15 (power of disposal), and
+where the receipt of consideration from the customer is probable. Typically, Infineon's
+customer contracts only contain one performance obligation which is fulfilled either
+over a period of time or at a specific point in time, with fulfillment at a specific point
+in time being the far more common case. For sales of customer-specific products
+with no alternative use for Infineon, for which Infineon has a legal right to payment
+for services rendered prior to delivery, revenue is recognized over time. Performance
+progress is determined using an input-based method and is based on the ratio of
+costs already incurred to the estimated total cost. If product revenue is not recognized
+over time, then it is generally recognized upon delivery. The recognition of revenue
+for deliveries into consignment warehouses depends on the individual contractual
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 168 >
+arrangement. Revenue recognition at the point of delivery into the consignment
+warehouse takes place in cases where the customers have contractual power of con-
+trol over the products at the point of delivery. Accordingly, in such cases, a contract
+asset is recorded. Otherwise, revenue is recognized when the products are withdrawn
+by the customer.
+The transaction price can include variable components such as rebates or discounts.
+Infineon can reliably estimate these in accordance with the contractual agreements
+and historical experience. Variable consideration is only taken into account in so far as
+it is highly probable that there will be no significant reversal of the revenue. If Infineon
+expects that the consideration received from the customer is to be reimbursed due
+to subsequent discounts, a reimbursement obligation is recognized, which is disclosed
+as other current liabilities.
+Infineon Technologies | Annual Report 2021
+At amortized cost
+Property, plant and equipment
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 161 >
+Balance sheet item
+LIABILITIES AND EQUITY
+Financial debt (short-term and long-term)
+Trade payables
+Provisions:
+Pensions
+Other provisions (current and non-current)
+Leasing liabilities (current and non-current)
+Other liabilities (current and non-current):
+Fair value through other comprehensive income
+Amortized cost
+Other financial liabilities:
+Designated hedging instruments
+Other financial liabilities
+Remaining other liabilities
+Own shares
+Hybrid bonds
+Cash and cash equivalents
+Measurement principle
+Fair value/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Amortized present value of outstanding lease payments
+Fair value through profit or loss
+Fair value through other comprehensive income
+Fair value/amortized cost
+Measured at fair value through profit or loss
+Fair value through profit or loss
+Fair value/amortized cost
+Amortized acquisition or production cost
+Amortized acquisition cost
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 160 >
+A list of subsidiaries of Infineon Technologies AG is provided in note 29. p. 225 ff.
+In the absence of control over an entity, but the entity is a joint venture or an asso-
+ciated company, these are included in the consolidated financial statements using
+the equity method (see note 4, ☐ p. 173). Where objective indications of impairment
+in the carrying amount of an equity-based investment are present, an impairment test
+is carried out. If the carrying amount exceeds the recoverable amount, an impairment
+loss is recognized in financial expenses.
+Functional currency and foreign currency translation
+The functional currency of Infineon Technologies AG is the euro.
+Foreign currency transactions of subsidiaries are translated into the functional
+currency of the relevant entity using the spot rate prevailing at the transaction date.
+Monetary foreign currency assets and liabilities are translated at the spot rate prevailing
+at the reporting date. Exchange rate gains and losses from the translation of foreign
+currency transactions are recognized in the Consolidated Statement of Profit or Loss.
+The assets and liabilities of subsidiaries with functional currencies other than the
+euro are translated into euros using the spot rate at the end of the reporting period.
+Income and expenses of these entities are translated using the average spot rate of
+the reporting period. All currency translation differences resulting from the consoli-
+dation are recognized directly in equity and presented as “Other reserves”.
+Recognition and measurement principles
+The following table summarizes the main measurement principles used in the
+preparation of the Consolidated Financial Statements:
+Balance sheet item
+ASSETS
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+Contract assets
+Impairment-only approach
+Amortized acquisition or production cost
+in accordance with IFRS 9
+Right to consideration/impairment
+and net realizable value
+Lower of acquisition or production cost
+Fair value/amortized cost
+Unconditional right to consideration/amortized cost
+Fair value/amortized cost
+Measurement principle
+At fair value through profit or loss
+Designated hedging instruments
+Remaining other assets
+Other assets (current and non-current):
+Other financial assets:
+Other intangible assets
+Right-of-use assets
+Property, plant and equipment
+Goodwill
+Fair value/amortized cost
+Property, plant and equipment are measured at amortized acquisition or construction
+cost, and its value is reduced by depreciation and considering any impairment.
+Acquisition cost
+Acquisition cost
+Financial instruments
+For trade receivables and contract assets, Infineon recognizes credit losses that are
+expected over the entire term using a simplified procedure. The estimate of expected
+credit losses on trade receivables and contract assets is based primarily on the analysis
+of customer financial data, ratings, credit default spreads, past payment behavior of
+customers and forward-looking Information.
+In the case of objective indications that expected future cash flows are affected, a
+financial asset is classified as impaired (with impaired creditworthiness) and adjusted
+to its individual value. As a rule, this is the case for financial assets (unless it is a
+trade receivable) no later than 90 days after the due date. For trade receivables, the
+impaired creditworthiness is not determined automatically in the event of a payment
+overdue by more than 90 days but always on the basis of the individual assessment
+of credit management.
+A default event occurs when Infineon concludes that the other party would most
+likely not be able to meet the payment obligations, or not in full.
+Financial assets are partly or completely written off, together with previously
+recognized impairments, if there is no reasonable expectation of repayment. This is
+generally the case when Infineon finds that the debtor does not have assets or revenue
+sources that could generate sufficient cash flows to repay the amounts subject to
+derecognition. Even when financial assets are written off, Infineon continues to con-
+duct enforcement measures to recover them. Amounts recovered are recognized in
+profit or loss.
+Financial liabilities
+Infineon classifies financial liabilities into the following categories: "Financial lia-
+bilities measured at fair value through profit and loss" and "Other financial liabilities”.
+Furthermore, “Designated hedging instruments (cash flow hedges)" belong to
+financial liabilities.
+Liabilities measured at fair value through profit or loss by Infineon include derivatives
+to hedge currency risks for which hedge accounting is not applied, as well as conver-
+sion rights from convertible bonds that were acquired in the course of the acquisition
+of Cypress.
+Upon acquisition, other financial liabilities are measured at fair value after deduction
+of transaction costs. In subsequent periods, they are measured at amortized cost using
+the effective interest method. The liabilities are derecognized when the contractual
+obligations are discharged, canceled or expired.
+Designated hedging instruments (cash flow hedges)
+Certain derivative financial instruments are used to hedge foreign currency and
+interest risks or risks of commodity price changes (such as gold prices) for firm
+commitments as well as expected and highly probable future transactions in order
+to minimize the associated risk (cash flow hedges).
+Derivative financial instruments are measured at their fair value and included in
+"other current assets" or "other current liabilities".
+The effective portion of changes in the fair value of derivative financial instruments,
+determined in accordance with IFRS 9, that are designated as cash flow hedges and
+are part of hedging relationships that meet the criteria for hedge accounting is recog-
+nized directly in equity. The gain or loss relating to the ineffective portion is recognized
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Valuation adjustments for expected credit losses on contract assets are determined
+in accordance with the measurement method for trade receivables (see "Financial
+instruments", ☐ p. 161 ff.).
+At Infineon, contract assets result from revenue arising from over-time revenue recog-
+nition for certain types of contracts, as well as from sales to some customers for
+whom Infineon maintains a consignment warehouse and where revenue is recorded
+at the time of delivery to the consignment warehouse, whereas the invoice is only
+issued at the time of withdrawal of the product by the customer.
+Contract assets are recognized if Infineon has fulfilled its performance obligations
+arising from contracts with customers and an unconditional entitlement to customer
+consideration does not yet exist.
+Contract assets
+Inventories include an asset resulting from sales with a right of return, representing
+Infineon's right to recover products from customers upon payment of the reimburse-
+ment obligation (see "Revenue recognition”, □ p. 167 f.). The valuation is made by
+reference to the previous book value of the products.
+Write-downs to net realizable value are recorded on inventories using a consistent
+approach throughout Infineon and are determined at product level for technically
+obsolete and slow-moving inventories on the basis of the amount of revenues
+expected to be generated by the relevant product.
+Q = < 163 >
+Inventories are measured at the lower of historical acquisition or fully absorbed
+production cost - calculated using the weighted-average method - and net realizable
+value. Net realizable value corresponds to realizable sale proceeds under normal
+business conditions less estimated expected costs to complete and sell. Production
+cost comprises costs of material, production wages and an appropriate portion of
+attributable overheads, along with attributable depreciation and amortization on
+property, plant and equipment and other intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+The recognition of a hybrid bond depends on the specific form of the instrument.
+A hybrid bond is measured and recognized in equity when certain conditions are jointly
+met. These include, but are not limited to, the fact that the hybrid bond has no final
+maturity date, that investors have no rights of termination, and that distributions are
+made at Infineon's discretion. In this case, discounts, transaction costs, tax effects
+and the remuneration of hybrid investors are deducted directly from equity.
+Hybrid bonds
+When a hedging instrument expires or is sold, or when a hedging relationship no
+longer meets the criteria for hedge accounting, any cumulative gain or loss existing at
+that time remains in equity until the underlying transaction actually occurs. When a
+forecasted transaction is no longer expected to occur, the cumulative gain or loss that
+was reported in equity is immediately transferred to profit or loss.
+in profit or loss. Amounts accumulated in equity are recycled in profit or loss in the
+periods in which the underlying hedged item affects profit or loss, or, if the expected
+transaction subsequently results in the recognition of a non-financial asset, included
+in the acquisition cost upon initial recognition.
+Q = < 164 >
+Further information
+Inventories
+Cash and cash equivalents represent cash and all financial resources with a maturity
+at acquisition date of three months or less. Cash equivalents partly include invest-
+ments in money market funds. The valuation is recorded at amortized acquisition
+cost or at fair value through profit or loss.
+Further information
+Combined Management Report
+Financial instruments are initially recognized at their fair value. Transaction costs
+directly attributable to the acquisition or issuance of financial instruments are only
+included in the carrying amount if the financial instruments are not measured at
+fair value through profit or loss.
+Trade receivables are recognized based on the amount to which Infineon has an
+unconditional right to receive. With the exception of matters which result in a partial
+refund of the purchase price to the customer, this corresponds to the transaction
+price determined in accordance with IFRS 15. The subsequent measurement of trade
+receivables is carried out at amortized cost.
+Purchases and sales of financial assets are recognized on the settlement date.
+Financial assets are derecognized when the rights to receive payments from the
+investments have expired or have been transferred and Infineon has transferred all
+risks and rewards associated with ownership. Financial liabilities are derecognized
+when they are extinguished, that is when the contractual obligation is discharged,
+canceled or expired.
+Financial assets
+› Classification and measurement of financial assets
+Upon initial recognition, financial assets are classified for subsequent measurement
+either as at amortized cost, fair value through other comprehensive income or fair
+value through profit or loss. This classification depends on the characteristics of the
+contractual cash flows of the financial assets and Infineon's business model for
+managing its financial assets.
+Infineon's business model for managing financial asset portfolios reflects how the
+Company controls its financial assets in order to generate cash flows. Depending
+on the business model, cash flows arise from the receipt of contractual cash flows,
+the sale of financial assets or both.
+In order for a financial asset in the form of a debt instrument to be classified and
+measured at amortized cost or at fair value through other comprehensive income,
+cash flows may only arise from the repayment of principal and interest payments on
+the outstanding principal amount. This assessment is referred to as a cash flow or
+SPPI test ("solely payments of principal and interest") and is carried out at the level
+of the individual financial instrument.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Q =
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+For cash and cash equivalents and financial investments measured at amortized cost,
+Infineon determines credit losses expected in the next twelve months (twelve-month
+credit loss) in accordance with the general approach. Due to their short-term maturity,
+this corresponds to the expected credit losses over the entire term. Infineon rates the
+credit risk for cash and cash equivalents and financial investments as low. Infineon
+assumes that a financial asset has a low credit risk if it has an investment grade rating
+or a corresponding internal investment grade rating. In order to assess whether there
+has been a significant increase in credit risk since initial recognition, Infineon considers
+appropriate and robust information that is relevant and available without dispropor-
+tionately high levels of effort. This includes both quantitative and qualitative infor-
+mation and analyses, which are based on the Company's historical experience and
+a sound credit assessment as well as forward-looking information. Macroeconomic
+information is taken into account in the internal rating model (information on Infineon's
+financial risk management is included in note 27, p. 211 ff.). Irrespective of the above
+analysis, a significant increase in credit risk is assumed if a debtor is more than 30 days
+overdue with the settlement of a contractual payment.
+Infineon determines impairments for expected credit losses primarily for cash and
+cash equivalents, financial investments, trade receivables, and contract assets. The
+expected credit losses are adjusted at each reporting date to reflect changes in credit
+risk since the instrument was first recognized.
+Infineon determines an impairment charge for expected credit losses for financial
+assets in the form of debt instruments that are measured at amortized cost or at fair
+value through other comprehensive income. The calculation of the expected future
+credit losses is generally determined by multiplying the probability of default by the
+carrying amount of the financial asset (exposure at default) and the expected loss
+ratio (loss given default).
+> Impairment of financial assets
+Further information
+"Designated hedging instruments (cash flow hedges)" also belong to financial assets.
+At Infineon, financial assets in the form of equity instruments are consistently measured
+at fair value through profit or loss.
+Financial assets in the form of debt instruments that are measured at fair value
+through profit or loss include all financial assets at Infineon whose cash flows are not
+exclusively interest payments and principal repayments.
+At the reporting date, Infineon did not hold any financial assets with the intention to
+collect contractual cash flows and also to sell them. Therefore, there was no allocation
+of financial assets in the form of debt instruments to the category "fair value through
+other comprehensive income".
+Financial assets measured at amortized cost include all assets whose contractual
+provisions result in cash flows at fixed times that represent only interest and principal
+repayments of the outstanding principal amount, provided that those assets are held
+with the intention of collecting the contractual cash flows expected over their respec-
+tive duration. In subsequent periods, financial assets measured at amortized cost are
+measured using the effective interest method. Interest income, currency gains and
+losses, impairments, and gains or losses from the derecognition of such financial
+assets are recognized through profit or loss.
+On this basis, Infineon's financial asset measurement categories are as follows:
+< 162 >
+Net gains and losses, including interest and dividend income, from financial assets
+that are measured at fair value through profit or loss (debt and equity instruments) are
+recognized in the Consolidated Statement of Profit or Loss.
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+3,621
+Management Board and
+Supervisory Board
+2021
+2020
+1
+1
+1
+1
+Information on Infineon's credit risk management is contained in note 27. p. 214 ff.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 178 >
+Notes to the Consolidated Financial Statements
+9 Trade receivables
+Trade receivables result from contracts with customers that are due within one year.
+As of 30 September 2021 and 2020, they consisted of the following:
+10 Inventories
+Inventories as of 30 September 2021 and 2020 consisted of the following:
+€ in millions
+Trade receivables, third parties
+Trade receivables, related parties
+Allowances at end of the fiscal year
+Trade receivables, gross
+Revaluation of allowances, net
+0.87
+2 The calculation of earnings per share is based on unrounded figures.
+Infineon Technologies | Annual Report 2021
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+1,108
+600
+1,066
+777
+2,174
+1,377
+(1)
+(1)
+2,173
+1,376
+The impairment losses on financial investments that are measured at amortized cost
+changed as follows during the 2021 and 2020 fiscal years:
+0.88
+0.26
+€ in millions
+(0.01)
+Allowances at beginning of the fiscal year
+0.26
+1 Including the cumulative tax effect.
+Loss allowances
+€ in millions
+5
+Information about Infineon's credit risk management is contained in note 27. p. 214 ff.
+Infineon Technologies | Annual Report 2021
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+279
+215
+1,464
+1,341
+438
+496
+2,181
+2,052
+Cost of goods sold consisted mainly of inventory-related expenses in the 2021 and
+2020 fiscal years.
+As of 30 September 2021 and 2020, finished goods and merchandise contained
+an asset resulting from sales with a right of return of €12 million and €13 million,
+respectively.
+Inventory write-downs as of 30 September 2021 and 2020 amounted to €232 million
+and €252 million, respectively.
+11 Other current assets
+Other current assets as of 30 September 2021 and 2020 consisted of the following:
+€ in millions
+30 Septem-
+ber 2021
+5
+Trade receivables, net
+(2)
+5
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+Raw materials and supplies
+1,479
+9
+1,192
+Work in progress
+9
+1,488
+1,201
+Finished goods and merchandise
+Total
+(5)
+1,483
+(5)
+1,196
+Changes in the allowances for trade receivables in the 2021 and 2020 fiscal year were
+as follows:
+€ in millions
+Allowances at beginning of the fiscal year
+Current year's allowance, net of reversals
+Usage of loss allowances, net
+Allowances at end of the fiscal year
+2021
+2020
+7
+30 Septem-
+Earnings per share (in euro) - basic and diluted
+Basic and diluted earnings per share² (in euro):
+Income taxes recognized in other comprehensive income
+Income taxes
+2021
+2020
+(144)
+(52)
+1
+29
+25
+6
+21
+(108)
+(6)
+The income taxes recognized in other comprehensive income resulted from tax effects
+of €17 million (2020: €27 million) from realized and non-realized gains and losses from
+hedges offset by taxes on actuarial gains and losses arising from pension commitments
+of €11 million (2020: increase €6 million). Income taxes recognized directly in equity
+were the result of tax effects in connection with the compensation on hybrid capital
+as well as tax effects from reversal of valuation allowances on deferred tax assets
+resulting from capital measures in prior years.
+6 Disposals and discontinued operations
+Qimonda - discontinued operations
+On 23 January 2009, Qimonda AG (“Qimonda”), a majority-owned company, filed
+an application at the Munich Local Court to commence insolvency proceedings. On
+1 April 2009, the insolvency proceedings formally opened. Insolvency proceedings
+were also opened for further domestic and foreign subsidiaries of Qimonda. Some
+of these insolvency proceedings have already been completed. The impacts of these
+proceedings are reported as discontinued operations in Infineon's Consolidated
+Statement of Profit or Loss and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency
+proceedings.
+The current risks and provisions relating to Qimonda's insolvency are described in
+note 23 "Proceedings in relation to Qimonda”. □ p. 198 f.
+In the 2021 and 2020 fiscal years, adjustments to individual provisions as well as
+subsequent income arose as a result of recent developments in connection with the
+insolvency of Qimonda, which resulted in a loss from discontinued operations, net of
+income taxes of €6 million and €4 million, respectively.
+7 Earnings per share
+Basic earnings per share are calculated by dividing profit (loss) for the period by
+the weighted-average number of shares outstanding during the reporting period.
+The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in
+a corresponding increase in the number of shares.
+Income taxes recognized directly in equity
+The hybrid bond issued in the 2020 fiscal year is classified as equity (see note 19,
+p. 193). The related hybrid investors' remuneration entitlement (after tax) represents
+payments for a component of equity that reduces the earnings available to share-
+holders for distribution and was therefore taken into account in determining earnings
+per share (basic and diluted).
+Income taxes from discontinued operations
+€ in millions
+(particularly German trade tax and US state taxes)
+Tax credits
+Temporary differences
+Infineon Technologies | Annual Report 2021
+2021
+2020
+41
+58
+333
+1,129
+424
+412
+464
+651
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 176 >
+Including the items recognized directly in equity and in other comprehensive income
+and the expense/benefit from continuing and discontinued operations, the income
+tax consisted of the following:
+Income taxes from continuing operations
+Earnings per share (in euro) from continuing operations
+Earnings per share (in euro) from discontinued operations,
+net of income taxes
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+(6)
+(4)
+Weighted-average number of shares outstanding (in millions):
+€ in millions
+Fixed-term bank deposits
+Investment funds
+- Ordinary share capital
+1,305.9
+1,269.8
+- Adjustment for own shares
+Financial investments, gross
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+1,301.2
+(5.3)
+1,264.5
+Loss allowances
+Financial investments, net
+2.5
+1.0
+1,303.7
+1,265.5
+- Effect of share-based compensation
+Weighted-average number of shares outstanding - diluted
+337
+Management Board and
+Supervisory Board
+1,149
+1,143
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 177 >
+Basic and diluted earnings per share are calculated as follows for the fiscal years
+ended 30 September 2021 and 2020:
+8 Financial investments
+Financial investments comprise fixed-term deposits with banks and investment funds.
+Fixed-term deposits with banks are categorized as financial assets and measured at
+amortized cost. Investment funds are categorized as financial assets and measured at
+fair value through profit or loss (see also note 2, □ p. 161 ff., and note 26, □ p. 203 ff.).
+Financial investments as of 30 September 2021 and 2020 comprised the following:
+€ in millions (unless otherwise stated)
+Profit (loss) for the period - basic and diluted
+Remuneration entitlement of hybrid capital investors'
+2021
+2020
+1,169
+368
+26
+35
+Profit (loss) for the period attributable to shareholders
+of Infineon Technologies AG - basic and diluted
+thereof from continuing operations
+thereof from discontinued operations
+333
+Local tax loss carry-forwards
+ber 2020
+250
+Other intangible assets
+Capitalized development costs
+1,033
+199
+(14)
+2
+1,220
+(393)
+(69)
+14
+14
+(448)
+772
+640
+Customer relationships
+1,321
+12
+Technologies
+2,190
+Licenses and similar rights
+276
+4,110
+30
+4,443
+(27)
+753
+218
+(7)
+(321)
+2
+645
+(2)
+2
+645
+751
+Total property, plant
+and equipment
+14,426
+1,259
+(189)
+37
+15,533
+(10,316)
+(936)
+180
+6
+(11,090)
+construction in progress
+'༔ཌུ
+(396)
+106
+(18)
+(9)
+(1)
+(1)
+(29)
+77
+87
+Total other intangible assets
+4,925
+229
+(15)
+40
+5,179
+(1,304)
+(512)
+14
+(8)
+(20)
+(1,830)
+3,349
+1
+1,333
+105
+75
+(191)
+(8)
+(595)
+738
+925
+24
+2,214
+(296)
+(214)
+(7)
+(11)
+(528)
+1,686
+1,894
+(1)
+1
+306
+(201)
+(29)
+(230)
+76
+Remaining other intangible assets
+VAT and other receivables from tax authorities
+Payments on account and
+178
+The development of property, plant and equipment as well as other intangible assets
+for the years ended 30 September 2021 and 2020 was as follows:
+€ in millions
+Property, plant and equipment
+Cost
+Depreciation/amortization
+1 October
+2020
+Additions
+Disposals
+Reclassi-
+fication
+Foreign
+currency
+effects
+30 Sep-
+tember
+2021
+1 October
+2020
+Depre-
+ciation/
+amor-
+tization
+Disposals
+Carrying amount
+Impair-
+Foreign
+ments/
+currency
+30 Sep-
+tember
+30 Sep-
+other intangible assets
+tember
+12 Property, plant and equipment and
+Q = < 179 >
+167
+Prepaid expenses
+106
+92
+Grants receivables
+94
+71
+Derivative financial instruments (see note 26, p. 207 ff.)
+2
+3
+Other
+66
+197
+Total
+518
+530
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Notes to the Consolidated Financial Statements
+145
+30 Sep-
+tember
+effects
+222
+11,129
+(8,189)
+(737)
+123
+(19)
+(8,822)
+2,307
+2,139
+Other plant and office equipment
+1,349
+120
+(53)
+37
+4
+1,457
+(1,204)
+(123)
+52
+(4)
+(1,279)
+236
+reversals
+(126)
+10,328
+2021
+2021
+2020
+of impair-
+ments
+Land, land rights and buildings
+1,996
+252
+(3)
+48
+9
+2,302
+(921)
+(76)
+3
+9
+(4)
+(989)
+1,313
+1,075
+Technical equipment
+and machinery
+669
+Tax loss carry-forwards (domestic and foreign)
+(4.7)
+In connection with investments in subsidiaries, there were taxable temporary differ-
+ences of €349 million (2020: €544 million) for which no deferred taxes have been
+recognized because the timing of the reversal can be controlled, and it is not probable
+that the temporary differences will reverse in the foreseeable future.
+Total
+2021
+2020
+2021
+2020
+5
+29
+13
+4
+22
+29
+58
+40
+Financial expenses comprised the following in the 2021 and 2020 fiscal years:
+123
+108
+5
+4
+€ in millions
+186
+152
+Other financial income
+Interest expenses
+Gains on sales of financial assets
+Selling, general and administrative expenses
+2,877
+Total
+48,591
+43,800
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+€ in millions
+Financial income and expenses
+Financial income comprised the following in the 2021 and 2020 fiscal years:
+Grants
+Infineon has received grants from various governmental institutions under government
+business development programs, including grants for the construction of manufac-
+turing facilities, for research and development activities, and employee development.
+Grants included directly in profit or loss in the Consolidated Financial Statements
+during the 2021 and 2020 fiscal years were as follows:
+€ in millions
+Interest income
+€ in millions
+Included in the Consolidated Statement of Profit or Loss in:
+Cost of goods sold
+Research and development expenses
+Total
+3,772
+Other financial expenses
+2020
+€ in millions
+Income (loss) for the year, net of tax
+Total comprehensive income (loss) for the year, net of tax
+2021
+2020
+7
+(1)
+7
+(1)
+The pro rata result of the associated companies accounted for using the equity method
+is not part of the Segment Result (see note 28, p. 220).
+5 Income tax
+Income tax from continuing operations for the fiscal years ending 30 September 2021
+and 2020 amounts to:
+€ in millions
+Income (loss) for the year, net of tax
+Total comprehensive income (loss) for the year, net of tax
+€ in millions
+2021
+2020
+Current tax expense
+2
+(8)
+For the 2021 and 2020 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the joint ventures accounted for using the
+equity method were aggregated as follows:
+2021
+As of 30 September 2021 and 2020, the carrying amount of joint ventures accounted
+for using the equity method was €23 million and €21 million, respectively. The pro
+rata result from joint ventures accounted for using the equity method for the 2021
+fiscal year was €2 million (2020: negative €8 million).
+The investments accounted for using the equity method comprise shares in joint
+ventures and associated companies.
+(155)
+(130)
+(27)
+(47)
+(182)
+(177)
+Of the grants totaling €186 million (2020: €152 million) included in the Consolidated
+Statement of Profit or Loss in the 2021 fiscal year, €64 million (2020: €132 million)
+related to expenses from previous years.
+In the 2021 fiscal year, investment grants of €20 million (2020: €21 million) were
+deducted from acquisition or construction costs for property, plant and equipment
+and intangible assets. In the 2021 fiscal year, Infineon received investment grants
+of €12 million (2020: €30 million).
+For compliance with the conditions attached to the grants received and potential
+repayment requirements in case of nonfulfillment, see note 22. □ p. 197
+Total
+Financial expenses included other financial expenses of €3 million (2020: €25 million)
+in the 2021 fiscal year, as well as interest expenses of €5 million (2020: €1 million) in
+connection with interest rate derivatives concluded to hedge refinancing measures.
+Further information on Infineon's financial income and expenses is contained in
+note 26. p. 207
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 173 >
+Notes to the Consolidated Financial Statements
+4 Investments accounted for using the equity method
+Summarized financial information for joint ventures
+2
+therein: USA
+5,296
+Further information
+Q =
+< 171 >
+3 Notes to the Consolidated Statement of Profit or Loss
+Revenue
+Breakdowns of revenue by segments, product groups and geographic areas are
+disclosed in note 28. p. 219 ff.
+The aggregate amount of the transaction prices of the unsatisfied and partially
+unsatisfied performance obligations, arising from contracts with customers within
+the meaning of IFRS 15 with expected original durations of more than one year, was
+as follows as of 30 September 2021 and 2020:
+Expenses for materials and purchased services comprised the following in the 2021
+and 2020 fiscal years:
+€ in millions
+Cost of raw materials, supplies and purchased goods
+Cost of purchased services
+Total
+2021
+2020
+1,925
+1,712
+2,609
+1,975
+4,534
+3,687
+Personnel expenses comprised the following in the 2021 and 2020 fiscal years:
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Revenue expected in (€ in millions)
+Combined Management Report
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 170 >
+Tax liabilities are recognized as short-term in accordance with IAS 1.69(d), as they are
+due immediately, and Infineon generally has no option of deferring their due date.
+For uncertain tax positions, a current tax liability is recorded or, in case of a tax loss
+carried forward or a tax allowance, the respective deferred tax asset is reduced
+accordingly. IFRIC 23 clarifies the recognition and valuation requirements of IAS 12
+where there is uncertainty about tax treatment. Estimates and assumptions must
+be made for the recognition and valuation, for example, whether an assessment is
+made separately or together with other uncertainties, whether a probable or expected
+value is used for the uncertainty, and whether changes have occurred compared to
+the previous period. The detection risk for the recognition of uncertain tax positions
+is not relevant. Recognition assumes that the tax authorities investigate the matters
+in question and that they have all relevant information.
+Estimates and assumptions
+The preparation of financial statements in accordance with IFRS requires management
+to make estimates and assumptions that have an impact on the presented amounts
+and the associated disclosures.
+Estimates and assumptions undergo regular review and must be adjusted where
+appropriate.
+Although these estimates and assumptions are applied by management to the best
+of its knowledge based on current events and circumstances, actual events may
+result in deviations from these estimates. This applies in particular against the back-
+ground of the coronavirus pandemic, which is causing distortions in global supply
+chains, markets and general economic trends. Developments in the wake of the
+coronavirus pandemic are dynamic, so it cannot be ruled out that the actual results
+deviate significantly from the estimates and assumptions made in the preparation
+of these Consolidated Financial Statements, or that the estimates and assumptions
+made will have to be adjusted in future periods, and this will have a significant impact
+on Infineon's financial position, results of operations and cash flows.
+Areas containing estimates and assumptions and that are consequently most likely
+to be affected when actual results vary from estimates and assumptions are:
+> recognition and valuation of deferred tax assets as well as uncertain tax
+positions (see "Current and deferred taxes”, □ p. 169 f., and note 5, □ p. 173 ff.),
+> valuation of inventory (see "Inventories", p. 164, and note 10, □ p. 178),
+> revenue recognized over time as well as revenue where the transaction price
+includes a variable component (see “Revenue recognition”, p. 167 f.),
+> the recoverability of non-financial assets, in particular goodwill (see notes 12,
+p. 179 f., and 13, □ p. 181 f.),
+> recognition and valuation of provisions (see "Other provisions", p. 167, notes 16,
+p. 186, and 23, p. 198 ff.) and
+> valuation of defined benefit pension plans (see "Defined benefit pension plans",
+p. 166, and note 18, ☐ p. 187 ff.).
+All assumptions and estimates are based on the circumstances and assessments
+as of the balance sheet date, taking into account knowledge gained up to the
+approval by the Management Board of the Consolidated Financial Statements
+on 25 November 2021.
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+4,438
+As of 30 September 2021
+Total
+Greater China'
+Infineon Technologies | Annual Report 2021
+2021
+2020
+19,767
+18,894
+therein: Germany
+Asia-Pacific (excluding Japan, Greater China)
+therein: Mainland China, Hong Kong
+Japan
+12,680
+12,201
+20,457
+17,818
+2,423
+2,218
+2,086
+1,967
+648
+432
+Americas
+Europe
+As of 30 September 2020
+Cost of materials and purchased services as well as personnel expenses
+The Consolidated Statement of Profit or Loss (continuing and discontinued operations)
+includes the following expenses for purchased services, materials and personnel.
+The average number of employees by geographic region was as follows for the 2021
+and 2020 fiscal years:
+512
+Less than
+1 year
+157
+1 year
+and after
+€ in millions
+Wages and salaries
+355
+216
+55
+161
+Social insurance levies and employee benefits
+Expenses for pensions
+Total
+2021
+2020
+3,108
+2,476
+471
+370
+67
+70
+3,646
+2,916
+In contrast, Infineon refrains from disclosing the remaining performance obligations
+arising from contracts with customers within the meaning of IFRS 15 with original
+expected durations of one year or less. Accordingly, these values are not included in
+the table above.
+(8)
+Q = < 172 >
+2021
+193
+(52)
+29
+21
+166
+(54)
+8
+13
+Total deferred taxes
+1,462
+(1,091)
+37
+8
+1,430
+(1,096)
+(245)
+42
+Netting
+(767)
+767
+(803)
+Other
+803
+(11)
+184
+(34)
+Provisions, pensions and similar commitments
+310
+(170)
+40
+53
+273
+(173)
+109
+33
+Tax loss carry-forwards
+577
+(29)
+(66)
+606
+213
+19
+Unused tax credits and excess foreign tax credits
+201
+17
+17
+61
+(102)
+Total
+(324)
+Deferred taxes recognized in other comprehensive income
+Foreign currency translation
+Adjustment on initial application of IFRS 9 and IFRS 15
+Deferred taxes, net as of the end of the fiscal year
+2021
+2020
+334
+579
+8
+42
+42
+Deferred tax income
+Income tax
+28
+27
+6
+20
+(2)
+21
+(3)
+(3)
+371
+334
+Deferred tax arising from business acquisitions
+Deferred taxes recognized directly in equity
+695
+Change of deferred taxes, recognized directly in equity:
+Deferred taxes, net as of the end of the previous fiscal year
+Deferred tax income (expense), recognized through income statement:
+From continuing operations
+37
+8
+627
+(293)
+(245)
+42
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 175 >
+In Germany, Infineon Technologies AG accumulated corporate income tax loss
+carry-forwards of €1.3 billion and trade tax loss carry-forwards of €2.5 billion as of
+30 September 2021 (30 September 2020: €1.5 billion and €2.7 billion, respectively).
+In other jurisdictions, corporate income tax loss carry-forwards amounted to
+€313 million (30 September 2020: €717 million) and local income tax loss carry-
+forwards amounted to €398 million (30 September 2020: €287 million). Additionally,
+there were unused tax credits of €625 million (30 September 2020: €596 million).
+Infineon assessed the need for a valuation allowance of its deferred tax assets. Based
+on the results of such assessment, considering all positive and negative factors and
+information relating to the foreseeable future based on business plans, Infineon
+recognized deferred tax assets, after netting, of €695 million as of 30 September 2021
+(30 September 2020: €627 million).
+Deferred tax assets in the amount of €447 million were recognized for legal entities
+which have incurred tax losses in the prior year. In the prior fiscal year, those entities
+recorded deferred tax assets in the amount of €408 million. Such tax losses are pri-
+marily incurred due to extraordinary items with respect to the acquisition of Cypress
+in the prior year. It is expected that these legal entities based on company forecast
+incur positive taxable results in the next years. Special considerations are given to
+unforeseen items that could impact these results.
+No deferred taxes were recorded for the following items (gross amounts):
+Of the foreign corporate tax loss carry-forwards, for which no deferred tax assets were
+recognized, €0 million (2020: €18 million), of the local income tax loss carry-forwards
+€59 million (2020: €5 million) and of tax credits €2 million (2020: €0 million) will expire
+in the next five years.
+The change in the net amount of deferred tax assets and liabilities is as follows:
+€ in millions
+From discontinued operations
+(129)
+(352)
+(29)
+2020
+Expected income tax expense
+(367)
+(118)
+Tax rate differential
+47
+Effects due to changes in tax rates
+(15)
+(5)
+Effects from the difference between local and functional currency
+1
+(14)
+Previous year taxes
+73
+50
+Non-deductible expenses
+(33)
+(27)
+Tax-exempt income
+66
+33
+2021
+Change in permanent balance sheet effects
+33
+The reconciliation of income taxes from continuing operations for the fiscal years
+ended 30 September 2021 and 2020, based on the German combined statutory
+income tax rate of 28 percent (2020: 28 percent), is as follows:
+162
+2020
+(152)
+(94)
+8
+42
+(52)
+The pro rata result of the joint ventures accounted for using the equity method is not
+part of the Segment Result (see note 28, p. 220).
+Summarized financial information for associated companies
+As of 30 September 2021 and 2020, the carrying amount of the associated companies
+accounted for using the equity method was €48 million and €66 million, respectively.
+The pro rata result from associated companies accounted for using the equity method
+for the 2021 fiscal year was €7 million (2020: negative €1 million).
+For the 2021 and 2020 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the associated companies accounted for
+using the equity method were aggregated as follows:
+Current tax expense included tax income of €59 million (2020: €46 million tax income)
+relating to previous fiscal years.
+The German combined statutory tax rate for Infineon Technologies AG was 28 percent
+for the 2021 and 2020 fiscal years. This is based on a corporate income tax rate of
+15 percent, plus a solidarity surcharge of 5.5 percent and a trade tax rate of 12 percent.
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax
+laws applicable in the relevant countries and is taxed based on the respective country-
+specific tax rates.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 174 >
+€ in millions
+(50)
+(144)
+Change in valuation allowance on deferred tax assets
+Property, plant and equipment
+tax assets
+tax liabilities
+therein through
+profit or loss
+Deferred
+tax assets
+Deferred
+Total
+therein through
+tax liabilities
+profit or loss
+35
+(727)
+9
+12
+39
+(740)
+22
+146
+(142)
+(23)
+(29)
+Intangible assets
+€ in millions
+(534)
+Deferred
+Change in available tax credits
+Total
+64
+6
+(18)
+(144)
+(52)
+Other
+64
+Actual income taxes
+47
+In the 2021 fiscal year, the tax expense from the valuation allowances or non-recogni-
+tion of deferred tax assets for tax loss carry-forwards amounted to €23 million (2020:
+€1 million), for tax credits to €8 million (2020: €46 million), and from temporary differ-
+ences to €1 million (2020: €0 million). A write-up of deferred tax assets for tax loss
+carry-forwards of €77 million was recorded (2020: €37 million). With respect to the
+deferred tax assets for temporary differences, the write-up amounted to €19 million
+in the 2021 fiscal year (2020: €0 million).
+Deferred
+Change 2020
+The category "Other" includes a reduction of deferred tax liabilities of €10 million
+(2020: increase of €20 million) as a result of the recognition of deferred tax in connec-
+tion with investments of subsidiaries.
+30 September 2020
+Change 2021
+(10)
+30 September 2021
+"Effects due to changes in tax rates” related to a change in the applicable tax rates in
+Singapore and the USA.
+The utilization of tax loss carry-forwards, tax credits and temporary differences for
+which deferred tax assets had not previously been recorded resulted in current tax
+income of €5 million in the 2021 fiscal year (2020: €5 million).
+Deferred tax assets and liabilities as of 30 September 2021 and 2020 comprised the
+following:
+640
+41
+(10,316)
+4,110
+3,510
+Other intangible assets
+Capitalized development costs
+894
+158
+(18)
+(1)
+1,033
+(56)
+18
+(4)
+(393)
+9
+543
+(351)
+13,148
+(863)
+507
+11
+Customer relationships
+(1)
+(283)
+(6)
+753
+(2)
+(2)
+751
+525
+Total property, plant
+and equipment
+924
+588
+(136)
+(98)
+14,426
+(9,638)
+135
+406
+Remaining other intangible assets
+(83)
+105
+(13)
+(6)
+יצויי
+(396)
+925
+130
+17
+(9)
+(296)
+150
+2
+(201)
+75
+68
+1
+525
+(18)
+1,894
+96
+18
+(23)
+1,321
+(276)
+(131)
+11
+Technologies
+338
+2,011
+(159)
+2,190
+(188)
+(125)
+Licenses and similar rights
+260
+26
+3
+(12)
+(1)
+276
+(192)
+998
+construction in progress
+Land, land rights and buildings
+160
+combi-
+tization
+nations
+Impair-
+ments/
+Foreign
+reversals
+currency
+effects
+of impair-
+ments
+amor-
+30 Sep-
+tember
+2020
+30 Sep-
+30 Sep-
+tember
+tember
+2020
+2019
+Property, plant and equipment
+1,660
+Carrying amount
+Disposals
+Depre-
+ciation/
+1 October
+2019
+87
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 180 >
+Notes to the Consolidated Financial Statements
+€ in millions
+Cost
+Depreciation/amortization
+1 October
+2019
+Additions
+through
+Disposals Reclassi-
+fication
+business
+Foreign
+currency
+effects
+30 Sep-
+tember
+2020
+54
+Payments on account and
+278
+36
+(7,602)
+(698)
+84
+27
+27
+(8,189)
+2,139
+2,050
+10,328
+(50)
+(9)
+1,349
+(1,151)
+(110)
+50
+7
+(1,204)
+145
+19
+(52)
+228
+(84)
+(31)
+1,996
+(885)
+(55)
+1
+11
+7
+(921)
+1,075
+775
+Technical equipment
+and machinery
+9,652
+285
+299
+Other plant and office equipment
+1,311
+78
+66
+(1)
+5
+Additions
+1,916
+In Germany, Infineon primarily offers defined contribution benefits which provide
+for the employees when they reach retirement age, or in the event of disability or
+death. The statutory framework is provided by the Company Pension Act (in German:
+Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the
+Infineon pension plan, new entrants receive a defined contribution benefit, which is
+funded by Infineon. Payments by the Infineon pension plan are generally made in
+twelve annual installments. For active employees who were entitled to benefits in
+the form of an annuity before the Infineon Pension Plan came into force, this commit-
+ment was transferred into the Infineon Pension Plan and thereby the possibility of
+an annuity is guaranteed. Together with former employees whose pension benefit
+obligations were not transferred into the Infineon Pension Plan, this group makes up
+the largest part of the obligation at this time. A corresponding provision is recorded
+for the German defined benefit pension plans, which are partly backed by plan assets.
+Individual agreements are in place for the members of the Management Board, which
+are backed by plan assets (see detailed in the chapter "Remuneration report" in
+the Combined Management Report, p. 145 f.). The major portion of the plan assets is
+managed by a pension trust in the legal form of a registered association. This is
+composed of executives of Infineon Technologies AG, and the investment strategy is
+defined by Infineon Technologies AG.
+The benefit obligation of some foreign plans is measured according to the income
+in the last month or year of service; others are dependent on average income over
+the service period. Foreign pension plans are managed by country-specific external
+pension funds or other pension schemes. The obligation arising from foreign defined
+benefit pension plans are partly covered by plan assets. The management of existing
+foreign plan assets is performed by the respective pension scheme.
+The valuation date of both the German and foreign pension plans is 30 September.
+The Group-defined benefit pension plans are exposed to risks arising from changes
+to actuarial assumptions such as interest rates, salary and pension trends, investment
+risks and longevity risks. A lower discount rate leads to higher pension liabilities.
+Equally, lower than expected growth in plan assets could lead to a deterioration of
+the funded status, or require the payment of additional contributions.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 188 >
+Infineon's employee benefit plans consist of domestic and foreign defined benefit
+and defined contribution pension plans providing retirement, disability and sur-
+viving dependents' benefits. For Infineon, the significant benefit plans in Germany
+pertain to Infineon Technologies AG, and are among the foreign benefit plans to
+Infineon Technologies Austria AG.
+Notes to the Consolidated Financial Statements
+€ in millions
+Change in defined benefit obligations taking into account future salary increases:
+Present value at beginning of year
+Current service cost
+Past service income (cost)
+Interest cost
+Actuarial gains (losses) for:
+Experience adjustments
+Adjustments to demographic assumptions
+2021
+2020
+The development of Infineon's German (domestic) and non-German (foreign)
+pension plans and the plan assets as of 30 September 2021 and 2020 is presented
+in the following table:
+Defined benefit pension plans
+18 Pension plans
+< 187 >
+Total
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+395
+405
+206
+221
+104
+96
+66
+12
+4
+155
+158
+872
+950
+Contract liabilities amounted to €25 million as of 30 September 2021 and 2020,
+respectively. Of this amount, €13 million (30 September 2020: €21 million) related to
+non-current contract liabilities reported under other non-current liabilities.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+Domestic plans
+Foreign plans
+Total
+Domestic plans
+Effects from acquisitions
+Plan settlements
+60
+6
+66
+81
+76
+(20)
+(20)
+3
+3
+Benefits paid
+22
+9
+31
+22
+9
+Employee contributions
+(4)
+(4)
+(4)
+1
+@ - ཎྜ8 ་ སྐཝེ°
+(5)
+5150
+Adjustments to financial assumptions
+Other
+(63)
+(58)
+Foreign plans
+Total
+(1,217)
+(221)
+(1,438)
+(1,219)
+(197)
+(1,416)
+(31)
+(8)
+(39)
+(32)
+(6)
+(38)
+1
+1
+(11)
+(4)
+(15)
+(7)
+(4)
+(11)
+20
+(1)
+19
+(5)
+31
+of refinancing measures (see note 26, p. 208 f.)
+Contract liabilities
+Accrued interest expense
+833
+125
+505
+121
+Due after one year to five years
+3,066
+397
+3,925
+330
+Due after more than five years
+2,726
+debt
+261
+203
+Total
+6,625
+783
+7,080
+654
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+2,650
+Interest
+Financial
+Interest
+72
+3
+69
+245
+176
+69
+962
+962
+2,376
+2,376
+1,034
+965
+69
+2,621
+2,552
+69
+> Notes with a nominal value of US$350 million due in 2029,
+Amounts of financial debt and interest maturing in the coming years were as follows:
+> Notes with a nominal value of US$350 million due in 2031,
+> Notes with a nominal value of US$250 million due in 2033.
+Following completion of the transaction on 16 June 2021, parts of the existing term
+loans in the amount of US$1,300 million were repaid. In addition, Infineon repaid term
+loans of US$365 million in the 2021 fiscal year. As a result, the term loans maturing in
+2022 and 2023, respectively, were repaid in full. As of 30 September 2021, only one
+term loan in the amount of US$1,110 million maturing in 2024 remained outstanding.
+€ in millions
+Due within one year
+Infineon Technologies | Annual Report 2021
+30 September 2021
+30 September 2020
+Financial
+debt
+Q =
+< 186 >
+16 Provisions
+Current and non-current provisions as of 30 September 2021 consisted of the following:
+40
+17
+(8)
+(9)
+40
+83
+28
+(13)
+(5)
+93
+749
+752
+(334)
+(33)
+1,134
+436
+815
+€ in millions
+313
+319
+Obligations to employees included, among others, costs of variable remuneration,
+outstanding vacation and flextime, service anniversary awards, other personnel costs
+and social security costs.
+Provisions for warranties mainly represented the estimated future cost of fulfilling
+contractual requirements associated with products sold.
+Other provisions comprised provisions for litigations (other than those relating
+to Qimonda), restructuring, asset retirement obligations and miscellaneous other
+liabilities.
+Reimbursement obligations
+Payroll and similar obligations to employees
+211
+Other financial liabilities relating to interest hedging
+(4)
+206
+1 October
+Addition
+Usage
+Reversal
+€ in millions
+Obligations to employees
+2020
+30 Septem-
+ber 2021
+420
+698
+(309)
+(19)
+790
+Provisions related to Qimonda
+Of the total provisions as of 30 September 2021 and 2020, a cash outflow of €815 mil-
+lion and €436 million, respectively, was expected to occur within one year. For the
+non-current provisions, a cash outflow was expected to occur after more than one
+year. Besides the provisions in connection with Qimonda, €42 million and €44 million
+as of 30 September 2021 and 2020, respectively, of non-current provisions were
+attributable to length-of-service related anniversary awards.
+17 Other current liabilities
+Other current liabilities as of 30 September 2021 and 2020 consisted of the following:
+(see note 6, p. 176,
+四
+and note 23, p. 198 f.)
+Warranties
+Other
+Total provisions
+thereof current
+thereof non-current
+9
+(4)
+Foreign currency effects
+(5)
+1,325
+1,438
+a 50 basis points
+lower discount rate
+1,264
+235
+1,499
+1,333
+236
+1,569
+a 50 basis points
+higher expected rate
+221
+Actuarial assumptions
+1,170
+225
+1,395
+1,224
+228
+1,452
+The weighted-average assumptions used in calculating the actuarial values for the
+pension plans were as follows:
+a 50 basis points
+lower expected rate
+of salary increase
+1,154
+of salary increase
+1,217
+117
+1,208
+benefit pension plans with:
+Plans that are
+wholly unfunded
+8
+95
+103
+9
+104
+113
+a 50 basis points
+higher discount rate
+1,072
+205
+1,277
+1,116
+206
+1,322
+Plans that are
+wholly or partly funded
+1,153
+125
+Total
+1,161
+220
+1,278
+1,381
+215
+1,369
+1,206
+217
+Discount rate at the end of the fiscal year
+Rate of salary increase
+Projected future pension increases
+1.3
+2.4
+1.0
+2.0
+Increase in life expectancy
+2.0
+4.3
+2.0
+4.6
+by one year
+1,198
+1,422
+1,258
+224
+1,482
+1.8
+2.8
+1.8
+2.1
+In order to determine the present value as of the balance sheet date, the Willis Towers
+Watson RATE:Link approach was applied, which is based on high-grade fixed-interest
+corporate bonds from issuers carrying a very high credit rating, with the same maturity
+and in the same currency as the pension obligations to be assessed.
+Infineon Technologies | Annual Report 2021
+Total other intangible assets
+1,387
+Present value of defined
+218
+1,335
+1,423
+a 50 basis points
+higher expected rate
+30 September 2021
+30 September 2020
+of pension increase
+1,207
+225
+1,432
+1,266
+228
+1,494
+Domestic
+in %
+plans
+Foreign
+plans
+Domestic
+Foreign
+a 50 basis points
+plans
+plans
+lower expected rate
+of pension increase
+1,121
+214
+1,169
+Total
+Foreign
+plans
+plans
+4
+2
+6
+49
+5
+54
+10
+1
+11
+3
+3
+20
+8
+28
+18
+8
+26
+4
+4
+4
+4
+(22)
+(9)
+(31)
+(22)
+8
+(9)
+2
+683
+(5)
+6
+6
+Present value of defined benefit obligation at end of year
+(1,161)
+(220)
+(1,381)
+(1,217)
+(221)
+(1,438)
+Change in fair value of plan assets:
+Fair value of plan assets at beginning of year
+Expected return on plan assets
+Actuarial gains (losses)
+Acquisitions
+Contributions from Infineon
+Employee contributions
+Benefits paid
+Foreign currency effects
+Fair value of plan assets at end of year
+614
+85
+699
+600
+83
+6
+Available
+(31)
+2
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 189 >
+Pension obligations are reported in the Consolidated Statement of Financial Position
+under "Pensions and similar commitments”. □ p. 154
+Since no asset ceilings applied, the funded status of the Infineon pension plans
+corresponded to the amounts reported in the Consolidated Statement of Financial
+Position as of 30 September 2021 and 2020.
+The funding of the defined benefit obligations as of 30 September 2021 and 2020
+was as follows:
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany as in the
+previous year, and for Austria, the AVÖ 2018-P tables were applied.
+Sensitivity analysis
+The following sensitivity analysis table shows how the present value of all defined
+benefit pension obligations would be affected by changes in the aforementioned
+actuarial assumptions. In each case, they reflect the effect of changes in one actuarial
+assumption while all other assumptions remain constant.
+30 September 2021
+30 September 2021
+30 September 2020
+€ in millions
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+plans
+30 September 2020
+Foreign
+plans
+Total
+Domestic
+€ in millions
+plans
+Foreign
+plans
+Total
+Domestic
+Combined Management Report
+2
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+(3)
+(3)
+671
+93
+764
+614
+85
+699
+Net pension liability
+(490)
+(127)
+(617)
+(603)
+(136)
+(739)
+thereof: Infineon Technologies AG
+(447)
+(447)
+(552)
+(552)
+thereof: Infineon Technologies Austria AG
+(58)
+(58)
+(64)
+(64)
+Management Board and
+Supervisory Board
+Drawn
+224
+Available
+and buildings
+267
+110
+Technical equipment
+and machinery
+9
+1
+Other plant and
+office equipment
+Total
+10
+286
+Land, land rights
+6
+117
+€ in millions
+Due within one year
+Due after one year to five years
+30 September 2021
+Discounted
+30 September 2020
+lease liabilities
+Undiscounted
+lease liabilities
+Discounted lease
+liabilities
+Undiscounted
+lease liabilities
+66
+184
+The allocation of discounted and undiscounted lease liabilities by maturity as of
+30 September 2021 and 2020 was as follows:
+59
+€ in millions
+combi-
+1.5
+As a result of the impairment tests carried out, Infineon concluded that none of the
+operating segments gave rise to an impairment of goodwill in the year under report.
+Business planning is affected, among other things, by uncertainties regarding the
+assessment of markets and the macroeconomic environment and is based to a large
+extent on the assumption that the revenue and cost synergies expected from the
+acquisition of Cypress will be successfully realized. Therefore, sensitivity analyses
+were carried out at operating segment level, taking into account changes considered
+possible in the main assumptions. Even taking these changes into account, no impair-
+ment on goodwill was observed as a result of the sensitivity analyses at operating
+segment level.
+In addition, as of the reporting date, there was no indication that the recoverable
+amount of an operating segment to which goodwill had been allocated could have
+fallen below the book value.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+nations
+Q = < 183 >
+The changes in the rights of use in the 2021 and 2020 fiscal year were as follows:
+1 October
+2020
+Additions
+Additions
+Depreciation
+Other
+30 Septem-
+through
+changes¹
+ber 2021
+business
+14 Leases
+60
+139
+145
+Depreciation
+65
+56
+1 October
+Additions
+2019
+Additions
+through
+Depreciation
+Other
+changes 2
+30 Septem-
+ber 2020
+2020
+Impairment (Reversal of impairment)
+11
+business
+Interest expenses
+4
+5
+combi-
+€ in millions
+Land, land rights
+and buildings
+240
+Technical equipment
+(6)
+2021
+€ in millions
+1 Other changes for land, land rights and buildings include reversals of impairments amounting to €6 million.
+159
+172
+126
+133
+76
+85
+331
+346
+294
+317
+Due after more than five years
+(56)
+(2)
+319
+Total
+(3)
+1
+8
+(6)
+(1)
+9
+(65)
+(2)
+336
+The Consolidated Statement of Profit or Loss includes the following amounts in the
+2021 and 2020 fiscal year, which are attributable to leases:
+1.5
+and machinery
+8.7
+1.5
+Balance at the end of the fiscal year
+Balance at the beginning of the fiscal year
+Impairments
+Disposals
+Foreign currency effects
+Balance at the end of the fiscal year
+Carrying amount
+Balance at the beginning of the fiscal year
+Balance at the end of the fiscal year
+2021
+2020
+Accumulated impairments and other changes
+5,897
+5,962
+909
+5,430
+(442)
+5,897
+5,897
+5,962
+909
+5,897
+The amounts shown in the 2020 fiscal year under "Additions through business
+combinations" resulted exclusively from the acquisition of Cypress.
+Infineon carried out the annual goodwill impairment test at the operating segment
+level as of 30 June 2021.
+Infineon determines the recoverable amount of a particular cash generating unit to
+which goodwill has been allocated on the basis of its value in use. The value in use is
+measured by estimating the present value of future cash flows that will be generated
+by the continuing operations of the CGU discounted using an appropriate discount rate.
+Cash flows, including the underlying parameters such as revenue growth and margins,
+are projected based on past experience, current operating results and the business
+plan approved in the fiscal year just ended, which is calculated bottom-up based on
+certain central assumptions applied consistently throughout Infineon. Cash flows over
+a five-year period are used to derive the value in use. The derivation of the terminal
+value is based on a stable business state, reflecting synergies resulting from the
+acquisition of Cypress. The average revenue growth rates over the planning period
+are between 8.7 percent and 12.4 percent, which is in part higher than the average
+historical growth rates of the sectors in which the relevant segments operate, mainly
+because the segments benefit to varying degrees from the businesses acquired with
+Cypress and the related revenue and costs synergies. Investments to increase capacity
+for which no cash outflow has taken place are not taken into account. Cash flows for
+periods beyond the planning horizon are estimated using a terminal value.
+The discount rate for future cash flows is based on the after-tax weighted-average cost
+of capital ("WACC") for the CGU in question. The Capital Asset Pricing Model ("CAPM")
+is used to calculate the cost of equity. The relevant pre-tax WACC used to discount
+future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
+cash flows and the after-tax WACC using a typical tax rate for each operating segment.
+The risk-free interest rate is derived using the Svensson method, taking into account
+risk premiums, the beta factor and debt ratio are derived from a group of companies
+comparable to the operating segment. In this way, the discount rate derived reflects
+the current market rate of return as well as the specific risks attached to the respective
+operating segment.
+65
+Infineon Technologies | Annual Report 2021
+Foreign currency effects
+Cost
+3,108
+(30)
+(253)
+4,925
+(1,020)
+(341)
+30
+(4)
+31
+(1,304)
+3,621
+Balance at the beginning of the fiscal year
+Additions through business combinations
+896
+Property, plant and equipment of €13 million as of 30 September 2021 (30 Septem-
+ber 2020: €182 million) was assigned as security.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 181 >
+13 Goodwill
+Changes in goodwill during the 2021 and 2020 fiscal years were as follows:
+€ in millions
+Depreciation on property, plant and equipment is presented in the Consolidated
+Statement of Profit or Loss mainly in cost of goods sold. Amortization of intangible
+assets is mainly presented in cost of goods sold or selling, general and administrative
+expenses. Impairments on property, plant and equipment and other intangible
+assets are reported under other operating expenses.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+228
+11.9
+11.9
+1,697
+1,679
+12.5
+12.3
+2,617
+2,588
+10.8
+10.7
+10.9
+2
+5,962
+5,897
+8.6
+8.6
+1.5
+1.5
+8.9
+9.5
+9.1
+9.5
+1.5
+1.5
+1.5
+2
+11.1
+1,402
+1,418
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 182 >
+The following table shows the allocation of the carrying amount of goodwill to the
+segments, as well as the valuation parameters used:
+Operating segment
+Automotive
+Industrial Power Control
+Power & Sensor Systems
+Connected Secure Systems
+Corporate
+Total
+1 Valuation parameters as of 30 June 2021 and 2020.
+Book value of allocated goodwill
+€ in millions
+2021
+Pre-tax WACC1
+in %
+2020
+After-tax WACC¹
+in %
+2021
+2020
+Terminal growth rate¹
+in %
+2021
+2020
+0000
+226
+2020
+2021
+8.7
+5
+68
+office equipment
+30 Septem-
+30 Septem-
+ber 2021
+ber 2020
+3
+176
+500
+330
+Other plant and
+833
+505
+3
+6
+499
+747
+746
+744
+Convertible bonds, weighted average interest rate 4.50% (2020: 4.50%)
+Short-term financial debt and current portion of long-term financial debt
+Unsecured loans, weighted average interest rate 0.87% (2020: 1.06%), due 2023
+Bond €500 million, coupon 1.50%, due 2022
+Bond €750 million, coupon 0.75%, due 2023
+Bond €750 million, coupon 1.125%, due 2026
+Bond €750 million, coupon 1.625%, due 2029
+Bond €650 million, coupon 2.00%, due 2032
+743
+Bond €500 million, coupon 1.50%, due 2022
+€ in millions
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+20
+19
+39
+60
+1
+2
+60
+81
+In addition, there are future payment obligations for leases that have not been started
+but have already been contracted, as well as for short-term leases with a term of
+twelve months or less, which are immaterial.
+The leasing contracts concluded relate mainly to the rental of office and storage
+space, IT equipment, other operating and office equipment as well as vehicles for
+selected employees.
+Infineon's leases have no material impact on covenants connected to debt financing
+instruments. In addition, lease liabilities are not part of the net cash position measure
+used for capital market reporting purposes.
+The leasing contracts, in which Infineon subleases and acts as a lessor, are not material
+from the Group's point of view.
+The expected future minimum non-discounted lease payments from operating
+leases for land and buildings owned by Infineon and in which Infineon acts as lessor
+are as follows:
+Financial debt as of 30 September 2021 and 2020 consisted of the following:
+Short-term financial debt and current portion of long-term financial debt,
+weighted average interest rate: 1.25% (2020: 2.01%)
+741
+740
+638
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 185 >
+In June 2019 Infineon Technologies AG concluded unsecured, non-subordinated
+financing for the acquisition of Cypress with various national and international banks
+comprising:
+> a bridge facility of €6,600 million with a maturity of up to two years and nine months
+from the date of the loan commitment, and
+> three term loan tranches, each amounting to US$1,110 million, with maturities of
+three, four and five years.
+The bridge financing was fully repaid in the previous year as a result of various equity
+and debt measures. In addition, a portion of the term loan maturing in 2022 in the
+amount of US$555 million was repaid in the previous year.
+Infineon signed a US private placement of notes (USPP) with a nominal value of
+US$1,300 million in April 2021. The unsubordinated, unsecured USPP notes, which
+bear an average interest rate of 2.88 percent per annum, were broken down as follows:
+> Notes with a nominal value of US$350 million due in 2027,
+On 16 October 2020, the MoTo Objekt CAMPEON GmbH & Co. KG secured loans in the
+amount of €171 million were repaid.
+Financial debt, with the exception of conversion rights on outstanding convertible
+bonds, are recognized at amortized cost after deduction of directly attributable
+transaction costs. The conversion rights, which can only be exercised against cash
+payment after the acquisition of Cypress, are measured at fair value through profit
+or loss (see note 26, p. 206).
+The total lines of credit as of 30 September 2021 and 2020 are summarized in the
+following table:
+Term, € in millions
+Short-term
+Long-term
+Total
+30 September 2021
+30 September 2020
+Aggregate
+facility
+Drawn
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+7,033
+636
+Term loan US$1,110 million,
+weighted average interest rate 1.04% (2020: 1.66%), due 20241
+954
+2,361
+USPP notes US$935 million,
+weighted average interest rate 4.09%, due 2024-2028
+weighted average interest rate 2.88%, due 2027-2033
+Long-term financial debt
+70
+1,119
+6,528
+USPP notes US$1,300 million,
+806
+797
+Infineon Technologies | Annual Report 2021
+Total
+1 This is a variable-interest financial liability.
+6,585
+5,752
+92
+329
+58
+The Consolidated Statement of Cash Flows includes the following amounts in the
+2021 and 2020 fiscal year, which are attributable to leases:
+(56)
+(27)
+286
+1 The amounts shown under "Additions through business combinations" resulted in the 2020 fiscal year exclusively
+from the acquisition of Cypress.
+2 Other changes for land, land rights and buildings include impairments amounting to €11 million.
+Infineon Technologies | Annual Report 2021
+€ in millions
+Payments for short-term leases and low-value leases
+Payments for leasing liabilities
+Interest payments
+Total
+2021
+2020
+9
+2
+76
+63
+4
+4
+89
+69
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+10
+(3)
+(6)
+39
+10
+Total
+nations¹
+Expenses for short-term leases with a term of twelve months or less
+Expenses for low-value leases
+6
+1
+3
+1
+99
+66
+15 Financial debt
+32
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+(48)
+267
+Total
+72
+74
+7
+(2)
+(1)
+9
+10
+255
+9
+75
+(23)
+Further information
+Aggregate
+facility
+11
+1
+Due after more than five years
+Total
+2020
+2021
+Due after one year to five years
+Due within one year
+Due after more than five years
+Total
+Due after one year to five years
+Due within one year
+Payments for not reasonably certain renewal options
+€ in millions
+€ in millions
+88
+Due to the requirements of IFRS 16, the following future lease payments have not
+been included in the valuation of lease liabilities:
+Q =
+< 184 >
+4
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 17 >
+Supervisory Board
+Report of the Supervisory Board
+Strategy and Technology Committee
+The Supervisory Board's Strategy and Technology Committee convened three times
+during the fiscal year under report. The topics covered included detailed reports it
+received from the Management Board regarding the current market situation, com-
+petitors, the headway being made in terms of synergies and the progress of integration
+following the acquisition of Cypress, as well as the annual strategy and technology
+plan. Other topics of focus included new technologies such as SiC and GaN, the long-
+term development of key markets, developments relating to software applications,
+and preparations for the Supervisory Board's Strategy Day. A new framework for future
+M&A activities was also discussed.
+Supervisory Board remuneration
+The changes to Supervisory Board remuneration, which were approved by a large
+majority at the Annual General Meeting held in February 2021, took effect at the
+beginning of the 2022 fiscal year, i.e., on 1 October 2021.
+Corporate Governance
+Sven Schneider was born in 1966 in
+Berlin, Germany. After completing
+his studies in business administra-
+tion (Diplom-Kaufmann), he received
+his doctorate in business adminis-
+tration from the University of Trier,
+Germany. From 1995 to 2019, he
+held several positions at Linde AG,
+most recently as Spokesman of the
+Executive Board, Chief Financial
+Officer and Labor Director.
+Business focus and strategy
+The Executive Committee held two ordinary and seven extraordinary meetings
+during the fiscal year under report.
+At the ordinary meetings, the Executive Committee focused primarily on preparing
+the Supervisory Board's resolution to determine the level of variable remuneration to
+be paid to Management Board members. This included, firstly, determining the target
+achievement levels for the 2020 fiscal year and setting new target values for the 2021
+fiscal year, and secondly - for the first time - determining the STI modifier criteria,
+confirming the ESG targets for limiting carbon emissions and increasing diversity
+relevant for the LTI, and confirming the composition of the TSR peer group.
+In addition to remuneration matters, the main topic of the extraordinary meetings
+was the aforementioned succession planning for the Management Board.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 16 >
+Supervisory Board
+Report of the Supervisory Board
+Investment, Finance and Audit Committee
+The Investment, Finance and Audit Committee convened for five ordinary meetings
+during the 2021 fiscal year.
+Its activities centered on monitoring the financial reporting process, reviewing the
+half-year and quarterly financial statements, conducting the preliminary audit of the
+Separate Financial Statements, Consolidated Financial Statements and Combined
+Management Report for Infineon Technologies AG and the Infineon Group, and
+discussing the audit reports with the auditor. In addition, the Committee examined
+Infineon's financial and investment budget. It also received regular reports on the
+internal control, internal audit, risk management and compliance management
+systems and deliberated on their effectiveness. The Committee was also provided
+with continuous updates concerning significant legal disputes.
+The Committee's recommendation to the full Supervisory Board to propose to share-
+holders at the Annual General Meeting that KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich, (KPMG) be elected as Company and Group auditor was based on a Declara-
+tion of Independence obtained from KPMG as well as an analysis of the non-audit
+services provided by KPMG. There were no indications of conflicts of interest, grounds
+for exclusion, or other lack of independence on the part of the auditor. The recom-
+mendation was also based on the Committee's confirmation that it is free from undue
+influence by third parties and that it has not been subject to any restriction regarding
+the selection of auditors within the meaning of section 16, paragraph 6 of the EU
+Statutory Audit Regulation. The Committee also considered the fee arrangements
+and issued contracts for the relevant audit engagements. Supplementary areas for
+audit emphasis were also defined.
+The Act to Strengthen Financial Market Integrity (Finanzmarktintegritätsstärkungs-
+gesetz –“FISG”) – key parts of which came into force on 1 July 2021 – significantly
+restricts the permitted scope of non-audit services. Although these restrictions do
+not apply to Infineon until the 2023 fiscal year, the Investment, Finance and Audit
+Committee has elected to comply with the new rules as of the 2022 fiscal year and
+accordingly resolved to reduce the scope of services that may be performed by the
+external auditor.
+The representatives of the auditor attended all meetings of the Investment, Finance
+and Audit Committee and reported in detail on the audit procedures performed.
+In light of the legal provisions governing the regular rotation of external auditors, the
+Investment, Finance and Audit Committee intensified its involvement with this topic
+and the corresponding requirements of the tender process.
+The Committee also devoted time to considering the Group's Non-Financial Report
+and, in this context, took a close look at other sustainability issues, including the
+EU taxonomy.
+One special topic that the Investment, Finance and Audit Committee dealt with during
+the 2021 fiscal year was the private placement of notes with a volume of US$1.3 billion
+at very attractive conditions. The considerable over-subscription of the transaction was
+once again clear evidence of the confidence of capital markets in Infineon's economic
+prospects, underlining the Group's ability to access all relevant sources of funding.
+The placement has also improved the maturity profile of Infineon's debt and success-
+fully rounds off the various capital market transactions undertaken during the past
+two years in conjunction with the refinancing of the acquisition of Cypress.
+The high opinion in which Infineon is held by investors and analysts alike was also
+evident on the occasion of Capital Markets Day. This event took place most recently
+in 2018 and was again a great success when held in a virtual format at the beginning
+of October.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Declaration of Compliance 2021
+The Executive Committee faced a number of challenging tasks during the 2021 fiscal
+year and will continue to do so going forward. Over the twelve-month period under
+report, it was closely involved in implementing new requirements relating to Manage-
+ment Board and Supervisory Board remuneration as well as creating the new
+Management Board function responsible for digital transformation and appointing
+Ms. Hufenbecher to the post. In the course of the current fiscal year, the Supervisory
+Board will continue to deal with the topic of succession planning for the Management
+Board. In view of the workload involved, on 6 August 2021, the Supervisory Board
+resolved to temporarily enlarge the Executive Committee from four to six members
+until 30 September 2022 and therefore elected Ms. Engelfried and Ms. Suckale as
+new Committee members.
+In the Declaration of Compliance dated November 2021, the Management Board and
+the Supervisory Board jointly declared that all the recommendations of the German
+Corporate Governance Code (DCGK) contained in the version dated 16 December 2019
+have been complied with and will continue to be complied with in the future.
+Self-assessment by the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 19 >
+Supervisory Board
+Report of the Supervisory Board
+At the meeting of the Investment, Finance and Audit Committee held on 8 November
+2021 and continued in a conference call on 18 November 2021, thorough discussions
+were held with the auditor regarding the Separate Financial Statements, the Consoli-
+dated Financial Statements, the Combined Management Report, the appropriation
+of profit, and the auditor's findings. The Committee deliberated at length on the key
+audit matters as well as on the related audit procedures performed by the auditor.
+Based on the insights gained in the course of these deliberations, the Investment,
+Finance and Audit Committee resolved to suggest to the Supervisory Board that the
+financial statements drawn up and presented by the Management Board be approved
+and the proposed appropriation of profit agreed to.
+The Separate Financial Statements, the Consolidated Financial Statements, the
+Combined Management Report, the Management Board's proposal for the appro-
+priation of unappropriated profit (all prepared by the Management Board) and
+KPMG's long-form audit reports were all made available to the Supervisory Board
+at the meeting held on 25 November 2021. At this meeting, the Chairman of the
+Investment, Finance and Audit Committee reported in depth on the corresponding
+recommendations of the Committee. In addition, all material issues relevant to the
+financial statements and the audit, including key audit matters, were exhaustively
+discussed with the auditor and closely examined by the Supervisory Board. The
+examination also covered the proposal to pay a dividend of €0.27 per entitled share.
+The Supervisory Board concluded that it has no objections to the financial statements
+and the audits performed by the auditor. In its opinion, the Combined Management
+Report complies with all legal requirements. The Supervisory Board also concurs with
+the assertions regarding Infineon's future development contained therein as well as
+with the results of the audit of the financial statements. It therefore approved the
+Separate Financial Statements of Infineon Technologies AG and the Consolidated
+Financial Statements of the Infineon Group for the 2021 fiscal year. The Separate
+Financial Statements were accordingly adopted. The Supervisory Board also approved
+the Management Board's proposal for the appropriation of unappropriated profit.
+The Investment, Finance and Audit Committee and the full Supervisory Board also
+deliberated on the combined separate Non-Financial Report for the year ended
+30 September 2021 drawn up by the Management Board. KPMG performed a “limited
+assurance“ engagement for the report that was extended to a “reasonable assurance”
+engagement in regards to specific aspects. KPMG issued an unqualified opinion theron.
+The documents were carefully examined by the Investment, Finance and Audit
+Committee at its meeting held on 8 November 2021, which was continued in a con-
+ference call on 18 November 2021, and by the Supervisory Board at its meeting held
+on 25 November 2021. The Supervisory Board positively acknowledged the combined
+separate Non-Financial Report drawn up by the Management Board.
+The Supervisory Board wishes to thank the entire staff and the Management Board of
+Infineon once again for their tremendous commitment and outstanding achievements
+during a fiscal year that has been a challenging one in every respect.
+Neubiberg, November 2021
+On behalf of the
+Supervisory Board
+лиш
+Wallory hum
+Weekery
+Dr. Wolfgang Eder
+Chairman of the Supervisory Board
+Infineon Technologies | Annual Report 2021
+The Management Board
+Q = < 10 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+The Management Board
+Business focus and strategy
+Management Board and
+Infineon Technologies | Annual Report 2021
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG
+and the Consolidated Financial Statements of the Group and reviewed the Interim
+Financial Statements of the Group since the 1999 fiscal year (short fiscal year from
+1 April 1999 to 30 September 1999). Mr. Pritzer, the auditor responsible for the
+engagement, signed the auditors' report for the first time for the 2017 fiscal year
+(1 October 2016 to 30 September 2017), and Mr. Schmitt, as co-signatory, for the
+first time for the 2021 fiscal year (1 October 2020 to 30 September 2021).
+The Supervisory Board regularly assesses how effectively it, as a corporate body, and
+its related committees perform their duties. An internal self-assessment was performed
+in summer 2021, based primarily on a questionnaire, the results of which were dis-
+cussed by the Supervisory Board. The next assessment is scheduled for 2022 and will
+be supported by an external consultant - as was the case most recently in 2017.
+Examination of potential conflicts of interest
+The members of the Management Board and the Supervisory Board are required to
+disclose any conflicts of interest to the Supervisory Board without delay. No situations
+occurred during the 2021 fiscal year involving conflicts of interest.
+Prior to members of the Management Board assuming sideline activities, particularly
+supervisory board mandates outside the Company, the DCGK requires that permission
+be granted by the Supervisory Board. No conflicts of interest were discernible in any
+of the sideline activities performed. In fact, they were all in the best interest of Infineon.
+Further information on the topic of corporate governance is available in the Statement
+on Corporate Governance, which also includes the Corporate Governance Report.
+www.infineon.com/declaration-on-corporate-governance
+Rules of procedure for the Supervisory Board and
+the Management Board
+All rules of procedure are available on the Infineon website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
+Infineon Technologies | Annual Report 2021
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+The actual wording of the Declaration of Compliance 2021, as well as all previous
+Declarations of Compliance, are available on Infineon's website.
+www.infineon.com/declaration-of-compliance
+Further information
+Supervisory Board
+Report of the Supervisory Board
+Related party transactions
+Publicly listed companies such as Infineon require the approval of the Supervisory
+Board or one of its committees before entering into certain transactions with related
+parties. In order to identify related party transactions that require approval and to
+treat them in compliance with the law, Infineon has implemented a procedure based
+on guidelines that apply across the Group. The Supervisory Board has delegated
+responsibility in this area to the Investment, Finance and Audit Committee, particu-
+larly for resolutions requiring approval. As in the previous fiscal year, there were no
+related party transactions requiring approval during the twelve-month period under
+report.
+Act to Strengthen Financial Market Integrity (FISG)
+The Act to Strengthen Financial Market Integrity (Finanzmarktintegritätsstärkungs-
+gesetz - "FISG"), which for the most part came into force at the beginning of July 2021,
+has resulted in various regulatory changes, including some affecting the corporate
+governance of companies. Most of the new requirements now enacted in legislation
+had already been standard practice at Infineon for some time. For this reason, action
+was only needed in a few areas.
+Section 109, paragraph 1, sentence 3 of the German Stock Corporation Act (Aktien-
+gesetz) now stipulates that the Management Board is generally not permitted to attend
+meetings of the Supervisory Board and its committees in the event that the auditor
+is called upon to attend these meetings as an expert, unless the Supervisory Board or
+the committee concerned deems the Management Board's attendance to be neces-
+sary. The Supervisory Board is of the opinion that the attendance of the Management
+Board and its involvement in any discussions with the auditor is beneficial for all
+parties concerned, including the Supervisory Board and its committees in the perfor-
+mance of their (audit-related) activities, not least with regard to the specialized
+expertise of the Chief Financial Officer. The Supervisory Board therefore considers it
+necessary for the Management Board to continue attending such meetings in the
+future and until further notice, in particular the meetings of the Investment, Finance
+and Audit Committee as well as the meeting of the full Supervisory Board at which
+the financial statements are deliberated upon. If a Supervisory Board or committee
+member wishes to discuss a particular matter with the auditor at a specific meeting
+without the Management Board being present, the Chairman of the Supervisory
+Board or relevant committee is required to take this request into account by dealing
+with the relevant agenda item either in full or temporarily without the presence of
+the Management Board.
+In addition, the agendas of all Supervisory Board and committee meetings at which
+the auditor is either involved or (partially) present will in future include a discussion
+between the Supervisory Board and the auditor without the presence of the Manage-
+ment Board as a standard agenda item.
+Separate and Consolidated Financial Statements
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and
+the Consolidated Financial Statements as of 30 September 2021, as well as the
+Combined Management Report for Infineon Technologies AG and the Infineon Group,
+and issued unqualified audit opinions thereon.
+The Half-Year Financial Report was also reviewed by KPMG. No issues were identified
+that might indicate that the condensed Interim Group Financial Statements and
+Interim Group Management Report were not prepared in accordance with the appli-
+cable provisions in all material respects.
+← Q = < 18 >
+Executive Committee
+Supervisory Board topics
+Nomination Committee
+Constanze Hufenbecher was born
+in 1970 in Ebingen (now Albstadt),
+Germany. She received her degree
+in business administration from the
+University of Tübingen, Germany.
+She began her career in 1994 at
+VIAG AG in Munich, Germany.
+Jochen Hanebeck has been a
+member of the Management Board
+of Infineon Technologies AG and
+Chief Operations Officer since 2016
+(mandated until 30 June 2024).
+He is responsible for Operations,
+including Manufacturing, Logistics,
+Quality, Customs and Procurement.
+Jochen Hanebeck was born in 1968
+in Dortmund, Germany. Hereceived
+a degree in electrical engineering
+from RWTH Aachen University,
+Germany. He has been with Infineon
+since 1994 (Siemens AG until 1999).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+← Q = < 14 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Infineon Technologies | Annual Report 2021
+Furthermore, during the year under report, the Supervisory Board extended the
+mandate and service contract of Dr. Sven Schneider (CFO) by a further five years with
+effect from the end of his first term of office in April 2022. Over the past two-and-a-half
+years, Dr. Schneider has repeatedly demonstrated his wide-ranging capabilities,
+such as with the highly acclaimed refinancing concept he developed for the acquisi-
+tion of Cypress. We are therefore extremely pleased that Dr. Schneider will remain
+with the Infineon Management Board as CFO in the long term.
+Consolidated Financial Statements
+Further information
+← Q = < 12 >
+Report of the Supervisory Board
+Report of the Supervisory Board
+to the Annual General Meeting
+Ladies and Gentlemen,
+Constanze Hufenbecher has been
+a member of the Management
+Board of Infineon Technologies AG
+and Chief Digital Transformation
+Officer since 2021 (appointed until
+14 April 2024). She is responsible for
+Information Technology, Business
+Continuity, Export Control, Business
+Excellence, and Sales & Marketing
+Transformation, as well as the
+cross-functional tasks of digitaliza-
+tion, process optimization, basic
+data architecture and implement-
+ing major projects.
+Dr. Wolfgang Eder
+Chairman of the
+Supervisory Board
+Reinhard Ploss was born in 1955
+in Bamberg, Germany. He studied
+process engineering at the Technical
+University of Munich, Germany,
+and received his doctorate in 1990.
+He began his career at Infineon
+(Siemens AG until 1999) in 1986.
+Dr. Sven Schneider
+Sven Schneider has been a member
+of the Management Board and
+Chief Financial Officer at Infineon
+Technologies AG since 2019
+(mandated until 30 April 2027).
+He is responsible for Accounting &
+Reporting, Financial Controlling,
+Financial Planning, Investor
+Relations, Tax, Treasury, Audit,
+Compliance, Risk Management.
+Helmut Gassel was born in 1964 in
+Dortmund, Germany. He holds a
+Diploma in Physics from the Ruhr-
+University in Bochum, Germany.
+He received his PhD in Electrical
+Engineering from the University
+Duisburg, Germany. He joined
+Infineon (Siemens AG until 1999)
+in 1995.
+Helmut Gassel has been a member
+of the Management Board and
+Chief Marketing Officer of Infineon
+Technologies AG since 2016
+(mandated until 30 June 2024).
+He is responsible for Sales &
+Marketing, Regions, Strategy Devel-
+opment, Mergers & Acquisitions
+and Intellectual Property.
+Jochen Hanebeck
+Chief Operations Officer
+Constanze Hufenbecher
+Chief Digital
+Transformation Officer
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dr. Sven Schneider
+Chief Financial Officer
+Dr. Helmut Gassel
+Chief Marketing Officer
+Q = < 11 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+The Management Board
+Chief Operations Officer
+Chief Digital Transformation Officer
+Chief Executive Officer
+Chief Financial Officer
+Jochen Hanebeck
+Constanze Hufenbecher
+Dr. Reinhard Ploss
+Infineon Technologies | Annual Report 2021
+The Nomination Committee did not convene during the 2021 fiscal year.
+One year ago, I expressed my conviction in this report that Infineon was extremely
+well positioned to meet the challenges of the coronavirus pandemic and would
+emerge even stronger from the global health and economic crisis.
+The huge demand for microchips will continue to influence how Infineon performs
+in the current fiscal year. Last summer, our most recently constructed fabrication
+plant went into operation in Villach (Austria). Built at a cost of €1.6 billion, the new
+plant was the culmination of one of the largest investment projects ever undertaken
+in the European microelectronics industry. In view of the rapidly growing global
+demand for power semiconductors, our timing could not have been better. At the
+time when Infineon took this investment decision, the massive upswing in demand
+was not in the least foreseeable, but now means that the Group has an advantage
+over its competitors. This is not only good news for our customers, it also helps
+Infineon to continue generating a solid return for you, our shareholders. Against
+this backdrop, the Management Board and the Supervisory Board jointly propose
+to increase the dividend for the 2021 fiscal year to €0.27 per share.
+> Secondly, the Supervisory Board has set a diversity target with a specific focus on
+gender diversity, namely to increase the proportion of women in management
+positions.
+The changes relating to the short-term incentive (STI) variable remuneration compo-
+nent do not become relevant until the 2022 fiscal year. However, in view of the changes
+to be made to the STI going forward - including the introduction of a criteria-based
+modifier and the addition of the Segment Result Margin to financial targets - it was
+necessary to make some related decisions during the 2021 fiscal year. The purpose of
+the criteria-based modifier is to enable the Supervisory Board to assess the Manage-
+ment Board's collective performance as well as the impact of any extraordinary that
+were not adequately reflected in targets set at an earlier stage. The collective perfor-
+mance assessment is meant to reward the extent to which the Management Board in
+its entirety contributes to the sustainable development of the Company - in strategic,
+technical and structural terms. Prior to the beginning of each fiscal year, the Super-
+visory Board selects the criteria that it has determined are relevant for the fiscal year
+in question. At the recommendation of the Executive Committee, the Supervisory
+Board has defined two specific criteria for the 2022 fiscal year. Based on these criteria,
+the Management Board's performance will therefore be measured firstly in terms of
+its success in implementing Infineon's digital transformation strategy and secondly in
+terms of its ability to develop key technologies and innovative solutions or, expressed
+more specifically, by its ability to grow business with SiC and GaN products on this
+strategically important market for Infineon.
+Further information on Management Board remuneration – particularly the amounts
+paid to individual members in or for the 2021 fiscal year - is available in the detailed
+remuneration report. ☐ p. 132 ff.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 15 >
+Supervisory Board
+Report of the Supervisory Board
+Litigation
+The Supervisory Board was regularly provided with in-depth information regarding
+major legal disputes during the 2021 fiscal year, which it then discussed at length
+with the Management Board. These included, in particular, the appeal brought by
+Infineon before European courts (which has meanwhile been resolved) regarding an
+antitrust fine imposed by the EU Commission in 2014 and the related follow-up pro-
+ceedings, as well as the legal dispute with the insolvency administrator of Qimonda AG
+pertaining to alleged residual liability claims, which has been ongoing for years.
+Reinhard Ploss has been a member
+of the Management Board of
+Infineon Technologies AG since
+2007. He has been Chief Executive
+Officer since 1 October 2012
+(mandated until 31 December 2022).
+He is responsible for Divisions,
+Group Strategy, Communications
+& Public Policy, Human Resources
+(Labor Director), Legal, Research &
+Development.
+Basic and ongoing training
+Supervisory Board members are responsible for undertaking any basic and ongoing
+training measures considered necessary to perform their duties and receive appropri-
+ate support from Infineon to do so. In-house information events are held to provide
+targeted training as the need arises. As part of the onboarding process for new Super-
+visory Board members, Infineon offers a series of workshops covering a broad range
+of topics, including the individual operating segments, the underlying elements of
+Infineon's corporate strategy, the target business model and investment planning as
+well as manufacturing strategy and life cycle management. In addition, Supervisory
+Board members are regularly provided with information on the regulatory environment
+relevant to their work as well as any other legal developments that may affect them.
+Committee work
+The Supervisory Board's various committees are responsible for drawing up resolutions
+and preparing other major topics that need to be dealt with by the full Supervisory
+Board. Moreover, the Supervisory Board has delegated certain decision-making powers
+to its committees, to the extent permitted by German law. The chairpersons of each
+committee are required to report on committee meetings at the next relevant full
+Supervisory Board meeting.
+Mediation Committee
+The Mediation Committee did not need to convene during the 2021 fiscal year.
+> Firstly, the Supervisory Board has set a sustainability target derived from Infineon's
+strategic focus on sustainability. Infineon has long been one of the world's most
+sustainable companies and is a well-established member of the Dow Jones Sustain-
+ability Index. Among other things, Infineon has committed to becoming carbon-
+neutral by 2030. Forward-thinking corporate governance, ecological action and
+social commitment are indispensable prerequisites for Infineon's resilience and
+long-term corporate success. The current sustainability target is to achieve 50 per-
+cent carbon neutrality by the end of the 2024 fiscal year.
+Today we can safely state that Infineon can look back upon a highly successful year.
+An increasing number of global megatrends are being driven by microelectronics
+technologies, particularly future-critical areas such as electrification and digitalization.
+Infineon focuses its strategy precisely on these trends and thus continues to tread
+the path of profitable growth and sustainable value creation. The fact that this develop-
+ment has not escaped the notice of the capital market is underlined not only by
+the outstanding performance of the Infineon share, but also by its inclusion in the
+EURO STOXX 50 index.
+The new Management Board remuneration system decided upon by the Supervisory
+Board in November 2020 was approved by a large majority at the Annual General
+Meeting held in February 2021, and the new rules were fully incorporated into the ser-
+vice contracts of all Management Board members, effective 1 October 2021. Some of
+these rules were, however, already relevant for the 2021 fiscal year. In particular, the
+tranche allocated on 1 April 2021 (for the 2021 fiscal year) for the long-term incentive
+(LTI) variable remuneration component is already covered by the new remuneration
+regime. As in the previous system, the LTI continues to be based on a four-year per-
+formance period and is geared towards settlement in the form of shares. The target
+structure, however, has been significantly changed, the most notable difference
+being that it now includes ESG targets for the first time alongside financial targets.
+With the mandate of Infineon's long-serving CEO Dr. Reinhard Ploss due to expire at
+the end of 2022, both the Executive Committee and the full Supervisory Board have
+been working on a suitable succession plan for some time now. During the fiscal
+year under report, the Supervisory Board engaged a well-known external personnel
+consultant who has helped create a role profile for the position of Chair of the
+Management Board.
+The market environment remains dynamic, and although that can entail uncertainties
+going forward, it also gives rise to opportunities, which our management team con-
+tinues to leverage with great determination. Last but not least, agility is one of the
+core strengths of Infineon as a high-tech company - true to the motto adopted for the
+opening of the plant in Villach: "Ready for Mission Future".
+Main activities of the Supervisory Board
+During the 2021 fiscal year, the Supervisory Board once again performed its duties
+with the utmost diligence in accordance with the law, Infineon's statutes and the
+Supervisory Board's own terms of reference. It advised and monitored the Manage-
+ment Board in equal measure, based on detailed written and oral reports presented
+by the Management Board at Supervisory Board and committee meetings regarding
+all issues relevant to the Company, focusing for the most part on corporate strategy
+and planning, current business performance, financial position and risk profile as
+well as matters relating to risk management and compliance. The Supervisory Board
+Infineon Technologies | Annual Report 2021
+Management Board and
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 13 >
+Supervisory Board
+Report of the Supervisory Board
+was always given ample opportunity to thoroughly examine the reports presented
+by the Management Board and was thus able to satisfy itself that the governance of
+Infineon's corporate affairs was lawful, compliant and appropriate in every respect.
+The Supervisory Board was provided with written quarterly reports on Infineon's
+business performance, key financial data, risks and opportunities and major areas of
+litigation as well as other specific topics of relevance. Between quarterly reports, the
+Management Board also provided the Supervisory Board with additional information
+in the form of monthly reports on current business performance and developments.
+As Chairman of the Supervisory Board, I was also in regular contact with both the
+Chairman (CEO) and the other members of the Management Board between meetings,
+focusing for the most part on Infineon's corporate strategy, business performance
+and financial position. Either at or in the context of regular Supervisory Board meet-
+ings, the CEO also kept me well informed at all times of other key events - several of
+which occurred over the course of the challenging twelve-month period under report.
+In the 2021 fiscal year, the full Supervisory Board convened six times, holding five
+ordinary meetings and one extraordinary meeting during that period. One resolution
+was also passed on the basis of written communication. The attendance rate at
+Supervisory Board meetings was close to 100 percent; Mr. Scholz was excused from
+attending two meetings. The attendance rate at the Supervisory Board's committee
+meetings was 100 percent in all cases. Details of the individual attendance record of
+Supervisory Board members are provided in the Statement on Corporate Governance
+www.infineon.com/declaration-on-corporate-governance. Due to pandemic-related restric-
+tions, some of the meetings were held either fully or partially using a virtual format.
+In preparation for ordinary Supervisory Board meetings, separate preliminary meetings
+were held for both the shareholder representatives and the employee representatives.
+The Supervisory Board also convened regularly without the presence of Management
+Board members.
+Corporate strategy
+The Infineon Supervisory Board remains fully committed to providing the Management
+Board with support in the task of developing and implementing corporate strategy.
+For this reason, in addition to the regular meetings of the Strategy and Technology
+Committee, a meeting of the full Supervisory Board was again held during the fiscal
+year under report with the primary aim of discussing strategic topics. At this strategy
+meeting, Infineon's growth opportunities, corporate strategy, business model and
+financial targets were deliberated upon as a coherent whole, also taking into account
+the fact that semiconductors have increasingly become part of the political agenda in
+the context of geopolitical tensions and the impact they could have on Infineon. The
+strategy meeting also focused on digital transformation - a complex range of topics
+that both the Supervisory Board and the Management Board view as particularly
+relevant for the future development of the Group.
+Personnel matters relating to the Management Board
+In light of these and other considerations, the Supervisory Board enlarged the Manage-
+ment Board with effect from 15 April 2021 by creating the new position of Chief Digital
+Transformation Officer (CDTO). With the appointment of Constanze Hufenbecher,
+we were able to secure the services of an excellent manager to take up this key role.
+Ms. Hufenbecher has extensive experience in the relevant fields, particularly with
+transformation management and the development and establishment of consistent
+processes across organizations. Ms. Hufenbecher has been very involved since taking
+office and is already an integral part of the Management Board team.
+Report of the Supervisory Board
+Management Board remuneration
+Supervisory Board
+Dr. Helmut Gassel
+Management Board and
+Supervisory Board
+Chief Marketing Officer
+Q = < 192 >
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 197 >
+Notes to the Consolidated Financial Statements
+The following is an overview of the allocations made:
+Tranche
+2nd tranche
+End of the
+waiting period
+Price of an
+Infineon share
+at grant date
+in €
+Number of
+restricted
+stock units
+as of 30 Sep-
+tember 2021
+Fair value
+per restricted
+stock unit
+in €
+Fiscal year 2021:
+The fair value of the restricted stock units at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of share price developments). The fair value of
+the instruments granted is determined, taking into account future dividends.
+The Restricted Stock Unit Plan (RSUP) was introduced in the 2017 fiscal year.
+Under this plan, (virtual) restricted stock units are initially provisionally granted
+on 1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a pre-
+determined LTI grant amount in euros. With the allocation of a (virtual) restricted stock
+unit, the plan participant acquires the right to receive a (real) Infineon share after the
+expiry of the vesting period, provided that the employee is still employed by Infineon
+at this time. The final allocation is made in stages (each representing 25 percent of
+the provisionally allocated restricted stock units) after the expiry of the vesting period
+of one year following allocation.
+28.87
+28.87
+The performance period begins on 1 October of the first fiscal year of the performance
+period and ends four years later on 30 September. Performance during the perfor-
+mance period is measured using the relative total shareholder return (TSR) financial
+performance criterion compared to companies in a selected industry peer group,
+together with non-financial performance criterion comprising strategy-derived
+environmental, social & governance (ESG) objectives. The TSR target accounts for
+80 percent and the ESG 20 percent of the overall target achievement. TSR and the
+ESG target achievements can be between 0 percent and 150 percent.
+The tranche is granted on 1 April in the first fiscal year of the performance period
+(allocation day). The vesting period begins on the allocation day. In contrast to the
+performance period, the vesting period ends four years after the allocation day, i.e.,
+on 31 March. At the end of the four-year performance period, the target achievement
+is determined.
+The final number of performance shares to be allocated after the expiry of the vesting
+period is determined by multiplying the number of provisionally allocated performance
+shares by the overall target achievement of the two performance criteria during the
+performance period. The final allocation of the performance shares within an LTI
+tranche may not result in a profit (before tax) of more than 250 percent of the respective
+LTI grant amount; above this cap, all performance shares still to be allocated lapse.
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of the TSR target achievements). The fair value of
+the instruments granted is determined taking into account future dividends as well as
+the payment cap.
+The following is an overview of the allocations made:
+Tranche
+Fiscal year 2021: Employees
+Fiscal year 2021: Management Board
+Restricted Stock Unit Plan
+1st tranche
+End of the
+waiting period
+22.82
+Number of
+performance
+shares
+outstanding
+as of 30 Sep-
+tember 2021
+Fair value per
+performance
+share in €
+31 March 2025
+31 March 2025
+22.82
+572,631
+178,213
+Average share
+price in the
+60 trading
+days before
+the start of the
+performance
+period in €
+31 March 2022
+36.16
+346,715
+79,043
+4th tranche
+29 February 2024
+18.62
+79,043
+17.98
+17.65
+17.31
+Fiscal year 2019:
+3rd tranche
+18.62
+28 February 2022
+4th tranche
+28 February 2023
+19.66
+58,765
+58,765
+18.84
+18.58
+Fiscal year 2018:
+4th tranche
+28 February 2022
+19.66
+With the granting of a virtual performance share, the participant in the plan acquires
+the right to receive (real) Infineon shares once a personal investment in Infineon
+shares - depending on position and LTI grant amount – has reached a four-year hold-
+ing period. The number of real Infineon shares to be transferred depends on the
+achievement of targets during the performance period.
+28 February 2023
+79,043
+35.90
+31 March 2023
+36.16
+346,715
+35.60
+31 March 2024
+36.16
+346,715
+3rd tranche
+31 March 2025
+346,715
+35.29
+34.87
+3rd tranche
+4th tranche
+Fiscal year 2020:
+2nd tranche
+28 February 2022
+18.62
+36.16
+Plan conditions for tranches from 1 April 2021
+Q = < 196 >
+Further information
+With gross financial debt of €6,585 million as of 30 September 2021 (30 September
+2020: €7,033 million) following the financing of the acquisition of Cypress, and EBITDA
+of €2,982 million for the 2021 fiscal year (2020: €1,785 million), the gross debt to
+EBITDA ratio was 2.2 as of 30 September 2021 (30 September 2020: 3.9). Cypress has
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Further information
+The gross cash position increased from €3,227 million as of 30 September 2020,
+to €3,922 million as of 30 September 2021 (for details, see the chapter "Review of
+liquidity" in the Combined Management Report, p. 107). Based on revenues of
+€11,060 million, the ratio of gross cash to revenue as of 30 September 2021 was
+€1 billion, plus an additional 26.4 percent of revenue (previous year: €1 billion plus
+26.0 percent of revenue). Cypress has been included in the revenues of the 2020 fiscal
+year since 16 April 2020.
+< 195 >
+The USPP notes totaling US$2,235 million issued in April 2016 and June 2021 contain
+a number of standard covenants, including a debt coverage ratio, which provides
+for a certain relationship between the size of debt (adjusted) and earnings (adjusted).
+In the 2021 fiscal year, Infineon had met the minimum requirements of all covenants.
+Should Infineon not comply with the covenants attached to the USPP notes, then
+all USPP notes outstanding as of 30 September 2021 amounting to US$2,235 million
+(see note 15, p. 184) could become immediately repayable.
+21 Share-based payment
+The Company makes use of the Performance Share Plan and, since the 2017 fiscal year,
+the Restricted Stock Unit Plan, in order to provide share-based payments.
+Performance share plan
+A Long-Term Incentive (LTI) Plan, the so-called Performance Share Plan, was developed
+for the Management Board and selected senior executives.
+Under this plan, (virtual) performance shares are initially provisionally granted on
+1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a predeter-
+mined LTI grant amount in euros.
+Plan conditions for tranches up to and including 1 March 2020
+been included in the EBITDA of the 2020 fiscal year since 16 April 2020. Infineon con-
+tinues to have sufficient financial flexibility to ensure that, in addition to financing its
+planned investments, it is also able to pay regular dividends (see note 19, p. 193 f.).
+With the granting of a virtual performance share, the participants in the plan acquire
+the right to receive (real) Infineon shares once a personal investment in Infineon
+shares - depending on position and LTI grant amount - has reached a four-year
+holding period.
+Capital management, as well as the corresponding targets and definitions, are based
+on indicators determined on the basis of the consolidated IFRS financial statements.
+Gross cash is defined as the total of cash, cash equivalents and financial investments.
+Gross financial debt comprises short-term and long-term financial debt. Infineon
+defines EBITDA as earnings (loss) from continuing operations before interest, taxes
+and depreciation and amortization.
+Based on these principles and the intention to retain its investment grade rating,
+Infineon has derived medium- and long-term key objectives for capital management.
+For liquidity, the gross cash should amount to €1 billion plus at least 10 percent of
+revenue. Infineon's gross financial debt is capped at a maximum of two times EBITDA.
+As a result of the acquisition of Cypress, Infineon has exceeded its gross debt target
+but only to an extent that was still compatible with maintaining the investment grade
+rating. The originally medium-term objective of Infineon to reduce its debt level
+to or below the maximum target value after the closing of the Cypress transaction is
+expected to be achieved already in the 2022 fiscal year.
+(71)
+ㄖˋˊ
+(543)
+(71)
+65
+(170)
+28
+(142)
+Infineon is not subject to any statutory capital requirements, nor are any such defined
+in the Articles of Association.
+42
+137
+17
+154
+(742)
+28
+(714)
+20 Capital management
+Infineon's main capital management objective is to ensure financial flexibility on the
+basis of a solid capital structure. It is of prime importance that sufficient cash funds
+are available to finance operating activities and planned investments throughout all
+phases of the business cycle. On the other hand, debt should only constitute a modest
+portion of the financing mix.
+42
+21.80
+For the tranches up to and including 1 March 2020, the performance shares were
+split between 50 percent performance-related shares and 50 percent that were not
+dependent on performance. The performance-related shares were finally granted only
+when the Infineon share outperformed the Philadelphia Semiconductor Index (SOX)
+during the period between the date of the provisional allocation and the end of the
+vesting period. If at the end of the vesting period the requirements for an allocation
+of performance shares - either all or only those that are not performance-related -
+were fulfilled, then entitlement to the transfer of the corresponding number of (real)
+Infineon shares was acquired. The value of the performance shares ultimately assigned
+to members of the Management Board could not exceed 250 percent of the respective
+LTI grant amount; above this cap, performance shares lapse.
+The following is an overview of the allocations made:
+28 February 2023
+20.02
+44,954
+13.79
+28 February 2022
+21.48
+646,882
+15.76
+Fiscal year 2019: Management Board
+Fiscal year 2018: Employees
+Fiscal year 2018: Management Board
+21.48
+41,896
+15.25
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+28 February 2022
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of share price and index developments). The fair
+value of the instruments granted was determined, taking into account future dividends
+as well as the payment cap.
+14.20
+20.02
+Tranche
+Fiscal year 2020: Employees
+Number of
+performance
+shares
+outstanding
+as of 30 Sep-
+tember 2021
+Fair value per
+performance
+share in €
+End of the
+waiting period
+Average
+share price
+in the
+nine months
+before grant
+in €
+713,184
+29 February 2024
+1,007,326
+12.95
+Fiscal year 2020: Management Board
+Fiscal year 2019: Employees
+29 February 2024
+18.10
+70,850
+12.50
+28 February 2023
+18.10
+41,953
+20.87
+The tranches due in February and March 2021, respectively, were fulfilled in shares.
+244,804 Infineon shares were issued to eligible employees from the holding of
+own shares.
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+The actual return on plan assets in the fiscal year ended 30 September 2021 was
+€61 million (30 September 2020: €17 million).
+The market value of the land and real estate leased to Group companies by the legally
+independent pension trust amounted to €30 million as of both 30 September 2021
+and 2020.
+Government and corporate bonds are traded in liquid markets and the majority of
+them have an investment grade rating. The geographical allocation of the equity
+component of plan assets is predominantly based on the MSCI World Index. As a mat-
+ter of policy Infineon's pension plans do not invest in shares or debt instruments of
+Infineon. The position "Other" in the table above comprises exchange-traded com-
+modities (ETC) and other investment funds. The market value of the ETC held domes-
+tically was €31 million as of 30 September 2021 (previous year: €33 million).
+Q =
+Infineon Technologies | Annual Report 2021
+606
+92
+672
+26
+44
+24
+32
+30
+93
+5
+< 191 >
+The expenses and income of defined benefit plans for the 2021 and 2020 fiscal years
+comprised the following:
+Past service (cost) benefit
+(38)
+(6)
+(32)
+(39)
+(8)
+(31)
+Current service cost
+Amounts recognized in the Consolidated Statement of Profit or Loss
+and in the Consolidated Statement of Comprehensive Income
+Total
+Domestic
+plans
+Total
+Foreign
+plans
+plans
+Domestic
+2020
+2021
+€ in millions
+Foreign
+plans
+1
+30
+36
+Other
+Total
+Property
+Cash and cash equivalents
+Reinsurance policies
+Equity securities
+Corporate bonds
+€ in millions
+Government bonds
+As of 30 September 2021 and 2020, the allocation of invested plan assets to the major
+asset categories was as follows:
+Plan asset allocation
+30 September 2021
+The pension plans' assets are invested with several fund managers. The investment
+guidelines require a mix of active and passive investment management programs
+covering different asset classes. Taking the duration of the underlying liabilities into
+account, a portfolio of investments of plan assets in equity, debt and other securities,
+as well as real estate and reinsurance policies, is targeted to maximize the total long-
+term return on assets for a given level of risk. Investment risk is monitored on an
+ongoing basis through periodic portfolio reviews, by coordination with investment
+managers and annual liability measurements. Investment policies and strategies are
+periodically reviewed as part of detailed studies of assets and liabilities by indepen-
+dent investment advisors and actuaries to ensure the objectives of the plans are met,
+taking into account any changes in benefit plan structure, market conditions or other
+material items. The aim is to optimize the risk-return profile of plan assets against
+the liabilities using a diversified portfolio of investments within a defined risk budget
+and to thereby increase the funding ratio in the long term.
+Notes to the Consolidated Financial Statements
+< 190 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Investment strategy
+3
+30 September 2020
+Not quoted
+37
+19
+8
+213
+275
+117
+236
+1
+Quoted
+208
+118
+in an active
+market
+market
+in an active
+in an active
+market
+in an active
+market
+Not quoted
+Quoted
+1
+69
+1
+(11)
+Alleged activation of a shell company and liability for impairment of capital
+The insolvency administrator filed a request for declaratory judgment in an unspecified
+amount against Infineon Technologies AG and, by way of third-party notice, Infineon
+Technologies Holding B.V. and Infineon Technologies Investment B.V., at Regional
+Court Munich I in November 2010. This requested that Infineon be deemed liable
+to make good the deficit balance of Qimonda as it stood when the insolvency
+proceedings in respect of the assets of Qimonda began, i.e., to refund to Qimonda the
+difference between the latter's actual business assets when the insolvency proceed-
+ings began and its share capital (in German: “Unterbilanzhaftung”). The insolvency
+administrator contended that the commencement of operating activities by Qimonda
+amounted to what is considered in case law to be the activation of a shell company
+(in German: "Wirtschaftliche Neugründung"), and that this activation of a shell company
+was not disclosed in the correct manner. On 6 March 2012, with respect to another
+matter, the German Federal High Court issued a ruling on principle that any liability
+resulting from the activation of a shell company only depends on the situation at the
+date of the activation of a shell company and not, as asserted by the insolvency admin-
+istrator, on the situation at the date on which insolvency proceedings are opened.
+In addition to the request for declaratory judgment against Infineon in an unspecified
+amount, on 14 February 2012 the insolvency administrator also lodged a request for
+payment based on an alternative claim (in German: "Hilfsantrag"), as well as making
+other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in con-
+nection with the alleged activation of a shell company. On 15 June 2012, the insolvency
+administrator increased his request for the payment of 14 February 2012 on the grounds
+of activation of a shell company to at least approximately €3.35 billion plus interest.
+Furthermore, the insolvency administrator continues to base a substantial part of his
+alleged payment claims, as already asserted out of court against Infineon in August
+2011 for an unspecified amount, on liability for impairment of capital (in German:
+"Differenzhaftung”). This claim is based on the allegation that, from the very begin-
+ning, the carved-out memory products business had a negative billion euro value.
+The insolvency administrator therefore asserts that Infineon is obliged to make good
+the difference between this negative value and the lowest issue price (in German:
+"geringster Ausgabebetrag") of the subscribed stock. Additionally, the insolvency
+administrator has asserted a claim for repayment of allegedly unjustly charged consul-
+tancy fees in an amount of €10 million in connection with the flotation of Qimonda.
+The alleged impairment of capital runs contrary to two valuations prepared as part
+of the preparatory documentation for the capital increase by independent auditing
+companies, one of which had been engaged by Infineon and the other of which was
+acting in the capacity of a court-appointed auditor of contributions in kind and
+post-formation acquisitions. The auditing company engaged by Infineon concluded
+in its valuation that the business area contributed had a value of several times the
+lowest issue price of the shares issued, while the court-appointed auditor of contribu-
+tions in kind and post-formation acquisitions confirmed to the court that the lowest
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+All significant assets, liabilities and business activities attributable to the memory
+business (Memory Products) were carved out from Infineon and transferred to Qimonda
+in the form of a contribution in kind with economic effect from 1 May 2006. Qimonda
+filed an application at the Munich Local Court to commence insolvency proceedings
+on 23 January 2009. On 1 April 2009, the insolvency proceedings formally opened.
+The insolvency of Qimonda has given rise to various disputes between the insolvency
+administrator and Infineon.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Q = < 199 >
+issue price of the shares issued was covered - as legally required – by the value of the
+contributions in kind. Additionally, in the course of its defense against the claims
+asserted by the insolvency administrator, Infineon has commissioned several expert
+opinions, all of which arrived at the same conclusion that the objections raised by the
+insolvency administrator against the valuation of the contribution in kind are not valid.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged
+lack of value. On 29 August 2013, the court appointed an independent expert to
+clarify the valuation issues raised by the insolvency administrator and to address
+technical matters.
+The legal dispute is being pursued with great effort by both parties, and many extensive
+written submissions have already been exchanged between the parties. Both sides
+have engaged numerous specialists and experts who are supporting the respective
+parties with assessments and opinions.
+On 21 September 2018, in consultation with the parties, the independent expert
+appointed by the court presented an interim report on his preliminary assessment
+of the value of the contribution in kind. The Company is in principle prepared to
+conduct discussions about an out-of-court settlement of the legal dispute on the
+basis of the interim report.
+The parties are exchanging further written submissions. It is not clear at this stage
+if the legal dispute can be resolved with an out-of-court settlement, and, if this is not
+the case,
+when a first-instance court decision would be reached.
+Residual liability of Infineon as former shareholder
+of Qimonda Dresden GmbH & Co. OHG
+Further information
+Infineon was a shareholder with personal liability of Qimonda Dresden until the
+carve-out of the memory business; as a result, certain long-standing creditors have
+Proceedings in relation to Qimonda
+In July 2019, a direct customer filed a lawsuit against Infineon Technologies UK
+Limited and several Renesas entities in London (United Kingdom) relating to the
+aforementioned EU antitrust case.
+Costs for share-based payment
+The costs for share-based payment amounted to €27 million in the 2021 fiscal year
+(2020: €14 million).
+22 Other financial commitments
+In addition to provisions and liabilities, there were other financial obligations that
+were not recognized in the Consolidated Statement of Financial Position. These
+result, in particular, from unconditional purchase commitments, which are explained
+in more detail below.
+Contracts already entered into for commenced or planned investments in property,
+plant and equipment (purchase commitments) as of 30 September 2021 amounted
+to €894 million (30 September 2020: €435 million).
+In the course of its investing activities, Infineon also receives government grants
+related to the construction and financing of certain of its manufacturing facilities.
+Grants are also received for selected research and development projects. Certain
+grants have been received contingent upon Infineon complying with particular
+project-related requirements, such as creating a specified number of jobs over a
+defined period of time. From today's perspective, Infineon expects to comply with
+these requirements. Nevertheless, should such requirements not be met, as of
+30 September 2021, a maximum of €236 million (30 September 2020: €200 million)
+of subsidies already received could be refundable.
+Through certain sales and other agreements, Infineon may be obligated in the nor-
+mal course of business to indemnify its counterparties under certain conditions for
+warranties, patent infringement or other matters. The maximum amount of potential
+future payments under these types of agreements is not predictable with any degree
+of certainty, since the potential obligations are contingent on events that may or
+may not occur in the future and depend on certain facts and circumstances specific
+to each agreement. Historically, payments made by Infineon under these types of
+agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Infineon Technologies | Annual Report 2021
+Any further statements about this matter by the Company could seriously compromise
+the Company's position in this dispute.
+Management Board and
+Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 198 >
+23 Legal risks
+Litigation and government inquiries
+Smart card chips antitrust litigation
+In October 2008, the EU Commission initiated an investigation into the Company and
+other manufacturers of chips for smart cards for alleged violations of antitrust laws.
+In September 2014, the EU Commission imposed a fine of €83 million on Infineon, which
+in July 2020 was reduced to €76.9 million by the General Court of the European Union.
+Business focus and strategy
+Interest cost
+residual liability claims against Infineon. These claims can only be exercised by the
+insolvency administrator acting in the name of the creditors concerned. In the mean-
+time, settlements have been concluded with most of the major liability creditors.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon recognizes provisions and liabilities for such obligations and risks, which it
+assesses at the end of each reporting period, are more likely than not to be incurred
+(that is where, from Infineon's perspective at the end of each reporting period, the
+probability of having to settle an obligation or risk is greater than the probability of
+not having to) and the obligation or risk can be estimated with reasonable accuracy
+at this time.
+Infineon Technologies | Annual Report 2021
+6
+2
+4
+8
+2
+6
+Pension cost
+on plan assets
+(36)
+The following table shows the expected disbursements for defined benefit plans for
+the next ten fiscal years as of 30 September 2021 and 2020:
+In the 2022 fiscal year, payments of €30 million are expected to be made to plan
+assets, of which €27 million relate to benefits paid directly to pension recipients by
+the Group companies.
+As of 30 September 2021 and 2020, cumulative actuarial losses amounted to
+€403 million and €542 million, respectively.
+Expected return
+(11)
+(4)
+(7)
+(15)
+(4)
+The weighted-average duration of defined benefit plans was around 17 and 18 years
+as of 30 September 2021 and 2020, respectively.
+As described above, Infineon faces certain risks in connection with the insolvency
+proceedings relating to the assets of Qimonda and that entity's subsidiaries. In con-
+sideration of the interim report from the court-appointed expert, Infineon recorded
+provisions relating to Qimonda of €211 million in total as of 30 September 2021. This
+comprises mainly provisions for the still pending legal dispute over the alleged acti-
+vation of a shell company and liability for impairment of capital, including legal costs.
+As of 30 September 2020, provisions relating to Qimonda amounted to €206 million.
+There can be no certainty that the provisions recorded for Qimonda will be suffi-
+cient to cover all of the liabilities that could ultimately be incurred in relation to the
+insolvency of Qimonda and, in particular, the matters discussed above. In addition,
+it is possible that liabilities and risks materialize that are currently considered to be
+unlikely to do so and, accordingly, represent contingent liabilities that are not included
+in provisions. Should the alleged claims relating to the activation of a shell company
+and liability for impairment of capital prove to be valid, substantial financial obliga-
+tions above the provisions already recorded could arise for Infineon, which could have
+a material adverse effect on its business and its financial condition, liquidity position
+and results of operations.
+(9)
+(35)
+303
+282
+177
+172
+40
+38
+ber 2020
+30 Septem-
+(45)
+30 Septem-
+ber 2021
+Due after more than five years up to ten years
+Total
+Due after more than one year to five years
+Actuarial gains before taxes of €139 million and €25 million for the 2021 and 2020
+fiscal years, respectively, had been recognized outside profit (loss) for the period in
+other comprehensive income.
+Service costs were recorded within cost of goods sold to the extent that they relate
+to production employees; otherwise they are recorded as research and development
+or selling, general and administrative expenses. Interest costs and expected return
+on plan assets were recorded net as part of financial expenses.
+Due within one year
+€ in millions
+(43)
+(8)
+Defined contribution plans
+(1)
+Q =
+90
+> Section 4 paragraph 4 of the Articles of Association provides that the Management
+Board is authorized, with the approval of the Supervisory Board, to increase the
+share capital in the period until 19 February 2025 once or in several partial amounts
+by a total of up to €640,000,000 through the issue of new no par value registered
+shares, against contributions in cash or in kind (Authorized Capital 2020/1). The
+new shares participate in profits from the beginning of the fiscal year of their issue.
+To the extent legally permissible, the Management Board may, with the approval of
+the Supervisory Board, and contrary to section 60 paragraph 2 of the German Stock
+Corporation Act, stipulate that the new shares participate in the profits from the
+beginning of an already ended fiscal year for which no resolution of the Annual
+General Meeting on the use of the distributable profit has yet been made at the
+time of their issue. The originally authorized capital 2020/1, of €750,000,000 was
+reduced to €640,000,000 by the capital increase of €110,000,000 as decided by the
+Management Board and the Supervisory Board on 26 May 2020 and entered in
+the Commercial Register on 27 May 2020. Within the framework of the Authorized
+Capital 2020/1, the Management Board is authorized, with the approval of the
+Supervisory Board, to exclude the subscription rights of the shareholders in certain
+cases. Cash capital increases with subscription rights excluded pursuant to section
+186, paragraph 3, sentence 4, of the German Stock Corporation Act, are not per-
+mitted to exceed 10 percent of a company's share capital – neither at the time of the
+resolution of the authorization in the Annual General Meeting, nor at the effective
+date of the authorization, or its exercise. The capital increase of 26/27 May 2020
+utilized around 4 percent of this framework. For share capital increases against
+contributions in kind or a combination of cash contributions and contributions in
+kind, the authorization further provides an upper limit of 10 percent of the share
+capital in place at the date of the authorization in the Annual General Meeting.
+> Section 4, paragraph 7, of the Articles of Association provides that the Manage-
+ment Board is authorized, with the approval of the Supervisory Board, to increase
+the share capital in the period up to 24 February 2026 - either once or in partial
+amounts - by a total of up to €30,000,000 by issuing new no par value registered
+Infineon Technologies | Annual Report 2021
+Combined Management Report
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+As of 30 September 2021, the Company's Articles of Associations provided for two
+authorized share capitals amounting to up to €670,000,000:
+In connection with defined contribution plans, fixed contributions are made to exter-
+nal insurance providers or funds. Infineon has no further performance obligations
+or risks with regard to these pension plans in excess of the fixed contributions paid.
+Additionally, the Group makes contributions to government pension schemes.
+Expenses for defined contribution plans amounted to €234 million and €212 million
+in the 2021 and 2020 fiscal years.
+492
+Further information
+Q =
+< 193 >
+shares against contributions in cash for the purpose of increasing the issue to
+employees and members of the Executive Board of the Company or its Group
+companies. The subscription rights of the shareholders are excluded in relation to
+these shares. The shares may be issued to employees in such a manner that the
+contribution to be paid on such shares is covered by the portion of the profit for
+the year that the Management Board and Supervisory Board could transfer to
+retained earnings in accordance with section 58, paragraph 2 of the German Stock
+Corporation Act. The Management Board, with the approval of the Supervisory
+Board, decides on the additional content of the share rights and the conditions of
+share issue (Authorized Capital 2021/I).
+Conditional capital
+As of 30 September 2021, the Company's Articles of Associations provided for a con-
+ditional capital amounting to up to €260,000,000:
+Hybrid capital
+Infineon Technologies AG issued a perpetual hybrid bond on 1 October 2019 to
+refinance the acquisition of Cypress, which is an equity instrument under IAS 32.
+The term is not contractually limited; the bond has no final maturity date. The hybrid
+bond can only be canceled by Infineon subject to certain conditions. The investors
+have no cancellation rights and cannot trigger a premature repayment liability for
+Infineon. Distributions are at Infineon's sole discretion.
+In the 2021 fiscal year, €39 million (2020: €39 million) was recognized in equity as
+compensation to hybrid capital investors. For the purpose of calculating earnings
+per share, the profit (loss) for the period attributable to the shareholders and hybrid
+capital investors of Infineon Technologies AG of €1,169 million (2020: €368 million)
+was reduced by compensation to the hybrid capital investors of €26 million (2020:
+€35 million; net of tax), to €1,143 million (2020: €333 million) (see note 7, ☐ p. 176 f.).
+520
+The hybrid capital investors' compensation is paid annually in arrears on 1 April of
+each year, subject to repayment or redemption. On 1 April 2021, €39 million (2020:
+€20 million) was paid out to the hybrid capital investors.
+Authorized share capital
+Additional paid-in capital
+Notes to the Consolidated Financial Statements
+(543)
+19 Equity
+Ordinary share capital
+The following table shows a reconciliation of the number of ordinary shares issued as
+of 30 September 2021 and 2020:
+quantity
+Shares outstanding at the beginning of the fiscal year
+Creation of new shares through capital increase from authorized capital
+Creation of new shares through the exercise of
+option rights under stock option plans
+Transfer of own shares under the Performance Share
+and Restricted Stock Unit Plans (see note 21, p. 195 ff.)
+The pro rata expense for share-based payment resulted in an increase in additional
+paid-in capital of €27 million in the 2021 fiscal year (2020: €14 million). Due to the
+transfer of own shares to employees and members of the Management Board, addi-
+tional paid-in capital, as well as the line item for own shares, decreased by €5 million
+(2020: €4 million). Tax effects totaling €29 million (2020: €22 million) increased the
+additional paid-in capital. In the previous year, the issue of 55,000,000 new shares
+resulted in a significant increase in additional paid-in capital of €934 million.
+Shares outstanding at the end of the fiscal year
+Shares issued at the end of the fiscal year
+2021
+2020
+1,300,669,746
+1,244,684,071
+55,000,000
+237,066
+705,789
+1,301,375,535
+4,545,602
+1,305,921,137
+748,609
+1,300,669,746
+5,251,391
+1,305,921,137
+As of 30 September 2021, the ordinary share capital amounted to €2,611,842,274 and
+was fully paid up. It was divided into 1,305,921,137 no par value registered shares,
+each representing €2 of the Company's ordinary share capital. Each share grants the
+holder one vote and an equal portion of the profits in the form of a dividend as resolved
+by the Annual General Meeting. Own shares held by the Company as of the date of
+the Annual General Meeting carry no voting rights and are not entitled to a dividend.
+Consolidated Financial Statements
+Repurchased own shares
+Retained earnings
+> Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is
+conditionally increased by up to €260,000,000 through the issue of up to 130,000,000
+new no par value registered shares for the granting of shares to creditors or the
+holders of warrants or convertible bonds, which due to the authorization by the
+Annual General Meeting on 20 February 2020 are issued by the Company or a sub-
+sidiary company (Conditional Capital 2020/1).
+€ in millions
+Q = < 194 >
+With regard to the 2021 fiscal year, a dividend of €0.27 for each share entitled to a
+dividend shall be proposed to be paid from the €353 million of distributable profits
+of Infineon Technologies AG. This would result in an expected distribution of approxi-
+mately €351 million. The payment of this dividend depends on the approval of the
+Annual General Meeting on 17 February 2022.
+Other reserves
+The following table shows a reconciliation of retained earnings as of 30 Septem-
+ber 2021 and 2020:
+€ in millions
+Foreign currency translation
+differences
+2021
+2020
+Pre-tax
+Tax
+Net of tax
+Pre-tax
+Further information
+Tax
+90
+Unrealized gains (losses)
+resulting from hedge
+accounting
+(1)
+Realized gains (losses)
+resulting from hedge
+accounting
+48
+17
+Cost of hedging
+Total
+Net of tax
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Changes in other reserves during the 2021 and 2020 fiscal years were as follows:
+Business focus and strategy
+As of 1 October 2019
+Profit (loss) for the period attributable to shareholders
+and hybrid capital investors of Infineon Technologies AG
+Dividends to shareholders of Infineon Technologies AG
+Compensation of hybrid capital investors
+Actuarial gains on pensions and similar commitments net of tax of €6 million
+As of 30 September 2020
+Profit (loss) for the period attributable to shareholders
+and hybrid capital investors of Infineon Technologies AG
+Dividends to shareholders of Infineon Technologies AG
+Compensation of hybrid capital investors
+Combined Management Report
+421
+368
+(336)
+(39)
+21
+Actuarial gains on pensions and similar commitments net of tax of €11 million
+As of 30 September 2021
+1,169
+435
+Infineon Technologies | Annual Report 2021
+For the 2020 fiscal year, a cash dividend of €0.22 per share (total amount: €286 million)
+was paid. For the 2019 fiscal year, a cash dividend of €0.27 per share (total amount:
+€336 million) was paid.
+Dividends
+"Actuarial gains on pensions and similar commitments" contain the share of profit
+(loss) of associates and joint ventures accounted for using the equity method in the
+2021 fiscal year of €0 million (2020: losses €0 million).
+Management Board and
+Supervisory Board
+128
+(39)
+(286)
+1,407
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 208 >
+Derivative financial instruments designated as a hedging relationship
+As of 30 September 2021 and 2020, Infineon held the following instruments, which
+were designated as cash flow hedges and were used to hedge against interest rate
+and commodity price changes:
+30 September 2021
+Commodity swaps
+Nominal value (€ in millions)
+Average price (US dollar/ounce)
+30 September 2020
+Interest rate swaps
+Hedging of interest risks
+Hedging of other risks
+Management Board and
+Supervisory Board
+The nominal values and fair values of Infineon's derivative instruments as of 30 Sep-
+tember 2021 and 2020 that were not designated as cash flow hedges were as follows:
+(3)
+3
+therein foreign currency exchange
+30 September 2020
+30 September 2021
+(40)
+3
+Financial assets or liabilities measured at fair value
+through profit and loss - held for trading
+(3)
+Financial liabilities at fair value through profit or loss
+Nominal value (US$ in millions)
+Derivative financial instruments not designated as a hedging relationship
+Infineon holds derivative financial instruments exclusively for hedging purposes. This
+includes the use of forward exchange contracts, foreign currency options, interest- and
+commodity swaps. The objective is to reduce the impact of exchange rate, interest
+rate and commodity price fluctuations on future net cash flows.
+Derivative financial instruments and hedging activities
+Infineon does not net financial instruments. Infineon conducts derivative transactions
+according to the global netting agreement (Master Agreement) of the International
+Swaps and Derivatives Association (ISDA) and other comparable national framework
+agreements. Under the terms of these agreements, any netting arising from the
+occurrence of certain future events would have had no material effect on the balance
+sheet presentation of these financial instruments.
+therein interest income
+Financial assets measured at amortized cost
+€ in millions
+The net gain or loss on financial instruments (including interest income and expense)
+within continuing operations in the Consolidated Statement of Profit or Loss
+amounted to the following as of 30 September 2021 and 2020:
+Gains and losses in relation to financial instruments
+(5)
+(2)
+therein other financial expenses
+(40)
+Infineon Technologies | Annual Report 2021
+Nominal
+Nominal
+Total
+Interest expense on financial liabilities measured at amortized cost mainly included
+interest on financial debt and effects from using the effective interest method.
+2
+151
+2
+236
+Forward exchange contracts purchased
+(2)
+144
+(5)
+280
+Forward exchange contracts sold
+(118)
+(139)
+Total
+value
+value
+value
+value
+€ in millions
+Fair
+Fair
+Average interest rate
+Hedging of foreign exchange risk
+Commodity swaps
+2020
+2021
+The amounts related to positions designated as hedged items were as follows as of
+30 September 2021 and 2020:
+Effects from derivative financial instruments designated
+as a hedging relationship
+Day one losses at end of the fiscal year
+Reversal through profit or loss in the period
+Addition from new transactions
+Day one losses at beginning of the fiscal year
+€ in millions
+The development of the day one losses was as follows:
+Notes to the Consolidated Financial Statements
+Q = < 209 >
+Further information
+Consolidated Financial Statements
+1
+Combined Management Report
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Interest rate swaps with a nominal volume of €2,025 million already matured in the
+2020 fiscal year. In the course of the US private placement of the notes in April 2021
+(see note 15, p. 184 f.), the remaining interest rate swaps with a nominal volume of
+US$750 million matured on 26 March 2021, resulting in a cash outflow of €23 million.
+The amounts from this hedging relationship that continue to be recognized in other
+reserves amounting to negative €19 million will be recognized in interest expense over
+the term of the individual tranches of the notes. Ineffectiveness of €2 million from
+the interest rate swaps was recognized in the Consolidated Statement of Profit or
+Loss in the 2021 fiscal year. This arose as a result of a deviation between the actual
+and planned credit terms. A further €2 million was related to the transaction-related
+premium implicit in the swap rates. Of this, €1 million had already been recognized
+in profit or loss in the previous year.
+In view of future refinancing measures, in December 2019, Infineon partially hedged
+against the risk of rising interest rates with transaction-dependent interest rate hedging
+transactions with a total nominal volume of €2,025 million and US$750 million, which
+were accounted for as cash flow hedges. For the aforementioned hedging relation-
+ships, there was at all times an economic relationship between the hedged item
+and the hedging instrument (critical term). The hedging ratio was 1:1. As part of the
+hedging, the swap rates were designated in their volume to 100 percent. On the other
+hand, the transaction-dependent premium implicit in the swap rates was excluded
+from the designation of the hedging instrument. The resulting market price deviations
+from the respective transaction price were capitalized as so-called day one losses
+and were recognized directly in the Consolidated Statement of Profit or Loss over the
+term of the hedges until the date of the refinancing measures.
+Hedging of interest risks
+Foreign exchange derivatives are entered into by Infineon to offset the exchange
+risk from anticipated cash receipts from operating activities. In the 2021 fiscal year,
+no foreign exchange derivatives were designated as cash flow hedges to hedge the
+operating activities. In connection with the acquisition of Cypress, foreign exchange
+derivatives were acquired in the previous year to hedge the operating activities,
+which were redesignated as cash flow hedges. These foreign currency derivatives
+expired in full in the previous year.
+1,765
+15
+1.9548%
+750
+1,813
+21
+Short term
+Hedging of foreign exchange risk
+Business focus and strategy
+11
+(1)
+(10)
+Nominal value (€ in millions)
+Average price (US dollar/ounce)
+Infineon Technologies | Annual Report 2021
+In the 2021 and 2020 fiscal years, no balances remained in other comprehensive
+income for which hedge accounting was no longer applied.
+(97)
+1
+(1)
+(98)
+99
+(98)
+(75)
+(50)
+(1)
+1
+(49)
+19
+Hedging of commodity price risks
+Total
+Interest rate swaps
+1
+€ in millions
+Change in the value
+of the hedged item
+used to determine
+ineffectiveness
+Hedge reserve
+(before taxes)
+Hedging of other risks
+Hedging of other risks
+To hedge the price risks of highly probable gold purchases in the 2022 fiscal year,
+Infineon entered into swaps, which are designated as cash flow hedges. The desig-
+nated hedged items and the hedging instruments were subject to the same risk.
+The economic connection was proven by means of a regression analysis. Due to the
+execution of only highly effective hedging transactions, Infineon assumes that signifi-
+cant ineffective elements will normally not be generated. Infineon applies a hedging
+ratio of 1:1. Ineffectiveness can be caused mainly from the impact of the credit risks
+arising from the counterparty and the Company on the fair value of the swap, that
+is not reflected in the change in the fair value of hedged cash flows attributable to
+changes in raw material prices. As in the previous year, no hedge ineffectiveness was
+recorded in the Consolidated Statement of Profit or Loss for these hedging relation-
+ships. As in the previous year, no gains or losses were transferred from other reserves
+to profit or loss as a result of cash flow hedges for future raw material purchases
+being canceled following the decision that the occurrence of the hedged transaction
+had become unlikely.
+Hedging of interest risks
+Interest rate swaps
+Hedging of commodity price risks
+Total
+30 September 2020
+107
+Deal Contingent Forward
+Deal Contingent Option
+Hedging of interest risks
+30 September 2021
+(36)
+17
+(120)
+Total
+Other non-current assets
+Non-current assets:
+2
+2
+1,066
+1,066
+1,456
+1,456
+Cash and cash equivalents
+Financial investments
+Other current assets
+46
+2,616
+2,638
+94
+114
+Level 3
+Level 2
+Current liabilities:
+Level 1
+Short-term financial debt and current portion
+of long-term financial debt
+Other current liabilities
+€ in millions
+< 206 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+16
+16
+149
+149
+Total
+6
+143
+6
+143
+Fair value by category
+Fair value
+30 September 2021
+Current assets:
+8,908
+141
+9,409
+77
+77
+77
+235
+6,783
+235
+6,528
+6,528
+Infineon Technologies | Annual Report 2021
+Total
+Non-current leasing liabilities
+Other non-current liabilities
+Long-term financial debt
+Non-current liabilities:
+Other current liabilities
+66
+294
+9,374
+Management Board and
+Supervisory Board
+€ in millions
+The allocation to the levels as of 30 September 2021 and 2020 was as follows:
+> Level 3: valuation parameters for assets and liabilities, which are not based on
+observable market data.
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1,
+but which can be observed either directly or indirectly for the assets
+or liabilities,
+› Level 1: quoted prices (unadjusted) in active markets for identical assets and
+liabilities,
+Financial instruments measured at fair value are allocated to the following measure-
+ment levels in accordance with IFRS 13. The allocation to the different levels is based
+on the market proximity of the valuation parameters used in the determination of the
+fair values:
+Financial instruments at fair value
+The fair value of current and non-current financial debt that is measured at amortized
+cost is based either on quoted prices as of the reporting date (level 1) or is determined
+based on expected future cash flows discounted using a current market interest rate
+(level 2). As of 30 September 2021, short-term financial debt and current portion of
+long-term financial debt was assigned to level 1 with a fair value of €504 million (pre-
+vious year: €0 million) and to level 2 with a fair value of €193 million (previous year:
+€139 million). As of 30 September 2021, fair values of non-current financial debt which
+were allocated to level 1, amounted to €3,077 million (previous year: €3,521 million).
+As of 30 September 2021, fair values for level 2 amounted to €2,972 million (previous
+year: €3,262 million).
+30 September 2020
+For assets allocated to the category "At amortized cost", it is assumed that the
+fair values correspond to their carrying amounts. The same assumption applies to
+liabilities resulting from trade payables and other current liabilities categorized as
+"Other financial liabilities (amortized cost)".
+Disclosures about fair value
+In the 2021 and 2020 fiscal years, there were no reclassifications between the categories
+of financial instruments.
+Within financial assets measured at amortized cost, financial assets with a carrying
+amount of €12 million (previous year: €2 million) were included as of 30 September
+2021, which Infineon has pledged as collateral for liabilities or contingent liabilities.
+In addition, €0 million (previous year: €1 million) relating to an agreement in connec-
+tion with the subsequent liability as shareholder with personal liability of Qimonda
+Dresden GmbH & Co. OHG (see note 23, p. 199) was deposited in an escrow account
+as security against potential claims against Infineon.
+Q = < 205 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Financial instruments at amortized cost
+Current assets:
+Financial investments
+Fair value
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+A hypothetical change in the material non-observable valuation parameters at the
+balance sheet date of ± 10 percent would have resulted in a theoretical reduction
+in fair values of €1 million or an increase of €1 million (previous year: both €1 million).
+1 This relates to gains recognized in financial income or losses recognized in financial expenses.
+2 This relates to the sale of an investment acquired in the course of the acquisition of Cypress.
+16
+13
+(1)
+16
+13
+(1)
+(13)
+(13)
+17
+or loss 1,2
+in profit
+Unrealized
+losses
+recognized in
+profit
+or loss¹
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 207 >
+2021
+(139)
+therein interest expenses
+(18)
+(177)
+Financial liabilities measured at amortized cost
+(15)
+13
+Financial assets measured at fair value through profit and loss
+Sales
+(including
+disposals)
+(70)
+therein foreign currency exchange
+(1)
+therein impairment losses
+28
+5
+(42)
+24
+2020
+19
+therein foreign currency exchange
+30 Sep-
+tember
+2020
+30 Sep-
+tember
+Short-term financial debt and current portion
+of long-term financial debt
+Current liabilities:
+Total
+Other non-current assets
+Non-current assets:
+3
+3
+Other current assets
+777
+777
+1,524
+1,524
+Cash and cash equivalents
+Level 3
+Level 2
+Fair value by category
+Level 1
+Other current liabilities
+Total
+98
+81
+Realized
+gains
+recognized
+Equity investments
+Total
+€ in millions
+The following table shows the reconciliation of financial instruments classified as
+level 3 (before tax):
+Short-term financial debt included the conversion rights from convertible bonds
+acquired in the course of the acquisition of Cypress (see note 15, □ p. 184 f.), which can be
+exercised against cash payment by bondholders until the maturity of the instruments.
+The fair value of the conversion rights was determined by discounting future cash
+flows according to the discounted cash flow method. Valuation parameters observed
+on the reporting date in the relevant markets, such as interest rates and US dollar spot
+rates drawn from reliable external market data providers, were used (level 2).
+instruments whose fair value was calculated using recognized financial-mathematical
+models, with only observable input parameters included in the measurement (level 2).
+For equity investments where no market price from an active market is available, the
+fair value was determined by considering existing contractual arrangements based
+on externally observable dividend policy (level 3).
+Other non-current assets included equity investments and investments in funds. Where
+these are traded on an active market, the fair value was based on the actual market
+price (level 1). In addition, other non-current assets included derivative financial
+Other current assets and other current liabilities contained derivative financial
+instruments (including cash flow hedges to hedge planned raw material purchases).
+Their fair value was determined by discounting future cash flows according to the
+discounted cash flow method. Where possible, valuation parameters observed on
+the reporting date in the relevant markets (such as currency rates, interest rates,
+or commodity prices) drawn from reliable external market data providers were used
+(level 2).
+2021
+Cash equivalents and financial investments included investments in money market
+funds and investment funds (level 1).
+139
+68
+207
+139
+68
+17
+3
+2,382
+2,402
+17
+207
+(2)
+139
+845
+Ending balance
+changes
+Acquisitions¹
+Currency effects
+New leases
+Other changes
+7,033
+(487)
+1
+1
+294
+7,328
+(76)
+(562)
+29
+10
+Non-cash effective changes
+Cash-effective
+Starting balance
+Total
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 202 >
+Disclosure of the individual remuneration of the members of the Management Board
+and the Supervisory Board as required by section 315e, paragraph 1, in connection
+with section 314, paragraph 1, no. 6a, sentences 5 to 8, of the German Commercial Code
+(version before ARUG II), is provided in the remuneration report which is part of the
+Combined Management Report. p. 132 ff.
+6,585
+In the 2021 and 2020 fiscal years, there were no significant transactions between
+Infineon and related persons which fall outside of the scope of the existing employ-
+ment, service or appointment terms, or of the contractual arrangements for their
+remuneration.
+Cash and cash equivalents reported as of 30 September 2021 and 2020 totaling
+€1,749 million and €1,851 million, respectively, included €104 million and €77 million,
+respectively, which were subject to legal transfer restrictions and so were not avail-
+able for general use by Infineon. This amount represented cash and cash equivalents
+of consolidated companies located in countries where the transfer of cash is legally
+restricted, for example China.
+The reconciliation below shows changes in those financial liabilities and hedging
+transactions for which payments received and made are shown under cash flows from
+financing activities in the statement of cash flows.
+€ in millions
+The 2021 fiscal year
+Short-term and long-term financial debt
+Related party financial payables
+Short-term and long-term leasing liabilities
+25 Supplemental cash flow information
+Management Board and
+Supervisory Board
+2
+110
+(8)
+63
+294
+Total
+1,818
+4,381
+1,375
+(314)
+63
+5
+7,328
+1 Amounts shown for the 2020 fiscal year as "Acquisitions" related to financial debt acquired in connection with the acquisition of Cypress.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+40
+(63)
+262
+Short-term and long-term leasing liabilities
+331
+32
+110
+10
+6,918
+The 2020 fiscal year
+Short-term and long-term financial debt
+3
+Related party financial payables
+4,443
+1,335
+(306)
+5
+7,033
+1
+1
+1,556
+17
+75
+20
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 201 >
+Related companies
+Infineon purchases certain raw materials and services from and sells certain products
+and services to related companies. These purchases from and sales to related com-
+panies are generally effected at arm's length.
+Related companies receivables and payables as of 30 September 2021 and 2020
+consisted of the following:
+€ in millions
+Trade and other receivables
+Joint
+ventures
+30 September 2021
+Other
+related
+companies
+30 September 2020
+Joint
+ventures
+Associates
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+24 Transactions with related companies and persons
+Infineon has transactions in the normal course of business with joint ventures, asso-
+ciates and other related companies (collectively "related companies”). The related
+companies are disclosed in note 29, □ p. 225 ff. Related persons are persons in key
+management positions, in particular members of the Management and Supervisory
+Board (see note 29, □ p. 222 f.) and their close relatives (collectively "related persons”).
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 200 >
+Other
+6
+Infineon is also involved in various other legal disputes and proceedings in connection
+with its existing or previous business activities. These can relate, in particular, to
+products, services, patents, export control and environmental issues and other matters.
+Furthermore, in connection with its existing or previous business operations, Infineon
+is also exposed to numerous legal risks, which have until now not resulted in legal
+disputes. These include risks related to product liability, environment, capital market,
+anti-corruption, competition and antitrust legislation as well as export control and
+other compliance regulations. Claims could also be made against Infineon in connec-
+tion with these matters in the event of breaches of law committed by individual
+employees or third parties.
+As part of an audit finding relating to the tax treatment of losses from the repurchase
+of convertible bonds in the 2011 and 2012 fiscal years, as of 30 September 2021
+and 2020, there was a contingent liability of €55 million for withholding tax payables
+plus interest. Suspension of enforcement has been granted under the current appeal
+procedure. Infineon expects that there is a sufficient likelihood of winning any potential
+appeal or legal action.
+Provisions and contingent liabilities for legal proceedings and
+other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded
+when it is probable that a liability has been incurred and the associated amount can
+be reasonably estimated. To the extent that liabilities arising from legal disputes and
+other uncertain legal positions are not probable or cannot be reliably estimated, then
+they qualify as contingent liabilities.
+Any potential liability is reviewed again as soon as additional information becomes
+available and the estimates are revised if necessary. Provisions with respect to these
+matters are subject to future developments or changes in circumstances in each of
+the matters, which could have a material adverse effect on Infineon's financial condi-
+tion, liquidity position and results of operations.
+A settlement or adverse judicial decision in any of the matters described above
+could result in significant financial liabilities for Infineon and other adverse effects,
+and these in turn could have a material adverse effect on its business and financial
+condition, liquidity position and results of operations. Irrespective of the validity
+of the allegations and the success of the aforementioned claims and other matters
+described above, Infineon could incur significant costs in the defense of these matters.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution
+of these other pending legal disputes and proceedings will have a material adverse
+effect on Infineon's financial condition, liquidity position and results of operations.
+However, future revisions to this assessment cannot be ruled out, and any reassess-
+ment of the miscellaneous legal disputes and proceedings could have a material
+adverse effect on the financial condition, liquidity position and results of operations,
+particularly in the period in which reassessment is made.
+3
+4
+5
+Other
+related
+companies
+75
+18
+3
+29
+5
+2
+Joint Associates
+ventures
+As of 30 September 2021, sales and services relationships with related companies
+resulted in purchase commitments of €22 million (30 September 2020: €4 million).
+Related persons
+The remuneration of the members of the Supervisory Board of Infineon Technologies
+AG in the 2021 fiscal year, including attendance fees, amounted to €2.1 million (2020:
+€2.1 million). Employee representatives in the Supervisory Board who are employed
+by Infineon also receive a salary for their activities as employees.
+Former members of the Management Board received payments (in particular pension
+payments) of €2.6 million in the 2021 fiscal year (2020: €2.2 million).
+As of 30 September 2021, pension obligations for former members amounted to
+€72.4 million (30 September 2020: €76.6 million).
+Products and
+services received
+Infineon Technologies | Annual Report 2021
+80
+Members of the Management Board active in the 2021 fiscal year received fixed
+non-performance-related remuneration for their services of €4.1 million (2020:
+€3.8 million). In addition, the members of the Management Board received variable
+performance-related remuneration for their services in the 2021 fiscal year of
+€8.6 million (2020: €3.6 million). This comprised a Short-Term Incentive of €3.4 mil-
+lion (2020: €1.4 million), and a Mid-Term Incentive of €0 million (2020: €1.3 million).
+Furthermore, the Management Board received a Long-Term Incentive (LTI) which,
+since 2014, takes the form of performance shares. The expense resulting from the LTI
+amounted to €5.1 million (2020: €0.9 million). The remuneration granted to active
+members of the Management Board amounted to €12.7 million in the 2021 fiscal year
+(2020: €7.3 million).
+Combined Management Report
+Other
+related
+companies
+2020
+Financial receivables
+33
+1
+32
+Trade and other payables
+Financial payables
+7
+2
+2
+Joint Associates
+ventures
+9
+1
+1
+1
+Sales and service charges to and products and services received from related com-
+panies in the 2021 and 2020 fiscal years consisted of the following:
+€ in millions
+Sales and service charges
+2021
+Other
+related
+companies
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Associates
+Q = < 203 >
+Current liabilities:
+Short-term financial debt and current portion
+of long-term financial debt
+833
+143
+690
+Trade payables
+1,569
+1,569
+840
+1,569
+Current leasing liabilities
+Other current liabilities
+Non-current liabilities:
+Long-term financial debt
+Non-current leasing liabilities
+As of 30 September 2021
+Fair value
+instruments
+(cash flow hedges)
+Others
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 204 >
+66
+Notes to the Consolidated Financial Statements
+Carrying amount
+Categories of financial liabilities
+Not assignable to any
+IFRS 9 measurement category
+At fair value through
+profit or loss
+Other
+financial liabilities
+(amortized cost)
+Designated hedging
+Financial liabilities, € in millions
+Infineon Technologies | Annual Report 2021
+66
+5
+Short-term financial debt and current portion
+of long-term financial debt
+505
+Trade payables
+1,160
+366
+1,160
+509
+1,160
+Current leasing liabilities
+59
+59
+845
+2
+777
+66
+Further information
+Current liabilities:
+9,281
+331
+1
+745
+1
+751
+Other non-current liabilities
+Total
+5,752
+5,752
+751
+265
+265
+72
+72
+72
+9,308
+148
+8,828
+6,049
+4,834
+As of 30 September 2020
+2,432
+1,483
+156
+2
+154
+Not assignable to any IFRS 9
+measurement category
+Fair value
+Designated hedging
+instruments
+(cash flow hedges)
+1,749
+2,173
+1,483
+156
+Other current assets
+Non-current assets:
+Other non-current assets
+1,483
+1,107
+1,066
+2,173
+26 Additional disclosures on financial instruments
+1
+Categories of financial instruments
+The following tables present the carrying amounts and the fair values of financial
+instruments by their respective classes and a breakdown by category of financial
+instruments as of 30 September 2021 and 2020 according to IFRS 9:
+Financial assets, € in millions
+As of 30 September 2021
+Current assets:
+193
+Cash and cash equivalents
+Trade receivables
+Categories of financial assets
+At fair value through
+profit or loss
+At amortized cost
+1,749
+1,456
+293
+Financial investments
+114
+Carrying amount
+193
+1,196
+Other current assets
+257
+2
+254
+1
+257
+1,196
+Non-current assets:
+98
+56
+154
+2,401
+Total
+79
+4,834
+Other non-current assets
+1,196
+154
+1,376
+2,638
+3,116
+Trade receivables
+5,754
+5,754
+Total
+Current assets:
+Cash and cash equivalents
+1,851
+As of 30 September 2020
+1,524
+327
+599
+1,851
+Financial investments
+1,376
+777
+30 September 2021
+Holding Quality 1
+AA- to BBB
+1
+A to BBB
+30 September 2020
+Holding Quality 1
+Holding Quality 0
+Total
+926
+926
+1
+1,401
+1
+Holding Quality 0
+Total
+Basis for the
+determination of
+the loss allowance
+At amortized cost
+-
+1
+Expected
+12-month
+credit loss
+1,401
+Infineon rating
+€ in millions
+The following table provides information on the credit risk for cash and cash
+equivalents measured at amortized cost, as well as financial investments as of
+30 September 2021 and 2020:
+using a weighted-probability method. This impairment is calculated as a measure
+of the probability of default based on the exposure at the balance sheet date, the loss
+ratio for that exposure, and the credit default swap spread.
+Q = < 215 >
+Combined Management Report
+Expected lifetime
+credit loss
+non-credit-impaired
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+External rating
+As in the previous year, Infineon had no financial assets that were overdue or impaired
+as of 30 September 2021. There was no reclassification between the impairment
+levels in the 2021 and 2020 fiscal years.
+low risk
+Infineon manages the credit risk with respect to trade receivables through a com-
+prehensive credit evaluation for all major customers, the use of credit limits and
+monitoring procedures. New customers are evaluated for creditworthiness in accor-
+dance with Infineon guidelines. Credit limits are also in place for individual customers
+and creditworthiness and credit limits are constantly monitored. A further measure
+taken to reduce credit risk is the use of reservation of title clauses. However, despite
+continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising
+from the default of one of its contract parties.
+A- to AAA
+Total
+Business focus and strategy
+others
+individual
+high risk
+5
+increased risk
+4
+3
+2
+1
+above average risk
+As in the previous year, Infineon spread its cash investments over more than ten banks
+as of 30 September 2021. As of 30 September 2021, no financial institution was respon-
+sible for more than 18 percent (30 September 2020: 22 percent) of Infineon's cash
+investments. This gave rise to a maximum risk of €220 million (30 September 2020:
+€160 million) in the event of the default of a single financial institution assuming no
+deposit insurance scheme is in place. In addition, to spread the risk of investment,
+investments were made in money market funds with the best rating, and in money
+market investment funds. Infineon also held derivative financial instruments with a
+positive fair value of €2 million as of 30 September 2021 (30 September 2020: €2 million).
+average risk
+Risk class
+Infineon rating
+€ in millions
+The following table provides information about the credit risk for trade receivables
+from third parties as of 30 September 2021 and 2020:
+< 216 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Infineon assigns trade receivables to different risk classes based on external ratings,
+the analysis of customer balance sheet figures, default probabilities (credit default
+swaps), customer payment behavior and country risks. The simplified method is used
+to determine the expected losses from trade receivables. The expected losses over
+the entire term of the trade receivables are determined. The allowance is calculated
+for each customer using a weighted-probability method. In calculating the expected
+credit losses, for each customer, Infineon takes into account a forward-looking
+probability of default provided by a credit rating agency. Individual allowances are
+recorded based on case-by-case facts or other risk indicators.
+External credit rating
+Management Board and
+Supervisory Board
+641
+Infineon applies the general impairment model in accordance with IFRS 9 for cash and
+cash equivalents as well as financial investments. Since Infineon invests exclusively
+in high-quality financial assets from issuers with a rating of at least investment grade
+in order to minimize default risk, Infineon assumes that its financial assets carry low
+credit risk arising from the creditworthiness of its contract parties, so that any impair-
+ment loss recorded at first-time recognition is limited to the twelve-month expected
+credit losses. Infineon considers low credit risk to be an internal credit rating "Hold-
+ing Quality 1". A change in the internal rating from "Holding Quality 1" to "Holding
+Quality 0" indicates a significant increase in credit risk. The impairment is calculated
+(59)
+53
+(2)
+2
+(139)
+Designated interest rate
+hedging instruments
+(cash flow hedging relationships)
+Fixed-interest financial liabilities
+measured at fair value through
+profit or loss
+(59)
+53
+(18)
+(22)
+6
+(24)
+(2,369)
+Variable-interest financial liabilities
+22
+Variable-interest financial assets
+353
+(143)
+སྶ$
+30 September 2020
+profit or loss
+measured at fair value through
+Fixed-interest financial liabilities
+1
+(10)
+(959)
+BBB to BBB+
+Variable-interest financial liabilities
+As in the previous year, Infineon did not hold any fixed-rate financial assets that are
+measured at fair value through profit or loss. Furthermore, as in the previous year,
+Infineon did not hold any fixed-interest financial assets that were measured at fair
+value through other comprehensive income.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Credit risk arises when a customer or other counterparty of a financial instrument
+fails to discharge its contractual obligations. Infineon is exposed to this risk as a con-
+sequence of its ongoing operations, its financial investments and certain financing
+activities. Infineon's credit risk arises primarily from cash and cash equivalents, finan-
+cial investments, trade receivables and derivative financial instruments. Excluding the
+impact of any collateral received, the carrying amount of financial investments, cash
+and cash equivalents and trade receivables corresponds to the maximum credit risk.
+Foreign exchange and interest hedging contracts as well as the investment of liquid
+assets in cash equivalents and financial investments are entered into with major
+financial institutions worldwide that have high credit ratings. Infineon assesses the
+creditworthiness of banks using a methodology that establishes investment limits
+for individual banks that are updated on a daily basis based on current ratings (S&P,
+Moody's or Fitch) and credit default swap premiums. Possible breaches of stipulated
+investment thresholds result in immediate notification and the requirement to reduce
+the risk. This methodology is also used to identify a significant increase in credit risk
+in the context of the recognition of expected credit losses within the meaning of
+IFRS 9 at the balance sheet date.
+Credit risk
+(2)
+2
+15
+(2)
+2
+21
+minus 10%
+plus 10%
+Equity
+Nominal
+value
+Commodity swaps
+Infineon Technologies | Annual Report 2021
+30 September 2020
+30 September 2021
+€ in millions
+The following table presents the effect on equity of a change in the relevant market
+prices by ± 10 percent as of 30 September 2021 and 2020.
+Additionally, Infineon is exposed to price risks with respect to raw materials upon
+which it is dependent. Infineon seeks to minimize these risks through its procure-
+ment policy (including the use of multiple sources, where possible) and its operating
+procedures. In line with these measures, Infineon concluded additional financial
+derivative contracts for certain commodity supplies (gold) for the following fiscal year
+in order to mitigate the remaining risk arising from the fluctuation of commodity
+prices (see note 26, □ p. 209 ff.).
+In the 2021 fiscal year, Infineon held financial instruments that are exposed to market
+price risks. A change in the relevant market prices would have had no significant
+impact on the result of the 2021 and 2020 fiscal years.
+According to IFRS 7, other price risk is defined as the risk that the fair value or future
+cash flows of a financial instrument could fluctuate because of changes in market
+prices (other than those arising from interest rate risk or exchange rate risk), irrespec-
+tive of whether those changes are caused by factors specific to the individual financial
+instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+Other price risk
+Notes to the Consolidated Financial Statements
+< 214 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Commodity swaps
+BB+ to BBB-
+3,108
+C to B+
+229
+229
+2,965
+92
+92
+1,362
+1,846
+1,165
+2,624
+10,054
+Beyond 2025
+2025
+2024
+(161)
+2023
+2021
+Total
+3,108
+1,207
+133
+1,424
+940
+3,314
+10,126
+(301)
+(301)
+307
+307
+2022
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+(161)
+2,692
+(25)
+Corporate and Eliminations
+Other Operating Segments comprise the remaining activities of divested businesses
+and other business activities. Since the sale of the Wireless mobile phone business,
+supplies to Intel Mobile Communications and MaxLinear are included in this segment.
+Also included are supplies of LDMOS wafers and related components to Wolfspeed, Inc.
+(formerly Cree, Inc.), since the sale of the major part of Infineon's Radio Frequency
+Power Components business.
+Other Operating Segments
+The Connected Secure Systems segment designs, develops, manufactures and
+markets semiconductor-based security solutions for networked devices, card-based
+applications, and government documents, on the one hand, and microcontrollers for
+industrial, entertainment, and household applications, components for connectivity
+solutions; and a customer support ecosystem consisting of software, services, and
+development platforms, on the other.
+Connected Secure Systems
+The Power & Sensor Systems segment designs, develops, manufactures and markets
+semiconductors for energy-efficient power supplies, mobile devices, mobile phone
+network infrastructures, human-machine interaction as well as applications with
+special demands on their robustness and reliability.
+Power & Sensor Systems
+The Industrial Power Control segment designs, develops, manufactures and markets
+semiconductor products for the conversion of electrical energy for small, medium
+and high-power applications. The products are used in the manufacturing, the low-loss
+transmission, the storage and the efficient use of electrical energy.
+Industrial Power Control
+The Automotive segment designs, develops, manufactures and markets semiconductor
+products used in the automotive industry (powertrain, driver assistance and safety
+systems, information security, infotainment and comfort electronics), and also memory
+products for specific applications.
+Automotive
+The basis for identifying the reporting segments is the differences between the
+products and applications. In the 2021 fiscal year, Infineon's business was structured
+into the four operating segments Automotive, Industrial Power Control, Power &
+Sensor Systems and Connected Secure Systems. In addition, Infineon differentiates
+Other Operating Segments as well as Corporate and Eliminations.
+10,122
+Identification of segments
+Q = < 218 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Future cash flows from derivative financial instruments (see note 26, ☐ p. 207 ff.) may
+differ from the amounts shown in the table, since exchange rates or relevant factors
+are subject to change.
+2,965
+92
+1,362
+1,846
+1,165
+28 Segment reporting
+BB- to BB
+Total
+Cash outflow
+Infineon Technologies | Annual Report 2021
+The following table discloses the maturity profile for non-derivative financial liabilities
+and a cash flow analysis for derivative financial instruments with negative fair values.
+The table shows the undiscounted contractually agreed cash flows that result from
+the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign cur-
+rencies were translated using the closing rate at the reporting date. The value of
+financial instruments with variable interest payments is determined using the interest
+rate from the last interest fixing date before 30 September 2021 and 2020. The cash
+outflows of financial liabilities that can be repaid at any time are assigned to the
+period in which the earliest redemption is possible.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing
+financial obligations. Infineon's liquidity management provides that sufficient levels
+of cash and other liquid assets are available as well as ensuring the availability of
+funding through adequate levels of committed credit facilities.
+Financing and liquidity risk is the risk that an entity will encounter difficulties in
+meeting obligations associated with financial liabilities.
+Financing and liquidity risk
+9
+Developments in the wake of the coronavirus pandemic are very dynamic, so it can-
+not be ruled out that the actual credit losses deviate significantly from the expected
+credit losses recognized based on current estimates and assumptions or that the
+affected estimates and assumptions will have to be adjusted in future periods and
+this could have a significant impact on Infineon's expected credit losses.
+As of 30 September 2021, expected credit losses on trade receivables (see note 9,
+p. 178) amounted to €1 million for all risk classes (30 September 2020: €1 million).
+The individual allowances on trade receivables (no rating) amounted to €4 million
+in the 2021 fiscal year (2020: €4 million).
+1,192
+1,479
+46
+4
+4
+Management Board and
+Supervisory Board
+48
+109
+73
+296
+418
+470
+489
+30 September 2020
+256
+406
+30 September 2021
+Basis for the determination
+of the loss allowance
+At amortized cost
+none
+none
+43
+Cash inflow'
+Business focus and strategy
+Consolidated Financial Statements
+Derivative financial liabilities:
+Non-derivative financial liabilities
+30 September 2020
+Total
+Cash inflow¹
+Cash outflow
+Derivative financial liabilities:
+1,207
+133
+1,424
+940
+3,308
+10,120
+Combined Management Report
+Non-derivative financial liabilities
+Beyond 2026
+2026
+2025
+2024
+2023
+2022
+Total
+Due in the fiscal year
+€ in millions
+Notes to the Consolidated Financial Statements
+< 217 >
+Q =
+Further information
+30 September 2021
+25
+Hedging of
+commodity
+price risks
+Variable-interest financial assets
+The following table shows the reconciliation for the reserve for cash flow hedges
+(before taxes) by risk category:
+Q = < 211 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+(114)
+246
+(11)
+expenses
+(11)
+€ in millions
+EE
+42
+(240)
+39
+67
+1
+(98)
+(99)
+66
+Financial
+Total
+Hedging of interest risks
+Other current liabilities:
+Inventories
+1
+(5)
+30 September 2019
+Amount reclassified to the
+Statement of Profit or Loss
+Market risk
+Amount reclassified to the
+43
+(1)
+44
+(97)
+1
+(98)
+30 September 2020
+Change in fair value
+(142)
+(5)
+(137)
+Amounts reclassified to the
+cost of non-financial items
+Change in fair value
+The coronavirus pandemic and the related measures to contain the virus can have a
+direct and indirect effect on financial risks. The course of the spread of the coronavirus
+and the impact on Infineon's risk position is continually monitored and is taken into
+account in the methods, models and processes used to control financial risks. Possible
+longer-term effects on Infineon as a consequence of the spread of the coronavirus
+and the associated volatility in the financial markets cannot actually be estimated
+more precisely.
+1
+1
+(57)
+3
+(99)
+39
+101
+3
+98
+Total
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/
+losses to the extent that these arise between the segments.
+Hedging of
+interest risks
+Hedging of
+foreign
+exchange risks
+The FT department's policies contain principles for overall risk management as well
+as guidance covering specific areas such as foreign exchange risk, interest rate risk,
+credit risk, the use of derivative and non-derivative financial instruments, and the
+investment of excess liquidity.
+Statement of Profit or Loss
+Goodwill
+Goodwill
+181
+Other current liabilities:
+Line item of
+the Statement of
+Financial Position
+or the Statement
+of Profit or Loss
+affected by the
+reclassification
+assets
+Amount reclassified
+from the cost of
+hedging reserve
+to the cost of
+non-financial
+Amount reclassified
+from the hedge
+reserve to the cost
+of non-financial
+assets
+Amount reclassified
+from the hedge
+reserve to the State-
+ment of Profit or
+Loss from hedging
+relationships for
+which the underlying
+transaction is no
+longer expected
+to the Statement
+of Profit or Loss
+Amount
+reclassified from
+hedge reserve
+income
+fair value of
+cost of hedging
+recognized in other
+comprehensive
+Changes in
+income
+Changes in
+fair value of the
+hedging instrument
+recognized in other
+comprehensive
+Hedging of interest risks
+of the ineffective-
+ness in the
+reporting period
+Changes in
+Carrying amount
+30 September 2021
+€ in millions
+The relevant amounts of the derivative financial instruments designated as hedging
+instruments as of 30 September 2021 and 2020 (before taxes) were as follows:
+Notes to the Consolidated Financial Statements
+< 210 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+fair value for the
+measurement
+28
+(142)
+(21)
+5
+70
+(2)
+1
+1
+Hedging of commodity price risks
+77
+(84)
+39
+Deal Contingent Option
+(35)
+(56)
+98
+Deal Contingent Forward
+44
+Hedging of foreign exchange risks
+30 September 2020
+Inventories
+Financial
+expenses
+(1)
+(1)
+5
+43
+(22)
+1
+Total
+(1)
+(1)
+1
+Hedging of commodity price risks
+Other current assets:
+2,458
+Amounts reclassified to the
+30 September 2021
+4
+(6)
+5
+(7)
+(7)
+བྱེསྱེ
+6
+(12)
+10
+6
+(22)
+18
+30 September 2020
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+(5)
+1
+Euro/Malaysian ringgit
+(5)
+4
+Euro/Singapore dollar
+6
+(5)
+(46)
+38
+(44)
+36
+minus 10%
+plus 10%
+minus 10%
+(1)
+plus 10%
+Euro/Malaysian ringgit
+1
+(24)
+15
+1,356
+100 basis
+points
+minus
+plus
+100 basis
+points
+minus
+100 basis
+points
+plus
+100 basis
+points
+Equity
+Profit or Loss
+Nominal
+value
+30 September 2021
+€ in millions
+(1)
+The following table shows the effects on profit or loss for the 2021 and 2020 fiscal
+year and equity as of 30 September 2021 and 2020 of a ± 100 basis points shift in
+market interest rates:
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market
+interest rates on profit or loss and equity. Infineon prepares this using the iteration
+method.
+Interest rate risks related to refinancing measures were partially hedged by interest
+rate derivatives designated as cash flow hedges in the previous year. These interest
+rate derivatives matured in the 2021 fiscal year (see note 26, ☐ p. 208 ff.).
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able
+to make use of interest rate derivatives in order to align the fixed interest periods of
+assets and liabilities.
+Infineon is exposed to interest rate risk through its financial investment instruments
+and financial debt resulting from bond issuances and debt financing. Due to the cycli-
+cal nature of its core business and the need to maintain high operational flexibility,
+Infineon holds a relatively high level of liquid financial assets that are invested in
+short-term fixed-interest instruments. These financial assets generally are invested
+with contract duration of between one and twelve months at interest rates that can
+be achieved in the short-term. The risk to these assets of changing interest rates is
+not material in the current period of low or zero interest rates.
+In accordance with IFRS 7, interest rate risk is defined as the risk that the fair value
+or future cash flows of a financial instrument will fluctuate because of changes in
+interest rates.
+Interest rate risk
+Q = < 213 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Changes in market interest rates affect interest income and expenses from variable-
+yield financial instruments as well as from fixed-yield financial instruments that are
+measured at fair value through profit or loss, and also affect equity due to the hedge
+accounting designated interest rate hedging instruments.
+cost of non-financial items
+Equity
+30 September 2021
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+Euro/British pound
+Euro/US dollar
+Euro/Japanese yen
+€ in millions
+Foreign exchange risk at Infineon arises predominantly from main foreign currency
+positions. The following table shows the net exposure as of 30 September 2021
+and 2020:
+The Management Board has established policies that require Infineon's individual legal
+entities to manage the foreign exchange risk with respect to their functional currency.
+Group entities prepare a monthly rolling cash flow forecast by currency in order to
+determine foreign exchange risks. The net foreign exchange positions determined in
+these forecasts are required to be hedged, usually by entering into internal hedging
+contracts. Infineon's policy with respect to limiting short-term foreign currency expo-
+sure is to hedge at least 75 percent of its estimated net cash flow for the following
+two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a certain additional portion
+for the periods thereafter. Part of the foreign currency risk cannot be mitigated due to
+differences between actual and forecasted amounts. Infineon calculates this remaining
+risk based on net cash flows considering items in the Statement of Financial Position,
+actual orders received or placed and all other planned cash receipts and payments.
+For the net result related to foreign currency hedging transactions and foreign
+currency transactions included within profit (loss) for the period see note 26. ☐ p. 207
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying
+but significant portion of its revenue, as well as cost of goods sold, research and
+development and product distribution costs, are denominated in currencies other
+than the euro, primarily the US dollar. Fluctuations in the exchange rates of these
+currencies compared to the euro had an effect on the results of Infineon in the 2021
+and 2020 fiscal years.
+< 212 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Financial position exposure
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+Euro/British pound
+Infineon Technologies | Annual Report 2021
+Foreign exchange risk
+Infineon is exposed to various market risks in the ordinary course of business, primarily
+resulting from changes in foreign exchange rates and interest rates. Infineon enters
+into a range of derivative financial transactions with various counterparties to limit
+such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Market risk is defined as the risk of losses resulting from adverse changes in the market
+prices of financial instruments, including those related to foreign exchange rates,
+interest rates and other price risks.
+Infineon's activities are exposed to a variety of financial risks: market risk (including
+foreign exchange risk, interest rate risk and price risk), credit risk, financing and
+liquidity risk. Infineon's financial risk management seeks to minimize potential
+adverse effects on its profitability and liquidity. Infineon uses derivative financial
+instruments to hedge certain risks to which it is exposed. Financial risk management
+is carried out by the central Finance & Treasury (FT) department in accordance
+with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units.
+(50)
+(1)
+(49)
+(1)
+(1)
+5
+EE
+5
+27 Financial risk management
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes
+to foreign exchange rates. Accordingly, foreign exchange risks are associated with
+financial instruments that are denominated in a foreign currency that does not corre-
+spond to the functional currency, and the foreign currency represents the relevant
+risk variable. Risks arising from the translation into Infineon's reporting currency are
+not risks within the meaning of IFRS 7.
+Profit or Loss
+Forward exchange contracts
+Net exposure
+30 Septem-
+€ in millions
+The following table shows the effects on profit or loss for the 2021 and 2020 fiscal
+year and equity as of 30 September 2021 and 2020 of a ±10 percent shift in exchange
+rates. The assumed exchange rate changes relate only to financial instruments within
+the meaning of IAS 32.
+(194)
+(396)
+(17)
+(78)
+9
+7
+57
+48
+24
+31
+37
+30 Septem-
+ber 2020
+116
+(280)
+(177)
+(318)
+(7)
+(48)
+(42)
+(70)
+(74)
+(86)
+(64)
+34
+(138)
+ber 2021
+(144)
+Similarly, certain items are included in Corporate and Eliminations, which are not
+allocated to the other segments. These include certain corporate headquarters costs
+and selected topics, which are not allocated to the segments since they arise from
+corporate decisions and are not within the direct control of segment management.
+2,220
+Infineon Technologies | Annual Report 2021
+630
+704
+99
+265
+1,921
+2,299
+2,650
+3,268
+Power & Sensor Systems
+1,406
+1,542
+1,406
+1,542
+Industrial Power Control
+251
+601
+551
+Connected Secure Systems
+Subtotal
+648
+Other Operating Segments
+Corporate and Eliminations
+Total
+974
+Furthermore, raw materials and supplies are mostly not under the control or
+responsibility of the operating segment management and are therefore allocated
+to corporate functions. Work in progress and finished goods are allocated to the
+operating segments.
+Infineon Technologies | Annual Report 2021
+8,567
+11,060
+16
+12
+251
+601
+1,181
+1,352
+1,928
+2,890
+5,191
+6,205
+8,551
+974
+1,397
+1,397
+855
+11,048
+1,864
+Power semiconductors
+Total
+The XMCTM family of industrial microcontrollers business was transferred from the
+Automotive segment to the Connected Secure Systems segment with effect from
+1 October 2020. The previous year's figures have been adjusted accordingly.
+Segment information
+The exception to this approach is certain inventory information which is regularly
+analyzed at a segment level. Infineon also allocates depreciation and amortization
+expense to the operating segments based on production volume and products
+produced using standard costs.
+Neither assets, liabilities nor cash flows per segment are reported to the Management
+Board on a regular basis, nor is segment performance assessed on this basis.
+Decisions relating to financing and the investment of cash funds are taken at a Group
+level and not at a segment level. For this reason, financial income and financial
+expense (including interest income and expense) are not allocated to the segments.
+Segment Result is defined as operating profit excluding certain net impairments
+and reversal of impairments (in particular on goodwill), the impact on earnings of
+restructuring and closures, share-based payment, acquisition-related depreciation/
+amortization and other expense, impact on earnings of sales of businesses or interests
+in subsidiaries, and other income (expense).
+Based on revenue and Segment Result, the Management Board assesses performance
+and defines operating targets and budgets for the segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation
+of assets and liabilities to the individual segments
+Q = < 219 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+1,228
+Product category
+Embedded Control &
+The Management Board, as joint Chief Operating Decision Maker, decides how
+resources are allocated to the segments.
+Connectivity
+2,364
+RF & sensors
+3,521
+4,841
+Automotive
+Revenue from contracts with customers:
+2020
+2021
+€ in millions
+2021
+2021
+2020
+Memory ICs for
+specific applications
+2021
+2020
+2020
+2021
+2020
+17.39
+0.22
+4.72
+0
+Infineon Technologies Denmark ApS
+Herlev, Denmark
+9
+187.05
+9, 23
+100
+Infineon Technologies Dresden GmbH & Co. KG
+Neubiberg, Germany
+Infineon Technologies Epi Services, Inc.
+Dresden, Germany
+100
+100
+246.52
+8.70
+9, 20, 21
+100
+0
+0
+0.09
+Infineon Technologies Dresden Verwaltungs GmbH
+100
+Villach, Austria
+Shanghai, People's Republic of China
+0.00
+Blackburn, Australia
+100
+0
+1.40
+0.08
+100
+0.004
+1,186.02
+163.15
+9
+Cegléd, Hungary
+100
+0
+24.82
+(0.70)
+9
+Shanghai, People's Republic of China
+17
+100
+0
+3.03
+0.09
+17
+Wilmington, Delaware, USA
+0
+0
+2,916.15
+7.61
+Rotterdam, The Netherlands
+9
+100
+100
+10,814.67
+54.71
+Hong Kong, People's Republic of China
+9
+100
+9
+2.03
+0.40
+7
+Bangalore, India
+100
+0
+14.33
+2.65
+9
+Rotterdam, The Netherlands
+100
+0
+100
+100
+9
+8.16
+3.25
+9, 30
+Infineon Technologies Finance B.V.
+Rotterdam, The Netherlands
+100
+100
+1.97
+(0.03)
+12
+9
+Infineon Technologies France S.A.S.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies Hong Kong Ltd.
+Infineon Technologies India Private Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Ireland Limited
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+St. Denis, France
+Milan, Italy
+100
+0
+9.10
+0.64
+Singapore, Singapore
+128.42
+355.15
+0
+100
+2.16
+0.00
+3, 20, 22
+Beijing, People's Republic of China
+17
+100
+0
+15.27
+1.14
+18
+Shenzhen, People's Republic of China
+100
+0
+1.39
+0.03
+Wuxi, People's Republic of China
+17
+100
+0
+45.53
+1.74
+Melaka, Malaysia
+100
+100
+Karlsruhe, Germany
+0.00
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Shenzhen) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co., Ltd.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Registered office
+Shareholdings
+in %
+thereof Infineon
+Technologies AG
+Equity
+(€ in millions)
+Net result
+Footnote
+(€ in millions)
+17
+Lviv, Ukraine
+100
+0
+2.02
+0.11
+Camana Bay (George Town), Cayman Islands
+100
+0
+6.08
+11, 30
+0
+27.79
+9
+Infineon Technologies China Co., Ltd.
+Xi'an, People's Republic of China
+17
+100
+0
+8.31
+0.37
+Infineon Technologies 2. Vermögensverwaltungsgesellschaft mbH
+Neubiberg, Germany
+100
+0
+0.01
+(0.02)
+9
+Wilmington, Delaware, USA
+100
+0
+2,563.29
+9, 30
+248.35
+9
+Singapore, Singapore
+100
+Infineon Technologies Center of Competence (Shanghai) Co., Ltd.
+Infineon Technologies Cegléd Kft.
+Infineon Technologies Austria AG
+Infineon Technologies Australia Pty Limited
+2.33
+9
+Kulim, Malaysia
+100
+0
+326.53
+1.21
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Wuxi) Co., Ltd.
+Melaka, Malaysia
+100
+639.88
+0
+36.46
+9
+17
+Wuxi, People's Republic of China
+100
+0
+123.92
+10.55
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd
+0
+0.11
+Infineon Technologies Shared Service Center, Unipessoal Lda.
+Dublin, Ireland
+9
+Kista, Sweden
+100
+0
+5.14
+0.23
+9
+Muntinlupa City, Philippines
+100
+0
+0.20
+0.26
+Cheonan, Republic of Korea
+9
+100
+100
+55.82
+2.77
+Bristol, Great Britain
+9
+100
+0
+17.00
+n.a.
+0.81
+n.a.
+100
+0
+n.a.
+n.a.
+Netanya, Israel
+4
+100
+0
+62.14
+2.83
+Kawasaki, Japan
+100
+0
+0.04
+0.00
+14, 30
+Kuala Lumpur, Malaysia
+100
+0
+0.00
+0.00
+13, 30
+19
+Taipei, Taiwan
+0
+100
+9
+100
+100
+0
+1,532.80
+271.26
+9, 30
+Wilmington, Delaware, USA
+100
+0
+(0.04)
+19.25
+9, 30
+Neubiberg, Germany
+100
+100
+125.22
+0.00
+9, 20, 21
+Herlev, Denmark
+9
+100
+0
+1.06
+0.26
+Wilmington, Delaware, USA
+Bucharest, Romania
+277.82
+0
+0
+4.58
+1.70
+3
+Maia, Portugal
+100
+100
+3.50
+0.62
+Taipei, Taiwan
+Bristol, Great Britain
+9
+100
+0
+8.60
+1.55
+9
+100
+0
+1.51
+1.92
+9, 30
+Wilmington, Delaware, USA
+100
+2,231.98
+Bangalore, India
+19
+15, 30
+Infineon Technologies Korea Co., LLC
+Infineon Technologies Linz GmbH & Co KG
+Infineon Technologies LLC
+Infineon Technologies Maasstad C.V.
+Infineon Technologies Memory Solutions Germany GmbH
+Infineon Technologies Memory Solutions Holdings Inc.
+Infineon Technologies Memory Solutions India LLP
+Infineon Technologies Memory Solutions Israel Ltd.
+Infineon Technologies Memory Solutions Japan G.K.
+Infineon Technologies Memory Solutions Malaysia Sdn. Bhd.
+Infineon Technologies Memory Solutions Taiwan Ltd.
+Infineon Technologies Nordic AB
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Limited
+Infineon Technologies Romania & Co. Societate in Comandita
+Cypress Semiconductor World Trade Corp.
+Hitex GmbH
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies UK Limited
+Infineon Technologies US HoldCo Inc.
+Infineon Technologies US InterCo LLC
+Infineon Technologies US Investment LLC
+Infineon Technologies Vermögensverwaltungsgesellschaft mbH
+International Rectifier HiRel Denmark ApS
+International Rectifier HiRel Products, Inc.
+International Rectifier Mauritius, Inc. (in liquidation)
+MOLSTANDA Vermietungsgesellschaft mbH
+MOTEON GmbH
+Infineon Technologies Japan K.K.
+MoTo Objekt CAMPEON GmbH & Co. KG
+Name of company
+< 227 >
+9
+100
+100
+0.41
+0.14
+9
+100
+0
+7.25
+2.18
+9
+Klagenfurt, Austria
+100
+0
+10.24
+5.61
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+Notes to the Consolidated Financial Statements
+Nihon Cypress G.K.
+PT Infineon Technologies Batam
+Ramtron International Corporation
+Wilmington, Delaware, USA
+100
+0
+121.66
+49.30
+11, 30
+Rotterdam, The Netherlands
+9
+100
+0
+26.80
+2.08
+9
+Neubiberg, Germany
+100
+0
+0.02
+0.00
+Wilmington, Delaware, USA
+100
+0
+68.48
+0.00
+5.89
+5.94
+0
+100
+Infineon Technologies | Annual Report 2021
+Registered office
+Shareholdings
+in %
+thereof Infineon
+Technologies AG
+Equity
+Net result
+Footnote
+(€ in millions)
+(€ in millions)
+9
+0.00
+Tokyo, Japan
+0
+40.64
+6.17
+Seoul, Republic of Korea
+9
+100
+0
+13.42
+3.92
+9
+Linz, Austria
+100
+Cypress Semiconductor Ukraine LLC
+0
+Notes to the Consolidated Financial Statements
+Position
+Géraldine Picaud
+Chief Financial Officer,
+Holcim Ltd., Switzerland
+Dr. Manfred Puffer
+Melanie Riedl¹
+Jürgen Scholz¹
+Kerstin Schulzendorf¹
+Dr. Ulrich Spiesshofer
+Margret Suckale
+Diana Vitale¹
+1 Employee representative
+Independent
+Management Consultant
+Analysis Engineer and
+Vice Chairwoman of the
+Works Council Campeon,
+exempted member
+of the Works Council
+First authorized agent
+of IG Metall Regensburg
+Expert in the frontend-
+manufacturing,
+Infineon Technologies
+Dresden GmbH & Co. KG
+Senior advisor -
+The Blackstone Group,
+member of various advisory
+boards and investor
+Member of various
+supervisory bodies
+Deputy Chairwoman
+of the Infineon Works
+Council, Warstein,
+Infineon Technologies AG
+Membership of other Supervisory Boards
+and other comparable governing bodies of domestic
+and foreign companies (as of 30 September 2021)
+Member of the Board of Directors
+> Holcim Group Services Ltd, Switzerland
+> Holcim Technology Ltd, Switzerland
+Name
+> Lafarge Maroc SA, Morocco
+Infineon Technologies | Annual Report 2021
+Member of the Advisory Board
+Management Consultant
+Dr. Susanne Lachenmann' Principal Engineer
+Membership of other Supervisory Boards
+and other comparable governing bodies of domestic
+and foreign companies (as of 30 September 2021)
+Supervisory Board member
+> voestalpine AG, Austria
+Member of the Administrative Board
+> SBK Siemens-Betriebskrankenkasse, Germany
+Supervisory Board member
+› Capgemini SE, France
+› Amadeus IT Group SA, Spain
+Member of the Administrative Board
+› Cornelsen Group, Germany
+Member of the Board of Directors
+> BHP Group Plc., UK and BHP Group Ltd., Australia
+Supervisory Board member
+> Festo Management SE, Germany (Chairman)
+> Allianz SE, Germany
+Supervisory Board member
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+> Siemens Gamesa Renewable Energy
+Management GmbH, Germany
+Supervisory Board member
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+> Bridge imp GmbH, Germany
+Independent
+> LafargeHolcim Maroc SAS, Morocco
+> Huaxin Cement Co., Ltd., People's Republic of China
+Johann Dechant
+Hans-Ulrich Holdenried
+Jürgen Scholz
+Executive Committee
+Dr. Wolfgang Eder (Chairman)
+Johann Dechant
+Annette Engelfried
+Hans-Ulrich Holdenried
+Margret Suckale
+Diana Vitale
+Investment, Finance and Audit Committee
+Dr. Friedrich Eichiner (Chairman)
+Johann Dechant
+Dr. Wolfgang Eder
+Annette Engelfried
+Strategy and Technology Committee
+Dr. Ulrich Spiesshofer (Chairman)
+Xiaoqun Clever
+Dr. Wolfgang Eder
+Peter Gruber
+Dr. Susanne Lachenmann
+Jürgen Scholz
+Nomination Committee
+Dr. Wolfgang Eder (Chairman)
+> LafargeHolcim Maroc Afrique SAS, Morocco
+Mediation Committee
+Notes to the Consolidated Financial Statements
+Supervisory Board member
+> Athora Lebensversicherung AG, Germany
+› Nova KBM Bank, Slovenia
+> Servicios Prescriptor y Medios de Pagos, S.A.U., Spain
+› Oldenburgische Landesbank AG, Germany
+Member of the Board of Directors
+› Athene Holding Ltd., Bermuda
+› Catalina Holdings (Bermuda) Ltd., Bermuda
+Supervisory Board member
+> Krones AG, Germany
+Member of the Administrative Board
+> BKK of BMW AG, Germany
+Supervisory Board member
+> HeidelbergCement AG, Germany
+> Deutsche Telekom AG, Germany
+> DWS Group GmbH & Co. KGaA, Germany
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 224 >
+Supervisory Board committees
+Infineon Technologies AG
+Chief Financial Officer
+Operations,
+Labor union secretary
+IG Metall district
+management, Berlin-
+Brandenburg-Saxony
+Further information
+Q = < 222 >
+29 Additional information in accordance with HGB
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the
+Management Board and the Supervisory Board and made permanently available to
+the public on Infineon's website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#corporate-governance
+Fees for audit and advisory services pursuant to section 314,
+paragraph 1, no. 9 HGB
+Year-end audit fees
+At the Annual General Meeting held on 25 February 2021, the shareholders elected
+KPMG AG Wirtschaftsprüfungsgesellschaft (“KPMG”), Munich, as auditor for the 2021
+Separate Financial Statements and the Consolidated Financial Statements of Infineon
+Technologies AG. The audit fees charged by KPMG in the 2021 fiscal year amounted
+to €3.7 million for the audit of the Consolidated Financial Statements and various
+annual audits, including an audit review of the Interim Financial Statements.
+Fees for other advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.3 mil-
+lion in the 2021 fiscal year for other audit services which mainly included the provision
+of a comfort letter as well as the audit of the disclosures in the Sustainability Report.
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged €29 thousand in the
+2021 fiscal year for tax consulting services in connection with the assessment of
+individual items.
+Fees for other services
+Fees of €0.1 million were charged by KPMG to the Company in the 2021 fiscal year for
+other services. These mainly included quality assurance during the implementation
+of regulatory requirements.
+Management Board and Supervisory Board
+Management remuneration in the 2021 fiscal year
+As required by section 314, paragraph 1, no. 6a, sentences 5 to 8, HGB (version before
+ARUG II), the remuneration of the individual members of the Management Board and
+the Supervisory Board is disclosed in the remuneration report, p. 132 ff., which is
+part of the Combined Management Report.
+Management Board
+The Management Board members during the 2021 fiscal year were as follows:
+Name
+Dr. Reinhard Ploss
+Position
+Chief Executive Officer,
+Labor Director
+Dr. Sven Schneider
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Chief Financial Officer
+Combined Management Report
+Management Board and
+Supervisory Board
+9,124
+3,178
+2,472
+Total
+14,188
+14,033
+Japan
+1,094
+765
+Americas
+therein: USA
+Total
+1,254
+1,015
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+1,027
+845
+11,060
+8,567
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+The allocation of revenues from external customers to geographic areas is based
+on the customers' locations. The average number of employees by geographic region
+is provided in note 3. p. 171
+Infineon Technologies | Annual Report 2021
+Non-current assets do not include financial instruments, deferred tax assets and
+assets from employee benefits.
+Business focus and strategy
+Dr. Helmut Gassel
+Chief Marketing Officer
+Jochen Hanebeck
+> Voith Management GmbH, Germany
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 223 >
+Notes to the Consolidated Financial Statements
+The Supervisory Board
+The Supervisory Board members during the 2021 fiscal year, the Supervisory Board
+position held by them, their occupation, and their membership of other supervisory
+and governing bodies are as follows:
+Name
+Dr. Wolfgang Eder
+Chairman
+Johann Dechant'
+Deputy Chairman
+Xiaoqun Clever
+Position
+Member of various
+supervisory bodies
+Vice-Chairman of the
+Joint Works Council and
+Chairman of the Works
+Council Regensburg,
+Infineon Technologies AG
+Management Consultant -
+LuxNova Suisse GmbH
+Dr. Friedrich Eichiner
+Member of various
+supervisory bodies
+Annette Engelfried¹
+Peter Gruber¹
+Representative of
+Senior Management
+Hans-Ulrich Holdenried
+Member of the Shareholders' Committee
+> Voith GmbH & Co. KGaA, Germany
+Supervisory Board member
+> Infineon Technologies Austria AG, Austria
+Constanze Hufenbecher
+Chief Operations Officer
+Chief Digital
+Transformation Officer
+Membership of Supervisory Boards
+and other comparable governing bodies of domestic
+and foreign companies (as of 30 September 2021)
+Supervisory Board member
+> Infineon Technologies Austria AG, Austria
+(Chairman)
+> Futurium gGmbH, Germany
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., USA
+Supervisory Board member
+Dr. Wolfgang Eder (Chairman)
+> Infineon Technologies Austria AG, Austria
+> Infineon Technologies China Co., Ltd.,
+People's Republic of China
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore
+> Infineon Technologies Americas Corp., USA
+Member of the Board of Directors
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore (Chairman)
+> Infineon Technologies Japan K.K., Japan (Chairman)
+> Infineon Technologies China Co., Ltd.,
+People's Republic of China
+> Infineon Technologies Americas Corp., USA
+(Chairman)
+Supervisory Board member
+Member of the Board of Directors
+Name of company
+Dr. Manfred Puffer
+Infineon Technologies | Annual Report 2021
+17
+Amsterdam, The Netherlands
+100
+0
+6.07
+0.01
+Wilmington, Delaware, USA
+100
+0
+299.78
+(0.36)
+11, 30
+Cypress Semiconductor Ireland Limited
+Cypress Semiconductor Italia S.r.l.
+Cork, Ireland
+Basiglio (Milan), Italy
+6
+100
+0
+4.24
+0.78
+100
+0
+0.05
+0.31
+0.40
+100
+0
+78.26
+1.98
+5
+Bristol, Great Britain
+100
+0
+5.33
+(0.25)
+Wilmington, Delaware, USA
+100
+0
+5,693.76
+(471.58)
+11, 30
+6
+Munich, Germany
+100
+0
+8.64
+1.36
+4
+Hong Kong, People's Republic of China
+0
+100
+(0.03)
+Cypress Semiconductor Korea Ltd.
+Shanghai, People's Republic of China
+Bangalore, India
+17
+100
+0
+4.90
+0.73
+7
+100
+0
+31.49
+4.38
+100
+0
+253.17
+(0.82)
+11, 30
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 226 >
+0.53
+6
+6.27
+100
+Cypress Semiconductor México, S. de R.L. de C.V.
+Cypress Semiconductor Philippines Headquarters, Ltd.
+Cypress Semiconductor Singapore Pte. Ltd.
+Cypress Semiconductor Technology (Shanghai) Co. Ltd.
+Cypress Semiconductor Technology India Private Limited
+Cypress Semiconductor Technology Ltd.
+Camana Bay (George Town), Cayman Islands
+Seoul, Republic of Korea
+17
+100
+0
+2.86
+0.64
+Guadalajara, Mexico
+100
+Wilmington, Delaware, USA
+(0.04)
+(0.01)
+17
+Camana Bay (George Town), Cayman Islands
+100
+0
+5.78
+0.02
+11, 30
+17
+Singapore, Singapore
+0
+17
+(0.33)
+17.84
+Registered office
+Melaka, Malaysia
+Ebène, Mauritius
+Stockholm, Sweden
+Lausanne, Switzerland
+Nonthaburi, Thailand
+Shareholdings
+in %
+thereof Infineon
+Technologies AG
+Equity
+Net result
+Footnote
+(€ in millions)
+(€ in millions)
+11, 26, 30
+Austin, Texas, USA
+n.a.
+0
+0.00
+0.00
+Wilmington, Delaware, USA
+100
+0
+(2.28)
+(2.23)
+Cypress Semiconductor International, Inc.
+11, 30
+Cypress Semiconductor International Sales B.V.
+Cypress Semiconductor GmbH
+The business address of each member of the Supervisory Board is:
+Infineon Technologies AG, Am Campeon 1-15, D-85579 Neubiberg (Germany).
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 225 >
+Subsidiaries, associated companies, joint ventures and other companies
+(not consolidated) as of 30 September 2021
+GRI 102-45
+Name of company
+Fully consolidated subsidiaries:
+5200 Ben White Condominiums Association, Inc.
+AgigA Tech, Inc.
+Cirrent, LLC
+CYLand Corp.
+Cypress Innovates G.K.
+Cypress International, LLC
+Cypress Manufacturing, Ltd.
+Cypress Semiconductor (Canada), Inc.
+Cypress Semiconductor (Malaysia) Sdn. Bhd.
+Cypress Semiconductor (Mauritius) LLC
+Cypress Semiconductor (Scandinavia) AB
+Cypress Semiconductor (Switzerland) Sàrl
+Cypress Semiconductor (Thailand) Limited
+Cypress Semiconductor (UK) Limited
+Cypress Semiconductor Corporation
+Cypress Semiconductor Hong Kong Private Limited
+Wilmington, Delaware, USA
+100
+0
+Kanata, Ontario, Canada
+100
+0
+0.04
+0.03
+17
+100
+0
+6.96
+0.58
+7
+100
+0
+0.18
+(0.02)
+17
+100
+0
+0.62
+(0.09)
+17
+100
+0
+8
+0.72
+71.27
+0
+0.00
+0.00
+11, 30
+General Trias, Philippines
+40
+0
+1.42
+(0.04)
+6,27
+10
+Kawasaki, Japan
+Margret Suckale
+100
+20.96
+1.33
+Wilmington, Delaware, USA
+100
+0
+0.00
+0.00
+11, 30
+11, 30
+Camana Bay (George Town), Cayman Islands
+100
+0
+100
+Wilmington, Delaware, USA
+147.82
+Vila do Conde, Portugal
+40
+2
+Melaka, Malaysia
+77
+2
+77
+28
+2
+77
+2
+77
+2
+77
+2
+2
+77
+17
+2
+Qimonda Dresden GmbH & Co. OHG (in insolvency)
+Qimonda Dresden Verwaltungsgesellschaft mbH (in insolvency)
+Qimonda Finance LLC (in insolvency)
+Munich, Germany
+Singapore, Singapore
+Leuven, Belgium
+Bratislava, Slovakia
+Dresden, Germany
+Dresden, Germany
+Wilmington, Delaware, USA
+Qimonda Flash GmbH (in insolvency)
+Qimonda France SAS (in liquidation)
+Qimonda Holding B.V. (in insolvency)
+Qimonda International Trade (Shanghai) Co. Ltd.
+Qimonda Investment B.V.
+Infineon Technologies | Annual Report 2021
+Colorado Springs, Colorado, USA
+Qimonda Bratislava s.r.o. (in liquidation)
+2
+2
+8,790
+4,195
+Americas
+Greater China¹
+1,291
+1,744
+14
+18
+Japan
+Asia-Pacific (excluding Japan, Greater China)
+67
+92
+therein: Mainland China, Hong Kong
+1,056
+1,278
+9,137
+77
+3,174
+77
+77
+2
+Dresden, Germany
+77
+2
+St. Denis, France
+77
+2
+Rotterdam, The Netherlands
+0
+2
+Shanghai, People's Republic of China
+77
+2
+Rotterdam, The Netherlands
+therein: Mainland China, Hong Kong
+Qimonda Belgium BVBA (in insolvency)
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda AG (in insolvency)
+0.01
+0.00
+Jakarta, Indonesia
+100
+0
+0.00
+0.00
+16
+9
+Wilmington, Delaware, USA
+100
+0
+0.00
+0.00
+25
+100
+Dublin, Ireland
+100
+9
+24
+1.40
+0.07
+25
+Dover, Delaware, USA
+Kaohsiung, Taiwan
+n.a.
+0
+n.a.
+n.a.
+25
+n.a.
+0
+n.a.
+n.a.
+Neubiberg, Germany
+n.a.
+0
+n.a.
+Graz, Austria
+n.a.
+n.a.
+n.a.
+n.a.
+25
+Bristol, Great Britain
+n.a.
+0
+n.a.
+n.a.
+Qimonda AG and its subsidiaries:²
+Celis Semiconductor Corp.
+Itarion Solar Lda.
+Qimonda (Malaysia) Sdn. Bhd. (in liquidation)
+25
+n.a.
+n.a.
+n.a.
+n.a.
+Schramberg, Germany
+9
+9
+46.28
+(9.15)
+17
+therein: Germany
+25
+n.a.
+0
+n.a.
+n.a.
+25
+Vienna, Austria
+n.a.
+Villach, Austria
+2,322
+2,773
+Europe, Middle East, Africa
+(27)
+Industrial Power Control
+(20)
+Automotive
+11
+1
+Reversal of impairments (impairments) (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Share-based payment
+Inventories:
+€ in millions
+1,170
+2,072
+2020
+2021
+Plus/minus:
+Segment Result:
+(14)
+€ in millions
+Power & Sensor Systems
+(544)
+29
+22
+Financial income
+Total
+581
+1,470
+Operating profit
+Corporate and Eliminations
+Other Operating Segments
+(27)
+(31)
+Connected Secure Systems
+1
+(1)
+(540)
+Acquisition-related depreciation/amortization and other expenses
+Gains (losses) on sales of businesses, or interests in subsidiaries, net
+Other income and expense, net
+Depreciation and amortization allocated to the segments
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+Other Operating Segments
+The following table provides the reconciliation of Segment Result to profit (loss) from
+continuing operations before income taxes:
+Power & Sensor Systems
+Industrial Power Control
+Automotive
+Segment Result:
+€ in millions
+Of the €544 million (2020: €540 million) “Acquisition-related depreciation/amortization
+and other expenses” incurred in the 2021 fiscal year, €295 million (2020: €316 million)
+was attributable to cost of goods sold, €15 million (2020: €18 million) to research
+and development expenses, €220 million (2020: €161 million) to selling, general and
+administrative expenses and €14 million (2020: €45 million) to other operating income
+and expense.
+2020
+2021
+There were limited levels of trading relationships between the operating segments
+during the 2021 and 2020 fiscal years. Costs are generally recharged without impact
+on profit or loss.
+Q = < 220 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Connected Secure Systems
+Other Operating Segments
+Corporate and Eliminations
+Total
+792
+147
+€ in millions
+Connected Secure Systems
+1,170
+Power & Sensor Systems
+(2)
+(2)
+2,072
+Industrial Power Control
+3
+Financial expenses
+2
+130
+182
+Depreciation and amortization:
+636
+823
+256
+275
+Automotive
+24
+(182)
+Share of profit (loss) of associates and joint ventures
+Revenue for the 2021 and 2020 fiscal years by region was as follows:
+Entity-wide disclosures in accordance with IFRS 8
+Impairment losses on assets in the 2021 fiscal year amounted to €0 million (2020:
+€5 million) in the Automotive segment, €18 million (2020: €5 million) in the Power &
+Sensor Systems segment, and €9 million (2020: €13 million) in Corporate and
+Eliminations. Also allocated to Corporate and Eliminations in the 2021 fiscal year
+was €15 million (2020: €11 million) of reversal of impairments to assets.
+2020
+2021
+Q = < 221 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+2,052
+2,181
+184
+243
+€ in millions
+3
+Revenue:
+Non-current assets as of 30 September 2021 and 2020, by region, were as follows:
+73
+106
+Greater China¹
+1,182
+1,167
+Asia-Pacific (excluding Japan, Greater China)
+2,495
+2,582
+therein: Germany
+3,627
+4,107
+Non-current assets:
+Europe
+30 Septem-
+ber 2020
+30 Septem-
+ber 2021
+€ in millions
+No single customer accounted for more than 10 percent of Infineon's revenue during
+the 2021 and 2020 fiscal year.
+2
+190
+149
+226
+272
+181
+186
+495
+509
+2020
+2021
+Infineon Technologies | Annual Report 2021
+424
+1,319
+Profit (loss) from continuing operations before income taxes
+(9)
+9
+accounted for using the equity method
+70
+62
+3
+3
+449
+565
+251
+232
+975
+990
+ber 2020
+(177)
+ber 2021
+30 Septem-
+1,260
+1,513
+293
+473
+967
+1,040
+30 Septem-
+Lippstadt, Germany
+77
+0.29
+CHIL Semiconductors Corporation
+EPOS embedded core & power systems GmbH & Co. KG
+EPOS embedded core & power systems Verwaltungs GmbH
+Futurium gGmbH
+Hitex (UK) Limited
+Infineon Technologies Bipolar Verwaltungs GmbH
+Infineon Technologies Campeon Verwaltungsgesellschaft mbH
+Infineon Technologies Delta GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Holding GmbH
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Linz Verwaltungs GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Mantel 29 GmbH
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Romania s.r.l.
+Infineon Technologies RUS LLC
+Other companies (not consolidated):1
+Infineon Technologies | Annual Report 2021
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd
+Joint ventures:
+516.15
+(0.03)
+11, 30
+11, 30
+Wilmington, Delaware, USA
+100
+0
+678.49
+162.27
+Spansion Inc.
+Spansion LLC
+Associated companies:
+Deca Technologies, Inc.
+pmdtechnologies ag
+SkyHigh Memory Limited
+Infineon Technologies Bipolar GmbH & Co. KG
+Dover, Delaware, USA
+42.5
+Siegen, Germany
+17
+Shanghai, People's Republic of China
+49
+25
+(10.73)
+(10.32)
+9
+Wilmington, Delaware, USA
+100
+0
+0.00
+0.00
+9
+Duisburg, Germany
+100
+9, 29
+(3.75)
+38.65
+60
+15
+15
+15
+0
+8.93
+30.12
+Hong Kong, People's Republic of China
+0
+40
+13.67
+(16.05)
+(10.59)
+4.71
+17, 30
+17, 28
+17
+Warstein, Germany
+60
+0
+100
+100
+0.25
+0.00
+Neubiberg, Germany
+93
+0
+107.28
+17
+9, 24
+10
+Kawasaki, Japan
+100
+0
+6.37
+6.33
+Batam, Indonesia
+9
+0.03
+100
+100
+Neubiberg, Germany
+28.45
+9, 30
+Curepipe, Mauritius
+9, 30
+100
+0
+0.00
+0.00
+Neubiberg, Germany
+100
+6
+133.40
+0.00
+9, 20, 21
+9
+100
+0
+17.08
+1.22
+Footnote
+(€ in millions)
+9, 30
+Rectificadores Internacionales, S.A. de C.V.
+Tijuana, Mexico
+100
+0
+7.31
+1.14
+SILTECTRA GmbH
+Dresden, Germany
+100
+0
+3.19
+9
+Net result
+Equity
+(€ in millions)
+thereof Infineon
+Technologies AG
+in %
+8,778
+100
+0
+0.00
+0.00
+11,30
+Management Board and
+Supervisory Board
+Wilmington, Delaware, USA
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q = < 228 >
+Notes to the Consolidated Financial Statements
+Name of company
+Registered office
+Shareholdings
+Combined Management Report
+1.04
+23.81
+9
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 229 >
+Notes to the Consolidated Financial Statements
+Name of company
+Infineon Technologies South America Ltda
+Infineon Technologies Vietnam Company Ltd.
+IR International Holdings China, Inc.
+KAI Kompetenzzentrum Automobil- und Industrieelektronik GmbH
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+Metawave Corporation
+MicroLinks Technology Corp.
+OSPT IP Pool GmbH
+Business focus and strategy
+PT Infineon Technologies Indonesia
+Management Board and
+Supervisory Board
+0.22
+Warsaw, Poland
+100
+0
+0.11
+0.02
+17
+Bucharest, Romania
+100
+0
+0.04
+0.01
+17
+Moscow, Russian Federation
+100
+0
+0.02
+R Labco, Inc.
+Rapt Touch Ireland Ltd.
+Schweizer Electronic AG
+0
+0.09
+0.03
+9
+Wilmington, Delaware, USA
+100
+0
+0.00
+0.00
+Villach, Austria
+17
+100
+0
+0.57
+0.35
+100
+Hanoi, Vietnam
+9
+0.00
+Silicon Alps Cluster GmbH
+TTTech Auto AG
+Virtual Vehicle Research GmbH
+XMOS Limited
+Registered office
+Shareholdings
+in %
+9
+thereof Infineon
+Technologies AG
+Net result
+(€ in millions)
+Footnote
+17
+São Paulo, Brasil
+100
+0
+0.07
+Equity
+(€ in millions)
+9, 20
+therein: USA
+0.03
+60
+0.03
+0.00
+9
+Neubiberg, Germany
+100
+0
+0.11
+0.02
+9
+Neubiberg, Germany
+100
+100
+0.01
+0.00
+60
+Warstein, Germany
+9
+0.09
+Duisburg, Germany
+0.00
+100
+100
+0.07
+0.00
+25
+9
+n.a.
+n.a.
+n.a.
+9
+Coventry, Great Britain
+100
+0
+2.13
+n.a.
+Neubiberg, Germany
+Berlin, Germany
+100
+9
+Neubiberg, Germany
+100
+100
+0.03
+0.00
+Neubiberg, Germany
+100
+100
+0.03
+9, 20
+Neubiberg, Germany
+100
+100
+100
+0.00
+0.12
+0.00
+100
+9, 20
+0
+0.01
+Neubiberg, Germany
+100
+0.13
+0.00
+100
+Madrid, Spain
+Linz, Austria
+9
+9
+0.04
+0.15
+0.00
+0
+100
+The Management Board and the Supervisory Board, respectively, are responsible for
+the other information. The other information comprises the following components
+of the group management report, whose content was not audited:
+> the separate combined non-financial report of the Company and Group, which is
+referred to in the group management report,
+> the combined corporate governance statement for the Company and the Group
+referred to in the group management report, and
+The other information also includes the remaining parts of the annual report. The
+other information does not include the consolidated financial statements, the group
+management report information audited for content and our auditor's report thereon.
+Our opinions on the consolidated financial statements and on the group management
+report do not cover the other information, and consequently we do not express an
+opinion or any other form of assurance conclusion thereon.
+Other information
+In connection with our audit, our responsibility is to read the other information and,
+in so doing, to consider whether the other information
+> is materially inconsistent with the consolidated financial statements, with the
+group management report information audited for content or our knowledge
+obtained in the audit, or
+> otherwise appears to be materially misstated.
+If, based on the work we have performed, we conclude that there is a material
+misstatement of this other information, we are required to report that fact. We have
+nothing to report in this regard.
+Infineon Technologies | Annual Report 2021
+> information extraneous to management reports and marked as unaudited.
+< 236 >
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q =
+Responsibilities of the Management Board and the
+Supervisory Board for the Consolidated Financial Statements
+and the Group Management Report
+The Management Board is responsible for the preparation of consolidated financial
+statements that comply, in all material respects, with IFRSS as adopted by the EU, and
+the additional requirements of German commercial law pursuant to Section 315e (1)
+HGB and that the consolidated financial statements, in compliance with these require-
+ments, give a true and fair view of the assets, liabilities, financial position, and financial
+performance of the Group. In addition, the Management Board is responsible for
+such internal control as they have determined necessary to enable the preparation of
+consolidated financial statements that are free from material misstatement, whether
+due to fraud or error.
+In preparing the consolidated financial statements, the Management Board is
+responsible for assessing the Group's ability to continue as a going concern. It also
+has the responsibility for disclosing, as applicable, matters related to going concern.
+In addition, it is responsible for financial reporting based on the going concern basis
+of accounting unless there is an intention to liquidate the Group or to cease operations,
+or there is no realistic alternative but to do so.
+Furthermore, the Management Board is responsible for the preparation of the group
+management report that, as a whole, provides an appropriate view of the Group's
+position and is, in all material respects, consistent with the consolidated financial
+statements, complies with German legal requirements, and appropriately presents
+the opportunities and risks of future development. In addition, the Management Board
+is responsible for such arrangements and measures (systems) as it has considered
+necessary to enable the preparation of the group management report that is in accor-
+dance with the applicable German legal requirements, and to be able to provide
+sufficient appropriate evidence for the assertions in the group management report.
+The Supervisory Board is responsible for overseeing the Group's financial reporting
+process for the preparation of the consolidated financial statements and of the group
+management report.
+The related disclosures in the notes are appropriate.
+Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements and of the Group Management Report
+Management Board and
+Supervisory Board
+The Company's assumptions used for measurement are appropriate.
+Infineon tests goodwill for impairment in accordance with IAS 36 at the operating
+segment level annually as at 30 June, as well as in cases where events or changes to
+the prevailing conditions provide indications that the recoverable amount may have
+fallen below the carrying amount. The recoverable amount is the higher of fair value
+less costs of disposal and value in use. Goodwill is impaired if the carrying amount
+of the operating segment to which the goodwill is allocated exceeds the recoverable
+amount of this unit. Infineon determines the recoverable amount of the respective
+cash generating unit to which goodwill was allocated according to value in use.
+Impairment testing of goodwill is complex and based on a range of assumptions that
+require judgement. Such judgement includes, among other elements, the assumptions
+found in the adopted corporate planning for a period of five years, such as revenue
+growth and margins, assumed long-term growth rates in perpetuity, which consider
+a steady state including the synergy effects of the prior-year acquisition of Cypress
+Semiconductor Corporation, and the underlying discount rates.
+Our observations
+Our objectives are to obtain reasonable assurance about whether the consolidated
+financial statements as a whole are free from material misstatement, whether due
+to fraud or error, and whether the group management report as a whole provides an
+appropriate view of the Group's position and, in all material respects, is consistent
+with the consolidated financial statements and the knowledge obtained in the audit,
+complies with the German legal requirements and appropriately presents the oppor-
+tunities and risks of future development, as well as to issue an auditor's report that
+includes our opinions on the consolidated financial statements and on the group
+management report.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q = < 234 >
+Basis for the Opinions
+We conducted our audit of the consolidated financial statements and of the group
+management report in accordance with Section 317 HGB and the EU Audit Regulation
+No 537/2014 (referred to subsequently as "EU Audit Regulation") and in compliance
+with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the Institut der Wirtschaftsprüfer (IDW) [Institute of Public Auditors in Germany].
+Our responsibilities under those requirements and principles are further described in
+the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+and of the Group Management Report” section of our auditor's report. We are inde-
+pendent of the group entities in accordance with the requirements of European law
+and German commercial and professional law, and we have fulfilled our other Ger-
+man professional responsibilities in accordance with these requirements. In addition,
+in accordance with Article 10 (2)(f) of the EU Audit Regulation, we declare that we
+have not provided non-audit services prohibited under Article 5 (1) of the EU Audit
+Regulation. We believe that the evidence we have obtained is sufficient and appro-
+priate to provide a basis for our opinions on the consolidated financial statements
+and on the group management report.
+Key Audit Matters in the Audit of the Consolidated Financial Statements
+Key audit matters are those matters that, in our professional judgement, were of most
+significance in our audit of the consolidated financial statements for the financial
+year from 1 October 2020 to 30 September 2021. These matters were addressed in the
+context of our audit of the consolidated financial statements as a whole, and in form-
+ing our opinion thereon, we do not provide a separate opinion on these matters.
+Impairment testing of goodwill
+Please refer to note 2 in the notes to the consolidated financial statements for infor-
+mation on the accounting policies applied and the assumptions used. Information on
+the value of goodwill can be found under note 13.
+The financial statement risk
+The consolidated financial statements of Infineon Technologies AG reported goodwill
+in the amount of EUR 5,962 million as at 30 September 2021. At 26% of the balance
+sheet total, goodwill accounts for a considerable share of total assets.
+As a result of the impairment test performed, the Company did not identify any
+impairment. In light of the discretionary judgement of the assumptions underlying
+the impairment testing, there is the risk for the consolidated financial statements
+that a required impairment was not recognised. There is also the risk that the related
+disclosures in the notes are not appropriate.
+Our audit approach
+When assessing the impairment test, we also assessed the appropriateness of key
+assumptions. We assessed the Company's calculation method and selected assump-
+tions in terms of their appropriateness with the help of our valuation specialists. For
+this purpose, we checked that corporate planning was updated for the next five years
+and adopted by the Management Board. Using elements selected on the basis of risk,
+we had the staff responsible for preparing corporate planning explain to us in particular
+revenue and margin performance, as well as the long-term growth rates assumed in
+perpetuity, which consider a steady state including the synergy effects of the prior-year
+acquisition of Cypress Semiconductor Corporation. In this context, revenue perfor-
+mance in particular was critically reviewed and assessed based on publicly available
+market estimates and information to determine whether the revenue performance
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q = < 235 >
+used for measurement is within a reasonable range. We also confirmed the accuracy
+of the Company's previous forecasts by comparing the budgets of previous financial
+years with actual results and by analysing deviations.
+We checked how the discount rates used were derived and their amounts. For this
+purpose, we compared the assumptions and data underlying the discount rates,
+in particular the risk-free rate, the market risk premium and the beta factor with our
+own assumptions and publicly available data.
+To ensure the computational accuracy of the valuation method used, we verified the
+Company's calculations on the basis of selected risk-based elements.
+In order to take account of the existing forecast uncertainty and the earlier cut-off
+date selected for impairment testing, the Company examined the effects of possible
+changes in the discount rates, revenue and margin performance and the long-term
+growth rate in perpetuity on the value in use by calculating alternative scenarios
+and comparing these with its own reported figures (sensitivity analysis). We have
+assessed this analysis. In order to take into account the earlier cut-off date for impair-
+ment testing, we also assessed the impact of events until 30 September 2021 on
+impairment testing.
+Finally, we assessed whether the disclosures in the notes regarding impairment
+testing of goodwill are appropriate.
+The calculation method used for impairment testing of goodwill is appropriate and
+in line with the accounting policies to be applied.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an
+audit conducted in accordance with Section 317 HGB and the EU Audit Regulation
+and in compliance with German Generally Accepted Standards for Financial State-
+ment Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always
+detect a material misstatement. Misstatements can arise from fraud or error and
+are considered material if, individually or in the aggregate, they could reasonably be
+expected to influence the economic decisions of users taken on the basis of these
+consolidated financial statements and this group management report.
+Infineon Technologies | Annual Report 2021
+> Identify and assess the risks of material misstatement of the consolidated financial
+statements and of the group management report, whether due to fraud or error,
+design and perform audit procedures responsive to those risks, and obtain audit
+evidence that is sufficient and appropriate to provide a basis for our opinions. The
+risk of not detecting a material misstatement resulting from fraud is higher than
+for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal controls.
+> Identify and assess the risks of material intentional or unintentional non-compliance
+with the requirements of Section 328 (1) HGB, design and perform assurance pro-
+cedures responsive to those risks, and obtain assurance evidence that is sufficient
+and appropriate to provide a basis for our assurance opinion.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q = < 239 >
+> Obtain an understanding of internal control relevant to the assessment of the
+ESEF documents in order to design assurance procedures that are appropriate in
+the circumstances, but not for the purpose of expressing an assurance opinion
+on the effectiveness of these controls.
+> Evaluate the technical validity of the ESEF documents, i.e., whether the electronic
+file provided containing the ESEF documents meets the requirements of Commis-
+sion Delegated Regulation (EU) 2019/815 on the technical specification for this
+electronic file.
+> Evaluate whether the ESEF documents enable an XHTML reproduction with content
+equivalent to the audited consolidated financial statements and the audited group
+management report.
+> Evaluate whether the tagging of the ESEF documents with Inline XBRL technology
+(iXBRL), in accordance with Articles 4 and 6 of Commission Delegated Regulation
+(EU) 2019/815 in the version valid on the reporting date, enables an appropriate
+and complete machine-readable XBRL copy of the XHTML reproduction.
+Further information pursuant to Article 10 of the EU Audit Regulation
+We were elected as group auditor at the annual general meeting on 25 February 2021.
+We were engaged by the Supervisory Board on 3 May 2021. We have been the group
+auditor of Infineon Technologies AG without interruption since financial year 2000.
+Our objective is to obtain reasonable assurance about whether the ESEF documents
+are free from material intentional or unintentional non-compliance with the require-
+ments of Section 328 (1) HGB. We exercise professional judgement and maintain
+professional scepticism throughout the audit. We also:
+We declare that the opinions expressed in this auditor's report are consistent with
+the additional report to the Audit Committee pursuant to Article 11 of the EU Audit
+Regulation (long-form audit report).
+Our auditor's report should always be read in conjunction with the audited consoli-
+dated financial statements and the audited group management report as well as
+the audited ESEF documents. The consolidated financial statements and the group
+management report converted into ESEF format - including the versions to be
+published in the German Federal Gazette [Bundesanzeiger] – are merely electronic
+reproductions of the audited consolidated financial statements and the group
+audited management report and do not replace these. In particular, the ESEF assur-
+ance report and our assurance conclusion contained therein can only be used in
+conjunction with the audited ESEF documents provided in electronic form.
+-
+German Public Auditor Responsible for the Engagement
+The German Public Auditor responsible for the engagement is Michael Pritzer.
+Munich, 25 November 2021
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+Pritzer
+Wirtschaftsprüfer
+[German Public Auditor]
+Schmitt
+Wirtschaftsprüfer
+[German Public Auditor]
+Infineon Technologies | Annual Report 2021
+Other matter - Use of the Auditor's Report
+The Supervisory Board is responsible for overseeing the process of preparing the
+ESEF documents as part of the financial reporting process.
+In addition, the Company's Management Board is responsible for the internal controls
+it considers necessary to enable the preparation of ESEF documents that are free
+from material non-compliance, whether due to fraud or error, with the requirements
+of Section 328 (1) HGB for the electronic reporting format.
+The Company's Management Board is responsible for the preparation of the ESEF
+documents including the electronic reproduction of the consolidated financial
+statements and the group management report in accordance with Section 328 (1)
+sentence 4 item 1 HGB and for the tagging of the consolidated financial statements
+in accordance with Section 328 (1) sentence 4 item 2 HGB.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q =
+< 237 >
+> Obtain an understanding of internal control relevant to the audit of the consoli-
+dated financial statements and of arrangements and measures (systems) relevant
+to the audit of the group management report in order to design audit procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an
+opinion on the effectiveness of these systems.
+> Evaluate the appropriateness of accounting policies used by the Management
+Board and the reasonableness of estimates made by the Management Board and
+related disclosures.
+> Conclude on the appropriateness of the Management Board's use of the going
+concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast signifi-
+cant doubt on the Group's ability to continue as a going concern. If we conclude
+that a material uncertainty exists, we are required to draw attention in the auditor's
+report to the related disclosures in the consolidated financial statements and in
+the group management report or, if such disclosures are inadequate, to modify our
+respective opinions. Our conclusions are based on the audit evidence obtained up
+to the date of our auditor's report. However, future events or conditions may cause
+the Group to cease to be able to continue as a going concern.
+> Evaluate the overall presentation, structure and content of the consolidated finan-
+cial statements, including the disclosures, and whether the consolidated financial
+statements present the underlying transactions and events in a manner that the
+consolidated financial statements give a true and fair view of the assets, liabilities,
+financial position and financial performance of the Group in compliance with IFRSS
+as adopted by the EU and the additional requirements of German commercial law
+pursuant to Section 315e (1) HGB.
+> Obtain sufficient appropriate audit evidence regarding the financial information
+of the entities or business activities within the Group to express opinions on the
+consolidated financial statements and on the group management report. We are
+responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+> Evaluate the consistency of the group management report with the consolidated
+financial statements, its conformity with [German] law, and the view of the Group's
+position it provides.
+> Perform audit procedures on the prospective information presented by the Manage-
+ment Board in the group management report. On the basis of sufficient appropriate
+audit evidence we evaluate, in particular, the significant assumptions used by the
+Management Board as a basis for the prospective information, and evaluate the
+proper derivation of the prospective information from these assumptions. We do not
+express a separate opinion on the prospective information and on the assumptions
+used as a basis. There is a substantial unavoidable risk that future events will differ
+materially from the prospective information.
+We communicate with those charged with governance regarding, among other matters,
+the planned scope and timing of the audit and significant audit findings, including
+any significant deficiencies in internal control that we identify during our audit.
+We also provide those charged with governance with a statement that we have
+complied with the relevant independence requirements, and communicate with
+them all relationships and other matters that may reasonably be thought to bear on
+our independence, and where applicable, the related safeguards.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q = < 238 >
+From the matters communicated with those charged with governance, we determine
+those matters that were of most significance in the audit of the consolidated financial
+statements of the current period and are therefore the key audit matters. We describe
+these matters in our auditor's report unless law or regulation precludes public disclo-
+sure about the matter.
+Other Legal and Regulatory Requirements
+Report on Assurance in accordance with Section 317 (3a) HGB on the
+Electronic Reproduction of the Consolidated Financial Statements
+and the Group Management Report Prepared for Publication Purposes
+We have performed assurance work in accordance with Section 317 (3a) HGB to obtain
+reasonable assurance about whether the reproduction of the consolidated financial
+statements and the group management report (hereinafter the "ESEF documents”)
+contained in the electronic file "Infineon_Technologies_AG_KA+KLB_ESEF_2021-09-
+30.zip" (SHA256-Hashwert: f59eead9aa516c1fa1afefc8ed72d415a230c3f95c3892cd-
+38cc5aaa3514e019) provided and prepared for publication purposes complies in
+all material respects with the requirements of Section 328 (1) HGB for the electronic
+reporting format ("ESEF format"). In accordance with German legal requirements,
+this assurance only extends to the conversion of the information contained in the
+consolidated financial statements and the group management report into the ESEF
+format and therefore relates neither to the information contained in this reproduction
+nor any other information contained in the above-mentioned electronic file.
+In our opinion, the reproduction of the consolidated financial statements and the
+group management report contained in the above-mentioned electronic file provided
+and prepared for publication purposes complies in all material respects with the
+requirements of Section 328 (1) HGB for the electronic reporting format. We do not
+express any opinion on the information contained in this reproduction nor on any
+other information contained in the above-mentioned file beyond this reasonable
+assurance conclusion and our audit opinion on the accompanying consolidated
+financial statements and the accompanying group management report for the financial
+year from 1 October 2020 to 30 September 2021 contained in the "Report on the Audit
+of the Consolidated Financial Statements and of the Group Management Report" above.
+We conducted our assurance work of the reproduction of the consolidated financial
+statements and the group management report contained in the above-mentioned
+electronic file provided in accordance with Section 317 (3a) HGB and the IDW Assurance
+Standard: Assurance in accordance with Section 317 (3a) HGB on the Electronic Repro-
+duction of Financial Statements and Management Reports Prepared for Publication
+Purposes (IDW ASS 410 10.2021). Accordingly, our responsibilities are further described
+below. Our audit firm has applied the IDW Standard on Quality Management 1: Require-
+ments for Quality Management in Audit Firms (IDW QS 1).
+We exercise professional judgement and maintain professional scepticism throughout
+the audit. We also:
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led
+to any reservations relating to the legal compliance of the consolidated financial
+statements and of the group management report.
+Infineon Technologies | Annual Report 2021
+> the accompanying consolidated financial statements comply, in all material respects,
+with the IFRSS as adopted by the EU, and the additional requirements of German
+commercial law pursuant to Section 315e (1) HGB [Handelsgesetzbuch: German
+Commercial Code] and, in compliance with these requirements, give a true and fair
+view of the assets, liabilities, and financial position of the Group as at 30 Septem-
+ber 2021, and of its financial performance for the financial year from 1 October 2020
+to 30 September 2021, and
+Net result
+Footnote
+(€ in millions)
+Qimonda Taiwan Co. Ltd. (in liquidation)
+Qimonda UK Ltd. (in liquidation)
+1 Certain subsidiaries were not consolidated due to immateriality.
+Taipei, Taiwan
+High Blantyre, Scotland
+77
+77
+2 On 23 January 2009, Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009. The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due
+to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency. The list of subsidiaries held by Qimonda AG is based on information from 30 September 2010, since Infineon had not received any further information from the
+insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies, and further reflects information from the German commercial register. Since all Qimonda-related investments were written down in full in previous years,
+this has no effect on Infineon's net assets, financial position and results of operations.
+3 Equity and net result as of 30 September 2019.
+4 Equity and net result as of 29 December 2019.
+5 Equity and net result as of 30 December 2019.
+77
+6 Equity and net result as of 31 December 2019.
+8 Equity and net result as of 27 September 2020 (period from 16 April 2020 until 27 September 2020).
+9 Equity and net result as of 30 September 2020.
+10 Equity and net result as of 30 September 2020 (period from 1 January 2020 until 30 September 2020).
+11 Equity and net result as of 30 September 2020 (period from 16 April 2020 until 30 September 2020).
+12 Equity and net result as of 30 September 2020 (period from 28 April 2020 until 30 September 2020).
+13 Equity and net result as of 30 September 2020 (period from 29 May 2020 until 30 September 2020).
+14 Equity and net result as of 30 September 2020 (period from 26 June 2020 until 30 September 2020).
+15 Equity and net result as of 30 September 2020 (period from 8 July 2020 until 30 September 2020).
+17 Equity and net result as of 31 December 2020.
+18 Equity and net result as of 31 December 2020 (period from 8 July 2020 until 31 December 2020).
+19 The entity was founded in the 2021 fiscal year.
+20 Control and profit transfer agreement.
+21 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325 German Commercial Code.
+22 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the preparation of a management report pursuant to section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements
+pursuant to Section 325 German Commercial Code.
+23 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report as well as notes and from the obligations to disclose the annual financial statements.
+24 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
+7 Equity and net result as of 31 March 2020.
+25 Because criteria pursuant to Section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not disclosed.
+77
+77
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 230 >
+Notes to the Consolidated Financial Statements
+Name of company
+Qimonda IT (Suzhou) Co., Ltd. (in liquidation)
+Qimonda Italy s.r.l. (in liquidation)
+Qimonda Korea Co. Ltd. (in liquidation)
+Qimonda Licensing LLC
+Qimonda Memory Product Development Center (Suzhou) Co. (in liquidation)
+Wilmington, Delaware, USA
+Wilmington, Delaware, USA
+Qimonda North America Corp. (in insolvency)
+Registered office
+Suzhou, People's Republic of China
+Padua, Italy
+Shareholdings
+in %
+thereof Infineon
+Technologies AG
+Equity
+(€ in millions)
+77
+77
+Seoul, Republic of Korea
+77
+Fort Lauderdale, Florida, USA
+77
+Suzhou, People's Republic of China
+Qimonda Richmond LLC (in insolvency)
+> the accompanying group management report as a whole provides an appropriate
+view of the Group's position. In all material respects, this group management
+report is consistent with the consolidated financial statements, complies with
+German legal requirements and appropriately presents the opportunities and risks
+of future development. Our opinion on the group management report does not
+cover the content of those components of the group management report specified
+in the "Other Information" section of the auditor's report. The group management
+report contains cross-references that are not required by law and which are marked
+as unaudited. Our audit opinion does not extend to the cross-references and the
+information to which the cross-references refer.
+26 Non-stock entity. Disclosure of ownership in percent does not apply.
+28 Infineon accounts for its interest using the equity method because Infineon has significant influence due to the right to hold a supervisory board position in combination with comprehensive minority rights and certain contractual rights in the context of development cooperation.
+29 Infineon accounts for its interest using the equity method as Infineon lacks controlling influence due to certain contractual participation rights of the co-shareholder.
+Neubiberg, 25 November 2021
+Infineon Technologies AG
+Management Board
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+Dr. Helmut Gassel
+Jochen Hanebeck
+Constanze Hufenbecher
+Infineon Technologies | Annual Report 2021
+Further information
+Responsibility Statement
+by the Management Board
+Q =
+< 232 >
+Management Board and
+Supervisory Board
+To the best of our knowledge, and in accordance with the applicable reporting
+principles, the Consolidated Financial Statements give a true and fair view of
+the assets, liabilities, financial position and profit or loss of the Group, and the
+Combined Management Report, which is combined with the Management Report
+of Infineon Technologies AG, includes a fair review of the development and perfor-
+mance of the business and the position of the Group, together with a description
+of the principal opportunities and risks associated with the expected development
+of the Group.
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+Q =
+< 233 >
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified auditor's report.
+The English language text below is a translation of the auditor's report. The original German text shall prevail in the event of any discrepancies
+between the English translation and the German original. We do not accept any liability for the use of, or reliance on, the English translation
+or for any errors or misunderstandings that may derive from the translation.
+Independent Auditor's Report
+To Infineon Technologies AG, Neubiberg
+Report on the Audit of the Consolidated Financial Statements
+and of the Group Management Report
+Opinions
+We have audited the consolidated financial statements of Infineon Technologies AG,
+Neubiberg, and its subsidiaries (the Group), which comprise the consolidated state-
+ment of financial position as at 30 September 2021, and the consolidated statement
+of profit or loss, consolidated statement of comprehensive income, consolidated state-
+ment of changes in equity and consolidated statement of cash flows for the financial
+year from 1 October 2020 to 30 September 2021, and notes to the consolidated financial
+statements, including a summary of significant accounting policies. In addition, we
+have audited the combined management report of Infineon Technologies AG and
+of the Group (hereinafter: the "group management report") for the financial year
+from 1 October 2020 to 30 September 2021.
+In accordance with German legal requirements, we have not audited the content
+of those components of the group management report specified in the “Other Infor-
+mation" section of our auditor's report.
+The group management report contains cross-references that are not required by
+law and which are marked as unaudited. In accordance with German legal require-
+ments, we have not audited the cross-references and the information to which the
+cross-references refer.
+In our opinion, on the basis of the knowledge obtained in the audit,
+Combined Management Report
+27 The entity owns land of which Infineon is the sole tenant.
+Responsibility Statement
+by the Management Board
+Consolidated Financial Statements
+30 IFRS figures.
+Infineon Technologies | Annual Report 2021
+2
+2
+2
+2
+2
+2
+2
+2
+2
+Management Board and
+Supervisory Board
+Business focus and strategy
+Further information
+Combined Management Report
+Further information
+Q =
+< 231 >
+Notes to the Consolidated Financial Statements
+Neubiberg, 25 November 2021
+Infineon Technologies AG
+Management Board
+Dr. Sven Schneider
+Dr. Helmut Gassel
+Jochen Hanebeck
+Constanze Hufenbecher
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+16 Equity and net result as of 30 September 2020 (period from 28 September 2020 until 30 September 2020).
+Dr. Reinhard Ploss
+high-voltage power MOSFETs (Si-based)
+> Brand protection
+› Accessories
+Authentication
+Applications
+Connected Secure Systems
+< 243 >
+Q =
+› Game consoles
+Further information
+Applications and product range
+Connected Secure Systems
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+› Telecommunication technology
+Infineon Technologies | Annual Report 2021
+> USB controller
+> TVS (transient voltage suppressor) diode
+Consolidated Financial Statements
+> Industrial control systems
+> Printer cartridges
+Automotive
+> Social insurance cards
+› Passports
+> National identity cards
+> Healthcare cards
+> Driver's licenses
+Government identification documents
+> Smart watches and activity trackers
+> Remote control
+› Game consoles
+Consumer electronics
+> Protection against manipulation (e.g., tachographs)
+> In-cabin infotainment
+> Electronic toll collection (Toll Collect)
+-Car-to-infrastructure communications
+- Car-to-car communications
+- eCall
+› Connected vehicles
+> SiC diodes, SiC MOSFETS
+> RF power transistors
+› RF antenna switches
+> Radar sensor ICs (24 GHz, 60 GHz)
+> Health care trackers
+› Activity trackers
+Mobile devices
+Microinverter for roof-top systems
+LED and conventional lighting systems
+> Voice control
+> Smart speakers
+› Sensors
+› Communications
+IoT
+Human-machine interaction
+> Submarine telecommunications
+> Oil and gas exploration
+> Defense technologies
+> Aviation technologies
+› Aerospace systems
+Special applications in harsh environments
+› Navigation devices
+IoT
+› Smartphones
+Power management
+> Low-voltage and high-voltage driver ICs
+> GPS low-noise amplifier
+> GaN power switches
+> Discrete low-voltage, mid-voltage and
+> Customized chips (ASICS)
+› Control ICs for power switches
+› Chips for pressure sensors
+> Chips for MEMS microphones
+> Chips for gas sensors
+> 3D ToF sensors
+Product range
+› Servers
+> PCs and notebooks
+> Mobile devices
+> Home appliances
+› Data centers
+› Consumer electronics
+> Tablets
+> Industry 4.0
+> IT equipment
+> Smart city
+78
+excl. NFC embedded Secure Element) in the 2020 calendar year
+37
+as well as SiC wafers with minimum loss of material
+74
+73
+له لا
+C27 Revenue and Segment Result of the Power & Sensor Systems segment
+C28 Market share for security ICs (excl. NFC controller;
+C06 Siltectra's Cold Split technology allows splitting of SiC boules
+36
+in the 2020 calendar year (by units)
+73
+73
+C25 Market share for power ICs in the 2020 calendar year
+C26 Market share of MEMS microphones die suppliers
+36
+and modules market share in the 2020 calendar year
+C05 Worldwide discrete power semiconductors
+C07 Market share in the total semiconductor market in the 2020 calendar year 38
+C08 System knowhow and services are becoming more and more
+C04 Strategic growth model
+a differentiating factor
+51
+C14 Dividend per share for the 2010 to 2021 fiscal years
+C15 Core competencies in the segments
+56
+88
+80% 80 1
+82
+C33 Infineon owns the key components for XEV charging stations
+C34 Investments
+54
+C12 Top 20 semiconductor consumer in the 2020 calendar year
+C13 Revenue by segment in the 2021 fiscal year
+54
+C32 R&D expenses
+79
+8%
+78
+78
+C29 Market share for security ICs (excl. NFC controller; excl. NFC
+embedded Secure Element) in the 2020 calendar year by application
+C30 Market share for microcontrollers in the 2020 calendar year
+C31 Revenue and Segment Result of the Connected
+Secure Systems segment
+53
+C10 Top 20 semiconductor manufacturers in the 2020 calendar year
+C11 Global semiconductor sales in the 2020 calendar year by region
+(total market size US$473 billion)
+C09 The main stages of the semiconductor value chain
+Charging stations for electric vehicles
+32
+69
+> Embedded security controllers
+› Connectivity solutions (Wi-Fi, Bluetooth, BLE)
+Product range
+Infineon Technologies | Annual Report 2021
+Trusted Computing
+Ticketing, access control
+> NFC-based contactless payment
+> Mobile payment
+› Credit/debit cards
+Payment systems
+> SIM cards
+- IoT applications
+- Consumer applications
+(machine-to-machine communication)
+> Embedded SIM
+Mobile communications
+> Smart home
+> Microcontroller for consumer electronics
+C03 We are linking the real and the digital world
+and industrial applications
+Management Board and
+Supervisory Board
+C23 Revenue and Segment Result of the Industrial Power Control segment
+C24 Market share for MOSFETs in the 2020 calendar year
+28
+C02 Additional semiconductor demand per vehicle raised by electromobility
+22
+68
+C22 Market share in IGBT modules in the 2020 calendar year
+from megatrends in society
+C01 Our growth areas and growth drivers are derived
+Page
+Page
+Chart overview
+< 244 >
+Q =
+Further information
+Chart overview
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+> Security controllers (contact-based, contactless,
+dual-interface)
+› Base stations
+Cellular communications infrastructure
+> Multi-copters
+> IGBT modules
+> Discrete power semiconductors
+> 3D ToF sensors
+> 32-bit automotive microcontrollers for powertrain,
+safety, driver assistance systems, infotainment and
+digital display systems
+Product range
+> Tachograph
+> Protection against software manipulation
+> Protection against manipulation (e.g., odometer)
+> Original spare parts authentication
+-Car-to-infrastructure
+-Car-to-car
+› Communication
+Security
+> Transmission control
+> Start-stop system
+› Generator control
+> Electric motor control
+> Industrial microcontrollers
+> Combustion engine control
+> Magnetic and pressure sensors
+> Power ICS
+> Wind power turbines
+> Photovoltaic systems
+Energy generation
+Applications
+Industrial Power Control
+< 241 >
+Q =
+Further information
+Applications and product range
+Industrial Power Control
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> Voltage regulators
+> Transceivers (CAN, CAN FD, LIN, Ethernet, FlexRay™)
+> SiC diodes, SiC MOSFETs and SiC modules
+> Radar sensor ICs (77 GHz)
+> Memory ICs (NOR flash, SRAM, nvSRAM, F-RAM)
+Energy storage
+› Battery management
+Powertrain
+› Distance control
+> Cruise control
+> Blind spot detection
+> Automatic parking
+› Airbag
+> ABS (Anti-blocking system)
+Assistance systems and safety systems
+Applications
+Automotive
+Applications and product range
+< 240 >
+Q =
+Further information
+Applications and product range
+Automotive
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+> Electronic chassis control
+› Battery charging control
+> Electronic power steering
+> ESP (Electronic Stability Program)
+› Digital instrument cluster
+› Connectivity for in-cabin infotainment
+Infotainment
+> Windshield wipers
+> Suspension
+> Sunroof
+> Steering
+> Power window
+> Lighting
+> Hatch door
+> Electronic seat adjustment
+> Door electronics
+› Body control units
+> Air conditioning
+Comfort electronics
+> Tire pressure monitoring system
+> Lane departure warning system
+> Emergency braking assistant
+57
+> Grid stability
+> Urban district
+< 242 >
+Q =
+Further information
+Applications and product range
+Power & Sensor Systems
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> SiC diodes, SiC MOSFETs, SiC modules
+control unit, driver and switch
+> Intelligent IGBT modules with integrated
+> IGBT module solutions including IGBT stacks
+> IGBT modules (low-power, medium-power,
+high-power)
+> Driver ICs
+› Discrete IGBTs
+› Bare die business
+Product range
+☐ Power & Sensor Systems
+1 Including motors, compressors, pumps and fans.
+Applications
+> Battery-powered loudspeakers
+> eScooters
+> eBikes
+- Power saws
+- Drills
+- Cordless screwdrivers
+> Battery-powered power tools, e.g.,
+- Vacuum cleaners
+> Battery-powered home appliances, e.g.,
+- Lawn mowers
+> Battery-powered gardening equipment, e.g.,
+- Hedge trimmers
+BLDC motor
+> Power train for low-speed electric vehicles
+> Onboard charger
+> In-cabin USB PD charging
+> Blind spot detection
+Automotive electronics
+> Smart speakers
+Audio amplifiers
+> Home usage
+› Trams
+› Locomotives
+> Drives technologies
+> Automation technology
+> Air conditioning technology
+Industrial drives¹
+> Washing machines
+> Vacuum cleaners
+> Refrigerators
+> Microwave ovens
+> Induction cooktops
+> Dishwashers
+> Air conditioners
+Home appliances
+> Overland HVDC transmission lines
+> Offshore wind farm HVDC transmission lines
+> FACTS (Flexible AC Transmission Systems)
+Energy transmission
+> Wall box
+> Elevator systems
+› Metro trains
+> Escalators
+> Oil derricks
+> High-speed trains
+Traction
+> Hybrid buses
+> Forklifts
+> Electric delivery vehicles
+› Construction vehicles
+> Agricultural vehicles
+Industrial vehicles
+Industrial robotics
+> Uninterruptable power supplies
+> Home energy storage
+› Charging stations for electric vehicles
+> Battery chargers
+> Auxiliary power supplies
+Industrial power supplies
+> Rolling mills
+› Pipelines
+> Materials handling
+59
+39
+$$ཡཿགྷ
+February
+February
+May
+August
+November
+Thursday
+Thursday
+Financial calendar 2022
+Monday
+3
+17
+9
+3
+Tuesday
+15
+Publication of
+first quarter 20221
+results
+Wednesday
+Q = < 246 >
+Further information
+Financial calendar 2022
+Consolidated Financial Statements
+light-emitting diode
+micro-electromechanical system
+machine learning
+metal-oxide-semiconductor field-effect transistor
+near-field communication
+plug-in hybrid electric vehicles
+programmable system-on-chip
+radio frequency
+silicon
+silicon carbide
+time-of-flight
+trusted platform module
+universal serial bus
+(universal serial bus standard power delivery)
+wireless fidelity
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Annual General
+Meeting 2022
+(virtual)
+Publication of
+second quarter 2022¹
+results
+Publication of
+third quarter 2022¹
+results
+The following were brand names of Infineon Technologies AG
+in the 2021 fiscal year:
+Infineon, the Infineon logo, AURIX™M, CIPOSTM, CoolGaNTM, CoolMOS™, CoolSIC™,
+EiceDRIVER™, FlexRay™, HybridPACK™, ¡MOTION™, ModusToolbox™, OPTIGA™,
+PrimePACKT, PSoCTM, SECORATM, TRAVEO", XENSIVTM, XMCTM.
+Visit us on the web: www.infineon.com f in
+Forward-looking statements
+This report contains forward-looking statements and/or assessments about the business, financial condition,
+performance and strategy of the Infineon Group. These statements and/or assessments are based on assumptions
+and management expectations resting upon currently available information and present estimates. They are
+subject to a multitude of uncertainties and risks, many of which are partially or entirely beyond Infineon's control.
+Infineon's actual business development, financial condition, performance and strategy may therefore differ
+materially from what is discussed in this report.
+Specific disclaimer for Informa Tech - former IHS Markit Technology - reports, data and information
+referenced in this document:
+The Informa Tech reports, data and information referenced herein (the "Informa Tech Materials - mostly former
+IHS Markit Technology Materials") are the copyrighted property of Informa Tech Research Ltd. and its subsidiaries
+("Informa Tech") and represent data, research, opinions or viewpoints published by Informa Tech, and are not
+representations of fact. The Informa Tech Materials speak as of the original publication date thereof and not as of
+the date of this document. The information and opinions expressed in the Informa Tech Materials are subject to
+change without notice and neither Informa Tech nor, as a consequence, Infineon have any duty or responsibility
+to update the Informa Tech Materials or this publication as a result. Informa Tech Materials are delivered on
+an "as-is" and "as-available" basis. No representation or warranty, express or implied, is made as to the fairness,
+accuracy, completeness or correctness of the information, opinions and conclusions contained in the Informa
+Tech Materials. To the maximum extent permitted by law, Informa Tech and its affiliates, IHS Markit and its Affiliates
+and their respective, officers, directors, employees and agents, disclaim any liability (including, without limitation,
+any liability arising from fault or negligence) as to the accuracy or completeness or use of the Informa Tech
+Materials. Informa Tech and/or IHS Markit will not, under any circumstance whatsoever, be liable for any trading,
+investment, commercial or other decisions based on or made in reliance of the Informa Tech Materials. The
+"IHS Markit" brand and logo have been licensed for use by Informa Tech. The "IHS Markit" brand and logo and
+any third-party trademarks used in the IHS Markit Technology Materials are the sole property of IHS Markit Group
+or their respective third-party owners.
+Specific disclaimer for IHS Markit - reports, data and information referenced in this document:
+The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted
+property of IHS Markit Ltd. and its subsidiaries ("IHS Markit") and represent data, research, opinions or viewpoints
+published by IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original
+publication date thereof and not as of the date of this document. The information and opinions expressed in the
+IHS Markit Materials are subject to change without notice and neither IHS Markit nor, as a consequence, Infineon
+have any duty or responsibility to update the IHS Markit Materials or this publication. Moreover, while the IHS
+Markit Materials reproduced herein are from sources considered reliable, the accuracy and completeness thereof
+are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit and the trademarks
+used in the Data, if any, are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are
+the property of IHS Markit or their respective owners.
+Infineon Technologies | Annual Report 2021
+Infineon Technologies AG
+Headquarters:
+Contact for Investors and Analysts:
+Media Contact:
+Visit us on the web:
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+www.infineon.com
+C16 World market for automotive semiconductors in the 2020 calendar year
+C17 Market share for automotive semiconductors in the 2020 calendar year
+C18 Market share of Infineon for automotive semiconductors
+by region in the 2020 calendar year
+Page 6, 10: Werner Bartsch, Hamburg (Germany)
+intelligent power module
+HGB Hamburger Geschäftsberichte GmbH & Co. KG,
+Hamburg (Germany)
+1 October to 30 September
+Publication of
+fourth quarter and
+fiscal year 2022¹
+results
+1 Preliminary
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Imprint
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Q = < 247 >
+Published by:
+Editors:
+Copy deadline:
+Fiscal year:
+Independent auditors:
+Designed by:
+Photography:
+Note
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+25 November 2021
+KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich (Germany)
+Industrial Internet of Things
+Internet of Things
+Further information
+Imprint
+Wi-Fi
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+List of abbreviations
+Q = < 245 >
+List of abbreviations
+Infineon Technologies | Annual Report 2021
+AC-DC
+ADAS
+Пот
+advanced driver assistance system
+ΑΙ
+artificial intelligence
+IoT
+IPM
+ASIC
+application-specific integrated circuit
+alternating current to direct current conversion
+139
+113
+104
+63
+Infineon Technologies | Annual Report 2021
+C35 Development of the Infineon Technologies AG share compared to
+Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index for the 2021 fiscal year
+(daily closing prices)
+63
+C36 Shareholder structure as of the end of the 2021 fiscal year
+G37 Revenue by segment
+63
+G38 Revenue by segment in the 2021 fiscal year
+C19 Revenue and Segment Result of the Automotive segment
+C20 Market share for discrete IGBTs in the 2020 calendar year
+C21 Market share for IPMS in the 2020 calendar year
+64
+G39 Financial debt by currencies
+68
+G40 Risk assessment matrix
+68
+G41 Diversity target
+97
+98
+100
+LED
+ASIL
+100
+MEMS
+direct current to direct current conversion
+Si
+FHEV
+full hybrid electric vehicles
+Sic
+FPGA
+field programmable gate array
+GaN
+IC
+IGBT
+HMI
+HVDC
+high-voltage DC transmission
+integrated circuit
+insulated gate bipolar transistor
+gallium nitride
+human-machine interaction
+automotive safety integrity level
+TPM
+DC-DC
+RF
+ToF
+USB (USB PD)
+brushless direct current
+central processing unit
+ML
+BLE
+Bluetooth Low Energy
+MOSFET
+BLDC
+Bluetooth
+BT
+Clot
+Consumer Internet of Things
+PHEV
+CPU
+CMOS
+complementary metal-oxide-semiconductor
+NFC
+PSOC
+Business focus and strategy
+Growth drivers
+Urbanization
+More and more people are crowding into the cities from rural areas. The coronavirus
+pandemic may interrupt this trend in the short term if at all. In the long term, major
+cities and metropolitan regions will continue to grow and act as magnets for migration,
+with the result that the trend towards urbanization will continue. Rapid urbanization
+places huge demands on infrastructure and on related services. How should a major
+city be designed in order to guarantee an adequate quality of life for everyone when
+Digital transformation
+Combined Management Report
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Digitalization is permeating more and more areas of our lives and the coronavirus
+pandemic has accelerated this trend. New digital communication technologies have
+an impact on our everyday life, alter our lifestyle and give rise to new patterns of
+behavior. The digital transformation also allows for better use of resources. Resource
+use can be monitored and tracked and
+thus optimized. Meanwhile, humans and
+machines are producing enormous amounts
+of data. Big data is an extremely valuable
+raw material. People are revealing more and
+more sensitive information about them-
+selves. This makes it necessary for users to
+be able to communicate with one another
+securely and without the risk of the misuse
+or theft of data. Safeguarding electronic
+devices and infrastructures thus takes the
+highest priority and makes the digital trans-
+formation possible. Meeting this increased
+need for security represents one of the core
+competencies of Infineon.
+Climate change has found its way into the public consciousness, and climate protection
+policies are being adopted in many parts of the world. Our actions have a significant
+impact on our environment. Efficient use of resources is therefore of fundamental
+importance. Developing energy-efficient products is one of the key elements in saving
+energy and tackling climate change. Our goal is to make "more from less". Our semi-
+conductors feed renewable energy into electricity grids with minimum loss, reduce
+electricity consumption in computers, secure our digital data traffic, and power our cars
+in a more energy-efficient way. They make our everyday lives more comfortable, while
+at the same time minimizing the environmental impact of our energy consumption.
+・ジュの
+people are living in such close proximity? One possible solution is the “smart city”
+model. In the cities of the future, all aspects of public life will be intermeshed and
+connected with one another. This will also be true of suburban areas. An intelligent
+power grid (smart grid) can manage energy requirements efficiently. Sustainable
+mobility solutions like the smart car and expansion of the rail network will help
+manage the increasing volume of traffic. Digital and intelligent solutions in the
+smart home can also enhance the quality of life. Our products are our contribution
+towards advances in energy infrastructure, traffic and transportation systems and
+residential spaces. The objective is to make metropolises more efficient, greener,
+and more livable.
+According to the United Nations, around 9.7 billion people will be living on Earth by
+2050, two billion more than today. Population growth and the desire for a good life
+are two of the factors leading to an increase in energy consumption. This makes it
+necessary to produce, store, transmit and use energy more efficiently. Rising demand
+for resources is also pushing existing concepts for infrastructure, industry and com-
+munication to their limits. Microelectronics play a decisive role in supplying energy
+to the growing and evolving population and in creating sustainable spaces in which
+to live.
+Demographic and social change
+← Q = < 21 >
+Further information
+Consolidated Financial Statements
+Business focus and strategy
+Business focus
+ム・バチスタ2
+ジェネラル・
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+Climate change and scarce resources
+Combined Management Report
+Electrification, Digitalization
+Q = < 22 >
+Industrial Power Control,
+Power & Sensor Systems
+› Usage and conversion of electrical energy
+> Energy storage
+100-0
+› Energy transmission
+> Renewable energy sources
+IoT and big data
+Security
+Mobility
+Digital transformation
+Urbanization
+Further information
+Climate change and scarce resources
+Demographic and social change
+Profiting segments
+Growth drivers
+Growth areas
+Megatrends
+C01 Our growth areas and growth drivers are derived from megatrends in society
+store and use energy more efficiently is growing. Rising levels of traffic and trans-
+portation mean that sustainable, intelligent mobility solutions are crucial. The
+increasing digitalization of things enables energy to be used more efficiently. Electri-
+fication also requires more semiconductors in the end application, depending on
+the level of electrification. In a highly digitalized world, the number of interconnected
+objects increases and there is a rise in demand for secure processing, transmission and
+storage of data. Our solutions and systems serve all these application areas and help
+us achieve sustainable growth. In summary, Infineon is benefiting in equal measure
+from increasing electrification and from the digitization of end applications. C01
+In each of the growth areas we address in the semiconductor market - energy efficiency,
+mobility, security, and IoT and big data – there are numerous application fields with
+high growth potential for our semiconductor business. Driven by increasing demand for
+energy and the setting of global carbon reduction goals, the need to generate, transmit,
+-
+Megatrends create new areas of growth
+Growth drivers
+Energy efficiency
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Growth drivers
+We want to continue to develop, grow and create value for our customers and our
+shareholders as well as for our employees and society. The coronavirus pandemic
+has put the brakes on for the moment but cannot stop us. On the contrary, the
+coronavirus pandemic has worked in some ways as a catalyst and accelerator of
+innovation. Many of the developments would have happened anyway, but the
+coronavirus pandemic has resulted in change being instigated much more rapidly
+or implemented more swiftly, especially with regard to the digitalization of society
+and the economy.
+While the current average semiconductor content of a car with a conventional com-
+bustion engine is about US$490, the amount in mild-hybrid vehicles is about US$600,
+while for full hybrid vehicles it is about US$890 and for plug-in hybrid as well as pure
+electric vehicles, it is about US$950. Here, power semiconductors make up the vast
+majority of the additional semiconductor content per vehicle. C02
+Charging infrastructure for electromobility
+The steadily increasing number of electric vehicles makes an appropriate charging
+infrastructure necessary. A well-developed network of charging stations increases the
+incentive to buy an electric vehicle. To promote acceptance of electromobility, most
+countries are continuing to expand their networks of publicly accessible charging
+stations. Depending on the system topology, the charging stations use different types
+of power semiconductors. SiC solutions are increasingly being used for ultra-fast
+charging stations which can deliver over 150 kilowatts of power.
+Autonomous
+Mode
+Infineon Technologies | Annual Report 2021
+48
+Driving
+900
+Management Board and
+Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 29 >
+Infineon
+TLE 4998x8D
+magnetic field
+sensor chip 1
+sensor chip 2
+Active safety systems are increasingly
+developing into driver assistance systems.
+By supporting the driver with the tasks of
+driving, they increase both comfort and
+road safety. Among other things, they assist
+in critical situations or help correct a driver
+error where appropriate, for example, with
+automatic emergency braking maneuvers.
+The main systems for partially and fully
+automated driving comprise, firstly, sensors
+(such as exterior cameras, radar, and 3D
+ToF cameras for in-cabin surveillance),
+and secondly, a central high-performance
+computer to evaluate sensor data and
+determine the driving strategy (in a sense,
+the system's intelligence). The third element
+is additional secure memory IC solutions
+and the fourth is actuators (steering, brakes,
+engine control and transmission), while
+the fifth is a reliable power supply for all
+these control units, sensors, memories
+and actuators, R07. Our competence in
+providing solutions illustrates the potential
+edge computing holds for us.
+The Dual Hall Sensor TLE4998 includes
+two sensor ICs which are placed exactly on top
+of each other. This kind of redundancy is a basic
+requirement for highly dependable systems.
+Sustainable and optimally networked mobility within metropolitan areas as well as
+between large cities is one of the key topics of the 21st century. Today more than ever,
+rapid and reliable public transportation determines the quality of life in many regions
+and cities worldwide and the ability of those regions and cities to compete with
+others. The trend towards electric trains has been with us for some time and is set to
+continue. Our components (mainly power semiconductors, but also microcontrollers
+and sensors) are used not only in local passenger trains, metro trains and trams, but
+also in high-speed trains. Moreover, electrification is becoming increasingly common
+for the locomotives of freight trains, as well as for buses, trucks, construction equip-
+ment and farm machinery. Power electronics also play a key role here.
+> Electromobility
+Transport of people and goods
+are known as mild-hybrid vehicles. On the one hand, this technology means that
+the vehicles can recover a certain amount of braking energy. On the other hand,
+pollutant emissions can be reduced by more efficient systems. Mechanical functions
+are increasingly being replaced by electric functions. The 48-volt part of the onboard
+network handles the power supply for high power consumers, such as the electric
+turbocharger, electric power steering and electronic stability control.
+In the past few years, our strategy has been consistently guided by global megatrends
+that will continue to shape the world in the future: demographic and social change,
+climate change and scarce resources, urbanization, and digital transformation. From
+these megatrends, we derive our focus on the following growth areas: energy efficiency,
+mobility, security, and loT and big data. In these markets, we address structural
+drivers: i.e., areas which are expected to see disproportionate growth in the long term
+as a result of these trends or which have major innovation potential. The coronavirus
+pandemic has not altered these underlying assumptions.
+"Vision Zero" describes one of the major objectives of the automotive industry, which
+is that vehicles should become so safe that there are no longer any serious or fatal
+accidents. Around 90 percent of such accidents today are attributable to human error.
+Active safety systems can either completely prevent an accident or at least signifi-
+cantly reduce its consequences by directly intervening in the driving process. Examples
+of such systems include pedestrian detection, adaptive cruise control and blind spot
+detection. Many of these functions are no longer reserved for luxury cars but have
+become standard features in mid-range vehicles.
+目 R06
+Business focus
+OIO
+and strategy
+Business focus
+< 20 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+← Q = < 28 >
+C02 Additional semiconductor demand per vehicle raised by electromobility
+in US$
+-490
+~600
+~950
+-890
+illl
+Combustion
+engine vehicle
+Mild-hybrid
+vehicle
+Full hybrid
+vehicle
+Plug-in hybrid
+and pure
+electric vehicle
+Additional semiconductor demand
+raised by electromobility
+Semiconductor demand for
+combustion engine vehicle
+Automated driving
+› Charging infrastructure for
+electromobility
+moves or is transported or cooled. Drives
+are also found in pumps, ventilators and
+compressors. According to the European
+Commission, electric motors account
+for almost 50 percent of the electricity
+consumed in Europe. Accordingly, there
+is great potential for savings if efficiency
+is improved. We provide our customers
+with all-in-one solutions for the efficient
+control of their electric motors, compris-
+ing microcontrollers, driver ICs, power
+switches and configuration software. These
+enable us to support fast times to market
+of our customers' products and to ensure
+their simple operation.
+› Passenger and freight transport
+Drives and automation
+As with AC-DC conversion, rising demand for more computing power and storage
+capacity is also driving demand for DC-DC converters. Special processors such as
+Al accelerators, FPGAs, ASICs and GPUs require high power at very low voltages.
+In addition, energy requirements change considerably depending on load and at
+extremely short notice. As a result, the electronic systems are supplied with higher
+voltages that are then precisely stepped down to the required low voltage directly
+in the processor. The same applies to PCs and communication devices, which some-
+times require a large number of different voltages. This voltage conversion system is
+known as point of load. Requirements placed on dynamics, efficiency and stand-by
+consumption are increasing all the time. Customers are looking for simple, reliable
+high-performance solutions, necessitating the change to digital regulation of point
+of load systems and driving the trend towards all-in-one solutions.
+DC-DC conversion
+← Q = < 26 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+USB ports are widely used around the world, for example, in laptops, vehicle cabins
+and planes, or in numerous public places as wall sockets. They are used primarily for
+the transmission of data but can also supply power to a limited extent to connected
+devices. The USB PD standard was created to increase significantly the maximum
+power that can be transmitted. Behind the standard lies the idea of a universal power
+supply for various devices, in which the power supply on offer is more flexible, while
+allowing data to be transmitted through a cable at the same time. This means that
+devices such as laptops, which require more power than a smartphone, can be supplied
+with power and charged via this interface. USB PD is on its way to becoming the new
+universal charging standard.
+> USB power delivery (USB PD)
+transported from the charging station to the device and the battery will be recharged
+without requiring a physical connection.
+The number of devices that can be charged wirelessly is constantly increasing.
+Wireless charging gives users the chance to charge their devices almost in passing,
+wherever they are, in the car, at home or in a public place. A charging station can
+also be used for the wireless recharging of several devices at a time. User acceptance
+will continue to increase as opportunities for fast charging grow. Wireless charging
+has advantages in terms of space and design, especially for small devices, as there
+is no need for a charging port. Following on from the smartphone, wireless charging
+will also apply to many other devices. Using electromagnetic fields, energy will be
+> Wireless charging
+In the area of AC-DC conversion, we see high growth potential in the medium term
+in servers and telecommunications infrastructure. Power semiconductor demand
+and the number of servers are determined above all by the increasing complexity of
+the various systems and the growing demand for power which is the result. Demand
+for computing power and DRAM/Flash memory has been boosted substantially by
+the coronavirus pandemic. Working from home and mobile working, video streaming,
+social networking and, increasingly, machine learning will keep demand high. IoT
+and Industry 4.0 will accelerate this trend in the future. In addition, we see growth
+opportunities for our business in the following areas: compact chargers, fast-charging
+features and wireless charging solutions for smartphones, tablets and light laptops
+(portables).
+AC-DC conversion
+A power supply for electric devices consists essentially of two stages. First, the power
+unit converts the grid alternating current (AC) into generally much lower direct current
+(DC), a process referred to as AC-DC conversion. The second step, depending on the
+intended usage, is for the voltage of this direct current to be adapted precisely at the
+point of load to suit actual requirements, such as those of a server's processors. This
+second stage is referred to as DC-DC conversion. The devices in question usually have
+several DC-DC converters. Growth in the area of power supply depends on the power
+and complexity of the devices and, above all, on an increase in the number of units.
+Power supply
+Using electric energy
+Q = < 25 >
+Further information
+Consolidated Financial Statements
+Electric drives are at the heart of a large number of systems, such as cranes, con-
+veyor belts, automation systems and robots. We find them wherever something
+Combined Management Report
+> Industrial automation
+> Home appliances
+A high degree of reliability is required for driver assistance systems in vehicles. Unlike
+humans, they are expected to be 100 percent reliable. Functional safety and the
+quality of products, software and systems are therefore very important, placing chal-
+lenges on the whole industry. For Infineon, this falls under the umbrella of reliability
+or "dependability” and the Company has a significant competitive lead in this field.
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+In order to reduce the fleet average to the mandated carbon target value, many vehicle
+manufacturers are expanding their product ranges to include models such as hybrid
+vehicles or pure electric vehicles. These have a significantly higher semiconductor
+content than conventional vehicles. Infineon offers a wide range of power semicon-
+ductor components for these vehicles. Of interest here is 48-volt technology, which is
+used in addition to the 12-volt onboard network. The vehicles that use this technology
+carbon per kilometer by 2025. The reduction target for 2030 is 59 grams of carbon per
+kilometer, a reduction of 37.5 percent compared with 95 grams of carbon per kilometer
+in the 2021 calendar year. This will increase demand for semiconductors. Optimization
+of the combustion engine is in itself no longer enough to fulfill legal requirements
+and to satisfy customer demand for sustainable mobility. Instead, systems consuming
+energy in the vehicle will increasingly have to be made more efficient, while hydraulic
+or mechanical solutions will need to be replaced by more efficient electromechanical
+systems based on semiconductors.
+The automotive industry is working con-
+tinuously to reduce pollutant emissions.
+European Commission rules require, for
+example, a reduction in fleet average
+emissions from new cars to 81 grams of
+Electromobility
+World population growth and increasingly
+global value chains as well as urbaniza-
+tion are driving demand for all types of
+transportation, ranging from mass trans-
+portation, such as trains and buses, to
+vehicles for private use, such as cars, eBikes
+and eScooters. Towns and cities in particu-
+lar are confronted with the challenge of
+making transportation cheaper, more effi-
+cient and more sustainable.
+Mobility
+charge lasts as long as possible. As a result, more and more brushless direct current
+(BLDC) motors are being used. In BLDC motors, all the commutation (i.e., the polarity
+reversal of the direction of the current to produce electromagnetic fields) is electronic,
+depending on rotor position, rotor rotation speed and torque. This calls for appropriate
+power semiconductors and also, depending on the configuration, components for
+diagnostic and security functions. This type of motor requires high-performance elec-
+tronic control units, compared with conventional electric motors. In addition to their
+high levels of energy efficiency, BLDC motors are particularly well-suited for use in
+battery-powered systems due to their low power-to-weight ratio. Examples include
+cordless home appliances such as robot vacuum cleaners, cordless screwdrivers and
+electronic lawnmowers. In addition to the electric motors, batteries are also becoming
+more and more efficient, enabling longer operating times, which is continuing to
+drive forward the transition from wired devices to battery-powered devices. Further-
+more, all the examples cited also require additional power semiconductor components
+for the chargers. With battery-powered devices, we benefit both from unit growth
+and from the higher number of semiconductor components used.
+← Q = < 27 >
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+In battery-powered devices, efficiency is
+particularly important, so that a battery
+› Battery-powered devices
+Ever-stricter energy efficiency requirements
+are being imposed on home appliances. The
+new rules are intended, among other things,
+to create incentives to design products that
+are more efficient and have longer service
+lives. As a result, manufacturers of major
+home appliances are turning to highly-
+efficient motors with modern variable-speed
+control. These motors are significantly
+more energy-efficient, low-noise and have
+longer service lives. They are used, for
+example, in washing machines (drums and
+water pumps), dishwashers, refrigerators
+(compressors) and air-conditioning systems
+(fans, compressors).
+One way to reduce the energy consumption of an electric motor is to use an electronic
+control unit for speed control, which adapts performance to the load required at that
+time. Electronically controlled motors are also a key element in automation. Without
+them, it would be impossible to coordinate the various motion sequences efficiently.
+The market penetration of speed-controlled motors will increase. Such a motor
+control unit requires a large number of the power semiconductors we supply. The
+number and value of these power semiconductors depend on the power range of the
+motor. Industry 4.0 will trigger a new investment cycle, not only for automation in
+factories, but also for general transport and handling systems as well as for collabora-
+tive robots (see "IoT and big data" in this chapter, p. 31 ff.).
+> Automated driving
+Business focus and strategy
+Growth drivers
+Management Board and
+← Q = < 23 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Power & Sensor Systems,
+Connected Secure Systems
+> Edge computing
+› Cellular infrastructure
+› Data center
+> Industrial loT
+› Consumer IoT
+> Human-machine interaction
+Connected Secure Systems,
+Automotive
+> Integrity of devices
+> Security for connected vehicles
+> Secure authentication for the
+Consumer loT and Industrial IoT
+> Security for contactless payment
+› Security for mobile devices
+Power & Sensor Systems
+Automotive, Industrial Power Control,
+> Infotainment
+Infineon's growth areas are the source of its specific
+growth drivers
+Supervisory Board
+Energy efficiency
+Power generation from renewable energy sources
+Infineon Technologies | Annual Report 2021
+REFUELLING STATION
+HYDROGEN
+Green hydrogen from renewable energy is
+due to be produced at the Villach site (Austria)
+from the beginning of 2022.
+Very high direct current (DC) is needed for the electrolysis process to produce green
+hydrogen. Alternating current (AC) supplied by the power grid must therefore first be
+converted into direct current. High system
+output (> 50 megawatts) can be achieved
+efficiently through the interaction of several
+high-performance switches. In conjunction
+with photovoltaic plants, there only
+needs to be an adjustment to the directly-
+generated DC in the electrolysis process.
+The combination of renewable energy and
+efficient power semiconductors is a key
+lever for the large-scale production of
+green hydrogen, which could become a
+major growth driver for Infineon. If one day
+green hydrogen is available in sufficient
+quantity and at a competitive cost, fuel cell
+technology will be used in various applica-
+tions to generate electricity, for example,
+in the transportation sector (cars, trucks,
+buses, trains, helicopters, small aircraft)
+and as an alternative to diesel generators
+(on construction sites and campsites,
+for instance, and especially in base sta-
+tions in remote areas and mountainous
+regions).
+Over the course of the next decade, hydrogen will play a crucial role in energy supply.
+However, if we are to exploit the potential of hydrogen, solutions must be found for
+the challenges associated with its production, storage, transportation and use. Semi-
+conductor solutions from Infineon can provide significant support in the development
+of a sustainable hydrogen economy along the value chain.
+Hydrogen
+As a result of the energy transformation, 50 percent of Europe's electricity should
+come from renewable energy by 2030. The use of renewable energy is linked with
+specific requirements for the entire energy supply chain. In contrast to conventional
+electricity generation, which takes place centrally in a small number of power plants,
+the generation of electricity from renewable energy takes place decentrally in a large
+number of small power plants. In addition, fluctuating power generation does not
+always match the demand. Conventional power plants still have to substitute for or
+supplement renewable energy sources. This makes the expansion of battery-based
+energy storage necessary in the long run. With its semiconductors, Infineon provides
+the essential power components and subsystems for efficient energy storage.
+Energy storage
+HVDC systems are playing a key role globally by providing reliable, low-loss energy
+transmission over long distances. They are also used for the grid connection of offshore
+wind farms. It is to be expected that future growth in the use of renewable energy
+will result in a rise in demand for efficient transmission routes. The semiconductor
+products for HVDC applications must satisfy particular requirements: robustness,
+short-circuit resistance and dynamic performance. We have developed an IGBT
+module- and a diode module-family specifically for this purpose.
+High-voltage direct current transmission (HVDC)
+In photovoltaics, Infineon has been cooperating for years with the world's leading
+manufacturers of PV inverters. Among other things, we are benefiting from the growth
+of Chinese inverter manufacturers, both with regard to domestic expansion of photo-
+voltaics in China itself and to the export of PV inverters to other regions. We are also
+working closely with leading European and U.S. manufacturers. Efficient conversion
+and low system costs contribute to reducing electricity generation costs in open-space
+photovoltaic plants and to creating grid parity compared with conventionally gener-
+ated electricity. Using our SiC transistors enables manufacturers of PV inverters to
+achieve better systems performance in terms of efficiency, size and cost when com-
+pared with Si-based solutions.
+Photovoltaics
+← Q = < 24 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+When it comes to energy generation from wind, two trends in particular drive demand
+for semiconductors. First of all, older low-performance wind power turbines are
+being replaced by modern high-performance ones, a process referred to as repowering.
+Secondly, ever-stronger turbines are being used in initial installations. The performance
+of wind turbines has risen from around 100 kilowatts in the 1980s to present-day
+figures of up to 6 megawatts for onshore turbines and 14 megawatts for turbines in
+offshore wind farms. Depending on the type of wind turbine, semiconductors costing
+€2,000 to €3,500 per megawatt are required. Offshore wind farms in particular present
+major challenges in terms of the robustness and reliability of the components used,
+since they have to function in a harsh environment, at high humidity levels and in
+saline air over a long period, as well as needing to be low-maintenance.
+Wind
+The renewable energy industry has been expanding fast for years and is gaining in
+importance as a result of the greenhouse gas reduction pledges made in various
+regions. According to estimates from the International Energy Agency, annual addi-
+tions from renewables will need to more or less quadruple from their current figure
+of around 200 gigawatts by 2030, if the global goal of carbon neutrality is to be
+reached by 2050. Infineon benefits from the fact that wind turbines and photovoltaic
+(PV) power plants require multiple power semiconductors per gigawatt of electricity
+generated, compared with conventional power plants. In contrast to coal-fired,
+gas-fired and nuclear power plants, there is no turbine whose consistent movement
+can generate a constant alternating current of 50 or 60 hertz. Therefore, the electricity
+generated cannot be fed directly into the grid. Instead, power electronic systems are
+required for conversion and safeguarding. Infineon supplies all major manufacturers
+of wind power turbines and PV inverters.
+A new mindset on climate protection depends entirely on a new mindset on energy
+transformation. An energy transformation will only be viable if we take sustainable
+and climate-friendly action along the entire supply chain, from the generation of
+electricity to its consumption. Microelectronics play a decisive role here, helping to
+provide the growing population with energy in an efficient and environmentally
+friendly manner. For environmental reasons, it will no longer be possible in the future
+to meet the rising demand for electric energy by using fossil fuels to the same extent
+as we do today. Renewable energy sources, which do not emit carbon into the environ-
+ment, are becoming more and more important. The use of wind power and solar
+energy is a key factor here. The fluctuating availability of energy from these sources
+can be balanced out by using electric storage systems but requires holistic manage-
+ment of the power grid.
+Infineon Technologies | Annual Report 2021
+Further information
+Management Board and
+Supervisory Board
+Business focus and strategy
+Business focus
+Thinking and acting responsibly over the long term goes beyond our direct business.
+It is also crucial that, in addition to developing a greater understanding of our cus-
+tomers' systems, optimizing our products and solutions, and achieving an adequate
+return in line with our objectives, we incorporate sustainability into the management
+of our business and engage responsibly with society. Making life greener is part of our
+mission. Therefore, we have set ourselves the target of becoming carbon-neutral
+by 2030.
+Within these strategic guidelines, the acquisition of Cypress that we completed in the
+2020 fiscal year is enabling us to grow faster than we would have done organically.
+By combining complementary product portfolios, we are strengthening and expanding
+our core business and can service an even wider range of applications. We also offer
+our customers comprehensive system solutions and better performance and ensure a
+faster time to market for their products. These are the ways in which we differentiate
+ourselves and increase our growth potential.
+Since the end of the 2020 calendar year, the semiconductor industry has experienced an
+unprecedented global shortage of manufacturing capacity. There were, and in some
+cases still are, many factors contributing to this shortage. In the December quarter,
+economic recovery began sooner and faster than expected. In geographical terms, this
+was the case, especially in China. In terms of industries, the bounce back was strongest
+in the automotive industry. The digitalization push caused by the coronavirus pandemic
+led to a surge in demand. Lockdowns in some countries (i.e., Malaysia), extreme
+climate situations (the winter storm in Texas, water scarcity in Taiwan), accidents
+(the fire in a semiconductor factory in Japan), disruption to the logistics chain (the
+tanker accident in the Suez Canal, a shortage of air and sea freight capacity) and,
+last but not least, ongoing political tensions greatly slowed production. Our strategy
+of engaging in differentiating in-house production, on the one hand, and outsourcing
+products based on standard manufacturing technologies to contract manufacturers,
+on the other, has proved successful. We will continue to adopt this strategy, making
+adjustments where necessary.
+At the heart of our implementation is our
+strategic approach "Product to System",
+through which we focus our entire value
+chain on achieving success for the cus-
+tomer. This approach is supported by
+other elements: a broad-based culture of
+innovation, constant pursuit of technology
+leadership, a high level of quality aware-
+ness, in-house production that differentiates
+us from our competitors, and a sales and
+marketing strategy tailored to the various
+markets. We are therefore able to offer
+our customers leading products with the
+highest quality and delivery reliability,
+enabling us to achieve profitable growth
+and grow faster than the market. All
+this promotes our goal of achieving and
+securing a leading position in the markets
+and applications we are active in, while
+successfully addressing issues relating
+to the future.
+In recent years, we have established a stable foundation for success in our target
+markets. Our strategy is to further strengthen our core business and tap into new
+growth markets. We have built up and systematically expanded the technical
+expertise required over many years. Since good ideas do not turn into innovations
+until they are successful in the market, we have also developed the right concepts
+for implementing our value-creation strategy. Il C04
+Group strategy
+Q = < 35 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+IoT and the related explosive growth in devices with an internet connection, as well as
+other new applications that require real-time computing, will drive the growth in edge
+computing systems. In edge computing, data are processed where they arise, on the
+edge of a network. They do not first need to be sent to a central computer server, the
+cloud. This means that edge devices need to have sufficient capacity. High levels of
+capacity combined with limited system resources and energy budget require optimized
+concepts. This is where our products and systems come into play, for example, micro-
+controllers, power semiconductors and sensors, as well as connectivity ICs and security
+ICs. Our hardware, algorithms and system solutions are optimized for these tasks.
+Edge computing
+The advent of the new 5G mobile communications standard has greatly increased
+potential applications when compared with previous standards. Above all, 5G's high
+data transmission rates and considerably shorter reaction times and/or response
+times make new applications and devices possible. Network providers are continuing
+to expand their 5G infrastructure so that they are prepared for the increase in data
+volume and can offer their customers good network coverage. The network archi-
+tecture has to migrate to smaller and more numerous cell sites to enable better
+exploitation of the available frequency spectrum and especially the use of higher
+frequency ranges. Our radio frequency components are used for communication
+between mobile devices and/or edge computing end devices (see next paragraph)
+and the base station, as well as for wireless backhaul from local networks to the core
+network.
+5G mobile communications infrastructure
+supply chain and manufacturing more efficient. By involving customers and suppliers,
+demand-related changes in capacity utilization or a breakdown in the supply chain
+can be offset faster. Predictive maintenance means that expensive machine down-
+time can be avoided. Infineon is both a user and provider of IloT solutions. We supply
+microcontrollers, sensors and security solutions for smart factories. At the same
+time, we have adopted Industry 4.0 approaches to a great extent at our own manu-
+facturing sites.
+The lloT describes the digital transformation of industrial production. Sensors, micro-
+controllers and actuators make machines smarter. They can monitor themselves
+and their surroundings and optimize their actions. In manufacturing, machines are
+connected with each other to form an intelligent network that enables comprehensive
+optimization of processes, material flow and capacity utilization. This makes the
+Industrial Internet of Things (IoT)
+00000
+22.0
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Mitsubishi
+Toshiba
+STMicroelectronics
+onsemi
+Infineon
+C05 Worldwide discrete power semiconductors and modules market share
+in the 2020 calendar year
+grow in scope
+New
+Drive
+Enable
+Drive
+Enable
+220
+Adjacent
+grow in scale
+Products/
+Technologies
+Applications
+Markets
+C04 Strategic growth model
+Our core business includes all those areas in which we have a full understanding of
+the applications or where we master the underlying technologies and in which we
+can therefore offer an extensive differentiating product portfolio. In our core business,
+we want at least to grow with the market and thereby maintain or even strengthen
+our leading positions ("grow in scale"). One example is our power semiconductors,
+which are employed in the generation, transmission, storage and use of electric power.
+With our strategic focus on the megatrends referred to above, we are ensuring long-
+term growth for Infineon. We concentrate on markets with strong structural growth,
+especially on electromobility, the various stages of the electric energy supply chain
+and the increasing digitalization of all aspects of life. The way we act in the individual
+markets depends on our competitive position, which we analyze in terms of technol-
+ogies, products and application understanding. Here we look at three categories:
+firstly, our core business; secondly, adjacent complementary business; and thirdly,
+new options for products and applications as well as for markets. Il C04
+Strategic guideline: Strengthening our core business
+and tapping into new growth markets
+Q = < 36 >
+Further information
+Consolidated Financial Statements
+Core
+Smart buildings improve the comfort of their occupants and are set to become an
+integral part of the energy transformation. According to the German Federal Ministry for
+Economic Affairs and Energy, buildings are currently responsible for around 35 percent
+of Germany's energy consumption. By 2050, however, the Federal Government wants
+to reduce the energy requirements of its building stock by 80 percent. That goal could
+be achieved if smart buildings were to generate their own electricity (using solar
+systems, for example, as part of a smart grid) and, at the same time, were much more
+energy-efficient than conventional buildings. They can, for example, use sensors to
+detect how many people are in a room at a
+particular time and, based on that informa-
+tion, automatically regulate the lighting or
+heating. Maintenance costs are also reduced.
+Sensors that measure and monitor the con-
+dition of components are included in the
+building installations, such as elevators. If
+there is the risk of a defect as a result of
+wear and tear, technicians are notified. They
+then carry out predictive maintenance
+before the elevator breaks down. Expensive
+outages can thus be avoided. Last but not
+least, smart buildings improve safety. If
+there is a fire in the building, sensors are
+able to detect how the smoke is spreading,
+enabling escape routes to be identified.
+Smart buildings
+← Q = < 34 >
+010100
+Connectivity
+Security solutions
+Compute & connect
+Software/
+Ecosystem
+Actuate
+Sense
+Information and data
+about the real world
+Infineon at the core of loT
+Coin cell-powered devices
+Consumer loT
+Smart city
+Real-world applications
+Smart home
+|_
+Drives
+Industrial IoT
+Power supplies
+Battery-powered devices
+C03 We are linking the real and the digital world
+Human-machine interaction is concerned with how humans and systems interact
+and communicate with each other. For a long time now, the focus has no longer been
+on traditional industrial machines but on computers, digital systems or loT devices:
+i.e., the connection between the real world and the digital world. More and more
+devices are connected and perform their tasks automatically. The operation of all
+these machines, systems and devices has to be as intuitive as possible, as if the user
+were communicating with a human.
+Human-machine interaction
+Our semiconductor solutions drive the loT. Sensors record mostly analog information
+from their surroundings and transform it into digital data. Then microcontrollers
+process this data and generate control signals, actuators convert the control signals
+into actions (in most cases motion, but also light or heat) and security solutions
+protect the integrity of devices and data, while connectivity chips are the link
+between the real world (the end device) and the digital world (the digital twin in
+the cloud). C03
+00101001
+101010010100:
+101001 Digital world
+01010
+Value addition and
+optimized use of resources
+Smartphones
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Smart home
+"Smartification" is also happening in the home and involves the use of pioneering
+technology to make our daily lives easier and more convenient. Today's growing
+range of technologies includes home appliances and interconnected mobile devices.
+To be "smart" in this sense, these devices and systems need to be equipped with the
+right semiconductor solutions. These enable smart devices to perceive their surround-
+ings and to adapt to changing situations through connectivity. Sensors, control units
+and actuators enable real-time data to be properly captured, interpreted and processed
+and for the appropriate action and/or reaction to be triggered. In times of increasing
+connectivity, cyber-attacks present a security risk that can be reduced by including
+security solutions as an integral part of the devices.
+Souto
+The area of robotics has been attracting great attention for some years. In addition
+to the continuing development of conventional industrial robots, more and more
+areas of industry are using collaborative robots (cobots). Cobots work together with
+humans in the manufacturing process and are no longer separated from their human
+colleagues by protective equipment like typical industrial robots. They are therefore
+required to meet high standards of safety and reliability, as they have to be able to
+perceive their surroundings well enough to work effectively together with humans
+without endangering them. Cobots will be able to relieve and support humans per-
+forming hard and dangerous tasks. In the long term, cobots will also support elderly
+people in living independent lives, helping to solve the challenge of an aging popula-
+tion. As cobots develop, the trend will be towards intuitive robot programming and
+self-learning robots. Infineon offers not only the necessary sensors, microcontrollers,
+connectivity solutions, power semiconductors and security solutions, but also pro-
+vides numerous start-ups in this market with knowhow in the areas of motor control,
+sensor systems and security.
+Collaborative robots
+Wearables are continuing to offer new innovative functions, such as health and fitness
+monitoring. They are practical and comfortable to wear and can, depending on the
+application, be used for a variety of purposes. Factors to consider in the design of a
+wearable are size, comfort for the wearer and ease of use. Other success factors are
+accuracy of measurement, a long service life, stability, and security functions. Our
+products and system solutions fulfill these requirements. Small energy-saving sensors
+enable, for example, high-quality monitoring of health, physical movement and
+sporting activities. Our radio frequency solutions support connectivity and location
+tracking. Our solutions for wireless charging also make it easier for the user to recharge
+the devices. As wearables collect user data about health, a high level of data security
+is essential in order to protect the user's privacy.
+8.3%
+Wearables
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Actuate Power semiconductors
+Compute & connect Microcontrollers, special memories, Wi-Fi, BT, BLE, USB
+Sense Sensors
+Automotive
+Health care products
+Q = < 33 >
+5.5%
+Management Board and
+Supervisory Board
+4.6%
+Customer system
+Hardware
+Software
+Services
+C08 System knowhow and services are becoming more and more a differentiating factor
+The basic idea is that we continue to expand our competence portfolio, thereby
+increasing our potential for differentiation and helping shape semiconductor trends.
+Best of all, however, is always to be one step ahead. Technology knowhow has
+invariably been the foundation of our business model, whether in the form of discrete
+components, integrated solutions or products that combine analog and digital
+functionality. Our broad portfolio ranges from individual components to solutions
+with basic firmware and driver software. This enables us to provide targeted support
+As the range of services provided is increasingly becoming a differentiating factor,
+we have expanded our range to include an ecosystem. For many small customers
+without expertise in mounting semiconductor components, an ecosystem offers
+crucial value added, as it can significantly reduce their development time.
+Our strategic approach "Product to System" shapes our actions
+Our strategic approach "Product to System" goes well beyond thinking in terms of
+technologies and products, co8. This approach was also a key element in develop-
+ing the strategic guideline on strengthening our core business and tapping into new
+and adjacent growth markets described above. We want to understand what the
+markets are demanding and how they are changing. Only then will we be able to
+understand how we in turn can change the markets ourselves. We therefore look
+not only at the direct sales opportunities for our products, but also at our customers'
+success factors and at trends in the end markets. We want to recognize at an early
+stage when the foundation of our business is changing. Only then can we take appro-
+priate action in good time, ensure sustainable differentiation in growth applications
+and increase earnings. For this to succeed, we have to understand the environment
+in which our customers' products are used, how these products are embedded in
+larger systems, with which other devices the products interact, what requirements
+they have to fulfill and what function they are intended to perform. Looking at
+our products in these systems, we have to consider which other active and passive
+components and control concepts they use and what capabilities our customers
+contribute to the value creation process. Equipped with this knowledge, we can make
+the most of our competencies. We want to translate the technologically possible
+into marketable products that provide the greatest possible benefit to our customers.
+Sensor systems, for example, not only capture information about their surroundings,
+but also interpret and process the data they gather in order to initiate a particular
+action. Digital control loops in power supplies enable higher energy efficiency at
+both high and low load levels. Connectivity enables devices to be networked. Security
+controllers must be capable of distinguishing between authorized and unauthorized
+access. In all cases, in addition to the hardware components involved, software
+is also required to a greater or lesser extent. System understanding therefore also
+means software understanding.
+Factors for successful implementation
+Strategic action areas:
+Q = < 39 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+R01
+Texas Instruments
+2.4%
+MediaTek
+2.4%
+Infineon
+Ecosystem
+Development environment
+Full system functionality
+(algorithms, Al)
+Partial system functionality
+(firmware)
+Infineon Technologies | Annual Report 2021
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 31 >
+disruptions and downtime through predictive maintenance. However, the networking
+and digitalization of factories create points of attack for hackers. To protect them-
+selves, companies must therefore take security into account from the very beginning
+of Industry 4.0 projects. A combination of software-based and hardware-based security
+solutions can protect connected machines and communication nodes. Examples
+are OPTIGA™ TPM chips from Infineon, which can be integrated into routers, industrial
+PCs or complex control units and which serve to identify devices to communicating
+partners in the network. They thus authenticate themselves in the network while
+securing transmission of the data. At the same time, they also help protect the devices
+against manipulation, for example by helping to secure software updates. They act
+in a way like vaults for the encryption certificates.
+Security for connected vehicles
+The ever-increasing connectedness of vehicles creates opportunities for many new
+services but also carries the risk of unauthorized access. This makes it necessary to
+guarantee the secure exchange of data both between the various onboard systems
+and with other vehicles and the infrastructure. Vehicle safety and personal safety, on
+the one hand, and data security and IT security, on the other hand, can no longer be
+considered in isolation from each other. The vehicle is becoming a networked com-
+puter on four wheels and part of the lot. The demand for data security and IT security
+in the vehicle is rising. We see our opportunity here in the hardware-based security
+provided by our security controllers - either as a separate component or integrated
+into our automotive microcontrollers.
+Integrity of devices
+The integrity of devices has to be ensured as they become increasingly interconnected.
+In principle, this means that no unauthorized modifications can be made to programs
+and data by third parties. A Trusted Platform Module (TPM) can be implemented here.
+This special security chip can protect keys, passwords and digital certificates and store
+them separately from the CPU. In this way, sensitive information and security-critical
+data are locked away in a "data vault”. At the same time, the integrity of the data can
+be checked, making it possible to detect attacks promptly and ensure the correct
+functioning of a system.
+IoT and big data
+2.8%
+IoT connects the real world and the digital world. A wide variety of physical things
+- ranging from smartphones, watches and cameras to cars and computers and even
+to home appliances and industrial machinery - are equipped with embedded elec-
+tronic systems, sensors and software. The possibilities are huge: greater convenience
+and security in the smart home, higher productivity together with better ecology in
+farming, greater productivity in manufacturing, new services, and support for older
+people. These examples show that loT has the potential to effect radical change in
+the interaction not only between companies and consumers, but also between com-
+panies as well as between consumers.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Infineon Technologies | Annual Report 2021
+Services
+Competencies evolve over time
+System knowhow
+Base technology
+Single function
+(discrete components)
+Building block (integration of
+analog and digital functionality)
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Growth drivers
+Nvidia
+3.8%
+Device fabrication
+Epitaxy
+Management Board and
+Supervisory Board
+Lower half
+Wafer splitting
+Upper half
+Device fabrication
+Epitaxy
+Boule splitting
+Boule
+C06 Siltectra's Cold Split technology allows splitting of SiC boules as well as SiC wafers
+with minimum loss of material
+output of SiC components from the raw materials purchased, which increases our
+security of supply. This is particularly important given the ongoing expansion of
+renewable energy and the increasing use of SiC in the powertrain of electric vehicles.
+We have now established all the prerequisites for future success in the growing
+SiC market: access to high-quality wafers, leading technology at the product level
+(Trench SIC MOSFET), module expertise and system understanding.
+← Q = < 37 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+We began researching new materials for power semiconductors at an early stage.
+SiC and GaN are particularly well suited for use in power electronics. Here, we are
+moving towards new levels of performance and efficiency. These components are
+typically more expensive than Si-based products, but thanks to new system architec-
+tures they also offer the customer multidimensional additional benefits, such as a
+smaller form factor, greater efficiency and lower system costs. Realizing these benefits
+often goes hand in hand with higher research and development costs for our cus-
+tomers. Therefore, we support the introduction of these new technologies in two ways.
+On the one hand, we work closely together with our highly innovative customers,
+while, on the other hand, we provide less technology-oriented customers with appro-
+priate solutions that make the switch easy to implement, for example, compatible
+control components. Given the increasing relevance of SiC for certain power semi-
+conductor applications, we acquired SiC specialist Siltectra in 2018. The company
+has developed an innovative method known as Cold Split technology to process
+crystal efficiently and with minimum loss of material, c06. Infineon will use the
+Cold Split technology for the efficient separation of SiC boules and to split SiC wafers.
+That gives us two advantages. Firstly, we can manufacture in a more cost-effective
+manner, as we use the raw materials more efficiently. Secondly, we achieve a higher
+We understand how these systems are used to convert and control electric power,
+and we supply particularly compact and energy-efficient MOSFETs and IGBTs for this
+purpose. We are the undisputed global market leader in this area. Il C05
+R04
+19.7%
+Wafer dicing
+Accordingly, we offer our customers optimal solutions, and we can show them new
+ways of being successful. Our high-volume manufacturing means that we can achieve
+economies of scale, while at the same time, we can provide manufacturing capacity
+for individual customer projects and grow alongside our customers.
+The greatest growth potential is to be found in markets adjacent to our core business
+that we have not yet addressed at all or in which we have only been partly active. It
+only takes a moderate amount of effort to adapt existing technologies and products
+for additional applications, enabling us to increase potential sales. In the application
+fields where we are already active, we can use our system understanding to increase
+revenue with a broader portfolio of products and solutions ("grow in scope"). The
+core mentioned above should therefore not be seen as a static portfolio of activities.
+Instead, the adjacent business becomes part of our core business in the medium
+term, the core grows and the boundaries shift, because when we make progress in
+specific markets in terms of technology, products and application understanding,
+the classification of these markets changes accordingly. To return to the example of
+power semiconductors, "Power" is one of our original core competencies, but here
+too we continue to develop. We are expanding our portfolio so that we can offer our
+customers an increasing degree of “Intelligence” in addition to power semiconductors.
+Specifically, this means that we have focused on complementing our range of efficient
+power transistors with additional components, increasingly using digital solutions.
+The products required for intelligent control of switches tend to be more complex and
+higher-end because they incorporate greater functionality. In the context of increas-
+ingly complex systems and shorter development times, many customers appreciate
+this greatly, as it enables them to reduce their development costs and development
+risk significantly.
+Technological progress also paves the way for completely new application areas for
+which commercialization has not yet started on a wide scale. Sometimes innovations
+in semiconductor technology provide the momentum for new applications, while
+4.1%
+Qualcomm
+Broadcom
+In the era of Industry 4.0, companies are using the latest technologies to make their
+manufacturing faster and more cost-effective, to reduce rejection rates and to minimize
+4.7%
+Micron
+5.6%
+SK Hynix
+12.0%
+16.1%
+Samsung
+Intel
+3.0%
+US$473.491 billion market size
+even more extensive and forward-looking system solutions. The synthesis of our
+security expertise and Cypress' connectivity knowhow is accelerating our entry into
+new applications in the area of loT. In the field of automotive semiconductors,
+the expanded portfolio of microcontrollers and NOR Flash memory ICs offers great
+potential, especially given their growing importance for driver assistance systems, new
+electronic architectures and haptic operating elements. The complementary nature
+of our product ranges means that we can differentiate ourselves even more strongly
+from the competition in our core applications with our strategic approach "Product
+to System" and we can thus service adjacent business areas. After the acquisition of
+Cypress Infineon is among the world's top-10 semiconductor manufacturers, co7.
+The advantage of our system solutions to the customer is that the relevant parts
+come from a single source. They are compatible with each other and rounded off with
+software solutions. For our customers, this means shorter product development
+times and an attractive cost-benefit ratio for their products.
+We applied these very criteria to the acquisition of Cypress, which was a major
+groundbreaking step in Infineon's strategic approach. By combining complementary
+product portfolios, we are strengthening and broadening our core business in power
+semiconductors and are able to service an even wider range of applications. Our
+focus on structural growth drivers has been reinforced as a result and the base
+of our business model widened. Cypress has an extensive portfolio of microcontrol-
+lers, software and connectivity components. By combining these with our power
+semiconductors, sensors and security solutions, we are able to offer our customers
+We will continue to supplement our organic growth in the future with selective acqui-
+sitions. These acquisitions will need to fulfill three criteria: a) strategically beneficial
+across our three growth categories (core business, adjacent business, new options),
+b) financially advantageous and c) a good cultural fit. A purchase must strengthen
+Infineon's market position in accordance with our strategic focus, usefully comple-
+menting our range of competencies. The corporate culture of any potential acquisition
+target must be a good fit with Infineon's culture, or at least add valuable elements.
+other times groundbreaking concepts on the customer side require the development
+of suitable semiconductor solutions. By becoming involved in these new business areas
+at an early stage, we want to secure a good starting position in highly promising future
+markets. Take the example of smart buildings. Sensors are the sensing organs of a
+building. They actively perceive their surroundings by "hearing", "seeing", "smelling"
+and "feeling". With our sensors, we can open up new application fields, such as
+predictive maintenance of smart buildings. To identify system failures, such as in an
+air-conditioning system, before they occur, our sensors measure various parameters
+and data points. These measurements provide information about whether the rele-
+vant system is operating properly or whether it might break down soon. The ability
+to monitor the state of these devices and systems and to predict outages before they
+actually occur, and to avoid the need to replace devices or systems too early, means
+that smart buildings offer significant potential for cost savings and greater convenience
+for their occupants. Intelligent control and monitoring of systems can of course also
+be used in many other areas, especially in industry.
+Q = < 38 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+C07 Market share in the total semiconductor market in the 2020 calendar year
+5.0%
+Further information
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+Security
+The increasing degree of interconnection between humans, machines and devices
+demands greater IT security: from the manufacturing industry and smart home
+applications to information and communication technologies. We provide our cus-
+tomers with robust, future-oriented embedded security hardware for electronic
+devices, computer systems, network components and industrial facilities. These
+security technologies make it possible to authenticate people and machines, protect
+confidential data and detect unauthorized changes to networked machines and
+devices. In industry, this trend is already evident. With increasing digitalization, the
+desire for reliable IT security that is also easy to use is growing.
+Security for mobile devices
+The development of smartphones and wearables, the mobile internet and Near
+Field Communication (NFC) technology has made it possible to integrate payment
+< 30 >
+Security for contactless payment
+Contactless payment has been common for several years in many countries and
+regions, such as the U.S. and Canada, and Europe, but also Asia, especially China and
+Singapore. The coronavirus pandemic ensured greater acceptance of this type of
+payment, even in previously hesitant countries such as Germany. Behind contactless
+payment transactions, there is generally a transmission standard that transmits the
+data over a short distance of four centimeters at the most. This small range, in con-
+junction with encrypted data transmission, makes contactless payment transactions
+secure. Infineon is one of the world's largest manufacturers of security chips and
+antennae for payment cards.
+Secure authentication for the loT
+Security plays a key role in IoT. The rising number of hacking attacks underlines
+the need for appropriate precautions. In order to secure electronic systems, it is
+important to connect only authorized and
+authenticated devices with each other and
+to protect them against manipulation and
+cyber-attacks. This means that security
+must be integrated into every end-point
+whenever possible. The electronic compo-
+nents central to security are typically
+assembled on the printed circuit board,
+which is why these components are referred
+to as embedded security. Infineon offers
+various embedded security controller
+families adapted to meet specific security
+requirements.
+For machine-to-machine communication, Infineon
+offers eSIM controllers in a tiny package.
+Security for industrial applications (smart factories)
+← Q = < 32 >
+services into today's mobile devices.
+During the coronavirus pandemic, people
+have particularly valued this function.
+However, cashless payment is just one of
+many of the functions of mobile devices
+requiring the storage and processing of
+sensitive data. Travelers on public trans-
+portation, for example, enjoy the conve-
+nience of using mobile tickets instead
+of coins or physical tickets. These applica-
+tions require special security solutions
+such as a security chip called a Secure
+Element (SE). The SE can either be built
+into the smartphone (when it is referred
+to as an embedded SE, or eSE) or inte-
+grated into the SIM card.
+Combined Management Report
+Consolidated Financial Statements
+Further information
+to rapidly changing markets
+IoT and big data are constantly bringing new players to the electronics marketplace,
+and they call for a strong partnership across a variety of competence areas. In this
+dynamic environment, joint innovation is the key to corporate success. One example
+is our Silicon Valley Innovation Center, a start-up center for innovations. It provides
+a platform on site for investigating new ideas and for fast learning. We also operate
+co-innovation spaces, the first of which we opened in Singapore. With our experience
+and expertise, we support the typical skill set of start-ups trying out new technologies
+and applications and bringing some of them to market. This way, both sides benefit.
+This approach also lets us accelerate our own innovation processes and penetrate
+further into new and adjacent markets. One example of this is our collaboration with
+a start-up that enables new utilization concepts in its product with gesture control
+and audio transmission through the finger bones: i.e., structure-borne sound. A large
+number of different Infineon components are used in this application.
+Flexible marketing approaches enable Infineon to adapt
+Business focus and strategy
+Group strategy
+solve potential problems efficiently, simply and independently. As a user, on the
+other hand, we also use digitization to optimize our internal processes and to make
+them as efficient as possible. So, for example, we connect our sites and organize
+our global supply chains in accordance with Industry 4.0 in a virtual manufacturing
+network. In sales and marketing, we are using new methods for analyzing big data
+to improve our cross-segment sales opportunities and, as a result, we can provide
+more targeted solutions for our customers' needs. With initiatives such as these, we
+are building our digital expertise and becoming even more competitive. We are
+taking an exploratory approach to make the best use of the potential of the digital
+transformation. This way, we gather experience based on specific use cases and
+work towards solutions in an iterative process.
+Management Board and
+Supervisory Board
+← Q = < 40 >
+possible way using efficient platforms. An important aspect here is the digitization
+of technical support, which we continuously drive forward. Technical support is
+essential to build and maintain customer relationships in fragmented markets. We
+enable customers to have direct access to the information they require in order to
+a provider and, on the other, as a user of
+digital solutions. As a provider, we use digi-
+tization to service our customers in the best
+The digital transformation plays a crucial
+role here. As a global semiconductor manu-
+facturer, we benefit from the digital trans-
+formation in two ways: on the one hand, as
+This is why innovation and system thinking ideally complement one another. We
+consider what the key factors are and how we can combine several innovative steps,
+which may sometimes appear rather small, to form a greater whole that will in turn
+provide an additional and noticeable benefit to the customer. Our commitment to
+innovation today covers all areas of our company: logistics, operations, technology,
+products, system solutions and cooperation with our customers. We focus on differ-
+ent aspects, depending on market demands. Within the company, the focus is on
+innovation in our business activities and on continuous improvement, with the aim
+of becoming leaner and faster. The key to success is collaboration across organiza-
+tional boundaries and the resultant creation of a working environment that helps us
+expand our innovative expertise. In parallel
+with a structured innovation process, we
+have successfully established new concepts
+that do not take a hierarchical approach but
+are based on the initiative of our employees
+and therefore provide the necessary free-
+dom to act.
+Innovation is one of the fundamental success factors in the semiconductor industry
+and is the basis on which we differentiate ourselves from the competition. Infineon
+has shown time and again that our technological and product innovation enables
+us to grow faster than the market. However, the challenges are becoming greater. In
+the attractive markets where we are active, competition is increasing, and we require
+an ever-broader technology portfolio to remain competitive in these markets in all
+applications. In addition, development costs are increasing disproportionately with
+Innovation drives differentiation
+Key aspects of the focus of our manufacturing landscape include not only innovative
+strength and delivery capability, but also quality and productivity. Our manufacturing
+strategy (of applying leading manufacturing technologies and process expertise in
+our in-house manufacturing, while outsourcing in areas with little differentiation)
+ensures growth, competitiveness and flexibility.
+To reach more customers, we will be even more flexible in the future, and we will
+develop new approaches. Historically, Infineon has grown through close collaboration
+with key customers. With these customers, we have successfully defined products
+that then enabled us to penetrate the wider market. We reach many of our smaller
+customers through distributors. We intend to take even greater advantage of the huge
+Infineon Technologies | Annual Report 2021
+potential of the distribution channel with standardized but configurable products for
+the wider market. We have made good progress here in recent years, because we
+have focused on continuous targeted adjustment of the product portfolio and close
+partnership with distributors.
+< 44 >
+Infineon Technologies | Annual Report 2021
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+in which we have invested for years, and we will continue to increase this where it
+is beneficial and adapt it to different production conditions. In addition, we will
+gradually be switching our electricity supplies to renewable sources of energy. At our
+European sites we have already switched to 100 percent green electricity. At our sites,
+energy teams who are responsible for the implementation of efficiency measures
+also play a key role. The ongoing transition to state-of-the-art 300-millimeter pro-
+cess technology and the promotion of Industry 4.0 enable us to achieve further
+significant savings. We also expect the introduction of an in-house carbon prize to
+act as an incentive for efficiency improvement measures: Energy-efficient projects
+are becoming more economical. Moreover, we are promoting electromobility by
+expanding the charging infrastructure at our sites. We will offset the small remaining
+part of our emissions with certificates that combine development support and
+carbon avoidance.
+Through good resource management, our products and solutions make an active
+contribution to climate protection. During their service life, they contribute to savings
+of around 72.45 million tons of carbon equivalents. We know, however, that we can do
+even more. We have been working for years on reducing our carbon emissions and have
+set ourselves binding carbon reduction targets. Thus we will become carbon-neutral
+by 2030; by 2025 emissions are to be reduced by 70 percent compared to 2019. This
+target relates to Infineon's own footprint for greenhouse gases and includes not only
+direct emissions, but also indirect emissions from electricity and heat. Our primary
+focus here is on continuing to improve energy efficiency and on reducing carbon in
+our factories. We will achieve the greatest impact from PFC exhaust air abatement,
+To be successful in the long term, economic success must go hand in hand with
+environmental and social commitment. Our "making more from less" approach has
+shaped our actions for a long time. A key factor in arriving at greater sustainability
+and solving climate challenges is technologies that achieve more with fewer resources
+and save emissions at the same time. By fully adopting this approach, also in its
+manufacturing, Infineon consumes 17 percent less water and 44 percent less electricity
+and produces 67 percent less waste in its frontend factories than the global average
+of semiconductor companies represented on the World Semiconductor Council. We
+work constantly on avoiding direct emissions and on continuing to reduce the energy
+requirements of our facilities and processes.
+Sustainable growth: optimized manufacturing processes, efficient
+products and binding carbon emissions targets
+At the same time, we engage in networks consisting of distributors, development
+service providers and manufacturing service providers. These networks enable smaller
+companies and start-ups to come together to develop and manufacture electronics
+for new functions or new end devices. Applying this broad-based sales strategy,
+we want to maximize revenue from existing technologies, while at the same time
+increasing the return on our investment in research and development.
+For these customers, we offer easy-to-use solutions using, for example, optimized
+product combinations, reference designs and basic software. Here, in particular, our
+system understanding makes a difference.
+of scale. Compared with manufacturing on 200-millimeter wafers, we benefit here
+from lower costs, with equal productivity and a lower capital intensity. We have taken
+a further step to extend our lead. With the new factory at the Villach (Austria) site,
+together with our 300-millimeter manufacturing facility in Dresden (Germany), we
+have established a closely coordinated
+manufacturing network across the two sites.
+In line with our "One Virtual Fab❞ concept,
+we are using the same processes, equip-
+ment, and automation and digitization
+concepts in Villach and in Dresden. This
+brings cost advantages, but it also benefits
+the customer, as we can rapidly shift pro-
+duction volumes between the sites. By
+expanding our manufacturing capacity,
+especially as a result of the start-up of our
+new 300-millimeter factory in Villach, we
+are sending a strong signal to our custom-
+ers that Infineon is the ideal partner for
+future growth.
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Digitalization is providing a boost to potential applications. More and more devices can
+be upgraded to include new functions through connection to the internet. We acquired
+the components and expertise needed here through our acquisition of Cypress. Next,
+we want to provide our solutions to existing customers and, in particular, new custom-
+ers who want to make their products smart and to help them upgrade their products
+quickly and without encountering obstacles. For most of these new customers, semi-
+conductor technology is only a means to an end. They have neither the ability nor
+the desire to deal with it themselves. The challenge is to offer this very varied clientele
+the service they expect using the available resources as effectively as possible.
+← Q = < 42 >
+All our actions are designed to create, on the one hand, added value for the customer
+and, on the other hand, potential differentiation for us. This also applies to manufac-
+turing. We manufacture in-house when doing so means we can differentiate ourselves
+from the competition through lower cost or higher performance. Typically, this is
+the case for power components and sensors. However, when it comes to standard
+technologies where the intellectual property lies above all in the design or in the
+software, we work primarily with contract manufacturers. This is predominantly the
+case for highly-integrated products, such as microcontrollers, connectivity compo-
+nents, security ICs and memory ICs. As a result of the current shortage of manufactur-
+ing capacity in the standard technologies - for Infineon this applies mainly to feature
+sizes of 65 nanometers and 40 nanometers – we have signed supply agreements with
+our contract manufacturers, which in some cases are multi-year agreements, to
+ensure better delivery capability.
+Consolidated Financial Statements
+Infineon Technologies | Annual Report 2021
+We systematically use our strong technological position to expand our expertise,
+strengthen our core business and grow in scope, for example, whenever the require-
+ments of our markets change or when we see long-term growth potential in an
+adjacent business area. As one of the market leaders in the field of power electronics,
+we began researching new materials at an early stage, building up our expertise,
+and we are constantly broadening our product portfolio. In the future, we will also
+continue to strengthen our expertise in the control of power semiconductors and
+to broaden our product portfolio. As the number one in MOSFETs and IGBTs, we see
+interesting opportunities for faster growth in this adjacent area than has been seen
+to date.
+In accordance with our strategic approach of thinking in systems, our engineers
+anticipate many challenges before our customers are affected by them. This enables
+us to fulfill the promise of technological leadership. By cooperating closely with our
+customers, we learn to understand applications better. Thus we can identify future
+trends at an early stage, then develop products and tailor them accordingly. In this
+way, we can offer our customers individual components as well as complete system
+solutions as required.
+Technology leadership creates added value for customers
+In the area of software, we are also making considerable progress, which is benefiting
+our customers. We are combining our expertise in software with our hardware exper-
+tise. The second generation of our successful automotive microcontroller family
+AURIX™ can, for example, be used for radar signal pre-processing in combination with
+our radar sensor ICs. We have implemented this digital pre-processing of data in
+hardware, as this is considerably more effective. However, we were only able to do this
+because we mastered and integrated the underlying algorithms.
+online tutorials. A key element of this successful ecosystem is the ModusToolbox™
+development environment. This includes reusable firmware that makes it signifi-
+cantly easier for engineers to program microcontrollers and Wi-Fi and Bluetooth
+components. The next step is to expand Al functionality: ModusToolbox™ Machine
+Learning with access to algorithms for implementation in microcontrollers.
+In recent years, we have intensified our activities in the area of software, not only in
+strategic partnerships and our own software development, but also as a result of the
+acquisition of Cypress. The acquisition means that now, for the first time, we have an
+entire ecosystem comprising software components and a development environment,
+as well as reference designs, product support, blogs, a developer community and
+and understand how to create added value.
+To generate even more of it for our digital-
+age customers, we have expanded the
+iMOTION™ platform to include security and
+connectivity components. It is not always
+the most sophisticated solution that
+provides the greatest added value for the
+customer. Sometimes standard compo-
+nents may be the right fit. Nevertheless,
+system understanding creates a competitive
+advantage, because it gives us the ability
+to cooperate with our customers and
+develop better products.
+can support all these different approaches
+The IMOTION™ IMD111T6 is a highly-integrated IC
+for the control of 3-phase BLDC motors.
+Infineon
+IMD111T6
+to our customers using totally different approaches. Some customers want to differen-
+tiate themselves from their competitors by using their own software, purchasing only
+the necessary hardware from us. We go one step further with automotive microcon-
+trollers and security controllers, which we supply with special firmware that supports
+the basic functionality of the hardware and cannot be modified. More extensive func-
+tions can then be implemented using additional program code. The second genera-
+tion of our IMOTION™ digital motor control platform was developed, for example, for
+use in home appliances and comes with a development kit as standard that reflects
+the priorities of our customers in this market: lower system costs, compact design,
+reduced development costs, short development time and a high level of reliability.
+The iMOTION™ components already contain all the algorithms required to control an
+electric motor. Only a small number of application-specific parameters need to be
+defined in order to complete the programming. Since we think in terms of systems, we
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+Further information
+Business focus and strategy
+Group strategy
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+With our 300-millimeter thin wafer manufacturing technology for power semicon-
+ductors, we have made a breakthrough. As pioneers of this technology, the scale
+of manufacturing we have now reached allows us to achieve significant economies
+Our outstanding manufacturing methods and our process and manufacturing expertise
+give us a strategic advantage in many application areas, such as power electronics
+and sensor technologies, enabling us to offer differentiating components.
+Consolidated Financial Statements
+Strategic differentiation through in-house manufacturing
+Customers choose Infineon because we stand for the highest levels of quality, for
+reliability and for technological leadership. The satisfaction of our customers attests
+to the fact that this rigorous approach to quality is successful. By way of example, in
+the 2021 fiscal year, Infineon was again recognized by several leading manufacturers
+in the automotive and computer industry, who paid tribute in particular to very good
+collaboration during periods of chip shortages. We received the Best Collaboration
+Award from the Chinese subsidiary of automotive supplier Bosch as well as the
+Best Supplier Award from the Taiwan-based server manufacturer Quanta for brilliant
+services, strategic collaboration, and logistic fulfillment.
+Quality leadership keeps customers loyal
+The highly sensitive XENSIVT MEMS microphone IM67D130A allows the capture of
+distortion-free audio signals even in loud environments, and hence enables
+the use of sound as a complementary sensor for ADAS.
+O
+Infineon
+IM67D130A
+Another example is CO2 sensors for buildings. Here energy efficiency standards
+require thicker insulation, which tends to lead to poorer air quality in the building.
+In the 2021 fiscal year, we launched our first CO2 sensor able to detect an increase
+in carbon concentration. Compared to conventional CO2 sensors, ours has a much
+smaller form factor, which opens up new areas of application, such as loT devices and
+smart home applications to improve indoor air quality like air purifiers, thermostats,
+weather stations and personal assistants.
+Many years ago, we deliberately blazed new trails in the field of sensor technologies,
+in the knowledge that capturing environmental data would become massively more
+important in our target markets. Today we have a comprehensive portfolio of sensors
+for a wide variety of systems in vehicles, for mobile devices, in consumer electronics
+and for the IoT. MEMS microphones in particular are experiencing a boom, not only in
+the field of traditional audio applications. In a vehicle, they support driver assistance
+systems by warning of approaching emergency vehicles with sirens sounding.
+← Q = < 41 >
+Further information
+Combined Management Report
+Further information
+each further step, as the technologies approach successive physical limits. This fact
+underlines the importance of economies of scale and the relationship between
+technology leadership and size. Previous formulas for success fall short under these
+conditions and have to be either expanded or replaced.
+Long-term financial targets underline
+our growth ambitions
+88 Manufacturing
+87 R&D sites
+80 Research and development
+75 Connected Secure Systems
+70 Power & Sensor Systems
+65 Industrial Power Control
+Automotive
+The segments
+60
+58
+91 Manufacturing sites
+55 2021 fiscal year
+50 Business model
+Management Report
+Combined
+Jan
+Q= < 49 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+52 Review of the semiconductor industry
+20000
+92 Internal management system
+96 The Infineon share
+Infineon Technologies | Annual Report 2021
+The content of these sections is voluntary content that has not
+been checked by the auditor but only read critically. In the case of
+cross-references, the information to which the cross-references
+refer was not checked either.
+The business with the XMCTM family of industrial microcontrollers
+was transferred from the Automotive segment to the Connected
+Secure Systems segment with effect from 1 October 2020. The previous
+year's figures have been adjusted accordingly.
+This report combines the Group Management Report of Infineon
+("Infineon" or "Group") - comprising Infineon Technologies AG
+(hereafter also referred to as "the Company") and its consolidated
+subsidiaries - and the Management Report of Infineon Technologies AG.
+The Combined Management Report contains forward-looking state-
+ments about the business, financial condition and earnings perfor-
+mance of Infineon. These statements are based on assumptions and
+projections based on currently available information and present
+estimates. They are subject to a multitude of uncertainties and risks.
+Actual business development may therefore differ materially from
+what has been expected. Beyond disclosure requirements stipulated
+by law, Infineon does not undertake any obligation to update forward-
+looking statements.
+List of references
+151
+132 Remuneration report
+to section 289f, 315d of the German Commercial
+Code (HGB)/Corporate Governance Report
+132 Statement on Corporate Governance pursuant
+of the German Commercial Code (HGB)
+95 Sustainability at Infineon
+Information pursuant to section 289a, paragraph 1,
+and section 315a, paragraph 1,
+128 Corporate Governance
+← Q = < 45 >
+112 Risk and opportunity report
+Outlook
+109 Report on outlook, risk and opportunity
+109
+Review of liquidity
+105
+103 Review of financial condition
+99 Review of results of operations
+99 Group performance
+128
+10000
+124 Overall statement on Infineon's financial condition
+125 Infineon Technologies AG
+www.infineon.com/csr_reporting ☐ www.infineon.com/hrreport
+Business focus and strategy
+Human Resources strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+We took further steps in the refinancing process in the 2021 fiscal year, focusing
+on the term loans that were deliberately raised in US dollars as part of the acquisition
+financing. In April 2021, Infineon signed a private placement of bonds in the United
+States with a volume of US$1.3 billion in four tranches with maturities of six, eight,
+ten and twelve years. As a result, the term loan due in 2022 was fully repaid, as were
+US$745 million of the term loan due in 2023. The transaction was completed in June
+2021. Following a further partial redemption of US$365 million in September 2021,
+only one US$1,110 million term loan due in 2024 remained outstanding at the end
+of the 2021 fiscal year.
+Our leverage target is expressed as an upper limit on gross financial debt of two
+times EBITDA. Infineon defines EBITDA as earnings (loss) from continuing operations
+before interest, taxes and depreciation and amortization. As a result of the acquisition
+of Cypress, we exceeded this level, but only to the extent compatible with retaining
+our investment grade rating. The originally medium-term objective of Infineon to
+reduce its debt level to or below the maximum target value after the closing of the
+Cypress transaction is expected to be achieved already in the 2022 fiscal year.
+Infineon's capital structure targets consist of a liquidity target and a leverage target.
+For liquidity, our gross cash should amount to €1 billion plus at least 10 percent
+of revenue. The fixed base amount of €1 billion provides a solid liquidity reserve for
+contingent liabilities and pension liabilities, which are unrelated to revenue. The
+additional amount of at least 10 percent of revenue means that we always have access
+to sufficient cash to be able to finance our operating business and investment through-
+out all the phases of the semiconductor cycle.
+The sustainable continuation of the company is of great importance from a variety
+of perspectives. It is important to our customers that we remain a trusted partner and
+reliable supplier for many years to come. Our debt providers need to be certain that
+we can repay principal and pay interest over a long period of time, while our share-
+holders want to achieve an attractive return over the mid to long term. Long-term
+reliability is something we also want to offer our employees, even well beyond their
+working lives through retirement benefits. We therefore attach great importance to
+solid creditworthiness. An investment grade rating is and remains the key element of
+Infineon's conservative financial policy. From this cornerstone, we derive our medium-
+term and long-term capital structure targets. On 11 February 2021, S&P confirmed
+Infineon's investment grade rating of BBB- and raised its outlook to positive.
+Capital structure targets demonstrate
+our long-term reliability
+Target 3: Investments totaling 13 percent of revenue over the cycle
+Our planning is geared towards providing the necessary manufacturing capacity
+for our expected growth. In the area of power semiconductors, one of the factors
+differentiating Infineon from the competition is that we manufacture our own
+products. To generate growth in this field, we are planning to expand our 300-milli-
+meter production as well as expanding capacity for SiC and GaN. In the area of
+microcontrollers, connectivity components and security ICs we will continue in the
+future to work together primarily with our manufacturing partners. We are therefore
+able to set our investment rate target at 13 percent of revenue over the cycle. When
+calculating the investment rate, we do not include step-cost investments in clean
+rooms or major office buildings.
+← Q = < 46 >
+Combined Management Report
+Further information
+Combined Management Report
+Business focus and strategy
+Group strategy
+Infineon Technologies | Annual Report 2021
+On the other hand, we are confronted with increased cost for contract manufacturers
+and materials. Moreover, initial development costs will be incurred, preceding the
+generation of revenue synergies and the commercialization of new technologies, in
+particular the materials SiC and GaN. These factors are considered in our target of
+achieving a Segment Result Margin of 19 percent over the cycle.
+Target 2: 19 percent Segment Result Margin over the cycle
+Growth is only one prerequisite for sustainable success. Another criterion is profit-
+ability. When we work profitably on a sustainable basis, it allows us even in weaker
+market phases, to consistently pursue our development projects. Therefore also our
+profitability target of achieving a Segment Result Margin of 19 percent applies over
+the cycle. Reaching this level will be based on a number of factors: Our system solu-
+tions create higher value. We thereby focus our development on designs that are of
+the greatest use to our customers and for which we will be accordingly rewarded. Our
+technology leadership and our strategic approach "Product to System" enable us to
+maintain a higher degree of differentiation. The integration of Cypress and the related
+revenue and cost synergies are also improving our profitability. Furthermore, we rely
+on the economies of scale and cost advantages generated by innovative manufacturing
+technologies such as 300-millimeter thin wafer manufacturing. In addition, we strive
+for a disproportionately low increase in functional costs such as selling, general and
+administrative expenses.
+We hold leading positions in our core markets and have expanded systematically
+over the years into new and adjacent markets. Our four segments focus on the
+aforementioned trends. Our strategic approach "Product to System" has gained even
+greater impetus due to our integration of Cypress' product portfolio. As a result, we
+use our extensive technological and product expertise to develop better solutions and
+thus create significant added value for our customers. We expect to achieve revenue
+growth in the future of more than 9 percent (“9%+") over the cycle.
+Target 1: Average annual revenue growth of more than
+9 percent over the cycle
+5G
+Infineon Technologies | Annual Report 2021
+In the coming years, structural trends will drive our growth, in particular, electro-
+mobility, automated driving, renewable energy, manufacturing automation, mobile
+phone standard 5G, data centers, loT and a steadily increasing number of battery-
+powered devices. Thanks to our leading technologies, our understanding of applica-
+tions and systems, and our differentiating expertise in manufacturing, we have
+achieved an outstanding position in these markets. We want to take advantage of
+the resulting opportunities and continue to grow at a faster rate than the markets in
+which we operate, gradually increasing our profitability. To do so, we consistently
+invest. Our long-term financial targets reflect this aspiration. They apply over the
+cycle and are based on a stable macroeconomic environment.
+Consolidated Financial Statements
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+In addition to all the above-mentioned topics, the successful integration of Cypress
+remains a high priority. HR is playing a significant role in integrating more than 6,000
+former Cypress employees worldwide – from a strategic, financial and cultural point
+of view. During the fiscal year just ended, we were able to integrate these new colleagues
+in our organization, processes, systems and remuneration logic and at the same time
+initiate the necessary onboarding and training measures at both individual and team
+level. These are important steps in our ongoing efforts to successfully integrate our
+new colleagues who have joined Infineon as a result of the acquisition of Cypress.
+Further information, including detailed statistics, is available in the 2021 Sustainability
+Report and the 2021 Human Resources Report.
+Customer centricity, ease of use, efficiency and a proactive approach to development
+are key points of focus in our ongoing HR services and support work. Moreover, the
+expectations of the younger generation differ significantly from those of the past and
+present us with new challenges. The digital transformation of HR at Infineon has
+enabled us to take a decisive step towards meeting these expectations. In doing so,
+we are focusing on business requirements and at the same time continuously devel-
+oping our HR capabilities. In the course of the 2021 fiscal year, we developed a new
+concept for Human Resources Shared Services going forward and intend to roll it out
+globally in the upcoming fiscal year. The focus is on creating a positive customer
+experience for employees and managers as well as the further standardization and
+digitalization of "end-to-end" processes and services. We also launched the Career
+Project during the 2021 fiscal year with the aim of creating an inspiring career environ-
+ment that promotes individual development while contributing to business value,
+both now and in the future.
+We see diversity as the natural participation of everyone concerned and a key factor
+for our enduring success. The perception that skills and behavior complement each
+other is an essential part of our recruitment and organizational development strategy.
+Our objective for the dimension "gender" is to achieve a share of 20 percent of women
+in leadership positions by 2030, an aim also reflected in our Environmental, Social
+and Governance (ESG) targets, which are part of Infineon's Long-Term Incentives (LTI).
+We will continue to focus on this factor with the aim of constant progress in mind.
+We also define ourselves through a motivating working environment and in the way
+we collaborate with each other, embracing a distinctive feedback culture, actively
+practiced leadership principles and worldwide interaction with colleagues from over
+100 nations. We are proud of this diversity and will continue to cultivate it with the
+aim of taking in additional dimensions of diversity and inclusion going forward.
+-
+To strengthen a positive employee experience and the resulting high level of engage-
+ment, it is also important to continuously develop employees and managers. We
+have geared our learning methods towards digitalization and offer the right formats
+for the relevant content. We provide our employees with a wide range of high-quality
+training courses in various languages, many of which are virtual and can therefore
+be accessed from anywhere and at any time. Due to the dynamic market environment,
+our leaders are regularly faced with new challenges and therefore the approach
+to leadership development at Infineon was revised during the fiscal year just ended.
+For example, various new and integrated offerings were introduced to foster and
+strengthen the self-reflection of our leaders. Moreover, new leadership programs have
+been developed and made available, with the aim of encouraging leadership devel-
+opment in line with specific leadership requirements. Where appropriate, we draw
+on the expertise of external partners. For example, we have entered into a strategic
+partnership with INSEAD Business School to handle selected aspects of our manage-
+ment training program.
+People are the main focus of our activities, as dedicated, healthy, successful employees
+are key to maintaining and improving our market-leading position, thereby creating
+a successful future for us all.
+Q = < 48 >
+Consolidated Financial Statements
+Combined Management Report
+Further information
+possess the required skillsets and are given opportunities for further development,
+they not only display higher levels of creativity, productivity and innovation, but also
+create better outcomes, which goes hand in hand with a personal sense of achieve-
+ment and greater motivation. Regularly conducted pulse checks of our employees
+worldwide enable us to measure their level of engagement and thus keep our finger
+on the pulse of their needs. Appropriate measures are taken as the need arises.
+← Q = < 47 >
+Human Resources strategy
+We view our Human Resources (HR) strategy from a position of overarching responsibil-
+ity. Firstly, it makes a decisive contribution to ensuring Infineon's ability to achieve its
+growth and profitability targets and successfully navigate through varying economic
+phases and challenges. Secondly, we also feel to have the responsibility to contribute
+to solving the major challenges currently facing society. Our HR understanding "People
+create value. HR fosters people engagement” remains unchanged. It was rolled out
+globally in 2020 and is now firmly embedded throughout the Infineon organization.
+Our overriding objective is to foster our employees' engagement and to take the nec-
+essary measures to achieve this. When employees are enthusiastic about their job,
+Business focus and strategy
+Human Resources strategy
+The coronavirus pandemic continued to necessitate swift, carefully considered action
+in the field of HR in the fiscal year just ended. The health of our employees is our fore-
+most priority. At the same time, however, we also need to ensure business continuity.
+With a variety of testing and vaccination concepts at its sites, Infineon undertook a
+raft of measures designed to optimally support and safeguard not only its employees,
+but the business as a whole.
+Further information
+In order to remain innovative, competitive and successful going forward, Infineon is
+in constant search of the most highly talented individuals. This is a challenge in itself,
+as talented people in the STEM fields (science, technology, engineering and mathe-
+matics) remain in great demand on the labor market. In the fiscal year just ended,
+Infineon recorded its highest level of new hires in recent years. One of Infineon's great
+advantages is its positive brand and employer image, which helps us in our efforts to
+recruit and retain talents. The fact that we manufacture future-oriented products that
+create value for society makes our company a highly attractive prospect to many
+potential employees.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+The future of work is impacted by megatrends such as digitalization, artificial intelli-
+gence, the collaboration of man and machine and the (de)globalization of markets.
+Most recently, the coronavirus pandemic acted as a "time machine to the future".
+Changes related to "New Work" that were predicted to take place over the next few
+decades happened within just a few months. In recent years, Infineon has introduced
+a number of digital tools and processes that have helped to keep our business run-
+ning successfully, even after the outbreak of the coronavirus pandemic. Our task now
+is to make further use of the foundations already in place and build on them to define
+a comprehensive understanding of "New Work" for Infineon.
+42.8
+•
+C11 Global semiconductor sales in the 2020 calendar year by region
+(total market size US$473 billion)
+10% Europe, Middle East, Africa
+15% Asia-Pacific (excluding China, excluding Japan)
+58% Greater China
+Infineon Technologies | Annual Report 2021
+NXP
+● 10% Americas
+Greater China comprises Mainland China, Hong Kong, Macau, and Taiwan.
+C12 Top 20 semiconductor consumer in the 2020 calendar year
+Purchasing volume in billion US$
+24.1 23.5
+The boom in demand for data centers, smartphones, consumer electronics, PCs,
+notebooks and PC accessories is clearly shown by almost all the semiconductor con-
+sumers increasing their purchasing volume. Out of the top 20 companies, only the
+two automotive suppliers, Bosch (in 12th position) and Continental (in 15th position),
+reduced their purchasing volume. Denso, another automotive supplier with a pur-
+chasing volume that shrank, which was in 17th position in 2019, was no longer one of
+the top 20 semiconductor consumers in the 2020 calendar year. At US$42.821 billion,
+the purchasing volume of Apple is now significantly higher than the total purchasing
+volume of the global automotive industry. R10
+20.0
+Apple
+7% Japan
+In terms of purchasing volume, the top 20 semiconductor consumers accounted for
+US$214.353 billion, equivalent to a share of 65.3 percent (2019: US$184.497 billion
+with a share of 62.1 percent). C12
+In August 2021, US semiconductor manufacturer Synaptics announced its acquisition
+of Israel-based company DSP Group for around US$538 million. DSP Group develops
+digital signal processors and chipsets for wireless communications and audio applica-
+tions. Infineon is a competitor of Synaptics in some product categories.
+The 20 largest semiconductor companies accounted for 74.4 percent of global semi-
+conductor revenue in the 2020 calendar year (2019: 73.0 percent). The remaining
+25.6 percent (2019: 27.0 percent) was spread over more than 1,500 other semicon-
+ductor companies. The semiconductor industry is therefore highly fragmented.
+The consolidation process has advanced at different rates depending on the product
+category. R01
+Sony
+Huawei
+HiSilicon
+Western Digital
+Apple
+Renesas
+Analog Devices
+Greater China has played the dominant role for years in terms of regional semicon-
+ductor revenue. In the 2020 calendar year, Greater China increased its share of the
+global semiconductor market still further to 58 percent, compared with 56 percent
+in 2019, R09. In Greater China, and especially in Mainland China, contract manufac-
+turers known as EMS (Electronic Manufacturing Services) play a special role. These
+companies assemble electronic products predominantly for Western customers. This
+business model applies particularly to consumer durables and to IT and telecommuni-
+cations products such as servers, PCs, laptops, tablets and mobile phones. Most of
+the semiconductors delivered to and mounted in Mainland China are re-exported as
+part of a finished product. C11
+In August 2021, US semiconductor manufacturer onsemi announced its acquisition
+of SiC materials manufacturer GT Advanced Technologies for US$415 million. The
+transaction is expected to be completed in the first half of the 2022 calendar year.
+Infineon is a competitor of onsemi in some product categories and purchases SiC
+materials from GT Advanced Technologies.
+R01
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Review of the semiconductor industry
+Consolidated Financial Statements
+Further information
+Q = < 54 >
+The acquisition of Maxim by Analog Devices announced in July 2020 was completed
+in August 2021. The transaction was valued at US$28 billion. Infineon is a competitor
+of both companies in only a few product categories.
+Samsung
+Combined Management Report
+2021 fiscal year
+Dell
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q = < 55 >
+2021 fiscal year
+AS
+81.053 4.35
+17 62.985 2.07
+3 37.278 1.14
+Management Board and
+Supervisory Board
+94.107 0.73
+21.744 5.63
+13.361 1.82
+158.037 1.581x 375.000
+916.598 5.032% 621.000
+634.270 3.984 363.200
+538.014 2.416% 748.000
++3.16A 692.360 0.657 905000
+-1.23 237.981 0.183 832.0
+ALC
+O
+> Infineon records revenue of over €11 billion
+for first time
+> Profitability significantly up: Segment Result Margin
+rises to 18.7 percent (2020: 13.7 percent)
+Frontend contract manufacturers are not included in this market research.
+-2.09▾
++1.17 A
++0.72 A
+-0.51▼
+Lenovo
+R10
+ZTE
+Xiaomi
+HP
+14.0
+11.9 11.5
+7.0 7.0 6.6 6.3 5.2 5.0 4.8 4.6 4.5 4.4 4.1 3.5 3.5
+LG Electronics
+Cisco
+[ R09
+Panasonic
+Intel
+Sony
+Continental
+Western Digital
+Amazon
+Vivo
+Asustek
+Bosch
+AMD
+COC
+Kioxia
+Frontend
+manufacturing
+Backend
+manufacturing
+In-house
+manufacturing
+In-house
+manufacturing
+Design
+Distribution
+center
+Customer
+C09 The main stages of the semiconductor value chain
+by foundry
+by
+sub-contractors
+Infineon Technologies | Annual Report 2021
+1020
+In frontend manufacturing, in order to optimize the use of capital and increase flexi-
+bility, we use external manufacturing partners, called foundries, in addition to our
+in-house manufacturing. This applies primarily to technology nodes of 65 nanometers
+or smaller and to older generations of power semiconductors. In backend manufac-
+turing, particularly in assembly and testing, we also use manufacturing partners,
+called subcontractors, for standardized package types. More information about our
+manufacturing strategy is given in the chapter "Manufacturing”, □ p. 89.
+Following the completion of backend manufacturing, the products are dispatched
+and sent to customers via regional distribution centers.
+Management Board and
+Supervisory Board
+Business focus and strategy
+partners
+Combined Management Report
+Review of the semiconductor industry
+Our manufacturing landscape covers both stages of semiconductor manufacturing:
+frontend and backend. In frontend manufacturing, the wafers are processed. Optical,
+physical and chemical methods are used to implement transistors and their inter-
+connections, thus determining the function of the chip. The wafers are dispatched
+from the frontend site to a backend site, where the remaining processing steps take
+place in backend manufacturing. These steps include sawing the wafer into individual
+chips as well as assembly and testing. Finally, the chips are dispatched to the distri-
+bution centers. At the end of the 2021 fiscal year, Infineon operated 20 manufacturing
+sites (see the list of sites on the page “Manufacturing sites”, p. 91).
+Q = < 51 >
+> Dividend set to be raised to 27 cents per share
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Business model
+Consolidated Financial Statements
+Further information
+Q = < 50 >
+Infineon covers the main stages of the semiconductor value chain: from the design,
+via frontend and backend manufacturing, to delivery to customers, C09. It operates
+56 research and development sites worldwide to develop chips, software, and manu-
+facturing technologies (see the list of sites on the page "R&D sites", □ p. 87).
+Business model
+Infineon is divided into four segments, each of which derive their long-term focus
+from the Group strategy. All the Group's activities relate to one of the higher-level
+growth drivers - energy efficiency, mobility, security, and loT and big data. See the
+chapter "Growth drivers”, p. 22 ff. The segments are each responsible for particular
+areas that reflect their core competencies (see the chapter "The segments", p. 58 ff.).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Business model
+Consolidated Financial Statements
+Further information
+With 50,288 employees worldwide, Infineon is a leading global provider of semicon-
+ductors. Semiconductors connect the real world and the digital world. They enable,
+for example, intelligent mobility, efficient energy management and the secure
+collection and transmission of data. Infineon designs, develops, manufactures and
+markets a large number of semiconductor and system solutions, focusing on the
+automotive, industrial, and information and communications markets, as well as on
+hardware-based security. Its products range from standard components to customer-
+specific solutions for components and systems, all the way to special components
+for digital, analog and mixed-signal applications.
+Consolidated Financial Statements
+Further information
+Q = < 52 >
+56.9
+26.5
+22.2 19.4 18.0-14.1-13.0 11.2 11.1 10.8 10.2 9.6
+10% market share
+5% market share
+_____11211.1 10.8 10.2 9.6 8.7 8.4 8.4 8.2 6.9 6.7 5.7
+Intel
+76.2
+Samsung
+Micron
+Qualcomm
+Broadcom
+Texas Instruments
+Nvidia
+Infineon
+MediaTek
+SK Hynix
+C10 Top 20 semiconductor manufacturers in the 2020 calendar year
+Revenue in billion US$
+Infineon Technologies | Annual Report 2021
+In December 2020, Taiwanese wafer manufacturer GlobalWafers announced its acqui-
+sition of German wafer manufacturer Siltronic for around €4.4 billion. In February 2021,
+GlobalWafers secured more than 50 percent of the shares of Siltronic, thus reaching
+the minimum acceptance threshold. The transaction is expected to be completed in
+the first half of the 2022 calendar year. Infineon purchases wafers from both companies.
+In February 2021, Japanese semiconductor manufacturer Renesas announced its
+acquisition of Dialog Semiconductor for around €4.9 billion. The transaction was
+completed on 31 August 2021. Infineon is a competitor of both companies in some
+product categories.
+Review of the
+semiconductor industry
+Review of the semiconductor market in the 2021 fiscal year (in euros)
+Global semiconductor revenue in the 2021 fiscal year was €436.887 billion, R08.
+This is an increase of 13.7 percent compared with the figure for the same period of
+the previous year of €384.109 billion.
+Growth in the 2021 fiscal year was mainly due to the digitalization push during the
+coronavirus pandemic and to the resulting strong demand throughout the year for data
+centers, smartphones, consumer electronics, PCs, notebooks and PC accessories.
+However, some industrial projects (including in particular the expansion of high-speed
+trains in China) were postponed or curtailed as a result of the coronavirus pandemic.
+There were also several months of interruptions in automobile production. In addition,
+for various reasons, there were Manufacturing stoppages in the semiconductor industry
+itself, which resulted in a chip shortage in some product categories.
+The global market for semiconductors without microprocessors, DRAM and NAND
+flash memory grew by 16.7 percent, from €236.673 billion in the 2020 fiscal year to
+€276.293 billion in the 2021 fiscal year, R08. In the same period, Infineon's revenue
+increased by 29.1 percent. Cypress has been fully consolidated since 16 April 2020.
+This limits the comparability of the current figures with those of the prior year.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 53 >
+Review of the semiconductor industry
+Review of the semiconductor market in the 2020 fiscal year
+(in US dollars)
+In the 2020 calendar year, global semiconductor revenue was US$473.713 billion.
+This was the second highest figure ever for annual revenue. The highest figure, of
+US$485.313 billion, was achieved in the 2018 calendar year. Compared with the
+revenue generated in the 2019 calendar year of US$428.832 billion, growth in revenue
+in the 2020 calendar year was 10.5 percent. R01
+As in 2019, there were only three companies in 2020 with a market share of more than
+5 percent: Intel (16.1 percent), Samsung (12.0 percent) and SK Hynix (5.6 percent),
+C10. For Infineon, the revenue figure calculated by Omdia for the 2020 calendar year
+was US$11.215 billion. This represents a market share of 2.4 percent and 9th place in
+the ranking of companies according to revenue. Revenue from Cypress was included
+for both the full 2019 calendar year and the full 2020 calendar year. Infineon's revenue
+grew at a slower pace than that of the semiconductor market as a whole due to the
+high proportion of its revenue derived from automotive and industrial applications.
+Nvidia was able to increase its revenue by 37.3 percent - or around US$3.5 billion -
+to US$13.035 billion and thus oust Infineon from the 8th place it held in 2019. Of
+the 20 largest semiconductor companies, the following are direct competitors of
+Infineon in at least one product category: Samsung, Qualcomm, Texas Instruments,
+STMicroelectronics, NXP, Renesas and Analog Devices.
+STMicroelectronics
+Co
+Revenue up by 29 percent; Segment Result Margin rises to 18.7 percent
+Infineon achieved a revenue of €11,060 million in the 2021 fiscal year, 29 percent up
+on the previous year's figure of €8,567 million and in line with the adjusted forecast
+of around €11 billion. Firstly, revenue went up on the back of continued high demand
+for semiconductors and the related expansion of manufacturing capacities, with
+the resulting positive volume and pricing effects causing revenue to grow. Secondly,
+the higher revenue was driven by the acquisition of Cypress in April 2020. For the
+first time, Cypress contributed to Group revenue for a full fiscal year, whereas in the
+fiscal year just ended Cypress' revenue was only included for the period from April to
+Management Board and
+Supervisory Board
+くくく
+power semiconductors
+Power semiconductors
+Security
+Software
+✓
+✓
+Differentiating
+✓
+in-house manufacturing
+Infineon Technologies | Annual Report 2021
+✓
+Infineon Technologies | Annual Report 2021
+Q = < 58 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+2021
+2020
+2019
+2018
+The segments
+Memories for
+specific applications
+Connectivity
+✓
+✓
+Infineon comprises four segments, each of which derive their long-term focus from
+the Group strategy. All the Group's activities relate to one of four key growth areas -
+energy efficiency, mobility, security, and IoT and big data. The segments are each
+responsible for particular areas that reflect their core competencies. The Automotive
+segment is responsible for the semiconductor business for automotive electronics,
+including activities with memory products. The Industrial Power Control segment
+concentrates on power semiconductors primarily used in industrial applications and
+renewable energy, while the Power & Sensor Systems segment addresses more
+consumer-oriented applications and power supplies in general. Also falling within
+the sphere of responsibility of the Power & Sensor Systems segment are activities
+in the area of radio frequency and sensor-based applications, including the collection
+of sensor data and interaction with machines and devices. Microcontrollers for
+non-automotive electronic applications, connectivity solutions and activities relating
+to traditional and new security applications are bundled in the Connected Secure
+Systems segment.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Consolidated Financial Statements
+Further information
+Q = < 59 >
+In the areas of sensor technologies, power semiconductors, hardware-based security,
+radio frequency and embedded control, Infineon has continually developed and
+deepened its knowledge of its traditional core competencies. In particular, we have
+expanded our expertise in the area of sensor technologies to include the collection
+of other physical measurands, C15. As a result of the acquisition of Cypress, we
+greatly strengthened our position in the area of embedded control. Contributing to
+this are the extensive portfolio of microcontrollers and different types of memory for
+specific applications. Furthermore, with connectivity we acquired a new competence,
+indispensable for the loT growth market. Combining this in turn with our security
+knowhow takes us to a new level.
+Our markets are converging more and more, so that a strict organizational separation
+is not appropriate. Technologies and products are increasingly being used across the
+segments in line with our strategic approach "Product to System”. Digital transforma-
+tion in particular requires flexible and innovative approaches. Teams from various
+organizational units work together on an application-oriented and expertise-specific
+basis. In such cases, one segment takes responsibility for the overall system and
+develops the roadmap for the application, while responsibility for the technologies
+and products required remains in the established organizational units of the other
+segments. Similarly, the segments collaborate on technology development. High-
+voltage power semiconductors for electromobility are, for example, a core topic in
+the area of automotive electronics, so it follows that the Automotive segment assumes
+responsibility here. On the other hand, it is the Industrial Power Control segment
+that takes on responsibility for fundamental developments in IGBT technology,
+IGBT module housing technology and SiC technology.
+C15 Core competencies in the segments
+Core competencies
+Sensor technologies
+Radio frequency
+Automotive
+Industrial
+Power Control
+Power & Sensor
+Systems
+Connected
+Secure Systems
+✓
+✓
+✓
+Embedded control
+✓
+Control of
+2017
+2016
+OPPO
+22
+Key performance indicators for Group up on previous year
+Profit for the period improved to €1,169 million (see the chapter "Review of results
+of operations", p. 102), representing an increase of €801 million compared to the
+previous fiscal year's figure of €368 million. The resulting earnings per share for the
+2021 fiscal year amounted to €0.87 (basic and diluted) and were thus significantly
+above the preceding year's figure of €0.26 (basic and diluted). Adjusted earnings per
+share (diluted) for the year under report amounted to €1.20 (2020: €0.64).
+The Return on Capital Employed (ROCE) rose from 3.0 percent to 8.4 percent year over
+year, mainly reflecting the sharp rise in operating profit from continuing operations
+after tax from €473 million to €1,325 million (see the chapter "Review of results of
+operations", p. 99 ff.). Capital employed stood at €15,793 million as of 30 September
+2021, very similar to the amount reported one year earlier (30 September 2020:
+€15,827 million).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+2021 fiscal year
+Consolidated Financial Statements
+Further information
+Q = < 57 >
+Free Cash Flow from continuing operations was a positive amount of €1,574 million
+in the 2021 fiscal year (2020: negative €6,727 million) and arose mainly due to the
+high level of net cash provided by operating activities from continuing operations
+totaling €3,063 million (2020: €1,817 million). The figure reported for the previous
+fiscal year was influenced primarily by the net payment (i.e., net of cash and cash
+equivalents acquired) amounting to €7,433 million used to acquire Cypress.
+The gross cash position improved by €695 million to stand at €3,922 million at the
+end of the reporting period (30 September 2020: €3,227 million), with the increase
+resulting mainly from high Free Cash Flow amounting to €1,574 million.
+The net cash position at the end of the 2021 fiscal year was a negative amount of
+€2,663 million (30 September 2020: negative €3,806 million).
+Dividend payment of €0.27 per share planned
+Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
+economic development and, in general, at paying out at least an unchanged dividend
+even in the event of stagnating or declining earnings. However, due to the negative
+economic impact of the coronavirus pandemic, the risks that existed at the time of
+the payout, and in order to maintain sufficient financial flexibility, a dividend of €0.22
+was paid for the 2020 fiscal year, i.e. €0.05 lower than the amount distributed for the
+2019 fiscal year. Due to Infineon's good economic performance in the 2022 fiscal year
+and the positive outlook for the current fiscal year, the dividend is now to be increased
+again by €0.05. Accordingly, a proposal is planned to be put forward at the Annual
+General Meeting in February 2022 to distribute a dividend of €0.27 per share for the
+2021 fiscal year. The number of shares issued totaled 1,305,921,137 as of 30 Septem-
+ber 2021. The figure includes 4,545,602 shares owned by the Company that are
+not entitled to a dividend. The total dividend amount would therefore increase to
+€351 million, compared with €286 million one year earlier.
+C14 Dividend per share for the 2010 to 2021 fiscal years
+in € cents
+22
+22
+20
+18
+12
+12
+271
+10
+The Segment Result Margin of 18.7 percent was accordingly higher than the previous
+fiscal year's figure of 13.7 percent, and hence in line with the most recent forecast of
+more than 18 percent, as upwardly adjusted in the third quarter.
+The Segment Result totaled €2,072 million for the 2021 fiscal year, 77 percent up on
+the €1,170 million reported one year earlier. One of the factors contributing to this
+strong earnings performance was the decline in idle costs compared to one year earlier.
+It was also possible to pass on increased procurement prices to customers. By contrast,
+the pandemic-related restrictions on manufacturing in Melaka and the shutdown of
+the fabrication plant in Austin had a negative impact on the Segment Result.
+12
+● 29% €3,268 million Power & Sensor Systems
+22
+● 13% €1,397 million Connected Secure Systems
+0% €12 million Other Operating Segments,
+Corporate and Eliminations
+27
+27
+27
+25
+1 Proposal to the Annual General Meeting to be held on 17 February 2022.
+2015
+2014
+2013
+2012
+2011
+22
+Business focus and strategy
+2010
+year
+14% €1,542 million Industrial Power Control
+C13 Revenue by segment in the 2021 fiscal
+The development of the US dollar exchange rate to the euro, which averaged 1.19 for
+the year compared to 1.12 one year earlier, had a negative impact on revenue.
+44% €4,841 million Automotive
+September. Pandemic-related constraints, for example on manufacturing capacity
+in Melaka (Malaysia) and on contract manufacturers, and the aftermath of the winter
+storm in Austin (Texas, USA) held down revenue growth.
+Q = < 56 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2021 fiscal year
+The segments all developed positively, with Automotive remaining the largest in
+revenue terms. Based on segment revenue of €4,841 million (2020: €3,521 million),
+Automotive contributed 44 percent of Infineon's total revenue, up by 37 percent
+on the previous year. The Power & Sensor Systems segment recorded revenue of
+€3,268 million (2020: €2,650 million), corresponding to a growth rate of 23 percent.
+Both segments included revenue contributions from Cypress. Revenue generated
+by the Industrial Power Control segment totaled €1,542 million and was therefore
+10 percent above the previous year's figure (2020: €1,406 million). The Connected
+Secure Systems segment reported revenue of €1,397 million (2020: €974 million), up
+by a significant 43 percent and largely driven by an improved product mix and the
+acquisition of Cypress.
+8.5%
+8.3%
+C17 Market share for automotive semiconductors in the 2020 calendar year
+13.2%
+STMicroelectronics
+Texas Instruments
+Renesas
+NXP
+Infineon
+10.9%
+● 15% Japan
+22% Power
+13% Sensors
+23% Processors
+0
+7% Korea
+6% Other
+18% North America
+⚫ 20% China
+• 34% Europe
+0
+by region
+7.5%
+by product category
+⚫9% Memory
+⚫33% Other
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+13.8%
+R02
+year
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Japan
+Korea
+China
+World North America Europe
+目 R02
+10.8%
+目 R02
+13.3%
+13.2%
+15.9%
+#1
+#1
+#1
+#2
+#2
+#1
+Position
+C18 Market share of Infineon for automotive semiconductors by region in the 2020 calendar year
+14.2%
+C16 World market for automotive semiconductors in the 2020 calendar
+US$34.960 billion (minus 6.0% compared with 2019)
+Infineon supports the trend towards increasing connectivity. This includes both the
+communication between the various control units within the vehicle (for example,
+via CAN, CAN FD and FlexRay™) and the communication with other vehicles (vehicle-
+to-vehicle) and with the cloud (vehicle-to-infrastructure). It also includes the connection
+of mobile devices via Wi-Fi and Bluetooth for in-cabin infotainment. In the area of
+human-machine interaction, switches, buttons and dials will increasingly be replaced
+by touch pads. Human-machine interaction also includes head-up displays.
+In the 2020 calendar year, Infineon remained the world's largest manufacturer of
+automotive semiconductors, with a 13.2 percent share of the total market, C17.
+It slightly increased its lead over second-placed manufacturer NXP. The five largest
+market players together accounted for 48.4 percent of the market (2019: 49.2 percent).
+Q = < 61 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Business focus and strategy
+Management Board and
+Supervisory Board
+Applications p. 240
+an ever-increasing degree of automated driving,
+electric-electronic (E/E) vehicle architecture and greater
+connectivity, digitization and a higher level of data
+security in vehicles. We also offer our customers
+innovative solutions in the areas of safety, the digital
+cockpit, infotainment, comfort and lighting technology.
+In addition to sensors, microcontrollers, a reliable
+power supply, high-performance memory ICs for specific
+applications and power semiconductors based on
+Si and SiC, our product portfolio also comprises com-
+ponents for human-machine interaction and vehicle
+connectivity. Infineon is the world market leader in
+semiconductor solutions for cars. R02
+engines to hybrid or electric drives, as well as enabling
+and infotainment, body and comfort electronics, safety
+and security. Our range of products and solutions helps
+to navigate the transition from internal combustion
+The Automotive segment shapes the future of mobility
+with products and solutions to make cars clean, safe
+and smart. We cover all application areas in the vehicle:
+powertrain and energy management, connectivity
+Automotive
+€792 m
+SEGMENT
+RESULT
+Q = < 60 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Infineon Technologies | Annual Report 2021
+€4,841 m
+REVENUE
+Business focus and strategy
+Management Board and
+Supervisory Board
+Strategic focus
+In both regions with the greatest decline in market size, North America (9.5 percent)
+and Japan (9.4 percent), Infineon was able to significantly outperform the market,
+gaining market share, and in each case moving up one position. This means that
+Infineon is now at least in 2nd position in all regions, C18. The trend in Japan, where
+the company has quadrupled its market share over the last ten years, is particularly
+encouraging.
+The automotive industry continues to experience a period of profound upheaval. The
+car of the future will be a purely electric vehicle, assisted, fully connected and always
+online. Even if this will not yet apply to every newly produced car by the end of the
+current decade, we are still seeing an acceleration in structural change compared
+with previous decades. The reasons for this are the desire for vehicles which are ever-
+safer, ever-smarter and increasingly connected and the need for compliance with
+ever-stricter emission standards and therefore for sustainable mobility. This is evident
+from automotive megatrends: electromobility, automated driving, connectivity and
+security. The greatest contribution to this process will come from vehicle electronics
+and consequently from semiconductor solutions. We are contributing to the change
+and want to benefit disproportionately from these trends. We have a broad product
+portfolio of automotive semiconductor solutions. With this portfolio and a high level
+of system expertise, Infineon can handle a wide range of automotive applications.
+These include powertrain, assistance systems, safety, comfort electronics, digital
+instrument clusters, infotainment applications and security.
+In the traditional applications, our growth will be driven by new functions in the areas
+of connectivity, lighting technology, comfort and safety, on the one hand, and by con-
+tinuing electrification of various vehicle functions, on the other. This means that the
+number of electronic components per vehicle and therefore the value of the semicon-
+ductor content per vehicle will increase. The two megatrends electromobility and
+automated driving have the effect of further increasing the average semiconductor
+demand per vehicle. Even if it will take some time for autonomous driving to be intro-
+duced and to become widespread, driver assistance systems are in high demand and
+the strong growth they have already shown looks set to continue in the coming years.
+Driver assistance systems not only ensure
+greater driving comfort, but also contribute
+to the implementation of "Vision Zero", the
+global project that seeks one day to achieve
+its aim of road traffic without fatalities.
+Power semiconductors and controllers are the two largest product categories. Together
+they account for around half of all semiconductors in the automotive sector. Infineon
+was the market leader in the 2020 calendar year for power semiconductors, with a
+market share of 30.2 percent. In the case of controllers, Infineon had a market share of
+16.9 percent and was in 3rd position. The gap between it and the two frontrunners
+Renesas (with a market share of 26.7 percent) and NXP (with a market share of
+26.3 percent) narrowed, while the gap between Infineon and Texas Instruments (with
+a market share of 9.8 percent) widened. In the case of sensors, Infineon (with a market
+share of 15.5 percent) remained the second largest manufacturer behind Bosch
+(with a market share of 22.2 percent), R02.
+In the 2020 calendar year, the automotive industry experienced its greatest decline in
+a decade as a result of the coronavirus pandemic. As most car manufacturers halted
+production for several months across all regions, demand for automotive semicon-
+ductors shrank by 6.0 percent from US$37.186 billion in 2019 to US$34.960 billion in
+the 2020 calendar year, R02. An even greater decline was averted by the recovery
+in China in the second half of the 2020 calendar year and by surprisingly high demand
+for electric vehicles, C16. The unexpected rapid resurgence in demand for cars and
+the boom triggered by incentive schemes for electric vehicles, on the one hand, and
+insufficient manufacturing capacity on the other resulted in the ongoing chip shortage.
+Market position
+Q = < 63 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+reliability of the systems, components and semiconductor solutions built into them.
+They must all be fault-tolerant, must not fail and must ensure a minimum function
+if there are unexpected disruptions, and all this must apply for the service life of
+the vehicle. For some time now, Infineon has provided concepts and solutions for
+reliability at the component and subsystem level, adopting an integrated approach.
+Our semiconductor solutions - sensors, microcontrollers, memory, power electronics,
+power management ICs and security ICs - enable systems to meet the high functional
+safety requirements set out in ISO 26262. The AURIX™ family of microcontrollers is
+used, for example, in steering and braking, and as host controllers that contribute
+towards the functional safety of central control units. Other semiconductor solutions
+ensure both internal and external data communication.
+Our product portfolio meets the high quality and reliability requirements of the
+automotive industry. In the case of automated driving, the greater the trust in the
+technological innovations that are replacing the driver of the vehicle, the greater
+the acceptance and the sooner it will be possible to achieve higher levels of auto-
+mation in vehicles - in private vehicles, taxis and buses, in utility and construction
+vehicles, in agricultural machinery and in public transport such as trains and trams.
+The prerequisite for gaining that trust is the reliability of the vehicles and thus the
+In the area of power electronics, we are the undisputed market leader for Si-based
+power semiconductor solutions in the automotive market. In the fast-growing market
+for SiC-based components (diodes, discrete MOSFETs and power modules), we offer
+our customers alternative scalable solutions for greater efficiency and more compact
+design in the areas of drive trains and onboard chargers. In the medium term, we are
+also expanding our portfolio to include components based on GaN. Both compound
+materials, SiC and GaN, offer additional potential for improvements in efficiency and
+power density.
+For electromobility, Infineon has an extensive range of power semiconductors and
+control ICs with the corresponding packaging and connection technologies. Infineon
+also offers battery management solutions for the efficient charging and monitoring
+of battery systems. Infineon's semiconductor solutions are suitable for all types of
+electric vehicles: pure electric vehicles, plug-in hybrid vehicles and mild hybrid
+vehicles with 48-volt technology. Our portfolio also covers semiconductor solutions
+for vehicles based on emerging hydrogen technology. The AURIX™ family of micro-
+controllers is used both in the control of electric motors and in battery management.
+memory IC solutions) enable our customers to achieve faster time to market. Our
+microcontrollers are not only used in driver assistance systems that are radar-based,
+but also in those that are camera-based, as well as in sensor fusion systems up to
+Level 2+. The intermediate level 2+, which was retrospectively defined, includes those
+functions which are part of Level 3 except for the function of the complex handover
+of vehicle control between the vehicle and the driver.
+Q = < 62 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+We are benefiting from the trend towards
+automated driving, on the one hand, with
+our 77 gigahertz radar sensor ICs, which
+are used in emergency braking systems
+and increasingly in lane change assistance
+systems. On the other hand, we also pro-
+vide dedicated microcontrollers which
+undertake a significant part of the radar
+signal processing. Our optimized radar
+system solutions (including radar sensor
+ICs, microcontrollers, power supply and
+Combined Management Report
+The segments
+Automotive
+Consolidated Financial Statements
+C19 Revenue and Segment Result of the Automotive segment
+Q = < 64 >
+29.3%
+32.9%
+17.1%
+11.6%
+11.2%
+5.5%
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+Fuji Electric
+Semikron
+C22 Market share in IGBT modules in the 2020 calendar year
+Fuji Electric
+36.5%
+Infineon Technologies | Annual Report 2021
+11.4%
+Mitsubishi
+9.7%
+Infineon
+Semikron
+onsemi
+Infineon
+C21 Market share for IPMS in the 2020 calendar year
+Market position
+The world market for discrete power semiconductors and modules grew slightly
+by 0.4 percent in the 2020 calendar year to US$20.896 billion. In the same period,
+Infineon increased its revenue by 3.1 percent. Therefore its market share saw a
+slight rise of 0.5 percentage points to 19.7 percent. R03
+The world market for discrete IGBT power transistors reached US$1.586 billion in the
+2020 calendar year, R03. This was an increase of 10.9 percent compared with the
+figure for 2019 of US$1.430 billion. Infineon's revenue in this area fell by 0.7 percent.
+With a market share of 29.3 percent, Infineon continued to be the clear market leader
+(2019: 32.7 percent), C20. The five largest market players together accounted for
+67.4 percent of the market (2019: 63.9 percent).
+The world market for Intelligent Power Modules (IPMS) reached US$1.429 billion in
+the 2020 calendar year, R03. This was a decrease of 7.1 percent compared with the
+figure for 2019 of US$1.537 billion. Infineon's revenue in this area fell by 9.4 percent.
+With a market share of 11.6 percent (2019: 11.9 percent), Infineon remained in 3rd
+position, C21. The five largest market players together accounted for 78.3 percent
+of the market (2019: 79.0 percent).
+The world market for IGBT modules reached US$3.626 billion in the 2020 calendar
+year, R03. This was an increase of 9.3 percent compared with the figure for 2019
+of US$3.316 billion. Infineon's revenue in this area increased by 12.6 percent. With
+a market share of 36.5 percent, Infineon continued to be the clear market leader
+(2019: 35.5 percent), C22. The five largest market players together accounted for
+66.7 percent of the market (2019: 68.5 percent).
+C20 Market share for discrete IGBTs in the 2020 calendar year
+Mitsubishi
+Infineon
+onsemi
+Toshiba
+15.6%
+9.3%
+7.7%
+5.5%
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+Fuji Electric
+Mitsubishi
+5.8%
+Vincotech
+3.3%
+1,406
+Revenue
+256
+275
+Segment Result
+Demand in the area of automation and electric drives, the segment's largest field of
+application, recovered strongly from the impact of the coronavirus pandemic.
+1,542
+With 26 percent, the fastest rate of growth was to be seen in the area of renewable
+energy, which now accounts for 28 percent of segment revenue. The generation of
+clean energy is an essential prerequisite for the achievement of global carbon emis-
+sion targets. Thanks to our strong market position in the area of renewable energy,
+Infineon is able to benefit directly from this megatrend.
+The energy infrastructure business comprises the transmission, distribution and
+storage of energy, as well as the charging infrastructure for electromobility. This last
+area enjoyed particularly strong demand. In the 2021 fiscal year, Infineon's revenue
+from battery-based storage solutions was still low. However, as the proportion of
+renewable energy in the energy mix continues to grow, so does the importance of
+storage solutions to stabilize the grids. The energy infrastructure business represents
+8 percent of the segment revenue.
+In home appliances, the trend towards inverterized motor control systems continues.
+As a result of energy efficiency regulations, we expect demand for inverterized home
+appliances, especially air conditioning units and washing machines, to remain high
+over the coming years. Following a decline in demand in the previous year as a result
+of the coronavirus pandemic, revenue in this area increased substantially in the
+2021 fiscal year.
+Revenue in the transportation sector saw a significant decline. As a result of the corona-
+virus pandemic, passengers are using public transportation much less than usual. In
+many regions, expansion of transport capacity was postponed. New business areas
+such as the electrification of buses, trucks and farm machinery were unable to offset
+this decline.
+Infineon Technologies | Annual Report 2021
+2020
+2021
+There was a significant increase in revenue from products for wind power as well as
+from PV inverter products. In many regions of the world, solar and wind power are
+now the cheapest way of generating electricity. Capacity is therefore being expanded
+accordingly, especially in the form of utility scale installations.
+€ in millions
+C23 Revenue and Segment Result of the Industrial Power Control segment
+In the 2021 fiscal year, the Segment Result was €275 million. This was an increase of
+7 percent compared with the figure for the previous fiscal year of €256 million, C23.
+Despite the increase in revenue, the Segment Result Margin fell slightly to 17.8 percent
+(previous year: 18.2 percent), as the result was adversely impacted by costs arising
+from the coronavirus pandemic and by idle costs in the high power area.
+R03
+目 R03
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+目 R03
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Consolidated Financial Statements
+Further information
+Q = < 69 >
+Industrial Power Control
+Review of the Industrial Power Control segment
+in the 2021 fiscal year
+In the Industrial Power Control segment, Infineon generated revenue in the 2021 fiscal
+year of €1,542 million, which was an increase of 10 percent compared with the figure
+for the previous fiscal year of €1,406 million. The segment contributed 14 percent to
+Infineon's Group revenue.
+The growth in revenue was driven by the strong recovery in the areas of automation,
+electric drives and home appliances, as well as by continuing growth in renewable
+energy and in the energy infrastructure, whereas there was a decline in revenue in the
+area of transportation. From a regional perspective, the Chinese market in particular
+contributed to this growth. Revenue increased by 21 percent and represent 55 percent
+of segment revenue.
+Industrial Power Control
+Further information
+Q = < 68 >
+Consolidated Financial Statements
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+SEGMENT
+RESULT
+€275 m
+Our system understanding, commitment to quality and the excellent service we pro-
+vide all create added value for our customers and help them grow their businesses.
+In the 2021 fiscal year, we again received awards from several leading automotive
+manufacturers, in particular, recognition of our sustainable actions as well as excellent
+cooperation during this period of chip shortages. From the Chinese car manufacturer
+Great Wall Motor, for example, we received the Best Cooperation Contribution Award
+for exceptionally customer-oriented cooperation. A second example is the Excellent
+Contribution Award which we were given by FinDreams Technology Company, a sub-
+sidiary of the Chinese automotive manufacturer BYD. Thirdly, we received the Global
+Supplier Sustainability Award from the German automotive supplier Bosch for our
+climate-friendly actions. See the chapter “Group strategy”, □ p. 41. |
+Combined Management Report
+The segments
+Consolidated Financial Statements
+Further information
+Q = < 65 >
+REVENUE
+€1,542 m
+Industrial
+Industrial Power Control
+The Industrial Power Control segment specializes in
+semiconductor solutions for the intelligent manage-
+ment and efficient conversion of electric energy along
+the entire conversion chain: generation, transmission,
+storage and use. The product portfolio comprises
+mainly IGBT power transistors, driver ICs to control
+them, and power semiconductors based on SiC.
+The latter are becoming increasingly important for
+industrial applications. We offer the products in the
+Industrial Power Control segment, whether Si-based or
+SiC-based, in various form factors and with different
+levels of functionality. The segment's broad application
+spectrum includes motor control units for industrial
+manufacturing and building technology, inverters for
+photovoltaic and wind power systems, home appli-
+ances, traction, electric utility vehicles (such as buses
+and construction and agricultural vehicles), systems
+for high-voltage direct current transmission and energy
+storage, industrial power supplies and the charging
+infrastructure for electric vehicles. Our focus is on inte-
+gration and digitization.
+Alongside power semiconductors, the second product category to achieve above-
+average revenue growth rates in the segment is microcontrollers, including the two
+families, AURIX™ and TRAVEO™.
+Particularly the purchase of electric vehicles showed a sharp increase in demand. This
+turn around, together with continuing high levels of demand for other semiconductor
+products in other sectors, led to an industry-wide chip shortage. Pandemic-related
+restrictions on the manufacturing capacity at our frontend and backend manufacturing
+partners exacerbated the difficult supply situation.
+Review of the Automotive segment
+in the 2021 fiscal year
+In the Automotive segment, Infineon generated revenue in the 2021 fiscal year of
+€4,841 million, an increase of 37.5 percent compared with the figure for the previous
+fiscal year of €3,521 million. Cypress was fully consolidated with effect from 16 April
+2020, and therefore the comparability of the current-year figures with the prior-year
+figures is limited. The segment contributed 44 percent of Infineon's Group revenue.
+In the 2021 fiscal year, the Segment Result was €792 million, an increase of 438.8 per-
+cent compared with the Segment Result for the previous fiscal year of €147 million.
+Based on revenue, the Segment Result Margin was 16.4 percent (previous year:
+4.2 percent). C19
+The increase in the Segment Result Margin was due to a higher revenue, a significant
+reduction in under-utilization costs and a 12-month contribution to revenue made
+by Cypress' business activities. Factors which had a negative impact on the Segment
+Result were restrictions on our manufacturing capacity as a result of the pandemic,
+especially in Melaka (Malaysia), and costs arising from a manufacturing stoppage in
+Austin (Texas, USA).
+The 2021 fiscal year was characterized by an unexpectedly swift economic recovery in
+China and a significant subsequent ramp-up in automotive production in the country.
+€ in millions
+Electromobility and driver assistance systems continued to be the main drivers behind
+our growth in the 2021 fiscal year. Electromobility benefited not only from incentive
+schemes, but also from the increasing availability of charging stations, the wider
+range of models being produced by almost all vehicle manufacturers and from a
+change in attitude in society to sustainable technologies. During the reporting period,
+the first vehicle with our CoolSiCTM Hybrid PACKTM drive module also went into series
+manufacturing. As a result, we generated significant revenue from SiC for the first
+time in the automotive area. We won three additional contracts for SiC in the power
+train, so we can assume that over the coming years we will continue to achieve steady
+increases in revenue in this area.
+4,841
+Revenue
+792
+147
+Segment Result
+2020
+2021
+3,521
+Further information
+Applications p. 241
+Management Board and
+Supervisory Board
+Combined Management Report
+The segments
+Industrial Power Control
+Consolidated Financial Statements
+Further information
+Q = < 67 >
+photovoltaics, industrial automation and the charging infrastructure for electric
+vehicles. In addition to the modules, we are strengthening the volume production
+of our extensive product portfolios of discrete SiC MOSFET components. With our
+SiC products, customers can count on Infineon delivering the reliability for which
+it is known, as well as providing support to develop systems based on this new
+material.
+The Industrial Power Control segment uses
+the expertise acquired in the application of
+discrete IGBTs and IGBT modules to unlock
+additional growth potential in adjacent
+product areas, such as Intelligent Power
+Modules (IPMs). The functional integration
+of drivers and power switches into our
+CIPOST IPMS helps our customers increase
+the efficiency of drives for small motors
+and therefore meet new energy efficiency
+standards for home appliances and indus-
+trial applications. These integrated prod-
+ucts also enable a significant reduction in
+system size and development cost. We
+develop special control algorithms for the
+products in the iMOTION™ family mentioned
+above. Customers only need to adjust a
+few parameters within the algorithms to
+find efficient solutions to their problems.
+Business focus and strategy
+Products in the iMOTION™ family are used in all types of home appliances, from
+hairdryers and washing machines to air conditioning units.
+With this expanded range, we can address a larger proportion of the semiconductor
+value in an application, which will enable us to continue to grow in our existing
+markets, while we can also offer our customers easy-to-use complete solutions.
+Understanding the newly acquired products and markets also enables us to expand
+the scope of our operations. We can see the potential for synergies, particularly in the
+areas of home appliances and factory automation (and here especially in robotics
+and driverless transport systems).
+Software development is part of our strategic approach "Product to System”. In addi-
+tion to hardware-near software such as firmware or drivers, we offer our customers
+other types of support. One example is IPOSIM (Infineon Online Power Simulation
+Tool), a program that helps the customer select the right product for a given applica-
+tion topology. It also simulates the switching and conduction losses, including an
+assessment of the thermal performance.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Looking across the segments, the Industrial Power Control segment benefits from
+the range of microcontrollers and connectivity and security solutions on offer in
+the Connected Secure Systems segment. This opens the door to new markets and
+additional growth potential in the application areas for which the Industrial Power
+Control segment is responsible.
+Industrial Power Control
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Combined Management Report
+The segments
+Consolidated Financial Statements
+Further information
+Q = < 66 >
+Strategic focus
+406
+Power semiconductors are a key element in the products and systems of our cus-
+tomers, largely determining the function, efficiency, size, weight and cost of the
+systems. The products in our Industrial Power Control segment provide the founda-
+tion for the efficient generation, almost lossless transmission and storage of electric
+energy, on the one hand, and the reduction of losses on consumption, on the other.
+Our core business consists of discrete IGBTs and IGBT modules and the driver ICs
+associated with them.
+We want to continue to strengthen this core. We are constantly refining our existing
+products, combining them to create complete solutions for the customer. We leverage
+our economies of scale in research and development, as well as in manufacturing,
+and are therefore able to achieve a broad portfolio optimized for both cost and per-
+formance. In addition, we develop products that provide the opportunity for long-term
+differentiation.
+Two examples of this are the following:
+> The PrimePACK™ module, which combines IGBT5 chip technology with the .XT
+bonding technology. While the IGBT5 chip technology allows higher power
+densities with lower static and dynamic losses, the .XT bonding and connection
+technology in the modules ensures a
+longer service life through improved
+thermal load cycling capability. This pro-
+vides our customers with significant
+added value for high-power inverters in
+wind and photovoltaic applications and
+in industrial drives.
+> The products in the iMOTION™ family-
+which are basically application-optimized
+microcontrollers - enable easy-to-imple-
+ment intelligent motor control. Infineon
+offers reference design solutions for
+these compact products, including
+connectivity solutions and components
+for human-machine interaction.
+Infineon offers its customers evaluation
+boards for motor drive applications, including
+hardware and software. These reference designs allow
+short development times of the customer's products.
+We are strengthening our product portfolio by using new materials. [See the chapter
+“Research and development”, □ p. 82 f. The Easy module family is an important success
+factor here for fast market entry for the customer. It offers a flexible, easily scalable
+module solution with Si or SiC that is particularly effective in applications such as
+Infineon offers IGBT modules for all power classes and all applications, from small industrial
+motors in household applications and fans in the kilowatt power range to conveyor drives in the
+hundreds of kilowatt power range to traction and pumps in the megawatt power range.
+Power Control
+Microchip
+STMicroelectronics
+Business focus and strategy
+C26 Market share of MEMS microphones die suppliers in the 2020 calendar year (by units)
+15.8%
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.8%
+6.4%
+7.2%
+8.2%
+STMicroelectronics
+Qualcomm
+Infineon
+Analog Devices
+Texas Instruments
+C25 Market share for power ICs in the 2020 calendar year
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.1%
+7.7%
+8.8%
+12.4%
+24.4%
+Renesas
+Infineon
+Knowles
+44.2%
+38.3%
+In the Power & Sensor Systems segment, Infineon generated revenue in the 2021 fiscal
+year of €3,268 million, an increase of 23.3 percent compared with the figure for the
+previous fiscal year of €2,650 million (which included the contribution to revenue made
+by Cypress from 16 April 2020 onwards), C27. The segment contributed 29 percent
+of Infineon's Group revenue.
+Review of the Power & Sensor Systems segment
+in the 2021 fiscal year
+Power & Sensor Systems
+← Q = < 74 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+Toshiba
+R04
+R03
+Comparability limited due to differing reporting period (fiscal year-end).
+2.6%
+NJRC
+3.5%
+Omron
+6.8%
+MEMSensing
+Infineon Technologies | Annual Report 2021
+目 R03
+In the 2021 fiscal year, the Segment Result was €823 million, an increase of 29.4 percent
+compared with the figure for the previous fiscal year of €636 million. The Segment
+Result Margin improved from 24.0 percent in fiscal 2020 to 25.2 percent in the 2021
+fiscal year. The main reason for the significant growth in revenue was the sustained
+rise in demand for semiconductors in a variety of applications. Another reason was
+the consolidation of Cypress' USB component business for the first time for a full
+fiscal year. The positive revenue trend also led to a further slight improvement in the
+Segment Result Margin.
+STMicroelectronics
+Infineon
+greater functionality. The system therefore becomes more complex and higher-end,
+allowing Infineon's customers shorter development times for their own products.
+These functionalities have been further enhanced by the microcontrollers and con-
+nectivity solutions we added to our product portfolio when we acquired Cypress.
+Infineon is now offering its customers not only wireless connection technologies
+(Wi-Fi, Bluetooth and Bluetooth Low Energy) but also wired USB controllers, which
+transmit both signals and power.
+At the core of the Power & Sensors Systems segment are power semiconductors for
+power supply applications in the low and medium voltage range. The key require-
+ments for power semiconductors are high efficiency levels, the best possible perfor-
+mance and a small form factor. Here, Infineon is able to offer solutions covering all
+the key active components of the system: i.e., control ICs, drivers and MOSFET switches.
+Currently, Si is the predominant base material for power switches, but now we are
+seeing a gradual trend towards increased use of power semiconductor products that
+are based on the new materials SiC and GaN. These result in far lower switching
+losses, which means that significant increases in efficiency and power density can
+be achieved. Digital controls are another factor contributing to improvements in per-
+formance. Power management is moving away from analog systems and becoming
+increasingly digital (Digital Power Management). Digital control ICs also allow for
+Strategic focus
+← Q = < 71 >
+Further information
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+17.2%
+17.1%
+14.7%
+14.5%
+12.7%
+目 R01
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Connected Secure Systems
+Consolidated Financial Statements
+Further information
+← Q = < 79 >
+Review of the Connected Secure Systems segment
+in the 2021 fiscal year
+Power & Sensor Systems' broad sensor portfolio allows machines and other electrical
+devices to communicate with their surroundings, depending on their situation. The
+various types of sensors emulate the human senses. MEMS microphones are a substi-
+tute for human ears, radar and time-of-flight (ToF) sensors provide 3-D vision, while
+gas sensors replicate the sense of smell. If the customer so wishes, any of these sensors
+can easily be combined with microcontrollers and connectivity solutions.
+Infineon Technologies | Annual Report 2021
+I'I
+Management Board and
+Supervisory Board
+C24 Market share for MOSFETs in the 2020 calendar year
+The world market for MEMS microphones reached 5.976 billion units in the 2020
+calendar year, R04. This was an increase of 9.0 percent compared with the figure
+for 2019 of 5.482 billion units. Units sold by Infineon rose by 12.8 percent. Infineon
+continued to expand its market share, which rose from 42.7 percent in the 2019
+calendar year to 44.2 percent in the 2020 calendar year, retaining the position as
+market leader it held in the previous year, C26. The five largest market players
+together accounted for 95.4 percent of the market (2019: 95.1 percent).
+The world market for power semiconductor ICs, comprising power management
+ICs, voltage monitoring ICs, drivers and voltage regulators, as well as controllers for
+switch-mode power supplies, power factor correction and battery management,
+was US$24.326 billion in the 2020 calendar year. This was an increase of 0.6 percent
+compared with the figure for 2019 of US$24.191 billion, R03. Infineon's revenue
+in this area rose significantly by 6.8 percent. Hence the company improved its market
+share from 7.8 percent in the previous year to 8.2 percent in the 2020 calendar year
+and remained in 2nd place, C25. The five largest market players together accounted
+for 43.4 percent of the market (2019: 43.2 percent).
+The world market for power MOSFETs, comprising standard MOSFETs, protected
+MOSFETs, SiC MOSFETs and GaN transistors, reached US$8.114 billion in the 2020
+calendar year, R03, an increase of 0.1 percent compared with US$8.105 billion
+in the previous year. Infineon's revenue in these product categories decreased by
+0.4 percent in the 2020 calendar year. With a market share of 24.4 percent compared
+with 24.6 percent in the previous year, the company maintained its clear market
+leader position, C24. The five largest market players together accounted for
+58.4 percent of the market in the 2020 calendar year (2019: 59.7 percent).
+Market position
+Q = < 73 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Power & Sensor Systems
+onsemi
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+In May 2021, at the PCIM exhibition in Nuremberg (Germany), Infineon presented the
+first integrated product combining a CoolGaN™ switch in a system-in-package with a
+specially designed driver.
+Both GaN and SiC are playing an increasingly important role in the area of power
+semiconductors. Using these new materials makes it possible to achieve further
+efficiency improvements here. In the case of SiC, 650 volt SiC switches are of particular
+interest to customers in the Power & Sensor Systems segment for use in their prod-
+ucts. The applications these switches primarily address are servers, telecommunica-
+tions and industry, solar energy systems, energy storage systems, motor drives and
+charging stations for electric cars. In the 2021 fiscal year, we have doubled our port-
+folio of 650 volt CoolSiCTM products. The portfolio now comprises 15 product types,
+including special SiC driver components that offer the customer optimal performance
+in combination with our SiC switches. Our existing portfolio of GaN products is also
+constantly being expanded. It currently comprises several switches in the 400 and
+600 voltage classes. The main applications addressed by the existing portfolio are
+telecommunications, chargers and adapters, motor drives, servers, wireless charging
+and Class D audio amplifiers. A 650 volt GaN switch for use in the onboard chargers
+of electric cars is currently under development. There are plans to add 100 volt and
+200 volt switches to the GaN portfolio in the near future. These could then be used,
+for example, in solar micro-inverters.
+In the area of radio frequency, the company offers high-performance products for
+various special applications, such as amplifying the signal in cell phones and communi-
+cating between the cell phone and the base station. The portfolio includes RF antenna
+switches, RF power transistors, low-noise amplifiers, GPS signal amplifiers and
+transient voltage suppressor (TVS) diodes. The product portfolio is supplemented
+by GaN-on-Si power transistors for use in 5G base stations.
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Power & Sensor Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+In the Connected Secure Systems segment, Infineon generated revenue in the 2021
+fiscal year of €1,397 million. Compared to the previous fiscal year figure of €974 million
+this corresponds with an increase of 43.4 percent for which a significant contribution to
+revenue was made by Cypress since 16 April 2020. The segment contributed 13 percent
+of Infineon's Group revenue.
+C27 Revenue and Segment Result of the Power & Sensor Systems segment
+3,268
+Samsung
+NXP
+Infineon
+C28 Market share for security ICs (excl. NFC controller; excl. NFC embedded Secure Element)
+in the 2020 calendar year
+The world market for microcontrollers reached US$17.283 billion in the 2020 calendar
+year, R01. This was a decrease of 0.9 percent compared with the figure for 2019 of
+US$17.448 billion. The five largest market players together accounted for 76.2 percent
+of the market (2019: 71.0 percent), C30. The political tensions between the USA
+and China, on the one hand, and the production cutbacks in the automotive industry,
+on the other, had a significant impact on Infineon and thereof on the Cypress busi-
+ness. Infineon lost over 1 percentage point of market share (from 16.0 percent in
+2019 to 14.7 percent in 2020), though it remained the third largest manufacturer of
+microcontrollers.
+The trends in the various submarkets were very different. The coronavirus pandemic
+encouraged the trend towards cashless payment. The largest submarket, security ICs
+for payment cards (US$1.021 billion, down 2.0 percent), was virtually unchanged by
+this, whereas other submarkets such as governmental identity documents and health
+care cards (US$388 million, down 12 percent) and security ICs for standard SIM cards
+(US$500 million, down 16 percent) saw much more significant declines, C29. Of all
+the submarkets, the fastest growth rate was to be seen in the embedded SIM market
+(US$221 million, up 45 percent), a market which, though still small, is strategically
+important for us.
+The world market for security ICs (excluding NFC controllers and NFC embedded
+Secure Elements) reached US$2.779 billion in the 2020 calendar year, R05. This
+was a decrease of 7.1 percent compared with the figure for 2019 of US$2.991 billion,
+C28. Infineon was able to retain its number 1 position, increasing its market share
+slightly from 24.4 percent in 2019 to 24.6 percent in 2020. The five largest market
+players together accounted for 85.1 percent of the market (2019: 81.0 percent).
+Market position
+Q = < 78 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Connected Secure Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+physical attacks. The Trusted Platform Module (TPM) secures all the major communi-
+cation channels in the car, such as the central gateway, the telematic unit and access
+to the infotainment system. OPTIGA™ TPM can therefore be regarded as a successful
+example of our strategic approach "Product to System" and of collaboration across
+segment boundaries.
+us with the opportunity to advance into new
+application areas, including for example
+authenticating devices for IoT applications
+and connecting vehicles, but also protect-
+ing smart factories in industry. Growth in
+this area is being driven by increasing data
+exchange. Vehicles, for example, send
+real-time traffic information to the cloud
+or receive updates from the manufacturer
+"over the air", meaning that the software
+can be updated quickly and cost-effectively.
+The senders and recipients of these data,
+whether these are the vehicle manufactur-
+ers or individual systems in the vehicle, are
+authenticated using cryptographic keys.
+OPTIGA™ TPM stores this sensitive informa-
+tion in much the same way as if it were in
+a vault, providing particularly high levels
+of protection against data-technical and
+Embedded security applications provide
+For example, the SECORA™ pay portfolio comprises easy-to-integrate solutions for
+contactless payment cards and mobile devices. With SECORA™ Connect, the product
+family has been expanded to include a solution for coin cell-powered, connected
+smart wearables, such as smart watches. The solution combines a security module
+(Secure Element) with a system-in-package NFC antenna, facilitating the integration
+and management of payment applications for device manufacturers, as well as ticket-
+ing and access solutions. The basis for this is the secure digitization of credit or debit
+cards, referred to as tokenization, in the smartphone or smart watch.
+STMicroelectronics
+CEC Huada
+24.6%
+20.4%
+Infineon
+Management Board and
+Supervisory Board
+Renesas
+NXP
+Infineon Technologies | Annual Report 2021
+目 R05
+C30 Market share for microcontrollers in the 2020 calendar year
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+13% Others (incl. ticketing, transportation, access control, others)
+We have now expanded our core competence in security, originally acquired in
+traditional smartcard applications (payment cards and governmental identification
+documents), to cover the fast-growing area of embedded security applications and
+we have established ourselves as a provider of security solutions with a chip that
+functions as a highly reliable anchor for security. Software is becoming an increasingly
+important element of the solution we provide, right through to the complete product.
+We offer our customers solutions for secure authentication, encryption and protection
+against unauthorized access, all the way to complete system solutions for payment
+transactions or for PC protection.
+. 9% Authentication
+8% Embedded SIM
+37% Payment
+0
+US$2.779 billion (minus 7.1% compared with 2019)
+C29 Market share for security ICs (excl. NFC controller; excl. NFC embedded Secure Element)
+in the 2020 calendar year by application
+目 R05
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+8.5%
+14.5%
+17.1%
+19% Mobile communications (incl. standard SIM, SWP SIM)
+14% Government ID
+€ in millions
+Cypress has had years of experience in software development and system knowhow,
+and it is precisely this that enables us to develop reference designs even faster for
+easy-to-use applications. This approach is important, because in the future there will
+be more and more customers whose products are acquiring loT capabilities for the
+first time (i.e., they are "connected"), yet whose expertise does not lie in connecting
+their products to the internet. We want to be able to offer these customers turnkey
+reference designs that are tailor-made for their specific projects. As far as possible,
+we provide all the necessary semiconductor components and the software required
+to control our components. We therefore offer our customers ModusToolbox™, a
+software and development environment that is intuitive to use. ModusToolbox™M
+provides a modern software development approach based on an open-source system
+with prefabricated tools and seamless integration into the applications of third-party
+suppliers, so that developers can use the tools they wish and therefore easily design
+products tailored to their application. The application software remains the customer's
+responsibility.
+Q = < 77 >
+Q = < 75 >
+Further information
+Consolidated Financial Statements
+Connected Secure Systems
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+2021
+2020
+Infineon Technologies | Annual Report 2021
+Revenue from radio frequency products, which comprise mainly RF power transistors
+for base stations, RF antenna switches and GPS low-noise amplifiers, also contributed
+to growth in this area.
+The recovery in demand for 24 gigahertz radar sensor ICs also contributed to the
+increase in revenue. An important field of application for radar sensors with this
+frequency range is in blind spot detection systems for cars. Revenue from 3D time-of-
+flight sensors sold to smartphone and automotive customers stagnated in the 2021
+fiscal year, remaining at the same level as in the 2020 fiscal year, while the company
+generated first revenue from gas sensors for measuring CO₂, newly launched onto the
+market in the 2021 fiscal year.
+Good revenue growth was also to be seen in the 2021 fiscal year in the area of radio
+frequency and sensor technologies. The greatest contributor to growth was our
+MEMS microphone business. Demand for microphones, not only for smartphones
+but also for the relatively new product group of wireless earphones with active noise
+cancellation, saw further strong growth. This growth was further supported by the
+use of these microphones in voice-controlled applications, such as smart speakers
+and remote controls for smart home devices.
+Demand for battery-powered devices, games consoles and televisions also continued
+to develop positively. All these applications require a large number of power semicon-
+ductors, which has resulted in the increase in revenue in these areas.
+Growth in data volumes transmitted remained consistently high due to the persistent
+coronavirus pandemic and the resulting extent of virtual business conferences, working
+from home, home-schooling, online shopping and video streaming. In response, the
+expansion of server capacity and data centers continued undiminished in the 2021
+fiscal year. In light of this development, many countries also expedited the expansion
+of their 5G cellular infrastructure.
+Revenue
+Segment Result
+636
+823
+2,650
+SEGMENT
+RESULT
+€182 m
+REVENUE
+€1,397 m
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Connected Secure Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+One of the main reasons for the acquisition of Cypress was to strengthen our compe-
+tencies and expand our portfolio in the area of microcontrollers (MCUs). Cypress'
+microcontroller business was brought together with Infineon's XMC™ family under
+one roof. This structure is helping us to combine forces and derive mutual benefit
+from the experience, knowhow, methods and tools brought to the table by both
+former parts of the business. Cypress' PSOC™ family of microcontrollers have tradi-
+tionally had a greater presence in consumer and IoT applications. The strength of
+the XMCTM family of microcontrollers, on the other hand, lies in industrial applications
+such as motor drives, automation and communication, power conversion and LED
+lighting. Combining the two enables us to benefit from the synergies generated.
+Working together with other segments, we offer our customers tailored system
+solutions. In line with our strategic approach “Product to System", we incorporate
+security functions for example into special microcontrollers. We are thus expanding
+our portfolio, which has until now consisted of specialized security ICs, to include
+microcontrollers enhanced with security functions. This enables us to adapt even
+more specifically to the level of security desired by the customer. These are new
+features that differentiate us from our competitors and therefore provide us with
+growth opportunities.
+The digital transformation is penetrating more and more areas of daily life. Digitaliza-
+tion is a key aspect of many applications. As a result of the acquisition of Cypress, we
+were able to expand our product portfolio and our competence portfolio in this area
+to include microcontrollers and connectivity solutions. IoT in particular offers us new
+opportunities for growth. Starting with consumer loT, we will also continue to expand
+our loT industrial applications. It is precisely these applications that require greater
+integration of security solutions into the design of intelligent devices, connected
+vehicles, companies and Industry 4.0 factories. The security aspect will continue to
+be imperative to provide defense against attacks - whether these involve theft of
+intellectual property or private data, fraud or manipulation.
+Strategic focus
+Our product range now also includes hardware and software for connectivity solu-
+tions, developed by Cypress specifically for loT applications. The portfolio comprises
+components for Wi-Fi, Bluetooth and BLE transmission standards. Together with
+industrial microcontrollers, these can be included in complete solutions not only for
+customers in the Connected Secure Systems segment, but also for customers in the
+Industrial Power Control and Power & Sensor Systems segments. To do so, products in
+the Industrial Power Control and Power & Sensor Systems segments are assembled
+in a manner specific to the application and combined using software components to
+create a complete solution in a compact form factor.
+In addition to its role as an independent business unit, the Connected Secure Systems
+segment fulfills a second important function within the Group. As a competence
+center, it helps the other three segments to integrate security, microcontrollers,
+connectivity and software as functions in their system solutions and thus to create
+additional potential differentiation between them and their competitors.
+← Q = < 76 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Connected Secure Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+Applications p. 243
+The Connected Secure Systems segment provides
+comprehensive systems for a secure, connected world
+based on reliable, game-changing microcontrollers and
+wireless connectivity solutions and security solutions.
+In particular, we offer microcontroller solutions, Wi-Fi
+and Bluetooth solutions, and combined connectivity
+solutions (known as combo chips), along with hardware-
+based security technologies and an efficient software
+environment for the programming and configuration
+of the microcontrollers and connectivity components
+that cover many application areas: devices for lot
+applications, connected home appliances and smart
+home appliances, IT equipment, consumer electron-
+ics, cloud security and connected vehicles, as well
+as credit and debit cards, electronic passports and
+national identity cards. With our technologies in the
+areas of computing, connectivity and security, we
+are contributing significantly towards ensuring that
+current and future connected systems are reliably
+protected, since communication and data security
+go hand in hand.
+Connected
+Secure Systems
+Increasing digitalization unlocks new opportunities but increases the risks of hacker
+attacks or the violation of privacy if suitable countermeasures are not taken. With
+our expanded product portfolio and prefabricated solution components, we have
+strengthened our position, and we confirm our strategy, which is to support our
+customers in the best way we can by providing easy-to-use solutions for system
+integration and ensuring a short time-to-market.
+In the 2021 fiscal year, the Segment Result was €182 million, an increase of
+40.0 percent compared with the figure for the previous fiscal year of €130 million.
+Based on revenue, the Segment Result Margin was 13.0 percent (previous year:
+13.3 percent). C31
+< 72 >
+974
+2020
+Infineon Technologies | Annual Report 2021
+Authentication products are gaining in importance, driven by the trend for working
+from home. There was a high level of demand in the 2021 fiscal year for a wide range
+of applications in this field, including printers and battery authentication.
+Revenue from embedded SIMS (eSIMs), which are used in vehicles to make automatic
+emergency calls, increased once again. Demand for eSIMs in industry is also growing
+stronger, driven in particular by progress with Industry 4.0. manufacturing machinery,
+tools and other technical devices are increasingly connected and can therefore be
+monitored or serviced and maintained remotely.
+The coronavirus pandemic has fueled the trend towards cashless and contactless
+payment. The shift from purely contact-based cards to dual-interface cards, acceler-
+ated by the pandemic, led to supply bottlenecks due to the high level of demand.
+We made progress in the area of biometric cards. On the security side, we announced
+a reference design for the next-generation biometric smart card architecture. This
+enables fingerprint authentication with low latency, high accuracy and power efficiency.
+The integration of the fingerprint sensor, and of the Secure Element, power manage-
+ment and communications reduces the complexity of card manufacturing, which
+shortens the time-to-market and lowers costs.
+Demand for connectivity solutions and microcontrollers remained strong. People
+spending more time at home was one of the contributory factors here. Demand for
+Wi-Fi and Bluetooth components was driven by an increase in the penetration rate
+of end devices for wearables and smart home applications and in the automotive
+sector. Strong demand for microcontrollers was driven by industrial and consumer
+applications. Of particular note here are HMI applications, wearables and battery-
+powered applications.
+2021
+Segment Result
+130
+Revenue
+1,397
+€ in millions
+C31 Revenue and Segment Result of the Connected Secure Systems segment
+The increase in revenue was due to an improved product mix and a full year's contri-
+bution from the business activities of Cypress. The Segment Result Margin remained
+largely stable due to increased operating costs. Usually there would have been scope
+for higher revenue volumes, but scarce foundry capacity meant that we were not
+able to meet in full the brisk demand for general-purpose microcontrollers and for
+Wi-Fi and Bluetooth components. In addition, there was the temporary shutdown
+of our manufacturing facilities in Austin (Texas, USA) caused by a winter storm, which
+further exacerbated the difficult supply situation.
+182
+Consolidated Financial Statements
+International travel started to pick up slowly in the second half of the fiscal year.
+Demand for passports slowly began to stabilize as a result. In many towns and cities
+around the world, the use of public transport declined due to multiple local lock-
+downs and to working from home. As a consequence of this, we continued to see
+weak demand for our transport and ticketing products.
+Business focus and strategy
+Combined Management Report
+The segments
+Power & Sensor Systems
+Combined Management Report
+The segments
+Power & Sensor Systems
+€3,268 m
+Infineon Technologies | Annual Report 2021
+Consolidated Financial Statements
+Further information
+REVENUE
+SEGMENT
+RESULT
+€823 m
+Power & Sensor
+Systems
+The Power & Sensor Systems segment encompasses
+a large selection of technologies relating to power
+semiconductors, radio frequency and sensors. We use
+these technologies to make electronic devices like
+power supplies, power tools, lighting systems, mobile
+devices and industrial and consumer applications
+smaller, lighter and more energy-efficient, as well as
+to develop new functionalities. We are drawing on
+the next generation of new, innovative solutions based
+on Si, SiC and GaN for applications in the areas of
+5G, big data, power supplies and adapters, battery-
+powered devices, and renewable energy. Our portfolio
+of products for power supplies, comprising control ICs,
+drivers and MOSFET power transistors, addresses
+the two key requirements of the market: efficiency
+and power density. Infineon is the clear market leader
+in the global Si MOSFET market, C24. Our high-
+precision sensor solutions give loT devices "human
+senses", enabling them to react intuitively to their
+surroundings. The portfolio is rounded off with USB
+controllers and radio frequency products such as
+RF antenna switches, RF power transistors and GPS
+low-noise amplifiers.
+Applications p. 242
+Management Board and
+Supervisory Board
+Q = < 70 >
+Further information
+Q = < 83 >
+In the 2017 calendar year, Infineon was one of the first manufacturers to bring a
+SiC MOSFET with trench technology to market. Trench architecture offers significantly
+more opportunities for the realization of efficient, robust transistors than technically
+less demanding planar architecture. It gave Infineon a competitive edge on the devel-
+opment front, which we want to sharpen with the second generation currently in
+development.
+Building on our comprehensive system understanding, we develop new tailor-made
+solutions with our key customers. We are also expanding our product portfolio to
+include additional voltage classes. Suitable packages will also be produced, so as to
+exploit SiC technology to the full.
+At the beginning of the 2019 fiscal year, we acquired Siltectra in order to address
+the high cost of the base material, the SiC wafer. We plan to use Siltectra's Cold Split
+technology on an industrial scale in the 2022 fiscal year. In the first phase, boule
+splitting takes place. This technology enables crystalline materials to be split with
+minimum loss of material compared with conventional sawing techniques, which will
+make it possible to produce significantly more wafers from one boule. The second
+phase in the manufacturing is wafer splitting. In this process, the raw wafers we
+purchase are split in two, effectively doubling our output. Advanced development of
+the Cold Split technology is taking place in Villach (Austria) and at the Siltectra site
+in Dresden (Germany).
+In the 2021 fiscal year, our product portfolio
+was expanded with the launch of a GaN
+power semiconductor IC. This IC, which is
+called CoolGaNTM Integrated Power Stage
+600 V, comprises for the first time a driver IC
+and a switch in one package. The high
+degree of switch integration means that
+the advantages of GaN technology can be
+combined with simple control. With this
+product, we are primarily addressing appli-
+cations such as USB PD chargers, adapters,
+and low to medium-power switch-mode
+power supplies. We will be expanding our
+product range in the medium to long term
+to include discrete and integrated solutions
+with additional voltage classes in the high-
+to medium-power range. Moreover, we are
+expanding our package portfolio.
+Compared to Si-based transistors, GaN-based transistors also have advantages that
+make them useful in areas such as power supplies and chargers. Devices that are
+more efficient and much more compact can be built due to lower losses both when
+switching and when in the on-state. GaN's properties, which are very different from
+those of Si, make it possible to integrate high-voltage systems on a chip, which
+represents another step towards more compact solutions. These can be used, for
+example, in motor control units in robots, where high dynamics and small form
+factor are important. Another field of application is data centers, which have very
+high requirements in terms of energy efficiency and power density.
+Microcontrollers
+Infineon
+CoolGaNT IPS
+Consolidated Financial Statements
+GaN
+Combined Management Report
+Research and development
+> Richmond, BC
+Management Board and
+Supervisory Board
+The market for SiC is growing at an extremely dynamic pace. Demand was initially
+determined by industrial applications such as photovoltaic inverters, industrial
+power supplies and the charging infrastructure for electric vehicles, but this is now
+being surpassed by demand for automotive applications. Specifically, the new solu-
+tions are being used for the drive train and onboard chargers.
+Sic
+Manufacturing technologies and transistor architectures for power semiconductor
+components based on new materials are a key focus of our research and develop-
+ment activities. SiC, a compound of silicon and carbon, and GaN, a compound of gal-
+lium and nitrogen, enable higher power densities and low switching losses, both of
+which contribute towards improved efficiency of power electronic systems and there-
+fore to reduced losses. Whereas SiC is used especially for voltages exceeding
+600 volts, GaN is favored for lower voltages, where it can play to its particular
+strength, extremely low switching losses. The three materials (SIC, GaN and Si) all
+complement each other, with each one suitable for particular applications and
+requirements.
+New materials
+OPTIGAT
+Vehicle
+Discrete IGBTs,
+IGBT modules, CoolSiC™
+Sic
+GaN
+Si
+Internal power supply
+IGI60F1414A1L
+Business focus and strategy
+At the power-source, e.g. in a USB charger, ultimate
+efficiency and reliability can be achieved by aligning the
+latest CoolGaN™ Integrated Power Stage (IPS) 600 V
+with GaN and driver technologies.
+Artificial intelligence
+processor architecture
+In many areas of digitalization, values-based trustworthy Al offers an opportunity
+to provide people with support, while at the same time preserving personal freedom.
+If people's wellbeing and dignity are to remain at the heart of all Al-based applica-
+tions in the future, ethical guidelines governing the deployment and use of Al will be
+required. This insight also underlies the new EU Regulation governing Al. The Draft
+Regulation published in April 2021 includes a risk-based approach that regulates the
+supply and operation of Al systems. Applications that conflict with the norms and
+values of the EU will simply be banned. These include, for example, systems that can
+be used by governments for social scoring activities. High-risk applications have
+to fulfill specific conditions regarding data protection, transparency and operability.
+As a company, we endorse a value-based approach that takes ethical aspects into
+consideration when dealing with Al and, at the same time, makes innovation and
+development possible. Infineon is also involved in various cross-company initiatives,
+sometimes politically coordinated, such as Applied.Al and the “Learning Systems"
+platform launched by the German Federal Ministry of Education and Research (BMBF).
+Q = < 85 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Infineon develops hardware solutions and software solutions so that Al algorithms
+can be used in integrated systems. In addition to optimizing the hardware of existing
+architectures, this also includes specific Al accelerators with extremely low electricity
+consumption. These are used, for example, in keyword and gesture recognition,
+object identification and classification, and sensor fusion. The prerequisite for this is
+an understanding of the algorithms of neural networks so that these can be imple-
+mented in special semiconductor components in switching circuits (i.e., in hardware).
+As a result, an enormous speed advantage can be achieved with reduced electricity
+consumption compared with a software-based solution. Our aim is to develop com-
+plete solutions in the area of sensors, Al accelerators, microcontrollers and software.
+Al is a key element of our software expertise.
+With our products and the use of Al, we make completely new applications and
+forms of human-machine interaction possible. Using our modern sensors, machines
+acquire spatial hearing or the ability to see in 3D, or the capacity to feel or to analyze
+gases. These abilities correspond to the human senses, which makes the machines
+intuitive to operate. Edge Al (artificial intelligence within a device or on the edge
+between the device and the cloud) opens up the possibility of many new applica-
+tions. Al in the cloud, which has prevailed until now, is easily scalable but has the
+disadvantage of high electricity consumption and also requires a reliable data
+connection.
+Infineon uses artificial intelligence (AI) methods in many areas such as development,
+production and marketing. In the area of manufacturing, examples include auto-
+mated visual fault detection and predictive maintenance. Around the world, many
+teams from different functions are involved with the use of Al in their working environ-
+ment. Since 2017, Infineon has had local teams of experts who use Al to optimize
+manufacturing. Our development center in Dresden for Al in our products started
+up in 2018. In 2020, we set up our Center of Excellence for Al in Munich (Germany)
+for the global coordination of our Al activities. This was followed in 2021 by our ARISE
+initiative in Singapore.
+Infineon Technologies | Annual Report 2021
+Microcontrollers are key elements of every electronic system. In the automotive
+sector, the highly successful microcontrollers in the AURIX™ family, with their focus on
+the powertrain (motor control/inverters/transmission/charging systems), security
+components and automated driving, have been supplemented by those in Cypress'
+TRAVEO™ family, with their focus on infotainment and body functions. For industrial
+applications, Cypress' PSOC™ family has been added to the product range. Both
+TRAVEO™ and PSOCTM are product families that build on ArmⓇ
+and therefore reach a wide developer community.
+Developing our own software has other advantages. We can ensure the software and
+hardware are a perfect match, thus optimizing performance, energy efficiency and
+data security at the system level. We can generally differentiate our solutions from
+those of our competitors not only through our hardware, but also through software
+we have written ourselves and/or programmed algorithms.
+ModusToolbox™
+1825
+迪
+Software development is playing an increasingly important role in Infineon's research
+and development. It is a significant part of our strategic approach "Product to System",
+which involves presenting the customer with comprehensive and easy-to-use solu-
+tions. Traditionally, we develop hardware-near software like firmware or drivers. In
+addition, for more and more applications, we are now offering application-related
+program codes. The dynamic loT market offers great potential. Here especially, aspects
+that are important to the customer are short development times and little need
+for modification, combined with a high degree of IT security. This requires not only
+individual software elements, but also a comprehensive software development
+environment.
+Software and system support
+Q = < 84 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The acquisition of Cypress brought us
+for the first time a complete ecosystem,
+including the ModusToolbox™ develop-
+ment environment, software components
+and an active developer community.
+The Modus ToolboxTM comprises, among
+other things, reusable firmware, which
+makes programming Wi-Fi and Bluetooth
+components, microcontrollers and
+sensors significantly easier for the engi-
+neers. In addition, we have launched
+the Modus ToolboxTM ML. ML stands for
+machine learning (i.e., artificial intelligence
+methods).
+Authentication
+and
+encryption
+In this way, the customer can
+User
+At the end of the 2021 fiscal year, we employed 10,372 people (21 percent of Infineon's
+total workforce) in research and development worldwide. At the end of the 2020 fiscal
+year, the corresponding figure was 9,262 (20 percent of the work-force). The number
+of research and development sites was 56 in the 2021 fiscal year (2020: 54 sites) in
+20 countries.
+Q = < 81 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+R&D expenses
+Percentage of revenue
+13.1%
+2021
+2020
+H
+Patents
+1,113
+1,448
+Infineon Technologies | Annual Report 2021
+€ in millions
+C32 R&D expenses
+Research and development expenses were €1,448 million in the 2021 fiscal year
+compared with €1,113 million in the previous year. This increase of €335 million or
+30 percent was in line with revenue. In the 2021 fiscal year, we invested 13.1 percent
+of revenue in research and development, compared with 13.0 percent in the previous
+year. Capitalized development costs in the 2021 fiscal year were €199 million (previ-
+ous year: €158 million). Amortization of capitalized development costs in the 2021
+fiscal year was €69 million (previous year: €56 million). Subsidies and grants received
+for research and development rose from €108 million in the 2020 fiscal year to
+€123 million in the 2021 fiscal year.
+Research and
+development
+Q = < 80 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+13.0%
+Human-machine
+interface
+Canada
+Another indication of Infineon's innovative power and long-term competitiveness
+is the number of our patents. As in the previous fiscal year, we applied for around
+1,700 patents worldwide in the 2021 fiscal year. We regularly review and streamline
+our patent portfolio. At the end of the 2021 fiscal year, the worldwide patent port-
+folio comprised around 29,500 patents and patent applications (previous year:
+around 29,000).
+AURIX™, PSOC™, XMCTM
+Microcontroller
+Driver ICs
+EiceDRIVER™
+CoolMOST
+CoolSIC™
+Battery in XEV
+DC-DC stage
+AC-DC stage
+AC power
+C33 Infineon owns the key components for xEV charging stations
+> reduce product costs per watt.
+> increase efficiency through lower switching losses and line losses, and
+Infineon's research and development activi-
+ties accord with its strategy of securing
+and strengthening its core business and
+expanding its business in adjacent areas.
+Research and development activities
+therefore concentrate, on the one hand, on
+continuing improvements to our power
+semiconductors (with a particular focus
+on the use of new materials such as SiC
+and GaN) and, on the other hand, on the
+digitization of products and systems. The
+main development fields here are micro-
+controllers, connectivity solutions and
+software, and to an increasing extent artifi-
+cial intelligence in edge computing. The
+ongoing development and expansion of our
+sensor range is a key factor in the area of
+IoT. We address longer-term future-related
+topics in the fields of quantum computing
+and post-quantum cryptography.
+› improve the power density of the charging station within specified dimensions,
+Sensor technologies
+Based on this broad portfolio and our system understanding at application level, we
+support customers in a number of ways in the design of a high-performance solution.
+Our input includes reference designs, simulations, podcasts, blogs and videos.
+Q = < 82 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Fast charging stations for electric vehicles illustrate the P2S approach. Infineon supplies
+the relevant semiconductors in a system solution that includes not only Si-based or
+SiC-based power semiconductors, but also driver ICs, sensor solutions, communica-
+tions components, and microcontrollers with integrated security solutions. Il C33
+The strategic approach "Product to System" (P2S) is of crucial importance here in
+more than one respect. It helps us to better adapt our components to requirements.
+We understand new trends early on and can develop innovative approaches to the
+point that we can suggest new courses of action to our customers, or we can present
+them with completely new possibilities. Particularly important is the opportunity
+to offer customers all-in-one solutions. This provides them with benefits in terms
+of system performance, system costs and development time. This approach also means
+that we are increasingly focusing on and building more expertise in software and
+system solutions.
+Research and development fields at Infineon
+> increase the power output to shorten the charging time,
+Sensors capture the real analog world. The signals measured are first digitized. Then,
+the digital values are processed, transmitted and stored according to the requirements
+of the target application. Sensors also play an increasingly important role in operat-
+ing machines and devices, referred to as human-machine interaction. In the 2021 fiscal
+year, together with our partner Reality Al, we launched a new sensing solution for the
+automotive sector onto the market. It combines XENSIVT MEMS microphones with
+AURIX™ microcontrollers and Reality Al's Automotive See-With-Sound system. Using
+machine learning-based algorithms, the system is able to detect emergency vehicles,
+cars and other road users, even if they cannot be seen by the driver. Al also ensures
+that the country-specific sirens of emergency vehicles are recognized in all parts of
+the world.
+264
+which coronavirus, for example, is trans-
+mitted. Smart ventilation and warning sys-
+tems equipped with the XENSIV™ PAS CO2
+sensor warn of poor air quality or ensure
+the supply of fresh air necessary if they are
+linked to the air conditioning system. The
+XENSIVT PAS CO2 measures the CO2 content
+in the indoor air extremely accurately on the
+basis of photoacoustic spectroscopy (PAS).
+To do so, it uses a highly sensitive acous-
+tic detector optimized for low frequency
+operation. The PAS principle enables a
+significant reduction in the form factor of
+up to 75 percent compared to customary
+CO2 sensors.
+> Our manufacturing sites benefit from economies of scale. Our 300-millimeter thin
+wafer production enables us to create differentiated products, is cost-effective and
+ensures a high level of quality.
+> We use the opportunities presented by in-house manufacturing to develop new
+materials to suit the needs of the market, such as SiC and GaN, which involves
+close collaboration between manufacturing and development.
+› Close cooperation between chip design and manufacturing generally enables short
+development times and a high level of flexibility.
+> Infineon is able to control a large part of the supply chain itself.
+This final point particularly paid off when the chip shortage started to bite towards
+the end of 2020 and beginning of 2021. Past investment enabled us to be relatively
+successful at meeting customers' needs in that very fast-moving market environment.
+Certainly, the allocation situation in the fiscal year just ended was particularly difficult
+for products that we purchase from foundries (frontend). To ensure delivery capability
+in the future, we therefore concluded several long-term supply contracts with found-
+ries in the course of the 2021 fiscal year.
+Start-up of the 300-millimeter factory in Villach
+Manufacturing commenced at the new 300-millimeter factory on the Villach site in
+Austria in the fiscal year just ended, around three months ahead of schedule. At a big
+opening ceremony attended by many politicians, including the Austrian Chancellor
+and several secretaries of state, the first finished wafer was presented. Over the
+coming four to five years, the areas in the clean room will be fitted with production
+facilities. The total planned investment for the fully equipped buildings and clean
+room facilities is around €1.6 billion. The development of the Villach site will generate
+significant economies of scale and revenue potential of around €2 billion per year.
+Mission Futre.
+easier, safer a greener
+The first finished 300-millimeter wafer manufactured in the new fab is presented by
+(f.l.t.r): Dr. Sabine Herlitschka (CEO Infineon Austria), Dr. Reinhard Ploss (CEO Infineon)
+and Jochen Hanebeck (COO Infineon).
+Infineon Technologies | Annual Report 2021
+> Bucharest
+> Neubiberg
+> Milpitas, CA
+The relatively high proportion of in-house manufacturing has a number of advantages:
+Romania
+In its in-house manufacturing, Infineon focuses on differentiating technologies. In
+frontend manufacturing, these include, in particular, power semiconductors and
+sensors, while in backend manufacturing they include the associated modules. We
+use external manufacturing partners in the frontend phase for CMOS and CMOS-
+derivative technologies. This applies to technology nodes of 65 nanometers and
+smaller but also to older generations of power semiconductors. In the backend area,
+particularly in assembly and testing, we are making increasing use of manufacturing
+partners for standardized package types.
+As of 30 September 2021, there were 33,699 people employed in manufacturing-related
+functions (previous year: 31,292 employees). The increase reflects the capacity expan-
+sion and higher plant utilization rate. We reduced the number of manufacturing sites
+to 20 in 13 countries, compared with 21 manufacturing sites in 13 countries at the end
+of the 2020 fiscal year.
+12.8%
+1,497
+1,099
+2020
+1 Property, plant and equipment and other intangible assets.
+2021
+13.5%
+Investments
+Percentage of revenue
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Manufacturing
+Consolidated Financial Statements
+Further information
+By far the largest share of investments in property, plant and equipment was dedi-
+cated to manufacturing. Of this, the larger part was invested in frontend operations
+and the smaller part in backend operations.
+Manufacturing strategy
+> Martinsried
+> Herlev
+> Lynnwood, WA
+Germany
+› Graz
+Austria
+Europe, Middle East, Africa
+> Irvine, CA
+> Hazlet, NJ
+> El Segundo, CA
+> San Diego, CA
+> Colorado Springs, CO
+› Chandler, AZ
+> Beaverton, OR
+> Austin, TX
+In the field of intelligent building control, Infineon is offering a new CO2 sensor. CO2 is
+a key parameter for indoor air quality, which directly correlates with the aerosols via
+> Andover, MA
+USA
+› Augsburg
+Israel
+> Netanya
+Italy
+› Langen
+Denmark
+> Lexington, KY
+> Erlangen
+› Leominster, MA
+> Duisburg
+> Villach
+€ in millions
+› Dresden
+Malaysia
+> Seoul
+Korea
+› Bangalore
+India
+Asia-Pacific
+› Pavia
+› Linz
+C34 Investments
+› Padua
+In the 2021 fiscal year, our investments amounted to €1,497 million. This was an
+increase of €398 million, or 36 percent, compared with the €1,099 million invested
+in the previous year. This increase is slightly stronger than our revenue increase and a
+result of a strong recovery in demand. Investments as a proportion of revenue increased
+from 12.8 percent in the 2020 fiscal year to 13.5 percent in the 2021 fiscal year. Of the
+total investments, €1,268 million related to property, plant and equipment (previous
+year: €915 million) and €229 million to other intangible assets, including capitalized
+development costs (previous year: €184 million).
+Module of a trapped-ion quantum chip assembled
+Tonests
+in a socket using a compression frame for mechanical fixation.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+R&D sites
+Business focus and strategy
+Combined Management Report
+Research and development
+R&D sites
+Consolidated Financial Statements
+Further information
+Q = < 87 >
+America
+> Kulim
+> Regensburg
+> San José, CA
+Even if quantum computers are only available in some years' time, this already has
+practical consequences today. The service life of major systems or products, such as
+passports, industrial facilities, medical technology and cars, will potentially extend
+into the era of quantum computers, and these systems and products will still need to
+be secure at that time. Established encryption technologies could be attacked and
+broken with quantum computers. For this reason, Infineon is focusing on post-quantum
+cryptography to start developing solutions now with security chips that will be able
+to resist the computing power attacks of quantum computers. Infineon sits on a
+number of committees involved in setting international standards in this field.
+> Warwick, RI
+approaches and is developing both superconductive components and spin-based
+systems in SiGe structures for future quantum computers.
+Quantum computers and post-quantum cryptography
+XENSIV PAS CO2
+Infineon Technologies | Annual Report 2021
+Connectivity solutions
+Due to its small size, the XENSIVT PAS CO2
+can be integrated into ventilation or lighting
+systems in smart buildings.
+Cypress' Wi-Fi and Bluetooth solutions are
+already well-established in various markets.
+The current main applications are in con-
+sumer products and IoT, including intelligent loudspeakers (smart speakers), activity
+trackers and printers, as well as in the automotive sector. Customers' needs in many
+applications are met primarily as a result of our ability to integrate Wi-Fi and Bluetooth
+technologies on combo chips, as well as the option we can provide of highly integrated
+dual stream 2x2 Wi-Fi components to fulfill complex system requirements.
+Our future developments under the umbrella of the Connected Secure Systems
+segment are focusing, on the one hand, on the next generation of integrated Wi-Fi,
+BT and BLE products and, on the other hand, on the incorporation of these new
+connectivity capabilities into our existing and future range of products and systems
+in the markets and applications we address.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Further information
+Q = < 86 >
+Innovative memory solutions
+Through its acquisition of Cypress, Infineon acquired additional expertise in various
+memory technologies. The most important of these for Infineon are NOR Flash mem-
+ory ICs, which have a wide range of potential applications in the automotive sector,
+industry and the communications infrastructure. A NOR Flash memory IC is used pri-
+marily as program memory and is therefore distinguished from NAND Flash memory,
+which is used for (multimedia) data. Infineon's NOR Flash memory ICs offer immedi-
+ate availability in the systems used, a sort of "instant on".
+The active use and precise manipulation of quantum mechanical effects in a few or
+individual particles is a basis for innovative components that may be significant for
+future industrial products. Above all, the field of quantum computing is thought to
+have disruptive potential, as this new computing architecture will enable the solution
+of types of problems that have, until now, hardly been accessible. Problems of such
+complexity occur, for example, in materials research, drug development, weather
+forecasting and logistics optimization. Infineon is a sought-after partner in this highly
+innovative field. Above all, in research networks both inside and outside Germany, it
+contributes its expertise in the planning, design and manufacture of special technol-
+ogies and/or special components. On 10 June 2021, ten leading German companies
+presented the Quantum Technology and Application Consortium (QUTAC) to the pub-
+lic. On board with Infineon are BASF, BMW, Boehringer Ingelheim, Bosch, Merck,
+Munich Re, SAP, Siemens and Volkswagen. Together we will continue to build on the
+existing foundations of quantum computing in order to move into industrially useful
+fields of application.
+UK
+In the 2021 fiscal year, Infineon presented the prototype of an industrially manufac-
+tured ion trap quantum chip. The 2x9 ion quantum processor is a pilot designed
+to show how to implement the industrial manufacturing chain of an ion processor
+from conception to application. Our manufacturing expertise, combined with
+strong academic partners at the University of Innsbruck (Austria) and ETH Zurich
+(Switzerland), is enabling the rapid ongoing development of our first prototypes.
+In addition, Infineon is driving forward the development of other technological
+> Bristol
+> Shanghai
+> Shenzhen
+> Xi'an
+Taiwan
+> Taipeh
+> Tokyo
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Manufacturing
+Consolidated Financial Statements
+Further information
+> Warstein
+Q = < 88 >
+Manufacturing
+› Chengdu
+› Nagoya
+> Sendai
+> Hsinchu
+› Reigate
+Réparade
+France
+> Cork
+> Dublin
+> Le Puy-Sainte-
+Ukraine
+› Lviv
+Japan
+> Ipoh
+> Melaka
+› Penang
+Philippines
+> Muntinlupa
+Singapore
+Greater China
+Ireland
+29
+Cash flows from investing activities
+(7)
+18
+4,070
+23
+3,798
+1,648
+Cash flows from financing activities
+13
+2,046
+13
+1,822
+12
+Free Cash Flow4
+0
+Power & Sensor Systems
+Other Operating Segments
+Connected Secure Systems
+from continuing operations
+14,218
+13
+millions
+€ in
+millions
+20
+Change in
+%
+Revenue by segment
+16,309
+15
+Selected liquidity key data
+Automotive
+8,242
+51
+6,516
+45
+26
+Cash flows from operating activities
+Green Industrial Power
+2,205
+13
+1,790
+23
+0
+3,962
+Corporate and Eliminations
+(1,565)
+11.0
+(2)
+Gross cash position4
+Operating profit
+3,948
+2,845
+39
+Net cash position
+3,986
+(1)
+(2,264)
+(2,441)
+7
+(1,301)
+(1,869)
+30
+1,158
+€ in
+9.8
+(1,599)
+administrative expenses
+Selling, general and
+Selected results of
+operations key data
+Adjusted Free Cash Flow5
+Adjusted Free Cash Flow as percentage of revenue
+Depreciation and amortization
+Gross profit/Gross margin
+7,413
+45.5
+6,131
+(10)
+43.1
+Investments4
+Research and
+development expenses
+(1,985)
+12.2
+(1,798)
+12.6
+(10)
+€ in millions (unless otherwise stated)
+21
+2022
+27
+Change in
+%
+Supervisory Board
+37
+Internal management system
+90 Consolidated Statement of
+Comprehensive Income
+Q.
+Search
+=
+4 Letter to shareholders
+40 Review of the semiconductor
+91 Consolidated Statement of
+←
+Previous page
+10
+The Management Board
+industry
+Financial Position
+→
+12 Report of the Supervisory Board
+to the Annual General Meeting
+42
+Research and development
+2023 fiscal year
+34
+Consolidated Statement of
+Profit or Loss
+(30)
+Annual Report 2023
+Infineon Technologies AG
+Infineon
+www.infineon.com
+Ó
+III
+← 1 →
+Navigation in the report per mouse click
+Last page viewed
+Main table of contents
+Next page
+2 Infineon key data
+19 Combined Management Report
+88 Consolidated Financial Statements
+20 Business model
+89
+3 Infineon at a glance
+Group strategy
+4 Management Board and
+92
+Consolidated Statement of Cash Flows
+58 Infineon on the capital market
+61 Overall statement on Infineon's
+financial condition
+Reference to external documents
+This interactive pdf is optimized for use
+with Adobe Acrobat.
+Contents
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Infineon key data¹
+Fiscal year from 1 October to
+30 September
+2022
+2023
+Fiscal year from 1 October to
+30 September
+€ in
+millions
+in % of
+revenue
+€ in
+millions
+in % of
+revenue
+(List of references on p. 87)
+Reference
+(Chart overview on p. 184)
+Chart reference
+93
+Consolidated Statement of
+Changes in Equity
+95
+Notes to the Consolidated
+62 Report on outlook, risk and
+opportunity
+Financial Statements
+172
+Infineon | Annual Report 2023
+2023
+79 Infineon Technologies AG
+Further information
+172 Responsibility Statement by
+the Management Board
+173 Independent Auditor's Report
+180 Applications and product range
+184 Chart overview
+184
+185
+List of abbreviations
+Financial calendar 2024
+186 Imprint
+Further information
+Page reference
+82 Corporate Governance
+87 List of references
+1,638
+Infineon | Annual Report 2023
+1,754
+We are driving decarbonization and digitalization with our partners
+Efforts to tackle the climate crisis are being intensified worldwide. At the same time,
+we are seeing rapid development in the area of digitalization. Semiconductors are
+essential in order to overcome the energy challenges of our time and help shape the
+digital transformation. They are the building blocks of technological progress and
+the engine of sustainable global development. At Infineon, we are actively doing
+everything possible to drive forward decarbonization and digitalization. We are a
+global leader in power systems and IoT. Together with our partners, we enable game-
+changing solutions in three growth areas: green and efficient energy, clean and safe
+mobility, and a smart and secure IoT.
+Five core applications are particularly strong drivers for our business: electromobility,
+renewable energy, automated driving, data centers - propelled by the ever-increasing
+use of artificial intelligence - and IoT. These applications will account for around
+60 percent of our expected revenue growth over the coming years. So that Infineon
+can make the most of these major growth opportunities, we are setting the course
+and laying the groundwork early on.
+Investments in manufacturing capacities and security of supply
+will set Infineon up for long-term growth
+Our manufacturing strategy is based on clear principles. We focus on expanding our
+in-house manufacturing in those areas in which added value for our customers
+and differentiation for Infineon is created. This is the case, for example, for power
+semiconductors and sensors. However, in the case of highly integrated digital
+products such as microcontrollers and connectivity and security components, we
+prefer to work together with contract manufacturers, as the design and software
+are the main sources of differentiation in those areas. We also pursue this strategy
+when making our investment decisions.
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = 4 6
+The groundbreaking ceremony for our "Smart Power Fab” at the Dresden site took
+place at the beginning of May 2023. This factory will link our two major growth areas,
+decarbonization and digitalization. We are strengthening our manufacturing base
+for both analog mixed-signal technologies and power semiconductors. Analog mixed-
+signal components are used in power supply systems (such as those in energy-efficient
+chargers), in small motor control units for cars, in data centers and in IoT applications.
+The interaction between power semiconductors and analog mixed-signal compo-
+nents makes particularly energy-efficient and intelligent system solutions possible.
+We therefore want to use our in-house manufacturing to create some of these prod-
+ucts in the future, from both a differentiation and a resilience perspective.
+The great importance of the project for Infineon, the region, Germany and Europe has
+become clear, not least due to visits to the Dresden site by high-ranking politicians
+- especially the President of the European Commission and the German Federal
+Chancellor - and the resulting high level of media interest. Support provided by the
+German Federal Government as funding body and the European Chips Act is giving
+our project a tailwind. The additional capacity provided by the fab will enable us to
+meet increasing demand from our customers in the second half of the decade and
+will reinforce our position as a world-leading supplier of power systems.
+Silicon chips of the type we make in Dresden will be the technically appropriate and
+economically viable solution in many applications in the long term. Compound
+semiconductors based on silicon carbide (SiC) and gallium nitride (GaN) expand the
+options presented by silicon-based solutions. They enable particularly efficient,
+fast-switching and compact system solutions that consume less power. We see rising
+demand for these, especially for use in electric cars, charging stations and solar systems.
+We want to lead the way across the whole range of power semiconductors - for silicon
+chips as well as for technologies based on SiC and GaN. We are therefore constantly
+expanding our portfolio for different application areas. We are also increasing our
+manufacturing capacity for both types of technology, while adopting an entrepreneur-
+ial and long-term approach.
+In August 2023, we therefore announced that we would be significantly increasing
+the
+scope of the ongoing expansion of our manufacturing facilities on our Kulim site
+(Malaysia). In a second expansion phase, we want to build the world's largest and
+most competitive SiC power semiconductor factory based on 200-millimeter manufac-
+turing technology there. Together with the planned conversion to 200-millimeter
+production of our existing SiC manufacturing lines at the sites in Villach (Austria) and
+Kulim, this investment offers Infineon annual revenue potential of around €7 billion
+by the end of the decade.
+Our investment decision is backed by numerous long-term agreements with high-
+profile customers in the automotive sector and in the field of renewable energy.
+Additional design wins worth €5 billion and associated advance payments of around
+€1 billion are evidence of the great confidence our customers place in Infineon as
+a reliable partner and driver of innovation.
+In the global competition for the leading position in SiC technologies, certain strengths
+differentiate Infineon from its competitors. First of all, the trench architecture we use
+in chip manufacture has advantages in terms of performance and productivity. Second,
+we offer all markets the most comprehensive product and packaging portfolio. Third,
+we score with our excellent systems understanding and first-class access to customers.
+However, we see few opportunities for differentiation in manufacturing the SiC base
+material used in chip production, so this we buy in. We ensure access to this material
+through a broad and regionally diversified supplier network. Infineon's own laser-
+based cold split technology enables particularly efficient use of the base material.
+Your company has all the key factors at its disposal for sustainable success with SiC
+solutions. We are therefore very well placed to benefit from similar economies of
+scale with SiC as has previously been the case with silicon – both in manufacturing
+and in research and development. We are very confident that we will be able to
+achieve a market share in SiC of 30 percent by the end of the decade.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Digitalization is a crucial lever for our company. I am very much looking forward to
+working together with Elke Reichart. She will bring new perspectives and impetus to
+the Management Board team and use her extensive experience to help lead Infineon
+into an even more successful future.
+Further information
+Having successfully established the Management Board position for Digital Trans-
+formation, our colleague Constanze Hufenbecher decided not to renew her expiring
+contract and has handed over the baton to Elke Reichart on 1 November 2023.
+Constanze Hufenbecher contributed significantly to the good progress made by
+Infineon in the areas of digitalization and sustainability. She has laid important
+foundations with the Digital Agenda and the Sustainability Strategy. Moreover, she
+established a culture of cross-departmental collaboration at Infineon. I would like
+to express my sincere personal gratitude for her achievements.
+5 Q = 4 5 →
+employees
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 4 →
+Letter to shareholders
+Jochen Hanebeck
+Chief Executive Officer
+Neubiberg, November 2023
+Dear readers,
+Infineon can look back on a remarkable 2023 fiscal year. On the one hand, electromo-
+bility and renewable energy and the applications associated with them have ensured
+a continuing high level of demand. On the other hand, demand for consumer applica-
+tions, such as PCs and smartphones, has fallen in the wake of the Covid pandemic.
+In this challenging market environment, your company has set new records for both
+revenue and profitability. Our revenue rose to €16.3 billion, and we achieved a Segment
+Result Margin of 27.0 percent.
+Both figures exceeded our original annual forecast and are an initial confirmation
+on the more ambitious course we have adopted as a company. A year ago, we raised
+our long-term financial targets through the semiconductor cycle. Now we have proven
+that we are also delivering at this higher level of expectation.
+In our target markets, we are expecting strong growth drivers to continue and we
+are anticipating big opportunities for Infineon. We want to grow and be sustainably
+profitable, advance at a rapid rate, and make full use of strategic investments to lay
+the important groundwork for Infineon's future.
+I would like to express my gratitude to all the 58,600 people working for Infineon for
+their exceptional commitment in the past fiscal year. I would also like to thank you,
+our shareholders, for your continuing confidence in our company. At our forthcoming
+Annual General Meeting, we will propose an increase in the dividend payment to
+€0.35 per share. Thus, we would like to ensure that you participate appropriately in
+Infineon's success while at the same time retaining the financial headroom we need
+for the future development of your company.
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Following the last Annual General Meeting, the Supervisory Board elected a new
+Chairman. On behalf of the Management Board, I would like to express my sincere
+thanks to the long-standing Chairman, Dr. Wolfgang Eder, for the good working rela-
+tion we have enjoyed over the past few years. Particular highlights include reorga-
+nizing the Management Board team, setting higher financial targets and preparing
+for the expansion of our manufacturing facilities on our site in Dresden (Germany).
+Dr. Wolfgang Eder was always a trusted guide and support to the Management Board.
+With Dr. Herbert Diess, his successor as Chairman of the Supervisory Board, Infineon
+has gained a proven expert in the major topics affecting the future of our business.
+Our working relation with Dr. Herbert Diess is also respectful, constructive and built
+on trust, which is very important to Infineon maintaining its successful course.
+58,590
+So that we are equipped to handle the expected increase in demand for semiconductors
+from our customers and are able to deliver in the long term, we are not only boosting
+our in-house manufacturing but also increasing the supply of semiconductors we
+purchase from contract manufacturers. Especially against the backdrop of geopoliti-
+cal uncertainty, we want to make our supply chain even more resilient in the future.
+Together with Taiwan Semiconductor Manufacturing Company (TSMC), the world's
+largest silicon contract manufacturer based in Taiwan, and the companies Bosch and
+NXP Semiconductors, we want to invest in a joint company. As we and our partners
+announced in August, the European Semiconductor Manufacturing Company (ESMC)
+in Dresden is to build an ultra-modern fab for semiconductors with small feature
+sizes of 12 to 28 nanometers. TSMC is to operate the fab for the entity. The project is
+planned under the framework of the European Chips Act.
+This investment will bring the first FinFET fab to Europe. FinFET is a transistor techno-
+logy used in state-of-the-art digital chips. Even more transistors can be housed on
+the smallest three-dimensional structures. As a result, the semiconductors are even
+more powerful and energy-efficient. FinFET technology is becoming increasingly
+important for our high-performance microcontrollers. With this fab, we are ensuring
+Infineon will have direct access to this technology in Europe, and we are strengthen-
+ing the European semiconductor ecosystem in the long term.
+Consolidated Financial Statements
+Further information
+5 Q = 4 9
+Here we are making good progress. At the end of the 2023 fiscal year, our scope 1 and
+scope 2 emissions were around 56.8 percent below the emissions of the base year 2019.
+The installation of new PFC abatement systems in our frontend manufacturing in
+Kulim (Malaysia) has already enabled us to reduce our scope 1 emissions by 21 percent.
+In the past fiscal year, we also launched a similar project at our site in Austin (Texas,
+USA). This means that we will have equipped all our prime manufacturing facilities
+with highly efficient PFC abatement systems. The new manufacturing facilities
+referred to above will of course be equipped with such systems right from the start,
+so that they are in line with our CO2 neutrality goal.
+In addition to avoiding direct emissions, other key levers for reducing CO₂ are energy
+conservation and the use of green electricity. In the 2023 fiscal year, we were able
+to use green electricity to meet over three quarters of our electricity requirements.
+We are continuing to develop our corporate culture
+Infineon is seeing strong growth. Over the past few years, our business has become
+bigger and, at the same time, more complex. We therefore make adjustments in the
+company, adapt our processes and, last but not least, continue to develop our corpo-
+rate culture. Crucial to our success is not only what we do but how we do it.
+When I assumed my role as CEO, we launched the SPIRIT project. This is designed to
+deliberately promote three behaviors in the company. We set ourselves ambitious
+targets at all levels. We are accountable for our results and clarify our responsibilities.
+We make timely decisions that are implemented consistently.
+Whether you are setting ambitious targets or clarifying responsibilities, you need to
+begin at the corporate level. We therefore made a decision in the summer that, in the
+future, we would combine accountability with functional management roles across
+the Group. This will make us significantly faster, because it will reduce the complexity
+in our organization and create strong global functions - with local teams, where this is
+expedient. Furthermore, we promote a sense of responsibility and purposefulness as
+elements of our corporate culture. All this makes us even more attractive as an employer.
+A challenging market environment in the 2024 fiscal year
+At the beginning of the 2024 fiscal year, we are operating in an environment that con-
+tinues to present challenges. The mobility of the future and renewable energies
+are currently the strongest growth drivers for our business. In all other areas, we see
+a temporarily difficult, cyclical market environment.
+Overall, we are expecting revenue growth to continue in the 2024 fiscal year but at
+a lower rate. We are assuming an increase in revenue of 4 percent. Hence, after the
+two boom years of 2022 and 2023, we anticipate growth will be below the target we
+have set ourselves of average revenue growth of "more than 10 percent per year"
+over the semiconductor cycle. However, the sequence of different growth phases is
+nothing unusual in the semiconductor market and as a company we know how to
+deal with this situation.
+With regard to structural growth opportunities, we are continuing to implement our
+strategy consistently and we are reinforcing our leading position in power systems
+and lot with long-term investments in our manufacturing landscape and technological
+leadership. Decarbonization and digitalization remain the foundations of our busi-
+ness. With our solutions, we are driving forward the green and digital transformation,
+thus providing our customers and you, our shareholders, with tangible added value.
+Neubiberg, November 2023
+Sincerely
+Jochen Handlech
+Jochen Hanebeck
+Chief Executive Officer
+Infineon | Annual Report 2023
+10.0%
+Combined Management Report
+The planned fab is an ideal complement to our own manufacturing landscape. Whereas
+the projects in Dresden and Kulim mentioned above are designed to expand capacity
+for
+power semiconductors and analog mixed-signal technologies, our participation
+in ESMC secures us access to capacity for our automotive microcontrollers and IoT
+semiconductors, further improving our ability to meet growing demand.
+Management Board and Supervisory Board
+Letter to shareholders
+At Infineon, as a leading manufacturer of semiconductors, our objective is not only to
+be a technological leader but also a pioneer in sustainability. Infineon will become
+CO2-neutral by the end of the 2030 fiscal year. Our target includes all direct emissions
+(scope 1) as well as indirect emissions from purchased electricity and heat (scope 2).
+By the end of the 2025 fiscal year, we want to have reduced our emissions by 70 percent
+compared with 2019. To achieve these targets, we are working in particular on avoid-
+ing direct emissions.
+We are continuing to enhance our competence in power systems
+and lot with targeted acquisitions
+In addition to SiC, GaN is developing into a key material for power semiconductors. It
+has advantages especially at higher switching frequencies. In particular, for applications
+such as mobile charging, power supplies for data centers, solar inverters for private
+households, and onboard chargers for electric vehicles, GaN is on the brink of a break-
+through and promises very strong market growth. We therefore want to continue to
+enhance our technical skills in the field of GaN.
+In October 2023, we completed the acquisition of the company GaN Systems. The
+company, which is headquartered in Ottawa (Canada), brings with it a broad port-
+folio of GaN-based solutions for power conversion as well as first-class application
+know-how. We are delighted that the team from GaN Systems, comprising more than
+200 employees, is now part of Infineon.
+The strengths of both companies in terms of intellectual property and application
+understanding ideally complement each other. Together, we now have over 450 GaN
+experts, as well as more than 350 GaN patent families and a large number of highly
+promising customer projects in the pipeline. This puts our company in an outstand-
+ing position, opening up huge opportunities in various high-growth markets. This
+will significantly accelerate our development roadmap for GaN solutions and further
+strengthen our leading position in power systems.
+Another exciting key topic for Infineon is artificial intelligence (AI). Machine learning is
+being used in more and more loT applications and enables new functionalities.
+In May 2023, we acquired the company Imagimob. The startup, based in Stockholm
+(Sweden), is a leading platform provider for machine learning solutions for energy-
+efficient edge devices. Imagimob's platform enables a variety of applications, such as
+audio event detection, voice control, gesture recognition, predictive maintenance,
+signal classification and material detection.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 α = 4 8
+Artificial intelligence also offers Infineon huge growth potential in the area of power
+systems. More and more data are being recorded, processed, stored and linked. To
+make the data usable for different applications, the major cloud computing providers
+are increasingly employing generative Al. As the example of ChatGPT shows, large
+language models (LLMs) have the potential to take digitalization to a completely new
+level.
+In the coming years, Al will be used in more and more application areas. The volume
+of data to be processed and the computing power required as a result will mean
+a significant increase in the quantity and value of the semiconductors needed in
+the data center servers. Energy-efficient power stages help reduce power losses and
+cooling efforts This allows operators to significantly reduce their costs – and avoid
+CO2. Demand is growing strongly. We offer highly energy-efficient power solutions
+for the entire supply chain, from the grid to the central processor (GPU), making a
+broader use of Al possible. Green computing is an ideal application area for Infineon.
+This is a good example of how decarbonization and digitalization are closely linked
+with one another.
+Networks, data centers, servers and the IT infrastructure form the backbone of digi-
+talization. Another crucial element of the loT is wireless connectivity between end
+devices. In October 2023, we acquired the company 3db Access, a move designed to
+enhance our skills in this area as well. The startup based in Zurich (Switzerland) is
+a pioneer in energy-efficient ultra-wideband (UWB) technology. UWB technology can
+be used to precisely determine positions and distances while being robustly protected
+against signal interference. This makes it extremely attractive for many loT applications.
+These include secure access to vehicles and buildings, indoor navigation and pres-
+ence detection of people in rooms. UWB complements our connectivity technologies
+(Wi-Fi, Bluetooth®/ Bluetooth® Low Energy and NFC) and offers Infineon additional
+opportunities in an interesting growth market.
+Besides the targeted enhancement of our technological skills through acquisitions,
+we are rapidly advancing with the company's research and development activities.
+The focus here is the benefit provided to customers. Our aim is to roll out differentiat-
+ing solutions at an even faster rate. It is therefore crucial that we recognize product
+and customer requirements at an early stage and that we understand our customers'
+systems. Our “from product thinking to system understanding” approach, which
+we have applied for many years, has proved its worth. Given the growing number of
+applications served by Infineon, this approach is now more important than ever.
+Particularly in application areas that are new to Infineon, we work closely together
+with key customers on development. Our teams develop new solutions in tandem
+with customers in an iterative process. By exchanging ideas directly, they learn to
+understand customer and market requirements even better and more quickly and
+can therefore offer tailor-made system solutions within a short period of time.
+We are making Infineon CO2-neutral by 2030
+Infineon | Annual Report 2023
+Infineon ❘ Annual Report 2023
+With this acquisition, we are strengthening our position as a provider of machine
+learning solutions, complementing our range of embedded Al solutions. This will
+enable us to transfer the capabilities of machine learning, which have until now been
+used mainly in large server farms, to our microcontrollers.
+Segment Result
+and Margin
+26,912
+6
+Segment Result Margin
+4,399
+27.0
+3,378
+23.8
+30
+Total equity
+17,044
+14,944
+14
+Basic earnings per share in €
+2.38
+1.65
+44
+Equity ratio
+59.9%
+55.5%
+28,439
+440 bp
+Total assets
+Segment Result/
+1,664
+€4.399 bn
+±27.0%
+5
+2,994
+2,310
+30
+As of 30 Sep-
+tember 2023
+As of 30 Sep-
+tember 2022
+Change
+in %
+3,590
+3,717
+(3)
+(1,143)
+(1,945)
+41
+3,137
+2,179
+44
+Selected financial condition key data
+Diluted earnings per share in €
+Profit (loss) for the period
+1.65
+Infineon | Annual Report 2023
+2 See the chapter "Review of results of operations" for definition. p. 52
+3 A dividend per share of €0.35 for the 2023 fiscal year will be proposed to the Annual General Meeting on 23 February 2024.
+4 See the chapter "Internal management system" for definition p. 37 ff.
+5 See the chapter "Review of liquidity" for definition. p. 55 f.
+6 Equity ratio = Total equity/Total assets.
+7 The calculation is based on unrounded figures. Own shares were not taken into consideration for the calculation of market capitalization.
+Management Board and Supervisory Board
+Combined Management Report
+1 Percentage changes of more than +/-99.5% are shown as "+++" or "---" in the tables in the Annual Report.
+Consolidated Financial Statements
+Infineon at
+a glance
+Infineon Technologies AG is a world
+leader in semiconductor solutions
+that make life easier, safer and greener.
+Microelectronics from Infineon is
+the key to a better future. In the 2023
+fiscal year (ending 30 September),
+the Company reported revenue of
+approximately €16.3 billion with
+some 58,600 employees worldwide.
+Infineon is listed on the Frankfurt
+Stock Exchange (ticker symbol: IFX)
+and in the USA on the over-the-counter
+market OTCQX International Premier
+(ticker symbol: IFNNY).
+Revenue
+€16.309 bn
++15%
+Infineon
+Dividend of
+2.38
+35 cents
+per share planned
+5 α = < 3 →
+9
+Further information
+0.35
+Return on Capital Employed (ROCE)4
+16.6%
+0.32
+12.6%
+400 bp
+Adjusted earnings per share
+40,879
+29,574
+38
+in € - diluted²
+Market capitalization?
+1.97
+35
+Dividend per share in €³
+Infineon employees (in total figures)
+44
+58,590
+4
+2.65
+56,194
+(280)
+59
+5
+9
+(280)
+(280)
+5
+(280)
+5
+(39)
+5
+57
+1,683
+(351)
+(351)
+3,862
+39
+3,823
+1,683
+2,179
+39
+2,140
+11,401
+(39)
+10,198
+1,203
+57
+(39)
+The fiscal year-end for both Infineon and the Company is 30 September of each year.
+2,612
+IAS 16
+(28)
+Impact on
+Infineon
+Effective date
+Standard/amendment/interpretation
+The IASB has issued the following Standards or amendments to Standards, which are
+required to be applied in the Consolidated Financial Statements for the year ended
+30 September 2023:
+Financial reporting rules applied for the first time
+The Company's Management Board presented the Consolidated Financial Statements
+on 21 November 2023.
+Deviations between amounts presented are possible due to rounding. Negative
+amounts are presented in parentheses.
+The Group's reporting currency is the euro ("€").
+The Consolidated Statement of Profit or Loss is presented using the cost of sales
+method.
+The Consolidated Financial Statements for the year ended 30 September 2023,
+prepared by Infineon Technologies AG as the ultimate parent company, have been
+prepared in accordance with International Financial Reporting Standards (“IFRS”)
+and related interpretations effective as of 30 September 2023 as issued by the Inter-
+national Accounting Standards Board ("IASB”) to the extent to which the IFRS and
+interpretations have been endorsed by the European Union (“EU”). The Consolidated
+Financial Statements also comply with the supplementary requirements set out in
+section 315e, paragraph 1 of the German Commercial Code ("Handelsgesetzbuch"
+or "HGB"). The aforementioned standards were complied with in full.
+1 Basis of the Consolidated Financial Statements
+(39)
+Infineon Technologies AG is a listed company under German law and the ultimate
+parent company of Infineon. The principal office of the Company is Am Campeon 1–15,
+85579 Neubiberg (Germany). The Company is registered in the Commercial Register
+of the local court of Munich (Germany) under the number HRB 126492.
+Notes to the Consolidated Financial Statements
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+14,944
+1,203
+13,741
+(23)
+7
+1,060
+3,506
+6,579
+The Infineon Group ("Infineon”), comprising Infineon Technologies AG (hereafter
+also referred to as "the Company”) and its direct and indirect subsidiaries, develops,
+manufactures and markets a wide variety of semiconductors and semiconductor-
+based solutions. The focus is on the key markets: automotive as well as industrial and
+consumer-related segments. The product portfolio ranges from standard components,
+to special components for digital, analog and mixed-signal applications, as well as
+customer-specific solutions, together with the appropriate software. Research and
+development sites, manufacturing facilities, investments and customers are located
+mainly in Europe, Asia and North America.
+AG
+Currency
+effects
+Total equity
+4
+1,369
+310
+2,140
+3
+(309)
+1,407
+6,513
+2,612
+Hedges
+Other reserves
+Retained
+earnings
+reserves
+Capital
+Share capital
+Notes
+Transactions with owners
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+Balance as of 1 October 2021
+€ in millions
+for the fiscal year ended 30 September 2022
+Consolidated Statement of Changes in Equity
+5 Q = < 94 →
+Further information
+Consolidated Financial Statements
+Property, plant and equipment - income before intended use
+(amendments to IAS 16)
+2,450
+hybrid capital
+investors
+1,369
+Contributions by and distributions to owners
+Equity
+attributable to
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+Own shares
+Cost of
+hedging
+Infineon | Annual Report 2023
+Balance as of 30 September 2022
+Total transactions with hybrid capital investors
+20
+Compensations to hybrid capital investors
+Transactions with hybrid capital investors
+(351)
+66
+Total transactions with owners
+(351)
+66
+Total contributions by and distributions to owners
+9
+20
+Other contributions and distributions
+20
+Disposal (purchase) of own shares
+57
+20,22
+Share-based payment
+(351)
+20
+Dividends
+4
+1 January 2022
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+IAS 37
+Further information
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Financial assets are derecognized when the rights to receive payments from the
+investments have expired or have been transferred and Infineon has transferred all
+risks and rewards associated with ownership. Financial liabilities are derecognized
+when they are extinguished, that is, when the contractual obligation is discharged,
+canceled, or expired.
+Purchases and sales of financial assets are recognized on the settlement date.
+Trade receivables are recognized based on the amount to which Infineon has an
+unconditional right to receive. With the exception of matters that result in a partial
+refund of the purchase price to the customer, this corresponds to the transaction
+price determined in accordance with IFRS 15. The subsequent measurement of trade
+receivables is carried out at amortized cost.
+Financial instruments are initially recognized at their fair value. Transaction costs
+directly attributable to the acquisition or issuance of financial instruments are only
+included in the carrying amount if the financial instruments are not measured at fair
+value through profit or loss.
+Financial instruments
+Cash and cash equivalents represent cash and all financial resources with a maturity
+at acquisition date of three months or less. Cash equivalents partly include invest-
+ments in money market funds. The valuation is recorded at amortized acquisition cost
+or at fair value through profit or loss.
+Cash and cash equivalents
+Recognition and measurement principles
+The assets and liabilities of subsidiaries with functional currencies other than the
+euro are translated into euros for consolidation purposes using the spot rate at the
+end of the reporting period. Income and expenses of these entities are translated
+using the average spot rate of the reporting period. All currency translation differences
+are recognized directly in equity and presented as "Other reserves".
+Foreign currency transactions of subsidiaries are translated into the functional
+currency of the relevant entity using the spot rate prevailing at the transaction date.
+Monetary foreign currency assets and liabilities are translated at the spot rate
+prevailing at the reporting date. Exchange rate gains and losses from the translation
+of foreign currency transactions are recognized in the Consolidated Statement of
+Profit or Loss.
+The functional and reporting currency of Infineon Technologies AG is the euro.
+Functional currency and foreign currency translation
+In the absence of control over an entity, but where the entity is a joint venture or an
+associated company, this is included in the Consolidated Financial Statements using
+the equity method (see note 5, ☐ p. 110 f.). Where objective indications of impairment
+in the carrying amount of an equity-based investment are present, an impairment test
+is carried out. If the carrying amount exceeds the recoverable amount, an impairment
+loss is recognized in financial expenses.
+A list of subsidiaries of Infineon Technologies AG is provided in note 30. □ p. 165 ff.
+5 Q = < 97 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The balance sheet effects of intragroup transactions as well as gains and losses
+arising from intragroup business relationships are eliminated on consolidation.
+The financial statements of entities included in the Consolidated Financial Statements
+are prepared using uniform valuation and accounting policies.
+An entity is included in the Consolidated Financial Statements from the date on
+which Infineon acquires control. Upon first-time consolidation of an entity, the
+acquired assets and assumed liabilities are basically measured on the basis of their
+fair value at the acquisition date. Any excess of consideration paid (purchase price)
+over the share of the fair value of acquired assets, liabilities and contingent liabilities
+is recognized as goodwill. Any excess of Infineon's share of the fair value of items
+acquired over consideration paid is, after re-examination, recognized as a gain.
+Financial assets
+Control exists when Infineon is subjected to variable returns arising from its engage-
+ment with the subsidiary or has a right to such and has the ability to influence these
+returns as a result of its power over the subsidiary. Power means that Infineon has
+existing rights that give Infineon the ability to direct the relevant activities of the
+subsidiary, that is the activities that significantly affect the aforementioned returns.
+› Classification and measurement of financial assets
+Infineon's business model for managing financial asset portfolios reflects how the
+company controls its financial assets in order to generate cash flows. Depending
+on the business model, cash flows arise from the receipt of contractual cash flows,
+the sale of financial assets or both.
+Combined Management Report
+Infineon | Annual Report 2023
+Liabilities measured at fair value through profit or loss by Infineon include derivatives
+to hedge currency risks for which hedge accounting is not applied.
+Infineon classifies financial liabilities into the following categories: “Financial liabili-
+ties measured at fair value through profit and loss” and “Other financial liabilities”.
+Furthermore, "Designated hedging instruments (cash flow hedges)" belong to financial
+liabilities.
+Financial liabilities
+Financial assets are partly or completely written off, together with previously
+recognized impairments, if there is no reasonable expectation of repayment. This is
+generally the case when Infineon finds that the debtor does not have assets or revenue
+sources that could generate sufficient cash flows to repay the amounts subject to
+derecognition. Even when financial assets are written off, Infineon continues to con-
+duct enforcement measures to recover them. Amounts recovered are recognized in
+profit or loss.
+A default event occurs when Infineon concludes that the other party would most
+likely not be able to meet the payment obligations, or not in full.
+In the case of objective indications that expected future cash flows are affected, a
+financial asset is classified as credit-impaired and adjusted to its individual value. As
+a rule, this is the case for financial assets (unless it is a trade receivable) no later than
+90 days after the due date. Trade receivables are not automatically determined as
+credit-impaired in the event of a payment overdue by more than 90 days but always
+on the basis of the individual assessment of credit management.
+For trade receivables and contract assets, Infineon recognizes lifetime expected
+credit losses using a simplified approach. The estimate of expected credit losses on
+trade receivables and contract assets is based primarily on the analysis of customer
+financial data, ratings, credit default spreads, past payment behavior of customers
+and forward-looking information.
+For cash and cash equivalents and financial investments measured at amortized cost,
+Infineon determines credit losses expected in the next twelve months (twelve-month
+expected credit loss) in accordance with the general approach. Due to their short-term
+maturity, this corresponds to the lifetime expected credit losses. Infineon rates the
+credit risk for cash and cash equivalents and financial investments as low. Infineon
+assumes that a financial asset has a low credit risk if it has an investment grade rating
+or a corresponding internal investment grade rating. In order to assess whether
+there has been a significant increase in credit risk since initial recognition, Infineon
+considers appropriate and robust information that is relevant and available without
+disproportionately high levels of effort. This includes both quantitative and qualitative
+information and analyses, which are based on the company's historical experience
+and a sound credit assessment as well as forward-looking information. Macroeconomic
+information is taken into account in the internal rating model (information on Infineon's
+financial risk management is included in note 28, p. 150 ff.). Irrespective of the
+above analysis, a significant increase in credit risk is assumed if a debtor is more
+than 30 days overdue with the settlement of a contractual payment.
+Infineon determines allowances for expected credit losses primarily for cash and
+cash equivalents, financial investments, trade receivables, and contract assets. The
+expected credit losses are adjusted at each reporting date to reflect changes in credit
+risk since the instrument was first recognized.
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Infineon determines an allowance for expected credit losses for financial assets in
+the form of debt instruments that are measured at amortized cost or at fair value
+through other comprehensive income. The calculation of the expected future credit
+losses is generally determined by multiplying the probability of default by the carry-
+ing amount of the financial asset (exposure at default) and the expected loss ratio
+(loss given default).
+> Impairment of financial assets
+"Designated hedging instruments (cash flow hedges)" also belong to financial assets.
+Net gains and losses, including interest and dividend income, from financial assets
+that are measured at fair value through profit or loss (debt and equity instruments)
+are recognized in the Consolidated Statement of Profit or Loss.
+At Infineon, financial assets in the form of equity instruments are consistently
+measured at fair value through profit or loss.
+Financial assets in the form of debt instruments that are measured at fair value
+through profit or loss include all financial assets of Infineon whose cash flows are not
+solely payments of principal and interest.
+As of the reporting date, Infineon did not hold any financial assets with the intention
+to collect contractual cash flows and sell them. Therefore, there was no allocation
+of financial assets in the form of debt instruments to the category "fair value through
+other comprehensive income".
+losses, impairments, and gains or losses from the derecognition of such financial
+assets are recognized through profit or loss.
+Financial assets measured at amortized cost include all assets whose contractual
+provisions result in cash flows at fixed times that represent only interest and repay-
+ments of the outstanding principal amount, provided that those assets are held with
+the intention of collecting the contractual cash flows expected over their respective
+duration. In subsequent periods, financial assets measured at amortized cost are
+measured using the effective interest method. Interest income, currency gains and
+On this basis, Infineon's financial asset measurement categories are as follows:
+In order for a financial asset in the form of a debt instrument to be classified and
+measured at amortized cost or at fair value through other comprehensive income,
+cash flows may only arise from the repayment of principal and interest payments on
+the outstanding principal amount. This assessment is referred to as a cash flow or
+SPPI test ("solely payments of principal and interest") and is carried out at the level
+of the individual financial instrument.
+Upon initial recognition, financial assets are classified for subsequent measurement
+either as at amortized cost, fair value through other comprehensive income or fair
+value through profit or loss. This classification depends on the characteristics of
+the contractual cash flows of the financial assets and Infineon's business model for
+managing its financial assets.
+The Consolidated Financial Statements presented here include the individual financial
+statements of Infineon Technologies AG and its direct and indirect subsidiaries on
+a consolidated basis. A subsidiary is defined as an entity, that is directly or indirectly,
+controlled by Infineon Technologies AG.
+Basis of consolidation
+2 Summary of significant accounting policies
+immaterial
+none
+Impact on
+Infineon
+Effective date
+(amendments to IAS 7 and IFRS 7)
+IAS 7 and Supplier finance arrangements
+Classification of liabilities as current or non-current
+(amendments to IAS 1)
+IAS 1
+Standard/amendment/interpretation
+The following new or amended Standards have been issued by the IASB and will
+be relevant to Infineon from today's perspective. They have not been applied in the
+Consolidated Financial Statements as of 30 September 2023 since they are not yet
+mandatory or, alternatively, have not yet been endorsed by the EU. The new or
+amended Standards are applicable for fiscal years beginning on or after their respec-
+tive effective date. As a general rule, they are not applied before their effective date,
+even if this is permitted for certain Standards.
+Financial reporting rules issued not yet applied
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+none
+immaterial
+none
+1 January 2022
+Annual IFRS improvement cycle 2018-2020
+1 January 2022
+References to the conceptual framework
+(amendments to IFRS 3)
+IFRS 3
+(amendments to IAS 37)
+1 January 2022
+Onerous contracts - costs of fulfilling a contract
+1 January 2024
+IAS 1
+Disclosure of accounting policies
+1 January 2023
+Individual provisions of the amendments to IAS 12 (International tax reform - pillar
+two model rules) published on 23 May 2023 are in principle applicable retrospectively
+for the prior fiscal year as a result of the adoption by the EU on 8 November 2023.
+No deferred taxes in connection with pillar two income taxes were recorded.
+none
+1 January 2025
+Lack of exchangeability (amendments to IAS 21)
+IAS 21
+none
+1 January 2023
+none
+1 January 2024
+Lease liability in a sale and leaseback (amendments to IFRS 16)
+Insurance contracts including amendments to IFRS 17
+IFRS 17
+IFRS 16
+immaterial
+none
+1 January 2023
+IAS 12
+a single transaction (amendments to IAS 12)
+none
+1 January 2023
+none
+1 January 2023
+Definition of accounting estimates (amendments to IAS 8)
+Deferred tax relating to assets and liabilities arising from
+IAS 12
+IAS 8
+IFRS 7
+none
+1 January 2024
+(amendments to IAS 1 and IFRS Practice Statement 2)
+International tax reform - pillar two model rules
+(amendments to IAS 12)
+Management Board and Supervisory Board
+3,137
+1,203
+14
+14
+100
+114
+5
+using the equity method
+Investments accounted for
+Other non-current liabilities
+(1)
+309
+15
+Non-current lease liabilities
+405
+405
+15
+Right-of-use assets
+310
+27
+192
+203
+Total liabilities
+(49)
+(259)
+527
+268
+6
+Deferred tax assets
+(10)
+(654)
+6,380
+5,726
+Total non-current liabilities
+2
+2
+Non-current income tax receivables
+(5)
+(11)
+4
+11
+289
+300
+(29)
+297
+268
+19
+Pensions and similar commitments
+27
+1,500
+5,545
+7,045
+13
+Property, plant and equipment
+(10)
+(507)
+4,910
+4,403
+16
+Long-term financial debt
+(10)
+11,395
+Goodwill
+6,547
+17
+Other non-current provisions
+(15)
+(506)
+3,483
+2,977
+13
+Other intangible assets
+(32)
+(117)
+371
+254
+6
+Deferred tax liabilities
+(8)
+(536)
+7,083
+14
+13
+11,968
+(5)
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+6
+1,527
+26,912
+Further information
+28,439
+6
+1,527
+26,912
+28,439
+Total assets
+14
+2,100
+Total liabilities and equity
+5 Q = < 92 →
+Consolidated Statement of Cash Flows
+Change
+(5,198)
+9
+Purchases of financial investments
+26
+in %
+absolute
+2022
+2023
+Notes
+€ in millions
+in %
+absolute
+2022
+2023
+Notes
+€ in millions
+Change
+14,944
+17,044
+Total equity
+1,203
+Additional paid-in capital
+2,612
+2,612
+Ordinary share capital
+2
+288
+17,459
+17,747
+Total non-current assets
+20
+Equity:
+24
+75
+314
+389
+27
+Other non-current assets
+6,684
+(573)
+6,579
+2
+1,203
+Hybrid capital
+43
+10
+(23)
+(13)
+Own shares
+(67)
+(713)
+1,067
+354
+Other reserves
+77
+2,698
+3,506
+6,204
+Retained earnings
+105
+(5,605)
+1,239
+10,692
+(37)
+(1,421)
+3,862
+2,441
+Shareholders and hybrid capital investors of Infineon Technologies AG
+(37)
+(1,421)
+Infineon | Annual Report 2023
+3,862
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Consolidated Statement of Comprehensive Income
+Change
+€ in millions
+2,441
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Change
+30 Sep-
+tember
+2022
+tember
+2023
+Notes
+30 Sep-
+€ in millions
+in %
+Change
+absolute
+30 Sep-
+tember
+2022
+2023
+Notes
+30 Sep-
+tember
+€ in millions
+Consolidated Statement of Financial Position
+5 Q = < 91 →
+Further information
+Notes
+2023
+2022
+absolute
+(718)
+1,369
+(2,087)
+9
+4
+5
++++
+(4)
+(4)
+(713)
+1,373
+(2,086)
+(696)
+1,683
+(2,379)
+Total comprehensive income (loss), net of tax
+Attributable to:
+17,044
+(95)
+absolute
+(293)
+17
+in %
+20
+Profit (loss) for the period
+Actuarial gains (losses) on pensions and similar commitments
+Total items that will not be reclassified subsequently to profit or loss
+Currency effects
+Gains (losses) resulting from hedge accounting
+Cost of hedging
+Total items that may be reclassified subsequently to profit or loss
+Other comprehensive income (loss), net of tax
+3,137
+2,179
+958
+44
+17
+310
+(293)
+(95)
+310
+9,453
+in %
+LIABILITIES AND EQUITY
+18, 27
+Other current liabilities
+35
+30
+85
+115
+Contract assets
+བག
+Current lease liabilities
+62
+356
+418
+Current income tax payables
+9
+5
+58
+17
+72
+76
+(4)
+Total current assets
+1
+81
+5,588
+5,669
+Total current liabilities
+53
+334
+625
+959
+12,27
+Other current assets
+11
+124
+1,161
+1,285
+(5)
+63
+Current income tax receivables
+(19)
+(184)
+(422)
+752
+330
+16
+of long-term financial debt
+(22)
+(509)
+2,279
+1,770
+9
+Financial investments
+Short-term financial debt and current portion
+27
+382
+1,438
+1,820
+Cash and cash equivalents
+(56)
+ASSETS
+Trade receivables
+1,887
+983
+799
+17
+Current provisions
+29
+893
+3,081
+3,974
+11
+Inventories
+22
+505
+2,260
+2,765
+Trade payables
+6
+104
+1,991
+407
+10
+Profit (loss) for the period
+Infineon | Annual Report 2023
+(1)
+(20)
+3,980
+3,960
+Cash flows from operating activities
+67
+Management Board and Supervisory Board
+4
+(2)
+from discontinued operations
+Cash flows from operating activities
+27
+382
+1,438
+1,820
+(6)
+Combined Management Report
+Consolidated Financial Statements
+Further information
+3,506
+6,579
+2,612
+Hedges
+Currency
+effects
+Other reserves
+Retained
+earnings
+reserves
+Capital
+Share capital
+Notes
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+Balance as of 1 October 2022
+€ in millions
+for the fiscal year ended 30 September 2023
+Consolidated Statement of Changes in Equity
+Cash and cash equivalents at end of period
+(1)
+(24)
+3,986
+14
+21
+(149)
+(128)
+4
+Interests paid
++++
+47
+10
+57
+4
+Interests received
+30
+568
+(1,869)
+(1,301)
+(39)
+Income taxes paid
+1,060
+6
+(350)
+3,962
+from continuing operations
+Cash flows from operating activities
+(18)
+(311)
+1,749
+1,438
+(32)
+19
+(13)
++++
+725
+(330)
+395
+Net change in cash and cash equivalents
+Currency effects on cash and cash equivalents
+Cash and cash equivalents at beginning of period
+(52)
+(183)
+(533)
+(39)
+7
+Own shares
+Infineon | Annual Report 2023
+(417)
+(417)
+82
+82
+10
+10
+Balance as of 30 September 2023
+10
+23
+10
+(302)
+(302)
+10
+(302)
+(302)
+23
+Total transactions with hybrid capital investors
+20
+Compensations to hybrid capital investors
+Share-based payment
+20
+(417)
+20,22
+82
+Disposal (purchase) of own shares
+20
+Other contributions and distributions
+20
+23
+Total contributions by and distributions to owners
+105
+(417)
+Total transactions with owners
+105
+(417)
+Transactions with hybrid capital investors
+(39)
+(39)
+(39)
+(39)
+(4)
+9
+(718)
+3,137
+39
+3,098
+3,098
+14,944
+1,203
+13,741
+(23)
+AG
+attributable to
+hybrid capital
+investors
+Total equity
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+Equity
+(696)
+Cost of
+hedging
+(696)
+(718)
+2,612
+6,684
+6,204
+342
+16
+(4)
+(13)
+7
+15,841
+Dividends
+Contributions by and distributions to owners
+Transactions with owners
+2,441
+39
+2,402
+(4)
+9
+3,115
+(19)
+17
+(351)
+Gains on disposals of
+(33)
+(686)
+(2,053)
+(2,739)
+13
+Purchases of property, plant and equipment
+(25)
+(33)
+131
+4
+2,179
+958
+44
+Proceeds from sales of financial investments
+9
+5,738
+Proceeds from sales of property, plant and
+5,502
+property, plant and equipment
+(12)
+7
+177
+(2,441)
++++
+107
+16
+123
+(2,264)
+Cash flows from investing activities
+17
+1
+6
+7
+5
+Dividends received
+equipment and other assets
+1
+(87)
+(99)
+Impairments (reversals of impairments)
+236
+Plus: profit (loss) from discontinued operations,
+net of income taxes
+13, 15
+(66)
+1,754
+1,664
+90
+5
+Income tax
+6
+782
+537
+245
+46
+Purchases of other intangible assets and
+other assets
+13
+(255)
+(257)
+2
+98
+4
+Depreciation and amortization
+6
+Acquisitions of businesses, net of cash acquired
+3
+(22)
+(36)
+14
+39
+2
+7
+(5)
+(71)
+Adjustments to reconcile profit (loss) for the
+period to cash flows from operating activities:
+Proceeds from sales of businesses and
+interests in subsidiaries, net of cash disbursed
+Investments in related companies
+91
+91
++++
+(2)
+(8)
+75
+13, 14, 29
+Interest result
+24
+(2)
+2
++++
+Change in trade payables
+547
+640
+(93)
+18
+(15)
+(25)
+(25)
+Change in provisions
+17
+(138)
+89
+(227)
+Payments for other financial liabilities
+Change in cash deposited as collateral
+(32)
+(248)
+(86)
+15
+Payments for lease liabilities
+40
+122
+(307)
+(185)
+10
+Change in trade receivables
+60
+1,140
+(1,893)
+(2)
+Change in inventories
+11
+(1,014)
+(766)
+Dividend payments
+(84)
+(753)
+Change in other assets and other liabilities
+92
+22
+Share-based payment
+Proceeds from issuance of
+(30)
+(30)
++++
+62
+19
+25
+receivables and payables
+Losses (gains) from sales of businesses,
+interests in subsidiaries and investments
+Net change in related party financial
+(25)
+(6)
+24
+19
+30
+(417)
+48
+(359)
+266
+(625)
+Cash outflow to hybrid capital investors
+Cash flows from financing activities
+20
+22
+16
+Repayments of long-term financial debt
+(2)
+(1)
+(45)
+(46)
+Other non-cash result
+(500)
+500
+16
+long-term financial debt
+20
+(2)
+Further information
+Other provisions are measured at their expected settlement amount. The amount
+recognized for a provision is the best estimate of the expenditure required to settle
+the present obligation. Estimates of outcomes and financial effects are dependent
+upon the judgment of management, supplemented by experience gained from similar
+transactions and, where appropriate, the assessment of independent experts. If the
+circumstances to be assessed encompass a large number of possible outcomes,
+the obligation is estimated by weighting all possible outcomes by their associated
+probabilities (expected value method).
+Further information
+← 105 →
+Distributors can, subject to certain conditions, return a limited amount of inventory
+(stock return) or request scrap allowances. The estimation of the transaction price is
+based on the expected stock returns in accordance with the contractual agreement,
+combined with historical experience. Distributor scrap allowances are taken into
+account based on the contractual agreement when determining the transaction price
+and, upon submission of a valid claim, are granted up to a certain maximum based
+on turnover in a given period. Infineon monitors such product returns on an ongoing
+basis and adjusts estimate assumptions accordingly. In the case of stock returns and
+scrap allowances, the consideration to be refunded to the customer is recognized as
+a reimbursement obligation within other current liabilities. Other returns are only
+permitted for quality defects within the ordinary warranty period. These obligations
+are taken into consideration through corresponding warranty provisions.
+The additional costs to obtain a contract are immediately recognized as an expense
+as soon as they arise, providing the otherwise resulting depreciation period would
+not exceed one year. Costs to fulfill a contract are capitalized at the earliest when an
+expected, specifically identifiable contract exists.
+Cost of goods sold
+Cost of goods sold includes the manufacturing costs of products sold during the
+reporting period. In addition, cost of goods sold contains idle costs, inventory risks,
+the cost of warranty cases, as well as the amortization of capitalized development
+costs. Recognized currency translation effects, as well as changes in the fair value of
+undesignated derivative financial instruments that are connected to the operating
+business, are recognized in cost of goods sold.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Research and development expenses
+Grants
+Grants are recognized when it is reasonably assured that Infineon will comply with
+the conditions attached to the grant, and it is reasonably assured that the grant
+will be received. Investment-related grants are deducted from the purchase and pro-
+duction cost of the related asset and thereby reduce depreciation and amortization
+expense in future periods.
+Grants that are related to expenses are presented as a reduction of the related
+expense in the Consolidated Statement of Profit or Loss (see note 4, □ p. 109 f.).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Costs of research activities are expensed as incurred. Costs for development activities
+are capitalized if the results lead to a plan or design for the production of new or sub-
+stantially improved products or for improved production processes. Capitalization
+requires that the development costs can be measured reliably, the product or process
+is technically and commercially feasible, and future economic benefits are probable.
+In addition, Infineon must intend, and have the ability, to complete development and
+use or sell the asset. The costs capitalized include the cost of materials, direct labor
+and directly attributable general overhead expenses that serve to prepare the asset
+for use. Such capitalized costs are presented as internally generated intangible assets
+within "Other intangible assets” (see note 13, ☐ p. 118 f.). Development costs, that
+do not fulfill the criteria for capitalization, are expensed as incurred. Capitalized
+development costs are stated at cost less accumulated amortization and impairment
+charges.
+With regard to legal proceedings and litigation, for example, those connected with the
+Qimonda insolvency, Infineon regularly assesses the probability of an unfavorable
+outcome. Infineon records provisions and liabilities, including provisions for signifi-
+cant legal costs, for those obligations and risks relating to legal disputes which it
+assesses at the relevant reporting date are likely to occur. That is where, from Infineon's
+perspective as of the date of assessment, there is compelling evidence that indicates
+an obligation or risk, and the obligation or risk can be quantified with reasonable
+accuracy at the time of assessment. As soon as additional information is available,
+the affected estimates are reviewed and, where necessary, provisions for these pro-
+ceedings are revised.
+Combined Management Report
+Infineon | Annual Report 2023
+Where cash flows are expected to arise after the next twelve months, the expected
+settlement amount corresponds to the present value of the expected cash outflows.
+Discounting is only carried out if the interest effect is significant.
+If the obligation decreases because of a change in the estimate, the provision is
+adjusted accordingly and the resulting income recognized in the same functional
+cost area of the Consolidated Statement of Profit or Loss in which the original charge
+was recognized.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and Supervisory Board
+← 104 →
+Contingent liabilities are either possible obligations whose actual existence is depen-
+dent on the occurrence of one or more uncertain future events not wholly within
+Infineon's control, or they are present obligations that will probably not result in the
+outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead
+they are disclosed in the Notes to the Consolidated Financial Statements (see note 23,
+p. 135 f., and note 24, p. 136 ff.).
+Revenue recognition
+Infineon generates revenues mainly from the sale of semiconductor products, related
+system solutions and relevant software. Revenue is recognized when control over the
+products is transferred to the customers in accordance with IFRS 15 (power of disposal),
+and where the receipt of consideration from the customer is probable. Typically,
+Infineon's customer contracts only contain one performance obligation which is ful-
+filled either over a period of time or at a specific point in time, with fulfillment at a
+specific point in time being the far more common case. For sales of customer-specific
+products with no alternative use for Infineon, for which Infineon has a legal right to
+payment for services rendered prior to delivery, revenue is recognized over time. Per-
+formance progress is determined using an input-based method and is based on the
+ratio of costs already incurred to the estimated total cost. If product revenue is not
+recognized over time, then it is generally recognized upon delivery. The recognition
+of revenue for deliveries into consignment warehouses depends on the individual
+contractual arrangement. Revenue recognition at the point of delivery into the con-
+signment warehouse takes place in cases where the customers gain contractual
+power of control over the products at the point of delivery. Accordingly, in such cases,
+a contract asset is recorded. Otherwise, revenue is recognized when the products are
+withdrawn by the customer.
+Invoices for sales of products are issued at the time of delivery or withdrawal by
+the customer from the consignment warehouse and have a short payment term.
+The amount of revenue corresponds to the expected transaction price to be settled
+by the customer.
+The transaction price can include variable components such as rebates or discounts.
+Infineon can reliably estimate these in accordance with the contractual agreements
+and historical experience. Variable consideration is only taken into account in so
+far as it is highly probable that there will be no significant reversal of the revenue.
+If Infineon expects that the consideration received from the customer is to be partially
+reimbursed due to subsequent discounts, a reimbursement obligation is recognized
+as a reduction to revenue, and is disclosed within other current liabilities.
+Infineon recognizes revenue for deliveries to distributors by using the "sell in" method,
+that is, when a product is delivered, to the extent that revenue has not already been
+recognized over time. The transaction price for sales to distributors, in particular,
+contains variable components. In accordance with established business practices in
+the semiconductor industry, distributors can request price adjustments under certain
+circumstances. This allows distributors to receive a credit (debit) note for unsold
+products held in inventory, where Infineon has reduced (increased) the standard list
+price of certain products. In addition, in certain cases and for certain products, dis-
+tributors may request what is referred to as a ship and debit credit note. As with all
+product sales, Infineon recognizes revenue based on the transaction price and records
+an obligation for the estimated consideration to be reimbursed to the customer during
+the period in which the relevant revenue is recognized. In the case of price adjustments
+and ship and debit, the determination of the transaction price, and thus also the
+refund obligation, is based on rolling historical price trends in the difference between
+contract prices and standard list prices to the distributors. The refund liability is
+disclosed as part of other current liabilities.
+Contingent liabilities
+Combined Management Report
+4,353
+900
+600
+555
+45
+8
+69
+71
+(2)
+Social insurance levies and employee benefits
+Expenses for pensions
+(3)
+Further information
+4,170
+183
+4
+Infineon has received grants from various governmental institutions under government
+business development programs, including grants for the construction of manufac-
+turing facilities, research and development activities and employee development.
+Grants included directly in profit or loss in the Consolidated Financial Statements
+during the 2023 and 2022 fiscal years were as follows:
+The average number of employees by geographic region was as follows for the 2023
+and 2022 fiscal years:
+€ in millions
+Total
+Other provisions are recognized for present legal and/or constructive obligations
+arising from past events that are likely to result in a future outflow of resources, the
+amount of which can be reliably estimated.
+Grants
+140
+14
+Total
+57,662
+54,286
+3,376
+6
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+4
+Change
+2023
+2022
+absolute
+in %
+Wages and salaries
+3,684
+3,544
+€ in millions
+106 →
+← 109 →
+The current tax expense is calculated in accordance with taxation provisions in force
+at the end of the reporting period.
+2023
+Total
+Cost of purchased services
+and purchased goods
+Cost of raw materials, supplies
+€ in millions
+12
+326
+2,698
+3,024
+Greater China¹
+Change
+6
+1,429
+23,762
+25,191
+Asia-Pacific (excluding Japan, Greater China)
+7
+922
+13,687
+14,609
+therein: Germany
+8
+1,833
+21,703
+23,536
+Europe
+2022
+absolute
+in %
+therein: Mainland China, Hong Kong
+(4)
+Change
+(174)
+3,908
+3,734
+therein: USA
+9
+316
+3,433
+3,749
+(4)
+(229)
+5,470
+The Consolidated Statement of Profit or Loss includes the following expenses for
+materials, purchased services, and personnel:
+5,241
+21
+584
+2,788
+3,372
+3
+17
+653
+670
+Japan
+13
+298
+2,313
+2,611
+Americas
+in %
+absolute
+2022
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Acquisition of 100 percent of the shares in GaN Systems Inc.
+On 24 October 2023, Infineon acquired all of the shares in GaN Systems Inc. (“GaN
+Systems"), which is based in Ottawa (Canada). GaN Systems develops GaN-based
+power conversion solutions. With this acquisition, Infineon strengthens its leading
+position in the power systems sector. The provisional purchase price is €828 million,
+of which €825 million resulted in a cash outflow at the time of acquisition, and a
+further €3 million will be paid later to former shareholders under a terminated stock
+option program. According to the preliminary opening balance sheet, the net assets
+acquired by the Company amounted to €57 million. The acquired assets mainly relate
+to cash, inventories, rights of use under leasing arrangements, and property, plant
+and equipment. Acquired liabilities primarily relate to trade payables and leasing
+liabilities. The estimated excess of purchase price over assets acquired is around
+€771 million. The purchase price allocation was not yet completed at the time of
+3 Acquisitions
+All assumptions and estimates are based on the circumstances and assessments
+as of the balance sheet date, taking into account the knowledge gained up to the
+approval by the Management Board of the Consolidated Financial Statements on
+21 November 2023.
+> revenue where the transaction price contains a variable element (see "Revenue
+recognition", p. 104 f.).
+> recognition and valuation of provisions (see “Other provisions” notes 17, □ p. 124,
+and 24, p. 136 ff.) and
+> recoverability of non-financial assets, in particular property, plant and equipment
+(see note 13, p. 118 f.) and goodwill (see note 14, □ p. 120 f.),
+> valuation of inventory (see "Inventories”, p. 100, and note 11, □ p. 117),
+Areas containing estimates and assumptions and that are consequently most likely to
+be affected when actual results vary from estimates and assumptions are the following:
+Assumptions and estimates regarding cyclical market, industry, and geopolitical
+risks are made to the best of management's knowledge based on current events
+and actions. Actual results may deviate from these estimates. This is especially true
+against the backdrop of the geopolitical risks that continue to exist, particularly due
+to the ongoing war in Ukraine, the conflict over Taiwan, and tensions in the Middle
+East. The war in Ukraine can lead to further price increases and shortages of energy
+and raw materials. An extension of the conflict situation beyond Ukraine would
+further increase the risk of a global economic downturn. Rising inflation and higher
+interest rates could also lead to a significant decline in consumption. Both customs
+disputes and trade restrictions, for example between the USA and China, can affect
+global trade and thus global economic growth, and include the risk of a decline in
+foreign demand from the Chinese perspective and an accompanying decline in the
+Chinese gross domestic product. There is also the risk that semiconductors previously
+supplied to China will increasingly be replaced by locally manufactured products,
+and of growing exports of such semiconductors produced in China. Developments
+in the wake of the geopolitical risks are dynamic, so it cannot be ruled out that the
+actual results deviate significantly from the estimates and assumptions made in the
+preparation of these Consolidated Financial Statements, or that the estimates and
+assumptions made will have to be adjusted in future periods. These could have a sig-
+nificant impact on Infineon's financial position, results of operations and cash flows.
+impact of climate change on the valuation results. For a detailed explanation of
+climate-related risks and opportunities, we refer you to the risk and opportunity
+report in the Combined Management Report as well as to the report "Sustainability
+at Infineon" which can be found under the following link: www.infineon.com/cms/en/
+about-infineon/sustainability/csr-reporting. The reference to the report “Sustainability at
+Infineon" is not audited as part of the audit of the Consolidated Financial Statements
+but is subject to a separate audit to obtain limited assurance and for certain non-
+financial information reasonable assurance.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+← 107 →
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Estimates and assumptions are subject to regular review and must be adjusted where
+appropriate. Climate risks and opportunities are also analyzed, reported, and evalu-
+ated for their potential financial and accounting impact as part of the quarterly risk
+management process. They are regularly included in the review of estimates and
+assumptions for accounting purposes. Furthermore, in the case of valuations based
+on longer-term planning assumptions for business development, sensitivity analyses
+of the valuation results are carried out, which appropriately reflect the potential
+The preparation of financial statements in accordance with IFRS requires management
+to make estimates and assumptions that have an impact on the presented amounts
+and the associated disclosures.
+Estimates and assumptions
+For uncertain tax positions, a current tax liability is recorded; in the case of a tax
+loss carried forward or a tax allowance, the respective deferred tax asset is reduced
+accordingly. Estimates and assumptions must be made for the recognition and
+valuation, for example, whether an assessment is made separately or together with
+other uncertainties, whether a probable or expected value is used for the uncertainty,
+and whether changes have occurred compared to the previous period. The detection
+risk for the recognition of uncertain tax positions is not relevant. Recognition assumes
+that the tax authorities investigate the matters in question and that they have all
+relevant information.
+Tax liabilities are recognized as short-term as they are due immediately, and Infineon
+generally has no option of deferring their due date.
+Taxes are recognized in the Consolidated Statement of Profit or Loss, with the
+exception of taxes relating to items recognized directly in equity or in other compre-
+hensive income.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax
+authority and to the same taxpayer or a group of different taxpayers who are jointly
+assessed for income tax purposes.
+Deferred tax assets with respect to deductible temporary differences, tax loss
+carry-forwards and tax allowances that exceed deferred tax liabilities in respect of
+taxable temporary differences, are only recognized to the extent that it is probable
+that the relevant Group entity can generate sufficient taxable profit to realize the
+corresponding benefit. Infineon reviews deferred tax assets for impairment at every
+reporting date. The assessment requires management to make assumptions about
+future taxable profits as well as other positive and negative influencing factors. This
+assessment also takes into account insights from the company's five-year plan as
+approved in the fiscal year just ended.
+Deferred taxes are calculated on temporary differences between the tax base and
+the book value of assets and liabilities and on tax losses available for carry-forward
+and tax allowances. By contrast, generally no deferred tax is recognized on initial
+recognition of goodwill arising in connection with a business combination. Similarly,
+deferred taxes are not recognized on the initial recognition of an asset or liability in
+connection with a transaction that is not a business combination and which, at the
+time of the transaction, affects neither the pre-tax income according to IFRS nor tax-
+able profit. Deferred tax assets and liabilities are measured using applicable tax rates
+and laws that have been enacted by the end of the reporting period or are about
+to be enacted and are to be applied when the related deferred tax asset is realized,
+or the deferred tax liability is settled.
+Further information
+Current and deferred taxes
+Further information
+preparing the Consolidated Financial Statements, so the preliminary results are
+not yet available. The excess purchase price is expected to be primarily attributable
+to goodwill and, downstream, to technologies and customer relationships. Due to the
+proximity of the acquisition to the date of preparation of the Consolidated Financial
+Statements and the resulting insufficient information, other disclosures required by
+IFRS 3 cannot be made.
+2023
+Change
+personnel expenses
+Cost of materials and purchased services as well as
+Notes to the Consolidated Financial Statements
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Infineon refrains from disclosing the remaining performance obligations arising
+from contracts with customers within the meaning of IFRS 15 with original expected
+durations of one year or less.
+The increase in expected revenue is mainly due to capacity reservation agreements.
+2,307
+769
+← 108 →
+488
+Less than
+1 year
+1,804
+4,111
+1,257
+Total
+As of 30 September 2023
+As of 30 September 2022
+Revenue expected in (€ in millions)
+The aggregate amount of the transaction prices of the unsatisfied and partially
+unsatisfied performance obligations, arising from contracts with customers within
+the meaning of IFRS 15 with original expected durations of more than one year, was
+as follows as of 30 September 2023 and 2022:
+Breakdowns of revenue by segments, product groups and geographic areas are
+disclosed in note 29. ☐ p. 156 ff.
+Revenue
+4 Notes to the Consolidated Statement
+of Profit or Loss
+The last two acquisitions mentioned have only minor or no financial impacts during
+the reporting period, therefore no further disclosures in accordance with IFRS 3
+are required.
+On 4 October 2023, Infineon also acquired all shares in the startup 3db Access AG,
+based in Zurich (Switzerland). The startup is a pioneer in secured low power
+ultra-wideband technology. The acquisition strengthens Infineon's portfolio of
+secure and intelligent access control, precise localization and enhanced sensing.
+On 15 May 2023, Infineon acquired Imagimob AB in full. The startup, based in Stock-
+holm (Sweden), is a platform provider for Machine Learning solutions for edge devices.
+Infineon further advances its position as a provider of machine learning solutions
+with this acquisition and, once again, significantly supplements its artificial intelli-
+gence offering.
+Acquisition of Imagimob AB and 3db Access AG
+1 year
+and after
+2023
+Other intangible assets
+absolute
+← 102 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Infineon reviews non-current assets, including property, plant and equipment,
+goodwill and other intangible assets for possible impairment whenever events or
+changes in circumstances indicate that the carrying amount of an asset may not be
+recoverable. Regardless of whether an indication of impairment exists, goodwill and
+other intangible assets, including capitalized development costs not yet subject to
+amortization, undergo an annual impairment test (see also "Research and develop-
+ment expenses", p. 105). The impairment test for goodwill is carried out annually
+at the operating segment level.
+The recoverability of an asset is measured by comparing its carrying amount with
+its recoverable amount. To the extent it is not possible to determine the recoverable
+amount of an individual asset, the book value of the cash generating unit to which
+the asset is allocated is compared to its recoverable amount.
+2022
+3-12
+3-5
+1-12
+1-12
+3-10
+Years
+Remaining other intangible assets
+Infineon did not hold any intangible assets with indefinite useful lives in either the
+2023 or the 2022 fiscal year.
+Licenses and similar rights
+A cash generating unit (“CGU”) represents the smallest identifiable group of assets
+that generates cash inflows from continuing activities and that are largely independent
+of the cash inflows from other assets or group of assets.
+The recoverable amount of an asset is defined as the higher of its fair value less costs
+to sell and its value in use. The value in use is calculated based on discounted future
+cash flows. Considerable management judgment is necessary to estimate future
+cash flows.
+The net pension obligation recognized with respect to defined benefit pension plans
+comprises the present value of the defined benefit obligation (DBO) at the end of the
+reporting period less the fair value of the plan assets. The present value of the DBO
+and the resulting pension expense are determined annually in accordance with IAS 19
+"Employee Benefits" for each separate plan by independent, qualified actuaries
+using the projected unit credit method. The calculation is subject to, among other
+things, assumptions on increases in salaries, future developments in pensions as well
+as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations
+are discounted using discount rates determined primarily on the basis of market
+yields of high-grade, fixed-interest corporate bonds from issuers carrying a very high
+credit rating.
+Defined benefit pension plans
+← 103 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Goodwill arising in connection with a business combination is allocated to the CGUS
+or groups of CGUs that will benefit from the synergies generated by the business
+combination and the going concern element of the business operations acquired.
+Infineon | Annual Report 2023
+At the beginning of a lease, Infineon capitalizes a right-of-use asset at amortized
+acquisition cost and recognizes as a liability a corresponding lease liability, using the
+present value of the outstanding lease payments. Right-of-use assets are amortized
+on a straight-line basis over the expected useful life (see "Property, plant and equip-
+ment”, □ p. 101), or over the duration of the contract if shorter. In subsequent valua-
+tions, lease liabilities are measured at the current value of the outstanding lease
+payments using the effective interest method and are presented as lease liabilities
+(current and non-current).
+IFRS 16 defines a lease as a contract that conveys the right to use an identifiable asset
+over a specified period of time in exchange for consideration.
+Leased assets
+In the case of property, plant and equipment or other intangible assets, if the recover-
+able amount of a CGU is less than its carrying value, the impairment loss is allocated
+pro rata to the assets within the scope of IAS 36. An impairment loss recognized in
+prior periods for property, plant and equipment or other intangible assets is reversed
+insofar as, since the last impairment, a change in the underlying assumptions has
+occurred, which leads to a lower impairment requirement. The maximum possible
+reversal of an impairment loss is that which would lead to the carrying amount that
+would have been determined (net of scheduled depreciation and amortization) if
+no impairment loss had been recognized for that asset in prior years. The reversal of
+impairments recognized on goodwill in subsequent periods is not permitted.
+If the carrying amount of the respective operating segment to which goodwill
+is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired
+accordingly.
+Goodwill is impaired when the carrying amount of the operating segment to which
+goodwill is allocated exceeds the recoverable amount of that unit.
+If an asset or CGU is considered to be impaired, the impairment recognized is measured
+as the amount by which the carrying value exceeds the recoverable amount.
+The costs associated with leasing agreements with a term of not more than twelve
+months (provided they do not contain an option to purchase), as well as leasing
+agreements in which the value of the underlying asset in the leasing contract is low,
+are recorded in the profit or loss on a straight-line basis in the functional costs. As
+a general rule, leased assets with an acquisition cost of up to €5,000 are defined as
+low-value assets.
+Capitalized development costs
+Customer relationships
+Technologies
+Amortization of other intangible assets is based on the following useful lives:
+Other intangible assets consist of capitalized development costs and purchased
+intangible assets, for example licenses, technologies and customer relationships.
+These assets have finite useful lives and are valued at their amortized acquisition
+or production costs, with amortization recorded using the straight-line method over
+their expected economic life.
+Inventories are measured at the lower of historical acquisition or fully absorbed
+production cost - calculated using the weighted-average method - and net realizable
+value. Net realizable value corresponds to realizable sale proceeds under normal
+business conditions less estimated expected costs to complete and sell. Production
+cost comprises costs of material, production wages and an appropriate portion of
+attributable overheads, along with attributable depreciation and amortization on
+property, plant and equipment and other intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Inventories
+The recognition of a hybrid bond depends on the specific form of the instrument.
+A hybrid bond is measured and recognized in equity when certain conditions are
+jointly met. These include, but are not limited to, the fact that the hybrid bond has no
+final maturity date, the investors have no rights of termination, and the distributions
+are made at Infineon's discretion. In this case, discounts, transaction costs, tax effects
+and the remuneration of hybrid investors are deducted directly from equity.
+Hybrid bonds
+When a hedging instrument expires or is sold, or when a hedging relationship no
+longer meets the criteria for hedge accounting, any cumulative gain or loss existing at
+that time remains in equity until the underlying transaction actually occurs. When a
+forecasted transaction is no longer expected to occur, the cumulative gain or loss that
+was reported in equity is immediately transferred to profit or loss.
+The effective portion of changes in the fair value of derivative financial instruments,
+determined in accordance with IFRS 9, that are designated as cash flow hedges
+and are part of hedging relationships that meet the criteria for hedge accounting is
+recognized directly in equity. The gain or loss relating to the ineffective portion is
+recognized in profit or loss. Amounts accumulated in equity are recycled in profit or
+loss in the periods in which the underlying hedged item affects profit or loss, or, if the
+expected transaction subsequently results in the recognition of a non-financial asset,
+included in the acquisition cost upon initial recognition.
+Derivative financial instruments are measured at their fair value and included in
+"other current assets" or "other current liabilities".
+Write-downs to net realizable value are recorded on inventories using a consistent
+approach throughout Infineon and are determined at product level for technically
+obsolete and slow-moving inventories on the basis of the amount of revenues
+expected to be generated by the relevant product.
+Certain derivative financial instruments are used to hedge foreign currency and
+interest risks or risks of commodity price changes (such as gold prices) for firm
+commitments as well as expected and highly probable future transactions in order to
+minimize the associated risk (cash flow hedges).
+Upon initial recognition, other financial liabilities are measured at fair value after the
+deduction of transaction costs. In subsequent periods, they are measured at amor-
+tized cost using the effective interest method. The liabilities are derecognized when
+the contractual obligations are discharged, canceled or expired.
+← 100 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+7,121
+Designated hedging instruments (cash flow hedges)
+Inventories include an asset resulting from sales with a right of return, representing
+Infineon's right to recover products from customers upon payment of the reimburse-
+ment obligation (see “Revenue recognition”, ☐ p. 104 f.). The valuation is made by
+reference to the previous book value of the products.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+1-10
+25
+3-10
+Years
+Other plant and office equipment
+Technical equipment and machinery
+Buildings
+Depreciation on property, plant and equipment is recorded using the straight-line
+method. Land, property rights and construction in progress are not depreciated
+on a scheduled basis. Depreciation on property, plant and equipment is based on
+the following useful lives, as applied consistently throughout Infineon:
+Property, plant and equipment are measured at amortized acquisition or construction
+cost, and their value is reduced by depreciation and considering any impairment.
+Property, plant and equipment
+Loss allowances for expected credit losses on contract assets are determined in
+accordance with the measurement method for trade receivables (see "Financial
+instruments", p. 97).
+At Infineon, contract assets result from revenue arising from over time revenue recog-
+nition for certain types of contracts, as well as from sales to some customers for
+whom Infineon maintains a consignment warehouse and where revenue is recorded
+at the time of delivery to the consignment warehouse, whereas the invoice is only
+issued at the time of withdrawal of the product by the customer.
+Contract assets are recognized if Infineon has fulfilled its performance obligations
+arising from contracts with customers and an unconditional entitlement to customer
+consideration does not yet exist.
+Contract assets
+← 101 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+All items of income and expense relating to defined benefit plans, with the exception
+of the net interest result, are recognized on a net basis in the functional costs within
+the operating result. The net interest result arising from the multiplication of the
+net pension obligation (pension obligation less plan assets) by the discount rate is
+presented as a financial expense. Actuarial gains and losses arising from changes to
+actuarial assumptions and estimates as well as the difference between the normal-
+ized and actual return on plan assets are recognized directly in equity and recorded
+in the Consolidated Statement of Comprehensive Income in the periods in which they
+arise. Past service costs are recognized immediately in profit or loss.
+Other provisions
+Recoverability of property, plant and equipment and intangible assets
+(including goodwill)
+Research and development expenses
+18
+32
+176
+208
+Total
+50
+1
+2
+3
+Selling, general and administrative expenses
+Infineon | Annual Report 2023
+15
+113
+130
+23
+14
+61
+75
+Cost of goods sold
+of Profit or Loss in:
+Included in the Consolidated Statement
+in %
+17
+Of the grants included in profit or loss in the 2023 fiscal year, €3 million relate to
+expenses incurred in the prior year (prior year: €0 million).
+6,221
+(1)
+(1)
+10
+(11)
+The German combined statutory tax rate for Infineon Technologies AG was 28 percent
+for both the 2023 and 2022 fiscal years. This is based on a corporate income tax rate of
+15 percent, plus a solidarity surcharge of 5.5 percent and a trade tax rate of 12 percent.
+Taxable income earned by foreign subsidiaries is determined on the basis of the
+tax laws applicable in the relevant countries and is taxed based on the respective
+country-specific tax rates.
+The reconciliation of income taxes from continuing operations for the fiscal years
+ended 30 September 2023 and 2022, based on the German combined statutory income
+tax rate of 28 percent for the 2023 and 2022 fiscal years, is as follows:
+Total comprehensive income (loss), net of tax
+Change
+The pro rata result of the associated companies accounted for using the equity method
+is not part of the Segment Result (see note 29, p. 159).
+Expected income tax expense
+Tax rate differential
+2023
+(1,098)
+2022
+absolute
+in %
+€ in millions
+Other comprehensive income (loss), net of tax
+(11)
+10
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 111 →
+Summarized financial information for associated companies
+As of 30 September 2023 and 2022, the carrying amount of the associated companies
+accounted for using the equity method was €40 million and €44 million, respectively.
+For the 2023 and 2022 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the associated companies accounted for
+using the equity method were aggregated as follows:
+€ in millions
+Change
+2023
+2022
+absolute
+in %
+Profit (loss) for the period
+(1)
+(760)
+Infineon | Annual Report 2023
+(338)
+136
+69
+73
+(4)
+(5)
+Non-deductible expenses
+(47)
+therein: current tax income
+(52)
+10
+Change
+Tax-exempt income
+96
+73
+€ in millions
+5
+Income tax from continuing operations for the fiscal years ending 30 September 2023
+and 2022 amounted to:
+12
+9
+93
+43
+46
+Effects due to changes in tax rates
+(1)
+13
+(14)
+Effects from the difference between
+6 Income tax
+local and functional currency
+Previous year taxes
+(28)
+8
+(36)
+86
+77
+(44)
+(3)
+Further information on Infineon's financial income and expenses is contained in
+note 27. p. 146 f.
+9
+11
+60
+Interest income
+Change
+in %
+absolute
+49
+2022
+Change
+For the 2023 and 2022 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the joint ventures accounted for using the
+equity method were aggregated as follows:
+As of 30 September 2023 and 2022, the carrying amounts of joint ventures accounted
+for using the equity method were €74 million and €56 million, respectively.
+Summarized financial information for joint ventures
+The investments accounted for using the equity method comprise shares in joint
+ventures and in associated companies.
+5 Investments accounted for using
+the equity method
+2023
++++
+€ in millions
+2023
+29
+28
+Profit (loss) for the period
++++
+98
+7
++++
+49
+(4)
+45
+105
+Total
+Other financial income¹
+in %
+absolute
+2022
+€ in millions
+5
+Financial income comprised the following in the 2023 and 2022 fiscal years:
+For compliance with the conditions attached to the grants received and potential
+repayment requirements in case of nonfulfillment, see note 23. □ p. 135 f.
+(16)
+(142)
+(158)
+Financial expenses comprised the following in the 2023 and 2022 fiscal years:
+in %
+absolute
+(11)
+2022
+Change
+Other financial expenses
+Total
+Interest expenses
+96
+(159)
+(168)
+2023
+(1)
+(26)
+25
+In the 2023 fiscal year, investment grants of €45 million (adjusted previous fiscal
+year amount: €22 million) were deducted from acquisition or construction costs for
+property, plant and equipment and intangible assets. In the 2023 fiscal year, Infineon
+received investment grants of €27 million (2022: €22 million).
+← 110 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Other comprehensive income (loss), net of tax
+3
+(3)
+1 The negative amount in other financial income in the 2022 fiscal year arose from the negative change in the fair value of the
+derivative financial instruments, recorded as a reversal of unrealized gains recognized in previous fiscal years.
+Total comprehensive income (loss), net of tax
+28
+32
+(4)
+(13)
+Financial income and expenses
+The pro rata result of the joint ventures accounted for using the equity method is not
+part of the Segment Result (see note 29, p. 159).
+(156)
+126
+(12,024)
+5,545
+4,443
+Other intangible assets
+Capitalized
+development costs
+1,220
+209
+15
+1,444
+(100)
+(448)
+(4)
+(1)
+(547)
+897
+772
+Customer relationships
+1,333
+212
+1,545
+(595)
+(94)
+216
+(1,050)
+(11,090)
+(12)
+(1,338)
+222
+178
+Payments on account and
+construction in progress
+645
+889
+(1)
+(629)
+904
+1
+(1)
+(6)
+898
+645
+Total
+15,533
+2,061
+9
+(222)
+188
+17,569
+23
+(90)
+(841)
+704
+106
+5,179
+20
+126
+(29)
+(11)
+(7)
+(47)
+79
+77
+240
+(5)
+657
+6,071
+(1,830)
+(534)
+5
+(4)
+(225)
+(2,588)
+3,483
+3,349
+Depreciation on property, plant and equipment is presented in the Consolidated
+Statement of Profit or Loss, mainly in cost of goods sold. Amortization of intangible
+assets is mainly presented in cost of goods sold or selling, general and administrative
+expenses. Impairments on property, plant and equipment and other intangible
+assets are reported under other operating expenses.
+Infineon | Annual Report 2023
+Total
+8
+intangible assets
+76
+738
+Technologies
+2,214
+404
+2,618
+(528)
+(243)
+(121)
+(892)
+1,726
+1,686
+Licenses and similar rights
+306
+31
+(5)
+6
+338
+(230)
+(30)
+5
+(6)
+(261)
+77
+Remaining other
+83
+(138)
+(1,279)
+← 119 →
+Notes to the Consolidated Financial Statements
+€ in millions
+Property, plant
+1 October
+2021
+Cost
+Depreciation/amortization
+Additions
+Additions
+Disposals Reclassi-
+through
+fication
+Currency
+effects
+business
+30 Sep-
+tember
+2022
+1 October
+2021
+Depre-
+Disposals Reclassi-
+Impair-
+ciation/
+fication
+amorti-
+ments/
+reversals
+Further information
+Currency
+effects
+Consolidated Financial Statements
+Management Board and Supervisory Board
+(10)
+116
+(47)
+(10)
+3
+(54)
+62
+79
+Total
+6,071
+255
+(40)
+(332)
+5,954
+(2,588)
+(531)
+31
+(13)
+124
+(2,977)
+2,977
+3,483
+Infineon | Annual Report 2023
+Combined Management Report
+Remaining other intangible assets
+combi-
+of impair-
+11,129
+972
+6
+(130)
+455
+108
+12,540
+(8,822)
+(829)
+127
+(8)
+(68)
+(9,600)
+2,940
+2,307
+Other plant and
+office equipment
+1,457
+131
+(85)
+38
+19
+1,560
+and machinery
+zation
+Technical equipment
+1,485
+nation
+ments
+Carrying amount
+30 Sep-
+tember
+2022
+30 Sep-
+tember
+2022
+30 Sep-
+tember
+2021
+and equipment
+Land, land rights
+and buildings
+2,302
+69
+69
+3
+(6)
+136
+61
+2,565
+(989)
+(83)
+5
+6
+(19)
+(1,080)
+1,313
+32
+(217)
+Current tax expense
+in %
+1
+(1)
+(1)
+1
++++
+Information on Infineon's credit risk management is contained in note 28. p. 153 f.
+Infineon | Annual Report 2023
+absolute
+Information about Infineon's credit risk management is contained in note 28. p. 153 f.
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 117 →
+11 Inventories
+Inventories as of 30 September 2023 and 2022 consisted of the following:
+€ in millions
+Raw materials and supplies
+Management Board and Supervisory Board
+2022
+2023
+Change
+of the fiscal year
+6
+5
+1
+20
+Current year's loss allowance, net of reversals
+(1)
+1
+(2)
+Loss allowances as of the end of the fiscal year
+5
+6
+(1)
+(17)
+€ in millions
+Loss allowances as of the beginning
+of the fiscal year
+Revaluation of loss allowances, net
+Loss allowances as of the end of the fiscal year
+Work in progress
+The loss allowances on financial investments that are measured at amortized cost
+changed as follows during the 2023 and 2022 fiscal years:
+Finished goods and merchandise
+12 Other current assets
+Change
+30 Septem-
+ber 2023
+30 Septem-
+ber 2022
+absolute
+in %
+€ in millions
+612
+15
+470
+30
+Prepayments
+2,593
+1,949
+644
+33
+VAT and other receivables from tax authorities
+769
+142
+19
+131
+150
+Other current assets as of 30 September 2023 and 2022 consisted of the following:
+Change
+30 Septem-
+ber 2023
+30 Septem-
+ber 2022
+absolute
+in %
+347
+58
+289
++++
+204
+2441
+(40)
+(16)
+186
+1451
+41
+28
+Total
+662
+Loss allowances as of the beginning
+absolute
+Financial investments as of 30 September 2023 and 2022 comprised the following:
+10 Trade receivables
+Trade receivables result from contracts with customers that are due within one year.
+As of 30 September 2023 and 2022, they consisted of the following:
+€ in millions
+Trade receivables, third parties
+Trade receivables, related parties
+Change
+30 Septem-
+ber 2023
+Financial investments comprise fixed-term deposits with banks and investment
+funds. Fixed-term deposits with banks are categorized as financial assets and mea-
+sured at amortized cost. Investment funds are categorized as financial assets and
+measured at fair value through profit or loss (see also note 2, ☐ p. 98 f., and note 27,
+p. 142 ff.).
+30 Septem-
+ber 2022
+in %
+1,977
+1,883
+94
+5
+19
+1,996
+10
+9
+absolute
+9 Financial investments
+€ in millions
+Further information
+Diluted earnings per share (in euro): 2
+Earnings per share (in euro)
+from continuing operations
+2.38
+1.65
+0.73
+44
+Earnings (loss) per share (in euro)
+from discontinued operations
+Earnings per share (in euro) - diluted
+2.38
+1.65
+0.73
+44
+1 Including the cumulative tax effect.
+2 The calculation of earnings per share is based on unrounded figures.
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+90
+in %
+1,893
+5
+(269)
+(13)
+Financial investments, gross
+1,770
+2,279
+(509)
+(22)
+Changes in the loss allowances for trade receivables in the 2023 and 2022 fiscal years
+were as follows:
+2,039
+Loss allowances
+1,770
+2,279
+(509)
+(22)
+€ in millions
+Change
+2023
+2022
+Financial investments, net
+1,770
+Investment funds
+(240)
+(5)
+1,991
+(6)
+1,887
+1
+17
+104
+6
+Trade receivables, gross
+Change
+Loss allowances
+30 Septem-
+30 Septem-
+€ in millions
+ber 2023
+ber 2022
+absolute
+in %
+Trade receivables, net
+Fixed-term bank deposits
+240
+103
+107
+16
+Grants receivables
+17,569
+2,729
+(422)
+(140)
+19,736
+(12,024)
+(1,143)
+394
+Total
+(1)
+(12,691)
+7,045
+5,545
+Other intangible assets
+Capitalized development costs
+1,444
+214
+(10)
+83
+898
+1,828
+(7)
+64
+(18)
+1,648
+(1,338)
+(147)
+93
+12
+(1,380)
+268
+222
+Payments on account and construction in progress
+904
+1,656
+(6)
+(715)
+(4)
+1,835
+(6)
+(1)
+(8)
+(93)
+1,640
+(93)
+(3)
+371
+(261)
+(31)
+915
+50
+(934)
+490
+(5)
+704
+68
+(1,062)
+1,341
+1,726
+3
+(284)
+87
+77
+7
+41
+338
+Licenses and similar rights
+10
+(13)
+(643)
+997
+897
+Customer relationships
+1,545
+(14)
+(107)
+1,424
+(841)
+(152)
+Technologies
+2,618
+(11)
+(204)
+2,403
+(892)
+(245)
+(547)
+135
+1,560
+Other plant and office equipment
+53
+1 The previous year's figures for "VAT and other receivables from tax authorities" and "Grants receivables" have been adjusted.
+Further information on Infineon's financial assets can be found in note 27. □ p. 142 ff.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+13 Property, plant and equipment and
+other intangible assets
+334
+The development of property, plant and equipment, as well as other intangible assets
+for the years ended 30 September 2023 and 2022, was as follows:
+Property, plant and equipment
+Further information
+← 118 →
+Cost
+1 October
+Additions Disposals
+2022
+Reclassi-
+fication
+€ in millions
+625
+959
+48
+3,974
+3,081
+893
+29
+Prepaid expenses
+Derivative financial instruments
+(see note 27, p. 147 ff.)
+Other
+Total
+Cost of goods sold consisted mainly of inventory-related expenses in the 2023 and
+2022 fiscal years.
+As of 30 September 2023 and 2022, finished goods and merchandise included an asset
+of €22 million and €16 million, respectively, which resulted from sales with a right
+of return.
+Inventory write-downs as of 30 September 2023 and 2022 amounted to €414 million
+and €282 million, respectively.
+10
+5
+5
++++
+62
+42
+20
+Currency
+effects
+30 Sep-
+tember
+2023
+1 October
+2022
+Depre-
+ciation/
+amorti-
+22
+14
+(1,124)
+1,502
+1,485
+Technical equipment and machinery
+12,540
+829
+(286)
+623
+(79)
+13,627
+(9,600)
+(916)
+279
+57
+(10,180)
+3,447
+2,940
+(80)
+44
+(1,080)
+(39)
+Disposals
+zation
+Depreciation/amortization
+Impair-
+ments/
+reversals
+of impair-
+ments
+Currency
+effects
+30 Sep-
+tember
+2023
+Carrying amount
+30 Sep-
+tember
+2023
+30 Sep-
+tember
+2022
+Land, land rights and buildings
+2,565
+109
+(37)
+28
+2,626
+0.73
+= ← 116 →
+2.38
+(5)
+(6)
+Total deferred taxes on temporary differences
+487
+(815)
+80
+65
+607
+(39)
+(1,015)
+93
+Tax loss carry-forwards
+156
+(238)
+(240)
+394
+(183)
+(197)
+(1)
+29
+14
+13
+(2)
+35
+(28)
+(7)
+(6)
+39
+(25)
+8
+6
+213
+(22)
+(113)
+(81)
+339
+(35)
+24
+21
+50
+(47)
+Unused tax credits and excess foreign tax credits
+(13)
+186
+19
+(371)
+(215)
+(144)
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+527
+= ← 113 →
+Taxable losses brought forward and tax credits amount to the following:
+The change in the net amount of deferred tax assets and liabilities is as follows:
+€ in millions
+2023
+2022
+156
+371
+Deferred taxes, net as of the end of the previous fiscal year
+Deferred tax income (expense), recognized through profit or loss:
+Infineon assessed the need for a valuation allowance of its deferred tax assets. Based
+on the results of this assessment, considering all positive and negative factors and
+information relating to the foreseeable future based on business plans, Infineon
+recognized deferred tax assets, after netting, of €268 million as of 30 September 2023
+(30 September 2022: €527 million).
+(156)
+(142)
+1.65
+170
+(31)
+(40)
+Total deferred taxes
+829
+(815)
+(142)
+(156)
+1,171
+(1,015)
+(215)
+(144)
+Netting
+(561)
+561
+(644)
+644
+Total
+268
+16
+(165)
+156
+(39)
+(12)
+(8)
+Change in available tax credits
+71
+96
+(25)
+(26)
+(782)
+(144)
+(537)
+(46)
+Other
+(12)
+1
+(13)
+Actual income taxes
+(782)
+(537)
+(245)
+(156)
++++
+68
+Deferred tax income
+Income tax
+2023
+2022
+absolute
+in %
+Change in permanent balance sheet effects
+(10)
+(43)
+33
+77
+(626)
+(393)
+(233)
+(59)
+Change in valuation allowance
+on deferred tax assets
+25
+(43)
+(245)
+(46)
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Provisions, pensions and similar commitments
+Other
+tax assets
+tax liabilities
+profit or loss
+tax assets
+tax liabilities
+profit or loss
+23
+(511)
+219
+177
+44
+(751)
+(15)
+74
+166
+(207)
+(32)
+Inventories
+From continuing operations
+Property, plant and equipment
+€ in millions
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 112 →
+"Change in valuation allowances on deferred tax assets" consisted of the following:
+In the 2023 fiscal year, amounts recognized in profit or loss included valuation
+allowances or non-recognition of deferred tax assets for tax loss carry-forwards
+of €0 million (2022: €27 million) and tax credits of €20 million (2022: €67 million).
+A write-up of deferred tax assets for tax loss carry-forwards of €10 million was
+recorded (2022: €0 million). Within tax credits, the write-up of deferred tax assets
+amounted to €35 million in the 2023 fiscal year (2022: €10 million) and temporary
+differences amounted to €0 million (2022: €41 million).
+The utilization of tax loss carry-forwards, tax credits and temporary differences for
+which deferred tax assets had not previously been recorded resulted in current tax
+income of €61 million in the 2023 fiscal year (2022: €1 million).
+Deferred tax assets and liabilities as of 30 September 2023 and 2022 comprised the
+following:
+30 September 2023
+Change 2023
+30 September 2022
+Change 2022
+Deferred
+Deferred
+Total
+Therein through
+Deferred
+Deferred
+Total
+Therein through
+Intangible assets
+(156)
+(254)
+From discontinued operations
+Basic earnings per share are calculated by dividing profit (loss) for the period by
+the weighted-average number of shares outstanding during the reporting period.
+The calculation of the diluted earnings per share is based on the assumption that
+all potentially dilutive instruments are converted into ordinary shares, resulting
+in a corresponding increase in the number of shares.
+The hybrid bond issued in the 2020 fiscal year is classified as equity (see note 20,
+p. 130 f.). The related hybrid investors' remuneration (after tax) represents payments
+for a component of equity that reduces the earnings available to shareholders for
+distribution and was therefore taken into account in determining earnings per share
+(basic and diluted).
+Basic and diluted earnings per share are calculated as follows for the fiscal years
+ended 30 September 2023 and 2022:
+Change
+€ in millions (unless otherwise stated)
+Profit (loss) for the period - basic and diluted
+Remuneration of hybrid capital investors'
+Profit (loss) for the period attributable to
+shareholders of Infineon Technologies AG -
+basic and diluted
+2023
+2022
+absolute
+8 Earnings per share
+in %
+2,179
+958
+44
+(29)
+(29)
+3,108
+2,150
+958
+3,137
+← 115 →
+(144)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
++++
+Income taxes recognized in
+other comprehensive income
+Income taxes
+(12)
+(771)
+(26)
+14
+54
+(554)
+(39)
+As in the previous fiscal year, income taxes recognized directly in equity in the 2023
+fiscal year were the result of tax effects in connection with the compensation for
+hybrid capital and with share-based compensation.
+The income taxes recognized in other comprehensive income in the 2023 fiscal year
+comprise mainly actuarial gains and losses arising from pension commitments of
+€15 million (2022: €25 million).
+7 Disposals and discontinued operations
+Qimonda - discontinued operations
+On 23 January 2009, Qimonda AG (“Qimonda”), a majority-owned company, filed
+an application at the Munich local court to commence insolvency proceedings. On
+1 April 2009, the insolvency proceedings formally opened. Insolvency proceedings
+were also opened for further domestic and foreign subsidiaries of Qimonda. Some
+of these insolvency proceedings have already been completed. The impacts of these
+proceedings are reported as discontinued operations in Infineon's Consolidated
+Statement of Profit or Loss and Consolidated Statement of Cash Flows to the extent
+that the underlying events occurred before the commencement of insolvency pro-
+ceedings.
+The current risks and provisions relating to Qimonda's insolvency are described in
+note 24 "Proceedings in relation to Qimonda”. ☐ p. 136 ff.
+In the 2023 and 2022 fiscal years, adjustments to individual provisions arose as a
+result of recent developments in connection with the insolvency of Qimonda, which
+resulted in a loss from discontinued operations, net of income taxes of €2 million
+and €7 million, respectively.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+45
+13
+3,110
+953
+Effect of share-based payment
+Weighted-average number of shares
+outstanding - diluted
+2.8
+1.8
+1.0
+10
+56
+1,305.8
+1,303.6
+Adjustments for:
+2.2
+Basic earnings per share (in euro): 2
+Earnings per share (in euro)
+from continuing operations
+2.39
+1.66
+0.73
+44
+Earnings (loss) per share (in euro)
+from discontinued operations
+Earnings per share (in euro) - basic
+(0.01)
+(0.01)
+0
+0
+1.2
+1,301.8
+44
+༥
+(2)
+(7)
+5
+71
+thereof from continuing operations
+thereof from discontinued operations
+Infineon | Annual Report 2023
+Weighted-average number of shares
+outstanding (in millions):
+Ordinary share capital
+1,305.9
+1,305.9
+Adjustment for own shares
+(2.9)
+(4.1)
+1.2
+29
+Weighted-average number of shares
+outstanding - basic
+1,303.0
+2,157
+9
+Further information
+Income taxes recognized directly in equity
+(13)
+(26)
+22
+(49)
+14
+156
+local tax loss carry-forwards (particularly
+US state tax loss carry-forwards) - foreign
+Tax credits
+509
+5
+625
+(19)
+632
+714
+(82)
+(11)
+No deferred taxes were recorded for the following items (gross amounts):
+Change
+€ in millions
+(116)
+5
+22
+Deferred taxes, net as of the end of the fiscal year
+Change of deferred taxes, recognized directly in equity:
+Change
+Deferred tax arising from business acquisitions
+€ in millions
+2023
+2022
+absolute
+in %
+Deferred taxes recognized directly in equity
+G
+Corporate tax loss carry-forwards - Germany
+Trade tax loss carry-forwards - Germany
+716
+(716)
+982
+1,940
+(958)
+(49)
+Deferred taxes recognized in other comprehensive income
+Currency effects
+Corporate tax loss carry-forwards and
+2023
+2022
+(1)
+in %
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 114 →
+Including the items recognized directly in equity and in other comprehensive income
+and the expense/benefit from continuing and discontinued operations, the income
+tax consisted of the following:
+€ in millions
+Change
+2023
+2022
+in %
+Income taxes from continuing operations,
+recognized in profit or loss
+(782)
+(537)
+(245)
+(46)
+Income taxes from discontinued operations,
+recognized in profit or loss
+1
+1
++++
+absolute
+Combined Management Report
+Management Board and Supervisory Board
+absolute
+Infineon | Annual Report 2023
+Corporate tax loss carry-forwards and
+local tax loss carry-forwards (particularly
+US state tax loss carry-forwards) - foreign
+Thereof expire within the next five years
+Tax credits
+In connection with investments in subsidiaries, there were temporary taxable differ-
+ences of €299 million (2022: €242 million) for which no deferred taxes have been
+recognized because the timing of the reversal can be controlled, and it is not probable
+that the temporary differences will reverse in the foreseeable future.
+345
+412
+(67)
+(16)
+87
+(34)
+(39)
+446
+53
+9
+(98)
+(18)
+Thereof expire within the next five years
+Deductible temporary differences
+'
+45
+36
+544
+25
+Due within one year
+Due after more than one year to five years
+Due after more than five years up to ten years
+Total
+Defined contribution plans
+48
+ber 2023
+30 Septem-
+ber 2022
+€ in millions
+30 Septem-
+The following table shows the expected disbursements for defined benefit plans for
+the next ten fiscal years as of 30 September 2023 and 2022:
+Combined Management Report
+In the 2024 fiscal year, payments of €38 million are expected to be made to plan
+assets, of which €35 million relate to benefits paid directly to pension recipients by
+the Group companies.
+As of 30 September 2023 and 2022, cumulative actuarial losses amounted to €39 million
+and €71 million, respectively.
+Actuarial gains before taxes of €32 million and €332 million for the 2023 and
+2022 fiscal years, respectively, had been recognized outside of profit (loss) for the
+period in other comprehensive income.
+Service costs were recorded within cost of goods sold, research and development
+expenses or selling, general and administrative expenses. Interest costs and expected
+return on plan assets were recorded net as part of financial expenses.
+129 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and Supervisory Board
+46
+The weighted-average duration of defined benefit plans was around 12 and 13 years
+as of 30 September 2023 and 2022, respectively.
+218
+The pro rata expense for share-based payments resulted in an increase in additional
+paid-in capital of €92 million in the 2023 fiscal year (2022: €62 million). Due to the
+transfer of own shares within the framework of share-based payment to employees
+and members of the Management Board, additional paid-in capital, as well as the line
+354
+86
+Infineon | Annual Report 2023
+Additional paid-in capital
+As of 30 September 2023, the ordinary share capital amounted to €2,611,842,274 and
+was fully paid up. It was divided into 1,305,921,137 no par value registered shares,
+each representing €2 of the Company's ordinary share capital. Each share grants the
+holder one vote and an equal portion of the profits in the form of a dividend, as
+resolved by the Annual General Meeting. Own shares held by the Company as of the
+date of the Annual General Meeting carry no voting rights and are not entitled to
+a dividend.
+855,701
+1,302,231,236
+3,689,901
+1,305,921,137
+1,301,375,535
+2022
+1,518,875
+1,303,750,111
+2,171,026
+1,305,921,137
+1,302,231,236
+2023
+Shares issued at the end of the fiscal year
+Shares outstanding at the beginning of the fiscal year
+Transfer of own shares under the Performance Share
+and Restricted Stock Unit Plans (see note 22, p. 133 ff.)
+Shares outstanding at the end of the fiscal year
+Repurchased own shares
+quantity
+The following table shows a reconciliation of the number of ordinary shares issued as
+of 30 September 2023 and 2022:
+Ordinary share capital
+20 Equity
+Additionally, the Group makes contributions to government pension schemes.
+Expenses for defined contribution plans amounted to €333 million and €309 million
+in the 2023 and 2022 fiscal years.
+In connection with defined contribution plans, fixed contributions are made to external
+insurance providers or funds. Infineon has no further performance obligations or
+risks with regard to these pension plans in excess of the fixed contributions paid.
+563
+620
+325
+192
+602
+10.7
+628
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+99
+26
+73
++++
+91
+93
+(2)
+(2)
+38
+50
+(12)
+(24)
+128
+151
+Further information
+120 →
+14 Goodwill
+Changes in goodwill during the 2023 and 2022 fiscal years were as follows:
+Balance as of the end of the fiscal year
+Currency effects
+Disposals
+Impairments
+Balance as of the beginning of the fiscal year
+Accumulated impairments and other changes
+6,547
+Balance as of the end of the fiscal year
+(23)
+(10)
+(553)
+Disposals
+7,083
+27
+2022
+2023
+Additions through business combination
+Balance as of the beginning of the fiscal year
+Cost
+€ in millions
+Currency effects
+Carrying amount
+(15)
+1,161
+Further information
+126 →
+The development of Infineon's German (domestic) and non-German (foreign) pension
+plans and the plan assets as of 30 September 2023 and 2022 is presented in the
+following table:
+2023
+2022
+Domestic plans
+Foreign plans
+Total
+Domestic plans
+Foreign plans
+Total
+€ in millions
+Change in defined benefit obligations taking into account future salary increases:
+Present value as of the beginning of year
+Current service cost
+Past service income (cost)
+Interest cost
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+124
+11
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+125 →
+Contract liabilities amounted to €126 million and €32 million as of 30 September 2023
+and 2022, respectively. Of this amount, €27 million (30 September 2022: €6 million)
+related to non-current contract liabilities reported under other non-current liabilities.
+1,285
+The increase in contract liabilities mainly results from advance payments from
+customers based on capacity reservation agreements.
+19 Pension plans
+Defined benefit pension plans
+Infineon's employee benefit plans consist of domestic and foreign defined benefit
+and defined contribution pension plans providing retirement, disability and
+surviving dependents' benefits. For Infineon, the significant benefit plans in
+Germany pertain to Infineon Technologies AG and, within the foreign benefit plans,
+to Infineon Technologies Austria AG, Austria.
+In Germany, Infineon primarily offers defined contribution benefits which provide
+for the employees when they reach retirement age, or in the event of disability or
+death. The statutory framework is provided by the Company Pension Act (in German:
+Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the
+Infineon pension plan, new entrants receive a defined contribution benefit, which is
+funded by Infineon. Payments by the Infineon pension plan are generally made in
+twelve annual installments. For active employees who were entitled to benefits in the
+form of an annuity before the Infineon Pension Plan came into force, this commitment
+was transferred into the Infineon Pension Plan and thereby the possibility of an
+annuity is guaranteed. Together with former employees whose pension benefit obli-
+gations were not transferred into the Infineon Pension Plan, this group makes up the
+largest part of the obligation at this time. A corresponding provision is recorded for
+the German defined benefit pension plans, which are partly backed by plan assets.
+Individual agreements are in place for the members of the Management Board, which
+are backed by plan assets. The major portion of the plan assets is managed by a pen-
+sion trust in the legal form of a registered association. This is composed of executives
+of Infineon Technologies AG, and the investment strategy is defined by Infineon
+Technologies AG.
+The benefit obligation of some foreign plans is measured according to the income
+in the last month or year of service; others are dependent on average income over
+the service period. Foreign pension plans are managed by country-specific external
+pension funds or other pension schemes. The obligations arising from foreign defined
+benefit pension plans are partly covered by plan assets. The management of existing
+foreign plan assets is performed by the respective pension scheme.
+The valuation date of the pension plans is 30 September.
+The Group-defined benefit pension plans are exposed to risks arising from changes
+to actuarial assumptions such as discount factors, salary and pension trends,
+investment risks and longevity risks. A lower discount rate leads to higher pension
+liabilities. Lower than expected growth in plan assets could lead to a deterioration
+of the funded status.
+Further information on Infineon's financial liabilities can be found in note 27. ☐ p. 142 ff.
+Actuarial gains (losses) for:
+Balance as of the beginning of the fiscal year
+5,962
+28
+Obligations to employees included, among others, costs of variable remuneration,
+outstanding vacation and flextime, service anniversary awards, other personnel costs
+and social security costs.
+Infineon | Annual Report 2023
+Change
+30 Septem-
+ber 2023
+30 Septem-
+ber 2022
+absolute
+in %
+688
+593
+95
+16
+241
+248
+(7)
+(3)
+13.4
+Total
+Other
+300
+289
+70
+15
+(36)
+3
+52
+Contract liabilities
+Total provisions
+thereof current
+15.2
+thereof non-current
+664
+(782)
+(55)
+1,099
+Accrued interest expense
+983
+799
+VAT payables
+1,272
+Balance as of the end of the fiscal year
+261
+1.5
+Book value of allocated goodwill
+The following table shows the allocation of the carrying amount of goodwill to the
+segments, as well as the valuation parameters used:
+← 121 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The discount rate for future cash flows is based on the after-tax weighted-average
+cost of capital ("WACC") for the CGU in question. The Capital Asset Pricing Model
+("CAPM") is used to calculate the cost of equity. The relevant pre-tax WACC used to
+discount future pre-tax cash flows in line with IAS 36 is derived from estimated future
+after-tax cash flows and the after-tax WACC using a typical tax rate for each operating
+segment. The risk-free interest rate is derived using the Svensson method taking
+into account risk premiums, the beta factor and debt ratio are derived from a group
+of companies comparable to the operating segment. In this way, the discount rate
+derived reflects the current market rate of return as well as the specific risks attached
+to the respective operating segment.
+Cash flows, including the underlying parameters such as revenue growth and margins,
+are projected based on past experience, current operating results and the business
+plan approved in the fiscal year just ended, which is calculated bottom-up based on
+certain central assumptions applied consistently throughout Infineon. Cash flows over
+a five-year period are used to derive the value in use. The derivation of the terminal
+value is based on a stable business state, reflecting synergies resulting from the
+acquisition of Cypress. The average revenue growth rates over the planning period
+are between 10.5 percent and 16.4 percent, which is in part higher than the average
+historical growth rates of the sectors in which the relevant segments operate because,
+among other things, the segments benefit to varying degrees from the businesses
+acquired with Cypress and the related revenue synergies. Investments to increase
+capacity for which no cash outflow has taken place are not taken into account. Cash
+flows for periods beyond the planning horizon are estimated using a terminal value.
+Infineon determines the recoverable amount of a particular cash generating unit to
+which goodwill has been allocated on the basis of its value in use. The value in use is
+measured by estimating the present value of future cash flows that will be generated
+by the continuing operations of the CGU discounted using an appropriate discount rate.
+Infineon carried out the annual goodwill impairment test at the operating segment
+level in the fourth quarter of the 2023 fiscal year.
+7,083
+7,083
+6,547
+5,962
+7,083
+1,093
+€ in millions
+Pre-tax WACC'
+in %
+After-tax WACC¹
+in %
+Terminal growth rate¹
+in %
+1.5
+9.9
+10.7
+13.2
+14.5
+1,686
+1,556
+2022
+244
+2023
+2023
+2022
+2023
+2022
+2023
+Green Industrial Power
+Automotive
+Operating segment
+2022
+Other
+Experience adjustments
+Adjustments to financial assumptions
+(3)
+(3)
+5
+5
+Fair value of plan assets as of the end of year
+657
+64
+721
+617
+71
+688
+Net pension liability
+(144)
+(124)
+(268)
+(185)
+(112)
+Currency effects
+1.5
+4
+Reclassification of fair value of plan assets
+(99)
+23
+10
+33
+22
+11
+33
+8
+(297)
+8
+10
+Benefits paid
+(26)
+(12)
+(38)
+(24)
+(11)
+(35)
+10
+(29)
+thereof: Infineon Technologies AG
+(128)
+Total
+Domestic
+plans
+Foreign
+plans
+Total
+corporate bonds from issuers carrying a very high credit rating, with the same maturity
+and in the same currency as the pension obligations to be assessed.
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany as in the
+previous year, and for Austria, the AVÖ 2018-P tables were applied.
+Sensitivity analysis
+The following sensitivity analysis table shows how the present value of all defined
+benefit pension obligations would be affected by changes in the aforementioned
+actuarial assumptions. In each case, they reflect the effect of changes in one actuarial
+assumption while all other assumptions remain constant.
+Plans that are wholly
+unfunded
+48
+92
+140
+48
+82
+130
+Plans that are wholly
+Foreign
+plans
+plans
+Domestic
+30 September 2022
+(167)
+(167)
+thereof: Infineon Technologies Austria AG
+(58)
+(58)
+(51)
+(51)
+Infineon | Annual Report 2023
+(128)
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+127 →
+Pension obligations are reported in the Consolidated Statement of Financial Position
+under "Pensions and similar commitments". p. 91
+Since no asset ceilings applied, the funded status of the Infineon pension plans
+corresponded to the amounts reported in the Consolidated Statement of Financial
+Position as of 30 September 2023 and 2022.
+The funding of the defined benefit obligations as of 30 September 2023 and 2022 was
+as follows:
+€ in millions
+30 September 2023
+Combined Management Report
+Adjustments to demographic assumptions
+(70)
+(5)
+(8)
+(44)
+23
+(10)
+13
+1
+1
+32
+32
+72
+72
+333
+53
+386
+New plans created and plan amendments
+(4)
+(4)
+(36)
+(19)
+(5)
+(14)
+(802)
+(183)
+(985)
+(1,161)
+(220)
+「8 '
+(20)
+(8)
+Benefits paid
+(28)
+(7)
+(1,381)
+(35)
+(1)
+2
+1
+(29)
+(8)
+(37)
+(28)
+3
+26
+38
+617
+71
+688
+671
+93
+764
+Expected return on plan assets
+Actuarial gains (losses)
+Contributions from Infineon
+Employee contributions
+23
+3
+26
+8
+2
+10
+8
+Fair value of plan assets as of the beginning of year
+Change in fair value of plan assets:
+(985)
+(183)
+24
+11
+35
+Employee contributions
+(8)
+(8)
+(10)
+(10)
+12
+Currency effects
+6
+(7)
+(7)
+Present value of defined benefit obligation as of the end of year
+(801)
+(188)
+(989)
+(802)
+6
+€ in millions
+Payroll and similar obligations to employees
+(13)
+office equipment
+10
+9
+(7)
+5|སྱེ
+(1)
+11
+Expenses for short-term leases
+with a term of twelve months or less
+Total
+405
+103
+(80)
+(23)
+405
+Expenses for low-value leases
+5
+Other plant and
++++
+6
+5
+389
+€ in millions
+Technical equip-
+Depreciation
+ment and machinery
+6
+2
+(3)
+5
+5
+Change
+2023
+2022
+absolute
+in %
+80
+80
+11
+Interest expenses
+(22)
+11
+5
+Change
+2023
+2022
+absolute
+in %
+336
+127
+1
+(80)
+21
+405
+Payments for short-term leases
+and low-value leases
+16
+11
+5
+45
+€ in millions
+10
+(6)
+7
+83
+The 2022 fiscal year
+Land, land rights
+and buildings
+23
+Technical equip-
+ment and machinery
+8
+6
+1
+office equipment
+Total
+319
+119
+1
+(71)
+(3)
+9
+Other plant and
+Payments for lease prepayments
+(70)
+389
+Total
+6,547
+7,083
+1 Valuation parameters as of 30 June 2023 and 2022 for the respective impairment test in the fourth quarter.
+As a result of the impairment tests carried out, Infineon concluded that none of the
+operating segments gave rise to an impairment of goodwill in the year under report.
+Business planning is affected, among other things, by uncertainties regarding the
+assessment of markets and the macroeconomic environment. Therefore, sensitivity
+analyses were carried out at operating segment level, taking into account changes
+considered possible in the main assumptions. Even taking these changes into
+account, no impairment on goodwill was observed as a result of the sensitivity
+analyses at operating segment level.
+In addition, up to the date of preparation of the Consolidated Financial Statements,
+there was no indication that the recoverable amount of an operating segment to which
+goodwill had been allocated could have fallen below the book value.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+=
+122 →
+15 Leases
+Leases concluded relate mainly to the rental of office and warehouse space, IT equip-
+ment, other plant and office equipment, as well as vehicles for selected employees.
+2
+2
+Corporate
+1.5
+1.5
+Power & Sensor Systems
+Connected Secure Systems
+1,843
+2,011
+14.2
+14.1
+11.1
+€ in millions
+11.0
+1.5
+2,902
+3,123
+14.0
+12.9
+10.6
+10.0
+1.5
+1.5
+92
+Due within one year
+Due after one year to five years
+81
+197
+230
+209
+235
+112
+133
+101
+115
+381
+445
+386
+431
+The Consolidated Statement of Profit or Loss includes the following amounts in the
+2023 and 2022 fiscal years that are attributable to leases:
+The 2023 fiscal year
+Land, land rights
+and buildings
+76
+82
+72
+Undiscounted
+lease liabilities
+The changes in the right-of-use assets in the 2023 and 2022 fiscal years were as follows:
+Due after more than five years
+Total
+Starting
+balance
+Additions
+Additions
+through
+Depreciation
+Other
+Carrying
+€ in millions
+changes
+business
+combi-
+nations
+30 September 2023
+Discounted
+30 September 2022
+lease liabilities
+Undiscounted
+lease liabilities
+Discounted lease
+liabilities
+amount
+50
+17
+The allocation of discounted and undiscounted lease liabilities by maturity as of
+30 September 2023 and 2022 was as follows:
+Further information
+5α = 124
+Nominal amounts of financial debt and interest maturing in the coming years were
+as follows:
+30 September 2023
+30 September 2022
+€ in millions
+Due within one year
+Financial
+debt
+Interest
+Financial
+debt
+Interest
+330
+108
+753
+Due after one year to five years
+2,133
+319
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+80
+Aggregate
+facility
+Drawn
+Available
+Aggregate
+facility
+Drawn
+Available
+Short-term
+69
+2,327
+69
+3
+80
+Long-term
+Total
+69
+69
+83
+3
+83
+Term, € in millions
+Due after more than five years
+Total
+143
+(737)
+(40)
+785
+Provisions related to Qimonda
+€ in millions
+(see note 7, p. 114,
+and note 24, p. 136 ff.)
+211
+9
+(3)
+(5)
+212
+Reimbursement obligations
+Warranties
+39
+30
+(6)
+610
+952
+Obligations to employees
+30 Septem-
+ber 2023
+2,616
+4,760
+570
+5,696
+120
+385
+215
+720
+17 Provisions
+Provisions for warranties mainly represented the estimated future cost of fulfilling
+contractual requirements associated with products sold.
+Other provisions comprised mainly provisions for litigations (other than those relating
+to Qimonda), asset retirement obligations and miscellaneous other liabilities.
+2,297
+Of the total provisions as of 30 September 2023 and 2022, cash outflows of €799 million
+and €983 million, respectively, were expected to occur within one year. For the non-
+current provisions, the cash outflow was expected to occur after more than one year.
+Besides the provisions in connection with Qimonda, €49 million as of 30 September
+2023 and €42 million as of 2022 of non-current provisions were attributable to length-
+of-service related anniversary awards.
+Other current liabilities as of 30 September 2023 and 2022 consisted of the following:
+Current and non-current provisions as of 30 September 2023 consisted of the following:
+1 October
+Addition
+Usage
+Reversal
+€ in millions
+2022
+18 Other current liabilities
+(17)
+30 September 2022
+The total lines of credit as of 30 September 2023 and 2022 are summarized in the
+following table:
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+=
+123
+Some leases contain renewal options that may be exercised by Infineon prior to
+the expiration of the non-cancelable lease term. Infineon has possible future (undis-
+counted) leasing payments amounting to €45 million that are not included in
+lease liabilities because it is not sufficiently certain that the leases will be renewed.
+In addition, there are future payment obligations for leases that have not yet started
+but have already been contracted amounting to €48 million.
+Future payment obligations relating to short-term leases with a term of twelve months
+or less are immaterial in value.
+The lease contracts, in which Infineon subleases and acts as a lessor, are not material
+from the Group's point of view.
+The expected non-discounted future minimum lease payments from operating leases
+for land and buildings owned by Infineon and in which Infineon acts as lessor are as
+follows:
+16 Financial debt
+Financial debt as of 30 September 2023 and 2022 consisted of the following:
+€ in millions
+Short-term financial debt and current portion of long-term financial debt,
+weighted average interest rate 2022: 0.87%
+Bond €750 million, coupon 0.75%, due 2023
+USPP note US$350 million, interest rate 3.94%, due 2024
+Short-term financial debt and current portion of long-term financial debt
+Bond €500 million, coupon 0.625%, due 2025
+Bond €750 million, coupon 1.125%, due 2026
+Bond €750 million, coupon 1.625%, due 2029
+Bond €650 million, coupon 2.00%, due 2032
+USPP notes US$585 million,
+weighted average interest rate 4.18%, due 2026-2028
+USPP notes US$1,300 million,
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+6
+Payments for lease liabilities
+86
+84
+2
+2
+Interest payments
+11
+5
+30 Septem-
+ber 2023
+6
+Total
+113
+117
+(4)
+(3)
+21
+389
+The Consolidated Statement of Cash Flows includes the following amounts in the
+2023 and 2022 fiscal years that are attributable to leases:
++++
+30 September 2023
+30 Septem-
+ber 2022
+749
+ber 2023
+ber 2022
+Total
+12
+18
+16
+23
+1
+29
+41
+1,224
+1,329
+4,403
+4,910
+4,733
+5,662
+A €750 million bond maturing on 24 June 2023 was repaid as scheduled.
+Long-term financial debt
+30 Septem-
+30 Septem-
+weighted average interest rate 2.88%, due 2027-2033
+330
+330
+752
+498
+497
+746
+745
+743
+3
+742
+639
+552
+958
+€ in millions
+Due within one year
+Due after one year to five years
+Due after more than five years
+Total
+Infineon | Annual Report 2023
+640
+Domestic
+plans
+4
+30 September 2022
+128 →
+Investment strategy
+The pension plans' assets are invested with several fund managers. The investment
+guidelines require a mix of active and passive investment management programs
+covering different asset classes. Taking the duration of the underlying liabilities into
+account, a portfolio of investments of plan assets in equity, debt and other securities,
+as well as real estate and reinsurance policies, is targeted to maximize the total long-
+term return on assets for a given level of risk. Investment risk is monitored on an
+ongoing basis through periodic portfolio reviews, in coordination with investment
+managers and annual liability measurements. Investment policies and strategies are
+periodically reviewed as part of detailed studies of assets and liabilities by indepen-
+dent investment advisors and actuaries to ensure the objectives of the plans are met,
+taking into account any changes in benefit plan structure, market conditions or other
+material items. The aim is to optimize the risk-return profile of plan assets against
+the liabilities using a diversified portfolio of investments within a defined risk budget
+and to thereby increase the funding ratio in the long term.
+Plan asset allocation
+As of 30 September 2023 and 2022, the allocation of invested plan assets to the major
+asset categories was as follows:
+Government and corporate bonds are traded in liquid markets and the majority have
+an investment grade rating. The geographical allocation of the equity component
+of plan assets is globally diversified. As a matter of policy, Infineon's pension plans
+do not invest in the shares or debt instruments of Infineon. The position “Other” in
+the previous table comprises exchange-traded commodities (ETC) and other invest-
+ment funds. The market value of the ETC held domestically was €36 million as of
+30 September 2023 (previous year: €35 million).
+The market value of the land and real estate leased to Infineon group companies by
+the legally independent pension trust amounted to €29 million and €30 million as of
+30 September 2023 and 2022 respectively.
+The realized return on plan assets in the fiscal year ended 30 September 2023 was
+positive €29 million (30 September 2022: negative €89 million).
+Amounts recognized in the Consolidated Statement of Profit or Loss
+and in the Consolidated Statement of Comprehensive Income
+The expenses and income of defined benefit plans for the 2023 and 2022 fiscal years
+comprised the following:
+€ in millions
+Government bonds
+Corporate bonds
+Equity securities
+Cash and cash equivalents
+Reinsurance policies
+Property
+Other
+Total
+Infineon | Annual Report 2023
+30 September 2023
+Quoted
+in an
+active market
+Not quoted
+in an
+active market
+30 September 2022
+Quoted Not quoted
+in an
+in an
+active market active market
+2023
+2022
+Domestic
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+1,012
+825
+186
+1,011
+Projected future pension increases
+2.1
+2.8
+2.3
+2.9
+a 50 basis points
+lower expected rate
+of pension increase
+783
+Foreign
+185
+781
+180
+961
+Increase in life expectancy
+In order to determine the present value as of the balance sheet date, the Willis Towers
+Watson RATE:Link approach was applied, which is based on high-grade fixed-interest
+of one year
+818
+190
+1,008
+820
+185
+1,005
+Infineon | Annual Report 2023
+968
+191
+Total
+Foreign
+22
+29
+Expected return
+42
+39
+on plan assets
+Pension cost
+23
+(26)
+(13)
+33
+26
+8
+2
+10
+(39)
+(35)
+(8)
+(43)
+3
+29
+3
+30
+37
+21
+36
+16
+(19)
+(5)
+(14)
+(37)
+Total
+€ in millions
+plans
+plans
+plans
+plans
+146
+1
+130
+1
+Current service cost
+(20)
+(8)
+Domestic
+(28)
+(7)
+(35)
+159
+173
+Past service (cost) benefit
+(1)
+2
+1
+Interest cost
+261
+231
+(29)
+(8)
+(28)
+30 September 2023
+Foreign
+plans
+10.0
+lower expected rate
+996
+821
+of pension increase
+5.0
+2.5
+5.7
+2.4
+187
+higher expected rate
+3.8
+5.1
+a 50 basis points
+975
+179
+796
+978
+4.8
+183
+809
+193
+93
+a 50 basis points
+Actuarial assumptions
+lower discount rate
+851
+a 50 basis points
+198
+1,001
+1,049
+193
+1,050
+The weighted-average assumptions used in calculating the actuarial values for the
+pension plans were as follows:
+a 50 basis points
+higher expected rate
+of salary increase
+808
+857
+795
+4.1
+30 September 2023
+of salary increase
+985
+183
+802
+989
+188
+801
+Total
+855
+101
+754
+849
+96
+753
+or partly funded
+Total
+Foreign
+plans
+Domestic
+plans
+Total
+a 50 basis points
+higher discount rate
+Present value of defined
+benefit pension plans with:
+plans
+in %
+Discount rate at the end of the fiscal year
+Rate of salary increase
+plans
+plans
+30 September 2022
+Foreign
+plans
+926
+Domestic
+173
+935
+179
+756
+Domestic
+753
+Foreign
+31 March 2024
+3rd tranche
+2021 fiscal year:
+36.16
+31 March 2025
+36.16
+30.99
+278,708
+278,708
+31 March 2026
+31 March 2025
+30.99
+721,280
+4th tranche
+721,280
+30.33
+29.96
+29.56
+35.29
+34.87
+With the granting of a (virtual) performance share, the participants in the plan acquire
+the right to receive (real) Infineon shares once a personal investment in Infineon
+shares - depending on position and LTI grant amount – has reached a four-year
+holding period.
+4th tranche
+12.95
+938,666
+18.10
+29 February 2024
+2020 fiscal year: Employees
+2020 fiscal year:
+Fair value per
+performance
+share in €
+Number of
+performance
+shares
+outstanding
+as of 30 Sep-
+tember 2023
+in €
+Average share
+price in the
+nine months
+before grant
+End of the
+waiting period
+Tranche
+The following is an overview of the allocations made:
+simulation model for the prediction of share price and index developments). The
+fair value of the instruments granted was determined, taking into account future
+dividends as well as the payment cap.
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+For the tranches up to and including 1 March 2020, the performance shares are split
+between 50 percent performance-related shares and 50 percent that are not dependent
+on performance. The performance-related shares are finally granted only when the
+Infineon share outperforms the Philadelphia Semiconductor Index (SOX) during
+the period between the date of the provisional allocation and the end of the vesting
+period. If at the end of the vesting period the requirements for an allocation of perfor-
+mance shares - either all or only those that are not performance-related – are fulfilled,
+then entitlement to the transfer of the corresponding number of (real) Infineon shares
+is acquired. The value of the performance shares ultimately assigned to members
+of the Management Board must not exceed 250 percent of the respective LTI grant
+amount; above this cap, performance shares lapse.
+-
+The costs for share-based payment amounted to €92 million in the 2023 fiscal year
+(2022: €62 million).
+Plan conditions for tranches up to and including 1 March 2020
+Under this plan, (virtual) performance shares are initially provisionally granted on
+1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a predeter-
+mined LTI grant amount in euros.
+A Long-Term Incentive (LTI) plan, the so-called Performance Share Plan, was developed
+for employees and members of the Management Board.
+Performance Share Plan
+The Company makes use of the Performance Share Plan and the Restricted Stock
+Unit Plan in order to provide share-based payments.
+22 Share-based payment
+133 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Members of the Management Board
+29 February 2024
+18.10
+70,850
+2020 fiscal year:
+4th tranche
+29 February 2024
+18.62
+73,146
+17.31
+The development of the restricted stock units is as follows:
+in number of shares (in millions)
+Outstanding restricted stock units at the beginning of the fiscal year
+Granted
+Allocated
+Outstanding restricted stock units as of the end of the fiscal year
+Costs for share-based payment
+2023
+3rd tranche
+2022
+1.8
+3.7
+3.3
+(1.2)
+(0.5)
+(0.3)
+(0.3)
+6.5
+4.3
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The performance period begins on 1 October of the first fiscal year of the perfor-
+mance period and ends four years later on 30 September. Performance during the
+performance period is measured using the relative total shareholder return (TSR)
+financial performance criterion compared to companies in a selected industry peer
+group, together with non-financial performance criterion comprising strategy-derived
+environmental, social and governance (ESG) objectives. The TSR target accounts
+for 80 percent and the ESG targets 20 percent of the overall target achievement. For
+tranches from 1 April 2023, the TSR target accounts for 70 percent to 80 percent and
+the ESG targets for 20 percent to 30 percent of the overall target achievement. TSR and
+the ESG target achievements can be between 0 percent and 150 percent.
+Plan conditions for tranches from 1 April 2021
+With the granting of a (virtual) performance share, the participants in the plan
+acquire the right to receive (real) Infineon shares when one of the position-dependent
+personal investments in Infineon shares has reached a four-year holding period.
+The number of real Infineon shares to be transferred depends on the achievement
+of targets during the performance period.
+12.50
+4.3
+Forfeited
+in number of shares (in millions)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Tranche
+The following is an overview of the allocations made:
+135 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+28.87
+178,213
+2nd tranche
+22.82
+Members of the Management Board
+28.87
+500,510
+22.82
+31 March 2025
+2021 fiscal year: Employees
+2021 fiscal year:
+27.63
+148,737
+34.85
+31 March 2026
+31 March 2025
+Members of the Management Board
+End of the
+waiting period
+Number of
+restricted
+stock units
+as of 30 Sep-
+tember 2023
+31 March 2024
+2nd tranche
+2022 fiscal year:
+37.34
+36.53
+36.16
+35.77
+920,464
+37.68
+31 March 2027
+4th tranche
+920,464
+37.68
+Price of an
+Infineon share
+as of the
+grant date in €
+31 March 2026
+920,464
+37.68
+31 March 2025
+920,464
+37.68
+31 March 2024
+1st tranche
+2023 fiscal year:
+restricted
+stock unit
+in €
+Fair value per
+3rd tranche
+Combined Management Report
+2022 fiscal year:
+464,798
+2022
+2023
+Restricted Stock Unit Plan
+Outstanding performance shares as of the end of the fiscal year
+Forfeited
+Allocated
+Outstanding performance shares at the beginning of the fiscal year
+Granted
+In the 2023 fiscal year, Infineon has met the minimum requirements of all covenants.
+Should Infineon not comply with the covenants attached to the USPP notes, then
+all USPP notes outstanding as of 30 September 2023 amounting to US$2,235 million
+(see note 16, p. 123) could become immediately repayable.
+The development of the performance shares is as follows:
+Fair value per
+performance
+share in €
+3.2
+Number of
+performance
+shares
+outstanding
+as of 30 Sep-
+tember 2023
+60 trading
+Average share
+price in the
+End of the
+waiting period
+Tranche
+The following is an overview of the allocations made:
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of the share price development and the TSR target
+achievements). The fair value of the instruments granted is determined taking into
+account future dividends as well as the payment cap.
+The final number of performance shares to be allocated after the expiry of the
+vesting period is determined by multiplying the number of provisionally allocated
+performance shares by the overall target achievement of the two performance criteria
+during the performance period. The final allocation of the performance shares
+within an LTI tranche may not result in a profit (before tax) of more than 250 percent
+of the respective LTI grant amount; above this cap, all performance shares still to
+be allocated lapse.
+The tranche is granted on 1 April in the first fiscal year of the performance period
+(allocation day). The vesting period begins on the allocation day. In contrast to the
+performance period, the vesting period ends four years after the allocation day, i.e.,
+on 31 March. At the end of the four-year performance period, the target achievement
+is determined.
+← 134 →
+Further information
+days before
+the start of the
+performance
+period in €
+27.63
+3.3
+0.7
+34.85
+31 March 2026
+2022 fiscal year: Employees
+32.31
+207,343
+25.00
+31 March 2027
+Members of the Management Board
+2023 fiscal year:
+32.31
+0.9
+683,239
+31 March 2027
+2023 fiscal year: Employees
+The fair value of the restricted stock units at the date of allocation was determined
+by an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of share price developments). The fair value of
+the instruments granted is determined, taking into account future dividends.
+Under this plan, (virtual) restricted stock units are initially provisionally granted on
+1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a predeter-
+mined LTI grant amount in euros. With the allocation of a (virtual) restricted stock
+unit, the plan participants acquire the right to receive a (real) Infineon share after the
+expiry of the vesting period, provided that the employees are still employed by Infineon
+at this time. The final allocation is made in stages (each representing 25 percent of
+the provisionally allocated restricted stock units) after the expiry of the vesting period
+of one year following allocation.
+3.2
+3.2
+(0.5)
+(0.5)
+(0.3)
+(0.4)
+25.00
+The USPP notes totaling US$2,235 million issued in April 2016 and June 2021 contain
+a number of standard covenants, including a debt coverage ratio, which provides
+for a certain relationship between the size of debt (adjusted) and earnings (adjusted).
+(716)
+The gross cash position decreased from €3,717 million as of 30 September 2022,
+to €3,590 million as of 30 September 2023 (for details, see the chapter "Review
+of liquidity" in the Combined Management Report, p. 56). Based on revenues of
+€16,309 million, the ratio of gross cash to revenue as of 30 September 2023 was
+€1 billion, plus an additional 15.9 percent of revenue (30 September 2022: €1 billion,
+plus 19.1 percent of revenue).
+Infineon | Annual Report 2023
+As of 30 September 2023, sales and services relationships with related companies
+resulted in purchase commitments of €36 million (30 September 2022: €37 million).
+5
+hedge accounting
+(417)
+Dividends to shareholders of Infineon Technologies AG
+Compensation of hybrid capital investors
+resulting from
+3,137
+and hybrid capital investors of Infineon Technologies AG
+Realized gains (losses)
+Profit (loss) for the period attributable to shareholders
+(2)
+(2)
+1
+(1)
+2
+hedge accounting
+3,506
+As of 30 September 2022
+resulting from
+Unrealized gains (losses)
+310
+Actuarial gains (losses) on pensions and similar commitments
+net of tax of minus €25 million
+19
+100
+21
+120
+1
+35
+2
+8
+1
+2
+1
+Sales and service charges to and products and services received from related
+companies in the 2023 and 2022 fiscal years consisted of the following:
+2023
+2022
+Joint
+ventures
+1,369
+Associates
+Other
+related
+companies
+Joint Associates
+ventures
+Other
+related
+companies
+Sales and service charges
+Products and
+132
+29
+1
+115
+21
+1
+services received
+€ in millions
+2
+1,369
+(718)
+In the 2023 fiscal year, €39 million (2022: €39 million) was recognized in equity as
+compensation to hybrid capital investors. For the purpose of calculating earnings per
+share, the profit (loss) for the period attributable to the shareholders and hybrid
+capital investors of Infineon Technologies AG of €3,137 million (2022: €2,179 million)
+was reduced by compensation to the hybrid capital investors of €29 million (2022:
+€29 million; net of tax), to €3,108 million (2022: €2,150 million) (see note 8, ☐ p. 115).
+5 Q = <131>
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon Annual Report 2023
+Infineon Technologies AG issued a perpetual hybrid bond on 1 October 2019 to
+refinance the acquisition of Cypress, which is an equity instrument under IAS 32.
+The term is not contractually limited; the bond has no final maturity date. The hybrid
+bond can only be canceled by Infineon subject to certain conditions. The investors
+have no cancellation rights and cannot trigger a premature repayment liability for
+Infineon. Distributions are at Infineon's sole discretion.
+Hybrid capital
+> Pursuant to section 4, paragraph 6 of the Articles of Association the share capital
+is conditionally increased by up to €260,000,000 through the issue of up to
+130,000,000 new no par value registered shares for the granting of shares to
+creditors or the holders of warrants or convertible bonds, which due to the autho-
+rization by the Annual General Meeting on 20 February 2020 are issued by the
+Company or a subsidiary company (Conditional Capital 2020/1).
+As of 30 September 2023, the Company's Articles of Association provided for a
+conditional capital amounting to up to €260,000,000:
+Conditional capital
+> Section 4, paragraph 7 of the Articles of Association provides that the Manage-
+ment Board is authorized, with the approval of the Supervisory Board, to increase
+the share capital in the period up to 24 February 2026 - either once or in partial
+amounts - by a total of up to €30,000,000 by issuing new no par value registered
+shares against contributions in cash for the purpose of increasing the issue to
+employees and members of the Executive Board of the Company or its Group
+companies. The subscription rights of the shareholders are excluded in relation
+to these shares. The shares may be issued to employees in such a manner that the
+contribution to be paid on such shares is covered by the portion of the profit for
+the year that the Management Board and Supervisory Board could transfer to
+retained earnings in accordance with section 58, paragraph 2 of the German Stock
+Corporation Act. The Management Board, with the approval of the Supervisory
+Board, decides on the additional content of the share rights and the conditions of
+share issue (Authorized Capital 2021/1).
+-
+> Section 4, paragraph 4 of the Articles of Association provides that the Management
+Board is authorized, with the approval of the Supervisory Board, to increase the
+share capital in the period until 19 February 2025 once or in several partial amounts
+by a total of up to €640,000,000 through the issue of new no par value registered
+shares, against contributions in cash or in kind (Authorized Capital 2020/1). The
+new shares participate in profits from the beginning of the fiscal year of their issue.
+To the extent legally permissible, the Management Board may, with the approval
+of the Supervisory Board, and contrary to section 60, paragraph 2 of the German
+Stock Corporation Act, stipulate that the new shares participate in the profits from
+the beginning of an already ended fiscal year for which no resolution of the Annual
+General Meeting on the use of the distributable profit has yet been made at the
+time of their issue. The originally authorized capital 2020/1 of €750,000,000 was
+reduced to €640,000,000 by the capital increase of €110,000,000 as decided by the
+Management Board and the Supervisory Board on 26 May 2020 and entered in
+the Commercial Register on 27 May 2020. Within the framework of the Authorized
+Capital 2020/1, the Management Board is authorized, with the approval of the
+Supervisory Board, to exclude the subscription rights of the shareholders in certain
+cases. Cash capital increases with subscription rights excluded pursuant to section
+186, paragraph 3, sentence 4 of the German Stock Corporation Act, are not permit-
+ted to exceed 10 percent of a company's share capital – neither at the time of the
+resolution of the authorization in the Annual General Meeting, nor at the effective
+date of the authorization, or its exercise. The capital increase of 26/27 May 2020
+utilized around 4 percent of this framework. For share capital increases against
+contributions in kind or a combination of cash contributions and contributions in
+kind, the authorization further provides an upper limit of 10 percent of the share
+capital in place at the date of the authorization in the Annual General Meeting.
+As of 30 September 2023, the Company's Articles of Association provided for two
+authorized share capitals amounting to up to €670,000,000:
+Authorized share capital
+item for own shares, decreased by €10 million (2022: €5 million). Tax effects totaling
+€23 million (2022: €9 million) increased the additional paid-in capital.
+← 130 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+The hybrid capital investors' compensation is paid in arrears on 1 April of each year,
+subject to repayment or redemption. On 1 April 2023, €39 million (2022: €39 million)
+was paid out to the hybrid capital investors.
+Retained earnings
+The following table shows a reconciliation of retained earnings as of 30 September 2023
+and 2022:
+"Actuarial gains (losses) on pensions and similar commitments" contain the share of
+profit (loss) of associates and joint ventures accounted for using the equity method in
+the 2023 fiscal year of €0 million (2022: €3 million).
+Currency effects
+(39)
+Compensation of hybrid capital investors
+Net of tax
+Tax
+Pre-tax
+Net of tax
+Tax
+Pre-tax
+€ in millions
+(351)
+(718)
+2022
+2,179
+Changes in other reserves during the 2023 and 2022 fiscal years were as follows:
+1,407
+and hybrid capital investors of Infineon Technologies AG
+Dividends to shareholders of Infineon Technologies AG
+Profit (loss) for the period attributable to shareholders
+As of 1 October 2021
+€ in millions
+Other reserves
+With regard to the 2023 fiscal year, a dividend of €0.35 for each share entitled to a
+dividend shall be proposed to be paid from the €710 million of distributable profits
+of Infineon Technologies AG. This would result in an expected distribution of approxi-
+mately €456 million. The payment of this dividend depends on the approval of the
+Annual General Meeting on 23 February 2024.
+For the 2022 fiscal year, a cash dividend of €0.32 per share (total amount: €417 million)
+was paid. For the 2021 fiscal year, a cash dividend of €0.27 per share (total amount:
+€351 million) was paid.
+Dividends
+2023
+8
+1
+3
+(1)
+7
+8
+00
+3
+23 Other financial commitments
+In addition to provisions and liabilities, there were other financial obligations that
+were not recognized in the Consolidated Statement of Financial Position. These
+resulted, in particular, from legal risks (see note 24, □ p. 136 ff.) and unconditional
+purchase commitments, which are explained in more detail below.
+Contracts already entered into for commenced or planned investments in property,
+plant and equipment (purchase commitments) as of 30 September 2023 amounted
+to €2,921 million (30 September 2022: €2,344 million). Commitments arising from
+orders placed for investments in intangible asset projects amount to €1 million as of
+30 September 2023 (30 September 2022: €6 million).
+Furthermore, Infineon has committed to invest €500 million in the "European Semi-
+conductor Manufacturing Company (ESMC) GmbH" in Dresden (Germany), 100 percent
+of whose shares are currently held by Taiwan Semiconductor Manufacturing Company
+Limited (TSMC). Infineon's participation will amount to 10 percent.
+In the course of its investing activities, Infineon also receives government grants
+related to the construction and financing of certain of its manufacturing facilities.
+Grants are also received for selected research and development projects, and for
+employee development initiatives. Certain grants have been received contingent upon
+Infineon complying with particular project-related requirements, such as creating
+a specified number of jobs over a defined period of time. From today's perspective,
+Infineon expects to comply with these requirements. Nevertheless, should such
+requirements not be met, as of 30 September 2023, a maximum of €290 million
+(30 September 2022: €275 million) of subsidies already received could be refundable.
+Through certain sales and other agreements, Infineon may be obligated in the normal
+course of business to indemnify or compensate its counterparties under certain con-
+ditions for warranties, patent infringement or other matters. The maximum amount
+of potential future payments under these types of agreements is not predictable with
+any degree of certainty since the potential obligations are contingent on events that
+may or may not occur in the future and depend on certain facts and circumstances
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+136 →
+specific to each agreement. Historically, payments made by Infineon under these
+types of agreements have not had a material effect on Infineon's financial condition,
+liquidity position and results of operations.
+24 Legal risks
+Litigation and government inquiries
+Smart card chips antitrust litigation
+In October 2008, the EU Commission initiated an investigation into the Company and
+other manufacturers of chips for smart cards for alleged violations of antitrust laws.
+In September 2014, the EU Commission imposed a fine of €83 million on Infineon,
+which in July 2020 was reduced to €76.9 million by the General Court of the European
+Union.
+In July 2019, a direct customer filed a lawsuit against Infineon Technologies UK Limited
+and several Renesas entities in London (United Kingdom) relating to the aforemen-
+tioned EU antitrust case. The London court dismissed the complaint for being time-
+barred. The dismissal was confirmed by the Court of Appeal. The plaintiff filed a further
+appeal to the UK Supreme Court. In December 2022, the UK Supreme Court finally
+dismissed the complaint.
+(39)
+Cost of hedging
+(5)
+1
+Capital management, as well as the corresponding targets and definitions, are based
+on indicators derived from the consolidated IFRS financial statements. Gross cash
+is defined as the total of cash and cash equivalents and financial investments. Gross
+financial debt comprises short-term and long-term financial debt. Infineon defines
+EBITDA as earnings from continuing operations before interest, taxes and depreciation
+and amortization.
+Infineon is not subject to any statutory capital requirements, nor are any such
+defined in the Articles of Association.
+Infineon derives its long-term key objectives for capital management based on these
+principles and the clear target to remain investment grade. For liquidity, the gross
+cash should amount to €1 billion, plus at least 10 percent of revenue. Gross financial
+debt should not exceed two times EBITDA.
+Infineon's main capital management objective is to ensure financial flexibility at all
+times on the basis of a solid capital structure. It is of prime importance that sufficient
+cash funds are available to finance operating activities and planned investments
+throughout all phases of the business cycle. On the other hand, debt should only
+constitute a modest portion of the financing mix.
+21 Capital management
+132 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Proceedings in relation to Qimonda
+6,204
+As of 30 September 2023
+net of tax of minus €16 million
+1,373
+(1)
+1,374
+(713)
+3
+30.99
+Total
+Actuarial gains (losses) on pensions and similar commitments
+(4)
+17
+All significant assets, liabilities and business activities attributable to the memory
+business (Memory Products) were carved out from Infineon and transferred to
+Qimonda in the form of a contribution in kind with economic effect from 1 May 2006.
+Qimonda filed an application at the Munich local court to commence insolvency
+proceedings on 23 January 2009. On 1 April 2009, the insolvency proceedings were
+formally opened. The insolvency of Qimonda has given rise to various disputes
+between the insolvency administrator and Infineon.
+Alleged activation of a shell company and liability for impairment of capital
+The insolvency administrator filed a request for declaratory judgment in an unspeci-
+fied amount against Infineon Technologies AG and, by way of third-party notice,
+Infineon Technologies Holding B.V. and Infineon Technologies Investment B.V., at the
+Regional Court Munich I in November 2010. This requested that Infineon be deemed
+liable to make good the deficit balance of Qimonda as it stood when the insolvency
+proceedings with respect to the assets of Qimonda began, i.e., to refund to Qimonda
+the difference between the latter's actual business assets when the insolvency pro-
+ceedings began and its share capital (in German: "Unterbilanzhaftung"). The insolvency
+administrator contended that the commencement of operating activities by Qimonda
+amounted to what is considered in case law to be the activation of a shell company
+(in German: "Wirtschaftliche Neugründung”), and that this activation of a shell com-
+pany was not disclosed in the correct manner. On 6 March 2012, with respect to
+another matter, the German Federal High Court issued a ruling on principle that any
+liability resulting from the activation of a shell company only depends on the situa-
+tion at the date of the activation of a shell company and not, as asserted by the insol-
+vency administrator, on the situation at the date on which insolvency proceedings
+are opened.
+Provisions relating to legal proceedings and other uncertain legal issues are recorded
+when it is probable that a liability has been incurred and the associated amount can
+be reasonably estimated. To the extent that liabilities arising from legal disputes and
+other uncertain legal positions are not probable or cannot be reliably estimated, then
+they qualify as contingent liabilities. Any potential liability is reviewed again as soon
+as additional information becomes available and the estimates are revised if necessary.
+Provisions with respect to these matters are subject to future developments or changes
+in circumstances in each of the matters, which could have a material adverse effect
+on Infineon's financial condition, liquidity position and results of operations.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+139 →
+A settlement or adverse judicial decision in any of the matters described above
+could result in significant financial liabilities for Infineon and other adverse effects,
+and these in turn could have a material adverse effect on its business and financial
+condition, liquidity position and results of operations. Irrespective of the validity
+of the allegations and the success of the aforementioned claims and other matters
+described above, Infineon could incur significant costs in the defense of these matters.
+25 Transactions with related companies and persons
+Infineon has transactions in the normal course of business with joint ventures, asso-
+ciates and other related companies (collectively "related companies"). The related
+companies are disclosed in note 30, p. 165 ff.. Related persons are persons in key
+management positions, in particular members of the Management and Supervisory
+Board (see note 30, ☐ p. 162 f.) and their close relatives (collectively "related persons").
+Related companies
+Provisions and contingent liabilities for legal proceedings
+and other uncertain legal issues
+Infineon purchases certain raw materials and services from and sells certain products
+and services to related companies.
+€ in millions
+30 September 2023
+30 September 2022
+Joint
+ventures
+Associates
+Other
+related
+companies
+Joint
+ventures
+Associates
+Other
+related
+companies
+Trade and other receivables
+Financial receivables
+Trade and other payables
+Financial payables
+16
+12
+30
+Related companies receivables and payables as of 30 September 2023 and 2022
+consisted of the following:
+With gross financial debt of €4,733 million as of 30 September 2023 (30 September
+2022: €5,662 million), and EBITDA of €5,773 million for the 2023 fiscal year (2022:
+€4,518 million), the gross debt to EBITDA ratio was 0.8 as of 30 September 2023
+(30 September 2022: 1.3). Infineon continues to have sufficient financial flexibility
+to ensure that, in addition to financing its planned investments, it is also able to
+regularly pay dividends (see note 20, p. 131).
+As part of an audit finding relating to the tax treatment of losses from the repurchase
+of convertible bonds in the 2011, 2012 and 2014 fiscal years, there were contingent
+liabilities of €63 million as of 30 September 2023 (2022: €63 million) for withholding
+tax on capital gains to be paid in arrears as well as corporate income tax and trade
+tax of €3 million (2022: €3 million), in each case plus interest. Suspension of enforce-
+ment was granted as part of the ongoing appeal proceedings for 2011 and 2012. After
+completion of the current tax audit, suspension of enforcement will also be applied
+for 2014 and the appeal proceedings will be extended accordingly. Infineon expects
+that there is a sufficient degree of likelihood of winning any potential appeal or
+legal action.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution
+of these other pending legal disputes and proceedings will have a material adverse
+effect on Infineon's financial condition, liquidity position and results of operations.
+However, future revisions to this assessment cannot be ruled out, and any reassess-
+ment of the miscellaneous legal disputes and proceedings could have a material
+adverse effect on the financial condition, liquidity position and results of operations,
+particularly in the period in which reassessment is made.
+In addition to the request for declaratory judgment against Infineon in an unspecified
+amount, on 14 February 2012 the insolvency administrator also lodged a request for
+payment based on an alternative claim (in German: "Hilfsantrag"), as well as making
+other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in con-
+nection with the alleged activation of a shell company. On 15 June 2012, the insolvency
+administrator increased his request for the payment of 14 February 2012 on the
+grounds of activation of a shell company to at least approximately €3.35 billion plus
+interest. Furthermore, the insolvency administrator continues to base a substantial
+part of his alleged payment claims, as already asserted out of court against Infineon
+in August 2011 for an unspecified amount, on liability for impairment of capital (in
+German: "Differenzhaftung”). This claim is based on the allegation that, from the
+very beginning, the carved-out memory products business had a negative billion
+euro value. The insolvency administrator therefore asserts that Infineon is obliged
+to make good the difference between this negative value and the lowest issue price
+(in German: "geringster Ausgabebetrag") of the subscribed stock. Additionally, the
+insolvency administrator has asserted a claim for repayment of allegedly unjustly
+charged consultancy fees in the amount of €10 million in connection with the flotation
+of Qimonda.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+137 →
+The alleged impairment of capital runs contrary to two valuations prepared as part
+of the preparatory documentation for the capital increase by independent auditing
+companies, one of which had been engaged by Infineon and the other of which was
+acting in the capacity of a court-appointed auditor of contributions in kind and
+post-formation acquisitions. The auditing company engaged by Infineon concluded
+in its valuation that the business area contributed had a value of several times the
+lowest issue price of the shares issued, while the court-appointed auditor of contribu-
+tions in kind and post-formation acquisitions confirmed to the court that the lowest
+issue price of the shares issued was covered - as legally required - by the value of
+the contributions in kind. Additionally, in the course of its defense against the claims
+asserted by the insolvency administrator, Infineon has commissioned several expert
+opinions, all of which arrived at the same conclusion that the objections raised by
+the insolvency administrator against the valuation of the contribution in kind are
+not valid.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged
+lack of value. On 29 August 2013, the court appointed an independent expert to
+clarify the valuation issues raised by the insolvency administrator and to address
+technical matters.
+The legal dispute is being pursued with great effort by both parties, and many
+extensive written submissions have already been exchanged between the parties.
+Both sides have engaged numerous specialists and experts who are supporting the
+respective parties with assessments and opinions.
+On 21 September 2018, in consultation with the parties, the independent expert
+appointed by the court presented an interim report on his preliminary assessment
+of the value of the contribution in kind. The Company is in principle prepared to
+conduct discussions about an out-of-court settlement of the legal dispute on the
+basis of the interim report.
+Furthermore, in connection with its existing or previous business operations, Infineon
+is also exposed to numerous legal risks, which until now have not resulted in legal
+disputes. These include risks related to product liability, environment, capital market,
+anti-corruption, competition and antitrust legislation as well as export control and
+other compliance regulations. Claims could also be made against Infineon in connec-
+tion with these matters in the event of breaches of law committed by individual
+employees or third parties.
+The parties are exchanging further written submissions. It is not clear at this stage
+if the legal dispute can be resolved with an out-of-court settlement, or, if this is not
+the case,
+when a first-instance court decision would be reached.
+Infineon was a shareholder with personal liability of Qimonda Dresden until the
+carve-out of the memory business; as a result, certain long-standing creditors have
+residual liability claims against Infineon. These claims can only be exercised by the
+insolvency administrator acting in the name of the creditors concerned. In the mean-
+time, settlements have been concluded with most of the major liability creditors.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon recognizes provisions and liabilities for such obligations and risks, which it
+assesses at the end of each reporting period, are more likely than not to be incurred
+(that is where, from Infineon's perspective at the end of each reporting period, the
+probability of having to settle an obligation or risk is greater than the probability of
+not having to) and the obligation or risk can be estimated with reasonable accuracy
+at this time.
+As described above, Infineon faces certain risks in connection with the insolvency
+proceedings relating to the assets of Qimonda and that entity's subsidiaries. In con-
+sideration of the interim report from the court-appointed expert, Infineon recorded
+provisions relating to Qimonda of €212 million in total as of 30 September 2023. This
+comprises mainly provisions for the still pending legal dispute over the alleged acti-
+vation of a shell company and liability for impairment of capital, including legal costs.
+As of 30 September 2022, provisions relating to Qimonda amounted to €211 million.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+138 →
+There can be no certainty that the provisions recorded for Qimonda will be sufficient
+to cover all of the liabilities that could ultimately be incurred in relation to the insol-
+vency of Qimonda and, in particular, the matters discussed above. In addition, it is
+possible that liabilities and risks materialize that are currently considered to be unlikely
+to do so and, accordingly, represent contingent liabilities that are not included in
+provisions. Should the alleged claims relating to the activation of a shell company and
+liability for impairment of capital prove to be valid, substantial financial obligations
+above the provisions already recorded could arise for Infineon, which could have an
+adverse effect on its business and its financial condition, liquidity position and results
+of operations.
+Other
+Infineon is also involved in various other legal disputes and proceedings in connection
+with its existing or previous business activities. These can relate, in particular, to
+products, services, patents, export control and environmental issues and other matters.
+Residual liability of Infineon as former shareholder of
+Qimonda Dresden GmbH & Co. OHG
+721,280
+Expense for termination benefits²
+Infineon | Annual Report 2023
+122
+478
+3
+(1,478)
+6,918
+386
+122
+17
+(84)
+331
+1
+(1)
+2
+5,662
+6
+461
+3
+(1,393)
+6,585
+5,115
+4
+6
+100
+6,049
+Combined Management Report
+Financial investments
+Cash and cash equivalents
+Current assets:
+As of 30 September 2022
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+As of 30 September 2023
+€ in millions
+The following tables present the carrying amounts and the fair values of financial
+instruments by their respective classes and a breakdown by category of financial
+instruments as of 30 September 2023 and 2022 according to IFRS 9:
+Categories of financial instruments
+27 Additional disclosures on financial instruments
+142 →
+=
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and Supervisory Board
+Trade receivables
+(199)
+(2)
+Total remuneration of the Management Board and Supervisory Board
+according to IAS 24.17
+The members of the Management Board and Supervisory Board active in the 2023
+and 2022 fiscal years received the following remuneration for their activities in
+accordance with IAS 24.17:
+€ in millions
+Expense for short-term benefits¹
+Change
+2023
+2022
+absolute
+in %
+9
+11
+(2)
+(18)
+Expense for share-based payment
+3
+2
+1
+50
+Expense from post-employment benefits
+1
+1
+Related persons
+381
+← 140 →
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+100
+(17)
+1
+4,733
+6
+(182)
+(839)
+6,049
+(86)
+386
+1
+(753)
+5,662
+Other changes
+New leases
+Carrying amount
+Non-cash-effective changes
+Currency effects
+Acquisitions
+Cash-effective
+changes
+Management Board and Supervisory Board
+Combined Management Report
+Further information
+Other current assets¹
+Non-current assets:
+Other non-current assets¹
+these provisionally allocated (virtual) performance shares amounted to €6 million
+(2022: €4 million).
+The total remuneration of the members of the Management Board for their active
+service pursuant to section 314, paragraph 1, no. 6 in conjunction with section 315e,
+paragraph 1, HGB amounted to €9 million (2022: €15 million). This includes a long-term
+incentive (LTI) in the form of a performance share plan (see note 22, □ p. 133 f.). A total
+of 193,373 (virtual) performance shares (2022: 148,737) were provisionally allocated
+to the members of the Management Board in the 2023 fiscal year. The fair value of
+Total remuneration of the Management Board and Supervisory Board
+pursuant to section 314, paragraph 1, no. 6 in conjunction with
+section 315e, paragraph 1, HGB
+1 The expense includes the fixed remuneration, including fringe benefits and the one-year variable remuneration (STI).
+2 Both Dr. Reinhard Ploss and Dr. Helmut Gassel resigned from the Management Board of Infineon Technologies AG in the 2022 fiscal year.
+Their employment contracts continued until 31 December 2022 and 30 September 2022, respectively. For this period, Dr. Reinhard Ploss
+and Dr. Helmut Gassel were entitled to remuneration in full. In addition, Dr. Helmut Gassel was granted a severance payment and agreed
+to a post-contractual non-competition clause that runs until November 2023, for which Dr. Helmut Gassel received compensation.
+3 Employee representatives on the Supervisory Board who are employed by Infineon also receive a salary for their activities as employees.
+(43)
+(12)
+28
+16
+Total remuneration of the executive bodies
+3
+3
+Total remuneration of the Supervisory Board³
+(48)
+(12)
+25
+13
+Total remuneration of the Management Board
+(11)
+1 The presentation of grants receivables as well as of some of the advance payments made was corrected in the 2023 fiscal year. These are now no longer reported under current or non-current financial assets. The previous year's figures have been adjusted to improve comparability.
+5,902
+205
+The total remuneration of the members of the Supervisory Board in the 2023 fiscal year
+amounted to €3 million (2022: €3 million).
+93
+Former members of the Management Board received payments of €7 million in the
+2023 fiscal year (2022: €3 million).
+In the 2023 and 2022 fiscal years, there were no significant transactions between
+Infineon and related persons that fell outside of the scope of the existing employ-
+ment, service or appointment terms, or the contractual arrangements for their
+remuneration.
+Current and non-current lease liabilities
+Total
+Related party financial payables
+Short-term and long-term financial debt
+The 2022 fiscal year
+Current and non-current lease liabilities
+Total
+11
+Short-term and long-term financial debt
+The 2023 fiscal year
+€ in millions
+The reconciliation below shows changes in those financial liabilities and hedging
+transactions for which payments received and made are shown under cash flows from
+financing activities in the statement of cash flows.
+of consolidated companies located in countries where the transfer of cash is legally
+restricted, for example, China.
+Cash and cash equivalents reported as of 30 September 2023 and 2022 totaling
+€1,820 million and €1,438 million, respectively, included €50 million and €69 million,
+respectively, which were subject to legal transfer restrictions and so were not avail-
+able for general use by Infineon. This amount represented cash and cash equivalents
+26 Supplemental cash flow information
+141 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+With regard to the disclosures on the individual remuneration of the members of the
+Management Board and Supervisory Board pursuant to section 162 of the German
+Stock Corporation Act (AktG), reference is made to the Remuneration Report prepared
+according to stock corporation law, which can be found under the following link:
+www.infineon.com/remuneration-report
+Constanze Hufenbecher resigned from her position on the Management Board with
+effect from 31 October 2023; her contract of employment will end on 14 April 2024.
+The Supervisory Board appointed Elke Reichart to succeed Constanze Hufenbecher
+with effect from 1 November 2023 until 31 October 2026.
+As of 30 September 2023, pension obligations for former members of the Management
+Board amounted to €63 million (30 September 2022: €63 million).
+1,887
+2,279
+1,438
+353
+2
+363
+1,991
+1,991
+1,991
+1,770
+1,770
+1,770
+1,820
+651
+1,169
+1,820
+Fair value
+Designated hedging
+instruments
+(cash flow hedges)
+Not assignable to any
+IFRS 9 measurement
+category
+At amortized cost
+At fair value through
+profit or loss
+Categories of financial assets
+Carrying amount
+Total
+8
+363
+208
+113
+2,705
+97
+108
+3,197
+205
+5,902
+88
+5
+93
+1,887
+1,887
+240
+Starting balance
+2,039
+393
+1,045
+1,438
+6,152
+8
+3,090
+3,054
+6,152
+208
+95
+2,279
+Related party financial payables
+The references to the Remuneration Report were not audited as part of the audit
+of the financial statements. The Remuneration Report was subjected to a separate
+substantive audit by the auditor in accordance with IDW PS 490. This audit also
+includes the formal audit required by section 162, paragraph 3 of the German Stock
+Corporation Act (AktG).
+Infineon | Annual Report 2023
+Total
+Inventories
+1
+(1)
+1
+1
+Hedging of commodity price risks
+(1)
+1
+1
+Line item of the Statement
+of Financial Position
+or the Statement of
+Profit or Loss affected
+by the reclassification
+7
+(5)
+from the hedge reserve
+Amount reclassified
+Changes in fair value
+of cost of hedging
+recognized in other
+comprehensive income
+5
+8
+Changes in fair value
+of the hedging instrument
+recognized in other
+comprehensive income
+Changes in fair value
+for the measurement
+of the ineffectiveness
+in the reporting period
+Carrying amount
+Deal contingent forward
+Hedging of foreign exchange risks
+Other current liabilities:
+to the cost of
+non-financial assets
+Deal contingent option
+(2)
+1
+Acquisitions (including additions)
+13
+Unrealized losses recognized in profit or loss¹
+Losses in equity
+30 September 2023
+(4)
+(5)
+8
+(1)
+(1)
+10
+1 This relates to gains recognized in financial income or losses recognized in financial expenses.
+A hypothetical change in the material on the market non-observable valuation
+parameters at the balance sheet date of ± 10 percent or one month would have resulted
+in a theoretical reduction in fair values of €1 million or an increase of €1 million
+(previous year: both €1 million).
+(5)
+Infineon | Annual Report 2023
+Inventories
+Infineon | Annual Report 2023
+(2)
+(2)
+Total
+(2)
+(2)
+3
+Hedging of commodity price risks
+Other current liabilities:
+30 September 2022
+16
+Unrealized losses recognized in profit or loss¹
+Hedging of foreign exchange risks
+30 September 2023
+30 September 2023
+€ in millions
+The amounts relating to positions that were designated as hedged items as of
+30 September 2023 and 2022 are shown in the table below.
+as a hedging relationship
+Effects from derivative financial instruments designated
+Consolidated Statement of Profit or Loss for these hedging relationships. As in the
+previous year, no gains or losses were transferred from other reserves to profit or loss
+as a result of cash flow hedges for future raw material purchases being canceled
+following the decision that the occurrence of the hedged transaction had become
+unlikely.
+To hedge the price risks of highly probable gold purchases in the 2024 fiscal year,
+Infineon entered into swaps, which are designated as cash flow hedges. The designated
+hedged items and the hedging instruments were subject to the same risk. The eco-
+nomic connection was proven by means of a regression analysis. Due to the execu-
+tion of only highly effective hedging transactions, Infineon assumes that significant
+ineffective elements will normally not be generated. Infineon applies a hedging ratio
+of 1:1. Ineffectiveness can be caused mainly by the impact of the credit risks arising
+from the counterparty and Infineon on the fair value of the swap that is not reflected
+in the change in the fair value of hedged cash flows attributable to changes in raw
+material prices. As in the previous year, no hedge ineffectiveness was recorded in the
+As part of the hedging, only the spot component of the deal contingent forward and the
+intrinsic value of the deal contingent option were designated as hedging instruments.
+The forward elements of the deal contingent forward, and the time value of the deal
+contingent option, each containing a contingency component, are excluded from the
+designation of hedging instrument and were considered in the recognition of costs
+of hedging and disclosed in equity in a reserve for the costs of hedging, to the extent
+that they can be attributed to the hedged item. No material ineffective elements arising
+from the deal contingent forward or the deal contingent option were recognized in
+the Consolidated Statement of Profit or Loss in the 2023 fiscal year. Any ineffectiveness
+was attributable to changes in the expected timing of the payment of the purchase
+price in US dollars as well as the contingency component contained within the hedg-
+ing instruments and the credit default risk. With the completion of the acquisition
+of GaN Systems on 24 October 2023, the deal contingent forward and deal contingent
+option became due and the hedge was closed. The effective portion of the hedge
+and the cumulative amounts recognized in the reserve for the costs of hedging were
+reclassified as costs of the acquisition of GaN Systems and were therefore taken into
+account in determining the goodwill arising from the transaction.
+148 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Change in the value
+of the hedged item
+used to determine
+ineffectiveness
+Combined Management Report
+In order to hedge the foreign currency risks attributable to the purchase price obliga-
+tion arising from the acquisition of GaN Systems (see note 3, □ p. 107 f.), a contingent
+(transaction-dependent) euro/US dollar foreign currency forward (deal contingent
+forward) and a contingent (transaction-dependent) euro/US dollar foreign currency
+option (deal contingent option), each with a nominal value of US$415 million, were con-
+cluded on 2 March 2023 and were accounted for as cash flow hedges. At the inception
+of the hedging transaction, and on a continuing basis, Infineon verifies the existence
+of an economic relationship between the hedged item and the hedging instrument
+(critical term). For the abovementioned hedging transactions, the hedge ratio was 1:1.
+Infineon | Annual Report 2023
+1,797
+51
+2,008
+24
+1.0575
+415
+415
+1.0574
+Short term
+(17)
+Management Board and Supervisory Board
+Other current assets:
+Hedge reserve
+(before taxes)
+Hedging of foreign exchange risk
+€ in millions
+The relevant amounts of the derivative financial instruments designated as hedging
+instruments as of 30 September 2023 and 2022 (before taxes) were as follows:
+149 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+In the 2023 and 2022 fiscal years, no balances remained in other comprehensive
+income for which hedge accounting was no longer applied.
+(2)
+(2)
+2
+Cost of
+hedging reserve
+(before taxes)
+Hedging of commodity price risks
+Total
+(5)
+(2)
+(1)
+1
+Hedging of commodity price risks
+Total
+(5)
+5
+Deal contingent option
+(1)
+1
+Deal contingent forward
+30 September 2022
+30 September 2022
+1 October 2021
+14
+94
+108
+Other non-current assets
+Non-current assets:
+5
+5
+Other current assets
+2,039
+2,039
+Financial investments
+1,045
+14
+1,045
+30 September 2022
+Current assets:
+1
+5
+1
+5
+6
+6
+Total
+Other current liabilities
+Current liabilities:
+18
+Cash and cash equivalents
+2
+Total
+3,178
+Equity
+investments
+forward
+Deal contingent
+Deal contingent
+option
+The following table shows the reconciliation of financial instruments classified as
+level 3 (before tax):
+€ in millions
+Other non-current assets included equity investments and investments in funds. Where
+these are traded on an active market, the fair value was based on the actual market
+price (level 1). In addition, other non-current assets included derivative financial
+instruments whose fair value was calculated using recognized financial-mathematical
+models, with only observable input parameters included in the measurement (level 2).
+For equity investments where no market price from an active market is available, the
+fair value was determined by considering existing contractual arrangements based
+on externally observable dividend policy (level 3).
+The determination of the fair values of the deal contingent forward and deal contingent
+option designated as cash flow hedges (see “Derivative financial instruments and
+hedging activities”, p. 147 ff.) were determined on the basis of factors observable in
+markets such as forward prices, interest rate curves and volatilities. In addition, the
+assumption about the date of completion of the acquisition was taken into account
+as a non-observable factor (level 3).
+Other current assets and other current liabilities contained derivative financial instru-
+ments (including cash flow hedges). Their fair value was determined by discounting
+future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such
+as currency rates, interest rates, or commodity prices) drawn from reliable external
+market data providers were used (level 2). Where fair values are determined on the
+basis of non-observable factors, these are assigned to level 3.
+← 145 →
+Further information
+3,197
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and Supervisory Board
+Cash equivalents and financial investments included investments in money market
+funds and investment funds (level 1).
+25
+25
+25
+25
+Total
+Other current liabilities
+Current liabilities:
+14
+5
+Combined Management Report
+3,042
+3,062
+Total
+Financial instruments at fair value
+Disclosures about fair value
+In the 2023 and 2022 fiscal years, there were no reclassifications between the
+categories of financial instruments.
+Within financial assets measured at amortized cost, financial assets with a
+carrying amount of €13 million (previous year: €14 million) were included as of
+30 September 2023, which Infineon has pledged mainly as collateral for rental
+liabilities.
+5 Q = 144 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+8,377
+386
+Financial instruments measured at fair value are allocated to the following measure-
+ment levels in accordance with IFRS 13. The allocation to the different levels is
+based on the market proximity of the valuation parameters used in the determination
+of the fair values:
+3
+22
+9,350
+67
+67
+310
+4,333
+310
+67
+4,911
+4,910
+Infineon | Annual Report 2023
+Non-current lease liabilities
+Other non-current liabilities
+Total
+8,940
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and
+liabilities,
+> Level 2: valuation parameters whose prices are not considered in level 1, but which
+can be observed either directly or indirectly for the asset or liability,
+> Level 3: valuation parameters for assets and liabilities that are not based on
+observable market data.
+10
+103
+113
+Other non-current assets
+Non-current assets:
+8
+2
+10
+Other current assets
+1,770
+1,770
+Financial investments
+1,169
+1,169
+Cash and cash equivalents
+Current assets:
+30 September 2023
+€ in millions
+Level 3
+Level 2
+Level 1
+Fair value by category
+Fair value
+The allocation to the levels as of 30 September 2023 and 2022 was as follows:
+Infineon | Annual Report 2023
+(2)
+1
+(2)
+2
+9,002
+4
+8,615
+2
+381
+130
+8,136
+As of 30 September 2022
+Current liabilities:
+Short-term financial debt and current portion
+of long-term financial debt
+752
+130
+Trade payables
+752
+2,260
+742
+2,260
+Current lease liabilities
+76
+76
+975
+22
+950
+3
+975
+Other current liabilities
+2,260
+Non-current liabilities:
+130
+309
+Not assignable to any IFRS 9
+measurement category
+At fair value through
+profit or loss
+Other
+financial liabilities
+(amortized cost)
+Designated hedging
+instruments
+(cash flow hedges)
+Others
+Fair value
+330
+2,765
+330
+2,765
+309
+333
+2,765
+72
+993
+4
+987
+2
+993
+Other non-current liabilities
+Total
+4,403
+4,403
+3,915
+72
+Categories of financial assets
+Long-term financial debt
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+(344)
+1
+1
++++
+therein impairment losses
+therein currency effects
+therein other financial expenses
+Financial assets measured at fair value
+through profit and loss
+(3)
+(13)
+10
+243
+77
+51
+(544)
+595
++++
+Fair value
+Fair value by category
+therein interest expenses
+(126)
+(129)
+3
+337
+Financial liabilities measured at amortized cost
+Management Board and Supervisory Board
+(101)
+1
+Further information
+← 146 →
+Financial instruments at amortized cost
+For assets allocated to the category "At amortized cost”, it is assumed that the
+fair values correspond to their carrying amounts. The same assumption applies to
+liabilities resulting from trade payables and other current liabilities categorized as
+"Other financial liabilities (amortized cost)".
+The fair value of current and non-current financial debt that is measured at amortized
+cost is based either on quoted prices as of the reporting date (level 1) or is determined
+based on expected future cash flows discounted using a current market interest rate
+(level 2).
+The allocation to the levels of current and non-current financial debt measured at
+amortized cost as of 30 September 2023 and 2022 was as follows:
+Gains and losses in relation to financial instruments
+The net gain or loss on financial instruments (including interest income and expense)
+in the Consolidated Statement of Profit or Loss amounted to the following as of
+30 September 2023 and 2022:
+2
+€ in millions
+Change
+1
+2023
+absolute
+in %
+Financial assets measured at amortized cost
+(57)
+255
+(312)
+therein interest income
+42
+11
+31
++++
+2022
+Carrying amount
+Combined Management Report
+Long-term financial debt
+30 September 2022
+Forward exchange contracts purchased
+Total
+Forward exchange contracts sold
+€ in millions
+Derivative financial instruments not designated as a hedging relationship
+The nominal values and fair values of Infineon's derivative instruments as of
+30 September 2023 and 2022 that were not designated as cash flow hedges were
+as follows:
+Infineon holds derivative financial instruments exclusively for hedging purposes. This
+includes the use of forward exchange contracts and interest- and commodity swaps.
+The objective is to reduce the impact of the exchange rate, interest rate and commodity
+price fluctuations on future net cash flows.
+Derivative financial instruments and hedging activities
+Infineon does not net financial instruments. The Company conducts derivative
+transactions according to the global netting agreement (Master Agreement) of the
+International Swaps and Derivatives Association (ISDA) and other comparable
+national framework agreements. Under the terms of these agreements, any netting
+arising from the occurrence of certain future events would have had no material
+effect on the balance sheet presentation of these financial instruments.
+← 147 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+30 September 2023
+Combined Management Report
+Infineon | Annual Report 2023
+1,983
+3,092
+5,075
+Total
+Interest expense on financial liabilities measured at amortized cost mainly included
+interest on financial debt and effects from using the effective interest method.
+1,980
+2,353
+4,333
+Long-term financial debt
+3
+Management Board and Supervisory Board
+739
+Hedging of foreign exchange risks
+Nominal value (US dollar in millions)
+Average forward rate (euro/US dollar)
+Deal contingent option
+384
+Non-current lease liabilities
+Average price (US dollar/ounce)
+(18)
+420
+(4)
+191
+value
+value
+Fair value
+Nominal
+Deal contingent forward
+Fair value
+30 September 2023
+Nominal value (€ in millions)
+Commodity swaps
+Hedging of other risks
+30 September 2022
+Average price (US dollar/ounce)
+Nominal value (€ in millions)
+Commodity swaps
+Hedging of other risks
+Average forward rate (euro/US dollar)
+Nominal value (US dollar in millions)
+Nominal
+742
+Derivative financial instruments designated as a hedging relationship
+As of 30 September 2023 and 2022, Infineon held the following instruments, which
+were designated as cash flow hedges and were used to hedge against foreign
+exchange and commodity price changes:
+Short-term financial debt and current portion
+(1)
+therein other financial expenses
+Level 3
+Level 2
++++
+591
+(414)
+177
+therein currency effects
+€ in millions
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← 143 →
+Notes to the Consolidated Financial Statements
+€ in millions
+As of 30 September 2023
+Current liabilities:
+Short-term financial debt and current portion
+of long-term financial debt
+Trade payables
+Current lease liabilities
+of long-term financial debt
+Other current liabilities
+Non-current liabilities:
+1
++++
+Level 1
+1,878
+30 September 2022
+30 September 2023
+2,370
+4,248
+Total
+86
+158
+(184)
+Total
+1,545
+2,370
+3,915
+(26)
+(135)
+Short-term financial debt and current portion
+of long-term financial debt
+Financial assets or liabilities measured at fair value
+through profit and loss - held for trading
+Long-term financial debt
+(17)
+118
+333
+(135)
+therein currency effects
+(17)
+118
+333
+31
+(29)
+3,084
+29
+(31)
+According to IFRS 7, other price risk is defined as the risk that the fair value or future
+cash flows of a financial instrument could fluctuate because of changes in market prices
+(other than those arising from interest rate risk or exchange rate risk), irrespective
+of whether those changes are caused by factors specific to the individual financial
+instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+31
+(31)
+2,940
+In the 2023 and 2022 fiscal years, Infineon held financial instruments that were
+exposed to market price risks. A change in the relevant market prices would have had
+no significant impact on the results of the 2023 and 2022 fiscal years.
+3,084
+(29)
+€ in millions
+2,940
+basis points
+The following table shows the effects on profit or loss for the 2023 and 2022 fiscal years
+of a ±100 basis points shift in market interest rates:
+minus 100
+plus 100
+basis points
+Profit or loss
+Nominal
+value
+Other price risk
+30 September 2022
+Variable-interest financial assets
+Variable-interest financial assets
+30 September 2023
+Additionally, Infineon is exposed to price risks with respect to raw materials upon
+which it is dependent. Infineon seeks to minimize these risks through its procure-
+ment policy (including the use of multiple sources, where possible) and its operating
+procedures. In line with these measures, Infineon concluded additional financial
+derivative contracts for certain commodity supplies (gold) for the following fiscal year
+in order to mitigate the remaining risk arising from the fluctuation of commodity
+prices (see note 27, p. 147).
+29
+Infineon | Annual Report 2023
+€ in millions
+Combined Management Report
+30 September 2023
+Holding Quality 1
+Holding Quality 0
+Total
+Changes in market interest rates affect Infineon's interest income and expenses from
+variable-yield financial instruments as well as from fixed-yield financial instruments
+that were measured at fair value through profit or loss.
+Infineon rating
+The following table provides information on the credit risk for cash and cash equivalents
+measured at amortized cost, as well as financial investments as of 30 September 2023
+and 2022:
+Infineon applies the general impairment model in accordance with IFRS 9 for cash and
+cash equivalents as well as financial investments. Since Infineon invests exclusively
+in high-quality financial assets from issuers with a rating of at least investment grade
+in order to minimize default risk, Infineon assumes that its financial assets carry low
+credit risk arising from the creditworthiness of its contract parties, so that any impair-
+ment loss recorded at first-time recognition is limited to the twelve-month expected
+credit losses. Infineon considers low credit risk to be an internal credit rating "Holding
+Quality 1". A change in the internal rating from “Holding Quality 1" to "Holding Qual-
+ity 0" indicates a significant increase in credit risk. The impairment is calculated using
+a weighted-probability method. This impairment is calculated as a measure of the
+probability of default based on the exposure at the balance sheet date, the loss ratio
+for that exposure, and the credit default swap spread.
+Foreign exchange hedging contracts, as well as the investment of liquid assets in cash
+equivalents and financial investments, are entered into with major financial institu-
+tions worldwide that have high credit ratings. Infineon assesses the creditworthiness
+of banks using a methodology that establishes investment limits for individual banks
+that are updated on a daily basis according to current external ratings and credit
+default swap premiums. Possible breaches of stipulated investment thresholds result
+in immediate notification and the requirement to reduce the risk. This methodology
+is also used to identify a significant increase in credit risk in the context of the recog-
+nition of expected credit losses within the meaning of IFRS 9 at the balance sheet date.
+Credit risk arises when a customer or other counterparty of a financial instrument
+fails to discharge its contractual obligations. Infineon is exposed to this risk as a con-
+sequence of its ongoing operations, its financial investments and certain financing
+activities. Infineon's credit risk arises primarily from cash and cash equivalents, finan-
+cial investments, trade receivables and derivative financial instruments. Excluding
+the impact of any collateral received, in the case of financial investments, cash and
+cash equivalents, trade receivables, and financial assets measured at amortized cost,
+the carrying amount corresponds to the maximum credit risk.
+(5)
+5
+51
+(2)
+2
+Management Board and Supervisory Board
+24
+plus 10%
+Equity
+Nominal
+value
+Credit risk
+30 September 2022
+Commodity swaps
+Commodity swaps
+30 September 2023
+€ in millions
+The following table presents the effect on equity of a change in the relevant market
+prices by ± 10 percent as of 30 September 2023 and 2022.
+← 153 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+minus 10%
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market
+interest rates on profit or loss. Infineon prepares this using the iteration method.
+50
+Infineon is exposed to interest rate risk through its financial investment instruments
+and financial debt resulting from bond issuances and debt financing. Due to the
+cyclical nature of its core business and the need to maintain high operational flexibil-
+ity, Infineon holds a relatively high level of liquid financial assets that are invested
+in short-term fixed-interest instruments. These financial assets generally are invested
+with a contract duration of between one day and twelve months maturity at interest
+rates achievable in the short-term. The associated interest rate risk is compensated
+to a certain extent by financial liabilities, which generally have fixed interest rates.
+(9)
+minus 10%
+plus 10%
+minus 10%
+plus 10%
+Equity
+Profit or Loss
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+30 September 2023
+€ in millions
+The following table shows the effects on profit or loss for the 2023 and 2022 fiscal years
+of a ±10 percent shift in exchange rates. The assumed exchange rate changes relate
+only to financial instruments within the meaning of IAS 32.
+Forward exchange contracts
+Net risk position
+(2)
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+Euro/British pound
+(709)
+58
+(91)
+193
+5
+5
+102
+107
+53
+82
+129
+External rating
+Euro/US dollar
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able
+to make use of interest rate derivatives in order to align the fixed interest periods of
+assets and liabilities.
+(44)
+(12)
+In accordance with IFRS 7, interest rate risk is defined as the risk that the fair value
+or future cash flows of a financial instrument will fluctuate because of changes in
+interest rates.
+Interest rate risk
+← 152 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+(4)
+3
+Euro/Singapore dollar
+(6)
+72
+5
+(69)
+57
+Euro/US dollar
+(79)
+65
+30 September 2022
+(1)
+(5)
+4
+72
+(44)
+2
+Euro/Japanese yen
+Basis for the
+determination of
+the loss allowance
+30 September 2023
+651
+The Industrial Power Control segment was renamed Green Industrial Power with
+effect from 1 April 2023. Decarbonization, electrification and energy efficiency are key
+business drivers in this segment. This focus, together with the decisive contribution
+that the segment makes to CO2 reduction, is reflected in the new name. The name
+change has no impact on the organizational structure, the strategy, or the scope of
+the business. The Green Industrial Power segment specializes in semiconductor solu-
+tions for the intelligent management and efficient conversion of electrical energy
+across the entire conversion chain, comprising the generation, transmission, storage
+and use of electricity. The product portfolio comprises mainly IGBT power transistors
+and the driver ICs to control them, as well as power semiconductors based on SiC.
+Power & Sensor Systems
+The Power & Sensor Systems segment comprises a wide range of power semiconductor,
+radio frequency and sensor technologies. The portfolio of products consists of control
+ICs, drivers and MOSFET power transistors, USB controllers and radio frequency
+products such as RF antenna switches, RF power transistors and signal amplifiers.
+Connected Secure Systems
+Other Operating Segments
+Other Operating Segments comprise the remaining activities of divested businesses
+and other business activities. Since the sale of the Wireless mobile phone business,
+services to Intel Mobile Communications and MaxLinear are included in this segment.
+Also included are supplies of LDMOS wafers and related components and services
+to Wolfspeed, Inc. (formerly Cree, Inc.), since the sale of the major part of Infineon's
+Radio Frequency Power Components business.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+157 →
+Green Industrial Power
+Corporate and Eliminations
+Similarly, certain items are included in Corporate and Eliminations which are not
+allocated to the other segments. These include certain corporate headquarters costs
+and selected topics, which are not allocated to the segments since they arise from
+corporate decisions and are not within the direct control of segment management.
+Furthermore, raw materials and supplies are mostly not under the control or respon-
+sibility of the operating segment management and are therefore mostly allocated
+to corporate functions. Work in progress and finished goods are almost entirely
+allocated to the operating segments.
+Chief Operating Decision Maker, definition of Segment Result and
+allocation of assets and liabilities to the individual segments
+The Management Board, as joint Chief Operating Decision Maker, decides how
+resources are allocated to the segments.
+Based on revenue and Segment Result, the Management Board assesses performance
+and defines operating targets and budgets for the segments.
+Segment Result is defined as operating profit excluding certain net impairments
+and reversal of impairments (in particular on goodwill), the impact on earnings of
+restructuring and closures, share-based payment, acquisition-related depreciation/
+amortization and other expense, impact on earnings of sales of businesses or interests
+in subsidiaries, and other income (expense).
+Decisions relating to financing and the investment of cash funds are taken at a
+Group level and not at a segment level. For this reason, neither financial income nor
+financial expense (including interest income and expense) is allocated internally to
+the segments.
+Neither assets, liabilities nor cash flows per segment is reported to the Management
+Board on a regular basis, nor is segment performance assessed on this basis.
+The exception to this approach is certain inventory information which is regularly
+analyzed at a segment level. Infineon also allocates depreciation and amortization
+expense to the operating segments based on production volume and products
+produced using standard costs.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+The elimination of intragroup revenue and profits/losses to the extent that these
+arise between the segments is presented in Corporate and Eliminations.
+The Automotive segment designs, develops, manufactures and markets semicon-
+ductor products for automotive applications. These include powertrain and energy
+management, connectivity and infotainment, body and comfort electronics, safety
+and data security. The product portfolio ranges from sensors, microcontrollers,
+software solutions, reliable power supplies, storage systems for specific applications,
+Si and SiC power semiconductors, as well as components for human-machine
+interaction and vehicle connectivity.
+Automotive
+The basis for identifying the reporting segments is the differences between the
+products and applications. In the 2023 fiscal year, Infineon's business was structured
+into the four operating segments Automotive, Green Industrial Power, Power & Sensor
+Systems and Connected Secure Systems. In addition, Infineon differentiates Other
+Operating Segments as well as Corporate and Eliminations.
+4,133
+554
+681
+1,294
+473
+2,946
+596
+596
+(557)
+(557)
+10,120
+4,172
+554
+681
+1,294
+473
+2,946
+Future cash flows from derivative financial instruments (see note 27, ☐ p. 147 ff.) may
+differ from the amounts shown in the table, since exchange rates or relevant factors
+are subject to change.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← 156 →
+Notes to the Consolidated Financial Statements
+29 Segment reporting
+Identification of segments
+Consolidated Financial Statements
+10,081
+Further information
+Notes to the Consolidated Financial Statements
+Green Industrial Power
+2,205
+1,790
+2,205
+1,790
+Power & Sensor Systems
+3,798
+4,070
+2,997
+3,034
+332
+330
+743
+469
+Connected Secure Systems
+Subtotal
+2,046
+1,822
+2,046
+1,822
+16,291
+14,198
+9,242
+8,122
+5,174
+3,894
+1,179
+706
+696
+733
+710
+Segment information
+Total
+Power semiconductors
+Product category
+Embedded control
+RF & sensors
+& connectivity
+Memory ICs for
+specific applications
+2022
+2023
+2022
+€ in millions
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+Revenue from contracts with customers:
+Automotive
+8,242
+6,516
+4,040
+3,298
+2,796
+1,742
+← 158 →
+Beyond 2027
+2027
+2026
+average risk
+above average risk
+A- to AAA
+BBB to BBB+
+BB+ to BBB-
+4
+increased risk
+5
+high risk
+individual
+others
+Total
+BB-to BB
+C to B+
+none
+3
+none
+Basis for the determination
+of the loss allowance
+30 September 2022
+586
+300
+490
+714
+450
+559
+304
+221
+102
+62
+At amortized cost
+2
+low risk
+1
+651
+30 September 2022
+Holding Quality 1
+Holding Quality 0
+AA- to BBB
+633
+Total
+633
+At amortized cost
+Expected 12-month
+credit loss
+Expected lifetime
+credit loss
+non-credit-impaired
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 154 →
+As in the previous year, Infineon had no financial assets that were overdue or impaired
+as of 30 September 2023. There was no reclassification between the impairment
+levels in the 2023 and 2022 fiscal years.
+Infineon had slightly reduced the distribution of its cash investments over around
+ten banks as of 30 September 2023. As of 30 September 2023, no financial institution
+was responsible for more than 18 percent (30 September 2022: 13 percent) of
+Infineon's cash investments. This gave rise to a maximum risk position of €76 million
+(30 September 2022: €55 million) in the event of the default of a single financial
+institution, assuming no deposit insurance scheme is in place. In addition, to spread
+the risk of investment, investments were made in money market funds with the
+best rating and in money market investment funds. Infineon also held derivative
+financial instruments with a positive fair value of €10 million as of 30 September 2023
+(30 September 2022: €5 million).
+Infineon manages the credit risk with respect to trade receivables through a com-
+prehensive credit evaluation for all major customers, the use of credit limits and
+continual monitoring procedures. New customers are evaluated for creditworthiness
+in accordance with Infineon guidelines. Credit limits are also in place per customer,
+and creditworthiness and credit limits are constantly monitored. A further measure
+taken to reduce credit risk is the use of reservation of title clauses. However, despite
+continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising
+from the default of one of its contract parties.
+Infineon assigns trade receivables to different risk classes based on external ratings,
+the analysis of customer balance sheet figures, default probabilities (credit default
+swaps), customer payment behavior and country risks. The simplified method is used
+to determine the expected losses from trade receivables. The expected losses over
+the entire term of the trade receivables are determined. The allowance is calculated
+for each customer using a weighted-probability method. In calculating the expected
+credit losses, for each customer, Infineon takes into account a forward-looking
+probability of default provided by a credit rating agency. Individual allowances are
+recorded based on case-by-case facts or other risk indicators.
+The following table provides information about the credit risk position for trade
+receivables from third parties as of 30 September 2023 and 2022:
+€ in millions
+Infineon rating
+Risk class
+External rating
+3
+4
+43
+23
+2025
+2026
+2027
+2028
+Beyond 2028
+9,544
+4,168
+705
+1,246
+456
+324
+574
+574
+(526)
+(526)
+9,592
+4,216
+705
+1,246
+456
+324
+2,645
+2,645
+Total
+2023
+2024
+2025
+2024
+AA- to BBB
+Total
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+1,978
+1,883
+Expected credit losses on trade receivables (see note 10, ☐ p. 116) amounted to €2 million
+for all risk classes in both the 2023 and 2022 fiscal years. The individual allowances
+on trade receivables (no rating) amounted to €3 million as of 30 September 2023
+(30 September 2022: €4 million).
+Developments in cyclical market and segment risks as well as geopolitical risks are
+dynamic, so it cannot be ruled out that the actual credit losses deviate significantly
+from the expected credit losses recognized based on current estimates and assump-
+tions or that the affected estimates and assumptions will have to be adjusted in future
+periods and this could have a significant impact on Infineon's expected credit losses.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 155 →
+Financing and liquidity risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in
+meeting obligations associated with financial liabilities.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing
+financial obligations. Infineon's liquidity management provides that sufficient
+levels of cash and other liquid assets are available and ensures the availability
+of funding through adequate levels of committed credit facilities.
+The following table discloses the maturity profile for non-derivative financial liabilities
+and a cash flow analysis for derivative financial instruments with negative fair values.
+The table shows the undiscounted contractually agreed cash flows that result from
+the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign cur-
+rencies were translated using the closing rate at the reporting date. The cash outflows
+of financial liabilities that can be repaid at any time are assigned to the period in
+which the earliest redemption is possible.
+€ in millions
+30 September 2023
+Non-derivative financial liabilities
+Derivative financial liabilities:
+Cash outflow
+Cash inflow¹
+Total
+30 September 2022
+Non-derivative financial liabilities
+Derivative financial liabilities:
+Cash outflow
+Cash inflow¹
+Total
+Due in the fiscal year
+The Connected Secure Systems segment provides comprehensive systems which are
+based on microcontrollers as well as on wireless connectivity and security solutions.
+Notably, this includes microcontroller, Wi-Fi, Bluetooth and combined connectivity
+solutions (so-called combo chips), hardware-based security technologies, and a
+powerful software environment for programming and configuring microcontrollers
+and connectivity components, covering a wide range of applications including:
+devices for loT applications, home appliances and smart home appliances, IT equip-
+ment, consumer electronics, cloud security and connected vehicles, as well as credit
+and debit cards, electronic passports and national identity cards.
+1
+696
+17
+59
+342
+401
+(67)
+(2)
+Total
+3
+Other Operating Segments
+Corporate and Eliminations
+44
+1,198
+2,723
+3,921
+48
+1
+3,974
+3,081
+893
+Euro/Malaysian ringgit
+(104)
+(106)
+Euro/British pound
+(7)
+Financial position exposure
+(135)
+(618)
+(101)
+(330)
+Euro/Japanese yen
+Infineon | Annual Report 2023
+Impairment losses on assets in the 2023 fiscal year amounted to €0 million (2022:
+€4 million) in the Automotive segment, €12 million (2022: €0 million) in the Green
+Industrial Power segment, €5 million (2022: €20 million) in the Power & Sensor
+Systems segment, and €1 million (2022: €7 million) in Corporate and Eliminations.
+Also allocated to Corporate and Eliminations in the 2023 fiscal year was €0 million
+(2022: €7 million) of reversal of impairments to assets.
+Of the €464 million (2022: €484 million) "Acquisition-related depreciation/amortization
+and other expenses” incurred in the 2023 fiscal year, €276 million (2022: €288 million)
+was attributable to cost of goods sold, €9 million (2022: €12 million) to research and
+development expenses, €168 million (2022: €177 million) to selling, general and
+administrative expenses and €11 million (2022: €7 million) to the balance of other
+operating income and expense.
+29
+150
+311
+461
+Connected Secure Systems
+1,337
+2,039
+Automotive
+5
+9
+(168)
+(159)
+Financial expenses
+Inventories:
++++
+98
+7
+105
+Financial income
+in %
+702
+(82)
+53
+Green Industrial Power
+Profit (loss) from continuing operations
+before income taxes
+(8)
+(62)
+798
+736
+Power & Sensor Systems
+(31)
+(12)
+39
+27
+and joint ventures accounted for using
+the equity method
+16
+46
+290
+336
+Share of profit (loss) of associates
+Euro/Singapore dollar
+(131)
+(171)
+(2)
+(2)
+of Profit or Loss
+8
+8
+30 September 2022
+(41)
+(3)
+(44)
+Change in fair value
+(6)
+3
+(3)
+Amount reclassified to Statement
+of Profit or Loss
+(50)
+Amount reclassified to the
+(1)
+risks
+1,439
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 150 →
+The following table shows the reconciliation for the reserve for cash flow hedges
+(before taxes) by risk category:
+€ in millions
+1 October 2021
+Change in fair value
+Amount reclassified to Statement
+Hedging of
+foreign
+exchange
+Hedging of
+interest risks
+Hedging of
+commodity
+price risks
+Total
+(49)
+absolute
+cost of non-financial items
+7
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 151 →
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying
+but significant portion of its revenue, as well as cost of goods sold, research and
+development and product distribution costs, are denominated in currencies other
+than the euro, primarily the US dollar. Fluctuations in the exchange rates of these
+currencies compared to the euro had an effect on the results of Infineon in the 2023
+and 2022 fiscal years.
+The Management Board has established policies that require Infineon's individual
+legal entities to manage the foreign exchange risk with respect to their functional
+currency. Group entities prepare a monthly rolling cash flow forecast by currency
+in order to determine foreign exchange risks. The net foreign exchange positions
+determined in these forecasts are required to be hedged, usually by entering into
+internal hedging contracts. Infineon's policy with respect to limiting short-term
+foreign currency exposure is to hedge at least 75 percent of its estimated net cash
+flow for the following two months, at least 50 percent of its estimated net cash flow
+for the third month and, depending on the nature of the underlying transactions,
+a certain additional portion for the periods thereafter. Part of the foreign currency
+risk cannot be mitigated due to differences between actual and forecasted amounts.
+Infineon calculates this remaining risk based on net cash flows considering items
+in the Statement of Financial Position, actual orders received or placed and all other
+planned cash receipts and payments.
+In order to hedge the foreign currency risks arising from the purchase price obligation
+arising from the acquisition of GaN Systems, a deal contingent forward and a deal
+contingent option were concluded by Infineon in the 2023 fiscal year and were
+accounted for as cash flow hedges (see note 27, p. 145).
+For the net result related to foreign currency hedging transactions and foreign currency
+transactions included within profit (loss) for the period, see note 27. p. 142 ff.
+Foreign exchange risk at Infineon arises predominantly from main foreign currency
+positions. The following table shows the value of the net risk position as of
+30 September 2023 and 2022:
+€ in millions
+Euro/US dollar
+Euro/Japanese yen
+30 Septem-
+ber 2022
+30 Septem-
+ber 2023
+187
+(292)
+Combined Management Report
+30 September 2023
+Management Board and Supervisory Board
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes
+to foreign exchange rates. Accordingly, foreign exchange risks are associated with
+financial instruments that are denominated in a foreign currency that does not
+correspond to the functional currency, and the foreign currency represents the
+relevant risk variable. Risks arising from the translation into Infineon's reporting
+currency are not risks within the meaning of IFRS 7.
+7
+(1)
+(1)
+(6)
+(34)
+(1)
+(41)
+28 Financial risk management
+Infineon's activities are exposed to a variety of financial risks: market risk (including
+foreign exchange risk, interest rate risk and price risk), credit risk, financing and
+liquidity risk. Infineon's financial risk management seeks to minimize potential
+adverse effects on its profitability and liquidity. Infineon uses derivative financial
+instruments to hedge certain risks to which it is exposed. Financial risk management
+is undertaken by the central Finance & Treasury (FT) department in accordance
+with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units.
+The FT department's policies contain principles for overall risk management as well
+as guidance covering specific areas such as foreign exchange risk, interest rate risk,
+credit risk, the use of derivative and non-derivative financial instruments, and the
+investment of excess liquidity.
+Developments in cyclical market and segment risks as well as geopolitical risks are
+dynamic and can have direct and indirect effects on financial risks. The course of
+events and their impact on Infineon's risk position is continually monitored and
+taken into account in the methods, models and processes used to control financial
+risks. Possible longer-term effects on Infineon and the associated volatility in the
+financial markets cannot actually be estimated more precisely.
+Market risk
+Market risk is defined as the risk of losses resulting from adverse changes in the
+market prices of financial instruments, including those related to foreign exchange
+rates, interest rates and other price risks.
+Infineon is exposed to various market risks in the ordinary course of business, primar-
+ily resulting from changes in foreign exchange rates and interest rates. Infineon enters
+into a range of derivative financial transactions with various counterparties to limit
+such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Foreign exchange risk
+Infineon | Annual Report 2023
+30 Septem-
+ber 2022
+(47)
+30 Septem-
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+30
+1,021
+3,378
+4,399
+Total
++++
+19
+(16)
+3
+5
+← 159 →
+5
+The following table provides the reconciliation of Segment Result to profit (loss) from
+continuing operations before income taxes:
+€ in millions
+Depreciation and amortization:
+Automotive
+in %
+absolute
+2022
+2023
+(in particular on goodwill)
+Certain reversal of impairments (impairments)
+Plus/minus:
+Segment Result:
+€ in millions
+Change
+in %
+absolute
+2022
+2023
+Change
+716
+Other Operating Segments
+110
+in %
+absolute
+2022
+2023
+Change
+€ in millions
+There were limited levels of trading relationships between the operating segments
+during the 2023 and 2022 fiscal years. Costs are generally recharged without impact
+on profit or loss.
+14,218
+16,309
+Total
+Other Operating Segments
+Corporate and Eliminations
+20
+18
+ber 2023
+743
+Segment Result:
+29
+Automotive
+1,490
+378
+488
+Connected Secure Systems
+(24)
+(276)
+1,137
+861
+Power & Sensor Systems
+72
+278
+384
+662
+Green Industrial Power
+60
+890
+2,380
+631
+Corporate and Eliminations
+85
+1,664
+480
+448
+1,754
+Total depreciation and amortization
+4
+20
+(484)
+(464)
+amortization and other expenses
+Acquisition-related depreciation/
+not allocated to the segments
+Depreciation and amortization
+(48)
+(30)
+(62)
+(32)
+90
+(92)
+(7)
+Gains (losses) on sales of businesses,
+Change
+39
+1,103
+2,845
+3,948
+Operating profit
++++
+64
+7
+71
+Other income and expenses
++++
+30
+30
+or interests in subsidiaries
+5
+Share-based payment
+€ in millions
+122
+6
+16
+279
+295
+30
+1,021
+3,378
+4,399
+7
+13
+187
+200
+Green Industrial Power
+13
+10
+Connected Secure Systems
+93
+Power & Sensor Systems
+8
+1,184
+85
+Depreciation and amortization
+allocated to the segments
++++
+4
+4
+restructuring and closures
+Gains (losses) on earnings of
+1,306
+2
+Other Operating Segments
+(6)
+6
+9
+2
+6,24
+0.00
+11, 20
+Wilmington, Delaware, USA
+100
+0
+0.00
+Camana Bay (George Town), Cayman Islands
+6,24
+100
+0
+47.35
+0.42
+1.39
+0.00
+0
+(€ in millions)
+General Trias, Philippines
+Net result
+Footnote
+Kanata, Ontario, Canada
+(€ in millions)
+Austin, Texas, USA
+n.a.
+0
+40
+0.00
+6, 19, 24
+Wilmington, Delaware, USA
+100
+0
+0.32
+(2.04)
+6,24
+0.00
+100
+Wilmington, Delaware, USA
+1.34
+Wilmington, Delaware, USA
+100
+0
+316.41
+4.78
+6,24
+Cork, Ireland
+100
+0
+8.89
+2.34
+4
+100
+Guadalajara, Mexico
+Equity
+6,24
+0
+(197.26)
+0
+1.05
+6
+Ebène, Mauritius
+100
+0
+0.13
+(0.03)
+5
+Lausanne, Switzerland
+100
+0
+7.09
+1.46
+11
+100
+6,495.61
+Registered office
+> DWS Group GmbH & Co. KGaA, Germany (listed)
+Infineon Technologies (Thailand) Limited
+Infineon Technologies (Wuxi) Co., Ltd.
+Infineon Technologies (Xi'an) Co., Ltd.
+Hans-Ulrich Holdenried (Member until 16 February 2023)
+Jürgen Scholz
+Margret Suckale (Member since 16 February 2023)
+Executive Committee
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Dr. Wolfgang Eder (Member and Chairman until 16 February 2023)
+Johann Dechant
+Dr. Friedrich Eichiner (Member since 16 February 2023)
+Annette Engelfried
+Hans-Ulrich Holdenried (Member until 16 February 2023)
+Margret Suckale
+Diana Vitale
+Strategy and Technology Committee
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Xiaoqun Clever-Steg
+Dr. Wolfgang Eder (Member until 16 February 2023)
+Peter Gruber
+Dr. Susanne Lachenmann
+Jürgen Scholz
+Dr. Ulrich Spiesshofer (Chairman until 16 February 2023)
+Dr. Wolfgang Eder (Member and Chairman until 16 February 2023)
+Johann Dechant
+Nomination Committee
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Supervisory Board committees
+0
+Supervisory Board member
+> Klöckner & Co. SE, Germany (listed)
+> MTU Aero Engines AG, Germany
+(since 11 May 2023)
+Member of the Advisory Board
+> Borussia Dortmund Geschäftsführungs-GmbH,
+Germany
+The business address of each member of the Supervisory Board is:
+Infineon Technologies AG, Am Campeon 1-15, D-85579 Neubiberg (Germany).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← 164 →
+Notes to the Consolidated Financial Statements
+Mediation Committee
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Dr. Friedrich Eichiner (Chairman until 16 February 2023)
+Géraldine Picaud (Member until 2 February 2023)
+Cypress International, LLC
+Cypress Manufacturing, Ltd.
+Cypress Semiconductor (Canada), Inc.
+Cypress Semiconductor (Mauritius) LLC
+Cypress Semiconductor (Switzerland) Sàrl
+Cypress Semiconductor Corporation
+Cypress Semiconductor International, Inc.
+Cypress Semiconductor Ireland Limited
+Cypress Semiconductor México, S. de R.L. de C.V.
+Cypress Semiconductor Philippines Headquarters, Ltd.
+Cypress Semiconductor Singapore Pte. Ltd.
+Cypress Semiconductor Technology (Shanghai) Co. Ltd.
+Cypress Semiconductor Technology Ltd.
+Cypress Semiconductor Ukraine LLC
+Cypress Semiconductor World Trade Corp.
+Hitex GmbH
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Shenzhen) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co., Ltd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Penang) Sdn. Bhd.
+Infineon Technologies (Shanghai) Co. Ltd.
+CYLand Corp.
+AgigA Tech, Inc.
+5200 Ben White Condominiums Association, Inc.
+Fully consolidated subsidiaries:
+Dr. Manfred Puffer (Member until 16 February 2023)
+Margret Suckale
+Investment, Finance and Audit Committee
+Dr. Friedrich Eichiner (Chairman)
+Johann Dechant
+Dr. Wolfgang Eder (Member until 16 February 2023)
+Annette Engelfried
+Infineon | Annual Report 2023
+Ute Wolf (Member since 22 April 2023)
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+165 →
+Subsidiaries, associated companies, joint ventures and other companies (not consolidated)
+as of 30 September 2023
+Name of company
+Infineon | Annual Report 2023
+(0.03)
+Footnote
+11
+100
+0
+8.13
+0.37
+11
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+166 →
+Notes to the Consolidated Financial Statements
+Name of company
+Infineon Technologies 2. Vermögensverwaltungsgesellschaft mbH
+Infineon Technologies 3. Vermögensverwaltungsgesellschaft mbH
+Infineon Technologies Acquisition B.V.
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd
+Xi'an, People's Republic of China
+Registered office
+11
+141.33
+Shanghai, People's Republic of China
+100
+0
+n.a.
+n.a.
+12
+Nonthaburi, Thailand
+100
+0
+91.88
+3.80
+8
+Wuxi, People's Republic of China
+100
+0
+14.74
+Neubiberg, Germany
+Infineon Technologies Australia Pty Limited
+Infineon Technologies Austria AG
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., LLC
+Infineon Technologies LLC
+Infineon Technologies Memory Solutions Germany GmbH
+Infineon Technologies Memory Solutions Holdings Inc.
+Infineon Technologies Memory Solutions India LLP
+Infineon | Annual Report 2023
+Shareholdings
+in %
+Thereof Infineon
+Technologies AG
+Equity
+Net result
+> Greiner AG, Austria (since 27 June 2023)
+(€ in millions)
+100
+0
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Italia s.r.l.
+Infineon Technologies Ireland Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Canada Acquisition Inc.
+Infineon Technologies Cegléd Kft.
+Infineon Technologies Center of Competence (Shanghai) Co., Ltd.
+Infineon Technologies China Co., Ltd.
+Infineon Technologies d.o.o. Beograd
+Infineon Technologies Denmark ApS
+Infineon Technologies Dresden GmbH & Co. KG
+8
+Infineon Technologies Dresden Verwaltungs GmbH
+Infineon Technologies Finance B.V.
+Infineon Technologies France S.A.S.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies Hong Kong Ltd.
+Infineon Technologies India Private Limited
+Infineon Technologies Innovates G.K.
+Infineon Technologies Epi Services, Inc.
+1.36
+9.10
+0
+0
+274.43
+(0.82)
+6,24
+Lviv, Ukraine
+100
+0
+2.36
+0.09
+11
+Camana Bay (George Town), Cayman Islands
+100
+0
+6.64
+0.00
+100
+Camana Bay (George Town), Cayman Islands
+11
+(6.92)
+Camana Bay (George Town), Cayman Islands
+100
+0
+6.29
+(0.03)
+6, 24
+Singapore, Singapore
+6,24
+100
+2.80
+2.24
+11
+Shanghai, People's Republic of China
+100
+0
+4.29
+0
+0.02
+Karlsruhe, Germany
+100
+11
+Kulim, Malaysia
+100
+0
+429.36
+76.96
+6
+Melaka, Malaysia
+100
+0
+353.34
+47.08
+6
+Kuala Lumpur, Malaysia
+100
+2.92
+47.64
+0
+100
+2.16
+0.00
+3, 13, 14
+Beijing, People's Republic of China
+100
+0
+15.16
+100
+1.29
+Shenzhen, People's Republic of China
+100
+0
+3.39
+1.88
+11
+Wuxi, People's Republic of China
+11
+> DWS Group GmbH & Co. KGaA, Germany (listed)
+Dr. Sven Schneider
+> Heidelberg Materials AG, Germany (listed)
+27
+423
+1,594
+2,017
+therein: Germany
+25
+717
+2,904
+3,621
+therein: Germany
+28
+961
+3,399
+4,360
+Europe, Middle East, Africa
+Asia-Pacific (excluding Japan, Greater China)
+25
+2,128
+501
+As required by section 314, paragraph 1, no. 6, in conjunction with section 315e
+paragraph 1, HGB, the total remuneration of the Management Board and the Super-
+visory Board is disclosed in note 25, p. 140.
+Disclosure of the renumeration of individual members of the Management Board and
+the Supervisory Board, as required by section 162 of the AktG, can be found in the
+Remuneration Report, which is prepared according to stock corporation law and is
+available under the following link:
+www.infineon.com/remuneration-report
+5,275
+Greater China'
+16
+24
+152
+176
+Greater China²
+11
+251
+2,343
+2,594
+Asia-Pacific (excluding Japan, Greater China)
+31
+1,627
+1,232
+4,873
+6,105
+Combined Management Report
+Management Board and Supervisory Board
+The references to the Remuneration Report are not audited as part of the audit of
+the financial statements. The Remuneration Report was subjected to a separate
+substantive audit by the auditor in accordance with IDW PS 490. This audit also
+includes the formal audit required by section 162, paragraph 3 of the German Stock
+Corporation Act (AktG).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+162 →
+Notes to the Consolidated Financial Statements
+Management Board
+The Management Board members were as follows:
+Name
+Position
+Jochen Hanebeck
+Consolidated Financial Statements
+Further information
+160 →
+Notes to the Consolidated Financial Statements
+Non-current assets:
+Europe
+Revenue:
+in %
+absolute
+2022
+2023
+€ in millions
+Management remuneration in the 2023 fiscal year
+€ in millions
+in %
+absolute
+30 Septem-
+ber 20221
+30 Septem-
+ber 2023
+Change
+Non-current assets as of 30 September 2023 and 2022, by region, were as follows:
+Entity-wide disclosures in accordance with IFRS 8
+Revenue for the 2023 and 2022 fiscal years by region was as follows:
+Change
+Chief Executive Officer,
+Labor Director
+Management Board and Supervisory Board
+Fees for other services
+Japan
+1,706
+1,415
+291
+21
+Americas
+8,767
+9,993
+(1,226)
+(12)
+Americas
+2,374
+1,857
+517
+28
+18
+therein: USA
+12
+79
+0.03
+5,204
+71
+1
+therein: Mainland China, Hong Kong
+162
+137
+25
+18
+therein: Mainland China, Hong Kong
+4,124
+4,063
+61
+2
+Japan
+67
+8,750
+9,978
+(1,228)
+2 Greater China comprises Mainland China, Hong Kong and Taiwan.
+Non-current assets do not include financial instruments, deferred tax assets and
+assets from employee benefits.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 161 →
+30 Additional information in accordance with HGB
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the
+Management Board and the Supervisory Board and made permanently available to
+the public on Infineon's website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#corporate-governance
+Fees for audit and advisory services pursuant to section 314,
+paragraph 1, no. 9, HGB
+Year-end audit fees
+At the Annual General Meeting held on 16 February 2023, the shareholders elected
+KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), Munich (Germany), as auditor for
+the 2023 Separate Financial Statements and the Consolidated Financial Statements
+of Infineon Technologies AG. The audit fees charged by KPMG in the 2023 fiscal year
+amounted to €4.3 million for the audit of the Consolidated Financial Statements and
+various annual audits, including an audit review of the Interim Financial Statements.
+Fees for other advisory services
+In addition to the amounts described above, KPMG charged an aggregate of
+€0.7 million in the 2023 fiscal year for other audit services, which mainly included
+the audit of the disclosures in the Sustainability Report, the audit of compliance
+management systems, the provision of comfort letters, as well as the substantive
+audit of the Remuneration Report.
+1 The presentation of grants receivables, as well as of some of the advance payments made, was corrected in the 2023 fiscal year.
+These are now no longer reported under current or non-current financial assets. The previous year's figures have been adjusted to
+improve comparability.
+No single customer accounted for more than 10 percent of Infineon's revenue during
+the 2023 and 2022 fiscal years.
+The allocation of revenues from external customers to geographic areas is based on
+the customers' locations. The average number of employees by geographic region is
+provided in note 4. □ p. 109
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+(12)
+therein: USA
+1,982
+1,564
+418
+27
+Total
+Fees of €0.2 million were charged by KPMG to the Company in the 2023 fiscal year for
+other services. These mainly included quality assurance during the implementation
+of regulatory requirements.
+17,255
+543
+3
+Total
+16,309
+14,218
+2,091
+15
+16,712
+> Deutsche Telekom AG, Germany (listed)
+Constanze Hufenbecher
+Elke Reichart
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Supervisory Board member
+> ZF Friedrichshafen AG, Germany
+> Festo SE & Co. KG, Germany
+Hans-Ulrich Holdenried
+(until 16 February 2023)
+Dr. Susanne Lachenmann'
+Géraldine Picaud
+(until 2 February 2023)
+Independent
+Management Consultant
+Principal Engineer,
+Infineon Technologies AG
+Chief Financial Officer,
+Holcim Ltd., Switzerland
+(until 30 April 2023)
+Dr. Manfred Puffer
+Independent
+Melanie Riedl¹
+Jürgen Scholz¹
+Management Consultant
+Analysis Engineer and
+Vice Chairwoman of the
+Works Council Campeon
+Labor union secretary
+Margret Suckale
+Member of the Foundation Council
+Member of various
+supervisory bodies
+> Friedhelm Loh Familienstiftung, Germany
+Infineon Technologies AG
+(since 16 February 2023)
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+163 →
+Notes to the Consolidated Financial Statements
+Name
+Position
+Membership of other Supervisory Boards
+Name
+and other comparable governing bodies of domestic
+and foreign companies
+Supervisory Board member
+Dr. Ulrich Spiesshofer
+Peter Gruber¹
+Representative of
+Senior Management
+Klaus Helmrich
+Chief Financial Officer
+Operations,
+Mirco Synde¹
+> Friedhelm Loh Stiftung, Germany
+Member of the Advisory Board
+> BKK of BMW AG, Germany
+Diana Vitale¹
+Ute Wolf
+(since 22 April 2023)
+1 Employee representative.
+Position
+Senior advisor -
+The Blackstone Group,
+member of various advisory
+boards and investor
+Member of various
+supervisory bodies
+Supervisor
+frontend production,
+Infineon Technologies
+Dresden GmbH & Co. KG
+Chairwoman of the
+Works Council Warstein,
+Infineon Technologies AG
+Member of various
+supervisory bodies
+Membership of other Supervisory Boards
+and other comparable governing bodies of domestic
+and foreign companies
+Member of the Board of Directors
+> Schlumberger N.V. (Schlumberger Ltd), Curaçao
+(listed)
+Supervisory Board member
+Member of the Administrative Board
+> Krones AG, Germany (listed)
+(until 23 May 2023)
+Supervisory Board member
+› Catalina Holdings (Bermuda) Ltd., Bermuda
+> Bridge imp GmbH, Germany
+Member of the Board of Directors
+> Danone S.A., France (listed)
+Following Holcim Group mandates (until 30 April 2023):
+> Holcim Group Services Ltd, Switzerland
+> Holcim Technology Ltd, Switzerland
+> Lafarge Maroc SA, Morocco
+Infineon | Annual Report 2023
+> LafargeHolcim Maroc SAS, Morocco (listed)
+> Huaxin Cement Co., Ltd., People's Republic of China
+(listed)
+Supervisory Board member
+> Athora Lebensversicherung AG, Germany
+> Nova KBM Bank, Slovenia (until 6 February 2023)
+› Oldenburgische Landesbank AG, Germany
+Member of the Board of Directors
+> Athene Holding Ltd., Bermuda (listed)
+> LafargeHolcim Maroc Afrique SAS, Morocco
+(until 31 October 2023)
+Deutschland GmbH, Germany
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Member of the Board of Directors
+> esure Group plc, Great Britain
+Supervisory Board member
+> Covestro AG, Germany (listed)
+> Infineon Technologies Austria AG, Austria
+Member of the Board of Directors
+> Infineon Technologies China Co., Ltd.,
+People's Republic of China
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+> Infineon Technologies Americas Corp., USA
+> Infineon Technologies Japan K.K., Japan
+Member of the Board of Directors
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+(Chairman)
+> Infineon Technologies Japan K.K., Japan
+> Infineon Technologies China Co., Ltd.,
+> BECHTLE AG, Germany
+People's Republic of China
+> SUSE S.A., Luxembourg
+> Voith Management GmbH, Germany
+Supervisory Board member
+(since 1 November 2023)
+Chief Digital
+Transformation Officer
+Chief Digital
+Transformation Officer
+Chief Financial Officer
+Andreas Urschitz
+Chief Marketing Officer
+Dr. Rutger Wijburg
+Chief Operations Officer
+Membership of Supervisory Boards
+and other comparable governing bodies of domestic
+and foreign companies
+Supervisory Board member
+> Infineon Technologies Austria AG, Austria
+(Chairman)
+Supervisory Board member
+> Voith GmbH & Co. KGaA, Germany
+Member of the Shareholders' Committee
+> Trumpf SE + Co. KG, Germany
+> Infineon Technologies Americas Corp., USA
+(Chairman)
+Supervisory Board member
+> SMART Photonics B.V., Netherlands
+> SBK Siemens-Betriebskrankenkasse, Germany
+Supervisory Board member
+› Capgemini SE, France (listed)
+(until 16 May 2023)
+› Amadeus IT Group SA, Spain (listed)
+Member of the Administrative Board
+> Cornelsen Group, Germany
+Member of the Board of Directors
+> BHP Group Plc., Great Britain (listed)
+und BHP Group Ltd., Australia (listed)
+Supervisory Board member
+> voestalpine AG, Austria (listed)
+(Chairman)
+Supervisory Board member
+> Festo Management SE, Germany (Chairman)
+> Allianz SE, Germany (listed)
+Supervisory Board member
+Member of the Administrative Board
+and other comparable governing bodies of domestic
+and foreign companies
+Membership of other Supervisory Boards
+Labor union secretary
+IG Metall district
+management, Berlin-
+Brandenburg-Saxony
+› Carl Zeiss AG, Germany (since 13 March 2023)
+The Supervisory Board
+The Supervisory Board members, their Supervisory Board position, their occupation,
+and their membership of other supervisory and governing bodies are as follows:
+Name
+Dr. Herbert Diess
+Chairman
+(since 16 February 2023)
+Johann Dechant¹
+Vice Chairman
+> Siemens Gamesa Renewable Energy
+Xiaoqun Clever-Steg
+(until 16 February 2023)
+Dr. Friedrich Eichiner
+Annette Engelfried¹
+Position
+Manager, most recently
+CEO of Volkswagen AG
+Chairman of the
+group works council,
+Vice Chairman of the
+general works council
+and Chairman of the
+works council Regensburg,
+Infineon Technologies AG
+Member of various
+supervisory bodies
+Member of various
+supervisory bodies
+Member of various
+supervisory bodies
+Dr. Wolfgang Eder
+Chairman
+(€ in millions)
+(0.02)
+5.39
+Dresden, Germany
+0
+0.00
+0.00
+6
+Wilmington, Delaware, USA
+n.a.
+0
+n.a.
+n.a.
+18
+Duisburg, Germany
+100
+100
+100
+0.54
+6
+Duisburg, Germany
+100
+100
+0.08
+0.00
+6
+Berlin, Germany
+n.a.
+n.a.
+n.a.
+1.26
+n.a.
+Wilmington, Delaware, USA
+43.11
+42.5
+0
+9.31
+(0.85)
+11, 23, 24
+Siegen, Germany
+15
+15
+4.48
+(13.54)
+11, 21
+Hong Kong, People's Republic of China
+6,22
+11
+40
+52.76
+19.23
+11, 23
+Warstein, Germany
+60
+60
+52.67
+17.73
+Shanghai, People's Republic of China
+49
+25
+53.57
+0
+18
+Coventry, Great Britain
+100
+0.04
+0.00
+6
+Neubiberg, Germany
+100
+100
+0.03
+0.00
+6
+Neubiberg, Germany
+100
+100
+100
+0.13
+6, 13
+Madrid, Spain
+100
+0
+0.16
+0.06
+Netanya, Israel
+6
+0
+0.00
+0.00
+9
+0.00
+100
+Neubiberg, Germany
+6
+0
+2.64
+0.85
+6
+Stockholm, Sweden
+100
+0
+0.08
+(1.02)
+11
+Neubiberg, Germany
+100
+100
+0.53
+(0.06)
+8
+Warstein, Germany
+60
+60
+0.03
+0.00
+6
+Neubiberg, Germany
+100
+0
+0.15
+0.02
+Dover, Delaware, USA
+Neubiberg, Germany
+(€ in millions)
+Footnote
+11
+Batam, Indonesia
+100
+0
+24.87
+1.41
+6
+Wilmington, Delaware, USA
+100
+0
+0.00
+0.00
+0.62
+6,24
+100
+0
+14.34
+1.99
+6,24
+Dresden, Germany
+100
+0
+15.92
+12.47
+6
+Wilmington, Delaware, USA
+Tijuana, Mexico
+100
+1.15
+100
+6, 13, 15
+Wilmington, Delaware, USA
+100
+0
+307.76
+86.78
+6,24
+Neubiberg, Germany
+100
+0
+304.94
+0.00
+0
+6, 15
+100
+100
+0.31
+0.21
+6
+Neubiberg, Germany
+100
+0
+93.39
+28.40
+6, 17
+Bucharest, Romania
+Neubiberg, Germany
+0
+1,281.11
+56.64
+EPOS embedded core & power systems Verwaltungs GmbH
+Futurium gGmbH
+Hitex (UK) Limited
+Imagimob AB
+Industrial Analytics IA GmbH
+Infineon Technologies Bipolar Verwaltungs GmbH
+Infineon Technologies Campeon Verwaltungsgesellschaft mbH
+Infineon Technologies Delta GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Holding GmbH
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Israel Ltd.
+EPOS embedded core & power systems GmbH & Co. KG
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 29 GmbH
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Romania s.r.l.
+Infineon Technologies South America Ltda
+Infineon Technologies Vietnam Company Ltd.
+IR International Holdings China, Inc.
+KAI Kompetenzzentrum Automobil- und Industrieelektronik GmbH
+Infineon | Annual Report 2023
+Registered office
+Shareholdings
+in %
+Thereof Infineon
+Technologies AG
+Equity
+Net result
+Infineon Technologies Mantel 27 GmbH
+Cypress Envirosystems, Inc.
+CHIL Semiconductors Corporation
+Other companies (not consolidated):1
+6,24
+Wilmington, Delaware, USA
+100
+0
+1,859.61
+326.82
+6,24
+Melaka, Malaysia
+100
+0
+5.57
+1.09
+8
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+=
+168 →
+Notes to the Consolidated Financial Statements
+Name of company
+Associated companies:
+Deca Technologies, Inc.
+pmdtechnologies ag
+SkyHigh Memory Limited
+Joint ventures:
+Infineon Technologies Bipolar GmbH & Co. KG
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd
+(€ in millions)
+0.00
+100
+0.02
+Qimonda France SAS (in liquidation)
+Qimonda Holding B.V. (in insolvency)
+Qimonda International Trade (Shanghai) Co. Ltd.
+Qimonda Investment B.V.
+Qimonda IT (Suzhou) Co., Ltd. (in liquidation)
+Qimonda Italy s.r.l. (in liquidation)
+Qimonda Korea Co. Ltd. (in liquidation)
+Qimonda Licensing LLC
+Qimonda Memory Product Development Center (Suzhou) Co. (in liquidation)
+Qimonda North America Corp. (in insolvency)
+Infineon | Annual Report 2023
+Colorado Springs, Colorado, USA
+Qimonda Flash GmbH (in insolvency)
+17
+2
+2
+Vila do Conde, Portugal
+40
+0
+Melaka, Malaysia
+77
+0
+2
+77
+28
+2
+77
+0
+0
+Wilmington, Delaware, USA
+Dresden, Germany
+MicroLinks Technology Corp.
+OSPT IP Pool GmbH
+PT Infineon Technologies Indonesia
+R Labco, Inc.
+Schweizer Electronic AG
+Silicon Alps Cluster GmbH
+TTTech Auto AG
+Virtual Vehicle Research GmbH
+XMOS Limited
+Registered office
+Lippstadt, Germany
+Kaohsiung, Taiwan
+Neubiberg, Germany
+Qimonda AG and its subsidiaries:²
+Dresden, Germany
+Celis Semiconductor Corp.
+Qimonda (Malaysia) Sdn. Bhd. (in liquidation)
+Qimonda AG (in insolvency)
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda Belgium BVBA (in insolvency)
+Qimonda Bratislava s.r.o. (in liquidation)
+Qimonda Dresden GmbH & Co. OHG (in insolvency)
+Qimonda Dresden Verwaltungsgesellschaft mbH (in insolvency)
+Qimonda Finance LLC (in insolvency)
+Munich, Germany
+Singapore, Singapore
+Leuven, Belgium
+Bratislava, Slovakia
+Itarion Solar Lda.
+2
+77
+0
+0
+2
+Suzhou, People's Republic of China
+77
+0
+2
+Padua, Italy
+77
+0
+2
+Seoul, Republic of Korea
+77
+77
+0
+Fort Lauderdale, Florida, USA
+77
+0
+2
+Suzhou, People's Republic of China
+77
+0
+2
+Wilmington, Delaware, USA
+77
+0
+2
+2
+Rotterdam, The Netherlands
+2
+0
+2
+77
+0
+2
+77
+0
+2
+77
+0
+2
+77
+0
+2
+Dresden, Germany
+77
+0
+2
+St. Denis, France
+77
+0
+2
+Rotterdam, The Netherlands
+77
+0
+2
+Shanghai, People's Republic of China
+77
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+100
+Name of company
+n.a.
+(0.11)
+11
+Hanoi, Vietnam
+100
+0
+0.17
+0.05
+6
+Wilmington, Delaware, USA
+100
+0
+0.00
+(0.03)
+0.00
+Villach-St. Magdalen, Austria
+100
+0
+0.87
+0.30
+11
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+169 →
+Notes to the Consolidated Financial Statements
+6
+Shareholdings
+in %
+0
+São Paulo, Brasil
+(0.01)
+6
+Neubiberg, Germany
+100
+100
+0.03
+0.00
+6, 13
+Neubiberg, Germany
+100
+100
+0.03
+100
+0.00
+Warsaw, Poland
+100
+0
+0.15
+0.02
+6
+Bucharest, Romania
+100
+0
+0.05
+0.01
+11
+6,13
+Thereof Infineon
+Technologies AG
+Equity
+(€ in millions)
+Net result
+9
+24.23
+(24.89)
+11
+Villach, Austria
+n.a.
+0
+n.a.
+n.a.
+18
+Vienna, Austria
+n.a.
+9
+n.a.
+n.a.
+18
+Graz, Austria
+n.a.
+n.a.
+n.a.
+n.a.
+18
+Bristol, Great Britain
+n.a.
+0
+n.a.
+n.a.
+Schramberg, Germany
+6
+0.00
+Footnote
+(€ in millions)
+24
+24
+1.27
+0.09
+11
+n.a.
+0
+n.a.
+n.a.
+18
+100
+100
+0.03
+(0.01)
+6
+Jakarta, Indonesia
+100
+0
+0.23
+0.04
+6
+Wilmington, Delaware, USA
+100
+0
+0.00
+18
+286.47
+100
+100
+100
+0
+6.77
+1.69
+6
+Klagenfurt, Austria
+100
+0
+11.15
+6.53
+6
+Milan, Italy
+Tokyo, Japan
+0
+56.88
+17.98
+6
+Seoul, Republic of Korea
+100
+0
+15.89
+7.01
+6
+Wilmington, Delaware, USA
+100
+6
+0.26
+0.54
+0
+2.63
+0.90
+6
+Bangalore, India
+100
+0
+22.35
+Shareholdings
+in %
+5
+Tokyo, Japan
+100
+0
+24.90
+5.78
+6
+Rotterdam, The Netherlands
+100
+0
+0.09
+(0.02)
+6
+Dublin, Ireland
+100
+100
+100
+0
+832.53
+52.39
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Limited
+Infineon Technologies Romania & Co. Societate in Comandita
+Infineon Technologies Semiconductor GmbH
+Infineon Technologies Semiconductor India Private Limited
+Infineon Technologies Shared Service Center, Unipessoal Lda.
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies UK Limited
+Infineon Technologies US HoldCo Inc.
+Registered office
+Netanya, Israel
+Tokyo, Japan
+Kuala Lumpur, Malaysia
+Taipei, Taiwan
+Aschheim, Germany
+Bangalore, India
+Maia, Portugal
+Taipei, Taiwan
+Infineon Technologies US InterCo LLC
+Infineon Technologies US Investment LLC
+Infineon Technologies Vermögensverwaltungsgesellschaft mbH
+International Rectifier HiRel Products, Inc.
+MOLSTANDA Vermietungsgesellschaft mbH
+MOTEON GmbH
+MoTo Objekt CAMPEON GmbH & Co. KG
+NoBug Consulting SRL
+PT Infineon Technologies Batam
+Ramtron International Corporation
+Rectificadores Internacionales, S.A. de C.V.
+SILTECTRA GmbH
+Infineon Technologies Nordic AB
+100
+Infineon Technologies Nijmegen B.V.
+Name of company
+6, 24
+Neubiberg, Germany
+100
+0
+0.11
+0.09
+3
+Wilmington, Delaware, USA
+100
+0
+74.84
+0.00
+6,24
+Bangalore, India
+100
+0
+0.15
+0.14
+5
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+167 →
+Notes to the Consolidated Financial Statements
+Infineon Technologies Memory Solutions Israel Ltd.
+Infineon Technologies Memory Solutions Japan G.K.
+Infineon Technologies Memory Solutions Malaysia Sdn. Bhd.
+Infineon Technologies Memory Solutions Taiwan Ltd.
+Spansion Inc.
+Hong Kong, People's Republic of China
+276.10
+Villach, Austria
+100
+0.004
+1,965.89
+518.96
+6
+Toronto, Ontario, Canada
+100
+0
+n.a.
+n.a.
+6
+12
+100
+0
+42.37
+(12.95)
+6
+Shanghai, People's Republic of China
+100
+0
+4.09
+1.19
+11
+Cegléd, Hungary
+0.05
+1.46
+0
+100
+0
+n.a.
+n.a.
+100
+Rotterdam, The Netherlands
+100
+100
+n.a.
+n.a.
+12
+Wilmington, Delaware, USA
+100
+0
+1,818.33
+200.18
+6, 24
+Singapore, Singapore
+100
+0
+802.02
+275.97
+6
+Blackburn, Australia
+100
+Shanghai, People's Republic of China
+100
+0
+217.53
+21.07
+7.17
+6,24
+Rotterdam, The Netherlands
+100
+100
+1.91
+(0.02)
+6
+St. Denis, France
+100
+0
+9.14
+0.68
+6
+Singapore, Singapore
+100
+0
+3.81
+3.04
+6
+Rotterdam, The Netherlands
+100
+100
+11,677.51
+0
+6
+100
+6, 13, 15
+36.64
+11
+Belgrade, Serbia
+100
+0
+0.07
+0.07
+11
+Herlev, Denmark
+100
+0
+(1.03)
+(5.95)
+6
+Dresden, Germany
+100
+100
+288.61
+25.27
+6, 16
+Neubiberg, Germany
+100
+0
+0.09
+0.00
+Wilmington, Delaware, USA
+Spansion LLC
+12
+Thereof Infineon
+Technologies AG
+12.09
+0
+100
+6
+2.55
+6.21
+0
+100
+Bucharest, Romania
+6
+1.09
+4.68
+0
+100
+Bristol, Great Britain
+6
+4.81
+52.74
+100
+2.68
+4
+100
+0
+Wilmington, Delaware, USA
+6
+0.97
+4.33
+0
+100
+Bristol, Great Britain
+6
+2.10
+100
+10.00
+100
+6
+0.86
+5.59
+100
+100
+5
+8.27
+52.03
+0
+100
+Cheonan, Republic of Korea
+0.52
+(€ in millions)
+(€ in millions)
+100
+0
+84.64
+6.27
+3
+100
+0
+0.80
+0.43
+6
+100
+0
+0.57
+0.18
+10
+100
+0
+Footnote
+Net result
+Equity
+Thereof Infineon
+Technologies AG
+0.70
+0
+100
+Muntinlupa City, Philippines
+6
+0.54
+4.87
+0
+100
+6
+Kista, Sweden
+0.00
+0.20
+0
+100
+Nijmegen, The Netherlands
+6
+Syntronixs Asia Sdn. Bhd.
+Infineon | Annual Report 2023
+Shareholdings
+in %
+7
+0.31
+0
+19.23
+8,648.84
+Neubiberg, Germany
+6,24
+19.15
+(0.09)
+0
+100
+0.11
+6,24
+Wilmington, Delaware, USA
+Wilmington, Delaware, USA
+100
+6,24
+7,889.00
+2.10
+0
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+> Identify and assess the risks of material intentional or unintentional non-compliance
+with the requirements of Section 328 (1) HGB, design and perform assurance pro-
+cedures responsive to those risks, and obtain assurance evidence that is sufficient
+and appropriate to provide a basis for our assurance opinion.
+Our objective is to obtain reasonable assurance about whether the ESEF documents
+are free from material intentional or unintentional non-compliance with the require-
+ments of Section 328 (1) HGB. We exercise professional judgement and maintain
+professional scepticism throughout the assurance work. We also:
+The Supervisory Board is responsible for overseeing the process of preparing the
+ESEF documents as part of the financial reporting process.
+In addition, the Company's Management Board is responsible for such internal control
+that it has considered necessary to enable the preparation of ESEF documents that
+are free from material intentional or unintentional non-compliance with the require-
+ments of Section 328 (1) HGB for the electronic reporting format.
+The Company's Management Board is responsible for the preparation of the ESEF
+documents including the electronic rendering of the consolidated financial statements
+and the group management report in accordance with Section 328 (1) sentence 4
+item 1 HGB and for the tagging of the consolidated financial statements in accordance
+with Section 328 (1) sentence 4 item 2 HGB.
+we do not express any assurance opinion on the information contained within these
+renderings or on the other information contained in the file identified above.
+Consolidated Financial Statements
+In our opinion, the rendering of the consolidated financial statements and the group
+management report contained in the electronic file made available, identified above
+and prepared for publication purposes complies in all material respects with the
+requirements of Section 328 (1) HGB for the electronic reporting format. Beyond this
+assurance opinion and our audit opinion on the accompanying consolidated financial
+statements and the accompanying group management report for the financial year
+from 1 October 2022 to 30 September 2023 contained in the "Report on the Audit of
+the Consolidated Financial Statements and the Group Management Report" above,
+We have performed assurance work in accordance with Section 317 (3a) HGB to obtain
+reasonable assurance about whether the rendering of the consolidated financial
+statements and the group management report (hereinafter the "ESEF documents")
+contained in the electronic file „Infineon_Technologies_AG_KA+KLB_ESEF_2023-
+09-30.zip" (SHA256-Hashwert: 2e23e589e5a7223309fd39b953f18c24f0f95c79648
+b6d38651487c0207649db) made available and prepared for publication purposes
+complies in all material respects with the requirements of Section 328 (1) HGB for
+the electronic reporting format (“ESEF format”). In accordance with German legal
+requirements, this assurance work extends only to the conversion of the information
+contained in the consolidated financial statements and the group management report
+into the ESEF format and therefore relates neither to the information contained in
+these renderings nor to any other information contained in the file identified above.
+Report on the Assurance on the Electronic Rendering of the
+Consolidated Financial Statements and the Group Management
+Report Prepared for Publication Purposes in Accordance with
+Section 317 (3a) HGB
+Other Legal and Regulatory Requirements
+We conducted our assurance work on the rendering of the consolidated financial
+statements and the group management report contained in the file made available
+and identified above in accordance with Section 317 (3a) HGB and the IDW Assurance
+Standard: Assurance Work on the Electronic Rendering of Financial Statements and
+Management Reports Prepared for Publication Purposes in Accordance with Section
+317 (3a) HGB (IDW ASS 410 (06.2022)). Our responsibility in accordance therewith is
+further described below. Our audit firm applies the IDW Standard on Quality Manage-
+ment 1: Requirements for Quality Management in Audit Firms (IDW QS 1).
+Further information
+Independent Auditor's Report
+> Evaluate the technical validity of the ESEF documents, i.e. whether the file made
+available containing the ESEF documents meets the requirements of Commission
+Delegated Regulation (EU) 2019/815, as amended as at the reporting date, on the
+technical specification for this electronic file.
+> Obtain an understanding of internal control relevant to the assurance on the ESEF
+documents in order to design assurance procedures that are appropriate in the
+circumstances, but not for the purpose of expressing an assurance opinion on the
+effectiveness of these controls.
+Infineon | Annual Report 2023
+Infineon | Annual Report 2023
+Wirtschaftsprüfer
+[German Public Auditor]
+Schmitt
+Huber-Straßer
+Wirtschaftsprüferin
+[German Public Auditor]
+Wirtschaftsprüfungsgesellschaft
+[Original German version signed by:]
+KPMG AG
+Munich, 23 November 2023
+The German Public Auditor responsible for the engagement is Martin Schmitt.
+Responsible for the Engagement
+German Public Auditor
+Our auditor's report must always be read together with the audited consolidated
+financial statements and the audited group management report as well as the exam-
+ined ESEF documents. The consolidated financial statements and group management
+report converted to the ESEF format – including the versions to be entered in the
+company register - are merely electronic renderings of the audited consolidated
+financial statements and the audited group management report and do not take their
+place. In particular, the ESEF report and our assurance opinion contained therein
+are to be used solely together with the examined ESEF documents made available in
+electronic form.
+Other matter - Use of the Auditor's Report
+We declare that the opinions expressed in this auditor's report are consistent with
+the additional report to the Audit Committee pursuant to Article 11 of the EU Audit
+Regulation (long-form audit report).
+> Evaluate whether the tagging of the ESEF documents with Inline XBRL technology
+(iXBRL) in accordance with the requirements of Articles 4 and 6 of Commission
+Delegated Regulation (EU) 2019/815, as amended as at the reporting date, enables
+an appropriate and complete machine-readable XBRL copy of the XHTML rendering.
+Further information pursuant to Article 10 of the EU Audit Regulation
+We were elected as group auditor at the Annual General Meeting on 16 February 2023.
+We were engaged by the Supervisory Board on 3 May 2023. In compliance with the
+transitional provision of Article 41 (2) of the EU Audit Regulation, we have been, with-
+out interruption since short financial year 1999 (1 April to 30 September 1999), the
+group auditor of Infineon Technologies AG, which without interruption since its IPO
+in 2000 has fulfilled the definition of a public interest entity within the meaning of
+Section 316a sentence 2 HGB.
+> Evaluate whether the ESEF documents provide an XHTML rendering with content
+equivalent to the audited consolidated financial statements and the audited group
+management report.
+From the matters communicated with those charged with governance, we determine
+those matters that were of most significance in the audit of the consolidated financial
+statements of the current period and are therefore the key audit matters. We describe
+these matters in our auditor's report unless law or regulation precludes public disclo-
+sure about the matter.
+← 179 →
+← 178 →
+Management Board and Supervisory Board
+Consolidated Financial Statements
+The Supervisory Board is responsible for overseeing the Group's financial reporting
+process for the preparation of the consolidated financial statements and of the group
+management report.
+Furthermore, the Management Board is responsible for the preparation of the group
+management report that, as a whole, provides an appropriate view of the Group's
+position and is, in all material respects, consistent with the consolidated financial
+statements, complies with German legal requirements, and appropriately presents
+the opportunities and risks of future development. In addition, the Management Board
+is responsible for such arrangements and measures (systems) as they have consid-
+ered necessary to enable the preparation of a group management report that is in
+accordance with the applicable German legal requirements, and to be able to provide
+sufficient appropriate evidence for the assertions in the group management report.
+In preparing the consolidated financial statements, the Management Board is respon-
+sible for assessing the Group's ability to continue as a going concern. They also have
+the responsibility for disclosing, as applicable, matters related to going concern. In
+addition, it is responsible for financial reporting based on the going concern basis of
+accounting unless there is an intention to liquidate the Group or to cease operations,
+or there is no realistic alternative but to do so.
+The Management Board is responsible for the preparation of consolidated financial
+statements that comply, in all material respects, with IFRSS as adopted by the EU and
+the additional requirements of German commercial law pursuant to Section 315e (1)
+HGB and that the consolidated financial statements, in compliance with these require-
+ments, give a true and fair view of the assets, liabilities, financial position, and financial
+performance of the Group. In addition, the Management Board is responsible for such
+internal control as they have determined necessary to enable the preparation of con-
+solidated financial statements that are free from material misstatement, whether due
+to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
+Supervisory Board for the Consolidated Financial Statements
+and the Group Management Report
+Responsibilities of the Management Board and the
+176 →
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+If, based on the work we have performed, we conclude that there is a material
+misstatement of this other information, we are required to report that fact. We have
+nothing to report in this regard.
+> otherwise appears to be materially misstated.
+> is materially inconsistent with the consolidated financial statements, with the
+group management report information audited for content or our knowledge
+obtained in the audit, or
+Auditor's Responsibilities for the Audit of the Consolidated
+Financial Statements and of the Group Management Report
+Our objectives are to obtain reasonable assurance about whether the consolidated
+financial statements as a whole are free from material misstatement, whether due
+to fraud or error, and whether the group management report as a whole provides an
+appropriate view of the Group's position and, in all material respects, is consistent
+with the consolidated financial statements and the knowledge obtained in the audit,
+complies with the German legal requirements and appropriately presents the oppor-
+tunities and risks of future development, as well as to issue an auditor's report that
+includes our opinions on the consolidated financial statements and on the group
+management report.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
+conducted in accordance with Section 317 HGB and the EU Audit Regulation and in
+compliance with German Generally Accepted Standards for Financial Statement Audits
+promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material
+misstatement. Misstatements can arise from fraud or error and are considered material
+if, individually or in the aggregate, they could reasonably be expected to influence
+the economic decisions of users taken on the basis of these consolidated financial
+statements and this group management report.
+We exercise professional judgement and maintain professional scepticism throughout
+the audit. We also:
+> Identify and assess the risks of material misstatement of the consolidated financial
+statements and of the group management report, whether due to fraud or error,
+design and perform audit procedures responsive to those risks, and obtain audit
+evidence that is sufficient and appropriate to provide a basis for our opinions. The
+risk of not detecting a material misstatement resulting from fraud is higher than
+the risk of not detecting a material misstatement resulting from error, as fraud
+may involve collusion, forgery, intentional omissions, misrepresentations, or the
+override of internal controls.
+Combined Management Report
+Infineon | Annual Report 2023
+We also provide those charged with governance with a statement that we have
+complied with the relevant independence requirements, and communicate with
+them all relationships and other matters that may reasonably be thought to bear on
+our independence, and where applicable, the actions taken or safeguards applied
+to eliminate independence threats.
+We communicate with those charged with governance regarding, among other matters,
+the planned scope and timing of the audit and significant audit findings, including
+any significant deficiencies in internal control that we identify during our audit.
+> Evaluate the consistency of the group management report with the consolidated
+financial statements, its conformity with [German] law, and the view of the Group's
+position it provides.
+> Obtain sufficient appropriate audit evidence regarding the financial information
+of the entities or business activities within the Group to express opinions on the
+consolidated financial statements and on the group management report. We are
+responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+> Evaluate the overall presentation, structure and content of the consolidated
+financial statements, including the disclosures, and whether the consolidated
+financial statements present the underlying transactions and events in a manner
+that the consolidated financial statements give a true and fair view of the assets,
+liabilities, financial position and financial performance of the Group in compliance
+with IFRSS as adopted by the EU and the additional requirements of German
+commercial law pursuant to Section 315e (1) HGB.
+Further information
+Independent Auditor's Report
+> Conclude on the appropriateness of the Management Board's use of the going
+concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast significant
+doubt on the Group's ability to continue as a going concern. If we conclude that a
+material uncertainty exists, we are required to draw attention in the auditor's report
+to the related disclosures in the consolidated financial statements and in the group
+management report or, if such disclosures are inadequate, to modify our respec-
+tive opinions. Our conclusions are based on the audit evidence obtained up to the
+date of our auditor's report. However, future events or conditions may cause the
+Group to cease to be able to continue as a going concern.
+> Obtain an understanding of internal control relevant to the audit of the consolidated
+financial statements and of arrangements and measures (systems) relevant to the
+audit of the group management report in order to design audit procedures that are
+appropriate in the circumstances, but not for the purpose of expressing an opinion
+on the effectiveness of these systems.
+← 177 →
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+> Evaluate the appropriateness of accounting policies used by the Management
+Board and the reasonableness of estimates made by the Management Board and
+related disclosures.
+> Perform audit procedures on the prospective information presented by the
+Management Board in the group management report. On the basis of sufficient
+appropriate audit evidence we evaluate, in particular, the significant assumptions
+used by the Management Board as a basis for the prospective information, and
+evaluate the proper derivation of the prospective information from these assump-
+tions. We do not express a separate opinion on the prospective information and
+on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+Management Board and Supervisory Board
+Combined Management Report
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Independent Auditor's Report
+← 173 →
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified auditor's report.
+The English language text below is a translation of the auditor's report. The original German text shall prevail in the event of any discrepancies
+between the English translation and the German original. We do not accept any liability for the use of, or reliance on, the English translation
+or for any errors or misunderstandings that may derive from the translation.
+Independent Auditor's Report
+Management Board and Supervisory Board
+To Infineon Technologies AG, Neubiberg
+We have audited the consolidated financial statements of Infineon Technologies AG,
+Neubiberg, and its subsidiaries (the Group), which comprise the consolidated state-
+ment of financial position as at 30 September 2023, and the consolidated statement
+of profit or loss, consolidated statement of comprehensive income, consolidated state-
+ment of changes in equity and consolidated statement of cash flows for the financial
+year from 1 October 2022 to 30 September 2023, and notes to the consolidated financial
+statements, including a summary of significant accounting policies. In addition, we
+have audited the combined management report of Infineon Technologies AG and of
+the Group (hereinafter: the "group management report") for the financial year from
+1 October 2022 to 30 September 2023.
+In accordance with German legal requirements, we have not audited the content
+of those components of the group management report specified in the “Other Infor-
+mation" section of our auditor's report.
+The group management report contains cross-references that are not required by
+law and which are marked as unaudited. In accordance with German legal require-
+ments, we have not audited the cross-references and the information to which the
+cross-references refer.
+In our opinion, on the basis of the knowledge obtained in the audit,
+> the accompanying consolidated financial statements comply, in all material respects,
+with the IFRSS as adopted by the EU, and the additional requirements of German
+commercial law pursuant to Section 315e (1) HGB [Handelsgesetzbuch: German
+Commercial Code] and, in compliance with these requirements, give a true and fair
+view of the assets, liabilities, and financial position of the Group as at 30 Septem-
+ber 2023, and of its financial performance for the financial year from 1 October 2022
+to 30 September 2023, and
+> the accompanying group management report as a whole provides an appropriate
+view of the Group's position. In all material respects, this group management report
+is consistent with the consolidated financial statements, complies with German
+legal requirements and appropriately presents the opportunities and risks of future
+development. Our opinion on the group management report does not cover the
+content of those components of the group management report specified in the
+"Other Information" section of the auditor's report. The group management report
+contains cross-references that are not required by law and which are marked as
+unaudited. Our audit opinion does not extend to the cross-references and the
+information to which the cross-references refer.
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led
+to any reservations relating to the legal compliance of the consolidated financial
+statements and of the group management report.
+Report on the Audit of the Consolidated Financial
+Statements and of the Group Management Report
+Opinions
+In connection with our audit, our responsibility is to read the other information and,
+in so doing, to consider whether the other information
+← 172 →
+Further information
+Responsibility Statement
+Dr. Rutger Wijburg
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Responsibility Statement
+by the Management Board
+by the Management Board
+To the best of our knowledge, and in accordance with the applicable reporting
+principles, the Consolidated Financial Statements give a true and fair view of the
+assets, liabilities, financial position and profit or loss of the Group, and the Combined
+Management Report, which is combined with the Management Report of Infineon
+Technologies AG, includes a fair review of the development and performance of the
+business and the position of the Group, together with a description of the principal
+opportunities and risks associated with the expected development of the Group.
+Infineon Technologies AG
+Management Board
+Jochen Hanebeck
+Elke Reichart
+Dr. Sven Schneider
+Andreas Urschitz
+Dr. Rutger Wijburg
+Infineon | Annual Report 2023
+Neubiberg, 23 November 2023
+Andreas Urschitz
+Our opinions on the consolidated financial statements and on the group management
+report do not cover the other information, and consequently we do not express an
+opinion or any other form of assurance conclusion thereon.
+> information extraneous to management reports and marked as unaudited.
+As a result of the impairment test performed, the Company did not identify any
+need to recognise impairment losses. In light of the discretionary judgement of the
+assumptions underlying impairment testing, there is the risk for the consolidated
+financial statements that a required impairment was not recognised. There is also the
+risk that the related disclosures in the notes are not appropriate.
+Impairment testing of goodwill is complex and based on a range of assumptions that
+require judgement. Such judgement includes, among other elements, the assumptions
+found in the adopted corporate planning for a period of five years, such as revenue
+growth and margins, assumed long-term growth rates in perpetuity, which consider
+a steady state taking into account the synergy effects of the acquisition of Cypress
+Semiconductor Corporation, and the underlying discount rates.
+Infineon tests goodwill for impairment in accordance with IAS 36 at the operating
+segment level annually in the fourth quarter of the financial year ending 30 Septem-
+ber, as well as in cases where events or changes to the prevailing conditions provide
+indications that the recoverable amount may have fallen below the carrying amount.
+The recoverable amount is the higher of fair value less costs of disposal and value
+in use. Goodwill is impaired if the carrying amount of the operating segment to which
+the goodwill is allocated exceeds the recoverable amount of this unit. Infineon
+determines the recoverable amount of the respective cash-generating unit to which
+goodwill was allocated according to value in use.
+The consolidated financial statements of Infineon Technologies AG reported goodwill
+in the amount of EUR 6,547 million as at 30 September 2023. At 23% of the balance
+sheet total, goodwill accounts for a considerable share of total assets.
+The financial statement risk
+Please refer to note 2 in the notes to the consolidated financial statements for infor-
+mation on the accounting policies applied and the assumptions used. Information on
+the value of goodwill can be found under note 14.
+Impairment testing of goodwill
+Our audit approach
+Key audit matters are those matters that, in our professional judgement, were of most
+significance in our audit of the consolidated financial statements for the financial
+year from 1 October 2022 to 30 September 2023. These matters were addressed in
+the context of our audit of the consolidated financial statements as a whole, and in
+forming our opinion thereon, we do not provide a separate opinion on these matters.
+We conducted our audit of the consolidated financial statements and of the group
+management report in accordance with Section 317 HGB and the EU Audit Regulation
+No 537/2014 (referred to subsequently as "EU Audit Regulation") and in compliance
+with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
+Our responsibilities under those requirements and principles are further described in
+the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+and of the Group Management Report" section of our auditor's report. We are inde-
+pendent of the group entities in accordance with the requirements of European law
+and German commercial and professional law, and we have fulfilled our other German
+professional responsibilities in accordance with these requirements. In addition, in
+accordance with Article 10 (2)(f) of the EU Audit Regulation, we declare that we have
+not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regula-
+tion. We believe that the evidence we have obtained is sufficient and appropriate to
+provide a basis for our opinions on the consolidated financial statements and on the
+group management report.
+Basis for the Opinions
+← 174 →
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Key Audit Matters in the Audit of the Consolidated
+Financial Statements
+The other information also includes the remaining parts of the annual report. The
+other information does not include the consolidated financial statements, the group
+management report information audited for content and our auditor's report thereon.
+When assessing the impairment test, we also assessed the appropriateness of key
+assumptions. We assessed the Company's calculation method and selected assump-
+tions in terms of their appropriateness with the help of our valuation specialists.
+For this purpose, we checked that corporate planning was updated for the next five
+years and adopted by the Management Board. Using elements selected on the basis
+of risk, we had the staff responsible for preparing corporate planning explain to us in
+particular revenue and margin performance, as well as the long-term growth rates
+assumed in perpetuity, which consider a steady state taking into account the synergy
+effects of the acquisition of Cypress Semiconductor Corporation. In this context,
+revenue performance in particular was critically reviewed and assessed based on
+publicly available market estimates and information to determine whether the revenue
+Management Board and Supervisory Board
+> the combined corporate governance statement for the Company and the Group
+referred to in the group management report, and
+The Management Board and the Supervisory Board, respectively, are responsible for
+the other information. The other information comprises the following components of
+the group management report, whose content was not audited:
+Other information
+The related disclosures in the notes are appropriate.
+The Company's assumptions used for measurement are appropriate.
+The calculation method used for impairment testing of goodwill is appropriate and
+in line with the accounting policies to be applied.
+Our observations
+Infineon | Annual Report 2023
+Finally, we assessed whether the disclosures in the notes regarding impairment
+testing of goodwill are appropriate.
+To ensure the computational accuracy of the valuation method used, we verified the
+Company's calculations on the basis of selected risk-based elements.
+We checked how the discount rates used were derived and their amounts. For this
+purpose, we compared the assumptions and data underlying the discount rates,
+in particular the risk-free rate, the market risk premium and the beta factor, with our
+own assumptions and publicly available data.
+performance used for measurement is within a reasonable range. We also confirmed
+the accuracy of the Company's previous forecasts by comparing the budgets of
+previous financial years with actual results and by analysing deviations.
+← 175 →
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+In order to take account of the existing forecast uncertainty and the earlier cut-off
+date selected for impairment testing, the Company examined the effects of possible
+changes in the discount rates, revenue and margin performance and the long-term
+growth rate in perpetuity on the value in use by calculating alternative scenarios
+and comparing these with its own reported figures (sensitivity analysis). We have
+assessed this analysis. In order to take into account the earlier cut-off date for impair-
+ment testing, we also assessed the impact of events until 30 September 2023 on
+impairment testing.
+Dr. Sven Schneider
+> the separate combined non-financial report of the Company and Group, which is
+referred to in the group management report
+Jochen Hanebeck
+5 Equity and net result as of 31 March 2022.
+4 Equity and net result as of 31 December 2021.
+3 Equity and net result as of 30 September 2021.
+2 On 23 January 2009, Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009. The equity and earnings of Qimonda AG and its subsidiaries
+are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency. The list of subsidiaries held by Qimonda AG is based on information from 30 September 2010, since Infineon
+had not received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies, and further reflects information from the German commercial register.
+Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and results of operations.
+0
+0
+(€ in millions)
+Thereof Infineon
+Technologies AG
+0
+77
+77
+77
+in %
+Shareholdings
+High Blantyre, Scotland
+Wilmington, Delaware, USA
+Taipei, Taiwan
+Registered office
+1 Certain subsidiaries were not consolidated due to immateriality.
+Qimonda UK Ltd. (in liquidation)
+Qimonda Taiwan Co. Ltd. (in liquidation)
+Qimonda Richmond LLC (in insolvency)
+Name of company
+Footnote
+Net result
+(€ in millions)
+Equity
+Notes to the Consolidated Financial Statements
+← 170 →
+=
+Elke Reichart
+Consolidated Financial Statements
+6 Equity and net result as of 30 September 2022.
+7 Equity and net result as of 30 September 2022 (period from 12 November 2021 until 30 September 2022).
+Further information
+9 Equity and net result as of 30 September 2022 (period from 8 September 2022 until 30 September 2022).
+17 Exemption pursuant to section 264b German Commercial Code from the obligations to prepare a management report, from the audit obligation, and from the obligation to disclose the annual financial statements.
+18 Because criteria pursuant to section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not disclosed.
+19 Non-stock entity. Disclosure of ownership in percent does not apply.
+20 The entity owns land of which Infineon is the sole tenant.
+21 Infineon accounts for its interest using the equity method because Infineon has significant influence due to the right to hold a supervisory board position in combination with comprehensive minority rights and certain contractual rights
+in the context of development cooperation.
+22 Infineon accounts for its interest using the equity method as Infineon lacks controlling influence due to certain contractual participation rights of the co-shareholder.
+23 Consolidated financial statements.
+24 IFRS figures.
+Infineon | Annual Report 2023
+16 Exemption pursuant to section 264b German Commercial Code from the obligations to prepare a management report as well as notes and from the obligations to disclose the annual financial statements.
+2
+2
+8 Equity and net result as of 30 September 2022 (period from 1 January 2022 until 30 September 2022).
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← 171 →
+Notes to the Consolidated Financial Statements
+Neubiberg, 21 November 2023
+Infineon Technologies AG
+Management Board
+2
+15 Exemption pursuant to section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to section 325 German Commercial Code.
+Management Board and Supervisory Board
+11 Equity and net result as of 31 December 2022.
+12 The entity was founded in the 2023 fiscal year.
+13 Control and profit transfer agreement.
+14 Exemption pursuant to section 264, paragraph 3, German Commercial Code from the preparation of a management report and from the audit obligation pursuant to section 264 et seq. German Commercial Code and from the obligations
+to disclose the annual financial statements pursuant to section 325 German Commercial Code.
+10 Equity and net result as of 2 October 2022 (period from 4 October 2021 until 2 October 2022).
+› Communications
+> Battery-powered gardening equipment, e.g.,
+- Hedge trimmers
+- Lawn mowers
+› Battery-powered home appliances, e.g.,
+- Vacuum cleaners
+> Battery-powered power tools, e.g.,
+LED and conventional lighting systems
+> Voice control
+> Smart speakers
+- Cordless screwdrivers
+› Sensors
+- Drills
+> eBikes
+BLDC motor
+> eScooters
+> Multi-copters
+Cellular communications infrastructure
+› Base stations
+Charging stations for electric vehicles
+Human-machine interaction
+IoT
+- Power saws
+> Power train for low-speed electric vehicles
+Applications
+Microinverter for roof-top systems
+PSS Power & Sensor Systems
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+> SiC diodes, SiC MOSFETs, SiC modules
+control unit, driver and switch
+> Intelligent IGBT modules with integrated
+> IGBT module solutions, including IGBT stacks
+> IGBT modules (low-power, medium-power,
+high-power)
+› Driver ICs
+> Discrete IGBTs
+› Bare die business
+Product range
+1 Including motors, compressors, pumps and fans.
+› Trams
+> Metro trains
+Audio amplifiers
+> Battery-powered loudspeakers
+> Smart speakers
+Automotive electronics
+> Blind spot detection
+> In-cabin USB PD charging
+> Onboard charger
+Further information
+Applications and product range
+Power & Sensor Systems
+> GaN power switches
+› Activity trackers
+> Radar sensor ICs (24 GHz, 60 GHz)
+> RF antenna switches
+> RF power transistors
+> SiC diodes, SiC MOSFETS
+› Game consoles
+> Brand protection
+› Accessories
+Authentication
+Applications
+Connected Secure Systems
+CSS
+183 →
+Further information
+Applications and product range
+Connected Secure Systems
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+182 →
+› Locomotives
+> Submarine telecommunications
+> Oil and gas exploration
+Infineon | Annual Report 2023
+> USB controllers
+> TVS (transient voltage suppressor) diodes
+> Low-voltage and high-voltage driver ICS
+> GPS low-noise amplifiers
+high-voltage power MOSFETs (Si-based)
+> Discrete low-voltage, mid-voltage and
+> Health care trackers
+› Navigation devices
+› Smartphones
+> Tablets
+Power management (chargers, adapters, power
+supplies, DC-DC conversion, wireless charging)
+› Consumer electronics
+› Data centers
+> Home appliances
+> Mobile devices
+> PCs and notebooks
+Mobile devices
+> Servers
+Special applications in harsh environments
+› Aerospace systems
+> Aviation technologies
+> Defense technologies
+Product range
+> 3D ToF sensors
+> Chips for gas sensors
+> Chips for MEMS microphones
+› Chips for pressure sensors
+> Control ICs for power switches
+> Customized chips (ASICS)
+› Telecommunication technology
+> High-speed trains
+> Protection against software manipulation
+> Hybrid buses
+> Electric motor control
+› Generator control
+> Start-stop system
+› Thermal management
+› Transmission control
+Security
+› Communication
+-Car-to-car
+-Car-to-infrastructure
+› Original spare parts authentication
+> Protection against manipulation (e.g., odometer)
+> Industrial control systems
+> Remote keyless entry
+> Tachograph
+Product range
+> 32-bit automotive microcontrollers for powertrain,
+safety, driver assistance systems, infotainment and
+digital display systems
+› Discrete power semiconductors
+> IGBT modules
+> Industrial microcontrollers
+> Memory ICs (NOR flash, SRAM, nvSRAM, F-RAM)
+> Power ICs
+> Sensors (3D-ToF, pressure, magnetic,
+› DC-DC converter
+77 GHz radar, current)
+› Combustion engine control
+› Battery charging control
+› Distance control
+> Electronic chassis control
+> Electronic power steering
+› Emergency braking assistant
+> ESP (Electronic Stability Program)
+> Lane departure warning system
+> Tire pressure monitoring system
+Comfort electronics
+> Air conditioning
+› Body control units
+> Door electronics
+> Electronic seat adjustment
+> Hatch door
+> Lighting
+> Power window
+> Steering
+> Sunroof
+> Suspension
+> Windshield wipers
+Infotainment
+› Connectivity for in-cabin infotainment
+› Digital instrument cluster
+Powertrain
+› Battery management
+> SiC (diodes, MOSFETs, modules)
+> Transceivers (CAN, CAN FD, LIN, Ethernet, FlexRay™)
+> Voltage regulators
+> Washing machines
+Industrial drives¹
+> Air conditioning technology
+> Automation technology
+> Drives technologies
+> Elevator systems
+> Escalators
+> Materials handling
+> Oil derricks
+› Pipelines
+> Rolling mills
+Industrial power supplies
+> Auxiliary power supplies
+> Battery chargers
+› Charging stations for electric vehicles
+> Home energy storage
+> Uninterruptable power supplies
+Industrial robotics
+Industrial vehicles
+> Agricultural vehicles
+› Construction vehicles
+> Electric delivery vehicles
+> Forklifts
+> Vacuum cleaners
+> Refrigerators
+> Microwave ovens
+> Induction cooktops
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+GIP
+Green Industrial Power
+Further information
+Applications and product range
+Green Industrial Power
+← 181 →
+Applications
+Energy generation
+> Photovoltaic systems
+Traction
+> Wind power turbines
+> Grid stability
+> Home usage
+> Urban district
+> Wall box
+Energy transmission
+> FACTS (Flexible AC Transmission Systems)
+> Offshore wind farm HVDC transmission lines
+> Overland HVDC transmission lines
+Home appliances
+> Air conditioners
+> Dishwashers
+Energy storage
+> Printer cartridges
+445
+› Connected vehicles
+Further information
+Financial calendar 2024
+← 185 →
+Financial calendar 2024
+1 Preliminary
+February
+February
+May
+August
+November
+Tuesday
+Friday
+Tuesday
+Monday
+6
+23
+7
+5
+Tuesday
+12
+Publication of
+first quarter 2024¹
+results
+Annual General
+Meeting 2024
+virtual
+Publication of
+second quarter 2024¹
+results
+Publication of
+third quarter 2024¹
+results
+Consolidated Financial Statements
+Publication of
+fourth quarter and
+fiscal year 2024¹
+results
+Combined Management Report
+← 184 →
+66
+RF
+ML
+Internet of Things
+light-emitting diode
+micro-electromechanical system
+machine learning
+MOSFET metal-oxide-semiconductor field-effect transistor
+not AND
+near-field communication
+programmable system-on-chip
+radio frequency
+Si
+silicon
+Sic
+silicon carbide
+ToF
+time-of-flight
+USB
+universal serial bus
+Wi-Fi
+wireless fidelity
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Risk assessment matrix
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Infineon Technologies AG
+Headquarters:
+Contact for Investors and Analysts:
+Media Contact:
+Visit us on the web:
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+> Cruise control
+> Blind spot detection
+- On-board network
+Power distribution
+-
+> E/E architecture
+> Automatic parking
+› Airbag
+> ABS (Anti-blocking system)
+Assistance systems and safety systems
+Applications
+← 180 →
+Further information
+Applications and product range
+Automotive
+ATV Automotive
+Applications and product range
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Combined Management Report
+Visit us on the web: www.infineon.com f in X
+The provision of the information used by Infineon does not imply any judgment on Infineon and no liability is
+assumed for the information.
+Further information
+Imprint
+186 →
+Imprint
+Published by:
+Editors:
+Copy deadline:
+Fiscal year:
+Independent auditors:
+Designed by:
+Photography:
+Note
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+23 November 2023
+1 October to 30 September
+KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich (Germany)
+HGB Hamburger Geschäftsberichte GmbH & Co. KG,
+Hamburg (Germany)
+Page 4: Werner Bartsch, Hamburg (Germany)
+Page 10: Bernhard Schmidt, Munich (Germany)
+Page 12: Tobias Eble, Munich (Germany)
+The following were brand names of Infineon Technologies AG
+in the 2023 fiscal year:
+Infineon, the Infineon logo, AURIX™, FlexRay™, Modus Toolbox™, PROFET™,
+PSoCT, TRAVEO M
+Public
+Forward-looking statements
+This report contains forward-looking statements about the business, financial condition, earnings performance
+and strategy of the Infineon Group. These statements and assessments are based on assumptions and projections
+resting upon currently available information and present estimates. They are subject to a multitude of uncertain-
+ties and risks, many of which are wholly or partially beyond Infineon's control. Infineon's actual business devel-
+opment, financial position, performance and strategy may therefore differ materially from the statements made
+in this report.
+Specific disclaimer for Omdia reports, data and information referenced in this document:
+Specific disclaimer for S&P Global - reports, data and information referenced in this document:
+The S&P Global Mobility and S&P Global Commodity Insights reports, data and information referenced herein
+(the "S&P Global Materials") are the copyrighted property of S&P Global Inc. and its subsidiaries ("S&P Global")
+and represent data, research, opinions or viewpoints published by the relevant divisions within S&P Global, and
+are not representations of fact. The S&P Global Materials speak as of the original publication date thereof and not
+as of the date of this document. The information and opinions expressed in the S&P Global Materials are subject
+to change without notice and neither S&P Global nor, as a consequence, Infineon have any duty or responsibility
+to update the S&P Global Materials or this publication. Moreover, while the S&P Global Materials reproduced
+herein are from sources considered reliable, the accuracy and completeness thereof are not warranted, nor are
+the opinions and analyses which are based upon it. S&P Global and the trademarks used in the Data, if any, are
+trademarks of S&P Global. Other trademarks appearing in the S&P Global Materials are the property of S&P Global
+or their respective owners.
+C13
+PSOC
+60
+Payment systems
+› Credit/debit cards
+> Mobile payment
+> NFC-based contactless payment
+Ticketing, access control
+Trusted computing
+Infineon | Annual Report 2023
+Product range
+› Connectivity solutions (Wi-Fi, Bluetooth, BLE, UWB)
+> Embedded security controllers (Embedded SIM,
+Authentication, Trusted Computing)
+> Microcontroller for consumer electronics
+and industrial applications
+> Security controllers (contact-based, contactless,
+dual-interface)
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Chart overview
+Further information
+Chart overview | List of abbreviations
+List of abbreviations
+C01 The main stages of the semiconductor value chain
+Page
+22
+> SIM cards
+ADAS
+- IoT applications
+(machine-to-machine communication)
+- eCall
+-Car-to-car communications
+-Car-to-infrastructure communications
+> Electronic toll collection (toll collect)
+> In-cabin infotainment
+> Protection against manipulation (e.g., tachographs)
+Consumer electronics
+› Game consoles
+> Remote control
+› Smart watches and activity trackers
+Government identification documents
+> Driver's licenses
+> Healthcare cards
+> National identity cards
+> Passports
+> Social insurance cards
+IoT
+> Industry 4.0
+> IT equipment
+> Smart city
+> Smart home
+Mobile communications
+> Embedded SIM
+- Consumer applications
+advanced driver assistance system
+C02
+Core competencies in the segments
+C07
+Revenue and Segment Result of the
+IC
+integrated circuit
+Connected Secure Systems segment
+49
+IGBT
+insulated gate bipolar transistor
+C08 Revenue by segment
+50
+IoT
+C09 Financial debt by currency
+53
+LED
+C10 Development of the Infineon Technologies AG share
+compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones
+MEMS
+US Semiconductor Index for the 2023 fiscal year
+(daily closing prices)
+59
+NAND
+C11 Shareholder structure as of the end of the 2023 fiscal year
+59
+NFC
+C12 Dividend per share for the 2014 to 2023 fiscal years
+gallium nitride
+GaN
+47
+dynamic random access memory
+24
+ΑΙ
+artificial intelligence
+ASIC
+C03
+R&D expenses
+35
+application-specific integrated circuit
+BLDC
+brushless direct current
+C04 Revenue and Segment Result of the
+Automotive
+Automotive segment
+46
+BLE
+CSR
+46
+DC-DC
+bluetooth low energy
+corporate social responsibility
+direct current to direct current conversion
+C06
+Revenue and Segment Result of the
+Power & Sensor Systems segment
+DRAM
+C05 Revenue and Segment Result of the
+Green Industrial Power segment
+Infineon | Annual Report 2023
+www.infineon.com
+The content of these sections is voluntary content that has not been
+checked by the auditor but only read critically. In the case of cross-
+references, the information to which the cross-references refer has not
+been checked either.
+Consolidated Financial Statements
+Further information
+5 Q = < 16 →
+Strategy and Technology Committee
+The Supervisory Board's Strategy and Technology Committee convened three times
+during the reporting year. The Management Board provided it with reports on a num-
+ber of topics, including key aspects of the macroeconomic market and competitive
+environment and the progress of the Group's digital agenda. Other areas discussed
+at committee meetings were strategic considerations with regard to the expansion of
+manufacturing capacity and the value contribution of software at Infineon.
+Corporate Governance
+Declaration of Compliance 2023
+In the Declaration of Compliance dated November 2023, the Management Board and
+Supervisory Board jointly declared that, since the submission of the last Declaration
+of Compliance in November 2022, all the recommendations of the German Corporate
+Governance Code contained in the version dated 28 April 2022 have been complied
+with and will continue to be complied with in the future.
+The actual wording of the Declaration of Compliance 2023 and all previous Declara-
+tions of Compliance are available on Infineon's website.
+www.infineon.com/declaration-of-compliance
+Self-assessment by the Supervisory Board
+The Supervisory Board regularly assesses how effectively it performs its duties. It
+conducted such a self-assessment in the 2023 fiscal year. Given that in the 2022 fiscal
+year, the self-assessment was carried out with the support of an external consultant
+(including personal interviews with all the members of the Management Board and
+the Supervisory Board), Infineon reverted in the 2023 fiscal year to the use of an inter-
+nal questionnaire. The results of the questionnaire were discussed in the course of
+a Supervisory Board meeting in August 2023 and a full-day Supervisory Board work-
+shop in November 2023. Issues discussed included reinforcing the expertise of
+the Supervisory Board in the area of semiconductors, which led to Prof. Hermann Eul
+being nominated to the Supervisory Board, cooperation between the committees
+and the full Supervisory Board, the framework for the Supervisory Board's engage-
+ment with strategic topics, and the parameters of the Supervisory Board's continuous
+succession planning for Management Board positions.
+Skills and expertise profile and list of objectives for
+the Supervisory Board/qualifications matrix
+The Supervisory Board decided to make a modification to the skills and expertise
+profile and list of objectives. One of the reasons for this was to make explicit refer-
+ence in the skills and expertise profile to sustainability expertise. It was also decided
+to modify the age limit of 70 previously set for Supervisory Board members to the
+extent that, in the future, it will no longer be simply a rule but a strict limit. Moreover,
+the Supervisory Board looked in detail at the qualifications matrix published in the
+Statement on Corporate Governance.
+Examination of potential conflicts of interest
+The members of the Management Board and of the Supervisory Board are required
+to disclose any conflicts of interest to the Supervisory Board without delay. One
+Supervisory Board member disclosed a potential conflict of interest in respect of an
+M&A project. Thereafter, this Supervisory Board member was not given access to
+the relevant documents and also did not participate in the meetings and decision-
+making process of the Supervisory Board in this respect.
+Prior to Management Board members assuming sideline activities, particularly super-
+visory board mandates outside the Company, the German Corporate Governance
+Code requires that permission be granted by the Supervisory Board. No conflicts of
+interest were discernible in any of the sideline activities performed. In fact, they were
+all in Infineon's best interests and were therefore approved by the Supervisory Board
+and/or Executive Committee.
+Further information on the topic of corporate governance is available in the Statement
+of Corporate Governance.
+www.infineon.com/declaration-on-corporate-governance
+Infineon | Annual Report 2023
+Combined Management Report
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Management Board and Supervisory Board
+Report of the Supervisory Board
+The Committee also devoted time to the Remuneration Report and the separate
+combined Non-Financial Report and, in this context, considered other sustainability
+issues, including the German Supply Chain Act (LkSG).
+Following the resignation of Géraldine Picaud from the Supervisory Board at the
+beginning of 2023, Ute Wolf was appointed as a member of the Supervisory Board by
+court order in April 2023 and elected by the Supervisory Board as a member of the
+Investment, Finance and Audit Committee. Until shortly before her appointment by
+Infineon, Ute Wolf was the Chief Financial Officer of a public limited company listed
+in Germany. In addition, she has already spent several years as the Chair of audit
+committees of listed companies. She therefore increases the level of financial expertise
+on the Supervisory Board. At the Annual General Meeting to be held in February 2024,
+the Supervisory Board will propose that Ute Wolf be elected to the Supervisory Board
+for a regular four-year term of office.
+Basic and ongoing training
+Supervisory Board members are responsible for undertaking any basic or ongoing
+training considered necessary to perform their duties, and they receive appropriate
+support from Infineon to do so. In-house information events are held to provide targe-
+ted training. In the 2023 fiscal year, for example, events took place that covered the
+EU Taxonomy and governance topics as well as current regulatory developments affec-
+ting the Supervisory Board. As part of the onboarding process for new Supervisory
+Board members, Infineon also conducts comprehensive briefings covering a broad
+range of topics, including its individual operating segments, the principles and key
+elements of its corporate strategy, investment planning and its manufacturing strategy.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Consolidated Financial Statements
+Further information
+5 Q = 15 →
+Committee work
+The Supervisory Board's various committees are responsible for drawing up resolutions
+and preparing other major topics that need to be dealt with by the full Supervisory
+Board. Moreover, the Supervisory Board has delegated certain decision-making powers
+to its committees. The chairpersons of each committee are required to report on
+committee meetings at the next full Supervisory Board meeting.
+Mediation Committee
+The Mediation Committee did not need to convene during the reporting year.
+Nomination Committee
+The Nomination Committee held six meetings in total during the 2023 fiscal year.
+The topics discussed at the meetings included the replacements for Supervisory
+Board positions referred to above following the resignations of Dr. Wolfgang Eder,
+Hans-Ulrich Holdenried and Géraldine Picaud. Klaus Helmrich and I were elected at
+the 2023 Annual General Meeting and Ute Wolf was appointed by the court. The
+committee also prepared the nomination for election at the 2024 Annual General
+Meeting of Ute Wolf, as well as of Prof. Hermann Eul, an acknowledged expert in
+semiconductors.
+Executive Committee
+At its ordinary meetings, the Executive Committee focused primarily on preparing the
+Supervisory Board's resolutions to determine the level of variable remuneration to be
+paid to Management Board members. These included, firstly, determining the Short-
+Term Incentive (STI) target achievement levels for the 2022 fiscal year and setting new
+target values for the 2023 fiscal year and, secondly, determining the STI modifier cri-
+teria, confirming the ESG targets for limiting carbon emissions and increasing diversity
+that are relevant for the Long-Term Incentive (LTI) and confirming the composition
+of the TSR (Total Shareholder Return) peer group. The topics discussed at the extra-
+ordinary meetings were the personnel and remuneration issues referred to above.
+Investment, Finance and Audit Committee
+The Investment, Finance and Audit Committee held five ordinary meetings in the
+2023 fiscal year.
+Its activities centered on monitoring the financial reporting process, reviewing the
+half-year and quarterly financial statements, conducting the preliminary audit of the
+Separate Financial Statements, Consolidated Financial Statements and Combined
+Management Report for Infineon Technologies AG and the Infineon Group, and dis-
+cussing the audit reports with the auditor. The Committee also conducted an assess-
+ment of the quality of the audit. In addition, the Committee examined Infineon's
+financial and investment budget. It also received regular reports on the internal con-
+trol, internal audit, risk management and compliance management systems and
+deliberated on their appropriateness and effectiveness. The Committee was also
+provided with continuous updates on additional risks and significant legal disputes.
+The Committee's recommendation to the full Supervisory Board to propose to share-
+holders at the 2023 Annual General Meeting that KPMG AG Wirtschaftsprüfungs-
+gesellschaft, Munich (KPMG) be elected for the last time as Company and Group audi-
+tor was based on a Declaration of Independence obtained from KPMG as well as an
+analysis of the non-audit services provided by KPMG. There were no indications of
+conflicts of interest, grounds for exclusion or other lack of independence on the part
+of the auditor. The Committee also considered the fee arrangements, issued con-
+tracts for the relevant audit engagements and defined supplementary areas for audit
+emphasis.
+Representatives of the auditor attended all the meetings of the Investment, Finance
+and Audit Committee and reported in detail on the audit procedures performed. At
+each of the meetings, there was also a closed session involving the auditor and the
+members of the Investment, Finance and Audit Committee without the Management
+Board being present. This also applied to the full Supervisory Board meeting that
+considered the financial statements.
+Infineon | Annual Report 2023
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Chairman of the Supervisory Board
+Infineon | Annual Report 2023
+50 = ( 19 )
+Combined Management Report
+42 2023 fiscal year
+20 Business model
+21
+Overview
+42 Group performance
+22 Value chain and manufacturing
+44
+Segment performance
+49
+Review of results of operations
+53
+Review of financial condition
+24 The segments
+27 Group strategy
+27 Long-term growth trends
+27 Strategic targets
+29 Strategic guidelines
+Dr. Herbert Diess
+H. DIESS
+On behalf of the Supervisory Board
+Neubiberg, November 2023
+5 Q = < 17 →
+Rules of procedure for the Supervisory Board and
+the Management Board
+All the rules of procedure for the Supervisory Board and the Management Board are
+available on the Infineon website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
+Related party transactions
+Publicly listed companies such as Infineon require the approval of the Supervisory
+Board or one of its committees before entering into certain transactions with related
+parties. In order to identify related party transactions that require approval and to
+treat them in accordance with the law, Infineon has implemented a procedure based
+on guidelines that apply worldwide across the Group. The Supervisory Board has
+delegated responsibility in this area to the Investment, Finance and Audit Committee,
+particularly for resolutions requiring approval. There were no related party trans-
+actions requiring approval in the 2023 fiscal year.
+Separate and Consolidated Financial Statements
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and
+the Consolidated Financial Statements as of 30 September 2023, as well as the
+Combined Management Report of Infineon Technologies AG and the Infineon Group,
+and issued unqualified opinions thereon.
+The Half-Year Financial Report was also reviewed by KPMG. No issues were identified
+that might indicate that the condensed Interim Consolidated Financial Statements
+or the Interim Group Management Report were not prepared in accordance with the
+applicable provisions in all material respects.
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG
+and the Consolidated Financial Statements of the Infineon Group and reviewed the
+Interim Consolidated Financial Statements since the 1999 fiscal year (short fiscal year
+from 1 April 1999 to 30 September 1999). Martin Schmitt, the auditor responsible for
+the engagement, signed the auditor's report for the first time for the 2021 fiscal year
+(1 October 2020 to 30 September 2021) and Angelika Huber-Straßer, as co-signatory,
+for the first time for the 2023 fiscal year (1 October 2022 to 30 September 2023).
+Dr. Wolfgang Eder and Hans-Ulrich Holdenried resigned from the Supervisory Board
+with effect from the end of the Annual General Meeting on 16 February 2023. Based
+on a proposal by the Supervisory Board, Klaus Helmrich and I were newly elected to
+the Supervisory Board. At its meeting immediately after the Annual General Meeting,
+the Supervisory Board elected me as the new Chairman of the Supervisory Board,
+as a member and the Chairman of the Strategy and Technology Committee, and as
+the Chairman of the Nomination Committee. I am grateful for this vote of confidence
+from Infineon's Supervisory Board and would like to take the opportunity here to
+thank once again Dr. Wolfgang Eder and also Hans-Ulrich Holdenried for their success-
+ful work over the past years.
+At the meeting of the Investment, Finance and Audit Committee held on 14 November
+2023 and continued in a conference call on 21 November 2023, thorough discussions
+were held with the auditor regarding the Separate Financial Statements, the Consoli-
+dated Financial Statements, the Combined Management Report, the appropriation
+of profit and the auditor's findings. The Committee deliberated at length on the key
+audit matters disclosed in the auditor's report as well as on the related audit proce-
+dures. Based on the insights gained in the course of these deliberations, the Investment,
+Finance and Audit Committee resolved to suggest to the Supervisory Board that the
+financial statements drawn up and presented by the Management Board be approved
+and the proposed appropriation of profit agreed to.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 18 →
+After detailed discussions, the Supervisory Board concluded that it had no objections
+to the financial statements and the audits performed by the auditor. In its opinion, the
+Combined Management Report complied with all legal requirements. The Supervisory
+Board also concurred with the assertions regarding Infineon's future development
+contained therein, as well as with the results of the audit of the financial statements.
+It therefore approved the Separate Financial Statements of Infineon Technologies AG
+and the Consolidated Financial Statements of the Infineon Group for the 2023 fiscal
+year. The Separate Financial Statements were adopted accordingly. The Supervisory
+Board also approved the Management Board's proposal for the appropriation of
+unappropriated profit.
+Moreover, the Investment, Finance and Audit Committee and the full Supervisory
+Board deliberated on the combined separate Non-Financial Report for the year ended
+30 September 2023 drawn up by the Management Board and the Remuneration
+Report prepared together with the Management Board. KPMG performed a reason-
+able assurance engagement for the Remuneration Report and a limited assurance
+engagement for some parts of the combined separate Non-Financial Report and a
+reasonable assurance engagement for other parts of that report. In both cases, KPMG
+issued an unqualified opinion thereon. The documents were carefully examined by
+the Investment, Finance and Audit Committee at its meeting on 14 November 2023,
+which was continued in a conference call on 21 November 2023, and by the Super-
+visory Board at its meeting on 23 November 2023. The Supervisory Board approved
+the Remuneration Report and positively acknowledged the combined separate
+Non-Financial Report prepared by the Management Board.
+The Supervisory Board wishes to thank all Infineon employees and the Management
+Board for their great commitment and their excellent performance in the 2023 fiscal
+year, which has again been a challenging year.
+The Separate Financial Statements, the Consolidated Financial Statements, the Com-
+bined Management Report, the Management Board's proposal for the appropriation
+of unappropriated profit (all prepared by the Management Board), and KPMG's long-
+form audit reports were all made available to the Supervisory Board at its meeting on
+23 November 2023. At this meeting, the Chairman of the Investment, Finance and
+Audit Committee reported in depth on the corresponding recommendations of the
+Committee. In addition, all material issues relevant to the financial statements and
+the audit, including the key audit matters, were exhaustively discussed with the audi-
+tor and closely examined by the Supervisory Board. The examination also covered
+the proposal to pay a dividend of €0.35 per share entitled to dividend.
+Personnel matters relating to the Supervisory Board
+Combined Management Report
+The Supervisory Board was regularly provided during the 2023 fiscal year with in-depth
+information regarding major legal disputes, which it then discussed at length with
+the Management Board. These included, in particular, the legal dispute with the insol-
+vency administrator of Qimonda AG pertaining to alleged residual liability claims,
+which has been ongoing for years.
+(From left to right)
+Andreas Urschitz
+Chief Marketing Officer
+Dr. Sven Schneider
+Chief Financial Officer
+Jochen Hanebeck
+Chief Executive Officer
+Elke Reichart
+Chief Digital
+Transformation Officer
+Dr. Rutger Wijburg
+Chief Operations Officer
+Management Board and Supervisory Board
+The Management Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 11
+The Management Board
+Andreas Urschitz
+Chief Marketing Officer
+Dr. Sven Schneider
+Chief Financial Officer
+Jochen Hanebeck
+Chief Executive Officer
+Elke Reichart
+Supervisory Board topics
+Dr. Rutger Wijburg
+Chief Operations Officer
+Andreas Urschitz has been a
+member of the Management Board
+and Chief Marketing Officer of
+Infineon Technologies AG since
+2022 (appointed until 31 May 2025).
+He is responsible for Group Sales,
+Marketing & Distribution; Customer
+Engagement Strategy; Application
+Framework & Services; Organization
+and Strategy enablement/imple-
+mentation of Regions Greater China,
+Asia Pacific and Japan; Marketing
+Communications.
+Andreas Urschitz was born in
+1972 in Klagenfurt, Austria. He
+obtained his master's degree in
+commercial science at the Vienna
+University of Economics and Busi-
+ness, Austria. He has been with
+Infineon (Siemens AG until 1999)
+since 1995.
+ઉમ
+Infineon | Annual Report 2023
+The Management Board
+10 →
+This report combines the Group Management Report of Infineon ("Infineon"
+or "the Group") - comprising Infineon Technologies AG (hereafter also
+referred to as "the Company") and its consolidated subsidiaries - and the
+Management Report of Infineon Technologies AG.
+87 List of references
+86 Remuneration Report
+86 Statement on Corporate Governance pursuant to sections
+289f and 315d of the German Commercial Code (HGB)
+82 Information pursuant to section 289a, paragraph 1
+and section 315a, paragraph 1 of the German
+Commercial Code (HGB)
+82 Corporate Governance
+79 Infineon Technologies AG
+65 Risk and opportunity report
+62 Outlook
+62 Report on outlook, risk and opportunity
+Sven Schneider has been Chief
+Financial Officer at Infineon
+Technologies AG since 2019
+(appointed until 30 April 2027).
+He is responsible for Group
+Finance; Group Financial Con-
+trolling & Planning; Treasury;
+Taxes; Accounting, Consolidation
+& Reporting; Investor Relations;
+Compliance; Audit; Risk Manage-
+ment; Internal Controls.
+61 Overall statement on Infineon's financial condition
+55 Review of liquidity
+Infineon | Annual Report 2023
+40 Review of the semiconductor industry
+37 Internal management system
+34 Research and development
+33 Human resources strategy
+Management Board and Supervisory Board
+The Management Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+58 Infineon on the capital market
+Sven Schneider was born in 1966 in
+Berlin, Germany. After completing
+his studies in business administration
+(Diplom-Kaufmann), he received
+his doctorate in business adminis-
+tration from the University of Trier,
+Germany. From 1995 to 2019, he
+held several positions at Linde AG,
+most recently as Spokesman of
+the Executive Board, Chief Finan-
+cial Officer and Labor Director.
+Chief Digital Transformation Officer
+Jochen Hanebeck was born in
+1968 in Dortmund, Germany.
+He received a degree in electrical
+engineering from RWTH Aachen
+University, Germany. He has been
+with Infineon since 1994 (Siemens
+AG until 1999).
+The three extraordinary meetings of the full Supervisory Board were conducted virtu-
+ally, and all the ordinary meetings were face-to-face meetings. Of the six meetings of
+the Executive Committee, two were virtual. One of the five meetings of the Investment,
+Finance and Audit Committee and four of the six meetings of the Nomination Com-
+mittee were in a virtual format. All the meetings of the Strategy and Technology Com-
+mittee, without exception, were face-to-face meetings.
+In preparation for ordinary Supervisory Board meetings, separate preliminary meet-
+ings were held for both the shareholder representatives and the employee representa-
+tives. The Supervisory Board and the Investment, Finance and Audit Committee also
+convened regularly without the presence of the Management Board.
+Corporate strategy
+The 2023 fiscal year was characterized by a variety of strategic projects that were
+closely monitored and then all approved by the Supervisory Board:
+> First, the Supervisory Board approved a more ambitious target operating model
+and thereby an upward revision of Infineon's long-term financial targets. Like the
+Management Board, the Supervisory Board is convinced that decarbonization and
+digitalization will ensure structurally increasing demand for semiconductors and
+that, thanks to its strategic focus, Infineon will benefit disproportionately from this
+development.
+Jochen Hanebeck has been a
+member of the Management
+Board of Infineon Technologies AG
+since 2016. He has been CEO
+since 1 April 2022 (appointed until
+31 March 2027). He is responsible
+for Divisions; Group Strategy;
+Mergers & Acquisitions; Organization
+and Strategy enablement/imple-
+mentation of region Americas;
+Communications & Public Policy;
+Human Resources (Labor Director);
+Legal & Patents; Research & Devel-
+opment (CTO).
+> Finally, the Supervisory Board examined measures relating to the Group's inorganic
+growth in promising new fields and granted its approval for the acquisition of
+the Canadian company GaN Systems, the technological leader in the development
+of GaN-based solutions for power conversion. The acquisition will significantly
+strengthen Infineon's leading position in power systems. The Supervisory Board
+also agreed on strategic portfolio management measures with the Management
+Board and endorsed the sale of its HiRel (High Reliability) DC-DC converter business to
+Micross Components, a transaction that enables Infineon to focus in the future on
+those HiRel business areas that benefit from its leading semiconductor technologies.
+In the 2023 fiscal year, separately from the examination of specific strategic projects,
+the Supervisory Board also considered various aspects of Infineon's corporate strategy
+at a daylong strategy meeting that took place on the Dresden site. Topics discussed
+included strategic fundamentals, portfolio management, parameters for organic and
+inorganic growth, geopolitical issues, financial targets and, last but not least, Infineon's
+sustainability strategy.
+Personnel matters relating to the Management Board
+In the course of the fiscal year, Constanze Hufenbecher, Management Board member
+and Chief Digital Transformation Officer (CDTO), informed the Supervisory Board
+of her intention not to renew her contract which was due to expire in April 2024. The
+Supervisory Board accepted her decision with regret. Immediately thereafter, the
+Supervisory Board initiated the process of finding a replacement for the CDTO position
+on the Management Board. Based on the Supervisory Board's continuous succes-
+sion planning and with the support of a human resources consultant, an extensive
+search process was launched. Infineon was eventually able to recruit Elke Reichart,
+an experienced digitalization expert. Elke Reichart was appointed as a member of the
+Management Board for three years with effect from 1 November 2023. Constanze
+Hufenbecher resigned from the Management Board with effect from 31 October 2023.
+The Supervisory Board thanks Constanze Hufenbecher for her achievements and
+personal commitment and wishes Elke Reichart a successful start in her new role.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+The Combined Management Report contains forward-looking statements
+about the business, financial condition and earnings performance of
+Infineon. These statements are based on assumptions and projections on
+the basis of currently available information and present estimates. They
+are subject to a multitude of uncertainties and risks. Actual business devel-
+opment may therefore differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law, Infineon does not
+undertake any obligation to update forward-looking statements.
+With effect from 1 April 2023, the "Industrial Power Control" segment
+was renamed "Green Industrial Power". Decarbonization, electrification
+and energy efficiency are important drivers of the business in this seg-
+ment. This focus and the significant contribution made by this segment
+to CO2 reduction are reflected in its new name. The change of name has
+no impact on the organizational structure, strategy or scope of business.
+Further information
+5 Q = < 14 →
+Management Board remuneration
+In November 2022, the Supervisory Board established a new remuneration system
+for the Management Board. This created a remuneration structure with higher variable
+remuneration components, whereby the Management Board remuneration will in
+the future be even more closely linked with the success of the business. Moreover,
+the maximum remuneration for longer-serving Management Board members will
+be increased, giving the Supervisory Board more scope to offer experienced Manage-
+ment Board members competitive remuneration. The restriction of the STI modifier
+to extraordinary developments brought the system more in line with the provisions
+set out in the German Stock Corporation Act (AktG) and the German Corporate Gover-
+nance Code. Finally, the opportunity was provided to weight ESG targets in the long-
+term variable remuneration even more heavily in the future. At the Annual General
+Meeting in February 2023, this new remuneration system for the Management Board
+was approved by a large majority. It was thereupon implemented in all Management
+Board employment contracts as of 1 April 2023.
+Further information on Management Board remuneration is available in the detailed
+Remuneration Report. As in the previous year, the Management Board and the Super-
+visory Board decided to ask the auditors to perform an additional review of the
+content of the Remuneration Report in addition to their formal audit of the report.
+KPMG issued an unqualified audit opinion on the Remuneration Report.
+Litigation
+5 Q = 13
+Further information
+> In addition, the past fiscal year has involved major investment – the construction
+of a new factory in Dresden (Germany), significant expansion of manufacturing
+in Kulim (Malaysia) and, finally, the participation of Infineon in a joint venture
+with TSMC, Bosch and NXP to build a modern semiconductor fab, also in Dresden.
+Infineon is therefore creating the production capacity required to reliably meet
+growing demand from its customers over the long term. Moreover, the investment
+in Dresden is an important milestone that will reinforce the European semicon-
+ductor ecosystem and strengthen supply chain resilience in Europe. Accordingly,
+the Supervisory Board was satisfied that these investments were necessary for
+the business and made economic sense and approved the plans.
+Combined Management Report
+Elke Reichart has been a member of
+the Management Board of Infineon
+Technologies AG and Chief Digital
+Transformation Officer since 2023
+(appointed until 31 October 2026).
+She is responsible for Groupwide
+Digitalization Strategy, Information
+Technology, Digital Sales & Market-
+ing Platforms and Services, Business
+Continuity, Business Excellence,
+Group Processes.
+Elke Reichart was born in 1965 in
+Stuttgart, Germany. She received
+her diploma in Romance Languages
+and Economics as well as a post-
+graduate degree in Applied Com-
+puter Science from the University
+of Gießen, Germany. She began
+her career at Hewlett-Packard Inc.
+in 1991.
+Rutger Wijburg has been a mem-
+ber of the Management Board of
+Infineon Technologies AG and Chief
+Operations Officer since 1 April 2022
+(appointed until 31 March 2025).
+He is responsible for Group Manufac-
+turing, Supply Chain, Procurement,
+Customs, Quality Management, Real
+Estate and Facility Management
+(Manufacturing Sites).
+Rutger Wijburg was born in
+Nijmegen, Netherlands, in 1962.
+He studied Electrical and Electronics
+Engineering at the University of
+Twente, Netherlands, and received
+his PhD in 1990. He started his
+career in 1990 at the University
+of Twente. Before joining Infineon
+in 2018, he held various leading
+positions at Philips, NXP and
+Globalfoundries.
+Consolidated Financial Statements
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 12 →
+Infineon | Annual Report 2023
+Dr. Herbert Diess
+Report of the Supervisory Board
+to the Annual General Meeting
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Infineon | Annual Report 2023
+As Chairman of the Supervisory Board, I was also in regular contact with both the Chief
+Executive Officer and other members of the Management Board between meetings.
+The CEO kept me well-informed at all times of other key events for Infineon. My work-
+ing relationship with the CEO was respectful, constructive and based on trust.
+During the 2023 fiscal year, the Supervisory Board again performed its duties with
+utmost diligence in accordance with the law, Infineon's Articles of Association and
+the Supervisory Board's own rules of procedure. Its work was based in particular on
+reports presented by the Management Board at Supervisory Board and committee
+meetings regarding all issues relevant to Infineon. For the most part, the focus was
+again on corporate strategy, current business performance and the economic situa-
+tion, financial and investment planning, and the risk profile, as well as issues relating
+to risk management and compliance. In addition, the Supervisory Board addressed
+the replacement of the Chairman of the Supervisory Board and other personnel
+changes on the Supervisory Board, as well as preparing for the appointment of a new
+Management Board member responsible for digital transformation. The Supervisory
+Board was provided with written quarterly reports on the economic environment,
+Infineon's business performance, including investment and acquisition activities, key
+financial data, risks and opportunities, and major areas of litigation, as well as other
+specific topics of relevance. Between quarterly reports, the Management Board also
+provided the Supervisory Board with additional information in the form of monthly
+reports on current business performance and developments.
+In the 2023 fiscal year, the full Supervisory Board convened nine times, holding
+six ordinary meetings and three extraordinary meetings. Additionally, two resolutions
+were passed on the basis of written communication. The attendance rate at Super-
+visory Board meetings was just under 98 percent; Diana Vitale was excused from attend-
+ing one meeting and Dr. Manfred Puffer from two meetings. The attendance rate at the
+Supervisory Board's committee meetings was 100 percent. Details of the individual
+attendance record of Supervisory Board members at full Supervisory Board and com-
+mittee meetings are provided in a table in the Statement on Corporate Governance.
+www.infineon.com/declaration-on-corporate-governance
+Main activities of the Supervisory Board
+The times we live in are being affected by so much change. What sets us apart at
+Infineon is that we see this as an opportunity and are actively working to shape that
+change. Our forward-looking technologies and products are making an important
+contribution towards halting (or at least slowing down) climate change and towards
+using digitalization with human beings in mind. I can see how Infineon employees
+around the world are playing their part with enthusiasm, skill and a positive mindset.
+This is not only making us an innovative high-tech company but also ensures sustain-
+able economic success. The 2023 fiscal year has demonstrated this once again. We
+want you, dear shareholders, to be able to participate in this success in the usual way
+and will therefore submit a proposal jointly with the Management Board to the Annual
+General Meeting for another increase in the dividend to €0.35 per share entitled
+to a dividend. For many years, Infineon's success story has been built on outstanding
+technological and business performance combined with added value for society
+as a whole, and I would be delighted if you continued to accompany us on our way.
+Ludies and Grunthermen,
+Chairman of the Supervisory Board
+Combined Management Report
+Business model
+Overview
+21 →
+Further information
+Consolidated Financial Statements
+Overview
+Infineon Annual Report 2023
+Combined Management Report
+Business model
+Business model
+20-
+Further information
+Consolidated Financial Statements
+Management Board and Supervisory Board
+Semiconductors are essential to mastering the challenges of decarbonization and
+digital transformation. They make our everyday lives easier, safer and greener. With
+around 58,600 employees worldwide, Infineon is a leading global provider of semi-
+conductor solutions that pave the way for green and efficient energy, clean and safe
+mobility, and intelligent and secure IoT. Infineon develops, manufactures and markets
+a large number of semiconductors and semiconductor-based solutions, focusing
+on the key markets in the automotive, industrial and consumer sectors. Its products
+range from standard components to special components for digital, analog and
+mixed-signal applications, all the way to customer-specific solutions and the appro-
+priate software.
+Infineon
+Our core business includes power semiconductors based on silicon (Si), silicon carbide
+(SiC) and gallium nitride (GaN) in the form of individual components, modules and
+system solutions. Over the years, Infineon has acquired in-depth knowledge about
+the use of power semiconductors in all applications and the specific challenges
+associated with them, developing a very broad portfolio. By adopting our strategic
+approach "Product to System", we combine these power semiconductors with
+microcontrollers (including software and driver components), so that we can provide
+perfect solutions for energy conversion systems and enable decarbonization.
+Management Board and Supervisory Board
+In addition to our established core business, we also service new and adjacent busi-
+ness areas. Links may arise between the different areas, not only in terms of products
+or technology but also in terms of markets or applications.
+The Automotive segment shapes the future of mobility with products and solutions
+to make cars clean, safe and smart. We cover all application areas in the vehicle: pow-
+ertrain and energy management, connectivity and infotainment, body and comfort
+electronics, safety and data security. Infineon is the world market leader in semicon-
+ductor solutions for cars. Our range of products and solutions helps to navigate the
+transition from internal combustion engines to hybrid and electric drives, enabling
+an ever-increasing degree of automated driving, electric-electronic (E/E) vehicle
+architecture, greater connectivity and digitization, and a higher level of data security
+in vehicles. We also offer our customers innovative solutions in the areas of safety,
+digital cockpit, infotainment, comfort and lighting technology. In addition to sensors,
+microcontrollers, software solutions, a reliable power supply, memories for specific
+applications and power semiconductors based on Si and SiC, our product portfolio
+also comprises components for human-machine interaction and vehicle connectivity.
+GIP Green Industrial Power
+The Green Industrial Power segment specializes in semiconductor solutions for the
+intelligent management and efficient conversion of electric energy along the entire
+conversion chain, comprising the generation, transmission, storage and use of electri-
+city. The product portfolio comprises mainly IGBT power transistors and the driver
+ICs to control them, as well as power semiconductors based on SiC. We offer products
+in the Green Industrial Power segment, whether Si-based or SiC-based, in various
+form factors and with different levels of functionality. The segment's broad application
+spectrum includes motor control units for industrial manufacturing and building
+technology, inverters for photovoltaic and wind power systems, major home appliances,
+traction, electric utility vehicles (such as buses and construction and agricultural
+vehicles), systems for high-voltage direct current transmission and energy storage,
+industrial power supplies and the charging infrastructure for electric vehicles.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Business model
+ATV Automotive
+The segments
+=
+26-
+PSS Power & Sensor Systems
+The Power & Sensor Systems segment encompasses a wide selection of technologies
+relating to power semiconductors, radio frequency and sensors. We use these tech-
+nologies to make electronic devices like power supplies, power tools, lighting systems,
+mobile devices and industrial and consumer applications smaller, lighter and more
+energy-efficient, as well as to develop new functionalities. We are drawing on the
+next generation of new, innovative solutions based on Si, SiC and GaN for applications
+in the areas of 5G, data centers, power supplies and adapters, battery-powered devices,
+and renewable energy. Our portfolio of products for power supplies, comprising con-
+trol ICs, drivers and MOSFET power transistors, addresses the two key requirements
+of the market: efficiency and power density. Infineon is the clear market leader in
+the global Si MOSFET market. Our high-precision sensor solutions give IoT devices
+"human senses", enabling them to react intuitively to their surroundings. The port-
+folio is rounded off with USB controllers and radio frequency products such as RF
+antenna switches, RF power transistors and low-noise amplifiers.
+css Connected Secure Systems
+The Connected Secure Systems segment supplies comprehensive systems for a
+secure, connected world based on reliable, game-changing microcontrollers and
+wireless connectivity and security solutions. In particular, we offer microcontroller
+solutions, Wi-Fi and Bluetooth solutions and combined connectivity solutions
+(known as combo chips), along with hardware-based security technologies and an
+efficient software environment for the programming and configuration of the micro-
+controllers and connectivity components that cover many application areas. These
+include devices for loT applications, connected home appliances and smart home
+appliances, IT equipment, consumer electronics, cloud security and connected vehicles,
+as well as credit and debit cards, electronic passports and national identity cards.
+With our technologies in the areas of computing, connectivity and security, we are
+contributing significantly towards ensuring that current and future connected systems
+are reliably protected.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Group strategy
+III
+The segments
+Business model
+25 →
+Control of
+✓
+✓
+✓
+power semiconductors
+Power semiconductors
+Memories for
+specific applications
+Connectivity
+Security
+Software
+✓
+✓
+✓
+Infineon | Annual Report 2023
+In the area of digitalization, we have a broad portfolio of microcontrollers with hard-
+ware-based security, sensors and connectivity products, such as Wi-Fi and Bluetooth,
+supplemented by software. These are used in the automotive, industrial and consumer
+sectors, as well as in end applications such as mobile payment and governmental
+identity documents.
+Connected
+Secure Systems
+✓
+✓
+A detailed presentation of the applications and product range of the individual
+segments is given in the chapter "Applications and product range”. □ p. 180 ff.
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Consolidated Financial Statements
+Further information
+5 Q = < 27 →
+Long-term growth trends | Strategic targets
+Looking at value generation, we include a Free Cash Flow target in our target operating
+model. Free Cash Flow, adjusted for large investments in frontend buildings as well
+as large M&A transactions (acquisitions and disposals), should fall within a range of
+10 to 15 percent of revenue over the cycle. This will be achieved by ensuring our oper-
+ating cash flow grows at a faster rate in the long term than our investment expenditure.
+Capital structure targets
+Our capital structure targets link together the concepts of environmental and economic
+sustainability and ensure that Infineon remains a trusted partner in the long term.
+An investment grade rating is the key element of Infineon's conservative financial
+policy. From this cornerstone, we derive our long-term capital structure targets, which
+consist of a liquidity target and a leverage target.
+Our liquidity target is €1 billion, plus at least 10 percent of revenue. The fixed base
+amount of €1 billion provides a solid liquidity reserve for contingent liabilities and
+pension liabilities, which are unrelated to revenue. The additional amount of at least
+10 percent of revenue means that we always have access to sufficient cash to be
+able to finance our operating business and investment throughout all phases of the
+semiconductor cycle.
+Our leverage target is expressed as an upper limit on gross financial debt of two times
+EBITDA. Infineon defines EBITDA as earnings from continuing operations before inter-
+est, taxes, depreciation and amortization.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Group strategy
+Consolidated Financial Statements
+Further information
+5 Q = < 29 →
+Strategic targets | Strategic guidelines
+Sustainable corporate governance
+We are convinced that economic success must go hand in hand with environmental
+and social commitment. This includes contributing towards more sustainable devel-
+opment in society. With our products, solutions and systems, we are enabling greater
+efficiency and making an active contribution towards climate protection. Sustain-
+ability is of crucial importance both within the Group and in relation to our supply
+chains. We manage Infineon sustainably and are committed to acting sustainably
+for the benefit of society. Making a contribution towards containing global warming
+forms part of our mission. We have therefore set ourselves the target of becoming
+carbon-neutral by the end of the 2030 fiscal year; by 2025, our emissions are to be
+reduced by 70 percent compared with 2019. This target relates to Infineon's own
+greenhouse gas footprint and includes not only all direct emissions but also indirect
+emissions from electricity and heat. Already by the end of the 2023 fiscal year, our
+scope 1 and scope 2 emissions were 56.8 percent below the emissions for the base
+year 2019. The development of intelligent exhaust air abatement systems, the
+purchase of electricity from renewable sources and the implementation of energy
+efficiency schemes have all contributed to this reduction.
+Our other sustainability activities are described in the separate report "Sustainability
+at Infineon". This report, including the summarized separate Non-Financial Report,
+which is based on the requirements set out in the German CSR Directive Implementa-
+tion Act, can be downloaded from the internet at www.infineon.com/csr_reporting.
+Strategic guidelines
+To achieve our strategic targets, we rely on a number of strategic guidelines to ensure
+sustainable corporate governance and profitable growth.
+"Product to System" (P2S) and software
+With our approach “Product to System” (P2S), we are fostering our leading positions
+in the area of power systems and IoT. P2S helps us to better adapt our solutions and
+products to customer requirements. We understand new trends early on and can
+develop innovative approaches together with our customers. As a result, our custom-
+ers can realize sustainable benefits, among others, in terms of systems performance,
+system costs and development time.
+For this to succeed, we have to understand the environment in which our customers'
+products are used, how these products are embedded in larger systems, with which
+other devices the products interact, what requirements they have to fulfill and what
+function they are intended to perform. We also have to consider which other active
+and passive components and control concepts they use and what capabilities our custo-
+mers themselves contribute to the value creation process. Equipped with this know-
+ledge, we can make the most of our competencies. We want to translate the technolo-
+gically possible into marketable products that provide the greatest possible benefit
+to our customers. This helps us to continue to develop leading positions in our markets.
+Infineon | Annual Report 2023
+10 to 15 percent of revenue over the cycle
+✓
+Target 3: Adjusted Free Cash Flow within a range of
+Target 2: Average Segment Result Margin of
+25 percent over the cycle
+Group strategy
+Long-term growth trends
+As a leading global provider of semiconductor solutions, Infineon focuses its business
+activities on two issues that are fundamental to society and where it sees major long-
+term growth trends: decarbonization and digitalization.
+Decarbonization
+Decarbonization is a necessity to contain global warming and therefore the key respon-
+sibility of humanity over the next decades. We will need to make drastic changes to
+the ways in which we generate, transport, store and use energy. To halt global warm-
+ing, it is imperative that we waive the use of fossil fuels to a great extent and that we
+make a consistent transition to renewables and widely adopt electrification. Effecting
+this transition requires not only the use of wind and solar power but also of systems
+for the storage and efficient transportation of energy. We believe that one of the key
+tasks for Infineon is to provide semiconductor solutions for more efficient generation,
+conversion and use of electric energy. Our business operations are thereby making a
+significant contribution to the quality of life of generations to come.
+Digitalization
+Digitalization is another key trend. This involves connectivity between ever-smarter
+devices with an ability to perceive their environment; devices that make life easier,
+safer and more pleasant. The possibilities are huge: greater convenience and security
+in the smart home, more efficiency in manufacturing, higher productivity together
+with better environmental sustainability in farming, and new services to support older
+people. Infineon's products in these areas include microcontrollers with software
+and sensors that make it possible to produce connected and smart loT devices with
+increasing performance in both the industrial sector and the end user sector.
+Infineon sees itself as a trailblazer for a carbon-neutral and digital future: "Driving
+decarbonization and digitalization. Together." This applies to large parts of our
+portfolio. Sensors record mostly analog information from the world around us and
+transform it into digital data; microcontrollers process these data and generate
+control signals; memory ICs enable the microcontrollers to store data and program
+codes; actuators such as power semiconductors convert the control signals into actions
+and make the efficient generation and conversion of energy possible; security solu-
+tions protect the integrity of devices and data, while connectivity chips transfer these
+data within the digital world. Software enhances the benefit to customers of our semi-
+conductor solutions, allowing for more flexible adjustment. We thereby establish a link
+between the real world and the digital world and enable a carbon-neutral future.
+Strategic targets
+To generate value from decarbonization and digitalization for our customers, the
+company, our shareholders and society with our semiconductor solutions, we pursue
+clear and measurable strategic targets.
+Profitable growth
+We want to continue to grow in the markets in which we operate and to increase our
+profitability. Our long-term financial targets reflect this aspiration and apply over the
+semiconductor cycle. At the beginning of the 2023 fiscal year, we revised our target
+operating model and significantly raised our long-term financial targets. This reflects
+Infineon's success over the past few years and, at the same time, is an expression
+of our greater ambitions, especially with regard to profitability and value generation.
+We want to create even more value by focusing consistently on the long-term growth
+trends of decarbonization and digitalization and implementing our strategic guidelines
+(see the chapter “Strategic guidelines”, □ p. 29 ff.).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Group strategy
+Consolidated Financial Statements
+Further information
+5 Q = < 28
+Strategic targets
+Target 1: Average annual revenue growth of
+more than 10 percent over the cycle
+We hold leading positions in our core markets and have expanded systematically
+over the years into new and adjacent markets. Our four segments focus on the
+long-term growth trends of decarbonization and digitalization. With our strategic
+approach "Product to System", we use our extensive technological and product
+expertise to provide more comprehensive solutions and thus create more value for
+our customers. In the areas of electromobility, advanced driver assistance systems
+(ADAS), renewable energy, data center/Al and IoT in particular, we expect to achieve
+above-average growth, resulting in total average annual revenue growth for the
+Group over the cycle of more than 10 percent (">10%”).
+A key criterion for our success is sustainable profitability. Infineon can consistently pur-
+sue its targets even in weaker market phases by engaging in economic activity that
+is sustainably profitable. We have set ourselves the target of achieving an average
+Segment Result Margin of 25 percent over the cycle. Key elements that will enable
+us to achieve our profitability target are our system solutions, which are based on our
+strategic approach "Product to System", and generate higher value and greater cus-
+tomer benefit. In the future, software will play a larger role. We enjoy economies of scale
+and cost advantages while continuing to develop our leading market position and
+innovative manufacturing technologies (such as those used to produce 300-millimeter
+thin wafers) and accelerating the expansion of silicon carbide manufacturing facili-
+ties. At the same time, we make sure that, if we consider our overall portfolio, all our
+businesses are making an adequate contribution to Infineon's success. We also aim
+to ensure that our research and development expenses as well as our selling, general
+and administrative expenses increase at a slower rate than the rate of growth in our
+revenue. This is supported by our digitalization strategy.
+Embedded control
+CSS
+✓
+These steps include sawing the wafer into individual chips as well as assembly and
+testing. Following the backend manufacturing, the chips are sold to customers via
+regional distribution centers.
+In order to optimize the use of capital and increase flexibility, we use external manufac-
+turing partners in addition to our in-house manufacturing. In frontend manufacturing,
+this applies primarily to manufacturing processes with little potential for differen-
+tiation and, in backend manufacturing, to standardized package types. More informa-
+tion about our manufacturing strategy is given in the chapter "Group strategy”. p. 27 ff.
+Management Board and Supervisory Board
+Combined Management Report
+Business model
+Consolidated Financial Statements
+Further information
+Radio frequency
+Value chain and manufacturing
+Headquarters and manufacturing sites
+Digital
+services
+Americas
+Mexico
+■ 1 Tijuana
+■ 2 El Segundo, CA
+■ 3 Austin, TX
+■ 4 Leominster, MA
+■ 5 Mesa, AZ
+■ 6 San José, CA
+Europe, Middle East, Africa
+Austria
+■ 1 Villach
+USA
+Application
+support
+Software
+Infineon | Annual Report 2023
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Business model
+Consolidated Financial Statements
+Further information
+5 Q = < 22 →
+Value chain and manufacturing
+Value chain and manufacturing
+Infineon covers the main stages of the semiconductor value chain: from development
+and design, via frontend and backend manufacturing and marketing, to delivery
+to customers (see C01). Increasingly, it also provides software and other services,
+such as application-specific support for the implementation of its solutions.
+In frontend manufacturing, the wafers are processed. Optical, physical and chemical
+methods are used to create transistors and their interconnections, thus determining
+the function of the chip. The wafers are transferred from the frontend site to a back-
+end site, where the remaining processing steps take place in backend manufacturing.
+C01 The main stages of the semiconductor value chain
+Design
+Frontend
+manufacturing
+Backend
+manufacturing
+In-house
+manufacturing
+In-house
+manufacturing
+Distribution
+center
+Customer
+By foundry
+partners
+By
+sub-contractors
+Services
+Germany
+2 Neubiberg
+5 Q = < 23 →
+■ 3 Dresden
+■ 8 Shanghai
+■ 9 Wuxi
+Japan
+■ 10 Tokyo
+Management Board and Supervisory Board
+Combined Management Report
+Business model
+The segments
+Consolidated Financial Statements
+Further information
+5 Q = < 24 →
+The segments
+In addition to general areas within the Group, such as manufacturing and various cor-
+porate functions, Infineon comprises four segments (also known as divisions). Each
+segment focuses on the needs of its own target markets and customers and also has
+individual responsibility for specific areas that reflect its core competencies. The
+Automotive segment is responsible for the semiconductor business for automotive
+electronics. The Green Industrial Power segment concentrates on power semicon-
+ductors primarily used in industrial applications and renewable energy, while the
+Power & Sensor Systems segment addresses not only sensor technologies but also
+power supplies in general, including those for data centers, telecommunications
+networks and more consumer-oriented applications. Activities relating to loT and
+traditional and new security applications are bundled within the Connected Secure
+Systems segment. The segments often cooperate with one another to ensure com-
+prehensive coverage of the requirements of the various target markets. As a result,
+the sales activities of one segment are generally, but not always, focused on its
+own target market.
+Chart Co2 provides an overview of the core competencies of the individual segments.
+C02 Core competencies in the segments
+Core competencies
+near Munich
+GIP
+PSS
+Automotive
+Green
+Industrial Power
+Power & Sensor
+Systems
+Sensor technologies
+Mainland China
+Greater China
+ATV
+Thailand
+■ 7 Bangkok
+■■ 4 Regensburg
+Hungary
+5 Warstein
+■ Corporate headquarters
+Regional headquarters ■Frontend manufacturing ■ Backend manufacturing
+For the definition of frontend/backend manufacturing, see chapter "Value chain and manufacturing". p. 22
+Infineon | Annual Report 2023
+6 Cegléd
+Asia-Pacific
+"
+■ 1 Batam
+Indonesia
+Singapore
+■ 5 Cavite
+6 Singapore
+■ 4 Melaka
+Philippines
+■ 3 Kulim
+Malaysia
+- 2 Cheonan
+Korea
+from the design and the software. To ensure and improve our delivery capability, even
+in times of scarce production capacity in standard technologies, we have signed sup-
+ply agreements with our contract manufacturers, sometimes covering a period of
+several years.
+Expanding our capacity in line with expected market trends over the cycle has proved
+very effective and forward-thinking. For this reason, we have now decided to extend
+the third module significantly beyond its original specifications, creating the world's
+largest and most competitive manufacturing facility for silicon carbide semiconductors,
+reflected in a particularly efficient production landscape and substantial economies
+of scale. We are also expanding our site in Dresden as planned to include an additional
+300-millimeter module for analog mixed-signal products as well as power semicon-
+ductors. These can be used in a wide variety of applications, such as data centers,
+automotive and loT. The new factory combines the two growth areas, decarbonization
+and digitalization, and is designed to meet demand from our customers in the second
+half of the decade.
+Our supply chains and our production are both particularly resilient. Our manufacturing
+facilities are spread across all major regions of the world, and our contract manufac-
+turer and supplier base is broadly diversified. The investment in a production company
+in Germany (European Semiconductor Manufacturing Company, ESMC), which will
+be founded under the leadership of TSMC (Taiwan Semiconductor Manufacturing
+Company) and in which Infineon will hold a 10 percent stake, will play an important
+role in the geographical diversification of the supply chains.
+High quality and reliability are key values for us, differentiating us from our competitors.
+Therefore, quality plays a key role in the lifecycle of an Infineon product – from its
+development and production to its supply and product-related services. Infineon is
+certified worldwide in accordance with the leading quality standards and has an
+efficient management system.
+Our 300-millimeter thin wafer manufacturing technology for power semiconductors
+is a clear indication of the value of differentiating manufacturing in our own fabs:
+As pioneers of this technology, the scale of manufacturing we have now reached
+allows us to achieve significant economies of scale. Compared with manufacturing
+on 200-millimeter wafers, we benefit from significantly lower costs and lower
+capital investment. This has enabled us to maintain our lead: With the factory at
+the Villach site (Austria), together with our 300-millimeter manufacturing facility
+in Dresden (Germany), we have established a closely coordinated manufacturing
+network across the two sites. In line with our “One Virtual Fab” concept, we are
+using the same processes, equipment, and automation and digitalization concepts
+in Villach and in Dresden. This generates economies of scale, but it also benefits
+the customer, as we have the flexibility to shift production volumes between the
+sites. We are applying a similar concept in the area of compound semiconductors
+between our sites in Villach and Kulim (Malaysia). The third module under construc-
+tion in Kulim is also able to generate synergies with the existing 200-millimeter pro-
+duction infrastructure.
+In addition, clearly defined quality principles provide guidance for our employees.
+These principles have the overriding aim of honoring the pledges we have made
+to our customers relating, among other things, to product functionality and reliabil-
+ity. To achieve this, we attach great importance to understanding our customers'
+concerns and clearly defining their product requirements. Honoring our pledges is
+an essential guiding principle that is also reflected in the in-house cooperation we
+see at Infineon.
+Consolidated Financial Statements
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Group strategy
+Strategic guidelines
+Further information
+5 Q = 31
+5 Q = 32
+Tried-and-tested processes, methods and tools, together with continuous improve-
+ment programs, form the basis for the high priority Infineon attaches to quality.
+Our quality departments are embedded in the global organization. Regular events
+such as Quality Days at our global sites promote a greater awareness of quality,
+with the result that all Infineon employees are responsible for honoring our quality
+pledge within their own sphere of responsibility.
+Further information
+In the context of P2S, software is playing an increasingly significant role. We have
+intensified our activities in this area in recent years through our own organic growth
+and strategic partnerships, as well as through the acquisitions of Cypress, Industrial
+Analytics and Imagimob. This means that we have at our disposal an entire ecosystem
+comprising software components and a development environment, as well as refer-
+ence designs, product support, blogs, a developer community and online tutorials.
+An important element of this ecosystem is the ModusToolbox TM development environ-
+ment. This includes reusable firmware that makes it easier for customers' developers
+to program microcontrollers and Wi-Fi and Bluetooth components. With software,
+we enable smaller customers in particular to make even better use of our products
+and thus increase our profitability.
+Combined Management Report
+Group strategy
+Strategic guidelines
+Portfolio management and inorganic growth
+Management Board and Supervisory Board
+Combined Management Report
+Group strategy
+Strategic guidelines
+Consolidated Financial Statements
+Further information
+in the 2023 fiscal year for principal and selected supplementary performance indicators
+with the values forecasted and the expectations for the 2024 fiscal year.
+Consolidated Financial Statements
+Technology leadership and customer-focused
+innovation
+We are continuing to enhance our leading technological position and expertise in our
+core markets through radical and customer-focused innovation. As a result, we are
+strengthening our core business and identifying long-term growth opportunities in
+adjacent business areas. As one of the market leaders in the field of power electronics,
+we began researching new materials such as silicon carbide and gallium nitride at an
+early stage, building up our expertise, and we are constantly broadening our product
+portfolio in order to generate added value for our customers.
+From a technological perspective, compound semiconductors are of particular impor-
+tance. Whereas most semiconductor components to date have been based on pure
+silicon, silicon carbide and gallium nitride are two chemical compounds with physical
+properties, in particular a wide band gap, that make it possible to produce semi-
+conductors with even greater performance. These compounds allow for particularly
+efficient electric switches in the smallest space; for example, they make efficient charg-
+ing stations for electric vehicles much more compact, allowing them to be installed
+in more places. We consider a strong position in compound semiconductors essential
+to reinforcing our leading position in power semiconductors and, thereby, in power
+systems. The acquisition of GaN Systems Inc., which was successfully completed after
+the end of the past financial year on 24 October 2023, will make a significant contri-
+bution to this. The Ottawa (Canada)-based company contributes a broad portfolio of
+GaN-based energy conversion solutions and first-class application expertise.
+Value creation through differentiating in-house
+manufacturing and high quality
+We are continuing to expand our in-house manufacturing in areas in which we create
+added value for the customer and differentiation for Infineon. Thus, we manufacture
+products in our own fabs when doing so means that our customers benefit from lower
+cost, higher performance or improved availability. This has been the case until now,
+for example, for power semiconductors and sensors. Customers are increasingly recog-
+nizing the competitive advantage offered by our in-house manufacturing by entering
+into long-term supply contracts and capacity reservation arrangements. Some cus-
+tomers make multi-year advance payments that support the cashflow during times of
+investments to expand production capacity. However, where manufacturing in our
+own fabs offers no additional customer benefit or opportunity to differentiate our-
+selves from the competition, we work together with contract manufacturers. This is
+predominantly the case for highly integrated digital products such as microcontrollers,
+connectivity components and security ICs, where the differentiation arises mainly
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+In accordance with our strategic approach of thinking in application trends, our
+developers identify challenges early, together with our customers. This enables us to
+fulfill the promise of technological leadership. Through close cooperation, we learn
+to understand applications better, allowing us to identify future trends at an early
+stage and develop products that are tailored accordingly. In this way, we can offer
+our customers either individual components or complete solutions, including the
+necessary software, depending on their requirements.
+We conduct regular reviews to ascertain whether our operations, both individually and
+as part of our overall portfolio, make an appropriate contribution to the success of
+Infineon. This enables us to target the use of our financial resources and, as a result,
+to continue to improve our profitable growth. We consider individual operations
+from various points of view, such as value creation, current and expected market posi-
+tion, significance to the customer and risk assessment. On this basis, we decide the
+extent to which we will invest in or divest an operation. Growth prospects and prof-
+itability are mutually dependent here, with profitability enabling investment and
+ensuring sustainable innovation and growth as a result.
+Infineon | Annual Report 2023
+A pioneer of digitalization
+19 Nagoya
+20 Sendai
+21 Tokyo
+Sites >10 employees.
+Infineon Annual Report 2023
+(20
+Management Board and Supervisory Board
+Combined Management Report
+Internal management system
+Consolidated Financial Statements
+Further information
+5 Q = < 37 →
+Internal management system
+The internal management system at Infineon is designed to help implement Group
+strategy and the related long-term financial targets. Accordingly, performance indica-
+tors are used that enable profitable growth and efficient employment of capital to
+be measured.
+Overall, the achievement of our long-term financial targets will lead to a sustainable
+increase in the value of Infineon by generating a permanent premium on the cost
+of capital.
+In this context, growth, profitability, liquidity and investments are all interdependent.
+Profitability is the prerequisite for being able to finance operations internally, which,
+in other words, means opening up potential opportunities for growth. Growth, in turn,
+requires continual investment in research and development as well as manufactur-
+ing capacities. Growing at a commensurate rate enables Infineon to achieve leading
+market positions and generate economies of scale that contribute to greater profit-
+ability. Employing financial resources efficiently is a critical factor in achieving these
+goals.
+Infineon deploys a comprehensive controlling system to manage its business with
+respect to the strategic targets it has set itself. The system involves the use of financial
+and operating performance indicators. Information for controlling purposes is derived
+from annual long-term planning, quarterly outlooks, actual monthly data and infor-
+mation available with even greater frequency, such as the volume of orders received.
+This knowledge enables management to base its decisions in a timely manner on
+sound information about the current situation and future expected financial and
+operational developments.
+Sustainable business practices and the consideration of forward-thinking qualitative
+factors are important for Infineon's long-term success. As an enterprise very much aware
+of its responsibilities towards society, Infineon also takes account of non-financial
+factors, mainly in relation to the environment and employee diversity. See the report
+"Sustainability at Infineon" on our website www.infineon.com/csr_reporting |
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with legal require-
+ments and that it also complies with its internal corporate governance standards (see
+the chapter "Corporate Governance”, p. 82 ff.).
+Performance indicators
+Principal performance indicators
+In order to measure its success in implementing its strategy, Infineon uses the follow-
+ing three principal performance indicators:
+> Segment Result Margin/Segment Result,
+> Free Cash Flow from continuing operations, and
+> Return on Capital Employed (ROCE).
+These financial performance indicators are also the cornerstones of the system for vari-
+able remuneration. Most of the variable salary components pertaining to employees
+and management are directly linked to these performance indicators.
+17 Hsinchu
+18 Taipeh
+Japan
+Segment Result Margin/Segment Result
+Taiwan
+11 Ilmenau
+Thailand
+11 Nonthaburi
+Greater China
+Mainland China
+12 Chengdu
+12 Morrisville, NC
+13 Murrieta, CA
+20 Dublin
+30 Redhill
+7 Melaka
+14 Portland, OR
+13 Shanghai
+8 Penang
+14 Shenzhen
+15 San Diego, CA
+8 Dresden
+21 Netanya
+16 San José, CA
+17 Warwick, RI
+Ukraine
+31 Lviv
+9 Duisburg
+15 Wuxi
+16 Xi'an
+10 Erlangen
+Italy
+22 Padua
+23 Pavia
+Segment Result Margin/Segment Result is the key figure used by the Group to measure
+operating performance (for an analysis of the development of the Segment Result
+Margin/Segment Result of Infineon and of the individual segments in the 2023 fiscal
+year, see the chapter "2023 fiscal year” p. 42 ff.). The Segment Result Margin is the
+Segment Result expressed as a percentage of revenue and is a measure of the profit-
+ability of revenue and the success of Infineon's operating business. The activities
+of the segments are managed on the basis of the Segment Result Margin/Segment
+Result. Responsibility for optimizing the Segment Result Margin/Segment Result
+within the framework of the Group strategy (as approved by the Management Board)
+rests with the management teams of the relevant segments, acting, however, in
+close coordination with the Management Board.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+ROCE 1/②
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Internal management system
+Consolidated Financial Statements
+Further information
+5 Q = < 39 →
+Selected supplementary performance indicators
+The principal performance indicators are supplemented by the following additional
+performance indicators.
+Growth and profitability indicators
+Since the three principal performance indicators, especially Segment Result/Segment
+Result Margin, positively correlate with revenue growth, the latter is not used as a
+principal performance indicator in its own right but is covered by the three performance
+indicators indirectly.
+In order to analyze operating profitability in detail, the result and cost block compo-
+nents of the Segment Result are considered. These are gross profit, research and
+development expenses, and selling, general and administrative expenses, as well as
+their relation to revenue.
+These indicators are analyzed both at Group level and at segment level (for changes
+in these indicators for the Group in the 2023 fiscal year, see the chapter "Review of
+results of operations", p. 49 ff.).
+Liquidity performance indicators
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity
+at its disposal and an optimal capital structure. Liquidity is managed only at Group
+level, and not at segment level, using the following performance indicators:
+> Gross cash position: Cash and cash equivalents plus financial investments
+› Net cash position: Gross cash position less short-term and long-term financial debt
+› Investments: The total amount invested in property, plant and equipment and in
+other intangible assets, including capitalized development costs
+For an analysis of changes in these performance indicators during the 2023 fiscal
+year, see the chapter "Review of liquidity”. p. 55 ff.
+Non-financial performance indicators
+Non-financial performance indicators at Infineon include CO2 emissions and indicators
+relating to diversity.
+Already at the 2020 Annual General Meeting, Infineon announced that it wanted to
+become carbon-neutral by 2030. By 2025, Infineon would like to reduce its CO2 emis-
+sions by 70 percent compared to the 2019 calendar year.
+The degree of target achievement for these non-financial performance indicators
+is also reflected in the remuneration of the Management Board (see the chapter
+"Remuneration Report", p. 86).
+Actual and target values for performance indicators
+The chapter "Outlook”, p. 62, contains a table comparing the actual values achieved
+= Capital employed ②
++ Liabilities classified as held for sale
++ Short-term financial debt and current maturities of long-term financial debt
+Total current liabilities
+Combined Management Report
+Internal management system
+Consolidated Financial Statements
+Further information
+Segment Result is defined as follows:
+Operating profit, adjusted for:
+Certain reversal of impairments (impairments) (in particular on goodwill)
+Gains (losses) on earnings of restructuring and closures
+Share-based payment
+Acquisition-related depreciation/amortization and other expenses
+Gains (losses) on sales of businesses, or interests in subsidiaries
+Other income and expenses
+= Segment Result
+Free Cash Flow
+Free Cash Flow measures the ability to generate sufficient cash flows to finance day-to-
+day operations and to fund required investments out of the ongoing business. It is
+Infineon's stated target to sustainably generate positive Free Cash Flow (for an expla-
+nation of changes in Free Cash Flow during the 2023 fiscal year, see the chapter
+"Review of liquidity", p. 55 f.). Free Cash Flow is managed by Infineon at Group level
+only and not at segment level.
+The main factors influencing Free Cash Flow are a positive earnings trend combined
+with effective management of inventories, trade accounts receivable and payable,
+and capital expenditures.
+Free Cash Flow at Infineon is defined as follows:
+Singapore
+10 Singapore
+Cash flows from operating activities from continuing operations
++ Purchases of (proceeds from sales of) financial investments, net
+= Free Cash Flow
+Return on Capital Employed (ROCE)
+The performance indicator RoCE measures the return on capital and shows the corre-
+lation between profitability and the capital resources required to run the business
+(for the mathematical derivation and development of ROCE in the 2023 fiscal year, see
+the chapter "Review of financial condition”, p. 54). ROCE describes how efficiently
+a company uses its resources and, through the comparison with cost of capital, serves
+as an instrument for value-based corporate management. It is also analyzed by Infineon
+at Group level only and not at segment level.
+ROCE is defined as follows:
+Operating profit, plus/minus:
+Financial result excluding interest result
+Share of profit (loss) of associates and joint ventures accounted for using the equity method
+Income taxes
+= Operating profit from continuing operations after tax :D:D:D:D:D
+Assets, plus/minus:
+Cash and cash equivalents
+Financial investments
+Assets classified as held for sale
++ Cash flows from investing activities from continuing operations
+We will continue to supplement our organic growth in the future with selective acquisi-
+tions. These acquisitions will need to fulfill three criteria: a) be strategically beneficial
+based on the portfolio process, b) be financially advantageous and c) be a good cultural
+fit. A purchase must strengthen Infineon's market position in accordance with our
+strategic focus, usefully complementing our range of competencies. The corporate
+culture of any potential acquisition must be a good fit with Infineon's culture or must
+add valuable elements.
+Philippines
+9 Muntinlupa
+Malaysia
+5 Ipoh
+Research and
+development
+Infineon ❘ Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Further information
+5 Q = < 35 →
+Research and development expenses were €1,985 million in the 2023 fiscal year,
+compared with €1,798 million in the previous year. This increase of €187 million, or
+10 percent, was less than the increase in revenue. Accordingly we invested 12.2 percent
+of revenue in research and development in the 2023 fiscal year, compared with
+12.6 percent in the previous year. Capitalized development costs in the 2023 fiscal year
+were €214 million (previous year: €209 million). The amortization of capitalized devel-
+opment costs in the 2023 fiscal year was €93 million (previous year: €94 million). Sub-
+sidies and grants received for research and development increased from €113 million
+in the 2022 fiscal year to €130 million in the 2023 fiscal year.
+At the end of the 2023 fiscal year, Infineon employed 12,830 people (22 percent of the
+total workforce) in research and development worldwide. Of these, 1,645 worked on
+software. At the end of the 2022 fiscal year, 12,005 people were employed by Infineon
+in research and development worldwide (21 percent of the workforce). The number of
+research and development sites in the 2023 fiscal year was 69 (2022: 64) in 25 countries.
+Infineon's research and development activities are in accord with its strategy of con-
+tinuing to strengthen its leading technological position through customer-focused
+innovation. Research and development activities therefore concentrate on continuing
+to improve our power semiconductors, with a particular focus on the use of new
+materials such as silicon carbide and gallium nitride. Important development goals
+are to improve efficiency and increase power density while at the same time main-
+taining a high level of reliability.
+Research and development activities are also focused on the digitization of products
+and solutions as an essential prerequisite for the implementation of our P2S strate-
+gic approach. The opportunity to offer customers all-in-one solutions is particularly
+important and provides them with benefits in terms of system performance, system
+costs and development time. The main development fields here are microcontrollers,
+connectivity and security solutions, and software.
+C03 R&D expenses
+€ in millions
+1,985
+1,798
+12.6%
+H
+2022
+2023
+12.2%
+R&D expenses
+Percentage of revenue
+Artificial intelligence (AI) methods are being used in a wide variety of applications
+to improve products and processes. In the field of edge computing, for example,
+Al is used in combination with our smart sensors and microcontrollers to classify
+tone, key words or gestures to enable the adoption of new and innovative approaches
+in human-machine communication. In addition, Al supports many processes such
+as chip design, marketing and production.
+We are also addressing longer-term future-related topics in areas such as quantum
+computing and post-quantum cryptography.
+Patents
+← 34 →
+Another indication of Infineon's innovative power and long-term competitiveness is
+the number of our patents. In the 2023 fiscal year, we applied for around 1,850 patents
+worldwide (previous year: around 1,700). In addition to patent applications and
+expirations, there were changes in the portfolio due to regular strategic patent port-
+folio adjustments. Maintenance of the patent portfolio is carried out on a regular
+basis. This has resulted, along with new patent applications for inventions, in a signif-
+icant increase in the relevance of the patents, as highlighted again by LexisNexis®
+and ClarivateⓇ in their innovation reports. At the end of the 2023 fiscal year, the world-
+wide patent portfolio comprised around 29,700 patents and patent applications
+(previous year: around 29,600).
+Further information
+Combined Management Report
+Research and development
+An important topic for us is Infineon's digital transformation, which we are driving
+forward using a strategic roadmap. As a global semiconductor manufacturer, we
+benefit from the digital transformation in two ways: on the one hand, as a provider
+and, on the other, as a user of digital solutions. As a provider, we use digitization
+and efficient platforms to support our customers in the best possible way throughout
+the customer relationship and the development process. We are constantly optimiz-
+ing and expanding our website and web content, and it is important for us that all
+product-related information and support services are easily accessible.
+The accompanying software products and digital services are increasingly being pro-
+vided using appropriate licensing models via our digital customer interfaces, such
+as the Infineon Developer Center. A major focus is on scaling up technical support, so
+that, even in fragmented markets, we can provide support to customers during their
+product choice and design-in. The Infineon Developer Community offers round-the-clock
+technical support to all customers and continues to expand and improve by learning
+from customer queries and customer experience. With the specific usage of Al-based
+methods, we enable even better support for our customers through the use of power-
+ful generative language models. This makes access to our resources faster and easier.
+We will therefore continue to expand the Al-based portion in the next few years. This
+is a particularly efficient way for us to ensure that customers use our products and,
+indeed, use them in a more effective and targeted way.
+As a user, we also use digitization to optimize our internal processes and make them
+as efficient and future-proof as possible. So, for example, we connect our sites and
+contract manufacturers in accordance with Industry 4.0 in a virtual manufacturing net-
+work. In sales and marketing, we use applications based on methods for analyzing
+big data that enable us to provide our customers with targeted personal and increas-
+ingly customized support via our digital platforms. In addition, we evaluate customer
+behavior and customer requirements in a structured way and incorporate these results
+into the development of our solutions and products. In manufacturing, we are focus-
+ing to a greater extent on a high level of automation and the increasing use of artificial
+intelligence methods in order to continue to improve our productivity and quality. In
+all of these areas, we systematically analyze which processes can be further improved
+and optimized through the use of generative Al language models.
+As part of our digital roadmap, we are focusing on the rapid implementation of
+projects. When selecting projects, we are guided by the direct value contribution to
+improving the customer experience through efficiency or productivity gains and
+by their function as the necessary basis for future digitization initiatives.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Group strategy
+Consolidated Financial Statements
+Further information
+5 Q = <33 →
+Human resources strategy
+Human resources strategy
+Our human resources (HR) strategy is a key component of Infineon's success. It sup-
+ports us in our efforts to achieve our growth and profitability targets and enables us to
+successfully navigate our way through varying economic phases and challenges. Our
+HR understanding is "People create value. Engagement drives people”. Our overriding
+objective is to foster our employees' engagement and to take targeted measures to
+achieve this. When employees are enthusiastic about their job, have the relevant skill
+sets, and can take advantage of suitable opportunities for continuing professional
+development, the outcome is a higher level of creativity, productivity and innovation,
+as well as better results. We use regular pulse checks of our employees worldwide
+to measure their level of engagement and thus keep our finger on the pulse of their
+needs, enabling Infineon to make continuous progress.
+We consider it our responsibility to contribute to addressing the key societal challenges.
+Decarbonization and digitalization are having an impact not only on our world but
+also on the future of work. From this, we derive the key action areas of our HR strategy.
+Our main focus is on
+1) attracting the best talent in the market, optimizing the onboarding process,
+developing internal talent and keeping it loyal to Infineon,
+2) continuing to drive digitalization and standardization forward in HR and
+positioning ourselves in a scalable way to support Infineon's growth,
+3) strengthening hybrid working where possible and practical,
+4) pushing ahead with leadership development programs as well as employee
+training and skill enhancement, and
+5) strengthening the area of organizational development in order to be prepared
+for further growth and to promote the desired internal cultural change (SPIRIT).
+Frank
+People are the main focus of our activities, as dedicated, healthy, successful employees
+are key to maintaining and improving our market-leading position, thereby creating a
+successful future for us all.
+Further information, including detailed statistics, is available in the HR Report 2023
+and the 2023 Sustainability Report.
+www.infineon.com/hrreport
+www.infineon.com/csr_reporting
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Research and development
+France
+6 Le Puy-Sainte-
+Réparade
+Germany
+7 Augsburg
+Hungary
+17 Budapest
+18 Cegléd
+Ireland
+19 Cork
+Israel
+Netherlands
+24 Nijmegen
+Romania
+25 Braşov
+26 Bucharest
+27 laşi
+Serbia
+UK
+29 Bristol
+Asia-Pacific
+India
+1 Bangalore
+Indonesia
+2 Batam
+Korea
+3 Cheonan
+4 Seoul
+5 Herlev
+Denmark
+4 Villach
+3 Linz
+Consolidated Financial Statements
+Further information
+R&D sites and application centers
+29 30
+11
+Americas
+Mexico
+1 Guadalajara
+2 Tijuana
+USA
+3 Andover, MA
+4 Austin, TX
+5 Chandler, AZ
+6 Kulim
+6 Colorado Springs, CO
+8 Irvine, CA
+9 Leominster, MA
+10 Lexington, KY
+11 Lynnwood, WA
+Europe, Middle East, Africa
+Austria
+1 Graz
+12 Langen
+13 Neubiberg
+14 Regensburg
+2 Klagenfurt
+15 Soest
+16 Warstein
+7 El Segundo, CA
+28 Belgrad
+€ in millions
+2022
+5 Q = < 46 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+2023
+2022
+Infineon | Annual Report 2023
+Segment Result
+Segment Result Margin
+-
+Revenue
+1,490
+2,380
+22.9%
+⚫28.9%
+6,516
+8,242
+C04 Revenue and Segment Result of the Automotive segment
+€ in millions
+The Segment Result in the 2023 fiscal year was €2,380 million, an increase of 60 percent
+compared with the Segment Result for the previous fiscal year of €1,490 million. Based
+on revenue, the Segment Result Margin was 28.9 percent (previous year: 22.9 percent),
+see C04. The increase in the Segment Result Margin was mainly due to positive price
+effects, the higher level of revenue and improvements in the product mix.
+We were able to win additional contracts worldwide for our microcontrollers and
+power semiconductors, particularly for silicon carbide both in the power train and
+onboard chargers as well as in DC-DC converters. We therefore anticipate achieving
+significant increases in revenue in this area over the next few years.
+Higher prices also contributed to the increase in revenue.
+Moreover, during the reporting period, there was a further increase in comfort fea-
+tures across all vehicle segments. Examples of these include retractable door handles,
+electrically controlled seat adjustment, sun visors and tailgates. All these functions
+require power switches, sometimes several per function, around a hundred on average
+per vehicle. As Infineon has an extensive portfolio of semiconductor switches, it
+achieved above-average growth in this area in the past fiscal year.
+fuses and relays. With PROFET™, Infineon offers an extensive portfolio of smart semi-
+conductor switches. They enable decentralized configurable power distribution that
+at the same time complies with the highest safety standard.
+Infineon was also able to benefit from the fact that electromobility, automated driving
+and mobility services are increasingly requiring more powerful software. This software
+needs to be updatable throughout the lifecycle of the vehicle. This flexibility, as well
+as higher safety requirements for automated driving, require a new architecture for
+onboard networks used for data transmission and power distribution. For the latter, in
+particular, special safety-certified semiconductor solutions are used, replacing existing
+Our business with microcontrollers developed particularly well. These include the
+AURIX™, TRAVEOTM and PSOC™ families. The transition to new vehicle architectures by
+many manufacturers, expanded driver assistance systems and the electrification of
+vehicles ensured above-average demand. Our AURIX™ family was developed specifi-
+cally for embedded control systems with the highest safety requirements and is there-
+fore used in addition to driver assistance systems for engine control, security and in
+high-speed onboard networks. Real-time capability, high computing power and low
+power consumption are the decisive characteristics. The TRAVEOTM family benefited
+from the trend towards digital instrument and display systems. In addition, the delivery
+situation at our manufacturing partners continued to improve in the past financial
+year, which also had a positive impact on sales development.
+Electromobility, driver assistance systems, software-defined vehicle architecture and
+the trend towards higher levels of electronic features in vehicles continued to be the
+main drivers of our growth in the 2023 fiscal year. Electromobility benefited not only
+from purchase incentive schemes but also from the increasing availability of charging
+stations, the wider range of models being produced by almost all vehicle manufacturers
+and a change in attitude in society towards sustainable mobility.
+revenue.
+In the Automotive segment, Infineon generated revenue in the 2023 fiscal year of
+€8,242 million, an increase of 26 percent compared with the figure for the previous
+fiscal year of €6,516 million. The segment contributed 51 percent of Infineon's Group
+Review of the Automotive segment
+in the 2023 fiscal year
+Segment performance
+ATV
+GIP
+In the Green Industrial Power segment, Infineon generated revenue in the 2023 fiscal
+year of €2,205 million, an increase of 23 percent compared with the figure for the
+previous fiscal year of €1,790 million. The revenue growth was the result of higher
+volumes as well as positive price effects. The segment contributed 13 percent to
+Infineon's Group revenue.
+Review of the Power & Sensor Systems segment
+in the 2023 fiscal year
+PSS
+Segment performance
+5 α = 47
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+2023
+2022
+Infineon | Annual Report 2023
+Segment Result Margin
+Segment Result
+384
+662
+Revenue
+21.5%
+30.0%
+1,790
+2,205
+€ in millions
+C05 Revenue and Segment Result of the Green Industrial Power segment
+In the 2023 fiscal year, the Segment Result was €662 million, an increase of 72 percent
+compared with the figure for the previous fiscal year of €384 million. As a result of the
+growth in volumes and positive price effects, the Segment Result Margin improved from
+21.5 percent in the 2022 fiscal year to 30.0 percent in the 2023 fiscal year, see C05.
+In home appliances, the revenue declined due to the weak construction activity in
+China. The trend towards inverterized motor control systems continued but could not
+compensate for the weak demand.
+Revenue in transportation grew strongly from a weak basis. Besides the recovery
+in trains, new business areas such as the electrification of buses, trucks and farm
+machinery contributed to the improved result.
+Revenue in the fields of automation and electric drives benefited from demand in the
+area of factory equipment and automation.
+As the proportion of renewable energy in the energy mix continues to grow, so too
+does the importance of storage solutions to stabilize the grids. The energy infrastruc-
+ture business comprises the transmission, distribution and storage of energy, as
+well as the charging infrastructure for electromobility and enjoyed strong demand.
+There was an increase in revenue from products for wind power as well as from PV
+inverter products. In many regions of the world, solar and wind power are now the
+cheapest way of generating electricity. Capacity is therefore being expanded accord-
+ingly, especially in the form of utility-scale installations.
+Demand in the area of renewable energy remained high. The generation of clean energy
+is an essential prerequisite for the achievement of global carbon emission targets.
+Thanks to its strong market position in the area of renewable energy, Infineon was
+able to benefit directly from this megatrend.
+Review of the Green Industrial Power segment
+in the 2023 fiscal year
+Segment performance
+5 Q = 45 →
+Further information
+Consolidated Financial Statements
+Infineon Annual Report 2023
+Group
+performance
+2023 fiscal year
+Combined Management Report
+2023 fiscal year
+Group performance
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+In the first nine months of the 2023 fiscal year, Infineon achieved a market share of
+3.4 percent in the global semiconductor market and was ranked in 11th place. In the
+Infineon reference market, Infineon achieved a market share of 4.7 percent in the
+first nine months of the 2023 fiscal year and was ranked in sixth place. In the first nine
+months of the fiscal year, Infineon was ranked in second place among European
+semiconductor manufacturers in both markets (☐ R04). Data for the full 2023 fiscal
+year was not yet available at the time this report was prepared.
+In the 2022 calendar year, Infineon was ranked in 13th place in the global semiconduc-
+tor market, with a market share of 2.6 percent. In the Infineon reference market,
+Infineon ranked in seventh place worldwide in the 2022 calendar year, with a market
+share of 4.0 percent. This puts Infineon in second place among European semicon-
+ductor manufacturers in both markets (R04).
+Market position
+Revenue in Infineon's reference market (i.e., the market for semiconductors exclud-
+ing DRAM and NAND flash memory chips and microprocessors) was €364 billion in
+the 2023 fiscal year, 1 percent less compared with €367 billion in the 2022 fiscal year.
+Expressed in US dollars, the decrease was 2 percent (☐ R02). The relatively steady
+performance in the Infineon reference market was primarily due to the automotive
+and industrial market segments, in which growth was driven by the decarbonization
+and digitalization trends. Semiconductor content in vehicles increased, partly as a
+result of growing demand for electric vehicles, comfort features and efficient driver
+assistance systems. Growing demand for semiconductors was also evident again in
+the renewable energy sector (☐ R03).
+Worldwide semiconductor revenue totaled €480 billion in the 2023 fiscal year. This was
+13 percent lower than the figure for the 2022 fiscal year of €550 billion. Expressed in
+US dollars, the decrease was 14 percent (☐ R02). This was mainly due to the significant
+fall in demand in the computing, smartphone and consumer market segments, with
+a double-digit contraction in revenue in some areas ( R03).
+Review of the semiconductor market
+in the 2023 fiscal year
+The growth figures relate to market size, translated into US dollars at market
+exchange rates.
+For the 2023 calendar year, experts at the International Monetary Fund (IMF) expect a
+global economic growth of 2.5 percent (☐ R01). This would mean growth in the 2023
+calendar year would be slightly below the long-term growth trend. The reasons for this
+include the impact of the energy crisis, high rates of inflation, sharp increases in inter-
+est rates, a drop in consumer and business confidence, and the unexpectedly slow
+recovery of the Chinese economy after the removal of pandemic-related restrictions.
+Following exceptionally strong growth in the global economy in the 2021 calendar
+year in the wake of the post-Covid recovery, growth returned to a more normal level
+in the 2022 calendar year of 3.0 percent (☐ R01).
+Review of the global economy in the
+2022 and 2023 calendar year
+5 Q = 41
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Review of the semiconductor industry
+Management Board and Supervisory Board
+Infineon ❘ Annual Report 2023
+Review of the
+semiconductor
+industry
+40 ->
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Review of the semiconductor industry
+Management Board and Supervisory Board
+Further information
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+niven
+INNOVATORS
+CONFERENCE
+CAL
+GLOBAL
+INNOVATORS
+Segment
+performance
+CSS
+PSS
+GIP
+ATV
+Segment performance
+2023 fiscal year
+In the Power & Sensor Systems segment, Infineon generated revenue in the 2023 fiscal
+year of €3,798 million, a decrease of 7 percent compared with the figure for the pre-
+vious fiscal year of €4,070 million, see C06. In the first quarter of the fiscal year, weak
+demand in the consumer business was still partially offset by increasing demand for
+semiconductors used in servers and industrial applications. In the following quarters,
+demand for semiconductors used in servers also declined significantly, following high
+growth rates in previous years. Combined with continuing weak demand for semicon-
+ductors for computers, consumer electronics and telecommunications infrastructure,
+this led to a decrease in revenue in the 2023 fiscal year. The segment contributed
+23 percent of Infineon's Group revenue.
+Management Board and Supervisory Board
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Infineon | Annual Report 2023
+Details about Infineon's two other principal performance indicators, Free Cash Flow
+and ROCE, and about its other performance indicators can be found in the chapters
+"Review of results of operations”, p. 49 ff., “Review of financial condition”, p. 53 f.,
+and "Review of liquidity", p. 55 ff..
+Taking all this into account, the Segment Result Margin of 27.0 percent was signifi-
+cantly higher than the figure for the previous fiscal year of 23.8 percent.
+Infineon improved its Segment Result by 30 percent from €3,378 million in the 2022
+fiscal year to €4,399 million in the 2023 fiscal year. The main reasons for this were
+price increases, higher volumes and improvements in the product mix. Moreover,
+operating expenses rose at a lower rate than revenue. This was offset by higher idle
+costs and write-downs on increased inventories.
+Segment Result Margin of 27.0 percent achieved
+Infineon generated Group revenue of €16,309 million in the 2023 fiscal year, a 15 percent
+increase on the previous year's figure of €14,218 million. Around half the growth in
+revenue was due to price increases and around half to higher volumes and product mix
+adjustments. Continuing high levels of demand for semiconductors in the automotive
+and renewable energy sectors, in particular, had a positive impact here. At the same
+time, manufacturing capacity is continually being expanded. This was also the case
+in the 2023 fiscal year at our sites in Villach (Austria), Dresden (Germany) and Kulim
+(Malaysia). Production corridors of contract manufacturers also contributed to the
+increase in revenue. In addition, there were positive exchange rate effects during
+the reporting period.
+Group revenue up by 15 percent
+In the 2023 fiscal year, Infineon has set new records for revenue and profitability. The
+results are an initial confirmation of our more ambitious course we embarked on as a
+company a year ago. Nevertheless, we find ourselves in an environment that continues
+to present challenges. We are seeing different trends in our target markets. Structural
+semiconductor growth in the areas of renewable energy, electromobility (especially
+in China) and microcontrollers for the automotive industry remains unabated. In con-
+trast, consumer, communication, computing and IoT applications are experiencing
+a temporary period of low demand. Details about the performance of the segments
+can be found in the chapter "Segment performance". p. 44 ff.
+Group performance
+5 α = 443
+Further information
+44 →
+2023
+In past years, there was significant growth in demand in the server market, mainly
+driven by high levels of investment from cloud computing service providers. However,
+this growth slowed considerably in the course of the 2023 fiscal year. Furthermore,
+investment in cloud servers was deferred, and more Al accelerators were ordered
+instead. Al accelerators are special parts of servers that significantly accelerate artificial
+intelligence (AI) learning. In principle, this deferral should be seen as a positive devel-
+opment for semiconductor demand, as the power supply of an Al accelerator processor
+has a significantly higher semiconductor content than that required for the power
+supply of a processor for standard servers. The increase in demand for semiconductors
+for Al was not yet sufficient in the 2023 fiscal year to offset the decline in revenue in
+the area of traditional servers. Demand for power semiconductors in the area of tele-
+communications infrastructure also slowed in the 2023 fiscal year.
+Demand in our industrial business and for applications in the automotive sector
+continued on an upward trend. The growing number of electric vehicles being sold
+resulted in steadily increasing demand for charging stations and onboard chargers.
+In addition, the number of vehicles with in-cabin USB-C ports for charging mobile
+devices is continuing to rise. Good revenue growth was also to be seen in the compo-
+nents business for light electric vehicles such as eBikes, eScooters and forklift trucks.
+Demand for microinverters for roof-top solar systems remained steady, although it
+began to weaken towards the end of the fiscal year.
+(2)
+net of income taxes
+Profit (loss) from discontinued operations,
+44
+953
+2,186
+3,139
+Profit (loss) from continuing operations
+(46)
+(245)
+(537)
+(782)
+Income tax
+(31)
+(12)
+39
+27
+Share of profit (loss) of associates and joint
+ventures accounted for using the equity method
+66
+107
+(161)
+(54)
+(financial income and expenses, net)
+39
+1,103
+2,845
+3,948
+55
+42
+(7)
+5
+71
+Profit (loss) for the period
+Infineon | Annual Report 2023
+378
+488
+1,822
+2,046
+20.7%
+C07 Revenue and Segment Result of the Connected Secure Systems segment
+35
+0.68
+1.97
+2.65
+Adjusted earnings per share (in euro) - diluted
+44
+0.73
+77
+1.65
+Diluted earnings per share (in euro)
+- Segment Result Margin
+-
+Segment Result
+44
+0.73
+1.65
+2.38
+Basic earnings per share (in euro)
+Revenue
+44
+958
+2,179
+3,137
+2.38
+Demand for products in the consumer market also remained weak in the 2023 fiscal
+year. Sales figures for consumer electronic devices of all types (e.g., smartphones, PCs,
+laptops and notebooks, games consoles, as well as television) rose sharply during
+the Covid pandemic before returning to more normal levels, which led to a decrease
+in revenue in this area. Bucking the generally weak trend, interest in chargers, adapters
+and power supplies based on the new material GaN is continuing to grow. This led to
+an increase in revenue in this market segment, even if this was from a relatively low
+base. As a result of the acquisition of GaN Systems, the number of GaN specialists in
+our Group has virtually doubled. We are therefore now in a position to gain even faster
+access to the market of various GaN applications.
+119
+(34)
+Around the world, there was a significant increase in travel in the past fiscal year.
+In addition to this trend, other major ID projects contributed significantly to strong
+revenue growth in this business area.
+The trend towards cashless and contactless payment is continuing. There was strong
+demand for our solutions across all regions.
+Demand for connectivity solutions and microcontrollers was adversely impacted by
+a worsening macroeconomic climate, which had a dampening effect on consumer
+spending. Despite macroeconomic obstacles, the digitalization of applications in the
+context of IoT remains one of our principal long-term growth areas. This growth is
+driven primarily by an increase in the penetration rate of end devices, especially in
+the area of industrial and consumer applications.
+The growth in revenue was driven by higher prices, an improved product mix and
+volume growth in dedicated applications. The security solutions business in particular
+benefited from the stabilization of the supply situation in the past fiscal year, which
+meant it was possible to meet the outstanding demand, especially for payment and
+ID solutions. Moreover, demand for eSIM solutions for automotive and industrial
+applications remained high.
+In the Connected Secure Systems segment, Infineon generated revenue in the 2023
+fiscal year of €2,046 million, an increase of 12 percent compared with the figure
+for the previous fiscal year of €1,822 million. The segment contributed 13 percent of
+Infineon's Group revenue.
+Review of the Connected Secure Systems segment
+in the 2023 fiscal year
+CSS
+As a result of the decrease in revenue described above, there was also a decline in
+the Segment Result and the Segment Result Margin. The Segment Result in the 2023
+fiscal year was €861 million, compared with €1,137 million in the 2022 fiscal year, a
+decrease of 24 percent. The Segment Result Margin was 22.7 percent, compared with
+27.9 percent in the 2022 fiscal year, see Il C06.
+In the 2023 fiscal year, we generated our first revenue from ion traps for quantum
+computing. Together with the German firm eleQtron GmbH, a pioneer in quantum
+computers, Infineon is now manufacturing quantum processors based on ion-trap
+technology and supplies continuously improved generations of ion traps for eleQtron
+to incorporate into its quantum computers. Several other partnerships have already
+been established with regard to the manufacture of quantum computers. One example
+of these is the English company Oxford Ionics. These collaborations with partners in
+the quantum industry will continue to be expanded in the future.
+Our software business becomes more important year to year. For a variety of products,
+software offers an additional benefit and helps us to differentiate via the enhance-
+ment of our product portfolio. We provide software either directly to complement the
+firmware already integrated into the end product or as an additional service. In both
+cases, software enables us to augment our revenue, either by selling a greater number
+of higher-quality products at correspondingly higher prices or by producing additional
+revenue with our software services. In the 2023 fiscal year, we generated increasing
+revenue from software, primarily related to USB-C chargers. Turnkey products that can
+still subsequently be configured and programmed by the customer were particularly
+in demand in this product area.
+As a result of the decline in demand for smartphones and other mobile devices,
+there was a decrease in revenue from MEMS microphones, TVS (transient voltage
+suppressor) diodes, as well as antenna tuners and RF antenna switches in the
+2023 fiscal year.
+Segment performance
+5 Q = 4 48
+Further information
+Infineon | Annual Report 2023
+Consolidated Financial Statements
+Management Board and Supervisory Board
+Segment Result Margin
+2023
+2022
+Segment Result
+861
+1,137
+Revenue
+⚫22.7%
+27.9%
+Infineon | Annual Report 2023
+3,798
+4,070
+C06 Revenue and Segment Result of the Power & Sensor Systems segment
+€ in millions
+Combined Management Report
+2023 fiscal year
+(2)
+Management Board and Supervisory Board
+Segment performance | Review of results of operations
+(1,565)
+(1,599)
+(10)
+(187)
+(1,798)
+(1,985)
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income and expenses, net
+Operating profit
+21
+1,282
+6,131
+7,413
+15
+2,091
+Combined Management Report
+2023 fiscal year
+14,218
+in %
+Consolidated Financial Statements
+Further information
+5 Q = < 49 →
+There was an increase in revenue from embedded SIMS (eSIMS), which are used in
+vehicles with an automatic emergency call function as well as in the industrial sector.
+Progress with Industry 4.0 applications is also leading to growing demand for eSIMs.
+Manufacturing machinery, tools and other technical devices are becoming more and
+more connected and can therefore be monitored, serviced and maintained remotely.
+Given the growth in revenue, both the Segment Result and Segment Result Margin
+were higher than in the 2022 fiscal year. Higher prices, a better product mix and
+volume growth in dedicated applications led to this improvement. The Segment
+Result in the 2023 fiscal year was €488 million, an increase of 29 percent compared
+with the prior-year figure of €378 million. Based on revenue, the Segment Result
+Margin was 23.9 percent (previous year: 20.7 percent), see c07.
+16,309
+Review of results of operations
+Net financial result
+Change
+€ in millions, except earnings per share
+Revenue
+2023
+2022
+absolute
+Gross profit
+23.9%
+7.45% BlackRock Inc.
+9.50% Retail investors
+83.05% other
+Dow Jones US Semiconductor Index
+(16)
+Infineon | Annual Report 2023
+2 The calculation of the adjusted earnings per share is based on unrounded figures.
+1 Including the cumulative tax effect.
+Tax effect on adjustments
+Acquisition-related expenses within
+financial result
+35
+0.68
+1.97
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 Q = < 50 →
+Review of results of operations
+High demand and positive price and exchange rate effects
+have resulted in an increase in revenue
+Revenue grew by €2,091 million or 15 percent in the 2023 fiscal year to €16,309 million
+(previous year: €14,218 million). Around half the growth in revenue was due to price
+increases and around half to higher volumes and product mix adjustments. Conti-
+nuing high levels of demand for semiconductors in the automotive and renewable
+energy sectors, in particular, had a positive impact here. At the same time, manu-
+facturing capacity is continually being expanded. This was also the case in the 2023
+fiscal year at our sites in Villach (Austria), Dresden (Germany) and Kulim (Malaysia).
+Production corridors released by contract manufacturers also contributed to the
+increase in revenue.
+In addition, there were positive exchange rate effects during the reporting period.
+A significant proportion of revenue in the 2023 fiscal year was earned in foreign
+currencies, primarily in US dollars. The average euro/US dollar exchange rate was
+around 1.08 in the 2022 fiscal year and 1.07 in the 2023 fiscal year.
+Revenue by segment is disclosed below:
+C08 Revenue by segment
+Management Board and Supervisory Board
+€ in millions
+Combined Management Report
+2023 fiscal year
+Further information
+(127)
+3,717
+3,590
+in %
+absolute
+ber 2022
+30 Septem-
+30 Septem-
+ber 2023
+Change
+Trade receivables
+financial investments
+Cash and cash equivalents and
+ASSETS
+€ in millions
+Property, plant and equipment increased by €1,500 million to €7,045 million as of
+30 September 2023. Additions of €2,729 million significantly exceeded depreciation
+of €1,143 million. The main focus of Infineon's investing activities in the 2023 fiscal
+year was on the expansion of its frontend manufacturing facilities in Villach (Austria)
+and Dresden (Germany), as well as the development of the frontend manufacturing
+site in Kulim (Malaysia).
+Increase in property, plant and equipment due to expansion
+in frontend manufacturing facilities
+Review of financial condition
+Review of financial condition
+5 Q = < 53 →
+Consolidated Financial Statements
+(3)
+Slight shifts in the regional distribution of revenue
+2023
+25%
+4,063
+29%
+1,706
+10%
+1,415
+10%
+2,374
+15%
+1,857
+13%
+1,982
+12%
+1,564
+11%
+16,309
+100%
+14,218
+100%
+4,124
+€ in millions, except percentages
+therein: Mainland China, Hong Kong
+5,204
+2022
+Europe, Middle East, Africa
+4,360
+27%
+3,399
+24%
+therein: Germany
+2,017
+12%
+1,594
+11%
+Asia-Pacific (excluding Japan, Greater China)
+2,594
+16%
+2,343
+16%
+Greater China¹
+5,275
+32%
+37%
+1,991
+1,887
+104
+14,944
+17,044
+Equity
+5,662
+2022
+(3)
+(120)
+3,749
+3,629
+Remaining current and non-current liabilities
+(10)
+(29)
+297
+268
+Pensions and similar commitments
+€ in millions
+(929)
+5,662
+4,733
+2,100
+Financial debt
+14
+60%
+Increase in trade payables
+Review of financial condition
+5 Q = < 54 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Euro
+56%
+44%
+US dollar
+4,733
+2023
+6
+1,527
+26,912
+28,439
+Total liabilities and equity
+40%
+C09 Financial debt by currency
+22
+505
+3,483
+2,977
+Other intangible assets
+(8)
+(536)
+7,083
+6,547
+Goodwill
+27
+1,500
+5,545
+7,045
+Property, plant and equipment
+29
+893
+3,081
+3,974
+Inventories
+6
+(506)
+(15)
+Remaining current and non-current assets
+2,315
+2,260
+2,765
+Trade payables
+LIABILITIES AND EQUITY
+More detailed information on financial debt is provided in note 16 to the Consolidated
+Financial Statements. ☐ p. 123 f.
+Financial debt decreased by €929 million to €4,733 million, mainly as a result of the
+repayment of a €750 million bond. Exchange rate effects of €182 million arising
+from financial debt denominated in US dollars also contributed to the reduction in
+financial debt.
+Repayment of financial debt
+Other intangible assets decreased by €506 million to €2,977 million as of
+30 September 2023. Amortization of €531 million significantly exceeded additions
+of €255 million. Currency effects of €208 million also contributed to the decline.
+Decrease in other intangible assets
+Japan
+Americas
+Goodwill decreased by €536 million to €6,547 million as of 30 September 2023.
+The decline was almost exclusively due to currency effects, in particular the weaker
+US dollar compared to the euro as of the reporting date.
+Increase in business volume results in a rise in inventories
+Inventories, and in particular work in progress, rose by €893 million to €3,974 million
+as of 30 September 2023. This increase is mainly attributable to our Automotive
+segment, where delivery reliability is a key factor in winning and retaining orders.
+6
+1,527
+26,912
+28,439
+Total assets
+9
+199
+2,116
+Currency-related decrease in goodwill
+ROCE for the 2023 and 2022 fiscal years is calculated as follows:
+therein: USA
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+Adjusted earnings per share (diluted) increased from €1.97 in the 2022 fiscal year to
+€2.65 per share in the 2023 fiscal year and is calculated as follows:
+Change
+€ in millions (unless otherwise stated)
+2023
+2022
+absolute
+in %
+Profit (loss) from continuing operations - diluted
+Compensation of hybrid capital investors'
+Profit (loss) from continuing operations
+attributable to shareholders
+3,139
+2,186
+953
+44
+(29)
+(29)
+of Infineon Technologies AG - diluted
+Plus/minus:
+or interests in subsidiaries
+Other income and expenses
+3,110
+2,157
+Earnings per share in accordance with IFRS is influenced by amounts relating to pur-
+chase price allocations for acquisitions (in particular Cypress) and other exceptional
+items. To enable better comparability of operating performance over time, Infineon
+calculates adjusted earnings per share (diluted). Adjusted profit (loss) for the period
+and adjusted earnings per share (diluted) should not be seen as a replacement or as
+superior performance indicators, but rather as additional information to the profit (loss)
+for the period and earnings per share (diluted) determined in accordance with IFRS.
+953
+Increase in adjusted earnings per share
+Both basic and diluted earnings per share stood at €2.38 for the 2023 fiscal year
+(previous year: €1.65).
+1,565
+11.0%
+34
+2
+(120 bp)
+Despite the 15 percent increase in its revenue, Infineon was able to keep its selling,
+general and administrative expenses at a stable level of €1,599 million. Expressed as
+a percentage of revenue, selling, general and administrative expenses comprised
+9.8 percent of revenue in the 2023 fiscal year, which was lower than the prior-year
+figure of 11.0 percent. The impact on earnings of the purchase price allocations and
+acquisition-related expenses included in Infineon's selling, general and administrative
+expenses in the 2023 fiscal year was €168 million (previous year: €177 million).
+Increase in net amount of other operating income and expenses
+The net amount of other operating income and expenses improved in the course of
+the 2023 fiscal year to €119 million (previous year: €77 million). This includes income
+from the sale of Infineon's HiRel DC-DC converter business to Micross Components,
+Inc. and from the sale of the Temecula site (USA).
+Improvement in financial result
+The financial result in the 2023 fiscal year was a net loss of €54 million (previous year:
+net loss of €161 million). The improvement in the financial result arose mainly from
+higher interest income due to increased interest rates and from positive valuation
+effects. In contrast, interest expenses relating to financial liabilities were subject to
+almost no fluctuations due to contractually agreed fixed interest rates. In addition,
+in June 2023, a bond with a nominal volume of €750 million was repaid on schedule.
+Further information is provided in note 4 to the Consolidated Financial Statements.
+p. 110
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 Q = < 52 →
+Review of results of operations
+Effective tax rate of 19.9 percent
+The income tax expense in the 2023 fiscal year increased to €782 million (previous
+year: €537 million). Based on the profit from continuing operations before income
+taxes of €3,921 million (previous year: €2,723 million), the tax rate for the reporting
+year was 19.9 percent (previous year: 19.7 percent).
+Further details regarding the income tax expense are provided in note 6 to the
+Consolidated Financial Statements. p. 111 ff.
+Profit for the period and earnings per share up on previous year
+After deducting income taxes and adjusting for the profit/loss from discontinued
+operations, Infineon recorded a profit for the period of €3,137 million in the 2023
+fiscal year (previous year: €2,179 million).
+The higher profit for the period resulted in a corresponding increase in earnings
+per share.
+The calculation of earnings per share in accordance with IFRS is presented in detail
+in note 8 to the Consolidated Financial Statements. □ p. 115
+1,599
+9.8%
+44
+(in particular on goodwill)
+(4)
+(95)
+(116)
+21
+18
+Revaluation of deferred tax assets resulting
+from the annually updated earnings forecast
+Adjusted profit (loss) for the period from
+continuing operations attributable to shareholders
+of Infineon Technologies AG - diluted
+(15)
+15
++++
+3,466
+2,563
+903
+35
+Weighted-average number of shares outstanding
+(in millions) diluted
+1,306
+1,304
+2
+4
+Certain impairments (reversal of impairments)
+(64)
+(71)
+(6)
+6
++++
+Losses (gains) on earnings of restructuring
+and closures
+(4)
+(4)
+Share-based payment
+92
+62
+30
+48
+Acquisition-related depreciation/amortization
+and other expenses
+464
+484
+(20)
+(4)
+Losses (gains) on sales of businesses,
+(30)
+(30)
+(7)
+Selling, general and administrative expenses
+As percentage of revenue
+in %
+absolute
+absolute
+in %
+8,896
+8,087
+809
+10
+54.5%
+56.9%
+(240 bp)
+7,413
+6,131
+1,282
+21
+45.5%
+43.1%
+240bp
+Details on the performance of the segments can be found in the chapter "Segment
+performance". p. 44 ff.
+At €8,896 million, cost of goods sold during the reporting year was €809 million or
+10 percent higher than the previous year's figure of €8,087 million. The increase in the
+cost of goods sold was therefore less than the increase in revenue. This was primarily
+due to positive price effects and improvements in the product mix. The increase in idle
+costs and inventory write-downs had an opposite effect.
+Infineon | Annual Report 2023
+2022
+Management Board and Supervisory Board
+2023
+Other Operating
+Segments
+The decrease in the proportion of revenue generated in the Greater China region is
+primarily due to the decline in revenue from consumer applications such as PCs
+and smartphones.
+Disproportionately low increase in cost of goods sold;
+significant improvement in gross margin
+6,516
+8,242
+1.
+Automotive
+1,790 2,205
+Green
+Industrial Power
+€ in millions, except percentages
+Cost of goods sold
+4,070 3,798
+1,822 2,046
+As percentage of revenue
+2022
+2023
+Gross profit
+2018
+Gross margin
+Power & Sensor Connected
+Systems Secure Systems
+Change
+Combined Management Report
+2023 fiscal year
+Review of results of operations
+Consolidated Financial Statements
+Further information
+(15)
+(214)
+(209)
+(5)
+(2)
+1,985
+1,798
+187
+10
+12.2%
+12.6%
+(40 bp)
+Research and development expenses increased by €187 million or 10 percent, from
+€1,798 million in the 2022 fiscal year to €1,985 million in the 2023 fiscal year. The
+increase reflects the higher volume of business and results mainly from the intensi-
+fication of research and development activities and the higher headcount in this
+area. A total of 12,830 employees were engaged in research and development as of
+30 September 2023, an increase of 7 percent over the figure for 30 September 2022
+of 12,005.
+Expressed as a percentage of revenue, research and development expenses comprised
+12.2 percent of revenue in the 2023 fiscal year, which was lower than the prior-year
+figure of 12.6 percent.
+Selling, general and administrative expenses
+€ in millions, except percentages
+Change
+2023
+2022
+(17)
+(113)
+(130)
+As percentage of revenue
+51 →
+Cost of goods sold also includes expenses of €276 million incurred mainly in connec-
+tion with the acquisition of Cypress (previous year: €288 million). These expenses
+include the amortization of fair value adjustments of €250 million (previous year:
+€278 million) identified in the course of purchase price allocations and other acquisi-
+tion-related expenses.
+Gross profit (revenue less cost of goods sold) in the 2023 fiscal year was €7,413 million,
+21 percent higher than the prior-year figure of €6,131 million. The gross margin
+improved accordingly, from 43.1 percent in the 2022 fiscal year to 45.5 percent in the
+2023 fiscal year.
+Operating expenses have fallen as a percentage of revenue
+Operating expenses (research and development expenses, and selling, general and
+administrative expenses) rose at a lower rate than revenue by €221 million in the
+2023 fiscal year to €3,584 million (previous year: €3,363 million), corresponding to
+22.0 percent of revenue (previous year: 23.7 percent).
+Research and development expenses
+Change
+€ in millions, except percentages
+2023
+2022
+Total
+absolute
+Research and development expenses, gross
+2,329
+2,120
+209
+10
+Minus:
+Grants received
+Capitalized development costs
+Research and development expenses
+in %
+Adjusted earnings per share (in euro) - diluted��
+The increase in trade payables of €505 million to €2,765 million resulted mainly from
+the increase in investments and in the business volume.
+Equity increased by €2,100 million to €17,044 million as of 30 September 2023. The
+main contributory factor was the profit for the period of €3,137 million. Exchange rate
+effects recognized in other comprehensive income of €718 million and the dividend
+of €417 million paid out for the 2022 fiscal year had an opposite effect.
+Consolidated Financial Statements
+Combined Management Report
+Infineon on the capital market
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+A Treasury Committee is in place to deliberate on current financial market devel-
+opments and their potential impact on Infineon and to agree upon key liquidity,
+hedging and financing topics. The Committee, which meets on a quarterly basis,
+comprises the CFO and representatives from the Finance & Treasury, Accounting,
+Controlling and Tax departments.
+Furthermore, to the extent permitted by law, all financing activities and credit lines
+worldwide are arranged, structured and managed, either directly or indirectly, by the
+Group Finance & Treasury department in accordance with our treasury principles.
+external financing requirements. Liquidity accumulated at Group level is invested
+centrally by the Group Finance & Treasury department based on a conservative
+investment strategy, in which preserving capital is prioritized over maximizing returns.
+Group Finance & Treasury is also responsible for managing currency and interest rate
+risks and hedging against commodity price risks. For hedging purposes, we employ
+the following derivative financial instruments in our current operations: forward foreign
+currency contracts to reduce the impact of exchange rate exposure (to the extent
+foreign currency cash flows are not offset within the Group) and commodity swaps to
+reduce price risks for expected purchases of gold. Derivative financial instruments
+are not used for trading or speculation purposes. To hedge against most of the foreign
+currency risk relating to the purchase price obligation arising from the acquisition
+of GaN Systems, Infineon concluded a contingent (transaction-dependent) euro/US
+dollar forward foreign currency contract (a deal contingent forward) and a transaction-
+dependent euro/US dollar foreign currency option contract (a deal contingent option).
+Further information regarding derivative financial instruments and the management
+of financial risks is provided in notes 27, p. 142 ff., and 28, p. 150 ff., to the Consoli-
+dated Financial Statements.
+In the context of centralized liquidity management and, to the extent that this is per-
+mitted by law and economically justifiable, cash pooling structures are in place to
+ensure the best possible allocation of liquid funds within the Group and reduce its
+In accordance with our treasury principles, we adopt a highly centralized approach.
+Group Finance & Treasury is the department responsible for all major tasks and
+processes worldwide relating to financing and treasury matters.
+The abovementioned treasury principles cover all liquidity and financing topics, such
+as banking policy and strategy, the execution of financing agreements, global liquidity
+and investment management, the management of currency, interest rate and some
+commodity price risks, and the handling of external and intragroup cash flows.
+As a general rule, debt should only constitute a modest proportion of the financing mix
+to ensure that sufficient headroom is available at all times. The key objective is to
+maintain an investment grade rating. In February 2023, S&P Global Ratings confirmed
+Infineon's BBB investment grade rating and changed the outlook from "stable" to
+"positive". For further information on the nature, maturity, currency and interest rate
+structure of Infineon's gross financial debt, see note 16 to the Consolidated Financial
+Statements. p. 123 f.
+Infineon treasury's stated objective is to ensure financial flexibility based on a solid
+capital structure. Its primary goal is to ensure that sufficient funds are available to
+finance operating activities and planned investments throughout all phases of the
+business cycle. We aim to achieve a gross liquidity level of €1 billion, plus at least
+10 percent of revenue.
+Principles and structure of Infineon's treasury
+Review of liquidity
+5 Q = 57 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+Further information
+Infineon | Annual Report 2023
+Infineon on the capital market
+Share types
+DE0006231004
+2,171,026 (as of 30 September 2023),
+3,689,901 (as of 30 September 2022)
+€2,611,842,274 (as of 30 September 2023),
+€2,611,842,274 (as of 30 September 2022)
+1,305,921,137 (as of 30 September 2023),
+1,305,921,137 (as of 30 September 2022)
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+Index membership (selected)
+Daily average ADS traded
+Market capitalization²
+Trading in the USA
+Daily average shares traded on Xetra
+Market capitalization²
+Listings
+Nasdaq IR Insight
+Bloomberg
+Ticker symbol
+WKN
+ISIN
+Own shares
+Shares issued¹
+Share capital
+Basic information on shares
+623100
+Infineon is party to two financing agreements that contain a number of standard
+covenants, including a debt coverage ratio that provides for a certain relationship
+between the size of debt (adjusted) and earnings (adjusted) (see note 21 to the
+Consolidated Financial Statements, p. 132).
+The following table shows the gross cash position and the net cash position. Since
+some liquid funds are held in the form of financial investments, which for IFRS pur-
+poses are not classified as cash and cash equivalents, Infineon reports on its gross
+and net cash positions in order to provide investors with a better understanding of
+its overall liquidity situation. The gross and net cash positions are determined as
+follows from the Consolidated Statement of Financial Position:
+(1,143)
+Net cash position
+7
+177
+(2,441)
+(2,264)
+Cash flows from investing activities¹
+(16)
+(929)
+5,662
+4,733
+Gross financial debt
+(1)
+(24)
+3,986
+3,962
+(10)
+(507)
+4,910
+(1,945)
+Taking into account the financial resources available to Infineon - including internal
+liquidity on hand, net cash that will be generated, and currently available credit facili-
+ties amounting to €69 million (previous year: €80 million, see note 16 to the Consoli-
+dated Financial Statements, ☐ p. 123) - Infineon assumes that it will be able to cover
+those capital requirements for the 2024 fiscal year that are currently expected. These
+include the repayment of financial debt on its due date. Forecast capital requirements
+also include other financial obligations, such as orders already placed for initiated
+or planned investments in property, plant and equipment (see note 23 to the Consoli-
+dated Financial Statements, p. 135 f.). Investments planned for the 2024 fiscal year
+are described in the chapter "Outlook”. p. 62 ff.
+802
+Purchases of (proceeds from sales of)
+Gross cash position and net cash position
+10.0%
+1,638
+480
+1 From continuing operations.
+Percentage of revenue
+Adjusted Free Cash Flow
+related investment subsidies
+Cash outflows for investments in large front-end
+buildings after deduction of cash inflows for
+Plus:
+(30)
+(490)
+1,648
+1,158
+Free Cash Flow
+(643)
+103
+(540)
+financial investments, net
+41
+IFX (share), IFNNY (ADS)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-PK
+Shares: Frankfurt Stock Exchange (FSE)
+22.71
+24.98
+27.25
+29.52
+MA
+31.79
+34.07
+36.34
+38.61
+40.88
+43.15
+45.42
+Infineon share price in €
+C10 Development of the Infineon share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2023
+fiscal year (daily closing prices)
+The closing price for Infineon shares at the end of the 2023 fiscal year was €31.36.
+This was up 38 percent on the closing price of €22.71 at the end of the 2022 fiscal year.
+Share price performance
+5 Q = 59
+Further information
+Consolidated Financial Statements
+20.44
+Combined Management Report
+Infineon on the capital market
+30 September 2022 = 100
+190
+■SOX
+Infineon | Annual Report 2023
+DAX
+■Infineon
+10|2022 11|2022 12|2022 01|2023 02|2023 03|2023 04|2023 05|2023 06|2023 07|2023 08|2023 09|2023
+90
+C11 Shareholder structure as of the end of the 2023 fiscal year
+100
+110
+As of 30 September 2023, the company BlackRock Inc. held more than 5 percent of
+the Infineon shares issued. The share capital held by retail investors increased slightly
+to 9.50 percent at the end of the 2023 fiscal year, compared with 9.47 percent at the
+end of the 2022 fiscal year.
+Shareholder structure
+On 3 October 2022, right at the beginning of the fiscal year, Infineon shares fell to their
+lowest price for the year of €23.09. Subsequently, the share price climbed relatively
+steadily, reaching its year high for the 2023 fiscal year of €40.00 on 31 July 2023. With
+an increase in value of 38 percent during the fiscal year, Infineon shares rose at a
+faster rate than the DAX, which was up 27 percent. The US benchmark indices, the
+Philadelphia Semiconductor Index (SOX) and Dow Jones US Semiconductor Index,
+rose even faster, mainly as a result of a surge in the price of some technology shares
+at the end of May due to a wave of interest in artificial intelligence. The SOX improved
+by 49 percent compared with the previous year and the Dow Jones US Semiconductor
+Index by 79 percent. With a closing price for Infineon shares of €31.36, its market capi-
+talization as of 30 September 2023 was €40,879 million, compared with €29,574 million
+at the end of the 2022 fiscal year when the share price was €22.71.
+120
+130
+140
+150
+160
+170
+180
+200
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+A full overview of other major indices in which the Infineon share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/infineon-share/#5|
+due on 24 June 2032,
+ISIN: XS2194283839
+due on 17 February 2025,
+ISIN: XS2443921056
+due on 24 June 2026,
+ISIN: XS2194283672
+Basic information on bonds and other
+financing instruments
+Dow Jones Sustainability World Index
+S&P Europe 350
+MSCI Germany
+Dow Jones Germany Titans 30
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones STOXX Europe 600
+EURO STOXX 50
+TecDAX
+DAX 40
+199,504 (in the 2023 fiscal year)
+(based on closing price of US$33.17 as of 30 September 2023)
+US$43,245 million
+ADS, over-the-counter trading on the OTC market
+(OTCQX International)
+(based on closing price of €31.36 as of 30 September 2023)
+3,829,653 (in the 2023 fiscal year)
+€40,879 million
+0.625% Bond from 17 February 2022
+€500 million
+1.125% Bond from 24 June 2020
+€750 million
+2 Calculation of market capitalization: ("shares issued" - "own shares") x share price. The calculation is based on unrounded figures.
+1 The number of shares issued includes own shares.
+due on 16 June 2031
+due on 16 June 2033
+since 15 February 2023:
+"BBB", Outlook: "positive"
+ISIN: XS2056730679
+due on 5 April 2026
+due on 5 April 2028
+due on 16 June 2027
+due on 16 June 2029
+due on 5 April 2024
+US$350 million
+US$350 million
+US$235 million
+US$350 million
+US$350 million
+US$350 million
+US$250 million
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+Rating of S&P Global Ratings
+first call date 1 January 2028,
+4,403
+€600 million
+first call date 1 January 2025,
+ISIN: XS2056730323
+€600 million
+2.875% Hybrid Bond from 1 October 2019
+ISIN: XS2194192527
+€650 million
+2.000% Bond from 24 June 2020
+due on 24 June 2029,
+€750 million
+1.625% Bond from 24 June 2020
+3.625% Hybrid Bond from 1 October 2019
+Equity up mainly due to profit for the period
+Long-term financial debt
+absolute
+(1)
+(81)
+(5,588)
+(5,669)
+22
+509
+(2,279)
+(1,770)
+(27)
+(382)
+(1,438)
+(1,820)
+6
+1,527
+26,912
+28,439
+Assets classified as held for sale
+Total current liabilities
+Cash and cash equivalents
+Financial investments
+Plus/minus:
+Short-term financial debt and
+current maturities of long-term financial debt
+Liabilities classified as held for sale
+Assets
+330
+(422)
+Review of liquidity
+5 Q = 55 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+1 The financial result for the 2023 and 2022 fiscal years amounted to negative €54 million and negative €161 million, respectively,
+and included negative €98 million and negative €131 million, respectively, of net interest result.
+Infineon | Annual Report 2023
+400 bp
+12.6%
+16.6%
+ROCE 1/②
+6
+1,151
+18,359
+19,510
+Capital employed ②
+59
+(56)
+752
+Review of liquidity
+40
+920
+(54)
+39
+1,103
+2,845
+3,948
+in %
+absolute
+2022
+2023
+Change
+Financial result excluding interest result¹
+Less interest result
+Financial result
+Plus/minus:
+€ in millions, except percentage
+Operating profit
+Consequently, Return on Capital Employed (ROCE) increased from 12.6 percent to
+16.6 percent.
+In the 2023 fiscal year, operating profit from continuing operations after tax increased
+significantly by €920 million to €3,237 million (previous year: €2,317 million) and
+therefore at a faster rate than capital employed. Adjustments made to volumes, prices
+and the product mix, as well as exchange rate effects, contributed to the increase in
+operating profit (see the chapter "Review of results of operations”, □ p. 49 ff.). Capital
+employed rose by €1,151 million to €19,510 million as of 30 September 2023.
+Improvement in ROCE due to higher operating profit
+The equity ratio as of 30 September 2023, based on total assets of €28,439 million,
+was 59.9 percent (30 September 2022: 55.5 percent).
+(161)
+40
+107
+98
+2,317
+3,237
+Operating profit from continuing
+operations after tax ①
+(46)
+(245)
+(537)
+(782)
+(31)
+(12)
+39
+27
+Share of profit (loss) of associates and joint
+ventures accounted for using the equity method
+Income tax
++++
+74
+(30)
+44
+(25)
+(33)
+131
+66
+Cash flow
+in %
+Change
+1,820
+in %
+absolute
+ber 2022
+30 Septem-
+30 Septem-
+ber 2023
+Change
+Financial investments
+Gross cash position
+Cash and cash equivalents
+€ in millions
+Both figures should not be seen as a replacement or as superior performance indicators,
+but rather as useful information in addition to the disclosure of the cash flow reported
+in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
+other liquidity performance indicators and other performance indicators determined
+in accordance with IFRS. Free Cash Flow and adjusted Free Cash Flow are derived as
+follows from the Consolidated Statement of Cash Flows:
+5 Q = < 56 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Review of liquidity
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Since the 2023 fiscal year, adjusted Free Cash Flow has become part of Infineon's
+target operating model (see the chapter “Group strategy”, p. 28) and is defined
+as Free Cash Flow adjusted for cash outflows for investments in large frontend build-
+ings, for cash inflows for related investment subsidies and for major M&A transactions
+(acquisitions and disposals) adjusted for cash acquired or disposed of.
+Infineon reports the Free Cash Flow figure, defined as cash flows from operating
+activities and cash flows from investing activities, both from continuing operations,
+after adjusting for cash flows from the purchase and sale of financial investments.
+Free Cash Flow serves as an additional performance indicator since Infineon holds
+part of its liquidity in the form of financial investments. This does not mean that
+the Free Cash Flow calculated in this way is available to cover other disbursements,
+because dividends, debt-servicing obligations and other fixed disbursements have
+not been deducted.
+1,438
+at 10.0 percent of revenue
+382
+1,770
+2022
+2023
+Cash flows from operating activities'
+€ in millions
+(56)
+(422)
+752
+330
+of long-term financial debt
+Change
+Short-term financial debt and current portion
+Minus:
+(3)
+(127)
+3,717
+3,590
+(22)
+(509)
+2,279
+27
+Decrease in Free Cash Flow; adjusted Free Cash Flow
+More information about financial debt is provided in note 16 to the Consolidated
+Financial Statements. p. 123 f.
+Cash outflows from financing activities decreased by €568 million compared with the
+previous fiscal year. The main effects for this decline are the reduction of €640 million
+in net repayment of financial debt which was offset by a €66 million higher divi-
+dend payment. The net cash outflows from financing activities thus amounted to
+€1,301 million in the 2023 fiscal year.
+568
+(1,869)
+(1,301)
+Cash flows from financing activities
+7
+177
+(2,441)
+(2,264)
+Cash flows from investing activities
+(1)
+(24)
+3,986
+3,962
+from continuing operations
+Cash flows from operating activities
+absolute
+2022
+2023
+€ in millions
+30
+Net change in cash and cash equivalents
+from discontinued operations
+(2)
+improvement. This was offset by the €686 million increase in payments for property,
+plant and equipment. Further information about investments made in the 2023 fiscal
+year can be found in the chapter "Review of financial condition". ☐ p. 53 f.
+Cash outflows from investing activities decreased by €177 million compared with
+the previous fiscal year to €2,264 million. The improvement resulted mainly from
+the €643 million increase in net cash inflow from the purchase and sale of financial
+investments. Cash inflows totaling €200 million from the sale of the HiRel DC/DC
+converter business and the sale of the Temecula site (USA) also contributed to the
+Cash flows from operating activities from continuing operations decreased by
+€24 million to €3,962 million. Set against a significant improvement in profit from
+continuing operations before income taxes of €1,198 million were negative effects,
+principally in relation to the change in other assets and other liabilities and the
+change in working capital.
++++
+693
+(311)
+382
+(32)
+19
+in %
+(13)
++++
+725
+(330)
+395
+cash equivalents
+Cash-relevant change in cash and
+67
+4
+(6)
+Currency effects on cash and cash equivalents
+Change in cash and cash equivalents
+2.65
+Significant risks
+Combined Management Report
+Infineon's centralized ERM system is based on a Group-wide, management-oriented
+ERM approach, which aims to cover all relevant risks and opportunities. This approach
+is based on the “Enterprise Risk Management - Integrating with Strategy and Per-
+formance” (2017) framework developed by the Committee of Sponsoring Organi-
+zations of the Treadway Commission (COSO). The objective of the system is the early
+identification, assessment and management of risks and opportunities that could
+have a significant influence on Infineon's ability to achieve its strategic, operational,
+financial, legal and compliance targets. Infineon's Internal Control System is also
+based on a framework developed by COSO ("Internal Control - Integrated Framework"
+(2013)). This framework describes the various elements in a control system (the control
+environment, risk assessment, control activities, information and communication,
+and monitoring) and sets out the basis for the evaluation of the appropriateness and
+effectiveness of the ICS.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+5 Q = < 66
+The responsibility for processes and systems relating to the ICS and the ERM rests
+with the Risk Management and ICS function within the Group Finance department
+as well as with designated Risk and Control Officers working at divisional, corporate
+function and regional levels. Responsibility for the identification, measurement,
+management and reporting of risks and opportunities, as well as for their mitigation
+and control, lies with the management of the organizational unit concerned.
+The new IDW Auditing Standard 340 on the audit of the early risk detection system
+came into force on 1 January 2021. We therefore adapted our Risk and Opportunity
+Management System in the 2022 fiscal year to the methodology of the new standard.
+Significant changes involved implementing a risk-bearing capacity concept based on
+shareholders' equity and improving risk aggregation by using Monte Carlo simulations.
+Furthermore, in addition to categorizing risks (classifying risk events into various
+thematic blocks) and setting threshold levels for risk tolerance, the review period for
+risk reporting (with regard to the degree of impact of the risks and opportunities) was
+amended. The review period is divided into three time segments: the impact in the
+current fiscal year, in the coming fiscal year, and a trend statement for years three to
+five. This adjustment of the risk assessment now enables us to calculate the risk-bearing
+capacity for the individual fiscal years.
+In organizational terms, implementation of the ICS and ERM is via a closed-loop,
+multiple-stage process that stipulates the manner and criteria to be applied to identify,
+measure, manage, mitigate, control and report on risks and opportunities and defines
+how the system is to be monitored as a whole. Major components of the system are
+a quarterly analysis of risks and opportunities, a reporting of all units included, an
+analysis of the overall situation at divisional and Group levels, and reporting to the
+Management Board on the risk and opportunity situation, the results of tests of the
+controls, and the major management and control measures undertaken. The Manage-
+ment Board, in turn, reports regularly to the Supervisory Board's Investment, Finance
+and Audit Committee on the developments and results of the ICS and ERM. Where
+necessary, standard I processes are supplemented by ad hoc reporting of any major
+risks identified between the regular reporting dates.
+Risks and opportunities under ERM are measured on a net basis by taking into
+account any existing management and mitigation measures. The time periods and
+measurement categories used are closely linked to our short-term and medium-term
+business planning and entrepreneurial targets.
+All relevant risks and opportunities are assessed uniformly across the Group in
+quantitative or qualitative terms, based on two factors: degree of impact on
+the Segment Result and/or on business objectives, reputation, compliance, and
+likelihood of occurrence.
+The scales used to measure these two factors (degree of impact and likelihood of
+occurrence) and the resulting risk assessment matrix for the presentation of risks
+for impact years 1 and 2 are depicted in chart C13. The scale used to measure the
+degree of impact on the Segment Result has been adjusted in comparison with the
+previous year for the measurement of risks in the coming years to take account of the
+profitable growth and the increased size of Infineon's business.
+Based on the potential degree of impact as well as the estimated likelihood of
+occurrence, a risk is classified as “very high”, “high”, “medium” or “low”.
+C13 Risk assessment matrix
+Degree of impact
+5
+4
+We define a risk or an opportunity as the occurrence of future uncertainties that
+could result in either a negative or a positive variance from the business plan. We
+incorporate all relevant organizational units within the Group in this analysis, thus
+covering all divisions, significant corporate functions and regions.
+3
+ERM and ICS systems
+Effective risk and opportunity management is an important element of our business
+activities and supports the implementation of our strategy to achieve our strategic
+goals. Infineon's risk and opportunity situation continues to be characterized by the
+dynamic market environment in the semiconductor industry, a substantial need for
+capital investment to achieve and sustain its market position, extraordinarily rapid
+technological change, decarbonization and digitalization. Competition to gain an
+innovative edge also occurs at the legal level, as evidenced, for example, by patents.
+Against this background, Infineon's risk policy is aimed at quickly realizing the
+opportunities that arise in a way that increases its enterprise value. It also focuses
+on identifying risks early and actively mitigating them - particularly those risks that
+might pose a threat to Infineon's going-concern status - by adopting appropriate
+countermeasures. Risk management at Infineon is therefore closely linked to corporate
+planning and the implementation of our strategy. The ultimate responsibility for
+risk management lies with the Infineon Management Board.
+Investments and depreciation/amortization
+Investments (defined by Infineon as the sum of investments in property, plant and
+equipment, investments in other intangible assets and capitalized development
+costs) are planned at around €3.3 billion for the 2024 fiscal year.
+Most of the investment relates to the construction and expansion of frontend
+manufacturing facilities. The main focus is on the completion of Phase 1 and the
+commencement of Phase 2 of the third fabrication facility at the Kulim site, which is
+designed to manufacture compound semiconductors, as well as on the construction
+of the fourth module in Dresden.
+Considerable funds are also being invested in acquiring equipment for the production
+of products based on silicon carbide and gallium nitride. Further amounts invested
+in frontend facilities will be used to implement structural measures, optimize product
+quality, increase the degree of automation and promote innovation.
+A significant amount of investment is also planned in order to expand capacity and
+implement structural measures at backend facilities, albeit at a much lower level
+than for frontend facilities.
+In the 2023 fiscal year, investments totaled €2,994 million, comprising €2,739 million
+for property, plant and equipment and €255 million for capitalized development
+costs and other intangible assets. In the 2024 fiscal year, investments in capitalized
+development costs and other intangible assets are expected to be at a slightly higher
+level than in the 2023 fiscal year.
+Depreciation and amortization are predicted to be around €2.1 billion in the
+2024 fiscal year. Approximately €0.4 billion relates to the amortization of purchase
+price allocations, mainly in connection with the acquisition of Cypress.
+Overall statement on expected developments
+at Infineon
+Coordinated risk management and control system elements are in place that enable
+us to implement our risk policy. In addition to the Risk and Opportunity Management
+System (ERM) and the Internal Control System (ICS) described below, these elements
+include, in particular, the related forecasting, management and internal reporting
+processes as well as our Compliance Management System (CMS).
+Based on forecasts for the development of the global economy and the semicon-
+ductor market in the 2024 calendar year, Infineon expects Group revenue to grow
+to €17 billion, plus or minus €500 million. The Segment Result Margin is forecast, at
+the middle of the range for the revenue forecast, to be around 24 percent of revenue.
+Investments are expected to be at around €3.3 billion. Depreciation and amortization
+are expected to total about €2.1 billion. Free Cash Flow from continuing operations
+should reach around €0.4 billion. Return on Capital Employed (ROCE) is forecast to be
+around 13 percent.
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 65 →
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Risk and opportunity report
+Risk policy: Basis of our risk and
+opportunity management
+Infineon | Annual Report 2023
+For the 2024 fiscal year, Return on Capital Employed (ROCE) is forecast to reach
+around 13 percent.
+2
+1
+5
+>90% Virtually certain
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+5 Q = < 67 →
+Very high risk
+All risks and opportunities reported for Infineon are reviewed for possible cumulative
+effects and analyzed using an Infineon-specific categorization model that also takes
+non-financial and sustainability-related risks into account. Interdisciplinary work-
+shops held at division, corporate and regional levels support our risk and opportunity
+analysis and enhance our risk and opportunity management culture. Important
+information relevant for Infineon's ICS and ERM is available to all employees via
+our intranet system, including access to our guidelines containing job descriptions
+for all functions involved in the process as well as all the information required for
+reporting purposes.
+Compliance with the ICS and ERM approaches is monitored by the corporate function
+responsible for risk management and ICS using procedures incorporated into business
+processes. Group Internal Audit also performs tests for compliance with certain legal
+requirements and Infineon guidelines and, where appropriate, rules relating to the
+ICS and ERM and recommends corrective measures.
+The Supervisory Board's Investment, Finance and Audit Committee monitors the
+appropriateness and effectiveness of both systems (ICS and ERM).
+As part of the group audit, the external Group auditor also examines the early risk
+detection system pursuant to section 91, paragraph 2 of the German Stock Corporation
+Act (AktG) to ascertain its suitability to detect risks at an early stage that could pose
+a threat to Infineon's going-concern status in accordance with IDW Auditing Standard
+340 and reports thereon annually to the Chief Financial Officer (CFO) and to the
+Investment, Finance and Audit Committee of the Supervisory Board.
+Compliance Management System
+We have implemented a Group-wide Compliance Management System (CMS) to
+manage compliance-related risks in a systematic, comprehensive and sustainable
+manner. We are continuously enhancing the key elements of our CMS to prevent, detect
+and respond to compliance-related incidents. The Corporate Compliance Officer
+reports to the Chief Financial Officer and, on a quarterly basis, to the Management
+Board and the Investment, Finance and Audit Committee of the Supervisory Board.
+In structuring its CMS, Infineon has for years complied with IDW Auditing Standard
+980 and has engaged an external auditing firm to confirm the appropriateness,
+implementation and effectiveness of its CMS globally in the areas of "antitrust law"
+and "corruption prevention" (last time in the 2018/2019 fiscal year). Since that time,
+adherence to the CMS in the respective legal entities has been monitored by regular
+internal audits.
+As part of the CMS, a formal annual assessment of our risks is conducted with
+a particular emphasis on corruption and antitrust laws. Any necessary measures
+derived from this assessment are summarized in Infineon's compliance program.
+Infineon | Annual Report 2023
+Risk and Opportunity Managers are designated at appropriate hierarchy levels to
+manage and monitor identified risks and opportunities according to their relevance.
+They are responsible for formally determining a set of appropriate risk and opportunity
+management strategies (in the case of risks: avoidance, mitigation, control, transfer
+or acceptance). Working closely with corporate functions and individual managers
+responsible for measures, the Risk and Opportunity Managers are also responsible
+for defining and monitoring the measures aimed at implementing the management/
+control strategy. The active and specific management and monitoring of risks and
+opportunities are critical to the success of our system.
+1
+5
+3 40-60% Possible
+2 3
+4
+5
+Low risk
+Medium risk
+High risk
+1 Relating to a planning year.
+Degree of impact
+4 60-90% Probable
+Likelihood of occurrence
+1
+<€40 million Marginal
+1 <10% Very unlikely
+2 €40-100 million Minor
+3 €100-200 million Moderate
+4 €200-400 million Significant
+>€400 million Major
+Likelihood of occurrence
+2 10-40% Unlikely
+on Segment Result¹
+ROCE
+For the 2024 fiscal year, Infineon is forecasting Free Cash Flow of around €0.4 billion.
+This figure includes net cash outflows for investments in the expansion of frontend
+manufacturing facilities in Dresden (Germany) and Kulim (Malaysia) and net cash
+outflows for the acquisition of GaN Systems.
+Free Cash Flow from continuing operations
+Segment Result Margin
+23.8%
+Around 27%
+(at a revenue level
+27.0%
+of around €16.2 billion
+Free Cash Flow from
+continuing operations
+ROCE
+1,648
+Around €1.2 billion
+indicators
+1,158
+Around 15%
+16.6%
+Outlook for
+FY 2024
+Around 24%
+(at a revenue level
+of around €17 billion)
+Around €0.4 billion
+Around 13%
+Revenue increase
+Selected supplementary
+performance indicators
+Revenue respectively
+12.6%
+14,218
+Principal performance
+except percentages
+Geopolitical and macroeconomic disruptions once again led to a volatile market
+environment in the past fiscal year. Our target markets developed correspondingly
+differently.
+On a positive note, structural demand for many of our semiconductors for electro-
+mobility applications remains unbroken. We saw a similarly healthy demand picture
+for renewable energy applications as well as for power and charging infrastructure,
+supported by government decarbonization initiatives. By contrast, demand for end
+consumer applications such as PCs and smartphones declined following the corona-
+virus pandemic. Consumers and companies were reluctant to spend in a persistently
+inflationary and uncertain environment.
+Despite the challenging conditions, Infineon was very successful in the 2023 fiscal year.
+This is also reflected in our current figures, see the chapters "Group performance",
+p. 42 f., "Review of results of operations”, ☐ p. 49 ff., "Review of financial condition”,
+p. 53 f., and "Review of liquidity", p. 55 ff..
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Consolidated Financial Statements
+FY 2022
+Further information
+Report on outlook, risk and opportunity
+Outlook
+Actual and target values for performance indicators
+The following table and subsequent comments compare the actual and forecast
+values of Infineon's key performance indicators for the 2023 fiscal year (FY) and show
+the outlook for the 2024 fiscal year.
+€ in millions,
+Outlook for
+FY 20231
+Actuals
+FY 2023
+Actuals
+5 α = < 62 →
+Revenue increase
+16,309
+change in revenue
+Assumed euro/US dollar exchange rate
+As a globally operating organization, Infineon generates revenue not only in euros,
+but also in foreign currencies, predominantly in US dollars. It also incurs expenses in
+US dollars and, to some extent, in currencies correlated with the US dollar, such as
+the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of
+non-euro-denominated revenue and expenses does not always balance out. For this
+reason, fluctuations in exchange rates, particularly between the euro and the US dollar,
+influence the amounts reported for revenue and earnings. A stronger US dollar against
+the euro has a positive effect, whereas a weaker US dollar against the euro has an
+adverse effect on revenue and earnings. Excluding the effect of currency hedging
+instruments, the impact of a deviation of 1 US cent in the actual exchange rate of the
+US dollar against the euro compared to the forecast rate would amount to a change
+in Segment Result of around €10 million per quarter or around €40 million per fiscal
+year compared to the forecast value. These figures are calculated on the assumption
+that the exchange rates of currencies – in which costs arise for Infineon - change in
+line with the euro/US dollar exchange rate. In terms of revenue, the impact of exchange
+rates is limited primarily to the euro/US dollar rate, where a deviation of 1 US cent
+in the actual exchange rate compared to the forecast rate would have an impact on
+revenue of around €25 million per quarter or around €100 million
+fiscal year.
+per
+Planning for the 2024 fiscal year is based on an assumed exchange rate of US$1.05
+to the euro.
+External growth prospects for the global economy
+and the semiconductor market
+In the course of the 2023 fiscal year, the global economy continued to be affected
+by the consequences of the Russian invasion of Ukraine and high inflation. Due to
+significant rises in interest rates and difficult financing conditions as a result, economic
+activity slowed down considerably compared with the previous year. However, most
+countries have so far avoided going into recession. According to the forecasts of the
+International Monetary Fund (IMF), global economic growth in the 2023 calendar year
+will be around 2.5 percent, a somewhat higher figure than the 2.1 percent forecast
+in autumn 2022. Growth of 2.4 percent is forecast for the 2024 calendar year ( R01).
+This means that current growth rates for the global economy are remaining more
+or less stable, although they are below their historical average. Risks of a further
+weakening in the global economy also remain.
+Market analysts at Omdia expect Infineon's reference market (i.e., the semiconductor
+market excluding DRAM and NAND flash memory chips and microprocessors) to see
+a slight decline of 1 percent in revenue in US dollar terms in the 2023 calendar year
+(R03). Demand for semiconductors for automotive and industrial applications is
+again higher than average, whereas revenue from semiconductors in the consumer
+market segment and in the area of cellular infrastructure will decrease significantly.
+The experts at Omdia expect the Infineon reference market to grow by 6 percent in the
+2024 calendar year (R03). The long-term trends decarbonization and digitalization
+are continuing to drive demand for semiconductors, especially in the automotive
+and industrial sectors. In the areas of consumer electronic goods and cellular infra-
+structure, the forecast is for a noticeable recovery in revenue in the 2024 calendar
+year following the decline in revenue in the 2023 calendar year.
+Outlook for the 2024 fiscal year
+Explanatory comments on the outlook
+for the 2024 fiscal year
+The following outlook is based on current business developments and internal
+forecasts.
+Infineon Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Consolidated Financial Statements
+Further information
+5 Q = < 64
+Green Industrial Power segment should remain more or less stable compared with
+the 2023 fiscal year. The Power & Sensor Systems and Connected Secure Systems
+segments are each forecast to see a decline in revenue in the high single-digit per-
+centage range, due to weak demand for semiconductors for computers and consumer
+electronics as well as relatively high inventory levels still held by customers.
+Segment Result Margin of around 24 percent of revenue expected
+If the middle of the range for the revenue forecast is reached, the Segment Result
+Margin is expected to be around 24 percent in the 2024 fiscal year.
+Revenue of €17 billion plus or minus €500 million expected
+Based on the forecasts for the growth of the global economy and the semiconductor
+market segments relevant for Infineon described above and an assumed exchange
+rate of US$1.05 to the euro, Infineon forecasts that Group revenue will grow in the 2024
+fiscal year to €17 billion, plus or minus €500 million. This is equivalent to a 4 percent
+increase in revenue compared with the prior year. Revenue growth in the Automotive
+segment is expected to be in the low double-digit percentage range. Revenue in the
+5 Q = 63
+Further information
+Consolidated Financial Statements
+to around €16.2 billion
+compared to
+to €17 billion plus
+or minus €500 million
+previous year
+Investments
+2,994
+2,310
+Around €3.0 billion
+Around €3.3 billion
+1 The forecast presented here corresponds to the forecast last finalized in the second and third quarters of the 2023 fiscal year.
+Comparison of original outlook with actual figures
+for the 2023 fiscal year
+Revenue for the 2023 fiscal year was originally forecast in November 2022 to be
+€15.5 billion, plus or minus €500 million. In light of Infineon's positive business
+performance, this outlook was raised incrementally in the following quarters to an
+expected revenue of around €16.2 billion. The actual amount of revenue generated in
+the 2023 fiscal year was €16,309 million. This figure was within the projected range
+of the final forecast on 3 August 2023 and significantly above the original forecast in
+November 2022. The good level of demand and price increases both had a positive
+impact on revenue.
+In conjunction with the adjustments to the revenue forecast, the expected Segment
+Result Margin was also adjusted upwards in the course of the fiscal year. Originally,
+a Segment Result Margin of around 24 percent was forecast for the 2023 fiscal year.
+The most recent forecast was a figure of around 27 percent. The actual figure was
+27.0 percent, so the forecast was met.
+According to the original forecast in November 2022, Free Cash Flow was expected to
+reach around €0.8 billion. As a result of the ongoing adjustments to the revenue and
+earnings forecasts, adjustments were also made on a regular basis to the expected
+figure for Free Cash Flow. The final forecast for Free Cash Flow of around €1.2 billion
+was made in August 2023. The actual figure for Free Cash Flow in the 2023 fiscal year
+was €1,158 million. This was in line with the most recent forecast and was significantly
+higher than the figure originally forecast of €0.8 billion.
+As a result of Infineon's positive earnings performance, the actual figure for Return
+on Capital Employed (ROCE) in the 2023 fiscal year was 16.6 percent, exceeding the
+forecast made in November 2022 of “around 12 percent” respectively in March 2023
+of "around 15 percent".
+The actual figure for investments in the 2023 fiscal year of €2,994 million was in line
+with the forecast figure of €3.0 billion.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Management Board and Supervisory Board
+Overall statement on Infineon's financial condition
+Further information
+Further information
+2015
+2016
+2017
+2018
+1 Proposal to the Annual General Meeting to be held on 23 February 2024.
+332
+2014
+351
+2020
+2021
+2022
+2023
+Interested parties may participate in telephone conferences via a webcast broadcast in the Investor Relations section of the
+Infineon website.
+www.infineon.com/investor
+2019
+Retail investors can contact us by email (investor.relations@infineon.com)
+and by telephone (+49 89 234-26655).
+18
+22
+Consolidated Financial Statements
+Management Board and Supervisory Board
+Combined Management Report
+Infineon on the capital market
+Consolidated Financial Statements
+Further information
+5 Q = < 60 →
+20
+Dividend
+C12 Dividend per share for the 2014 to 2023 fiscal years
+in € cents
+27
+27
+25
+22
+Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
+economic development and, in general, at paying out at least an unchanged dividend
+even in the event of stagnating or declining earnings. The dividend payout for the
+2021 fiscal year was increased by €0.05 per share compared with the previous year.
+The dividend payout for the 2022 fiscal year was then increased again by €0.05, to
+€0.32 per share. It is now planned to put forward a proposal at the Annual General
+Meeting in February 2024 for a further increase in the dividend of €0.03. The reason
+for this is Infineon's even better business performance in the 2023 fiscal year compared
+with the previous year while at the same time retaining the financial headroom of
+the Company for profitable growth. If the planned proposal is approved at the Annual
+General Meeting, the dividend for the 2023 fiscal year would rise to €0.35 per share.
+The number of shares issued remained unchanged as of 30 September 2023 at
+1,305,921,137. This figure now includes 2,171,026 shares owned by the Company
+that are not entitled to a dividend. The total amount to be distributed to shareholders
+is therefore anticipated to rise to €456 million, compared with €417 million one
+year earlier.
+Infineon | Annual Report 2023
+27
+Combined Management Report
+Overall statement on Infineon's financial condition
+We systematically assess the appropriateness and effectiveness of the ICS with
+respect to the financial reporting process. An annual risk analysis is initially performed,
+and the defined controls are revised as and when required. The assessment involves
+identifying and updating significant risks relating to accounting and financial reporting
+in the relevant legal entities and corporate functions. The controls defined for identi-
+fying risks are documented in accordance with Group-wide guidelines. Regular random
+tests are performed to assess the appropriateness and effectiveness of these controls.
+The tests constitute the basis for assessing the appropriateness of the design and
+effectiveness of the controls. The results are documented and reported in a global
+IT system. Any deficiencies identified are remedied, with due consideration given to
+their potential impact.
+Assessment of appropriateness and effectiveness
+> processes are in place for the segregation of duties and for the four-eye principle
+in the context of preparing financial statements, as well as for authorization and
+access rules for relevant IT accounting systems.
+> processes and controls are in place to explicitly guarantee the completeness and
+correctness of the financial reporting in the Separate and Consolidated Financial
+Statements; and
+> issues relevant for financial reporting and disclosures in connection with agreements
+entered into are recognized and appropriately presented;
+> intragroup transactions are fully accounted for and properly eliminated;
+Furthermore, all legal entities, divisions and relevant corporate functions confirm in
+a Representation Letter that all business transactions, all assets and liabilities, and
+all income and expense items have been duly recognized in the financial statements.
+At the end of the annual cycle, the main legal entities review and confirm the appro-
+priateness and effectiveness of the ICS with respect to the financial reporting process.
+The Management Board and the Investment, Finance and Audit Committee of the
+Supervisory Board are regularly informed about any significant control deficiencies
+identified in the ICS with respect to the financial reporting process and about the
+effectiveness of the internal controls in place.
+> Group-wide financial reporting, measurement and accounting guidelines are
+continually updated and adhered to;
+The ICS with respect to the financial reporting process is also based on the framework
+developed by the COSO "Internal Control – Integrated Framework" (2013) and is
+part of the accounting process in all relevant legal entities and corporate functions.
+The overriding objective of our “Internal Control System with respect to the financial
+reporting process" as part of the general ICS and ERM described above is to monitor
+and ensure the correctness, appropriateness and effectiveness of our accounting and
+financial reporting. The ICS with respect to the financial reporting process, aims to
+minimize the risk of misstatement in Group accounting and external reporting and to
+provide reasonable assurance that the Consolidated Financial Statements comply
+with all relevant regulations. For this to be the case, Group-wide compliance with
+legal and internal regulations must be ensured. Clear responsibilities are assigned to
+each of the processes.
+Internal Control System with respect to the
+financial reporting process
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+5 Q = 68
+The system monitors compliance with policies and procedures using preventive
+and detective controls. Among other things, we regularly check that
+Infineon | Annual Report 2023
+-
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+The additional classification in “A”, “B” or “C” in brackets behind the respective title
+of the risk sub-category results from the described materiality for Infineon and
+enables a ranking of the risk sub-categories across the main risk categories. The risk
+sub-categories with the bracketed addition "A" represent the first quartile of materiality
+(highest risk sub-categories), “B” describes the second and third quartiles and “C”
+the fourth quartile. The classification in the quartiles represents a change compared
+to the classification in the previous year (high, medium, low).
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+In the following section, we describe risks that could have a significant or material
+adverse impact on Infineon's Segment Result and/or its business objectives, reputation
+or compliance. We divide these risks into four main risk categories: “Strategic risks",
+"Operational risks”, “Financial risks" and "Legal and compliance risks". Within these
+main risk categories are risk sub-categories. The order in which the various risk
+sub-categories are presented reflects their materiality to Infineon. This means that
+the most material risk sub-category is mentioned at the beginning, and the risk
+sub-categories are mentioned thereafter in descending order of materiality. The
+materiality of each risk is determined on the basis of the total risk score for impact in
+years 1 and 2. The risk score of an individual risk for impact in years 1 and 2 is calcu-
+lated in each case by multiplying the likelihood of occurrence (on a scale of 1-5) by
+the degree of impact of the risk (on a scale of 1-5). Unless otherwise stated, the risks
+described within the risk sub-categories apply across the divisions.
+Consolidated Financial Statements
+In all material respects, on the basis of the ICS and ERM activities conducted in the
+2023 fiscal year, no factors came to our attention that would give rise to doubt as to
+the appropriateness and effectiveness of the ICS and ERM system.
+On the basis of the findings of reviews by Internal Audit and external reviews and
+audits, we make continual improvements to our ICS and ERM.
+> Discussion of new risk topics with the managers responsible and with the Risk
+Committee
+Both the general ICS and ERM and the ICS with respect to the financial reporting
+process are continuously being developed and expanded to ensure compliance with
+internal and external requirements. Improvements made to these systems contribute
+to the ongoing monitoring of the relevant risk areas, including the responsible
+organizational units.
+> Timeliness of regular risk inventory, risk reporting processes and testing of
+the controls
+Consolidated Financial Statements
+> Availability of clear Group-wide guidelines about the ICS and ERM processes
+> Appropriate organizational coverage of the ICS and ERM processes of Infineon
+Further information
+> Timeliness and regular monitoring of ICS and ERM mitigation activities
+In the semi-annual meetings of the Risk Committee, the Group-wide risk and
+opportunity situation is evaluated, and the results of the internal control process are
+discussed. In addition, an overall statement on the appropriateness and effectiveness
+of our general ICS and ERM is produced once a year. This overall statement is based
+on reviews conducted by Internal Audit, voluntary external reviews and audits, and
+self-assessments. The evaluation here was conducted inter alia on the basis of the
+following criteria:
+5 Q = 70 →
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Strategic risks
+Risks arising from cyclical market and sector trends (A)
+The worldwide semiconductor market is dependent on global economic growth and
+hence subject to fluctuations. Our target markets are therefore exposed to the risk of
+short-term market fluctuations. As a result, our forecasts of Infineon's future business
+performance are subject to uncertainties. The absence of hitherto projected market
+growth or an unforeseen decline in market growth (related, for example, to the expan-
+sion of renewables or electromobility) would make it considerably more difficult to
+attain our own growth target. We are countering this by entering into long-term sales
+contracts as well as service contracts that are not dependent on the cycle. We also
+address the fluctuations in economic conditions and customer demand that are typical
+of the semiconductor business by continuously monitoring vital early warning indi-
+cators and, as far as possible, by adopting specific mitigation strategies. Examples of
+these strategies include making systematic adjustments to capacity and inventories
+at an early stage, introducing cost-cutting measures and making flexible use of
+external production facilities for both frontend and backend manufacturing.
+Further information
+Risks arising from increased market competition and
+commoditization of products
+If we were unprepared for market fluctuations or the mitigation strategy we had
+adopted proved to be inappropriate, this could have a sustained adverse impact on
+Infineon's financial condition, liquidity and results of operations.
+General market risks
+Consolidated Financial Statements
+Risks that semiconductor companies operating in-house manufacturing facilities
+typically face is that of construction delays at new manufacturing sites and delays
+in the ramping up of production volumes at those sites, or delays in the transfer of
+technology. One good example is the Automotive division, where customers' product
+approval and testing processes can be conducted over an extended period of time,
+thus influencing our global manufacturing strategy as well as our short-term and
+medium-term capacity utilization. Failure to anticipate these changes in the manu-
+facturing process in good time may result in capacity shortages and hence lower
+revenue or lead to idle costs due to underutilized capacity and therefore have an
+adverse impact on earnings.
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+5 Q = < 72
+feasible to the extent envisaged. The dynamic markets and the increasing customer
+need for flexibility, combined with short-term adjustments to order quantities, could
+result in rising costs due to the underutilization of manufacturing capacities, higher
+inventory levels and unfulfilled commitments to suppliers.
+Thus, despite the fact that our manufacturing processes and sites have become even
+more flexible due to cross-location production optimization, fluctuations in capacity
+utilization levels or purchase commitments that have been entered into, coupled
+with idle costs at the manufacturing sites, nevertheless continue to pose a cost risk.
+In addition, frontend and backend manufacturing processes need to be optimally
+synchronized to enable Infineon to develop and manufacture competitive, high-quality
+products designed to provide new technological solutions. In view of the rapid pace
+of technological change and the dynamics of customer requirements, we consider
+this coordination needs to be increasingly sophisticated. Failure to make the required
+progress in this area could result in quality problems, delays in product development
+or market rollout, as well as higher research and development expenses, and hence
+adversely impact Infineon's liquidity and results of operations.
+Moreover, our dependence on energy supplies for our production, as well as on
+various components (such as wafers), raw materials (including gold and copper) and
+specialty gases, exposes us to substantial price and supply risks. Price risks are also
+attributable in part to the prevailing rate of inflation. In such a situation, if we are
+unable to offset cost increases or pass them on to our customers, it could have an
+adverse impact on our liquidity and results of operations.
+In particular, a restriction of or interruption in the supply of natural gas for manufac-
+turing sites in Europe could lead to significant disruptions to production. In the event
+of an interruption to the natural gas supply and associated production disruptions,
+we have secured in 2023 the supply of alternative energy sources for the operation of
+the combined heat and power plants at selected locations and implemented further
+energy-saving measures (such as heat recovery).
+In some cases, we have used derivatives to hedge price risks with respect to the
+amount of gold wire and electricity required for the 2024 fiscal year.
+Risks relating to the areas of cyber security, information security
+and IT security (C)
+The spread of new technological developments in a global market also results in
+greater replaceability of products. Due to the resulting price competition, we may be
+unable to achieve our long-term strategic goals of gaining and/or maintaining market
+share and of product pricing. Moreover, accelerating M&A (merger and acquisition)
+activities within the semiconductor industry or government subsidies restricted
+to specific regions could result in even tougher competition. Potential benefits for
+The reliability and security of Infineon's data, systems and networks are of crucial
+importance. At the same time, the world has seen a rise in threats in cyberspace. This
+increasingly applies to the use of IT systems to support business processes as well as
+supporting internal and external communications. Despite the array of precautionary
+measures put in place, any major disruption to these systems could result in risks
+relating to the confidentiality, availability and integrity of data used in research and
+development, manufacturing, selling or administration functions, which, in turn, could
+have an adverse impact on our reputation, production capability, competitiveness
+and operations.
+Combined Management Report
+competitors in this market include improved cost structures and more effective sales
+channels. There is also the risk that an increased volume of previously imported
+semiconductors will be manufactured in China and that a greater volume of those
+made in that country will be exported. Overall, this situation could have an adverse
+impact on Infineon's results of operations.
+Another risk is the limited global availability of renewable energy, which could jeop-
+ardize Infineon's declared goal of becoming carbon-neutral by 2030. Infineon has
+adopted a variety of measures to counter this risk (such as adopting its own efficiency
+Risks arising from an uncertain political and economic environment
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn – particularly in the markets we
+serve - may result in not achieving our forecasted revenue and contribution to earn-
+ings. Risks could also arise due to political and social changes, particularly when
+those changes occur in countries in which we manufacture and/or sell our products.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Furthermore, our medium-term and long-term forecasts are based on expected
+manufacturing cost trends for our products. In this context, measures aimed at
+optimizing manufacturing costs for raw materials and supplies, energy, labor and
+automation, as well as for bought-in services from external partners, may not be
+Our South-East Asian and European manufacturing sites are of great importance for
+our production. If, for example, political upheavals, natural disasters or pandemic
+outbreaks in one of these regions were to restrict or completely obstruct our ability to
+manufacture at these sites at the planned scale or to export products manufactured
+at the sites, this would have an adverse impact on our financial condition, liquidity
+and results of operations.
+Risks arising from manufacturing (B)
+To take account of the growing importance of Infineon's ecosystem partners (enter-
+prises with which Infineon shares a significant long-term economic interest and which
+represent added value for Infineon's products), we have implemented a partner risk
+evaluation system for Go2Market and IP/R&D partners (intellectual property/research
+and development). This partner risk assessment addresses Infineon's dependence
+on its ecosystem partners. As a result, the high-risk ecosystem partners throughout
+the Group are identified and continuously assessed. Additionally, corrective risk miti-
+gation measures are implemented to avoid an adverse impact on Infineon's financial
+condition, liquidity and results of operations and/or on its business objectives, repu-
+tation and compliance.
+In general, we seek to minimize procurement-related risks through our purchasing
+strategies and the use of appropriate product and cost analyses ("Best Cost Country
+Sourcing" and "Focus on Value"), as well as through geographical diversification.
+These programs include cross-functional teams of experts who are responsible for
+standardizing procurement processes for materials and technical equipment.
+measures, evaluating the construction of its own solar plants, and forming partnerships
+with local solar and wind farm operators).
+We cooperate with numerous suppliers who provide us with materials and services
+or manage parts of our supply chain for whom there are not always multiple alter-
+natives. We therefore partly depend on the delivery capability of our suppliers and the
+quality of their supplies. At the same time, we face price increases from our suppliers,
+and there is a risk that it will not be possible to pass on these increases in full to
+our customers. In addition, the current conflict over Taiwan may affect the supply
+situation for our Taiwanese partners. Any failure of one or more of these suppliers
+to meet their obligations to Infineon could have an adverse impact on Infineon's
+liquidity and results of operations.
+Purchasing and logistical risks (B)
+Operational risks
+Risks arising from acquisitions and cooperation arrangements (C)
+In order to develop or expand our existing business, it may be appropriate for us
+to make further acquisitions or enter into other forms of partnership with external
+companies. In the case of acquisitions, there is a risk that we may be unsuccessful,
+particularly regarding the integration of employees and products in existing business
+structures. These issues could adversely impact Infineon's financial condition and
+results of operations.
+In addition to the risks mentioned above, the government debt situation worldwide,
+which has changed very little in the 2023 fiscal year, continues to present a risk that,
+regardless of our assessment of scenarios and potential outcomes within this complex
+set of risks, may have an adverse impact on Infineon's financial condition, liquidity
+and results of operations.
+Macroeconomic risks
+5 Q = 71
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Furthermore, customs disputes, export controls and export bans for advanced tech-
+nology and/or critical basic materials, as well as trade restrictions such as those
+between the USA and China, may constrain global trade, thereby dampening global
+economic growth. This includes the risk of a decline in foreign demand from a Chinese
+perspective and hence a decline in China's gross domestic product. All of this may
+have a significant impact on Infineon's liquidity and results of operations.
+Geopolitical risks in the 2023 fiscal year continue to be seen as very high, especially
+as a result of the ongoing war in Ukraine, the conflict over Taiwan and the tensions
+in the Middle East, which has significantly reduced the predictability of economic
+development. The war in Ukraine is giving rise to risks and adverse impacts, such as
+price increases and scarcity of energy and raw materials. Any escalation of the con-
+flict beyond Ukraine would further increase the risk of a global economic downturn.
+Rising inflation and increases in interest rates may also lead to a significant decline in
+consumption.
+Corporate strategy risks (B)
+Management Board and Supervisory Board
+Infineon could be exposed to tax risks arising from prior assessment periods and
+changes in tax legislation or jurisdiction. Unforeseen tax expenses might occur relating
+to prior assessment periods that have not yet been the subject of a tax audit or are
+currently the subject of a tax audit in the various countries in which Infineon operates.
+The realization of any of these risks could result in fines and penalties and therefore
+have an adverse impact on the Group's financial condition, liquidity and results
+of operations.
+Consolidated Financial Statements
+-
+despite various state-insured deposit protection mechanisms – by a combination of
+risk avoidance analyses and risk-spreading measures. The failure of these measures
+could have a materially adverse impact on Infineon's financial condition and liquidity.
+Further information regarding the management of financial risks is provided in
+note 28 to the Consolidated Financial Statements. p. 150 ff.
+Other financial risks (C)
+In principle, there is a risk that a breach in the financial covenants of capital market
+instruments (such as the net debt ratio) might lead to a credit event (default) and
+potentially to a cross-default, resulting in possible changes to existing or outstanding
+debts. However, this risk is currently considered to be very low. Nonetheless, regular
+monitoring of our projected Segment Result and of our liquidity and debt enables
+us to identify any aggravation of this risk at an early stage and to apply appropriate
+countermeasures.
+Tax risks (C)
+Infineon adopts a number of strategies to mitigate these risks. These include,
+among others, regular employee training, a Tax Compliance Management System for
+selected sites, and internal audits to ensure adherence to important compliance
+regulations in all legal entities of the Group (Framework for Internal Controls in the
+Tax Process).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = 75 →
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Legal and compliance risks
+Regulatory risks (B)
+Compliance risks
+There is a risk that, due to inappropriate business conduct by employees, Infineon
+could violate antitrust regulations or laws combating bribery and corruption. Potential
+consequences might include heavy financial penalties, compensation claims, the
+cost of external support (such as lawyers' fees), damage to Infineon's reputation and
+exclusion from tendering for public contracts.
+We have therefore introduced a Group-wide Compliance Management System (CMS)
+to manage these compliance-related risks in a systematic, comprehensive and sus-
+tainable manner. We continue to refine the key elements of our CMS. One of the ways
+we are doing this is by providing specific employee training designed to prevent,
+detect and react to compliance-related incidents. The Corporate Compliance Officer
+reports on a regular basis to the Chief Financial Officer, the Management Board as
+a whole and the Investment, Finance and Audit Committee of the Supervisory Board.
+Export control risks
+As a result of the increasing complexity and frequent changes to export control
+regulation in all the countries in which Infineon operates, there is a risk of not com-
+plying fully with all applicable national and international export control laws and
+regulations, which might result in fines and penalties. This could have an impact on
+Infineon's results of operations or could influence the availability of export permits.
+The central Export Control department is responsible for the implementation of
+effective measures relating to export control legislation and foreign trade to avoid
+sanctions and fines being imposed on Infineon. To prevent divergence from the
+relevant regulations, Infineon has introduced organizational measures (such as
+appointing local managers responsible for export control) and implemented training
+measures for all the employees concerned. It is also using Group-wide approval
+routines in all relevant processes, conducting internal audits of export control and
+implementing other control measures.
+Data protection risks
+In principle, there is a risk that there could be a violation of laws and regulations
+relating to the processing and use of personal data, which could lead to data breaches,
+resulting in severe penalties and/or reputational damage. The Data Protection
+Management System (DPMS) established by Infineon to mitigate this risk sets out
+rules and standards for the Group-wide processing of personal data and monitors
+compliance with these rules and standards.
+-
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+The relatively high level of our holdings of liquid funds (gross cash position) exposes
+us to the potential risk of a default of one or more of the banking and financing
+partners with whom we do business. We mitigate this risk – which could still arise
+Specified currencies are hedged Group-wide by means of derivative financial instru-
+ments. These hedges are based on forecasts of future cash flows, the occurrence
+of which is uncertain. Under these circumstances and despite hedging measures,
+exchange rate fluctuations could adversely impact Infineon's results of operations.
+Further information
+5 Q = 73
+Potential cyber-attacks on data, systems and networks used in our manufacturing
+processes present risks that could result in production downtime and supply bottle-
+necks. In addition, cyber-attacks with industrial espionage intent and any related
+potential loss of intellectual property or patents pose risks that could jeopardize our
+investment in research and development and impair our long-term competitiveness.
+Infineon has had a global cyber security program in place for many years now to
+ensure that it is suitably protected and prepared for the constantly changing cyber
+security threat situation. A key element of this program is our Cyber & Information
+Security Management System (CISMS). This system, which takes a structured approach,
+aims to identify and evaluate risks to our data, information systems, networks, products,
+solutions and services, to constantly improve our protective measures, processes and
+tools and to adapt them to the threat situation. Our CISMS covers all areas of Infineon's
+business and is certified in accordance with international standards (including TISAX).
+The effectiveness of the CISMS is continuously monitored in the course of regular
+internal and external audits.
+Risks relating to the development process and product lifecycle (C)
+The ever-increasing complexity of technologies and products, shorter development
+cycles and dynamic customer demands can cause a great deal of tension in the
+field of product development. Buffer times built into processes to compensate for
+potential delays are reduced accordingly. If we are unable to execute our development
+plans, this could result in delays and increased development costs.
+This situation is exacerbated by the fact that some of our products are highly depen-
+dent on the degree of commercial success achieved by individual customers in their
+own markets. Furthermore, there is the risk of losing future business and design wins
+if we are unable to deliver volumes above our contractual obligations if called upon
+by customers to do so. These factors could have an adverse impact on Infineon's
+liquidity and results of operations.
+A structured project management system is in place to handle development projects,
+including those of a customer-specific nature. To help us identify potential project
+risks at an early stage and use specific measures to counter these risks, we require
+projects to have clear project milestones, ongoing verification procedures and clearly
+defined limits of approval authority.
+Product quality assurance is of crucial importance. Shortfalls in product quality can
+lead to product recalls at our customers and related potential costs for liability claims.
+In addition, quality risks could also damage Infineon's reputation and thus have a
+significant adverse impact on its future business, liquidity and results of operations.
+To avoid quality risks, we have adopted various quality management strategies such
+as "FMEA" (Failure Mode and Effects Analysis) and "Six Sigma” in order to prevent
+or solve problems and to continue to improve all our business processes. Our Group-
+wide quality management system has been certified for a number of years in accor-
+dance with ISO 9001 and ISO/TS 16949 and also encompasses the development
+processes of our suppliers.
+Our processes and initiatives to ensure continuous improvement are aimed, among
+other things, at identifying and eliminating the causes of quality-related problems
+at an early stage.
+Risks relating to the availability of qualified employees (C)
+One of the key factors in our success is qualified employees. There is a general risk
+of not being able to recruit enough people or people who are sufficiently qualified
+to work at Infineon, of losing existing qualified staff or failing to provide them with
+adequate training, and of not retaining people in the business. A lack of technical or
+management personnel could, among other things, restrict future growth and hence
+adversely impact Infineon's liquidity and results of operations.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+5 Q = < 74
+To counter these risks, Infineon has set up its own work group. The specific remit of
+this work group is employee recruitment, retention and training.
+Business continuity risks (C)
+An increasing number of events, such as extreme weather conditions (e.g., floods,
+drought, storms) and other damaging events (e.g., earthquake, fire, chemical accidents,
+power failures) could pose a threat at any time to our production facilities and office
+buildings in all the main operating segments and thus have an adverse impact on our
+business success.
+We counter these risks on an individual site basis with appropriate mitigation mea-
+sures, business interruption insurances and other business continuity structures,
+all of which are reviewed regularly by conducting stress tests to ensure their appro-
+priateness and effectiveness.
+Financial risks
+Currency risks (C)
+The international orientation of our business activities creates cash flows in a num-
+ber of currencies other than the euro, primarily in US dollars. A significant share of
+revenue, operating costs and capital expenditures is denominated in US dollars and
+correlated currencies. For the most part, Infineon generates a US dollar surplus from
+these transactions.
+Risk of default of banks and financing partners (C)
+Income after taxes/net profit
+Transfers to retained earnings
+Unappropriated profit
+Further information
+Risks arising from the Qimonda insolvency
+Research and development expenses
+(1,599)
+(1,394)
+(205)
+(15)
+Selling expenses
+23
+(550)
+(17)
+(3)
+General and administrative expenses
+(304)
+(300)
+(4)
+(533)
+(1)
+733
+3,971
+2022
+absolute
+in %
+Revenue
+9,865
+7,920
+3,238
+1,945
+Cost of goods sold
+(5,894)
+(4,682)
+(1,212)
+(26)
+Gross profit
+25
+2023
+132
+251
+774
++++
+(710)
+(228)
+(482)
+710
+646
+418
+70
+Earnings position
+Continuing high demand for semiconductor products (which had an impact on both
+volumes and prices) led to an increase in revenue for Infineon Technologies AG of
+25 percent to €9,865 million (2022: €7,920 million). Gross profit rose accordingly by
+23 percent to €3,971 million (2022: €3,238 million). Operating expenses (research
+and development expenses, selling, general and administrative expenses) increased
+in the 2023 fiscal year at a lower rate than revenue, by €226 million to €2,453 million
+(2022: €2,227 million), thus comprising 24.9 percent of revenue (2022: 28.1 percent).
+Other income (expense), net
+Result from investments, net
+Interest result
+Other financial result
+Income tax
+Other legal risks (C)
+292
+(119)
+1,420
+(109)
++++
+43
+67
+(24)
+(36)
+(14)
+(154)
+(201)
+93
+4
+(3)
+7
++++
+(263)
+187
+Change
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+The net profit of Infineon Technologies AG in the 2023 fiscal year was €1,420 million,
+following a net profit of €646 million in the previous fiscal year. After transferring a total
+of €710 million to retained earnings, unappropriated profit amounted to €710 million.
+Statement of income of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+Significant opportunities
+Opportunities arising from decarbonization, digitization and the strategic approach
+"Product to System" have already been included in the forecast report and are
+described here as additional overarching opportunities.
+The classification into “A”, “B” or “C” in brackets after the respective title of the
+opportunity is carried out in the same way as the classification for the risks.
+Opportunities arising from decarbonization and the acceleration
+of the energy transition
+With a constantly growing world population and increasing industrialization, global
+demand for energy is rising. Electric power is becoming the most important energy
+form of the 21st century, while renewables are playing a key role in curbing carbon
+emissions. The long-term objective is to achieve global decarbonization by the end
+of the century, as resolved at the Climate Change Conference held in Paris (France)
+in December 2015. As part of its Green Deal concept, the European Union intends to
+become carbon-neutral by 2050.
+To achieve this target, it will be necessary to develop renewable sources of energy
+at a faster rate than originally envisaged. This should lead to an increase in demand
+for our products, as Infineon's semiconductors enable electric power to be generated
+more efficiently from renewable energy sources. Indeed, they offer efficiency gains
+at all stages of the energy industry's conversion chain, whether in generation, trans-
+mission, storage or, above all, in the use of electric power. They form the basis for the
+intelligent and efficient use of electric power, for instance, in industrial applications,
+power supplies for computers, consumer electronics and vehicles.
+Infineon Annual Report 2023
+The overall risk assessment is based on a consolidated view of all significant
+individual risks. The risk situation as a whole remains essentially unchanged from
+the previous year. We are currently not aware of any individual risks capable of
+jeopardizing Infineon's going-concern status.
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Further information
+Opportunities arising from digitalization
+The trend towards digitalization offers substantial business potential for Infineon. This
+is reflected in the optimization of internal processes, such as for our interconnected
+manufacturing lines on a global scale, as well as in sales and administration. Further-
+more, our portfolio of sensors, microcontrollers, power semiconductors, security chips
+and security solutions, as well as specific software, puts us in an excellent position
+to successfully exploit growing market potential. The strategic approach "Product
+to System" we have already implemented makes us very well prepared to penetrate
+and develop the markets involved. Good examples already apparent today include
+automated driving, the smart home and the advancing development of the lot.
+Additional opportunities are arising from accelerated and/or broader market
+pene-
+tration by digital products. In this context, the issue of "security and data integrity"
+plays a very important role. We are able to address this issue by offering our customers
+appropriate security chips and security solutions.
+Opportunities arising from our strategic approach "Product to System"
+With the strategic approach "Product to System", we seek to identify additional
+benefits for our customers at a system level from within our broad portfolio of tech-
+nologies and products. This strategy enables us to exploit further revenue growth
+potential, reduce customers' development costs and shorten the lead times required
+to bring their products to market and thereby support our growth and margin targets.
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+The principal opportunities are described in the following section, divided into
+"Strategic opportunities”, “Operational opportunities” and “Financial opportunities",
+which are to be seen in addition to the future business prospects mentioned in the
+forecast report. However, these represent only a selection of the opportunities avail-
+able to Infineon. Our assessment of opportunities is also subject to continual change.
+This reflects the fact that our business, our markets and the technologies we deploy
+are constantly subject to new developments, bringing with them fresh opportunities
+and causing others to become less relevant or otherwise changing the significance
+of an opportunity from our perspective.
+on the risk situation
+Asian markets are particularly important to our long-term growth strategy. Our
+operations in China are influenced by a legal system that may be subject to change.
+One example is the fact that local regulations could make it mandatory to enter into
+partnerships with local companies. These circumstances could lead to Infineon's
+intellectual property no longer being sufficiently protected or to intellectual property
+developed by Infineon in China not being freely transferable to other countries and
+locations, thus impairing Infineon's financial condition and results of operations.
+The insolvency proceedings relating to Qimonda and the resulting actions of the
+insolvency administrator expose Infineon to potential risks, which are described in
+detail in note 24 to the Consolidated Financial Statements. ☐ p. 136 ff.
+€ in millions
+Provisions are recognized in connection with these matters as of 30 September 2023.
+The provisions reflect the amount of those liabilities that management believes are
+probable and can be estimated with reasonable accuracy as of that date. There can
+be no assurance that these provisions will be sufficient to cover all liabilities that may
+be incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Risks relating to intellectual property rights and patents
+As with many other companies in the semiconductor industry, allegations are made
+against us from time to time that we have infringed upon other parties' protected
+rights. Regardless of the prospects of success of such claims, substantial legal defense
+costs can arise.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Overall statement by Group management
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Further information
+5 Q = < 76 →
+We cannot rule out that patent infringement claims will be upheld in a court of law,
+thus resulting in significant claims for damages or restrictions on selling the products
+concerned. Any such outcome could, in turn, have an adverse impact on Infineon's
+financial condition, liquidity and results of operations.
+Further information regarding litigation and government inquiries is provided in
+note 24 to the Consolidated Financial Statements. p. 136 ff.
+Risks arising from our global operations
+Our global business strategy requires the maintenance of research and development
+locations and manufacturing sites throughout the world. The location of such facilities
+is determined by market entry hurdles and by technology and cost factors. Risks
+could therefore arise if economic and geopolitical crises were to impact our regional
+markets and if country-specific legislation and regulations were to influence invest-
+ment activities and the ability to trade freely. Differing practices in the way tax, judicial
+and administrative regulations are interpreted could also restrict business activities.
+In addition, we could also be exposed to the risk of fines, sanctions and reputational
+damage.
+Consolidated Financial Statements
+Strategic opportunities
+One of the ways in which we counter patent-related risks is by adopting a specific
+patent strategy. This includes patent searches in relation to development projects,
+the systematic registration of our own patents and patent cross-licensing arrange-
+ments with major competitors. However, no such opportunities exist to safeguard
+against risks of this nature in the case of companies specializing in the exploitation
+of patent rights.
+Growth opportunities relating to data centers and mobile applications
+The ongoing trends in the areas of artificial intelligence (AI) training and machine
+learning (ML) are reflected in the high level of demand for solutions that will ensure
+efficient and effective power management (high-voltage and low-voltage power
+transistors, driver ICs and control ICs) for data centers.
+Other opportunities arising from Infineon's liquidity situation (C)
+Our current liquidity position, which is described in detail in the chapter "Review of
+liquidity", p. 55 ff., provides us with the financial headroom for organic growth and
+growth by acquisition and enables us to make use of favorable refinancing conditions,
+if necessary.
+Consolidated Financial Statements
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Infineon Technologies AG
+Consolidated Financial Statements
+Just as there are risks arising from currencies, as described in the risk section above,
+there are also opportunities for Infineon in this area if exchange rates move in a way
+that is favorable to the Group. This may have a positive impact on Infineon's financial
+condition, liquidity and results of operations.
+Further information
+In addition to reporting on Infineon as a whole, in the following section we also
+provide information on the performance of Infineon Technologies AG.
+Infineon Technologies AG is the parent company of Infineon and performs the Group's
+management and corporate functions. It is responsible for key Group-wide functions
+such as Finance and Accounting, Treasury Management, Investor Relations, Corporate
+Compliance, Internal Audit, Business Continuity, Business Excellence, Information
+Technology, Strategy, Mergers and Acquisitions, Legal and Patents, Human Resources,
+strategic and production-oriented research and development activities and Corpo-
+rate and Marketing Communication worldwide. Furthermore, it manages supply
+chain processes throughout the Group. Infineon Technologies AG also has its own
+manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Unlike the Consolidated Financial Statements, which are prepared in accordance with
+International Financial Reporting Standards (IFRS), the Separate Financial Statements
+of Infineon Technologies AG are prepared in accordance with the provisions of the
+German Commercial Code (HGB). The complete Separate Financial Statements are
+published separately.
+Opportunities arising from cyclical market and sector trends (A)
+The net figure for other income/expenses improved, primarily as a result of currency
+fluctuations, especially with regard to the US dollar exchange rate. There was also an
+improvement in the interest result, due in particular to the positive performance of
+the plan assets for pensions and similar commitments. The improvement in earnings
+before tax of €928 million resulted in an increase in the income tax expense of
+€154 million.
+www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+Infineon Technologies AG
+Currency opportunities (B)
+5 α = 79
+Our in-house manufacturing capacities, together with those of our external partners,
+provide us with a degree of flexibility to meet demand. In particular, the further
+expansion of 300-millimeter production and the planned new investment in the
+fourth manufacturing module in Dresden (Germany), the second fully automated
+300-millimeter factory at the Villach site (Austria), the third manufacturing module
+in Kulim Phase 1 (Malaysia) currently under construction, and the new planned
+expansion of wide band gap capacity in Kulim Phase 2 (Malaysia) will strengthen
+our ability to meet the growing demand for power semiconductors. Furthermore,
+additional production capacity, including external capacity, can help to meet future
+customer demand.
+Opportunities arising from new technologies and materials
+We are convinced that current global carbon emissions targets cannot be achieved
+without further electrification. The need for increased efforts in this field is relevant
+not only for electromobility (i.e., hybrid, plug-in hybrid and all-electric vehicles)
+but also for power units in vehicles with combustion engines. Moreover, the trend
+towards automated and assisted driving offers great potential for our sensors and
+microcontrollers.
+Financial opportunities
+Opportunities arising from the growth of semiconductor content in vehicles
+We expect semiconductor content per vehicle to continue growing. The primary
+driving force behind this trend is the rising demand for electromobility, active safety
+and comfort features, and driver assistance systems.
+We are constantly striving to develop new technologies, products and solutions and
+to improve on existing ones, both separately and in collaboration with customers.
+We therefore continually invest in areas such as research and development into
+the use of new technologies and materials. Those in current use may well lose their
+predominance in the foreseeable future (such as Si, which is reaching its physical
+limits in some applications).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+We therefore see numerous opportunities for working with new materials, such as
+SiC and GaN, to develop more powerful and/or lower-cost products. These materials
+could well have a positive influence on our ability to attain our strategic growth and
+profitability targets.
+Consolidated Financial Statements
+Further information
+Opportunities relating to market access and activities in China
+China is one of the world's largest automotive markets, and its growth potential
+remains high. In particular, high rates of growth for electric-powered vehicles make
+China one of the largest markets for electromobility.
+The expansion of renewable energy sources in China has also become hugely important.
+Our presence in this market, alongside our collaboration with leading companies in
+the wind and solar power sectors, will create further opportunities for long-term growth.
+Operational opportunities
+Opportunities relating to our ability to meet supply requirements
+with available capacity (C)
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Bonds
+Infineon | Annual Report 2023
+Loans payable to banks
+Advance payments received
+Trade payables
+11
+Liabilities to affiliated companies
+Other liabilities
+Management Board and Supervisory Board
+In accordance with the German Stock Corporation Act (AktG), the amount of the divi-
+dend available for distribution to shareholders is based on the level of unappropriated
+profit recorded by the ultimate parent company, as determined in accordance with
+the provisions of the German Commercial Code (HGB).
+Consolidated Financial Statements
+Further information
+5 Q = 81
+Dividend
+The ultimate parent company Infineon Technologies AG, after making a transfer to
+other retained earnings, reported unappropriated profit of €710 million in its financial
+statements for the fiscal year ended 30 September 2023. With regard to the 2023
+fiscal year, a proposal will be made to pay a dividend of €456 million, or €0.35 per
+dividend-entitled share, out of the unappropriated profit of Infineon Technologies AG.
+The disbursement of the proposed dividend is subject to approval by the shareholders.
+The Company paid a dividend of €0.32 per share (€417 million in total) for the
+2022 fiscal year.
+For information regarding Infineon's long-term dividend policy, see the "Dividend"
+paragraph in the chapter "Infineon on the capital market”. □ p. 60
+Expected developments and associated
+significant risks and opportunities
+2,224
+Expected developments at Infineon Technologies AG and the associated significant
+risks and opportunities are essentially identical to those of the Group as a whole.
+As a general rule, Infineon Technologies AG participates in the risks of its subsidiaries
+and equity investments on the basis of the extent of its shareholding. As the parent
+company of the Group, Infineon Technologies AG is integrated into the Group-wide
+risk management and internal control systems. For more information on this topic,
+expected developments and associated significant risks and opportunities, see the
+chapter "Risk and opportunity report”. p. 65 ff.
+Combined Management Report
+Infineon Technologies AG
+20,766
+40
+Total liabilities and shareholders' equity
+Most transactions within the Group involving derivative financial instruments are
+handled by Infineon Technologies AG. The comments provided in "Principles and
+structure of Infineon's treasury” within the chapter "Review of liquidity”, □ p. 57,
+regarding the nature and scope of transactions with derivative financial instruments
+and hedged risks also apply to Infineon Technologies AG. Information on this subject
+is also provided in the Notes to the Separate Financial Statements of Infineon
+Technologies AG.
++++
+657
+464
+193
+42
+5,060
+3,627
+1,433
+Liabilities
+22,990
+958
+10,608
+62
+7
+9,620
+988
+10
+Deferred income
+1
+2
+(1)
+(50)
+896
+www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+The power of the Management Board to issue shares derives from section 4 of the
+Articles of Association of the Company, in conjunction with applicable legal provisions.
+Further information relating to the Company's existing Authorized and Conditional
+Capital can be found in note 20 to the Consolidated Financial Statements, p. 129 ff..
+Management Board and Supervisory Board
+Section 5, paragraph 1 of the Articles of Association stipulates that the Management
+Board of Infineon Technologies AG is required to consist of at least two members.
+With effect from 15 April 2021, the Management Board comprises five members
+(previously four members). Management Board members are appointed and dis-
+missed by the Supervisory Board pursuant to section 84, paragraph 1 AktG. As
+Infineon Technologies AG falls within the scope of the German Co-Determination Act
+(Mitbestimmungsgesetz – “MitbestG"), the appointment or dismissal of Management
+Board members requires a two-thirds majority of the votes of the Supervisory Board
+members (section 31, paragraph 2 MitbestG). If the required majority is not achieved
+at the first ballot, the appointment may be approved on the recommendation of
+the Mediation Committee at a second ballot by a simple majority of the votes of the
+Supervisory Board members (section 31, paragraph 3 MitbestG). If the required
+majority is still not achieved, a third ballot is held in which the chairman of the Super-
+visory Board has two votes (section 31, paragraph 4 MitbestG).
+In urgent cases, if the Management Board does not have the required number of
+members, the local court ("Amtsgericht” of Munich) makes the necessary appointment
+upon the petition of a party concerned pursuant to section 85, paragraph 1 AktG.
+Pursuant to section 84, paragraph 1, sentence 1 AktG, the maximum term of appoint-
+ment for Management Board members is five years. Re-appointment or an extension
+of the term of office, in each case for a maximum of five years, is permitted (section 84,
+paragraph 1, sentence 2 AktG). Section 5, paragraph 1 of the Articles of Association
+and section 84, paragraph 2 AktG stipulate that the Supervisory Board may appoint
+a chairman and a deputy chairman to the Management Board. The Supervisory Board
+may revoke the appointment of a Management Board member and the chairman of
+the Management Board for good cause (section 84, paragraph 4 AktG).
+Pursuant to section 179, paragraph 1 AktG, responsibility for amending the Articles of
+Association rests with the Annual General Meeting. However, section 10, paragraph 4
+of the Articles of Association gives the Supervisory Board the authority to amend the
+Articles of Association insofar as any such amendment relates merely to the wording,
+such as changes in the share capital amount resulting from a capital increase out of
+conditional or authorized capital or a capital decrease by means of cancellation of own
+shares. Unless the Articles of Association provide for another majority, section 179,
+paragraph 2 AktG stipulates that resolutions of the Annual General Meeting regarding
+the amendment of the Articles of Association require a majority of at least three-
+quarters of the share capital represented. Section 17, paragraph 1 of the Articles of
+Association of Infineon Technologies AG provides in principle for resolutions to be
+passed with a simple majority of the votes cast and, when a capital majority is required,
+with a simple majority of the capital, unless a higher majority is required by law or
+in accordance with other stipulations contained in the Articles of Association.
+Powers of the Management Board, particularly with respect to
+issuing or buying back of shares
+52
+Infineon | Annual Report 2023
+Consolidated Financial Statements
+Further information
+5 Q = < 84
+Statutory regulations and Articles of Association provisions governing
+the appointment and dismissal of members of the Management Board
+and amendments to the Articles of Association
+Management Board and Supervisory Board
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Authorization to issue convertible bonds and/or bonds with warrants
+The Annual General Meeting held on 20 February 2020 authorized the Management
+Board, in the period through 19 February 2025, either once or in partial amounts, to
+issue convertible bonds and/or bonds with warrants (referred to collectively as "bonds")
+of an aggregate nominal amount of up to €4,000,000,000, to guarantee such bonds
+issued by subordinated Group companies of the Company and to grant bond creditors
+and/or bondholders conversion or option rights to up to 130,000,000 no par value
+registered Company shares, representing a notional portion of the share capital of up
+to €260,000,000 in accordance with the relevant terms of the bonds. With the approval
+of the Supervisory Board, the Management Board is authorized to exclude the right
+of shareholders to subscribe to the bonds
+> if the issue price is not substantially lower than the bonds' theoretical market
+value as determined in accordance with accepted valuation methods, particularly
+those based on financial mathematics. However, this right of exclusion only
+applies insofar as the aggregate value of the shares to be issued to service the con-
+version or option rights established on this basis does not exceed 10 percent of the
+share capital, neither at the time the resolution concerning this authorization was
+passed by the Annual General Meeting, at the time of this authorization becoming
+effective, nor at the time it is exercised;
+> in order to exclude fractional amounts resulting from a given subscription ratio
+from the subscription rights of the shareholders to the bonds or insofar as any such
+action is necessary in order to grant holders of conversion or option rights arising
+from bonds that have already been or will in future be issued by the Company
+or its subordinated Group companies subscription rights to that extent to which
+they would be entitled after exercising their rights, or after the fulfillment of any
+conversion or option obligations; or
+> insofar as bonds are issued in return for a capital contribution in kind, provided
+that the value of any such capital contribution in kind is appropriate in relation to
+the market value of the bonds.
+Even if the dilution protection regulations are applied, the conversion or option
+price must equal at least 80 percent of the arithmetic mean of the closing prices
+of the Company's share in Xetra trading on the Frankfurt Stock Exchange (or a com-
+parable successor system). Further details – including the conditions under which the
+conversion or option price may be reduced - are set out in the authorization.
+Subject to the requirements resolved by the shareholders at the Annual General
+Meeting, the Management Board is authorized to determine the further details of the
+bond issue, including its terms and conditions.
+Authorization to acquire own shares
+A resolution passed by the Annual General Meeting on 16 February 2023 authorized
+Infineon Technologies AG, in the period through 15 February 2028, to acquire its own
+shares, within the statutory boundaries, in an aggregate amount not exceeding
+10 percent of the share capital at the time the resolution was passed or - if the latter
+amount is lower - of the share capital in existence at the time the authorization is
+exercised. The Company may not use the authorization for the purpose of trading in
+its own shares. The Management Board decides whether own shares are acquired
+through the stock exchange, by means of a public offer to purchase addressed to
+all shareholders, a public invitation to submit offers for sale, or via a bank or other
+entity that meets the requirements of section 186, paragraph 5, sentence 1 AktG.
+The authorization includes differentiating requirements – in particular with regard to
+the permissible purchase price – for each method of acquisition.
+Combined Management Report
+Infineon | Annual Report 2023
+Nature of control over voting rights when employees participate in
+the Company's capital and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise
+their control rights directly in accordance with the applicable laws and the Articles
+of Association, just like other shareholders.
+Corporate Governance
+Consolidated Financial Statements
+Further information
+5 Q = 4 82
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Corporate Governance
+Information pursuant to
+section 289a, paragraph 1 and
+section 315a, paragraph 1 of the
+German Commercial Code (HGB)
+Structure of the subscribed capital
+The share capital of Infineon Technologies AG stood at €2,611,842,274 as of
+30 September 2023. This sum is divided into 1,305,921,137 no par value registered
+shares, each of which represents a notional portion of the share capital of €2
+per share. Each share carries one vote and gives an equal right to the profit of the
+Company based on the profit appropriation resolved by the shareholders at the
+Annual General Meeting.
+Information pursuant to the German Commercial Code (HGB)
+The Company held 2,171,026 of the abovementioned issued shares as own shares
+as of 30 September 2023 (30 September 2022: 3,689,901). Own shares held by the
+Company on the date of the Annual General Meeting do not carry a vote and are not
+entitled to participate in profit.
+Pursuant to section 67, paragraph 2 AktG, rights and obligations arising from shares
+in relation to Infineon Technologies AG exist only for and from the parties entered
+in the share register. In order to be recorded in the share register, shareholders are
+required to submit to Infineon Technologies AG the number of shares held by them
+and their name or company name, their postal and electronic address and, where
+applicable, their registered office and their date of birth. Pursuant to section 67,
+paragraph 4 AktG, Infineon Technologies AG is entitled to request information from
+the party listed in the share register regarding the extent to which the shares relating
+to the entry in the share register are actually owned by the registered party and, if
+not, to receive the information necessary for the maintenance of the share register
+in relation to the party for whom the shares are held. Section 67, paragraph 2 AktG
+stipulates that the shares concerned do not confer voting rights until such time as the
+information requested has been supplied in the appropriate manner.
+Direct or indirect shareholdings exceeding 10 percent
+of the voting rights
+Section 33, paragraph 1 WpHG requires each shareholder whose voting rights reach,
+exceed or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the
+voting rights of a listed corporation to notify such corporation and the German Federal
+Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht -
+“BaFin”) immediately. As of 30 September 2023, we have not been notified of any
+direct or indirect shareholdings reaching or exceeding 10 percent of the voting rights.
+The shareholdings notified to us as of 30 September 2023 are presented in the Notes
+to the Separate Financial Statements of Infineon Technologies AG under the infor-
+mation pursuant to section 160, paragraph 1, number 8 AktG.
+Shares with special rights that confer control rights
+No shares conferring special control rights have been issued.
+Infineon | Annual Report 2023
+Consolidated Financial Statements
+Further information
+5 Q = 83
+Management Board and Supervisory Board
+Combined Management Report
+Restrictions on voting rights or the transfer of shares
+Restrictions on the voting rights of shares may, in particular, arise as a result of the
+regulations set out in the German Stock Corporation Act (Aktiengesetz – “AktG”). For
+example, pursuant to section 136 AktG, shareholders are prohibited from voting under
+certain circumstances and, pursuant to section 71b AktG, Infineon Technologies AG
+has no voting rights on its own shares. Furthermore, non-compliance with the notifi-
+cation requirements pursuant to section 33, paragraphs 1 or 2 of the German Securi-
+ties Trading Act (Wertpapierhandelsgesetz - "WpHG") and section 38, paragraph 1, or
+section 39, paragraph 1 WpHG can, pursuant to section 44 WpHG, have the effect that
+certain rights (including the right to vote) may, at least temporarily, not exist. We are
+not aware of any contractual restrictions on voting rights or on the transfer of shares.
+52
+3,545
+1
+13,663
+12,682
+981
+8
+14,343
+13,302
+1,041
+8
+2,215
+1,601
+10
+614
+Receivables and other assets
+2,950
+2,323
+627
+27
+Cash and cash equivalents, marketable securities
+Current assets
+Prepaid expenses
+3,347
+3,402
+(55)
+(2)
+38
+8,512
+60
+680
+Management Board and Supervisory Board
+Combined Management Report
+Infineon Technologies AG
+Consolidated Financial Statements
+Further information
+Net assets and financial position
+Total assets increased by 11 percent, from €20,766 million as of 30 September 2022 to
+€22,990 million as of 30 September 2023. Non-current assets rose by €1,041 million,
+mainly due to an increase in loans to affiliated companies. Current assets increased
+by €1,186 million as a result of the higher volume of business. Receivables and other
+assets rose by €627 million and inventories by €614 million. Offsetting these increases
+was the decrease in cash and cash equivalents and marketable securities of €55 million
+to €3,347 million (30 September 2022: €3,402 million). Cash and cash equivalents
+and marketable securities accounted for 39 percent of current assets.
+The increase in equity of €1,048 million was mainly due to the net profit for the
+2023 fiscal year of €1,420 million, offset by the dividend paid out for the 2022 fiscal year
+of €417 million.
+Provisions for pensions and similar commitments decreased by a total of €14 million,
+due to an increase in the value of the plan assets that exceeded the increase in
+the settlement amount. Other provisions rose by €203 million, mainly due to the
+increase of €128 million in tax provisions. Liabilities increased in the 2023 fiscal year
+by €988 million to €10,608 million, mainly due to the development of liabilities
+to affiliated companies as a result of the higher volume of business.
+The equity ratio at 30 September 2023 was 47.2 percent, the same figure as of the
+end of the previous year.
+For information on Infineon's own shares, please see the comments relating to
+section 160, paragraph 1, no. 2 of the German Stock Corporation Act (AktG) provided
+in the Separate Financial Statements of Infineon Technologies AG.
+www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+620
+Statement of financial position of Infineon Technologies AG
+in accordance with the German Commercial Code (condensed)
+Non-current assets
+Inventories
+Share capital
+Change
+30 Septem-
+ber 2023
+30 Septem-
+ber 2022
+absolute
+in %
+Intangible assets, property, plant and equipment
+Financial assets
+€ in millions
+7,326
+1,186
+16
+70
+10,857
+9,809
+1,048
+11
+Provisions for pensions and similar commitments
+Other provisions
+Provisions
+386
+400
+(14)
+(4)
+292
+1,138
+203
+22
+1,524
+1,335
+189
+14
+3,881
+4,632
+(751)
+(16)
+935
+418
+710
+22
+135
+137
+(2)
+(1)
+Active difference resulting from offsetting
+Total assets
+1
+(1)
+22,990
+20,766
+2,224
+11
+2,608
+2,605
+3
+0
+Capital reserves
+Retained earnings
+Unappropriated profit
+Shareholders' equity
+3,581
+Infineon | Annual Report 2023
+36
+1
+3,958
+3,241
+717
+(1)
+Consolidated Financial Statements
+Further information
+5 Q = 4 85
+5
+Share of profit (loss) of associates and joint ventures accounted for using the equity method
+5
+27
+39
+(12)
+(31)
+Profit (loss) from continuing operations before income taxes
+Income taxes
+Profit (loss) from continuing operations
+9
+Profit (loss) from discontinued operations, net of income taxes
+Attributable to:
+3,921
+2,723
+1,198
+44
+6
+(782)
+(537)
+(245)
+(46)
+Profit (loss) for the period
+3,139
+(168)
+4
+4
+(1,599)
+(1,565)
+(34)
+(2)
+192
+129
+63
+49
+(73)
+(159)
+(52)
+(40)
+3,948
+2,845
+1,103
+39
+4
+105
+7
+98
++++
+(21)
+(10)
+2,186
+44
+2.38
+1.65
+0.73
+44
+Diluted earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:¹
+Diluted earnings per share (in euro) from continuing operations
+8
+2.38
+1.65
+0.73
+8
+44
+8
+-
+Diluted earnings per share (in euro)
+8
+2.38
+1.65
+0.73
+44
+1 The calculation of earnings per share is based on unrounded figures.
+Infineon | Annual Report 2023
+Diluted earnings (loss) per share (in euro) from discontinued operations
+953
+Basic earnings per share (in euro)
+(0.01)
+7
+(2)
+(7)
+5
+71
+3,137
+2,179
+958
+44
+Shareholders and hybrid capital investors of Infineon Technologies AG
+(0.01)
+3,137
+958
+44
+Basic earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:¹
+Basic earnings per share (in euro) from continuing operations
+8
+2.39
+1.66
+0.73
+44
+Basic earnings (loss) per share (in euro) from discontinued operations
+8
+2,179
+Further information
+(187)
+(1,985)
+The Remuneration Report is publicly available.
+www.infineon.com/remuneration-report
+The references to the Remuneration Report are not audited as part of the audit of
+the financial statements. The Remuneration Report was subjected to a separate
+substantive audit by the auditor in accordance with IDW PS 490. This audit also
+includes the formal audit required by section 162, paragraph 3 of the German Stock
+Corporation Act (AktG).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+List of references
+Consolidated Financial Statements
+5 Q = < 87 →
+List of references
+R01
+R02
+Remuneration Report
+International Monetary Fund (IMF):
+World Semiconductor Trade Statistics (WSTS):
+Semiconductor Industry Blue Book History. October 2023.
+Neubiberg, 21 November 2023
+Management Board
+R03
+Based on or includes research from Omdia:
+Jochen Hanebeck
+Elke Reichart
+Dr. Sven Schneider
+Application Market Forecast Tool - 3Q23. September 2023.
+World Economic Outlook. October 2023.
+R04
+The Statement on Corporate Governance pursuant to sections 289f and 315d of the
+German Commercial Code (HGB) is publicly available.
+www.infineon.com/declaration-on-corporate-governance
+The conditions of both the Performance Share Plan and the Restricted Stock Unit Plan,
+in which Infineon managers and other selected employees worldwide participate,
+contain rules that are triggered in the event of a defined change of control. For the
+most part, these rules specify that the vesting periods that are envisaged by the
+relevant plans are aborted in the event of a change of control. Although Management
+Board members also participate in the Performance Share Plan, the rules therein
+relating to a change of control do not apply to Management Board members, given
+that their service contracts take precedence.
+Management Board and Supervisory Board
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+-
+Infineon shares acquired or being acquired on the basis of this or an earlier authoriza-
+tion may - if not sold either via the stock exchange or by means of a public offer to
+purchase addressed to all shareholders – be used for all legally permissible purposes.
+The shares may also be canceled or offered to third parties in conjunction with busi-
+ness combinations or the acquisition of companies, parts of companies or participa-
+tions in companies, as well as being offered and transferred to other depositable
+assets related to such an acquisition project. Under specified circumstances, subject
+to the approval of the Supervisory Board, the shares may also be sold to third parties
+in return for cash payment (including by means other than through the stock
+exchange or through an offer to all shareholders); used to meet the Company's obli-
+gations under convertible bonds and bonds with warrants; offered for sale or granted
+as a remuneration component to members of the Company's Management Board,
+members of the management boards and other boards of affiliated companies, and
+employees of the Company or of its affiliated companies; and, finally, used to repay
+securities-backed loans. The subscription right of shareholders is excluded in the
+cases mentioned above. In addition, the subscription rights of shareholders are
+excluded in respect of fractional amounts in instances in which the shares are sold
+through a public offer addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on 16 February 2023,
+shares in Infineon Technologies AG may also be acquired using equity derivatives.
+The total number of shares that can be acquired using derivatives may not exceed
+5 percent of the Company's share capital, either at the time of this authorization
+becoming effective or at the time of its exercise through the use of the derivatives.
+The shares acquired through the exercise of this authorization are to be counted
+toward the acquisition threshold for the shares acquired in accordance with the
+authorization to acquire own shares as described above. The authorization stipulates
+other restrictions when derivatives are deployed, including with regard to their
+execution, term, servicing and price.
+If own shares are acquired using derivatives in accordance with the requirements
+stipulated in the authorization, any right of the shareholders to conclude such deriva-
+tive transactions with the Company will be excluded in the analogous application
+of section 186, paragraph 3, sentence 4 AktG. Shareholders have no right to conclude
+derivative transactions with the Company.
+Shareholders have a right to sell their Infineon shares in this connection only insofar
+as the Company is required to accept the shares under the derivative transactions.
+No other right to sell shares shall apply in this connection.
+The use of own shares acquired through derivatives is governed by the same rules
+as those applicable for the direct acquisition of own shares.
+Statement on Corporate Governance
+pursuant to sections 289f and 315d
+of the German Commercial Code (HGB)
+Significant agreements of the Company that are subject to the
+condition of a change of control as a result of a takeover bid and
+remuneration agreements with Management Board members
+or employees in the event of a takeover bid
+Furthermore, certain patent cross-licensing agreements, development agreements,
+subsidy agreements and approvals, supply contracts, joint venture agreements and
+license agreements contain customary change-of-control clauses, which, in the event
+of a change of control at Infineon Technologies AG, make the continuation of the
+agreement dependent on the consent of the contracting party, grant special rights
+to the contracting party that may be unfavorable for Infineon, or even entitle the
+contracting party to terminate the agreement.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Corporate Governance
+Consolidated Financial Statements
+Further information
+Information pursuant to the German Commercial Code (HGB) |
+Statement on Corporate Governance of the German Commercial Code (HGB) | Remuneration Report
+If a Management Board member leaves their position in connection with a defined
+change of control, that member is entitled to continued payment of the relevant
+annual remuneration for the remaining contract term up to a maximum period of
+24 months. Further details are contained in the Remuneration Report (see the chapter
+"Remuneration Report").
+The change-of-control clauses agreed to by Management Board members are
+intended to provide financial security to those members in the event of a change of
+control, with a view to preserving their independence in this situation.
+Various financing agreements with lending banks and capital market creditors
+contain defined change-of-control clauses that give creditors the right to demand
+early repayment; these clauses reflect standard market practice.
+(1,798)
+Based on or includes research from Omdia:
+Andreas Urschitz
+Financial income
+Financial expenses
+Notes
+2023
+2022
+absolute
+in %
+4,29
+16,309
+14,218
+Operating profit
+2,091
+4
+(8,896)
+(8,087)
+(809)
+(10)
+7,413
+6,131
+1,282
+21
+4
+15
+Competitive Landscaping Tool CLT Quarterly - 2Q23. August 2023.
+Other operating expenses
+Selling, general and administrative expenses
+Dr. Rutger Wijburg
+Infineon | Annual Report 2023
+Consolidated Financial Statements
+89 Consolidated Statement of Profit or Loss
+90 Consolidated Statement of Comprehensive Income
+91 Consolidated Statement of Financial Position
+92 Consolidated Statement of Cash Flows
+22-235
+93
+Consolidated Statement of Changes in Equity
+95 Notes to the Consolidated Financial Statements
+Infineon | Annual Report 2023
+Other operating income
+5988 →
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Consolidated Statement of Profit or Loss
+Change
+€ in millions
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+Management Board and Supervisory Board
+5 Q = 4 89 >