> Driver ICs
12.9%
Employees Infineon as of September 30
Return on Capital Employed (ROCE) 11
Debt-to-total-capital ratio 10
Debt-to-equity ratio⁹
Inventory intensity³
(12)
8.3%
7.3%
Return on assets?
5
12.9%
13.6%
√6
Return on equity
(17)
64.6%
53.4%
Equity ratio
25
0.48
11.0%
17
38.4%
4.5%
Infineon at a glance
11 Return on Capital Employed (ROCE): for definition [G] see glossary, page 288.
10 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
9 Debt-to-equity ratio = long-term and short-term debt divided by total equity.
8 Inventory intensity = inventories (net) divided by total assets.
7 Return on assets = net income divided by total assets.
6 Return on equity = net income divided by total equity.
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.
4 Net cash position: for definition [G] see glossary, page 288.
3 Gross cash position: for definition G see glossary, page 288.
0.60
2 Free cash flow: for definition G see glossary, page 287.
19
29,807
35,424
(37)
20.3%
12.8%
607
2.9%
20.5%
753
1 Columns may not add due to rounding.
Far-reaching global changes lie ahead of us in the coming decades:
Adjusted earnings per share in € - diluted
0.18
861
(179)
1,363
(853)
(272)
(2,593)
(3)
988
957
Gross cash position³
Capital expenditure
Depreciation and amortization
Net cash used in financing activities from continuing operations
Free cash flow²
Net cash used in investing activities from continuing operations
Net cash provided by operating activities from continuing operations
12
4,158
4,665
Total equity
36
6,438
(1,654)
317
(622)
760
0.20
Dividend per share in €5
17
0.48
0.56
Diluted earnings per share in €
17
0.48
0.56
Basic earnings per share in €
11
(90)
220
Net cash position 4
(17)
2,418
2,013
18
668
785
48
514
2,232
> The demographic trend
> The associated demand for resources and
> Technological changes due to connectivity and digitalization
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.
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.
ABOUT THIS REPORT
5
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
As a participant of the UN Global Compact Initiative, Infineon made a voluntary commitment to
abide by the 10 principles included in it. Principles 1 and 2 deal with the topic of human rights.
Responsible manufacturing: Respect for human rights is essential for Infineon as a sustainable
company. Our Business Conduct Guidelines reflect our commitment to respect all valid inter-
national human rights.
Effective risk and opportunity management is central to all of our business activities and plays
an important role in implementing the strategic targets described in the section "Group strategy"
in the chapter "Finances and strategy" - namely achieving sustainable, profitable growth
and preserving our financial resources through the efficient employment of capital. Various
coordinated risk management and control system elements are in place and enable us to
pursue our stated risk strategy in practice, including "Risk and Opportunity Management", the
"Internal Control System with respect to Financial Reporting Processes", the underlying
forecasting, management and internal reporting processes, and the Compliance Management
System. Further information on this material topic is provided in the chapters "Risk and
opportunity report" and "Finances and strategy".
Long-term viability of core business: The global megatrends - energy efficiency, mobility and
security - continue to offer Infineon enormous growth potential. The competitive race will be
won by embracing innovation and achieving the right combination of costs and benefits.
This insight opens up a wealth of opportunities to a global player with our innovative strength
and technological expertise to exploit its areas of differentiation in the market. Our ability to
make the most of these opportunities will enable us to achieve both sustainable and profit-
able long-term growth.
P see page 27 ff.
Psee page 149 ff.
P see page 32 ff.
Product use
Infineon internal
Supply chain
Labor relations
Business ethics
Product sustainable value
Presence in local markets
Diversity and equal opportunity
Responsible manufacturing
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.
Further information on this material topic is provided in the section "The Infineon carbon
footprint" in the chapter "Sustainability at Infineon" and in the chapter "The segments"
Our products also provide solutions for societal challenges: All "things" capable of transferring
data and functioning via the internet are covered by the catchword "Internet of Things”. They
include machines, robots, vehicles, containers and medical equipment. Not only people but
also a wide range of devices communicate with one another via the Internet of Things. These
developments are opening up a whole new world of services that will ultimately change
people's everyday lives. Secure storage and transfer of data are therefore becoming essential
for many w of these billions of interconnected "things".
Power semiconductors are often not only crucial for the essential functioning of our customers'
products and systems, they also have a key impact on efficiency, size, weight and costs. The
most important energy-saving factor is the ability to boost energy efficiency and thereby mini-
mize consumption. The several hundred million industrial motors and billions of household
appliances in use mean enormous saving potential.
Semiconductors play a decisive role in reducing energy consumption and have achieved the
highest energy efficiency rates to date.
As described in our Infineon IMPRES policy, potential environmental impacts are examined
at the earliest possible stage and taken into account when developing both products and
processes. This principle applies to all aspects of what we do, whether procurement, develop-
ment, manufacturing, or the products' sale. All our activities are based on the compliance
with applicable legislation and regulations. For more information see "Product sustainable
value" in the chapter "Sustainability at Infineon".
Product sustainable value: We help to make life easier, safer and more environment-friendly -
with technologies that do more, consume less and are available to everyone. Microelectronics
made by Infineon are the key to attaining better living standards. Our inventiveness and
commitment enable us to create added value for customers, staff and investors alike. We
understand how technical systems can be made increasingly efficient through the use of
semiconductors, with the aim of providing sustainable solutions for today's world and that
of the future, thereby contributing to the ultimate success of our customers.
Further information is provided in the chapter "The segments” as well as in the section
"Group strategy" in the chapter "Finances and strategy" and in the section "Corporate
Citizenship" in the chapter "Sustainability at Infineon".
"Local social needs" is one of our four Corporate Citizenship focus areas and relates to the
voluntary social commitment of our local entities towards the communities in which we
operate. The focus areas as well as the engagement possibilities are set out in our Corporate
Citizenship Guidelines.
P see page 52 ff.
P see page 103 f.
Long-term viability of core business
G see glossary, page 292
P see page 103 f.
see pages 52 ff., 32 ff. and 106 f.
P
GRI G4-19, G4-20, G4-21
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
ABOUT THIS REPORT
6
P see page 110 f.
P see page 97 ff.
P see page 105 ff.
GRI G4-19, G4-20, G4-21
G see glossary, page 294
Material aspects along the value chain
The table below shows the areas of the value-added chain where Infineon actually sees
key fields of activity in accordance with the guidelines on sustainability reporting set out
in the GRI 4:
The results of these discussions and consequently the material topics were presented to
and confirmed by the Management Board. These topics are described in this report.
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").
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.
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.
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.
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.
GRI G4-18, G4-23
P see page 108 ff.
P see page 92 ff.
Combined Reporting
GRI G4-18, G4-23
The Combined Management Report has been prepared in accordance with sections 315 and 315a
of the German Commercial Code ("HGB") and in accordance with German Accounting Standard
("DRS") 20. Disclosures with respect to the compensation of members of the Management
Board are provided in accordance with DRS 17, which sets out the requirements for reporting
on the remuneration of members of governing bodies and, in addition, based on the model
tables recommended by the German Corporate Governance Code.
About this report
2
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Read more about this sensor in the chapter "Research and
Development" (P see page 73).
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.
These kinds of dual magnetic field sensors are used in power
steering, for example. They measure the angle of rotation of
the steering axle and the steering torque, or, in other words,
what the driver wishes to do. Each of the sensor chips has
an approximate size of 2 by 3 millimeters.
The title page shows a magnetic field sensor with two sensor
chips in a cross section: One chip is above the substrate and
one chip is located below. The picture on the left shows the
sensor chips assembled on the leadframe as part of an array
of hundreds of copies. Of the bottom sensor chip only its
bounding wires are visible.
Systematic integration
We are fully committed to live up to this high aspiration. The
acquisition of International Rectifier has been an important
step in the right direction.
Infineon's microelectronic technologies are the key to a future.
worth living - with products that help improve the quality of life
and preserve natural resources.
These changes represent major challenges to society,
but also offer exceptional opportunities to promote growth
and achieve success.
About this report
8,741
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.
3
In a fourth step, these relevant topics and any potentially related risks or opportunities which
could impact the long-term performance of the organization were discussed with our in-house
sustainability experts.
GRI G4-19, G4-20, G4-21
P see GRI G4 Content Index,
page 297 ff.
GRI G4-25, G4-26, G4-27
ABOUT THIS REPORT
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
4
P see page 92 ff.
@www.infineon.com/csr_reporting
P see page 94 f.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
ABOUT THIS REPORT
P see GRI G4 Content Index,
page 297 ff.
Relevant topics were then pre-selected, based on our own corporate strategy and stakeholder
expectations.
In a second step, consideration was given to general as well as sector- and company-specific
sustainability standards appropriate for determining the principal factors relevant for
assessing Infineon's sustainability performance.
Firstly, we identified Infineon's most important stakeholders, taking into account the factors
"Responsibility", “Influence”, “Proximity", "Dependency”, and “Representation" in the
"Stakeholder Engagement Manual" drawn up by the organization "AccountAbility" (see the
chapter "Sustainability at Infineon").
Infineon engages in continuous dialog with its stakeholders. In our materiality analysis, we
evaluate the expectations and requirements of our internal and external stakeholders with
regard to sustainability in various topics in accordance with the guidelines on sustainability
reporting set out in the Global Reporting Initiative GRI 4.
Determining the content of the report
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.
In addition to the statutory audit of the Combined Management Report, KPMG AG Wirtschafts-
prüfungsgesellschaft, Munich, has provided independent assurance ("limited assurance")
on the sustainability performance information in the chapter "Sustainability at Infineon" in
accordance with the "International Standard for Assurance Engagements 3000" and the
"International Standard on Assurance Engagements 3410", which constitute the pertinent
standards for assuring sustainability information.
The information contained in the Annual Report 2015 also serves as "Communication on
Progress" for the United Nations Global Compact Initiative (see the section "Business Ethics"
in the chapter "Sustainability at Infineon").
The non-financial performance figures contained in this combined report have been prepared
on the basis of the G4 Guidelines of the Global Reporting Initiative ("GRI”), having regard to
the GRI "Core" option, and are contained in the Combined Management Report.
Sustainability Reporting
GRI GG4-18, G4-23
medium-power, low-power)
Total assets
1,700
Japan
Therein: China
Asia-Pacific (w/o Japan)
Therein: Germany
Europe, Middle East, Africa
Revenue by region
Fiscal year from October 1 to September 30
As at and for the fiscal years ended September 30 (under IFRS)'
Infineon key data
Infineon at a glance
P An overview of our worldwide locations can be found on pages 124 and 125 in the chapter "Infineon worldwide".
Source: IHS Inc., July 2015
for microcontroller-based chip card ICs
2 with a market share of 23.9%
Market position¹
Gemalto / Giesecke & Devrient / Google / HP/Lenovo/
Microsoft / Oberthur Technologies / Safran Morpho/
Samsung / US Government Publishing Office /
Watchdata
Key customers²
> Dual-interface security controllers
(contact-based and contactless)
› Contactless security controllers
› Contact-based security controllers
Product range
Americas
Therein: USA
2015
2014
1,845
46
2,666
10
20
859
16
942
18
39
> Trusted computing
1,707
2,020
34
4,320
5,795
Change
in %
2015/2014
in % of
revenue
€ in
millions
in % of
revenue
€ in
millions
35
43
> Ticketing, access control
> Payment systems incl. mobile payment
> Mobile devices
> LED and conventional lighting systems
> HiRel (high-reliability components)
> DC motors
> Cellular network infrastructure
Applications
Page 62
Power Management & Multimarket
IIIII
2
23.9%
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
ABB / Alstom / Bombardier / CSR Times / Danfoss /
Eaton/Emerson / Fronius / Goldwind / Midea /
Rockwell / Schneider Electric / Siemens / Toshiba /
Yaskawa/Vestas
• Key customers²
> IGBT module solutions incl. IGBT stacks
> Power management (adapters, chargers, power supplies)
Product range
› Control ICs
> Customized chips (ASICs)
> Mobile communications
> Internet of Things
> Healthcare cards
> Governmental identification documents
> Automotive
> Authentication
Applications
Page 66
Chip Card & Security
Source: IHS Inc., September 2015
> Secure NFC (Near Field Communication)
transactions
for standard MOSFET power transistors
Market position¹
AAC / Airbus / Artesyn / Boeing / Cisco / Dell / Delta/
Ericsson / Hewlett Packard Enterprise / Huawei / Lenovo/
LG Electronics / Lite-on/ muRata / Nokia / Osram /
Panasonic / Quanta / Samsung / ZTE
Key customers²
> 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 transistors
1 with a market share of 27.8%
44
1,337
23
13.4
(778)
Selling, general and administrative expenses
30
12.7
(550)
12.4
(717)
Research and development expenses
26
38.1
1,647
35.9
2,080
Gross profit/Gross margin
80
0
(5)
0
(1)
Corporate and Eliminations
(496)
11.5
57
Operating income
2,093
Property, plant and equipment
45
14.4
620
15.5
897
Segment Result/Segment Result Margin
19
535
(36)
634
47
12
Gain (loss) from discontinued operations, net of income taxes
Net income
27
488
622
Income from continuing operations
6
525
555
(74)
1
22
0
34
4,320
5,795
Revenue by Segment
55
8
367
10
568
47
Automotive
11
12
710
40
7
284
7
399
54
20
868
484
23
2,351
1,965
14
Other Operating Segments
35
11
494
11
666
Chip Card & Security
69
25
41
1,061
1,794
Power Management & Multimarket
24
18
783
17
971
Industrial Power Control
20
45
31
> Discrete IGBTs
> IGBT modules (high-power,
Source: Strategy Analytics, April 2015
> 32-bit automotive microcontrollers
•Product range
> Security
> Driver assistance systems
› Comfort electronics
> CO₂ reduction
Applications
Automotive
Page 54
010C
1
10.5%
19.2%
2
Market position¹ ○ Market share
Segment
Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
Microelectronics from Infineon is the key to a better future. In the 2015 fiscal year (ending September 30),
the company reported sales of about €5.8 billion with some 35,400 employees worldwide. Infineon is listed on
the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
International Premier (ticker symbol: IFNNY).
Infineon at a glance
Infineon
Infineon Technologies AG
Annual Report 2015
Industrial Power Control
for powertrain, safety and driver
assistance systems
> Discrete power semiconductors
Systematic integration
> Industrial microcontrollers
Page 58
Applications
> Charger station for electric vehicles
> Energy transmission and conversion
> Home appliances
> Industrial drives
> IGBT modules
> Renewable energy generation
› Traction
> Uninterruptable power supplies
> Industrial vehicles
› Bare die business
2 with a market share of 10.5%
Market position¹
Autoliv / Bosch / BYD / Continental / Delphi / Denso /
Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
Mitsubishi / Omron / Tesla / Valeo / ZF Friedrichshafen
Key customers²
> Voltage regulators
> Transceiver (CAN, LIN, Ethernet, FlexRay)
> Radar
> Power ICs
Product range
> Magnetic and pressure sensors
Internal
management system
P see page 32 ff.
Psee page 92 ff. and page 108 ff.
> limiting investments to 13 percent of revenue over the economic cycle
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
Psee page 174 ff.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
> Discrete power
> Discrete semiconductors
> Chip card modules
Wuxi
> IPMS (Intelligent Power
Modules)
Cheonan
> IGBT stack assembly
Beijing
semiconductors
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.
Batam
88
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.
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.
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").
> Wafer thinning
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
90
90
P see page 52 ff. and page 28
P see page 264 ff.
Segment Result is defined as operating income (loss) excluding the following: the net amount of
asset impairments and reversals thereof; the impact on earnings of restructuring and closures;
share-based compensation expense; acquisition-related depreciation/amortization and other
expenses; gains (losses) on sales of assets, businesses, or interests in subsidiaries as well as
other income (expense), including litigation costs (see note 32 to the Consolidated Financial
Statements for a computation of the relevant figures). Court and legal fees arising in conjunction
with licensing Infineon's patents are included in Segment Result, as is any related income.
Segment Result is the indicator that Infineon uses to evaluate the operating performance of its
segments (for an analysis of Group and individual segment performance in the 2015 fiscal year,
see the chapter "The segments" and the section "Successful 2015 fiscal year" in the chapter
"Finances and Strategy").
Segment Result
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.
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.
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.
> 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
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.
chip test and wafer test
Regensburg
Singapore
> Fully automated manu-
facturing on 200mm
and 300mm wafers for
automotive, industrial and
security applications
Dresden
> High-power IGBT modules
Warstein
> Epitaxy for gallium nitride
wafers
> ICS
> Power semiconductors
(MOSFETS, IGBTs)
Newport
87
Regensburg
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Manufacturing sites
Participation in
surveys and studies
Social and NGOs
Citizenship activities
⚫ Conferences &
workshops
We understand Corporate Social Responsibility (CSR) as our voluntary responsibility towards
both international and local societies. Our commitment is based on compliance with current
legal requirements, the ten Principles of the UN Global Compact and the principle of sustain-
ability as the symbiosis of economy, ecology and social engagement. Based on these tenets,
1 Any data in this chapter relating to International Rectifier are explicitly identified in the various sections.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Sustainability at Infineon
93
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.
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").
Social stakeholders
> Analog and mixed-signal
components
> Power semiconductors
› Competence center for
sensors and metallization
P see page 142
› Package development
> ICS
› Sensors
› Discrete semiconductors
> Power semiconductors
Malacca
> Power semiconductors
Kulim
> Medium- and high-power
IGBT modules
Cegléd
gallium nitride technology
(epitaxy, manufacturing)
> Silicon carbide and
> MEMS components
› Competence center
for 300mm thin-wafer
technology
> Power semiconductors
Villach
› Competence center for
package development
> Wafer-level packaging
> Discrete semiconductors
› Sensors
> Power semiconductors
> Chip card modules
› Competence center for
Free cash flow
> Investments: The total amount invested in property, plant and equipment and intangible
assets, including capitalized research and development costs
The main levers for generating free cash flow are profitability, the ability to manage working
capital efficiently and the levels of investments.
•
• Product requirements
24/7
• Infineon Service Center
by experts
Services provided
•
⚫ Audits
Customers
Roadshows
Employees involved in
Industry Associations
⚫ Workshops
Politics
Business Ethics
MANAGEMENT
STAKEHOLDER
Yearly Financial Statements
•
• Annual Report
Quarterly segments presentation
•
⚫ Political dialogs
Corporate
Citizenship
CSR
Supply Chain
Management
GRI G4-24, G4-25, G4-26, G4-27
about water-stressed areas
Awareness-raising campaign
Compliance website
•
Principles of Purchasing
.
.
Suppliers-Assessment
Suppliers
topics e.g. "Corporate
Citizenship Panel"
Trainings
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
Quarterly Reports
.
Roadshows & conferences
Annual General Meeting
> Net working capital: Current assets less cash and cash equivalents, less financial invest-
ments, less assets classified as held for sale, less current liabilities excluding short-term
debt and current maturities of long-term debt, excluding liabilities classified as held for sale
> Net cash position: Gross cash position less short-term and long-term debt
> Gross cash position: Cash and cash equivalents plus financial investments
A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its
disposal and an optimal capital structure. Liquidity is managed at Group level, not at segment
level, and uses the following key performance indicators:
Liquidity performance indicators
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".
91
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Internal management system
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.
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.
In 2015, Infineon again qualified for listings in key sustainability indices, which assess companies
according to environmental, social and governance criteria.
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).
For an analysis of changes in these key performance indicators during the previous fiscal year,
see the chapter "Review of liquidity".
Operational early indicators
•
Investors
Infineon CSR Concept
G36
In addition to the statutory audit of the Combined Management Report, KPMG AG Wirtschafts-
prüfungsgesellschaft, Munich, has provided independent assurance ("limited assurance")
regarding the sustainability performance information provided in this chapter in accordance
with the International Standard for Assurance Engagements 3000 and the International
Standard on Assurance Engagements 3410, the pertinent standards for assuring sustainability
information. Further information, including the independent assurance report issued, can be
found in the Corporate Social Responsibility section of the Infineon website.
@www.infineon.com/csr_reporting
Sustainability
at Infineon'
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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:
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.
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".
Committees for CSR
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).
Principle 10: Action against corruption
> Completion of a specific web-based training on anti-corruption,
in which more than 7,000 selected employees worldwide have
participated. The training is mandatory for selected employees
and for Management.
> Initiation of a campaign to raise awareness on the topic of com-
pliance, including posters displayed at all of our Asian sites.
> 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".
> Formalized risk assessment as part of the Compliance Manage-
ment System and the definition of required measures.
Human resources management, human rights
Anti-corruption
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).
Even for its suppliers, Infineon requires compliance with all applicable laws, including those
pertaining to human rights and fair business practices (see "Our responsibility along the
supply chain" in this chapter).
Additional information is included in the chapters "Corporate Governance" and
"Our Employees”.
Psee page 93
P see page 105 f.
P see page 174 ff.
P see page 108 ff.
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).
96
P see "Product sustainable value ", page 103 f.
> 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.
> 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).
> 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.
> More than 90 percent of our employees work at production
sites where committees are in place that also offer employers,
employees and/or employee representatives the opportunity
to discuss and receive advice on topics relating to environmental
protection, occupational safety and health.
> Persons under 15 years of age are not allowed to work for Infineon.
Exceptions apply for certain developing countries covered by
International Labour Organization (ILO) convention 138 (minimum
age lowered to 14 years), or for job training and vocational training
programs that are authorized by the governments of the countries
involved and who demonstrably promote those participating.
(after investigation)
Thereof still under investigation
> 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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Sustainability at Infineon
UN Global Compact
Environment
Principle 7: Precautionary approach to
environmental protection
Principle 8: Support initiatives for greater
awareness of environmental
responsibility
Principle 9: Development and diffusion
of environmentally friendly
technologies
Measures implemented
95
96
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
0.3
0.2
0.1
0
||||
2011
0.4
2012
2014
2015
Infineon
2015
Infineon
incl. Int.
Rectifier
1 The Injury Rate is calculated as follows: total number of injuries/total hours worked x 200,000.
Holidays and public holidays are included in the working hours.
2013
0.5
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.
G38
Occupational safety
Target achievement and summary
of results in the 2015 fiscal year
> Our Injury Rate in the 2015 fiscal year
was 0.46. Almost half of the accidents
resulted in 5 or less lost days
Target for the 2016 fiscal year
> Our target for the next fiscal year is to
achieve an Injury Rate of 0.4 or lower.
Responsibility for our employees
One of our primary objectives is to create a safe working environment. Our approach in the
fields of occupational safety and health protection is based on the principle of prevention.
Our occupational safety and health management system has been certified in accordance
with OHSAS 18001 at all of our main manufacturing sites as well as our corporate headquarters.
The workplace-related risk assessment is designed to ensure that the required measures are
taken to minimize any risks at their workplace that could endanger our employees. Work-
place-related risk assessment is a key preventive instrument in the fields of occupational
safety and health and is subject to continual improvement.
Workplace-related risk assessments enable us to define measures that improve the working
environment at Infineon. The implementation of these measures is supported by experts in
this field. One example is the measures which have already been implemented at a number of
Infineon sites to reduce noise levels.
Programs designed to improve ergonomics have also been implemented, including special
training for preventing back injuries, the optimization of computer workstations and tips on
the correct lifting and carrying of loads.
The measures taken are then monitored for effectiveness to ensure they achieve the
desired result.
Our experts in the fields of occupational safety, health and fire prevention invested approxi-
mately 56,972 hours in further training and educational measures worldwide during the
2015 fiscal year.
Apart from a range of accident prevention measures, we carry out fire prevention training and
evacuation exercises at all of our main production sites as well as the Campeon corporate
headquarters on an annual basis.
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.
Principle 5: Abolition of child labor
Principle 6: Elimination of discrimination
Principle 4: Elimination of all forms
of forced labor
Injury Rate (IR)'
Principle 3: Uphold freedom
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.
> Apart from beginning to
Targets achieved:
Target achievement and summary
of results in the 2015 fiscal year
Business Ethics
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
94
P see page 174 ff.
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").
Business ethics
DRIVING SUSTAINABLE ECONOMIES
FTSE4Good cekom research
In Collaboration with RobecoSAM
> 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.
ESS LEADERS INDICES
ated by
Prime
STOXX
Corporate
Responsibility
Dow Jones
Sustainability Indices
20100%
MEMBER OF
P see the chapter "Awards"
on page 122 f.
P see page 111 f.
P see page 4 ff.
Psee page 3 f.
GRI G4-25, G4-26, G4-27
of association
CDP
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.
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.
UN Global Compact
As a UN Global Compact participant, Infineon has made a commitment to abide by the stated
principles and reports below in an exemplary manner in its Communication on Progress on
the measures implemented:
Thereof confirmed as non-breach
Thereof confirmed as compliance breach
(after investigation)
incl. Int.
Rectifier
2015
Infineon
2015
Infineon
2014
13
19
28
47
38
51
24
71
Human Rights
Principle 1: Support for human rights
Principle 2: Non-complicity in human
rights abuses
Measures implemented
66
> 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.
P see "Infineon products without DRC-conflict minerals", page 105 f.
and "Human Resources Management, Human Rights", page 95
Targets for the 2016 fiscal year
> Implementation of the revised Business
Conduct Guidelines worldwide and
the corresponding training, which
addresses all Infineon employees.
> To complete the integration of the
former International Rectifier sites in
the existing Compliance Management
System: Infineon compliance training
and compliance processes will be
successively applied to all International
Rectifier employees. The revised
Business Conduct Guidelines will also
apply directly to International Rectifier
employees upon publishing.
G37
Reports of possible compliance
breaches
> 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.
Labor
88
Ratio around 1:23
CO₂ savings²
Around 36.5 million tons CO2 equivalents
Net ecological benefit: CO2 emissions reduction of around 35 million tons
1 This figure considers manufacturing, transportation, function cars, flights, materials, chemicals, water/wastewater, direct emissions, energy consumption, waste, etc. and
is based on internally collected data and externally available conversion factors. All data relate to the 2015 fiscal year.
2 This figure is based on internally established criteria, which are explained in the explanatory notes. The figure relates to the calendar year 2014 and considers the following
fields of application: automotive, LED, PC power supply, renewable energy (wind, photovoltaic), drives as well as induction cookers. CO2 savings are calculated on the
basis of potential savings of technologies in which semiconductors are used. The CO2 savings are allocated on the basis of Infineon market share, semiconductor content
and lifetime of the technologies concerned, based on internal and external experts' estimations. Despite the fact that CO2 footprint calculations are subject to imprecision
due to the complex issues involved, the results are nevertheless clear.
Compliance with legal and customer-specific requirements
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).
Two important EU directives regulate the use of certain hazardous substances in end products
as defined by EU legislators.
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.
None of the Infineon products are in the scope of these directives. However, our customers
expect Infineon products to meet legal requirements in their applications. The Infineon
products comply with these requirements and conform to the substances restrictions in all
applicable legal regulations, including those applicable in countries outside Europe.
Furthermore, we provide our customers with information on the chemical composition of the
materials contained in our products.
Infineon works constantly on developing alternatives for certain materials, such as lead, with
the aim to use them as replacements, beyond the extent required by law.
Around 1.6 million tons CO2 equivalents
Labor
standards
Our responsibility along the supply chain
Long-term partnership between Infineon and its suppliers is a core element of our corporate
philosophy.
> To harmonize the supplier evaluation
methodology and reporting with
International Rectifier in the field
of CSR.
Target for the 2016 fiscal year
> We installed CSR evaluation
for suppliers in the new supplier
management tool and carried out
evaluations.
Target achieved:
Target achievement and summary
of results in the 2015 fiscal year
CSR in the supply chain
Principles of Purchasing
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.
105
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Sustainability at Infineon
Ecological net benefit
Target achievement and summary
of results in the 2015 fiscal year
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.
Maximum value
103
In addition to PFC reporting, we calculate emissions for other relevant substances used at
Infineon and International Rectifier main manufacturing sites on an annual basis. In the 2015
fiscal year 144,887 kilograms of sulfur oxides (SOX), 293,425 kilograms of nitrogen oxides
(NOx), 331,160 kilograms of volatile organic compounds (VOCs), and 122,812 kilograms of
particulate matter (PM) were emitted.
Scope 2 emissions
Taking into account provider-specific emission factors of the energy sources used, Scope 2
emissions totaled 533,921 tons of CO2 in the fiscal year under report.
This approach was selected in order to illustrate the implementations achieved so far in terms of
regenerative energy supply, such as connecting the Infineon Campeon corporate headquarters
to the district heating network of the geothermal plant in nearby Unterhaching (Germany).
Scope 3 emissions
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.
Product sustainable value
Our products and innovations are the key to manufacturing energy-efficient end products and
applications, and thereby make an important contribution towards improving our carbon
footprint.
The products manufactured by Infineon are used in a broad range of applications and contribute
towards improving the ecological efficiency of end products and applications during their
use-phase. Our high-performance products make it possible to operate large-scale wind farms
and photovoltaic facilities and therefore the production of regenerative energy. They are also
used in industrial applications such as drive systems and engine control units and make it
possible, for instance, to reduce power losses. Other Infineon products, in turn, enable the
development of new, more efficient technologies such as LED lighting or induction cookers.
Together with their products in the fields of drivers and digital control, Infineon delivers energy-
efficient system solutions for servers, data and telecommunications applications. This is
illustrated by the two following examples. The 600-volt series CoolMOSTM C7 Superjunction (SJ)
MOSFETs reduce turn-off losses by 50 percent compared with similar technologies and have
therefore achieved ultra-low switching losses. High-power applications in switch-mode power
supplies with stringent requirements regarding efficiency and operating costs such as state-
of-the-art servers in data centers and base stations for telecommunications benefit in particular.
The OptiMOST 5 25-volt and 30-volt product family also shows improved performance based
on the consistent reduction of switching losses by 50 percent when compared to the previous
technology. These systems can be operated at higher switching frequencies, resulting in sig-
nificantly lower energy consumption and overall system costs. For example, implementing the
new OptiMOS 25-volt would mean annual savings of 1.3 gigawatt hours (GWh) for an average
of 50,000 computers working in a server farm.
The Infineon carbon footprint
Complex processes and a multitude of influencing factors need to be considered when draw-
ing up an entity's carbon footprint. By nature, carbon footprint calculations are subject to a
certain degree of imprecision. However, in order to further minimize the resulting imprecision,
Infineon has continued to refine its approach.
During their use-phase, Infineon products in the fields of automotive electronics, industrial
drives, servers, lighting, photovoltaics and wind energy as well as induction cooking alone
enable savings of roughly 36.5 million tons of CO2 equivalents, 2.5 times higher than the
previous year's figure. The increase is attributable to a number of factors. Improvements were
made in the field of LEDs, where sales volumes have risen significantly. The sharpest increase,
G see glossary, page 290
Human rights
Target achieved:
> The CO2 saved by Infineon
products included in end
products over their use-phase was
about 23 times higher than the CO₂
emissions generated when manufac-
turing the products.
We have continued to improve the
methodology for calculating our carbon
footprint and induction cookers have
now also been included in production
savings.
Target for the 2016 fiscal year
> To integrate International Rectifier data
in the carbon footprint calculation.
104
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
G 53
Carbon footprint
however, is in the field of controls for industrial drives. Here, the estimated average improve-
ment in efficiency has been adjusted in line with standard market values. The further
increases in installed capacities for photovoltaics and wind power in 2014 compared with
2013 and the inclusion of the new "induction cookers” product group were responsible for
this improvement.
CO₂ burden¹
Occupational
Only suppliers who have committed to following our principles can enter into a business rela-
tionship with Infineon.
and health
Target for the 2016 fiscal year
> To integrate International Rectifier
Corporate Citizenship activities
consistent with our guidelines.
We have determined a Group-wide approach to this topic with the aim of guaranteeing the
necessary transparency within our own supply chain.
Infineon uses the above-mentioned materials in the manufacture of its products and their
functionality is crucial. Infineon is not listed on US stock exchanges and therefore not legally
required to publish a report on conflict minerals. Nevertheless, as a member of the Conflict-
Free Sourcing Initiative (CFSI), we are aware of our voluntary commitment and duty of
due diligence in the supply chain. At the same time, we assist those of our customers who
are required to perform due diligence within their supply chains in meeting their reporting
duties in accordance with the requirements of the United States Securities and Exchange
Commission (SEC).
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 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.
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.
Corporate Citizenship
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.
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.
G55
Corporate Citizenship expenditure
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.
in €
Sponsoring
Employee
volunteering
In-kind giving
Total
€
789,613
321,942
16,810
4,273
1,132,638
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Sustainability at Infineon
1 In creating the Annual Report 2015 the WSC figures were not available.
Donations
safety
> Employee participation in
Corporate Citizenship
Business
continuity
Principles
of Purchasing
planning
Conflict
of interest
Environmental
protection
Security
Fair business
practices
Business gifts
Furthermore, our suppliers are contractually obliged to comply with our CSR requirements.
In the 2015 fiscal year we introduced a supplier management portal to provide our suppliers
with a centralized platform for registering and updating relevant CSR parameters. This
enables fast evaluations by the various specialists and the determination of further steps in
cooperation with the suppliers, if necessary (see supply chain information in the chapter
"Operations").
Target achieved:
Infineon products without DRC conflict minerals
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.
P see page 85
106
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Conflict minerals
Target achievement and summary
of results in the 2015 fiscal year
Target achieved:
> The establishing of a query,
registration and supplier
evaluation system in accordance with
the OECD guidance on implementing
and maintaining a DRC conflict-free
supply chain.
Targets for the 2016 fiscal year
> To maintain the DRC conflict-free
supply chain.
> To integrate International Rectifier
products in the Infineon conflict
minerals declaration.
@www.infineon.com/csr_reporting
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.
Target achievement and summary
of results in the 2015 fiscal year
■Infineon Frontends
Lost Day Rate (LDR) 1
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
Petrol
Firewood
0.50
renewable
G47
Direct energy (Scope 1)
GWh
Consumption by energy source is shown in graph 47 and in the adjoining table.
consumers.
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
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.
Energy consumption
Target for the 2016 fiscal year
0.06
3.65
■Fuel oil
District heating
Liquid gas
Electricity
Natural gas
Firewood
101.06
District heating
2015
Infineon
2015
Infineon
incl. Int.
Rectifier
| | | |
1,253.07
Electricity
1,354.13
non-renewable
Petrol (cars)
Indirect energy (Scope 2)
2013
2012
2011
0.28
Fuel oil
0
6.24
Diesel (cars)
300
0.68
Diesel
600
2014
Petrol
Diesel
Approximately 65.51 percent of waste
generated at Infineon sites was recycled.
Target achieved:
0
4,000
8,000
12,000
16,000
20,000
in tons
Waste generation
G 44
65.51%
0
1.58%
Hazardous waste
14.96%
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.
10.75%
> Compared with the WSC
global average, Infineon sites
generated approximately 50 percent
less waste to manufacture one square
centimeter of wafer.
2011
2013
of results in the 2015 fiscal year
Target achievement and summary
Waste management
Within its manufacturing chain, Infineon consumes the majority of its energy in its frontend
manufacturing sites, where the facilities require highly sophisticated physical conditions,
such as particularly demanding stable conditions in the cleanrooms, which means additional
energy consumption. Due to their nature, backend processes require less energy than
frontend processes, followed by the development and office sites, which consume the
lowest percentage.
At Infineon, energy is used mainly in the form of electricity in all stages of semiconductor
manufacturing. Primary energy sources such as oil and gas play only a minor part.
Efficient energy management
Energy efficiency and climate protection
During the 2015 fiscal year, a new waste collection center went into operation at the Villach
(Austria) site with the aim of improving waste logistics. The center covers a total area of
1,600 square meters. Furthermore, from the beginning of the new fiscal year, the Villach site
plans to discontinue recycling its dimethylformamide (DMF) solvent itself and have the work
performed by an external specialist with further technical capabilities. The change will on the
one hand improve the quality of the recycled DMF and on the other hand significantly
increase the recycling rate.
The WSC has defined the total volume of waste in grams per square centimeter of wafer manu-
factured to measure the efficiency of waste generation. In the 2014 calendar year, Infineon
frontend sites worldwide generated around 50 percent less waste per square centimeter of
wafer manufactured than the WSC global average.
In the 2015 fiscal year, 67.30 percent of non-hazardous waste and 63.27 percent of hazardous
waste were recycled. The percentages of the various waste management methods are illus-
trated in chart 45.
100%
50%
2012
1 Frontend sites worldwide
Infineon'
per square centimeter manufactured wafer
Standardized waste generation
Composting
Incineration
G46
■Chemical treatment
Recycling
Landfill
Non-hazardous waste
2015
Infineon
incl. Int.
Rectifier
2015
Infineon
1 Further emissions along the value chain
WSC
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.
Petrol (cars)
Diesel (cars)
Standardized electricity consumption
per square centimeter manufactured wafer
incl. Int.
Infineon
2015
Infineon
2015
2014
2013
2012
2011
0
||||||
0.10
35 GWh
Rectifier
of 35 GWh of energy by the end of the
2017 fiscal year.
0.20
> To implement projects and measures
0.30
Target for the 2016 fiscal year
0.40
in kilowatt hours per €
Energy consumption per revenue
G49
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.
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.
at our manufacturing sites worldwide
which are capable of saving a total
measures that saved an annual
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Sustainability at Infineon
Greenhouse gas emissions
Infineon function cars
Raw materials and supplies
Waste
Materials
Fuel and energy supply
Water consumption
Wastewater
Electricity
District heating
Firewood
Petrol
Fueloil
Diesel
Gas
PFCs
Scope 3-Indirect¹
101
Scope 2-Indirect
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.
Scope 1 - Direct
G48
> This year we implemented
Target achievement and summary
of results in the 2015 fiscal year
> Due to better available data, we have
changed our method of reporting
and the resulting target. From now on
we will orient our reporting on the
WSC NER target value of 2.2 for 2020.
Target for the 2016 fiscal year
> To maintain the Infineon NER below
2.2 in the 2016 fiscal year. The typically
growing complexity of our products
is leading to an increasing need for
greenhouse gases. Therefore the
target is a challenging and reasonable
reference value for the efficiency of
our emissions' reduction measures.
Scope 1 emissions
The semiconductor industry uses various greenhouse gases in wafer-etching processes as well
as for the cleaning of production equipment. The Perfluorinated Compounds (PFCs), sulfur
hexafluoride (SF) and nitrogen trifluoride (NF3) used cannot be substituted by another class
of substances. These gases mean around 92 percent of Scope 1 emissions.
We minimize the use of these gases firstly by continually optimizing our processes by increas-
ingly efficient manufacturing methods and intelligent abatement concepts and secondly
through the use of alternative gases within the PFC group with higher utilization rates and
lower greenhouse gas potential.
However, the growing complexity of our products is leading to an increasing need for green-
house gases.
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.
G52
Normalized Emission Rate
in tons CO2 per square meter
3.50
Target achievement and summary
of results in the 2015 fiscal year
3.00
2.00
G39
1.50
1.00
0.5
0
་་་།།།
2020
Infineon
Infineon
incl. Int.
Rectifier
Infineon'
2.50
Target achieved:
Normalized Emission Rate
Waste
1,763 tCO2e
100%
60%
Energy efficiency
1 Frontend sites worldwide
Altogether, the Infineon carbon footprint totaled 1.57 million tons of CO2 equivalents in the
2015 fiscal year.
102
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
The following chart 51 illustrates the emissions by origin. The input streams show emissions
that were generated in the course of supplying the materials. The output streams show
emissions that were directly generated during production and through internal and external
transportation.
G 51
Allocation of emissions by origin
in tons CO2 equivalents (tCO2e)
Air emissions
217,668 tCO2e
Input
460,421 tCO₂e
Process gases
74,744 tCO2e
Process
chemicals
13,170 tCO2e
Electricity
660,362 tCO₂e
Internal and
external
transportation
107,572 tCO₂e
Infineon
production sites
Other energy
32,159 tCO2e
Drinking water
1,503 tCO2e
WSC
Wastewater
3,099 tCO₂e
Output
Raw materials
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.
2014
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.
Evaporation
Water withdrawal
(partly treated):
21,379,138 m³
Groundwater:
13,970,559 m³
Drinking water:
4,503,492 m³
Non-drinking water:
2,905,087 m³
Production
Cooling water:
10,813,469 m³
Ultrapure water:
7,190,245 m³
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.
Psee pages 97 f. and 99 f.
@www.infineon.com/csr_reporting
World Semiconductor Council¹
Municipal wastewater (sewage plant)
Water discharge after production: 19,857,629 m³
Sanitary systems, canteen area
Wastewater: 10,073,287 m³
Internal wastewater treatment
97
In accordance with
purity requirements
In accordance with
purity requirements
Indirect discharge
Non-ultrapure water
Direct discharge
Water use
G40
10
8
6
4
2
0
2011
2012
2013
Water balance
2014
2015
Infineon
incl. Int.
Rectifier
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Sustainability at Infineon
Environmental sustainability
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.
Sustainable use of resources at our manufacturing sites
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.
2015
Infineon
Sewage plant:
5,400,250 m³
Flights
Transport
25,000,000
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%
49.27%
G 43
79%
Water discharges 2015
> 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.
> 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
15,000,000
20,000,000
Discharge to river:
4,673,037 m³
in cubic meters
G42
100%
O
2011
Discharge to river:
9,784,342 m³
98
0
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Water management
Target achievement and summary
of results in the 2015 fiscal year
Targets achieved:
> Infineon consumed approxi-
mately 21 percent less water
> 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.
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.
than the WSC global average to manu-
facture one square centimeter of wafer.
Non-drinking water
2012
2013
G41
2015
Infineon
2015
Infineon
incl. Int.
Rectifier
2014
Groundwater
Drinking water
Water consumption
181
Rate of newly hired
employees¹
11.9
7.0
15.0
7.0
19.8
12
16.8
8.5
Staff departures
3,048
476
195
1,927
219
619
6.3
11
682
13,322
2,562
633
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.
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
Preventive health program
Female/male employees
(new entries worldwide 2015)
Total Europe Therein:
Germany
Asia- Therein:
Pacific China
Japan
Americas
Therein:
46.0%
USA
54.0%
Newly hired
employees
4,206
1,014
659
393
166
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.
Male
30 to 50 years
Over 50 years
G 63
Age structure
Under 30 years
64.2%
33.1%
2.7%
(Infineon worldwide 2015)
25.3%
59.9%
14.8%
30 to 50 years
Over 50 years
116
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Notable events 2015
October 2014
30 years of microchips
from Regensburg
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.
Female
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.
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.
Rate of staff
departures²
9.0
3.4
2.1
11.6
11.8
7.2
21.7
9.4
G62
1 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective region.
2 Figures in percent, calculated on the basis of the monthly workforce in the 2015 fiscal year.
Age structure
(new entries worldwide 2015)
Under 30 years
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.
Of the departures, 1,371 were women and 1,677 men. 1,727 employees were in the under-30 age
group, 1,071 in the middle age group (30-50 years) and 250 in the over-50 age group. The
worldwide employee turnover rate during the 2015 fiscal year was 9.0 percent, which represents
a slight increase of 0.1 percentage points compared to 8.9 percent in the previous year. In
Germany, the employee turnover rate was 2.1 percent (previous year: 3.4 percent). The per-
centage figure includes voluntary terminations and other reasons for leaving.
Age structure and length of service
The average age of employees worldwide in the 2015 fiscal year is 38.1 years, marginally
higher than one year earlier (2014 fiscal year: 37.1 years). The proportion of employees below
30 s of age fell (2015 fiscal year: 25.3 percent, 2014 fiscal year: 27.5 percent). Likewise, the
years
proportion of the middle age group (2015 fiscal year: 59.9 percent, 2014 fiscal year: 60.2 per-
cent) is lower, whereas the share of the group over 50 years of age has risen (2015 fiscal year:
14.8 percent, 2014 fiscal year: 12.3 percent).
Outlook
Compensation
Therein: China
114
8,734
783
Male
1,989
1,982
7
1,340
1,335
5
Employees on fixed-term contracts
Female
2,412
9,517
2,402
1,541
1,529
12
Total
35,424
34,066
1,358
29,807
28,626
1,181
Employees, who were, for example, on parental leave or in the non-working phase of early
retirement part-time working arrangements, are not active employees and therefore not
included in the tables above. Similarly, temporary employees are not included. At September 30,
2015, 2,654 temporary employees were working for Infineon worldwide, of whom 1,323 were
women and 1,331 men. Approximately 77 percent of the external workers were employed in
production, giving Infineon flexibility in its manufacturing capacities.
The worldwide personnel cost for current internal Infineon employees in the 2015 fiscal year
totaled €1,939 million (2014 fiscal year: €1,490 million). The amount includes wages and
salaries, including overtime and allowances, as well as social costs (pension expenses and
social contributions).
10
854
10,056
10,910
1,454
556
183
373
22,102
29,807
11,058
18,749
Due to the acquisition of International Rectifier, there was an increase of 3,126 employees in
the Americas. Almost half of the entire workforce was employed in the Asia-Pacific region
(17,035). 41 percent of all employees were employed in Europe (14,533), with the majority
working in Germany (9,426).
In the workforce as a whole, at September 30, 2015, 2,412 female employees and 1,989 male
employees had fixed-term contracts and 10,910 female employees and 20,113 male employees
had permanent contracts. A total of 1,358 employees were working part-time at that date.
2015
2014
Total
Full-Time
Part-Time
Total
Full-Time
Part-Time
Male
20,113
19,626
487
17,409
17,028
381
Employees on permanent contracts
Female
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Our employees
115
Employee recruitment and turnover
In total, 4,206 new employees were hired worldwide during the 2015 fiscal year, of whom
1,933 were women and 2,273 men. 2,703 employees were under 30 years of age, 1,391
belonged to the 30-50 age group and 112 were over 50 years of age.
10,043
3,136
13,179
11,034
3,499
14,533
Male
Female
Total
Male
Female
Total
2014
2015
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.
Employees and personnel expense
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.
Number of employees
Total
Therein: USA
Americas
Japan
Asia-Pacific
Therein: Germany
Europe
Employees by geographical region
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
9,426
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.
7,011
2,265
2,136
35,424
373
183
556
2,207
1,475
3,682
112
24
136
138
36
174
935
813
1,748
1,006
980
1,986
8,221
7,715
15,936
8,723
G 61
8,312
17,035
6,623
8,888
2,415
Trust and
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Sustainability at Infineon
15
15.0%
12.1%
12.5%
13.0%
10
10.2%
5
0
2010
2013
2014
2015
Target
2015
Target
2020
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
G56
7.3
20
Women in management positions (Infineon worldwide¹)
3 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
expertise as defined in the internal job evaluation system.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Our employees
111
With regard to the breakdown by gender and age structure: Of 13,322 female employees,
36.2 percent are under 30 years of age, 52.6 percent in the middle age group and 11.2 percent
are over 50. Of 22,102 male employees, 18.7 percent are under 30 years of age, 64.3 percent
in the middle age group and 17.0 percent are over 50.
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
75.4
21,173
46.4
53.6
31,405
37.5
62.5
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.
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.
G59
25
2 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective comparison group.
2013
2015
Sales & Marketing
Administrative
Total
1 International Rectifier not included; calculated on the basis of the monthly workforce in the 2015 fiscal year.
Per employee¹
27.0
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
Our employees
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
Research & Development
2014
Production
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.
1 International Rectifier not included
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.
Our focus in this area is on professional training aimed at developing the technical know-how
and innovation skills of our workforce; programs concentrating on improving the leadership
and feedback culture within the organization; training courses on the development of social
skills and aptitudes; project management training. In addition, in-house training opportunities,
such as mentoring programs and on-the-job training, are also of importance to us.
In 2015, 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.
Training hours
Middle and senior level management²
Entry level management²
Non-management staff
Total
Per employee¹
Female¹
Male¹
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.
Training hours
13.3
20.0%
26.8
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
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
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
109
Our employees
Leadership excellence
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
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
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
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.
59.9
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
> Cooperation with the association of "Industrial Engineers" of the University
of Technology in Graz, Austria.
> Chips@school: Pupils and teachers develop new ideas for the use
of semiconductors
> LittleTech: Early support in technologies in kindergardens and primary schools
> "Learn for Life" project in China
> 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
Local investments and services
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.
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.
108
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Our employees
Acquisition and integration of International Rectifier
G58
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.
(Infineon worldwide 2015)
Malaysia
Germany
Austria
China
Indonesia
Other
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
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.
Over 50 years²
4,912
72.7
27.3
5,320
3.2
84.1
12.7
21,173
38.9
50.9
10.2
31,405
Nationalities
Total'
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.
nationalities (98)
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.
25.2%
26.2%
6.8%
8.0%
25.0%
The foundations for the first manu-
facturing building for 1-megabit
memory chips in Regensburg were
laid on October 23, 1984. Only two
years later, in October 1986, the
first samples were already manu-
factured. The volume production
started in December 1987. However,
memory chips are no longer pro-
duced in Regensburg. Today, this
site manufactures sensors, power
semiconductors and logic and
radio-frequency components.
November 2014
International Rectifier
shareholders approve
acquisition
Encouraging diversity
January 2015
Successful closing of
the acquisition of
International Rectifier
After the shareholders of Inter-
national Rectifier had approved the
transaction with a great majority
in November 2014, the relevant
authorities also issued the required
releases. This makes the El Segundo
(California, USA)-headquartered
company part of Infineon as of
January 13, 2015.
During an extraordinary general
meeting, the shareholders of Inter-
national Rectifier agreed to the
planned acquisition by Infineon by
a majority of 99.5 percent.
Infineon +IOR
=
A Powerful
IOR
Combination
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.
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.
Talent marketing and management
Promoting talent
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.
Infineon issues two
Eurobonds worth a total
of €800 million
8.8%
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
Infineon purchases shares
of Schweizer Electronic
November 2014
March 2015
S&P-Europe-350
DAX 30
MSCI Germany
Dow Jones Germany Titans 30
Dow Jones Euro STOXX TMI Technology Hardware & Equipment
Dow Jones STOXX Europe 600
IFXGN.DE
CUSIP
45662N103
Index membership
(selected)
Reuters
Bloomberg
Identification Number (WKN) 623100
Dow Jones Sustainability™ Europe Index
IFX GY (Xetra trading system), IFNNY US
Dow Jones Sustainability World Index
9,190
As of
DE0006231004
11,294
Market capitalization' € in millions
+0.1%
1,128
1,129
Infineon Technologies AG share capital, shares outstanding and market capitalization
Shares issued' in millions
2,255
2,259
Share capital' € in millions
2014
Change
September 30, September 30,
2015
+0.1%
German Security
Infineon invests in TTTech
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
Infineon
Complete acquisition
of LSPS
April 2015
Tech
Since the site's foundation in 1994, the fab in Dresden has been visited by all
of the German Chancellors: Dr. Helmut Kohl for the groundbreaking ceremony
for the 200-millimeter fab in June 1994, Gerhard Schröder for the ground-
breaking ceremony for the 300-millimeter memory fab in May 2000, and now
Dr. Angela Merkel in 2015.
Other items on the agenda included a presentation in the analysis and
characterization laboratory along with a live broadcast from the fab,
during which the guests were able to see an existing Industrial Internet
(Industry 4.0) manufacturing.
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.
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.
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).
March 2015
117
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notable events 2015
+22.9%
Chancellor Dr. Angela Merkel visits Infineon Dresden
ISIN Code
LSPS develops, manufactures and
sells IPMS (intelligent power mod-
ules) that enable a higher energy
efficiency in household appliances
and air conditioning systems.
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).
€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
From left to right:
Share types
The Infineon Share
index-membership/
@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/
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
118
Share information
Market capitalization' US$ in millions
95
USA: OTCQX closing in US$
тиму
September 30, 2014 = 100
150
140
130
9.01
8.19
7.37
120
110
100
90
6.55
80
10|2014
11|2014
12|2014
9.83
10.65
11.47
12.29
+2.0%
+12.4%
+33.9%
Philadelphia Semiconductor Index (SOX)
(5.6%)
+22.8%
+57.7%
Dow Jones US Semiconductor Index
01|2015
(6.8%)
+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 €
+22.7%
Allianz Global Investors Europe GmbH
02|2015
03|2015
At the Annual General Meeting held in Munich on February 12, 2015, the shareholders approved
the proposal, jointly put forward by Infineon's Management Board and Supervisory Board, to
increase the dividend substantially. In May 2014, Infineon announced that the expected annual
ratio of investments to revenue will decrease from approximately 15 percent to approximately
13 percent. Infineon is also convinced that the acquisition of International Rectifier, announced
on August 20, 2014 and closed on January 13, 2015 will make a positive contribution to Segment
Result and free cash flow over the full economic cycle. With this in mind, the Management
and Supervisory Boards presented a proposal at the Annual General Meeting that the dividend
be increased by 6 cents from €0.12 to €0.18 per share. As a consequence, a total amount of
€202 million was paid to the shareholders on February 13, 2015. Based on the good earnings
performance in the 2015 fiscal year and Infineon's positive business outlook, a proposal will
be made to the Annual General Meeting to be held in February 2016 to increase the dividend
by a further 2 cents to €0.20.
Infineon's strategy is to pursue a dividend policy that enables shareholders to adequately
participate in growing earnings or, in times of flat or declining earnings and/or with negative
free cash flows, to keep the dividend at least at a constant level.
Infineon bonds
In March 2015, Infineon issued two bonds, one maturing in three-and-a-half years (€300 million)
and one in seven years (€500 million), the first with a nominal interest rate of 1 percent and
the second with a nominal interest rate of 1.5 percent. The two bonds have been listed since
March on the Luxembourg Stock Exchange and also traded on German stock markets. The
ISIN codes for the bonds are XS1191115366 and XS1191116174 respectively.
Communication with capital markets
The 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.
The Annual Report, Quarterly Reports and telephone conferences held in conjunction with the
release of financial data plus a whole range of detailed information, figures and tables made
available on the Infineon website, form the basis for our communication with capital market
participants.
A further component of our Investor Relations activities is communication with analysts and
investors at conferences and roadshows. During the 2015 fiscal year, the three members of
the Management Board, the segment Heads, as well as the Investor Relations team, were all
involved in capital market communication activities. We participated in nine investor confer-
ences in Europe and the USA and organized eight roadshows. To provide detailed information
on the business, a telephone conference was held for the Chip Card & Security segment as
well as an investor conference in London for the Automotive segment. Investors were able to
listen to the investor conference via webcast. All presentations and webcasts can be viewed
and downloaded from the Investor Relations section of the Infineon website via "Reporting/
Download Center". In addition to the events described above, a whole host of discussions
were held with analysts and investors at group meetings, on a one-to-one basis and in telephone
conference calls. More than 35 analysts continuously monitor Infineon's business perfor-
mance and publish analyses on a regular basis. Prior to the placement of the two bonds in
March 2015, a bond roadshow was held for institutional investors.
Dividend
P see page 92 ff.
2010
Dividend for
Dividend
per share
€0.10
2011
€0.12
2012
fiscal year
DAX
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”.
121
04|2015
05|2015
06|2015
07|2015
08|2015
09 |2015
- Infineon
-
The Infineon Share
DAX
-
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 criteria applied for testing membership in the DAX are the average market capitalization
and trading volume in euro. Essential for the calculation of market capitalization are on the
one hand the number of shares outstanding and on the other hand the number of free-float
shares. As a result of the exercise of employee stock options, the number of shares in issue
increased during the 2015 fiscal year by 1,532,251 shares to stand at 1,129,271,481 shares at
September 30, 2015. The corresponding figure at the end of the previous fiscal year was
1,127,739,230 shares. With the exception of 6 million own shares held by Infineon, all shares
are deemed to be free float and hence taken into account in the calculation of the average
market capitalization, which rose from €9.9 billion in the 2014 fiscal year to €10.9 billion in
the 2015 fiscal year. In terms of its DAX ranking, Infineon improved by two places, moving up
from place 24 at the end of the 2014 fiscal year to place 22 at the end of the 2015 fiscal year.
The 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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
SOX
+103.6%
+36.0%
+22.7%
Year high
9.98
10.30
11.31
Fiscal year closing (end September)
Thereof: Kuwait Investment Authority
94
94
13.42
Thereof: Xetra trading in %
7,294,896
7,602,198
German stock exchanges
Daily average shares traded on regulated
4.96
6.88
6.95
7.61
8,134,049
9.42
12.84
Year low
Thereof: BlackRock Financial Management, Inc.
Thereof: BlackRock HoldCo 2, Inc.
BlackRock, Inc.
Thereof: EuroPacific Growth Fund
Thereof: Capital Research and Management Company
The Capital Group Companies, Inc.
Thereof: Dodge & Cox International Stock Fund
Dodge & Cox Investment Managers
10.35
119
Shareholder structure¹
80,678
66,501
146,820
Daily average ADS traded
6.47
9.24
8.80
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
The Infineon Share
€0.12
12.17
8.19
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
4.98% (as per June 9, 2015)
5.003% (as per May 7, 2015)
5.004% (as per June 23, 2015)
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.
about-infineon/investor/infineon-share/
shareholder-structure
Performance of the Infineon share and worldwide indices through September 30, 2015 since:
September 30,
2014
September 30,
2013
September 30,
2012
Infineon (Xetra)
@www.infineon.com/cms/en/
7.40
8.02% (as per September 1, 2012)
5.06% (as per July 28, 2011)
9.95% (as per August 5, 2009)
10.06
Year low
Year high
Fiscal year closing (end September)
Germany: Xetra closing in €
2013
2014
2015
9.88% (as per August 5, 2009)
Fiscal year ending September 30
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
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.
Infineon share statistics
2013
State of Kuwait
2014
Sales
Sa
Sf
M
Service function
Manufacturing
R&D Research & Development
Distribution center
Regional headquarters
Headquarters
Dc
Infineon sites
Infineon worldwide
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
124
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.
Nomination for the
Deutscher Zukunftspreis
2015
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
Duisburg R&D Sa
Bristol R&D Sa O
Reigate R&D
Hanover Sa
Kista Sa O
Skovlunde R&D
Newport MO
Dublin Sa O
● São Paulo Sa
In Collaboration with RobecoSAM
Durham Sa❤
Raleigh Sa
Livonia Sa O
Lebanon Sa
Tewksbury R&D
Leominster R&D M Sa
Warwick R&D
Tijuana M
Temecula M
Chandler R&D
Mesa M
Kokomo Sa ○
Dow Jones
Sustainability Indices
MEMBER OF
For the sixth year in a row, Infineon was
confirmed as a member in the Dow Jones
Sustainability Index. Additionally, Infineon
was accepted into the World Index for the
first time and as the only European semi-
conductor company. This makes Infineon
part of the most sustainable 10 percent
of semiconductor enterprises worldwide.
In January 2015, the listing was also
confirmed in the Sustainability Yearbook.
Only the top 15 percent of the most
sustainable companies in the world are
represented here.
123
Awards
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
modules to be used in electric and hybrid vehicles, which were customized for 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
Two awards from BYD
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.
BSR
February 2015
GREEN
FREIGHT
ASIA
GFA Lab Le Le One
receg of your company's co
Infineon Technologies
Asia Pacific Pte Ltd
Singapore
2014
CERTIFICATE OF
EXCELLENCE
ASIA
GREEN
FREIGHT
January 2015
€0.12
°
Gold status from Ecovadis
March 2015
Infineon is the only
European semiconductor
enterprise listed in the
Dow Jones Sustainability
World Index
September 2015
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.
Accolade for radar chips
from Bosch
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.
Global Player Award
GLOBAL PLAYER
AWARD2015
GLOB
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.
July 2015
Distinguished Partners
in Progress Award
June 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).
April 2015
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.
ecoVadis
GOLD
2015
CSR Rating
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.
● Dresden R&D M
Warstein R&D M Sa
Rotterdam Sa ○
Neu-Isenburg Sa ●
Groẞostheim Dc
December 2014
Ericsson Supply Excellence
Award 2014
Ericsson presented the Supply Excellence
Award to Infineon for its outstanding
delivery reliability and delivery quality
in the 2014 calendar year.
National Occupational
Safety and Health
Excellence Award 2014
The Malaysian Minister of Human
Resources, Yang Berhormat Dato' Sri
Richard Riot Anak Jaem, presented
the National Occupational Safety and
Health Excellence Award 2014 to
Infineon for its continuous efforts to
increase occupational safety at its
manufacturing sites.
GSA honors Infineon as
outstanding EMEA semi-
conductor company
Global Semiconductor Alliance (GSA)
presents this prize, which Infineon
GSA
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.
2014 AWARDS
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
Saint-Denis Sa
○
awards 2014
WINNER
Automotive, Aerospace & Industrial
Two awards from Huawei
received in December
2014, to semiconductor
companies in the region
of Europe, Middle East
and Africa (EMEA)
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.
European Supply Chain Excellence
Award 2014
Work-Life Excellence Award
€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
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.
us via e-mail or telephone hotline
Phone: +49 89 234-26655
Fax: +49 89 234-955 2987
E-mail: investor.relations@infineon.com
122
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Awards
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
with their questions:
Supplier Gold Award from Midea
enc
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
Beijing R&D M Sa ●
O Padova R&D
● Cegléd M
● Graz R&D
Klagenfurt Sf
Villach R&D M Sa
Our 2015 fiscal year
☐
Neubiberg
near Munich o
F&E Sa
Linz, DICE R&D
Milan Sa O
Pavia R&D O
Espoo Sa
Bangalore R&D Sa ●
Madrid Sa O
● Porto Sf
Barcelona Sa ○
Le Puy-Sainte-Réparade R&D
Ditzingen Sa
Augsburg R&D
Zurich Sa
Karlsruhe, Hitex Development Tools R&D M Sa
Regensburg R&D M
Erlangen Sa
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.
Bucharest R&D
● Vienna Sa
Seoul R&D Sa
126
Moscow Sa ○
Blackburn Sa
Istanbul Sa
Taipeh Sa
Shanghai Dc R&D Sa
Hong Kong Sa
Shenzhen Sa
Batam M
● Muntinlupa Sf
Malacca R&D MO
Ipoh R&D
Kulim M
Wuxi MOO
Xi'an Sa O
Tokyo Sa
Nagoya Sal
Osaka Sa O
Cheonan M
Singapore Dc R&D M Sa
2015
2014
Europe, Middle East, Africa
2,020
35%
16%
39%
Therein: Germany
942
859
€ in millions, except percentages
1,707
Importance of Asia-Pacific continues to grow
Share of Group Revenue 2015
Automotive
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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)
2015
2014
5,795
4,320
2,080
(31)
102
3
4
(9)
(39)
Gross profit
525
(76)
(30)
(496)
(778)
(550)
1,647
555
Revenue
€ in millions, except earnings per share
Review of results of operations
ASSOCIATED MATERIAL RISKS AND OPPORTUNITIES
REPORT ON EXPECTED DEVELOPMENTS, TOGETHER WITH
139 Review of liquidity
136 Review of financial condition
128 Review of results of operations
GROUP PERFORMANCE
144 Outlook
170
167
165
161
144
128
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
169
622
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
Group performance
Combined Management Report - Our 2015 fiscal year
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
128
127
Management Report
Our 2015 fiscal year
TREASURY AND CAPITAL REQUIREMENTS
Combined
179 Declaration concerning the management of the company
174 Corporate Governance Report
170 Information pursuant to section 289, paragraph 4, and section 315,
paragraph 4, of the German Commercial Code (HGB)
CORPORATE GOVERNANCE
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
INFINEON TECHNOLOGIES AG
186 Compensation report
488
12
47
Industrial Power Control
41%
17%
11% 0%
31%
Psee page 52 ff.
Power Management & Multimarket
2014
Other Operating Corporate and
Segments Elimininations
Chip Card &
Security
Power
Management
& Multimarket
Industrial
Power Control
Automotive
(1) (5)
2015
0
Chip Card & Security
Positive currency impact on revenue from strong US dollar
130
129
12%
34%
4,320
5,795
Other Operating Segments
2014
Changes year-on-year
Revenue
€ in millions, except percentages
GRI G4-22
The currency impact is measured by applying the previous fiscal year's relevant average
exchange rates to the 2015 fiscal year revenue.
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.
2015
Combined Management Report - Our 2015 fiscal year
14 22
500
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).
Earnings per share (basic and diluted) amounted to €0.56 per share and were therefore higher
than one year earlier (2014: €0.48).
gave
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.
P see page 135
GRI G4-22
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Group performance
Review of results of operations
0.48
0.48
0.56
0.48
0.56
535
634
0.60
494
Sharp increase in revenue
As in the previous year, business disposals had no impact on revenue in the 2015 fiscal year.
666
783
971
1,061
1,794
1,000
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").
1,500
2,000
2,351
2,500
€ in millions
Revenue by segment
G 65
1,965
The consolidated statement of operations
2014
20%
2015
2014
Change
year-on-year
4,115
3,934
5%
4,626
2,504
85%
8,741
6,438
36%
1,585
1,603
(1%)
2,491
677
268%
4,076
2,280
79%
4,665
4,158
2014
2015
6%
5%
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
Review of financial condition
€ in millions, except percentages
8,741
6,438
23%
Current assets
38%
Non-current assets
8%
Total assets
12%
13%
Current liabilities
11%
Non-current liabilities
24%
Total liabilities
26%
Total equity
20%
4%
7%
6%
9%
Statement of Financial Position Ratios:
Return on assets 1
7.3%
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
12.8%
378
Other assets
5 Inventory intensity = Inventories (net)/Total assets
422
404
6 Calculation see following section about ROCE in this chapter
8,741
6,438
G72
Liabilities and equity
8,741
6,438
4 Debt-to-equity ratio = (long-term and short-term debt)/Total equity
Assets
11.0%
38.4%
8.3%
Equity ratio 2
53.4%
64.6%
€ in millions
2015
2014
Return on equity 3
13.6%
12.9%
Gross cash position
4.5%
2,013
Trade and
other receivables
742
581
Inventories
1,129
707
Property, plant
Debt-to-equity ratio 4
Inventory intensity5
ROCE 6
1 Return on assets = Net income/Total assets
2,418
G 71
136
135
134
P see page 143
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
Negative impact on net finance result from additional debt capital
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.
Positive result from discontinued operations
133
The result from discontinued operations, net of income taxes comprised the following:
Qimonda
Wireline Communications business
Wireless mobile phone business
Result from discontinued operations, net of income taxes
2015
2014
12
29
10
8
12
€ in millions
47
P see page 230
Selling, general and
administrative expenses
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.
We incur only minor marketing expenses for advertising and trade fairs due to our sales and
customer structure.
G70
Selling, general and
administrative expenses
€ in millions
Percentage of revenue
496
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.
-
778
9%
Psee page 265 ff.
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.
2
(2)
16
72
Tax effects on adjustments
(73)
1
Revaluation of deferred tax assets resulting from
the annually updated earnings forecast
(209)
(48)
3868
Adjusted earnings from continuing operations attributable to
Weighted-average number of shares outstanding - diluted
Adjusted earnings per share (in euro) - diluted'
680
539
1,125.3
1,123.0
0.60
0.48
1 The calculation of the adjusted earnings per share is based on unrounded figures.
Adjusted net income and adjusted earnings per share (diluted) should not be seen as
a replacement or superior performance indicator, but rather as additional information
to 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".
P see page 233 f.
shareholders of Infineon Technologies AG - diluted
P see page 227 f.
Other income and expense, net
Gains (losses) on sales of assets, businesses,
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
Earnings per share in accordance with IFRS are influenced by amounts relating to purchase
price allocations for acquisitions (in particular International Rectifier) as well as by other
exceptional items.
To enable better comparability of operating performance over time, Infineon computes
adjusted earnings per share (diluted) as follows:
€ in millions (unless otherwise stated)
Earnings from continuing operations attributable to
shareholders of Infineon Technologies AG - diluted
Plus/minus:
or interests in subsidiaries, net
Impairments on assets including assets
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
2015
2015
10%
21%
› capacity utilization level of production facilities and related idle costs,
In addition to volume-related factors, the cost of goods sold is also influenced by the following:
> manufacturing support, including buildings, supply facilities, quality control and
management costs.
> foundry as well as assembly and test costs charged by subcontractors and
> overheads, including the maintenance of production facilities, operational supplies and
license fees,
› depreciation and amortization,
> personnel expenses,
> material expenses – in particular for raw wafers,
Cost of goods sold comprises mainly:
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.
Reduction in gross margin
The book-to-bill ratio was practically unchanged at 1.11 (2014: 1.12) and therefore remains
at a high level. The value of orders received increased by 32 percent from €4,857 million to
€6,421 million, boosted by organic growth, the strength of the US dollar and the acquisition
of International Rectifier.
Book-to-bill ratio still at high level
131
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Group performance
Review of results of operations
Americas
Share of Group Revenue 2015
Europe, Middle East, Africa
Asia-Pacific (excluding Japan)
Japan
35%
46%
0
12%
7%
2014
> amortization of purchased and internally generated intangible assets,
> product warranty costs,
> inventory risks
> government grants received that are spread over the useful lives of production plants and
2014
2015
Cost of goods sold
€ in millions, except percentages
Book-to-bill ratio
■Revenue
Orders received
2015
2014
1.11
班
2015
5,795
4,320
4,857
1.12
except book-to-bill ratio
€ in millions,
Orders received and revenue
G 67
A part of the cost of goods sold is incurred in currencies other than the euro. To some extent,
the effects of exchange rates on the cost of goods sold offset a similar impact on revenue.
Exchange rates had a net positive impact on gross profit in the low-triple-digit million range
in the 2015 fiscal year.
The gross margin fell accordingly year-on-year from 38.1 percent to 35.9 percent. The drop
compared to the previous fiscal year, which arose despite the revenue increase and the
positive impact of the strong US dollar, was primarily due to the earnings impact on the cost
of goods sold arising in conjunction with the purchase price allocation as well as acquisition-
related expenses for International Rectifier amounting to €143 million. The main items in
this context were higher amortization/depreciation on intangible assets and property, plant
and equipment that have been stepped up to fair values in the course of the purchase price
allocation as well as the additional expense of consuming inventories revalued to their fair
value. Moreover, further investments were made in manufacturing facilities, with a view to
creating a broader base for sustainable growth.
Gross profit (revenue less cost of goods sold) amounted to €2,080 million in the 2015 fiscal year,
an improvement of €433 million or 26 percent compared to €1,647 million one year earlier,
and hence underproportionally to the 34 percent increase in revenue.
> effects from the purchase price allocation of International Rectifier.
6,421
Americas
Japan
Asia-Pacific
(excluding
Japan)
10%
568
Total
Therein: USA
11%
484
12%
710
Americas
7%
284
367
7%
Japan
20%
868
23%
1,337
Therein: China
43%
1,845
46%
2,666
Asia-Pacific (excluding Japan)
399
3,715
8%
100%
Europe,
Middle East,
Africa
399 284
484
710
0
500
1,000
1,500
1,707
1,845
2,020
5,795
2,000
2,666
3,000
€ in millions
Revenue by region
G66
Within the Asia-Pacific region (excluding Japan), China accounted for revenue of €1,337 million
(23 percent) and therefore the largest share at individual country level. Germany followed in
second place with €942 million (16 percent). It nevertheless remains an important technology
center for the Automotive and Industrial sectors and, going forward, will continue to play
a major role, firstly in the development of new products and solutions and secondly as
a sales market.
The Asia-Pacific region (excluding Japan) had already become the largest region in the previous
fiscal year, when it accounted for 43 percent of revenue, ahead of the Europe, Middle East
and Africa region with 39 percent. The importance of the Asia-Pacific region (excluding Japan)
continued to grow in the year under report, accounting for 46 percent of revenue, compared to
the 35 percent generated in the Europe, Middle East and Africa region. The two regions together
accounted for 81 percent (2014: 82 percent) of revenue and, therefore, remain Infineon's
largest markets.
Of the total year-on-year revenue increase of €1,475 million, more than one half (€821 million
or 56 percent) related to the Asia-Pacific region (excluding Japan), followed by the Europe,
Middle East and Africa region, where revenue rose by €313 million or 21 percent of the total
revenue increase. In the Americas region - and within that region particularly the USA, which
remains the driving force for innovation - revenue grew by €226 million or 15 percent of the
total revenue increase.
All regions contributed to revenue growth in the 2015 fiscal year. The acquisition of International
Rectifier granted better access to the Chinese and US markets, a fact reflected in above-average
growth rates in these countries.
100%
4,320
2,500
2,673
Change year-on-year
39%
4,665 4,158
8,741 6,438
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.
Percentage of revenue
Change year-on-year
Selling, general and administrative expenses
Equity
€ in millions, except percentages
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.
Selling, general and administrative expenses
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Group performance
Review of results of operations
The principal R&D activities undertaken during the 2015 fiscal year are described in more
detail in the chapter "Research and development".
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.
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.
12.4%
P see page 70 ff.
Percentage of revenue
R&D expenses
2015
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.
2014
407
Other liabilities
10%
5%
6%
5%
7%
65%
53%
2015
2014
€ in millions
2015 2014
581
Trade and
802
648
Debt
1,793
186
Pension plans and
similar commitments
426
Provisions
474
379
660
other payables
3%
6%
717
12.7%
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.
Acquisition- and integration-related costs result in higher operating expenses
Operating expenses (research and development expenses and selling, general and
administrative expenses) increased by €449 million to €1,495 million in the year under report
(2014: €1,046 million), corresponding to 25.8 percent of revenue (2014: 24.2 percent).
Research and development expenses (R&D expenses)
35.9%
2015
2014
H
2,080
1,647
38.1%
€ in millions
Gross profit and gross margin
Gross profit
G 68
132
38.1%
35.9%
Percentage of revenue (gross margin)
1,647
2,080
Gross profit
61.9%
64.1%
Percentage of revenue
6%
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
550
Percentage of revenue (gross margin)
Research and development expenses
€ in millions
R&D expenses
G 69
16.7%
92
100
13.9%
1.5%
1.0%
66
59
12.7%
€ in millions, except percentages
12.4%
30%
550
717
2014
2015
Percentage of research and development expenses
For information: capitalized development costs
Percentage of revenue
Therein included grants received
Percentage of revenue
Change year-on-year
5%
(717)
12.9%
Gain from investments accounted for using the equity method
1,363
2,000
€ in millions
Cash flow
G75
Change in cash and cash equivalents from discontinued operations negatively
impacted by payments in conjunction with the Qimonda partial settlement
Net cash used from discontinued operations in the 2015 fiscal year totaled €140 million,
of which €125 million (net of value added tax) related to payments in conjunction with the
settlement reached with the Qimonda insolvency administrator. These payments were made
as part of an amicable agreement reached to terminate the proceedings relating to claims
pertaining to intragroup payments (which had been contested under insolvency law), and the
settlement of other extra-judicial claims. The payments were also deemed to settle all other
claims of the insolvency administrator, to the extent that they do not pertain to the alleged
activation of a shell company and the liability for impairment of capital, as well as the residual
liability of Qimonda Dresden.
In the previous fiscal year, net cash used in financing activities from continuing operations
amounted to €179 million, including €129 million used to pay the dividend for the 2013
fiscal year and €35 million to repurchase parts of the convertible bond that fell due in 2014.
A net amount of €25 million was used to repay non-current financial liabilities.
Net cash provided by financing activities from continuing operations totaled €1,363 million
in the 2015 fiscal year. Credit lines agreed with various national and international banks in
August 2014 to finance the International Rectifier acquisition were drawn down in January 2015.
€800 million of these amounts were repaid in March 2015 following the issue of two senior and
unsecured bonds with a total nominal value of €800 million. Overall, net cash inflows totaled
€1,584 million. In addition, the dividend for the 2014 fiscal year amounting to €202 million was
also paid. An amount of €15 million was used to acquire the remaining 33.6 percent of the
shares of LSPS.
provided by financing activities from continuing operations
Financial income excluding interest income¹
Plus:
Operating income
€ in millions
ROCE for the 2015 and 2014 fiscal years is calculated as follows:
Review of liquidity
Capital employed - ROCE
The Return on Capital Employed (ROCE) for the 2015 fiscal year fell to 12.8 percent from
20.3 percent one year earlier.
ROCE down due to increase in capital employed
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.
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.
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.
Equity up due to net income and currency factors
Deferred tax liabilities increased by €142 million to €147 million, mostly due to the revaluation
of the carrying amounts of International Rectifier's assets and liabilities to their fair value as
part of the purchase price allocation. Pensions and similar obligations went up by €47 million
to €426 million (September 30, 2014: €379 million), mainly due to actuarial losses totaling
€27 million.
Non-current 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
12.8%
2015
2014
20.3%
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.
1,000
957 988
529
(272)
(2,593)
988
957
2014
2015
Net cash provided by operating activities from continuing operations
Net cash used in investing activities from continuing operations
Purchases of (proceeds from sales of) financial investments, net
Free cash flow
€ in millions
Infineon reports the free cash flow figure, defined as net cash provided by and/or used in
operating activities and net cash provided by and/or used in or investing activities, both
from continuing operations, after adjusting for cash flows related to the purchase and sale
of financial investments. Free cash flow serves as an additional performance indicator, since
Infineon holds part of its liquidity in the form of financial investments. This does not mean
that the free cash flow calculated in this way is available to cover other disbursements, since
dividend, debt-servicing obligations and other fixed disbursements are not deducted. Free
cash flow should not be seen as a replacement or superior performance indicator, but rather
as an additional useful piece of information over and above the disclosure of the cash flow
reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
other liquidity performance indicators and other performance indicators derived from the
IFRS figures. Free cash flow includes only amounts from continuing operations, and is derived
as follows from the Consolidated Statement of Cash Flows:
Free cash flow
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
142
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.
■■■2014
2015
Net increase (decrease)
in cash and cash equivalents'
Net cash used from
discontinued operations
0
།
(1,000)
(272)
(179)
(140) (8)
H
(413)
(3,000)
(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
(2,000)
(18)
5,176
€ in millions
2
28
529
(413)
(8)
In view of the economic situation described above, Infineon expects Group revenue to
increase by 13 percent, plus or minus 2 percentage points, in the 2016 fiscal year. The Power
Management & Multimarket segment is expected to grow faster than the Group average.
Revenue growth in the Industrial Power Control segment should be roughly in line with the
Group average. The Automotive and Chip Card & Security segments are expected to be
slightly lower than the Group average.
Revenue increase of 13 percent expected, plus or minus 2 percentage points,
compared to the previous fiscal year
Forecasts for the five-year period from 2015 to 2019 also show growth rates for these three
sectors at above the expected level for the global semiconductor market as a whole, which,
according to IHS, will grow by an average of 3 percent over this period. The fastest annual
growth rate (9 percent) is predicted for the industrial sector. Over the same period, the
automotive sector is expected to grow at an average rate of 6 percent, compared to a rate of
5 percent for the chip card semiconductor market. By contrast, according to the IHS forecast,
the semiconductor markets for communications, consumer electronics and computing
applications will grow at rates below those of the global semiconductor market as a whole.
For the 2016 calendar year, IHS forecasts growth of 2 percent for the global semiconductor
market. The base scenario for this assessment is that the growth rate of the world economy
will pick up to 3.0 percent. The fastest growth rate in 2016 (10 percent) is predicted for the
industrial sector. The chip card and automotive semiconductor markets are expected to record
growth of 8 and 7 percent respectively.
In the 2014 calendar year, the global semiconductor market as denominated in US dollar
grew at an above-average rate of 9 percent. Demand developed positively across all market
segments, with only the semiconductor market for consumer electronic applications down
compared to the previous year. Experts at the market research firm IHS forecast that semi-
conductor revenues worldwide will decrease by just under 1 percent in the 2015 calendar year.
In the automotive, industrial and chip card market sectors relevant for Infineon, however,
growth rates of between 4 and 11 percent are forecast for the 2015 calendar year. By contrast,
revenue in other semiconductor segments is expected to fall.
Economic experts from the International Monetary Fund (IMF) forecast a slight improvement
for the 2016 calendar year, with a growth rate of 3.0 percent. This more optimistic forecast is
based on the assumption that the USA's economic upturn will continue and China's growth
rate will remain at a somewhat slower, but still above-average rate. The experts predict
a continuation of the Chinese government's policies aimed at preventing a faster economic
slowdown. Japan's growth rate is also set to gain pace, albeit only moderately. The IMF forecasts
further economic improvement for the eurozone on the back of low oil prices, a comparatively
weak euro and continued expansionary monetary policies.
The world economy grew by 2.7 percent in the 2014 calendar year and is expected to grow
by around 2.5 percent in the 2015 calendar year, slowed down by various unfavorable
developments, including concerns about the economic situation in China and other emerging
economies, a further escalation of the world's geopolitical crises and turbulence in financial
markets around mid-year.
Growth prospects for the world economy and the semiconductor market
In terms of revenue, the impact of exchange rates is limited almost entirely to the euro/
US dollar rate, where a deviation of 1 cent in the actual exchange rate compared to the fore-
cast rate would have an impact on revenue of between €7 million and €8 million per quarter,
or approximately €30 million per fiscal year. Planning for the 2016 fiscal year is based on an
assumed average exchange rate for the US dollar against the euro of US$1.10.
(385)
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal 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 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.
Assumed euro/US dollar exchange rate
Infineon's forecasts for the 2016 fiscal year are summarized in the table above and discussed
in detail below.
Operating expenses also developed as predicted. Research and development expenses
increased by 30 percent, 4 percentage points below the rate of revenue growth. At 57 percent,
the increase in selling, general and administrative expenses was, as expected, considerably
higher than the revenue growth rate of 34 percent. A high proportion of the increase in selling,
general and administrative expenses was attributable to acquisition-related expenses incurred
in conjunction with the acquisition of International Rectifier. For this reason, the ratio of
selling, general and administrative expenses to revenue in the 2015 fiscal year (13.4 percent)
was at the upper end of the longer-term target range of a low-teen percentage of revenue.
At 12.4 percent of revenue, research and development expenses were within the longer-term
target range of a low to mid-teen percentage of revenue.
Due to the integration of International Rectifier and the related expenses, a considerable
decrease in the gross margin was forecast. In actual fact, the gross margin finished at
35.9 percent for the 2015 fiscal year, compared to 38.1 percent one year earlier.
The outcomes for the supplementary performance indicators were also in line with forecast.
Revenue growth of 34 percent, for instance, was at the lower end of the forecast range of
36 percent, plus or minus 2 percentage points.
A sharp decrease in the Return on Capital Employed (ROCE) was forecast due to the acquisition
of International Rectifier. The actual value of 12.8 percent recorded for the 2015 fiscal year was
well below the previous year's figure of 20.3 percent, in line with expectations. The decrease
reflects the sharp rise in capital employed, which rose by €2,724 million to €5,176 million.
In light of the purchase price payment for International Rectifier, payments made in connection
with the partial Qimonda settlement and the payment of the fine imposed by the European
Commission, a high negative free cash flow had been forecast for the 2015 fiscal year. With
an actual negative free cash flow of €1,654 million, the mid-point of the forecast range was
achieved. At about €400 million, the actual outcome for free cash flow adjusted for these
exceptional items was also within the forecast range of between €350 and €500 million.
Infineon's principal performance indicators comprise Segment Result Margin, free cash flow
from continuing operations and RoCE. With a Segment Result Margin of 15.5 percent, Infineon
was slightly ahead of its forecast value of 15 percent for the 2015 fiscal year.
Outlook
145
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
About €850 million
785
146
531
139
140
ROCE
G 74
186
1,793
15
18
Other
828
US dollar
171
947
Euro
2014
2015
€ in millions
2014
8%
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
P see page 225 ff.
Net cash provided by operating activities from continuing operations
lower than in previous year
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.
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.
2,452
High level of cash used in investing activities from continuing operations
due to acquisition of International Rectifier
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
2015
92%
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.
(399)
(1,654)
317
About 16% (at the
mid-point of the planned
range for revenue growth)
Between €500 and
€600 million
Slight increase compared to
FY 2015
FY 2016
Outlook
12.8%
(1,654)
15.5%
About 15% (at the
mid-point of the planned
range for revenue growth)
Between a negative amount
of €1.6 billion to €1.7 billion
Sharp decrease compared to
previous fiscal year
About 14% (at the
mid-point of the planned
range for revenue growth)
Between €0 and
€100 million
Slight decrease compared to
FY 2014
FY 2015
Actuals
Outlook FY 2015, March 31, 2015
After integration of
International Rectifier
FY 2015
Original Outlook
In addition, the original forecasts for the 2015 fiscal year, as presented in the 2014 Annual
Report, are shown in the third column. These forecasts related to the expected development
of the Infineon Group, without taking account of financial figures for International Rectifier:
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.
Outlook
Report on expected developments,
together with associated
material risks and opportunities
Supplementary
20.3%
317
Free cash flow from
continuing operations
ROCE
14.4%
Segment Result Margin
performance indicators
Principal
FY 2014
Actuals
€ in millions, except percentages
Combined Management Report - Our 2015 fiscal year
Actual and target values for performance indicators
Growth and profitability
Change in revenue
12%
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Group performance
Review of liquidity
In the range of 40-50%
relative to revenue, therefore
above the target of 30-40%
Net cash position (gross cash
position higher than debt)
Increase to €350
to €450 million
(52)
Working capital
2,232
Net cash position
2,418
56%
Gross cash position
performance indicators
Liquidity
Growth slightly below
revenue growth
57%
Growth in line with or slightly
below revenue growth
717
30%
778
2 percentage points
Slight increase compared to
FY 2015
35.9%
2 percentage points
Considerable decrease
compared to 38.1%
in FY 2014
Growth in line with or slightly
below revenue growth
Growth considerably above
revenue growth
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%
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Increase by 13% plus/minus
550
development expenses
Selling, general and
496
administrative expenses
Growth in line with or slightly
above sales growth
Growth in line with or slightly
above sales growth
Research and
144
Debt
Net cash position
Short-term debt and current maturities of long-term debt
Long-term debt
Less:
Gross cash position
Financial investments
Cash and cash equivalents
€ in millions
The following table reconciles the gross cash position and net cash position (i.e. after deduction
of debt). Since some liquid funds are held in the form of financial investments, which for IFRS
purposes are not considered to be "cash and cash equivalents”, Infineon reports on its gross
and net cash positions in order to provide investors with a better understanding of its overall
liquidity. The gross and net cash positions are determined as follows from the Consolidated
Statement of Financial Position:
Gross cash position and net cash position
143
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Group performance
Free cash flow
of financial investments, net
Purchase of and proceeds from sales
As of September 30, 2014
317
from continuing operations
Net cash used in investing activities
Acquisition of International Rectifier results in substantial negative free cash flow
Free cash flow in the 2015 fiscal year was a negative amount of €1,654 million, compared to a
positive free cash flow of €317 million in the previous year. Of the figure for the 2015 fiscal year,
€1,869 million (after deduction of cash acquired) related to the acquisition of International
Rectifier. The payments to the Qimonda insolvency administrator, net of proceeds from the
sale of the Qimonda patents, and the payment made to the EU Commission reduced free cash
flow from continuing operations by €178 million. Excluding these exceptional items, free cash
flow from continuing operations in the 2015 fiscal year would have totaled €393 million.
Free cash flow in the previous fiscal year amounted to €317 million. Net cash provided by
operating activities from continuing operations amounting to €988 million exceeded
investments in property, plant and equipment and intangible assets totaling €668 million.
G76
Free cash flow
€ in millions
957
(2,593)
Total debt
988
(399)
(18)
(1,654)
As of September 30, 2015
■Net cash provided by operating activities
from continuing operations
(272)
About €800 million
Net cash position
Septem-
ber 30, 2014
Gross cash position
186
2014
2015
['T II.
2,232
2,418
1,793
220
2,013
€ in millions
Liquidity position as of September 30, 2015 and 2014 by comparison
G 77
P see page 248
The net cash position, which is defined as the gross cash position less short-term and long-term
debt, was positive as of September 30, 2015, despite the high negative free cash flow figure
caused by the various factors described above. The net cash position amounted to €220 million
at the end of the reporting period (September 30, 2014: €2,232 million), after dipping during
the year to a negative amount of €176 million as of March 31, 2015 following payment of the
purchase consideration for International Rectifier, payment of the dividend and payments
to both the Qimonda insolvency administrator and the EU Commission. Infineon's net cash
position had already returned to a positive amount of €49 million by June 30, 2015, thus
bringing the capital structure back within the targeted range for the net cash position (see
note 25 of the Consolidated Financial Statements "Capital management"), just one quarter
after signing the contract to acquire International Rectifier.
The gross cash position as of September 30, 2015 amounted to €2,013 million, down by
€405 million on the €2,418 million reported at September 30, 2014. In addition to the negative
free cash flow of €1,654 million described above, the gross cash position was also reduced
by the dividend payment of €202 million and by payments totaling €140 million relating to
the Qimonda insolvency and reported as net cash used from discontinued operations. Net
debt raised amounting to €1,567 million and exchange gains of €28 million on cash and cash
equivalents worked in the opposite direction.
Review of liquidity
673
1,058
1,340
1,360
2,013
2,418
Septem-
ber 30, 2015
33
1,760
151
1,793
186
220
2,232
35
About €700 million
performance indicators
Investments
(1,603)
Plus:
Short-term debt and current maturities of long-term debt
33
35
Liabilities classified as held for sale
Capital employed ②
ROCE 1/②
5,176
2,452
12.8%
20.3%
(1,585)
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).
P see page 231
P see page 231
Review of liquidity
Cash flow
€ in millions
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
2015
2014
957
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.
988
Total current liabilities
(1,360)
668
2015
2014
555
525
4
4
3
Less:
Income tax
102
(31)
Assets classified as held for sale
Financial expense excluding interest expense²
Operating income from continuing operations after tax ①
664
497
Assets
8,741
6,438
Less:
Cash and cash equivalents
(673)
(1,058)
Financial investments
(1,340)
(1)
(2,593)
Net cash provided by operating activities from continuing operations
1,363
G73
Debt by currencies
53%
46%
186
1%
€850 million
Between €700 and
550
(272)
Increase to €500
to €600 million
In the range of 30-40%
relative to revenue, therefore
within the target of 30-40%
Net cash position (gross cash
position higher than debt)
220
2,013
34.7%
In the range of 30-40%
relative to revenue, therefore
within the target of 30-40%
Net cash position (gross cash
position higher than debt)
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
138
1,793
P see page 265
Based on the preliminary purchase price allocation (see note 3 to the Consolidated Financial
Statements "Acquisitions"), goodwill of €729 million arose at the date of acquisition. This
figure increased to €778 million as of September 30, 2015 due to exchange rate factors. Other
intangible assets acquired in conjunction with the acquisition of International Rectifier, such
as customer relationships and technologies, were measured at €701 million at the acquisition
date, while acquired property, plant and equipment were recognized at a value of €379 million.
Other investments in property, plant and equipment and intangible assets in the 2015 fiscal
year totaled €785 million. Investments related mainly to the manufacturing sites in Germany
(mainly Regensburg and Dresden), Malaysia (Malacca and Kulim), and Austria (Villach).
Depreciation and amortization on property, plant and equipment as well as on intangible
assets amounted to €760 million in the 2015 fiscal year.
137
Psee page 264 f.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Group performance
(140)
(179)
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.
Review of financial condition
Deferred tax assets increased by €226 million to €604 million (September 30, 2014: €378 million),
primarily as a result of reversals of previously recognized valuation allowances on deferred tax
assets relating to tax loss carry-forwards (see note 9 to the Consolidated Financial Statements
"Income tax").
Current liabilities nearly unchanged
Current liabilities stood at €1,585 million at the end of the reporting period, €18 million
(1 percent) lower than at September 30, 2014 (€1,603 million).
Current provisions went down by €188 million during the twelve-month period. Current
provisions relating to Qimonda decreased by €265 million, primarily due to payments made
in conjunction with the partial settlement reached with Qimonda's insolvency administrator
(see note 32 to the Consolidated Financial Statements "Legal risks"). Current provisions
for obligations to employees increased by €88 million, largely reflecting the fact that the
creation of provisions for the 2015 fiscal year exceeded payments for prior-year performance-
related remuneration. Alongside current provisions, other current liabilities decreased by
€36 million, partly due to an increase of €62 million in payables to employees mostly due to
the acquisition of International Rectifier. By contrast, other current liabilities decreased as
a result of the payment of €83 million in conjunction with the fine imposed by the European
Commission ("EU Commission"), against which Infineon has meanwhile filed an appeal
(see note 32 to the Consolidated Financial Statements "Legal risks").
While current provisions and other current liabilities decreased in total by €224 million, trade
payables increased by €154 million to stand at €802 million at the end of the reporting period
(September 30, 2014: €648 million). This increase was partly due to the addition of trade
payables from International Rectifier and partly to higher business volumes and investments.
P see page 225 f.
P see page 231 ff.
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.
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 and opportunity report
> 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 continuously
updated and adhered to;
The Internal Control System is an integral part of the accounting process in all relevant legal
entities and corporate functions. The system monitors compliance with stated principles
and stipulated procedures based on preventive and detective controls. Among other things,
we regularly check that:
The principal focus of the ICS is on the financial reporting process, with the aim of monitoring
the proper maintenance and effectiveness of accounting systems and financial reporting.
The primary objective of the ICS is to minimize the risk of misstatement in Infineon's internal
and external reporting and to ensure with a reasonable amount of certainty that the Consoli-
dated Financial Statements comply with all relevant regulations. Appropriate controls must
therefore be in place throughout the organization to ensure such compliance. Clear lines of
responsibility are assigned to each of the processes.
Internal Control System with respect to the financial reporting process
Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage
and monitor identified risks and opportunities, and are responsible for formally determining
a set of appropriate strategies (avoidance, mitigation, transfer to other parties, acceptance).
Working closely with corporate functions and individual managers, the Risk and Opportunity
Manager is also responsible for defining and monitoring the measures aimed at implementing
the adopted management strategy. For our system to be successful, it is essential that risks and
opportunities are managed and monitored pro-actively and with a great deal of commitment.
Compliance with the ERM approach is monitored by the corporate Risk Management and ICS
departments using procedures incorporated in business processes. Group Internal Audit also
employs procedures to test compliance with legal requirements and Infineon guidelines and,
where appropriate, rules relating to Risk and Opportunity management and initiates corrective
measures. The Supervisory Board's Investment, Finance and Audit Committee oversees the
effectiveness of the Risk Management System. As part of the statutory audit, the external Group
auditor also examines our early warning system pursuant to section 91, paragraph 2, of the
German Stock Corporation Act to ascertain its suitability to detect risks that could pose a threat
to Infineon's going-concern status and reports annually thereon to the Chief Financial Officer
(CFO) and the Investment, Finance and Audit Committee of the Supervisory Board.
All reported risks and opportunities in their entirety are reviewed for the Infineon Group
for possible correlation and overlap factors and are analyzed using an Infineon-specific
categorization model. Regular risks and opportunities analysis and new developments in risk
management culture are supplemented by interdisciplinary workshops held at segment,
corporate and regional levels. Important information relevant for Infineon's Risk and Oppor-
tunity Management System is available to all employees via our intranet system, including
access to ERM tools and ERM guidelines, containing job descriptions for all functions involved
in the process as well as all information necessary for reporting purposes.
2016
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".
15.5%
152
35.9%
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
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)
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.
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.
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.
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.
> Processes and controls are in place to explicitly guarantee the completeness and correctness
of the year-end financial statements and financial reporting;
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
151
As a globally operating company, our business is highly dependent on global economic
developments. A worldwide economic downturn - particularly in the markets we serve - may
result in lower revenues than originally expected, with the consequence that we may not
achieve our strategic target compound annual revenue growth rate of 8 percent. Risks can
also arise due to political and social changes in countries in which we manufacture and/or
sell our products.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
We therefore continue to monitor the European debt crisis where, under the pressure of high
levels of public sector debt, governments are implementing a wide range of measures to
consolidate budgetary shortfalls and cut investment expenditure. As a consequence of these
developments, the level of trust of consumers and companies is characterized by uncertainty,
while unemployment figures remain high in many EU countries. Added to this are the current
geopolitical risks arising from the crisis in the Ukraine and the unrest in the Middle East.
The economic recovery in the USA - a market which accounts for 10 percent (fiscal year 2014:
8 percent) of our revenues, after the integration of International Rectifier - continues to pro-
ceed at a slow pace. Strong revenue growth was achieved in China, where the share of Group
revenue rose from 20 percent in 2014 to 23 percent in 2015. As a result, the risk exposure in
the event of a further slowdown of growth in China, combined with a further deterioration in
demand for exports, has increased. Regardless of our assessment of potential scenarios and
outcomes within this complex construct of risks, these developments could have an adverse
impact on Infineon's operations, financial condition, liquidity, cash flows and earnings.
Cyclical market and sector development (RC: high)
Particularly in the past, the global semiconductor market has been of a highly cyclical nature.
Our target markets continue to be exposed to the risk of short-term market fluctuations.
As a result, our own forecasts of future business developments are subject to a high degree
of uncertainty. In the past, the cyclical pattern was fairly regular, at the end of which Infineon
was able to participate in the upturn after a period of market weakness. It is, however, possible
that future market downturns will follow another pattern, for example an L-shape. The absence
of market growth or its decline would make it considerably more difficult to attain our own
growth target. In the event that we are unprepared for market fluctuations, or our response to
such fluctuations turns out to be inappropriate, this could have a sustained materially adverse
impact on Infineon's operations, financial condition, liquidity and earnings.
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
the previous year
Gross margin
Segment Result Margin
High Risk
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.
Low Risk
Working capital expected to increase
Combined Management Report - Our 2015 fiscal year
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
148
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.
Income taxes
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.
Financial result
Infineon expects the non-segment result for the 2016 fiscal year to be a negative amount of
between €200 million and €250 million, mainly attributable to acquisition-related expenses.
The non-segment result in the 2015 fiscal year was a negative amount of €274 million.
Non-segment result
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.
Segment Result Margin of approximately 16 percent expected
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.
Operating expenses expected to increase
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.
Gross margin expected to increase slightly
Outlook
147
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
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.
Medium Risk
Need for qualified staff (RC: medium)
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.
Change in revenue compared to
34%
2015
Summary of outlook for revenue and earnings
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.
Overall statement on the expected development of the Infineon group
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.
ROCE
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
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.
Gross cash position and net cash position
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.
Cash flows from financing activities
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.
Free cash flow from continuing operations
Depreciation and amortization will rise to approximately €850 million, compared to €760 million
in the 2015 fiscal 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.
P see page 32 ff.
Investments and depreciation/amortization
149
Likelihood of Occurrence
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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.
Product quality trends (RC: medium)
Combined Management Report - Our 2015 fiscal year
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
154
153
Potential virus attacks, in particular on IT systems used in manufacturing processes, present
additional risks that could result in loss of manufacturing or supply bottlenecks.
The reliability and security of Infineon's information technology systems is of crucial
importance. At the same time, the world has seen a general rise in the level of threats to data
security. This applies increasingly to both the application of IT systems to support business
processes and to internal and external communications. Despite the array of precautionary
measures put in place, any major disruption to these systems could result in risks relating
to the confidentiality, availability and reliability of data and systems used in development,
manufacturing, selling or administration functions, which, in turn, could have an adverse
impact on our reputation, competitiveness and operations.
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.
Data and IT systems security (RC: high)
5
4
3
2
1
1
5 >90% Certain
4 <90% Probable
150
Financial risks
Risk of default by banking partners (RC: medium)
The relatively high level of our holdings of liquid funds (gross cash position) exposes us to
the potential risk of 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.
Our global business strategy requires the maintenance of R&D locations and manufacturing
sites throughout the world. The location of such facilities is determined by market entry
hurdles, technology and cost factors. Risks could, therefore, arise from adverse economic
and geo-political developments in our regional markets, changes in legislation, and policies
affecting trade and investment aimed at limiting free trade and varying practices of the
regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate.
These risks could restrict our business activities in those countries. We could also be exposed
to fines, sanctions and damage to our reputation.
Impact of our global operations (RC: medium)
We cannot rule out that patent infringement claims will be upheld in a court of law, thus
resulting in significant claims for damages or restrictions in selling the products concerned.
Any such outcome could in turn have an adverse impact on our earnings performance.
Further information is provided in note 32 to the Consolidated Financial Statements.
Whilst we often benefit from cross-licensing arrangements with major competitors and are
keen to broaden the protection offered in this area by entering into new agreements, no
such opportunities exist to safeguard against risks of this nature in the case of companies
specializing in the exploitation of patent rights.
As with many other companies in the semiconductor industry, allegations are made against
us from time to time that we have infringed other parties' protected rights. Regardless of the
prospects of success of such claims, substantial legal defense costs can arise.
Intellectual property rights and patents (RC: medium)
Provisions are recognized in connection with these matters as of September 30, 2015. The
provisions reflect the amount of those liabilities that management believes are probable and
can be estimated with reasonable accuracy at that time. There can be no assurance that such
provisions recorded will be sufficient to cover all liabilities that may ultimately be incurred
in relation to these matters.
Due to the insolvency proceedings relating to Qimonda and claims brought against Infineon,
we are exposed - even after the partial settlement reached on September 11, 2014 - to
a substantial amount of potential liabilities, which are described in detail in note 32 to the
Consolidated Financial Statements.
Qimonda insolvency (RC: medium)
Legal and compliance risks
Further information regarding the management of financial risks is provided in note 31 to the
Consolidated Financial Statements.
Specified currencies are hedged Group-wide by means of derivative financial instruments.
These hedges are based on forecasts of future cash flows, the occurrence of which is uncertain.
Under these circumstances, exchange rate fluctuations could - despite hedging measures -
also have a negative impact on earnings.
Our involvement and participation in various regional markets around the world creates cash
flows in a number of currencies other than the euro - primarily in US dollars. A significant
share of revenue on the one hand and of operating costs and investments on the other is
denominated in US dollars and correlated currencies. For the most part, Infineon generates
a US dollar surplus from these transactions.
Currency risks (RC: medium)
Psee page 265 ff.
P see page 261 ff.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
156
155
3 <60% Likely
2 <40% Possible
Likelihood of Occurrence
5 >€250 million Major
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.
1 <10% Unlikely
Degree of Impact
Risk assessment matrix
G78
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.
Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation
or hedging measures, but without offsetting any provisions recognized. The time periods and
the measurement categories used are closely linked to our short- and medium-term business
planning and Group targets.
In organizational terms, the Risk and Opportunity Management System is structured in a closed-
loop, multiple-stage process, which stipulates the manner and criteria to be applied to identify,
measure, manage and report on risks and opportunities and defines how the system is to be
monitored as a whole. Major components of the system are a quarterly analysis of risks and
opportunities, reporting by all consolidated entities, an analysis of the overall situation at
segment, regional and Group level, and reporting to the Management Board on the risks and
opportunities situation as well as major management measures undertaken. The Management
Board, in turn, reports regularly to the Supervisory Board's Investment, Finance and Audit
Committee. Where necessary, standard processes are supplemented by the ad-hoc reporting
of any major risks identified between regular reporting dates.
Responsibility for processes and systems relating to Risk and Opportunity Management rests
with the Risk Management and Internal Control System (ICS) function within the corporate
finance department and with designated Risk Officers working at segment, corporate function
and regional levels. Responsibility for the identification, measurement, management and
reporting of risks and opportunities lies with the management of the organizational unit
concerned.
Infineon's centralized risk management system is based on a Group-wide, management-
oriented Enterprise Risk Management (ERM) approach, which aims to cover all relevant risks
and opportunities. The approach is based on the "Enterprise Risk Management - Integrated
Framework" developed by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The objective of the system is the early identification, assessment and
management of risks that could have a significant influence on Infineon's ability to achieve
its strategic, operational, financial and compliance-related targets. We therefore define risk/
opportunity as the occurrence of future uncertainties that could result in a negative or posi-
tive variance from business planning. We incorporate all relevant organizational units within
the Group in this analysis, thus covering all segments, significant centralized functions and
regions. Accordingly, in conjunction with the acquisition of International Rectifier, the relevant
organizational units at segment and regional level have been integrated in Infineon's Risk and
Opportunity Management System.
Risk and Opportunity Management System
Combined Management Report - Our 2015 fiscal year
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Moreover, our dependence on various raw materials (such as gold and copper) used in manu-
facturing and our energy requirements expose us to substantial price risks. We are also depen-
dent on supplies of the so-called rare earths required for selected manufacturing processes in
conjunction with process integration. At the time of writing, financial instruments are in place
to hedge our price risk exposure for gold wire during the 2016 fiscal year, based on planned
5
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.
4 > €100 million Significant
3 >€60 million Moderate
2 >€20 million Minor
2
3
<€20 million Marginal
1
on Segment Result
4
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.
Degree of Impact
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
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 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 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.
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.
Overall statement of the
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.
Derivative financial instruments
Management Board with respect
to Infineon's financial condition
as of the date of this report
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.
-
Even after the International Rectifier acquisition, which we financed partly with existing liquidity
and partly by borrowings, the structure of Infineon's Statement of Financial Position remains
extremely solid. Just three months after completion of the acquisition of International Rectifier,
Infineon's net cash position had already returned to a positive amount of €49 million as of
June 30, 2015, thus bringing the capital structure back within the targeted range for the net
cash position (see note 25 of the Consolidated Financial Statements "Capital management").
As of September 30, 2015 we report an equity ratio of 53.4 percent and a gross cash position in
excess of €2 billion, enabling us to raise the dividend once again. Accordingly, a proposal will
be made to the Annual General Meeting to raise the dividend for the 2015 fiscal year by 2 cents
to 20 cents per share.
In recent years, we have focused systematically on growth markets where performance is being
driven by modern-day social, economic and ecological trends. Our semiconductor solutions
help make life easier, safer and more compatible with the environment - with technologies
that perform better, consume less and are readily available to everyone. Microelectronics
from Infineon are the key to a worthwhile future, by enabling us to combine the analog with
the digital world. Our aspiration to contribute towards better living standards is set out in
our new guiding principles. The acquisition of International Rectifier is helping us to perform
better than ever in our growth markets.
We remain fully committed to achieving our targets and plan to grow at a compound annual
revenue growth rate of 8 percent over the cycle, thereby generating a Segment Result Margin
of 15 percent. Our intention is to achieve this growth with an average ratio of investments to
revenue of 13 percent over the economic cycle.
P see page 248
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INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
Coverage of capital requirements
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.
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.
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.
> make scheduled debt and interest payments,
P see page 229
We see numerous opportunities for working with new materials, such as those associated
with gallium nitride or silicon carbide, to develop new, more powerful and lower-cost
products. These materials could well have a positive influence on our ability to attain our
strategic growth and profitability targets.
Strategic initiative "Product to System" (OC: high)
With our extended "Product to System" strategy, we seek to identify additional benefits for
our customers, in system terms, from within our broad portfolio of technologies and products.
The strategy enables us to effectively exploit available revenue potential to an even greater
degree and thereby achieve our growth and margin targets. This approach also helps us reduce
the level of development costs incurred by customers and shorten the lead-time required to
bring their products to market.
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. Electricity is becoming the most important energy
carrier of the 21st century. Fossil fuel sources exploited to cover energy and electricity require-
ments are likely to become increasingly scarce and could even run out entirely at some point
in the future. Alternative energy sources such as renewable energy need to be additionally
explored. At the same time, it is imperative to reduce CO2 emissions, or at least any increase in
them needs to be kept to a minimum. In order to achieve this goal, it is essential to increase
the efficiency of electric power consumption.
Infineon's semiconductors enable electricity to be generated from renewable energy sources.
They also boost energy efficiency and offer efficiency gains at all stages of the energy
industry's value-added chain, whether in generation, transmission, or above all in the use
of electrical power. They form the basis for the intelligent and efficient use of energy in
industrial applications, in power supplies for computers and consumer electronics, and in
vehicles. These innovative technologies may enable us to grow revenue beyond our strategic
target of 8 percent per annum.
Ability to supply due to available capacities (OC: medium)
Our own in-house frontend and backend capacities, the availability of external manufacturing
capacities and the options available to expand manufacturing capacities at our sites in
Dresden (Germany) and Kulim (Malaysia) place us in a flexible position to deliver the required
production volumes. The availability of additional capacities, combined with the pro-active
strategic and operational planning of internal and external resources, enable us to meet rising
demand from both existing and new customers in the event of a market upturn. This, in turn,
could have a positive impact on Infineon's future market share and earnings performance,
with the consequence that the actual Segment Result Margin could be higher than the targeted
level of 15 percent.
Market access and activities in China (OC: medium)
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:
Vehicle production in China is still expanding, albeit at a slower pace. China is also pressing
ahead with expanding its high-speed railway infrastructure and is, meanwhile, one of the
world's largest markets in the field of rail vehicles.
New wind turbines are being built with increasingly powerful generators, resulting in greater
semiconductor content per unit.
159
160
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
Our starting position with photovoltaic systems in China is a highly promising one. We col-
laborate with several leading Chinese inverter manufacturers and this year in particular have
expanded the scope of our collaboration with the Chinese market leader. We also have a strong
presence in China in the solar energy systems sector, which has become the most important
single market in the world.
If we succeed in positioning Infineon in China as an integral part of Chinese industry (and hence
Chinese society), it can open up a multitude of new opportunities that will have a positive
impact on the growth and profitability of our business.
Further growth in semiconductor content in vehicles (OC: medium)
We expect semiconductor content per vehicle to continue growing. The primary driving force
behind this trend is the rising demand for active safety features and driver assistance systems.
We are also convinced that the CO2 targets currently in place cannot be achieved without
further electrification. In this context, electrification not only relates to hybrid and electric
drives, but also to technologies such as electric power steering and electronic power brakes.
IT security within the vehicle is also gaining in importance. Thanks to its expertise in the field of
security controllers, Infineon is extremely well positioned to exploit opportunities in this area.
Growth from mobile 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).
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 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.
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.
Liquidity position (OC: medium)
New technologies and materials (OC: high)
Opportunities
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Proposed dividend
Asian markets are particularly important to our long-term growth strategy. Our operations
in China are impacted by the fact that the legal system in that country is still undergoing a
phase of development and change. One example is the fact that local regulations could make
it mandatory to enter into partnerships with local companies. These circumstances could lead
to Infineon's intellectual property no longer being sufficiently protected and that intellectual
property developed in China could not be freely transferred to other countries and locations,
thus impairing revenue and profitability.
Acquisitions and cooperation arrangements (RC: medium)
In order to develop or expand our business, we may seek to acquire other businesses or enter
into various forms of cooperation arrangements. In the case of acquisitions, there is a risk
that these activities prove to be unsuccessful, particularly regarding the integration of people
and products in existing business structures. These issues could adversely impact our financial
condition and earnings performance.
In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-com-
pliance with antitrust regulations due to lack of knowledge or failure to make the people
involved in such transactions adequately aware of the issues. This can result in high levels of
cost (e.g. significant time spent by management, assignment of attorneys) and fines. Infineon's
reputation may also suffer under these circumstances.
The acquisition of International Rectifier was successfully executed in 2015 as planned.
The risks described above, especially in terms of assimilating the two businesses, have not
materialized to date.
Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate
these risks, we rely upon the advice of both in-house and external experts and provide suitable
training to our employees.
Measures to implement our risk management strategy
At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor
sector from economic and demand fluctuations and the risks related to Infineon's operations,
financial condition, liquidity and earnings by closely monitoring changes in early warning
indicators as well as by developing specific response strategies appropriate to the current
position within the economic cycle. This can be done, for instance, by rigorously adjusting
capacities and inventory levels at an early stage, initiating cost-saving measures and making
flexible use of external production capacities, both at frontend and backend facilities.
A raft of measures to improve manufacturing productivity was introduced under the "Next Level
of Productivity" program during the 2015 fiscal year.
At an operational level, we have adopted various quality management strategies aimed at
avoiding quality risks (such as “Zero Defects” and “Six Sigma"), to prevent or solve problems
and to improve our business processes. Our company-wide quality management system
has been certified on a worldwide basis in accordance with ISO 9001 and ISO/TS 16949 for
a number of years and also encompasses supplier development. Our processes and initiatives
to ensure continuous quality improvement in corporate procedures are aimed at identifying
and eliminating the reasons for quality-related problems at an early stage.
A structured project management system is in place to handle development projects, including
customer-specific projects. Clear project milestones and verification procedures required
to be carried out during a project as well as clearly defined limits of authority help us identify
potential project risks at an early stage and counter these risks with specific measures.
157
158
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
We seek to minimize procurement-related risks through appropriate purchasing strategies
and techniques, including constant product and cost analysis ("Best Cost Country Sourcing"
and "Focus-on-Value"). These programs include cross-functional teams of experts, who are
responsible for the standardization of purchasing processes with respect to material and
technical equipment.
In response to the general increase in threats to data security and the high degree of pro-
fessionalism meanwhile applied in the area of cybercrime, we have initiated a data security
program to provide the greatest possible protection against hacking attacks and related risks
to our IT systems, networks, products, solutions and services. Once the required measures
have been defined, they are then implemented in successive stages.
We are subject to legislation with regard to the environment, climate protection and the use
of energy. Present or future environmental legislation and other government regulations,
or amendments thereto, could require an adjustment to our operating activities and result
in higher costs. Infineon keeps abreast of planned legislative changes and engages in these
issues in various associations and organizations on an ongoing basis.
In the past, energy prices have been subject to fluctuations and, at times, to increases as a
result of regulations. For this reason too, a high degree of energy efficiency has been an integral
part of our sustainability strategy for many years.
We minimize legal risks relating to intellectual property rights and patents by pursuing a
well-defined patent strategy, including thorough patent research and selective development
and registration of Infineon patents as well as precautionary protective measures in the form
of agreements with major competitors. We aim to increase the number and scope of such
cross-licensing agreements with leading competitors in order to reduce patent-related risks.
However, no such opportunities exist to safeguard against risks of this nature in the case of
companies specializing in exploiting patent rights.
We have established a Group-wide compliance management system with the aim of managing
compliance-related risks on a systematic, comprehensive and sustainable basis. Under this
system, major preventive procedures are continuously developed, other elements of the
system revamped or strengthened, and appropriate responses established for possible or
actual incidences of non-compliance with internal or external regulations.
In certain cases,
‚ insurance policies have been taken out to protect against potential claims
and liability risks, with the aim of avoiding or at least minimizing any adverse impact on
Infineon's financial condition and liquidity.
Overall statement by Group Management on risk situation
The overall risk assessment is based on a consolidated view of all significant individual risks.
We are not currently aware of any substantial risks capable of jeopardizing Infineon's going-
concern status.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
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.
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 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.
> finance planned investments,
> settle provisions and contingent liabilities, if and when they become payable or arise and
> pay the proposed dividend.
We expect to meet these requirements through
> cash flows generated from operations,
› available cash funds and our cash reserves in the form of financial investments and
> available credit facilities.
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.
Semiconductor manufacturing is very capital-intensive. Infineon's target ratio for future
fiscal years for expected investments as a percentage of revenue over the economic cycle
(for definition see the chapter "Internal Management System") is approximately 13 percent.
Depending on the business situation, Infineon is currently planning investments for the 2016
fiscal year of approximately €850 million (for details see "Outlook" in the chapter "Report
on expected developments, together with associated material risks and opportunities").
Firm investment commitments as of September 30, 2015 totaled €202 million.
Debt repayment
As of September 30, 2015 Infineon's debt totaled €1,793 million, of which an amount of
€33 million falls due for repayment in the 2016 fiscal year.
Provisions and contingent liabilities
Infineon issues guarantees in the ordinary course of business, primarily for the payment of
import duties, the rental of buildings and contingent obligations related to government grants
received. As of September 30, 2015, the undiscounted amount of potential future payments
for guarantees was €72 million, of which up to a maximum of €14 million could have a cash flow
impact in the 2016 fiscal year.
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.
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).
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
International Rectifier acquisition (OC: medium)
P see page 247 f.
Psee page 90
> finance our operations,
We require capital for the 2016 fiscal year amongst others to
Investments
163
161
Treasury and capital requirements
Capital requirements for the 2016 fiscal year
Structure and principles of Infineon's treasury
Our principal objective for Group-wide treasury activities at Infineon is ensuring financial
flexibility based on a solid capital structure. It is of prime importance for all companies in the
semiconductor industry that sufficient cash funds are available to finance operating activities
and planned investments throughout all phases of the business cycle. Furthermore, debt
should only constitute a modest proportion of the financing mix. Based on these principles,
Infineon has defined the following three key objectives for capital management, all of which
continue to be pursued also after the acquisition of International Rectifier:
> Gross cash position of between 30 and 40 percent of revenue,
> Positive net cash position and
> Gross debt at a maximum of 2 x EBITDA (earnings from continuing operations before interest
and taxes plus scheduled depreciation and amortization).
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Treasury and capital requirements
Treasury principles and responsibilities
Group-wide treasury principles are in place regarding all issues relating to liquidity and
financing, such as banking policies and strategies, execution of financing agreements, liquidity
and investment management worldwide, currency and interest rate risk management and the
handling of external and intragroup cash flows. Treasury principles, which apply throughout
Infineon, are set out in the corresponding "Treasury Policy" and are regularly reviewed and
updated. Three levels of responsibility play a key role for treasury principles:
> The CFO is responsible for setting treasury principles and after consultation with the CEO,
for approving the Treasury Policy. The Treasury Committee, consisting of the CFO and
selected members of senior management, decides on treasury-related matters, including
exchange rates for planning purposes and currency hedging strategies, and issues the
appropriate guidelines to ensure that these strategies are implemented.
> The Group Finance and Treasury department is responsible for specific corporate treasury
transactions and for ensuring that Infineon's treasury principles are implemented worldwide.
> At subsidiary company level, responsibility for treasury matters lies with local financial
executives and heads of finance, or, in the case of larger entities, with dedicated treasurers.
Controlling functions at Group level ensure that transactions undertaken by individual
business entities are in keeping with treasury principles.
We are not subject to any statutory or legal capital requirements, nor are any defined in the
Articles of Association.
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
P see page 261 ff.
Corporate treasury function
Treasury at Infineon is based on a centralized approach, in which the Group Finance & Treasury
department is responsible for all major tasks and processes worldwide relating to financing
and treasury matters. The starting point is the creation of a multi-year business plan with
various scenarios for free cash flow. For the purposes of short-term liquidity management at
operational level, all consolidated subsidiaries are included in a monthly rolling cash flow
forecast. Simultaneously, a cash flow forecast is drawn up using a bottom-up approach
based on the operating segments' forecasts. At the end of each quarter, the two forecasts are
reconciled at a quarterly liquidity management meeting and checked for plausibility and
possible deviations.
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.
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).
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Treasury and capital requirements
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.
162
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Structure of the subscribed capital
Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
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.
171
Shareholdings exceeding 10 percent of the voting rights
of the German Commercial Code (HGB)
Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register
of Infineon Technologies AG are recognized as shareholders of the Company. In order to be
recorded in the share register of Infineon Technologies AG, shareholders are required to sub-
mit to the Company the number of shares held by them and their name or company name,
their address and, where applicable, their registered office and their date of birth. Pursuant to
section 67, paragraph 4, AktG Infineon Technologies AG is entitled to request information from
any party listed in the share register regarding the extent to which shares, to which the entry
in the share register relates, are actually owned by the registered party and, if it does not own
the shares, to receive the information necessary for the maintenance of the share register in
relation to the party for whom the party concerned holds the shares. Section 67, paragraph 2,
AktG stipulates that the shares concerned do not confer voting rights until such time as the
information requested has been supplied in the appropriate manner.
Restrictions on the voting rights of shares may, in particular, arise as the result of the regula-
tions of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example, pursuant
to section 136 AktG shareholders are under certain circumstances prohibited from voting and
according to section 71b AktG Infineon Technologies AG has no voting rights from its own
shares. Non-compliance with the notification requirements pursuant to section 21, paragraph 1
or 1a of the German Securities Trading Act (Wertpapierhandelsgesetz – “WpHG") can, according
to section 28 WPHG, have the effect that certain rights - including the right to vote - may,
temporarily at least, not exist. We are not aware of any contractual restrictions on voting rights
or the transfer of shares.
Restrictions on voting rights or the transfer of shares
The Company held 6 million of the above-mentioned issued shares as own shares at the end
of the reporting period (September 30, 2014: 6 million). Own shares held by the Company on
the date of the Annual General Meeting do not carry a vote and are not entitled to participate
in profit.
The share capital of Infineon Technologies AG stood at €2,258,542,962 as of September 30, 2015.
This sum is divided into 1,129,271,481 non-par registered shares, each of which represents
a notional portion of the share capital of €2. Each share carries one vote and gives an equal
right to the profit of the Company based on the profit appropriation resolved by shareholders
at the Annual General Meeting.
Information pursuant to section 289, paragraph 4,
and section 315, paragraph 4,
Shares with special control rights
Powers of the Management Board to issue shares
System of control over voting rights when employees' own shares and
their control rights are not exercised directly
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.
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. 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.
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).
Rules governing the amendment of the Articles of Association
Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Asso-
ciation rests with the Annual General Meeting. However section 10, paragraph 4, of the Articles
of Association gives the Supervisory Board the authority to amend the Articles of Association
insofar as such amendments relate merely to the wording, such as changes in the share capital
amount resulting from a capital increase out of conditional or authorized capital or a capital
decrease by means of cancellation of own shares. Unless the Articles of Association provide
for another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual
General Meeting regarding the amendment of the Articles of Association require a majority of
at least three quarters of the share capital represented. Section 17, paragraph 1, of the Articles
of Association of Infineon Technologies AG provides in principle for resolutions to be passed
with a simple majority of the votes cast and, when a capital majority is required, with a simple
majority of the capital unless a higher majority is required by law or in accordance with other
stipulations contained in the Articles of Association.
The powers of the Management Board to issue shares derive from section 4 of the Articles of
Association, in conjunction with applicable legal provisions. Further information relating
to the Company's existing Authorized and Conditional Capital can be found in note 24 to the
Consolidated Financial Statements.
Psee page 245 f.
Corporate Governance
172
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
No shares conferring special control rights have been issued.
Combined Management Report - Our 2015 fiscal year
21
170
Authorization to issue bonds with warrants and/or convertible bonds
Liabilities
2,578
819
Deferred income
15
Total liabilities and shareholders' equity
9,487
7,458
P see page 265
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.
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 ANNUAL REPORT 2015
Significant events after the end of the reporting period
169
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.
The equity ratio at the end of the reporting period was 67.3 percent, compared to 80.5 percent
one year earlier.
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 €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.
For the 2014 fiscal year, the Company paid a dividend of €0.18 per share (€202 million in total).
For information regarding Infineon's long-term dividend policy, see the section "Dividend"
in the chapter "The Infineon share".
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”.
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.
P see page 121
Psee page 149 ff.
P❘ see page 164
Significant events after the end
of the reporting period
No significant events occurred between the end of the reporting period and the submission
of the Consolidated Financial Statements to the Supervisory Board.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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,
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.
> 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.
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.
Corporate Compliance Officer and Compliance Panel
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Corporate Governance Report
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.
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.
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.
Risk management
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.
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.
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.
Transparent management
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.
-
P see page 149 ff.
175
176
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
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.
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.
D&O insurance
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).
Financial reporting and auditing
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.
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.
Directors' dealings
"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.
819
@www.infineon.com
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
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 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.
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
Corporate Governance
Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
173
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.
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.
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.
The use of own shares, acquired through derivative instruments, is governed by the same
rules as applicable for the direct acquisitions of own shares.
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.
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.
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.
P see page 247
@www.infineon.com/cms/en/
about-infineon/investor/capital-returns/
program-2013
Psee page 243 f.
174
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
Psee page 186 f.
Agreements for compensation in the event of a takeover bid
If a member of the Management Board leaves his or her position in connection with a change
of control, that member is currently entitled to continued payment of the relevant annual
remuneration for the entire remaining contract term. In accordance with a special contract
termination right granted to members of the Management Board, the period of continued
payment is capped at a maximum of 36 months in the event that the member resigns, or at a
minimum of 24 months and a maximum of 36 months in the event that the member is removed
from office or dismissed by Infineon Technologies AG. Further details are contained in the
Compensation Report.
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.
Comparable arrangements for employees are only in place in a small number of individual cases.
@www.infineon.com/cms/en/
about-infineon/investor/
corporate-governance/compliance/
business-conduct-guidelines/
Corporate Governance Report
> 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;
979
Cost of goods sold
795
1,003
Interest result
(52)
(22)
Other financial result
Income before taxes
Income tax
Net income
(7)
47
618
1,269
(47)
361
(28)
1,241
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
(137)
(228)
(208)
(784)
226
229
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.
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
571
Result from investments, net
39
48
Trade payables, liabilities to affiliated companies and other liabilities
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
(3,698)
(3,528)
Gross profit
1,545
1,073
(724)
(547)
Selling expenses
(153)
(138)
General and administrative expenses
(400)
(186)
Other income (expense), net
Combined Management Report - Our 2015 fiscal year
Net assets and financial position
Research and development expenses
€ in millions
Capital reserves
Retained earnings
Distributable profit
Shareholders' equity
2,247
2,243
1,179
1,165
2,737
2,365
226
229
6,389
6,002
Special reserve with an equity portion
Provisions for pensions and similar obligations
Other provisions
1
142
62
362
553
Provisions
504
615
Bonds
Statement of financial position of Infineon Technologies AG in accordance with
the German Commercial Code (condensed)
804
Liabilities to banks
Share capital
7,458
1
Total assets
Financial assets
Intangible assets, property, plant and equipment
2015
9,487
2014
530
474
3,651
Non-current assets
Inventories
5,775
4,125
517
344
Receivables and other assets
5,245
618
1,481
Active difference resulting from offsetting
3
39
28
3,301
4
Prepaid expenses
Current assets
2,339
1,672
Cash and cash equivalents, marketable securities
3,670
of the Supervisory Board's committees
and Supervisory Board and of the composition and mode of operation
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.
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.
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.
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.
Supervisory Board
Work of the Supervisory Board
The duties of the Supervisory Board and its committees are regulated by law, by the Articles
of Association and by the rules of procedure of the Supervisory Board and its committees.
In addition, the DCGK contains recommendations pertaining to Supervisory Board work.
Once a year, the Supervisory Board reviews the efficiency of its work, including its interaction
with the Management Board. The efficiency review is performed on the basis of a question-
naire addressing different areas and criteria of the Supervisory Board's work. The results are
subsequently discussed at a Supervisory Board meeting. In the 2010 fiscal year, an external
independent consultant was engaged for the first time to conduct a detailed survey of Super-
visory Board activities. The most recent efficiency review took place in summer 2015, again
based on a questionnaire. No significant deficits in efficiency were identified.
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.
Description of the mode of operation of the Management Board
182
181
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Corporate Governance Report
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.
1.
Combined Management Report - Our 2015 fiscal year
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
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:
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
Shareholders and Annual General Meeting
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:
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.
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.
P see pages 275 ff. und 16 f.
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.
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
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
"Law on Equal Participation of Women and Men in Leadership Positions
in the Private and Public Sector"
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Corporate Governance Report
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.
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.
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.
Shareholdings of Management Board and Supervisory Board
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.
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.
Compensation of the Management Board and the Supervisory Board
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
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.
› 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.
Diversity also includes gender diversity. As a listed company subject to co-determination
stipulations, by law the Supervisory Board must be made up of at least 30 percent women
and at least 30 percent men.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Corporate Governance Report
› International character
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.
› Age limit
As a general rule, no-one older than 69 years of age should be proposed for membership
of the Supervisory Board.
> General rule for maximum period of service on the Supervisory Board
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).
The objectives and requirements profile approved by the Supervisory Board is taken into
account when making nominations to the Annual General Meeting. As part of this process,
the Supervisory Board also discloses any of the candidate's business or other relationships
with Infineon, the Company's representative bodies and/or a major shareholder in the Com-
pany, if an impartial shareholder making an objective decision about the election would
consider such information to be of relevance. The same applies in respect of the work of the
Nomination Committee, insofar as this committee performs the preparatory work for the
Supervisory Board decision.
The Supervisory Board also recommends that members who have been elected by the
employees do what they can, within the scope of their influence, to have the objectives and
requirements profile taken into account in the nominations made by the relevant bodies on
the employees' side. Lastly, the Supervisory Board recommends that the objectives should
be taken into account by any of its members making an application for the appointment of
a member of the Supervisory Board by the courts.
The 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.
Supervisory Board committees
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.
› Personal suitability
@www.infineon.com
Purchase/sale
Price (per unit)
Frankfurt Stock Exchange (Xetra)
1,379
€10,794.81
Date of transaction
Number of units
Total volume
December 01, 2014
Purchase
€7.83
2,957
€23,144.44
€7.83
Date of transaction
Total volume
December 01, 2014
Purchase
€7.83
1,375
€10,764.88
Date of transaction
Purchase/sale
Price (per unit)
Purchase/sale
Price (per unit)
Number of units
Purchase
December 01, 2014
Member of the Management Board
Shares in Infineon Technologies AG
DE0006231004/623 100
€50,432.00
November 28, 2014
Purchase
€7.89
4,400
€34,694.00
Total volume of transactions
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
Number of units
Total volume
December 01, 2014
Purchase
€7.83
1,503
€261,560.00
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
Transaction location
Mittal, Arunjai
Member of the Management Board
Shares in Infineon Technologies AG
DE0006231004/623 100
June 2, 2015
Sale
€11.94
21,598
€257,885.52
26,000
P see page 249 f.
€10.06
February 16, 2015
€11,768.49
Total volume of transactions
Transaction location
€56,472.62
Frankfurt Stock Exchange (Xetra)
177
178
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
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
Sale
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.
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.
Supervisory Board
Compensation system
The Management Board compensation system - similar to the compensation paid to the
individual members of the Management Board - is defined and regularly reviewed by the full
Supervisory Board on the basis of proposals from the Executive Committee. In accordance
with applicable legal requirements and the recommendations of the DCGK, the compensation
paid to the members of the Management Board is intended to reflect the typical level and
structure of management board compensation at comparable companies in Germany and
elsewhere, as well as Infineon's economic position and future prospects. The duties, responsi-
bilities and performance of each member of the Management Board are also to be considered,
as is Infineon's wider pay structure. This includes considering Management Board compen-
sation in relation to the compensation of senior management and of the workforce as a whole,
including changes in the level of compensation over time. The stated objective is that the
compensation structure should be designed in such a way that it promotes sustainable busi-
ness development, with a cap in place in the event of exceptional developments. Infineon
aims to set compensation at a level that is competitive both nationally and internationally so
as to inspire and reward dedication and success in a dynamic environment.
Components of the Management Board compensation system
There have been no changes in the Management Board compensation system in the 2015
fiscal year compared to the 2014 fiscal year.
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:
> 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.
> 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 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:
(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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Corporate Governance Report
The following securities transactions were notified to the Company during the previous
fiscal year by persons discharging managerial responsibilities and parties related to them:
Last name, first name
Function
Description
Management Board compensation
ISIN/WKN
Purchase/sale
Price (per unit)
Number of units
Total volume
Purchase/sale
Price (per unit)
Number of units
Total volume
Dr. Ploss, Reinhard
Chairman of the Management Board
Shares in Infineon Technologies AG
DE0006231004/623 100
November 28, 2014
Purchase
€7.88
6,400
The targets to be achieved by June 30, 2017 by the entities concerned are as follows (in each
case compared to the current situation):
Date of transaction
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.
Date of transaction
Combined Management Report - Our 2015 fiscal year
Management Board/Board of Directors
Compensation report
1st leadership level
2nd leadership level
Infineon Technologies AG
Infineon Technologies
Current
situation
Target
figure
Current
Target
situation
figure
statutory 30% quota
16.7%
25%
Dresden GmbH
0%
186
0%
185
Psee page 275 ff.
22.2%
20%
18.5%
22.2%
13.3%
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
6%
0%
0%
0%
13.3%
128 Review of results of operations
144
GROUP PERFORMANCE
170
169
167
165
161
128
124
Content
9
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
126
INFINEON WORLDWIDE
AWARDS
122
THE INFINEON SHARE
136 Review of financial condition
118
o Our 2015 fiscal year
139 Review of liquidity
CONSOLIDATED STATEMENT OF OPERATIONS
ASSOCIATED MATERIAL RISKS AND OPPORTUNITIES
NOTABLE EVENTS 2015
210
208
206
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
204
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
203
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
OVERALL STATEMENT OF THE MANAGEMENT BOARD WITH RESPECT TO
TREASURY AND CAPITAL REQUIREMENTS
149 Risk and opportunity report
144 Outlook
REPORT ON EXPECTED DEVELOPMENTS, TOGETHER WITH
116
Content
108
24
16
14
10
10
CONSOLIDATED STATEMENT OF CASH FLOWS
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.
GRI G4-19, G4-20, G4-21
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”.
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.
26
OUR EMPLOYEES
Management Board and Supervisory Board
THE MANAGEMENT BOARD
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
LETTER TO SHAREHOLDERS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Dr. Reinhard Ploss
282
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
The Management Board
From left to right: Arunjai Mittal, Dr. Reinhard Ploss, Dominik Asam
The Management Board
Management Board and Supervisory Board
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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
15
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.
Dr. Reinhard Ploss
Doctorate in chemical engineering (Dr.-Ing.);
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,
as
Ladies
Report of the Supervisory Board
to the Annual General Meeting
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Management Board and Supervisory Board
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,
Arunjai Mittal
>> We have expanded our leading market position and achieved the
financial goals we set when we acquired International Rectifier
ahead of time. Infineon has impressively demonstrated how we are
successfully continuing on our growth path.«
Mechanical engineer (Dipl.-Ing.), Master of Business Administration (MBA);
Member of the Management Board since January 2011
Chief Financial Officer (CFO)
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
Chief Executive Officer (CEO), Labor Director
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
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.
IMPRINT
301
FINANCIAL CALENDAR
301
GRI G4 CONTENT INDEX
297
MEMBERSHIPS AND PARTNERSHIPS
TECHNOLOGY GLOSSARY
FINANCIAL GLOSSARY
296
289
287
LIST OF GRAPHICS
286
FINANCIAL DATA 2011-2015
AUDITOR'S REPORT
RESPONSIBILITY STATEMENT BY THE MANAGEMENT BOARD
Further Information
284
283
282
10
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.
10
Management Board and Supervisory Board
"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.
Effective October 1, 2015, International Rectifier has been fully absorbed within the three segments,
Automotive, Industrial Power Control, and Power Management & Multimarket.
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.
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.
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Management Board and Supervisory Board
12
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
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".
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"
11
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Letter to shareholders
Chief Executive Officer
7
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.
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.
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.
Dear shareholders and business partners,
dear Infineon colleagues,
Letter to shareholders
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
ABOUT THIS REPORT
Neubiberg, November 2015
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.
2015
2014
2015
Chief Financial Officer
Chief Executive Officer
Dominik Asam
Dr. Reinhard Ploss
in €
The total compensation allocated to the individual members of the Management Board
for the 2015 fiscal year in accordance with DCGK - analyzed by component - is shown in the
following table:
241,183
76,613
2,142,500
241,183
1,853,853 1,659,693 1,097,241 3,163,128
159,627
241,183
272,721
788,806
833,225
2,142,500
76,613
272,721 192,780 272,721
1,897,314 1,707,513 1,140,702 3,206,589
788,806
833,225
612,500
76,613
172,806
153,225
Arunjai Mittal
612,500
Member of the
Management Board
2015
Mid Term Incentive (MTI)
compensation
Multi-year variable
385,000
589,220
385,000
589,220
525,000
831,840
compensation (STI)
Single-year variable
Variable compensation
685,000
26,260
711,260
750,000
29,445
779,445
685,000
40,927
725,927
750,000
41,368
791,368
945,000
35,909
980,909
1,110,909
Total fixed compensation
35,909
Fringe benefits
1,075,000
Basic annual salary
Fixed compensation
2014
2014
76,613
172,806
153,225
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Compensation report
Arunjai Mittal
2015
2014 2015 (min.) 2015 (max.)
Chief Financial Officer
Dominik Asam
2015
In line with the DCGK recommendations, the pension expense meaning the service cost
pursuant to IAS 19 constitutes the allocation amount (see previous table), even though it is
not strictly speaking - an allocation.
In accordance with the DCGK, share-based payments are deemed to be allocated on the basis
of the relevant time and value for German tax law purposes. Accordingly, the members of
the Management Board were not deemed to have been allocated share-based payments in
either the 2015 or the 2014 fiscal year.
In line with the DCGK recommendations, the fixed compensation and the STI are required
to be disclosed as the allocation amount for the fiscal year concerned. In the case of the MTI,
the DCGK recommends that this is disclosed as flowing to members of the Management Board
in the fiscal year, in which the plan term of the relevant MTI tranche ends. In this sense, in
addition to the fixed compensation granted for 2015 and the STI, the allocation amount
for the 2013-2015 MTI tranche also flowed to the members of the Management Board for the
2015 fiscal year.
Since compensation granted to members of the Management Board for the fiscal year does
not always coincide with amounts disbursed in a particular fiscal year, a separate table is
presented - in accordance with the relevant DCGK recommendation - showing the amounts
flowing to members of the Management Board for the 2015 fiscal year (the "allocation amount"
("Zufluss")).
Allocation amount in accordance with DCGK
1 The figures of the active members of the Management Board in the 2015 fiscal year are based on a fair market value per
performance share amounting to €5.31 (2014: €5.20), which was calculated using a Monte-Carlo simulation model taking
account of the value-reducing cap.
4,403,205
1,444,843
2,217,936
2,518,982
219,796
219,796
912,500
3,072,500
114,138
114,138
247,426
1,087,426
149,601
219,796
1,188,277
228,277
193
Member of the Management Board
2014 2015 (min.) 2015 (max.)
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.
680,000
850,000
340,000
680,000
308,000
308,000
340,000
850,000
340,000
308,000
308,000
340,000
2012-2014 tranche
779,445
29,445
779,445
750,000
750,000
685,000
26,260
711,260
750,000
29,445
779,445
41,368
791,368
41,368
791,368
725,927
40,927
750,000
750,000
685,000
29,445
333,872
333,872
306,049
Combined Management Report - Our 2015 fiscal year
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
196
Corporate Governance
Compensation report
502,008
10,202,820
733,700
11,120,628
450,000
411,000
200,000
2014
205,000
2015
Total
159,627
3,079,244
205,500
2014
241,183
3,322,550
225,000
2015
Arunjai Mittal
192,780
1,836,096
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).
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
188
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
If the term of office commences during a fiscal year, the MTI tranche is determined on a pro-rata
basis (1/36 for each month of a full MTI tranche started). Upon leaving Infineon, regulations
ensure that the member of the Management Board can only receive an MTI payment for the
actual number of MTI tranches during his/her term of office. MTI tranches already started are
forfeited if a mandate or service contract of a member of the Management Board comes to
an end before the due date, for instance if a member resigns from office or terminates the con-
tractual arrangements of his/her own volition or if the contract is terminated for good cause.
The long-term incentive (LTI) is intended to reward long-term and, similar to the MTI, sustained
performance on the part of members of the Management Board and, additionally, to ensure
that their interests are aligned with the interest of the Company's shareholders regarding a
positive share price development. Assuming a 100 percent target achievement of the variable
compensation, the LTI constitutes approximately 15 percent of target annual income.
205,500
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 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.
Prior to the introduction of the Performance Share Plan, the Company maintained a stock
option plan as an LTI, which was resolved at the 2010 Annual General Meeting. Subject to
compliance with the terms of the Stock Option Plan 2010 – particularly the attainment of the
absolute and percentage performance targets - the stock options allocated to members of the
Management Board on the basis of this plan may still be exercised until December 14, 2019.
The review of the individual target annual incomes of the members of the Management Board
by an independent compensation expert in the 2014 fiscal year resulted in a rise in the com-
pensation of members of the Management Board effective October 1, 2014. The compensation
structure itself remained unchanged (see information provided in the 2014 Annual Report).
Increase in Management Board compensation
In accordance with section 4.2.2 DCGK, the Supervisory Board engaged an external, independent
compensation expert - most recently in the 2014 fiscal year - to review the appropriateness
of the Management Board compensation system in place since October 1, 2010. In this context,
the target annual incomes of each individual member of the Management Board were sub-
jected to detailed scrutiny. The next review is scheduled to take place in the 2016 fiscal year.
Review of Management Board compensation; changes to individual service contracts
Review of Management Board compensation system and individual contracts
Mr. Bauer did not receive any service fees in the 2014 or 2015 fiscal years relating to the
consultancy agreement concluded on November 26, 2012, by him and the Company after
prior approval by the Supervisory Board. The agreement, which provided only for the reim-
bursement of expenses, was terminated effective January 31, 2015.
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).
960,000
2014
2,163,812
In addition to a one-time, contractually vested initial component of €540,000 paid as compen-
sation for the loss of vested retirement pension entitlements in connection with the termina-
tion agreement with his previous employer, Mr. Asam will receive from the Company for each
fiscal year of his membership on the Management Board a pension contribution amounting to
between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed
basic annual salary, i.e. fixed compensation. As in the previous year, the pension contribution
for Mr. Asam for the 2015 fiscal year has been set at 30 percent of his basic annual salary,
which amounts to €225,000. The pension entitlements arising from the defined contributions
made on behalf of Mr. Asam became vested with effect from December 31, 2013.
The plan rules applicable for Mr. Asam and Mr. Mittal differ in terms of the initial defined
component, the annual transfer to the pension account and the vesting period.
If the entitlements of members of the Management Board (i) have not yet legally vested or (ii)
have legally vested, but are not protected by the state pension insurance scheme (Pensions-
sicherungsverein), the Company maintains pension reinsurance policies in favor of, and
pledged to, the members of the Management Board concerned.
The members of the Management Board who were in their positions prior to the introduction
of the new compensation system in 2010 are contractually entitled to a defined benefit pension
payment. In the 2015 fiscal year, this now only relates to Dr. Ploss, who has an entitlement
to an annual retirement benefit, currently standing at €205,000 and which increases by €5,000
for each full year of service on the Board, up to a maximum amount of €210,000. This entitle-
ment is already vested, both contractually and under the applicable statutory provisions. The
pension entitlement is required to be reviewed every three years from the start of payment
of the pension in accordance with the German Company Pension Act (Betriebsrentengesetz).
The Supervisory Board may decide to make an amendment as it sees fit, taking account of
the needs of the recipient and the financial condition of the Company. If Dr. Ploss's mandate
comes to an end, payment of the pension entitlement begins at the earliest at the age of 60.
In accordance with the compensation system in place since 2010, Mr. Asam and Mr. Mittal -
both of whom took up office after the new system had been approved - have both received
a defined contribution pension commitment (rather than a defined benefit pension commit-
ment based on the number of years of service), which is essentially identical to the Infineon
pension plan applicable to all employees. The Company has accordingly set up a personal
pension account (basic account) for each beneficiary and makes annual pension contributions
to it. The Company adds annual interest to the balance in the basic account using the highest
statutory interest rates valid for the insurance industry (guaranteed interest rates) until dis-
bursement of the pension begins and may also award surplus credits. 95 percent of any income
earned over and above the guaranteed interest rate is credited to the pension account, either
at the date on which disbursement of the pension begins or, at the latest, when the beneficiary
reaches the age of 60. The balance of the basic account when disbursement of the pension
begins (due to age, invalidity or death) - increased by an adjusting amount in the event of
invalidity or death - constitutes the retirement benefit entitlement and is paid out to the member
of the Management Board or his or her surviving dependents in twelve annual installments,
or, if so requested by the member of the Management Board, in eight annual installments, as
a lump sum or as life-long pension.
Allowances and pension entitlements in the 2015 fiscal year
upon termination of employment
Commitments to members of the Management Board
Combined Management Report - Our 2015 fiscal year
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
194
691,049
159,627
1,561,936
994,240
241,183
2,014,868
718,872
192,780
1,637,579
858,872 994,240
149,601 272,721
1,989,382 2,058,329
Total compensation (DCGK) 2,714,845
219,796
Pension expense
1,384,140
Total variable compensation
Stock Option Plan 2010
Performance Share Plan
Long Term Incentive (LTI)
405,020
405,020
552,300
2013-2015 tranche
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
195
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.
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.
225,000
2015
Dominik Asam
149,601
5,287,480
200,000
2014
(Chief Executive Officer)
219,796
5,634,266
205,000
2015
272,721
Dr. Reinhard Ploss
of pension
and benefit
entitlement
for the
relevant
fiscal year
period
Present value
determined
Benefit
amounts
Pension
entitlements
(annual) as of
beginning
of pension
Member of the
Management Board
Fiscal Year
in €
Pension entitlements
Alongside the annual retirement entitlements and related benefit amounts, the following
table shows the present values of pension entitlements earned to date and the service cost
in accordance with IFRS. In accordance with IFRS, the service cost for the current fiscal year is
determined at the beginning of the fiscal year concerned.
Service cost
(earned in the
current year)
1,200,000
750,000
41,368
791,368
420,000
Number
in €
in €
Dr. Reinhard Ploss
2015
47,582
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
28,856
480,000
Number
Number
Number
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).
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
Virtual performance shares
newly granted at the
beginning of the fiscal year
Virtual
performance
shares
outstanding
at the end
of the
fiscal year
Stock
options
outstanding
at the
beginning
of the
fiscal year
Stock
options
outstanding
at the
Stock
options
153,225
expired
in the
fiscal year
Exercisable
stock
options
outstanding
at the
end of the
fiscal year
Total
expense
for share-
based
compen-
sation
Fiscal year
Number
Number
Member of the
Management Board
Fair Value
grant date
end of the
fiscal year
Share-based compensation
62,088
350,952
120,000
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
191
Special bonuses
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
in €
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:
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
192
P see page 194 ff.
121,403
229,167
229,167
1,013,333 1,013,333
214,748
217,610
2014
33,232
172,806
33,232
350,952
350,952
141,089
Arunjai Mittal
2015
33,232
28,856
350,952
153,225
229,167
229,167
197,925
2014
33,232
172,806
33,232
Total
2015
2014
114,046
100,702
534,727
62,088
The Company also maintains accident insurance policies for members of the board.
Number
Fringe benefits
Management Board compensation in the 2015 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
Corporate Governance
Compensation report
Dr. Reinhard Ploss
Dominik Asam
Chief Executive Officer
Chief Financial Officer
Arunjai Mittal
Member of the
Management Board
2015
2014
2015
2014
2015
Total
2014
2015
2014
1,075,000
945,000
35,909
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.
Fixed compensation
Basic annual salary
Fringe benefits
Total compensation (DCGK)
Pension expense
Total variable compensation
Performance Share Plan¹
Long Term Incentive (LTI)
2015-2017 tranche
2014-2016 tranche
Mid Term Incentive (MTI)
Multi-year variable compensation
420,000
480,000
Single-year variable compensation (STI)
1,110,909
Variable compensation
35,909
1,110,909
1,075,000
1,075,000
945,000
35,909
980,909
35,909
1,110,909
1,075,000
2015 (max.)
2015 (min.)
2014
Dr. Reinhard Ploss
Chief Executive Officer
2015
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.
35,909
1,110,909
35,909
980,909
Total fixed compensation
685,000
40,927
725,927
242,620
175,000
177,921
128,333
177,921
128,333
598,462
431,666
277,280
196,407
196,407
670,094
431,666
Long Term Incentive (LTI)
Total variable compensation
Total compensation
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
593,038
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 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.
Members of the Management Board did not receive any loans from Infineon, either in the 2015
or 2014 fiscal years.
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.
190
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our 2015 fiscal year
P see page 249
750,000
41,368
791,368
Performance Share Plan 2
598,462
of the
fiscal year
177,921
128,333
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)
525,000
589,220
385,000
589,220
385,000 2,010,280 1,295,000
Multi-year variable compensation
831,840
2012-2014 tranche
177,921
Mid Term Incentive (MTI)1
175,000
242,620
128,333
384,999
128,333
128,333
2015-2017 tranche
2014-2016 tranche
2013-2015 tranche
128,333
200
Dr. Reinhard Ploss
Dominik Asam
Arunjai Mittal
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
CONSOLIDATED STATEMENT OF OPERATIONS
Financial
Statements
202
203
Management Board
Consolidated
Neubiberg, November 20, 2015
745,830
600,000
Other matters (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
286,000
248,000 1,517,830
233,125
220,000
290,875
90,000
204
2014
2015
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.
206
Consolidated Financial Statements
210
1,647
2,080
(2,673)
4,320
5,795
Other operating income
Selling, general and administrative expenses
Research and development expenses
Gross profit
Cost of goods sold
Revenue
2014
2015
208
Notes
for the year ended September 30, 2015 and 2014
Consolidated Statement of Operations
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
202
Financial Statements
Consolidated
201
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
€ in millions
(3,715)
(75)
(550)
981
23
70
72
20
5
147
9
379
426
151
1,760
22
22
29
1,603
1,585
817
Net cash provided by operating activities
(7)
(140)
Interest received
8
8
་གླུ 8 ཋ
74
(29)
10
Interest paid
Own shares
8
(9)
Income tax paid
9
(93)
(52)
Net cash provided by operating activities from continuing operations
Net cash used in operating activities from discontinued operations
957
988
(14)
Other reserves
Accumulated deficit
Additional paid-in capital
648
802
19
Trade payables
35
33
22
Short-term debt and current maturities of long-term debt
Short-term provisions
LIABILITIES AND EQUITY:
2015
Notes
Consolidated Statement of Financial Position
205
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
€ in millions
6,438
8,741
2014
99
20
590
Ordinary share capital
Shareholders' equity:
Total liabilities
Total non-current liabilities
Other non-current liabilities
Long-term provisions
Deferred tax liabilities
Pension plans and similar commitments
402
Long-term debt
261
225
21
Other current liabilities
69
123
9
Income tax payable
Total current liabilities
(95)
Change in other assets and liabilities
(48)
1
4
Total equity
4,665
4,158
Total liabilities and equity
8,741
6,438
Non-controlling interests
206
Consolidated Financial Statements
Consolidated Statement of Cash Flows
for the year ended September 30, 2015 and 2014
€ in millions
Net income
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
Notes
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
2015
4,154
Equity attributable to shareholders of Infineon Technologies AG
2,491
677
4,076
2,280
14
24
2,259
2,255
4,664
5,213
(2,897)
(3,502)
126
64
(37)
(37)
Put options on own shares
(40)
5,414
Total assets
2014
634
16
1
1
15, 18
31
3
(2)
12
Change in inventories
(65)
13
(133)
(89)
Change in trade payables
19
50
Change in provisions
20
(58)
27
Change in trade receivables
Impairment charges
535
(12)
(47)
15, 18
760
514
Income tax
9
Other non-cash result
(102)
Net interest result
8
42
9
Gains on disposals of property, plant and equipment
(7)
(2)
Dividends received from associated companies
31
(717)
2,504
Total non-current assets
Diluted earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:
0.48
0.56
10
Basic earnings per share (in euro)
0.04
0.01
10
Basic earnings per share (in euro) from discontinued operations
0.44
0.55
10
Basic earnings per share (in euro) from continuing operations
Basic earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:
535
632
2
Diluted earnings per share (in euro) from continuing operations
10
0.55
0.44
Total items that will not be reclassified to profit or loss
Actuarial losses on pension plans and similar commitments
Items that will not be reclassified to profit or loss:
Other comprehensive income
Net income
€ in millions
for the year ended September 30, 2015 and 2014
Consolidated Statement of Comprehensive Income
Shareholders of Infineon Technologies AG
203
0.48
0.56
10
Diluted earnings per share (in euro)
0.04
0.01
10
Diluted earnings per share (in euro) from discontinued operations
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Statement of Comprehensive Income
Non-controlling interests
Attributable to:
Net income
8
Financial expenses
10
10
8
Financial income
525
555
(49)
Operating income
(58)
7
Other operating expenses
26
28
7
(496)
(778)
(102)
Items that may be reclassified subsequently to profit or loss:
Currency translation effects
(19)
16
535
634
47
12
4
Income from discontinued operations, net of income taxes
488
622
Gain from investments accounted for using the equity method
Income from continuing operations
102
9
Income tax
519
520
Income from continuing operations before income taxes
3
4
(31)
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
Property, plant and equipment
3,934
4,115
Total current assets
221
229
14
7
15
2
707
1,129
13
581
742
12
1,360
1,340
9
11
2,093
Goodwill and other intangible assets
141
155
17
Other non-current assets
378
604
9
Deferred tax assets
1,700
3
Non-current income tax receivable
35
33
16
Investments accounted for using the equity method
250
1,738
18
9
4,626
1,058
Other current assets
(1)
43
(37)
12
100
(130)
(27)
(130)
62
(27)
634
24
2014
2015
Notes
Shareholders of Infineon Technologies AG
Non-controlling interests
Attributable to:
535
673
55
669
Income tax receivable
Inventories
Trade receivables
Financial investments
Cash and cash equivalents
ASSETS:
2014
2015
35
Notes
as of September 30, 2015 and 2014
Consolidated Statement of Financial Position
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
204
460
669
460
€ in millions
72
86
Dr. Eckart Sünner
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
Wolfgang Mayrhuber
2015
19,500
14,000
83,500
50,000
7,500
22,000
79,500
Gerd Schmidt
2015
20,833
8,125
15,625
10,000
50,000
54,583
2014
66,333
50,000
19,500
15,000
20,000
104,500
2014
50,000
7,500
15,000
26,000
98,500
Prof. Dr. Renate Köcher
2015
(since February 12, 2015)
50,000
12,000
81,500
2014
50,000
7,500
14,000
71,500
Dr. Susanne Lachenmann
2015
33,333
13,000
10,000
10,000
19,500
2015
(until February 12, 2015)
50,000
2015
33,333
13,000
8,000
54,333
(since February 12, 2015)
2014
2015
50,000
19,500
25,000
18,000
112,500
Kerstin Schulzendorf
2014
7,500
25,000
26,000
108,500
Diana Vitale
2015
33,333
13,000
8,000
54,333
(since February 12, 2015)
2014
Total
50,000
2014
94,500
15,000
7,500
37,500
28,000
123,000
Prof. Dr. Doris
2015
50,000
19,500
25,000
16,000
110,500
Schmitt-Landsiedel
2014
22,000
50,000
25,000
18,000
100,500
Jürgen Scholz
2015
50,000
19,500
15,000
16,000
100,500
2014
50,000
7,500
7,500
Hans-Ulrich Holdenried
2014
20,000
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)
33,333
2014
7,500
15,000
30,000
102,500
Johann Dechant
2015
33,333
13,000
25,000
14,000
85,333
(since February 12, 2015)
2014
50,000
2015
Peter Bauer
compen-
sation
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Corporate Governance
Compensation report
197
Supervisory Board compensation
Compensation structure
The Supervisory Board compensation system was subjected to a thorough review in the 2010
fiscal year and came into force with (retrospective) effect from October 1, 2010, in line with a
proposal put forward by the Management Board and Supervisory Board to the Annual General
Meeting on February 17, 2011.
The compensation due to the Supervisory Board in each fiscal year (total compensation)
is governed by section 11 of the Company's Articles of Association and comprises three
components:
> Fixed compensation (basic remuneration) of €50,000. This amount applies to each member
of the Supervisory Board and is payable within one month of the end of the fiscal year;
› A variable compensation component amounting to €1,500 for every €0.01 by which earnings
per share exceed a minimum threshold of €0.30. This minimum threshold is increased by
€0.03 every year, with the first increase taking effect for the fiscal year beginning October 1,
2011. The minimum amount is therefore €0.42 for the 2015 fiscal year. The variable compen-
sation component is determined in each case on the basis of the basic (undiluted) earnings
per share from continuing operations, determined in accordance with the pertinent financial
reporting regulations. The variable compensation component is limited to €50,000 per fiscal
year. It also applies to each member of the Supervisory Board and falls due for payment
once the Annual General Meeting following the fiscal year to which the compensation relates
has ended;
> An allowance recognizing the additional work involved in performing certain functions
within the Supervisory Board: The Chairman of the Supervisory Board receives an allowance
of €50,000, each Vice-chairman receives an allowance of €37,500, the Chairman of the Invest-
ment, Finance and Audit Committee and the Chairwoman of the Strategy and Technology
Committee each receive an allowance of €25,000 and each member of a Supervisory Board
committee receives an allowance of €15,000 - with the exception of the Nomination Com-
mittee and the Mediation Committee. The additional allowance is payable only if the body
to which the Supervisory Board or committee member belongs has convened or passed
resolutions in the fiscal year concerned. A member of the Supervisory Board performing more
than one of the functions indicated receives only the highest single additional allowance
payable to a member performing the functions concerned. The allowance is paid to the
relevant holder of office within one month of the end of the fiscal year.
In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or
one of its committees, or takes on a Supervisory Board function for which an allowance is
paid, the relevant compensation components are disbursed on a pro-rata basis (payment of
one twelfth of the relevant annual compensation component for each (started) month of
membership or exercise of function).
As part of the total compensation, the Company additionally grants each member of the
Supervisory Board a meeting attendance fee of €2,000 per meeting of the Supervisory Board
or one of its committees that is attended in person. The meeting attendance fee is paid only
once in cases in which more than one meeting is held on a given day.
92,500
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
Variable
compen-
sation
Allowance
for specific
functions
Meeting
attendance
Total
fees
Dr. Herbert Diess
2015
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.
13,000
25,000
3,750
14,000
42,750
Peter Gruber
2015
50,000
19,500
15,000
16,000
100,500
2014
50,000
2014
7,500
22,000
94,500
Gerhard Hobbach
2015
50,000
19,500
16,000
100,500
2014
50,000
7,500
15,000
33,333
15,000
until February 12, 2015)
15,000
39,208
8,000
(since April 1, 2014
54,333
(since February 12, 2015)
2014
2015
(until March 31, 2014)
2014
25,000
3,750
7,500
10,000
46,250
Annette Engelfried
Alfred Eibl
33,333
2015
8,125
20,833
Reinhard Gottinger
2014
(since February 12, 2015)
2015
6,250
68,333
12,000
10,000
13,000
4,000
› 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 2010-2012 (effective date: February 1, 2015). Infineon is currently analyzing
the impact on the Consolidated Financial Statements.
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
› 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.
› Amendments to IFRS 10 and IAS 28 "Sale or contribution of assets between an investor and its associate or
joint venture" (effective date January 1, 2016 but indefinite postponement has been proposed) Infineon is
currently analyzing the impact on the Consolidated Financial Statements.
> Annual IFRS improvement cycle 2012-2014 (effective date: January 1, 2016). Infineon is currently analyzing
the impact on the Consolidated Financial Statements.
> IFRS 9 "Financial Instruments” (effective date: January 1, 2018). Infineon is currently analyzing the impact on
the Consolidated Financial Statements.
› Amendments to IAS 1 "Disclosure Initiative" (effective date: January 1, 2016). Infineon is currently analyzing the
impact on the Consolidated Financial Statements.
212
> 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.
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.
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).
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.
A list of subsidiaries of Infineon Technologies AG is provided in note 35.
Investments accounted for using the equity method
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:
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").
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.
Associated companies and joint ventures
2 Summary of Significant Accounting Policies
Financial reporting rules issued not yet adopted
Put options on own shares
> 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.
(3,907)
535
5,549
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.
(130)
405
(129)
484,260
1
46,171,936
92
7
6
3
Other changes in equity
(22)
Balance as of September 30, 2014
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
211
Financial reporting rules applied for the first time
The IASB has issued the following Standards or amendments to Standards, which are required to be applied in
the Consolidated Financial Statements for the year ended September 30, 2015:
› Amendment to IAS 28 "Investments in associates and joint ventures" (effective date: January 1, 2014).
These changes had no significant impact on the Consolidated Financial Statements.
› Amendments to IAS 32 "Financial Instruments: Presentation - Offsetting Financial Assets and Financial
Liabilities" (effective date: January 1, 2014). These changes had no significant impact on the Consolidated
Financial Statements.
› Amendments to IAS 36 "Disclosure of recoverable amount for non-financial assets” (effective date:
January 1, 2014). These changes had no significant impact on the Consolidated Financial Statements.
› 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.
A list of the associated companies of Infineon Technologies AG is provided in note 35.
4.3830
213
4.2186
1.5960
1.6189
1.5429
1.7025
1.1170
1.2732
1.1432
1.3539
214
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
Recognition and measurement principles
1,127,739,230
2,255
5,414
(3,502)
Balance as of October 1, 2014
Net income
1,127,739,230
2,255
5,414
2,162
4.1518
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
4.9410
136.4560
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
The currency of the primary economic environment in which an entity operates and normally generates and expends
cash is considered to be the functional currency of that entity. The functional currency of Infineon Technologies AG
is the euro. The Consolidated Financial Statements have been prepared with the euro as reporting currency.
Foreign currency transactions are translated into the functional currency of the relevant entity using the exchange
rates prevailing at the transaction date. Monetary assets and liabilities which are not denominated in the functional
currency of the reporting entity are translated at the closing exchange rate prevailing at the end of the relevant
reporting period. Exchange rate gains and losses from the currency translation are recognized in the Consolidated
Statement of Operations as part of the operating result.
The assets and liabilities of foreign subsidiaries with functional currencies other than the euro are translated
into euros using period-end exchange rates. Income and expenses of these entities are translated using the
average exchange rate for the period under report. All cumulative differences arising from the currency translation
of the equity in foreign subsidiaries arising from changes to exchange rates are recognized directly in equity in
"Other reserves".
The exchange rates of the primary currencies (€1 in foreign currency units) used in the preparation of the
accompanying Consolidated Financial Statements, in alphabetical order, are as follows:
€1 in units of foreign currency
Japanese yen
Malaysian ringgit
Singapore dollar
US dollar
Closing rate
Annual average exchange rate
September 30, 2015
September 30, 2014
2015
2014
134.1300
138.9300
139.0405
1,081,083,034
The Company's Management Board approved the Consolidated Financial Statements for submission to the
Company's Supervisory Board on November 20, 2015.
Share-based compensation
57
4
Net cash used in investing activities from continuing operations
Net cash used in investing activities from discontinued operations
Net cash used in investing activities
(2,593)
(272)
(1)
(2,593)
(273)
Net change in short-term debt
Net change in related party financial receivables and payables
Proceeds from issuance of long-term debt
Repurchase of subordinated convertible bonds
Repayments of long-term debt
Change in cash deposited as collateral
Proceeds from issuance of ordinary shares
22
2
28
(1)
22
2,398
4
22
Proceeds from sales of property, plant and equipment and other assets
(831)
(567)
15
(3,502)
(139)
18
Purchases of intangible assets and other assets
(7)
(1,869)
3
Acquisitions of businesses, net of cash acquired
(14)
1,637
1,496
11
(1,238)
(1,478)
11
Proceeds from sales of financial investments
Purchases of other equity investments
Purchases of financial investments
2014
2015
Notes
Consolidated Statement of Cash Flows
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
€ in millions
(646)
24
(29)
7
2
1,058
527
673
1,058
207
208
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
for the year ended September 30, 2015 and 2014
€ in millions, except for number of shares
Note
Ordinary shares issued
Additional
paid-in capital
Accumulated
deficit
Shares
Amount
Balance as of October 1, 2013
Net income
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
Exercise of conversion rights
28
(35)
529
Cash and cash equivalents at end of period
24
11
1
Cash outflows due to changes of non-controlling interests
3
(15)
Proceeds from the issuance of put options on own shares
24
3
Dividend payments
24
(202)
(129)
Net cash provided by (used in) financing activities from continuing operations
1,363
(179)
Net cash used in financing activities from discontinued operations
Net cash provided by (used in) financing activities
1,363
(179)
Net change in cash and cash equivalents
Effect of foreign exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of period
(413)
632
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.
(27)
460
(129)
1
99
1
99
6
6
(40)
(37)
(37)
(22)
4
(18)
26
3
35
(37)
(40)
4,154
4
4,158
26
(129)
3
460
535
When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments previously
recognized in equity are reclassified to profit or loss.
215
216
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
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.
Derivative financial instruments are categorized as held for trading and measured at fair value through profit or loss
unless they are designated as hedging instruments and hedge accounting is applied. All fair value gains and losses
are recognized through profit or loss. Changes in the fair value of undesignated derivative financial instruments
that relate to operating activities are recorded as part of cost of goods sold, those of undesignated derivative financial
instruments relating to financing activities are recorded in financial income or financial expense.
All financial instruments in this category are measured at the value at the trading date. Derivative financial
instruments with a positive fair value at the end of the reporting period are reported as "Other current assets"
and those with a negative fair value at the end of the reporting period are reported as “Other current liabilities”.
Infineon had no derivative financial instruments with a remaining term of more than 12 months in place as of
September 30, 2015 and 2014.
Designated hedging instruments (cash flow hedges)
Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price
changes (such as gold prices) for expected and highly probable future transactions in order to minimize the
associated risk (cash flow hedges).
Derivative financial instruments are measured at their fair value and included in "Other current assets" or
"Other current liabilities".
The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. The
gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity are
recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to profit or loss.
Other financial liabilities
Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs.
In subsequent periods they are measured at amortized cost using the effective interest method. The liability is
derecognized when the contractual obligation is discharged, cancelled or expired.
Put options on own shares
(101)
535
(75)
Non-controlling
interests
Total equity
3,776
(75)
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.
35
(40)
40
40
40
(14)
(5)
(19)
4,664
1
4,665
210
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
Notes to the Consolidated
Financial Statements
The Infineon Group ("Infineon”) comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
develop, manufacture and market a broad range of semiconductors and system solutions, collectively: semicon-
ductors. The focus of activities is on automotive electronics, industrial electronics, information and communications
infrastructure as well as hardware-based security. The product range includes standard, application-specific and
customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
signal applications. More than half of Infineon's revenue is generated by power semiconductors, the remaining
revenue is attributable to high frequency components, sensors, driver components as well as microcontrollers
for automotive, industrial and security applications. Research and development sites, manufacturing facilities,
investments and customers are located mainly in Europe, Asia and North America.
Infineon Technologies AG is a listed company under German law and ultimate parent company of the Infineon Group.
The principal office of the Company is Am Campeon 1 – 12, 85579 Neubiberg (Germany). The Company is registered
in the Commercial Register of the District Court of Munich under the number HRB 126492.
1 Basis of the Consolidated Financial Statements
The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company for the
year ended September 30, 2015 have been prepared in accordance with International Financial Reporting Standards
("IFRS") and related interpretations effective as of September 30, 2015 as issued by the International Accounting
Standards Board ("IASB") to the extent to which the IFRS and Interpretations have been adopted by the European
Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements set forth
in section 315a, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB").
The fiscal year end for both Infineon and the Company is September 30 of each year.
The above-mentioned standards were complied with in full, on this basis the Consolidated Financial Statements
convey a true and fair view of the financial position, cash flows and results of operations of Infineon.
The Consolidated Financial Statements comprise the Consolidated Statement of Operations, Consolidated
Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of
Cash Flows, Consolidated Statement of Changes in Equity and the Notes to the Consolidated Financial Statements.
The Consolidated Statement of Operations is presented using the cost of sales method.
Infineon's accounting policies are described in more detail in note 2. The accounting and valuation policies used,
as well as the explanatory comments and disclosures made in the IFRS Consolidated Financial Statements for
the 2015 fiscal year are generally based on those used in the Consolidated Financial Statements for the year ended
September 30, 2014.
All amounts herein are presented in euros ("€") except where otherwise stated.
6
(37)
6
13
4,154
4
4,158
632
2
634
100
(4)
(34)
100
(4)
(34)
126
(1)
1
(37)
35
35
667
2
669
(202)
(202)
13
Other comprehensive income (loss)
for the period, net of tax
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
Put options
on own shares
Total equity
attributable to
shareholders
of Infineon
Technologies AG
14
3
(8)
(37)
12
12
43
43
3,776
The following table summarizes the principal measurement bases used in the preparation of the Consolidated
Financial Statements:
Balance sheet item
Assets
Cash and cash equivalents
Financial investments
Trade receivables
Inventories
Assets classified as held for sale
Property, plant and equipment
Goodwill
Intangible assets (except goodwill):
with definite useful life
Own shares
with indefinite useful life
Consolidated Statement of Changes in Equity
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Total comprehensive income (loss)
for the period, net of tax
Dividends
605
(202)
Issuance of ordinary shares:
Exercise of stock options
Share-based compensation
Put options on own shares
Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
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)
Foreign
currency
translation
adjustment
Other reserves
Securities
Hedges
209
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).
Other assets (current and non-current):
Loans and receivables
Designated hedging instruments
Other financial liabilities
Remaining other liabilities
Put options on own shares
Own shares
Fair value through profit or loss
Fair value directly through equity
Fair value/amortized cost
Fair value/amortized cost
Present value of nominal amount at date of issue
Acquisition cost
Cash and cash equivalents
Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of
three months or less, and are measured at their nominal amount.
Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and at the same time a financial
liability and/or equity instrument of another entity. Financial instruments containing both equity and liability
elements (for example convertible bonds which give the holder the right to convert the bond into shares of the
company), are required to be evaluated in accordance with IAS 32, "Financial Instruments: Presentation" and,
where necessary, split into their equity and liability components.
Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the
acquisition or issuance of financial instruments are only included in the carrying amount if the financial instruments
are not measured at fair value through profit or loss.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Regular purchases and sales of financial assets are recognized on the basis of the settlement date. The settlement
date is the date on which an asset is delivered to or by Infineon.
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 recorded at Infineon.
Infineon classifies financial liabilities into the following categories: "Financial liabilities measured at fair value
through profit and loss" and "Other financial liabilities”. Furthermore, "Designated hedging instruments (cash flow
hedges)" belong to financial liabilities.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. At Infineon the balance sheet items "Cash and cash equivalents”, “financial investments",
"trade receivables" and "current and non-current other assets" all contain financial assets which are classified in
the category "loans and receivables".
Loans and receivables are measured on initial recognition at their fair value plus incidental acquisition costs.
Subsequently, they are measured at amortized cost using the effective interest method. Loans and receivables
are tested for impairment. They are considered to be impaired when there is objective evidence that Infineon will
not receive all amounts contractually due at the relevant due date. Objective evidence that indicates that 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.
Measured at fair value through profit or loss
Other financial assets:
Other financial liabilities:
Other provisions
Available-for-sale
Measured at fair value through profit or loss
Designated hedging instruments
Remaining other assets
Measurement principle
Nominal amount
Fair value/amortized cost
Fair value/amortized cost
Lower of acquisition or production cost and net realizable value
Lower of carrying amount and fair value less costs to sell
(Amortized) Acquisition or production cost
Impairment-only approach
(Amortized) Acquisition or production cost
Impairment-only approach
Fair value/amortized cost
Fair value directly through equity
Fair value through profit or loss
Fair value directly through equity
(Amortized) Cost
Equity and liabilities
Trade payables
Debt
Provisions
Pensions
Fair value/amortized cost
Fair value/amortized cost
Projected unit credit method
Expected settlement amount
Other liabilities (current and non-current):
Purchases of property, plant and equipment
10.2
The gross carrying amount of the trade receivables acquired amount to €88 million at the acquisition date and
correspond to their fair value.
12.4
15.0
19
750
& Multimarket
Power Management
1
1
10.3
10.3
13.1
13.9
4
51
Industrial Power Control
2014
2015
2014
2015
2014
2015
2014
2015
CGU within segment
in %
11.0
1
1
Corporate
Other non-current assets
221
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
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".
2-8
3-5
4-12
1-12
3-5
Years
Other intangible assets
Licenses and similar rights
in %
Technologies
Capitalized development costs
Scheduled amortization of intangible assets is based on the following useful lives, applied consistently throughout
the Group:
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.
Other intangible 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 at the reporting date,
there were no triggering events that indicate that the recoverable amount of an entity to which goodwill had been
allocated could have fallen below the book value.
In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
analyses are performed on the calculation of 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.
1 Valuation parameters as of June 30, 2015 and 2014.
25
803
Total
2
2
Customer relationships
in %
€ in millions
terminal growth rate¹
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.
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.
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
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.
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.
Buildings
Discontinued operations
Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
relating to items recognized directly in equity or in Other Comprehensive Income.
Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed
deferred tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is
probable that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit.
Infineon reviews deferred tax assets for impairment at every reporting date. The assessment requires management
to make assumptions about future taxable profits as well as other positive and negative influencing factors.
Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
Deferred 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 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.
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
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 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.
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
217
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimate.
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.
Technical equipment and machinery
Years
after-tax WACC¹
pre-tax WACC¹
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.
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
220
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 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.
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.
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.
Other plant and office equipment
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.
Recoverability of intangible assets and other long-lived assets
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.
Leases
Infineon does not own any investment properties and therefore does not apply IAS 40 "Investment Properties".
Investment properties
219
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Infineon does not make use of the option to revalue property, plant and equipment as described in IAS 16 "Property,
Plant and Equipment".
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.
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.
1-10
10-25
3-10
Goodwill
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”.
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.
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.
Purchase price
Goodwill
Net assets acquired
Total liabilities
Other non-current liabilities
Long-term provisions
Deferred tax liabilities
Other current liabilities
Short-term provisions
Trade payables
Total assets
Other non-current assets
Paid in cash and cash equivalents during the 2015 fiscal year¹
Deferred tax assets
Property, plant and equipment
Other current assets
Inventories
Trade receivables
Cash and cash equivalents
€ in millions
The following table presents the preliminary allocation of the purchase price to assets and liabilities at the date
of the acquisition:
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
226
225
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.
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.
Intangible assets
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.
Acquired cash and cash equivalents
1 Including €5 million foreign currency effect.
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.
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.
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.
1,869
(556)
2,425
2,424
729
1,695
348
16
4
Net cash outflow for the acquisition
183
20
98
2,043
20
11
701
379
22
266
88
556
(preliminary)
27
International Rectifier Corporation
3 Acquisitions
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.
Revenues are measured on the basis of the fair value of the consideration receivable.
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.
Revenue recognition
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”.
Infineon's business is structured in four operating segments, namely Automotive, Industrial Power Control,
Power Management & Multimarket and Chip Card & Security.
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.
Segment reporting
223
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
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.
Own shares
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).
Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods are
transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will
flow to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or
receivable taking into account returns, settlement discounts and bonuses.
Contingent liabilities
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.
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.
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.
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 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
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
222
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.
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.
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.
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
> valuation of pension plans (see "Pensions and similar obligations" and note 29).
> recognition and valuation of provisions (see "Provisions" and notes 20 and 32) and
> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 9),
> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
long-lived assets" and note 18),
> recoverability of trade receivables (see note 12),
> valuation of inventory (see "Inventories" and note 13),
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
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
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 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.
Share-based compensation
Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
Statement of Operations (see note 5).
Grants for investments include both tax-free investment grants and taxable grants for investments in property,
plant and equipment. Grants are recognized when it is reasonably assured that Infineon will comply with the
conditions attached to the grant, and it is reasonably assured that the grant will be received. Tax-free investment
grants are deferred and recognized over the remaining useful life of the subsidized asset. Taxable grants are
deducted from the purchase and production cost of the related asset and thereby reduce depreciation and amorti-
zation expense in future periods.
Grants
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.
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.
Costs of research activities undertaken in order to gain new scientific or technical knowledge are expensed
as incurred.
Research and development costs
Other returns are permitted only for quality-related reasons in the normal course of business within the applicable
warranty period. Infineon records provisions for warranty costs as a charge to cost of goods sold based on historical
experience as well as information available about other warranty costs.
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 2015
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.
929
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.)
2014
228
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
1,206
The remaining risks and provisions relating to Qimonda's insolvency are described in detail in note 32 "Legal risks -
Proceedings in relation to Qimonda".
Sale of the Wireline Communications business - discontinued operations
On November 6, 2009 the Wireline Communications business was sold to various companies which are affiliates
of Golden Gate Private Equity Inc. (Lantiq). In the 2014 fiscal year €10 million of subsequent income arose as a result
of the release of a provision in connection with the sale.
Sale of the Wireless mobile phone business - discontinued operations
› €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.
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.
Gain/loss from discontinued operations, net of income taxes
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:
€ in millions
2015
2014
Qimonda's share of discontinued operations, net of income taxes
12
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.
> €21 million in "Net cash used in investing activities from continuing operations" for the acquisition of the
Qimonda patents, and
> €104 million in "Net cash used in operating activities from continuing operations" for the settlement of the dispute
over the continuation of useage rights of the Qimonda patents,
The partial settlement payment of €260 million made to the Qimonda administrator on the settlement date is
disclosed in the Consolidated Statement of Cash Flows for the 2015 fiscal year as follows:
1,273
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
227
Revenue and profit contribution of International Rectifier
The amount of revenue and the net result from International Rectifier, which has been significantly affected by
charges for acquisition-related amortization and other costs (see also note 34 Segment Reporting), and which has
been taken into account in the Consolidated Statement of Operations for the reporting period since the acquisition
date is as follows:
€ in millions
Revenue
Loss after tax
682
(133)
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.
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.
LS Power Semitech Co., Ltd.
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).
4 Disposals and discontinued operations
Qimonda - discontinued operations
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.
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.
29
1,263
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
8
105
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.
For the compliance with the requirements attached to the grants and subsidies received and potential repayment
requirements in case of nonfulfillment, see note 33.
6 Cost of materials and purchased services as well as personnel expense
The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
amounts of expense for purchased services, materials and personnel.
Expenses for purchased services and materials comprised the following in the 2015 and 2014 fiscal years:
€ in millions
101
Cost of raw materials, supplies and purchased goods
Total (continuing and discontinued operations)
Personnel expenses comprised the following in the 2015 and 2014 fiscal years:
€ in millions
Wages and salaries
Social insurance levies, pensions and similar obligations
Total (continuing and discontinued operations)
2015
Cost of purchased services
1
2
66
12
47
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
229
5 Grants and subsidies
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:
€ in millions
Included in the Consolidated Statement of Operations in:
Cost of goods sold
Research and development expenses
Selling, general and administrative expenses
Total
2015
2014
40
38
59
10
891
269
1,820
(304)
Netting
Total
(1,078)
(761)
Valuation allowance
(180)
1,631
304
(451)
Total deferred taxes
(11)
143
(28)
139
Other
279
1,669
307
(175)
604
2014
2015
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
175
Deferred taxes, net as of the beginning of the fiscal year
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)
€ in millions
373
Unused tax credits and excess foreign tax credits
846
Deferred
Deferred
tax liabilities
tax assets
Deferred
September 30, 2015
€ in millions
Deferred tax assets and liabilities as of September 30, 2015 and 2014 comprise the following:
September 30, 2014
Consolidated Financial Statements
232
Due to better sustained results of operations deferred tax assets increased in the 2015 fiscal year.
(31)
102
(3)
(6)
(3)
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
939
Deferred
tax liabilities
Tax loss carry-forwards
(111)
151
(125)
237
Provisions and pension obligations
(8)
tax assets
110
131
(50)
9
(255)
9
Property, plant and equipment
Intangible assets
(43)
Actual income taxes
321
253
1,125.3
0.7
2.7
11.6
1,110.7
1,116.7
(6.0)
1,128.6
(6.0)
1,122.6
1,123.0
Weighted-average number of shares outstanding - diluted
- Effect of potential conversion of convertible bond
Weighted-average number of shares outstanding - basic
Adjustments for:
- Adjustment for own shares
- Ordinary share capital
Weighted-average number of shares outstanding (in millions):
47
12
- Effect of stock options and performance shares
thereof from discontinued operations
Basic and diluted earnings per share¹ (in euro):
0.55
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
Earnings per share (in euro) from continuing operations
233
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
1 The calculation of earnings per share is based on unrounded figures.
(172)
491
thereof from continuing operations
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:
(31)
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
373
457
4
(1)
3
4
45
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.
620
(1)
4
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
10
2014
€ in millions (unless otherwise stated)
Basic and diluted earnings per share are calculated as follows:
Basic earnings per share are calculated by dividing earnings by the weighted average number of shares outstanding
during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
such as interest expense, on the other.
10 Earnings per share
(15)
105
6
2015
Other
Effects due to changes in tax rate
112
Other
Expenses (income) in connection with legal disputes
Fine from the chip card antitrust proceedings
Losses on disposals of assets
Expenses in connection with rental income
Expenses for restructuring and similar measures
and assets classified as held for sale (see note 15 and 18)
Total
Impairments of intangible assets, property, plant and equipment assets
Other operating expenses comprised the following in the 2015 and 2014 fiscal years:
Total
Other
Gain from revaluation of the former shareholding in LSPS
Other income from customers
Income from other equity investments
Gains on disposals of assets
€ in millions
Gain from sale of patents purchased from Qimonda
2015
9
31
2014
2015
26
28
6
6
2014
4
1
2
1
3
2
9
10
1
3
Rental income
Other operating income comprised the following in the 2015 and 2014 fiscal years:
2015
Total
Therein: USA
Americas
Japan
Therein: China
Asia-Pacific (without Japan)
2014
Therein: Germany
The average number of employees by geographic region is as follows for the 2015 and 2014 fiscal years:
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
1,670
1,490
1,939
217
Europe
€ in millions
14,168
9,258
Other operating income and expense
7
The increase of the number of employees in the 2015 fiscal year was mainly due to the acquisition of
International Rectifier.
28,610
33,971
533
1,753
12,959
533
129
167
1,708
1,890
14,989
16,738
8,766
2,898
13
8
9
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
Expected income tax expense
45
(76)
(151)
2014
2015
Income tax
Deferred tax benefit
Current tax expense
253
€ in millions
(151)
Change in available tax credits
309
Change in valuation allowance on deferred tax assets
(2)
(41)
Prior year taxes
(30)
(18)
(151)
Non-deductible expenses and tax-exempt income, net
(23)
Effects from the difference between local and functional currency (Malaysia)
25
22
Tax rate differential
19
13
(1)
Income tax from continuing operations for the fiscal years ended September 30, 2015 and 2014, is as follows:
9 Income tax
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).
Total
Valuation changes and gains on sales of financial investments
Interest income
€ in millions
Financial income comprised the following in the 2015 and 2014 fiscal years:
8 Financial income and expenses
In the 2015 fiscal year €8 million of impairments of intangible assets, property, plant and equipment assets and
assets classified as held for sale was allocated to the Industrial Power Control segment, €3 million (2014: €1 million)
to the Automotive segment and €1 million to the Power Management & Multimarket segment. €19 million (2014:
€2 million) was allocated to Corporate and Eliminations.
Financial expenses comprised the following in the 2015 and 2014 fiscal years:
102
21
1
(24)
83
1
4
10
58
€ in millions
Interest expenses
Other financial expenses
Total
19
49
1
19
48
2014
2,469
2015
10
10
4
10
6
2014
2015
231
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
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).
Financial investments at September 30, 2015 and 2014 comprise the following (for further information see also
notes 30 and 31):
230
Fixed-term bank deposits and money market funds
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
236
235
221
229
41
34
1
41
1
9
12
34
31
45
53
15 Property, plant and equipment
A summary of changes in property, plant and equipment for the years ended September 30, 2015 and 2014
is as follows:
Changes in property, plant and equipment 2015
€ in millions
(58)
4
1
1,123
Payments on account and
construction in progress
212
160
50
1
Transfers
Reclassi-
fication
sitions
Disposals
Acqui-
Additions
October 1,
2014
Cost
through
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:
13 Inventories
Receivables with a maturity of more than one year are presented as other non-current assets (see note 17).
2015
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.
16
554
577
6
16
718
740
Third party trade receivables, net of allowances as of September 30, 2015
Third party trade receivables, net of allowances as of September 30, 2014
7
1
98
649
Total
Other
Related party financial and other receivables
Derivative financial instruments
Third party financial and other receivables
Grants receivables
Prepaid expenses
VAT and other receivables from tax authorities
76
€ in millions
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
217
382
414
Other current assets at September 30, 2015 and 2014, consist of the following:
56
1,119
office equipment
40
7,220
Other plant and
office equipment
1,123
73
14
(57)
173
14
1,175
Payments on account and
construction in progress
272
217
25
(4)
(198)
8
Total
(106)
326
September
30, 2015
business
combi-
nations'
Land, land rights
and buildings
875
258
30
82
(2)
11
7
1,003
Technical equipment
and machinery
6,529
30
Past due
> 31 days
8,799
379
Land, land rights
and buildings
860
7
(1)
9
3
875
nations
Technical equipment
6,169
344
13
(102)
91
14
6,529
Other plant and
and machinery
646
combi-
30, 2014
(169)
2
314
57
9,712
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 property, plant and equipment 2014
€ in millions
business
Cost
Acqui-
sitions
Disposals
Reclassi-
fication
Transfers
Foreign
currency
effects
through
Foreign
currency
effects
September
October 1, Additions
2013
Past due
0-30 days
2014
Thereof
neither
impaired nor
past due
Financial investments
Securities
Investment funds
2015
2014
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.
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.
8,799
18
(161)
15
567
8,360
Total
12 Trade Receivables
272
Trade receivables due within one year at September 30, 2015 and 2014 consist of the following:
Trade receivables, related parties
€ in millions
Of which not impaired
but past due
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
Changes in the allowance for doubtful accounts for the 2015 and 2014 fiscal years were as follows:
Trade receivables, net
Allowance for doubtful accounts
Trade receivables, gross
Trade receivables, third parties
(101)
€ in millions
742
753
588
Carrying
amount
(11)
(7)
581
2015
4
2014
8
-
(1)
4
11
7
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
7
Third party trade receivables that are outstanding but not impaired at the reporting date comprise the following:
2
1,340
€ in millions
584
751
2014
2015
1,360
64
62
122
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. 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).
Additional paid-in 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.
Ordinary share capital
86
72
28
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
12
24 Equity
245
13
298
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:
28
16
19
28
2014
2015
Total
Other
Deferred grants and subsidies
Deferred income and liabilities from the linearization of expenses
Personnel liabilities
€ in millions
14
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.
Tax
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
494
968
Total
Bond €500 million, coupon 1.50%, due 2022
Long-term debt
Unsecured loans, weighted average interest rate 1.76% (2014: 1.18%), due 2016-2023
Bond €300 million, coupon 1.00%, due 2018
Loans payable to banks:
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:
35
Other non-current liabilities as of September 30, 2015 and 2014 consist of the following:
Tax
Pretax
Net after tax
151
Pretax
2014
2015
€ in millions
Changes in other reserves during the 2015 and 2014 fiscal years are as follows:
Other reserves
› 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.
› 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 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.
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
Consolidated Financial Statements
246
23 Other non-current liabilities
29
186
Less than 1 year
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
Aggregate
facility
facility
Available
Drawn
Aggregate
As of September 30, 2014
As of September 30, 2015
Total
€ in millions
Aggregate amounts of debt and interest maturing in the coming years are as follows:
1,602
186
33
Drawn
Available
110
33
77
103
35
September
68
968
1,685
151
1,534
1,078
1,001
77
1,788
968
8
Long-term
Term
28
16
2
303
28
13
1
943
27
4
1
514
22
118
1
1,809
134
16
3
35
33
€ in millions
The total lines of credit as of September 30, 2015 are summarized in the following table:
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.
Other financial liabilities as of September 30, 2015 primarily consist of financing at Infineon Technologies Austria AG.
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.
The bonds are listed on the Luxemburg Stock Exchange.
> a bond with a nominal value of €500 million due in 2022 and bearing annual interest of 1.5 percent.
> a bond with a nominal value of €300 million due in 2018 and bearing annual interest of 1.0 percent, and
Short-term
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:
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
244
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.
> a credit facility of €800 million with a term of one year and two extension options for Infineon each of six months
(bridge financing).
> a credit facility of US$934 million with a term of five years (term loan) and
Interest
Debt
Interest
Consolidated Financial Statements
8
(627)
25
474
(48)
(476)
338
660
Total provisions
Thereof short-term
55
(14)
34
41
Other
41
(14)
(6)
590
402
Thereof long-term
Deferred income
Liabilities related to Qimonda (see note 32)
VAT and other taxes payables
Advanced payments
Payroll and similar obligations to employees
€ in millions
Other current liabilities at September 30, 2015 and 2014 consist of the following:
21 Other current liabilities
Of the total provisions as of September 30, 2015 and 2014, a cash outflow of €402 million and €590 million, respec-
tively, is expected to occur within one year. With the exception of the service anniversary awards of €22 million
and €17 million as of September 30, 2015 and 2014, respectively, the cash outflow for the majority of the remaining
€50 million and €53 million as of September 30, 2015 and 2014, respectively, is expected within two to seven years.
Other provisions comprise provisions for onerous contracts, litigations (other than provisions relating to Qimonda),
asset retirement obligations, delay on contracts, restructuring and miscellaneous other liabilities.
Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements
associated with products sold.
Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
flextime, service anniversary awards, other personnel costs and social security costs.
1 The usage of provisions related to Qimonda contains an amount of €14 million that was reclassified to other current liabilities in the 2015 fiscal year
(see note 21).
72
70
(257)
312
Provisions related to Qimonda (see note 32)¹
56
20 Provisions
Trade payables with a maturity of more than one year are reported in other non-current liabilities (see note 23).
648
802
12
9
636
793
2014
2015
Trade payables
Trade payables, related parties
Trade payables, third parties
€ in millions
Trade payables at September 30, 2015 and 2014 consist of the following:
Short-term and long-term provisions at September 30, 2015 consist of the following:
Deferred grants and subsidies
€ in millions
Additions
(24)
(16)
21
75
Warranties
322
(4)
(189)
283
232
Obligations to employees
Septem-
ber 30, 2015
2014
Reversals
Usage
October 1,
Derivative financial instruments with negative fair values
Accrued interest
Fine from the chip card antitrust proceedings (see note 32)
Depreciation and impairment
158
Net after tax
(7,099)
3
40
57
(83)
(1,029)
(1)
96
(510)
(5,421)
1
2
October 1,
2013
(34)
Deprecia- Disposals
I
Current maturities of long-term debt, weighted average interest rate: 3.48% (2014: 3.04%)
Loans payable to banks, weighted average interest rate: 4.35%
Short-term debt and current maturities of long-term debt
2014
2015
€ in millions
Debt at September 30, 2015 and 2014 consists of the following:
22 Debt
The obligation to acquire own shares in connection with Infineon's capital returns amounts to €40 million as of
September 30, 2014 and corresponds to the discounted exercise value of outstanding put options on Infineon
Technologies AG shares as at issue date plus interest up to the end of the reporting period. No remaining put
options were outstanding as of September 30, 2015 (see note 24).
261
225
7
4
1
1
40
Carrying amount
tion
35
(649)
Foreign
currency
effects
3
14
9
14
18
16
73
135
2014
2015
243
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Other
Total
Related parties - financial and other payables
Obligation to acquire own shares
13
September
30, 2015
13
11
ments
Impair-
Transfers
Reclassi-
fication
Notes to the Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
tion
Disposals
Deprecia-
October 1,
2014
Depreciation and impairment
83
8
3
9
11
Foreign currency translation differences
September
100
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).
240
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
18 Goodwill and other intangible assets
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
7
7
16
1
2
Non-current liabilities
12
10
Net debt
11
5
Equity
55
53
Foreign
currency
effects
5
(1)
(2)
Therein: total comprehensive income (loss) for the year, net of tax
Revenue
4
3
10
18
5
6
5
Therein: other comprehensive income (loss) for the year, net of tax
September
30, 2015
combi-
201
Other intangible assets
17
1
18
506
100
1,430
18
(13)
2
89
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
€ in millions
Cost
Purchased
Disposals
Transfers
from additions
Foreign
currency
effects
September
2,130
14
(5)
32
nations¹
for consideration
25
729
49
803
Capitalized
development costs
327
100
18
(8)
Customer relationships
374
21
395
Technologies
278
16
294
Licenses and similar rights
154
419
30, 2014
15
10
212
(2)
(15)
(7,099)
1,700
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
1
85
83
10
Depreciation and amortization
3
4
272
159
(481)
(6,760)
(1)
(1)
(649)
226
240
(5,122)
(381)
100
(4)
(1)
Net interest result
(13)
1,108
1,047
(1,018)
(72)
58
4
(1)
(1,029)
94
101
(5,421)
Net income (loss)
Dividends received
Other
2015
2014
76
75
26
23
21
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
239
Bipolar
2015
2014
2015
2014
Current assets
71
67
7
Non-current assets
11
Cryptomathic
Current liabilities
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Other
Carrying amount of Investments accounted for using the equity method
Share of equity
52
51
1
33
32
2
1
33
Total
32
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
3
100
October 1,
Additions
internally
developed
250
Amortization and impairment
October 1,
2013
Amorti-
zation
Disposals
Impair-
ment
Foreign
currency
effects
September
30, 2014
Carrying amounts
30, 2014
September
30, 2013
25
21
(109)
(25)
10
(1)
(123)
(8)
(232)
1,738
(392)
(3)
(13)
202
(52)
(1)
(53)
342
(32)
(32)
262
(131)
(17)
(33)
5
(144)
57
23
(3)
(1)
(4)
14
(256)
(133)
13
(1)
10
(1)
סי יייס
resulting from securities
Realized (gains) losses
(2)
(2)
(1)
2
(3)
resulting from hedge accounting
Unrealized gains (losses)
6
(4)
6
6
from hedge accounting
Realized losses resulting
39
39
(39)
(39)
Deal Contingent Forward
12
12
6
260
1
---
(125)
202
136
(131)
23
23
13
(256)
250
170
(3)
242
55
55
62
3
59
1
(1)
Total
resulting from securities
Unrealized (losses)
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
2013
(159)
(12)
402
92
12
9
(10)
1
506
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.
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.
1
(28)
(620)
30, 2013
30, 2014
September
30, 2014
Foreign
currency
effects
Impair-
ments
Transfers
Reclassi-
fication
September
154
1
327
25
Additions
business
combi-
nations
Goodwill acquired
for consideration
21
Capitalized
development costs
245
September
92
1
Technologies
Licenses and similar rights
136
Other intangible assets
Total
4
8
9
(10)
Customer relationships
Carrying amount
1,700
2,093
October 1,
2014
Amorti-
zation
Disposals
Impair-
Foreign
September
ment
currency
effects
30, 2015
Amortization and impairment
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Carrying amounts
September
30, 2015
September
30, 2014
803
25
(125)
(29)
8
241
(1)
30, 2015
30, 2014
(7,619)
(33)
18
(18)
272
314
(3)
94
116
(1,059)
September
(4)
1,108
1,353
(5,867)
(25)
(6)
226
310
(693)
(4)
(9)
1
Total
Consolidated Financial Statements
19 Trade payables
Total
(22)
(20)
(4)
(24)
Expected return on plan assets
10
2
12
14
2
16
Amortization of unrecognized
past service (cost) benefit
(5)
(17)
Interest cost
(18)
Domestic
plans
Foreign
Total
Domestic
Foreign
Total
plans
plans
plans
Current service cost
(21)
(4)
(25)
(15)
(3)
3
3
Curtailment gain recognized
Pension cost
5
2014
21
18
21
18
82
2015
70
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.
Associates
197
1
5-10 years
2-5 years
5
(28)
(4)
(32)
(21)
(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:
€ in millions
Less than 1 year
1-2 years
2014
2015
€ in millions
The expenses and income of defined benefit plans for the years ended September 30, 2015 and 2014 comprise
the following:
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
As of September 30, 2015 and 2014 the allocation of invested plan assets to the major asset categories is as follows:
tables were applied.
€ in millions
Corporate bonds
Equity securities
Cash and cash equivalents
Reinsurance policies
Property
Other
Government bonds
The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
874
129
129
875
a 50 basis points lower expected
rate of pension increase
Increase in life expectancy by one year
754
136
890
715
123
838
790
143
933
745
Total
2015
2014
Quoted
24
15
25
8
414
74
415
67
The position "Other" in the table above comprises mainly commodity funds.
As a matter of policy Infineon's pension plans do not invest in shares of Infineon.
The actual return on plan assets in the fiscal year ended September 30, 2015 was €7 million (2014: €40 million).
256
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
Amounts recognized in profit or loss and in total comprehensive income
26
Other related
companies
23
33
in an active
market
Not quoted
in an active
market
Quoted
in an active
market
Not quoted
in an active
market
146
153
130
3
109
78
75
33
53
33
3
746
Associates
2015
6.62
September 30, 2017
Fiscal year 2014: Employees
Management Board
1,040,198
100,702
8.49
1,235,370
September 30, 2018
8.49
September 30, 2018
Fiscal year 2015: Employees
Number of
performance shares
at September 30, 2015
Average share price
of the nine months
before grant in €
End of the
waiting period
Fiscal year 2015:
Fiscal year 2014:
September 30, 2017
6.62
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).
There are no material changes with respect to the stock option plans described in the consolidated financial
statements as of September 30, 2013.
Stock Option Plan 2006 and Stock Option Plan 2010
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
250
As at 1 October, 2015 80,964 (virtual) performance shares were allocated to the Management Board and 1,301,206
(virtual) performance shares were allocated to employees.
5.20
5.72
5.31
5.44
in €
Fair Value per
performance share
Management Board
114,046
Tranche
The development of the 2006 and 2010 stock option plans during the 2014 and 2015 fiscal years is presented below:
The following is an overview of the allocations made:
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.
A dividend of €0.20 for each share entitled to a dividend shall be proposed to be paid from the €226 million of
distributable profits of Infineon Technologies AG for the 2015 fiscal year. Taking into account the fact that own
shares held by the Company at the time of the Annual General Meeting are not entitled to receive a dividend, this
would result in an expected distribution of approximately €225 million. Since payment of the dividend depends
on approval being given by the Annual General Meeting which is set to take place on February 18, 2016, a liability
has not been recognized in the Consolidated Financial Statements.
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
248
247
(6)
25 Capital management
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.
Dividends
409
(40)
6
40
(8)
Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available for distribution to
shareholders is based on the level of unappropriated profit (Bilanzgewinn) of the parent company, as determined
in accordance with the HGB. All dividend payments must be approved by the Annual General Meeting.
Infineon'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
Under this plan, (virtual) performance shares are initially provisionally allocated on October 1 for the fiscal year
starting on that date according to a pre-determined LTI allocation amount in euro. With the allotment of a virtual
performance share, the participant in the plan acquires the right to receive (real) Infineon shares once a personal
investment in Infineon shares has reached a four-year holding period. The level of personal investment is dependent
on position and LTI allocation.
A new Long Term Incentive Plan (LTI) consisting of a "performance share" plan was developed for the Management
Board and selected senior executives as a successor to the Stock Option Plan 2010.
Performance share plan
Share-based compensation expenses for the 2015 and 2014 fiscal years amounted to €6 million, respectively.
Share-based compensation expenses
In order to provide share-based compensation the Company has in place the Stock Option Plan 2006, the Stock
Option Plan 2010 and, from the 2014 fiscal year, the Performance Share Plan.
26 Share-based compensation
249
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
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.
The gross debt to EBITDA ratio was 1.4 as of September 30, 2015 (0.2 in 2014). Infineon continues to have sufficient
financial flexibility to ensure that in addition to financing its planned investments it is also able to pay regular
dividends (see note 24).
The gross cash position decreased from €2,418 million as of September 30, 2014, to €2,013 million as of September 30,
2015 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on revenue of
€5,795 million, the ratio of gross cash to revenue was 34.7 percent as of September 30, 2015 (56.0 percent in 2014)
and thus within the targeted range.
As of September 30, 2014, Infineon had a net cash position of €2,232 million. As a result of the acquisition of
International Rectifier and the payment made by Infineon of a total of €343 million relating to the Qimonda
partial settlement and the fine imposed by the European Commission (described in detail in note 32), there was a
temporary net debt position in the second quarter of the 2015 fiscal year. As at September 30, 2015 Infineon had
returned to a net cash position of €220 million.
Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
Capital management as well as the corresponding objectives and definitions are based on ratios which in turn
are based on the consolidated IFRS financial statements. Infineon defines its net cash position, or net debt position,
as gross cash less short-term and long-term debt (gross debt). Gross cash is defined as the total of cash, cash
equivalents and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before
interest and taxes and EBITDA as EBIT plus depreciation/amortization.
> gross debt of not more than 2x EBITDA (earnings from continuing operations before tax, depreciation and
amortization).
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.
Options outstanding as of September 30, 2013
Granted
Number of
options
Other related
companies
Associates
September 30, 2014
September 30, 2015
Trade and other payables
Financial receivables
Associates
Trade and other receivables
Related companies receivables and payables as of September 30, 2015 and 2014 consist of the following:
Related companies receivables and payables consist exclusively of trade and other receivables and payables from
and to associated and other related companies.
Infineon purchases certain raw materials and services from, and sells certain products and services to related
companies. These purchases from and sales to related companies are generally effected at arm's length.
Related companies
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
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").
€ in millions
Other related
companies
1
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 2015 and 2014
fiscal years consist of the following:
Financial payables
1
1
2
10
1
8
1
1
3
1
28 Transactions with related companies and persons
Cash and cash equivalents reported as of September 30, 2015 and 2014 totaling €673 million and €1,058 million,
respectively, include €85 million and €53 million, respectively, which were subject to legal transfer restrictions
and so were not available for general use by Infineon. This amount represents cash and cash equivalents of
consolidated companies located in countries where the transfer of cash is legally restricted, for example the
People's Republic of China.
There were no significant non-cash transactions from acquisition or financing activities during the 2015 and
2014 fiscal years.
27 Supplemental cash flow information
11.2
7.94
(0.1)
2.72
(0.5)
Exercisable at September 30, 2014
Options outstanding as of September 30, 2014
Forfeited and expired
Exercised
7.11
11.8
(in €)
(in millions)
exercise price
Weighted-
average
7.29
2014
0.4
Options outstanding as of September 30, 2014
8.62
1.9
7.33
9.5
6.32
(0.2)
7.11
(1.5)
Exercisable at September 30, 2015
Options outstanding as of September 30, 2015
Forfeited and expired
Exercised
Granted
7.29
11.2
2.72
941
146
795
Plan settlements
7
7
Benefits paid by Infineon
14
4
5
18
3
15
Foreign currency effects
(6)
(6)
(3)
12
5
Curtailments
(1)
(1)
(1)
(2)
(2)
Adjustments to financial assumptions
8
(2)
6
(134)
(15)
(149)
Acquisitions
(3)
(3)
(1)
(3)
demographic assumptions
Present value of defined benefit obligation
at end of year
(141)
Actuarial gains (losses)
(2)
(3)
(5)
22
2
16
24
13
6
19
12
6
18
Contributions from Infineon
2
14
12
(914)
(730)
(131)
(861)
Change in fair value of plan assets:
Fair value of plan assets at beginning of year
430
52
482
394
43
437
Expected return on plan assets
10
2
(773)
Adjustments to
(3)
(3)
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.
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.
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 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:
€ in millions
2015
2014
Domestic
Foreign
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board as
required by section 315a (1) in connection with section 314 (1) no. 6a, sentences 5 to 8 of the German Commercial
Code, is provided in the Compensation Report which is part of the Combined Management Report.
Neither Infineon Technologies AG nor any of its subsidiaries have granted loans to any member of the Supervisory
or Management Boards.
As of September 30, 2015, pension liabilities for former members of the Management Board amounted to
€60.2 million (2014: €59.5 million).
15
2
80
20
81
29
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).
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).
Total
Domestic
plans
plans
Past service income
3
3
Interest cost
(17)
(5)
(22)
(20)
(4)
(24)
Actuarial gains (losses) for:
Experience adjustments
(27)
(3)
(30)
(18)
Benefits paid
(3)
(25)
plans
Foreign
plans
Total
Change in defined benefit obligations
taking into account future salary increases:
Present value at beginning of year
(730)
(131)
(861)
(573)
(108)
(681)
Current service cost
(21)
(4)
(15)
(45)
(14)
(18)
0.7
2.0
0.7
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.
2.0
€ in millions
2014
Domestic
plans
Foreign
plans
Total
Domestic
2015
2.3
2.0
2.4
Discount rate at the end of the fiscal year
Rate of salary increase
Projected future pension increases
2015
2014
Domestic
plans
Foreign
plans
Domestic
plans
Foreign
plans
2.4
3.2
2.4
3.4
2.0
plans
in %
Foreign
plans
Present value of defined benefit pension
plans with:
928
736
130
866
a 50 basis points lower expected
rate of salary increase
145
765
902
724
122
846
a 50 basis points higher expected
rate of pension increase
137
783
rate of salary increase
a 50 basis points higher expected
a 50 basis points higher discount rate
708
131
839
669
117
786
a 50 basis points lower discount rate
847
152
999
800
136
Other related
companies
936
Total
The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
Actuarial assumptions
861
(336)
(90)
(426)
(300)
(79)
(379)
Net pension liability
Thereof: Infineon Technologies AG
Thereof: Infineon Technologies Austria AG
(313)
(281)
(281)
(40)
(40)
(37)
(313)
482
52
430
(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
(37)
Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
similar commitments".
Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
reported in the Consolidated Statement of Financial Position as at September 30, 2015 and 2014.
253
10
63
73
Plans that are wholly or partly funded
Total
763
70
833
720
68
788
773
141
914
730
131
81
(4)
71
Plans that are wholly unfunded
254
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
The funding of the defined benefit obligations is as follows:
€ in millions
2015
2014
Domestic
Foreign
Total
plans
plans
Domestic
plans
Foreign
plans
Total
10
14
5
(in units)
(3,502)
(130)
535
(3,907)
Actuarial gains on post employment benefit obligations net of tax of €1 million
As of September 30, 2015
Net income attributable to shareholders of Infineon Technologies AG
632
As of September 30, 2014
Net income attributable to shareholders of Infineon Technologies AG
€ in millions
The following table shows a reconciliation of accumulated deficit as of September 30, 2015 and 2014:
Accumulated deficit
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
85
Actuarial loss on post employment benefit obligations net of tax of €3 million
(27)
As of October 1, 2013
Put options on own shares and own shares
(2,897)
in €
shares
value
Exercise
Put options issued during the 2015 fiscal year
Less: put options lapsed in the 2015 fiscal year
Less: put options exercised in the 2015 fiscal year
Outstanding put options as of September 30, 2015
Outstanding put options as of September 30, 2014
Underlying
number of
Put options issued in the 2014 fiscal year
Outstanding put options as of October 1, 2013
In each case stated in millions
The following table contains an overview of put options issued, lapsed and exercised during the 2015 and 2014
fiscal year:
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.
Less: put options lapsed in the 2014 fiscal year
Less: put options exercised in the 2014 fiscal year
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.
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.
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
261
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.
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.
38
Market risk
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.
(8)
116
42
(2)
41
39
1,146
1
(4)
145
25
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.
(2)
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.
+10%
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.
In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the
fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
Interest rate risk
(11)
3
(2)
(13)
11
(10%)
(2)
(10%)
+10%
Equity
Profit or Loss
September 30, 2014
September 30, 2015
€ in millions
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.
For the net result related to foreign currency derivatives and foreign currency transactions included within net
income see note 30.
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
171
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).
Par value
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).
There is no active market for the securities included in financial investments. The fair value is calculated as the
present value of future expected cash flows, taking into account valuation parameters which can be observed in
the market (Level 2).
3
3
3
3
5
105
16
126
2014
Fair value
5
64
Fair value
Par value
2014
2015
Total
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.
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.
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.
(35)
(7)
(6)
(40)
(77)
(21)
36
3
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.
Financing and liquidity 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 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.
(57)
Cash inflow¹
7
53
60
Cash outflow
financial liabilities:
Derivative
17
107
(50)
6
21
865
1,032
financial liabilities
Non derivative
beyond 2019
2019
2018
2017
2016
16
(7)
Total
1,035
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.
In December 2014, an indirect customer filed a lawsuit against Infineon and Renesas in London (Great Britain)
which was served upon the Company on April 20, 2015. In this lawsuit the plaintiff claims for damages in an amount
still to be determined in connection with the allegations of the EU Commission.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Two class actions for damages in connection with the EU Commission investigative proceedings have been filed
in Canada: The first action was filed in the state of British Columbia in July 2013, and the second in the state of
Quebec in September 2014. The actions followed the press reports on the investigation and subsequent decision
of the EU Commission. No dates have been set for court proceedings.
In October 2008, the EU Commission initiated an investigation into the Company and other manufacturers of chips
for smartcards for alleged violations of antitrust laws. On September 3, 2014, the EU Commission imposed a fine of
€83 million on Infineon which was paid in October 2014. Infineon rejects the allegations as unfounded. Moreover
Infineon believes its procedural rights to have been violated by the EU Commission and brought an action against the
decision to fine before the European Court of Justice in Luxembourg in mid-November 2014.
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
2015
2014
540
14
Contractual cash flows
2017
2016
2015
€ in millions
The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
using the interest rate from the last interest fixing date before September 30, 2015. The cash outflows of financial
liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
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.
5
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
264
Infineon has spread its cash investments over more than 10 banks. At September 30, 2015 no financial institution was
responsible for more than 15 percent (2014: 14 percent) of Infineon's cash investments. This gives rise to a maxi-
mum risk of €203 million (2014: €190 million) in the event of the default of a single financial institution assuming no
deposit insurance scheme is in place. Infineon also holds derivative financial instruments with a positive fair value
of €1 million (2014: €41 million, of which €39 million related to the Deal Contingent Forward).
Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
equivalents and financial investments are entered into with major financial institutions worldwide that have high
credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
limits for individual banks that are updated on a daily basis based on current ratings (Standard & Poor's, Moody's or
Fitch) and credit default swap premiums. Any possible breaches of stipulated investment thresholds result in an
immediate notification and a call to reduce the risk.
Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
default of one of its contract parties.
Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, the financial investments
and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
maximum credit risk.
Credit risk
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
2018
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.
2019
beyond 2020
970
332
46
1,012
2,914
Total
(201)
(201)
Cash inflow'
209
209
Cash outflow
financial liabilities:
Derivative
540
14
970
332
46
1,004
2,906
financial liabilities
Non derivative
2020
16
Financial investments
41
3,232
39
3,106
85
2
3,232
Total
118
97
21
257
118
Non-current assets:
115
39
74
581
1,360
1,058
1,058
1,296
581
64
☐ ☐
Other non-current assets
258
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
€ in millions
(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
Non-current liabilities:
Other current liabilities
Trade payables
of long-term debt
Short-term debt and current maturities
Current liabilities:
Balance as of September 30, 2015
Financial liabilities
2
115
581
1,360
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
€ in millions
The following table presents the carrying amounts and the fair values of financial instruments by their respective
classes, and a breakdown by category of financial instruments as defined by IAS 39.
30 Additional disclosures on financial instruments
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
1,340
Fair value
742
1
1,058
Other current assets
Trade receivables
Financial investments
Cash and cash equivalents
Current assets:
2,958
2,741
216
1
2,958
129
97
32
129
74
73
742
742
673
1,340
1,156
184
673
74
33
33
33
32
Other non-current assets
Non-current assets:
1
1
62
122
184
Other current assets
Financial investments
Level 3
Level 2
Level 1
Fair value by category
Fair value
259
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
Current assets:
2015 Fiscal year
€ in millions
The allocation to the levels as of September 30, 2015 and 2014 is as follows:
> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
either directly or indirectly for the assets or liabilities,
19
> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
13
217
64
9
9
41
64
9
9
Total
Other current liabilities
Current Liabilities
Total
Other non-current assets
Non-current assets:
Other current assets
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.
Current assets:
2014 Fiscal year
Total
Other current liabilities
Current Liabilities
13
63
141
Total
21
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:
1,028
of long-term debt
Short-term debt and current maturities
Current liabilities:
Balance as of September 30, 2014
2,763
2
2,755
7
2,764
32
32
32
1,759
1,760
1,760
137
2
128
7
137
802
802
802
35
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)".
35
Trade payables
2
1,025
1
1,028
15
15
15
151
151
151
Total
Other non-current liabilities
Long-term debt
Non-current liabilities:
179
2
176
1
179
Other current liabilities
648
648
648
35
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.
(8)
265
Consolidated Financial Statements
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.
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 legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
already been exchanged between the parties. Both sides have engaged numerous specialists and experts who are
supporting the respective parties with assessments and opinions.
Due to the highly complex nature of the issues to be decided and the level of the claims asserted, it is not clear
at this stage if this legal dispute can be ended with an out-of-court settlement, and absent a settlement when
a first-instance court decision would be reached.
Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory 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.
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 2015
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.
266
Dr. Susanne
48
Lachenmann¹
Annual General
Meeting 2020
(since February 12,
2015)
Dr. Manfred Puffer
52
> Nestlé Deutschland AG, Frankfurt am Main
228
> Robert Bosch GmbH, Gerlingen
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
> Allianz SE, Munich
> BMW AG, Munich
Annual General
Meeting 2020
Annual General
Meeting 2020
Prof. Dr. Doris
Schmitt-Landsiedel
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
> Athene Holding Ltd., Pembroke, Bermuda
> Athene Life Re Ltd., Pembroke, Bermuda
Labor union secretary
Reinhard Gottinger¹
54
February 12, 2015
Gerd Schmidt¹
61
February 12, 2015
1 Employee representative
Chairman of the
IG Metall, Berlin
Member of the Board of Directors
Deputy Chairwoman
of the Infineon Works
Council, Warstein,
Infineon Technologies AG
Independent works
council representative
of the Infineon Works
Council, Dresden,
Infineon Technologies
Dresden GmbH
Independent Attorney
Annual General
Meeting 2020
Jürgen Scholz'
54
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)
Annual General
Meeting 2020
Annual General
Meeting 2020
Former members of the Supervisory Board
Management Consultant
Professor
Munich Technical University
First authorized agent
of IG Metall, Regensburg
62
Hans-Ulrich Holdenried 64
Representative of
53
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
Membership of Supervisory Boards and
comparable governing bodies of domestic
and foreign companies
Member of the Supervisory Board
> Deutsche Lufthansa AG, Köln
(Chairman)
Management Consultant
Annual General
Meeting 2020
68
Wolfgang Mayrhuber
Chairman
> tesa SE, Hamburg
Member of the Board of Directors
> Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore (Chairman)
> Infineon Technologies India, Pvt. Ltd.,
Bangalore, India
> Infineon Technologies North America Corp.,
Wilmington, Delaware, USA (Chairman)
> Infineon Technologies Japan K.K.,
Tokyo, Japan
> BMW AG, Munich
> International Rectifier Corporation,
(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
Wilmington, Delaware, USA
Annual General
Meeting 2020
(until May 13, 2015)
Gesellschaft AG, Munich
(since February 12,
Annual General
Meeting 2020
Member of the
2015)
Annette Engelfried¹
50
(since February 12,
Annual General
Meeting 2020
2015)
Peter Gruber¹
54
Central Works Council
Annual General
Meeting 2020
Senior Management
Gerhard Hobbach¹
56
Dr. Herbert Diess
Management Board
Volkswagen AG, Wolfsburg
Labor union secretary IG
Metall district management,
Berlin-Brandenburg-Saxony
Membership of Supervisory Boards and
comparable governing bodies of domestic
and foreign companies
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)
> Münchener Rückversicherungs-
> Kontron AG, Eching
275
276
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
Name
Age
Term expires
Occupation
(until August 31, 2015)
Member of the Supervisory Board
Infineon Technologies AG
594
from lease contracts
Payments arising
Payment obligations as of September 30, 2015
4-5 years After 5 years
3-4 years
2-3 years
1-2 years
Less than
1 year
Total
(€ in millions)
Payments due in
Undiscounted future minimum operating lease and rental payments arising from operating lease contracts at
September 30, 2015 amounted to €446 million (September 30, 2014: €402 million). The corresponding payment
obligations fall due as follows:
In addition to provisions, liabilities and contingent liabilities, Infineon also has other financial obligations, relating
in particular to lease and long-term rental arrangements, and unconditional purchase commitments. These are
explained in more detail below.
Other financial obligations and other risks
In total, Infineon has guarantees outstanding to third parties as of September 30, 2015 amounting to €72 million.
Guarantees are mainly issued for the payment of import duties, rentals of buildings, and contingent obligations
related to government grants received.
28
4
Regensburg,
47
Infineon Works Council,
Total
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.
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
The following tables present selected segment data:
€ in millions
Revenue:
Automotive
Industrial Power Control
Power Management & Multimarket
112
Other Operating Segments
Corporate and Eliminations
2015
271
7
13
The following table summarizes Infineon's contingent liabilities with respect to external parties, excluding possible
liabilities arising from litigation, as of September 30, 2015 and 2014:
Contingent liabilities relate to possible future events, the occurrence of which would result in an obligation. The
occurrence of these obligations is considered to be unlikely at the reporting date, but cannot be ruled out entirely.
Contingent liabilities
33 Contingent liabilities and other financial commitments
Consolidated Financial Statements
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
268
267
A settlement or adverse judicial decision in any of the matters described above could result in significant financial
liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its
business and financial condition, liquidity position and results of operations. Irrespective of the validity of the
allegations and the success of the aforementioned claims and other matters described above, Infineon could incur
significant costs in the defense of these matters.
Any potential liability is reviewed again as soon as additional information becomes available and the estimates are
revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
liquidity position and results of operations.
Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that
a liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
then they qualify as contingent liabilities.
Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
of law committed by individual employees or third parties.
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
Infineon Technologies AG
Payments due in
11
(€ in millions)
Less than
1 year
110
as of September 30, 2014
Guarantees
28
2
4
16
8
14
72
as of September 30, 2015
Guarantees
After 5 years
4-5 years
3-4 years
2-3 years
1-2 years
Total
Chairman of the
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
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.
39
177
Payment obligations as of September 30, 2014
Payments arising
from lease contracts
567
93
81
55
49
48
241
Payments arising
from sub-lease contracts
(165)
(17)
(16)
44
(15)
46
83
100
72
61
59
53
249
Payments arising
from sub-lease contracts
(148)
(17)
(15)
(15)
(15)
(14)
(72)
Total
446
57
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.
(15)
(87)
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.
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.
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.
Consolidated Financial Statements
(15)
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
269
Total
402
76
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
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.
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).
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.
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.
270
(since January 13, 2015)
Chip Card & Security
> International Rectifier Corporation,
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
2015
2014
897
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)
Share-based compensation expense
(6)
(6)
Acquisition-related depreciation/amortization and other expenses
(274)
172
(8)
352
122
2014
2,351
1,965
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.
€ in millions
Segment Result:
Automotive
Industrial Power Control
Power Management & Multimarket
Chip Card & Security
Other Operating Segments
Corporate and Eliminations
Total
2015
2014
300
259
144
58
Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
2
165
111
82
61
3
5
646
506
114
8
760
514
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
214
126
Wilmington, Delaware, USA
104
101
(2)
112
284
Other income and expense, net¹
(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)
(19)
4
3
520
519
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.
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.
€ 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
2015
2014
228
40
(16)
237
1
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.
22
274
Consolidated Financial Statements
35 Additional information in accordance with HGB
> Infineon Technologies China Co., Ltd.,
Shanghai, People's Republic of China
> Infineon Technologies Asia Pacific Pte., Ltd.,
Singapore
Member of the Board of Directors
Villach, Austria
> Infineon Technologies Austria AG,
> EPCOS AG, Munich
Member of the Supervisory Board
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
> Infineon Technologies (Kulim) Sdn. Bhd.,
Kulim, Malaysia (Chairman)
31
939
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
Non-current assets:
Europe
Therein: Germany
Asia-Pacific (without Japan)
670
Therein: China
Americas
Therein: USA
Total
2015
2014
1,504
1,321
982
862
Japan
Member of the Board of Directors
Villach, Austria (Chairman)
Application of exemption regulations
Management Board
The members of the Management Board during the 2015 fiscal year were as follows:
Name
Age
> Infineon Technologies Austria AG,
Term expires
Dr. Reinhard Ploss
59
September 30, 2020
Notes to the Consolidated Financial Statements
Dominik Asam
December 31, 2018
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
46
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
The remuneration of the individual members of the Management Board and the Supervisory Board, as required
by section 314 (1) no. 6a, sentences 5 to 8 HGB, is disclosed in the Compensation Report which is part of the
Combined Management Report.
Management compensation in the 2015 fiscal year
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:
> Hitex GmbH, Karlsruhe,
> Infineon Technologies Finance GmbH, Neubiberg,
> Infineon Technologies Akquisitionsgesellschaft 1 mbH, Neubiberg,
> Infineon Technologies Akquisitionsgesellschaft 2 mbH, Neubiberg,
> 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
(as at September 30, 2015)
568
367
710
1,129
> Infineon Technologies North America Corp.,
Wilmington, Delaware, USA
484
396
707
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
Revenue:
Europe, Middle East, Africa
Therein: Germany
Asia-Pacific (without Japan)
Member of the Supervisory Board
Japan
Therein: China
1,337
399
1,845
284
2,666
859
868
2,020
942
Total
Therein: USA
Americas
1,707
2014
2015
Neubiberg, Germany
3
Infineon Technologies Mantel 21 GmbH
millions)
Net result
in %
note
(€ in
(€ in
100
Foot-
millions)
Share-
holdings
Registered office
0.00
3
100
0.14
0.03
Dublin, Ireland
Equity
3
0.42
0.10
0.03
280
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Consolidated Financial Statements
Name of company
100
GRI G4-17
0.00
Infineon Technologies Mantel 24 GmbH
IR International Holdings China, Inc.
100
6
Bucharest, Romania
IR International Holdings, Inc.
KAI Kompetenzzentrum Automobil-
Infineon Technologies South America Ltda.
und Industrieelektronik GmbH
MicroLinks Technology Corp.
OSPT IP Pool GmbH
R Labco, Inc.
Schweizer Electronic AG
TTTech Computertechnik AG
Xi'an IR PERI Company, Ltd.
KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
0.00
Infineon Technologies Schweiz GmbH
0.00
Neubiberg, Germany
3
100
0.02
3
Infineon Technologies Mantel 26 AG
Infineon Technologies Romania s.r.l.
Infineon Technologies RUS LLC
Neubiberg, Germany
0.04
0.00
Infineon Technologies Mantel 27 GmbH
100
0.03
10
100
Neubiberg, Germany
144
0.01
5,873
5,898
5,905
6,438
8,741
Total assets
CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA
Gross cash position
2011
2013
2014
2015
€ in millions, except otherwise stated
Financial Data 2011-2015
285
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
2012
19.7%
2,013
2,286
5
Assets classified as held for sale
507
567
609
707
1,129
2,418
Inventories
1,940
1,983
2,232
220
Net cash position
2,692
2,235
2,387
13.5%
9.8%
14.4%
56
39
43
121
Chip Card & Security
242
142
54
0.02
3
Zurich, Switzerland
0.03
0.09
100
6
Moscow, Russian Federation
100
Other Operating Segments
5
6
15.5%
786
527
377
620
897
Segment Result Margin
Segment Result:
(5)
(13)
(2)
(4)
(3)
Corporate and Eliminations
14
5
(9)
0.04
100
3
3
9.37
100
Tijuana, Mexico
2.39
14.56
94
(28.36)
6
3,9
(0.75)
8.36
100
Cheonan, Republic of Korea
17.66
Neubiberg, Germany
5
100
2.90
2.62
68.92
3
666
60
60
Warstein, Germany
Cegléd, Hungary
CHIL Semiconductors Corporation
Advanced Power Electronics Corp.
Other companies (non consolidated): 1
Infineon Technologies Bipoláris Kft.
Infineon Technologies Bipolar GmbH & Co. KG
Associated companies:
6
(0.90)
41.94
100
5
Newport, Great Britain
Mumbai, India
0.22
1.19
100
5
Les Ulis (Courtaboeuf), France
5
(48.65)
36.71
100
Wilmington, Delaware, USA
0.10
1.49
100
5
8
3
100
0.00
0.15
5
0.40
100
Taipei, Taiwan
5
(2.86)
181.63
100
Newport, Great Britain
0.06
1.86
100
Milan, Italy
5
0.92
1.54
0.20
13
6
(0.03)
0.80
100
Villach, Austria
Infineon Technologies Austria Pensionskasse AG
Infineon Technologies Bipolar Verwaltungs GmbH
0.41
2.31
88
3
Coventry, Great Britain
N.A.
N.A.
N.A.
Berlin, Germany
3
13
Warstein, Germany
0.03
0.00
0.02
100
Neubiberg, Germany
3
0.00
0.00
100
St.John, New Brunswick, Canada
Madrid, Spain
Infineon Technologies Ireland Ltd.
Infineon Technologies Iberia S.L.U.
Infineon Technologies Canada, Inc.
Infineon Technologies Delta GmbH
Infineon Technologies Gamma GmbH
3
0.00
60
Neubiberg, Germany
0.01
51
0.10
72
Linz, Austria
DICE Danube Integrated Circuit Engineering GmbH
0.00
0.00
100
Wilmington, Delaware, USA
5
N.A.
Skovlunde (Kopenhagen, Denmark)
5
N.A.
N.A.
Hsinchu County, Taiwan
0.00
0.02
EPOS embedded core & power systems
EPOS embedded core & power systems
Verwaltungs GmbH
3
Wilmington, Delaware, USA
0.00
0.05
100
Duisburg, Germany
3
0.20
0.49
100
3
Duisburg, Germany
Hitex (UK) Limited
Haus der Zukunft gGmbH
eupec Thermal Management Inc. in liquidation
GmbH & Co. KG
Property, plant and equipment
77
1,700
7 Equity and net result as of March 31, 2015.
6 Equity and net result as of December 31, 2014.
5 Equity and net result as of June 30, 2014.
4 Equity and net result as of March 31, 2014.
3 Equity and net result as of September 30, 2014.
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.
8 Equity and net result as of May 13, 2013 (period from April 1, 2013 until May 13, 2013).
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
2
2
2
Foot-
note
Net result
(€ in
millions)
2
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).
2,518
Total equity
4,665
4,158
282
GRI G4-17
Arunjai Mittal
Dominik Asam
Dr. Reinhard Ploss
Management Board
Infineon Technologies AG
Neubiberg, November 20, 2015
The values in the above table represent financial statements prepared according to local requirements and are,
in some cases, provisional.
13 Share of less than 5 percent.
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).
millions)
Equity
(€ in
77
77
77
Fort Lauderdale, Florida, USA
2
77
Seoul, Republic of Korea
2
77
Padua, Italy
2
77
2
Suzhou, People's Republic of China
77
Rotterdam, The Netherlands
2
Name of company
Therein: USA
Registered office
Qimonda Richmond LLC in insolvency
Qimonda Solar GmbH
77
77
77
77
Share-
holdings
in %
Notes to the Consolidated Financial Statements
281
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
High Blantyre, Scotland
Qimonda UK Ltd. in liquidation
Taipei, Taiwan
Wilmington, Delaware, USA
Dresden, Germany
Wilmington, Delaware, USA
Suzhou, People's
Republic of China
Qimonda Taiwan Co. Ltd. in liquidation
Qimonda Memory Product Development
Center (Suzhou) Co., in liquidation
Qimonda North America Corp. in insolvency
77
315
368
Wirtschaftsprüfungsgesellschaft
Braun
Wolper
Wirtschaftsprüfer
Wirtschaftsprüfer
227
KPMG AG
252
710
484
489
284
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Further Information
202
Munich, November 20, 2015
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSS, as
adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB and give
a true and fair view of the net assets, financial position and results of operations of the Group in accordance with
these requirements. The group management report is consistent with the consolidated financial statements and
as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of
future development.
Our audit has not led to any reservations.
0.00
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Further Information
Responsibility Statement by the
Management Board
To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss
of the Group, and the Group Management Report, which has been combined with the Management Report for
Infineon Technologies AG, includes a fair review of the development and performance of the business and
the position of the Group, together with a description of the principal opportunities and risks associated with
the expected development of the Group.
Neubiberg, November 24, 2015
Infineon Technologies AG
Dr. Reinhard Ploss
Dominik Asam
Arunjai Mittal
Auditor's Report
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Auditor's Report
283
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.
Financial Data 2011-2015
€ in millions, except otherwise stated
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Revenue by region
1,845
1,560
1,470
1,450
1,337
868
710
637
663
399
284
450
425
568
367
2,666
332
1,090
1,920
Europe, Middle East, Africa
Therein: Germany
Asia-Pacific (w/o Japan)
Therein: China
Japan
Americas
2015
2014
2013
2012
2011
2,020
942
1,707
859
1,567
795
1,732
908
2
77
2
2.04
24
6
Lippstadt, Germany
0.00
0.10
0.14
100
Villach, Austria
0.00
0.00
100
5
Wilmington, Delaware, USA
6
Kaohsiung, Taiwan
13
N.A.
9
Schramberg, Germany
6
0.00
0.00
100
5
Wilmington, Delaware, USA
0.00
0.02
100
Neubiberg, Germany
3
N.A.
N.A.
0.00
0.00
100
Wilmington, Delaware, USA
295
303
186
1,793
Provisions
Debt
111
146
170
250
1,738
Goodwill and other intangible assets
1,343
1,731
1,600
305
48.44
474
721
5
3
(0.04)
0.03
100
São Paulo, Brazil
0.03
0.22
2,323
2,129
2,280
4,076
Total liabilities
836
740
660
5.58
Wien, Austria
13
2
2
བབྲབ
Munich, Germany
Wilmington, Delaware, USA
Qimonda Flash GmbH in insolvency
Qimonda Finance LLC in insolvency
Qimonda Flash Geschäftsführungs GmbH
in liquidation
Qimonda Europe GmbH in liquidation
Dresden, Germany
Qimonda Dresden Verwaltungsgesellschaft mbH
in insolvency
77
Dresden, Germany
Qimonda Dresden GmbH & Co. OHG in insolvency
2
77
Bratislava, Slovakia
2
Qimonda Bratislava s.r.o. in liquidation
2
Qimonda Holding B.V. in insolvency
77
2
77
2
FFFF
Rotterdam, The Netherlands
Shanghai, People's
Republic of China
Dresden, Germany
St. Denis, France
Dresden, Germany
GRI G4-17
Qimonda Licensing LLC
Qimonda Korea Co. Ltd. in liquidation
Qimonda Italy s.r.l. in liquidation
Qimonda IT (Suzhou) Co., Ltd. in liquidation
Qimonda Investment B.V.
Qimonda International Trade (Shanghai) Co. Ltd.
Qimonda France SAS in liquidation
2,093
2
Munich, Germany
Colorado Springs, Colorado, USA
Qimonda Asia Pacific Pte. Ltd.
Qimonda AG in insolvency
Qimonda (Malaysia) Sdn. Bhd. in liquidation
Itarion Solar Lda.
Celis Semiconductor Corp.
2
Qimonda AG and its subsidiaries: 2
N.A.
N.A.
50
Xi'an, People's Republic of China
N.A.
N.A.
N.A.
17
77
2
40
Qimonda Beteiligungs GmbH in insolvency
2
77
Leuven, Belgium
Qimonda Belgium BVBA in insolvency
2
77
2
77
Singapore, Singapore
Munich, Germany
2
77
Malacca, Malaysia
2
Vila do Conde, Portugal
0.16
Neubiberg, Germany
Bangalore, India
514
466
428
364
Purchases of property, plant and equipment
and intangible assets and other assets
Cash flow
Free cash flow
(785)
(668)
(378)
(890)
(887)
(413)
529
107
(585)
(662)
(1,654)
317
235
(219)
106
760
Depreciation and amortization
1,206
(40)
Net cash provided by operating activities from continuing operations
957
988
610
100
983
Net cash used in investing activities from continuing operations
(2,593)
(272)
(328)
(1,013)
The IFX Share (as of September 30)
(2,499)
from continuing operations
1,363
(179)
(165)
(199)
(352)
Net increase in cash and cash equivalents
from discontinued operations
(140)
(8)
(10)
Net cash provided by (used in) financing activities
Dividend per share 7 in €
Dividend 7 in € million
Closing price Xetra Trading System in €
11,294
9,190
7,950
5,335
6,073
Market capitalization US$ in millions
12,704
11,554
10,729
6,957
8,031
Market capitalization € in millions
Infineon employees (as of September 30 in total figures)
29,807
26,725
26,658
25,720
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.
2 Return on sales = net income/loss divided by revenue.
3 EBIT = earnings from continuing operations before interest and tax.
4 EBIT margin = EBIT divided by revenue.
5 EBITDA = EBIT plus scheduled depreciation and amortization.
6 Return on assets = net income (loss) divided by total assets.
7 A cash dividend of €0.20 per share for the 2015 fiscal year will be proposed at the Annual General Meeting.
35,424
CONSOLIDATED STATEMENTS OF CASH FLOWS DATA
1,087
1,081
Closing price OTCQX in US$
Shares issued in million
0.20
0.18
0.12
0.12
0.12
225
202
129
129
1,080
130
8.19
7.40
4.94
5.59
11.31
10.30
9.98
6.44
7.39
1,129
1,128
10.06
This would result in a distribution of approximately €225 million.
62.1%
14.1%
Selling, general and administrative expenses
(439)
(455)
(525)
(550)
(717)
Research and development expenses
41.4%
36.6%
34.4%
38.1%
35.9%
1,654
1,427
1,323
1,647
2,080
3,997
3,904
3,843
4,320
5,795
Gross margin
(778)
(496)
(440)
(475)
(1)
2
3
4
Income (loss) from investments accounted for using the equity method
(26)
(23)
(21)
(9)
(39)
Net financial result
Gross profit
736
325
525
555
Operating income
(30)
(42)
(33)
(76)
(30)
Other operating income and expense, net
(449)
455
Total Revenue
1
5
3,575
3,355
Statement of Financial Position Ratios
Equity ratio
Return on equity
Return on assets
Return on Capital Employed (ROCE)
53.4%
64.6%
63.9%
60.6%
3,776
57.1%
12.9%
7.2%
11.9%
33.4%
7.3%
8.3%
4.6%
7.2%
19.1%
12.8%
20.3%
13.6%
22.3%
Supervisory Board committees
Wolfgang Mayrhuber (Chairman)
2
(5)
(1)
Corporate and Eliminations
216
125
26
22
14
Other Operating Segments
428
Mediation Committee
457
494
666
Chip Card & Security
1,003
929
987
1,061
Executive Committee
Jürgen Scholz
Hans-Ulrich Holdenried
Johann Dechant
463
286
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Further Information
G25 Revenue and Segment Result of the
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
22
G65
Revenue by segment
G 66
Revenue by region
G67
63
Orders received and revenue
120
129
130
115
115
115
G 62 Age structure (new entries worldwide 2015)
G 63 Age structure (Infineon worldwide 2015)
G64 Development of the Infineon Technologies AG
share compared to Germany's DAX Index
and Philadelphia Semiconductor Index (SOX)
and the Dow Jones US Semiconductor Index
from the beginning of the 2015 fiscal year
(daily closing prices)
G58 Nationalities (Infineon worldwide 2015)
G59 Women in management positions
110
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
131
58
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
G61
65
55
G 68 Gross profit and gross margin
142
G77 Liquidity position as of September 30, 2015
and 2014 by comparison
143
G33 Interior design of the dual Hall sensor.
The two sensor chips are placed exactly
on top of each other.
G78 Risk assessment matrix
150
73
1,794
Power Management & Multimarket
G76 Free cash flow
797
651
783
971
Industrial Power Control
1,552
1,660
1,714
1,965
2,351
Automotive
Revenue by Segment
728
G19 China automotive semiconductor
62
G32 R&D expenses
G69 R&D expenses
132
132
65
G70 Selling, general and administrative expenses
133
65
G71
Assets
136
66
72
99
136
G73
Debt by currencies
138
G74
ROCE
138
67
G75 Cash flow
141
69
G72 Liabilities and equity
57
108
107
97
36
G40 Water balance
G07 Revenue in the fiscal years 1999 to 2015
G41
Water consumption
compared to the global semiconductor market
G08 Worldwide light vehicle production by region
G09 Average semiconductor content of
37
G42
Water discharges 2015
38
G 39 Lost Day Rate (LDR)
G43
G44
Waste generation
12222222222
92
94
96
97
98
98
98
99
Standardized water consumption
various types of vehicles
G06 Compound annual growth rate of the main
semiconductor target markets, 2014 to 2019
31
List of graphics
Graphic
Page
G01 Dividend per share for the 2010
to 2015 fiscal years
26
G02 Revenue growth of the individual segments
in the 2015 fiscal year compared to
the previous year
28
G03 Revenue by segment in the 2015 fiscal year
G04 Top 20 semiconductor manufacturers
28
G38 Injury Rate (IR)
G35
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
Page
75
82
G36
Infineon CSR Concept
for the 2014 calendar year
30
G37
Reports of possible compliance breaches
G05 Infineon revenue by region
Graphic
4
38
Waste management methods
102
48
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
G51 Allocation of emissions by origin
G54 Principles of Purchasing
G16 Revenue and Segment Result of
the Automotive segment
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
105
G45
G14 Segment Result and Segment Result Margin
over the last three years
Calculation of the CO2 burden
G10 Expected growth of the server market worldwide
G11 Development of Infineon's market share for
silicon microphone ICs from 2006 to 2014
43
in the 2015 fiscal year
99
G46
Standardized waste generation
99
44
G12 Development of global mobile data traffic
G47
Energy consumption
101
100
2014 to 2019
45
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
G48
Income tax
667
(31)
Infineon Technologies Southeast Asia Pte, Ltd.
Infineon Technologies Taiwan Co., Ltd.
Maia, Portugal
Kista, Sweden
3
100
Infineon Technologies Shared Service Center,
Unipessoal Lda.
6.03
Wilmington, Delaware, USA
100
112.30
2.58
3
Muntinlupa City, Philippines
0.83
100
Infineon Technologies Romania & Co. Societate
in Comandita
Infineon Technologies North America Corp.
8.44
2.35
Seoul, Republic of Korea
3
100
3.85
Infineon Technologies Philippines, Inc.
0.73
Neu-Isenburg, Germany
5
100
7.94
1.85
Infineon Technologies Nordic AB
Infineon Technologies Neu-Isenburg Vertriebs GmbH
100
0.18
5
Basic earnings per share (in €)
0.56
0.48
0.25
0.40
1.03
0.35
Diluted earnings (loss) per share attributable to shareholders
Diluted earnings per share from continuing operations (in €)
0.55
0.44
0.26
0.39
0.66
of Infineon Technologies AG (in €):
0.17
(0.01)
1.38
Bucharest, Romania
3
100
0.89
0.85
m
0.04
100
0.23
3
Singapore, Singapore
100
55.19
5
1.34
3
Tokyo, Japan
3.57
3
Infineon Technologies Finance GmbH
100
369.89
0.00
3
0.00
Infineon Technologies France S.A.S.
100
11.43
0.23
Rotterdam, The Netherlands
3
100
St. Denis, France
2,087.90
224.27
Dresden, Germany
Republic of China
6
100
3.37
0.24
Infineon Technologies China Co., Ltd.
0.01
Shanghai, People's
6
100
138.96
14.70
3
Infineon Technologies Dresden GmbH
Republic of China
250.79
Hong Kong, People's
Republic of China
Rotterdam, The Netherlands
3
100
0.13
0.00
Milan, Italy
1.73
3
1.73
0.40
Klagenfurt, Austria
3
100
6.42
100
14.47
100
4
5
100
15.89
3.16
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.
Hong Kong, People's
Republic of China
102
100
1.37
0.17
Bangalore, India
Diluted earnings (loss) per share from discontinued operations (in €)
Shanghai, People's
0.01
(0.01)
182.06
14.14
International Rectifier Corporation
Wilmington, Delaware, USA
100
1,238.56
100
(256.59)
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)
5
IR Denmark Aps
5
International Rectifier Company (Great Britain), Ltd.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
279
Notes to the Consolidated Financial Statements
Name of company
Registered office
Share-
holdings
Newport, Great Britain
Equity
(€ in
Foot-
(€ in
note
in %
millions)
millions)
Net result
GRI G4-17
IR EPI Services, Inc.
IR Infotech Private, Ltd. in liquidation
5
100
1.04
0.02
Kuala Lumpur, Malaysia
100
Seoul, Republic of Korea
0.41
5
Curepipe, Mauritius
5
100
3.16
0.02
0.00
IR France SAS
5.32
12.13
IR Italy s.r.l.
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.
5
Shanghai, People's
Republic of China
100
41.07
(52.22)
5
Tokyo, Japan
100
Wilmington, Delaware, USA
0.00
0.00
100
562
528
327
9.7%
12.2%
8.5%
7.1%
10.9%
453
11.6%
740
18.5%
1,322
1,042
793
881
28.0%
1,104
12.4%
EBITDA 5
0.32
Diluted earnings per share (in €)
0.56
0.48
0.25
0.39
10.9%
0.98
0.60
0.48
Key Data for the Consolidated Statement of Operations
Return on sales²
EBIT3
EBIT margin 4
Adjusted earnings per share (in €) - diluted
Segment Result
Automotive
300
Infineon Technologies U.K. Ltd.
Bristol, Great Britain
100
2.38
0.57
11
3
Infineon Technologies US HoldCo Inc.
100
0.06
0.00
Infineon Technologies US InterCo LLC
Wilmington, Delaware, USA
11
Wilmington, Delaware, USA
0.54
2.17
100
259
167
219
279
Industrial Power Control
122
144
38
118
202
Power Management & Multimarket
352
172
Taipei, Taiwan
3
0.04
Infineon Technologies Center of Competence
(Shanghai) Co., Ltd.
3
13.54
(0.01)
12
Malacca, Malaysia
(0.49)
20.62
1.46
13.71
3
Kulim, Malaysia
100
128.86
19.19
3
Malacca, Malaysia
3
100
100
1.06
3
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.
Infineon Technologies Austria AG
Karlsruhe, Germany
Wuxi, People's Republic of China
3
2.16
0.00
Beijing, People's Republic of China
6
100
16.30
100
1.47
125.01
6
Singapore, Singapore
100
3
162.23
41.11
Bayswater, Australia
0.00
3
1.05
Villach, Austria
100
495.59
0.13
118.75
3
100
12.08
0.02
Neubiberg, Germany
Wuxi, People's Republic of China
Xi'an, People's Republic of China
100
135.74
12.29
6
100
100
6.92
Neubiberg, Germany
3
100
0.05
0.00
3
0.32
1.52
72
Linz, Austria
272
427
1,119
Basic earnings (loss) per share attributable to shareholders of Infineon
Technologies AG (in €):
Basic earnings per share from continuing operations (in €)
0.55
535
0.44
0.40
0.68
Basic earnings (loss) per share from discontinued operations (in €)
Wolfgang Mayrhuber (Chairman)
Johann Dechant
Gerhard Hobbach
0.26
Hans-Ulrich Holdenried
634
375
(23)
1
30
Income from continuing operations
622
488
Net income
283
744
Income (loss) from discontinued operations, net of income taxes
12
47
(11)
(5)
432
Investment, Finance and Audit Committee
Dr. Eckart Sünner (Chairman)
Johann Dechant
Consolidated Financial Statements
Subsidiaries, associated companies and other related companies
as of September 30, 2015
Name of company
Registered office
Fully consolidated subsidiaries:
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Share-
holdings
in %
Net result
Foot-
(€ in
millions)
(€ in
millions)
note
DICE Danube Integrated Circuit Engineering
GmbH & Co. KG
Equity
278
277
The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-12,
D-85579 Neubiberg (Germany).
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
Wolfgang Mayrhuber (Chairman)
Prof. Dr. Renate Köcher
Dr. Manfred Puffer
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements
The members of the Company's Supervisory Board, individually or in aggregate, do not own, directly or indirectly,
more than 1 percent of Infineon Technologies AG's outstanding share capital as of September 30, 2015.
Infineon Technologies Batam PT
Batam, Indonesia
100
100
100
Cegléd, Hungary
Infineon Technologies Cegléd Kft.
3
3
100
16.23
1.45
201
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 employee representatives
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.
Composition of the Supervisory Board
Other information relating to corporate governance at Infineon can be found in the Corporate
Governance Report issued jointly by the two boards.
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.
see page 174
P
Management Board and Supervisory Board
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
20
20
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 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.
@www.infineon.com/cms/en/
about-infineon/investor/
corporate-governance/
declaration-of-compliance/
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report of the Supervisory Board to the Annual General Meeting
21
21
Elections within the Supervisory Board
The constituting meeting of the Supervisory Board took place immediately after the Annual
General Meeting on February 12, 2015. At that meeting, Mr. Mayrhuber was re-elected as
Chairman of the Supervisory Board and Mr. Dechant elected as Deputy Chairman.
In addition to the statutorily prescribed Mediation Committee, the Supervisory Board once
again resolved to form an Executive Committee, an Investment, Finance and Audit Committee,
a Strategy and Technology Committee and a Nomination Committee. In keeping with the
wishes of the Supervisory Board, all of these committees will be composed on a parity basis, i.e.
with equal numbers of shareholder and employee representatives, with the exception of the
Nomination Committee. Mr. Mayrhuber remains Chairman of the Supervisory Board, the
Mediation Committee and the Executive Committee. He was also elected as Chairman of the
Nomination Committee. Dr. Sünner will again chair the Investment, Finance and Audit Commit-
tee. Prof. Dr. Schmitt-Landsiedel continues to chair the Strategy and Technology Committee.
Report on the work of the Supervisory Board's Committees
The committees draw up resolutions or prepare topics that are required to be dealt with by the
full Supervisory Board. Certain decision-making powers have been delegated to committees,
to the extent permitted under German law. The chairpersons of each committee routinely report
on committee meetings at the next relevant full Supervisory Board meeting.
Nomination and Mediation Committee
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 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 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.
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
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.
1 Proposal to the Annual General Meeting to be held on February 18, 2016.
2014 2015
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report of the Supervisory Board to the Annual General Meeting
Wolfgang Mayrhuber
Chairman of the Supervisory Board
The Chairman of the Supervisory Board, the Chairman of the Investment, Finance and Audit
Committee and the Chairwoman of the Strategy and Technology Committee were in continual
contact with the Management Board. The Chairman of the Supervisory Board was also informed
without delay by the Chief Executive Officer of all significant events relevant to the business.
The full Supervisory Board Committee convened for six ordinary meetings during the 2015 fiscal
year. At three of these meetings, one member on each occasion was absent and excused.
Attendance at the meetings of the full Supervisory Board therefore averaged over 96 percent,
while attendance at Supervisory Board committee meetings averaged over 98 percent.
Financial and investment planning and business strategy
In the previous fiscal year, the Supervisory Board had already approved the acquisition of
International Rectifier prior to signature of the contract in August 2014. In the year under report,
alongside the regular updates reported by the Management Board on the progress of integra-
tion, the focus of attention with respect to the acquisition turned to financing. Among other
things, the Supervisory Board consented to the refinancing of the bridging facility, initially
entered into to finance the acquisition, by means of the issuance of two corporate bonds
(so-called "eurobonds").
At its meeting held on November 17, 2014, the Supervisory Board approved the financial and
investment budget including the overall investment budget and the borrowing limit deter-
mined for the 2015 fiscal year, as presented by the Management Board. At the meeting held on
May 12, 2015, the Supervisory Board agreed to an increase in total investments for the 2015
fiscal year, in light of the acquisition of International Rectifier.
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
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.
Personnel matters
10
Management Board compensation
The Supervisory Board engages an external compensation expert to review the Management
Board compensation system and the compensation of individual members of the Management
Board on a regular basis. The results contained in the compensation expert's report presented
during the 2015 fiscal year were discussed in detail during the Executive Committee meeting
held on October 23, 2014 and by the full Supervisory Board on November 17, 2014. The com-
pensation expert reached the conclusion that the compensation system complies with both the
legal requirements and the recommendations set out in the German Corporate Governance
Code. In particular, the review concluded that the compensation of Infineon's Management
Board is commensurate with market conditions and that the variable compensation compo-
nent is oriented towards the sustainable growth of the enterprise. The Supervisory Board shares
the opinion of the compensation expert. The review report also considered the moderate
increase in Management Board compensation effective October 1, 2014, resolved by the
Supervisory Board at the meeting held on May 6, 2014, and confirmed the appropriateness
of the increase.
2010 2011 2012 2013
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
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.
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.
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Management Board and Supervisory Board
66 Chip Card & Security
RESEARCH & DEVELOPMENT
70
80
OPERATIONS
88
INTERNAL MANAGEMENT SYSTEM
92
SUSTAINABILITY AT INFINEON
108
OUR EMPLOYEES
116
NOTABLE EVENTS 2015
118
THE INFINEON SHARE
122
AWARDS
22
18
12 12 12
in €-Cent
Dividend per share for the
2010 to 2015 fiscal years
G 01
62 Power Management & Multimarket
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
25
Combined
Management Report
Our Group
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
INFINEON WORLDWIDE
124
26
58 Industrial Power Control
Detailed information concerning Management Board compensation is provided in the
Compensation Report.
THE SEGMENTS
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.
The Chairman of the Investment, Finance and Audit Committee reported on the committee's
recommendations at the meeting of the Supervisory Board held on November 17, 2015. At
the Supervisory Board meeting held on November 24, 2015, the financial statements were
examined thoroughly in the presence of the auditor and scrutinized by the Supervisory Board
to ensure, in particular, that they were lawful, compliant and adequate.
The 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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Report of the Supervisory Board to the Annual General Meeting
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.
Separate and Consolidated Financial Statements
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 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.
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.
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.
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.
The Investment, Finance and Audit Committee convened four times during the year under report.
54 Automotive
Investment, Finance and Audit Committee
Strategy and Technology Committee
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.
The auditor attended all of the meetings of the Investment, Finance and Audit Committee and
reported in detail on its audit activities.
On behalf of the Supervisory Board
28 Successful 2015 fiscal year
32 Group strategy
Neubiberg, November 2015
FINANCES AND STRATEGY
26
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
52
Combined
Management
Report
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
24
23
Chairman of the Supervisory Board
Wolfgang Mayrhuber
Our Group
Power transistor
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 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).
Semiconductor
Shrink
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.
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
Smartcard
Plastic card with built-in memory chip and/or microcontroller,
which can be combined with a Personal Identification
Number (PIN).
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.
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 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.
Power semiconductor
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).
Plug-in hybrid electric vehicle (PHEV)
Micro-electro-mechanical system. A micro-electro-mechanical
system, or simply a microsystem, is a miniaturized device,
assembly or part that contains components of minute dimen-
sions (only measurable in micrometers) that work together
as a system. Usually a microsystem consists of one or more
sensors, actuators and control electronics on one chip.
Infineon manufactures microphones as MEMS. Due to their
diminutive size, low power consumption, good shielding from
interfering signals and low-cost production, these types of
microphone are being increasingly installed in mobile devices
such as smartphones, tablets, cameras, and accessories such
as headsets and hearing aids.
Microcontroller
A microprocessor integrated into a single IC combined with
memory and interfaces, which functions as an embedded
system. Logic circuits of the highest complexity can be
designed in a microcontroller and controlled by software.
Micron (Micrometer)
Metric linear measure, corresponding to the millionth part
of a meter (10-6). Symbol: μm. As an example, the diameter of
a single human hair is 0.1 millimeters, or 100 μm.
MOSFET
Metal-Oxide-Semiconductor Field-Effect Transistor. MOSFET
is currently the most widely used transistor architecture.
MOSFETs are used both in highly integrated circuits and in
power electronics as special power MOSFETs.
Nanometer
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Technology Glossary
NFC
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.
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.
The term used to describe the minimal resistance of a field-
effect transistor. The correct way to write it is RDS(on). The R
stands for the electrical resistance. The index DS stands for
the connections to the field-effect transistor, which are known
as Drain (D) and Source (S). "On" stands for the state of the
field-effect transistor.
OptiMOS™
Infineon's brand name for low-voltage power transistors for
voltages between 20 and 300 V.
Peta
Decimal prefix for usage in the international system of units.
Peta stands for 1015 = 1 quadrillion, abbreviated "P", for example
petabyte (PByte).
294
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Further Information
On-state resistance
295
VSD
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.
> World Semiconductor Council (WSC; organization of regional semiconductor associations)
> Global Semiconductor Alliance (GSA)
> Industrial Internet Consortium (IIC)
› European Semiconductor Industry Association (ESIA)
› Association representing the Smart Security Industry (EUROSMART)
> US Semiconductor Industry Association (SIA)
› Federal Association for Information Technology, Telecommunications and New Media (BITKOM)
> German Electrical and Electronic Manufacturers' Association (ZVEI)
> German Association of the Automotive Industry (VDA)
Standardization organizations
> International Electrotechnical Commission (IEC)
> International Organization for Standardization (ISO)
› Global Standards for the Microelectronics Industry (JEDEC)
> Universal Serial Bus Implementers Forum (USB-IF)
› TCG-Trusted Computing Group (Computer Security Standards)
› European Telecommunications Standards Institute (ETSI)
> Automotive Open System Architecture (AUTOSAR)
> German Institute for Standardization (DIN)
> German Commission for Electrical, Electronic & Information Technologies of DIN and VDE (DKE)
Others
> United Nations Global Compact
Industry associations
Smart Power Technology
Infineon is engaged in numerous industry associations
and standardization organizations - some examples:
Further Information
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.
Tablet
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).
Tera
Decimal prefix for usage in the international system of units.
Tera stands for 10¹² = 1 trillion, abbreviated “T”, for example
terabyte (TByte).
Thin wafer
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.
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.
Transistor
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.
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.
Variable Speed Drive. Electronic control units for controlling
the speed (revolutions per minute) of electric motors.
Wafer
Thin slice of semiconductor material from which the actual
chip is produced. Typical diameters for wafers currently
are 200 millimeters and 300 millimeters.
Zetta
A decimal prefix for usage in the international system of units.
Zetta stands for 1021 = 1 sextillion, abbreviated "Z", for exam-
ple zettabyte (ZByte).
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INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Memberships and partnerships
> China Semiconductor Industry Association (CSIA)
Hall sensor
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).
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.
Working capital
An indicator of operating performance, calculated as the
percentage of Segment Result in relation to revenue.
Segment Result Margin
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
Return on Capital Employed is defined as the operating
result after tax from continuing operations divided by capital
employed. RoCE shows the linkage between profitability and
capital resources required to run the business.
ROCE
Shares registered in the name of a certain person. This
person's details and number of shares are registered in
the Company's share ledger in accordance with securities
regulations. Only individuals registered in the Company's
share ledger are considered shareholders of the Company and
are, for example, able to exercise their rights at the Company's
Annual General Meeting.
Registered shares
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.
Put options
Proportional share in net income and equity attributable to
outside shareholders, and not to shareholders of the Infineon
Group's parent company.
Profit or loss and capital-share attributable to
non-controlling interests
One of three marketplaces for trading over-the-counter stocks
provided and operated by the OTC Markets Group.
OTCQX
Gross cash position less short-term and long-term debt.
289
Net cash position
300-millimeter technology
40-/65-/90-nanometer technology
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 (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
Infineon brand name for the 32-bit multicore automotive
microcontroller family.
AURIX™
Application Specific Standard Product. Standard product
designed for a specific use that can be used by many customers;
implemented on an integrated circuit.
ASSP
Application Specific Integrated Circuit. Logic IC specially
constructed for a specific application and customer;
implemented on an integrated circuit.
ASIC
"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
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.
Bipolar
A contractual arrangement whereby two or more parties
undertake an economic activity that is subject to joint control.
International Financial Reporting Standards; Infineon prepares
its Consolidated Financial Statements in accordance with IFRS,
as adopted by the European Union.
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.
Deferred tax
Deutscher Aktienindex - The German Stock Index tracking the
30 major German companies traded on the Frankfurt Stock
Exchange, in terms of order volume or market capitalization.
DAX
Convertible notes/bonds are interest-bearing securities which
normally - in addition to the right to receive interest and
repayment of the nominal amount - give the bearer a conver-
sion option. During the term of the option (conversion period),
the bearer can exchange the convertible bond/note for a
specified number of shares of the issuing entity. The conversion
ratio is stipulated and is typically adjusted for transactions
affecting the shareholders, such as dividend payments. If the
bondholder/noteholder does not convert the bond/note
into shares during the conversion period, the issuer redeems
the bond/note at the end of the term at its nominal amount.
Convertible bond
The cash-effective balance arising from inflows and outflows
of funds over the fiscal year. The Consolidated Statement of
Cash Flows is part of the Consolidated Financial Statements
and shows how the Company generated cash during the
period and where it spent cash, in terms of operating activities
(cash the Company made by purchasing/selling goods and
services), investing activities (cash the Company spent for
investment, or cash it raised from divestitures), and financing
activities (cash the Company raised by selling stocks, bonds
and loans or spent for the redemption of stocks or bonds).
Cash flow
Legal separation of business operations (e.g. business units).
Carve-Out
An entity in which the Company has significant influence,
but not a controlling interest, over the operating and financial
management policy decisions of the entity. Significant influ-
ence is generally presumed when the Company holds between
20 percent and 50 percent of the voting rights.
Associated Companies
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
Earnings per share in accordance with IFRS are influenced by
amounts relating to purchase price allocations for acquisitions
as well as by other exceptional items. In order to enable better
comparability of operating performance over time, Infineon
computes adjusted earnings per share by excluding extraordi-
nary effects including the tax effect on them.
Adjusted EPS
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Financial Glossary
Financial Glossary
MEMS
Defined benefit obligations (DBO)
Joint Venture
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.
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).
IFRS
Revenues less cost of goods sold.
Gross profit
Total of cash and cash equivalents plus financial investments.
Gross cash position
An intangible asset of the Company that results from a busi-
ness acquisition, representing the excess of the purchase price
(cost) paid for the acquired business over the fair value of
the separately identifiable assets acquired and liabilities and
contingencies assumed. Under IFRS, goodwill is not reduced
through scheduled amortization, but rather written down to its
fair value if impaired. An impairment assessment is performed
at least once a year.
Goodwill
288
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.
Fair Value
Valuation method for interests in associated companies in
which the investor has the ability to exercise significant
influence over the investee's operating and financial policies.
Equity Method
Earnings Per Share. Basic earnings per share is calculated by
dividing net income (loss) by the weighted average number
of ordinary shares outstanding during the period. For the
calculation of diluted earnings per share the weighted average
number of ordinary shares outstanding is increased by all
additional ordinary shares that would have been outstanding
if potentially dilutive instruments had been converted into
ordinary shares.
EPS
Derivate
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
Information unit; can take one of two values "true"/"false"
or "0"/"1".
293
Inverter
An inverter, also called a DC/AC converter, is an electrical
device for converting DC voltage into AC voltage, or direct
current into alternating current. Inverters are used in solar
power plants, for example, for converting the DC voltage
generated in the solar modules into AC voltage, which is then
fed into the electricity network.
ISO 26262
ISO 26262 is an ISO standard for safety-related electrical
and electronic systems in various types of vehicle. ISO 26262
defines a procedure model together with required activities
and methods to be used in development and production.
The implementation of the standard is designed to guarantee
the functional safety of systems that include electrical and
electronic components in vehicles. The standard is used by
carmakers, automotive suppliers and testing institutions.
Kilo
A decimal prefix for usage in the international system of units,
kilo stands for 103 = 1,000, or abbreviated to "k". In the world
of information technology, Kilo stands for 210 = 1,024, or "K"
for short, e.g. kilobyte (KByte).
LDMOS
Laterally Diffused MOS transistor. The increasingly stringent
standards concerning the electrical properties of field-effect
transistors (MOSFETs) have led to the development of variations
of the planar MOSFET in recent decades. They frequently
differ in the design of their doping profile or the selection of
material. For instance, there is a difference between lateral
(i.e., those aligned parallel to the surface) and vertical designs.
Whereas lateral transistors (LDMOS) are primarily used in
radio-frequency applications for telecommunications, the
vertical design is mainly used in the field of power electronics.
Mega
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).
Giga
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
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Technology Glossary
Frontend process is the designation for all process steps in
cleanrooms that the entire wafer must complete. These are
lithography, diffusion, ion implantation and application of
circuitry levels. Some stations must be completed a number
of times. At the end of the frontend process, the wafer may
have been through as many as 500 individual process steps.
After the conclusion of the frontend manufacturing, the
processed wafers are transferred to backend manufacturing
for testing and packaging (see Backend manufacturing).
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.
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.
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.
Bit
Hertz
Hertz (Hz) is the unit for frequency, and is named after the
German physicist Heinrich Rudolf Hertz (1857-1894). The
Hertz determines the number of oscillations per second, or
more generally speaking, the number of repetitive processes
per second. Frequently used units are kilohertz (one thousand
oscillations per second), megahertz (one million oscillations
per second) and gigahertz (one billion oscillations per second).
HEV/EV
Hybrid electric vehicle/electric vehicle: collective terms
for vehicles powered partly or entirely by an electric motor
(see hybrid car).
HVDC
High-voltage direct-current transmission. HVDC transmission
is a method of transmitting electrical energy at high direct-
current voltages of up to 800,000 volts over distances of more
than 1,000 kilometers. HVDC transmission is also used for
connecting offshore wind farms to the electricity grid on the
mainland.
Hybrid car
A hybrid car is usually understood to be a motor vehicle that
is driven by at least one electric motor, as well as a combustion
engine. The hybrid drive is used in standard car construction
to enhance efficiency, reduce consumption of fossil fuels or
increase performance at lower engine speeds. In full hybrid
cars the vehicle can be driven solely by the electric motor. In
mild hybrid cars, the electric motor is simply used to support
the combustion engine, for example when accelerating.
Hybrid technology
The word "hybrid" comes from the Greek for "mixed" or
"originating from two different sources". It has come to be
used to denote the heart of a new drive technology in the
automotive industry: hybrid vehicles operate with a combi-
nation of a diesel or gas engine and an electric motor.
IC
Integrated Circuit. Electronic Component parts composed of
semiconductor materials such as silicon; numerous compo-
nents, including transistors, resistors, capacitors and diodes
can be integrated into ICs and interconnected.
IGBT Module
Insulated Gate Bipolar Transistor Module. IGBTs are semi-
conductor components used increasingly in power electronics
due to their robustness, high blocking voltage, and their
ability to be triggered with negligible power. Modules are
formed using several IGBTs in parallel within a single casing.
These modules are used to drive electric motors both in
automotive and industrial applications. Motor speed and
torque can be regulated along a gradual scale. Trains such
as Germany's ICE and France's TGV use IGBT modules for an
efficient and rapid electrical drive control.
Industrial Internet, Industry 4.0
Industrial Internet, in Germany commonly referred to as
"Industrie 4.0", describes the gradual evolution towards the
smart, efficient and flexible factory of the future. It is character-
ized by high degrees of automation, deep horizontal and
vertical integration of production and logistics processes,
and the use of advanced “big data" analytics. Or simply put:
Industrial Internet = Industrial Automation + Internet of Things
(see Internet of Things).
Internet of Things
Integrity Guard
Frontend manufacturing
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Further Information
Firmware
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
Common Criteria for Information Technology Security Evalua-
tion, generally known as Common Criteria for short, constitute
an international standard for evaluating and certifying the
security of computer systems with regard to data security. The
Common Criteria define seven levels of reliability (Evaluation
Assurance Level, EAL1 to EAL7, i.e., the highest level), which
describe the correctness of the implementation and the depth
of inspection of the system being evaluated.
Common Criteria
Complementary Metal Oxide Semiconductor. Standard semi-
conductor manufacturing technology used to manufacture
microchips with low power usage and a high level of integration.
CMOS
High-voltage power transistor for voltages from 300 to 1,200 V.
Cloud computing
Byte
The electronic commutation does not cause wear and tear
in BLDC motors, such as in standard DC motors. Moreover,
BLDC motors do not require maintenance. Major advances in
the field of power electronics and circuit design in recent
years have made it possible to manufacture BLDC motors at
a reasonable market price.
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.
Brushless DC motor
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Further Information
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.
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.
Breakthrough voltage
Unit of information in data processing components. One byte
is equivalent to eight bits (see bit).
DC-DC conversion
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).
Driver Assistance Systems
FACTS
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.
Exa
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.
Euro NCAP
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.
ESC
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.
ESD
Electronic Stability Control. A vehicular technology system
that uses sensors and computers to brake individual wheels
in order to prevent skidding.
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.
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.
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
A decimal prefix for usage in the international system of units,
Exa stands for 1018 = 1 quintillion, abbreviated "E", for example
exabyte (EByte).
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
291
252-256
106-107
and measures taken
94
Management approach
7
G4-EC3
Coverage of benefit plans
G4-EC7
Infrastructure investments
LABOR RELATIONS
full-time employees
G4-LA1
Employee turnover by age
group, gender and region
115
and new employee hires
G4-LA2
Benefits provided to
113
G4-LA5
G4-LA6
Committees are in place
that also offer employers,
employees and/or employee
representatives the opportunity
to discuss on topics relating to
environmental protection, and
occupational safety and health
Work-related accidents
and lost days
94
Incidents of discrimination
and services provided
G4-HR3
Governance bodies by
diversity categories
Employee training on
human rights
about product and
services labeling
DIVERSITY AND EQUAL OPPORTUNITY
Management approach
5
G4-LA12
96-97
110-111, 114
G4-LA13
Wage differences by gender
113
94
G4-HR3
94
BUSINESS ETHICS
Management approach
G4-SO4
7
Percentage of employees
trained in anti-corruption
95
G4-S07
Legal actions for
264-265
anti-competitive behavior
G4-HR2
Incidents of discrimination
and measures taken
Audit of the consolidated financial statements
t
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.
Designed by:
Photography:
Printing:
HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
Tom Trenkle Fotografie, Gräfelfing (Germany): cover picture, page 1
Werner Bartsch, Hamburg (Germany): page 11, 14
Rolf Bewersdorf, Frankfurt/Main (Germany): page 17
Audi AG, Ingolstadt (Germany): page 54, 55
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
Independent auditors: KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
YouTube/Google ATAP, Mountain View (California, USA): page 74
Fotolia, New York (New York, USA): page 77
The following were brand names of Infineon Technologies AG in the 2015 fiscal year: Infineon, the Infineon logo,
.dp digital power, AURIX, CoolMOS, OPTIGA, OptiMOS, REAL3, SOLID FLASH, XHP.
Forward-looking statements
This Report contains forward-looking statements about the business, financial condition and earnings
performance of the Infineon Group.
These statements are based on assumptions and projections resting upon currently available information
and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
may therefore differ materially from what has been expected.
Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
forward-looking statements.
INFINEON TECHNOLOGIES AG
Headquarters:
Contact for Investors and Analysts:
Media Contact:
Visit us on the web:
Am Campeon 1-12, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
www.infineon.com
104
Note
October 1 to September 30
Investor Relations, Accounting, Consolidation & Reporting
November 25, 2015
Infineon Technologies AG, Neubiberg (Germany)
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.
In addition to the general accident data, in the 2015 fiscal year we
began sorting the information by gender. The female employees
had an IR of 0.45 and LDR of 7.39 and the male employees had
an IR of 0.47 and LDR of 4.49. Reporting of the accident rate and
lost days rate by region is not a global steering-relevant figure.
Infineon has currently no globally harmonized information for
the reporting of occupational diseases. The absenteeism rate
is not a global steering-relevant figure.
External
Audit
Financial calendar
Tuesday, February 2, 2016¹
Publication of first quarter 2016 results
Thursday, February 18, 2016
Annual General Meeting 2016
(Start 10:00 a.m. CET)
ICM - International Congress Center Munich
(Germany)
Tuesday, May 3, 2016'
Publication of second quarter 2016 results
Tuesday, August 2, 2016¹
Publication of third quarter 2016 results
Wednesday, November 30, 2016'
Publication of fourth quarter and
fiscal year 2016 results
1 preliminary
Visit us on the web: www.infineon.com
Imprint
f
8+
in
You
Tube
Published by:
Editors:
Copy deadline:
Fiscal year:
Limited Assurance
Kirsten Johannes Lassig, Dresden (Germany): page 117
BluePrintGroup, Munich (Germany)
GRI G4 Content Index
service categories for which
health and safety impacts are
assessed for improvement
3-4, 92-93
Audit of the consolidated financial statements
Limited Assurance
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
GRI G4 Content Index
Materiality
Disclosures
Selection of stakeholders
GRI
At Infineon stakeholders are involved continuously.
297
Nov 2015
Service
External
Audit
Infineon Technologies AG
.
G4-25
92
G4-22
Effect of any restatements
of information
G4-23
Significant changes in
the scope of the Report
stakeholder groups
STAKEHOLDER ENGAGEMENT
Explanatory Notes
(www.infineon.
com/csr_reporting)
2-3,
Explanatory Notes
(www.infineon.
com/csr_reporting)
G4-24
Overview of
128-129,
298
G4-26
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
G4-31
Contact point
G4-32
GRI Content Index
G4-33
External verification
2
302 (Back cover)
283, CSR website
(www.infineon.com/
csr_reporting)
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.
297-300
Reporting cycle
G4-30
previous report
Further Information
Issue
Page
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
outside the organization
GOVERNANCE
Description of material aspects 4-7
within the organization
G4-6
Countries where the
organization operates
"Infineon
at a glance"
124-125
124-125
Organization's headquarters
G4-7
and legal form
G4-8
Markets served
G4-9
Scale of the organization
G4-10
Nature of ownership
Employee structure
G4-5
Cover page
General Standard Disclosures
Issue
STRATEGY AND ANALYSIS
Remarks
Page
G4-1
products, and services
Statement from the
Management Board
ORGANIZATIONAL PROFILE
G4-3
Name of the organization
Cover page
G4-4
Primary brands,
10-13
G4-11
G4-12
G4-13
296
IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
G4-17
G4-18
Structure of the organization
124 125, 278-281
Memberships
Report's boundaries and
limitations on its scope
G4-19
Material aspects
4-7
G4-20
Description of material aspects 4-7
2-3
G4-16
principles and initiatives
Externally developed charters, 2-3
Percentage of total employees
covered by collective
bargaining agreements
Organization's supply chain
Significant changes during
the year under report
118-121
57, 61, 65, 69
Cover page
"Infineon
at a glance"
110 111, 114-115
94
85, 105-106
116-117
G4-14
Consideration of
28-31, 128-129
precautionary approach
G4-15
G4-21
G4-34
Governance structure
of the organization
180-185
G4 EN15 Direct (Scope 1)
101-103
GHG emissions
G4 EN16 Indirect (Scope 2)
GHG emissions
101, 103
G4 EN17 Other indirect (Scope 3)
GHG emissions
98
101, 103
102
G4 EN19 GHG emissions
100
reductions achieved
G4-EN21 Other significant air emissions 103
G4-EN22 Volume of water discharges
97-98
G4-EN18 GHG emissions intensity
G4-EN23 Total weight of hazardous
G4-EN10 Total volume of water
recycled and reused
98
100, 102
G4-EN5
Energy intensity
100
G4-EN6
Reductions in
water withdrawn
100
G4-EN7
Reductions in the energy
103
requirements of sold products
G4-EN8
Total volume of
energy consumption
99
and non-hazardous waste,
by disposal methods
G4-EN27 Activities to minimize the
G4-EN7
Reductions in the energy
requirements of sold products
Significant environmental
G4-EN30
impacts of transporting
products and other goods
and materials
Management approach
Page
6
103
101, 103-104
G4-PR1
Significant product and
104
Remarks
PRODUCT SUSTAINABLE VALUE
Issue
Further Information
103-104
G4-HR6
environmental impacts
of products and services
Measures taken intended
to contribute to the
elimination of all forms of
forced or compulsory labor
in the supply chain
105-106
Audit of the consolidated financial statements
Limited Assurance
Through the use of products in which our semiconductors are used,
Infineon has indirect economic impacts, for example in efficiency
improvements. The significance of those impacts, was - due to
external parameters - not determined in each individual case.
During the 2015 fiscal year, Infineon could not identify any incidents
of non-compliance with regulations and voluntary codes related to the
impacts of products and services on health and safety.
The description of the Scope 3 emissions is based on the Infineon
CO2 balance, which includes the whole energy consumption of Infineon,
and is reported in metric tons of CO2 equivalents. The other steps,
that is, the use phase of the products by the customer as well as their
disposal, cannot be automatically calculated due to the different
potential applications and fields of use of Infineon products.
Due to the confidentiality of specific information, Infineon reported the
specific energy consumption in gigawatt hours per euro (chart 49).
Reported by the NER (Normalized Emission Rate). Herewith only
PFC emissions were taken into account, since these are the most
significant source of CO2 emissions.
The avoided CO2 emissions were reported in the form of energy under
the indicator EN6. These are equivalent to 2,814.60 CO₂e.
External
Audit
300
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Energy consumed outside
of the organization
G4-EN4
of the organization
100
positive and negative
indirect economic impacts
G4-EC7
G4-EN8
Development of significant
infrastructure investments
and services supported
Total water
106-107
32-36
98
withdrawn by source
Operations related to local
106-107
community engagement
G4-SO2
Operations with significant
actual and potential negative
impacts on local communities
GRI G4
G4-SO1
Significant identified
G4-EC8
from governments
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
G4-EC4
Financial assistance received
224
Splitting of "received benefits" by country is not relevant.
Governments do not participate in Infineon.
Legally required information
Through the use of products in which our semiconductors are
used, Infineon has indirect economic impacts, for example
in efficiency improvements. The significance of those impacts,
was due to external parameters - not determined in each
individual case.
Content Index
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
"Infineon key data",
Total number of incidents
of non-compliance with
regulations and voluntary
codes concerning the health
and safety impacts of products
Content Index
RESPONSIBLE MANUFACTURING
Management approach
4
G4 - EN3
Energy consumed inside
GRI G4
Cover page
4
Significant positive
and negative indirect
During the 2015 fiscal year our worldwide citizenship
representatives did not find any adverse effects.
External
Audit
External
Audit
Issue
LONG-TERM VIABILITY OF CORE BUSINESS
Page
Remarks
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
GRI G4 Content Index
299
Management approach
G4-EC1
Direct economic value
generated and distributed
G4-EC2
G4-EC8
Risks and opportunities
posed by climate change
Indicator applicable due to the production site placed in a water-
stressed area and the associated specific local requirements.
G4-PR3
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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.
7.4
10.2 8.4
year
Renesas
MediaTek
Infineor
STMicro
Source: IHS Inc., "2015 Competitive Landscaping Tool", August 2015. Foundries and subcontractors are not included in this market analysis.
1 Including revenue of US$1.135 billion recorded by International Rectifier.
Top 20 semiconductor manufacturers for the 2014 calendar
Revenue in billion US$
G04
12.2
Broadcom
Toshiba
Texas Instr.
Micron
H
16.1
16.1
19.3
38.1
30
40
50.0
50
60
SK Hynix
20
Qualcomm
7.1
Samsung
7.0
6.3
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
Infineon's ranking and market share by region (including International Rectifier)
According to IHS, with revenue of US$7.072 billion, Infineon (including International Rectifier)
was ranked 10th in the 2014 calendar year, corresponding to 2.0 percent of the world market.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
Successful 2015 fiscal year
Marvell
nVidia
Freescale
Sony
AMD
NXP
Avago
SanDisk
3.7
4.1
4.5
5.1
5.4
5.5
5.6
6.8
10
Intel
0
Industrial Power Control: €971 million
Power Management & Multimarket:
€1,794 million
41%
Automotive: €2,351 million
17%
0%
11%
31%
Revenue by segment in the 2015
fiscal year
G 03
3 Power Management & Multimarket
4 Chip Card & Security
35%
2 Industrial Power Control
24%
20%
1 Automotive
CCS4
PMM3
IPC²
ATV¹
Revenue growth of the
individual segments in the 2015 fiscal
year compared to the previous year
G 02
> Good performance enables higher dividend
> Strong revenue growth in all segments;
Segment Result Margin better than expected
Finances
and strategy
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
27
28
> Acquisition of International Rectifier closed;
substantial progress made with integration
Chip Card & Security: €666 million
Other Operating Segments,
69%
Corporate and Eliminations: €13 million
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.
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.
Developments in the semiconductor industry
Our dividend policy is aimed firstly at having our shareholders participate appropriately
in growing earnings and secondly to at least keep the dividend at a constant level in times
of flat or declining earnings and/or negative free cash flows.
Planned dividend increase of 2 cents
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
50
30
29
P see page 248
P see page 91
P see page 248
P see page 91
#14
P see page 90
P see page 139
P see page 128
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.
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.
The gross cash position (see the chapter "Internal Management System" for definition) totaled
€2,013 million as of September 30, 2015, a decrease of 17 percent compared to the previous
year's reported figure of €2,418 million. In addition to the negative free cash flow of €1,654 mil-
lion described above, the gross cash position was also reduced by the dividend payment
of €202 million for the 2014 fiscal year and by payments totaling €140 million relating to the
Qimonda insolvency reported as net cash used for discontinued operations. The main items
working in the opposite direction were net debt raised totaling €1,567 million as well as
positive free cash flow from continuing operations (adjusted for exceptional items).
The Return on Capital Employed (ROCE) in the 2015 fiscal year amounted to 12.8 percent and
was thus well down on the previous year's figure of 20.3 percent. The decrease was mainly
due to the acquisition of International Rectifier and the related higher level of capital employed.
This effect could not be offset by the income from continuing operations after taxes which
increased from €497 million to €664 million in the 2015 fiscal year. (For a definition of, and
details relating to, the calculation of ROCE, see the chapters "Internal Management System"
and "Review of financial condition".)
Free cash flow from continuing operations (see the chapter "Internal Management System"
for definition) totaled a negative amount of €1,654 million in the 2015 fiscal year, a deteriora-
tion of €1,971 million compared to the €317 million generated one year earlier. The sharp
reduction mainly related to the purchase of International Rectifier (€1,869 million). Further-
more, free cash flow from continuing operations was reduced by €178 million due to payments
to the insolvency administrator for the settlement of the dispute over the continuation of
the right to use Qimonda patents less the subsequent proceeds from the sale of the Qimonda
patents as well as the payment to the EU Commission for the fine imposed in the chip card
antitrust proceedings. Excluding these exceptional items, free cash flow from continuing
operations in the 2015 fiscal year totaled €393 million, a year-on-year improvement of 24 per-
cent. Net cash provided by operating activities amounting to €957 million thereby exceeded
additions to property, plant and equipment and intangible assets totaling €785 million
(2014: €668 million).
Basic and diluted earnings per share for the 2015 fiscal year amounted in each case to €0.56
and were therefore 17 percent higher than the previous year's figure of €0.48 (also in each
case). Adjusted earnings per share (diluted) improved year-on-year from €0.48 to €0.60
(see the chapter "Review of results of operations" for details of the calculation of adjusted
earnings per share).
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
Successful 2015 fiscal year
Despite the high level of expenses incurred in conjunction with the acquisition of International
Rectifier, net income increased in the 2015 fiscal year, thanks to the sharp rise in revenue
as well as positive tax effects of €209 million (see the chapter "Review of results of operations"
P page 128) and amounted to €634 million in the 2015 fiscal year, an increase of 19 percent
compared to the previous year's figure of €535 million.
Net income and earnings per share up; free cash flow, return on capital employed
and cash position down, mainly due to acquisition-related factors; significant capital
structure targets nevertheless achieved
The Segment Result for the 2015 fiscal year totaled €897 million, surpassing the previous year's
figure of €620 million by 45 percent. The Segment Result Margin came in at 15.5 percent
(2014: 14.4 percent). Infineon thereby exceeded the target set for the 2015 fiscal year. The
Segment Result Margin of International Rectifier's business units increased significantly com-
pared to the three-month period ended December 31, 2014, the last quarter prior to the
acquisition.
Revenue up sharply on the back of organic growth, currency effects and acquisition
of International Rectifier, resulting in better-than-expected Segment Result Margin
Infineon generated revenue of €5,795 million in the 2015 fiscal year, a 34 percent increase
on the previous year's figure of €4,320 million. The sharp rise primarily reflects strong sales
performances across all segments. Of particular note is the organic growth of 35 percent
achieved by the Chip Card & Security segment. Infineon's strong revenue performance was
also influenced by currency factors, most notably the appreciation of the US dollar against
the euro (see the chapter “The segments" P page 52 for further details on the sales performance
of the individual segments). The higher revenue was also partly due to the acquisition of Inter-
national Rectifier, which contributed €682 million to the revenue figure in the 2015 fiscal year.
Following a 99.5 percent majority vote by the shareholders of International Rectifier in
November 2014 and receipt of approval from the responsible authorities in January 2015, the
acquisition of International Rectifier was closed on January 13, 2015. Since then, excellent
progress has been made in terms of integration. The vast majority of International Rectifier's
former business was allocated to the Power Management & Multimarket segment, while
smaller parts were also allocated to the Automotive and Industrial Power Control segments.
Infineon closes deal to acquire International Rectifier
P see page 90
Combined Management Report - Our Group
1.5%
1.2%
Compound annual growth rate
G06
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
36
Group strategy
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.
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
Solutions
Efficient use of global resources: The pivotal question is how to cope with increasing demand
for resources without negatively impacting the climate. The current trend in climate change
needs to be curbed or even reversed. Economic activity to date has put the climate and our
environment under threat. In the absence of a further reduction in greenhouse gases, most
notably of CO2 emissions, and in the absence of even more efficient vehicles, appliances and
machinery going into the future, the constantly growing demand for energy cannot be cov-
ered sustainably in either economic or ecological terms. Electricity and its consumption play a
key role in this respect. The demand for electricity is continually growing, not only in devel-
oped countries, but also an increasing number of households are being connected to the
power grid, notably in emerging economies. Furthermore, electricity requirements per house-
hold are also rising with better standards of living: first the fridge, then the TV, then the
gaming console. In the absence of greater efficiency, the demand for electric power will grow
exponentially. Recognizing that the best energy resource is energy-saving, boosting efficiency
in the conversion of electric power makes a decisive contribution. Naturally, apart from saving
energy, an increasing amount of energy needs to be generated from renewable sources rather
than from fossil fuels.
Not only machines, but vehicles too are becoming increasingly connected. They will commu-
nicate both directly with one another (car-to-car) and with centralized systems (car-to-infra-
structure). Vehicles will be able to contact control systems which, in turn, provide a real-time
picture of the current traffic situation. It is therefore possible, for example, to be warned of an
accident on the planned route, of a traffic jam just around a bend, or of extreme conditions
such as black ice. Above all, however, active traffic management will improve the flow of traffic,
which means that more vehicles will be able to move more quickly along the same roads and
therefore produce fewer CO2 emissions, entirely in keeping with our motto "more out of less".
The increasing connectivity of the machinery, appliances and IT systems operated by our
respective business partners - in short, the “cyber-physical systems" - requires secure data
exchange. The Industrial Internet will only succeed if process know-how can be reliably pro-
tected from hacking attacks. Secure transmission of product- and manufacturing-related data
throughout the supply and value-added chain within an open architecture is therefore of prime
importance. The Industrial Internet will then enable new business models that extend across
various industrial sectors. Confidence is therefore one of the most important prerequisites for
the digitalization of the economy and the digital lifestyle in highly developed countries.
Linking the real with the digital world will fundamentally change industrial processes.
Semiconductors are the interface between the real and the digital worlds. Without semi-
conductors, there would be no digitalization. Semiconductors are therefore the most
important source of increased productivity and improved quality of life.
The transformation towards more digital data in industry and the connectivity of billions of
appliances is a radical change, possibly unequalled since the Industrial Revolution of the 18th
and 19th centuries. The Chinese Government, for example, has adopted the "Made in China
2025" program, , in which it has assigned top priority to the digitalization of its economy under
its industrial policy. Likewise, Europe, and especially Germany, is pressing ahead with the
value-added networks based on the Industrial Internet (Industry 4.0), whereby the aim is to
achieve higher productivity through optimum capacity utilization, while keeping the use of
resources and inventory levels to a minimum.
G see glossary, page 292
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
34
34
Group strategy
Rise of productivity, digitalization and connectivity: To raise living standards for as many
people as possible, it is also necessary to boost productivity, in other words to make "more" out
of "less". This is relevant not only for developed countries, but also for emerging economies,
first and foremost China. Unit labor costs - measured in labor costs in relation to productivity -
play an important role in terms of an economy's international competitiveness. Rising wages
must be compensated by corresponding productivity advantages in order to guarantee compet-
itiveness. Greater productivity is partly achieved through increased levels of automation.
Productivity improvements are not limited to labor costs, but also influence the amount of
the materials and energy consumed. These aspects are also particularly important for us.
The digitalization process will largely determine what life, work and manufacturing will be
like in the developed regions going forward. In tandem with continually advancing connectivity,
further steps toward globalization will be achieved and productivity increases facilitated.
Digitalization is also making its mark in industries in countries that previously had a low level of
automation and relied on low-cost human labor. Nevertheless, rising wage costs are also forcing
these countries to introduce structural changes. Digitalization can boost both productivity
and efficiency and bring these countries a few steps further forward in the value-added chain.
of the main semiconductor
target markets, 2014 to 2019
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.
Industrial
9.6%
5.6%
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%)
0.5%
Consumer
Processing
Data
cations
1.2%
Communi-
ductor Market
2.3%
Total Semicon-
5.4%
Card ICs¹
Chip
Automotive
#18
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.
Global changes and the associated challenges
19%
20%
16%
20%
21%
23%
23%
22%
23%
20%
18%
7%
7%
6%
12%
11%
13%
100%
100%
100%
Infineon revenue by region
G05
Industrial structures in China and Germany differ considerably. The German industry is charac-
terized by strong demand from the automotive and industrial electronics sectors, whereas
the Chinese market is dominated by electronic manufacturing services, which focus mainly on
supplying electronics products, mostly to Western customers. This business model plays a
significant role in the fields of durable consumer goods on the one hand and information and
telecommunications sector-related products such as servers, PCs, notebooks and cellular
phones on the other.
The growing importance of China is also reflected in the regional spread of Infineon's revenue.
China became Infineon's best-selling market for the first time in the 2014 fiscal year. Revenue
again increased at an above-average rate in the 2015 fiscal year, partly due to China's com-
paratively high growth rate, but even more significantly due to the contribution made by
International Rectifier. With a figure of €1,337 million, China accounted for 23 percent (2014:
20 percent) of Infineon's revenue. Germany came in well behind in second place with revenue
of €942 million, corresponding to a market share of 16 percent (2014: 20 percent).
The picture is very different, however, when it comes to the regional split of semiconductor
sales. China has been the largest market for a number of years, accounting for a share of
41.2 percent (US$146 billion) in the 2014 calendar year. During the same period, 13.3 percent
(US$47 billion) of all semiconductors were sold in Europe.
Companies based in the Asia-Pacific region generate 27.1 percent of global semiconductor
revenue. Korea is the most important Asian country with 16.5 percent of the worldwide
production, followed by Taiwan with 6.5 percent. China (including Hong Kong) only plays a
minor role with 2.6 percent.
More than half of global semiconductor revenue (53.2 percent) is generated by US companies.
Japanese companies account for a further 11.5 percent. Only 8.2 percent of global semicon-
ductor revenue is generated by companies based in Europe. Infineon is Europe's second-largest
semiconductor manufacturer, just behind STMicroelectronics.
2.0%¹
#10
19%
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.
2013
2015
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.
2014
Guiding principles
Business strategy
Europe (excluding
Germany),
China
Japan
Middle East, Africa
Americas
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.
Germany
(excluding China,
excluding Japan)
31
32
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Group strategy
Asia-Pacific
Successful 2015 fiscal year
Authentication: In order to safeguard electronic systems, it is essential to connect only autho-
rized devices. In view of the growing number of connected devices being used by both busi-
nesses and consumers, this aspect is rapidly growing in importance. It is a matter of protecting
the connected devices against piracy, data manipulation, hacking and cyber attacks. Security,
therefore, needs to be introduced whenever possible at each critical end point.
Infineon meanwhile supplies over 70 percent of all government ID projects in Europe. In
addition, according to the US Government Printing Office, Infineon is one of the main suppliers
of security technology for the USA's electronic passports. It is the largest electronic passport
project in the world. Infineon has been supplying the US Government Printing Office since
the project began in 2005.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
True to our strategic approach "Product to System", we work closely together with our custom-
ers - primarily in order to better understand their needs, but also with the aim of seeing
potential for innovation that is either unknown to the customer or requires major changes in
concept. This approach enables us to identify the best solution in terms of size, costs, efficiency
and power density. Infineon is one of the few semiconductor manufacturers that develops
and produces control ICs and driver ICs as well as power transistors in its own right. In future,
increasingly fine-tuned adjustment between driver ICs and discrete power transistors will be
necessary. Future generations of power transistors will display different physical properties,
whether through further miniaturization or new semiconductor materials such as gallium
nitride (GaN). Driver ICs therefore need to be developed to suit the power transistors if the
system as a whole is to achieve maximum efficiency. Together with its special packaging
technology for power semiconductors, Infineon produces the entire range under one roof.
We regard this fact as a genuine advantage for our customers.
In the field of consumer electronics, we focus on providing our customers with differentiating
features, such as flat-screen televisions that are made possible by our extremely compact
power supply units, which are still based on silicon components today. They will become even
more compact in future through the use of GaN-based components (see paragraph on Gallium
nitride in the chapter "Research and development”). GaN-based components enable faster
switching with fewer losses, which decisively improves the overall efficiency, but above all result
in a significant size reduction, particularly in coils and condensers, which determine the overall
dimensions. In keeping with our "Product to System" approach, we have agreed on the first
close strategic cooperations in the field of flat-screen televisions.
G10
Expected growth of the server
market worldwide
in millions of units
CAGR (2014-2018):
+4.6%
11.0 11.3
11.7
12.1
10.1
2014
2015e 2016e 2017e 2018 e
1 CAGR Compound Annual Growth Rate
Source: Gartner, "Forecast: Servers, All Countries",
September 2015
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 291
44
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
G see glossary, page 290
Battery-powered screwdriver with
brushless DC motor
J
G see glossary, page 293
G11
Development of Infineon's market
share for silicon microphone ICs
from 2006 to 2014
8.8%
5.2%
34.3%
26.5%
2006 2008 2010 2012 2014
P see page 76 f.
Source: IHS Inc., "MEMS Microphones Data",
April 2014 and October 2015
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 target applications in detail:
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
41
Wind: We expect to see sustainable growth in the field of wind power in the medium and long
term. Both China and the USA are promoting this technology. The replacement of older, less
efficient wind turbines with more powerful, state-of-the-art versions, known as repowering, is
set to continue for a long time to come. Many years ago, the first wind turbines were installed
at windy locations and generated around 100 kilowatts of electricity. Now, however, they are
being replaced by new models that generate around three megawatts. The volume of power
semiconductor content installed increases with turbine output.
In first-time installations too, increasingly large generators are meanwhile being installed,
which means a greater number of semiconductors are required per wind turbine. This devel-
opment is particularly evident in China, where we have been cooperating with the Chinese
wind turbine manufacturer Goldwind since 2011. Whereas most turbines used to be installed
with a maximum output of 1.5 megawatts, a growing number of new systems now generate
two to three megawatts.
Photovoltaics: Here we notice that the market has been undergoing structural changes over
the last few years. Whereas most of the demand for these products in the past 20 years came
from the European market, the focus has meanwhile increasingly shifted to Asia and the USA.
Infineon is very well positioned internationally and has cooperated with the world's leading
manufacturers of PV inverters for a number of years. We profit to some degree from the
growth of Chinese inverter manufacturers, partly due to the expansion of photovoltaic tech-
nology in China itself, but also through the export of the inverters to other regions.
Capital goods industry
Automation: Industrial plants are being fitted with a growing number of electric motors. The
fundamental driver behind this development is the necessity to raise productivity continually
in order to secure a high standard of living for the population. In recent years the trend has
led to greater automation in former low-cost regions where higher wages are now being paid.
Where low-cost labor used to move the goods and carry out various types of work, robots and
machines are now increasingly taking over these tasks. Furthermore, the stronger a company
competes on a global basis, the greater the pressure to boost productivity. The next level of
automation, and therefore higher productivity, will be achieved with the Industrial Internet
(also referred to as "Industry 4.0"), which will not only initiate a further cycle of investment,
but also contribute towards creating higher-quality jobs.
Industrial motors are at the heart of manufacturing plants, wherever goods need to be moved
or transported. Cranes, conveyor belts, robots and elevators are the typical fields of application.
They are also deployed in the field of refrigeration and air conditioning as well as for simply
generating compressed air. The strongest industrial electric motors work in sluices, cement mills,
trains, in pumps for municipal waterworks, in air compressors for manufacturing technical
gases and in compressors for gas pipelines.
In industry alone, around 300 million electric motors are installed around the globe and use
around two thirds of all commercially consumed electric power. The leverage for cutting costs
is therefore correspondingly large if their effectiveness is improved.
One way of reducing the amount of power an electric motor consumes is to use an electronic
control system to regulate speed and thereby adjust performance to suit current needs. The
market penetration of speed-regulating motor controls will therefore increase. At the present
time, a good 15 percent of electric motors are controlled electronically and the trend is working
in our favor, as the implementation of a variable speed drive system requires a large number
of the power semiconductors we offer. The number of power semiconductors needed and their
value depends on the performance class of the motor.
Group strategy
42
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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.
Combined Management Report - Our Group
G see glossary, page 289 and page 290
Consumer goods industry
Large household appliances: There have been a number of changes in this class of goods
recently. To boost the efficiency of their appliances whether due to stricter efficiency regula-
tions or to offer consumers better performance, a growing number of manufacturers are
switching to electronically controlled motors. Whereas in the past it was only possible to switch
a motor either on or off, motor controls now enable speed to be regulated to follow the current
load. Examples of application are the water pumps in washing machines or dishwashers,
refrigerator compressors, or ventilators in air conditioning systems.
We benefit in particular from the demand for replacements. For example, around 1.4 billion
refrigerators and freezers are currently in use worldwide, consuming around 650,000 gigawatt
hours of electric power per year, equivalent to the annual consumption of Germany. If every
consumer purchasing a new appliance were to select the most energy-efficient unit from now
on, energy consumption could be slashed by more than 30 percent by the year 2030. This illus-
trative calculation even takes into account the fact that around 60 percent more refrigerators
and freezers will to be in use worldwide by 2030
Compact modules with outputs between 100 and 2,000 watts are installed in household appli-
ances. These integrated IGBT modules, known as IPMS (Integrated Power Modules), are the core
business of the Korea-based LS Power Semitech Co., Ltd. (LSPS) and a core competence of
International Rectifier. The complete takeover of LSPS in the 2015 fiscal year has enabled us to
further bolster our presence in the important Korean market which is home to global home
appliances champions such as Samsung and LG. Furthermore, the acquisition of International
Rectifier with its complementary portfolio of small IPMS opens up new markets for us in Asia,
South America and the USA.
Apart from large home appliances, we also serve the market for induction cookers. In close
cooperation with our leading customers, primarily in China, we have been developing IGBT
power transistors for the specific needs of each application, such as single-field induction
cookers and kitchen cookers with multiple cooking fields, for many years.
Summary for the Industrial Power Control segment:
The worldwide efforts to reduce CO2 emissions, firstly through the more efficient use of
electric power and secondly through the increased use of renewable sources of energy, will
lead to a further rise in demand for power semiconductor components. Moreover, the use
of speed-regulated drives delivers significantly added value to functionality, an important
aspect, particularly in the field of machine building. We expect our business with semi-
conductors for industrial electronics to grow by an average of around 9 percent per annum.
Growth drivers for the Power Management & Multimarket segment
Our broadly diversified product portfolio in the Power Management & Multimarket segment
addresses a wide variety of markets. We have been in the power supply business for decades
with our power components. These include power supplies for converting alternating current
to direct current (AC-DC conversion) and also DC-DC conversion for medium- and high-perfor-
mance computers. This field includes high-performance PCs, servers, network computers,
telecommunications equipment, gaming consoles and graphic cards. The acquisition of Inter-
national Rectifier has additionally given Infineon access to the market for high-reliability
power components, such as those required in the aerospace industry.
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
43
Group strategy
G see glossary, page 292
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.
46
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
G 13
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
46
93
680
592
2014 2015e 2016e 2017 e 2018 e
USA
China
Indien
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.
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.
1,051
G see glossary, page 289
Source: Cisco, "Visual Networking Index Forecast",
May 2015
1 CAGR = Compound Annual Growth Rate
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.
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.
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.
G12
Development of global mobile data
traffic 2014 to 2019
in petabytes per month
CAGR (2014-2019):
+57%
24,221
16,124
10,650
6,751
4,163
2,514
2014
2015 e 2016e 2017e 2018 e 2019 e
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.
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.
3.5%
Infrastructure
2007
2008
2009
2010
2011
2012
2013
2014
2015
Revenue of Infineon based on today's portfolio (excl. Other Operating Segments and Corporate)
Revenue International Rectifier
Semiconductor world market (adjusted to the Infineon fiscal year)
1 CAGR = Compound Annual Growth Rate
2 Based on market development assumptions, the 1999 fiscal year's revenue figures for some smaller product categories have been derived from the 2000 fiscal year's revenue figures.
Source: WSTS, November 2015
2006
In the following section we describe the main factors driving growth in our four segments in
38
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Growth drivers for the Automotive segment
Growing prosperity usually leads to the desire for greater individual mobility, a fact particularly
evident in the emerging economies in Asia and above all in China. The middle classes in India
and China each grow by around 10 million people per year. In Africa and Asia, the transition
from the bicycle or moped to the car is an expression of growing prosperity among the popu-
lation. A compound annual revenue growth rate of 2.7 percent has been calculated for auto-
motive production worldwide between 2014 and 2020 (source: IHS Inc.).
G08
Worldwide light vehicle production by region
in millions of vehicles
CAGR (2014-2020): +2.7%
100.3
102.5
97.1
93.6
view of the megatrends described in the previous chapter.
2005
2004
2003
37
Group strategy
Financial targets
Based on our Group strategy, we want to achieve three financial targets:
Target 1: Achieve a compound annual revenue growth rate of 8 percent.
Target 2: Achieve a 15 percent Segment Result Margin over the economic cycle.
Target 3: Limit our investment to 13 percent of revenue over the economic cycle.
Infineon introduced an internal control system for implementing its corporate strategy and for
achieving its financial targets (see the chapter "Internal Management System").
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.
Infineon achieved a compound annual revenue growth rate - not including the contribution
from International Rectifier - of about 9 percent from fiscal year 1999 through 2015 with its
current portfolio of products. We continue to operate in the same markets and, with our four
segments, continue to focus on the megatrends described above. These focus areas are the
source of the continued increase in demand for our products. Furthermore, International
Rectifier's complementary sales and regional strongholds allow us access to new markets. We
therefore expect to grow at around 8 percent per annum, essentially in line with our historic
growth track record.
G 07
Revenue in the fiscal years 1999 to 2015 compared to the global semiconductor market
€ in millions
CAGR (1999-2015): +5.4%
P see page 88 ff.
6,000
5,000
CAGR (1999-2015): ~9% :
4,000
3,000
682
5,100
296,383
2,000
126,895
~1,2002
1,000
0
1999
2000
2001
2002
6.6
90.3
Target 1: compound annual revenue growth rate of 8 percent
87.8
704
ill
plug-in pure electric
vehicle
internal
combustion hybrid
engine vehicle
vehicle
Source: Strategy Analytics, "Automotive Semi-
conductor Demand Forecast 2013-2022", June 2015
Apart from the total number of vehicles produced, their technical features and therefore
the average semiconductor content per vehicle plays an important role in demand for semi-
conductors. Individual mobility is no longer conceivable without sustainability, i.e. the lowest
possible pollution of the environment and the highest possible level of safety for all road
users. Together with the growing popularity of vehicle connectivity, a number of trends are
emerging that are continually increasing the number of semiconductors used in each car:
Reduction of CO2 emissions: Legislators worldwide have adopted regulatory targets aimed at
reducing CO₂ emissions in various regions and countries. For example, a requirement adopted
by the European Commission in October 2013 stipulates an average reduction of CO2 emissions
per car fleet from currently 130 grams of CO2 per kilometer to 95 grams of CO2 per kilometer
by the year 2021. These targets are unlikely to be met solely by improving the efficiency of
the conventional combustion engine. In order to meet these targets, the electrical consumers
installed in vehicles need to be made more efficient. Hydraulic, mechanical and electrome-
chanical parts need to be replaced with more efficient electronic and therefore semiconductor-
based solutions.
Furthermore, it is essential to increase the number of electric and hybrid vehicles on the
road, in order to lower the fleet averages of many automobile manufacturers to meet required
target levels. Hybrid and electric vehicles require a far greater number of semiconductors than
conventional models. Whereas the average vehicle powered by a conventional combustion
engine is currently equipped with semiconductors worth around US$338 (approximately €300),
average hybrid and electric vehicles have around US$700 (approximately €625) worth of semi-
conductors installed in them respectively. Some three quarters of the additional value of
semiconductors consists of power semiconductors. These components are crucial for operating
powerful electric motors.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
Group strategy
39
Exhaust gas testing procedures under more realistic conditions are currently the subject of
intensive general debate. If legislators decide on regulations to introduce new, more realistic
testing procedures, it will mean an implicit tightening of CO2 reduction targets, which would,
in turn, additionally drive demand for semiconductors.
Safety and driver assistance systems: An encouraging development is generally noticeable
throughout the developed economies: The number of traffic fatalities has been steadily decreas-
ing for many years and is now stagnating at a low level. This general trend is mainly thanks to
the widespread use of safety systems. However, passive safety systems are gradually reaching
the limits of their effectiveness. Firstly, their technical potential is practically exhausted and
occupant protection has meanwhile achieved a very high standard. Secondly, passive safety
systems have already reached a high degree of market penetration, even in light vehicles.
The next major growth market is that of active safety systems, which are capable of either
completely avoiding an accident or at least significantly minimizing its negative consequences
through active intervention. Prime examples of active safety systems are pedestrian recogni-
tion, adaptive speed control or blind spot detection. Although these functions are mostly only
installed in premium-class vehicles at the present time, they are becoming increasingly com-
mon in the medium range, too.
Active safety systems are being expanded to create advanced driver assistance systems (ADAS),
which are becoming ever more important in road safety because of the considerable help they
provide to motorists while driving. For example, they assist in critical situations or even correct
a driving error if necessary, thereby reducing the risk of an accident. If a vehicle is capable of
semi- or even fully autonomous driving and relieves the driver accordingly, it also improves
driving comfort, enabling drivers to make better use of the time saved to work, for entertain-
ment, or simply to relax.
A vehicle fitted with ADAS can also be viewed as a kind of robot, as a computer-controlled
machine that reacts extremely quickly and precisely to external influences. The "fail safe"
performance of the installed components and subsystems is therefore of utmost importance.
They need to be continually available and for that reason the safety-critical components
such as sensors, microcontrollers and power semiconductors are designed with multiple
redundancy, thus fueling demand for semiconductors. One good example is the magnetic
field sensor pictured on the front page of this Annual Report, which in principle contains two
sensors that function independently of each other.
Connectivity, data and IT security: The era of vehicle connectivity has begun. Whether for
internet services, navigation purposes, traffic reports, the automatic recording of toll fees,
when updating software at a vehicle service center and particularly for eCall systems, there is
a constant exchange of communication between the vehicle itself and a communication net-
work (car-to-infrastructure). Moreover, both semi-autonomous and fully autonomous driving
require supportive communication between vehicles (car-to-car).
This connectivity, however, also entails a certain risk, as it offers hackers the opportunity to
intervene in data traffic within the vehicle and thus manipulate certain functions. Communi-
cation between the various control units, including safety-critical functions such as brakes
and steering systems, needs to operate with the utmost safety, protected from unauthorized
access. The safety of the vehicle and its occupants on the one hand and IT security on the other
hand can no longer be viewed as separate issues. Vehicles are rapidly becoming computer
networks on wheels, again generating an increased need for data and IT security.
We predict that by the end of this decade every new car produced will be equipped with
augmented data and IT security features. Infineon sees itself ideally positioned to handle this
development, as we have a wealth of experience in the fields of data and IT security stemming
from the expertise of our Chip Card & Security segment. Based on this know-how, our range of
products includes security solutions for both vehicle-integrated microcontrollers and discrete
security technology that suit all relevant vehicle applications.
40
40
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Summary for the Automotive segment:
Growth drivers for the Industrial Power Control segment
The products developed and manufactured by the Industrial Power Control segment have an
impact along the entire value-added chain of electric power: generation, transmission and
consumption. In the opening section "Business Strategy" of this chapter we demonstrated
how energy efficiency contributes towards greater productivity and efficiency in order to meet
the global challenges of modern times. It is precisely these factors that are driving growing
demand for our power semiconductors.
87.4
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.
710
338
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.
Average semiconductor content
of various types of vehicles
in US$
5.8
17.0
19.0
8.7
9.2
22.6
12.6
29.6
15.7
22.9
2014
2015 e
20.2
2017 e
G 09
Source: IHS Inc., "Annual Light Vehicle Production 2007-2020", October 2015
1 CAGR = Compound Annual Growth Rate
2016 e
North America
Japan
China
Other countries
2019 e
2018 e
Europe
2020 e
Asia-Pacific (excl. China, excl. Japan)
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.
assistance systems
AURIX™M: part of Audi's driver
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
SEGMENT RESULT
18%
_
SEGMENT RESULT MARGIN
€121 million
In its function as primary controller it sends
out the commands for the brake, steering,
engine and transmission.
54
REVENUE
2,351
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
G16
Revenue and Segment Result
of the Automotive segment
€ in millions
1,965
1,714
€2,351 million
IIIII
€122 million
REVENUE
Jo-o
259
10-0
☐
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
The segments
53
Automotive
REVENUE
SEGMENT RESULT
SEGMENT RESULT MARGIN
€2,351 million
€300 million
............ 13%
Industrial
Power Control
REVENUE
SEGMENT RESULT
€971 million
SEGMENT RESULT MARGIN 13%
Power Management
& Multimarket
REVENUE
SEGMENT RESULT
SEGMENT RESULT MARGIN
€1,794 million
€352 million
20%
Chip Card & Security
€666 million
300
17%
2013
2013
35%
25%
23%
20%
23%
24%
23%
2014
Europe (excluding
Germany),
Middle East, Africa
Germany
2015
Asia-Pacific,
Japan
Americas
BEE
56
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.
Going forward, we see three main trends emerging, which will determine the development of
automotive technology - and which we strongly support with our products:
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.
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.
IIIII
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
17%
40%
38%
2014
2015
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
Automotive
A7 concept
Az
11976
Audi piloted driving
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.
G17
Automotive Segment revenue
by region
100%
100%
100%
15%
167
The segments
1.02
52
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.
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.
In order to achieve our margin target also in future, we will focus to a greater extent on the
following aspects:
> Realizing economies of scale in manufacturing, particularly from our 300-millimeter
manufacturing capabilities and our 200-millimeter manufacturing site in Kulim (Malaysia)
> Realizing economies of scale in research and development and in sales by achieving
leading market positions in our target markets and
› 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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
49
Group strategy
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
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:
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.
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.
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.
G see glossary, page 295
G15
Development of Infineon's market share and relative market share for power semiconductors
€ in millions
19.2%¹
9.4%
9.7%
10.2%
10.7%
11.2%
11.9% 11.8%
12.3%
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.
8.1%
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.
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
47
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.
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.
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.
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.
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.
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.
Group strategy
48
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Summary for the Chip Card & Security segment:
G14
€ in millions
377
9.8%
620
14.4%
897
2013
2014
2015
Segment Result
Segment Result Margin
15.5%
Segment Result and Segment Result
Margin over the last three years
8.4%
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.
1.01
50
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
G see glossary, page 291
G see glossary, page 289
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.
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.
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.
50
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Finances and strategy
Group strategy
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.
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.
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.
-
P see page 108 ff.
8.5%
P see page 92 ff.
51
Source: IHS Inc., several reports on power semiconductors 2004 to 2015
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".
-Infineon relative market share²
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.
1.08
1.31
1.31
1.49
1.65
2003
2004
2005
2006
2007
2008
2009
1.50
2011
2010
Infineon market share
1.71
H
1.69
2.741
田
2014
2013
2012
1.43
1 Including International Rectifier
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Driver ICs and power switches for demand-based
compressor control
1 Including International Rectifier
58
8.4%
8.6%
8.9%
10.1%
10.4%
Source: Strategy Analytics, "Automotive Semi-
conductor Vendor Market Shares", April 2015
NXP
STMicro-
Renesas
Infineon'
Freescale
in third place for the first time
China automotive semiconductor
market share 2014; Infineon
6.8%
7.5%
7.8%
10.5%
electronics
For a long time, the compressor of a refrigerator only
had two operating states: "off" and "full speed until
reaching the target temperature."
Growing importance of home appliance business
Lo-i
144
12.0%
651
783
971
€ in millions
Industrial Power Control segment
Revenue and Segment Result of the
G20
The Industrial Power Control segment in the 2015 fiscal year
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.
€122 million
Digitalization and functional integration the next major topics
€971 million
REVENUE
Industrial Power Control
International Rectifier's Driver IC and discrete
IGBTs are part of the compressor's control unit
IOR
IGBT
SSSS
Treiber-IC
IR
J0-0
SEGMENT RESULT
G19
> Windshield wipers
1 Including International Rectifier
> Sunroof
> Steering
> Power windows
› Lighting
> Hatchback
> Electronic seat adjustment
> Electronic control units
> Door electronics
> Air conditioning
Comfort electronics
> Suspension
> Transmission control
> Motor control
electric engines
> Control for combustion and
› Battery management
> Battery charging control
> Alternator control
CO₂ reduction
Fields of application
We see our security know-how as essential for providing added value to our customers. In
order to guarantee the functioning of the above-mentioned safety applications in increasingly
connected vehicles under the present communication standards, encryption technologies are
required. In this respect, we rely on the globally leading security expertise provided by our
Chip Card & Security segment and use it in the fields of infotainment, emergency call systems,
digital tachographs and vehicle communication. Furthermore, special hardware solutions
integrated in microcontrollers help to safeguard the intellectual property of our customers,
such as the program code for an engine control system.
122
> Start-stop system
Driver assistance systems
> ABS
› Airbag
› Blind spot detection
NXP
Freescale
STMicro-
electronics
Infineon'
Renesas
World automotive semiconductor
market share 2014
G18
In terms of market share by product category in the automotive semiconductor market,
Infineon remained in second place for sensors, with 11.5 percent of the market, and in third
place for microcontrollers with 8.7 percent of the market. Infineon remained the market
leader for power semiconductors, increasing its market share to 24.8 percent on the back of
organic growth and the acquisition of International Rectifier.
With a market volume of US$9.268 billion, Europe is still by far the most important region for
automotive semiconductors worldwide. Infineon remained market leader in Europe with
14.1 percent market share. In Japan, the initiatives launched a few years ago have meanwhile
paid off with above-average growth. In this country, which is heavily dominated by local sup-
pliers, Infineon achieved its highest market share so far of 5.2 percent, making it the largest
non-Japanese supplier on the market. The fastest growing region was China, where Infineon
advanced to third place for the first time with a market share of 8.9 percent. In Korea, Infineon
remained market leader by far, with a market share of 14.6 percent.
According to analyses performed by the market research firm Strategy Analytics, the world
market for automotive semiconductors grew by 9.4 percent, from US$25.177 billion in the
2013 calendar year to US$27.537 billion in 2014. At 10.5 percent (including International
Rectifier), Infineon's market share exceeded the 10 percent threshold for the first time. The
five largest competitors together held 44.6 percent of the market.
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
Source: Strategy Analytics, "Automotive Semi-
conductor Vendor Market Shares", April 2015
38
> Climate technology
2014
› Drives
1 Including motors, compressors, pumps and fans
> Washing machines
HVDC lines
> Offshore wind farm
*****
› Trams
> High-speed trains
> Locomotives
> Metro trains
Traction
> Wind turbines
> Elevators
systems
generation
Renewable energy
> Heavy construction
vehicles
> Forklifts
vehicles
Industrial vehicles
> Agricultural
> Conveyor technology
› Cranes
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.
technology
> Automation
> Photovoltaic
Industral drives¹
› Escalators
> Robotics
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 discrete IGBTs and IGBT 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 power semiconductors and modules
Market position
5.4%
5.7%
5.9%
7.0%
19.2%
> Factory automation
Toshiba
Mitsubishi
STMicro-
electronics
Infineon'
World discrete power semi-
conductors and modules market
share 2014
G22
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.
61
power supplies
Uninterruptible
> Hybrid buses
> Rollers
Fairchild
> Microwave ovens
> Refrigerators
Energy transmission > Induction cooking
> FACTS (Flexible
AC Transmission
Systems)
Home appliances
for electric vehicles > Air conditioning
> Dishwashers
44%
7%
9%
12%
100%
100%
100%
Industrial Power Control segment
revenue by region
G21
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.
50%
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 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).
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.
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.
Revenue
2015
Segment Result
54%
44%
41%
Fields of application
Charging stations
The segments
Industrial Power Control
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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.
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.
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.
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.
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:
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.
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.
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.
Business strategy and fields of application
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.
G see glossary, page 292
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
60
60
Europe, Middle East, Africa
Asia-Pacific, Japan
Americas
2015
2014
2013
39%
2013
57
€ in millions
1 Including International Rectifier.
> Smartphones
> Tablets
P see page 73
Power management for:
› Consumer electronics
> Home appliances
> IT and telecommunications
> PCs and notebooks
> Servers
> Smartphones
> Tablets
> Navigation devices
Market position
The world market for standard MOSFET power transistors (low-voltage and high-voltage
MOSFETs) totaled US$5.829 billion in the 2014 calendar year, an increase of 7.1 percent com-
pared to the previous year's figure of US$5.441 billion (source: IHS Inc.). With a market share
of 27.8 percent, Infineon (including International Rectifier) is the clear market leader in this
field, 17.3 percentage points ahead of its nearest competitor. The five largest competitors
together held 63.8 percent of the market.
Chips for silicon microphones
3.283 billion chips for silicon microphones were sold worldwide in the 2014 calendar year
(source: IHS Inc.), compared with 2.680 billion chips one year earlier, a growth rate of 22.5 per-
cent. Infineon again succeeded in increasing its sales volume at an above-average rate of
46.2 percent from 770 million chips to 1.126 billion chips, thus adding a further 5.6 percentage
points to our market share, which therefore increased from 28.7 percent in 2013 to 34.3 percent
in 2014. The five largest competitors together held 95.7 percent of the market.
G27
World standard power MOSFET
market share 2014
Infineon'
Renesas
Fairchild
STMicro-
electronics
Toshiba
1 Including International Rectifier.
Standard power MOSFET devices
27.8%
› Activity trackers
LED and conventional
lighting systems
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
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
The segments
Power Management & Multimarket
65
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
Mobile devices
Cellular network infrastructure
DC motors
> DIY appliances (power drills,
cordless screwdrivers etc.)
> Electric bicycles
› Pedelecs
HiRel
> Commercial aviation
> Defense technology
> Oil and gas exploration
› Space systems
> Submarine telecommuni-
cations cables
› Base stations
10.5%
9.2%
8.6%
Significant jump in revenue and earnings
Continued growth in the field of chip-based payment cards
and governmental identification documents
The Chip Card & Security segment in the 2015 fiscal year
G 29
Revenue and Segment Result
of the Chip Card & Security segment
€ in millions
666
494
463
€121 million
121
43
2013
2014
2015
Revenue
The Chip Card & Security segment generated revenue totaling €666 million in the 2015 fiscal
year, with no contribution coming from the acquisition of International Rectifier. The
35 percent increase over the previous year's figure of €494 million was therefore purely
organic growth. The segment generated 11 percent of Group revenue.
Strong revenue growth was recorded in the second quarter of the 2015 fiscal year and remained
at the higher level in the following two quarters. Practically all lines of business contributed
to revenue growth: high-end SIM cards with mobile payment functionality, government identi-
fication as well as authentication solutions. Furthermore, the market launch of Samsung's
flagship smartphone models Galaxy S6 and Galaxy S6 edge had a positive impact. Both models
Revenue
Segment Result
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.
39
SEGMENT RESULT
€666 million
REVENUE
7.7%
This market analysis covers not only components
of the Power Management & Multimarket segment,
but also components of the Automotive segment.
Source: IHS Inc., "Power Semiconductor Discretes &
Modules Report", September 2015
G28
World silicon microphone ICS
market share 2014 by units
Knowles
Infineon
Omron
NRJC
NeoMEMS
47.4%
34.3%
8.4%
4.1%
1.5%
Source: IHS Inc., "MEMS Microphones Report - 2015",
October 2015
99
66
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Security chip in Samsung smartphones
Infineon provides security chips for a large
number of mobile devices, thereby safeguarding
the security of both confidential data, such as
the user's bank details, and security-relevant
transactions, such as payments.
The Samsung flagship models Galaxy S6 and
Galaxy S6 edge are equipped with our embedded
Secure Element (eSE) security chip.
IIIII
IIIII
Chip Card & Security
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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
The segments
Automotive
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.
Business strategy and fields of application
Infineon'
46.1%
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
conductor
Infineon
Height measurement with a
DPS310 pressure sensor
Infineon expands its portfolio of sensors.
Thanks to the highly-accurate digital
barometric pressure sensor DPS310, the
exact height can be determined with only
a few centimeters tolerance. It can be
used to determine the floor level in build-
ings or parking garages. Or the altitude
covered when crossing the Alps.
1.0 mm
2.5 mm
2.0 mm
☐
Power Management & Multimarket
REVENUE
€1,794 million
DPS310
SEGMENT RESULT
ON Semi-
Fuji Electric
This market analysis covers not only components
of the Industrial Power Control segment, but
also components of the Automotive and the
Power Management & Multimarket segments.
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
Semikron
21.6%
12.8%
Semikron
7.3%
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
€352 million
Portfolio and market access strategically improved by means of
integration of International Rectifier
MEMS sensor product portfolio expanded
Power Management & Multimarket
segment revenue by region
100%
7%
100%
6%
100%
10%
74%
72%
71%
BEF
G26
2013
22%
19%
2014
2015
Europe, Middle East, Africa
Asia-Pacific, Japan
Americas
64
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
G see glossary, page 293
G see glossary, page 290
19%
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.
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).
Segment Result
The Power Management & Multimarket segment
in the 2015 fiscal year
G25
Revenue and Segment Result
of the Power Management &
Multimarket segment
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
The segments
Power Management & Multimarket
radio-frequency (RF) power transistors. Fifth, with each new generation of mobile telephony,
the semiconductor content in smartphones rises. The increasing number of frequency bands
and modulation concepts requires a growing number of RF components. Sixth, as a result of
the growing market acceptance of silicon microphones and through gains in market share, our
revenue from these products has risen.
Shifts occurred in the regional revenue split as a result of the acquisition of International
Rectifier. Due to the comparatively high level of revenue generated in the Americas and the
comparatively low revenue generated in Europe, the main changes in this split occurred in
these regions. Europe now accounts for only 19 percent of revenue (2014: 22 percent). The
percentage attributable to the Americas rose by 4 percentage points to 10 percent. The share
attributable to Asia-Pacific (including Japan) remained virtually unchanged at 71 percent
(2014: 72 percent). The most significant country in the Asia-Pacific region is China. The high
percentage of revenue generated in this market is due to the fact that major contract manu-
facturers of devices for brand manufacturers (so-called Electronic Manufacturing Services,
EMS) are established there. The brand manufacturers which place orders for such projects with
Infineon, on the other hand, have their headquarters and product development centers
located mostly in the USA or Europe.
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).
World market for IPMS
नै
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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).
Capitalized development costs totaled €100 million in the 2015 fiscal year (2014: €92 million).
Amortization of capitalized development costs totaled €29 million (2014: €25 million).
Subsidies and grants for R&D decreased year-on-year from €66 million to €59 million in the
2015 fiscal year.
R&D expenses are not only incurred for the development of new products, but also increas-
ingly for entire platforms and new product families. These include, for example, digital power
supply control, technology platforms for low- and high-voltage power switches, power semi-
conductors based on the new materials silicon carbide and gallium nitride (see the section
further below in this chapter) as well as new types of sensor, particularly those based on our
magnetic field, radar, and MEMS technologies.
Whereas in the past both research and development were mostly either technology- or com-
ponent-oriented, the systems in which the components are used are meanwhile playing an
increasingly vital role. Innovative system solutions are developed with the aim of improving
system functionality. Although the semiconductor components may well cost more than
previously, savings and improvements in other areas create added value for the user. In many
cases, conventional digital microelectronics are supplemented with non-digital components
such as radio-frequency electronics, power electronics, sensor technology, actuators or software.
Patents
Infineon's innovative strength and long-term competitiveness are also apparent in both the
quantity and the quality of our patents. We applied for some 2,200 patents worldwide in the
course of the 2015 fiscal year (including International Rectifier as of January 13, 2015), com-
pared with around 2,100 applications one year earlier. Infineon's patent portfolio worldwide
comprised approximately 25,000 patents and patent applications at the end of the 2015 fiscal
year, compared with around 21,000 patents and applications at the end of the previous year,
not including International Rectifier. The figure includes some 2,100 patents and applications
that we acquired through the acquisition of International Rectifier.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Research & development
73
In conjunction with the partial settlement reached with the insolvency administrator of
Qimonda AG in September 2014, in October 2014 Infineon acquired, among other things,
approximately 8,800 patents and patent applications. In July 2015, these patents and patent
applications were practically all sold to Polaris Innovations Limited, based in Ottawa
(Canada), and Samsung Electronics Ltd., based in Seoul (Korea).
Principal research and development activities
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.
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.
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.
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.
In October 2014, for example, we presented a new type of package featuring two sensor chips,
i.e. two dies, placed on top of each other (see cover picture of this Annual Report). Whereas
an electric power steering system had previously required two separate sensors (including
one sensor chip each) to reliably and precisely measure the torque of the steering axle, the
dual Hall sensor package developed at our Regensburg site now only needs one sensor (includ-
ing two sensor chips). Using a patented flip-chip process, the chips are now placed on top of
each other and therefore occupy the same space as versions designed with only one sensor chip.
The innovation saves valuable space and cuts system costs in safety-critical applications, which
include not only the power steering system, but also the accelerator and brake pedals as
well as the brushless DC motors built into the transmission and clutch systems. Safety-critical
applications need to meet stringent requirements in accordance with ISO 26262 standards.
Sensor redundancy plays a key role, which was solved with the integration of two sensor chips
in the dual Hall sensor package as a particularly low-cost, space-saving solution.
G33
In May 2015, we presented another magnetic field sensor: a 3D magnetic field sensor. One
of the most important development goals when designing this sensor was to keep power con-
sumption as low as possible, with the aim of installing it in battery-powered consumer goods
and industrial applications. Our 3D magnetic field sensor measures three-dimensional, linear
and rotating movements with great precision. Joysticks, control components in household
appliances, multi-functional switches and smart meters, for example, all require this type of
measurement. The electricity meters are currently fitted with three one-way magnetic sensors
in order to detect manipulation by means of large magnets; one one-way magnetic field sensor
for each direction of the external magnetic field. Electronic electricity meters can now be made
much smaller and also consume far less power, as our 3D magnetic field sensor is capable of
replacing all three of the previous sensors. Our family of 3D magnetic sensors will be enlarged.
Interior design of the dual Hall
sensor. The two sensor chips are
placed exactly on top of each other.
magnetic field
sensor chip 1
sensor chip 2
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.
Dual Hall sensor as packaged
component
G see glossary, page 294 and page 291
Percentage of revenue
Research &
development
71
72
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
> Research and development expenses in the 2015 fiscal year
increased to €717 million
> Developer teams from Infineon and International Rectifier
merged to form global research network
> Sensor technology a primary focus of our technology
and product development
G 32
R&D expenses
€ in millions
13.7%
525
550
12.7%
717
|||
2013
2014
2015
R&D expenses
12.4%
Я Infineon
TLE 4998x8D
74
Si
(~314 cm²)
SiC
(~177 cm²)
200 mm →
200 mm
< 150 mm →
0.70 mm
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
Silicon carbide diode in a package
for surface-mounted assembly on
printed circuit boards
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
76
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
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.
Silicon carbide: Focus on best-value solutions for the customer; product portfolio
expanded to include SiC MOSFETS
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.
+
(~314 cm²)
Si
"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.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
P see page 123
Infineon's 60-gigahertz radar IC
for controlling mobile devices via
gesture recognition. It is possible
to adjust the demonstration
wristwatch featured in Google's
"Project Soli❞ research project by
"virtually" turning the winder, i.e.
without touching the watch itself.
19:15
20
By the end of the 2015 calendar year, the industrial version will be followed by a version
designed for automotive applications, for use as a gearshift position sensor as well as in the
steering column controls to measure the applications located there, such as the indicators,
lights, high beam and windshield wiper controls.
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:
> 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.
> 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.
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.
32 sites in 13 countries.
The position of the 49 reference
points is determined using the Kostal
image recognition software.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Research & development
75
MEMS-based sensor chips: In addition to our range of silicon microphone chips, at the Mobile
World Congress in Barcelona (Spain) in February 2015 we presented the first barometric pressure
sensor for the consumer goods market (see the opening page of "Power Management & Multi-
market" in the chapter "The segments"). It is capable of precisely measuring the air pressure,
making it possible, for example, to record the altitude covered when crossing the Alps or to
navigate within buildings with the help of a smartphone. Moreover, we are researching further
types of MEMS-based sensor types that are capable of measuring other physical variables for
future use in smartphones.
"More out of less": More compact power supplies and motor controls through
new materials for power semiconductors
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.
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 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.
G see glossary, page 293
P see page 62 ff.
G34
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.
At Infineon, about
5,800 people are
employed in research
and development at
18
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
2015
67
69
68
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
Business strategy and fields of application
Nearly 30 years of experience in the largest and most sophisticated security projects in the
world has enabled Infineon to become a leader in security solutions. The Chip Card & Security
segment's core competencies lie mainly in the fields of tailor-made security, contactless com-
munication and embedded microcontroller solutions (embedded control). We have created
innovations in each of the three core competencies: Integrity Guard for security, Coil on Module
for contactless communication and SOLID FLASH™ for integrated security controller solutions.
With these three technologies and further security solutions, we offer a broad portfolio of
semiconductor-based security products for a wide range of chip card and security applications.
"Easy-to-implement” is decisive for the market success of hardware-based security technology.
Infineon has therefore developed special competence in the following aspects, which differen-
tiate it from its competitors:
> Tailored security: we provide the appropriate level of security for the target application
› Contactless excellence: the demand is for secure, fast transactions; the key points are a high
level of security, high data-transmission rates and rapid write-to-memory operations
> Embedded control: that is the ability to combine memory technologies to the security
controllers optimally depending on the specific application
Together with customers, the Chip Card & Security segment is developing solutions relating
to the following market trends:
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.
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.
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.
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.
Safeguarding mobile devices: Authentication solutions, such as embedded Secure Element
or Trusted Platform Modules, are bringing new applications, such as mobile payment or
platform integrity, to the mass market.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
69
60
Alongside major projects in the payment cards and governmental identification documents
sectors, we see growth potential increasingly in smaller and regional security projects. We are
therefore diversifying our customer portfolio and expanding our sales structures, which have
focused more on large-scale customers in the past. We see good potential to gain a growing
percentage of smaller regional customers on the one hand and in strengthening the distribution
channel on the other. We are also building up our presence in the regions in order to improve
our service to locally based customers and better cater to their specific requirements. Our aim
is to obtain an even better understanding of the factors that make our customers successful in
each of their regions. Often it is not a technically superior product which is required, but rather
a solution that offers the best value for money, i.e. it fulfills the specific security requirements
for the application at the lowest possible system cost and can be implemented simply and
quickly by the customer.
2014
2013
41%
44%
100%
100%
8%
9%
100%
Chip Card & Security segment
revenue by region
G30
Alongside favorable exchange rate factors, the sharp rise in revenue and productivity improve-
ments in all product categories contributed to the higher gross profit. Operating expenses
rose less rapidly than revenue. As a result of the increasing scope of outsourcing to manufac-
turing partners, some development expenses for manufacturing technologies were no longer
incurred. Our ambitious “shrink strategy" - i.e. the early transfer to 90 nanometer and to
65 nanometer manufacturing technology - is paying off.
The Segment Result amounted to €121 million, a jump of 181 percent compared to the
previous year's €43 million. The Segment Result Margin amounted to 18 percent of revenue
(2014: 9 percent), the highest level ever since the foundation of Infineon.
Segment Result
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.
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.
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.
Infineon
2.55 mm
2.72 mm
The segments
Chip Card & Security
Combined Management Report - Our Group
8%
41%
48%
51%
50%
eSE
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.
Europe, Middle East, Africa
Asia-Pacific, Japan
Americas
Fields of application
Secure NFC (Near
Field Communication)
transactions
Ticketing,
access control
Trusted Computing
G31
১
The segments
Chip Card & Security
70
Source: IHS Inc., "Smart Cards Semiconductors",
July 2015
> NFC-based contact-
less payments
6.7%
16.0%
23.9%
30.5%
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.
SHHIC
STMicro-
electronics
Samsung
Infineon
NXP
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.
15.2%
Payment systems
> Credit/debit cards
> Mobile payments
Market position
Mobile communications
Authentication
> Accessories
> Games consoles
> Industrial controllers
› Spare parts
Automotive
› Connected vehicles
(e.g. eCall, car-to-car,
car-to-infrastructure)
> Electronic tolls (toll collect)
> Manipulation protection
(e.g. digital tachometer)
Governmental
identification documents
> Driver's licenses
> ID cards
› Passports
Healthcare cards
› Conventional SIM cards
> High-end SIM cards
> Machine-to-machine
communication
World microcontroller-based
chip card ICs market share 2014
> Smart Home
> IT
Internet of Things
(Industry 4.0)
> Industrial Internet
> Connected driving
Tijuana
Leominster
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Frontend
Backend
> HiRel power components
and HiRel modules
San Jose
> HiRel hybrid modules
> HiRel printed circuit boards
Morgan Hill
› Competence center for
RF power transistors
> Epitaxy for silicon-based
products
Temecula
› Assembly
> Power semiconductors
(MOSFETs, IGBTs, diodes)
Mesa
Ipoh
Operations
Padova
Infineon sites
> Power semiconductors
> Mixed-signal components
Villach
> Power semiconductors,
analog and mixed-signal
ICs for automotive and
industrial applications
> Technology development
for sensors
› Competence center for
thin-wafer technology
› Competence center for
compound semiconductor
technologies
> Development center for
Industrial Internet
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
> 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
gh
Manufacturing sites
1 Property, plant and equipment and intangible assets
86
> Increased level of automation, expansion of Industrial Internet ("Industry 4.0") manufacturing
> Expansion of backend manufacturing capacity
> Expansion of 200-millimeter frontend capacity in differentiating manufacturing technologies,
such as power semiconductors and magnetic field sensors for automotive applications,
MEMS sensors and radio frequency components
> Expansion of 300-millimeter frontend capacity
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:
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).
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.
Percentage of revenue
13.5%
Investments
2015
2014
2013
15.5%
668
785
9.8%
378
€ in millions
Investments¹
G35
> International Rectifier manufacturing sites integrated
in the Infineon manufacturing network
> First product for automotive applications qualified
on 300-millimeter thin-wafer manufacturing technology
› Investments: €785 million
Combined Management Report - Our Group
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
82
sites employed a workforce
of about 26,000 people -
at 19 manufacturing sites
in 11 countries.
Infineon's manufacturing
> Driver ICs for motion control
› 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
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
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).
The main areas of investment in the 2015 fiscal year
98
G see glossary, page 289
Compared to all suppliers, spending with contract manufacturers increased disproportion-
ately. Firstly, because International Rectifier has traditionally had a higher outsourcing share
than Infineon, and secondly as a result of our above-mentioned manufacturing strategy. We
spent a good half of our revenue on externally manufactured products and services provided
by our suppliers.
Number of suppliers increased due to the acquisition of International Rectifier;
increased importance of contract manufacturers following the acquisition and
implementation of our manufacturing strategy
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.
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.
Strategic manufacturing approach bears fruit: The Chip Card & Security segment
is benefiting from increased foundry share
Operations
85
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
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 and UMC sign manufacturing contract for automotive applications
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.
converters.
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
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.
40-Volt
OptiMOS™ 5
Infineon
First volume production of auto-
motive-qualified products on
300-millimeter thin-wafers world-
wide: the 40-volt OptiMOS™ 5
G see glossary, page 290
G see glossary, page 293
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Combined Management Report - Our Group
84
3
83
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.
In order to boost the productivity of our in-house manufacturing capability, we have put even
more emphasis on our automation efforts in recent years. In the process, we have increased
the productivity of our plant in Dresden (Germany) by roughly 10 percent through automation.
Based on these positive experiences, we have also begun to increase the degree of automation
at our sites in Kulim, Regensburg (Germany) and Villach (Austria), adapting our approach to
suit the specific conditions at each site.
The Kulim (Malaysia) site. The first manufacturing building (left) was opened in 2006.
The second manufacturing building is to be equipped with cleanroom manufacturing
machinery as of spring 2016.
Continued brisk demand for power semiconductors for automotive applications and the
planned medium-term transfer of manufacturing from International Rectifier sites to Infineon
sites led to the further expansion of the second manufacturing building at the 200-millimeter
frontend site at Kulim (Malaysia), known as “Kulim 2”. The installation of the final infrastructural
facilities started during the 2015 fiscal year. The "Ready for Equipment” milestone, i.e. the
beginning of equipping the cleanroom, is scheduled for spring 2016.
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
Operations
Pavia
> Development and
Le Puy-Sainte-Réparade
Irvine
> DC-DC point-of-load ICs for
server, telecommunications
and router
Chandler
Operations
characterization of gallium
nitride components
> Epitaxy for gallium nitride
technology
Leominster
> HiRel package development
> HiRel power components
> HiRel power modules
Reigate
› Package concept
development
power management
> Package pathfinding
Bristol
› Microcontroller systems for
automotive applications
INFINEON TECHNOLOGIES ANNUAL REPORT 2015
79
R&D sites
Duisburg
> Technology development
> ASIC development
Warstein
> Product development IGBT
modules
> Assembly and package
technology for IGBT
modules and IGBT stacks
Skovlunde
› Thermal and electrical
modeling
› Control ICs for digital
Torrance
> Development of package
platforms
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.
GaN transistors make it possible
to manufacture highly compact
power supplies, such as those
required for flat-screen televisions
G see glossary, page 291
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
Morgan Hill
> RF power transistors for
cellular infrastructure
El Segundo
> Transistor development for
GaN-on-Si technology
> Development of radiation-
hardened components as
well as components for
medical applications
> HiRel DC-DC converter
> HiRel high-level power
management solutions
> Automotive applications:
driver ICs and half-bridge
driver for brushless
DC motors
Augsburg
Dresden
› Competence center for
technology, preassembly
and package development
› Competence center for
manufacturing innovation
> Product and technology
development for sensors
Neubiberg near Munich
> Technology integration
> Design flow and library
development
> IC, software and system
development for micro-
controllers, ASICs, sensors
and chip card ICs
> Power electronics for
automotive and industrial
applications
> Manufacturing processes
Linz
> RF ICs, especially radar ICS
› Software development for
sensor products
Graz
> Chip card applications
› Contactless systems
> Automotive power
semiconductors
> Sensor applications
Bucharest
> Power semiconductors
> Mixed-signal and RF ICs
> Chip card ICs
Beijing
> Application development
Seoul
> Automotive electronics
system solutions
> System integration for
power semiconductors
Regensburg
> Software for chip card
applications
81
> Highly-integrated and
multi-functional CMOS
technologies for RF, sensors
and MEMS, among others
> Discrete and integrated
power semiconductors
> Development center for
Industrial Internet
from continuing operations
18
0.56
0.66
Basic earnings per share in €
+++
220
471
11
2,013
2,240
5
785
Net cash provided by (used in) financing activities
826
760
833
+++
(1,654)
490
1,363
(229)
Net cash position²
Gross cash position²
Capital expenditure
Depreciation and amortization
Free cash flow²
(1,098)
(2,593)
10
58
32
37
11
5
Other Operating Segments
8
0
14
0
(43)
Corporate and Eliminations
(7)
0
(1)
0
Gross profit/Gross margin
2,330
36.0
2,080
35.9
12
665
11
698
Chip Card & Security
5,795
12
Automotive
2,651
41
2,350
41
13
Industrial Power Control
Research and development expenses
1,073
971
17
11
Power Management & Multimarket
2,050
Diluted earnings per share in €
1,796
31
14
16
(770)
11.9
(717)
982
15.2
897
15.5
9
Property, plant and equipment
2,119
2,093
1
Segment Result/Segment Result Margin
Total assets
8,741
4
Total equity
5,023
4,665
8
Net cash provided by operating activities from continuing operations
1,313
957
9,087
Net cash used in investing activities from continuing operations
17
743
12.4
7
Selling, general and administrative expenses
(791)
12.2
(778)
13.4
2
Operating income
634
763
37
Income from continuing operations
741
622
19
Gain (loss) from discontinued operations, net of income taxes
Net income
2
12
(83)
555
0.66
5 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
18
Consolidated Financial Statements
99 Infineon Technologies AG
102 Corporate Governance
98 Overall statement of the Management Board
with respect to Infineon's financial condition
as of the date of this report
95 Treasury and capital requirements
associated material risks and opportunities
78 Significant events after the end of the reporting period
78 Report on expected developments, together with
68 Group performance
Our 2016 fiscal year
66 The Infineon share
61 Our employees
61 Sustainability at Infineon
57 Internal management system
55 Operations
124 Consolidated Statement of Operations
53 Research and Development
49
40 The segments
18 Finances and strategy
Our Group
Combined Group Management Report
to the Annual General Meeting
8 Report of the Supervisory Board
The Management Board
6
2 Letter to shareholders
Management Board and Supervisory Board
Content
Sustainability rating by DJSI
Locations
#1 in Europe
125 Consolidated Statement of Comprehensive Income
126 Consolidated Statement of Financial Position
128 Consolidated Statement of Changes in Equity
130 Notes to the Consolidated Financial Statements
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.
Chief Executive Officer
Dr. Reinhard Ploss
Management Board and Supervisory Board
Letter to shareholders
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
2
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.
127 Consolidated Statement of Cash Flows
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.
and business partners,
dear Infineon colleagues,
Dear shareholders
Neubiberg, November 2016
Letter to shareholders
Letter to shareholders
Management Board and Supervisory Board
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
191 Imprint
191 Financial calendar
188 Technology Glossary
186 Responsibility Statement by the Management Board
187 Auditor's Report
Further Information
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.
Credit rating
"BBB"
Segment Result
(€ 15.2% Margin)
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
9
13.1%
13.6%
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
Adjusted earnings per share in € - diluted
14.8%
12.9%
2
35.2%
€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
6,473
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)
38.4%
0.56
Revenue by segment
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.
10
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
> Uninterruptable power supplies
#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
16
Page 40
> 32-bit automotive microcontrollers for powertrain,
safety and driver assistance systems
› Discrete power semiconductors
> Industrial drives
> Home appliances
> Energy transmission
› Charging stations for electric vehicles
Applications
Source: Strategy Analytics, April 2016
#2 with a market share of 10.4%
Market position²
Autoliv / Bosch / BYD / Continental / Delphi / Denso /
Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
Mitsubishi/ Omron / Tesla / Valeo / ZF
Key customers¹
> Voltage regulators
> Transceivers (CAN, LIN, Ethernet, FlexRay)
› Radar
> Power ICs
> Magnetic and pressure sensors
> Industrial microcontrollers
> IGBT modules
> Renewable energy generation
for standard MOSFET power transistors
Product range
Applications
48
3,083
6
16
942
15
1,000
2,666
6
2,020
33
2,147
12
5,795
6,473
Change
in %
35
46
16
1,574
Source: IHS Markit, October 2016
10
661
15
12
710
13
819
6
7
399
6
424
18
23
1,337
24
2016/2015
revenue
568
€ in
millions
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
> Automotive
in % of
#2 with a market share of 24.8%
for microcontroller-based chip card ICs
> Authentication
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.
Source: IHS Markit, July 2016
in % of
revenue
€ in
millions
2015
2016
Americas
Japan
Therein: China
Therein: USA
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)
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.
Manufacturing cost trends - raw material prices, cost of materials
and process costs (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.
Product development delays (RC: medium)
Product quality assurance is a key success factor for the business. Potential quality risks – for
example due to high utilization levels - can affect yield fluctuations and hence our ability to
supply customers. Shortfalls in product quality can lead to product recalls and potential costs
related to liability claims. In addition, quality risks could also damage Infineon's reputation
and thus have a significant adverse impact on future earnings.
Product quality trends (RC: medium)
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.
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.
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.
Increasingly dynamic markets (RC: high)
88
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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.
ANNUAL REPORT 2016
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.
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.
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Data and IT systems security (RC: high)
INFINEON TECHNOLOGIES
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)
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 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 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.
Determining and adjusting manufacturing volumes (RC: medium)
planned volume requirements. The prices of raw materials and energy have recently been
subject to significant fluctuation, and there is no reason to assume the situation will change
in the near future. If we are unable to offset cost rises or pass them on to customers, it could
have an adverse impact on earnings.
89
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Combined Management Report | Our 2016 fiscal year
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
Operational risks
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.
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
85
85
> Issues relevant for financial reporting and disclosures in connection with agreements entered
into are recognized and appropriately presented;
> Intragroup transactions are fully accounted for and properly eliminated;
> Group-wide financial reporting, measurement and accounting guidelines are continually
updated and adhered to;
The Internal Control System is an integral part of the accounting process in all relevant legal
entities and corporate functions. The system monitors compliance with stated principles
and stipulated procedures based on preventive and detective controls. Among other things,
we regularly check that:
Combined Management Report | Our 2016 fiscal year
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.
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.
All reported risks and opportunities in their entirety are reviewed for the Infineon Group
for possible correlation and overlap factors and are analyzed using an Infineon-specific
categorization model. Regular risks and opportunities analysis and new developments in
risk management culture are supplemented by interdisciplinary workshops held at segment,
corporate and regional levels. Important information relevant for Infineon's Risk and Oppor-
tunity Management System is available to all employees via our intranet system, including
access to ERM tools and ERM guidelines, containing job descriptions for all functions involved
in the process as well as all information necessary for reporting purposes.
Based on the potential degree of impact on operations, liquidity, earnings, cash flows and
reputation as well as the estimated probability of occurrence, a risk is classified as "high",
"medium" or "low".
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Internal Control System with respect to the financial reporting process
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
› Processes and controls are in place to explicitly guarantee the completeness and correctness
of the year-end financial statements and financial reporting;
> 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.
Cyclical market and sector development (RC: high)
We have once again achieved above-average revenue growth in China, as a result of which
the share of Group revenue generated in this region rose again slightly from 23 percent in the
2015 fiscal year to 24 percent in the 2016 fiscal year. Our dependence on the Chinese market
therefore remains and constitutes a slightly higher risk than one year earlier. This risk includes
the possibility of lower demand for exports to China and hence a decline in manufacturing
capacity utilization levels. There is also a risk that an increased volume of previously imported
semiconductors will be manufactured in China going forward. Regardless of our assessment
of potential scenarios and outcomes within this complex set of risks, these developments
could have an adverse impact on Infineon's operations, financial condition, liquidity, cash
flows and earnings.
In this context, we are particularly monitoring the European debt crisis. As a consequence of
high levels of public sector debt, measures are increasingly being taken to consolidate budge-
tary shortfalls and cut investment expenditure. Uncertainty among consumers and companies
is growing and unemployment remains high in many EU countries. A number of geopolitical
risks, such as the crisis in Ukraine as well as unrest and civil wars in the Middle East, represent
additional risk factors.
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Risk and opportunity report
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
98
86
As a globally operating company, our business is highly dependent on global economic
developments. A worldwide economic downturn - particularly in the markets we serve - may
result in us not achieving our forecasted revenue. Risks can also arise due to political and
social changes in countries in which we manufacture and/or sell our products.
Unsettled political and economic climate (RC: high)
Strategic risks
In the following section, we describe risks that could have a significant or materially adverse
impact on Infineon's operations, liquidity, earnings, cash flows and reputation and which have
therefore been allocated to the risk classes “high” or “medium”. Depending on the potential
degree of impact and the estimated likelihood of occurrence, the risk class is shown in paren-
theses for each risk (e.g. “RC: high").
Significant risks
At the end of the annual cycle, the material legal entities review and confirm the effectiveness
of the ICS with regard to the accounting and financial reporting process. The Management
Board and the Investment, Finance and Audit Committee of the Supervisory Board are regularly
informed about any significant control deficiencies and the effectiveness of the internal controls.
The Risk Management and ICS are continuously reviewed to ensure compliance with internal
and external requirements. Regular improvements made to the system contribute to the
continuous monitoring of the relevant risk areas within the responsible organizational units.
International Rectifier's ICS was integrated in the Infineon Group's ICS during the 2016 fiscal
year in conjunction with the merger of legal entities and processes.
Furthermore, in a Representation Letter, all legal entities, segments and relevant corporate
functions confirm that all business transactions, all assets and liabilities and all income and
expense items have been recognized in the financial statements.
Assessment of effectiveness
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.
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Qimonda insolvency (RC: medium)
90
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.
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).
Ability to supply due to available capacities (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.
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)
Strategic approach "Product to System" (OC: medium)
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.
Market access and activities in China (OC: medium)
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Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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: medium)
The principal opportunities are described in the following section. The list is not exhaustive
and represents only a cross-section of the opportunities available. Our assessment of these
opportunities is subject to continuous change, reflecting the fact that our business, our markets
and the technologies we deploy are continuously subject to new developments, bringing with
them fresh opportunities, causing others to become less relevant or otherwise changing the
significance of an opportunity from our perspective. Depending on the potential degree of
impact and the estimated probability of occurrence, each of these opportunities is assigned
to an "opportunity class" (OC) in the same way that risks are allocated to a risk class. These
classifications are shown in parentheses (e.g. “OC: medium”).
Opportunities
93
Infineon generates more revenue in China than in any other country. Accordingly, developments
and growth opportunities in China are of utmost importance to the Group and relate to the
following markets that we serve:
Vehicle production in China is still expanding, albeit at a slower pace. At the same time, rapid
growth in the production of plug-in hybrid and all-electric vehicles has turned China into the
world's largest market for electro-mobility.
China is the world's biggest market for trains and home to the world's largest train manufacturer
by far, which is an Infineon customer. The continued expansion of the domestic rail network
and a growing volume of international infrastructure projects both represent growing business
opportunities for Infineon.
90
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.
International Rectifier acquisition (OC: medium in the Annual Report 2015)
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.
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).
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.
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.
Further growth in semiconductor content in vehicles (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 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.
P see page 75
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Risk and opportunity report
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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
Security applications (OC: medium)
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.
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.
Impact of our global operations (RC: medium)
We cannot rule out that patent infringement claims will be upheld in a court of law, thus
resulting in significant claims for damages or restrictions in selling the products concerned.
Any such outcome could in turn have an adverse impact on our earnings performance.
Further information is provided in note 23 to the Consolidated Financial Statements.
Whilst we often benefit from cross-licensing arrangements with major competitors and
are keen to broaden the protection offered in this area by entering into new agreements,
no such opportunities exist to safeguard against risks of this nature in the case of companies
specializing in the exploitation of patent rights.
As with many other companies in the semiconductor industry, allegations are made against
us from time to time that we have infringed other parties' protected rights. Regardless of the
prospects of success of such claims, substantial legal defense costs can arise.
Intellectual property rights and patents (RC: medium)
Provisions are recognized in connection with these matters as of September 30, 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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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.
Further information regarding the management of financial risks is provided in note 22 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)
P see page 170 f.
Psee page 170 f.
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.
P see page 166 ff.
Legal and compliance risks
Combined Management Report | Our 2016 fiscal year
Specified currencies are hedged Group-wide by means of derivative financial instruments.
These hedges are based on forecasts of future cash flows, the occurrence of which is
uncertain. Under these circumstances, exchange rate fluctuations could – despite hedging
measures - also have an adverse impact on earnings.
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Risk and opportunity report
2
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Risk and opportunity report
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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.
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 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.
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.
Measures to implement our risk management strategy
Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate
these risks, we rely upon the advice of both in-house and external experts and provide suitable
training to our employees.
In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-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.
Acquisitions and cooperation arrangements (RC: medium)
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.
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.
Provisions
362
316
Other provisions
142
1
Provisions for pensions and similar obligations
1
Special reserve with an equity portion
6,389
409
Shareholders' equity
93
6,606
284
Bonds
3,237
Liabilities
226
48
848
Other liabilities
678
1,301
Liabilities to affiliated companies
253
Trade payables
795
Liabilities to banks
804
804
504
249
40
2,737
Current assets
1,672
1,954
Cash and cash equivalents, marketable securities
1,481
832
3,399
Receivables and other assets
613
Inventories
5,775
6,822
2,578
Non-current assets
517
Distributable profit
3,670
39
2,897
1,179
1,207
2,247
2,253
Retained earnings
Prepaid expenses
Capital reserves
9,487
10,265
Total assets
3
4
Active difference resulting from offsetting
Share capital
Deferred income
No shares conferring special control rights have been issued.
15
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
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.
The powers of the Management Board to issue shares derive from section 4 of the Articles
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.
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Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
Combined Management Report | Our 2016 fiscal year
Corporate Governance
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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
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.
of Association, in conjunction with applicable legal provisions. Further information relating
Authorization to issue bonds with warrants and/or convertible bonds
5,245
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.
to the Company's existing Authorized and Conditional Capital can be found in note 15 to the
Consolidated Financial Statements.
> 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;
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Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
Combined Management Report | Our 2016 fiscal year
Corporate Governance
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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,
12
Shareholdings exceeding 10 percent of the voting rights
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.
P see page 97
P see page 83 ff.
P see page 30
101
Infineon Technologies AG
Combined Management Report | Our 2016 fiscal year
Dividend
ANNUAL REPORT 2016
The equity ratio at the end of the reporting period was 64.4 percent, compared to 67.3 percent
one year earlier.
Provisions for pensions and similar obligations decreased by €49 million as a result of a new
statutory rule, applied for the first time, requiring liabilities to be discounted using the average
market interest rate for the past ten fiscal years. Other provisions decreased overall by
€46 million. Liabilities increased by €659 million over the twelve-month period, mainly owing
to a €623 million increase in liabilities to affiliated companies. The bank loan of €792 million
(US$934 million) taken out in conjunction with the acquisition of International Rectifier was
fully repaid out of proceeds from a US Private Placement (USPP) of notes, thus resulting in
a decrease in liabilities to banks and an increase in other liabilities.
Infineon Technologies AG's financial position compared to one year earlier was influenced
by a number of factors. Within assets, increases were recorded for investments (€940 million)
as well as for cash and cash equivalents and marketable securities (€282 million), reflecting
changes to the investment structure within the Infineon Group. At the same time, receivables
from affiliated companies decreased. The increase in equity (€217 million) was mainly attribu-
table to net income of €407 million recorded in the 2016 fiscal year. Payment of the dividend
for the 2015 fiscal year (€225 million) reduced equity accordingly.
9,487
10,265
Total liabilities and shareholders' equity
INFINEON TECHNOLOGIES
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.
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).
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".
Restrictions on voting rights or the transfer of shares
The Company held 6 million of the above-mentioned issued shares as own shares at the end
of the reporting period (September 30, 2015: 6 million). Own shares held by the Company
on the date of the Annual General Meeting do not carry a vote and are not entitled to participate
in profit.
The share capital of Infineon Technologies AG stood at €2,265,346,218 as of September 30, 2016.
This sum is divided into 1,132,673,109 non-par registered shares, each of which represents
a notional portion of the share capital of €2. Each share carries one vote and gives an equal
right to the profit of the Company based on the profit appropriation resolved by shareholders
at the Annual General Meeting.
Structure of the subscribed capital
Information pursuant to section 289, paragraph 4, and
section 315, paragraph 4, of the German Commercial Code (HGB)
Corporate Governance
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.
102
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".
Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
6,185
P see page 151
637
P see page 59
P see page 78
97
Capital requirements for the 2017 fiscal year | Derivative financial instruments | Rating
Treasury and capital requirements
Combined Management Report | Our 2016 fiscal year
P see page 174
ANNUAL REPORT 2016
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).
Acquisition of Wolfspeed
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.
Proposed dividend
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.
Debt repayment
INFINEON TECHNOLOGIES
Semiconductor manufacturing is very capital-intensive. Infineon's target ratio for future
fiscal years for expected investments as a percentage of revenue over the economic cycle
(for definition see the chapter "Internal Management System") is approximately 13 percent.
Depending on the business situation, Infineon is currently planning investments for the 2017
fiscal year of approximately €950 million (for details see the chapter "Outlook"). Firm investment
commitments as of September 30, 2016 totaled €275 million.
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.
Our gross cash position as of September 30, 2016 amounted to €2,240 million. We also have
access to various stand-alone short- and long-term credit facilities from various financial
institutions totaling €720 million. Free cash flow from continuing operations (for definition:
see the chapter "Internal Management System") will be between €400 and €500 million in
the 2017 fiscal year, since cash provided by operating activities is expected to exceed planned
investments.
The 2016 fiscal year has shown that Infineon enjoys sound health and is pursuing the right
strategy. In recent years, we have created a solid foundation for our business and focused
our attention on applications, technologies and products, which are in greater demand than
ever due to global megatrends. Over a period of many years we have built up, systematically
expanded and successfully deployed to the benefit of our customers the competencies needed.
Based on our strategic "Product to System" approach, we focus our efforts along the entire
value-added chain on the success of our customers. This approach is complemented by other
elements, namely an all-embracing culture of innovation, continuous striving for technological
leadership, and extreme quality awareness. In-house production makes a genuine difference
and facilitates a customized approach to the various markets, ensuring our continued success,
both now and in the future.
Infineon performed well in the 2016 fiscal year, despite a difficult economic environment.
We achieved our growth targets - revenue grew by 12 percent to €6,473 million and Segment
Result improved by 9 percent to €982 million, the latter corresponding to a margin of 15.2 per-
cent. Despite higher investments, free cash flow from continuing operations improved to
€490 million. In the previous fiscal year, adjusted for the three exceptional items (the acquisi-
tion of International Rectifier, the Qimonda partial settlement relating to patents, and the EU
fine), free cash flow amounted to €393 million. Our performance in recent years has also been
a convincing one for the international rating agency, S&P Global Ratings (S&P; formerly Standard
& Poor's Ratings Services), which assigned a first-time long-term credit rating to Infineon in
February 2016. S&P rates Infineon's creditworthiness with a "BBB" (outlook "stable") investment
grade rating. Infineon therefore currently holds the highest S&P rating of any European semi-
conductor manufacturer. We want our shareholders to participate appropriately in the excellent
progress that Infineon is making. Therefore, at the Annual General Meeting to be held on
February 16, 2017, the Management Board and the Supervisory Board will propose to raise
the dividend by 2 cents (10 percent) to €0.22 per share.
98
Overall statement of the
Management Board with respect
to Infineon's financial condition
as of the date of this report
Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
Combined Management Report | Our 2016 fiscal year
Coverage of capital requirements
ANNUAL REPORT 2016
Infineon was assigned a long-term credit rating from the international rating agency S&P for
the first time in February 2016. The solid investment grade rating "BBB" (outlook "stable")
reflects among other things Infineon's adjusted capital structure targets. S&P has confirmed
Infineon's rating following the announcement of the planned acquisition of Wolfspeed.
Rating
We employ the following derivative financial instruments for hedging purposes: forward
foreign currency contracts to reduce exchange rate exposures and commodity swaps to reduce
price risks for expected purchases of gold. We have concluded two Euro/US Dollar Deal
Contingent Forward contracts to hedge part of the exchange rate risks relating to the purchase
price obligation for the planned acquisition of Wolfspeed. We do not use derivative financial
instruments for trading or speculative purposes. Further information regarding derivative
financial instruments and the management of financial risks is provided in notes 21 and 22 to
the Consolidated Financial Statements.
Derivative financial instruments
P see page 162 ff.
Taking into account the financial resources available to Infineon - including internal liquidity
on hand, net cash that can be generated and available credit facilities - we assume that
we will be able to cover our planned capital requirements for the 2017 fiscal year. This also
includes guarantees issued mainly for the rental of buildings (see note 24 to the Consolidated
Financial Statements).
INFINEON TECHNOLOGIES
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.
Investments
P see page 82
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.
Treasury principles and responsibilities
P see page 166 ff.
Infineon is not subject to any statutory or legal capital requirements, nor are any defined in
the Articles of Association.
The balance of these two figures is no longer subject to a separate target (previously: positive
net cash position).
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).
Corporate treasury function
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.
Treasury and capital requirements
Principles and structure of Infineon's treasury
Treasury and capital requirements
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Principles and structure of Infineon's treasury
P see page 154
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.
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).
P see page 60
Based on our forecast for the 2017 fiscal year, we anticipate being able to finance operating
activities out of cash flows provided by operating activities. Further information regarding
fixed contractual obligations as of September 30, 2016 (such as leasing arrangements, fixed
service and supply agreements for commodities, input materials, electricity, gas and other
similar items) is provided in note 24 to the Consolidated Financial Statements.
Financing our operations
Capital requirements for the 2017 fiscal year
P see page 173
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.
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.
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.
Principles and structure of Infineon's treasury | Capital requirements for the 2017 fiscal year
Treasury and capital requirements
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
95
530
96
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.
95
ANNUAL REPORT 2016
571
407
(47)
(38)
618
445
Transfers to retained earnings according to section 58 paragraph 2 AktG
Transfers to retained earnings according to section 58 paragraph 2a AktG
Unappropriated profit at the end of year
(7)
Net income
Income tax
Income before taxes
Other financial result
(52)
Interest result
21
361
(158)
(208)
INFINEON TECHNOLOGIES
2015
2016
Financial assets
Intangible assets, property, plant and equipment
€ in millions
(137)
German Commercial Code (condensed)
Net assets and financial position
100
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Infineon Technologies AG posted a slight increase in revenue and gross profit (2 percent) in
the 2016 fiscal year. The sharp year-on-year drop in the result from investments was mainly
due to income recorded in the previous fiscal year in conjunction with the reversal of an
impairment charge on the investment in Infineon Technologies Holding B.V., which took the
carrying amount of the investment to the maximum level permitted under German Commercial
Code. Infineon Technologies AG reports a net income of €407 million for the 2016 fiscal year.
After transferring a total of €158 million to retained earnings, the unappropriated profit
amounted to €249 million.
226
249
Statement of financial position of Infineon Technologies AG in accordance with the
37
Combined Management Report | Our 2016 fiscal year
Infineon Technologies AG
Result from investments, net
5,243
5,357
Revenue
2015
2016
€ in millions
Cost of goods sold
Statement of income of Infineon Technologies AG in accordance with the
German Commercial Code (condensed)
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
Earnings position
(3,781)
Infineon Technologies AG is the parent company of the Infineon Group and performs the
Group's management and corporate functions. It takes on major Group-wide responsibilities
such as Finance and Accounting, Corporate Compliance, Human Resources, strategic and pro-
duct-oriented R&D activities, and also Corporate and Marketing Communication worldwide.
Furthermore, it manages supply chain processes throughout the Group. Infineon Technologies AG
has its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
Unlike the Consolidated Financial Statements, which are prepared in accordance with Inter-
national Financial Reporting Standards ("IFRS"), Infineon Technologies AG's Separate Financial
Statements are prepared in accordance with the provisions of the German Commercial Code
("HGB"). The complete Separate Financial Statements are published separately.
Gross profit
(3,698)
48
37
Other income (expense), net
(400)
General and administrative expenses
(153)
(303)
Selling expenses
(724)
(742)
Research and development expenses
(181)
1,545
1,576
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Corporate Governance
Compensation report
109
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).
INFINEON TECHNOLOGIES
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 (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
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.
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
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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.
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.
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.
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.
Dominik Asam
Chief Financial Officer
INFINEON TECHNOLOGIES
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.
1,075,000
2016
2015
2016
2015
2016
Member of the
Management Board
Dr. Helmut Gassel³
1,075,000
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
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.
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.
Combined Management Report | Our 2016 fiscal year
(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.
@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
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
The change-of-control clauses agreed with the members of the Management Board corres-
pond to the recommendation made in section 4.2.3, paragraph 5, of the German Corporate
Governance Code. Such clauses are intended to give members of the Management Board
security if a change-of-control situation occurs, and to preserve their independence in the
event of a takeover bid.
If a member of the Management Board leaves his or her position in connection with a defined
change of control (namely, where a party holds at least 50 percent of the voting rights in
Infineon Technologies AG), that member is currently entitled to continued payment of the
relevant annual remuneration for the entire remaining contract term. In accordance with a
special contract termination right granted to members of the Management Board, the period
of continued payment is capped at a maximum of 36 months in the event that the member
resigns, or at a minimum of 24 months and a maximum of 36 months in the event that the
member is removed from office or dismissed by Infineon Technologies AG. Further details are
contained in the Compensation Report.
Various financing contracts with lending banks and capital market creditors (see note 14 to
the Consolidated Financial Statements) contain defined change-of-control clauses which give
creditors the right to call for early repayment. These clauses reflect standard market practice.
Furthermore, certain patent cross-licensing agreements, development agreements, subsidy
agreements and approvals, supply contracts, joint venture agreements and license agree-
ments contain customary change-of-control clauses, according to which a change in control of
Infineon Technologies AG triggers the right of the other party at its sole discretion to terminate
or to continue the agreement as well as other rights which may, under certain circumstances,
be unfavorable for Infineon.
Significant agreements in the event of a change of control
The use of own shares, acquired through derivatives, is governed by the same rules as
applicable for the direct acquisition of own shares.
If own shares are acquired using derivatives in accordance with the requirements stipulated in
the authorization, any right of the shareholders to conclude such derivative transactions with
the Company will be excluded in analogous application of section 186, paragraph 3, sentence 4,
AktG. Similarly, the shareholders have no right to conclude derivative transactions with the
Company insofar as arrangements for the conclusion of derivative transactions include a pre-
ferred offer for the conclusion of derivative transactions concerning small volumes of shares.
Shareholders have a right to sell their Infineon shares in this connection only insofar as the
Company is required to accept the shares under the derivative transactions. No other right to
sell shares will apply in this connection.
According to a resolution passed by the Annual General Meeting on February 28, 2013, the
acquisition of Infineon Technologies AG shares may also be effected using equity derivatives.
The total number of shares that can be acquired using derivatives may not exceed 5 percent
of the Company's share capital, determined either at the time of this authorization becoming
effective or at the time of its exercise through the use of the derivatives. The shares acquired
through the exercise of this authorization are to be counted toward the acquisition threshold
for the shares acquired in accordance with the authorization to acquire own shares as described
above. The authorization stipulates other restrictions when derivatives are deployed, including
their execution, term, servicing and acquisition price.
P see page 106
P see page 151
105
Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
Corporate Governance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
750,000
corporate-governance-report
(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.
Corporate Governance Report
@www.infineon.com/declaration-on-
The short-term incentive (STI) is intended to reward performance over the preceding fiscal
year, reflecting Infineon's recent progress. Assuming a 100 percent target achievement of the
variable compensation, the STI constitutes approximately 20 percent of target annual income.
It is set by the Supervisory Board in a two-phase process:
> Variable (performance-related) compensation: The variable compensation comprises three
components: an annual bonus (short-term incentive), a multiple-year bonus (mid-term
incentive) and a long-term variable compensation component (long-term incentive).
> Fixed compensation: The fixed compensation comprises a contractual basic annual salary
that has no link to performance and is paid in twelve equal monthly installments.
All members of the Management Board receive as compensation for their service an annual
income which based on target achievement of 100 percent - comprises approximately 45 per-
cent fixed compensation and approximately 55 percent variable compensation components:
There have been no changes in the Management Board compensation system in the 2016
fiscal year compared to the 2015 fiscal year.
Components of the Management Board compensation system
107
P see page 59
Compensation report
Corporate Governance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
The periodic review of the Management Board compensation system was performed by
an external independent compensation expert during the 2016 fiscal year. Regardless of
the existence of some scope for maneuverability, the expert concluded that the Company's
compensation system complies with the requirements of the German Stock Corporation Act
(Aktiengesetz) and the DCGK and is in line with current market conditions (for details of the
review, see "Review of the Management Board compensation system and individual contracts"
in this chapter).
The Management Board compensation system - similar to the compensation paid to the
individual members of the Management Board – is defined and regularly reviewed by the full
Supervisory Board on the basis of proposals from the Executive Committee. In accordance
with applicable legal requirements and the recommendations of the DCGK, the compensation
paid to the members of the Management Board is intended to reflect the typical level and
structure of management board compensation at comparable companies in Germany and
elsewhere, as well as Infineon's economic position and future prospects. The duties, responsi-
bilities and performance of each member of the Management Board are also to be considered,
as is Infineon's wider pay structure. This includes considering Management Board compen-
sation in relation to the compensation of senior management and of the workforce as a whole,
including changes in the level of compensation over time. The stated objective is that the
compensation structure should be designed in such a way that it promotes sustainable busi-
ness development, with a cap in place in the event of exceptional developments. Infineon
aims to set compensation at a level that is competitive both nationally and internationally,
so as to inspire and reward dedication and success in a dynamic environment.
Compensation system
Management Board compensation
This Compensation report, which forms part of the Management Report, explains the
principles applied in determining compensation for the Management Board and Supervisory
Board of Infineon Technologies AG and the level of remuneration paid to the individual
members of the Management Board and Supervisory Board in accordance with the applicable
legal requirements and the recommendations of the German Corporate Governance Code in
the version dated May 5, 2015 (Deutscher Corporate Governance Kodex - "DCGK"). Infineon
believes that transparent and understandable reporting of Management Board and Supervisory
Board compensation represents a fundamental element of good corporate governance.
Compensation report
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
The Corporate Governance Report is publicly available at www.infineon.com/corporate-
governance-report.
35,724
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.
41,185
1,013,333
1,013,333
2015
2016
Total
229,167
2015
(Member of the Management Board)
160,607
229,167
229,167
667,619
1,013,333
229,167
Arunjai Mittal 4
2015
(Member of the Management Board)
2016
Jochen Hanebeck³
2015
(Member of the Management Board)
2016
Dr. Helmut Gassel 2
2016
217,610
197,925
82,174
Other awards and benefits
The Supervisory Board did not award any special bonuses to members of the Management
Board during the 2016 fiscal year.
Special bonuses
Further details regarding the performance shares granted on October 1, 2016 for the 2017 fiscal
year to the members of the Management Board are provided in note 17 to the Consolidated
Financial Statements.
P see page 116
P see page 155
113
Compensation report
Corporate Governance
263,540
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. The total cost of share-based
compensation for Mr. Mittal relates to his period as member of the Management Board. We refer to the performance shares allocated to Mr. Mittal during the 2016 fiscal year in
"Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)" in this chapter. The cost of these performance shares
amount to €164,136.
3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
2 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
Strategy Development, Mergers & Acquisitions and Intellectual Property.
1 When exercising stock options members of the Management Board may only make gains up to a pre-determined amount (cap). Where the cap has been reached in the fiscal year
stock options are forfeited.
729,821
120,000
697,528
120,000
ANNUAL REPORT 2016
350,952
350,952
2015
Number
Number
Number
Fiscal year
Member of the Management Board
Total
expense for
share-based
compensation
Exercisable
stock options
outstanding
at the end of
the fiscal year
Stock options
forfeited in
the fiscal year
Stock options
exercised in
the fiscal year
Number
of the
fiscal year
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
Stock options
outstanding at
the end
Number
in €
Dr. Reinhard Ploss
(Chief Financial Officer)
213,678
52,260
167,740
130,952
350,952
2016
Dominik Asam
314,286
120,000
433,214
433,214
2015
(Chief Executive Officer)
323,243
35,909
29,914
95,800
307,500
433,214
2016
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
164,024
912,500
122,183
228,277
1,188,277
219,796
2,518,982
2,315,091
Total compensation (DCGK)
Pension expense
1,204,367
Total variable compensation
153,225
244,367
Long Term Incentive (LTI)
680,000
340,000
960,000
340,000
480,000
480,000
2016-2018 tranche
2015-2017 tranche
Performance Share Plan¹
82,012
612,500
122,183
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.
P see page 111
4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his employment ended with effect from September 30, 2016. With relation to his pension expense,
in accordance with his contract of employment Mr. Mittal is treated as if he had remained a member of the Management Board until September 30, 2016.
3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations. Due to current actuarial assumptions past service costs
for Mr. Hanebeck amounting to €2,326,793 have been recorded in the 2016 fiscal year in accordance with IAS 19.
2 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
Strategy Development, Mergers & Acquisitions and Intellectual Property. Due to current actuarial assumptions past service costs for Dr. Gassel amounting to €1,981,124 have been
recorded in the 2016 fiscal year in accordance with IAS 19.
1 The figures of the active members of the Management Board in the 2016 fiscal year are based on a fair market value per performance share amounting to €7.07 (2015: €5.31),
which was calculated using a Monte-Carlo simulation.
3,204,746
1,144,258
1,897,314
1,906,270
4,183,224
1,232,907
271,061
271,061
272,721
271,061
2,142,500
82,012
833,225
844,024
3,072,500
850,000
272,512
340,000
1,200,000
2016 (max.)
2015 2016 (min.)
Dominik Asam
Chief Financial Officer
2016
2016 (max.)
2015 2016 (min.)
2016
Dr. Reinhard Ploss
Chief Executive Officer
Compensation granted to members of the Management Board in accordance with the DCGK
(total compensation and compensation components) as well as the minimum and maximum
values that can be achieved are shown in the following table:
1,075,000
114
Fixed compensation
Basic annual salary
in €
Compensation report
Corporate Governance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
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.
Fringe benefits
1,075,000
1,075,000
1,075,000
Mid Term Incentive (MTI)
Multi-year variable compensation
480,000
480,000
Single-year variable compensation (STI)
Variable compensation
Total fixed compensation
791,185
791,185
791,368
41,185
41,185
750,000
750,000
750,000
41,368
41,185
791,185
35,724
1,110,724
35,724
1,110,724
35,909
1,110,909
35,724
1,110,724
750,000
340,000
408,391
120,000
214,748
114,046
2,730,000
120,282
2,850,282
750,000
29,445
779,445
562,500
26,962
589,462
2015
57,764
2015
Total
2016
2015
2,575,000
106,722
2,681,722
Arunjai Mittal 4
Member of the
Management Board
7,697
171,250
2016
Member of the
Management Board
Jochen Hanebeck³
Fringe benefits
Basic annual salary
Fixed compensation
in €
178,947
Total fixed compensation
Variable compensation
Single-year variable compensation (STI)
670,094
382,414
196,407
112,087
598,462
691,534
177,921
201,537
598,462
177,921
2016-2018 tranche
2015-2017 tranche
2014-2016 tranche
2013-2015 tranche
Mid Term Incentive (MTI)1
Multi-year variable compensation
2,010,280
1,299,546
589,220
336,260
76,153
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.
25,384
2015
101,537
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
177,921
336,260
474,720
Single-year variable compensation (STI)
Variable compensation
Total fixed compensation
171,250
8,714
179,964
750,000
41,368
791,368
791,185
1,110,909
1,110,724
831,840
288,460
242,620
201,537
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
Total variable compensation
Performance Share Plan²
Long Term Incentive (LTI)
25,384
112,087
158,240
196,407
112,087
277,280
158,240
177,921
281,501
112,087
2016
Long Term Incentive (LTI)
2015
(Chief Financial Officer)
85,288
164,024
23,200
62,088
2016
Dominik Asam
90,572
33,232
228,277
47,582
2015
(Chief Executive Officer)
125,136
244,367
34,564
90,572
2016
Dr. Reinhard Ploss
42,990
28,856
153,225
62,088
2015
2016
Total
62,088
153,225
28,856
33,232
2015
(Member of the Management Board)
62,088
62,088
2016
Arunjai Mittal³
2015
(Member of the Management Board)
433,182
Jochen Hanebeck²
2015
(Member of the Management Board)
2016
Dr. Helmut Gassel¹
grant date
in €
Member of the Management Board
2016
Fair value
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.
P see page 106 ff.
7,093,747
534,727
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
Number
4,412,025
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.
408,391
3,215,067
6,065,349
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.
Number
Members of the Management Board did not receive any loans from Infineon, either in the 2016
or 2015 fiscal years.
Number
Fiscal year
of the fiscal year
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
at the end
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.
As described in the section "Management Board compensation", the contractually agreed
LTI is granted to members of the Management Board in the form of "performance shares".
The average price of the Infineon share relevant for the number of performance shares granted
for the 2016 fiscal year was €10.56 (2015: €8.49).
Share-based compensation
The Company also maintains accident insurance policies for members of the Board.
Fringe benefits
112
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.
7
36
102
Income from continuing operations
741
2
Income from discontinued operations, net of income taxes
4
12
Net income
Income tax
743
622
520
Financial income
Income from continuing operations before income taxes
4
3
Gain from investments accounted for using the equity method
(49)
(67)
Financial expenses
10
6
555
763
Operating income
(58)
634
705
Attributable to:
8
Shareholders of Infineon Technologies AG
(23)
1 The calculation of earnings per share is based on unrounded figures.
0.56
0.66
8
0.01
8
0.55
0.66
Diluted earnings per share (in euro) from continuing operations
Diluted earnings per share (in euro) from discontinued operations
Diluted earnings per share (in euro)
0.56
0.66
8
00
0.01
8
0.55
0.66
8
632
744
2
(1)
Diluted earnings per share (in euro) attributable to
shareholders of Infineon Technologies AG:1
Basic earnings per share (in euro)
Basic earnings per share (in euro) from discontinued operations
Basic earnings per share (in euro) from continuing operations
shareholders of Infineon Technologies AG:1
Basic earnings per share (in euro) attributable to
Non-controlling interests
Other operating expenses
Dr. Reinhard Ploss
17
90,000
2016
Annette Engelfried 2
54,333
8,000
13,000
33,333
2015
104,000
14,000
90,000
2016
Dr. Herbert Diess2
85,333
14,000
25,000
13,000
33,333
2015
150,000
30,000
30,000
90,000
2016
Johann Dechant 2
45,208
10,000
15,000
20,000
125,000
2015
15,000
90,000
2016
Gerhard Hobbach
100,500
16,000
15,000
19,500
50,000
2015
127,000
22,000
15,000
6,250
90,000
Peter Gruber
39,208
4,000
6,250
8,125
20,833
2016
Reinhard Gottinger³
68,333
12,000
10,000
13,000
33,333
2016
24,000
8,125
2015
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.
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:
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.
Compensation structure
Supervisory Board compensation
120
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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).
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.
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.
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
Corporate Governance
Combined Management Report | Our 2016 fiscal year
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Corporate Governance
2016
Wigand Cramer³
54,333
8,000
13,000
33,333
2015
116,417
16,000
10,417
90,000
2016
Peter Bauer²
20,833
sation
Total
Meeting
attendance
fees
Allowance
for specific
functions
Variable
compen-
sation
Fixed
compen-
sation
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):
Compensation of the Supervisory Board for the 2016 fiscal year
121
Compensation report
compen-
129,000
2015
50,000
15,000
19,500
50,000
2015
127,000
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
2016
Prof. Dr. Doris
54,583
10,000
15,625
8,125
16,000
100,500
Kerstin Schulzendorf²
2016
13,000
33,333
2015
106,000
16,000
90,000
2016
Diana Vitale 2
112,500
18,000
25,000
19,500
50,000
20,833
2015
24,000
25,000
90,000
2016
Dr. Eckart Sünner
54,333
8,000
13,000
33,333
2015
100,000
10,000
90,000
139,000
2015
2016
Gerd Schmidt³
2016
Dr. Susanne Lachenmann 2
81,500
12,000
19,500
50,000
2015
102,000
12,000
90,000
2016
Prof. Dr. Renate Köcher
104,500
90,000
20,000
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
15,000
ANNUAL REPORT 2016
15,000
127,000
83,500
14,000
19,500
50,000
2015
104,000
14,000
90,000
2016
Dr. Manfred Puffer
147,500
28,000
50,000
22,000
19,500
2015
214,000
34,000
90,000
90,000
2016
Wolfgang Mayrhuber
66,333
10,000
10,000
13,000
33,333
2015
50,000
INFINEON TECHNOLOGIES
The service contracts of members of the Management Board include a change of control
clause, which stipulates the terms that apply when the activities of a member of the Manage-
ment Board are terminated in the event of a significant change in Infineon's ownership struc-
ture. A change of control for the purposes of this clause occurs when a third party, individually
or together with another party, acquires at least 50 percent of the voting rights in Infineon
Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover
Act (Wertpapiererwerbs- und Übernahmegesetz – “WpÜG”). Members of the Management
Board have the right to resign and terminate their service contracts within 12 months of the
announcement of such a change of control and any who choose to do so are entitled to
continued payment of their annual remuneration up to the end of the originally agreed dura-
tion of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes
Early termination of service contracts
2016
2015
2016
2015
2016
2015
2016
Arunjai Mittal³
Member of the
Management Board
Member of the
Management Board
Jochen Hanebeck²
Dr. Helmut Gassel¹
Member of the
Management Board
Dominik Asam
Chief Financial Officer
Dr. Reinhard Ploss
Chief Executive Officer
116
The total compensation allocated to the individual members of the Management Board
for the 2016 fiscal year in accordance with DCGK - analyzed by component - is shown in the
following table:
in €
Compensation report
Corporate Governance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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.
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")).
year
Allocation amount in accordance with DCGK
1,530,000
241,677 241,677
831,139 2,361,139
833,225
241,677 241,183
1,511,139 1,853,853
2015
2016
2015
Fixed compensation
336,260
76,153
76,153
336,260 589,220
831,840
474,720
compensation (STI)
Single-year variable
Variable compensation
779,445
589,462
178,947
29,445
680,000
26,962
8,714
179,964
750,000
562,500
171,250
171,250
750,000
41,368
791,368
750,000
41,185
791,185
1,075,000
35,909
1,110,909
1,110,724
Total fixed compensation
35,724
1,075,000
Basic annual salary
Fringe benefits
7,697
654,500
29,321
862,768
29,321
208,268
308,000
29,321
516,268
179,964
179,964
8,714
171,250
171,250
171,250
8,714
8,714
171,250
2016 (max.)
2016 (min.)
2015
115
Arunjai Mittal 4
Member of the Management Board
179,964
2016
2016 (min.)
2015
Member of the Management Board
Jochen Hanebeck³
2016
2016 (min.) 2016 (max.)
2015
Member of the Management Board
Dr. Helmut Gassel²
2016
Combined Management Report | Our 2016 fiscal year
Corporate Governance
Compensation report
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
2016 (max.)
589,220
7,697
178,947
171,250
7,697
178,947
654,500
25,458
859,922
25,458
205,422
513,422
308,000
25,458
153,225
680,000
340,000
462,000
340,000
850,000
340,000
340,000
192,500
171,250
7,697
178,947
231,000
77,000
192,500
231,000
77,000
589,462
589,462
26,962
26,962
562,500
562,500
750,000
29,445
779,445
26,962
589,462
562,500
462,000
Total
Multi-year variable
Mid Term Incentive (MTI)
2,780,620
51,375
2016
Dr. Helmut Gassel¹
272,721
2,163,812
225,000
2015
(Chief Financial Officer)
271,061
2,558,440
225,000
2016
Dominik Asam
219,796
5,634,266
205,000
2015
(Chief Executive Officer)
6,832,791
210,000
2016
fiscal year
Original
service cost
(earned in the
current year)
Present value
of pension
and benefit
entitlement
for the
relevant
Benefit
amounts
determined
25,458
(Member of the Management Board)
2015
Jochen Hanebeck²
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
450,000
205,000
2015
567,517
18,223,665
241,183
3,322,550
241,677
Pension
entitlements
(annual) as
of beginning
of pension
period
2,511,117
210,000
2016
Total
2015
(Member of the Management Board)
2016
Arunjai Mittal³
2015
(Member of the Management Board)
29,321
3,540,697
51,375
2016
225,000
225,000
552,750
Management Board
Member of the
Fiscal year
241,677 241,183
994,240
844,052
76,153
29,321
284,421
281,575
2,058,329
25,458
272,721
76,153
994,240
1,384,140 1,806,552
219,796 271,061
2,868,798
Total compensation (DCGK) 2,841,524 2,714,845
Pension expense
1,675,191 2,014,868
1,730,800
Total variable
962,500
550,000
Stock Option Plan 2010
Performance Share Plan
Long Term Incentive (LTI)
507,792
405,020
507,792
706,080
Tranche 2014-2016
405,020
552,300
Tranche 2013-2015
compensation
compensation
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.
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.
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. 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).
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.
P see page 119
118
Compensation report
Combined Management Report | Our 2016 fiscal year
Corporate Governance
ANNUAL REPORT 2016
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.
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.
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:
In accordance with the compensation system in place since 2010, Mr. Asam, Dr. Gassel,
Mr. Hanebeck and Mr. Mittal – all of whom took up office after the new system had been
approved - have each received a defined contribution pension commitment (rather than
a defined benefit pension commitment based on the number of years of service), which is
essentially identical to the Infineon pension plan applicable to all employees. The Company
has accordingly set up a personal pension account (basic account) for each beneficiary and
makes annual pension contributions to it. The Company adds annual interest to the balance
in the basic account using the highest statutory interest rates valid for the insurance industry
(guaranteed interest rates) until disbursement of the pension begins and may also award
surplus credits. Ninety-five percent of any income earned over and above the guaranteed
interest rate is credited to the pension account, either at the date on which disbursement of
the pension begins or, at the latest, when the beneficiary reaches the age of 60. The balance
of the basic account when disbursement of the pension begins (due to age, invalidity or
death) - increased by an adjusting amount in the event of invalidity or death - constitutes
the retirement benefit entitlement and is paid out to the member of the Management Board
or his or her surviving dependents in twelve annual installments, or, if so requested by the
member of the Management Board, in eight annual installments, as a lump sum or as a life-
long pension.
117
Compensation report
Combined Management Report | Our 2016 fiscal year
Corporate Governance
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
The members of the Management Board who were in their positions prior to the introduction
of the new compensation system in 2010 are contractually entitled to a defined benefit pension
payment; these entitlements were not affected by the new compensation system. In the 2016
fiscal year, this only relates to Dr. Ploss, who, under these arrangements, has an entitlement to
an annual retirement benefit of €210,000. This entitlement is already vested, both contractually
and under the applicable statutory provisions (for details of the review of pension entitlements
of Dr. Ploss adopted by the Supervisory Board, see the end of this section).
termination
Allowances and pension entitlements in the 2016 fiscal year
upon
Commitments to members of the Management Board
of their Board activities
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.
P see page 111
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.
2016
2015
28
124 Consolidated Statement of Operations
Financial Statements
123 Consolidated
Content
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Jochen Hanebeck
Dr. Helmut Gassel
Dominik Asam
Dr. Reinhard Ploss
Management Board
Neubiberg, November 22, 2016
The company signed a contract on August 25, 2015 with the Technische Universität München
relating to the provision of research and development services, to be performed primarily
within the remit of the Chair of Professor Schmitt-Landsiedel. The Supervisory Board therefore
approved the contract as a precautionary measure on August 4, 2015. In accordance with this
contract the first rate of €50,000 was paid to the Technische Universität München in the 2016
fiscal year.
Other matters
Members of the Supervisory Board did not receive any loans from Infineon in either the 2016
or 2015 fiscal years.
122
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Corporate Governance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
2 For members of the Supervisory Board who joined since February 12, 2015, the compensation was awarded on a pro-rata basis.
3 For members of the Supervisory Board serving up until February 12, 2015, the compensation was awarded on a pro-rata basis.
1 Based on earnings per share (undiluted) from continuing operations of €0.55 in the 2015 fiscal year. The Supervisory Board
compensation was restructured with effect from October 1, 2015 from which date a variable compensation component
was no longer awarded.
54,333
2,032,084
248,000 1,517,830
233,125
290,875
8,000
330,000
262,084
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
(778)
(791)
(717)
(770)
2,080
2,330
(3,715)
(4,143)
5,795
6,473
Other operating income
Selling, general and administrative expenses
Research and development expenses
1,440,000
745,830
Gross profit
Revenue
2015
2016
Notes
124
€ in millions
for the year ended September 30, 2016 and 2015
Consolidated Statement of Operations
Consolidated Statement of Operations
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
123
Cost of goods sold
2015
126 Consolidated Statement of Financial Position
Amount
(846)
14
Repayments of long-term debt
2,398
824
14
Proceeds from issuance of long-term debt
(1)
(831)
19
2
(8)
14
Net change in short-term debt
(2,593)
(1,098)
Net cash used in investing activities from discontinued operations
Net cash used in investing activities
(2,593)
Net change in related party financial receivables and payables
Change in cash deposited as collateral
1
Proceeds from issuance of ordinary shares
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)
15
Dividend payments
(15)
3
Cash outflows due to changes of non-controlling interests
11
26
15
(1,098)
Net cash used in investing activities from continuing operations
57
14
817
1,291
Net cash provided by operating activities
(140)
(22)
Net cash used in operating activities from discontinued operations
957
1,313
Net cash provided by operating activities from continuing operations
(93)
(126)
7
Income tax paid
(14)
(26)
Interest paid
8
6
Interest received
Purchases of financial investments
Cash and cash equivalents at beginning of period
Proceeds from sales of financial investments
9
Proceeds from sales of property, plant and equipment and other assets
(646)
(716)
12
(139)
(110)
12
(1,869)
(11)
322
Purchases of property, plant and equipment
Purchases of intangible assets and other assets
Acquisitions of businesses, net of cash acquired
(14)
1,496
3,855
9
(1,478)
(4,130)
Purchases of other equity investments
Cash and cash equivalents at end of period
3
26
673
28
(12)
(413)
(36)
1,127,739,230
2,255
5,414
(3,502)
632
(27)
605
(202)
1,532,251
4
9
6
Other changes in equity
(14)
Balance as of September 30, 2015
1,058
1,129,271,481
625
INFINEON TECHNOLOGIES
Shares
deficit
Accumulated
Additional
paid-in capital
Ordinary shares issued
Note
Issuance of ordinary shares:
Exercise of stock options
Share-based compensation
Put options on own shares
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 October 1, 2014
except for number of shares.
€ in millions,
for the year ended September 30, 2016 and 2015
Impairment-only approach
128
Consolidated Statement of Changes in Equity
Consolidated Financial Statements
ANNUAL REPORT 2016
673
15
2,259
(2,897)
5,016
(2,312)
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
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
Non-
Total equity
controlling
interests
2,265
5,213
1,132,673,109
9
Balance as of October 1, 2015
Net income
1,129,271,481
2,259
5,213
(2,897)
744
Other comprehensive income (loss)
for the period, net of tax
(159)
Total comprehensive income (loss)
for the period, net of tax
Dividends
585
(225)
(95)
Issuance of ordinary shares:
Exercise of stock options
3,401,628
6
19
Share-based compensation
Balance as of September 30, 2016
35
(60)
(48)
2,093
2,119
12
22
Goodwill and other intangible assets
Property, plant and equipment
4,115
4,492
Total current assets
229
281
2
12
6
1,129
1,191
11
742
774
10
1,340
1,615
9
673
625
Other current assets
7
1,656
1,738
Investments accounted for using the equity method
802
857
Trade payables
33
17
14
Short-term debt and current maturities of long-term debt
LIABILITIES AND EQUITY
8,741
9,087
Total assets
4,626
4,595
Total non-current assets
155
162
604
623
7
3
3
7
Other non-current assets
Deferred tax assets
Non-current income tax receivable
33
32
Income tax receivable
Inventories
Trade receivables
Financial investments
Net change in fair value of available-for-sale financial assets
(37)
(6)
Net change in fair value of hedging instruments
100
(28)
(27)
(159)
(27)
(159)
634
743
Total items not expected to be reclassified to profit or loss in the future
Currency translation effects
Actuarial losses on pension plans and similar commitments
Net income
15
2015
2016
Notes
125
€ in millions
for the year ended September 30, 2016 and 2015
Consolidated Statement of
Comprehensive Income
Consolidated Statement of Comprehensive Income
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
(1)
Short-term provisions
(1)
(35)
Cash and cash equivalents
ASSETS
Septem-
ber 30, 2015
Septem-
ber 30, 2016
Notes
€ in millions
as of September 30, 2016 and 2015
Consolidated Statement of Financial Position
126
Consolidated Statement of Financial Position
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
667
2
550
(1)
Shareholders of Infineon Technologies AG
Non-controlling interests
Attributable to:
Total comprehensive income for the year, net of tax
669
549
35
(194)
Other comprehensive income (loss) for the year, net of tax
62
Total items expected to be reclassified to profit or loss in the future
Change in other assets and liabilities
13
37
7
Income tax
760
833
12
Depreciation and amortization
Adjustments to reconcile net income to net cash provided by operating activities:
(12)
(2)
634
743
18
(36)
Minus: income from discontinued operations, net of income taxes
2015
2016
Notes
127
€ in millions
for the year ended September 30, 2016 and 2015
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
8,741
Net income
(102)
Net interest result
58
(72)
13
Change in provisions
50
57
Change in trade payables
(133)
(66)
11
(65)
(25)
10
6
31
16
12
Change in inventories
Change in trade receivables
Other non-cash result
Impairment charges
1
2
Dividends received from joint ventures
(7)
5
Gains on disposals of property, plant and equipment
42
9,087
4,665
5,023
1
Other non-current liabilities
72
76
13
Long-term provisions
147
10
7
Deferred tax liabilities
426
604
20
Pension plans and similar commitments
1,760
1,752
14
Long-term debt
1,585
1,530
Total current liabilities
225
209
Other current liabilities
123
120
402
327
92
Income tax payable
86
Total liabilities
4,664
5,023
(37)
(37)
126
91
(2,897)
(2,312)
5,213
5,016
2,259
2,265
Total liabilities and equity
Total equity
Non-controlling interests
Equity attributable to shareholders of Infineon Technologies AG
Own shares at cost
Other reserves
Accumulated deficit
Additional paid-in capital
Ordinary share capital
15
4,076
4,064
2,491
2,534
Shareholders' equity:
Total non-current liabilities
(37)
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
4,154
25
(225)
(225)
549
(1)
550
(194)
(194)
743
(1)
744
4,665
1
4,664
4,665
1
4,664
(19)
(5)
(14)
(Amortized) Acquisition or production cost
Impairment-only approach
Fair value/amortized cost
Fair value directly through equity
Fair value through profit or loss
Fair value directly through equity
(Amortized) Cost
Equity and liabilities
9
Trade payables
98
(5)
"Employee benefits" for defined benefit plans
(Amendments to IAS 19)
IAS 19
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 September 30, 2016:
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
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
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
5,023
9
25
5,023
(37)
(2)
Debt
Provisions
Pensions
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. At Infineon the balance sheet items "Cash and cash equivalents", "Financial investments",
"Trade receivables" and current and non-current "Other assets" all contain financial assets which are classified in
the category "Loans and receivables".
Loans and receivables are measured on initial recognition at their fair value plus incidental acquisition costs.
Subsequently, they are measured at amortized cost using the effective interest method. Loans and receivables are
tested for impairment. They are considered to be impaired when there is objective evidence that Infineon will not
receive all amounts contractually due at the relevant due date. Objective evidence that indicates that impairment
should be recorded would include, for example, known financial difficulties or the insolvency of a debtor. The
impairment is recorded as an expense in profit or loss (in a separate allowance account). When a payment default
becomes certain, such loans and receivables are considered to be uncollectible and derecognized along with the
previously recognized allowance.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
or are not allocated to any of the other categories (see above).
Upon acquisition, available-for-sale financial assets are measured at fair value taking into account transaction
costs. Subsequently they are measured at their fair value at the end of the relevant reporting period. Transaction
costs relating to the acquisition of available-for-sale financial assets with a definite term and fixed or determinable
payments are capitalized and recognized in the Consolidated Statement of Operations using the effective interest
method. Changes in the fair value of available-for-sale financial assets are recognized directly in equity. If the fair
value is permanently or significantly lower than the amortized cost, then an impairment loss is recognized through
profit or loss.
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.
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.
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.
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.
Other provisions
Other liabilities (current and non-current):
Other financial liabilities:
Measured at fair value through profit or loss
Designated hedging instruments
Other financial liabilities
Remaining other liabilities
Put options on own shares
Own shares
Fair value/amortized cost
Fair value/amortized cost
Projected unit credit method
Expected settlement amount
Fair value through profit or loss
Annual IFRS improvement cycle 2010-2012
Fair value directly through equity
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.
Fair value/amortized cost
Annual IFRS improvement cycle 2011-2013
Effective date
Impact on Infineon
1.5960
1.5270
4.5685
4.9410
4.6434
136.4560
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
1.5266
4.2186
1.5429
1.1225
1.1170
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
Other financial assets:
Other assets (current and non-current):
with indefinite useful life
with definite useful life
ANNUAL REPORT 2016
Intangible assets (except goodwill):
Assets classified as held for sale
Inventories
Trade receivables
Financial investments
Cash and cash equivalents
Assets
Measurement principle
Balance sheet item
The following table summarizes the principal measurement bases used in the preparation of the Consolidated
Financial Statements:
Recognition and measurement principles
1.1432
1.1065
Property, plant and equipment
Goodwill
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.
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.
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
INFINEON TECHNOLOGIES
The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from today's
perspective. They have not been applied in the Consolidated Financial Statements as of September 30, 2016 since
they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended Standards
Financial reporting rules issued not yet applied
immaterial
immaterial
immaterial
February 1, 2015
February 1, 2015
January 1, 2015
immaterial
IAS 16/
IAS 38
IFRS 9
Clarification of acceptable methods of depreciation and amortization
(Amendments to IAS 16 and IAS 38)
January 1, 2016
Functional currency, reporting currency and foreign currency translation
A list of subsidiaries of Infineon Technologies AG is provided in note 26.
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
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.
January 1, 2019
January 1, 2016
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
none
January 1, 2018
Financial instruments
Annual IFRS improvement cycle 2012-2014
(40)
Consolidated Statement of Changes in Equity
2
(6)
(28)
(6)
35
35
667
669
(1)
(202)
13
13
6
6
40
40
40
(202)
(28)
E
1
4
632
2
4,158
634
100
(37)
(34)
100
(4)
(4)
126
(1)
1
(37)
126
(1)
(34)
1,734
Europe
1,670
313
269
2,047
1,939
The average number of employees by geographic region is as follows for the 2016 and 2015 fiscal years:
Therein: Germany
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.
Therein: China
Japan
Americas
Therein: USA
Total
2016
2015
2015
Asia-Pacific (without Japan)
2016
The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
expenses for purchased services, materials and personnel.
2,707
14,971
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:
€ in millions
Wages and salaries
Social insurance levies, pensions and similar obligations
Total (continuing and discontinued operations)
2016
2015
1,412
1,263
1,295
1,206
2,469
14,168
Income tax from continuing operations for the fiscal years ended September 30, 2016 and 2015, is as follows:
9,258
(116)
(151)
Deferred tax benefit
Income tax
152
253
36
102
Current tax expenses include an income tax benefit relating to previous fiscal years of €10 million.
A deferred tax benefit of €87 million results from the creation and reversal of temporary differences.
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.
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 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:
€ in millions
2016
2015
Expected income tax expense
Current tax expense
€ in millions
2015
2016
16,738
1,998
1,890
172
167
3,705
2,898
2,092
9,727
17,148
1,753
33,971
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
7 Income tax
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
144
6 Cost of materials and purchased services as well as personnel expense
35,996
For the compliance with the requirements attached to the grants and subsidies received and potential repayment
requirements in case of nonfulfillment, see note 24.
5 Grants and subsidies
110
taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
Statements on November 22, 2016.
All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
> valuation of pension plans (see "Pensions and similar obligations" and note 20).
> recognition and valuation of provisions (see "Provisions" and notes 13 and 23), and
> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
long-lived assets" and note 12),
> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 7),
> valuation of inventory (see "Inventories" and note 11),
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
Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
Statement of Operations (see note 5).
Grants for investments include both tax-free investment grants and taxable grants for investments in property,
plant and equipment. Grants are recognized when it is reasonably assured that Infineon will comply with the
conditions attached to the grant, and it is reasonably assured that the grant will be received. Tax-free investment
grants are deferred and recognized over the remaining useful life of the subsidized asset. Taxable grants are
deducted from the purchase and production cost of the related asset and thereby reduce depreciation and amorti-
zation expense in future periods.
Grants
Costs of research activities undertaken in order to gain new scientific or technical knowledge are expensed as incurred.
Costs for development activities, the results of which lead to a plan or design for the production of new or sub-
stantially improved products or process improvements, are capitalized if the development costs can be measured
reliably, the product or process is technically and commercially feasible, future economic benefits are probable
and Infineon intends, and has sufficient resources, to complete development and use or sell the asset. The costs
capitalized include the cost of materials, direct labor and directly attributable general overhead expense that
serves to prepare the asset for use. Such capitalized costs are presented as internally generated intangible assets
within "Goodwill and other intangible assets" (see note 12). Development costs, which do not fulfill the criteria
for capitalization, are expensed as incurred. Capitalized development costs are stated at cost less accumulated
amortization and impairment charges. After the completion of the development phase and following the ramp-up
of production, internally generated intangible assets are generally amortized as part of cost of goods sold over
a period of three to five years.
Research and development costs
141
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Income from discontinued operations, net of income taxes
Others business' share of discontinued operations, net of income taxes
Qimonda's share of discontinued operations, net of income taxes
€ in millions
Gain/loss from discontinued operations, net of income taxes
The current risks and provisions relating to Qimonda's insolvency are described in detail in note 23, section "Pro-
ceedings in relation to Qimonda".
In the 2016 and 2015 fiscal years adjustments to individual provisions arose as a result of recent developments in
connection with the insolvency of Qimonda, as well as subsequent income from other discontinued operations.
These led to earnings after tax as shown in the table below.
On January 23, 2009, Qimonda AG (“Qimonda”), a majority owned company, filed an application at the Munich
Local Court to commence insolvency proceedings. On April 1, 2009, the insolvency proceedings opened. Insolvency
proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of these insolvency
proceedings have already been completed. The impacts of these proceedings are reported as discontinued opera-
tions in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the extent
that the underlying events occurred before the commencement of insolvency proceedings. To the extent that the
events occurred after the commencement of insolvency proceedings, their results are reported as part of continuing
operations.
Notes to the Consolidated Financial Statements
Qimonda - discontinued operations
Cree's Board of Directors and Infineon's Supervisory Board have already approved the acquisition. The approval of
the responsible regulatory authorities is required to conclude the transaction. Completion and execution of the
transaction is expected at the beginning of the 2017 calendar year.
On July 14, 2016, the Company and Cree Inc. USA ("Cree") signed a contract for the acquisition of Cree's Wolfspeed
business. Infineon intends to buy Wolfspeed (including the related wafer substrate business) for a purchase price of
US$850 million. With the acquisition Infineon broadens its strategic portfolio of compound semiconductors.
Wolfspeed
The purchase price allocation for International Rectifier was finalized in January 2016; there were no adjustments
in the 2016 fiscal year.
The acquisition of 100 percent of the shares and associated voting rights of International Rectifier Corporation
("International Rectifier") based in El Segundo, California (USA) was closed by Infineon on January 13, 2015.
International Rectifier Corporation
3 Acquisitions
142
4 Disposals and discontinued operations
101
Consolidated Financial Statements
INFINEON TECHNOLOGIES
143
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:
€ in millions
Included in the Consolidated Statement of Operations in:
Cost of goods sold
Research and development expenses
Selling, general and administrative expenses
Total
2016
2015
33
40
75
59
Consolidated Financial Statements
2
2
(203)
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
Cost of goods sold includes the manufacturing costs of products sold during the reporting period. In addition, among
other things cost of goods contain idle costs, inventory risks, warranty issues as well as the amortization of capital-
ized development costs. Recognized foreign currency effects as well as changes in the fair value of undesignated
derivative financial instruments that are connected to the operating business are recognized in cost of goods.
Cost of goods sold
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.
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.
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.
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 23 and 24).
Contingent liabilities
ANNUAL REPORT 2016
140
2016
2015
(1)
12
3
2
12
INFINEON TECHNOLOGIES
Notes to the Consolidated Financial Statements
102
(151)
70
2015
Industrial Power Control
51
51
12.8
13.9
9.9
10.3
1
1
2016
Power Management
Corporate
Total
746
750
14.0
15.0
10.7
11.0
1
1
& Multimarket
2
799
2015
2015
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.
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
(26)
Consolidated Financial Statements
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:
2016
36
after-tax WACC¹
terminal growth rate¹
€ in millions
in %
in %
in %
Segment
2016
2015
2016
pre-tax WACC¹
Goodwill acquired in a business combination is allocated to the cash-generating units (CGUS) or groups of CGUS
that will benefit from the synergies generated by the business combination. A CGU represents the smallest
identifiable group of assets that generates cash inflows from continuing activities and that is as independent as
possible from other assets or asset groups.
2
1 Valuation parameters as of June 30, 2016 and 2015.
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
ANNUAL REPORT 2016
93
Property, plant and equipment
(255)
5
(206)
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.
17
liabilities
Deferred tax
Deferred tax
assets
Deferred tax
liabilities
assets
Deferred tax
September 30, 2015
September 30, 2016
€ in millions
Deferred tax assets and liabilities as of September 30, 2016 and 2015 comprise the following:
Intangible assets
803
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.
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.
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.
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.
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 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.
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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
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.
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
623
Total
304
(304)
457
(457)
Netting
(451)
908
(467)
(10)
1,080
(28)
110
(62)
142
Other
128
146
Unused tax credits and excess foreign tax credits
447
492
Total deferred taxes
Tax loss carry-forwards
604
(6)
13
Tax rate differential
27
14
Effects from the difference between local and functional currency (Malaysia)
7
(23)
Non-deductible expenses and tax-exempt income, net
25
(10)
(147)
19
(41)
Change in valuation allowance on deferred tax assets
63
309
Effects due to changes in tax rate
Other
Actual income taxes
32
(3)
(4)
Prior year taxes
(125)
152
(173)
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
136
Intangible assets (excluding goodwill)
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:
Capitalized development costs
Customer relationships
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.
Technologies
Other intangible assets
Infineon did not hold any intangible assets with indefinite useful lives in either the 2016 or 2015 fiscal years.
Leases
Years
3-5
1-12
4-12
3-5
2-8
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.
Licenses and similar rights
Other plant and office equipment
1-10
3-10
190
Provisions and pension obligations
(43)
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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.
Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
relating to items recognized directly in equity or in other comprehensive income.
For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimate.
Property, plant and equipment
Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
by scheduled depreciation and considering any impairment.
The cost of acquisition comprises the acquisition price plus incidental acquisition costs, and subsequent acquisition
costs, less any reduction received on the acquisition price. The cost of self-constructed equipment comprises direct
costs as well as appropriate allocations of the necessary material and manufacturing overheads.
Where an obligation exists to decommission or dismantle 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
Change in available tax credits
Book value of
allocated goodwill
66
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
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.
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.
150
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
250
1,738
(392)
(3)
(13)
13
(133)
(256)
14
(4)
(1)
(3)
23
57
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.
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.
13 Provisions
Short-term and long-term provisions at September 30, 2016 consist of the following:
41
Provisions related to Qimonda (see note 23)
46
(17)
(5)
12
56
Warranties
288
(10)
(144)
(241)
322
Obligations to employees
2016
Reversals
Usage
Additions
2015
September 30,
October 1,
€ in millions
217
5
(1)
(17)
Property, plant and equipment
Land, land rights and buildings
875
30
82
(2)
11
7
Technical equipment and machinery
6,529
326
258
(106)
173
40
1,003
7,220
Other plant and office equipment
1,123
73
14
(57)
€ in millions
nations¹
combi-
ber 30, 2015
(131)
262
(32)
(32)
342
(53)
18
110
(13)
(2)
5
2,225
Cost
October 1,
2014
Additions
Acquisitions
Disposals
Reclassi-
through
business
fication
Foreign
currency
effects
Septem-
Changes in property, plant and equipment and goodwill and other intangible assets 2015
14
(11)
32
15
1
1,210
Payments on account and construction in progress
314
271
(3)
(298)
284
Total property, plant and equipment
9,712
716
(171)
(20)
10,237
Goodwill and other intangible assets
Goodwill acquired for consideration
Capitalized development costs
Customer relationships
Technologies
Licenses and similar rights
(64)
83
1,175
Other plant and office equipment
Reclassi-
fication
Foreign
currency
effects
Septem-
ber 30, 2016
combi-
nations
€ in millions
Property, plant and equipment
Land, land rights and buildings
1,003
Other intangible assets
26
73
2
1,095
Technical equipment and machinery
7,220
336
(95)
210
(23)
7,648
(9)
(3)
Total goodwill and other intangible assets
(4)
Of the total provisions as of September 30, 2016 and 2015, a cash outflow of €327 million and €402 million, respec-
tively, is expected to occur within one year. With the exception of the service anniversary awards of €27 million
and €22 million as of September 30, 2016 and 2015, respectively, the cash outflow for the majority of the remaining
€49 million and €50 million as of September 30, 2016 and 2015, respectively, is expected within two to seven years.
Other provisions comprise provisions for litigations (other than provisions relating to Qimonda), asset retirement
obligations, onerous contracts and miscellaneous other liabilities.
Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements associated
with products sold.
Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
flextime, service anniversary awards, other personnel costs and social security costs.
76
327
402
72
Thereof long-term
Thereof short-term
403
(43)
(271)
243
474
Total provisions
37
(13)
(14)
9
55
Other
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
799
419
98
517
395
1
396
294
(12)
1
803
283
12
(1)
212
18
2,130
(52)
Septem-
Septem-
151
Debt at September 30, 2016 and 2015 consists of the following:
14 Debt
201
Disposals
8
Payments on account and construction in progress
(4)
(6)
(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
57
49
(163)
1
799
803
(159)
(31)
(15)
(205)
312
260
(53)
(68)
Septem-
(121)
342
(32)
(43)
5
(70)
213
€ in millions
262
(144)
(20)
275
2,093
ber 30, 2015
Septem-
(3)
314
272
(7,099)
(627)
158
(18)
(33)
(7,619)
2,093
1,700
803
25
(125)
(29)
8
(12)
(1)
(159)
260
202
3
94
116
(1,059)
ber 30, 2014
(649)
(34)
2
1
(9)
(4)
(693)
310
(5,421)
Septem-
ber 30, 2015
(510)
(1)
(6)
(25)
(5,867)
1,353
226
1,108
(1,029)
(83)
57
(4)
96
1,175
2,119
5
327
100
(8)
419
374
21
395
278
16
294
154
18
32
(5)
2
201
17
1
18
506
118
803
49
729
25
272
217
25
(4)
(198)
2
314
Total property, plant and equipment
8,799
646
1,430
379
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
Total goodwill and other intangible assets
(169)
(8,118)
(13)
2,130
310
(5,867)
(536)
89
(7)
16
(6,305)
1,343
1,353
(1,059)
(87)
64
(1,082)
128
116
284
314
(7,619)
(665)
162
(1)
364
(731)
(11)
6
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
Notes to the Consolidated Financial Statements
Depreciation and impairment
October 1, Depreciation/
2015
Disposals
amortization
Reclassi-
fication
89
Carrying amount
Impairments
Foreign
Septem-
currency
effects
ber 30, 2016
Septem-
ber 30, 2016
Septem-
ber 30, 2015
(693)
(42)
9
149
Acquisitions
through
business
(1)
October 1,
2015
(35)
59
3
62
Accumulated deficit
The following table shows a reconciliation of accumulated deficit as of September 30, 2015 and 2016:
€ in millions
As of October 1, 2014
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
(3,502)
632
(27)
(2,897)
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
(3)
744
(2,312)
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Dividends
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.
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.
154
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. 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).
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 €2,013 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.
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.
(159)
INFINEON TECHNOLOGIES
(32)
(1)
(28)
100
100
Deal Contingent Forward
(6)
(6)
(39)
(39)
Realized (gains) losses
resulting from hedge accounting
(1)
(1)
6
9
(1)
Unrealized gains (losses)
4
(3)
1
(3)
2
(1)
Realized (gains) losses
resulting from securities
(4)
1
(3)
Unrealized (losses) resulting from securities
Total
(1)
(1)
resulting from hedge accounting
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
(1)
613
457
Infineon did not provide for additional income taxes or foreign withholding taxes on the cumulative retained
earnings of foreign subsidiaries as of September 30, 2016 and 2015, to the extent that these earnings are intended
to be indefinitely reinvested in those operations.
Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
operations, the income tax benefit consisted of the following:
€ in millions
Income taxes from continuing operations
Income taxes from discontinued operations
Income taxes recognized directly in equity
Income taxes
2016
2015
36
102
(3)
(2)
(1)
4
38
105
8 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.
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:
ber 30, 2016
€ in millions (unless otherwise stated)
Earnings attributable to shareholders of Infineon Technologies AG - basic and diluted
thereof from continuing operations
5
4
5
253
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
Tax loss carry forwards (Corporate tax and local income tax)
Tax credits
Temporary differences
2016
2015
2,427
3,451
243
190
740
668
There are no material tax loss carry-forwards for which no deferred tax assets were recognized and which are
subject to expiration under statutory tax regulations. There are no material tax credits for which no deferred tax
assets were recognized and which will expire within the next 12 years.
153
(172)
373
457
2015
2016
(28)
Deferred taxes, net as of the end of the fiscal year
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:
Foreign currency translation
thereof from discontinued operations
Foreign currency translation differences
Tax
Term
Aggregate
facility
Drawn
Available
Aggregate
facility
Drawn
Available
Short-term
91
17
74
110
33
77
September 30, 2015
Long-term
127
646
968
968
Total
864
144
720
1,078
1,001
77
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
773
Notes to the Consolidated Financial Statements
September 30, 2016
The total lines of credit as of September 30, 2016 and 2015 are summarized in the following table:
17
25
8
17
33
Loans payable to banks:
Unsecured loans, weighted average interest rate 0.52% (2015: 1.76%), due 2017-2023
128
968
Bond €300 million, coupon 1.00%, due 2018
298
298
Bond €500 million, coupon 1.50%, due 2022
496
€ in millions
494
830
1,752
1,760
Total
1,769
1,793
Infineon successfully completed a US private placement of notes (USPP) with a nominal value of US$935 million
in April 2016. The senior, unsecured USPP notes, which bear average annual interest of 4.09 percent, consist of
the following:
> Notes with a nominal value of US$350 million due in 2024,
> Notes with a nominal value of US$350 million due in 2026, and
> Notes with a nominal value of US$235 million due in 2028.
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.
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.
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.
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.
USPP notes US$935 million, weighted average interest rate 4.09%, due 2024-2028
Long-term debt
Aggregate amounts of debt and interest maturing in the coming years are as follows:
€ in millions
Less than 1 year
1,809
134
Interest expense incurred in connection with debt for the years ended September 30, 2016 and 2015, was €64 mil-
lion and €48 million, respectively.
15 Equity
Ordinary share capital
The ordinary share capital of Infineon Technologies AG increased during the 2016 fiscal year by €6,803,256.
3,401,628 new shares were issued as a result of the exercise of stock options by employees as well as by current
and past members of the Management Board (2015: 1,532,251). As of September 30, 2016 the ordinary share capital
stood at €2,265,346,218 divided into 1,132,673,109 no par value registered shares, each representing €2 of the
Company's ordinary share capital. Each share grants the holder one vote and an equal portion of the profits in the
form of a dividend as resolved by the Annual General Meeting. As of September 30, 2016, of the above mentioned
total number of issued shares the Company held 6 million own shares (2015: 6 million). Own shares held by the
Company as at the date of the Annual General Meeting carry no voting rights and are not entitled to dividend.
Additional paid-in capital
Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €197 million
in the 2016 fiscal year, of which €225 million related to the dividend paid in February 2016. The exercise of stock
options by employees as well as by current and past members of the Management Board increased additional
paid-in capital by €19 million. Expenses amounting to €9 million for share-based compensation were recorded in
the 2016 fiscal year, additional paid-in capital increased by the same amount (see note 17).
Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €201 million in
the 2015 fiscal year, of which €202 million related to the dividend paid in February 2015. As a result of the acquisition
of the remaining 33.6 percent share in LS Power Semitech Co., Ltd. (LSPS), Korea, from LS Industrial Systems Co.,
Ltd. (LSIS), Korea for €15 million on April 30, 2015, additional paid-in capital decreased by €10 million and non-con-
trolling interests were reduced by €5 million. The exercise of employee stock options increased additional paid-in
capital by €9 million. Expenses amounting to €6 million for share-based compensation were recorded in the 2015
fiscal year, additional paid-in capital increased by the same amount.
Authorized share capital
As of September 30, 2016, the Company's Articles of Associations provide for two authorized share capitals
amounting to up to €706,000,000 (the Authorized Share Capital 2016/I was created by the Annual General Meeting
on February 18, 2016):
> Section 4(4) of the Articles of Association provides that the Management Board is authorized, with the approval of
the Supervisory Board, to increase the share capital in the period until its expiry in February 11, 2020 once or in
partial amounts by a total of up to €676,000,000 through the issue of new no par value registered shares, carrying
a dividend right from the beginning of the fiscal year in which they are issued, against contributions in cash or in
kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval of the Supervisory Board,
to exclude the subscription rights of the shareholders in certain cases. In accordance with German law, cash capital
increases with subscription rights excluded pursuant to section 186, paragraph 3, fourth sentence of the AktG,
are not permitted to exceed 10 percent of a company's share capital - neither at the time of the authorization
becoming effective nor at the time of its exercise. For share capital increases against contributions in kind or a
combination of cash contributions and contributions in kind, the authorization further provides an upper limit of
20 percent of the share capital, again measured either at the time the authorization becomes effective or, if the
value is lower, at the time of its exercise.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
363
Notes to the Consolidated Financial Statements
› Section 4(7) of the Articles of Association provides that the Management Board is authorized, with the approval
of the Supervisory Board, to increase the share capital in the period up to February 17, 2021 - either once or in
partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against contributions
in cash for the purpose of increasing the issue to employees of the Company or its Group companies (Authorized
Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares. The shares
may be issued in such a manner that the contribution to be paid on such shares is covered by the portion of the
profit for the year that the Management Board and Supervisory Board could transfer to revenue reserves in
accordance with section 58, paragraph 2, AktG.
Conditional capital
As of September 30, 2016, the Company's Articles of Associations provide for two conditional capitals amounting
to up to €281,714,094 (the previous Conditional Capital III was cancelled by the Annual General Meeting on
February 18, 2016):
› Pursuant to section 4(5) of the Articles of Association the share capital is conditionally increased by up to
€21,714,094 through the issue up to 10,857,047 new no par value registered shares in connection with the Com-
pany's "Infineon Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 17) (Conditional
Capital 2010/1). During the 2016 fiscal year, a total of 3,401,628 new no par value shares with a proportionate
amount of share capital of €2 per share were issued out of the Conditional Capital 2010/1 as a result of the exercise
of share options in connection with the Stock Option Plan 2010. Conditional Capital 2010/1 decreased accordingly
by €6,803,256 to €14,910,838. The corresponding change to the Articles of Association was submitted after the
end of the reporting period and entered into the Commercial Register as requested.
> Pursuant to section 4 (6) of the Articles of Association the share capital is conditionally increased by up to
€260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights of the
holders of warrants or convertible bonds, which the Company may issue at any time prior to February 12, 2019
(Conditional Capital 2014).
Other reserves
Changes in other reserves during the 2016 and 2015 fiscal years are as follows:
€ in millions
September 30, 2016
September 30, 2015
Pretax
Tax
Net after tax
Pretax
153
1,777
22
514
1-2 years
2-3 years
3-4 years
5 years and after
Total
152
September 30, 2016
September 30, 2015
Debt
Interest
Debt
Interest
17
46
303
46
ཆེ ཆེ
186
1,341
27
943
42
8
Net after tax
28
43
108
28
16
29
33
303
Weighted-average number of shares outstanding (in millions):
- Ordinary share capital
- Adjustment for own shares
740
718
16
6
With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there are
no indications that customers, based on their past credit history and current creditworthiness assessments, are not
able to meet their obligations.
Receivables with a maturity of more than one year are presented as other non-current assets.
11 Inventories
Inventories at September 30, 2016 and 2015 consist of the following:
€ in millions
Raw materials and supplies
Work in progress
Finished goods and merchandise
Total
Septem-
Septem-
ber 30, 2015
111
98
701
649
379
382
1,191
1,129
Cost of sales consist mainly of inventory-related expenses in the 2016 and 2015 fiscal years.
Inventories at September 30, 2016 and 2015 are stated net of write-downs of €136 million and €117 million,
respectively.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
6
14
753
773
Additions
1
2
785
753
(11)
(11)
774
742
Changes in the allowance for doubtful accounts for the 2016 and 2015 fiscal years were as follows:
€ in millions
Allowance for doubtful accounts at beginning of the fiscal year
2016
2015
148
11
Usage of allowance, net
Current year's allowance, net of reversals
Allowance for doubtful accounts at end of the fiscal year
11
11
Third party trade receivables that are outstanding but not impaired at the reporting date comprise the following:
€ in millions
Carrying
amount
Thereof
neither
impaired
nor past due
Of which not impaired
but past due
Past due
0-30 days
Past due
> 31 days
Third party trade receivables, net of allowances as of September 30, 2016
Third party trade receivables, net of allowances as of September 30, 2015
7
12 Property, plant and equipment, goodwill and other intangible assets
ber 30, 2016
Changes in property, plant and equipment and goodwill and other intangible assets 2016
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):
9 Financial investments
0.56
0.66
0.55
0.01
0.66
1,125.3
1,129.3
2.7
4.1
1,128.6
(6.0)
1,122.6
(6.0)
1,125.2
1,131.2
12
€ in millions
2
742
632
744
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
Basic and diluted earnings per share¹ (in euro):
Weighted-average number of shares outstanding - diluted
- Effect of stock options and performance shares
Adjustments for:
Weighted-average number of shares outstanding - basic
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:
Fixed-term bank deposits and money market funds
Investment funds
620
Financial investments
Cost
Securities
751
784
ber 30, 2015
Septem-
Septem-
ber 30, 2016
147
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:
10 Trade receivables
Trade receivables, net
Notes to the Consolidated Financial Statements
Septem-
ber 30, 2016
Septem-
ber 30, 2015
1,157
1,156
122
59
399
1,615
1,340
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
62
€ in millions
2.0
The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
changes in one actuarial assumption holding all other assumptions constant.
Sensitivity analysis
Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high
credit rating.
0.7
0.6
2.0
2.4
2.0
2.3
2.2
3.2
2.4
Present value of defined
2.0
benefit pension plans with:
708
September 30, 2015
1.0
1,059
839
131
1,038
160
878
a 50 basis points higher discount rate
Total
Foreign
plans
plans
Domestic
Total
Foreign
plans
Domestic
plans
September 30, 2016
plans
104
plans
5
5
Fair value of plan assets at end of year
470
62
532
437
51
488
Net pension liability
(5)
(494)
(604)
(336)
(90)
(426)
Thereof: Infineon Technologies AG
(461)
(313)
(313)
Thereof: Infineon Technologies Austria AG
(56)
(110)
(5)
Foreign currency effects
(7)
Actuarial gains (losses)
23
11
34
(2)
(3)
(5)
Contributions from Infineon
13
11
24
13
6
19
Benefits paid
(14)
(8)
(22)
(14)
(4)
(18)
Plan settlements
(7)
(40)
plans
(40)
ANNUAL REPORT 2016
763
70
833
964
172
1,136
773
141
914
Actuarial assumptions
1,032
The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
Discount rate at the end of the fiscal year
Rate of salary increase
Projected future pension increases
September 30, 2016
September 30, 2015
Domestic
Foreign
Domestic
Foreign
plans
in %
79
953
Plans that are wholly or partly funded
Total
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 at September 30, 2016 and 2015.
The funding of the defined benefit obligations is as follows:
159
€ in millions
September 30, 2016
September 30, 2015
Domestic
Foreign
Total
plans
plans
Domestic
plans
Foreign
plans
Total
Plans that are wholly unfunded
11
93
10
71
81
INFINEON TECHNOLOGIES
a 50 basis points lower discount rate
20 Pension plans
2
in €¹
Fiscal year 2016: Employees
September 30, 2019
10.56
Fiscal year 2016: Management Board
September 30, 2019
10.56
1,186,294
80,964
7.26
7.07
Fiscal year 2015: Employees
September 30, 2018
8.49
1,003,944
5.44
Fiscal year 2015: Management Board
September 30, 2018
8.49
100,702
5.31
Fiscal year 2014: Employees
September 30, 2017
6.62
1,199,588
5.72
at September 30, 2016
Fiscal year 2014: Management Board
Fair value per
performance share
the nine months
before grant in €
For information regarding the compensation paid to Mr. Mittal after termination of his Management Board activities,
see "Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17
(DRS 17)" in the compensation report in the chapter "Corporate Governance Report".
157
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
In accordance with a mutual agreement reached with the Supervisory Board, Mr. Mittal resigned as member of the
Management Board effective June 30, 2016 and his service contract came to an end effective September 30, 2016.
During the period between his resignation from the Management Board and the end of his service contract at the
end of the 2016 fiscal year, Mr. Mittal continued to be available in his previous role in order to facilitate the transfer of
duties and the induction of his successor. Mr. Mittal is still entitled to a payment of €557,344.13 under his service
contract which expired on September 30, 2016.
The active members of the Management Board in the 2016 fiscal year received total fixed non-performance-
related compensation for their services of €2.9 million (2015: €2.7 million). In addition, the members of the Manage-
ment Board received variable performance-related compensation for their services in the 2016 fiscal year totaling
€2.8 million (2015: €3.9 million). This comprised a Short Term Incentive of €1.3 million (2015: €2.0 million), and a
Mid Term Incentive of €1.5 million (2015: €1.9 million). Furthermore, the Management Board received a Long Term
Incentive (LTI) which, since 2014, takes the form of performance shares. The expense resulting from the LTI
amounted to €0.4 million (2015: €0.5 million). The total compensation granted to active members of the Manage-
ment Board amounted to €6.1 million in the 2016 fiscal year (2015: €7.1 million).
Related persons
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
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
155
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.
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
The following is an overview of the allocations made:
Tranche
End of the
waiting period
Average share price of
Number of
performance shares
September 30, 2017
6.62
114,046
1
1
1
1
8
1
8
1
1
1
Sales and service charges to and products and services received from related companies in the 2016 and 2015
fiscal years consist of the following:
€ in millions
Sales and service charges
Products and services received
2016
2015
Joint
ventures
Other related
companies
Joint
ventures
Other related
companies
3
1
5
1
Other related
companies
Joint
ventures
Other related
companies
Joint
ventures
5.20
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).
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.
Stock Option Plan 2010
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.
Costs for share-based compensation
The costs for share-based compensation amounted to €9 million and €6 million in the 2016 and 2015 fiscal years,
respectively.
18 Supplemental cash flow information
There were no significant non-cash transactions from acquisition or financing activities during the 2016 and 2015
fiscal years.
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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).
Consolidated Financial Statements
156
19 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 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").
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 as of September 30, 2016 and 2015 consist of the following:
€ in millions
Trade and other receivables
Financial receivables
Trade and other payables
Financial payables
September 30, 2016
September 30, 2015
Notes to the Consolidated Financial Statements
12
As of September 30, 2016, pension liabilities for former members of the Management Board amounted to €77.0 million
(2015: €60.2 million).
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.
22
8
14
Benefits paid by Infineon
7
7
Plan settlements
(3)
(3)
Acquisitions
6
(2)
8
(179)
(20)
(159)
Adjustments to financial assumptions
(1)
(1)
(13)
(13)
Adjustments to demographic assumptions
(30)
(3)
(27)
14
(3)
4
Foreign currency effects
10
13
2
11
Expected return on plan assets
482
52
430
488
51
437
Fair value of plan assets at beginning of year
Change in fair value of plan assets:
benefit obligation at end of year
(914)
(141)
(773)
(1,136)
(172)
(964)
(6)
(6)
5
5
Present value of defined
18
(1)
(2)
Experience adjustments
plans
plans
Total
Foreign
Domestic
Total
Foreign
Domestic
2015
2016
Change in defined benefit obligations taking
€ in millions
The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets to
September 30, 2016 and 2015 is presented in the following table:
The Group defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
status, or require the payment of additional contributions.
158
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
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
186
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.
plans
plans
into account future salary increases:
Present value at beginning of year
Actuarial gains (losses) for:
(22)
(5)
3
35
(17)
(23)
(5)
(18)
Interest cost
(5)
(5)
Neither Infineon Technologies AG nor any of its subsidiaries have granted loans to any member of the Supervisory
or Management Boards.
Past service income
(4)
(21)
(26)
(5)
(21)
Current service cost
(861)
(131)
(730)
(914)
(141)
(773)
(25)
1,245
plans
152
17
17
17
of long-term debt
Short-term debt and current maturities
Current liabilities:
Balance as of September 30, 2016
Financial liabilities
Fair value
163
(cash flow
hedges)
hedging
instruments
cost)
(amortized
Designated
Other
financial
liabilities
through
profit or loss
At fair value
Carrying
amount
Categories of
financial liabilities
Notes to the Consolidated Financial Statements
Trade payables
857
857
857
Balance as of September 30, 2015
2,830
8
2,745
2
2,755
8
8
8
1,827
Consolidated Financial Statements
1,752
Total
Other non-current liabilities
Long-term debt
Non-current liabilities:
121
8
111
2
121
Other current liabilities
1,752
€ in millions
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Trade receivables
Financial investments
Cash and cash equivalents
Current assets:
132
3,234
1
2,743
490
3,234
100
Other current assets
32
88
1
87
88
774
774
774
1,615
1,157
458
132
Current liabilities:
673
1,340
74
2,958
2,741
216
1
2,958
Total
129
97
32
129
742
Other non-current assets
74
73
742
742
1,340
1,156
184
673
673
1
Non-current assets:
1,615
Short-term debt and current maturities
33
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
14
18
32
Other non-current assets
Other non-current assets
Total
Current liabilities:
Other current liabilities
847
In the 2016 and 2015 fiscal years there were no reclassifications between the levels.
In addition, other non-current assets include an option to sell shares in an equity holding for a fixed price. The
option is recognized as a derivative financial instrument and is not designated as a hedging instrument. The fair
value is determined using the Black-Scholes option pricing model (Level 3).
Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
market price is available, the fair value is determined by considering existing contractual arrangements based on
externally observable dividend policy (Level 3).
Other current liabilities contain derivative financial instruments, including cash flow hedges. Their fair value is
determined by discounting future cash flows according to the discounted cash flow method. Where possible,
valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
prices) drawn from reliable external sources are used (Level 2).
There is no active market for the securities included in financial investments. The fair value is calculated as the
present value of future expected cash flows, taking into account valuation parameters which can be observed in the
market (Level 2).
9
9
9
9
Non-current assets:
13
141
217
13
19
32
62
1
1
122
184
Total
63
1
1
59
7
32
32
1,759
1,760
1,760
32
2,764
Total
Other non-current liabilities
Long-term debt
Non-current liabilities:
2,755
137
128
7
137
Other current liabilities
802
802
802
Trade payables
33
33
2
of long-term debt
2
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)".
399
458
Other current assets
Financial investments
Level 3
Level 2
Level 1
Fair value by category
Fair value
164
2,763
Current assets:
€ in millions
The allocation to the levels as of September 30, 2016 and 2015 is as follows:
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
either directly or indirectly for the assets or liabilities,
> 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:
2016 fiscal year
625
14
625
130
1
153
146
140
Not quoted
in an active
market
in an active
market
Quoted
September 30, 2015
Not quoted
in an active
market
in an active
market
Quoted
September 30, 2016
Total
Other
Property
Reinsurance policies
Cash and cash equivalents
Equity securities
Corporate bonds
Government bonds
3
133
78
6
INFINEON TECHNOLOGIES
The actual return on plan assets in the fiscal year ended September 30, 2016 was €47 million (2015: €7 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.
74
414
72
460
15
€ in millions
24
25
23
3
19
3
33
-
33
-
33
19
As of September 30, 2016 and 2015 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.
177
982
902
137
625
1,121
167
954
a 50 basis points lower
expected rate of pension increase
1,159
a 50 basis points higher
a 50 basis points lower
928
145
783
1,152
177
975
expected rate of salary increase
a 50 basis points higher
999
expected rate of salary increase
ANNUAL REPORT 2016
795
941
Investment strategies
160
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
tables were applied.
The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
933
143
146
790
172
992
890
136
754
1,104
164
940
Increase in life expectancy by one year
expected rate of pension increase
1,164
Consolidated Financial Statements
765
Amounts recognized in profit or loss and in total comprehensive income
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.
Defined contribution plans
321
315
197
191
82
81
21
22
21
21
Septem-
ber 30, 2015
Septem-
ber 30, 2016
Total
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 at
September 30, 2016 and 2015:
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Fair value
Notes to the Consolidated Financial Statements
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, 2015
Other non-current assets
The weighted average duration of defined benefit plans is around 18 years as of September 30, 2016 and 2015,
respectively.
Non-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
Other current assets
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.
Total
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.
(21)
(26)
(5)
(21)
Total
Foreign
plans
77
plans
Domestic
Total
(4)
Foreign
2015
2016
161
past service (cost) benefit
Pension cost
Expected return on plan assets
Interest cost
Current service cost
The expenses and income of defined benefit plans for the years ended September 30, 2016 and 2015 comprise
the following:
As of September 30, 2016 and 2015, cumulative actuarial losses amounted to €482 million and €322 million,
respectively. In addition, cumulative actuarial losses amounting to €7 million, resulting from deferred compen-
sation and health care plans, are also recognized directly in other comprehensive income.
€ in millions
Domestic
plans
(25)
Amortization of unrecognized
(5)
(4)
(18)
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.
(28)
(32)
(8)
(33)
3
3
(5)
(5)
(41)
(22)
12
(5)
2
13
11
10
2
8-
(23)
(17)
Purchase commitments for planned investments in intangible assets at September 30, 2016 amounted to €1 million
(September 30, 2015: €2 million).
39
177
Total rental expenses under operating lease contracts amounted to €83 million and €67 million in the 2016 and
2015 fiscal years, respectively, and related mainly to minimum lease payments.
The total income arising from sub-lease contracts amounted to €16 million for the years ended September 30, 2016
and 2015, respectively.
44
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).
ANNUAL REPORT 2016
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).
INFINEON TECHNOLOGIES
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
174
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.
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.
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.
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.
46
(17)
83
594
25 Segment reporting
100
72
61
59
53
249
57
Payments arising
(148)
(15)
(15)
(15)
(14)
(72)
Total
446
from sub-lease contracts
Identification of segments
332
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.
2,914
Total
(201)
(201)
Cash inflow¹
209
209
Cash outflow
financial liabilities:
Derivative
540
14
970
332
46
1,004
from lease contracts
1,012
46
970
14
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
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.
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 cellular infrastructure.
Chip Card & Security
The Chip Card & Security segment designs, develops, manufactures and markets hardware-based security products
for card applications and connected systems.
Infineon identifies reportable segments on the basis of the differences between the types of products and their
applications.
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.
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.
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.
Smartcard antitrust litigation
Litigation and government inquiries
23 Legal risks
1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
540
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.
Payments arising
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.
144
Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory business;
as a result certain long-standing creditors have residual liability claims against Infineon. These claims can only
be exercised by the insolvency administrator acting in the name of the creditors concerned. In the meantime settle-
ments have been concluded with most of the major liability creditors.
Liabilities, provisions and contingent liabilities relating to Qimonda
Infineon recognizes provisions and liabilities for such obligations and risks which it assesses at the end of each
reporting period are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
of Qimonda and that entity's subsidiaries. As a result, Infineon recorded provisions and liabilities in connection
with some of the above-mentioned matters totaling €32 million and €55 million as of September 30, 2016 and Sep-
tember 30, 2015, respectively. Of the provisions recorded as of September 30, 2016, €12 million has been provided in
connection with the residual liability as former shareholder of Qimonda Dresden. For the defense of the proceedings
still pending for the alleged activation of a shell company and liability for impairment of capital, the Company has
recorded a provision of €18 million as of September 30, 2016. Remaining provisions in connection with the Qimonda
insolvency total €2 million as of September 30, 2016.
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 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
172
Other
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.
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.
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 allegations
and the success of the aforementioned claims and other matters described above, Infineon could incur significant
costs in the defense of these matters.
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.
INFINEON TECHNOLOGIES
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.
171
Any further statements about these matters by the Company could therefore seriously compromise the Company's
position in these proceedings.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
170
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
202
Payments arising
from sub-lease contracts
(133)
(15)
(15)
(15)
(15)
(15)
(58)
Total
465
103
76
62
41
39
54
56
77
91
173
24 Other financial commitments
In addition to provisions and liabilities, Infineon also has other financial obligations, relating in particular to
lease and long-term rental arrangements, and unconditional purchase commitments. These are explained in more
detail below.
Undiscounted future minimum operating lease and rental payments arising from operating lease contracts at
September 30, 2016 amounted to €465 million (September 30, 2015: €446 million). The corresponding payment
obligations fall due as follows:
Payments due in
(€ in millions)
Total
Less than
1 year
Payment obligations as of September 30, 2015
1-2 years
3-4 years
4-5 years
After
5 years
Payment obligations as of September 30, 2016
Payments arising
from lease contracts
598
118
2-3 years
2,906
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.
Non derivative
(9)
(2)
41
1
39
(8)
455
(4)
145
(2)
167
(2)
171
165
Fair value
Nominal
value
Fair value
(8)
Nominal
value
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.
ANNUAL REPORT 2016
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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.
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.
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.
22 Financial risk management
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.
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.
166
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES
September 30, 2015
September 30, 2016
Total
5
2
2015
2016
Total
Designated hedging instruments (cash flow hedges)
Other financial liabilities
Held for trading
Loan and receivables
Available-for-sale financial assets
€ in millions
The net gain or loss on financial instruments (including interest income and expense) within continuing operations
in the Group Statement of Operations amounted to the following:
165
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
(22)
64
7
(21)
Commodity swaps
Deal Contingent Forward
Designated cash flow hedges
Forward exchange contracts purchased
Forward exchange contracts sold
€ in millions
The nominal values and fair values of Infineon's derivative instruments as of September 30, 2016 and 2015 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.
167
Derivative financial instruments and hedging activities
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).
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)
(2)
(77)
(33)
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.
The Management Board has established policies that require Infineon's individual legal entities to manage the
foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
received or placed and all other planned cash receipts and payments.
For the net result related to foreign currency derivatives and foreign currency transactions included within net
income see note 21.
The following table shows the effects on profit or loss and equity for continuing operations of a 10 percent shift in
exchange rates for the major foreign currencies (which can be found in note 2) as of September 30, 2016 and 2015.
The assumed exchange rate changes relate only to financial instruments within the meaning of IFRS 7.
financial liabilities:
Derivative
1,483
46
52
152
352
1,052
3,137
financial liabilities
Non derivative
beyond 2021
2021
2020
2019
2018
2017
Cash outflow
709
709
Cash inflow¹
beyond 2020
2020
2019
2018
2017
2016
Total
as of September 30, 2015
Total
1,483
52
152
352
1,063
3,148
Total
(698)
(698)
46
financial liabilities
as of September 30, 2016
€ in millions
INFINEON TECHNOLOGIES
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.
(13)
11
49
(40)
(7)
6
(10%)
+10%
(10%)
+10%
Equity
Profit or Loss
Interest rate risk
September 30, 2016
September 30, 2015
€ in millions
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
168
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.
169
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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.
Due in
Financing and liquidity 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.
Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
default of one of its contract parties.
Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, the financial investments
and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
maximum credit risk.
Credit risk
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.
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.
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
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.
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.
Other Operating Segments
ANNUAL REPORT 2016
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
120
112
186
165
Chip Card & Security
82
3
3
693
646
140
114
833
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.
82
Power Management & Multimarket
Industrial Power Control
Automotive
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
Notes to the Consolidated Financial Statements
177
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.
Of the €191 million (2015: €274 million) “acquisition-related depreciation/amortization and other expenses"
incurred in the 2016 fiscal year, €96 million (2015: €143 million) is attributable to cost of goods sold, €10 million
(2015: €15 million) to research and development expenses and €85 million (2015: €116 million) to selling, general
and administrative expenses.
€ in millions
Depreciation and amortization:
€ in millions
Inventories:
Automotive
Industrial Power Control
Asia-Pacific (without Japan)
Therein: China
Japan
Americas
Therein: USA
Total
2016
2015
2,147
2,020
1,000
942
3,083
2,666
1,574
1,337
424
399
819
710
661
Therein: Germany
Financial income
Europe, Middle East, Africa
€ in millions
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
434
396
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:
Revenue:
Operating income
(16)
(6)
Industrial Power Control
Power Management & Multimarket
Chip Card & Security
Corporate and Eliminations
Total
176
2016
2015
2,651
2,350
1,073
971
2,050
1,796
698
665
8
14
(7)
(1)
6,473
Automotive
5,795
Revenue:
The following tables present selected segment data:
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.
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Segment information
€ in millions
INFINEON TECHNOLOGIES
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.
€ in millions
€ 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)
Acquisition-related depreciation/amortization and other expenses
(191)
(274)
Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
Other income and expense, net
(4)
(2)
The following table provides the reconciliation of Segment Result to income from continuing operations before
income taxes:
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.
897
(3)
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
323
135
126
1
5
(4)
982
284
Rotterdam, The Netherlands
100
5
100
10.56
2.63
Newport, Great Britain
7
100
35.76
0.00
Kista, Sweden
100
5.52
Neu-Isenburg, Germany
0.32
100
n. a.
n. a.
8
Muntinlupa City, Philippines
100
(0.36)
(0.05)
Cheonan, Republic of Korea
100
3
17.58
Wilmington, Delaware, USA
8.75
n. a.
100
Rotterdam, The Netherlands
3
100
0.13
0.00
Milan, Italy
3
100
1.82
0.49
Klagenfurt, Austria
100
n. a.
6.69
3
Tokyo, Japan
100
15.09
3
5.07
Seoul, Republic of Korea
3
Registered office
4.06
0.95
Rotterdam, The Netherlands
3.91
Newport, Great Britain
100
157.26
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
DICE Danube Integrated Circuit Engineering GmbH
EPOS embedded core & power systems
GmbH & Co. KG
EPOS embedded core & power systems
Verwaltungs GmbH
eupec Thermal Management Inc. (in liquidation)
Haus der Zukunft gGmbH
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
Hitex (UK) Limited
Infineon Technologies Polska sp.z.o.o.
Infineon Technologies Romania s.r.l.
Infineon Technologies RUS LLC
Infineon Technologies Schweiz GmbH
Infineon Technologies South America Ltda.
International Rectifier Power Management
Private Limited (in liquidation)
IR Infotech Private, Ltd. (in liquidation)
IR International Holdings China, Inc.
IR International Holdings, Inc.
KAI Kompetenzzentrum Automobil-
und Industrieelektronik GmbH
KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
MicroLinks Technology Corp.
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
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Name of company
2.00
7
Bucharest, Romania
3
100
1.77
0.88
3
100
1.66
0.32
100
3.49
1.22
Bristol, Great Britain
100
0.56
0.01
3
Wilmington, Delaware, USA
100
2,225.98
3
0.00
GRI G4-17
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
0.76
OSPT IP Pool GmbH
4
100
Infineon Technologies Cegléd Kft.
Cegléd, Hungary
100
14.63
3
0.76
Infineon Technologies Center of Competence
(Shanghai) Co., Ltd.
Shanghai, People's Republic of China
100
3.47
0.27
Infineon Technologies China Co., Ltd.
1.69
Shanghai, People's Republic of China
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 Federal Solutions Inc.
Infineon Technologies Finance GmbH
100
Wilmington, Delaware, USA
13.96
Batam, Indonesia
100
118.75
10.02
6
Xi'an, People's Republic of China
6
100
6.77
0.20
Wilmington, Delaware, USA
Singapore, Singapore
100
n. a.
100
n. a.
100
193.40
55.68
3
100
1.35
0.20
100
520.53
122.59
3
Infineon Technologies Batam PT
3
8
100
(11.48)
Infineon Technologies US HoldCo Inc.
Maia, Portugal
Taipei, Taiwan
Rotterdam, The Netherlands
100
n. a.
n. a.
Singapore, Singapore
100
n. a.
n. a.
100
Infineon Technologies U.K. Ltd.
2,031.23
Hong Kong,
People's Republic of China
100
20.81
7
5.00
Hong Kong,
People's Republic of China
100
1.61
0.24
Bangalore, India
222.50
Infineon Technologies Taiwan Co., Ltd.
Infineon Technologies Shared Service Center,
Unipessoal Lda.
Infineon Technologies Romania & Co. Societate
in Comandita
1.22
Wilmington, Delaware, USA
100
n. a.
n. a.
Neubiberg, Germany
100
369.89
0.00
3, 13
Infineon Technologies France S.A.S.
St. Denis, France
3
100
11.52
0.08
Infineon Technologies Nordic AB
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 Power Semitech Co., Ltd.
Infineon Technologies Reigate Ltd.
15.10
GRI G4-17
183
Registered office
0.00
Neubiberg, Germany
100
0.03
0.00
11, 13
Warsaw, Poland
100
n. a.
n. a.
Bucharest, Romania
100
0.04
0.03
6
Moscow, Russian Federation
100
6
0.12
0.03
Zurich, Switzerland
100
0.20
3
0.03
São Paulo, Brazil
0.00
100
100
Neubiberg, Germany
0.00
0.00
Neubiberg, Germany
100
0.02
0.00
Neubiberg, Germany
100
0.02
0.00
3
Madrid, Spain
3
3
0.14
0.04
Dublin, Ireland
3
100
0.41
0.12
Neubiberg, Germany
100
0.02
0.00
3
100
(0.04)
(0.01)
3
12
n. a.
n. a.
n. a.
Neubiberg, Germany
3
100
0.02
0.00
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Consolidated Financial Statements
Kaohsiung, Taiwan
Notes to the Consolidated Financial Statements
Name of company
R Labco, Inc.
Schweizer Electronic AG
TTTech Computertechnik AG
Xi'an IR PERI Company, Ltd.
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
184
6
(0.32)
1.72
Bangalore, India
4
100
0.16
0.00
Mumbai, India
10
100
0.92
0.00
Wilmington, Delaware, USA
8
100
0.00
0.00
Wilmington, Delaware, USA
8
100
0.00
0.00
Villach, Austria
6
100
0.10
0.00
Lippstadt, Germany
24
100
3
St. John, New Brunswick, Canada
0.00
9.96
0.35
Kuala Lumpur, Malaysia
100
7
0.46
0.02
Curepipe, Mauritius
100
4.33
(0.07)
8
100
Newport, Great Britain
149.67
(5.22)
Neubiberg, Germany
100
1.92
(12.64)
6
Tijuana, Mexico
100
9.03
(0.58)
8
100
8
0.20
3.64
Share-
Equity
Net result
Foot-
holdings
(€ in
(€ in
note
in %
millions)
millions)
Wilmington, Delaware, USA
100
1,580.94
(6.48)
Neubiberg, Germany
100
0.03
0.00
3, 13
Skovlunde (Copenhagen), Denmark
Wilmington, Delaware, USA
Tokyo, Japan
100
7
1.58
0.09
8
100
Shanghai, People's Republic of China
Wuxi, People's Republic of China
100
(1.20)
0.05
0.00
Wilmington, Delaware, USA
51
(0.03)
0.00
3
Berlin, Germany
12
n. a.
n. a.
n. a.
100
Coventry, Great Britain
88
1.60
0.27
Villach, Austria
100
0.85
(0.05)
6
Warstein, Germany
3
60
0.03
3
Duisburg, Germany
0.18
0.50
6
Warstein, Germany
Cegléd, Hungary
60
67.88
0.97
3, 15
60
1.80
0.22
Hsinchu County, Taiwan
12
n. a.
n. a.
n. a.
Wilmington, Delaware, USA
100
0.00
0.00
Linz, Austria
72
3
0.10
0.00
Duisburg, Germany
3
100
2.90
15.70
148.72
100
1,504
1,095
982
834
939
38
31
2
1
1,286
1,449
1,279
1,718
1,402
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
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 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
In addition to the amounts described above, KPMG charged an aggregate of €0.1 million in the 2016 fiscal year
for other attestation services.
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
3,840
Fees of €30 thousand were charged by KPMG in the 2016 fiscal year for other services.
Septem-
ber 30, 2015
Total
(€ in
millions)
(€ in
millions)
in %
holdings
Net result
Equity
Share-
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
Septem-
ber 30, 2016
ANNUAL REPORT 2016
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
Japan
Americas
Therein: USA
Consolidated Financial Statements
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.
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
> Infineon Technologies Americas Corp.,
Wilmington, Delaware, USA
> Infineon Technologies (Kulim) Sdn. Bhd.,
Kulim, Malaysia (Chairman)
(since July 1, 2016)
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 Asia Pacific Pte., Ltd.,
Member of the Board of Directors
> Infineon Technologies Austria AG,
Villach, Austria (Chairman)
Member of the Supervisory Board
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
December 31, 2018
Dr. Helmut Gassel
52
June 30, 2019
(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)
Foot-
note
Wilmington, Delaware, USA
8
100
77
2
Wilmington, Delaware, USA
Qimonda North America Corp. in insolvency
77
Suzhou, People's Republic of China
77
Fort Lauderdale, Florida, USA
2
77
Seoul, Republic of Korea
77
Qimonda Richmond LLC in insolvency
77
2
77
2
Rotterdam, The Netherlands
Qimonda Memory Product Development
Center (Suzhou) Co., in liquidation
Qimonda Licensing LLC
Qimonda Korea Co. Ltd. in liquidation
Qimonda IT (Suzhou) Co., Ltd. in liquidation
Qimonda Investment B.V.
Qimonda Italy s.r.l. in liquidation
77
Shanghai, People's Republic of China
Suzhou, People's Republic of China
Padua, Italy
Qimonda Solar GmbH
Qimonda Taiwan Co. Ltd. in liquidation
Wilmington, Delaware, USA
GRI G4-17
15 Infineon accounts for its interest using the equity method because there are certain contractual participation rights of the other joint venturer inhibiting
Infineon from exercising control.
14 Exemption pursuant to Section 264 (3) German Commercial Code from certain obligations to prepare annual financial statements and a management
report pursuant to section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements pursuant to
Section 325 German Commercial Code.
13 Exemption pursuant to Section 264 (3) German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325
German Commercial Code.
12 Share of less than 5 percent.
11 Equity and net result as of September 30, 2015 (period from October 16, 2014 until September 30, 2015).
10 Equity and net result as of May 13, 2013 (period from April 1, 2013 until May 13, 2013).
9 Equity and net result as of December 31, 2015 (period from April 17, 2015 until December 31, 2015).
8 Equity and net result as of September 30, 2015 (period from July 1, 2015 until September 30, 2015).
7 Equity and net result as of September 30, 2015 (period from July 1, 2014 until September 30, 2015).
6 Equity and net result as of December 31, 2015.
5 Equity and net result as of June 30, 2015.
4 Equity and net result as of March 31, 2015.
3 Equity and net result as of September 30, 2015.
2 On January 23, 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally
opened on April 1, 2009. The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction
of Infineon's rights as a result of Qimonda AG's insolvency. Additionally, Qimonda and its subsidiaries are not included in the Company's Consolidated
Financial Statements. In addition, the list of subsidiaries held by Qimonda AG was based on information from September 30, 2010, since Infineon had not
received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies.
Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and
results of operations.
1 Certain subsidiaries were not consolidated due to immateriality.
77
2
High Blantyre, Scotland
Qimonda UK Ltd. in liquidation
77
Taipei, Taiwan
77
Dresden, Germany
2
77
2
Qimonda International Trade (Shanghai) Co. Ltd.
> Infineon Technologies (Kulim) Sdn. Bhd.,
77
77
40
Vila do Conde, Portugal
17
Colorado Springs, Colorado, USA
2
Qimonda Holding B.V. in insolvency
Qimonda France SAS in liquidation
Qimonda Flash GmbH in insolvency
Qimonda Europe GmbH in liquidation
Qimonda Finance LLC in insolvency
Qimonda Flash Geschäftsführungs GmbH
in liquidation
Qimonda Dresden Verwaltungsgesellschaft mbH
in insolvency
Qimonda Dresden GmbH & Co. OHG in insolvency
n. a.
Malacca, Malaysia
n. a.
Xi'an, People's Republic of China
n. a.
n. a.
n. a.
12
Wien, Austria
5.46
51.45
9
Schramberg, Germany
0.00
0.00
50
77
Munich, Germany
77
2
St. Denis, France
77
77
יי
Dresden, Germany
Dresden, Germany
77
Wilmington, Delaware, USA
2
77
Munich, Germany
77
Dresden, Germany
77
Dresden, Germany
77
Bratislava, Slovakia
2
77
Munich, Germany
2
77
Leuven, Belgium
77
Singapore, Singapore
2
Rotterdam, The Netherlands
Qimonda Beteiligungs GmbH in insolvency
Kulim, Malaysia
Member of the Supervisory Board
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
Mediation Committee
Wolfgang Mayrhuber (Chairman)
Johann Dechant
Hans-Ulrich Holdenried
Jürgen Scholz
Executive Committee
Membership of Supervisory Boards and
comparable governing bodies of domestic and
foreign companies (as at September 30, 2016)
Wolfgang Mayrhuber (Chairman)
Gerhard Hobbach
Hans-Ulrich Holdenried
Investment, Finance and Audit Committee
Dr. Eckart Sünner (Chairman)
Johann Dechant
Annette Engelfried
Wolfgang Mayrhuber
Strategy and Technology Committee
Peter Bauer (Chairman)
Peter Gruber
Hans-Ulrich Holdenried
Dr. Susanne Lachenmann
Johann Dechant
Wolfgang Mayrhuber
Deputy Chairwoman
of the Infineon Works
Council, Warstein,
Infineon Technologies AG
Annual General
Meeting 2020
Annual General
Meeting 2020
> Robert Bosch GmbH, Gerlingen
> Nestlé Deutschland AG, Frankfurt/Main
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
Name
Independent works council
representative of the Infineon
Works Council, Dresden,
Infineon Technologies
Dresden GmbH
Independent Attorney
Age
Occupation
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
Term expires
Jürgen Scholz
Nomination Committee
Wolfgang Mayrhuber (Chairman)
1.88
Karlsruhe, Germany
100
2.16
0.00
3,13
Beijing, People's Republic of China
Wuxi, People's Republic of China
6
100
14.69
1.48
100
1.93
19.66
9
Malacca, Malaysia
3
100
25.23
3.29
100
125.34
(11.78)
3
Malacca, Malaysia
3
(2.70)
72
Linz, Austria
Villach, Austria
Prof. Dr. Renate Köcher
Dr. Manfred Puffer
181
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.
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 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 %
Equity
Net result
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
Kulim, Malaysia
Bayswater, Australia
> BMW AG, Munich
> Allianz SE, Munich
> Wincor Nixdorf AG, Paderborn
(until September 30, 2016)
Member of the Supervisory Board
Member of the Supervisory Board
Occupation
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
Term expires
Annual General
Meeting 2020
51
Annual General
Meeting 2020
Peter Gruber¹
55
Representative of
Annual General
Meeting 2020
Senior Management
Chairman of the Infineon
Works Council, Regensburg,
Infineon Technologies AG
Management Consultant
Member of the
Management Board
Volkswagen AG,
Wolfsburg
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 at September 30, 2016)
Member of the Supervisory Board
Annette Engelfried¹
Age
Name
180
> tesa SE, Hamburg
Member of the Board of Directors
> Infineon Technologies Americas Corp.,
Wilmington, Delaware, USA
(until June 30, 2016)
> Infineon Technologies Asia Pacific Pte., Ltd.,
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:
> Deutsche Lufthansa AG, Cologne
(Chairman)
(since August 12, 2016)
> Münchener Rückversicherungs-
Member of the Board of Directors
Annual General
Meeting 2020
Hans-Ulrich Holdenried
65
Annual General
Meeting 2020
Prof. Dr. Renate Köcher
64
Annual General
Meeting 2020
Dr. Susanne
Lachenmann
49
1
Dr. Manfred Puffer
53
54
Annual General
Meeting 2020
Annual General
Meeting 2020
63
Schmitt-Landsiedel
Annual General
Meeting 2020
(until November 8, 2016)
Member of the
Infineon Works Council,
Campeon,
Infineon Technologies AG
Management Consultant
Managing Director
Institut für Demoskopie
Allensbach GmbH,
Allensbach
Development Engineer
Management Consultant
Professor
Munich Technical University,
Munich
Prof. Dr. Doris
Gerhard Hobbach 1
> Infineon Technologies (Kulim) Sdn. Bhd.,
Kulim, Malaysia
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
(since November 1, 2015)
> Shanghai Volkswagen Automotive Co., Ltd.,
Anting, People's Republic of China
(since November 1, 2015)
Member of the Advisory Board
> Porsche Holding GmbH, Salzburg, Austria
(since December 1, 2015)
Member of the Supervisory Board
> Infineon Technologies Dresden GmbH, Dresden
Member of the Supervisory Board
> Infineon Technologies Dresden GmbH, Dresden
Gesellschaft AG, Munich
Qimonda Bratislava s.r.o. in liquidation
ANNUAL REPORT 2016
The auditor attended the meetings of the Investment, Finance and Audit Committee and
reported in detail on its audit activities.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Management Board and Supervisory Board
The Management Board
From left to right:
Dominik Asam, Dr. Reinhard Ploss, Jochen Hanebeck, Dr. Helmut Gassel
7
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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
men
and Gentlem
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.
Main activities of the Supervisory Board
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 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
Chairman of the Supervisory Board
9
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
6.
At its meeting held on November 17, 2015, the Supervisory Board approved the financial
and investment budget, including the overall investment budget and the borrowing limit
determined for the 2016 fiscal year, as presented by the Management Board.
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).
Member of the Management Board
INFINEON TECHNOLOGIES
5
Management Board and Supervisory Board
Letter to shareholders
@www.infineon.com/
sustainability
reporting
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.
We sincerely hope you will continue to accompany us on this path also in the future.
Snicerely,
Rihaal Dys
Dr. Reinhard Ploss
Chief Executive Officer
ор
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Management Board and Supervisory Board
The Management Board
The Management Board
Dr. Reinhard Ploss
Chief Executive Officer
Reinhard Ploss has been a member of the
Management Board of Infineon Technologies AG
since 2007. He has been Chief Executive Officer
since 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.
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.
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.
Jochen Hanebeck
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.
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.
Management Board and Supervisory Board
ANNUAL REPORT 2016
Report of the Supervisory Board to the Annual General Meeting
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
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 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.
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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 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.
Report of the Supervisory Board to the Annual General Meeting
Management Board and Supervisory Board
The original versions of all Declarations of Compliance can be found on Infineon's website.
10
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.
Personnel matters
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.
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.
ANNUAL REPORT 2016
Management Board and Supervisory Board
Report of the Supervisory Board to the Annual General Meeting
11
P see page 106
Management Board compensation
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.
INFINEON TECHNOLOGIES
Details of Management Board compensation - in particular the amounts paid to individual
members in the 2016 fiscal year - can be found in the comprehensive Compensation Report
in the Annual Report.
The Supervisory Board was provided with regular and comprehensive information regarding
major legal disputes during the 2016 fiscal year, which were then thoroughly discussed with
the Management Board. The main items addressed were the Company's appeal against the
fine imposed by the EU Commission in 2014 relating to antitrust proceedings and the dispute
with the insolvency administrator of Qimonda AG pertaining to alleged residual liability claims.
The Supervisory Board 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.
Litigation
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.
Corporate governance
declaration-of-compliance/
@www.infineon.com/cms/en/about-
infineon/investor/corporate-governance/
Supervisory Board compensation
12
Report of the Supervisory Board to the Annual General Meeting
Management Board and Supervisory Board
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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.
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
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.
Comprehensive term for the manufacture and processing of
wafers with a diameter of 300 millimeters.
Further Information
188
Technology Glossary
Technology Glossary
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Backend manufacturing
Wirtschaftsprüfer
300-millimeter technology
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.
189
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.
Wirtschaftsprüfer
Frontend process is the designation for all process steps in
cleanrooms that the entire wafer must complete. These are
lithography, diffusion, ion implantation and application of
circuitry levels. Some stations must be completed a number
of times. At the end of the frontend process, the wafer may
have been through as many as 500 individual process steps.
After the conclusion of the frontend manufacturing, the
processed wafers are transferred to backend manufacturing
for testing and packaging (see Backend manufacturing).
Frontend manufacturing
Flexible AC Transmission System - control systems used in
electrical engineering. They are used in the field of electrical
power supply to specifically control power transmission and
distribution in AC networks, in which in principle components
of power electronics and therefore power semiconductors
such as IGBT modules are used. The controlling of power
transfers can be implemented in alternating current networks
by changing the idle and active power by means of capacitor
batteries or compensation coils.
FACTS
Further Information
Technology Glossary
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
From the Greek epi "upon" and taxis "arrangement" or "orien-
tation". Epitaxy is a form of crystalline growth that occurs
both in nature (such as in minerals) and in the technical world.
In semiconductor technology, epitaxy is the artificial growth
of crystalline layers on a substrate, which is usually a wafer.
Epitaxy enables various doping profiles for transistors to be
created, which are not feasible using other methods such as
diffusion or ion implantation.
Epitaxy
Control unit that can convert AC voltages of various rates and
frequencies. This is achieved by means of power electronics.
Converters are used in wind turbines, for example, in order to
feed fluctuating wind energy into the power network with
a voltage of constant frequency. In electric drive technology,
for example in engine controllers and trains, a converter is
used to generate an output voltage of variable, load-dependent
frequency from a mains supply of constant frequency.
Converter
Compound Semiconductor
Complementary Metal Oxide Semiconductor. Standard semi-
conductor manufacturing technology used to manufacture
microchips with low power usage and a high level of integration.
CMOS
A power bipolar transistor is a specialized version of a bipolar
transistor that is optimized for conducting and blocking large
electric currents (up to several hundred amperes) and very
high voltages (up to several 1,000 volts). In industry, the power
bipolar transistor - like the power MOSFET (see MOSFET) often
used as an alternative - constitutes an important industrial
semiconductor component for influencing electric current.
Bipolar
Bare die
Wolper
Dr. Reinhard Ploss
Wirtschaftsprüfungsgesellschaft
Responsibility Statement by the Management Board
Further Information
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Jochen Hanebeck
Dr. Helmut Gassel
Dominik Asam
Further Information
Gallium nitride
Management Board
Infineon Technologies AG
Neubiberg, November 22, 2016
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
185
Responsibility Statement by the
Management Board
186
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.
KPMG AG
Munich, November 22, 2016
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSS, as
adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB and give
a true and fair view of the net assets, financial position and results of operations of the Group in accordance with
these requirements. The Group Management Report is consistent with the consolidated financial statements and
as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of
future development.
Our audit has not led to any reservations.
We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer
[Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such
that misstatements materially affecting the presentation of the net assets, financial position and results of opera-
tions in the consolidated financial statements in accordance with the applicable financial reporting framework
and in the Group Management Report are detected with reasonable assurance. Knowledge of the business activities
and the economic and legal environment of the Group and expectations as to possible misstatements are taken
into account in the determination of audit procedures. The effectiveness of the accounting-related internal control
system and the evidence supporting the disclosures in the consolidated financial statements and the Group
Management Report are examined primarily on a test basis within the framework of the audit. The audit includes
assessing the annual financial statements of those entities included in consolidation, the determination of entities
to be included in consolidation, the accounting and consolidation principles used and significant estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements and Group
Management Report. We believe that our audit provides a reasonable basis for our opinion.
We have audited the consolidated financial statements prepared by the Infineon Technologies AG, Neubiberg,
comprising the statements of financial position, operations, comprehensive income, cash flows and changes
in equity, together with the management report of the Company and the Group for the business year from
October 1, 2015 to September 30, 2016. The preparation of the consolidated financial statements and the Group
Management Report in accordance with IFRSS, as adopted by the EU, and the additional requirements of German
commercial law pursuant to § 315a Abs. 1 HGB [Handelsgesetzbuch "German Commercial Code"] are the respon-
sibility of the Managing Board of the Company. Our responsibility is to express an opinion on the consolidated
financial statements and on the Group Management Report based on our audit.
Auditor's Report
187
Further Information
Auditor's Report
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Jochen Hanebeck
Dr. Helmut Gassel
Dominik Asam
Dr. Reinhard Ploss
Infineon Technologies AG
Neubiberg, November 29, 2016
Braun
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).
TPM
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.
Fiscal year:
Copy deadline:
Published by:
Editors:
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Independent auditors:
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Visit us on the web: www.infineon.com
1 preliminary
fiscal year 2017 results
Publication of fourth quarter and
Tuesday, November 14, 2017¹
Publication of third quarter 2017 results
Tuesday, August 1, 2017¹
Imprint
Publication of second quarter 2017 results
Designed by:
Printing:
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:
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.
Photography:
This Report contains forward-looking statements about the business, financial condition and earnings
performance of the Infineon Group.
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.
Note
G. Peschke Druckerei GmbH, Parsdorf (Germany)
HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
Werner Bartsch, Hamburg (Germany): page 3, 7
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
October 1 to September 30
Investor Relations, Accounting, Consolidation & Reporting
November 29, 2016
Forward-looking statements
Thursday, May 4, 2017'
ICM - International Congress Center Munich
(Germany)
Annual General Meeting 2017
(Start 10:00 a.m. CET)
MOSFET
Further Information
Technology Glossary
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Micro-electro-mechanical system. A micro-electro-mechanical
system, or simply a microsystem, is a miniaturized device,
assembly or part that contains components of minute dimen-
sions (only measurable in micrometers) that work together
as a system. Usually a microsystem consists of one or more
sensors, actuators and control electronics on one chip.
Infineon manufactures microphones as MEMS. Due to their
diminutive size, low power consumption, good shielding from
interfering signals and low-cost production, these types of
microphone are being increasingly installed in mobile devices
such as smartphones, tablets, cameras, and accessories such
as headsets and hearing aids.
MEMS
An inverter, also called a DC/AC converter, is an electrical
device for converting DC voltage into AC voltage, or direct
current into alternating current. Inverters are used in solar
power plants, for example, for converting the DC voltage
generated in the solar modules into AC voltage, which is then
fed into the electricity network.
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.
Inverter
Integrity Guard
Insulated Gate Bipolar Transistor Module. IGBTs are semi-
conductor components used increasingly in power electronics
due to their robustness, high blocking voltage, and their
ability to be triggered with negligible power. Modules are
formed using several IGBTs in parallel within a single casing.
These modules are used to drive electric motors both in
automotive and industrial applications. Motor speed and
torque can be regulated along a gradual scale. Trains such
as Germany's ICE and France's TGV use IGBT modules for an
efficient and rapid electrical drive control.
IGBT Module
Integrated Circuit. Electronic Component parts composed of
semiconductor materials such as silicon; numerous compo-
nents, including transistors, resistors, capacitors and diodes
can be integrated into ICs and interconnected.
IC
High-voltage direct-current transmission. HVDC transmission
is a method of transmitting electrical energy at high direct-
current voltages of up to 800,000 volts over distances of more
than 1,000 kilometers. HVDC transmission is also used for
connecting offshore wind farms to the electricity grid on the
mainland.
HVDC
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.
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
Thursday, February 16, 2017
Publication of first quarter 2017 results
Thursday, February 2, 20171
Financial calendar
190
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
Trusted Platform Module. A chip that adds elementary security
functions such as license and data protection to a computer
or similar device. TPMs can be integrated into tablet PCs,
smartphones and consumer electronics as well as PCs and
notebooks. A trusted computing platform (see Trusted Com-
puting) can be created by combining a specially configured
operating system and appropriate software with a device
containing a TPM.
A 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.
Thin wafer
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.
Switch-mode power supply
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).
Silicon Carbide
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).
Schottky diode
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).
Hall sensor
Infineon Technologies AG, Neubiberg (Germany)
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.
16.5 16.5
6.1
6.7
6.8
6.9
8.8
9.7
12.3
STMicroelectronics
Toshiba
NXP
Texas Instruments
Micron
Avago
Qualcomm
SK Hynix
Samsung
Intel
15.3 14.1 ****
0
5.7
5.3
5.0
4.4
10%
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
42%
nVidia
Sony
Renesas
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
SanDisk
22%
10
30
P see page 95 ff.
1 Proposal to the Annual General Meeting to be held
on February 16, 2017.
2010 2011 2012 2013 2014 2015 2016
221
12 12 12
18
20
in € cents
Dividend per share for the
2010 to 2016 fiscal years
P see page 60
20
20
2016 fiscal year
Finances and strategy
Combined Management Report | Our Group
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
The gross cash position (see the chapter "Internal Management System" for definition) totaled
€2,240 million as of September 30, 2016, an increase of 11 percent compared to the previous
year's reported figure of €2,013 million. The free cash flow from continuing operations of
€490 million described above exceeded the dividend payment of €225 million for the 2015
fiscal year.
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".
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.
Planned dividend increases by 10 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 earnings generated in the 2016 fiscal year and Infineon's positive business outlook, a
proposal will be made to the Annual General Meeting, which will be held on February 16, 2017,
to pay a dividend of €0.22 per share, an increase of 2 cents compared to the previous year.
40.2
40
50
51.4
60
Revenue in billion US$
Top 20 semiconductor manufacturers for the 2015 calendar year
The 20 largest companies account for 69.8 percent of global revenue. The remaining 30.2 percent
is spread over approximately 2,000 other semiconductor companies. These figures highlight
the extremely fragmented structure of the semiconductor sector. In the meantime, however, a
certain degree of consolidation is taking place within individual product categories. By acquiring
International Rectifier, Infineon added momentum to the latest wave of consolidation in the
power semiconductor sector. The planned acquisition of Wolfspeed is another important step
in this field. Similarly, ON Semiconductor's acquisition of Fairchild on September 19, 2016 will
contribute to further consolidation. This transaction has not yet been taken into account in
the market figures for the 2015 calendar year.
The semiconductor market is highly fragmented. Only the two largest players had a market
share in excess of 10 percent in the 2015 calendar year with a market size of US$347.118 billion
(source: market research company IHS Markit), with Intel taking a 14.8 percent share with
revenue of US$51.420 billion and Samsung Electronics taking an 11.6 percent share with
revenue of US$40.156 billion. The market share of all other competitors was below 5 percent.
Infineon finished in 11th place with a 2.0 percent market share with revenue of US$6.813 billion.
Intel is market leader for processors, Samsung Electronics for memory. Infineon does not
operate in either of these categories. Hence, neither of these companies competes directly
with Infineon in these two product categories. Of the top 20 semiconductor manufacturers,
the following compete with Infineon: Samsung (only in the field of chip card ICs, with revenue
accounting for only approximately 1 percent of Samsung's revenue), Texas Instruments, NXP,
Toshiba, STMicroelectronics, Renesas and ON Semiconductor.
20
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
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).
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.
China
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
Europe,
23
Finances and strategy
8.2%
Compound annual growth rate of the main semiconductor target markets, 2015 to 2020
Today Infineon addresses the three fastest growing segments of the semiconductor market for
the period from 2015 to 2020: Market researchers predict a compound annual growth rate of
8.2 percent for industrial power semiconductors, 7.3 percent for chip card ICs and 5.8 percent
for automotive semiconductors. Demand in these segments is driven by long-term, global
megatrends.
Infineon's objective is sustainable profitable growth. This is why we focus on markets in which
we can be successful with our core competencies in the long term and pursue the leading
position in these markets. In an effort to always offer the best solutions on the market to our
customers we achieve three things: We continuously increase the enterprise value for our
shareholders, offer our employees a safe and attractive working environment and also help
make life easier, safer and greener.
22
Group strategy
Group strategy
Finances and strategy
Combined Management Report | Our Group
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Tool", June 2016
Source: IHS Markit, "Application Market Forecast
excluding Japan)
(excluding China,
Americas
Asia-Pacific
Japan
Middle East, Africa
7.3%
5.8%
|||ili
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
Group strategy
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).
10
Improvement in key performance indicators
Report on expected developments, together with
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
associated material risks and opportunities
73 Review of financial condition
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.
Our 2016 fiscal year
66 The Infineon share
61 Our employees
61 Sustainability at Infineon
57 Internal management system
55 Operations
68 Review of results of operations
53 Research and Development
79 Outlook
95
INFINEON TECHNOLOGIES
17
ང་
106 Compensation report
106 Declaration on Corporate Governance
106 Corporate Governance Report
section 315, paragraph 4, of the German Commercial Code (HGB)
83 Risk and opportunity report
102 Information pursuant to section 289, paragraph 4, and
Infineon Technologies AG
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
102 Corporate Governance
ANNUAL REPORT 2016
49 Locations
44 Power Management & Multimarket
ANNUAL REPORT 2016
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.
Management Board and Supervisory Board
Report of the Supervisory Board to the Annual General Meeting
under report.
The Strategy and Technology Committee convened three times during the
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
year
47 Chip Card & Security
16
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.
42 Industrial Power Control
40 Automotive
40 The segments
31 Growth drivers
22 Group strategy
18 2016 fiscal year
18 Finances and strategy
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.
Our Group
Combined
Content
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Chairman of the Supervisory Board
Wolfgang Mayrhuber
On behalf of the Supervisory Board
Neubiberg, November 2016
Group Management Report
Combined Management Report | Our Group
Finances and strategy
68 Group performance
Finances and strategy
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
18%
Americas
Japan
Germany
China
2016
2016 fiscal year
P see page 59
2015
19%
15%
16%
20%
24%
23%
23%
Europe (excluding Germany), Middle East, Africa
Asia-Pacific (excluding China, excluding Japan)
P see page 72
19%
ANNUAL REPORT 2016
13%
4 Chip Card & Security
3 Power Management & Multimarket
2 Industrial Power Control
1 Automotive
5%
CCS4
11%
PMM3
ATV¹
individual segments in the 2016 fiscal
year compared to the previous year
Revenue growth of the
> Organic growth of 7 percent achieved despite difficult market
conditions; Segment Result Margin within forecast range
2016 fiscal year
18
P see page 68 f.
IPC2
14%
> Good performance enables higher dividend
32%
Revenue by segment in the 2016
fiscal year
Corporate and Eliminations: €1 million
Other Operating Segments,
€2,050 million
Power Management & Multimarket:
Industrial Power Control: €1,073 million
Automotive: €2,651 million
16%
Chip Card & Security: €698 million
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.).
11%
0%
INFINEON TECHNOLOGIES
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.
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).
41%
07|2016 08|2016 09|2016
100
9.05
90
10|2015
11|2015
01|2016
02|2016
Infineon
04|2016 05|2016
06|2016
DAX
110
12|2015
03|2016
11.06
130
140
150
160
10.06
12.07
13.07
14.08
15.08
16.09
September 30, 2015 = 100
-SOX
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 €
120
Dow Jones US Semiconductor Index
98.3
22.7
INFINEON TECHNOLOGIES
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.
ANNUAL REPORT 2016
Combined Management Report | Our Group
Finances and strategy
Growth drivers
Growth drivers
31
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.
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%
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.
100.7
91.4
92.8
6.1
88.7
5.0
18.8
17.5
8.6
8.8
23.7
12.8
20.9
29.3
15.2
95.0
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.
28
30
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.
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.
Strategic advantages through in-house manufacturing
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
2015
Finances and strategy
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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.
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.
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.
Technology leadership means added value for customers
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.
25
Group strategy
Finances and strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Group strategy
Financial targets underline our claim to grow
Combined Management Report | Our Group
Sustainable value creation for our shareholders
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.
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.
Group strategy
Finances and strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
The rating agency S&P Global Ratings (S&P) has evaluated Infineon's creditworthiness as
"BBB" (outlook "stable") (see the chapter "Treasury and Capital Requirements"). At present
this gives Infineon the best S&P rating of any European semiconductor manufacturer.
The upper limit on our gross financial debt is twice Earnings Before Interest, Tax, Depreciation
and Amortization (EBITDA). Our moderate debt level and the well distributed maturity profile
reaching until 2028 allow us to reliably service our debt, independent of the current capital
markets environment.
Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount
of €1 billion provides a solid liquidity reserve for contingent liabilities and retirement fund
liabilities which are independent of revenue. Furthermore, 10 to 20 percent of revenue means
we always have access to enough cash to be able to finance the operating business during all
phases of the business cycle.
It is important to our customers that Infineon remains a dependable partner that will also be
able to supply reliably for many years to come. As an employer, we also want to give this kind
of long-term reliability to our employees, even well beyond their active working lives in the
form of retirement benefits. As a result we give a high priority to solid creditworthiness. This is
reflected by our conservative capital structure targets.
Capital structure targets demonstrate our reliability
We will also continue to expand our partnerships with contract manufacturers in non-differ-
entiating areas of backend manufacturing, i.e. package assembly, in particular for standard
packages. This will mean a corresponding reduction in the amount of investment as well.
And we also increase output by continuously increasing the productivity of all our manufac-
turing processes. Taken together, all these strategies work towards achieving the target
of investing an average of approximately 13 percent of revenue over the cycle. This includes
approximately 2 percent of capitalized development costs. In the fiscal year just completed
the investment ratio amounted as targeted to 13 percent. Our investment volume is
defined so that it will help us realize our target objective of an average growth in revenue
of 8 percent annually.
For products manufactured using standard CMOS technologies with structures of 65 nanometers
or less we work together with contract manufacturers, developing the necessary technology
modifications together with them. The essential differentiation of these products lies in the
design and less so in the process technology, which is why we no longer manufacture them
in our own facilities, thereby eliminating the investments in frontend manufacturing which
would otherwise be necessary.
Up to now our capital intensity has been characterized by existing 200-millimeter technologies.
However, compared with 200-millimeter manufacturing, the new 300-millimeter thin wafer
technology requires less investment relative to the capacity provided. This reduces the amount
of investment in manufacturing capacities for power semiconductors that is necessary in order
to achieve growth targets.
Psee page 97
29
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.
Group strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
When expanding our manufacturing capacities we only invest in our own manufacturing facili-
ties when it makes a fundamental contribution to the differentiation of our products. This is
true in particular of power semiconductors, radio-frequency components and MEMS-based
sensors. When this is not the case, we outsource an increasing amount of our wafer processing
and our package assembly to manufacturing partners.
Target 3: Investments amounting to 13 percent of revenue
Growth is only one prerequisite for sustainable success. Another criterion is profitability.
Here the margin achieved by our products is an indicator for the value our products create for
the customer. When we work profitably on a sustainable basis, it means that we steer our
developments to the point where they provide the highest benefit to our customers. Working
profitably means using innovative strength effectively by meeting the demand of the customer
and the markets. In addition, we want to continue our development and sales achievements
at unabated speed even in difficult market phases. Going forward, we want to achieve an
average Segment Result Margin of 17 percent of sales through the cycle (the previous target
was 15 percent). Today, we are benefiting from a stronger US dollar, giving us some margin
tailwind compared to the situation when we published our previous targets. In order to achieve
this goal on a sustainable basis, we are relying among other things on cost advantages from
the integration of International Rectifier's manufacturing Landscape as well as from the
further ramp and utilization of our 300-millimeter site in Dresden (Germany). We also leverage
economies of scale in research and development and sales through leading positions in our
target markets. And technology leadership and the strategic approach "Product to System"
enable us to maintain a higher degree of differentiation. In the 2016 fiscal year we achieved a
Segment Result Margin of 15.2 percent.
Target 2: 17 percent Segment Result through the cycle
Infineon's current business has grown at an average rate of approximately 9 percent annually
since the company was established as an independent corporation in fiscal year 1999 -
excluding the revenue growth due to acquisitions. We remain active in the same markets and
our four segments are positioned to capitalize on the megatrends mentioned earlier, which
are driving a steady demand momentum for our products. We therefore expect to be able to
continue growing in the future at a pace very close to the historical rate. A detailed description
of the individual growth drivers follows in the next chapter. Here our strategic approach
"Product to System" helps us develop better solutions with our broad technology and product
expertise and thus to create significant added value for our customers who are willing to pay
more for solutions that are worth more. Furthermore, we are using tailor-made go-to-market
strategies to broaden our customer base and generate more business. In doing so we want
to continue to grow at an average of 8 percent per year.
Target 1: 8 percent average annual growth in revenue
Our strategy is based on sustainable, profitable growth, reflected in the ambitious targets we
have set for ourselves. They emphasize on the one hand the high level of expectations we place
on ourselves, and on the other hand ensure that we achieve the necessary balance between
growth in sales, profitability and investment volume.
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.
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.
Digitalization changes the way we work
Finances and strategy
2016 e
2020 e
2018 e
engine vehicle
vehicle
Source: Strategy Analytics, "Automotive Semi-
conductor Demand Forecast 2014-2023", May 2016
CO₂ reduction
The automotive industry is constantly working to reduce emissions. These efforts are in part
required by legal regulations: Thus, for example a new European Commission rule requires the
reduction of average fleet emissions to 95 grams CO2 per kilometer by the year 2021. A lively
discussion is currently taking place surrounding exhaust gas testing procedures under more
realistic conditions. If the legislature should decide on regulations for new, more realistic
testing procedures, it would implicitly mean tighter CO2 reduction rules, which would in turn
increase the demand for semiconductors. Furthermore, today customers increasingly make
purchase decisions while fully aware of the fact that reduced fuel consumption saves money,
minimizes impact on health and the environment and thus contributes to improving the
quality of life, especially in metropolitan areas.
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.
Charging stations for electric vehicles
The need for an appropriate charging infrastructure grows as electric vehicles become
more widely adopted. A well-developed network of charging stations is another incentive for
purchasing electric vehicles. In order to raise the level of electro-mobility acceptance, China
has begun operation of charging stations along the country's eight most important highways,
including the important connection between Beijing and Shanghai. By 2020 as many as
10,000 charging stations with 120,000 charging points will be in operation, with a correspond-
ing investment volume of approximately US$770 million. The charging stations are rated at
up to 100 kilowatts and each one requires power semiconductors worth from US$200 to
US$300. The network of publicly accessible charging stations can be expected to grow in other
countries in the years to come as well. In addition to dedicated electric service stations, it is
also possible to integrate charging stations in street lights.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our Group
Finances and strategy
Growth drivers
34
Internal Plug-in- Pure electric
combustion hybrid vehicle
World market for standard IGBT
modules in solar energy
CAGR¹ (2015-2020):
+9.2%
222
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.
2017e
US$ in millions
704
Finances and strategy
352
2019 e
China
Japan
North America
Other countries
Europe
Asia-Pacific (excl. China, excl. Japan)
1 CAGR = Compound Annual Growth Rate
Source: IHS Markit, "Annual Light Vehicle Production Forecast", August 2016
712
"Vision Zero" and Automated Driving
"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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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Finances and strategy
Growth drivers
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.
In spite of the constantly increasing number of vehicles on the road, the number of traffic
fatalities in developed nations has dropped over the course of several years. More than
anything this is the result of safety systems. Active safety systems constitute an especially large
growth market. By directly intervening in driving actions, these systems can either completely
prevent accidents or significantly reduce their consequences. Examples here are pedestrian
detection, adaptive cruise control and blind spot detection. In the meantime these functions
can be found not only in the luxury class, but also increasingly in medium-class vehicles.
Active safety systems are then enhanced to become driver assistance systems, which are of
increasing importance for road safety, since they provide the driver with extensive support
while driving. For example, they assist in critical situations and help correct driving errors
when necessary, thus reducing the risk of accidents. Systems for partial and completely auto-
mated driving consist essentially of sensors (such as radar, interior and exterior cameras), a
central high-performance computer (the intelligence of the system, so to speak) for evaluation
of the sensor data and the calculation of the driving strategy, and lastly of actuators (steering,
braking, engine control and transmission). As a leading provider of system solutions Infineon
has an extensive product portfolio for assistance systems and automated driving.
32
Average semiconductor content
of various types of vehicles
33
Growth drivers
Finances and strategy
Combined Management Report | Our Group
in US$
INFINEON TECHNOLOGIES
Another important trend is the continuously rising degree of interconnection between
vehicles. This development opens up opportunities for many new services, but also increases
the danger of unauthorized access to systems by a third party. This means secure data
exchange among the various on-board systems as well as with other vehicles and the infra-
structure has to be maintained. Vehicle and personal safety on the one hand and data and
information security on the other hand can no longer be provided independently of one
another. The vehicle is becoming a "connected computer on wheels". The need for data and
IT security in the vehicle will thus continue to grow. Infineon is ideally positioned to benefit
from this trend, with decades of experience in this area in the Chip Card & Security segment.
Networking, data and IT security
Our components strongly contribute to supporting vehicle drivers and bringing us closer to
autonomous driving. And the connection to the internet makes it possible to equip vehicles with
more and more new functions and services. Once again, semiconductors play an important role.
Actuators are also safety-critical applications. One of the most important requirements for
partially and fully automated driving is that the system continues to work reliably even in case
of a defect. In order to achieve this, Infineon offers ISO 26262-certified components for these
applications with redundancy in case of failure: Safety-critical components and subsystems have
to be highly available, i.e. protected against failure. This is why such sensors, microcontrollers
and
power semiconductors are deployed redundantly, also increasing the level of demand for
semiconductors.
The microcontrollers of our AURIXTM family ensure the reliability of the systems. In its function
as main controller, AURIXTM sends out the commands for the actuators in automated operations.
Furthermore, it has another key role as safety anchor in that it safeguards the components
not qualified according to automotive industry standards.
ANNUAL REPORT 2016
1
The PrimePACKTM module series
is especially configured for the
demanding conditions found in
wind power turbines
43
Industrial Power Control
The segments
Combined Management Report | Our Group
The core competence of the Industrial Power Control segment is the conversion of electrical
energy for medium to high power performance. Applications range from the refrigerator, with a
few hundred watts, all the way to natural gas compressors with as much as 50 megawatts. The
product portfolio includes discrete IGBTs, IGBT modules, drivers and controllers as well as their
combination in so-called Intelligent Power Modules (IPMs) or pre-fabricated stack units. Infineon
is the world market leader for IGBT-based power semiconductors (discretes and modules).
INFINEON TECHNOLOGIES
The Industrial Power Control segment in the 2016 fiscal year
Industrial Power Control
SEGMENT RESULT
€126 million
€1,073 million
ANNUAL REPORT 2016
44
The segment also benefited from the rise of electro-mobility. Revenue from IGBT modules
for hybrid and electric busses increased significantly, in particular with Chinese customers. In
other areas,
such as drives and traction systems as well as in natural gas and oil production,
we saw flat or slightly declining demand. Furthermore, for the first time International Rectifier
contributed to revenue throughout the entire 2016 fiscal year, compared with only about eight
and a half months in the previous year.
€ in millions
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.
The revenue increase was primarily driven by renewable energies. The worldwide increase
in wind and photovoltaic power capacities continued. The development targets of several
important countries such as China, the USA or India drove the increased demand. The dispro-
portionally high growth rates of recent years in this area also led to a change of revenue
distribution by end-markets. In the meantime renewable energies account for approximately
one fifth of the segment's revenues.
The 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 development
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.
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 and Segment Result of the
Industrial Power Control segment
Segment Result
126
2015
115
971
1,073
Revenue
2016
REVENUE
NXP
Market position
> Electronic stability control
Development of Segment Result
> Hatchback
> Lighting
> Power window
> Steering
> Lane departure warning system
› Sunroof
> Tire pressure monitoring system
> Suspension
> Windshield wipers
› Generator control
> Start-stop system
> Transmission control
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.
> Protection against hardware
> Protection against
software manipulation
World automotive semiconductor
market share 2015
Infineon
Renesas
STMicro-
electronics
Texas
Instruments
Source: Strategy Analytics, "Automotive Semi-
conductor Vendor Market Shares", April 2016
14.2%
10.4%
10.3%
7.7%
7.0%
manipulation (e.g. odometer)
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.
Renewable energy
generation
INFINEON TECHNOLOGIES
› Metro trains
› Trams
Uninterruptable
power supplies
World IGBT-based power
semiconductor market share 2015
Infineon
27.6%
Mitsubishi
20.6%
Fuji Electric
12.5%
Semikron
Fairchild
7.6%
4.9%
Market position
The world market for IGBT-based power semiconductors - discrete IGBT power semiconductors
and IGBT modules - reached US$3.944 billion in the 2015 calendar year, a decline of 11.8 percent
compared to the previous year value of US$4.473 billion (source: IHS Markit). Infineon was
able to increase its market share from 26.5 percent in the previous year to 27.6 percent in the
2015 calendar year and increased the distance to the number 2 in the market to 7.0 percentage
points (previous year: 4.9 percentage points). The five largest competitors together held
73.2 percent of the market.
Source: IHS Markit, "Power Semiconductor Discretes
Security for the Internet of Things
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.
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.
in the 2016 fiscal year
The Power Management & Multimarket segment
Power Management & Multimarket
> Locomotives
CoolMOST P7
800V
Infineon
The 800 Volt CoolMOST P7 series
is optimized with regard to
efficiency, ease of application
and system costs
SEGMENT RESULT
€328 million
€2,050 million
REVENUE
& Modules Report", October 2016
TO-247
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).
> High-speed trains
> Photovoltaic systems
> Wind power turbines
ANNUAL REPORT 2016
Combined Management Report | Our Group
The segments
Industrial Power Control | Power Management & Multimarket
44
Charging stations for
electric vehicles
Energy transmission
> FACTS (Flexible AC
Transmission Systems)
> Offshore wind farm
HVDC lines
Applications
Home appliances
> Air conditioners
› Dishwashers
> Induction cookers
> Microwave ovens
> Refrigerators
> Washing machines
1 Including motors, compressors, pumps and fans.
Industrial drives¹
> Electronic power steering
> Hybrid busses
> Forklifts
› Construction vehicles
> Agricultural vehicles
Industrial vehicles
Traction
> Rolling mills
> Materials handling
> Escalators
> Elevator systems
› Drives
> Automation technology
> Air conditioning technology
> Robotics
> Electronic chassis control
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.
EFFE
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
Combined Management Report | Our Group
Finances and strategy
Growth drivers
38
Radio-frequency and optical sensors
RF components play an important role in sensor technologies as well. In addition to automotive
applications we also see a wide variety of interesting use cases in mobile devices and consumer
electronics. For example, radar chips can be used to precisely control devices with hand
movements. Gesture recognition technology thus opens a whole range of new possibilities
for the interaction between humans and machines.
On the other hand our REAL3TM image sensor chip works based on infrared light. It lets devices
see in three dimensions using the time-of-flight principle. For each pixel the chip determines
how long the light transmitted takes to travel from the source to the object and back again, and
uses this data to calculate the distance to the object. Infineon is the only provider worldwide
whose image sensor chip meets the requirements of the Google technology platform Tango. The
technology is featured in the PHAB2 Pro smartphone from Lenovo and enables three-dimen-
sional images of the surrounding environment. This makes it possible to represent objects in
what is referred to as Augmented Reality. Other applications are for example alertness assistants
and fatigue detection in partially automated driving as well as gesture recognition in vehicles.
MEMS (Micro-Electromechanical Systems) sensors
MEMS-based silicon microphones are our most important product family when it comes to
sensors for mobile devices. The latest generation of mobile devices requires several differing
microphone variants with increasingly better signal-to-noise ratios. Improved acoustic capa-
bilities not only mean the potential to differentiate for the smartphone manufacturer, but also
an entirely new range of possible applications for high-performance microphones. Thus for
example additional microphones significantly improve voice control even in scenarios with high
background noise levels and improve the acoustic quality of telephone calls. Furthermore,
microphones fulfilling the highest technical requirements are installed next to the camera in
order to achieve even higher audio quality for video recordings made with the smartphone.
On top of unit growth in terms of devices and the growing number of microphones installed
per device, we also significantly benefit from the fact that besides smartphones, tablets and
notebook computers are also switching to silicon microphones. And entirely new device classes
are emerging as potential application areas, including for example headphones featuring
active noise cancellation.
At the same time devices are being designed to include more and more functions that require
detection of additional physical parameters. This further drives demand for new sensors.
Barometric pressure sensors support new functions such as indoor navigation in high-rise
buildings and shopping centers. Gas sensors can monitor air quality: An appropriately equipped
smartphone could for example warn the user of potentially harmful smog levels. We see
enormous growth opportunities in the application areas of consumer electronics, automotive
electronics and the Internet of Things.
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.
Security
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our Group
Finances and strategy
Growth drivers
39
Contactless payment with a ring:
A security controller from Infineon,
including antenna, is built into
the ring
Government identification documents
Government IDs include passports, national identity cards and in the broader sense driver's
licenses and health care cards. These documents are increasingly being equipped with security
chips. The market penetration of chip-based official government documents is steadily on
the rise. More and more countries are making the transition to the chip-based documents
or increasing the range of such documents in use. Infineon is the leading provider of security
solutions for ID projects in Europe. Furthermore, according to the US Government Publishing
Office (US GPO) Infineon is one of the main suppliers for the security technologies used in
electronic passports in the USA. Infineon has been supplying the US GPO since the beginning
of the project in 2005.
Security for mobile devices
Today payment services can be integrated in mobile devices thanks to the development of
smartphones and wearables, the mobile internet and Near Field Communication (NFC)
technologies. However, cash-free payment is only one of the many mobile device functions
involving the storage and processing of sensitive information. For example, people are experi-
encing new forms of comfort when travelling on public transportation with mobile tickets
instead of using coins and physical tickets.
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.
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.
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.
Radio-frequency power components
Networking and sensor systems
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
> Distance warning systems
Finances and strategy
Growth drivers
35
Traction systems
One of the key topics of the 21st century is sustainable and optimally connected mobility
within urban metropolitan areas as well as mobility between cities. Today reliable and fast
public transportation is more important than ever for the quality of life and competitiveness
of many regions and cities around the world. Our components are used both in local public
transportation trains, subway trains and trams as well as in high-speed trains.
By now China has become the largest railway vehicle market in the world. Here in particular
high-speed trains, overland trains and urban rail play a major role. We also expect a more
vibrant market for traction systems in the rest of Asia. Here industrialization is leading to rising
demand in particular for urban and regional rail systems. Further growth markets are South
Africa, South America, the Middle East and most probably in the future the USA. Our customers
are the world's largest manufacturers in the traction sector, including Bombardier Transportation,
China's CRRC and Siemens.
Automation
Industrial motors are at the heart of a large number of systems, for example cranes, conveyor
belts and robots. They are used wherever objects need to be moved or transported. Electric
motors are also used in refrigeration pumps and air conditioning and the simple production of
compressed air. The strongest industrial electric drives are found in sluices, cement mills,
pumps in municipal waterworks, in air compressors used in the production of technical gases
and in compressors for natural gas pipelines. Approximately 300 million electric motors have
been installed around the world in industrial applications alone, accounting for approximately
two thirds of commercially consumed electric power. This constitutes a substantial lever when
it comes to savings resulting from improvements in the degree of efficiency. One possibility
to reduce the energy consumed by an electric motor is to use an electronic control system to
regulate speed, i.e. adapting performance to suit current needs. The market penetration of
speed-regulating motor controls can thus be expected to increase. Modern manufacturing
facilities in which constant adjustment of rotation speed is necessary are not even possible
without regulated electric motors. The next level of automation will be achieved with the
Industrial Internet, which will give rise to a new investment cycle. At present only around
15 percent of the electric drives in use are controlled electronically. This is good news for
Infineon: The realization of a speed-controlled motor unit requires a large number of the power
semiconductors we provide to the market. Their number and value depend on the performance
class of the motor.
Brushless DC motors
One important model type of electric drives is referred to as the brushless direct current motor
(BLDC motor). In BLDC motors commutation is electronic; depending on the rotor position,
rotor rotation speed and torque. Rotor position and rotation speed can for example be detected
using sensors (e.g. magnetic field sensors). The windings that generate the torque on the rotor
are controlled via power semiconductors based on this position information. The electronic
commutation avoids losses in BLDC motors, in contrast to motors with brush-based commuta-
tion. Because of their high energy efficiency and their low weight to power ratio, brushless
direct current motors are frequently used among other things in battery-operated systems.
Power tools: Millions of households around the world rely on cordless power tools when
making repairs. Since the end customer expects robust and reliable portable tools, the purchase
decision is based not only on price, but especially on ease of use and long battery life. Battery-
operated power tools also have to be equipped with diagnostic and safety functions in order
to create user confidence in the application through quality and safety. The demand for suitable
semiconductor solutions is correspondingly high.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our Group
Finances and strategy
Growth drivers
37
Growth drivers
Finances and strategy
Combined Management Report | Our Group
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Security as cross-segment expertise
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
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
36
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.
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.
Combined Management Report | Our Group
ANNUAL REPORT 2016
Revenue development
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.
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.
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.
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.
The increasing demand for radar sensor ICs was due on the one hand to the increasing market
penetration of radar-based driver assistance systems and on the other hand to the higher
number of radar sensors per vehicle. In particular our 77 gigahertz radar solutions for driver
assistance systems were in very high demand. At present Infineon is the leading supplier to
the most important manufacturers of radar systems in the Europe, North America and Asia
regions. As a result of the rising demand for 77 gigahertz radar sensor ICs, we sold more than
12 million units in the completed fiscal year and thus about the same number compared with
the two preceding years taken together. In order to be able to continue meeting these rising
demands in the future, expansion of the frontend manufacturing capacities has begun for this
product in Regensburg (Germany).
Sales figures for the vehicle markets in Europe, North America and China were up. The high
demand for vehicles in the upper middle class, in particular sports utility vehicles (SUVs)
continued globally. This vehicle type is characterized by a comparably high level of additional
features for safety and comfort functions. Furthermore, vehicles from German car manufac-
turers, in particular premium class vehicles, were in particularly high demand in all regions.
Development of Segment Result
The Segment Result totaled €396 million, an increase of 20 percent to the previous year's figure
of €331 million. The Segment Result Margin stood at 14.9 percent (previous year: 14.1 percent)
of revenue.
The Segment Result was positively influenced by higher revenues. In addition, improved
productivity, in particular in the second half of the 2016 fiscal year, helped increase the
Segment Result Margin. However, this was partly offset by temporary ramp-up costs for the
new frontend manufacturing facility Kulim 2 (Malaysia).
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our Group
The segments
Segment Result
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.
42
Assistance and safety systems
> Airbag
> Anti-blocking system
> Automatic parking
› Blind spot detection
Applications
Comfort electronics
> Air conditioning
> Door electronics
> Electronic control units
> Electronic seat adjustment
Powertrain
› Battery charging control
› Battery management
> Combustion engine control
> Electric motor control
Security
> Communication (car-to-car,
car-to-infrastructure)
INFINEON TECHNOLOGIES
Automotive Industrial Power Control
2016
> Digital tachograph
> Original spare parts
authentication
396
Combined Management Report | Our Group
The segments
Automotive
The segments
40
40
REVENUE
€2,651 million
SEGMENT RESULT
€396 million
2015
is ideal for use in main inverters
and generators for hybrid and
electric vehicles
Infineon
FF4DOROTA01E3 56
Automotive
The Automotive segment in the 2016 fiscal year
Infineon is the leading provider of system solutions for automotive electronics, with over
40 years of experience and the industry's most comprehensive portfolio of power semi-
conductors, sensors and microcontrollers. Following the guiding principle of "clean, safe
and smart" the Automotive segment addresses the industry's current megatrends: Electro-
mobility, automated driving as well as connectivity and advanced security. Our profound
system understanding helps car manufacturers in their efforts to reduce CO2 emissions
and to avoid accidents. Electro-mobility and automated driving increase the semiconductor
bill-of-material per vehicle and are expected to account for 50 percent of our growth in
Automotive on a 5-years horizon. Infineon is the only semiconductor manufacturer to benefit
from both of these megatrends.
The power module Hybrid PACK™
DSC (double sided cooling)
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.
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.
2,350
2,651
Revenue
€ in millions
of the Automotive segment
Revenue and Segment Result
331
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.
41
Radio-frequency power transistors
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.
NXP
Ampleon
Infineon
Sumitomo
24.1%
34.8%
10.6%
8.1%
3.6%
Source: ABI Research, "RF Power Semiconductors",
Wolfspeed
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.
World standard power MOSFET
market share 2015
Market position
World RF power semiconductors
market share 2015
Source: IHS Markit, "Power Semiconductor Discretes
& Modules Report", October 2016
7.3%
8.0%
8.9%
9.5%
26.4%
Toshiba
electronics
STMicro-
Renesas
Fairchild
Infineon
Standard MOSFET power transistors
July 2016
126
ANNUAL REPORT 2016
› Base stations
The segments
Combined Management Report | Our Group
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Compared with the 2015 fiscal year, in which almost all business segments contributed to
revenue growth, individual business segments developed quite differently during the previous
fiscal year. The largest contribution to revenue growth came from business with government
IDs. We were also able to win new projects in Europe, Asia and South America.
The Chip Card & Security segment generated revenues totaling €698 million in the 2016 fiscal
year, an increase of 5 percent compared to the previous year's figure of €665 million. The
segment contributed 11 percent of Group revenue.
Revenue development
The continuous evolution of the Internet of Things makes security functions embedded in
connected devices more and more important. Embedded security is used to secure mobile
devices such as laptop computers, tablets and wearables, as well as securing information and
communication infrastructures, industrial facilities and connected vehicles. Awareness of the
need for hardware-based security technologies is continuously growing in this area. Solutions
which are easy to implement, such as our successful OPTIGA™ TPM chip, are particularly
attractive to our customers. Furthermore we provide support in the certification of security
solutions, provide reference designs and offer software that is closely related to our security
controllers (for example firmware, driver software and hardware-related application software).
With these services we reduce the development costs of our customers and accelerate the
market launch of their products.
The main challenge in many application areas is realizing the highest possible level of security
while using the least amount of space. Here we have an excellent position: This summer
the company NFC Ring presented a ring with a contactless payment function using a security
controller from Infineon. It communicates with the payment terminal in a matter of milliseconds
using a tiny antenna and initiates the secure payment transaction while using encryption
procedures. The ring can be used for payment in the same manner as a chip-based credit card
but is much more convenient. Infineon is the world's first and as of yet only semiconductor
company to fulfill the requirements of the international EMV (Europay International, Master-
Card and VISA) standard.
Traditional application areas include payment cards, electronic government IDs, SIM cards
for mobile communication and ticketing solutions. Particularly the business with government
IDs continued to grow during the previous fiscal year. In Europe we supply around 70 percent
of all ID document projects. We not only won further business in Europe but also in Asia and
South America. We are also successful in smaller and regional security projects by which we
further diversified our customer portfolio. During the summer, the operators of the Korean
civilian airports KAC (Korea Airports Corporation) began to implement a new building access
control system for example. Airports are among the best protected premises in the world,
therefore security requirements are particularly high. The solution now being implemented is
based on the open CIPURSE™ security standard; Infineon supplies the chips for the employee IDs.
The project is another milestone on the road to establishing CIPURSE™, after two major cities
in Europe and South America have started using the standard for their public transportation
ticketing systems. Infineon provided crucial support in the development and introduction of
CIPURSE™ as we are convinced of the advantages of open standards.
The Chip Card & Security segment has around 30 years of experience with the largest and
most demanding security projects in the world. As a leading provider of security solutions
we address the classic smart-card applications, while also offering solutions for embedded
security within larger electronic systems.
The Chip Card & Security segment in the 2016 fiscal year
Chip Card & Security
Segment Result
INFINEON TECHNOLOGIES
2016
135
665
698
Revenue
€ in millions
of the Chip Card & Security segment
Revenue and Segment Result
With the advent of the Internet
of Things, the awareness of the
need for hardware-based security
technologies for connected
systems is continuously rising
SEGMENT RESULT
€135 million
REVENUE
€698 million
47
Chip Card & Security
The segments
Combined Management Report | Our Group
2015
Cellular infrastructure
Charging stations
> Smartphones
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.
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.
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.
This growth in revenue was primarily driven by increased demand for MOSFET power transistors
in all voltage classes. Furthermore, for the first time International Rectifier made a contribution
to revenues over the entire 2016 fiscal year, as opposed to only approximately eight and a half
months in the previous year.
The Power Management & Multimarket segment generated revenues totaling €2,050 million
in the 2016 fiscal year, an increase of 14 percent compared to the previous year's figure of
€1,796 million. The segment contributed 32 percent of Group revenue.
Revenue development
The planned acquisition of Wolfspeed will also strengthen our position in radio-frequency
power components for next-generation cellular infrastructures (5G). This lays the foundation
for us taking over the leading position in the future.
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.
Segment Result
2016
2015
328
323
1,796
2,050
Revenue
€ in millions
of the Power Management &
Multimarket segment
Revenue and Segment Result
45
45
Power Management & Multimarket
The segments
Combined Management Report | Our Group
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Power Management & Multimarket
46
46
Chip Card & Security
> Navigation devices
› Activity trackers
Mobile devices
> Tablets
> Smartphones
> Servers
> PCs and notebooks
> IT and telecom
> Home appliances
› Consumer electronics
Power management
LED and conventional
lighting systems
> Submarine telecommunications
› Space systems
> Tablets
> Oil and natural gas exploration
> Commercial aviation
HiRel
Applications
The Segment Result increased with higher revenues. This was largely offset by higher operating
expenses, especially for research and development, as well as by temporary ramp-up costs
for the new frontend manufacturing facility Kulim 2 (Malaysia), impacting the Segment Result
margin negatively.
The Segment Result totaled €328 million, an increase of 2 percent compared to the previous
year's figure of €323 million. The Segment Result Margin was 16.0 percent (previous year:
18.0 percent) of revenue.
Development of the Segment Result
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.
> Pedelecs
> Multicopters
(cordless screwdrivers etc.)
> DIY tools
> eBikes
DC motors
for electric vehicles
> Defense technologies
48
Duisburg
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.
- Package derivatives
Ipoh
Malaysia
semiconductors
- System solutions for automotive electronics
- System integration for power
sales
Seoul
- IGBT modules
BE
Cheonan
Korea
sales
Tokyo
sales
Osaka
sales
Nagoya
Japan
- Power ICs
Kulim
Malacca
FE
- Power semiconductors
- Package technology
Combined Management Report | Our Group
Locations
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
GRI G4-17
sales
Taiwan
Taipei
- Test concepts
center, sales
- Package technology
BE
ters, distribution
BE
- IC, software and system development
regional headquar-
- ICS
- Interface to subcontractors
Philippines
Muntinlupa
Singapore
- Discrete semiconductors
- Sensors
- Power semiconductors
BE
Competence center for final test
Americas
Batam
- Design flow and library development
sales
Blackburn
Australia
FE = Frontend
BE Backend
Manufacturing
Research and Development
Function
Asia-Pacific
51
Combined Management Report | Our Group
Locations
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
BE - IGBT modules
- Power semiconductors
FE
BE
FE = Frontend
Backend
Manufacturing
- Chip card ICs
China
Beijing
sales
- Application development
- Software and system development
sales
Bangalore
India
sales
Xi'an
- Power semiconductors
- Discrete semiconductors
BE -Chip card modules
Indonesia
Wuxi
Shenzhen
sales
- Application development
distribution center,
Shanghai
sales
Hong Kong
- IGBT stack assembly
BE
sales
- Mixed-signal and RF ICS
Brasil
Research and Development
12.4%
717
770
550
12.7%
€ in millions
R&D expenses
Research and Development
Combined Management Report | Our Group
Research and Development
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
52
52
GRI G4-17
- Control ICs for digital power management
- DC-DC converter, driver ICs and power ICS
- Power semiconductors
FE
- Digital power management solutions
for DC-DC power stages
11.9%
2014
2015
2016
Another indication of the innovation power and long-term competitiveness of Infineon is the
number and quality of our patents. In the 2016 fiscal year we applied for approximately 2,000
patents worldwide, compared to approximately 2,200 patent applications in the previous year.
At the end of the 2016 fiscal year the worldwide patent portfolio consisted of approximately
27,000 patents and patent applications (previous year: approximately 25,000 patents and patent
applications). The planned acquisition of Wolfspeed will add approximately 2,000 patents and
patent applications.
Patents
Infineon makes systematic use of its technical core competencies in close collaboration among
the Segments (see the table in the chapter "Group Strategy/Strategic Fundamentals"). This lets
us make efficient use of our economies of scale for power semiconductors, radio-frequency
and security.
In addition to sensors, manufacturing technologies and transistor architectures for power
semiconductor components based on new materials are another important focus area of our
R&D activities. In the 2016 fiscal year we announced a new MOSFET power transistor based
on silicon carbide (SiC). The strengths of SiC are found in applications of 600 volts and higher.
This material enables power switches with significantly lower switching and conduction
losses. However, because of the expensive substrate material involved, SiC also has a cost
disadvantage. Therefore, SiC will become the material of choice wherever compactness and
efficiency are key requirements, for example in on-board chargers and powertrains for electric
and hybrid vehicles, as well as in photovoltaic inverters. Modification of the system design
and topology will make it possible for other applications to make use of these advantages as
well. This is due to the fact that disproportionally high savings with other components make
it possible to reduce system costs in spite of the higher expenses associated with SiC MOSFET.
The same is true for power transistors based on gallium nitride. Here we are currently develop-
ing the next generation of transistors, which will be used in highly-compact power supplies.
Another focus point of our R&D activities is in digital control of power semiconductors. We
currently witness the transition from analog control to digital control of power switches. Digital
control systems enable much easier adoption to various operating conditions (for example
stand-by, partial load, full load) and also enable better use of the ever more complex power
components. Programmability of the control ICs enables customers to adapt the function of
the control unit to meet their requirements with shorter learning cycles. This transition already
began several years ago for MOSFET-based control loops; the trend is now also starting for
IGBT-based control loops. Infineon provides components for all stages of the digital control
loop, namely control ICs, driver ICs and power switches.
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.
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.
P see page 23
54
Combined Management Report | Our Group
Research and Development
Tewksbury
Torrance
Warwick
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
While in the past both research and development were primarily focused on technologies or
components, today the systems in which the components are used are playing a decisive role.
Innovative system solutions start with the optimization of system functionality. When savings
and improvements - for example for passive components, cooling systems, packages, weight,
reliability - create value for the customer, the customer will be prepared to pay a higher price
for the enabling semiconductor component. Here digital microelectronics are often combined
with components from the areas of radio-frequency, control of power components, sensor
systems and actuators, resulting in a significant increase in performance.
R&D expenses are not only incurred for product development, but also increasingly for
platform developments, for new product families and for new manufacturing technologies.
This includes for example digital power management, technology platforms for low- and high-
voltage power switches, power semiconductors based on the new materials silicon carbide
and gallium nitride, and finally new sensor types, in particular those based on our magnetic
field, radar, infrared and MEMS (micro-electromechanical systems) technologies.
Principal research and development activities
The capitalized development costs in the 2016 fiscal year amounted to €98 million (previous
year: €100 million). Amortization of capitalized development costs totaled €31 million
(previous year: €29 million) in the 2016 fiscal year. Subsidies and grants for R&D increased
from €59 million in the 2015 fiscal year to €75 million in the 2016 fiscal year.
At the end of the 2016 fiscal year we employed 6,057 employees (17 percent of Infineon's total
workforce) at our research and development sites worldwide; at the end of the 2015 fiscal year
this figure stood at 5,778 employees (16 percent of the total workforce). Infineon maintains
R&D departments at 34 sites in 14 countries (see the chapter "Locations", P page 49 ff.).
Research and development expenses (R&D expenses) amounted to €770 million in the 2016
fiscal
year, ‚ after €717 million in the previous year, representing an increase of €53 million or
7 percent. The year-over-year increase was slower in percentage terms than the increase in
revenue which grew by 12 percent. In the 2016 fiscal year we spent 11.9 percent on R&D relative
to revenue compared to 12.4 percent in the previous year. With this rate we are well within our
target range, i.e. a percentage of revenue in the low- to mid-teens.
53
Percentage of revenue
R&D expenses
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.
Function
Temecula
BE
sales
Kokomo
distribution center
Hayward
- Package platforms
- Components for space and aviation
sales
sales
El Segundo
Durham
- Power semiconductors
BE
Manufacturing
FE = Frontend
BE Backend
of GaN components
Development and characterization
Chandler
USA
Tijuana
Mexico
São Paulo
Lebanon
sales
Leominster
sales
- Power semiconductors for space,
aerospace, defense, and high-temperature
applications
sales
San Jose
Raleigh
- RF power transistors
BE
- RF power transistors
Morgan Hill
quarters, sales
- HiRel hybrid modules
regional head-
FE
- Epitaxy
Mesa
Milpitas
sales
Livonia
- HiRel power modules
BE - HiRel power components
- HiRel power modules
- HiRel power components
- Epitaxy
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.
- Power ICs
sales
Linz
service function
Klagenfurt
- Power semiconductors
- Sensor products
- Chip card applications
FE
Research and Development
Function
Graz
Austria
Europe
Locations
Combined Management Report | Our Group
Locations
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Infineon grew the fastest among all other market participants and was able to acquire 1.1 per-
centage points of market share. The distance to the market leader was reduced to 5.7 percentage
points (previous year: 7.0 percentage points). The five largest competitors together held
97.0 percent of the market.
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.
Market position
Source: IHS Markit, "Smart Cards Semiconductors",
July 2016
- RF ICS
Vienna
sales
Villach
sales
Saint-Denis
Réparade
- Power ICs
Le Puy-Sainte-
France
sales
Espoo
Finland
10.4%
- SiC and GaN technology
FE - Power semiconductors
- HiRel products
- Power semiconductors, analog and
mixed-signal ICs and sensors
Competence center for thin-wafer and
compound semiconductor technologies
Skovlunde
Denmark
BE = Backend
Frontend
Manufacturing
sales
-
Germany
15.1%
24.8%
> Credit/debit cards
> Connected driving
Internet of Things
Government identification
documents
Payment systems
(e.g. odometer, digital tachograph)
> Protection against manipulation
> Electronic toll collection
› Connected vehicles (e.g. eCall,
car-to-car, car-to-infrastructure)
Automotive
› Spare parts
> Industrial control systems
› Game consoles
› Accessories
Authentication
Applications
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.
Development of Segment Result
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.
> Industrial Internet
> Driver's licenses
> National identity cards
› Passports
30.5%
CEC Huada
electronics
STMicro-
Samsung
Infineon
NXP
chip card ICs market share 2015
World microcontroller-based
16.2%
Ticketing, access control
Trusted Computing
> NFC-based contactless
payment
> Mobile payment
> Machine-to-machine
communication
› Conventional SIM cards
> High-end SIM cards
Mobile communications
> Smart Home
> IT
(Industry 4.0)
Healthcare cards
Secure NFC transactions
GRI G4-17
Augsburg
Ditzingen
- Driver ICs for motion control
Pavia
- Power ICs
Padova
sales
Milan
Italy
sales
Dublin
Ireland
- Package pathfinding
- Package concept development
- Microcontroller systems for automotive
applications
sales
Research and Development
Function
Hungary
Cegléd
Newport
Reigate
Bristol
Portugal
Porto
service function
Romania
Istanbul
Turkey
sales
Rotterdam
The Netherlands
sales
Zurich
Switzerland
sales
Great Britain
Kista
sales
Madrid
sales
Barcelona
Spain
sales
Moscow
Russian Federation
Bucharest
Sweden
- Software for chip card applications
50
ANNUAL REPORT 2016
- Hitex software development tools
for embedded systems
sales
-System-on-chip development
- Power semiconductors
Neu-Isenburg
Regensburg
near Munich
Neubiberg
Hanover
sales
headquarters, sales - Technology integration
Karlsruhe
Groẞostheim
sales
Erlangen
sales
- 200 mm and 300 mm manufacturing
FE
- CMOS derivative technologies for RF
and sensors, among others
Dresden
sales
distribution center
Combined Management Report | Our Group
Locations
- Design flow and library development
for microcontrollers, ASICS, sensors
and chip card ICs
INFINEON TECHNOLOGIES
49
GRI G4-17
- Assembly and package technology for
IGBT modules
- IGBT modules
BE
- Product development IGBT modules
sales
Warstein
- IC, software and system development
- Sensors
BE -Chip card modules
- Power semiconductors
- Analog and mixed-signal components
Radio-frequency
FE
- Technology development for sensors
- Competence center for preassembly and
package development
sales
- Power electronics
- Power semiconductors
sales
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
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".
Management development
Strive for
excellence
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.
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;
> the "Technical Ladder", which enables our technical experts to develop;
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.
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 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.
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.
20
15
15.0%
12.1%
12.5%
13.0%
13.4%
10
10.2%
5
0
2010'
20131
2014¹
2015'
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
25
For an analysis of changes in these key performance indicators during the previous fiscal year,
see the chapter "Review of liquidity".
Women in management positions (Infineon worldwide)
Combined Management Report | Our Group
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.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Our employees
> Investments: The total amount invested in property, plant and equipment and intangible
assets, including capitalized development costs
61
> Net cash position: Gross cash position less short-term and long-term debt
> 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.
> 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
Furthermore, the concluded fiscal year saw investments at the frontend and backend sites
primarily in the following areas:
Milestones and essential investment focuses in manufacturing in the 2016 fiscal year
Continued high demand for automotive power semiconductors resulted in further expansion
of the second manufacturing building at the frontend site at Kulim, known as "Kulim 2". The
"Ready for Equipment” milestone, i.e. the beginning of equipping the cleanroom, was reached
on January 15, 2016. The official opening of the manufacturing building took place on schedule
on May 13, 2016. This date also marked the beginning of volume production.
56
Combined Management Report | Our Group
Operations
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Of the amount invested in property, plant and equipment, the largest share is accounted for by
investments in manufacturing facilities. Here in turn approximately two thirds went on frontend
manufacturing facilities, with the rest essentially going on backend manufacturing facilities.
In the 2016 fiscal year our investments amounted to €826 million, representing an increase
of €41 million or 5 percent compared to the €785 million invested in the previous year. Relative
to revenues, the investments in the complete fiscal year stood at 12.8 percent, slightly lower
compared to the previous year's 13.5 percent. €716 million of the overall investment volume
went on property, plant and equipment (previous year: €646 million) and €110 million went on
intangible assets including capitalized R&D costs (previous year: €139 million).
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).
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.
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.
> Expansion of 300-millimeter frontend manufacturing capacities (see following paragraph).
1 Property, plant and equipment and intangible assets
12.8%
2016
Investments
2015
2014
卅
13.5%
785
826
668
15.5%
€ in millions
Investments
Percentage of revenue
P see page 49 ff.
> Increased level of automation at our frontend and backend sites, for example improvement
of the wafer transport system and mathematically optimized manufacturing planning.
› 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.
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.
In this context, growth, profitability and investments are all interdependent. Profitability is
the prerequisite for being able to finance operations internally, which, put another way, means
opening up potential opportunities for growth. Growth, in turn, requires continual investment
in research and development as well as in manufacturing capacities. Growing at a commen-
surate rate allows Infineon to achieve leading market positions and to generate economies
of scope that contribute to greater profitability. Employing financial resources efficiently is a
critical factor in achieving these goals.
Infineon deploys a comprehensive controlling system to manage its business with respect
to the strategic targets it has set itself. The system involves the use of financial and operating
key performance indicators. Information for controlling purposes is derived from annual
long-term planning, quarterly outlooks, orders received per week and actual monthly financial
results. This knowledge enables management to base its decisions on sound information
with respect to the current situation and future expected financial and operational develop-
ments. Sustainable business practices and the consideration of forward-thinking qualitative
factors are important for Infineon's long-term success. As an enterprise very much aware
of its responsibilities towards society, Infineon also takes account of non-financial factors,
mainly in the fields of sustainability (see "Sustainability at Infineon" on our website) and
human resources (see the chapter "Our employees"). Although these factors are not used to
manage business performance, they nevertheless help Infineon achieve its financial targets.
> Expansion of backend manufacturing capacities, in particular in Malacca, and also in Wuxi
with the construction of a second manufacturing facility.
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").
ANNUAL REPORT 2016
Combined Management Report | Our Group
Internal management system
P see page 169 ff.
P see page 40 ff. and page 18 ff.
58
Performance indicators
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
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
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.
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.
INFINEON TECHNOLOGIES
Internal
55
Operations
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 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 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.
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
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).
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.
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
P see page 79
As part of the process of analyzing operating profitability in detail, Infineon considers earnings
and costs above the Segment Result line. This involves a review of gross profit, research and
development expenses, selling, general administrative expenses and the ratio of these items
to revenue. These performance indicators are used to manage the business at both Group and
segment levels (for an analysis of changes in the fiscal year under report, see the chapter
"Review of results of operations").
Liquidity performance indicators
A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its
disposal and an optimal capital structure. Liquidity is managed at Group level, not at segment
level, and uses the following key performance indicators:
> Gross cash position: Cash and cash equivalents plus financial investments
INFINEON TECHNOLOGIES
55
Free cash flow
59
Combined Management Report | Our Group
Operations
ANNUAL REPORT 2016
Psee page 77
> Free cash flow from continuing operations to measure the amount of cash generated or
used excluding financing activities
> Return on Capital Employed (ROCE) to measure capital efficiency
Segment Result is the key figure for measuring operating performance. Expressed as a percent-
age of revenue (Segment Result Margin), it measures profitability of revenue and shows how
well operations are being managed. The activities of Infineon's segments are managed on the
basis of Segment Result. Responsibility for optimizing Segment Result within the framework
of Group strategy (as approved by the Management Board) rests with the management teams
of the relevant segments, acting, however, in coordination with the Management Board.
Free cash flow from continuing operations enables us to measure how well operating profit-
ability is being converted into cash inflows. This key figure also provides information on the
efficient use of working capital and property, plant and equipment.
Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE)
against the cost of capital, in order to ensure value creation.
Combined Management Report | Our Group
Internal management system
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.
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 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").
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our Group
Internal management system
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.
Dow Jones Sustainability Europe Index
16.09
September 30, 2015 = 100
Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
and the Dow Jones US Semiconductor Index for the 2016 fiscal year (daily closing prices)
Infineon share price in €
67
99
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
66
During the 2016 fiscal year the Infineon share continued the upward trend seen in previous
years, finishing the fiscal year at a closing price of €15.88, 58 percent higher than its closing
price of €10.06 at the end of fiscal 2015. The price of the Infineon share reached its low for the
year, €9.75, at the beginning of the fiscal year. After that, the price rose continuously, with at
times volatile price fluctuations. The Infineon share reached its high for the year of €15.88 on
the last day of trading in the fiscal year, September 30, 2016. During the 2016 fiscal year the
value of the Infineon share significantly outperformed comparable benchmark indices. In this
period the Philadelphia Semiconductor Index (SOX) rose by 39 percent and the Dow Jones US
Semiconductor Index rose by 35 percent. The 9 percent increase in value of the DAX was
significantly lower in the fiscal year just completed.
Further share price increase in 2016 fiscal year
2 Own shares were not taken into consideration for calculation of market capitalization.
Combined Management Report | Our Group
The Infineon share
due on September 10, 2018, ISIN: XS1191115366
due on March 10, 2022, ISIN: XS1191116174
since February 2016: "BBB" (outlook "stable")
130
14.08
5.08%
4.28%
3.25%
9.53%
O
Allianz Global Investors GmbH
The Capital Group Companies
BlackRock Inc.
State of Kuwait/
Kuwait Investment Authority
Retail investors
Other
Dividend for
fiscal year
Dividend per share
in €
2010
0.10
2011
5.74%
0.12
0.12
2013
0.12
2014
0.18
2015
0.20
Proposal 2016
0.22
P see page 30
Dow Jones Sustainability World Index
2012
15.08
72.12%
Dow Jones US Semiconductor Index
13.07
12.07
11.06
10.06
160
150
140
120
110
100
9.05
Shareholder structure
90
11|2015
12|2015
01|2016
02|2016
03|2016
04|2016 05|2016
06|2016 07|2016 08|2016
09|2016
Infineon
DAX
■SOX
10|2015
S&P-Europe-350
The Infineon share
Dow Jones Germany Titans 30
99
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our Group
Trading volumes and DAX ranking
The Infineon share
65
☐ Questions may be directed to us via
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
e-mail or telephone hotline:
@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/
Subsequent to completing the integration of International Rectifier during the 2016 fiscal
year, one of the areas to which the HR department will turn its attention during the 2017
fiscal year will be the scheduled acquisition of Wolfspeed.
Our human resources work focuses on continuing successful initiatives and programs and
developing new measures in response to current requirements. Infineon's long-term human
resources strategy continually contributes to meeting our high-performance aspirations.
Our aim is to deploy our workforce both competently and correctly - and to be motivated
through personal success to contribute to Infineon's overall success.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our Group
Our employees
Our workforce
Health management
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.
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.
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.
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.
Employees and personnel expense
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
Competence development
MSCI Germany
index-membership/
Share types
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)
€2,265,346,218 (as of September 30, 2016),
€2,258,542,962 (as of September 30, 2015)
€17,892 million (as of September 30, 2016)
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
5,469,535 (in the 2016 fiscal year)
Basic information on shares and bonds
Ordinary registered shares in the form of shares or
American Depositary Shares (ADS) with a notional value
of €2 each (ADS: shares = 1:1)
1.0% Infineon Bond from March 10, 2015
1.5% Infineon Bond from March 10, 2015
Rating of S&P Global Ratings
Share capital
Shares issued¹
Own shares
ISIN
WKN
Ticker symbol
Bloomberg
1 The number of shares issued includes own shares.
Reuters
Market capitalization²
Daily average shares traded on Xetra
Trading in the USA
Market capitalization²
Daily average ADS traded
Index membership (selected)
Listings
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.
8,741 9,087
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.
9,087
Total assets
(1%)
4,626
4,595
9%
4,115
4,492
Non-current assets
Current assets
Change
year-on-year
Septem-
ber 30, 2015
ber 30, 2016
€ in millions, except percentages
8,741
Septem-
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
23%
Assets
4%
1,530
Equity ratio 2
2016
2015
€ in millions
7.3%
8.2%
Return on assets 1
Statement of Financial Position Ratios:
2016
2015
5%
5%
8%
4,665
Current liabilities
5,023
7%
7%
0%
4,076
4,064
Total liabilities
18%
20%
2%
2,491
2,534
Non-current liabilities
(3%)
1,585
Total equity
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.
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:
Sharp 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 €0.56 (basic and diluted) in the previous fiscal year, the
corresponding figures for the 2016 fiscal year both amounted to €0.66.
Earnings per share improved
2016
72
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.
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
Further details regarding income tax are provided in note 7 to the Consolidated Financial
Statements.
In the previous fiscal year, the reassessment and reversal of valuation allowances on deferred
tax assets amounting to €209 million resulted in an income tax benefit of €102 million, based
on income from continuing operations before income tax of €520 million.
As in the previous fiscal year, tax expense for the 2016 fiscal year was affected by foreign tax
rates, non-deductible expenses, tax credits and changes in valuation allowances on deferred
tax assets. Overall, an income tax benefit of €36 million arose on income from continuing
operations before income tax of €705 million. The deferred income tax benefit arose primarily
in conjunction with the acquisition and integration of International Rectifier. In addition to the
reversal of deferred tax liabilities relating to the purchase price allocation, income of €43 million
was recognized as a result of changes in valuation allowances on tax credits, which became
utilizable as a result of the integration of International Rectifier.
Reduction of deferred tax liabilities and changes in valuation allowances on
deferred tax assets give rise to deferred tax benefit
At 12.2 percent of revenue selling, general and administrative expenses were lower in
percentage terms than in the previous fiscal year (13.4 percent). In absolute terms, however,
they edged up by €13 million to €791 million, mainly due to the inclusion of International
Rectifier for the full twelve-month period. Unlike in the current fiscal year, the previous year's
figures also included transaction-related costs (legal services and bank fees) relating to the
acquisition of International Rectifier.
12.2%
Psee page 144 f.
Selling, general and
administrative expenses
Percentage of revenue
2016
2015
Review of results of operations
2015
742
620
P see page 146
1 The calculation of the adjusted earnings per share is based on unrounded figures.
0.60
0.76
Adjusted earnings per share (in euro) - diluted¹
1,125
1,129
Weighted-average number of shares outstanding - diluted
680
853
shareholders of Infineon Technologies AG - diluted
Adjusted earnings from continuing operations attributable to
(209)
(59)
the annually updated earnings forecast
Revaluation of deferred tax assets resulting from
(73)
16
31
(7)
13
9
6
55.3%
191
4
2
6
16
Tax effects on adjustments
(49)
274
53.4%
Gross cash position
2,013
0%
1%
47%
46%
53%
53%
1,769
1,793
Debt by currencies
74
Review of financial condition
Group performance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
2015
INFINEON TECHNOLOGIES
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.
Increase in current assets due to higher gross cash position
4,665 5,023
Equity
431
581
Other liabilities
403
474
Provisions
604
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.
2016
€ in millions
2015
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
0
2016
2015
12.8%
H
15.0%
2016
Euro
947
939
US dollar
828
426
830
18
1,793
ROCE
€ in millions
5,176
5,334
Other
H
similar commitments
857
1,769
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%
15.0%
12.9%
13.1%
623
Inventory intensity 5
ROCE6
1,191
1,129
Inventories
774
742
other receivables
38.4%
35.2%
Debt-to-equity ratio 4
Trade and
13.6%
14.8%
Return on equity 3
2,240
Property, plant
3 Return on equity = Net income/Total equity
Other assets
422
1,793
Debt
802
other payables
Trade and
2016
2015
€ in millions
2016
2015
55%
53%
5%
7%
4%
5%
7%
484
8,741
9,087
5 Inventory intensity = Inventories (net)/Total assets
4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
6 Calculation see following section about ROCE in this chapter
Pension plans and
Liabilities and equity
9,087
9%
9%
21%
20%
5%
8,741
791
Group performance
13.4%
11% 0%
32%
2015
2016
Corporate and
Elimininations
Other Operating
Segments
Chip Card &
Security
Power
Management &
Multimarket
Industrial
Power Control
Automotive
0
(7) (1)
8 14
500
16%
698 665
1,000
1,500
1,796
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
1,073 971
INFINEON TECHNOLOGIES
41%
Industrial Power Control
6%
424
Japan
23%
1,337
24%
1,574
Therein: China
46%
2,666
48%
3,083
Asia-Pacific (excluding Japan)
778
Share of Group Revenue 2016
Automotive
942
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
Power Management & Multimarket
Chip Card & Security
Other Operating Segments
15%
Revenue grew by €678 million to €6,473 million in the year under report (2015: €5,795 million).
The increase primarily reflects strong business performances across all segments (see the
chapter “The segments") and the first-time inclusion of International Rectifier for a full twelve-
month period, contrasting with the previous fiscal year when revenue was included only for
the period after closing of the acquisition on January 13, 2015.
Good sales performance and the full-year inclusion of International Rectifier
drive revenue growth
Adjusted earnings per share (diluted) improved sharply from €0.60 to €0.76 per share (see "Sharp
improvement in adjusted earnings per share" in this chapter for details of the calculation).
(6)
Other operating income and expenses, net
(778)
(791)
(717)
(770)
2,080
2,330
Selling, general and administrative expenses
Research and development expenses
Gross profit
5,795
6,473
2015
(30)
2016
€ in millions, except earnings per share
68
The consolidated statement of operations
Review of results of operations
Group performance
Review of results of operations
Group performance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
After the dividend for the 2014 fiscal year had already been increased from €0.12 to €0.18,
the Management Board and Supervisory Board decided to propose a further increase of
the dividend to €0.20 per share for the 2015 fiscal year to the Annual General Meeting on
February 18, 2016. The shareholders approved the proposal and thus on February 19, 2016
the amount of €225 million was paid out to shareholders. At that point in time the number
of shares entitled to a dividend was 1,123,271,481 units. At September 30, 2016 the number
of shares issued was 1,132,673,109. This figure includes the unchanged amount of 6 million
shares owned by the company, which are not entitled to a dividend. Based on positive
business developments and Infineon's positive business outlook, a proposal will be made
to shareholders at the 2017 Annual General Meeting to increase the dividend for the 2016
fiscal year by 2 cents or 10 percent from €0.20 to €0.22. For more information on Infineon's
dividend policy, see "Sustainable value creation for our shareholders" in the chapter
"Group strategy".
Dividend
As of September 30, 2016, four shareholders each held more than 3 percent of the Infineon
shares issued; two of the four shareholders held more than 5 percent. At the end of the 2015
fiscal year, six shareholders held more than 3 percent of shares each. The share capital held
by retail investors dropped from 11.79 percent at the end of the 2015 fiscal year to 9.53 percent
at September 30, 2016.
Shareholder structure
Revenue
Operating income
763
555
Earnings per share (basic and diluted) amounted to €0.66 per share and were therefore higher
than one year earlier (2015: €0.56).
Net income improved year-on-year by €109 million to €743 million for the 2016 fiscal year
on the back of revenue growth. The €83 million decrease in acquisition-related depreciation,
amortization and other expenses (2016: €191 million; 2015: €274 million) for International
Rectifier (primarily expenses recognized in conjunction with the purchase price allocation)
was largely offset by a €66 million reduction in income tax benefits.
P see page 40 ff.
Psee page 72
Net income improved
0.60
0.76
Adjusted earnings per share (in euro) - diluted
0.56
0.66
Diluted earnings per share (in euro)
0.56
0.66
Basic earnings per share (in euro)
634
743
Net income
Net financial result (financial income and expenses, net)
Income from investments accounted for using the equity method
(61)
(39)
3
4
Income tax
399
36
Income from continuing operations
741
622
Income from discontinued operations, net of income taxes
2
12
102
7%
16%
819
100
13.9%
12.7%
Percentage of research and development expenses
98
For information: capitalized development costs
1.0%
59
75
1.2%
Percentage of revenue
Therein included grants received
12.4%
11.9%
30%
7%
INFINEON TECHNOLOGIES
717
2015
Americas
Percentage of revenue
Change year-on-year
Research and development expenses
€ in millions, except percentages
Grants received in conjunction with R&D projects and capitalized development costs reduce
the amount of R&D expenses recognized.
Research and development expenses (R&D expenses)
Operating expenses (research and development expenses and selling, general and
administrative expenses) increased year-on-year by €66 million to €1,561 million (2015:
€1,495 million), corresponding to 24.1 percent of revenue (2015: 25.8 percent).
35.9%
36.0%
2,080
2,330
64.1%
770
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Group performance
€ in millions
administrative expenses
Selling, general and
13.4%
12.2%
57%
2%
778
791
2015
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.
Review of results of operations
71
R&D expenses
€ in millions
717
770
64.0%
H
2015
R&D expenses
Percentage of revenue
2016
11.9%
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).
12.4%
39%
2016
3,715
7,050
1.11
except book-to-bill ratio
€ in millions,
Orders received and revenue
10
70
Review of results of operations
Group performance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
69
12%
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).
13%
710
12%
Therein: USA
661
10%
6,421
568
Total
6,473
100%
5,795
100%
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.
10%
6,473
69
开
5,795
2015
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
2016
2015
35.9%
艹
4,143
€ in millions, except percentages
2,080
2016
1.09
Orders received ― Book-to-bill ratio
Revenue
Gross profit and gross margin
€ in millions
2,330
2015
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).
Gross margin slightly improved
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.
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.
36.0%
Book-to-bill ratio still at high level
3 >€60 million Moderate
2 >€20 million Minor
2
3
Likelihood of Occurrence
<€20 million Marginal
on Segment Result
Degree of Impact
4
5
Degree of Impact
4 > €100 million Significant
Risk assessment matrix
1
5 >€250 million Major
1
2 <40% Possible
3 <60% Likely
4 <90% Probable
5 >90% Certain
1
2
3
4
5
Likelihood of Occurrence
Low Risk
Medium Risk
High Risk
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.
1 <10% Unlikely
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.
Combined Management Report | Our 2016 fiscal year
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.
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Group performance
Review of liquidity
77
Free cash flow
Infineon reports the free cash flow figure, defined as net cash provided by and/or used in
operating activities and net cash provided by and/or used in investing activities, both from
continuing operations, after adjusting for cash flows related to the purchase and sale of
financial investments. Free cash flow serves as an additional performance indicator, since
Infineon holds part of its liquidity in the form of financial investments. This does not mean
that the free cash flow calculated in this way is available to cover other disbursements, since
dividend, debt-servicing obligations and other fixed disbursements are not deducted. Free
cash flow should not be seen as a replacement or superior performance indicator, but rather
as an additional useful item of information over and above the disclosure of the cash flow
reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
other liquidity performance indicators and other performance indicators derived from the
IFRS figures. Free cash flow includes only amounts from continuing operations, and is derived
as follows from the Consolidated Statement of Cash Flows:
€ in millions
Net cash provided by operating activities from continuing operations
Net cash used in investing activities from continuing operations
Purchases of (proceeds from sales of) financial investments, net
Free cash flow
2016
2015
1,313
957
(1,098)
275
(2,593)
INFINEON TECHNOLOGIES
(18)
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.
Net cash used for discontinued operations
(48)
(385)
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Group performance
Review of liquidity
76
Net cash provided by operating activities from continuing operations
significantly up on previous year
Net cash provided by operating activities from continuing operations in the 2016 fiscal
year amounted to €1,313 million, an improvement of €356 million on the €957 million reported
for the previous fiscal year. The main reason for the improvement was the €259 million
increase in income from continuing operations before scheduled depreciation, amortization,
impairment charges, interest and taxes totaling €1,612 million (2015: €1,353 million). In addi-
tion, the figure reported for the previous fiscal year includes a payment of €104 million to settle
disputes relating to the continuation of the right to use Qimonda patents as well as a payment
of €83 million to the EU Commission relating to a fine imposed in conjunction with chip card
antitrust proceedings.
Net cash used in investing activities from continuing operations mainly reflects
investments in property, plant and equipment
Net cash used in investing activities from continuing operations totaled €1,098 million
in the 2016 fiscal year, resulting primarily from investments in property, plant and equipment
(€716 million) and in intangible and other assets (€110 million). Net purchases of financial
investments resulted in a cash outflow of €275 million.
Net cash used in investing activities from continuing operations in the previous fiscal year
amounted to €2,593 million, including €1,869 million (after deduction of cash acquired) for
the acquisition of International Rectifier. Investments in property, plant and equipment and in
intangible and other assets totaled €785 million.
Dividend payment results in net cash used in financing activities from
continuing operations
Net cash used in financing activities from continuing operations totaled €229 million in
the 2016 fiscal year. This figure includes primarily the cash outflow for the dividend payment
for the 2015 fiscal year amounting to €225 million. In April 2016, Infineon also successfully
completed a US Private Placement (USPP) of notes with a volume of US$935 million, which
provided net proceeds amounting to €819 million. The US dollar loan of US$934 million raised
in conjunction with the acquisition of International Rectifier was subsequently repaid, resulting
in a cash outflow of €820 million.
Net cash provided by financing activities from continuing operations in the 2015 fiscal year
amounted to €1,363 million, comprising mainly a net cash inflow of €1,584 million in con-
junction with the financing of the acquisition of International Rectifier and a cash outflow for
the dividend paid for the 2014 fiscal year amounting to €202 million.
Net cash used for discontinued operations 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.
490
(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.
Total debt
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
Combined Management Report | Our 2016 fiscal year
78
Significant events after the end of the reporting period | Report on expected developments, together with associated material risks and opportunities
Significant events after the end
of the reporting period
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).
1,760
1,752
33
17
Gross cash position and net cash position
The following table reconciles the gross cash position and the net cash position (i.e. after
deduction of debt). Since some liquid funds are held in the form of financial investments,
which, for IFRS purposes, are not considered to be "cash and cash equivalents", Infineon
reports on its gross and net cash positions in order to provide investors with a better under-
standing of its overall liquidity. The gross and net cash positions are determined as follows
from the Consolidated Statement of Financial Position:
€ in millions
Cash and cash equivalents
Septem-
ber 30, 2016
Septem-
ber 30, 2015
625
28
673
1,615
1,340
Gross cash position
2,240
2,013
Less:
Short-term debt and current maturities of long-term debt
Long-term debt
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.
(12)
(413)
33
17
Short-term debt and current maturities of long-term debt
Plus:
(1,585)
(1,530)
Total current liabilities
Assets classified as held for sale
(1,340)
(1,615)
Financial investments
(673)
(625)
Cash and cash equivalents
Less:
Liabilities classified as held for sale
8,741
Capital employed ②
5,334
Net cash used in investing activities from continuing operations
957
1,313
Net cash provided by operating activities from continuing operations
2015
2016
€ in millions
Cash flow
Review of liquidity
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.
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.
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.
12.8%
15.0%
5,176
ROCE 1/②
9,087
Assets
664
75
ROCE for the 2016 and 2015 fiscal years is calculated as follows:
Review of financial condition | Review of liquidity
Group performance
Combined Management Report | Our 2016 fiscal year
ANNUAL REPORT 2016
INFINEON TECHNOLOGIES
(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)
€ in millions
Operating income
2016
2015
799
Operating income from continuing operations after tax ⑫①ID:
(1)
(3)
Financial expense excluding interest expense²
102
36
Effect of foreign exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Income tax
3
Gain from investments accounted for using the equity method
4
Financial income excluding interest income¹
Plus:
555
763
4
Report on expected developments,
together with associated
material risks and opportunities
Less:
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.
Report on expected developments, together with associated material risks and opportunities
Outlook
81
IMF economists forecast a growth rate of 2.8 percent for the 2017 calendar year. Economic
stimulus measures in China, Japan and other countries, as well as low interest rates, should
have a positive impact on demand in the fields of consumer spending and investments. The
expected continued recovery in oil and commodity prices would also provide some welcome
financial headroom for raw material-exporting countries. Brazil and Russia could therefore exit
their two-year-long recession at some stage during the 2017 calendar year. Nevertheless, the
level of risks and challenges to which the world - and hence the world economy - is exposed
remains high. Protectionist tendencies, the threat of terrorism and unresolved conflicts in
various countries and regions are just some of the factors that could have a negative impact.
The global semiconductor market has mirrored the world economy's performance over the
past two years. After slipping by 2.0 percent in the 2015 calendar year, the semiconductor
market is expected to register another slight contraction in the 2016 calendar year.
At an expected growth rate of 4.8 percent, the outlook for the global semiconductor market
is considerably more optimistic for the 2017 calendar year.
Revenue increase of 6 percent expected, plus or minus 2 percentage points,
compared to the previous fiscal year
Based on our expectations for the global economy and for the semiconductor market
segments relevant for Infineon as described above, Infineon forecasts revenue growth of
6 percent, plus/minus 2 percentage points, for the 2017 fiscal year. The Automotive segment
is expected to grow at a substantially faster rate than the Group average. Growth in the
Industrial Power Control segment is forecast to be roughly in line with or slightly higher than
the Group average. The Power Management & Multimarket and Chip Card & Security segments
are both expected to report growth rates below the Group average.
Slight upward trend in gross margin expected
At the mid-point of the planned range for revenue growth, the gross margin for the 2017
fiscal year is expected to rise slightly. The gross margin will still be negatively influenced by
acquisition-related expenses.
Operating expenses expected to increase
Infineon expects operating expenses to increase in absolute terms as a result of revenue growth.
As a percentage of revenue, however, the increase should be lower than revenue growth.
Research and development expenses and selling, general and administrative expenses are
both forecast to increase below revenue growth. Acquisition-related expenses included in
operating expenses are expected to be slightly below the previous fiscal year's level.
Segment Result Margin of approximately 16 percent expected
Based on the forecast changes in revenue and expenses described above, the Segment Result
Margin in the 2017 fiscal year is expected to increase to approximately 16 percent, at the
mid-point of the planned range for revenue growth.
Non-segment result
Infineon expects the non-segment result for the 2017 fiscal year to be a negative amount of
between €200 million and €250 million, mainly attributable to acquisition-related expenses
(2016 fiscal year: minus €219 million). Approximately €130 million of the forecasted amount
relates to non-cash-relevant depreciation and amortization arising in conjunction with the
International Rectifier acquisition.
In organizational terms, the Risk and Opportunity Management System is structured in a
closed-loop, multiple-stage process, which stipulates the manner and criteria to be applied to
identify, measure, manage and report on risks and opportunities and defines how the system
is to be monitored as a whole. Major components of the system are a quarterly analysis of risks
and opportunities, reporting by all consolidated entities, an analysis of the overall situation
at segment, regional and Group level, reporting to the Management Board on the risks and
opportunities situation as well as major management measures undertaken. The Management
Board, in turn, reports regularly to the Supervisory Board's Investment, Finance and Audit
Committee. Where necessary, standard processes are supplemented by the ad-hoc reporting
of any major risks identified between regular reporting dates.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
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.
826
Between €750 and €900 million
About €950 million
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.
Revenue grew by 12 percent in the 2016 fiscal year and therefore within the forecast range
of 13 percent plus/minus 2 percentage points. The gross margin increased as forecast slightly
from 35.9 percent to 36.0 percent year-on-year. Operating expenses developed better than
expected. Growth in line with or slightly below revenue growth had been forecast for research
and development expenses as well as for selling, general and administrative expenses.
Research and development expenses increased by 7 percent, 5 percentage points below the
rate of revenue growth and therefore in line with expectations. By contrast, selling, general
and administrative expenses increased by only 2 percent, compared with revenue growth of
12 percent, and therefore at a substantially less pronounced rate than revenue.
Explanatory comments to the outlook for the 2017 fiscal year
Assumed euro/US dollar exchange rate
As a globally operating organization, Infineon generates revenue not only in euros, but also in
foreign currencies, predominantly in US dollars. It also incurs expenses both in US dollars and in
currencies closely correlated to the US dollar, such as the Singapore dollar, the Malaysian ringgit
and the Chinese renminbi. The impact of non-euro denominated revenue and expenses does
not always balance out. For this reason, fluctuations in exchange rates, particularly between
the euro and the US dollar, influence the amounts reported for revenue and earnings. Excluding
the effect of currency hedging instruments, the impact of a deviation of 1 cent in the actual
exchange rate of the US dollar against the euro compared to the forecast rate would amount
to a change in Segment Result of approximately €2 to €3 million per quarter, or approximately
€8 to €12 million per fiscal year compared to the forecast value. These figures assume, however,
that the exchange rates of currencies correlated with the US dollar - in which expenses arise
for Infineon - change in parallel to the euro/US dollar exchange rate. In terms of revenue, the
impact of exchange rates is limited almost entirely to the euro/US dollar rate, where a deviation
of 1 cent in the actual exchange rate compared to the forecast rate would have an impact on
revenue of approximately €8 million per quarter, or approximately €32 million per fiscal year.
Planning for the 2017 fiscal year is based on an assumed average exchange rate for the US dollar
against the euro of US$1.10.
Growth prospects for the global economy and the semiconductor market
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Report on expected developments, together with associated material risks and opportunities
Outlook
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.
Psee page 22 ff.
Risk and opportunity report
Risk policy: Underlying principles of our risk and opportunity management
Effective risk and opportunity management is central to all of our business activities and
plays an important role in implementing the strategic targets described in the chapter "Group
strategy" - namely achieving sustainable, profitable growth and preserving our financial
resources through efficient employment of capital. Infineon's risk and opportunity profile is
characterized by periods of rapid growth, followed by periods of significant market decline,
a substantial need for capital investment in order to achieve and sustain our market position
and an extraordinarily rapid pace of technological change. Gaining a leading edge through
technological innovation also has a legal dimension. Against this background, Infineon's risk
policy is aimed firstly at taking advantage of identified opportunities as quickly as possible in
a way most appropriate to increasing the value of the business, and secondly at proactively
mitigating risks - particularly those capable of posing a threat to Infineon's going-concern
status - by adopting appropriate countermeasures. Risk management at Infineon is therefore
closely linked to forecasting and the implementation of our business strategies. Ultimate
responsibility for risk management lies with the Infineon Management Board.
Coordinated risk management and control system elements are in place that enable us to
pursue our stated risk policy in practice. Alongside the "Risk and Opportunity Management
System" and the "Internal Control System with respect to Financial Reporting Processes"
described below, it also includes the related forecasting, management and internal reporting
processes as well as the Compliance Management System.
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
Combined Management Report | Our 2016 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
84
Risk and Opportunity Management System
P see page 78
83
Report on expected developments, together with associated material risks and opportunities
Outlook | Risk and opportunity report
Combined Management Report | Our 2016 fiscal year
P see page 78
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.
(1,098)
Income taxes
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.
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.
739
Working capital
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.
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.
Working capital is forecast to finish the 2017 fiscal year at between €750 million and €900 million.
Between €700 and €850 million
About €850 million
The investments in operations relate in roughly equal portions to frontend-related capacity
expansion measures, improvements to existing frontend manufacturing facilities and backend-
related investments, and will contribute to the expansion of Infineon's 200-millimeter as well
as its 300-millimeter manufacturing capacities. Continuous investments in automation, quality,
innovation and infrastructure will also ensure that frontend manufacturing facilities keep
pace with changing technological requirements. Around one third of capital expenditure in
the 2017 fiscal year will be used to improve and expand backend manufacturing facilities.
Depreciation and amortization are expected to be in the region of €830 million.
Investments
Free cash flow from
(1,654)
Between €500 and €600 million
490
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
performance indicators
Growth and profitability
performance indicators
15.2%
About 16% (at the mid-point of the
planned range for revenue growth)
15.5%
Segment Result Margin
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.
785
INFINEON TECHNOLOGIES
ANNUAL REPORT 2016
€ in millions, except percentages
Principal performance indicators
Combined Management Report | Our 2016 fiscal year
Change in revenue
Report on expected developments, together with associated material risks and opportunities
Outlook
Outlook
Actual and target values for performance indicators
The following table and subsequent comments compare the actual values of Infineon's key
performance indicators with the original forecasts for the 2016 fiscal year and show the outlook
for the 2017 fiscal year. The performance figures for the 2016 fiscal year include the financial
figures of International Rectifier for a full fiscal year. Actuals shown for the 2015 fiscal year
include figures for International Rectifier from January 13, 2015 onwards, in other words with
effect from the acquisition closure date.
Actuals
FY 2015
Actuals
FY 2016
Outlook
FY 2017
79
34%
Original Outlook
FY 2016
12%
57%
2%
Liquidity performance indicators
Gross cash position
2,013
34.7%
In the range of 30%-40% relative to revenue,
therefore within the target of 30%-40%
2,240
34.6%
administrative expenses
Net cash position
Net cash position
471
(gross cash position higher than debt)
Net cash position
(gross cash position higher than debt)
Increase by 13%
Working capital
550
220
Increase below revenue growth
In the range of €1.7-€2.4 billion and
therefore within the target range of €1 billion
+10% to 20% of revenue
791
35.9%
Gross margin
Increase by 6%
plus/minus 2 percentage points
Slight increase compared to FY 2016
Increase below revenue growth
compared to previous year
plus/minus 2 percentage points
Slight increase compared to FY 2015
36.0%
Research and
Development expenses
717
30%
Selling, general and
778
Increase in line with or
slightly below revenue growth
Increase slightly below revenue growth
770
7%
1,094
3,447
33
15
1,000
2,147
15
9
6
49
1,574
48
12
1,735
25
24
10
463
6
32
424
7
3,083
2,272
Asia-Pacific (w/o Japan)
6,473
for microcontroller-based chip card ICs
Source: IHS Markit, Technology Group, July 2017
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.
9
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
Revenue by region
Europe, Middle East, Africa
Therein: Germany
Therein: China
Japan
Americas
Therein: USA
2017
€ in
millions
in % of
revenue
€ in
millions
2016
in % of
revenue
2017/2016
Change
in %
7,063
9
881
1
819
31
5
Chip Card & Security
708
10
703
11
Other Operating Segments
9
0
8
0
13
Corporate and Eliminations
3
0
(7)
0
+++
Gross profit/Gross margin
2,621
#1 with a market share of 24.8%
37.1
2,041
12
31
Power Management & Multimarket
13
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
2,148
Market position²
#2 with a market share of 10.7%
Gemalto / Giesecke & Devrient / Google / HP/
Idemia/Lenovo/Microsoft / Samsung/
> Voltage regulators
Key customers¹
Autoliv / Bosch / BYD / Continental / Delphi / Denso /
Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
Mitsubishi Electric / Omron / Preh / Valeo/ZF
Market position²
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
> Transceivers (CAN, LIN, Ethernet, FlexRay)
ABB/Alstom / Bombardier / CRRC / Danfoss/
Eaton / Emerson / Goldwind / Midea / Rockwell /
Schneider Electric / Siemens / Toshiba / Vestas /
Yaskawa
> Radar sensor ICs (77 GHz)
> Magnetic and pressure sensors
2,330
Annual Report 2017
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 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
> Power ICs
US Government Publishing Office / Watchdata
Market position²
for IGBT-based power semiconductors
Source: IHS Markit, Technology Group, August 2017
Airbus / Artesyn / Boeing / Cisco / Dell / Delta /
Ericsson / Hewlett Packard Enterprise / HP / Huawei /
Lenovo / LG Electronics / Lite-On / Nokia / Osram /
Panasonic/Quanta / Samsung / ZTE
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'
Key customers¹
#1 with a market share of 26.6%
> TVS (transient voltage suppressor) diode
> RF antenna switches
1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Intron, Jingchuan, Macnica, Weikeng and WPG Holding (SAC).
Power Management & Multimarket
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 power transistors
36.0
(229)
Research and development expenses
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.
€7.063
billion
#1
Revenue
+9%
€1.208
billion
"BBB"
Rated credit-
worthiness
"S&P Global
Ratings"
in
Europe
Rating
by
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
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.
Our Group
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.
Our year
36,299
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%
14.9%
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).
at a glance
37,479
16 Finances and strategy
49
Dr. Reinhard Ploss
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
12
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
Letter to shareholders
38 The segments
Letter to shareholders
187 Imprint
Locations
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
Management Board and Supervisory Board
Infineon employees as of 30 September
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Debt-to-total-capital ratio
17.1
982
15.2
23
Property, plant and equipment
2,659
2,119
25
Total assets
9,945
9,087
9
Total equity
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)
1,208
(3)
Segment Result/Segment Result Margin
743
Return on Capital Employed (ROCE)²
(776)
11.0
(770)
11.9
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
6
Net cash used in financing activities from continuing operations
Free cash flow²
1
8.2%
6
Adjusted earnings per share in € - diluted
0.85
0.76
12
Dividend per share in €³
0.25
(340)
24
14
0.66
Equity ratio
55.3%
Return on equity4
14.0%
14.8%
Return on assets4
Inventory intensity4
Debt-to-equity ratio4
7.9%
12.5%
13.1%
56.7%
0.70
0.22
6
(48)
594
Diluted earnings per share in €
490
21
Depreciation and amortization
Capital expenditure
Gross cash position²
812
833
(3)
Net cash position²
826
0.66
1,022
Basic earnings per share in €
31
471
0.70
9
2,240
2,452
24
618
General and administrative expenses
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
Selling expenses
Infineon Technologies AG
Gross profit
Cost of goods sold
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.
Research and development expenses
2017
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.
5,789
612
93
(38)
(46)
21
24
(74)
37
478
36
20161
7
(172)
(240)
(259)
(787)
(907)
1,539
1,561
(3,839)
(4,228)
5,378
(161)
Infineon Technologies AG
91
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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.
Ability to supply due to available capacities (OC: medium)
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.
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.
Strategic approach "Product to System" (OC: medium)
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.
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.
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
407
New technologies and materials (OC: medium)
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
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.
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.
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.
Overall statement of the Management Board
with respect to Infineon's financial condition
as of the date of this report
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.
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.
Further growth in semiconductor content in vehicles (OC: medium)
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.
Combined Management Report | Our 2017 fiscal year
(306)
2,897
306
804
804
Bonds
409
490
316
350
Provisions
Other provisions
Trade payables
93
Provisions for pensions and similar obligations
1
1
6,606
249
306
Special reserve with an equity portion
Shareholders' equity
Unappropriated profit
140
316
284
Liabilities to affiliated companies
Overall statement by Group Management on risk situation
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
3,237
3,296
848
885
Liabilities
Other liabilities
1,301
1,291
3,203
1,207
1,226
2,253
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
==
94
Statement of financial position of Infineon Technologies AG in accordance with the
German Commercial Code (condensed)
Net assets and financial position
Combined Management Report | Our 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
6,822
(158)
617
Receivables and other assets
2,260
Retained earnings
Capital reserves
Share capital
10,265
10,792
Total assets
4
4
Active difference resulting from offsetting
40
44
Prepaid expenses
3,399
3,736
Current assets
1,954
2,216
Cash and cash equivalents, marketable securities
832
903
613
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.
6,995
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.
86
Product quality trends (RC: medium)
Product quality assurance is a key success factor for the business. Potential quality risks - for example, due to the
high utilization levels - can affect yield fluctuations and hence our ability to supply customers. Shortfalls in product
quality can lead to product recalls and potential costs related to liability claims. In addition, quality risks could also
damage Infineon's reputation and thus have a significant adverse impact on future earnings.
Product development delays (RC: medium)
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 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.
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 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
87
Psee page 162 ff.
Risk and opportunity report
P see page 154 f.
Report on expected developments, together with associated material risks and opportunities
85
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.
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
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
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)
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.
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 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.
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 2017
85
Dependence on individual suppliers (RC: medium)
Combined Management Report | Our 2017 fiscal year
Need for qualified staff (RC: medium)
Further information in regards to litigation and government inquiries are provided in note 19 to the Consolidated
Financial Statements.
Impact of our global operations (RC: medium)
Our global business strategy requires the maintenance of R&D locations and manufacturing sites throughout the
world. The location of such facilities is determined by market entry hurdles, technology and cost factors. Risks
could, therefore, arise from adverse economic and geopolitical developments in our regional markets, changes in
legislation, and policies affecting trade and investment aimed at limiting free trade and varying practices of the
regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate. These risks could restrict
our business activities in those countries. We could also be exposed to fines, sanctions and damage to reputation.
Asian markets are particularly important to our long-term growth strategy. Our operations in China are influenced
by a legal system that may be subject to change. One example is the fact that local regulations could make it
mandatory to enter into partnerships with local companies. These circumstances could lead on the one hand
to Infineon's intellectual property no longer being sufficiently protected and on the other to intellectual property
developed by Infineon in China not being freely transferable to other countries and locations, thus impairing
revenue and profitability.
Acquisitions and cooperation arrangements (RC: medium)
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-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.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
89
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
continuously monitored and optimized in conjunction with regular internal and external audits.
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.
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.
Measures to implement our risk management strategy
88
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
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.
Specified currencies are hedged Group-wide by means of derivative financial instruments. These hedges are based
on forecasts of future cash flows, the occurrence of which is uncertain. Under these circumstances, exchange rate
fluctuations could – despite hedging measures – also have an adverse impact on earnings.
Risk of default by banking partners (RC: medium)
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: medium)
The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the potential risk of
a default by one or more of the banking partners with whom we do business. We mitigate this risk - which could
still arise despite various state-insured deposit protection mechanisms - by a combination of risk avoidance
analyses and risk-diversification measures. The failure of these measures could have a materially adverse impact
on Infineon's financial condition and liquidity situation.
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.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Multi-year variable compensation
Mid Term Incentive (MTI)1
2014-2016 tranche
2015-2017 tranche
691,534
112,087
1,299,546
201,537
2,004,656
717,016
76,153
429,968
Single-year variable compensation (STI)
Variable compensation
2,730,000
120,282
2,850,282
562,500
26,962
589,462
178,947
171,250
7,697
415,193
336,260
382,414
761,971
1,351,433
155,951
685,000
32,016
4,781,961
101,537
280,484
1,649,124
Total compensation
932,108
Total variable compensation
408,391
907,922
190,238
Performance Share Plan²
Long Term Incentive (LTI)
727,095
155,951
2017-2019 tranche
433,182
727,095
112,087
25,384
2016-2018 tranche
Total fixed compensation
172,153
Basic annual salary
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
3,215,067
158,240
243,040
112,087
172,153
190,238
1,714,808
2,825,962
1,324,027
2,434,751
1,202,937
Fixed compensation
2016
2017
2016
Total
Management Board
2017
2016
Arunjai Mittal4
Member of the
Management Board
2017
Fringe benefits
Member of the
Management Board
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
1,664,836
1,717,180
1,996,140
101,537
932,108
925,995
Jochen Hanebeck³
8,136,062
(Chief Executive Officer)
1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
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
(Chief Financial Officer)
104,118
211,838
18,830
190,238
85,288
16,910
2016
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)
2017
Arunjai Mittal³
(Member of the Management Board)
2017
Dominik Asam
125,136
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).
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.
Fringe benefits
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.
Members of the Management Board did not receive any loans from Infineon, either in the 2017 or 2016 fiscal years.
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.
Fiscal
Number
year
Performance Share Plan
244,367
34,564
90,572
2016
158,240
153,190
315,608
28,054
125,136
6,065,349
2017
in €
Number
Fair value
grant date
Number
of the fiscal year
at the end
Virtual performance
shares outstanding
at the beginning of the fiscal year
Virtual performance shares newly granted
Dr. Reinhard Ploss
243,040
3,195,000
159,101
3,354,101
288,460
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.
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.
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.
98
Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
Corporate Governance
Combined Management Report | Our 2017 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
> 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.
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;
Authorization to issue bonds with warrants and/or convertible bonds
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.
Powers of the Management Board to issue shares
Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Association rests with the
Annual General Meeting. However, section 10, paragraph 4, of the Articles of Association gives the Supervisory
Board the authority to amend the Articles of Association insofar as 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.
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, 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 appointment and dismissal of members of the Management Board
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.
The use of own shares, acquired through derivatives, is governed by the same rules as applicable for the direct
acquisition of own shares.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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).
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.
Compensation report
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
Declaration concerning the management of the Company
The Corporate Governance Report is publicly available.
@www.infineon.com/corporate-governance-report
Corporate Governance Report
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.
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.
Psee page 149 f.
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 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.
Significant agreements in the event of a change of control
P see page 99 ff.
P see page 142 f.
99
99
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
Corporate Governance
Combined Management Report | Our 2017 fiscal year
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
97
Corporate Governance
95
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Significant events after the end of the reporting period correspond to the events described in note 25 to the
Consolidated Financial Statements.
Psee page 169
Significant events after the end
of the reporting period
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.
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".
Expected developments, together with associated material risks and opportunities
For information regarding Infineon's long-term dividend policy, see "Sustainable value creation for our shareholders"
in the chapter "Group Strategy".
The Company paid a dividend of €0.22 per share (€248 million in total) for the 2016 fiscal year.
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.
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 77
Psee page 81 ff.
P see page 28
Infineon Technologies AG | Significant events after the end of the reporting period
201,537
Combined Management Report | Our 2017 fiscal year
95
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)
Combined Management Report | Our 2017 fiscal year
96
96
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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).
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.
Nature of control over voting rights when employees participate in the Company's capital and do not
exercise their control rights directly
No shares conferring special control rights have been issued.
Shares with special control rights
Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
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.
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.
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.
Restrictions on voting rights or the transfer of shares
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.
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.
Structure of the subscribed capital
Information pursuant to section 289, paragraph 4, and section 315,
paragraph 4, of the German Commercial Code (HGB)1
Corporate Governance
Psee page 173 ff.
Shareholdings exceeding 10 percent of the voting rights
Combined Management Report | Our 2017 fiscal year
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.
Compensation report
1,075,000
2016
2017
2016
2017
2016
2017
Member of the
Management Board
Dr. Helmut Gassel³
Dominik Asam
Chief Financial Officer
Dr. Reinhard Ploss
Chief Executive Officer
Fringe benefits
Basic annual salary
Fixed compensation
in €
Total compensation to members of the Management Board pursuant to DRS 17 and benefits to the individual
members of the Management Board - also presented in accordance with DRS 17 - are shown in the following table:
Total compensation
German Accounting Standard 17 (DRS 17)
Management Board compensation in the 2017 fiscal year in accordance with
750,000
36,154
1,111,154
35,724
1,110,724
43,203
793,203
2017-2019 tranche
2016-2018 tranche
Corporate Governance
2015-2017 tranche
2014-2016 tranche
Mid Term Incentive (MTI)1
Multi-year variable compensation
76,153
429,968
103
336,260
474,720
670,080
Single-year variable compensation (STI)
Variable compensation
Total fixed compensation
171,250
8,714
179,964
685,000
47,728
732,728
791,185
750,000
41,185
474,640
Compensation report
1,075,000
Combined Management Report | Our 2017 fiscal year
101
Corporate Governance
Compensation report
Combined Management Report | Our 2017 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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
(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.
(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.
The short-term incentive (STI) is intended to reward performance over the preceding fiscal year, reflecting Infineon's
recent progress. Assuming a 100 percent target achievement of the variable compensation, the STI constitutes
approximately 20 percent of target annual income. It is set by the Supervisory Board in a two-phase process:
> Variable (performance-related) compensation: The variable compensation comprises three components -
an annual bonus (short-term incentive), a multiple-year bonus (mid-term incentive) and a long-term variable
compensation component (long-term incentive).
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.
> 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.
There have been no changes to the Management Board compensation system in the 2017 fiscal year compared
to the previous fiscal year.
Components of the Management Board compensation system
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 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.
Compensation system
Management Board compensation
Corporate Governance
P see page 111
100
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:
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.
P see page 58 ff.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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 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.
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 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).
-
(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.
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.
102
Compensation report
Corporate Governance
Combined Management Report | Our 2017 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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 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).
340,000
750,000
750,000
41,185
791,185
750,000
36,154
1,111,154
750,000
1,075,000
43,203
793,203
43,203
Single-year variable compensation (STI)
793,203
793,203
340,000
480,000
480,000
Multi-year variable compensation
Mid Term Incentive (MTI)
1,075,000
36,154
1,111,154
1,200,000
43,203
1,075,000
35,724
1,110,724
Dominik Asam
Chief Financial Officer
1,075,000
850,000
Basic annual salary
in €
Fringe benefits
Combined Management Report | Our 2017 fiscal year
Corporate Governance
Compensation report
Compensation granted to members of the Management Board in accordance with the DCGK (total compensation
and compensation components) as well as the minimum and maximum values that can be achieved are shown
in the following table:
Total fixed compensation
36,154
1,111,154
Variable compensation
106
Dr. Reinhard Ploss
Chief Executive Officer
2016
2017 (min.)
Fixed compensation
2017 (max.)
2017
2016 2017 (min.)
2017 (max.)
2017
2016-2018 tranche
4 With effect from 1 July 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for operations.
480,000
321,123
321,123
297,220
271,061
297,220
297,220
2,315,091
1,590,081
4,504,777
1,982,261
1,906,270
1,196,342
3,232,923
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.
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).
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 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.
321,123
2,707,885
Total compensation (DCGK)
Pension expense²
612,500
480,000
340,000
960,000
340,000
680,000
Long Term Incentive (LTI)
Performance Share Plan¹
315,608
244,367
2017-2019 tranche
157,804
211,838
164,024
Total variable compensation
1,275,608 1,204,367
157,804
3,072,500
891,838
844,024
105,919
105,919 2,142,500
912,500
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.
Corporate Governance
Compensation granted in accordance with DCGK
Dr. Reinhard Ploss
2017
307,500
208,200
99,300
376,461
(Chief Executive Officer)
2016
433,214
year
307,500
29,914
120,000
323,243
Dominik Asam
2017
130,952
62,800
68,152
285,173
95,800
(Chief Financial Officer)
Management Board
Number
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
2017
Combined Management Report | Our 2017 fiscal year
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
in €
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
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.
2016
130,952
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.
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.
667,619
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 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
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.
P see page 151 f.
350,952
438,452
1,013,333
2017
167,740
52,260
213,678
Dr. Helmut Gassel²
2017
94,858
(Member of the Management Board)
2016
Jochen Hanebeck³
2016
2017
(Member of the Management Board)
2016
Arunjai Mittal 4
2017
(Member of the Management Board)
2016
229,167
229,167
Total
94,858
Combined Management Report | Our 2017 fiscal year
0.66
Compensation report
297,220
(Chief Financial Officer)
2016
225,000
2,558,440
271,061
Dr. Helmut Gassel²
2017
205,500
2,716,822
132,853
(Member of the Management Board)
2016
51,375
2,780,620
25,458
Jochen Hanebeck³
Total
2016
(Member of the Management Board)
2017
Arunjai Mittal 4
29,321
2,586,986
3,540,697
2016
(Member of the Management Board)
162,385
3,361,736
205,500
2017
51,375
2017
225,000
Dominik Asam
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.
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).
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Corporate Governance
Compensation report
Pension entitlements
in €
Fiscal year
110
Pension
entitlements
(annual) as
of beginning
Benefit
amounts
determined
for the
relevant
Present value
of pension
and benefit
entitlement
Original
service cost
(earned in the
current year)
6,832,791
210,000
2016
4,876,940
210,000
(Chief Executive Officer)
2017
321,123
322,500
2017
Dr. Reinhard Ploss¹
fiscal year
of pension
period
Member of the
Management Board
629,343
> 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.
210,000
210,000
Compensation of the Supervisory Board for the 2017 fiscal year
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):
Supervisory Board compensation
in €
Fiscal year
Fixed
Allowance
Member of the Supervisory Board
Peter Bauer
compen-
sation
for specific
Corporate Governance
Meeting
attendance
fees
Total
compen-
sation
2017
90,000
146,000
26,000
30,000
90,000
2017
Johann Dechant
112
116,417
10,417
90,000
2016
133,000
18,000
25,000
16,000
2016
Compensation report
Combined Management Report | Our 2017 fiscal year
225,000
958,500
552,750
2,511,117
14,171,827
241,677
913,581
18,223,665
567,517
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.
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 employment ended with effect from 30 September 2016.
Early termination of service contracts
The service contracts of members of the Management Board include a change of control clause, which stipulates
the terms that apply when the activities of a member of the Management Board are terminated in the event of
a significant change in Infineon's ownership structure. A change of control for the purposes of this clause occurs
when a third party, individually or together with another party, acquires at least 50 percent of the voting rights
in Infineon Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover Act (Wert-
papiererwerbs- und Übernahmegesetz - "WpÜG”). Members of the Management Board have the right to resign and
terminate their service contracts within twelve months of the announcement of such a change of control and any
who choose to do so are entitled to continued payment of their annual remuneration through to the end of the
originally agreed duration of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes a
member of the Management Board or terminates his or her contract within twelve months of the announcement of
a change of control, the members of the Management Board concerned are entitled to continued payment of their
annual remuneration through to the end of the originally agreed duration of their contract, subject to a minimum
period of 24 months and a maximum period of 36 months.
The Management Board service contracts otherwise contain no promises of severance pay for situations in which
contracts are terminated early.
Payments to former members of the Management Board in the 2017 fiscal year
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).
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
› 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 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.
Corporate Governance
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:
Compensation structure
Supervisory Board compensation
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.
Review of the Management Board compensation system and individual contracts
111
Corporate Governance
Compensation report
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.
2016
> 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 plan rules applicable to members of the Management Board differ in terms of the initial defined component,
the annual transfer to the pension account and the vesting period.
1,936,000
680,000
241,677
1,511,139
P see page 100 ff.
Allocation amount in accordance with DCGK
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")).
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
in €
Combined Management Report | Our 2017 fiscal year
Corporate Governance
Compensation report
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:
108
Dr. Reinhard Ploss
Chief Executive Officer
Dominik Asam
Chief Financial Officer
Dr. Helmut Gassel²
Member of the
Management Board
2016
2017
2016
2017
2016
2017
95,119
162,385 162,385
974,520 2,815,401
2016
2016
2017
Member of the
Management Board
Arunjai Mittal 4
Member of the
Management Board
Jochen Hanebeck³
2017
Fixed compensation
308,000
29,321
516,268
95,119
685,000
47,728
732,728
171,250
8,714
179,964
685,000
47,728
732,728
685,000
47,728
732,728
685,000
32,016
717,016
171,250
7,697
178,947
685,000
32,016
717,016
685,000
32,016
717,016
562,500
26,962
589,462
308,000
77,000
231,000
308,000
770,000
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
308,000
25,458
513,422
132,853
1,671,819
806,238
190,238
616,000
550,000
340,000
770,000
308,000
616,000
231,000
77,000
308,000
340,000
> 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.
Basic annual salary
Fringe benefits
1,075,000
550,000
962,500
Total variable compensation 2,874,300
1,730,800
Pension expense
321,123
1,505,400 1,806,552
297,220 271,061
Total compensation (DCGK) 4,306,577 2,841,524 2,595,823 2,868,798
429,968
132,853
1,295,549
76,153
25,458
281,575 1,309,369
429,968
76,153
844,052
162,385
29,321
241,677
284,421
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.
109
Compensation report
Corporate Governance
Combined Management Report | Our 2017 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
550,000
-
Commitments to members of the Management Board upon termination of their Board activities
Benefits and pension entitlements in the 2017 fiscal year
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 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 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).
1,675,191
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.
1,075,000
Stock Option Plan 2010 1,525,500
Performance Share Plan
480,760
Total fixed compensation
36,154
1,111,154
750,000
35,724
43,203
1,110,724 793,203
750,000
41,185
791,185
685,000
47,728
732,728
171,250
8,714
179,964
685,000
32,016
717,016
171,250
7,697
178,947
562,500
26,962
589,462
Variable compensation
Single-year variable
compensation (STI)
670,080
474,720
474,640
336,260
678,720
2015-2017 tranche
507,792
507,792
706,080
2014-2016 tranche
Long Term Incentive (LTI)
Mid Term Incentive (MTI)
Multi-year variable
336,260
76,153
429,968
76,153
429,968
compensation
90,000
functions
30,000
120 Notes to the Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
113
Consolidated Financial Statements
Consolidated Statement of Operations
Consolidated Statement of Operations
for the year ended 30 September 2017 and 2016
€ in millions
Notes
114
2017
2016
Revenue
Cost of goods sold
118 Consolidated Statement of Changes in Equity
Gross profit
Selling, general and administrative expenses
Other operating income
7,063
6,473
(4,442)
(4,143)
2,621
2,330
(776)
(770)
(819)
(791)
14
17
Research and development expenses
117 Consolidated Statement of Cash Flows
116 Consolidated Statement of Financial Position
115 Consolidated Statement of Comprehensive Income
Diana Vitale
2017
90,000
12,000
102,000
2016
90,000
16,000
106,000
Total
2017
2016
1,425,000
1,440,000
260,000
288,000
1,973,000
262,084
114 Consolidated Statement of Operations
Consolidated
Financial Statements
Content
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Jochen Hanebeck
Dr. Helmut Gassel
Other operating expenses
Dominik Asam
Management Board
Neubiberg, 17 November 2017
Members of the Supervisory Board did not receive any loans from Infineon in either the 2017 or 2016 fiscal years.
30,000
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.
330,000
Dr. Reinhard Ploss
(57)
(23)
Operating income
666
(1)
790
744
0.70
0.66
0.70
0.66
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
1 The calculation of earnings per share is based on unrounded figures.
2017 (max.)
Dr. Helmut Gassel³
Member of the Management Board
2016
2017 (min.) 2017 (max.)
2017
Jochen Hanebeck4
Member of the Management Board
Diluted earnings per share (in euro) attributable to
shareholders of Infineon Technologies AG:1
2016
2017 (max.)
2017
Arunjai Mittal
Member of the Management Board
107
2016
2017 (min.)
2017 (min.)
139,000
Basic earnings per share (in euro)
Basic earnings per share (in euro) from continuing operations
983
763
Financial income
Financial expenses
10
6
(63)
(67)
Gain from investments accounted for using the equity method
3
3
Income from continuing operations before income taxes
Income tax
933
705
4
(142)
36
shareholders of Infineon Technologies AG:1
Basic earnings per share (in euro) attributable to
Shareholders of Infineon Technologies AG
Non-controlling interests
Attributable to:
743
Basic earnings per share (in euro) from discontinued operations
790
(1)
5
Income (loss) from discontinued operations, net of income taxes
Net income
741
791
Income from continuing operations
2
24,000
2,032,084
90,000
15,000
18,000
123,000
2016
90,000
15,000
24,000
129,000
Hans-Ulrich Holdenried
2017
25,000
15,000
24,000
129,000
2016
90,000
15,000
90,000
2017
Dr. Susanne Lachenmann
102,000
12,000
90,000
90,000
2016
16,000
90,000
2017
Prof. Dr. Renate Köcher
133,000
28,000
106,000
15,000
2017
127,000
150,000
Dr. Herbert Diess
2017
90,000
6,000
96,000
2016
90,000
14,000
104,000
Annette Engelfried
2017
90,000
15,000
20,000
125,000
2016
22,000
15,000
90,000
2016
123,000
18,000
Gerhard Hobbach
15,000
2017
Peter Gruber
125,000
20,000
15,000
90,000
90,000
18,000
90,000
2016
90,000
16,667
22,000
128,667
Jürgen Scholz
2017
90,000
15,000
18,000
123,000
2016
90,000
15,000
22,000
127,000
Kerstin Schulzendorf
2017
2016
135,000
20,000
25,000
90,000
2017
2016
Dr. Eckart Sünner
10,000
90,000
2016
123,000
12,000
90,000
100,000
15,000
102,000
2017
15,000
90,000
15,000
22,000
127,000
Wolfgang Mayrhuber
Géraldine Picaud 1
90,000
90,000
36,000
216,000
2016
90,000
90,000
34,000
2017
2016
Prof. Dr. Doris Schmitt-Landsiedel²
104,000
14,000
90,000
110,000
20,000
90,000
214,000
Dr. Manfred Puffer
2016
66,000
6,000
60,000
2017
2017
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
Inventories
(Amortized) Acquisition or production cost
Fair value/amortized cost
Nominal amount
Fair value directly through equity
Impairment-only approach
Measurement principle
Intangible assets (except goodwill):
Remaining other assets
Measured at fair value through profit or loss
Designated hedging instruments
Loans and receivables
Available-for-sale
Other assets (current and non-current):
Other financial assets:
with definite useful life
Property, plant and equipment
Goodwill
Assets classified as held for sale
Fair value through profit or loss
Fair value directly through equity
(Amortized) Cost
Equity and liabilities
Trade payables
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.
Provisions
Trade receivables
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Financial assets are derecognized when the rights to receive payments from the investments have expired or
have been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial
liabilities are derecognized when they are extinguished, that is when the contractual obligation is discharged,
canceled or expired.
Regular purchases and sales of financial assets are recognized on the basis of the settlement date.
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
124
Fair value through profit or loss
Fair value directly through equity
Fair value/amortized cost
Fair value/amortized cost
Acquisition cost
Debt
Projected unit credit method
Expected settlement amount
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
Pensions
Fair value/amortized cost
Fair value/amortized cost
Financial investments
Total equity
Assets
except for number of shares.
Balance as of 1 October 2015
Net income
Other comprehensive income (loss) for the period, net of tax
Total comprehensive income (loss) for the period, net of tax
Dividends
Issuance of ordinary shares:
Exercise of stock options
Share-based compensation
Balance as of 30 September 2016
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
€ in millions,
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
for the year ended 30 September 2017 and 2016
118
(340)
(229)
(340)
(229)
252
(36)
(17)
(12)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
625
673
860
625
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Notes
Ordinary shares issued
Additional
paid-in capital
(13)
1,136,200,929
2,272
4,774
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
Accumulated
deficit
Other reserves
Own shares
Foreign
Securities
Hedges
currency
translation
adjustment
Total equity
attributable to
shareholders
of Infineon
Technologies AG
119
Non-
17
19
7
3,527,820
Shares
Amount
1,129,271,481
2,259
5,213
(225)
3,401,628
6
(225)
19
9
1,132,673,109
2,265
5,016
1,132,673,109
2,265
5,016
(248)
17
(248)
15
26
1,291
Purchases of financial investments
8
(3,300)
(4,130)
Proceeds from sales of financial investments
8
3,303
3,855
Purchases of other equity investments
(9)
Acquisitions of businesses, net of cash acquired
(5)
(11)
Acquisitions of shares in MoTo, net of cash acquired
Proceeds from sales of businesses and interests in subsidiaries, net of cash disbursed
Purchases of intangible assets and other assets
1,723
Net cash provided by operating activities
(22)
(5)
(72)
Change in other assets and liabilities
(23)
(60)
Interest received
9
6
Interest paid
Purchases of property, plant and equipment
(58)
Income tax paid
4
(142)
(126)
Net cash provided by operating activities from continuing operations
1,728
1,313
Net cash used in operating activities from discontinued operations
(26)
controlling
interests
11
351
2
824
Repayments of long-term debt
Change in cash deposited as collateral
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
12
(119)
(846)
1
15
26
12
(1)
20
(8)
(112)
10
(148)
(110)
(874)
(716)
Proceeds from sales of property, plant and equipment and other assets
Net cash used in investing activities from continuing operations
Net cash used in investing activities from discontinued operations
Net cash used in investing activities
11
Net change in short-term debt
Proceeds from issuance of long-term debt
4
14
(1,131)
(1,098)
12
(1,131)
(1)
(1,098)
Net change in related party financial receivables and payables
(2,897)
126
(1)
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 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.
Standard/amendment/interpretation
Effective date
Expected impact
on Infineon
IAS 7
Cash flow statements (Disclosure initiative -
Amendments to IAS 7)
1 January 2017
immaterial
IAS 12
Recognition of deferred tax assets for unrealized losses
(Amendments to IAS 12)
1 January 2017
immaterial
IFRS 2
Share-based payment (classification and measurement
of share-based payment transactions - Amendment to IFRS 2)
1 January 2018
IFRS 9
121
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
immaterial
Standard/amendment/interpretation
IAS 1
Presentation of financial statements
(Disclosure initiative - Amendments to IAS 1)
IAS 16/IAS 38 Clarification of acceptable methods of depreciation and amortization
(Amendments to IAS 16 and IAS 38)
IFRS 11
Accounting for acquisitions of interests in joint operations
(Amendments to IFRS 11)
Annual IFRS improvement cycle 2012-2014
Financial instruments
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Impact on Infineon
1 January 2016
immaterial
1 January 2016
none
1 January 2016
1 January 2016
none
Effective date
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:
1 January 2018
Revenue from contracts with customers
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
122
IFRS 15 "Revenue from Contracts with Customers"
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).
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.
IFRS 16 "Leases"
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
123
P see page 173 ff.
2 Summary of significant accounting policies
Basis of consolidation
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 2018
including clarifications to IFRS 15
1 January 2018
IFRS 16
Leases
1 January 2019
IFRIC 22
IFRIC 23
Foreign currency transactions and advance consideration
Uncertainty over income tax treatments
IFRS 15
1 January 2018
immaterial
see explanations
below the table
see explanations
below the table
see explanations
below the table
immaterial
immaterial
Annual IFRS improvement cycle 2014-2016 -
Amendments to IFRS 12
1 January 2017
none
Annual IFRS improvement cycle 2014-2016 -
Amendments to IFRS 1 and IAS 28
1 January 2019
91
Financial reporting rules applied for the first time
The Group currency is the euro ("€").
(225)
25
25
9
9
(2,312)
98
(2)
(5)
(37)
5,023
5,023
(2,312)
98
(2)
(5)
(37)
(225)
549
(1)
550
1
(37)
4,664
1
744
744
(1)
4,665
743
5,023
(159)
(1)
(6)
(194)
(194)
585
(28)
(1)
(6)
(28)
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.
5,023
790
(1,404)
32
(1)
(37)
5,636
5,636
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Notes to the Consolidated
Financial Statements
120
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.
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.
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 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.
The fiscal year end for both Infineon and the Company is 30 September of each year.
(17)
(17)
(17)
(13)
790
118
(49)
2
4
75
75
908
790
(49)
4
865
865
(248)
(248)
26
26
(13)
2
13
15
57
Financial investments
Cash and cash equivalents
ASSETS
ber 2016
30 Septem-
30 Septem-
ber 2017
Notes
€ in millions
as of 30 September 2017 and 2016
Consolidated Statement of Financial Position
116
Consolidated Statement of Financial Position
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Trade receivables
1 Contains income from investments accounted for using the equity method in the 2017 fiscal year of €1 million (2016: expense €2 million).
865
Shareholders of Infineon Technologies AG
(1)
Non-controlling interests
549
865
(194)
75
(35)
(43)
(1)
2
(6)
4
550
Inventories
Income tax receivable
Other current assets
Investments accounted for using the equity method
1,656
1,586
11
Goodwill and other intangible assets
2,119
2,659
11
Property, plant and equipment
4,492
4,871
Total current assets
23
5
Assets classified as held for sale
281
300
860
625
8
1,592
1,615
9
(28)
851
10
1,240
1,191
4
5
6
774
(49)
(159)
118
Closing rate
Annual average exchange rate
30 September 2017
30 September 2016
2017
2016
Japanese yen
Malaysian ringgit
132.8200
4.9827
112.9300
4.6434
123.5746
122.8719
4.8052
4.5685
Singapore dollar
US dollar
Balance sheet item
The following table summarizes the principal measurement bases used in the preparation of the Consolidated
Financial Statements:
Recognition and measurement principles
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
€1 in units of foreign currency
1.1065
1.1225
1.1806
1.5266
1.5425
1.5270
1.6031
1.1060
28
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:
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.
(159)
118
743
790
15
2016
2017
Note
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
Net change in fair value of hedging instruments
Actuarial gains (losses) on pension plans and similar commitments¹
Total items not expected to be reclassified to profit or loss in the future
Currency translation effects
Net income
The functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
prepared with the euro as reporting currency.
Functional currency, reporting currency and foreign currency translation
Change in provisions
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.
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".
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).
Cash and cash equivalents
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of
Comprehensive Income
for the year ended 30 September 2017 and 2016
€ in millions
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.
32
A list of subsidiaries of Infineon Technologies AG is provided in note 26.
4
28
6
9
(91)
(25)
10
(73)
(66)
Change in trade payables
177
€ in millions
for the year ended 30 September 2017 and 2016
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
16
Consolidated Financial Statements
9,945
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Total liabilities and equity
Total equity
5,023
5,636
(37)
(37)
91
(2,312)
(1,404)
5,016
4,774
2,265
9,087
5
11
2
Non-current income tax receivable
Net income
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
117
Notes
2017
2016
21
790
743
1
(2)
11
812
833
Income tax
Net interest result
2
5
2
Change in inventories
Change in trade receivables
Other non-cash result
2,272
Impairment charges
Losses on disposals of property, plant and equipment
58
56
(36)
142
4
Dividends received from joint ventures
15
31
4,309
857
Short-term provisions
13
422
327
Income tax payable
4
1,020
103
Other current liabilities
230
209
Total current liabilities
2,098
1,530
Long-term debt
120
Trade payables
17
323
3
Deferred tax assets
4
612
623
Other non-current assets
189
162
Total non-current assets
5,074
4,595
Total assets
9,945
9,087
LIABILITIES AND EQUITY
Short-term debt and current maturities of long-term debt
12
4,064
1,511
12
Pension plans and similar commitments
1,752
Total non-current liabilities
13
67
76
112
92
Long-term provisions
2,211
Total liabilities
Shareholders' equity:
Ordinary share capital
Additional paid-in capital
Accumulated deficit
Other reserves
Own shares at cost
2,534
10
Other non-current liabilities
4
Deferred tax liabilities
14
503
604
18
Other
གླམ * ཋ8Ø
70
Effects due to changes in applicable tax rates arise mainly from changes to applicable tax rates in Germany (municipal
trade tax) and in Singapore.
27
7
Effects due to changes in tax rate
63
(18)
32
(1)
(4)
Actual income taxes
(142)
36
19
Change in valuation allowance on deferred tax assets
> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 4),
Non-deductible expenses and tax-exempt income, net
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.
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.
Acquisition of 93 percent of the shares in MoTo Objekt Campeon GmbH & Co. KG
3 Acquisitions
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.
> 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),
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.
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.
Consolidated Financial Statements
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.
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
P see page 131 f.
and page 133 ff.
132
Notes to the Consolidated Financial Statements
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.
Prior year taxes
Notes to the Consolidated Financial Statements
Income tax from continuing operations for the fiscal years ending 30 September 2017 and 2016 is as follows:
(11)
Effects from the difference between local and functional currency (Malaysia)
Tax rate differential
Change in available tax credits
(203)
(271)
Expected income tax expense
2016
2017
€ in millions
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:
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.
4 Income tax
A deferred tax benefit of €51 million results from the creation and reversal of temporary differences.
(142)
152
(17)
(116)
(125)
2016
2017
133
Current tax expense includes an income tax expense of €4 million relating to previous fiscal years.
Income tax
Deferred tax income (expense)
Current tax expense
€ in millions
36
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.
Provisions and pension obligations
Consolidated Financial Statements
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 €612 million 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.
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.
(10)
623
(18)
612
Total
457
(457)
536
(536)
2017
Netting
2016
2,427
457
613
2016
2017
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Deferred taxes, net as of the end of the fiscal year
Foreign currency translation
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, €27 million will expire in the coming five years.
740
516
243
260
1,868
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
(467)
(554)
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 2016
30 September 2017
€ in millions
134
Deferred tax assets and liabilities as of 30 September 2017 and 2016 comprise the following:
Notes to the Consolidated Financial Statements
(40)
1,080
93
Consolidated Financial Statements
1,147
Total deferred taxes
(62)
142
(92)
165
Other
146
141
Unused tax credits and excess foreign tax credits
492
430
Tax loss carry-forwards
(173)
190
(212)
255
(26)
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
1.5
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.
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".
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
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.
Notes to 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.
When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately transferred to profit or loss.
Other financial liabilities
Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs.
In subsequent periods they are measured at amortized cost using the effective interest method. The liabilities
are derecognized when the contractual obligations are discharged, canceled or expired.
Inventories
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.
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.
126
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
2017
2016
2017
2016
2017
Segment
in %
in %
in %
€ in millions
terminal growth rate¹
after-tax WACC¹
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
125
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.
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
3-5
2-8
Infineon did not hold any intangible assets with indefinite useful lives in either the 2017 or 2016 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 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.
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.
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 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 for future cash flows is based on the after-tax weighted average cost of capital (WACC) for the
CGU in question. The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax
WACC used to discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
cash flows and the after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate is
derived using the Svensson method taking into account risk premiums, and the beta factor and debt ratio are
derived from a group of companies comparable to the operating segment. In this way the discount rate derived
reflects the current market rate of return as well as the specific risks attached to the respective segment.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the 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:
128
Book value of
allocated goodwill
pre-tax WACC¹
(17)
4-12
2016
1-12
Years
Technical equipment and machinery
Other plant and office equipment
Intangible assets (excluding goodwill)
Years
10-25
3-10
1-10
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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
127
3-5
2017
2016
Automotive
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.
All other plans that do not fall under the definition of a defined contribution plan are accounted for as defined
benefit plans. These relate to the commitments of Infineon to pay vested rights and current benefits to eligible
present and former employees and their dependants. The obligations also relate to retirement pensions. The
liability recognized in respect of defined benefit pension plans is the present value of the defined benefit obligation
(DBO) at the end of the reporting period less the fair value of the plan assets, together with adjustments for past
service costs. The present value of the DBO and resulting pension cost are determined in accordance with IAS 19
"Employee Benefits" annually for each separate plan by independent, qualified actuaries using the projected-unit-
credit method. For the calculation, actuarial procedures are applied for which it is necessary to make specific
assumptions. The most important of these are the discount rate, future expected increases in salaries and pensions,
and mortality rates.
In the case of defined contribution plans, Infineon pays pre-determined amounts based on statutory or contractual
regulations to an independent fund or to public or private pension insurance companies. Once the contributions
are paid, Infineon has no further performance obligation. The contributions are recognized as expense in the year
in which they fall due and are included in costs by function within the operating result. Liabilities are recorded for
payments due to the various defined contribution plans. Prepaid contributions are recognized as an asset to the
extent that a cash refund or a reduction of future payments is possible.
129
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).
Notes to the Consolidated Financial Statements
Revenue recognition
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.
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
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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.
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.
Consolidated Financial Statements
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.
Power Management
1.0
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
0
5
& Multimarket
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Corporate
704
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
1 Valuation parameters as of 30 June 2017 and 2016.
799
2
2
759
1.0
1.5
10.7
10.4
14.0
14.1
746
Total
153
25
5
(2)
594
613
(2)
2
(720)
1,586
1,656
Depreciation/amortization and impairment
Depre- Disposals Reclassi-
ciation/
Transfers
fication
Impair-
ments
Foreign
currency
effects
1 October
2015
(5)
amor-
tization
Carrying amount
30 Septem-
ber 2016
30 Septem-
ber 2015
(693)
(42)
30 Septem-
ber 2016
12
(569)
9
(121)
(58)
(179)
213
275
(70)
(41)
2
(109)
166
(160)
213
(21)
10
(174)
45
49
(10)
(1)
(11)
7
8
(163)
6
364
(731)
803
(159)
(31)
(15)
(205)
312
260
(53)
(68)
(121)
275
342
(32)
(43)
5
(70)
213
262
(144)
(20)
1
799
2,093
2,119
(8,118)
312
310
(536)
89
(7)
16
(6,305)
1,343
1,353
(1,059)
(11)
(87)
(1,082)
128
116
284
314
(7,619)
(665)
162
(1)
5
64
396
(5)
(163)
Other intangible assets
18
18
Total goodwill and other intangible assets
2,130
110
(13)
(2)
2,225
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
141
Depreciation/amortization and impairment
Carrying amount
1 October
2016
Depre-
ciation/
Disposals
Reclassi-
fication
Transfers 2
212
(1)
12
201
(171)
(20)
10,237
Goodwill and other intangible assets
Goodwill acquired for consideration
803
(4)
799
Capitalized development costs
419
Impair-
98
Customer relationships
395
1
396
Technologies
294
(12)
1
283
Licenses and similar rights
517
Foreign
30 Septem-
30 Septem-
(1,082)
(94)
64
5
(1,107)
120
128
(8,118)
(652)
192
1,343
2
284
29
(8,547)
2,659
2,119
759
799
(205)
(39)
2
332
(247)
1,477
20
30 Septem-
ments
currency
ber 2017
ber 2017
ber 2016
amor-
effects
tization
(731)
(6,669)
(60)
(1)
2
4
(771)
730
364
(6,305)
(498)
113
1
15
49
(4)
716
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.
13 Provisions
Short-term and long-term provisions as of 30 September 2017 consist of the following:
€ in millions
1 October
Additions
Usage
Reversals
2016
30 Septem-
ber 2017
176
43
108
44
€ in millions
Less than 1 year
1-2 years
2-3 years
3-4 years
5 years and after
Total
30 September 2017
30 September 2016
Debt
Obligations to employees
Interest
Interest
322
48
17
46
20
44
303
46
21
Debt
288
282
(210)
Thereof short-term
Thereof long-term
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.
Other provisions comprise provisions for litigations (other than provisions relating to Qimonda), asset retirement
obligations, onerous contracts and miscellaneous other liabilities.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
489
Notes to the Consolidated Financial Statements
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
144
Aggregate amounts of debt and interest maturing in the coming years are as follows:
(34)
352
(6)
354
Warranties
46
34
(10)
(17)
53
P see page 154 f.
Provisions related to Qimonda (see note 19)
Other
(232)
32
(5)
(4)
33
37
26
(7)
(7)
49
Total provisions
403
10
57
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.
144
Total
Less than
1 year
1-5 years
After 5 years
96
21
60
15
8
6
2
Current maturities of long-term debt, weighted average interest rate: 1.65% (2016: 1.37%)
Bond €300 million, coupon 1.00%, due 2018
Short-term debt and current maturities of long-term debt
Loans payable to banks:
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
Bond €300 million, coupon 1.00%, due 2018
Bond €500 million, coupon 1.50%, due 2022
USPP notes US$935 million, weighted average interest rate 4.09%, due 2024 - 2028
Long-term debt
Total
30 Septem-
ber 2017
30 Septem-
ber 2016
€ in millions
Debt as of 30 September 2017 and 2016 consists of the following:
12 Debt
As of 30 September 2016
(6)
(10)
8
14
(392)
(168)
6
(15)
(569)
1,656
24
1,738
P see page 142
Psee page 153
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
142
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 €210 million serves mainly as collateral for existing financing arrangements
as of 30 September 2017 (prior year: €0 million) (see note 12).
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:
Payments due in (€ in millions)
As of 30 September 2017
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
17
299
323
30 September 2016
Aggregate
facility
Drawn
Available
Aggregate
facility
Drawn
Available
95
23
72
30 September 2017
91
74
225
225
773
127
646
320
248
72
864
17
720
143
Term
17
27
128
198
298
496
496
790
830
1,511
Short-term
Long-term
Total
1,752
1,769
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.
In order to optimize its capital structure Infineon repaid a loan of €100 million in June 2017.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
The total lines of credit as of 30 September 2017 and 2016 are summarized in the following table:
€ in millions
1,834
9,712
(5,867)
284
14,971
10,124
9,727
17,448
17,148
1,963
1,998
181
172
3,767
3,705
2,062
2,092
36,962
35,996
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:
€ in millions
Included in the Consolidated Statement of Operations in:
Cost of goods sold
Research and development expenses
Selling, general and administrative expenses
15,566
2016
2017
Grants and subsidies
1,412
1,426
1,295
2,923
2,707
2017
2016
1,868
1,734
338
Total
313
2,047
The average number of employees by geographic region is as follows for the 2017 and 2016 fiscal years:
Europe
Therein: Germany
Asia-Pacific (without Japan)
Therein: China
Japan
Americas
Therein: USA
Total
2,206
1,497
2017
37
466
399
56
59
1,592
1,615
9 Trade receivables
Trade receivables due within one year as of 30 September 2017 and 2016 consist of the following:
€ in millions
Trade receivables, third parties
Trade receivables, related parties
Trade receivables, gross
Allowance for doubtful accounts
Trade receivables, net
30 Septem-
ber 2017
30 Septem-
ber 2016
860
784
1
860
1,157
1,070
30 Septem-
ber 2016
30 Septem-
ber 2017
33
68
75
1
2
106
110
For compliance with the requirements attached to the grants and subsidies received and potential repayment
requirements in case of nonfulfillment, see note 18.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
2016
Notes to the Consolidated Financial Statements
Psee page 123 ff.
P see page 158 ff.
8 Financial investments
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).
Financial investments as of 30 September 2017 and 2016 comprise the following (for further information see also
notes 22 and 23):
€ in millions
Fixed-term bank deposits and money market funds
Investment funds
Securities
Financial investments
138
2016
2017
137
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)
(1)
3
(1)
2
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
136
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.
Total property, plant and equipment
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
The current risks and provisions relating to Qimonda's insolvency are described in detail in note 19 "Proceedings
in relation to Qimonda".
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.
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
Psee page 154 f.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
135
In connection with investments in subsidiaries there are taxable temporary differences of €668 million for which
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.
Including the items recognized directly in equity 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
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.
Income taxes
2016
(142)
36
(6)
(3)
5
(148)
38
Income taxes recorded directly in equity consist of current and deferred taxes of €2 million, respectively,
which offset one another.
5 Disposals and discontinued operations and assets
classified as held for sale
2017
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
1,133.9
1,129.3
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
4.1
Cost of materials and purchased services as well as personnel expense
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
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)
The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
expenses for purchased services, materials and personnel.
785
5.3
1,134.6
(6.0)
1,128.6
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 share-based compensation
Weighted-average number of shares outstanding - diluted
Basic and diluted earnings per share¹ (in euro):
1,131.2
(6.0)
1,125.2
Earnings per share (in euro) from continuing operations
1 The calculation of earnings per share is based on unrounded figures.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
2017
2016
790
744
791
742
(1)
2
Earnings per share (in euro) from discontinued operations, net of income taxes
Earnings per share (in euro) - basic and diluted
(9)
Assets classified as held for sale
851
Other intangible assets
Total goodwill and other intangible assets
517
129
(3)
396
283
2
212
19
(11)
18
2,225
148
7
(14)
(60)
(45)
759
643
(4)
Licenses and similar rights
Technologies
Customer relationships
Capitalized development costs
1,227
Payments on account
and construction in progress
284
329
(2)
(274)
(4)
(1)
332
392
Total property, plant and equipment
874
366
(215)
(14)
(42)
11,206
Goodwill and other intangible assets
Goodwill acquired for consideration
799
5
10,237
(10)
275
(1)
1,095
Technical equipment and machinery
7,220
336
(95)
210
(23)
7,648
Other plant and office equipment
1,175
2
83
15
1
1,210
Payments on account
and construction in progress
314
271
(3)
(298)
(11)
(64)
(8)
(9)
1,003
219
18
2,306
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.
Changes in property, plant and equipment and goodwill and other intangible assets 2016
€ in millions
Cost
1 October
2015
26
Additions Acquisitions
through
Transfers
Foreign
currency
30 Septem-
ber 2016
business
effects
combi-
nations
Property, plant and equipment
Land, land rights and buildings
Disposals Reclassi-
fication
14
73
76
Third party trade receivables,
net of allowances as of 30 September 2016
773
753
14
6
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
139
4
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.
10 Inventories
Inventories as of 30 September 2017 and 2016 consist of the following:
€ in millions
Raw materials and supplies
Work in progress
Finished goods and merchandise
Total
Cost of sales consists mainly of inventory-related expenses in the 2017 and 2016 fiscal years.
30 Septem-
30 Septem-
Receivables with a maturity of more than one year are presented as other non-current assets.
ber 2017
16
851
774
(65)
Changes in the allowance for doubtful accounts for the 2017 and 2016 fiscal years were as follows:
€ in millions
Allowance for doubtful accounts at beginning of the fiscal year
Current year's allowance, net of reversals
Allowance for doubtful accounts at end of the fiscal year
2017
2016
11
831
7
4
11
Third party trade receivables, net of allowances for doubtful accounts, at the reporting date comprise the following:
€ in millions
Carrying
amount
Thereof not
past due
Past due
0-30 days
Past due
> 31 days
Third party trade receivables,
net of allowances as of 30 September 2017
(2)
ber 2016
9
111
combi-
nations¹
Property, plant and equipment
Land, land rights and buildings
1,095
32
366
(21)
45
(10)
(6)
1,501
Technical equipment and machinery
437
(127)
215
(27)
8,146
131
1,210
Other plant and office equipment
30 Septem-
ber 2017
Foreign
currency
effects
7,648
Transfers 2
360
business
749
379
1,240
1,191
701
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
11 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 30 September 2017 and 2016 is as follows:
Inventories as of 30 September 2017 and 2016 are stated net of write-downs of €131 million and €136 million,
respectively.
Changes in property, plant and equipment and goodwill and other intangible assets 2017
Disposals
Acquisitions
through
Additions
1 October
2016
140
€ in millions
Cost
Reclassi-
fication
Total
2.0
30 September 2017
Foreign
plans
plans
Domestic
30 September 2016
Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high
credit rating.
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
2.3
1.9
2.0
2.1
1.8
€ in millions
Domestic
plans
160
Total
1,245
186
2.6
1,059
Fair value of plan assets at beginning of year
1,133
177
Foreign
plans
956
1,038
878
957
153
804
a 50 basis points higher discount rate
Present value of defined benefit pension
plans with:
a 50 basis points lower discount rate
2.0
164
1.0
1,032
79
953
949
83
866
Plans that are wholly or partly funded
Total
876
104
11
91
81
10
plans
a 50 basis points higher expected
Plans that are wholly unfunded
93
1,040
964
172
2.7
1.8
plans
plans
Foreign
Domestic
Foreign
plans
Domestic
plans
30 September 2016
30 September 2017
Projected future pension increases
Rate of salary increase
Discount rate at the end of the fiscal year
in %
The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
Actuarial assumptions
1,136
2.2
rate of salary increase
Equity securities
168
Quoted
in an active
market
30 September 2016
Not quoted
in an active
market
Quoted
in an active
market
30 September 2017
Total
Other
Not quoted
in an active
market
Property
Cash and cash equivalents
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.
Reinsurance policies
Investment strategies
127
160
19
Total
3
15
3
33
-
140
34
6
3
133
150
1
153
1
1
147
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
170
893
rate of pension increase
a 50 basis points higher expected
1,121
167
954
1,063
1,026
866
rate of salary increase
a 50 basis points lower expected
1,152
177
975
1,055
160
982
177
1,159
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
tables were applied.
1,164
172
992
1,063
167
896
Increase in life expectancy by one year
1,104
164
940
1,022
159
863
rate of pension increase
a 50 basis points lower expected
887
Foreign
8
Total
(13)
(13)
demographic assumptions
Adjustments to
(3)
(1)
(2)
Adjustments to financial assumptions
(20)
1
(21)
Experience adjustments
Actuarial gains (losses) for:
(23)
(5)
(18)
20
(14)
128
(159)
(876)
Present value of defined benefit obligation
at end of year
5
5
4
4
Foreign currency effects
136
22
14
19
5
14
Benefits paid by Infineon
(179)
(20)
8
(4)
(10)
Interest cost
Foreign
plans
plans
plans
plans
Domestic
Total
Foreign
Total
Domestic
2017
145
€ 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
24
2016
Change in defined benefit obligations
taking into account future salary increases:
Present value at beginning of year
(964)
(5)
(5)
1
1
Past service income (cost)
(26)
(5)
(21)
(30)
(6)
(24)
Current service cost
(914)
(141)
(773)
(1,136)
(172)
(164)
Domestic
plans
(1,040)
(172)
(461)
(373)
(373)
Thereof: Infineon Technologies AG
(604)
(110)
(494)
(461)
(503)
(402)
Net pension liability
532
62
470
537
63
(101)
474
Thereof: Infineon Technologies Austria AG
(53)
Foreign
plans
plans
Domestic
30 September 2016
30 September 2017
€ in millions
146
(53)
The funding of the defined benefit obligations is as follows:
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)
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.
Fair value of plan assets at end of year
(5)
(5)
(1)
Actuarial gains (losses)
13
2
11
7
2
(1)
5
488
51
437
532
470
Change in fair value of plan assets:
(1,136)
Expected return on plan assets
23
11
34
(2)
(2)
Foreign currency effects
(22)
(8)
(14)
(19)
(5)
(14)
Benefits paid
24
11
13
20
6
14
Contributions from Infineon
(964)
19
149
19
shares outstanding
as of 30 September 2017
Number of performance
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:
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 fair value of the performance shares at the date of allocation was determined by an external expert using
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.
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.
152
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
Fair value per
performance share
Performance share plan
in €
30 September 2020
10.56
30 September 2019
Fiscal year 2016: Management Board
7.26
1,142,538
10.56
30 September 2019
11.25
80,704
13.01
30 September 2020
Fiscal year 2017: Management Board
Fiscal year 2016: Employees
11.86
934,232
13.01
Fiscal year 2017: Employees
80,964
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.
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.
790
(2,312)
(159)
744
(2,897)
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
As of 30 September 2016
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 2015
€ in millions
The following table shows a reconciliation of accumulated deficit as of 30 September 2017 and 2016:
Accumulated deficit
(35)
(3)
118
17 Share-based compensation
(1,404)
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.
The USPP notes of US$935 million issued in April 2016 contain a number of standard covenants, including among
other things change of control clauses as well as the compliance with a debt coverage ratio, which provides for
a certain relationship between the size of debt (adjusted) and earnings (adjusted). The financial liabilities, which
were taken over in connection with the acquisition of MoTo, also contain three standard covenants based on certain
financial ratios (equity ratio, debt ratio and liquidity ratio).
With gross debt of €1,834 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).
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.
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.
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'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.
16 Capital management
P see page 142
P see page 150
P see page 76 f.
151
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
Dividends
7.07
Fiscal year 2015: Employees
30 September 2018
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).
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).
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.
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).
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).
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.
Total undiscounted future minimum sub-lease payments to be received as of 30 September 2017 amounted to
€1 million (30 September 2016: €133 million).
As of 30 September 2016
P see page 154 f.
P see page 142
P see page 132
202
278
118
598
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.
72
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Notes to the Consolidated Financial Statements
25
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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.
Alleged activation of a shell company and liability for impairment of 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.
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.
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 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.
Smartcard antitrust litigation
Litigation and government inquiries
19 Legal risks
154
Consolidated Financial Statements
140
96
308
114,046
6.62
30 September 2017
5.72
1,182,830
6.62
30 September 2017
5.31
100,702
8.49
30 September 2018
Fiscal year 2015: Management Board
Fiscal year 2014: Employees
Fiscal year 2014: Management Board
5.44
988,112
8.49
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.
After 5 years
1-5 years
Less than
1 year
Total
As of 30 September 2017
Payments due in (€ in millions)
Undiscounted future minimum lease payments arising from operating lease arrangements to be made by Infineon
as lessee are the following:
(32)
153
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
the Consolidated Statement of Financial Position, relating in particular to lease arrangements and unconditional
purchase commitments. These are explained in more detail below.
In addition to provisions and liabilities, Infineon also has other financial obligations which are not recognized in
18 Other financial commitments
The costs for share-based compensation amounted to €13 million and €9 million in the 2017 and 2016 fiscal years,
respectively.
Costs for share-based compensation
Notes to the Consolidated Financial Statements
(60)
62
(59)
(33)
(36)
(8)
(28)
(5)
(5)
1
1
11111
13
2
7
2
5
(23)
(8)
(5)
(41)
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.
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.
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.
(18)
(14)
(4)
€ 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
(1)
468
Current service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized
(10)
(26)
(5)
(30)
(6)
(24)
Total
27
Foreign
plans
Total
Foreign
plans
Domestic
plans
2016
2017
148
past service (cost) benefit
Pension cost
Domestic
plans
22
(21)
81
1
1
from hedge accounting
Realized (gains) losses resulting
(6)
(6)
6
6
Deal Contingent Forward
(28)
(28)
(66)
(66)
Foreign currency translation differences
Net after tax
(1)
Tax
(1)
(2)
Total
98
(1)
(1)
1
1
Unrealized gains (losses) resulting
from securities
1
1
from securities
Realized (gains) losses resulting
(3)
4
(3)
(1)
from hedge accounting
Pretax
Unrealized gains (losses) resulting
Tax
Authorized share capital
Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €197 million
in the 2016 fiscal year, of which €225 million related to the dividend paid in February 2016. The exercise of stock
options by employees as well as by current and past members of the Management Board increased additional
paid-in capital by €19 million. Expenses amounting to €9 million for share-based compensation were recorded in
the 2016 fiscal year, additional paid-in capital increased by the same amount.
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.
15 Equity
P see page 152
As of 30 September 2017, the Company's Articles of Associations provide for two authorized share capitals amounting
to up to €706,000,000:
Notes to the 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.
315
374
Net after tax
191
223
Consolidated Financial Statements
> 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.
Ordinary share capital
Other reserves
€ in millions
Changes in other reserves during the 2017 and 2016 fiscal years are as follows:
Pretax
> Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is conditionally increased by up
to €260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights of
the holders of warrants or convertible bonds, which the Company may issue at any time prior to 12 February 2019
(Conditional Capital 2014).
> 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.
-
Conditional capital
As of 30 September 2017, the Company's Articles of Associations provide for two conditional capitals amounting to
up to €274,910,838:
P see page 151 f.
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.
2016
2017
Current liabilities:
Balance as of 30 September 2016
3,089
Other non-current liabilities
Long-term debt
Non-current liabilities:
Total
1,511
2
1,566
40
40
40
3,031
3,029
Short-term debt and current
137
1,511
135
(amortized
137
through
maturities of long-term debt
financial
profit or loss
liabilities
cost)
hedging
instruments
(cash flow
hedges)
Fair value
Short-term debt and current
maturities of long-term debt
323
323
326
Trade payables
1,020
1,020
1,020
Other current liabilities
2
17
Consolidated Financial Statements
17
8
2,830
P see page 142
P see page 155
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)".
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.
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:
> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
2,745
> 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,
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Notes to the Consolidated Financial Statements
The allocation to the levels as of 30 September 2017 and 2016 is as follows:
€ in millions
30 September 2017
160
Fair value
Designated
> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
2
2,755
8
Trade payables
857
857
857
Other current liabilities
121
2
111
8
121
Non-current liabilities:
Long-term debt
Other non-current liabilities
Total
1,752
1,752
1,827
8
8
17
Other
Current assets:
Carrying
amount
Fair value
860
1,592
851
101
3
860
860
Designated
cash flow
hedges
522
1,592
851
851
97
1
101
163
40
1,070
123
Loans and
receivables
At fair value
through
profit or loss
€ in millions
Financial assets
Balance as of 30 September 2017
Current assets:
Cash and cash equivalents
Financial investments
Trade receivables
Other current assets
Available
for sale
Non-current assets:
Total
Balance as of 30 September 2016
Fair value by category
Cash and cash equivalents
Financial investments
Trade receivables
Categories of financial assets
Carrying
amount
Other non-current assets
163
3,567
3
100
132
Total
3,234
490
2,743
1
3,234
32
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Notes to the Consolidated Financial Statements
€ in millions
Financial liabilities
Balance as of 30 September 2017
Current liabilities:
Categories of
financial liabilities
159
Consolidated Financial Statements
132
Other non-current assets
Non-current assets:
562
3,001
1
3,567
625
625
625
1,615
458
1,157
1,615
774
774
774
88
87
1
88
Other current assets
At fair value
Level 1
(33)
Level 3
(9)
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.
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.
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
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
2
P see page 160
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.
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 2017 and 2016 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.
23 Financial risk management
For the net result related to foreign currency derivatives and foreign currency transactions included within net
income see note 22.
1
1
Commodity swaps
Total
30 September 2017
30 September 2016
Nominal
value
Fair
value
Nominal
value
39
Fair
value
165
126
1
167
(2)
455
(8)
33
281
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
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 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.
Other price risk
According to IFRS 7 "Financial Instruments: Disclosures”, other price risk is defined as the risk that the fair value or
future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded
in the market.
Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
would have no significant impact on the result of the 2017 and 2016 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 30 September 2017
and 2016 had no significant impact on equity in the 2017 and 2016 fiscal years.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
164
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
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 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.
163
P see page 123
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.
€ in millions
30 September 2017
30 September 2016
Profit or Loss
Equity
+10%
(10%)
+10%
(10%)
21
(25)
6
(7)
(40)
49
Interest rate risk
Deal Contingent Forward
Designated cash flow hedges
Forward exchange contracts purchased
Forward exchange contracts sold
Financial investments
Other current assets
Non-current assets:
Other non-current assets
Total
Current liabilities:
Other current liabilities
Total
Current assets:
2
2
2
458
399
59
1
1
32
2
30 September 2016
Total
Other current liabilities
Current assets:
Financial investments
Other current assets
522
466
56
4
4
Non-current assets:
Other non-current assets
40
19
21
Total
566
485
60
21
Current liabilities:
18
Level 2
14
417
(22)
(2)
(2)
7
63
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.
(37)
(46)
(96)
Consolidated Financial Statements
161
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.
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).
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 30 September 2017 and 2016
are as follows:
€ in millions
Notes to the Consolidated Financial Statements
2
2016
2017
60
14
10
10
10
10
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).
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).
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).
In the 2017 and 2016 fiscal years there were no reclassifications between the levels.
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:
€ in millions
Available-for-sale financial assets
Loan and receivables
Designated as fair value through profit and loss
Held for trading
Other financial liabilities
Total
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
491
22 Additional disclosures on financial instruments
162
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.
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.
Psee page 173 ff.
P see page 170 f.
20 Transactions with related companies and persons
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").
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
Consolidated Financial Statements
Related companies receivables and payables as of 30 September 2017 and 2016 consist of the following:
€ in millions
157
30 September 2017
30 September 2016
Joint Other related
ventures companies
Joint Other related
ventures companies
Trade and other receivables
Notes to the Consolidated Financial Statements
Financial receivables
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.
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.
158
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
155
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.
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.
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.
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 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.
Infineon recognizes provisions and liabilities for such obligations and risks which it assesses at the end of each
reporting period are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
of Qimonda and that entity's subsidiaries. As a result, Infineon recorded provisions 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.
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 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
156
Other
Liabilities, provisions and contingent liabilities relating to Qimonda
Trade and other payables
Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
1
1
79
17
77
14
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
3
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).
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).
As of 30 September 2017, pension liabilities for former members of the Management Board amounted to €67.9 million
(2016: €77.0 million).
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Financial payables
21 Supplemental cash flow information
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.
2
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.
Other related
companies
16
1
1
10
8
1
1
1
1
€ in millions
Sales and service charges
Products and services received
2017
2016
Joint
ventures
Other related
companies
Sales and service charges to and products and services received from related companies in the 2017 and 2016
fiscal years consist of the following:
Joint
ventures
Management Consultant
Johann Dechant¹
Deputy Chairman
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
> Deutsche Lufthansa AG, Cologne, Germany (Chairman)
(until 24 September 2017)
and comparable governing bodies of domestic
and foreign companies (as of 30 September 2017)
Member of the Supervisory Board
> Münchener Rückversicherungs-Gesellschaft AG, Munich,
Wolfgang Mayrhuber
Chairman
Germany (until 31 December 2016)
Member of the Board of Directors
Membership of Supervisory Boards
Occupation
Member of the Supervisory Board
Member of the Board of Directors
> Infineon Technologies Americas Corp., Wilmington,
Delaware, USA
> Heico Corporation, Hollywood, Florida, 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
> 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 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
Member of the Administrative Board
Name
Member of the Supervisory Board
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)
Peter Gruber¹
Representative of
Senior Management
Member of the Supervisory Board
Member of the Supervisory Board
> Infineon Technologies Dresden GmbH, Dresden, Germany
Member of the Board of Directors
> Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
Gerhard Hobbach 1
> Zalando SE, Berlin, Germany (since 31 May 2017)
Hans-Ulrich Holdenried
> Infineon Technologies Dresden GmbH, Dresden, Germany
Annette Engelfried¹
171
Notes to the Consolidated Financial Statements
> OSRAM Licht AG, Munich, Germany (Chairman)
> OSRAM GmbH, Munich, Germany (Chairman)
Member of the Supervisory Board
> Porsche Austria GmbH, Salzburg, Austria
> Porsche Holding GmbH, Salzburg, Austria
> Porsche Retail GmbH, Salzburg, Austria
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
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
> BKK of Siemens AG, Heidenheim/Brenz, Germany
> Infineon Technologies Austria AG, Villach, Austria
P see page 99 ff.
Member of the Supervisory Board
1,286
1,110
1,279
4,299
3,840
Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
1,118
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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
Prof. Dr. Renate Köcher
26 Additional information in accordance with HGB
Consolidated Financial Statements
Information pursuant to section 161 Stock Corporation Act (AktG)
2
38
Japan
Americas
Therein: USA
Total
30 Septem-
ber 2017
30 Septem-
2
ber 2016
1,718
1,727
1,095
873
834
41
2,306
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
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
Dominik Asam
Member of the
Management Board
and governing bodies of domestic and
foreign companies (as of 30 September 2017)
Member of the Supervisory Board
> Infineon Technologies Austria AG, Villach, Austria
(Chairman)
Member of the Board of Directors
> Infineon Technologies Americas Corp., Wilmington,
Delaware, USA (since 5 October 2017)
Membership of Supervisory Boards
Dr. Reinhard Ploss
Name
The members of the Management Board during the 2017 fiscal year were as follows:
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
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.
Management Board and Supervisory Board
Management compensation in the 2017 fiscal year
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 | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Management Board
> EPCOS AG, Munich, Germany (until 17 May 2017)
Dr. Susanne Lachenmann'
Géraldine Picaud
(since 16 February 2017)
Munich Technical University,
Munich, Germany
Jürgen Scholz¹
in %
logies AG
(€ in
millions)
(€ in
millions)
Fully consolidated subsidiaries:
Techno-
7
72
0
2.39
2.34
Karlsruhe, Germany
100
DICE Danube Integrated Circuit Engineering GmbH & Co. KG Linz, Austria
Hitex GmbH
100
note
holdings
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
Infineon
Name of company
Registered office
Share-
thereof
Equity
Net result
Foot-
173
2.16
0.00
7,12,13
0
26.14
2.63
7
100
0
100
138.45
Melaka, Malaysia
100
0
160.12
7
21.53
21.64
Melaka, Malaysia
7
0.04
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.
Kulim, Malaysia
Beijing, People's Republic of China
100
0
15.77
1.76
10
Wuxi, People's Republic of China
100
0
18.79
10
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.
172
Dr. Manfred Puffer
Prof. Dr. Renate Köcher
> 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
> Alstom S.A., Saint-Ouen, France
Member of the Supervisory Board
> Bremer Kreditbank AG, Bremen, Germany
> Bankhaus Neelmeyer, Bremen, Germany (since 4 April 2017)
> Nova KBM Bank, Maribor, Slovenia
Member of the Board of Directors
> Athene Holding Ltd., Pembroke, Bermuda
Member of the Supervisory Board
> Athene Lebensversicherung AG, Wiesbaden, Germany
Member of the Board of Directors
> Nestlé Deutschland AG, Frankfurt/Main, Germany
> Robert Bosch GmbH, Gerlingen, Germany
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)
> BMW AG, Munich, Germany
> Krones AG, Neutraubling, Germany
Member of the Administrative Board
Dr. Manfred Puffer
> BKK of BMW AG, Dingolfing, Germany
> K+S AG, Kassel, Germany
Investment, Finance and Audit Committee
Dr. Eckart Sünner (Chairman)
Johann Dechant
Annette Engelfried
Wolfgang Mayrhuber
Strategy and Technology Committee
Hans-Ulrich Holdenried
Peter Bauer (Chairman)
Hans-Ulrich Holdenried
Dr. Susanne Lachenmann
Wolfgang Mayrhuber
Jürgen Scholz
Nomination Committee
Wolfgang Mayrhuber (Chairman)
Peter Gruber
Gerhard Hobbach
Johann Dechant
Wolfgang Mayrhuber (Chairman)
Former members of the
Supervisory Board
Prof. Dr. Doris Schmitt-Landsiedel
(until 8 November 2016)
Professor
Therein: China
1 Employee representative
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
Member of the Supervisory Board
Asia-Pacific (without Japan)
49
Europe
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.
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.
Based on revenue and Segment Result, the Management Board assesses performance and defines operating targets
and budgets for the segments.
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
Individual small product groups were transferred to other segments with effect from 1 October 2016. The previous
year's figures have been adjusted accordingly.
The following tables present selected segment data:
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.
€ in millions
Other Operating Segments
Notes to the Consolidated Financial Statements
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.
166
Industrial Power Control
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 as well as applications
with special demands on their robustness and reliability.
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
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.
Revenue:
Automotive
Industrial Power Control
7,063
6,473
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.
(7)
€ in millions
Automotive
Industrial Power Control
Power Management & Multimarket
Chip Card & Security
Other Operating Segments
Corporate and Eliminations
Segment Result:
3
8
9
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
1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
1,483
46
52
69
246
539
936
Derivative
financial liabilities:
68
Cash outflow
208
Cash inflow¹
(206)
(206)
Total
3,392
208
1,532
3,390
financial liabilities
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
1,534
Total
68
246
1,483
Derivative
financial liabilities:
Cash outflow
709
709
46
Cash inflow¹
(698)
Total
3,148
1,063
352
152
(698)
52
52
152
539
936
As of 30 September 2016
Total
2017
2018
2019
2020
2021
beyond 2021
Non derivative
financial liabilities
3,137
1,052
352
69
2017
2016
474
Total
168
30 Septem-
ber 2017
30 Septem-
ber 2016
397
Corporate and Eliminations
338
115
264
255
Infineon Technologies (Wuxi) Co., Ltd.
49
401
129
Other Operating Segments
Chip Card & Security
Power Management & Multimarket
693
Depreciation and amortization not allocated to the segments
Total depreciation and amortization
129
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
Inventories:
Automotive
Industrial Power Control
434
683
1,240
Entity-wide disclosures in accordance with IFRS 8
1,735
1,574
463
424
881
819
3,083
714
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:
661
3,447
1,000
1,094
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
Total
2017
2016
2,272
2,147
1,191
Therein: Germany
Depreciation and amortization allocated to the segments
1
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)
1,208
7
(13)
(9)
Acquisition-related depreciation/amortization and other expenses
(153)
(191)
Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
Other income and expense, net
Share-based compensation expense
Segment Result:
2016
2017
363
183
133
427
354
124
135
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
(15)
3
(4)
(6)
Industrial Power Control
Power Management & Multimarket
2017
2016
350
302
Automotive
112
173
186
Chip Card & Security
47
82
Other Operating Segments
120
Depreciation and amortization:
€ 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.
Operating income
Financial income
983
763
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
705
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.
(36)
Wuxi, People's Republic of China
0.99
100
0
100
10
Moscow, Russian Federation
Silicon Alps Cluster GmbH
R Labco, Inc.
0.12
OSPT IP Pool GmbH
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)
MicroLinks Technology Corp.
International Rectifier Power Management Private Limited
0.00
100
Wilmington, Delaware, USA
Villach, Austria
100
Wilmington, Delaware, USA
100
Bangalore, India
0.16
Baden, Switzerland
0.13
10
100
São Paulo, Brazil
0.03
0.21
0
0
Infineon Technologies South America Ltda
Infineon Technologies Schweiz GmbH in liquidation
Infineon Technologies RUS LLC
Infineon Technologies Mantel 31 GmbH
11
n. a.
n. a.
100
100
Neubiberg, Germany
Neubiberg, Germany
11
n. a.
n. a.
11,12,13
100
100
Infineon Technologies Mantel 30 GmbH
100
100
n. a.
0.00
0.03
0
100
10
Bucharest, Romania
Infineon Technologies Romania s.r.l.
0.06
0.11
0
100
10
Warsaw, Poland
Infineon Technologies Sp. z o.o.
n. a.
100
100
oooo
7
GRI G4-17
n. a.
n. a.
0
n. a.
3
7
0.00
0
100
7
Wilmington, Delaware, USA
Villach, Austria
0.00
0.02
0.00
0.07
0.49
5
7.10
(1.38)
Kuala Lumpur, Malaysia
100
Curepipe, Mauritius
100
Neubiberg, Germany
100
Neubiberg, Germany
93
Tijuana, Mexico
100
Shanghai, People's Republic of China
100
106 000
100
Neubiberg, Germany
100
7
(0.16)
0.99
0
7
0.00
0.00
10
0
0.00
0
7
0.00
0.00
0
0.00
Villach, Austria
100
0
n. a.
n. a.
0
n. a.
3
Kaohsiung, Taiwan
10
0.06
1.78
24
24
Lippstadt, Germany
0.00
0.09
10
Neubiberg, Germany
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Infineon Technologies Mantel 29 GmbH
n. a.
0.00
0.00
0
100
7
Wilmington, Delaware, USA
Linz, Austria
n. a.
0
n. a.
Hsinchu County, Taiwan
3
0.20
1.99
n. a.
0
7
0
0.00
0.06
100
100
Duisburg, Germany
7
72
0.22
100
7
100
Duisburg, Germany
0.00
0.10
0.57
60
7
7,17
0.39
3.22
10
0.42
9.62
7
Joint ventures:
10,16
71.49
8,12,13
(1.54)
0.38
(0.03)
1.81
8.53
Infineon Technologies Bipolar GmbH & Co. KG
Infineon Technologies Bipoláris Kft.
Other companies (not consolidated):1
0.38
65.27
60
60
669
Cegléd, Hungary
Warstein, Germany
Infineon Technologies Canada, Inc.
Infineon Technologies Bipolar Verwaltungs GmbH
Hitex (UK) Limited
EPOS embedded core & power systems Verwaltungs GmbH
Haus der Zukunft gGmbH
EPOS embedded core & power systems GmbH & Co. KG
DICE Danube Integrated Circuit Engineering GmbH
CHIL Semiconductors Corporation
Advanced Power Electronics Corp.
3
Berlin, Germany
n. a.
n. a.
0
100
Neubiberg, Germany
7
0.13
0.39
0.02
0
Dublin, Ireland
7
0.04
0.14
0
100
100
0.00
7
Neubiberg, Germany
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
Madrid, Spain
n. a.
7
0.02
7
0.00
0.03
60
60
Warstein, Germany
St. John, New Brunswick, Canada
7
1.71
0
88
Coventry, Great Britain
n. a.
n. a.
0.28
7
100
0
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
100
Neubiberg, Germany
Infineon Technologies Delta GmbH
7
0.00
0.00
0.00
10
100
7
1,435.84
160.74
Rotterdam, The Netherlands
7
100
100
0
4,860.63
Hong Kong, People's Republic of China
7
100
0
23.18
3.40
282.39
Hong Kong, People's Republic of China
100
9
0.00
7,12,13
7
St. Denis, France
100
0
Singapore, Singapore
8.26
Rotterdam, The Netherlands
100
0
34.96
(0.06)
7
0.43
7
100
0
0.77
7
Klagenfurt, Austria
100
0
6.84
4.20
4.20
100
0
16.19
3.35
7
Seoul, Republic of Korea
Tokyo, Japan
0
100
Milan, Italy
1.86
0.33
Bangalore, India
100
0
9.97
(4.65)
4
Rotterdam, The Netherlands
7
100
0
0.13
0.00
7
369.89
50
100
Neubiberg, Germany
7
Singapore, Singapore
100
0
296.83
326.40
(15.77)
7
0
1.40
0.08
7
100
0,004
100
2,495.67
0
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
Villach, Austria
Xi'an, People's Republic of China
10
100
0
6.70
0.24
Wilmington, Delaware, USA
771.93
7
128.98
7
0
150.12
14.86
Dresden, Germany
100
100
100
224.27
7,12,14
Wilmington, Delaware, USA
100
0
(7.74)
3.18
0.00
10
Shanghai, People's Republic of China
0.23
100
0
13.26
7
100
0
15.71
1.21
Batam, Indonesia
Cegléd, Hungary
10
Shanghai, People's Republic of China
100
0
3.54
Infineon Technologies Batam PT
Tokyo, Japan
100
4.02
100
0
1,511.21
7
8.07
Neubiberg, Germany
Wilmington, Delaware, USA
100
10.19
0.00
7,12,14
GRI G4-17
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Name of company
100
Consolidated Financial Statements
Infineon Technologies US InterCo LLC
Infineon Technologies Vermögens-
verwaltungsgesellschaft mbH
2,149.55
7
2.88
0.74
Infineon Technologies U.K. Limited
Bristol, Great Britain
100
0.00
0
7
0.07
Infineon Technologies US HoldCo Inc.
Wilmington, Delaware, USA
100
0
(0.63)
Notes to the Consolidated Financial Statements
Innoluce B.V.
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.
0
1.25
0.49
Herlev, Denmark
100
0
100
1.71
Wilmington, Delaware, USA
100
0
55.46
52.00
7
0.13
10
Nijmegen, The Netherlands
millions)
174
Registered office
Share-
thereof
Equity
Net result
holdings
Infineon
Foot-
note
Techno-
(€ in
(€ in
in %
logies AG
millions)
0
0
100
0.31
7
Kista, Sweden
100
0
5.49
0.30
0.00
7
100
0
(0.18)
0.12
Cheonan, Republic of Korea
7
Muntinlupa City, Philippines
34.96
0
100
1.03
Rotterdam, The Netherlands
7
100
0
10.29
0.29
Neu-Isenburg, Germany
100
0
14.30
3.74
6
7
Bristol, Great Britain
100
Taipei, Taiwan
100
1.72
Infineon Technologies Hong Kong Ltd.
Infineon Technologies India Private Limited
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 Nordic AB
Infineon Technologies Philippines, Inc.
Infineon Technologies Power Semitech Co., Ltd.
Infineon Technologies Hong Kong Sales Limited
Infineon Technologies Reigate Limited
Infineon Technologies Romania & Co. Societate
in Comandita
Infineon Technologies Taiwan Co., Ltd.
Maia, Portugal
100
100
1.97
7
Infineon Technologies Shared Service Center,
Unipessoal Lda.
43.44
Infineon Technologies Holding B.V.
Infineon Technologies Holding 2 B.V.
Bristol, Great Britain
7
100
0
156.71
2.97
Infineon Technologies Holding Asia Pacific Pte. Ltd.
Bucharest, Romania
0
2.85
1.15
Infineon Technologies Cegléd Kft.
Infineon Technologies Center of Competence
(Shanghai) Co., Ltd.
Infineon Technologies China Co., Ltd.
Infineon Technologies Dresden GmbH
Infineon Technologies Epi Services, Inc.
Infineon Technologies Finance GmbH
Infineon Technologies France S.A.S.
100
0
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Qimonda AG in insolvency
77
Qimonda Holding B.V. in insolvency
Rotterdam, The Netherlands
77
Qimonda International Trade (Shanghai) Co. Ltd.
Qimonda Investment B.V.
Qimonda IT (Suzhou) Co., Ltd. in liquidation
St. Denis, France
Qimonda Italy s.r.l. 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
Shanghai, People's Republic of China
Rotterdam, The Netherlands
Suzhou, People's Republic of China
Padua, Italy
77
2
Qimonda Korea Co. Ltd. in liquidation
77
Qimonda France SAS in liquidation
77
Dresden, Germany
77
2
Qimonda Europe GmbH in liquidation
Qimonda Finance LLC in insolvency
Qimonda Flash Geschäftsführungs GmbH in liquidation
Qimonda Flash GmbH in insolvency
2
Munich, Germany
2
Wilmington, Delaware, USA
77
Dresden, Germany
77
2
Dresden, Germany
77
2
Seoul, Republic of Korea
FFFF
77
77
1 Certain subsidiaries were not consolidated due to immateriality.
Dresden, Germany
Taipei, Taiwan
High Blantyre, Scotland
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.
77
3 Share of not more than 5 percent.
5 Equity and net result as of 15 June 2016 (period from 1 October 2015 until 15 June 2016).
6 Equity and net result as of 30 June 2016.
7 Equity and net result as of 30 September 2016.
8 Equity and net result as of 30 September 2016 (period from 1 January 2016 until 30 September 2016).
9 Equity and net result as of 30 September 2016 (period from 18 January 2016 until 30 September 2016).
10 Equity and net result as of 31 December 2016.
11 The entity was founded in the 2017 fiscal year.
4 Equity and net result as of 31 March 2016.
Fort Lauderdale, Florida, USA
Qimonda UK Ltd. in liquidation
Qimonda Solar GmbH
2
77
77
2
77
2
77
Qimonda Taiwan Co. Ltd. in liquidation
Suzhou, People's Republic of China
77
Wilmington, Delaware, USA
77
2
Wilmington, Delaware, USA
77
2
2
Qimonda Dresden Verwaltungsgesellschaft mbH
in insolvency
77
Dresden, Germany
(€ in
millions)
10
Schramberg, Germany
9
9
53.75
4.73
(€ in
millions)
3
n. a.
n. a.
n. a.
n. a.
Xi'an, People's Republic of China
50
0
Vienna, Austria
n. a.
logies AG
Techno-
Name of company
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Schweizer Electronic AG
TTTech Computertechnik AG
Xi'an IR PERI Company, Ltd.
XMOS Limited
in %
175
Share-
thereof
Equity
Net result
holdings
Infineon
Foot-
note
Registered office
n. a.
15
n. a.
77
2
Munich, Germany
77
28
2
Singapore, Singapore
Melaka, Malaysia
77
77
Munich, Germany
77
2
Bratislava, Slovakia
77
2
Leuven, Belgium
2
40
2
0
n. a.
n. a.
Qimonda AG and its subsidiaries: 2
Celis Semiconductor Corp.
Itarion Solar Lda.
Qimonda (Malaysia) Sdn. Bhd. in liquidation
Qimonda Asia Pacific Pte. Ltd.
Qimonda Belgium BVBA in insolvency
Qimonda Beteiligungs GmbH in insolvency
Qimonda Bratislava s.r.o. in liquidation
Qimonda Dresden GmbH & Co. OHG in insolvency
Bristol, Great Britain
Colorado Springs, Colorado, USA
Vila do Conde, Portugal
2
17
12 Control and profit transfer agreement.
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.
2
15 Exemption pursuant to section 285, paragraph 11b, German Commercial Code from the obligations to disclose information of subsidiaries.
182
Auditor's responsibilities for the audit of the Consolidated Financial Statements and the
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.
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.
As part of our audit we exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
> 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.
› 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.
Independent Auditor's Report
> Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Management Board.
> 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.
> 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Further Information
Independent Auditor's Report
183
> Evaluate consistency of the Group Management Report with the Consolidated Financial Statements, its legal
compliance and presentation of the Group's position.
> 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.
› 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.
Further Information
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 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Further Information
Independent Auditor's Report
181
Our audit approach
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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.
Our conclusions
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.
Responsibilities of the Management and Supervisory Boards for the Consolidated Financial Statements
and the Group Management Report
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.
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.
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 verified the Company's calculation of the values for mathematical accuracy.
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 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.
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.
Application Specific Integrated Circuit. Logic IC specially
constructed for a specific application and customer;
implemented on an integrated circuit.
Authentication
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.
Backend manufacturing
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.
Bare die
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.
ASIC
Bipolar
CMOS
Complementary Metal Oxide Semiconductor. Standard semi-
conductor manufacturing technology used to manufacture
microchips with low power usage and a high level of integration.
Compound semiconductor
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.
Converter
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.
Epitaxy
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.
"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
Comprehensive term for the manufacture and processing of
wafers with a diameter of 300 millimeters.
Other disclosures pursuant to Article 10 of the EU Audit Regulation
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).
Auditor responsible for the engagement
The auditor responsible for the engagement is Michael Pritzer.
Munich, 21 November 2017
KPMG AG
Wirtschaftsprüfungsgesellschaft
Braun
Wirtschaftsprüfer
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Pritzer
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.
Further Information
Technology Glossary
Technology Glossary
184
300-millimeter technology
Financial statement risk
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.
Wirtschaftsprüfer
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.
Infineon Technologies AG
Dr. Reinhard Ploss
Dominik Asam
Dr. Helmut Gassel
Jochen Hanebeck
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Further Information
Neubiberg, 21 November 2017
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.
Independent Auditor's Report
To Infineon Technologies AG, Neubiberg
Report on the audit of the Consolidated Financial Statements
and Group Management Report
Opinion
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.
In our opinion, based on our audit findings,
178
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.
177
Responsibility Statement by the
Management Board
Measurement of deferred tax assets
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.
GRI G4-17
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Neubiberg, 17 November 2017
Infineon Technologies AG
Management Board
176
Dr. Reinhard Ploss
Dominik Asam
Dr. Helmut Gassel
Jochen Hanebeck
Further Information
Responsibility Statement by the Management Board
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
> 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Basis for opinion
Finally, we ascertained the completeness of disclosures on contingent liabilities as well as other disclosures in the
Notes to the Consolidated Financial Statements.
Our conclusions
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.
Impairment testing of goodwill
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Further Information
Independent Auditor's Report
Financial statement risk
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.
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.
Our audit approach
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.
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.
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.
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.
Our conclusions
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.
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.
180
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
179
Key audit matters in the audit of the Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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
We obtained a legal counsel's confirmation to audit the Management Board's risk assessment.
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.
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.
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.
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.
Further Information
Our audit approach
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.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Personnel matters
Financial and investment planning; business strategy; cybercrime
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 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.
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.
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.
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.
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.
9
Management Board compensation
Report of the Supervisory Board to the Annual General Meeting
10
10
P see page 99 ff.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Report of the Supervisory Board to the Annual General Meeting
Litigation
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
Management Board and Supervisory Board
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
Management Board and Supervisory Board
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
7
8
Jochen Hanebeck
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 2017
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,
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.
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.
Report of the Supervisory Board to the Annual General Meeting
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.
Declaration of Compliance 2017
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.
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.
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 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.
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.
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
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
Chief Financial Officer
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.
Corporate governance
Executive Committee
Management Board and Supervisory Board
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/
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.
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
Report of the Supervisory Board to the Annual General Meeting
Dominik Asam
Separate and Consolidated Financial Statements
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Reinhard Ploss was born on 8 December 1955
in Bamberg. He studied process engineering
at the Technical University of Munich and in
1986 received his doctorate. He began his
career at Infineon (Siemens AG until 1999) in
the same year.
Management Board and Supervisory Board
Letter to shareholders
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.
Suicenly
Reitrad
14
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
5
LO
Management Board and Supervisory Board
The Management Board
The Management Board
Chief Executive Officer
Dr. Reinhard Ploss
Chief Executive Officer
Dr. Reinhard Ploss
Visit us on the web: www.infineon.com
Imprint
f
Editors:
TM
Published by:
1 preliminary
in
fiscal year 2018 results
Publication of second quarter 2018 results
Monday, 12 November 2018¹
Publication of third quarter 2018 results
Wednesday, 1 August 2018¹
Copy deadline:
Thursday, 3 May 2018¹
ICM - International Congress Center Munich
(Germany)
(Start 10:00 a.m. CET)
Thursday, 22 February 2018
Annual General Meeting 2018
Publication of first quarter 2018 results
Publication of fourth quarter and
Fiscal year:
Photography:
Designed by:
Visit us on the web:
Contact for Investors and Analysts:
Media Contact:
INFINEON TECHNOLOGIES AG
Headquarters:
The IHS Markit reports, data and information referenced herein (the “IHS Markit Materials") are the copyrighted property
of IHS Markit Ltd. and its subsidiaries (“IHS Markit”) and represent data, research, opinions or viewpoints published by
IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and
not as of the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change
without notice and neither IHS Markit nor, as a consequence, Infineon have a duty or responsibility to update the IHS Markit
Materials or this presentation. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable,
the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit
and the IHS Markit globe design are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the
property of IHS Markit or their respective owners.
Specific disclaimer for IHS Markit reports, data and information referenced in this document:
Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
forward-looking statements.
These statements are based on assumptions and projections resting upon currently available information
and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
may therefore differ materially from what has been expected.
This report contains forward-looking statements about the business, financial condition and earnings
performance of the Infineon Group.
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
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)
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
1 October to 30 September
Investor Relations, Accounting, Consolidation & Reporting
21 November 2017
Infineon Technologies AG, Neubiberg (Germany)
Printing:
Wednesday, 31 January 2018¹
Independent auditors:
Financial calendar
Trusted Computing
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Integrity Guard (IG) is a revolutionary security technology
designed for chip cards and security applications, with which
Infineon is ringing in a new era in the field of hardware-based
security. IG was specially developed for sophisticated, long-
life applications such as payment cards and government
identification documents. IG enables a security controller for
the first time to provide complete error detection and com-
prehensive encryption of all chip functions across the entire
data path within the chip. For this reason it is known as "digital
security”. IG is used in the security controllers of the SLE 77
and 78 families and has won numerous international awards.
Integrity Guard
Insulated Gate Bipolar Transistor Module. IGBTs are semi-
conductor components used increasingly in power electronics
due to their robustness, high blocking voltage, and their
ability to be triggered with negligible power. Modules are
formed using several IGBTS in parallel within a single casing.
These modules are used to drive electric motors both in
automotive and industrial applications. Motor speed and
torque can be regulated along a gradual scale. Trains such
as Germany's ICE and France's TGV use IGBT modules for an
efficient and rapid electrical drive control.
IGBT Module
Integrated Circuit. Electronic Component parts composed of
semiconductor materials such as silicon; numerous compo-
nents, including transistors, resistors, capacitors and diodes
can be integrated into ICs and interconnected.
IC
High-voltage direct-current transmission. HVDC transmission
is a method of transmitting electrical energy at high direct-
current voltages of up to 800,000 volts over distances of more
than 1,000 kilometers. HVDC transmission is also used for
connecting offshore wind farms to the electricity grid on the
mainland.
HVDC
A sensor based on the Hall principle, used for measuring
magnetic fields, named after the US physicist Edwin Herbert
Hall (1855-1938). Hall sensors are used in automobiles, for
example, for detecting pedal positions or for measuring the
speed at which shafts rotate.
Hall sensor
Chemical symbol of gallium nitride (see Gallium nitride).
GaN
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
185
Technology Glossary
Further Information
Inverter
186
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.
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.
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 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.
TPM
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.
Thin wafer
Switch-mode power supply
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).
Silicon carbide
Chemical symbol of silicon carbide (see Silicon carbide).
Sic
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).
Schottky diode
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
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.
MOSFET
Technology Glossary
Further Information
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
MEMS
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.
www.infineon.com
nVidia
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
251
22
2013
2014
2015
2016
2017
Combined Management Report | Our Group
Finances and strategy
2017 fiscal year
19
G see graph 05
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
55.0
50
40.4
40
30
20
1 Proposal to the Annual General Meeting to be held on 22 February 2018.
10
2012
2010
2017
17%
Combined Management Report | Our Group
Finances and strategy
2017 fiscal year
18
P see page 60
and page 74
P see page 61
P see page 61
G see graph 04
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").
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).
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).
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
in € cents
20
18
20
12
12
12
10
2011
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
H
Intel
5% market share
3.6
4.8
4.2
5.0
G 06
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
20
G see graph 07
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.
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.
10% market share
0
HiSilicon
ON Semiconductor
Samsung
Qualcomm
Broadcom
SK Hynix
Micron
Texas Instruments
15.4 15.0 ... 14.7
12.7 12.7*******
10.3 9.3
8.7
Toshiba
electronics
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.
NXP
MediaTek
Infineon
STMicroelectronics
5.7
5.6
5.8
7.2
7.0
6.0
Western Digital
Renesas
Apple
Sony Semiconductor
AMD
Strategic fundamentals
Americas
Germany
China
93
92 Overall statement of the Management Board with respect
to Infineon's financial condition as of the date of this report
Infineon Technologies AG
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
Finances and strategy
2017 fiscal year
Finances and strategy
2017 fiscal year
> Revenue up 9 percent within a favorable market environment;
Segment Result Margin of 17.1 percent achieved
> Good performance enables higher dividend
P see page 78
G see graph 01
G see graph 02
P see page 38 ff.
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
in the 2017 fiscal year compared to the previous year
ATV'
IPC2
81 Risk and opportunity report
PMM³
78 Outlook
75 Review of liquidity
Mitsubishi
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
16 2017 fiscal year
20 Group strategy
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
56 Operations
58 Internal management system
61 Sustainability at Infineon
61 Our employees
66 The Infineon share
Our 2017 fiscal year
68 Group performance
68 Review of results of operations
72 Review of financial condition
78 Report on expected developments, together with
associated material risks and opportunities
Japan
CCS4
2 Industrial Power Control
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%
100%
100%
12%
13%
12%
7%
6%
7%
23%
24%
25%
23%
24%
24%
16%
15%
15%
19%
18%
2015
2016
Europe (excluding Germany), Middle East, Africa
Asia-Pacific (excluding China, excluding Japan)
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.
1 Automotive
Improvement in key performance indicators
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).
3 Power Management & Multimarket
4 Chip Card & Security
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
G 02
Revenue by segment in the 2017 fiscal year
13%
13%
31%
5%
1%
10% 0%
17%
42%
Automotive: €2,989 million
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
P see page 78
P see page 68
P see page 71
P see page 60
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").
Global megatrends drive core business
STMicro-
Opportunities in the convergence of the real and digital worlds
Firmware
Integration of analog
and digital functionality
Discrete components
Competencies evolve over time
Hardware
Software
Combined Management Report | Our Group
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
conductor
System know-how
Algorithms
Customer system
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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".
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
ON Semi-
22
Success factors in strategy
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.
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
22
Infineon
G see graph 09
World discrete power semiconductor and modules
Consumer¹
1
Processing
Industrial¹
Automotive¹
|||||||
4.1%
4.8%
Total
6.2%
6.7%
6.8%
8.2%
Compound annual growth rate of the main semiconductor target markets 2016 to 2021
G 07
market share 2016
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.
6.6%
Communi-
cations'
Data
Semiconductor
Market'
G 08
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.
Acquisitions add to organic growth
Chip Card
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.
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.
The three pillars of our strategy: Focus, technology leadership and system understanding
G see graph 08
21
Group strategy
Finances and strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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 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.
ICS²
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.
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.
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.
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.
Strategic advantages through in-house manufacturing
25
80
60
2010
2015
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.
2020
2025
China
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
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.
Target 1: 8 percent average annual growth in revenue
Flexible go-to-market strategies accommodate rapidly changing markets
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
Financial targets underline our claim to grow
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.
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.
Digital transformation
46
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.
26
factor of ~15
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our Group
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.
Finances and 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.
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.
Group strategy
Finances and strategy
Combined Management Report | Our Group
Group strategy
355
Finances and strategy
300
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.
Capital structure targets demonstrate our reliability
Group strategy
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
for more efficient home appliances such as
air conditioning systems
The transition to controlled motors allows
| 01
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
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.
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, 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.
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
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 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.
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. 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.
Automation
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.
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.
17
38
33
Combined Management Report | Our Group
265
130
300
Semiconductor
value in
internal combustion
engine vehicles
Drivetrain power semiconductors
Semiconductor
value in
electric vehicles'
Drivetrain non-power semiconductors
Other features (power and non-power semiconductors)
1 Mild hybrid vehicles are not considered here.
Combined Management Report | Our Group
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.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Finances and strategy
Growth drivers
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.
Individual mobility
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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.
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.
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.
"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.
Advanced driver assistance systems and automated driving
Growth drivers
Finances and strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Source: Based on or includes content supplied by IHS Markit, Automotive Group,
"Annual Light Vehicle Production Forecast", September 2017.
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.
1 CAGR Compound Annual Growth Rate
Europe Asia-Pacific (excluding China, excluding Japan)
2021e
23.5
21.5
2016
15.4
12.9
27.1
31.0
8.8
8.6
China - Japan North America Other countries
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
100
120
140
160
180
200
Transition from internal combustion engine vehicles
to electric vehicles increases demand for power
semiconductors in the drivetrain by a factor of ~15
G 13
Grams CO2/km normalized to NEDC test cycle
Legal requirements for fleet emissions of the
four major regions
G 12
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.
Electro-mobility
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.
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.
Emission reduction
G see graph 13
G see graph 12
31
Growth drivers
Combined Management Report | Our Group
Finances and strategy
Combined Management Report | Our Group
30
30
17.8
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.
18.0
93.1
110
120
130
140
150
15.88
17.47
19.06
20.64
22.23
23.82
100
Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2017 fiscal year (daily closing prices)
Infineon share price in €
30 September 2016 = 100
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.
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.
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.
Sustainable value creation for our shareholders
G see graph 10
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.
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.
28
Group strategy
Finances and strategy
Combined Management Report | Our Group
G 10
14.29
90
Infineon
7.4
103.9
CAGR (2016-2021): +2.2%
in million vehicles
Worldwide light vehicle production by region
G 11
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.
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).
G see graph 11
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.
29
29
Growth drivers
Growth drivers
Finances and strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
09|2017
08 |2017
06|2017 07|2017
03|2017 04|2017 05|2017
■Dow Jones US Semiconductor Index
-SOX
02|2017
01|2017
10|2016 11|2016 12|2016
■DAX
5.0
Finances and strategy
Comfort electronics
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
> Tire pressure monitoring system
> Air conditioning
> Door electronics
> Electronic control units
> Electronic seat adjustment
> Hatch door
> Lighting
> Power window
> Steering
› Sunroof
> Suspension
> Windshield wipers
Powertrain
> Alternator control
› Battery charging control
> Lane departure warning system
› Battery management
> Electronic stability control
> Electronic chassis control
40
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.
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.
Development of Segment Result
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).
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.
Applications
Assistance systems and
safety systems
› Airbag
> Anti-blocking system
> Automatic parking
> Autonomous emergency
braking system
› Blind spot detection
> Cruise control
> Distance warning systems
> Electronic power steering
> Combustion engine control
> Electric motor control
› Generator control
14.0%
10.7%
9.8%
7.8%
7.4%
Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares",
April 2017
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our Group
The segments
Automotive Industrial Power Control
41
G see graph 15
page 40
Market position
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.
electronics
STMicro-
Instruments
Texas
> Start-stop system
> Transmission control
Security
> Communication (car-to-car,
car-to-infrastructure)
> Digital tachograph
> Original spare parts
authentication
40
> Protection against
> Protection against
software manipulation
G 15
World automotive semiconductor market share 2016
NXP
Infineon
Renesas
manipulation (e.g. odometer)
Automotive
The segments
Combined Management Report | Our Group
Combined Management Report | Our Group
SEGMENT RESULT
€474 million
Infineon
IM69D130
The success of voice-controlled devices
is driving demand for highly sensitive
silicon microphones
102
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.
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.
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.
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.
Sensors for consumer electronics and industrial applications
I see image 02
36
Growth drivers
Finances and strategy
Combined Management Report | Our Group
Finances and strategy
Growth drivers
37
Security
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 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.
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
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.
Security as cross-segment expertise
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.
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.
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.
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.
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.
G14
Revenue and Segment Result
of the Automotive segment
€ in millions
Revenue
2,989
2,656
474
363
2016
Segment Result
2017
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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
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.
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).
Mobile communications
Sensing and data transmission
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
Growth drivers
Finances and strategy
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).
Combined Management Report | Our Group
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.
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 TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our Group
The segments
Automotive
39
G see graph 14
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.
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.
Industrial Power Control
REVENUE
€1,206 million
› Construction vehicles
> Forklifts
> Hybrid busses
Industrial drives¹
> Air conditioning
technology
> Automation technology
› Drives
> Elevator systems
> Escalators
> Materials handling
> Rolling mills
Traction
> High-speed trains
> Locomotives
> Metro trains
› Trams
> Agricultural vehicles
Charging stations
for electric vehicles
Industrial vehicles
> Microwave ovens
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
Energy transmission
> FACTS (Flexible AC
Transmission Systems)
> Offshore wind farm
HVDC lines
1 Including motors, compressors, pumps and fans.
Energy consumption
Home appliances
> Air conditioners
> Dishwashers
> Induction cooktops
> Refrigerators
> Washing machines
Robotics
Uninterruptable
power supplies
G see graph 17
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
The segments
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Source: Based on or includes content supplied by IHS Markit, Technology Group,
"Power Semiconductor Annual Market Share Report", August 2017.
Market position
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.
G 17
World IGBT-based power semiconductor
market share 2016
Infineon
Mitsubishi
43
Fuji Electric
conductor
Semikron
26.6%
17.0%
12.2%
7.1%
6.6%
ON Semi-
REVENUE
Industrial Power Control
Combined Management Report | Our Group
2016
183
133
LL
1,206
1,072
€ in millions
of the Industrial Power Control segment
Revenue and Segment Result
G 16
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.
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.
2017
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.
Revenue development
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.
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.
G see graph 16
42
Industrial Power Control
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).
The Industrial Power Control segment in the 2017 fiscal year
SEGMENT RESULT
€183 million
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 segments
€2,989 million
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Segment Result
Revenue
- Package pathfinding
- Mixed-signal and RF ICS
-Chip card ICs
Russian Federation
Moscow
sales
Spain
Barcelona
sales
Madrid
Sweden
- Power ICs
Kista
sales
Switzerland
Zurich
sales
Combined Management Report | Our Group
sales
research and development
Bucharest
service function
- Package concept development
- Microcontroller systems for automotive
applications
research and development
Italy
logistics
sales
Ireland
Cegléd
Hungary
Milan
sales, research and
development
research and development
Bristol
Great Britain
Padova
Pavia
research and development
research and development
- Power ICs
- Driver ICs for motion control
Portugal
Porto
Romania
Reigate
Dublin
Locations
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
10.5%
9.3%
Source: Based on or includes content supplied by IHS Markit, Technology Group,
"Smart Cards Semiconductors", July 2017.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our Group
Locations
Main competence areas in
General function
Europe
Locations
Combined Management Report | Our Group
- SiC modules
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
16.2%
GRI G4-17
BE
- Product development IGBT modules
-Assembly and package technology for
IGBT modules
sales, research and
development
Warstein
- IGBT modules
- 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
- Assembly and package technology for
SiC modules
24.2%
24.8%
CEC Huada
> Driver's licenses
> Healthcare cards
> National identity cards
> Passports
Internet of Things
> Connected driving
> Industrial Internet
(Industry 4.0)
> IT
> Smart Home
Mobile communications
› Conventional SIM cards
> High-end SIM cards
> Machine-to-machine
communication
Payment systems
> Credit/debit cards
> Mobile payment
> NFC-based contactless
payment
Ticketing, access control
Trusted Computing
G see graph 21
Market position
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).
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.
G 21
World microcontroller-based chip card ICs
market share 2016
Infineon
NXP
Samsung
STMicro-
electronics
49
sales
Neu-Isenburg
Regensburg
- Power electronics
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
Klagenfurt
Linz
Vienna
- Power semiconductors
- Sensor products
BE = Backend
Manufacturing
FE = Frontend
research and development - Chip card applications
Main competence areas in
research and development
General function
Graz
Austria
Europe
Le Puy-Sainte-
Government identification documents
research and development
Réparade
- 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
Neubiberg
near Munich
Hanover
Karlsruhe
Groẞostheim
- System-on-chip development
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
> Protection against manipulation
(e.g. odometer, digital tachograph)
> Electronic toll collection
> Connected vehicles (e.g. eCall,
car-to-car, car-to-infrastructure)
HiRel
› Pedelecs
> Multicopters
(cordless screwdrivers, etc.)
> DIY tools
> eBikes
DC motors
for electric vehicles
Charging stations
46
46
Applications
Power Management & Multimarket | Chip Card & Security
The segments
Combined Management Report | Our Group
Source: Based on or includes content supplied by IHS Markit, Technology Group,
"Power Semiconductor Annual Market Share Report", August 2017.
7.3%
7.5%
9.2%
13.4%
26.4%
electronics
STMicro-
Toshiba
Renesas
ON Semi-
conductor
Infineon
World standard power MOSFET market share 2016
G 19
› Commercial aviation
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
> Defense technologies
› Space systems
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.
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.
The Chip Card & Security segment in the 2017 fiscal year
SEGMENT RESULT
€124 million
REVENUE
€708 million
Chip Card & Security
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
> Activity trackers
> Navigation devices
> Smartphones
Mobile devices
> Voice control
› Sensors
› Communications
Internet of Things
› Base stations
Cellular infrastructure
› Telecom
› Servers
> PCs and notebooks
> Mobile devices
> Home appliances
> Consumer electronics
Power management
LED and conventional
lighting systems
> Submarine telecommunications
cables
> Oil and natural gas exploration
Europe
2017
2016
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.
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.
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.
G 20
Revenue and Segment Result
of the Chip Card & Security segment
€ in millions
703
708
135
124
2016
2017
Revenue
Segment Result
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our Group
The segments
Chip Card & Security
Development of Segment Result
48
Authentication
› Accessories
› Game consoles
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.
Applications
> Industrial control systems
› Spare parts
Automotive
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.
Segment Result
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.
Revenue development
427
354
LI
2,148
2,041
Revenue
€ in millions
of the Power Management & Multimarket segment
Revenue and Segment Result
G 18
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.
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).
Development of Segment Result
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.
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.
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.
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.
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.
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.
Revenue development
G see graph 18
45
45
Power Management & Multimarket
The segments
Combined Management Report | Our Group
47
G see graph 20
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.
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.
- Power semiconductors
Chip Card & Security
Nijmegen
research and development - Epitaxy
Morrisville
Mesa
Milpitas
Morgan Hill
Livonia
- HiRel power modules
- HiRel power modules
- HiRel power components
BE
- HiRel power components
regional headquarters, sales
sales, research and
development
sales
sales
Lebanon
Kokomo
- Package platforms
- Components for space and aviation
sales, research and
development
distribution center
Hayward
El Segundo
of GaN components
Leominster
research and development
sales
FE
P see page 49 ff.
G see graph 22
Research and development
Research and development
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
GRI G4-17
- DC-DC converter, driver ICs and power ICs
- Control ICs for digital power management
- Digital power management solutions
for DC-DC power stages
research and development
research and development
research and development
- 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
research and development - development and characterization
53
Chandler
- Power semiconductors
Percentage of revenue
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our Group
Research and development
54
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
R&D expenses
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.
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
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.
Infineon
CoolGaNT
600 V e-Mode
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
The segments
The Netherlands
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.
11.0%
2017
2016
BE
Tijuana
Mexico
sales
São Paulo
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
USA
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.
sales
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.
Manufacturing
FE = Frontend
Backend
BE
sales, research and
development
- Application development
BE
- IGBT stack assembly
Hong Kong
Shanghai
sales
Shenzhen
Beijing
distribution center, sales,
research and development
sales
Wuxi
BE
Chip card modules
Xi'an
sales, research and
development
- Application development
India
Bangalore
sales, research and
development
- Application development
China
sales
Blackburn
research and development
Lidar sensors
Rotterdam
sales
Turkey
Istanbul
sales
GRI G4-17
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Manufacturing
FE = Frontend
BE = Backend
BE
- IGBT modules
50
Asia-Pacific
Combined Management Report | Our Group
Locations
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").
General function
Main competence areas in
research and development
Australia
- Software and system development
- Design flow and library development
Asia-Pacific
- Discrete semiconductors
- Power semiconductors
- IGBT modules
BE
- Power semiconductors
- Discrete semiconductors
Philippines
Muntinlupa
Singapore
research and development
- Interface to subcontractors
Taiwan
Taipei
GRI G4-17
regional headquarters,
distribution center, sales,
research and development
- IC, software and system development
- Package technology
- Test concepts
776
770
11.9%
€ in millions
R&D expenses
G 22
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.
Indonesia
Principal research and development activities
- Package technology
research and development
H
FE
BE
Batam
- Power ICs
- Power semiconductors
Japan
Nagoya
Osaka
sales
Tokyo
sales
sales
Cheonan
Seoul
BE
- IGBT modules
sales, research and
development
- System solutions for automotive electronics
- System integration for power
semiconductors
Malaysia
- Package derivatives
research and development
Korea
Ipoh
Kulim
Melaka
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.
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.
57
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).
Combined Management Report | Our Group
Operations
G see graph 23
page 56
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.
1 Property, plant and equipment and intangible assets
Percentage of revenue
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.
Combined Management Report | Our Group
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.
Furthermore, the concluded fiscal year saw investments at the frontend and backend sites primarily in the
following areas:
> Increased level of automation at our frontend and backend sites, for example, improvement of the wafer
transport system.
› 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.
> Expansion of backend manfacturing capacities in Melaka, under application of Industry 4.0 elements that
increase manufacturing efficiency.
› Completion of the expansion of wafer manufacturing capacities in Regensburg. Mainly components for automotive
applications, in particular radar, are manufactured here.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Internal management system
Internal
management system
P see page 20 ff.
P see page 61 ff.
-
Psee page 96 ff.
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.
Investments
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.
2017
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:
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.
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.
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
14.5%
56
Operations
P see page 49 ff.
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 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.
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.
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.
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).
G 23
Investments'
€ in millions
12.8%
1,022
826
2016
Combined Management Report | Our Group
Operations
> achieving a compound annual revenue growth rate of 8 percent
Psee page 68 ff.
> realizing the abovementioned revenue growth with investments of 13 percent relative to revenue over the
economic cycle.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
G see graph 25
Combined Management Report | Our Group
Our employees
64
Encouraging diversity
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.
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.
P see page 99
Middle and senior level management 2,3
Entry level management²
Non-management staff
Total
Employees
Female
Male¹
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.
Total
> the Management career path for (junior) managers.
> the "Technical Ladder", which enables our technical experts to develop;
Focus on the
customer
Drive value
through
innovation
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Strive for
excellence
Be ambitious
and manage
risks
Combined Management Report | Our Group
Our employees
63
Management development
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.
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.
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.
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.
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. Four career paths have already been 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;
> 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
6,268
13.9%
86.1%
12.5%
13.0%
13.4%
13.9%
10
10.2%
5
0
2010'
2013'
20141
2015'
2016
2017
Target
2020
1 International Rectifier not included
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
12.1%
15.0%
15
20
6,978
26.5%
73.5%
24,233
46.5%
53.5%
37,479
37.3%
We commit.
We innovate.
We partner.
We perform.
62.7%
3 Including the Management Board.
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".
Cooperation with universities
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.
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.
G 25
Women in management positions (Infineon worldwide)
25
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.
> thereby achieving a 17 percent Segment Result Margin over the economic cycle and
Team up
for best
results
Be passionate
about profit
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
59
59
Combined Management Report | Our Group
Internal management system
60
60
P see page 76
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 (see the chapter
"Review of liquidity" for an analysis of free cash flow in the 2017 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 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.
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
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").
Segment Result
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.
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.
Overall, reaching these financial targets yields in a sustainable increase in the value of the business, brought about
by achieving a premium on the cost of capital in the long term.
In this context, growth, profitability and investments are all interdependent. Profitability is the prerequisite for
being able to finance operations internally, which, put another way, means opening up potential opportunities for
growth. Growth, in turn, requires continual investment in research and development as well as in manufacturing
capacities. Growing at a 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.
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.
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 2017
58
59
Combined Management Report | Our Group
Internal management system
P see page 74
P see page 165 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
> 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.
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.
P see page 38 ff.
and page 16 ff.
Foster your
talents
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.
Other performance indicators
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
12
61
Combined Management Report | Our Group
Our employees
62
62
G see graph 24
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”. These values are not purely theoretical:
The High Performance Behavior Model shows how we aim to achieve Infineon's targets and set priorities.
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.
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.
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.
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".
G24
High Performance Behavior Model
Trust and
respect others
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.
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").
Our employees
Sustainability at Infineon
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").
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our Group
Internal management system | Sustainability at Infineon | Our employees
P see page 75 ff.
P see page 78
Sustainability activities are described in the report "Sustainability at Infineon", which is available on Infineon's website.
@www.infineon.com/csr_reporting
Liquidity performance indicators
› Gross cash position: Cash and cash equivalents plus financial investments
> Net cash position: Gross cash position less short-term and long-term debt
> Net working capital: Current assets less cash and cash equivalents, less financial investments, less assets 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
> Investments: The total amount invested in property, plant and equipment and intangible assets, including
capitalized development costs
For an analysis of changes in these key performance indicators during the previous fiscal year, see the chapter
"Review of liquidity".
Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the key operational
figures for capacity utilization and forecast capacity requirements are analyzed. The results of this analysis are used
in determining investment requirements.
Actual and target values for performance indicators
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.
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:
Infineon is the first company worldwide to demonstrate an algorithm for Post-Quantum Cryptography
on contactless security chips
Qualifications and training
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.
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.
Net financial result (financial income and expenses, net)
(53)
(61)
Income from investments accounted for using the equity method
3
3
Income tax
(142)
36
Income from continuing operations
791
741
Income (loss) from discontinued operations, net of income taxes
Net income
(1)
2
790
743
763
Basic earnings per share (in euro)
983
(43)
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
2,330
(776)
(770)
(819)
(791)
(6)
€ in millions, except earnings per share
0.70
Diluted earnings per share (in euro)
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.
Significance of Asia-Pacific continues to grow; China ahead of Germany as most important sales market
€ in millions, except percentages
Europe, Middle East, Africa
Therein: Germany
Asia-Pacific (excluding Japan)
Therein: China
Japan
Americas
Therein: USA
Total
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.
2016
2,272
32%
2,147
33%
No significant impact of currency effects on revenue
0.66
69
Review of results of operations
0.70
0.66
Adjusted earnings per share (in euro) – diluted
0.85
0.76
P see page 133 ff.
P see page 71
G❘ see graph 28
page 69
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
69
1,094
The consolidated statement of operations
Group performance
G 26
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
140
130
120
110
100
14.29
90
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".
Infineon
Dividend
Shareholder structure
due on 10 September 2018, ISIN: XS1191115366
due on 10 March 2022, ISIN: XS1191116174
since February 2016: "BBB" (outlook "stable")
G see graph 26
page 67
Further share price increase in 2017 fiscal year
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.
Trading volumes and DAX ranking
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
66
99
Combined Management Report | Our Group
The Infineon share
67
G see graph 27
P see page 28
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.
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.
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.
Review of results of operations
10|2016 11|2016
DAX
02|2017
0.12
State of Norway
2013
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
2012
12|2016 01 | 2017
BlackRock Inc.
2011
03|2017 04|2017 05|2017 06|2017
07|2017
08|2017
09|2017
-SOX
■Dow Jones US Semiconductor Index
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
0.12
15%
1,000
15%
1%
7%
11.0%
11.9%
68
75
1.0%
1.2%
129
98
16.6%
12.7%
P see page 53 ff.
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).
The main R&D activities undertaken during the 2017 fiscal year are described in more detail in the chapter
"Research and development".
Selling, general and administrative expenses
€ in millions, except percentages
770
Selling, general and administrative expenses
776
2017
64.0%
2,621
2,330
37.1%
36.0%
Operating expenses as percentage of revenue continue to fall
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).
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
Change year-on-year
Percentage of revenue
Therein included grants received
Percentage of revenue
For information: capitalized development costs
Percentage of research and development expenses
2016
62.9%
Change year-on-year
2017
Impairments on assets including assets classified as held for sale, net of reversals
Impact on earnings of restructuring and closures, net
Plus/minus:
742
791
Earnings from continuing operations attributable to
shareholders of Infineon Technologies AG - diluted
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
5
Percentage of revenue
16
(7)
2016
819
791
4%
2%
11.6%
12.2%
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Group performance
Review of results of operations
71
Psee page 136
Acquisition-related depreciation/amortization and other expenses
9
13
Share-based compensation expense
3
12%
7%
4,143
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.
G 28
Revenue by segment
€ in millions
3,000
2,989
2,656
2,500
2,000
2,148
2,041
10%
1,500
661
714
3,447
49%
3,083
48%
1,735
25%
1,574
24%
463
7%
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
424
6%
881
12%
819
13%
10%
1,206
1,072
1,000
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
2016
4,442
Other Operating Segments,
Corporate and Eliminations
Chip Card & Security
Power Management & Multimarket
Industrial Power Control
708 703
500
98
3 (7)
0
Automotive
Industrial
Power Control
Power
Management &
Multimarket
Rating of S&P Global Ratings
Chip Card &
Security
2017
2016
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
31%
10% 0%
17%
42%
Share of Group revenue 2017
Automotive
Other Operating Corporate and
Segments Elimininations
1.5% Infineon Bond from 10 March 2015
2017
Bond information
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
851
774
Trade and other receivables
857 1,020
Intangible assets
Trade and other payables
1,656 1,586
431
73
Review of financial condition
Group performance
Combined Management Report | Our 2017 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
9,945
9,087
9,087 9,945
545
484
Other assets
5,023 5,636
Equity
612
623
Deferred tax assets
463
Other liabilities
Psee page 76 f.
2,240 2,452
2016
9,087
Liabilities and equity
G 30
15.0%
14.9%
13.1%
12.5%
1.0% Infineon Bond from 10 March 2015
35.2%
32.5%
14.8%
14.0%
55.3%
56.7%
8.2%
7.9%
12%
9,945
2017
9%
20%
€ in millions
2017
2016
Combined Management Report | Our Group
Our employees
Gross cash position
€ in millions
2017
2016
57%
55%
5%
5%
4%
5%
7%
5%
18%
10%
G see graph 31
P see page 142 f.
P see page 144 ff.
3
(3)
3
763
983
2016
2017
ROCE 1/②
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
3
Gain from investments accounted for using the equity method
Income tax
(142)
847
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.
15.0%
14.9%
5,334
5,695
17
323
(1,530)
(2,098)
(23)
(1,615)
(1,592)
(625)
(860)
9,087
9,945
799
36
Financial result excluding interest result¹
Plus/less:
Operating income
€ in millions
57%
43%
1,834
2017
1,769
2016
53%
47%
Debt by currencies
G|31
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).
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
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
Euro
US dollar
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
2016
€ 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.
5,023
74
Group performance
Combined Management Report | Our 2017 fiscal year
1,834
1,769
790
830
939 1,044
2017
Review of financial condition
5,636
P see page 133 ff.
4,064
Combined Management Report | Our 2017 fiscal year
Group performance
Review of results of operations | 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 financial condition
€ in millions, except percentages
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Total equity
Statement of Financial Position ratios:
Return on assets¹
Equity ratio 2
3
G see graph 29
and 30
Debt-to-equity ratio:
P see page 136
1 The calculation of the adjusted earnings per share is based on unrounded figures.
36
6
Tax effects on adjustments
(49)
(49)
Revaluation of deferred tax assets resulting from the annually updated earnings forecast
(59)
Adjusted earnings from continuing operations attributable to
shareholders of Infineon Technologies AG - diluted
Weighted-average number of shares outstanding (in million) - diluted
967
853
1,134
1,129
0.85
0.76
Adjusted earnings per share (in euro) - diluted'
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Inventory intensity 5
ROCE 6
4
5%
5%
2016
2017
72
30 Septem-
30 Septem-
ber 2017
ber 2016
10%
Change
year-on-year
4,871
4,492
8%
5,074
4,595
6%
6%
7%
16%
18%
1 Return on assets = Net income/Total assets
2 Equity ratio = Total equity/Total assets
3 Return on equity = Net income/Total equity
4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
5 Inventory intensity = Inventories (net)/Total assets
6 Calculation see following section about ROCE in this chapter
G 29
Assets
9,087
Other income and expense, net
9,945
25%
9%
-
13%
9%
12%
23%
27%
25%
4
Return on equity ³
Losses (gains) on sales of assets, businesses, or interests in subsidiaries, net
ADS, over-the-counter trading on the OTC market (OTCQX)
€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)
Ordinary registered shares in the form of shares or
American Depositary Shares (ADS) with a notional value
infineon-share/index-membership/
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
US$28,504 million (as of 30 September 2017)
98,358 (in the 2017 fiscal year)
DAX 30
Dow Jones STOXX Europe 600
(13%)
4,309
15
2,534
2,211
37%
1,530
2,098
Daily average shares traded on Xetra
9%
9,945
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
Dow Jones Sustainability World Index
S&P-Europe-350
MSCI Germany
Dow Jones Euro STOXX TMI Technology Hardware & Equipment
Dow Jones Germany Titans 30
9,087
Market capitalization²
4,143,726 (in the 2017 fiscal year)
Bloomberg
Reuters
99
65
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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.
Combined Management Report | Our Group
Employees and personnel expense
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
Listings
153
191
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.
The Infineon share
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.
@ It is possible to
participate in the
telephone confer-
The Infineon share
Ticker symbol
(+49 89 234-26655).
our private share-
holders by email
(investor.relations
@infineon.com)
and by telephone
We are available to
ISIN
Own shares
Shares issued¹
WKN
Share types
Basic information on shares
investor).
(www.infineon.com/
Relations pages
our Investor
ences via the internet
as a webcast on
Share capital
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
275
(3)
1,728
(1,131)
1,313
2016
2017
€ in millions
Net cash used in investing activities from continuing operations
Purchases of (proceeds from sales of) financial investments, net
Free cash flow
Gross cash position and net cash position
Net cash provided by operating activities from continuing operations
(1,098)
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:
30 Septem-
ber 2017
Cash and cash equivalents
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:
17
323
2,240
2,452
1,615
1,592
625
860
ber 2016
30 Septem-
1,511
Total debt
Short-term debt and current maturities of long-term debt
Long-term debt
Less:
Gross cash position
Financial investments
€ in millions
Free cash flow
Group performance
Review of liquidity
(229)
(340)
(1,098)
(1,131)
Net cash used in investing activities from continuing operations
Net cash used in financing activities from continuing operations
1,313
1,728
Net cash provided by operating activities from continuing operations
2016
2017
€ in millions
75
Cash flow
Review of liquidity
Review of liquidity
Combined Management Report | Our 2017 fiscal year
1,752
Net change in cash and cash equivalents from discontinued operations
Net change in cash and cash equivalents
(5)
(22)
252
Group performance
Combined Management Report | Our 2017 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
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.
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.
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.
76
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.
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.
Effect of foreign exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
Psee page 142 f.
(48)
235
(12)
(17)
(36)
Net cash used in investing activities from continuing operations influenced by investments in property, plant
and equipment and acquisition of MoTo
1,834
P see page 152 f.
618
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.
P see page 20 ff.
Risk and opportunity report
Risk policy: Underlying principles of our risk and opportunity management
Effective risk and opportunity management is central to all of our business activities and plays an important role
in implementing the strategic targets described in the chapter "Group strategy" - namely achieving sustainable,
profitable growth and preserving our financial resources through efficient employment of capital. Infineon's risk
and opportunity profile is characterized by periods of rapid growth, followed by periods of significant market
decline, a substantial need for capital investment in order to achieve and sustain our market position and an
extraordinarily rapid pace of technological change. Gaining a leading edge through technological innovation also has
a legal dimension. Against this background, Infineon's risk policy is aimed firstly at taking advantage of identified
opportunities as quickly as possible in a way most appropriate to increasing the value of the business, and secondly
at 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.
-
Coordinated risk management and control system elements are in place that enable us to pursue our stated risk
policy in practice. Alongside the "Risk and Opportunity Management System" and the "Internal Control System with
respect to Financial Reporting Processes” described below, it also includes the related forecasting, management
and internal reporting processes as well as the Compliance Management System.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
G see graph 32
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Risk and Opportunity Management System
Overall statement on the expected development of the Infineon Group
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.
In organizational terms, the Risk and Opportunity Management System is structured in a closed-loop, multiple-stage
process, which stipulates the manner and criteria to be applied to identify, measure, manage and report on risks
and opportunities and defines how the system is to be monitored as a whole. Major components of the system
are a quarterly analysis of risks and opportunities, reporting by all consolidated entities, an analysis of the overall
situation at segment, regional and Group level, reporting to the Management Board on the risks and opportunities
situation as well as major management measures undertaken. The Management Board, in turn, reports regularly
to the Supervisory Board's Investment, Finance and Audit Committee. Where necessary, standard processes are
supplemented by the ad-hoc reporting of any major risks identified between regular reporting dates.
Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation or hedging measures,
but without offsetting any provisions recognized. The time periods and the measurement categories used are
closely linked to our short- and medium-term business planning and Group targets.
All relevant risks and opportunities are assessed uniformly across the Group in quantitative and/or qualitative
terms, based on the dimensions degree of impact on operations, liquidity, earnings, cash flows and reputation on
the one hand and likelihood of occurrence on the other.
The scales used to measure these two factors (degree of impact and likelihood of occurrence) and the resulting
risk assessment matrix are depicted in the following graph.
G 32
Risk assessment matrix
Degree of impact
5
4
3
2
1
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.
1
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.
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.
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.
Operating expenses predicted to increase
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.
Segment Result Margin of approximately 17 percent expected
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.
Non-segment result
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.
Financial result
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.
Income taxes
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.
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.
ROCE
Working capital
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 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Outlook | Risk and opportunity report
81
P see page 27 f.
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.
Depreciation and amortization are expected to be in the region of €880 million.
Free cash flow from continuing operations
Free cash flow in the 2018 fiscal year is forecast to come in at between €500 million and €600 million.
Gross cash position
Working capital is forecast to finish the 2018 fiscal year at between €650 million and €850 million.
Slight upward trend in gross margin expected
2
4
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 Statements comply with all relevant
regulations. Appropriate controls must therefore be in place throughout the organization to ensure such compliance.
Clear lines of responsibility are assigned to each of the processes.
The 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, 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 2017
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
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.
84
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 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.
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 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.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Assessment of effectiveness
3
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.
5
Low Risk
Medium Risk
High Risk
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Degree of impact
on Segment Result
1
<€20 million Marginal
2 >€20 million Minor
3 >€60 million Moderate
4 > €100 million Significant
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 >€250 million Major
Likelihood of occurrence
1 <10% Unlikely
2 <40% Possible
3 <60% Likely
4 <90% Probable
5 >90% Certain
82
88
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
83
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".
Likelihood of occurrence
1,769
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.
60
Actuals
FY 2016
Original Outlook
FY 2017
Actuals
FY 2017
Outlook
FY 2018
Segment Result Margin
15.2%
Free cash flow from
continuing operations
490
About 16% (at the mid-point of the
planned range for revenue growth)
Between €400 million and €500 million
17.1%
About 17% (at the mid-point of the
planned range for revenue growth)
594
Principal performance indicators
Between €500 million and €600 million
15.0%
Slight decrease compared to FY 2016
14.9%
Slight increase
Supplementary
performance indicators
Growth and profitability
performance indicators
Change in revenue
12%
Increase by 6%
9%
ROCE
compared to previous year
€ in millions, except percentages
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.
471
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
P see page 142 f.
P see page 78 ff.
P see page 158 ff.
Combined Management Report | Our 2017 fiscal year
Group performance
Review of liquidity
77
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".
Principles and structure of Infineon's treasury
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.
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.
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.
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
Report on expected developments, together with associated material risks and opportunities
Outlook
78
P see Annual
Report 2016,
page 79-83
Report on expected developments,
together with associated material risks
and opportunities
Outlook
Actual and target values for performance indicators
The following table and subsequent comments compare the actual and forecast values of Infineon's key performance
indicators for the 2017 fiscal year and show the outlook for the 2018 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.
Revenue increase of 9 percent expected, plus or minus 2 percentage points, compared to the
previous fiscal year
Gross margin
Research and
Increase by 9%
plus/minus 2 percentage points
Slight increase
Increase slightly
above revenue growth
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
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Outlook
79
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Comparison of original outlook and actual figures for the 2017 fiscal year
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.
Explanatory comments to the outlook for the 2018 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 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.
Growth prospects for the global economy and the semiconductor market
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.
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2017
Combined Management Report | Our 2017 fiscal year
Report on expected developments, together with associated material risks and opportunities
Outlook
80
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.
36.0%
621
1,022
Investments
770
plus/minus 2 percentage points
Slight increase compared to FY 2016
Increase below revenue growth
37.1%
776
development expenses
7%
1%
Selling, general and
791
Increase below revenue growth
819
administrative expenses
(gross cash position higher than debt)
Between €750 million and €900 million
About €950 million
2%
Liquidity performance indicators
Gross cash position
2,240
€1 bn
+19%
Net cash position
471
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
2,452
€1 bn
+21%
618
Working capital
739
4%
826
Net cash position
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.
8
Europe, Middle East, Africa
2,443
32
2,272
32
8
Therein: Germany
1,171
15
1,094
15
7
1,129
15
1,071
15
5
Greater China
2,599
34
2,376
34
7,063
9
7,599
Change
in %
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
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
Revenue by region
> Trusted computing
Therein: China
25
3,284
43
2,989
42
10
Industrial Power Control
1,323
17
1,206
17
10
Power Management & Multimarket
2,318
31
2,148
31
8
Digital Security Solutions
664
Other Operating Segments
10
10
900
Automotive
1,921
8
7,599
1,735
25
11
Japan
534
7
463
7
15
Americas
894
12
881
12
1
Therein: USA
719
9
60
714
10
1
Revenue by segment
7,063
708
> Ticketing, access control
> Mobile communications
> Transceivers (CAN, LIN, Ethernet, FlexRay)
> Voltage regulators
Key customers¹
Aptiv / Bosch / BYD / Continental / Delphi /
Denso / Hella / Hitachi / Hyundai / Keihin / Lear/
Mando/Mitsubishi Electric / Omron / Preh /
Valeo/Veoneer / ZF
Market position²
#2 with a market share of 10.8%
Source: Strategy Analytics, April 2018
Page 42
Applications
> Charging stations for electric vehicles
> Energy distribution
> Home appliances
> Industrial drives
> Industrial power supplies
> Industrial robots
> Industrial vehicles
> Renewable energy generation
› Traction
Product range
› Bare die business
> Discrete IGBTs
> Driver ICs
> Radar sensor ICs (77 GHz)
> IGBT modules (low-power, medium-power,
high-power)
> Power ICs
> Industrial microcontrollers
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Annual Report 2018
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 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).
Automotive
Industrial
Power Control
Lo-i
0=0C
Page 40
Applications
> Assistance systems and safety systems
> Comfort electronics
> Powertrain
> Security
Product range
> 32-bit automotive microcontrollers for powertrain,
safety and driver assistance systems
> 3D ToF sensors
> Discrete power semiconductors
> IGBT modules
> Magnetic and pressure sensors
> Payment system, mobile payment
> IGBT module solutions including IGBT stacks
> Silicon carbide MOSFETs and modules
> MEMS and ASICs for pressure sensors
> MEMS and ASICs for silicon microphones
> Radar sensor ICs (24 GHz, 60 GHz)
> RF antenna switches
> RF power transistors
> Silicon carbide diodes
> TVS (transient voltage suppressor) diode
Key customers'
☐
Airbus / Alibaba / Artesyn / Baidu / Boeing / Cisco/
Dell/Delta / Ericsson / Google / Hewlett Packard
Enterprise/HP/Huawei / Lenovo / LG Electronics/
Lite-On / Makita / Nokia / Osram / Panasonic /
Quanta / Samsung/ZTE
Market position²
#1 with a market share of 26.3%
for standard power MOSFETs
Source: IHS Markit, Technology Group, September 2018
Digital Security
Solutions
(previously Chip Card & Security)
Page 47
Applications
> Authentication
> Automotive
> Governmental identification documents
> Healthcare cards
> Internet of Things
> Low-voltage and high-voltage driver ICs
> Intelligent power modules with integrated
control unit, driver and switch
> GPS low-noise amplifier
> Customized chips (ASICS)
Key customers'
ABB / Alstom / Bombardier / CRRC / Danfoss /
Eaton/Emerson / Goldwind / Inovance / Midea /
Nidec / Rockwell / Schneider Electric / Siemens/
Sungrow/Toshiba / Vestas / Yaskawa
Market position²
#1 with a market share of 27.1%
for IGBT-based power semiconductors
Source: IHS Markit, Technology Group, September 2018
1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Intron, Jingchuan, Macnica, Weikeng and WPG Holding (SAC).
Power
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
> Discrete low-voltage and high-voltage
power MOSFETS
10
Asia-Pacific (excluding Japan, Greater China)
9
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.
Our year
at a glance
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
2018
Combined Management Report
Our year
5 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
Return on assets4
9.9%
7.9%
Inventory intensity 4
Debt-to-equity ratio4
Debt-to-total-capital ratio5
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.
Infineon at a glance
Our Group
16 Finances and strategy
40 The segments
Neubiberg, November 2018
2
Dear shareholders
and business partners,
dear Infineon colleagues,
Infineon has added a new chapter to its success story:
The 2018 fiscal year was very strong in economic terms and
has given us a glimpse of the future. We have set the course
for long-term, profitable growth of Infineon.
First, to the figures for the fiscal year under report. Compared
to the previous year, revenue increased by 8 percent to
€7,599 million. The unfavorable development of the US dollar
exchange rate partly masked the underlying dynamic of our
business. The annual average exchange rate was 1.19. If it
had remained at the previous year's level of 1.11, our revenue
growth in the previous fiscal year would have been 12 percent
and as such clearly above the original forecast of 9 percent.
Not only did we grow strongly, we also became more profitable.
Management Board and Supervisory Board
Letter to shareholders
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.
Chief Executive Officer
Dr. Reinhard Ploss
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Letter to shareholders
50 Research and development
54 Operations
56 Internal management system
59 Sustainability at Infineon
60 The Infineon share
Our 2018 fiscal year
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
(6)
14.0%
108 Consolidated Statement of Operations
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
109 Consolidated Statement of Comprehensive Income
110 Consolidated Statement of Financial Position
16.7%
Consolidated Financial Statements
56.7%
Income from continuing operations
1,218
791
54
Gain (loss) from discontinued operations, net of income taxes
Net income
(143)
(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
49
9
983
Operating income
Return on equity4
0
11
3
0
Corporate and Eliminations
Gross profit/Gross margin
2,885
38.0
2,621
37.1
10
Research and development expenses
(836)
11.0
(776)
11.0
8
Selling, general and administrative expenses
(850)
11.2
11.6
4
1,469
Total equity
(819)
5,636
2,452
4
1,011
618
64
Basic earnings per share in €
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
6,446
59.3%
2,543
23
Equity ratio
1,254
1,022
Net cash provided by operating activities from continuing operations
1,571
1,728
(9)
Net cash used in investing activities from continuing operations
(1,131)
(3)
Net cash used in financing activities from continuing operations
Free cash flow²
(542)
(340)
(1,163)
618
6
812
(59)
861
Net cash position²
Gross cash position²
14
Capital expenditure
Depreciation and amortization
4
594
(491)
(306)
491
306
89
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.
612
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Infineon Technologies AG
Net assets and financial position
€ in millions
30 Septem-
ber 2018
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.
Statement of financial position of Infineon Technologies AG in accordance with the
German Commercial Code (condensed)
150
(46)
(1,003)
(907)
(282)
(259)
(200)
(172)
982
30 Septem-
ber 2017
980
478
(81)
(74)
24
(43)
7
Intangible assets, property, plant and equipment
Receivables and other assets
Non-current assets
1,561
Retained earnings
Capital reserves
Share capital
10,792
11,789
Total assets
4
3
Active difference resulting from offsetting
44
40
Prepaid expenses
3,736
Financial assets
4,662
2,216
2,318
Cash and cash equivalents, marketable securities
903
1,378
617
966
7,008
7,084
6,300
6,331
708
753
Inventories¹
Current assets
1,461
Combined Management Report | Our 2018 fiscal year
(3,896)
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)
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).
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.
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
Risk and opportunity report
Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
Report on expected developments, together with associated material risks and opportunities
85
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
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 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.
Market access and activities in China (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.
Ability to supply due to available capacities (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.
Digitalization (OC: medium)
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.
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Combined Management Report | Our 2018 fiscal year
2,262
85
Overall statement of
the Management Board
with respect to Infineon's
financial condition as of
the date of this report
87
We have now been able to report significant revenue growth and improved earnings for five years in a row. Revenue
increased by 8 percent to €7,599 million compared to €7,063 million in the previous year, despite the unfavorable
development of the US dollar exchange rate. Segment Result increased by 12 percent from €1,208 million to
€1,353 million, giving a margin of 17.8 percent. We therefore achieved our margin target of "at least 17 percent over
the cycle" (as raised during the 2018 fiscal year) despite the above-mentioned weakness of the US dollar and the
continued sharp increase in prices for wafer substrates and other materials such as copper. Adjusted earnings per
share (diluted) increased to €0.98 cents. Despite higher investments, free cash flow from continuing operations
improved from €594 million to €618 million year-on-year. The international rating agency S&P Global Ratings (S&P)
continues to rate Infineon's creditworthiness with an investment grade rating of "BBB" (outlook “stable”). Infineon
therefore currently holds the highest S&P rating of any European semiconductor manufacturer. We want our
shareholders to participate appropriately in the excellent progress that Infineon is making. Therefore, at the Annual
General Meeting to be held on 21 February 2019, it will be proposed to raise the dividend by 2 cents to €0.27 per share.
The 2018 fiscal year was not only extremely successful in terms of reported figures, it was also a defining year
for Infineon's future. Our focus on topics of high relevance for society as well as our technological strength are
expected to provide us with excellent growth opportunities in the coming years. For this reason, we have adjusted
our long-term financial targets over the cycle and are aiming for an average revenue growth rate of 9 percent per
year, a Segment Result Margin prospectively in excess of 17 percent and an investment-to-sales ratio of 15 percent.
In order to enable the aforementioned growth, a number of key strategic decisions were made during the 2018 fiscal
year. Highlighting just two of them, we announced the construction of a second 300-millimeter factory in Villach
(Austria) and set up a manufacturing joint venture with China's largest automotive manufacturer, SAIC Motor, which
will give us even better access to the largest and fastest growing market for electric vehicles.
5,789
5,357
2017
2018
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
Gross profit
Cost of goods sold¹
Revenue¹
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
(4,228)
88
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
In addition to reporting on Infineon, in the following section we also provide information on the performance of
Infineon Technologies AG.
2,260
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.
1,226
Combined Management Report | Our 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
> 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;
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,
Authorization to issue convertible bonds and/or bonds with warrants
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.
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.
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.
Nature of control over voting rights when employees participate in the Company's capital
and do not exercise their control rights directly
Psee page 143 f.
2
92
Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
Corporate Governance
Corporate Governance
Combined Management Report | Our 2018 fiscal year
No shares conferring special control rights have been issued.
Shares with special control 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.
Direct or indirect 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 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.
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.
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
(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.
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.
Structure of the subscribed capital
Information pursuant to section 289a,
paragraph 1, and section 315a, paragraph 1,
of the German Commercial Code (HGB)
Corporate Governance
91
Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
93
> in order to exclude fractional amounts resulting from a given subscription ratio from the subscription rights of the
shareholders to the bonds or insofar as such action is necessary in order to grant holders of conversion or option
rights arising from bonds that have already been or will in future be issued by the Company or its subordinated
Group companies subscription rights to that extent to which they would be entitled after exercise of their rights
or after fulfillment of any conversion or option obligations;
1,230
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
@www.infineon.com/declaration-on-corporate-governance
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.
Declaration concerning the management
of the Company
The Corporate Governance Report is publicly available.
@www.infineon.com/corporate-governance-report
Corporate Governance Report
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.
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.
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.
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.
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.
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
The use of own shares, acquired through derivatives, is governed by the same rules as applicable for the direct
acquisition of own shares.
P see page 95 ff.
P see page 136 f.
==
> insofar as bonds are issued in return for a capital contribution in kind, provided that the value of such capital
contribution in kind is appropriate in relation to the market value of the bonds.
Even if the dilution protection regulations are applied, the conversion or option price must equal at least 80 percent
of the arithmetic mean of the closing prices of the Company's share in XETRA trading on the Frankfurt Stock
Exchange (or comparable successor system); further details - including the conditions under which the conversion
or option price may be reduced - are set out in the authorization.
The Management Board is authorized, subject to the requirements resolved by the shareholders at the Annual
General Meeting, to determine the further details of the bond issue, including terms and conditions.
Authorization to acquire own shares
A resolution passed by the Annual General Meeting on 22 February 2018 authorizes Infineon Technologies AG, in
the period through 21 February 2023, to acquire its own shares, within the statutory boundaries, in an aggregate
amount not exceeding 10 percent of the share capital at the time the resolution was passed or - if the latter amount
is lower- of the share capital in existence at the time the authorization is exercised. The Company may not use the
authorization for the purposes of trading in its own shares. The Management Board decides whether own shares
are acquired through the stock exchange, by means of a public offer to purchase addressed to all shareholders or
a public invitation to submit offers for sale or via a bank or other entity that meets the requirements of section
186, paragraph 5, sentence 1, AktG. The authorization includes differentiating requirements – in particular with
regard to the permissible purchase price – for each method of acquisition.
Infineon shares acquired or being acquired on the basis of this or an earlier authorization may - if not sold either via
the stock exchange or by means of a public offer to purchase addressed to all shareholders - be used for all legally
admissible purposes. The shares may also be cancelled or offered to third parties in conjunction with business
combinations or the acquisition of companies, parts of companies or participations in companies. Under specified
circumstances subject to the consent of the Supervisory Board, the shares may also be sold to third parties in
return for cash payment (including by means other than through the stock exchange or through an offer to all
shareholders), used to meet the Company's obligations under convertible bonds and bonds with warrants and
stock option plans, offered for sale or granted as a remuneration component to members of representative bodies
and employees within the Group, and/or used to repay securities-backed loans. The subscription right of share-
holders is excluded in all of the above cases (except when the shares are cancelled). In addition, the subscription
rights of shareholders are excluded in respect of fractional amounts in instances in which the shares are sold through
a public offer addressed to all shareholders.
Corporate Governance
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.
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
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.
Combined Management Report | Our 2018 fiscal year
-
P see page 72
376
1
804
504
490
740
Liabilities
Other liabilities
Liabilities to affiliated companies¹
Trade payables
Loans payable to banks
Bonds
Provisions
350
316
524
216
Provisions for pensions and similar commitments
1
1
Special reserve with an equity portion
6,995
7,700
Shareholders' equity
306
491
Unappropriated profit
3,203
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
3,717
Other provisions
1,567
140
881
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).
The Company paid a dividend of €0.25 per share (€283 million in total) for the 2017 fiscal year.
Combined Management Report | Our 2018 fiscal year
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 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
1,291
P see page 30
P see page 76 ff.
Expected developments, together with associated material risks and opportunities
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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 equity ratio at the end of the reporting period was 65.3 percent, compared to 64.8 percent one year earlier.
Total liabilities and shareholders' equity
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
3,329
19
3,296
10
11,789
10,792
Deferred income
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.
885
750,000
65,596
Jochen Hanebeck
Member of the Management Board
2017
2018 (min.)
2018 (max.)
2017 2018 (min.) 2018 (max.)
2018
750,000
33,500
783,500
685,000
47,728
732,728
750,000
65,596
815,596
750,000
65,596
815,596
685,000
32,016
717,016
750,000
33,500
783,500
33,500
Member of the Management Board
750,000
815,596
Dr. Helmut Gassel
318,442
1,743,987
Fringe benefits
1,275,608
321,123
2,707,885
783,500
149,084
3,525,000
941,662
891,838
318,442
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
2018
Total fixed compensation
132,853
Single-year variable compensation (STI)
170,373
190,238
Total variable compensation
850,373
806,238
Pension expense
Total compensation (DCGK)
124,723
1,790,692
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
85,186 600,000
85,186 2,130,000
148,449
2,993,071
600,000
85,186
190,238
170,373
340,000
308,000
Multi-year variable compensation
Mid Term Incentive (MTI)
850,000
340,000
308,000
850,000
Variable compensation
2017-2019 tranche
308,000
340,000
308,000
680,000
340,000
680,000
Long Term Incentive (LTI)
Performance Share Plan¹
2018-2020 tranche
Total compensation (DCGK)
Compensation granted in accordance with DCGK
Pension expense²
Fixed compensation
Basic annual salary
Fringe benefits
Combined Management Report | Our 2018 fiscal year
Corporate Governance
Compensation report
101
Compensation granted to members of the Management Board in accordance with the DCGK (total compensation
and compensation components) as well as the minimum and maximum values that can be achieved are shown in
the following table:
Total fixed compensation
2018
Dr. Reinhard Ploss
Chief Executive Officer
Dominik Asam
Chief Financial Officer
2017 2018 (min.)
2018 (max.)
2018
2017 2018 (min.)
2018 (max.)
in €
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed pursuant to the DCGK at the
target value (i.e. the value in the event of 100 percent target achievement). The MTI is required to be disclosed - in
a deviation from DRS 17 - at the target value for an "average probability scenario" at the grant date. For these
purposes, Infineon assumes 100 percent target achievement on a scale ranging from 0 to 200 percent. In addition,
the pension expense, i.e. the service cost pursuant to IAS 19 (see "Commitments to members of the Management
Board upon termination of their Board activities” in this chapter), is also required to be included in the amount of
total compensation disclosed in accordance with the DCGK.
The following table shows the value of compensation granted for the 2017 and 2018 fiscal years, including fringe
benefits, as well as the minimum and maximum values that can be achieved for the 2018 fiscal year.
167,452
94,858
95,379
94,858
524,413
851,350
1 When exercising stock options members of the Management Board may only make gains up to a pre-determined amount (cap). Where the cap has been
reached in the previous fiscal year stock options have expired.
P see page 146
1,240,000
P see page 102 ff.
Special bonuses
The Supervisory Board did not award any special bonuses to members of the Management Board during the 2018
fiscal year.
Other awards and benefits
In the 2009 fiscal year, the Company entered into a restitution agreement with each of the active members of the
Management Board at that time. Dr. Ploss is the only current member of the Management Board affected by the
agreement. These agreements stipulate that the Company covers all costs and expenses of any legal, governmental,
regulatory and/or parliamentary proceedings and investigations as well as arbitration proceedings, in which the
member of the Management Board is involved in conjunction with his/her activities on behalf of the Company.
However, the agreements specifically exclude any restitution of costs if the Company initiates proceedings against
the member of the Management Board for a breach of the duty of care owed in conjunction with section 93,
paragraph 2, German Stock Corporation Act (Aktiengesetz).
Management Board compensation in the 2018 fiscal year in accordance with the
German Corporate Governance Code
The DCGK recommends that the individual compensation components for each member of the Management Board
be disclosed in accordance with specified criteria. It also recommends that disclosure is based on the model tables
- in part diverging from DRS 17 – provided in the appendix to the Code.
148,449
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.
318,442
36,461
1,075,000
36,154
1,111,154
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
315,608
149,084
1,050,000
191,662
211,838
Total variable compensation
1,398,168
2017-2019 tranche
937,500
340,000
375,000
1,240,000
36,461
1,276,461
1,240,000
36,461
1,276,461
825,000
44,940
869,940
750,000
43,203
793,203
825,000
825,000
44,940
1,276,461
44,940
869,940
Variable compensation
Single-year variable compensation (STI)
550,000
480,000
Multi-year variable compensation
Mid Term Incentive (MTI)
1,375,000
869,940
1,782,322
1,525,500
1,017,135
210,000
4,876,940
Dominik Asam
2018
247,500
2,787,031
279,374
(Chief Financial Officer)
2017
225,000
2,586,986
297,220
Dr. Helmut Gassel²
2018
225,000
2,241,660
124,723
321,123
629,343
322,500
2017
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
(Member of the Management Board)
Present value
Original
service cost
(earned in the
current year)
Dr. Reinhard Ploss¹
2018
372,000
(Chief Executive Officer)
210,000
977,189
5,046,826
318,442
of pension
and benefit
entitlement
> 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.
2017
2,716,822
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.
Payments to former members of the Management Board in the 2018 fiscal year
Total compensation (primarily pension benefits) of €1,527,437.89 (2017: €1,324,427.14) was paid to former members
of the Management Board in the 2018 fiscal year. As of 30 September 2018, accrued pension liabilities for former
members of the Management Board amounted to €68,838,837 (30 September 2017: €67,862,601).
Review of the Management Board compensation system, compensation components and
individual contracts
Review of the Management Board compensation system
In accordance with section 4.2.2 DCGK, the Supervisory Board has engaged an external, independent compensation
expert to review the Management Board compensation system in place since 1 October 2010 and conclude on its
compliance with applicable legislation and its overall appropriateness from an objective perspective. In this context,
the target annual incomes of each individual member of the Management Board were subjected to detailed scrutiny.
The expert's report concluded that the Company's compensation system complies with legal requirements and
with the recommendations contained in the German Corporate Governance Code (DCGK). In particular, the expert
concluded that the compensation of Infineon's Management Board is commensurate with market conditions and
that the variable compensation component is oriented towards the sustainable growth of the enterprise. The
individual target annual incomes of the members of the Management Board are appropriate, both horizontally (i.e.
looking at peer companies) and vertically (i.e. looking at Infineon's various employee groupings). Regardless of this,
however, there would be scope for the compensation to be increased, especially for the Chief Executive Officer. The
results of the compensation expert's review were discussed in detail during the Executive Committee meeting held
on 25 October 2018 and by the full Supervisory Board on 20 November 2018. The Supervisory Board concurred with
the conclusions reached by the external expert.
Increase in Management Board compensation
The increases in the compensation of the members of the Management Board resolved by the Supervisory Board in
the 2017 fiscal year - in the case of Dr. Ploss by approximately 15 percent and in the case of Mr. Asam, Dr. Gassel and
Mr. Hanebeck by approximately 10 percent respectively - took effect from the beginning of the 2018 fiscal year. The
increases did not, however, change the relation of the individual compensation components or the compensation
structure as a whole.
Other adjustments
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.
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:
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
1 The upper line for Dr. Ploss in the 2018 fiscal year respectively 2017 shows the contribution amount, the present value and the service cost relating to the
defined contribution pension commitment additionally granted to him with effect from 1 January 2016. The second line shows the pension entitlement
and the present value of his fixed amount pension plan. Income from past service cost amounting to €1,114,773 was recognized in the 2017 fiscal year.
2 As a result of the separate allocation to pension entitlement accounts and guaranteed interest component - compared to the previous year's flat-rate
allocation - the present value of the pension provision for Dr. Gassel and Mr. Hanebeck as of 30 September 2018 was reduced by €475,162 and €659,685
respectively (including the effect of changes in interest rates).
913,581
870,988
132,853
Jochen Hanebeck²
2018
225,000
2,702,051
148,449
(Member of the Management Board)
2017
205,500
205,500
162,385
Total
2018
210,000
2017
210,000
1,069,500
958,500
13,754,757
14,171,827
3,361,736
> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result of their previous periods
of employment in senior management positions with Infineon. The contracts appointing them to the Board
specifically state that the amounts made available to cover their vested pension entitlements represent a
continuation of those vested entitlements and are, therefore, not subject to any separate vesting arrangements.
The Company makes a fixed annual pension contribution on behalf of Dr. Gassel and Mr. Hanebeck for each
full fiscal year of service on the Board, equivalent to 30 percent of the relevant agreed basic annual salary. The
Supervisory Board is not required to decide each time on the amount to be contributed. The pension contributions
for the 2018 fiscal year for Dr. Gassel and Mr. Hanebeck amounted in each case to €225,000.
> On joining the Management Board, the Company made a one-time, contractually vested initial pension contribution
of €540,000 on behalf of Mr. Asam as compensation for the loss of vested retirement pension entitlements in
connection with the termination agreement with his previous employer. For each fiscal year of his membership
on the Management Board, Mr. Asam also receives a pension contribution from the Company amounting to
between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed basic annual salary.
As in the previous year, the pension contribution for Mr. Asam for the 2018 fiscal year has been set at 30 percent
of his basic annual salary and therefore amounts to €247,500. The pension entitlements arising from the defined
contributions made on behalf of Mr. Asam vested with effect from 31 December 2013.
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.
2018
2017
2018
2017
2018
2017
Fixed compensation
Basic annual salary
1,240,000
Fringe benefits
36,461
Total fixed compensation
1,276,461
1,075,000
36,154
1,111,154
825,000
44,940
869,940
750,000
43,203
793,203
750,000
65,596
815,596
2017
2018
Member of the
Management Board
Jochen Hanebeck
3,061,949
1 The figures of the active members of the Management Board in the 2018 fiscal year are based on a fair market value per performance share amounting to €15.25 (2017: €11.25),
which was calculated using a Monte-Carlo simulation.
2 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year.
Allocation amount in accordance with DCGK
Since compensation granted to members of the Management Board for the 2018 fiscal year does not coincide fully
with amounts disbursed in a particular fiscal year, a separate table is presented - in accordance with the relevant
DCGK recommendation - showing the amounts flowing to members of the Management Board for the 2018 fiscal
year (the "allocation amount” (“Zufluss")).
In line with the DCGK recommendations, the fixed compensation and the STI are required to be disclosed as the
allocation amount for the relevant fiscal year concerned. In the case of the MTI, the DCGK recommends that this is
disclosed as flowing to members of the Management Board in the fiscal year in which the plan term of the relevant
MTI tranche ends. In addition to the fixed compensation and the STI granted for the 2018 fiscal year, the allocation
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
685,000
47,728
732,728
Corporate Governance
102
P see page 95 ff.
amount for the 2016-2018 MTI tranche therefore flowed to the members of the Management Board in the 2018 fiscal
year. In accordance with the DCGK, share-based payments are deemed to be allocated on the basis of the relevant
time and value for German tax law purposes. The performance shares awarded on 1 October 2014 which were
settled in cash after the end of the 2018 fiscal year (see "Components of the Management Board compensation
system" in this chapter) will not be disclosed as having flowed until the 2019 fiscal year. In line with the DCGK
recommendations, the pension expense (meaning the service cost pursuant to IAS 19) constitutes the allocation
amount (see previous table), even though it is not - strictly speaking - an allocation.
The total compensation allocated to the individual members of the Management Board for the 2018 fiscal year in
accordance with DCGK - analyzed by component - is shown in the following table:
in €
Dr. Reinhard Ploss
Chief Executive Officer
Dominik Asam
Chief Financial Officer
Dr. Helmut Gassel
Member of the
Management Board
Compensation report
750,000
33,500
783,500
685,000
32,016
717,016
271,000
550,000
787,500
550,000
Total variable compensation
Pension expense²
Total compensation (DCGK)
2,002,990 2,874,300
318,442 321,123
3,597,893 4,306,577
Stock Option Plan 2010
Performance Share Plan
due in the financial
year 2018¹
1,394,245 1,505,400 671,338 429,968 671,338 429,968
279,374 297,220 124,723 132,853 148,449 162,385
2,543,559 2,595,823 1,611,657 1,295,549 1,603,287 1,309,369
Commitments to members of the Management Board upon termination of their Board activities
Benefits and pension entitlements in the 2018 fiscal year
In accordance with the Management Board compensation system in place since 2010, the members of the Management
Board have, in the meantime, all received a defined contribution pension commitment, which is essentially identical
to the Infineon pension plan applicable to all employees. The Company has accordingly set up a personal pension
account (basic account) for each beneficiary and makes annual pension contributions to it. The Company adds
annual interest to the balance in the basic account using the highest statutory interest rates valid for the insurance
industry (guaranteed interest rates) until disbursement of the pension begins and may also award surplus credits.
Ninety-five percent of any income earned over and above the guaranteed interest rate is credited to the pension
account, either at the date on which disbursement of the pension begins or, at the latest, when the beneficiary reaches
the age of 60. The balance of the basic account when disbursement of the pension begins (due to age, invalidity or
death) - increased by an adjusting amount in the event of invalidity or death - constitutes the retirement benefit
entitlement and is paid out to the member of the Management Board or his or her surviving dependents in twelve
annual installments, or, if so requested by the member of the Management Board, in eight annual installments, as
a lump sum or as a life-long pension. In addition to the defined contribution pension plan that has been in place
for Dr. Ploss since 1 January 2016, a fully vested fixed-amount pension entitlement of €210,000 p.a. also exists for
his Board activities up to 31 December 2015 which will not increase in future.
If the entitlements of members of the Management Board (i) have not yet legally vested or (ii) have legally vested
but are not protected by the state pension insurance scheme (Pensionssicherungsverein), the Company maintains
pension reinsurance policies in favor of, and pledged to, the members of the Management Board concerned.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Corporate Governance
Compensation report
103
1 Represents 250 percent of the LTI allocated amount (cap) at the time of granting the virtual performance shares in financial year 2013.
2 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year.
1,685,639
Long Term Incentive (LTI)
281,358
Variable compensation
Single-year variable
compensation (STI)
630,850
670,080
430,125
474,640 389,980 429,968
389,980
281,358
429,968
compensation
Mid Term Incentive (MTI)
2015-2017 tranche
678,720
480,760
2016-2018 tranche
584,640
414,120
Multi-year variable
438,452
2018
2018
172,153
117,759
155,951
210,283
143,375
129,993
Long Term Incentive (LTI)
Performance Share Plan²
298,168
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
129,993
243,040
183,520
155,951
670,080
430,125
474,640
389,980
429,968
Multi-year variable compensation
Mid Term Incentive (MTI)1
2015-2017 tranche
190,238
2016-2018 tranche
2018-2020 tranche
243,040
172,153
183,520
243,040
129,993
172,153
117,759
2017-2019 tranche
630,850
925,864
1,741,460
2,004,656
Multi-year variable compensation
Mid Term Incentive (MTI)1
2015-2017 tranche
415,193
2016-2018 tranche
117,759
155,951
549,031
727,095
2017-2019 tranche
117,759
155,951
549,031
727,095
2018-2020 tranche
129,993
1,840,935
429,968
389,980
Single-year variable compensation (STI)
1,664,836
in €
Jochen Hanebeck
Member of the
Management Board
2018
Total
Management Board
2017
2018
932,108
2017
Basic annual salary
Fringe benefits
Total fixed compensation
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
Fixed compensation
613,644
Single-year variable compensation (STI)
Total fixed compensation
Compensation report
(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 adjust-
ment 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 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
Compensation report
97
P see page 104 f.
P see page 104 f.
Corporate Governance
Combined Management Report | Our 2018 fiscal year
95
95
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
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.
Compensation system
In the 2018 fiscal year, the Supervisory Board engaged an independent external remuneration expert to perform
the regular review of the Management Board compensation system. The expert concluded that the Company's
compensation system complies with the requirements of the German Stock Corporation Act (Aktiengesetz)
and the DCGK and is in line with current market conditions (for details see "Review of the Management Board
compensation system, compensation components and individual contracts" in this chapter).
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
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.
Variable compensation
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.
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).
2018
2017
2018
2017
2018
2017
1,240,000
1,075,000
825,000
36,461
1,276,461
36,154
1,111,154
44,940
869,940
750,000
43,203
793,203
750,000
65,596
815,596
685,000
47,728
732,728
Member of the
Management Board
Dr. Helmut Gassel
Dominik Asam
Chief Financial Officer
Dr. Reinhard Ploss
Chief Executive Officer
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Corporate Governance
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).
Compensation report
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
98
Long Term Incentive (LTI)
Performance Share Plan 2
170,373
61,086
19,728
264,778
291,128
1 The share price of the virtual performance shares exercised in the fiscal year 2018 amounts to €21.90.
2 The expiration of the virtual performance shares results from the cap. The finally allocated performance shares may not exceed 250 percent
of the respective LTI allocation amount.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Corporate Governance
Compensation report
100
Stock options
outstanding
at the
beginning
of the
fiscal year
Stock Option Plan 2010
Stock options
outstanding
at the
end of the
fiscal year
Stock options
exercised
in the
fiscal year¹
> 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.
in the
fiscal year
830,576
907,922
80,704
54,464
291,128
210,424
2017
16,910
190,238
16,910
Jochen Hanebeck
2018
16,910
11,172
Exercisable
stock options
outstanding
at the end
of the
170,373
(Member of the
Management Board)
2017
16,910
190,238
16,910
Total
2017
28,082
Management Board)
fiscal year
Number
2017
130,952
62,800
68,152
285,173
Dr. Helmut Gassel
2018
95,379
(Member of the
Management Board)
2017
Jochen Hanebeck
2018
(Member of the
Management Board)
2017
Total
(Chief Financial Officer)
134,669
2018
Dominik Asam
Number
Number
Number
Total
expense
for share-
based com-
pensation
Member of the
Management Board
Fiscal year
Number
in €
2018
198,986
(Chief Executive Officer)
2017
307,500
208,200
99,300
376,461
Dr. Reinhard Ploss
(Member of the
28,082
170,373
Fringe benefits
In accordance with their service contracts, members of the Management Board are entitled to a chauffeur-driven
company car, which may also be used for private purposes. Operating and maintenance costs for the company car
and chauffeur are borne by the Company. Taxes arising on the fringe benefit related to private usage are borne by
the members of the Management Board.
The Company also maintains accident insurance policies for members of the Board in the case of death (€3 million)
and invalidity (€5 million).
Other fringe benefits related mainly to statutory obligations such as the payment of inventor's compensation or to
general benefits/discounts available to all Infineon employees.
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
granted
at the
beginning
of the
fiscal year
Virtual
performance
shares
exercised
in the
fiscal year¹
Virtual
performance
shares
expired
in the
Members of the Management Board did not receive any loans from Infineon, neither in the 2018 nor 2017 fiscal years.
Similarly, they did not receive any benefits from third parties in the 2018 and 2017 fiscal years, whether promised or
actually paid, for their board activities at Infineon.
P see page 95 ff.
99
99
190,238
830,576
907,922
Total variable compensation
Total compensation
925,864
1,709,364
932,108
4,383,217
fiscal year²
4,781,961
8,128,714
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Corporate Governance
Compensation report
1,649,124
shares
outstanding
at the end
of the
fiscal year
Virtual
performance
Fiscal
Dominik Asam
2018
104,118
12,568
191,662
25,119
8,113
83,454
153,190
(Chief Financial Officer)
85,288
18,830
211,838
104,118
Dr. Helmut Gassel
2018
16,910
11,172
2017
2017
315,608
125,136
Number
Number
in €
Number
Number
Number
Member of the Management Board
year
28,054
Dr. Reinhard Ploss
153,190
19,552
298,168
35,967
11,615
125,160
(Chief Executive Officer)
2017
2018
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Stock options
expired
Content
4,774
(333)
(1,404)
56
31
(37)
(37)
6,446
5,636
Total equity
Total liabilities and equity
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
4,486
10,879
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
9,945
790
2,272
15
Total non-current liabilities
12
1,507
1,511
14
552
503
5
9
18
13
46
2,274
67
112
2,251
2,211
Total liabilities
Shareholders' equity:
Ordinary share capital
Additional paid-in capital
Accumulated deficit
Other reserves
Own shares at cost
4,433
4,309
137
Other non-current liabilities
143
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
7
28
10
96
(116)
(91)
(251)
(73)
158
177
13
7
(1)
(25)
(23)
14
9
(50)
(58)
Income tax paid
5
(226)
(142)
Net cash provided by operating activities from continuing operations
1,571
91
1
11
8
11
861
812
Income tax
5
193
142
Net interest result
45
56
Losses (gains) on disposals of property, plant and equipment
(1)
2
2
Dividends received from joint ventures
Impairment charges
Other non-cash result
Change in trade receivables
Change in inventories
Change in trade payables
Change in provisions
Change in other assets and liabilities
Interest received
Interest paid
(270)
4
Gain from sale of RF power business
1,728
Long-term provisions
Pension plans and similar commitments
Consolidated Statement of Financial Position
110
Consolidated Statement of Financial Position
as of 30 September 2018 and 2017
€ in millions
Notes
30 Septem-
ber 2018
30 Septem-
ber 2017
ASSETS
Cash and cash equivalents
Financial investments
Consolidated Financial Statements
Trade receivables
Income tax receivable
Other current assets
Assets classified as held for sale
Total current assets
732
860
8
1,811
1,592
9
971
851
Inventories
10
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
865
Total comprehensive income for the year, net of tax
Attributable to:
109
Notes
2018
2017
15
1,075
790
(4)
118
(4)
1 Contains losses from investments accounted for using the equity method in the 2018 fiscal year of €1 million (2017: gains €1 million).
118
(49)
(2)
4
2
25
(43)
21
75
1,096
865
Shareholders of Infineon Technologies AG
1,096
27
Deferred tax liabilities
1,480
5
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
5,456
Short-term provisions
35
590
422
117
103
Other current liabilities
269
230
Total current liabilities
2,182
2,098
Long-term debt
Income tax payable
1,240
Total non-current assets
137
52
5
366
300
6
11
23
5,423
4,871
Property, plant and equipment
11
3,038
189
2,659
11
1,596
1,586
Investments accounted for using the equity method
4
37
28
Deferred tax assets
5
648
612
Other non-current assets
Goodwill and other intangible assets
Net cash provided by (used in) operating activities from discontinued operations
Net cash provided by operating activities
4
(5)
118
(49)
2
4
75
908
(49)
2
4
865
(248)
19
790
(13)
(13)
(17)
(17)
4,774
(1,404)
32
(1)
(37)
5,636
4,774
(1,404)
32
26
(1)
790
(37)
2,272
1,136,200,929
2,272
794,905
2
1,136,995,834
2,274
Consolidated Financial Statements
Consolidated Statement of Changes in Equity
Additional
paid-in capital
Accumulated
deficit
Other reserves
5,023
Foreign
Hedges
currency
translation
adjustment
113
Own shares
Total equity
attributable to
shareholders
of Infineon
Technologies AG
5,016
(2,312)
98
(2)
(5)
Securities
1,136,200,929
(37)
1,075
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 ("€").
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.
Financial reporting rules applied for the first time
The IASB has issued the following Standards or amendments to Standards, which are required to be applied in the
Consolidated Financial Statements for the year ended 30 September 2018:
Standard/amendment/interpretation
Effective date
Impact on Infineon
IAS 7
Cash flow statements
IAS 12
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.
(Disclosure initiative - Amendments to IAS 7)
Recognition of deferred tax assets for unrealized losses
(Amendments to IAS 12)
immaterial
1 January 2017
immaterial
Annual IFRS improvement cycle
2014-2016
Amendments to IFRS 12
1 January 2017
none
Financial reporting rules issued not yet applied
The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from
today's perspective. They have not been applied in the Consolidated Financial Statements as of 30 September 2018
since they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended
Standards are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they
are not applied before their effective date, even if this is permitted for certain standards.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
1 January 2017
5,636
1 Basis of the Consolidated Financial Statements
The Infineon Group ("Infineon") comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
develop, manufacture and market a broad range of semiconductors and related system solutions. The focus of
activities is on applications for automotive electronics, industrial electronics, information and communications
infrastructure as well as hardware-based security. The product range includes standard, application-specific and
customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
signal applications. 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.
1,075
(4)
27
(2)
21
1,071
27
(2)
1,096
(283)
(283)
4
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.
(9)
6
(9)
(333)
59
(3)
(37)
6,446
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Notes to the Consolidated
Financial Statements
114
4,486
17
17
7
(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
Net cash used in investing activities
Net change in short-term debt
Net change in related party financial receivables and payables
11
Proceeds from issuance of long-term debt
Change in cash deposited as collateral
(1,163)
(1,131)
2222
12
(1)
20
(18)
12
2
12
(321)
Repayments of long-term debt
(119)
Purchases of property, plant and equipment
(164)
1,575
1,723
Purchases of financial investments
8
(3,277)
(3,300)
Proceeds from sales of financial investments
8
3,067
3,303
Purchases of other equity investments
(1)
(148)
(9)
(16)
(5)
Acquisitions of shares in MoTo, net of cash acquired
(112)
Proceeds from sales of businesses and interests in subsidiaries, net of cash disbursed
6
324
10
Investments in related companies
(17)
Purchases of intangible assets and other assets
11
Acquisitions of businesses, net of cash acquired
74
Proceeds from issuance of ordinary shares
Dividend payments
€ 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
for the year ended 30 September 2018 and 2017
Other comprehensive income (loss) for the period, net of tax
Total comprehensive income (loss) for the period, net of tax
Dividends
Exercise of stock options
Share-based compensation
Balance as of 30 September 2018
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Notes
Ordinary shares issued
Shares
Amount
15
1,132,673,109
2,265
3,527,820
Issuance of ordinary shares:
Consolidated Statement of Changes in Equity
112
Consolidated Statement of Changes in Equity
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
6
26
15
(283)
(248)
(542)
(340)
(542)
(340)
(130)
252
2
(17)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
860
625
732
860
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Other comprehensive income (loss) for the year, net of tax
Total items expected to be reclassified to profit or loss in the future
(248)
Net change in fair value of hedging instruments
125,000
20,000
15,000
90,000
2017
123,000
18,000
15,000
90,000
2018
Annette Engelfried
Peter Gruber
2017
12,000
10,000
60,000
2018
Dr. Wolfgang Eder¹
96,000
6,000
90,000
2017
100,000
10,000
82,000
2018
90,000
15,000
2017
127,000
22,000
15,000
90,000
2018
Hans-Ulrich Holdenried
123,000
18,000
15,000
90,000
2017
125,000
20,000
15,000
90,000
2018
Gerhard Hobbach
123,000
18,000
15,000
90,000
2017
123,000
18,000
90,000
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Dr. Herbert Diess
146,000
Fixed
Fiscal
Peter Bauer
Member of the Supervisory Board
in €
Supervisory Board compensation
106
Compensation report
Corporate Governance
Combined Management Report | Our 2018 fiscal year
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
> 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.
> 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.
105
Compensation report
Allowance
90,000
year
for specific
26,000
30,000
90,000
2017
148,000
28,000
30,000
90,000
2018
Johann Dechant
133,000
18,000
25,000
90,000
2017
133,000
18,000
25,000
90,000
2018
Total
compen-
sation
fees
functions
sation
Meeting
attendance
compen-
Corporate Governance
15,000
129,000
25,000
90,000
2017
182,333
24,000
68,333
90,000
2018
Dr. Eckart Sünner
102,000
12,000
20,000
90,000
104,000
14,000
90,000
2018
Kerstin Schulzendorf
123,000
18,000
15,000
90,000
2017
125,000
2017
135,000
Diana Vitale
2018
Jochen Hanebeck
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
2018
Total
102,000
12,000
90,000
2017
104,000
14,000
90,000
20,000
15,000
90,000
2018
37,500
37,500
2018
Géraldine Picaud³
Wolfgang Mayrhuber²
123,000
18,000
15,000
90,000
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
Prof. Dr. Renate Köcher
18,000
24,000
93,000
90,000
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
6,000
60,000
2017
110,000
20,000
90,000
2018
216,000
36,000
90,000
2017
Combined Management Report | Our 2018 fiscal year
2018
Gain (loss) from investments accounted for using the equity method
3
(836)
(776)
Selling, general and administrative expenses
3
(850)
(819)
Other operating income
6
332
14
Other operating expenses
(62)
(57)
Operating income
1,469
983
Financial income
15
10
Financial expenses
(68)
(63)
2,621
4
2,885
(4,714)
110 Consolidated Statement of Financial Position
111 Consolidated Statement of Cash Flows
112 Consolidated Statement of Changes in Equity
114 Notes to the Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
107
Consolidated Financial Statements
Consolidated Statement of Operations
Consolidated Statement of Operations
for the year ended 30 September 2018 and 2017
€ in millions
108
Notes
2018
2017
Revenue
Cost of goods sold
Gross profit
Research and development expenses
3
7,599
7,063
3
(4,442)
(5)
3
Income from continuing operations before income taxes
7
0.95
0.70
Diluted earnings per share (in euro) attributable to
shareholders of Infineon Technologies AG:1
Diluted earnings per share (in euro) from continuing operations
Diluted earnings per share (in euro) from discontinued operations
Diluted earnings per share (in euro)
7
1.08
0.70
7
(0.13)
7
0.95
0.70
1 The calculation of earnings per share is based on unrounded figures.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
Consolidated Statement of
Comprehensive Income
for the year ended 30 September 2018 and 2017
€ in millions
Net income
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
Basic earnings per share (in euro)
(0.13)
7
0.70
1,411
933
Income tax
5
(193)
(142)
Income from continuing operations
Loss from discontinued operations, net of income taxes
Net income
Attributable to:
Shareholders of Infineon Technologies AG
109 Consolidated Statement of Comprehensive Income
Basic earnings per share (in euro) attributable to
shareholdersof Infineon Technologies AG:¹
791
6
(143)
(1)
1,075
790
1,075
790
Basic earnings per share (in euro) from continuing operations
Basic earnings per share (in euro) from discontinued operations
7
1.08
1,218
108 Consolidated Statement of Operations
Net change in fair value of available-for-sale financial 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").
Provisions:
Debt
Trade payables
LIABILITIES AND EQUITY
Remaining other assets
Measured at fair value through profit or loss
Designated hedging instruments
Loans and receivables
Available-for-sale
Other assets (current and non-current):
Other financial assets:
with definite useful life
Intangible assets (except goodwill):
Property, plant and equipment
Goodwill
Assets classified as held for sale
Inventories
Trade receivables
Pensions
Financial investments
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
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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).
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".
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 functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
prepared with the euro as the reporting currency.
Functional currency, reporting currency and foreign currency translation
A list of subsidiaries of Infineon Technologies AG is provided in note 26.
The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
relationships are eliminated on consolidation.
Cash and cash equivalents
Other provisions
Other liabilities (current and non-current):
Other 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.
Infineon classifies financial assets into the following categories: "Loans and receivables", "Available-for-sale financial
assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
were not held by Infineon.
119
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Financial assets are derecognized when the rights to receive payments from the investments have expired, or have
been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial liabilities are
derecognized when they are extinguished, that is when the contractual obligation is discharged, canceled or expired.
Regular purchases and sales of financial assets are recognized on the settlement date.
Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the acqui-
sition or issuance of financial instruments are only included in the carrying amount if the financial instruments are
not measured at fair value through profit or loss.
Financial instruments
Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of three
months or less, and are measured at their nominal amount.
Cash and cash equivalents
118
Fair value through profit or loss
Fair value directly through equity
Fair value/amortized cost
Fair value/amortized cost
Acquisition cost
Projected unit credit method
Expected settlement amount
Fair value/amortized cost
Fair value/amortized cost
Fair value through profit or loss
Fair value directly through equity
(Amortized) Cost
Measured at fair value through profit or loss
Designated hedging instruments
Other financial liabilities
Remaining other liabilities
Own shares
Measurement principle
The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
valuation and accounting policies.
Nominal amount
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/amortized cost
Loans and receivables
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 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.
1 January 2019
1 January 2018
Annual IFRS improvement cycle
Uncertainty over income tax treatments
advance consideration
IFRIC 23
Foreign currency transactions and
IFRIC 22
1 January 2019
Leases
IFRS 16
1 January 2018
Revenue from contracts with customers including
clarifications to IFRS 15
IFRS 15
immaterial
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
1 January 2018
see explanations
below the table
see explanations
below the table
see explanations
below the table
immaterial
immaterial
2014-2016 - Amendments to IFRS 1 and IAS 28
Basis of consolidation
2 Summary of significant accounting policies
P see page 167 ff.
117
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
The new standard applies to fiscal years that begin on or after 1 January 2019, accordingly Infineon will apply the
standard from the fiscal year that begins on 1 October 2019. In a cross-functional IFRS 16 project, divided into an
analysis and design phase as well as an implementation phase, Infineon is evaluating the expected effect on the
Consolidated Financial Statements. As of the balance sheet date the analysis phase has progressed considerably
but is not completed. Infineon enters into leasing contracts mainly as lessee, these are primarily for operating
leases. The application of IFRS 16 is expected to lead to an increase in assets and financial liabilities for Infineon.
Infineon is expected to elect to use the exemptions for short term leases and leases for low value asset. Infineon is
expected to make use of the modified retrospective approach for the transition to IFRS 16. A reliable estimate of
the accounting effects is not possible at this stage of the project, but only after the completion of the system imple-
mentation of the technical concept.
IFRS 16 introduces a standardized accounting model by which leasing contracts are to be recorded in the balance
sheet of the lessee and replaces all previous standards and lease accounting interpretations including IAS 17,
IFRIC 4, and SIC 15 and SIC 27. This means that in future all assets and liabilities arising from a leasing agreement
must be recognized by the lessee, unless it is a short term leasing arrangement (duration of twelve months or less)
or a leasing arrangement for low-value assets (each may be elected by the lessee). The distinction between finance
and operating leases is still required in the accounts of the lessor and therefore does not differ significantly from
IAS 17 Leases.
IFRS 16 "Leases"
The transition to IFRS 15 will lead to an increase of current assets of around €43 million in particular as a result of
the recognition of the contractual assets and a reduction to inventories, so that losses carried forward will decrease
by €31 million as of 1 October 2018 after the effect of deferred taxes.
In a cross-functional IFRS 15 project, divided into an analysis and design phase as well as an implementation
phase, Infineon captured and evaluated the effect on the Consolidated Financial Statements. This company-wide
investigation into the effects of the application of IFRS 15 has been completed. It has concluded that future revenue
under particular contract types will be recognized over a period of time instead of at a particular point in time. For
Infineon, this affects primarily customer-specific products with no alternative use for which Infineon has sufficient
entitlement to payment. This will tend towards an earlier recognition of revenue than has previously been the case.
For some customers with whom Infineon holds consignment stock, revenue recognition will shift from the point of
withdrawal of goods and products by the customer to the point of delivery into the consignment warehouse. Based
on the analyses, Infineon does not expect any material effect on earnings or financial position as a result of these
changes, since Infineon's customer contracts generally only contain a contractual obligation that is fulfilled either
over a period of time or at a particular point in time. The changes will involve the separate disclosure of contract
assets in the Consolidated Statement of Financial Position as well as expanded quantitative and qualitative disclosure
in the Notes to the Consolidated Financial Statements. The application of IFRS 15 requires changes to IT processes
and systems, and where necessary new processes will be implemented.
The new standard provides a comprehensive framework for determining whether, to what extent, and at which
point in time or over which period revenue should be recognized. It replaces all previous standards and revenue
recognition interpretations including IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31. For this purpose, the
standard provides a principle-based, uniform, five-step model, which is to be applied to all categories of revenue
transactions with customers. In essence, revenue is recognized at the point control is transferred to the customer.
The amount to be recognized as revenue is based on the value of the consideration that the entity expects to receive.
IFRS 15 is to be applied to fiscal years beginning on or after 1 January 2018. Infineon will apply the standard from
the fiscal year beginning on 1 October 2018. Cumulative effects that arise from the first-time application will be
recognized directly in equity whilst comparative information for previous periods will be disclosed according to
the old requirements (modified retrospective approach).
IFRS 15 "Revenue from Contracts with Customers"
Changes to the classification and measurement categories at 1 October 2018 will not give rise to any transitional
effects for Infineon. Infineon expects changes to allowances for cash and cash equivalents and financial investments
of around €2 million as a result of the implementation of IFRS 9. The portfolio of allowances for trade receivables
will decrease by around €2 million. In total, the implementation of IFRS 9 as of 1 October 2018, including the effect
of deferred taxes, will have no net effect on retained earnings.
116
Notes to the Consolidated Financial Statements
1 January 2018
none
Annual IFRS improvement cycle 2015-2017 - Amendments
to IFRS 3 and IFRS 11 as well as IAS 12 and IAS 23
1 January 2019
none
Revised Conceptual Framework for Financial Reporting
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.
1 January 2020
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).
In a cross-functional IFRS 9 project, divided into an analysis and design phase as well as an implementation phase,
Infineon captured and evaluated the effect on the Consolidated Financial Statements. This company-wide investi-
gation into the effects of the application of IFRS 9 has been completed. The future classification and measurement
of financial assets will be based on the underlying business model of the portfolio according to which the financial
asset is managed, as well as the specific form of the contractually agreed cash flows. A limited number of financial
assets (debt instruments) held by Infineon, which are currently recognized at amortized cost or at fair value through
equity, will be recognized at fair value through profit or loss. In the future, Infineon will measure all equity instruments
held at the date of the transition at fair value through profit or loss. According to IFRS 9 the future recognition of
the impairment of financial instruments will be based on expected losses, instead of losses already incurred as is
the case at present under IAS 39. For this purpose, models have been developed to estimate expected credit losses
for trade receivables (simplified impairment model) as well as cash and cash equivalents and financial investments
(general impairment model), which will be integrated into the existing credit risk management processes. Infineon
expects no material effects to arise from the transition to the new impairment model. The new rules for the application
of hedge accounting, whose target is to better represent risk management strategy, will primarily result in changes
to the documentation and effectiveness requirements for Infineon. All existing hedging arrangements fulfill the
hedge accounting requirements as set out in IFRS 9 and will continue as before. There will be no changes to existing
financial liabilities for Infineon. Additionally, expanded quantitative and qualitative disclosure in particular with
regard to credit risk and expected credit losses will be required. The implementation of IFRS 9 will require changes
to processes and systems.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
none
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
2
764
1.5
1.5
10.4
10.9
14.1
14.4
704
708
& Multimarket
Power Management
1.5
1.5
9.4
2
759
9.6
12.6
48
49
Industrial Power Control
1.5
1.5
9.2
9.3
12.3
12.2
5
5
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.
Automotive
12.4
Corporate
Total
1 Valuation parameters as of 30 June 2018 and 2017.
P see page 125
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.
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 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 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 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.
Cost of goods sold
In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
recognition purposes.
Distributors can, subject to certain conditions, return a limited amount of inventory (stock return) or request scrap
allowances. Stock return credit notes are accrued based on expected stock returns in accordance with the contractual
agreement combined with historical experience. Distributor scrap allowances are accrued based on the contractual
agreement and, upon submission of a valid claim, are granted up to a certain maximum based on turnover in a given
period. Infineon monitors such product returns on an ongoing basis and adjusts accrual assumptions accordingly.
Other returns are only permitted for quality defects within the ordinary warranty period.
In principle, Infineon recognizes revenue on sales to distributors by using the "sell in" method, that is when a product
is sold to the distributor. In accordance with established business practice in the semiconductor industry, under
certain circumstances distributors can apply for price protection and ship and debit credit notes. Price protection
allows distributors to request a credit (debit) note for unsold products held in inventory if Infineon has reduced
(increased) the standard list price of these products. In addition, in certain cases distributors may request a ship
and debit credit note for price adjustments. Infineon adjusts revenue for price protection and ship and debit in
the period in which the related revenue is recorded. The ship and debit adjustment is determined based on rolling
trends in the difference between contract prices and standard list prices to the distributors. The price protection
adjustment is based on actual list prices and distributor inventory on hand. The availability of detailed distributor
inventory data, the transparency of pricing for standard products and the long distributor pricing history enable
Infineon to reliably estimate the adjustments for price protection and ship and debit credit notes at the end of the
reporting period.
2017
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.
Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
one or more uncertain future events not wholly within the control of Infineon, or they are present obligations that
will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
described in the Notes to the Consolidated Financial Statements (see notes 18 and 19).
Contingent liabilities
P see page 147 ff.
124
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Revenue recognition
2018
2017
2018
Technologies
Customer relationships
Capitalized development costs
Scheduled amortization of intangible assets is based on the following useful lives:
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
relationships, which are measured at acquisition cost, as well as capitalized development costs. These intangible
assets have finite useful lives and are valued at their amortized acquisition or production costs with amortization
recorded using the straight-line method over their expected economic life.
1-10
10-25
3-10
Years
Intangible assets (excluding goodwill)
Other plant and office equipment
Technical equipment and machinery
Buildings
Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land, property
rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on property,
plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
Available-for-sale financial assets
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.
120
Notes to the Consolidated Financial Statements
Licenses and similar rights
Consolidated Financial Statements
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.
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 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Intangible assets and other non-current assets
Other intangible assets
Years
2017
2018
2017
2018
Segment
in %
in %
in %
€ in millions
terminal growth rate¹
after-tax-WACC¹
pre-tax WACC¹
Book value of
allocated goodwill
Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
by scheduled depreciation and considering any impairment.
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
3-5
1-12
4-12
3-5
2-8
Infineon did not hold any intangible assets with indefinite useful lives in either the 2018 or 2017 fiscal years.
121
Recoverability of intangible assets and other long-lived assets
Goodwill
Acquired goodwill is only impaired if there is evidence of impairment. Its value is tested at the operating segment
level for possible impairment annually as of 30 June and, additionally, whenever there are events or changes in
circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the higher
of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating segment to
which the goodwill is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired accordingly.
The reversal in subsequent periods of such impairments is not permitted.
Infineon determines the recoverable amount of a particular CGU to which goodwill has been allocated on the
basis of its value in use. The value in use is measured by estimating the present value of future cash flows that will
be generated by the continuing operations of the CGU discounted using an appropriate discount rate.
Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
past experience, current operating results and the five-year business plan approved in the fiscal year just ended.
The plan is established bottom-up based on certain central assumptions applied consistently throughout Infineon.
Average revenue growth rates used over the planning timeframe lie between 9.3 percent and 11.8 percent and
do not exceed the historical long-term average growth rate for the sector in which the relevant segment operates.
Investments to increase capacity for which no cash outflow has taken place are not taken into account. Cash flows
for periods beyond the planning horizon are estimated using a terminal value.
The discount rate for future cash flows is based on the after-tax weighted average cost of capital (WACC) for the CGU
in question. The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax
WACC used to discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
cash flows and the after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate
is derived using the Svensson method taking into account risk premiums, and the beta factor and debt ratio are
derived from a group of companies comparable to the operating segment. In this way, the discount rate derived
reflects the current market rate of return as well as the specific risks attached to the respective segment.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
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.
Property, plant and equipment
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
(0.13)
Third party trade receivables, net of allowances for doubtful accounts, at the reporting date comprise the following:
€ in millions
Carrying
amount
thereof not
past due
Third party trade receivables, net of allowances as of 30 September 2018
Third party trade receivables, net of allowances as of 30 September 2017
964
932
Past due
0-30 days
29
Past due
> 31 days
3
851
831
16
4
With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there are
no indications that customers, based on their past credit history and current creditworthiness assessments, are not
able to meet their obligations.
Receivables with a maturity of more than one year are presented as other non-current assets.
9
10 Inventories
9
11
973
860
7
980
860
(9)
(9)
971
851
Changes in the allowance for doubtful accounts for the 2018 and 2017 fiscal years were as follows:
€ in millions
Allowance for doubtful accounts at beginning of the fiscal year
Current year's allowance, net of reversals
Allowance for doubtful accounts at end of the fiscal year
2018
2017
9
(2)
Inventories as of 30 September 2018 and 2017 consist of the following:
€ in millions
Raw materials and supplies
11 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 30 September 2018 and 2017 is as follows:
Changes in property, plant and equipment and goodwill and other intangible assets 2018
€ in millions
134
Cost
1 October
2017
Additions
Acquisitions
through
Disposals
Reclassi-
fication
Transfers
Foreign
30 Septem-
business
currency
effects
ber 2018
Notes to the Consolidated Financial Statements
30 Septem-
ber 2017
Consolidated Financial Statements
Inventories as of 30 September 2018 and 2017 were stated net of write-downs of €138 million and €131 million,
respectively.
Work in progress
Finished goods and merchandise
Total
30 Septem-
30 Septem-
ber 2018
ber 2017
166
131
895
749
419
360
1,480
1,240
Cost of goods sold consisted mainly of inventory-related expenses in the 2018 and 2017 fiscal
years.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
30 Septem-
ber 2018
133
Trade receivables, net
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
page 137 and
page 148 ff.
P see page 123,
and page 134 ff.
P see page 121 f.
P see page 120
and page 133
and page 129 ff.
P see page 125
126
Notes to the Consolidated Financial Statements
> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 5),
Consolidated Financial Statements
> valuation of inventory (see "Inventories" and note 10),
> recognition and valuation of provisions (see "Provisions" and notes 13 and 19),
2017
2018
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
> valuation of share-based compensation (see note 17).
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).
> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
long-lived assets" and note 11),
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.
30 Septem-
ber 2018
30 Septem-
ber 2017
1,248
563
1,070
466
56
1,811
1,592
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
9 Trade receivables
Trade receivables due within one year as of 30 September 2018 and 2017 consist of the following:
€ in millions
Trade receivables, third parties
Trade receivables, related parties
Trade receivables, gross
Allowance for doubtful accounts
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Financial investments
Securities
Investment funds
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 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
combi-
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.
P see page 127
P see page 134 f.
125
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Financial investments as of 30 September 2018 and 2017 comprise the following (for further information see also
notes 22 and 23):
€ in millions
Fixed-term bank deposits and money market funds
Research and development expenses
nations
Property, plant and equipment
Land, land rights and buildings
combi-
ber 2017
30 Septem-
Foreign
currency
effects
business
fication
through
2016
Transfers²
Reclassi-
Acquisitions Disposals
Additions
1 October
Cost
2,462
26
18
nations¹
227
Property, plant and equipment
1,095
76
1,210
Other plant and office equipment
8,146
(27)
215
(127)
437
7,648
Technical equipment and machinery
1,501
(6)
(10)
45
(21)
366
32
Land, land rights and buildings
(65)
288
396
Customer relationships
(17)
143
643
Capitalized development costs
(28)
18
759
Goodwill acquired for consideration
Goodwill and other intangible assets
12,038
(2)
(256)
352
(333)
(2)
1,090
392
5 2
Technologies
8
4
769
764
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)
21
219
Licenses and similar rights
275
1,647
14
1,227
332
355
11,206
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
2 For the year ended 30 September 2017, transfers relate to assets that were classified as held for sale.
1 For the year ended 30 September 2017, amounts shown under property, plant and equipment as "Acquisitions through business combinations" relate to assets acquired in
connection with the acquisition of MoTo.
2,306
(60)
18
219
(1)
275
(10)
392
(4)
643
759
Total property, plant and equipment
(45)
and construction in progress
1,248
1,501
81
(3)
14
1,593
Technical equipment and machinery
8,146
589
(156)
266
8,845
Other plant and office equipment
1,227
65
(95)
53
(2)
Payments on account
(8)
(14)
148
11,206
(42)
(14)
(215)
366
874
10,237
Total property, plant and equipment
332
(1)
(4)
(274)
(2)
329
284
and construction in progress
Payments on account
Goodwill and other intangible assets
7
Goodwill acquired for consideration
Customer relationships
2,225
18
(11)
19
212
2
283
396
(3)
129
517
5
799
Total goodwill and other intangible assets
Other intangible assets
Licenses and similar rights
Technologies
Capitalized development costs
0.95
1,497
1,426
1,868
1,357
2017
2018
Temporary differences
Tax credits
Tax loss carry-forwards (corporate tax and local income tax)
€ in millions
No deferred taxes were recorded for the following items (gross amounts):
Infineon assessed its deferred tax assets for the need for a valuation allowance. Based on the results of the assessment
of deferred tax assets, considering all positive and negative factors and information relating to the foreseeable future,
Infineon recognized deferred tax assets, after netting, of €648 million as of 30 September 2018 (30 September 2017:
€612 million).
In Germany, Infineon Technologies AG had corporate income tax loss carry-forwards of €1.6 billion and trade tax loss
carry-forwards of €2.6 billion as of 30 September 2018 (30 September 2017: €1.8 billion and €2.9 billion, respectively).
In other jurisdictions, corporate income tax loss carry-forwards amounted to €33 million (30 September 2017:
€31 million) and local income tax loss carry-forwards amounted to €92 million (30 September 2017: €216 million).
Additionally, there are unused tax credits and excess foreign tax credits of €360 million (30 September 2017:
€401 million).
(18)
612
(9)
648
Total
536
224
(536)
260
516
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.
388
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.
350
Netting
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
30 September 2018
€ in millions
130
(40)
(350)
Provisions, pension plans and similar commitments
(140)
(554)
1,148
(359)
998
Total deferred taxes
(92)
165
(13)
137
141
136
Unused tax credits and excess foreign tax credits
Other
430
415
Tax loss carry-forwards
(212)
255
130
Deferred tax assets and liabilities as of 30 September 2018 and 2017 comprise the following:
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Notes to the Consolidated Financial Statements
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
0.70
- 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.
Earnings per share (in euro) from discontinued operations, net of income taxes
Assets classified as held for sale
Earnings per share (in euro) - basic and diluted
8 Financial investments
0.70
1.08
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
1,075
2017
2018
1 The calculation of earnings per share is based on unrounded figures.
Consolidated Financial Statements
132
Consolidated Financial Statements
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)
2017
2018
131
Income taxes recognized directly in equity
Income taxes
Income taxes from continuing operations
Income taxes from discontinued operations
€ in millions
Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
operations, the income tax consisted of the following:
classified as held for sale
Notes to the Consolidated Financial Statements
Qimonda - discontinued operations
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.
P see page 152 ff.
P see page 117 ff.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
On 6 March 2018, the largest part of the Radio Frequency Power Components business was sold to Cree, Inc. for
€345 million. The assets and selected liabilities were transferred separately. Overall, net assets with a carrying
amount of €25 million were transferred. In addition, goodwill of €28 million was disposed of. €22 million of the
purchase price was recognized as deferred income in connection with the long-term supply agreement for LDMOS
wafers and related components from Infineon to Cree, Inc. The pre-tax gain realized in the 2018 fiscal year arising
from the sale amounted to €270 million and was recognized in other operating income.
Radio Frequency Power Components business
(1)
(143)
7
(1)
(150)
2017
2018
Others business' share of discontinued operations, net of income taxes
Loss from discontinued operations, net of income taxes
Qimonda's share of discontinued operations, net of income taxes
€ in millions
Loss from discontinued operations, net of income taxes
The current risks and provisions relating to Qimonda's insolvency are described in detail in note 19 "Proceedings in
relation to Qimonda".
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.
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
2017
2018
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 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
37
191
37
68
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
86
Summarized financial information
1,963
2,115
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
2,347
1,921
2,206
Europe
2,076
15,333
16,167
10,124
10,980
15,566
16,757
2017
2018
Total
therein: USA
Americas
Japan
therein: China
Greater China
Asia-Pacific (excluding Japan, Greater China)
therein: Germany
The average number of employees by geographic region is as follows for the 2018 and 2017 fiscal years:
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:
€ in millions
Gain (loss) from investments accounted for using the equity method
(11)
4
Effects from the difference between local and functional currency (Malaysia)
25
35
Tax rate differential
49
64
Change in available tax credits
(271)
(350)
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.
Non-deductible expenses and tax-exempt income, net
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.
(51)
Prior year taxes
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)
Actual income taxes
(1)
(1)
(18)
27
Other
Effects due to changes in tax rate
39
117
12
(38)
Change in valuation allowance on deferred tax assets
34
(142)
(193)
(17)
2018
Total comprehensive income (loss) for the year, net of tax
Other comprehensive income (loss) for the year, net of tax
Income (loss) for the year, net of tax
€ in millions
The result of the investments accounted for using the equity method is not part of the segment result (see note 24).
For the 2018 and 2017 fiscal years, Infineon's proportion of selected items from the statement of comprehensive
income of the joint ventures were aggregated as follows:
Psee page 161
3
3
(8)
3
(5)
2017
2018
Segment Industrial Power Control
Segment Automotive
Attributable to:
2017
(5)
3
(1)
18
(125)
(211)
2017
2018
129
Deferred tax income (expense)
Income tax
Current tax expense
1,595
€ in millions
5 Income tax
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
As of 30 September 2018 and 2017, unrecognized capital contribution obligations in joint ventures amount to
€5 million and €10 million.
4
(6)
1
Income tax from continuing operations for the fiscal years ending 30 September 2018 and 2017 is as follows:
- Adjustment for own shares
> valuation of defined benefit pension plans (see “Defined benefit pension plans" and note 14) and
Quoted
in an active
market
2.8
1.8
2.7
2.0
2.1
2.0
2.6
1.8
2.0
1.8
2.1
Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high credit rating.
The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany, 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.
€ in millions
Present value of defined benefit pension
plans with:
30 September 2018
30 September 2017
Domestic
plans
Foreign
plans
Total
1.7
Domestic
plans
Foreign
plans
Foreign
plans
81
91
Plans that are wholly or partly funded
Total
973
80
1,053
866
83
987
167
1,154
876
164
1,040
Actuarial assumptions
The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
in %
Discount rate at the end of the fiscal year
Rate of salary increase
Projected future pension increases
30 September 2018
30 September 2017
Domestic
plans
Domestic
plans
Foreign
Total
plans
160
1,026
a 50 basis points higher expected
rate of pension increase
1,005
172
1,177
893
170
1,063
a 50 basis points lower expected
rate of pension increase
972
163
1,135
863
159
1,022
Increase in life expectancy by one year
1,013
171
1,184
896
866
1,139
163
976
a 50 basis points higher discount rate
909
156
1,065
804
153
957
a 50 basis points lower discount rate
1,073
180
1,253
10
956
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
177
167
101
14
Expected return on plan assets
7
Actuarial gains (losses)
(2)
Contributions from Infineon
14
Benefits paid
(15)
Reclassification of fair value of plan assets¹
56
3318EI
537
470
62
532
10
5
2
7
(1)
(1)
(1)
22
63
14
474
Change in fair value of plan assets:
15
7
22
14
5
19
Reclassification of present value of defined
benefit obligations'
(62)
662
(62)
Foreign currency effects
1
1
4
4
Present value of defined benefit obligation
at end of year
(987)
(167)
(1,154)
(876)
(164)
(1,040)
Fair value of plan assets at beginning of year
6
20
(7)
(56)
(56)
(53)
(53)
1 In the reporting period, net obligations from deferred compensation plans amounting to €6 million were reclassified from other liabilities. In the
previous year, other liabilities included net obligations from deferred compensation plans in the amount of €3 million, consisting of present values
of defined benefit obligations of €56 million and fair values of plan assets of €53 million.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
similar commitments".
Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
reported in the Consolidated Statement of Financial Position as of 30 September 2018 and 2017.
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
Plans that are wholly unfunded
thereof: Infineon Technologies Austria AG
(373)
(373)
(419)
(22)
(14)
(5)
(19)
56
Foreign currency effects
(2)
(2)
Fair value of plan assets at end of year
534
68
87
602
63
537
Net pension liability
(453)
(99)
(552)
(402)
(101)
(503)
thereof: Infineon Technologies AG
(419)
474
1,063
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €242 million
in the 2017 fiscal year, of which €248 million related to the dividend paid in February 2017. The exercise of stock
options by employees as well as by current and past members of the Management Board increased additional
paid-in capital by €19 million. Pro rata expenses amounting to €13 million for share-based compensation were
recorded in the 2017 fiscal year, additional paid-in capital increased by the same amount. In addition, negative
€26 million (net after tax) was recorded in additional paid-in capital in the 2017 fiscal year in connection with the
settlement of the 2014 fiscal year tranche of the Performance Share Plan.
Authorized share capital
As of 30 September 2018, the Company's Articles of Associations provide for two authorized share capitals amount-
ing to up to €706,000,000:
> Section 4, paragraph 4, of the Articles of Association provides that the Management Board is authorized, with
the approval of the Supervisory Board, to increase the share capital in the period until its expiry on 11 February
2020 once or in partial amounts by a total of up to €676,000,000 through the issue of new no par value registered
shares, carrying a dividend right from the beginning of the fiscal year in which they are issued, against contribu-
tions in cash or in kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval
of the Supervisory Board, to exclude the subscription rights of the shareholders in certain cases. In accordance
with German law, cash capital increases with subscription rights excluded pursuant to section 186, paragraph 3,
sentence 4, of the AktG, are not permitted to exceed 10 percent of a company's share capital - neither at the
time of the authorization becoming effective nor at the time of its exercise. For share capital increases against
contributions in kind or a combination of cash contributions and contributions in kind, the authorization further
provides an upper limit of 20 percent of the share capital, again measured either at the time the authorization
becomes effective or, if the value is lower, at the time of its exercise.
> Section 4, paragraph 7, of the Articles of Association provides that the Management Board is authorized, with the
approval of the Supervisory Board, to increase the share capital in the period up to 17 February 2021 - either once
or in partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against con-
tributions in cash for the purpose of increasing the issue to employees of the Company or its Group companies
(Authorized Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares.
The shares may be issued in such a manner that the contribution to be paid on such shares is covered by the
portion of the profit for the year that the Management Board and Supervisory Board could transfer to retained
earnings in accordance with section 58, paragraph 2, AktG.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
144
P see page 145 ff.
Conditional capital
As of 30 September 2018, the Company's Articles of Associations provide for two conditional capitals amounting to
up to €267,855,198:
> 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.
› 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 2018 and 2017 fiscal years are as follows:
€ in millions
2018
2017
Pretax
Tax
Net after tax
Pretax
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).
Tax
Additional paid-in capital
Ordinary share capital
Total
30 Septem-
30 Septem-
ber 2018
ber 2017
32
26
28
27
102
98
269
223
431
374
Defined contribution plans
In connection with defined contribution plans, fixed contributions are made to external insurance providers or
funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
fixed contributions paid. Additionally, the Group makes contributions to government pension schemes. Expenses
for defined contribution plans amounted to €183 million and €165 million in the fiscal years ended 30 Septem-
ber 2018 and 2017, respectively.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
143
P see page 146
15 Equity
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.
Net after tax
Foreign currency translation differences
27
2
25
(59)
(1)
(60)
The following table shows a reconciliation of accumulated deficit as of 30 September 2018 and 2017:
€ in millions
As of 1 October 2016
Net income attributable to shareholders of Infineon Technologies AG
Actuarial losses on pension plans and similar commitments net of tax of €5 million
As of 30 September 2017
Net income attributable to shareholders of Infineon Technologies AG
Actuarial gains on pension plans and similar commitments net of tax of €25 million
As of 30 September 2018
(2,312)
790
118
(1,404)
1,075
(4)
(333)
Dividends
For the 2017 fiscal year, a cash dividend of €0.25 per share (total amount: €283 million) was paid. For the 2016 fiscal
year, a cash dividend of €0.22 per share (total amount: €248 million) was paid.
Due to the results achieved in the reporting period as well as a positive business outlook, a dividend of €0.27 for
each share entitled to a dividend shall be proposed to be paid from the €491 million of distributable profits of
Infineon Technologies AG for the 2018 fiscal year, an increase of €0.02 compared to the previous year. This would
result in an expected distribution of approximately €305 million. The payment of this dividend depends on the
approval of the Annual General Meeting on 21 February 2019.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
23
1
1
Accumulated deficit
27
(66)
(66)
Deal Contingent Forward
6
6
Realized (gains) losses resulting
from hedge accounting
1
1
Unrealized gains (losses) resulting
5-10 years
from hedge accounting
2
(2)
(2)
(1)
(3)
Realized (gains) losses resulting
from securities
1
1
Unrealized gains (losses) resulting
from securities
Total
(4)
2-5 years
1-2 years
Less than 1 year
2
3
1
34
1
34
11
7
3
15
21
19
24
19
538
64
468
69
Government and corporate bonds are traded in liquid markets and the majority of them have an investment grade
rating. The geographical allocation of the equity component of plan assets is predominantly based on the MSCI
World Index. As a matter of policy Infineon's pension plans do not invest in shares or debt instruments of Infineon.
The position "Other" in the table above comprises exchange-traded commodities (ETC) and other investment funds.
The actual return on plan assets in the fiscal year ended 30 September 2018 was €7 million (30 September 2017:
€6 million).
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
142
7
150
169
160
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
Amounts recognized in profit or loss and in total comprehensive income
Reinsurance policies
Other
Total
30 September 2018
Quoted
in an active
market
Not quoted
in an active
market
30 September 2017
Not quoted
in an active
market
157
127
172
2
Property
Benefits paid by Infineon
The expenses and income of defined benefit plans for the years ended 30 September 2018 and 2017 comprise the
following:
2018
5
2
7
Amortization of unrecognized
past service (cost) benefit
Pension cost
(3)
(3)
1
1
(34)
(8)
(42)
(28)
(8)
(36)
Service costs are recorded within cost of goods sold to the extent that they relate to production employees, other-
wise they are recorded as research and development or selling, general and administrative expenses. Interest costs
and expected return on plan assets were recorded net as part of financial expense.
Actuarial losses of €28 million for the 2018 fiscal year and actuarial gains of €115 million for the previous fiscal
have been recognized outside profit and loss in other comprehensive income.
1 year
As of 30 September 2018 and 2017, cumulative actuarial losses amounted to €400 million and €368 million, respec-
tively. The 2018 fiscal year includes cumulative actuarial losses from deferred compensation plans of €7 Million. In
addition, cumulative actuarial losses amounting to €1 million resulting from health care plans, are also recognized
directly in other comprehensive income.
In the 2019 fiscal year, payments of €30 million are expected to be made to plan assets which relate to benefits paid
directly to pension recipients by the Group companies.
The weighted average duration of defined benefit plans is around 17 years as of 30 September 2018 and 2017,
respectively.
The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as of
30 September 2018 and 2017:
€ in millions
10
3
7
Expected return on plan assets
2017
Domestic
plans
Foreign
Total
Domestic
Foreign
Total
plans
plans
plans
Current service cost
€ in millions
(23)
(30)
(24)
(6)
(30)
Interest cost
(15)
(4)
(19)
(10)
(4)
(14)
(7)
136
949
128
332
284
(8,118)
(652)
192
2
29
(8,547)
2,659
2,119
(205)
(39)
12
(5)
(121)
(58)
(70)
(41)
(163)
(21)
10
(10)
(1)
128
(569)
120
5
30 Sep-
tember
2017
30 Sep-
tember
2016
(731)
(60)
15
(1)
2
4
(771)
730
364
(6,305)
(498)
113
1
20
(6,669)
1,477
1,343
(1,082)
(94)
64
(1,107)
(160)
12
(5)
Undiscounted future minimum lease payments to be received from operating lease arrangements for Infineon as
lessor are as follows:
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
1-5 years
5 years
and after
99
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-
Property, plant and equipment of €200 million (30 September 2017: €210 million) served mainly as collateral for the
existing financing arrangements of MoTo Objekt Campeon GmbH & Co. KG ("MoTo") as of 30 September 2018.
Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations, mainly
in cost of goods sold. Amortization of intangible assets is mainly presented in cost of goods sold or selling, general
and administrative expenses. Impairments on property, plant and equipment and intangible assets are reported
under other operating expenses.
136
Notes to the Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
759
799
(247)
396
312
(179)
213
275
2
(109)
Carrying amount
166
(174)
45
49
12
(11)
7
8
(720)
1,586
1,656
Consolidated Financial Statements
213
2017
30 Sep-
tember
Foreign
currency
effects
(6,669)
(540)
144
(6)
2
(7,069)
1,776
1,477
(1,107)
(102)
95
4
1
(1,109)
139
120
(8,547)
(702)
242
352
332
4
3
730
771
(822)
4
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Depreciation/amortization and impairment
1 October
2017
Depre-
ciation/
Disposals
Reclassi-
fication
Transfers
amor-
tization
Impair-
ments
(9,000)
Foreign
30 Sep-
tember
2018
135
Carrying amount
30 Sep-
tember
2018
30 Sep-
tember
2017
(771)
(60)
3
2
currency
effects
ber 2018
3,038
764
(247)
(50)
(179)
(49)
(109)
(39)
(174)
(20)
15
(11)
(1)
(720)
(159)
29
Depreciation/amortization and impairment
1 October
2016
8
Disposals
Reclassi-
fication
Transfers 2
Impair-
ments
amor-
tization
1,586
1,596
(866)
(5)
759
14
14
(11)
(1)
(3)
(1)
EWE!
(294)
475
396
2,659
(229)
213
(151)
137
166
(180)
47
45
(12)
6
7
(11)
167
30 Septem-
ber 2017
Depre-
ciation/
24
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
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.
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.
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 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
590
422
67
thereof long-term
thereof short-term
Warranties
53
14
(9)
(16)
42
Psee page 148 ff.
Provisions related to Qimonda (see note 19)
Other
33
159
(6)
Change in defined benefit obligations taking
(1)
49
13
(26)
(1)
35
Total provisions
489
489
(316)
(26)
636
185
374
2018
Domestic
(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)
25
(15)
Interest cost
1
1
Total
Domestic
plans
plans
plans
Foreign
plans
Total
into account future salary increases:
Present value at beginning of year
(876)
(164)
2017
(1,040)
(172)
Current service cost
(23)
(7)
(30)
(24)
(6)
(1,136)
(30)
Past service income (cost)
(3)
(3)
(964)
(8)
Foreign
303
Available
Aggregate
facility
Drawn
Available
Short-term
97
25
72
95
23
72
Long-term
204
204
225
225
Total
301
229
72
320
248
72
Drawn
Aggregate
facility
30 September 2017
30 September 2018
299
(275)
25
323
Loans payable to banks:
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
19
27
185
198
497
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
496
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
USPP notes US$935 million, weighted average interest rate 4.09%, due 2024 - 2028
Long-term debt
Consolidated Financial Statements
Term
Amounts of debt and interest maturing in the coming years are as follows:
40
176
41
810
126
1,297
178
1,533
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
Notes to the Consolidated Financial Statements
Obligations to employees
354
503
44
297
30 September 2018
Less than 1 year
21
1-2 years
2-3 years
3-4 years
5 years and after
Total
137
€ in millions
30 September 2017
Debt
Interest
Debt
23
46
322
48
21
44
20
44
176
41
Interest
financial
Other
through
At fair value
profit or loss
123
(amortized
cost)
Designated
hedging
instruments
(cash flow
hedges)
153
liabilities
Carrying
amount
1
Categories of
Current liabilities:
Balance as of 30 September 2018
Financial liabilities
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
40
562
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
3,567
3,001
Fair value
163
financial liabilities
Short-term debt and current
39
25
2
3
2,899
2,894
39
39
1,519
1,507
1,507
Current liabilities:
Balance as of 30 September 2017
Total
maturities of long-term debt
Other non-current liabilities
Non-current liabilities:
147
3
142
2
147
Other current liabilities
24
1,181
1,181
1,181
Trade payables
25
Long-term debt
3,567
Cash and cash equivalents
163
971
1,811
1,248
563
732
732
3
113
971
1,811
732
hedges
971
Fair value
Loans and
receivables
Available
for sale
At fair value
through
profit or loss
Carrying
amount
Categories of financial assets
Current assets:
Balance as of 30 September 2017
Total
Other non-current assets
Other current assets
3
Non-current assets:
Designated
cash flow
110
113
104
Other non-current assets
Non-current assets:
101
1
97
851
851
1,592
1,070
522
860
860
3
101
851
860
1,592
Other current assets
Trade receivables
Financial investments
3,731
3,125
603
3
3,731
104
64
40
Total
2,910
2017
maturities of long-term debt
21
19
40
4
4
56
466
522
Total
Other current liabilities
Current liabilities:
Total
566
Other non-current assets
Other current assets
Financial investments
Current assets:
30 September 2017
5
5
5
5
Total
Other current liabilities
Current liabilities:
22
Non-current assets:
3
485
21
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.
Trade receivables
(37)
(51)
63
(99)
(2)
(5)
(2)
(96)
59
(6)
60
2018
Other financial liabilities
Held for trading
Designated as fair value through profit and loss
Loan and receivables
Available-for-sale financial assets
€ in millions
The net gain or loss on financial instruments (including interest income and expense) within continuing operations
in the Consolidated Statement of Operations amounted to the following:
Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
market price is available, the fair value is determined by considering existing contractual arrangements based on
externally observable dividend policy (Level 3).
Other current assets and liabilities contain derivative financial instruments, including cash flow hedges. Their fair
value is determined by discounting future cash flows according to the discounted cash flow method. Where possible,
valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
prices) drawn from reliable external sources are used (Level 2).
2
2
2
2
Total
581
606
Total
Psee page 148 ff.
3,089
3,029
2
3,031
40
40
1,566
1,511
1,511
40
Total
Other non-current liabilities
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)".
Long-term debt
137
135
2
137
Other current liabilities
1,020
1,020
1,020
Trade payables
326
323
323
Non-current liabilities:
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).
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.
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:
22
18
40
Other non-current assets
Non-current assets:
3
3
563
563
Other current assets
Financial investments
Level 3
Level 2
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:
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
> Level 3: valuation parameters for assets and liabilities, which are not based on observable market data.
> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
either directly or indirectly for the assets or liabilities,
> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
Short-term debt and current
Financial investments
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.
Current assets:
Payments due in (€ in millions)
Undiscounted future minimum lease payments arising from operating lease arrangements to be made by Infineon
as lessee are the following:
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.
18 Other financial commitments
The costs for share-based compensation amounted to €13 million in each of the 2018 and 2017 fiscal years.
Costs for share-based compensation
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.
147
Restricted Stock Unit Plan
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
As of 30 September 2018
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.
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.
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.
5.31
100,702
8.49
30 September 2018
Fiscal year 2015: Management Board
5.44
956,206
8.49
30 September 2018
7.07
Stock Option Plan 2010
80,964
As of 30 September 2017
Less than
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 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.
Smartcard antitrust litigation
Litigation and government inquiries
19 Legal risks
148
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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, 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 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.
Total
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).
72
140
96
308
60
136
105
301
and after
1 year
5 years
1-5 years
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.
10.56
30 September 2019
Fiscal year 2016: Management Board
Fiscal year 2015: Employees
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.
The following is an overview of the allocations made:
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).
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.
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.
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'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.
16 Capital management
145
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
P see page 136
P see page 144
P see page 71
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).
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).
Tranche
End of the
waiting period
Average share price
of the nine months
before grant in €
7.26
1,112,568
10.56
30 September 2019
Fiscal year 2016: Employees
11.25
80,704
13.01
30 September 2020
Fiscal year 2017: Management Board
11.86
912,958
13.01
30 September 2020
Fiscal year 2017: Employees
15.25
54,464
21.48
28 Februar 2022
Fiscal year 2018: Management Board
15.76
in €
Fair value per
performance share
Number of performance
shares outstanding as of
30 September 2018
689,226
21.48
28 Februar 2022
Fiscal year 2018: Employees
Any further statements about these matters by the Company could seriously compromise the Company's position
in these proceedings.
Proceedings in relation to Qimonda
All significant assets, liabilities and business activities attributable to the memory business (Memory Products)
were carved out from Infineon and transferred to Qimonda in the form of a contribution in kind with economic
effect from 1 May 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings
on 23 January 2009. On 1 April 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
given rise to various disputes between the insolvency administrator and Infineon.
Alleged activation of a shell company and liability for impairment of capital
The 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
152
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
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.
€ in millions
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).
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
Other related
companies
Related persons
The 2018 fiscal year
Non-cash effective changes
Starting
balance
Balance as of 30 September 2018
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.
22 Additional disclosures on financial instruments
1,533
2
16
1
(321)
1,835
1
1,532
2
16
1
(321)
1,834
1
Related party financial payables
Total
Short-term debt
changes
balance
Ending
Other
changes
Currency
effects
effective
Cash- Aquisitions
Joint
ventures
Cash and cash equivalents
2017
Products and services received
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.
Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that a
liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
then they qualify as contingent liabilities.
Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
and results of operations. However, future revisions to this assessment cannot be ruled out and any reassessment
of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condi-
tion, liquidity position and results of operations, particularly in the period in which reassessment is made.
Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
of law committed by individual employees or third parties.
Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
business activities. These can relate to products, services, patents, environmental issues and other matters.
Other
150
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
do so, and accordingly represent contingent liabilities that are not included in provisions. Should the alleged claims
relating to the activation of a shell company and liability for impairment of capital prove to be valid, substantial
financial obligations above the provisions already recorded could arise for Infineon, which could have a material
adverse effect on its business and its financial condition, liquidity position and results of operations.
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.
P see page 164 ff.
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 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.
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.
Liabilities, provisions and contingent liabilities relating to Qimonda
20 Transactions with related companies and persons
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").
Related companies
Sales and service charges
€ in millions
Sales and service charges to and products and services received from related companies in the 2018 and 2017 fiscal
years consist of the following:
1
1
10
1
1
10
1
1
18
7
Joint Other related
ventures companies
Joint Other related
ventures companies
30 September 2017
30 September 2018
151
Financial payables
Trade and other payables
Financial receivables
Trade and other receivables
€ 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.
2018
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
€ in millions
€ in millions
174
173
46
47
3
1
112
758
103
129
861
812
30 Septem-
ber 2018
30 Septem-
683
ber 2017
128
407
Depreciation and amortization not allocated to the segments
Total depreciation and amortization
€ in millions
Inventories:
Automotive
Industrial Power Control
Power Management & Multimarket
350
Digital Security Solutions
Corporate and Eliminations
Total
Entity-wide disclosures in accordance with IFRS 8
162
2018
2017
Other Operating Segments
454
397
159
therein: USA
Total
2018
2017
2,443
2,272
Americas
1,171
1,129
1,071
2,599
2,376
1,921
1,735
1,094
Japan
therein: China
Greater China
129
302
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)
Depreciation and amortization allocated to the segments
534
Other Operating Segments
Power Management & Multimarket
1,208
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
1,353
Plus/minus:
Impairments on assets (excluding capitalized development costs) including assets classified
as held for sale, net of reversals¹
(7)
Impact on earnings of restructuring and closures, net
53
(5)
1,208
(3)
(1)
1
Other Operating Segments
Corporate and Eliminations
Total
2018
2017
466
(2)
474
183
532
427
105
124
(4)
256
Share-based compensation expense
(13)
(13)
(5)
3
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.
(63)
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.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
€ in millions
Depreciation and amortization:
Automotive
Industrial Power Control
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
(68)
Gain (loss) from investments accounted for using the equity method, net
Income from continuing operations before income taxes
Financial expenses
Acquisition-related depreciation/amortization and other expenses
(118)
(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
Digital Security Solutions
463
894
881
> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
> Infineon Technologies China Co., Ltd., Shanghai,
People's Republic of China
Member of the Board of Directors
> Infineon Technologies Americas Corp., Wilmington,
Delaware, USA (Chairman)
> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
(Chairman)
Delaware, USA
> 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) (until 1 November 2017)
164
The Supervisory Board
> Infineon Technologies China Co., Ltd., Shanghai,
People's Republic of China (since 1 July 2018)
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:
> Infineon Technologies Americas Corp., Wilmington,
> Zalando SE, Berlin, Germany
Chief Financial Officer
Dr. Helmut Gassel
Chief Marketing Officer
Jochen Hanebeck
Chief Operations Officer
Membership of Supervisory Boards
Member of the Board of Directors
and governing bodies of domestic and
Member of the Supervisory Board
> Infineon Technologies Austria AG, Villach, Austria
(Chairman)
Member of the Board of Directors
> Infineon Technologies Americas Corp., Wilmington,
Delaware, USA (since 5 October 2017)
Member of the Supervisory Board
> Infineon Technologies Austria AG, Villach, Austria
foreign companies (as of 30 September 2018)
Name
Dr. Eckart Sünner
Chairman
Johann Dechant¹
Deputy Chairman
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
> Audi AG, Ingolstadt, Deutschland (since 7 May 2018)
(Chairman)
> SEAT S.A., Martorell, Spain (since 12 April 2018)
(Chairman)
> Skoda Auto a.s., Mladá Boleslav, Czech Republic
(since 14 May 2018) (Chairman)
> Porsche Austria GmbH, Salzburg, Austria
Wolfsburg, Germany
> Porsche Holding GmbH, Salzburg, Austria
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 Retail GmbH, Salzburg, Austria
Chairman of the Management Board, Member of the Supervisory Board
Volkswagen AG,
> Bragi GmbH, Munich, Germany
> OSRAM GmbH, Munich, Germany (Chairman)
Peter Bauer
Dr. Herbert Diess
Occupation
Membership of Supervisory Boards
and comparable governing bodies of domestic
and foreign companies (as of 30 September 2018)
Chairman of the Supervisory Board, Member of the Supervisory Board
Infineon Technologies AG
(since 22 February 2018);
Independent Attorney
Vice-Chairman of the Joint Works
Council and Chairman of the Works
Council Regensburg,
Infineon Technologies AG
Independent
Management Consultant
> K+S AG, Kassel, Germany (until 15 May 2018)
Member of the Administrative Board
> SBK Siemens-Betriebskrankenkasse,
Heidenheim/Brenz, Germany
Member of the Supervisory Board
> OSRAM Licht AG, Munich, Germany (Chairman)
Dominik Asam
Chief Executive Officer,
Labor Director
Dr. Reinhard Ploss
Position
Total
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
2,516
2,306
2,020
1,727
therein: USA
969
42
41
41
41
2
2
832
Americas
Japan
therein: China
719
714
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.
30 Septem-
ber 2018
30 Septem-
ber 2017
Non-current assets:
Europe
therein: Germany
Asia-Pacific (excluding Japan, Greater China)
Greater China
1,175
Digital Security Solutions
1,118
1,110
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 tax advisory services
In addition to the amounts described above, KPMG charged €0.1 million in the 2018 fiscal year for tax consulting
services in connection with the assessment of individual items.
Fees for other services
Fees of €0.2 million were charged by KPMG to the Company in the 2018 fiscal year for other services. These included
quality assurance during the implementation of regulatory requirements and IT system changes as well as services
for the evaluation of IT security management and business continuity management systems.
Management Board and Supervisory Board
Fees for other advisory services
Management compensation in the 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Management Board
The members of the Management Board during the 2018 fiscal year were as follows:
Name
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.
At the Annual General Meeting held on 22 February 2018, the shareholders elected KPMG AG Wirtschaftsprüfungs-
gesellschaft ("KPMG"), Munich, as auditor for the 2018 Separate Financial Statements and the Consolidated
Financial Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2018 fiscal year amounted
to €1.9 million for the audit of the Consolidated Financial Statements and various Separate Financial Statements
including an integrated audit review of the Interim Financial Statements.
Year-end audit fees
Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
4,704
4,299
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
163
25 Significant events after the end of the reporting period
Acquisition of 100 percent of the shares in Siltectra GmbH
In November 2018, Infineon acquired all of the shares in Siltectra GmbH (Siltectra), which is based in Dresden
(Germany). The preliminary purchase price is €124 million.
Siltectra has developed a technology, that allows to cut the silicon carbide (SiC) crystal very precisely and efficiently,
nearly without any losses especially compared to sawing. This technology can be used in two ways. One is cutting
the boule into wafers yielding significantly more wafers than the conventional approach. The other use case is to
lift off a very thin layer from the top of a wafer and to use the remaining wafer once more. This 2-out-of-1 concept is
very important as the SiC wafer supply will be a limiting factor even longer-term, especially when SiC will ramp in a
larger scale in electro-mobility. Infineon will translate the technology into volume production within the next years.
Due to the proximity of the acquisition date to the date of the release of the Consolidated Financial Statements,
additional disclosures as required by IFRS 3 cannot be made.
P see page 95 ff.
26 Additional information in accordance with HGB
Information pursuant to section 161 Stock Corporation Act (AktG)
The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and the
Supervisory Board and made permanently available to the public on Infineon's website.
@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
1,167
> Porsche Holding GmbH, Salzburg, Austria
Power Management & Multimarket
Automotive
5
(5)
4
(10%)
+10%
(10%)
(1)
+10%
Profit or Loss
Other
Euro/US Dollar
30 September 2017
Other
Euro/US Dollar
Equity
30 September 2018
561
21
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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 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.
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
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.
(6)
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 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 accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the fair
value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
Interest rate risk
(26)
1
21
(25)
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.
€ in millions
The following table shows the effects on profit or loss for the 2018 and 2017 fiscal year and equity as of 30 Septem-
ber 2018 and 2017 for continuing operations of a 10 percent shift in exchange rates. The assumed exchange rate
changes relate only to financial instruments within the meaning of IFRS 7.
157
Other
US$
Currency
Forward exchange contracts
Net statement of financial position exposure
As of 30 September 2018
(17)
€ in millions
For the net result related to foreign currency derivatives and foreign currency transactions included within net
income see note 22.
The Management Board has established policies that require Infineon's individual legal entities to manage the
foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
received or placed and all other planned cash receipts and payments.
Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
revenue as well as cost of goods sold, research and development and product distribution costs are denominated
in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
compared to the euro had an effect on the results of Infineon in the 2018 and 2017 fiscal years.
Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes to foreign exchange rates.
Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated in
a foreign currency that does not correspond to the functional currency, and the foreign currency represents the
relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not risks within the
meaning of IFRS 7.
Foreign exchange risk
Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
trading or speculative purposes.
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.
(119)
(36)
129
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Net exposure
(229)
101
(269)
Forward exchange contracts
Net statement of financial position exposure
(101)
40
As of 30 September 2017
Net exposure
10
(53)
Consolidated Financial Statements
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.
Notes to the Consolidated Financial Statements
Credit risk
2019
2018
Total
As of 30 September 2017
924
35
2020
544
72
1,408
3,202
Total
(134)
(134)
219
Cash inflow¹
2021
Beyond 2022
208
208
Cash outflow
financial liabilities:
Derivative
936
2022
539
69
68
1,532
3,390
financial liabilities
Non-derivative
246
136
136
Cash outflow
159
Due in the fiscal year
€ in millions
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
As of 30 September 2018
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.
Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
with financial liabilities.
Financing and liquidity 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).
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.
Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
default of one of its contract parties.
Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, 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.
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.
Total
2019
2020
financial liabilities:
Derivative
924
35
544
219
72
1,406
3,200
financial liabilities
Non-derivative
Beyond 2023
2023
2022
2021
158
Market risk
P see page 154
156
2,989
2,111
1,847
599
595
574
3,284
547
1,323
1,206
1,323
1,206
Power Management &
Multimarket
Industrial Power Control
2,318
Automotive
2017
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
Revenue:
Embedded control
2017
2018
2017
2018
2017
2018
RF & Sensors
2,148
1,758
1,554
9
Corporate and
Eliminations
3
Total
7,599
10
7,063
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
161
There are currently limited levels of trading relationships between the operating segments. Costs are recharged in
general without impact on profit or loss.
€ in millions
Segment Result:
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Segments
Other Operating
1,141
560
594
Digital Security Solutions
664
708
664
708
Subtotal
7,589
7,051
5,192
4,607
1,263
1,303
1,134
Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
performance assessed on this basis.
Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals) excluding
capitalized development costs; impact on earnings of restructuring measures and closures; share-based com-
pensation expense; acquisition related depreciation/amortization and other expenses; gains (losses) on sales of
assets, businesses, or interests in subsidiaries and other income (expense), including the costs of legal proceedings.
Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
level. For this reason, financial income and financial expense (including interest income and expense) are not
allocated to the segments.
Based on revenue and Segment Result, the Management Board assesses performance and defines operating
targets and budgets for the segments.
The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to the
segments.
Fair
value
Nominal
value
Fair
value
Nominal
value
30 September 2017
30 September 2018
129
Total
Designated cash flow hedges
Forward exchange contracts purchased
Forward exchange contracts sold
€ in millions
The nominal values and fair values of Infineon's derivative instruments as of 30 September 2018 and 2017 are as
follows:
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.
Commodity swaps
281
239
1
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest
rate risk and price risk), credit risk, financing and liquidity risk. Infineon's financial risk management program seeks
to minimize potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments
to hedge certain risks to which it is exposed. Financial risk management is carried out by the central Finance &
Treasury (FT) department in accordance with policies approved by the Chief Financial Officer. The FT department
identifies, evaluates and hedges financial risks in close cooperation with the operating units. The FT department's
policy contains principles for overall risk management as well as policies covering specific areas such as foreign
exchange risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the
investment of excess liquidity.
23 Financial risk management
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.
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.
2
(2)
1
33
(3)
33
1
126
Derivative financial instruments and hedging activities
Industrial Power Control
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.
Notes to the Consolidated Financial Statements
The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
for energy-efficient power supplies, mobile devices, mobile phone network infrastructures, human-machine
interaction as well as applications with special demands on their robustness and reliability.
Digital Security Solutions
Effective 1 October 2018, the "Chip Card & Security" segment changed its name to "Digital Security Solutions".
The change in name has no impact on the organizational structure, strategy or scope of business. The Digital
Security Solutions segment designs, develops, manufactures and markets semiconductor-based security products
for card-based applications, government documents, and security functions in networked devices.
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 2018
Power Management & Multimarket
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.
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
Notes to the Consolidated Financial Statements
The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for
the conversion of electrical energy for small, medium and high-power applications. The products are used in
applications for generation, low loss transmission and efficient use of electrical energy.
Industrial Power Control
The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
applications.
Consolidated Financial Statements
(206)
3,392
(206)
1,534
68
69
246
539
936
1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
24 Segment reporting
Identification of segments
Infineon identifies reportable segments on the basis of the differences between the products and applications.
During the 2018 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
Automotive, Industrial Power Control, Power Management & Multimarket and Digital Security Solutions. Additionally,
Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
Automotive
155
Cash inflow¹
Total
0
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).
Nomination Committee
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Notes to the Consolidated Financial Statements
Subsidiaries, joint ventures and other related companies as of 30 September 2018
Name of company
Registered office
167
Share-
holdings
Consolidated Financial Statements
Jürgen Scholz
Dr. Susanne Lachenmann
Hans-Ulrich Holdenried
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
Peter Gruber
thereof
Equity
Net result
Foot-
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
100
0
16.29
2.00
11
Wuxi, People's Republic of China
11
100
2.16
Membership of Supervisory Boards
100
Karlsruhe, Germany
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
3.66
3.61
100
Jürgen Scholz
Hans-Ulrich Holdenried
Johann Dechant
> 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
> BMW AG, Munich, Germany
(since 22 January 2018)
Member of the Supervisory Board
Member of the Advisory 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)
> Bridge imp GmbH, Grünwald, Germany
0
> Lafarge Maroc SA, Casablanca, Morocco
> LafargeHolcim Maroc SAS, Casablanca, Morocco
> 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)
1 Employee representative
Occupation
Deputy Chairwoman of the Infineon
Works Council, Warstein,
Infineon Technologies AG
Management Consultant
Supervisory Board committees
Mediation Committee
Dr. Eckart Sünner (Chairman)
Member of the Administrative Board
(since 2 July 2018)
> Krones AG, Neutraubling, Germany
> Athene Holding Ltd., Pembroke, Bermuda
(since 2 July 2018)
> LafargeHolcim Maroc Afrique SAS, Casablanca, Morocco
(since 2 July 2018)
> Huaxin Cement Co., Ltd., Wuhan, People's Republic of China
(since 25 April 2018)
Member of the Supervisory Board
> 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
Member of the Supervisory Board
38.85
0.31
7
8
Neubiberg, Germany
100
0
0.02
0.00
Wilmington, Delaware, USA
100
0
(3.45)
7
4.44
Neubiberg, Germany
100
50
0.00
369.89
224.27
100
0.22
Shanghai, People's Republic of China
100
0
163.42
15.42
11
Herlev, Denmark
100
0
5.82
(1.83)
11
7,17
Dresden, Germany
100
3.14
0.00
St. Denis, France
0
23.88
0.23
Hong Kong, People's Republic
7
of China
100
0
1.86
0.50
Bangalore, India
4
100
0
10.60
100
7,13,14
7
177.60
100
0
8.82
0.56
7
Singapore, Singapore
100
0
1,447.20
71.96
Rotterdam, The Netherlands
7
100
100
4,700.82
Hong Kong, People's Republic
of China
Member of the Supervisory Board
0
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
0.36
Wilmington, Delaware, USA
11
7
Wuxi, People's Republic of China
14.80
Melaka, Malaysia
100
0
36.31
3.07
Kulim, Malaysia
100
0
205.89
0.89
7
Melaka, Malaysia
100
0
210.19
Infineon Technologies (Wuxi) Co., Ltd.
100
100
2,504.91
100
0
11.75
1.32
7
7
100
0
16.36
1.32
Infineon Technologies Center of Competence
(Shanghai) Co., Ltd.
Infineon Technologies China Co., Ltd.
Batam, Indonesia
Cegléd, Hungary
Shanghai, People's Republic of China
Infineon Technologies Cegléd Kft.
0
Infineon Technologies Batam PT
917.94
74.81
7
Singapore, Singapore
100
0
293.84
76.54
7
100
0
1.45
0.14
7
100
0.004
143.20
72
and foreign companies (as of 30 September 2018)
Membership of Supervisory Boards
Herlev, Denmark
0.14
6.79
0
100
9
100
Nijmegen, The Netherlands
0.00
125.22
100
100
Neubiberg, Germany
n.a.
7,13,15
0
1.87
0.16
100
7
Curepipe, Mauritius
0.09
7.27
0
100
Tokyo, Japan
7
43.02
99.58
0
100
7
Wilmington, Delaware, USA
n.a.
0
100
Wilmington, Delaware, USA
thereof
Share-
Registered office
168
MoTo Objekt Campeon GmbH & Co. KG
Rectificadores Internacionales, S.A. de C.V.
Shanghai International Rectifier Trading Ltd.
Molstanda Vermietungsgesellschaft mbH
International Rectifier Mauritius, Inc. (in liquidation)
International Rectifier HiRel Denmark ApS
International Rectifier HiRel Products, Inc.
International Rectifier Japan Co., Ltd.
Innoluce B.V.
Infineon Technologies US InterCo LLC
Infineon Technologies US Investment LLC
Infineon Technologies
Vermögensverwaltungsgesellschaft mbH
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Name of company
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
7
Equity
0
Net result
holdings
12
74.25
1,546.38
0
100
7
Wilmington, Delaware, USA
(€ in
millions)
millions)
logies AG
in %
(€ in
Techno-
note
Infineon
Foot-
1.85
0.00
Neubiberg, Germany
EPOS embedded core & power systems Verwaltungs GmbH
Futurium gGmbH
EPOS embedded core & power systems GmbH & Co. KG
DICE Danube Integrated Circuit Engineering GmbH
n.a.
n.a.
n.a.
n.a.
3
0.00
0.00
0
100
Computertechnik TTX Auto Technologies AG
CHIL Semiconductors Corporation
Other companies (not consolidated):1
Linz, Austria
n.a.
n.a.
Berlin, Germany
0.11
0.00
7
Duisburg, Germany
100
100
0.55
0.19
7
Duisburg, Germany
100
100
0.06
0.00
3
n.a.
69.11
n.a.
49
0
100
7
Tijuana, Mexico
9,18
17.81
76.51
0
93
Neubiberg, Germany
7,13,14
0.00
133.40
6
100
10.48
25
0.96
11
SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd. Shanghai, People's Republic of China
12
1.79
54.05
60
60
Warstein, Germany
Infineon Technologies Bipolar GmbH & Co. KG
7
Joint ventures:
Wilmington, Delaware, USA
Vienna, Austria
(0.48)
2.69
0
100
Shanghai, People's Republic of China
2,192.26
0
100
0
100
Tokyo, Japan
7
4.88
7.51
0
100
7
Klagenfurt, Austria
0.77
2.11
0
100
Milan, Italy
20.98
7
4.60
Seoul, Republic of Korea
(0.25)
14.05
0
100
Neu-Isenburg, Germany
3.00
23.29
0
100
7
Rotterdam, The Netherlands
1.26
4.64
0
100
7
5
0.12
100
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
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
Dr. Susanne Lachenmann'
Géraldine Picaud
0.39
Prof. Dr. Renate Köcher
Gerhard Hobbach 1
100
Dublin, Ireland
0.00
0.12
0
100
7
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
165
Name
Dr. Wolfgang Eder
(since 22 February 2018)
Annette Engelfried1
Peter Gruber¹
Representative of
Senior Management
Hans-Ulrich Holdenried
and comparable governing bodies of domestic
Bristol, Great Britain
0
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
Infineon Technologies Neu-Isenburg Vertriebs GmbH
7
Infineon Technologies Japan K.K.
Infineon Technologies Korea Co., Ltd.
Infineon Technologies Maasstad C.V.
100
2.39
Wilmington, Delaware, USA
0.41
1.55
0
0.00
100
Bristol, Great Britain
7
1.40
4.59
0
100
7
Taipei, Taiwan
0.43
100
100
Infineon Technologies India Private Limited
Infineon Technologies Investment B.V.
Infineon Technologies Ireland Limited
Infineon Technologies Italia s.r.l.
Infineon Technologies IT-Services GmbH
Infineon Technologies Hong Kong Sales Limited
Cheonan, Republic of Korea
0.10
0.00
0
100
Muntinlupa City, Philippines
7
0.31
5.16
0
100
Kista, Sweden
7
0.00
34.75
100
Infineon Technologies Hong Kong Ltd.
100
39.86
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
Bucharest, Romania
7
25.85
181.58
0
100
Bristol, Great Britain
7
85.43
7
0.00
1.43
0.00
0.03
60
60
60
Warstein, Germany
Infineon Technologies Bipolar Verwaltungs GmbH
0.41
Madrid, Spain
0
100
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.
Our observations
The purchase price paid was reconciled with the contract and evidence of payments that were presented to us.
Furthermore, we reviewed all relevant agreements associated with this transaction in respect of their accounting
effects. We verified the proper and full derecognition of the net assets transferred to the purchaser and reconciled
this with the contract. We audited the methodology and valuation underlying the assumptions regarding the
determination of proportional outgoing goodwill. Furthermore, we also evaluated whether the relevant supply
agreements were concluded at arm's length. We verified the determination of deferred income for future supplies
from Infineon to the purchaser.
There is the risk for the Consolidated Financial Statements that the gain on disposal was not properly determined.
Our audit approach
Both the determination of the outgoing goodwill and the determination of the amount of deferred income require
judgment.
The net assets that were transferred had a book value of €53 million. This includes the proportional outgoing good-
will of €28 million, which was allocated to the segment "Power Management & Multimarket". In connection with a
long-term supply agreement concluded with the purchaser €22 million was treated as deferred income. These will
be recognized as revenue over the contractual period.
7
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.
Infineon Technologies Campeon Verwaltungsgesellschaft mbH Neubiberg, Germany
0
Infineon Technologies Schweiz GmbH in liquidation
Infineon Technologies RUS LLC
Infineon Technologies Romania s.r.l.
Infineon Technologies Mantel 29 GmbH
Infineon Technologies Polska Sp. z o.o.
Infineon Technologies Iberia, S.L.U.
Infineon Technologies Holding GmbH
Infineon Technologies Mantel 26 AG
Infineon Technologies Mantel 27 GmbH
Infineon Technologies Gamma GmbH
0.00
7
0.02
100
100
Neubiberg, Germany
Infineon Technologies Delta GmbH
7
0.00
0.00
0
100
7
St. John, New Brunswick, Canada
Infineon Technologies Canada, Inc.
0.02
0.04
100
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
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
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Jochen Hanebeck
Rotterdam, The Netherlands
Dr. Helmut Gassel
Dominik Asam
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
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Further Information
Independent Auditor's Report
Independent Auditor's Report
Further Information
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Please refer to the notes to the Consolidated Financial Statements for more information on the accounting policies
applied. Disclosures on the sale of the majority of the Radio Frequency Power Business can be found in the notes to
the Consolidated Financial Statements in the section "Sales of company shares, discontinued operations and
assets held for sale".
of the Radio Frequency Power Business
Accuracy of the determination of the gain on disposal from the sale of the majority
The Management Board's assumptions are reasonable and balanced overall. The disclosures on contingent liabilities
and other disclosures in the notes are complete and adequate.
Our observations
notes.
Finally, we ascertained the completeness of disclosures on contingent liabilities as well as other disclosures in the
Furthermore, we consulted the valuation expert commissioned by the Company regarding the opinions drawn up
in connection with the Company's defence against the claims asserted by the insolvency administrator and
assessed the method applied with the assistance of a valuation expert.
Infineon Technologies South America Ltda
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
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.
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.
Risks associated with the insolvency of Qimonda AG
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the Consolidated Financial Statements for the financial year from 1 October 2017 to 30 September 2018. These
matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in
forming our opinion thereon, we do not provide a separate opinion on these matters.
Key Audit Matters in the Audit of the Consolidated Financial Statements
173
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.
IR International Holdings China, Inc.
IR International Holdings, Inc.
KAI Kompetenzzentrum Automobil- und
Industrieelektronik GmbH
100
0
0.07
(0.03)
9
Bucharest, Romania
11
100
0
0.04
0.01
Moscow, Russian Federation
100
Baden, Switzerland
100
São Paulo, Brazil
100
Wilmington, Delaware, USA
100
Wilmington, Delaware, USA
100
OOOOO
11
Warsaw, Poland
0.00
0.03
100
100
0
0.15
0.04
Neubiberg, Germany
100
100
0.03
0.00
8,13,14
Neubiberg, Germany
0
100
0.04
0.00
Neubiberg, Germany
100
100
0.03
0.00
7,13,14
8,13,14
Neubiberg, Germany
100
100
Responsibility Statement by the
Management Board
0.15
6
of China
100
Singapore, Singapore
Wilmington, Delaware, USA
100
100
Dover, Delaware, USA
n.a.
oooo
10
0
0.00
0.02
100
100
Neubiberg, Germany
7
OSPT IP Pool GmbH
MicroLinks Technology Corp.
Metawave Corporation
Merus Audio, Inc. (in liquidation)
Merus Audio Singapore Pty. Ltd. (in liquidation)
Merus Audio (Hong Kong) Ltd. (in liquidation)
KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
Hong Kong, People's Republic
0.15
1.94
24
0
0.15
0.01
11
0
0.10
0.00
0
0.00
0.00
7
0.05
7
0.00
0.00
11
Villach, Austria
100
0
0.09
0.00
11
Lippstadt, Germany
24
0
Further Information
1.83
Further Information
Qimonda AG in insolvency
Qimonda (Malaysia) Sdn. Bhd. in liquidation
Itarion Solar Lda.
Celis Semiconductor Corp.
Qimonda AG and its subsidiaries:²
n.a.
n.a.
0
n.a.
16
Bristol, Great Britain
5.11
56.37
9
9
Schramberg, Germany
11
n.a.
n.a.
0
n.a.
Villach, Austria
3
Qimonda Asia Pacific Pte. Ltd.
Qimonda Belgium BVBA in insolvency
Qimonda Beteiligungs GmbH in insolvency
Qimonda Bratislava s.r.o. in liquidation
77
Leuven, Belgium
2
77
Singapore, Singapore
2
28
77
Munich, Germany
2
77
0.00
Melaka, Malaysia
40
Vila do Conde, Portugal
2
17
Colorado Springs, Colorado, USA
Coventry, Great Britain
Hitex (UK) Limited
n.a.
n.a.
2
Qimonda Dresden GmbH & Co. OHG in insolvency
2
2
0.00
100
0.00
0.02
100
100
7
n.a.
n.a.
0
n.a.
3
Kaohsiung, Taiwan
Neubiberg, Germany
n.a.
n.a.
0
3
0.00
0.00
0
10
0.01
0.01
0
9
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Name of company
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
7
Wilmington, Delaware, USA
millions)
millions)
logies AG
in %
(€ in
(€ in
Techno-
note
Infineon
0
holdings
Responsibility Statement by the Management Board
Net result
Equity
thereof
Share-
Registered office
169
XMOS Limited
Schweizer Electronic AG
Silicon Alps Cluster GmbH
R Labco, Inc.
Foot-
Munich, Germany
7
2
Neubiberg, 20 November 2018
Infineon Technologies AG
Management Board
170
Dr. Reinhard Ploss
Dominik Asam
Dr. Helmut Gassel
Jochen Hanebeck
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Wilmington, Delaware, USA
2
77
2
Suzhou, People's Republic of China
77
Fort Lauderdale, Florida, USA
2
77
Seoul, Republic of Korea
2
77
Padua, Italy
77
Consolidated Financial Statements
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
18 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
17 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and notes and from the obligations to disclose the annual
financial statements.
77
77
2
Wilmington, Delaware, USA
77
2
77
77
2
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.
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.
2
3 Share of not more than 5 percent.
5 Equity and net result as of 30 June 2017.
6 Equity and net result as of 4 July 2017 (period from 1 October 2016 until 4 July 2017).
7 Equity and net result as of 30 September 2017.
8 Equity and net result as of 30 September 2017 (period from 24 November 2016 until 30 September 2017).
9 Equity and net result as of 30 September 2017 (period from 1 January 2017 until 30 September 2017).
10 Equity and net result as of 30 September 2017 (period from 2 June 2017 until 30 September 2017).
11 Equity and net result as of 31 December 2017.
12 The entity was founded in the 2018 fiscal year.
13 Control and profit transfer agreement.
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.
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.
4 Equity and net result as of 31 March 2017.
Suzhou, People's Republic of China
Notes to the Consolidated Financial Statements
Rotterdam, The Netherlands
77
Dresden, Germany
2
77
Dresden, Germany
77
Wilmington, Delaware, USA
2
77
Munich, Germany
Qimonda Flash GmbH in insolvency
2
Qimonda Flash Geschäftsführungs GmbH in liquidation
Qimonda Europe GmbH in liquidation
2
77
Dresden, Germany
2
Qimonda Dresden Verwaltungsgesellschaft mbH
in insolvency
77
Dresden, Germany
2
77
Bratislava, Slovakia
Qimonda Finance LLC in insolvency
Qimonda France SAS in liquidation
77
77
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
St. Denis, France
Qimonda Italy s.r.l. in liquidation
Qimonda IT (Suzhou) Co., Ltd. in liquidation
Qimonda Investment B.V.
Qimonda Korea Co. Ltd. in liquidation
Qimonda UK Ltd. in liquidation
1 Certain subsidiaries were not consolidated due to immateriality.
Rotterdam, The Netherlands
2
77
2
Qimonda Holding B.V. in insolvency
Shanghai, People's Republic of China
77
2
Qimonda Taiwan Co. Ltd. in liquidation
Qimonda International Trade (Shanghai) Co. Ltd.
Further Information
Independent Auditor's Report
Further Information pursuant to Article 10 of the EU Audit Regulation
We were elected as group auditor by the annual general meeting on 22 February 2018. We were engaged by the
supervisory board on 2 May 2018. We have been the group auditor of the Infineon Technologies AG, Neubiberg,
without interruption since the financial year 1999/2000.
We declare that the opinions expressed in this auditor's report are consistent with the additional report to the
audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is Michael Pritzer.
Munich, 20 November 2018
KPMG AG
ΑΙ
Braun
Wirtschaftsprüfer
(German Public Auditor)
Pritzer
Wirtschaftsprüfer
(German Public Auditor)
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
177
Further Information
List of Abbreviations
List of Abbreviations
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.
ASIC
Wirtschaftsprüfungsgesellschaft
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.
> 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.
> 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.
CAN
Further Information
Independent Auditor's Report
175
Responsibilities of Management and the Supervisory Board for the Consolidated Financial Statements
and the Group Management Report
Management is responsible for the preparation of the Consolidated Financial Statements that comply, in all material
respects, with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to
Section 315e (1) HGB and that the Consolidated Financial Statements, in compliance with these requirements, give
a true and fair view of the assets, liabilities, financial position, and financial performance of the Group. In addition,
management is responsible for such internal control as they have determined necessary to enable the preparation
of Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Consolidated Financial Statements, management is responsible for assessing the Group's ability to
continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going
concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting
unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to
do so.
Furthermore, management is responsible for the preparation of the Group Management Report that, as a whole,
provides an appropriate view of the Group's position and is, in all material respects, consistent with the
Consolidated Financial Statements, complies with German legal requirements, and appropriately presents the
opportunities and risks of future development. In addition, management is responsible for such arrangements
and measures (systems) as they have considered necessary to enable the preparation of a Group Management
Report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the Group Management Report.
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.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
and of the Group Management Report
Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a
whole are free from material misstatement, whether due to fraud or error, and whether the Group Management
Report as a whole provides an appropriate view of the Group's position and, in all material respects, is consistent
with the Consolidated Financial Statements and the knowledge obtained in the audit, complies with the German
legal requirements and appropriately presents the opportunities and risks of future development, as well as to
issue an auditor's report that includes our opinions on the Consolidated Financial Statements and on the Group
Management Report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards
for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material
misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these Consolidated Financial Statements and this Group Management Report.
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Further Information
Independent Auditor's Report
176
> 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 management and the reasonableness of estimates
made by management and related disclosures.
> 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.
› 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 con-
formity with German law, and the view of the Group's position it provides.
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.
CMOS
Siliconcarbide
Application-specific integrated circuit
Copy deadline:
Editors:
Published by:
TM
in
f
Imprint
Visit us on the web: www.infineon.com
Fiscal year:
1 preliminary
Publication of fourth quarter and
Tuesday, 12 November 20191
Publication of third quarter 2019 results
Thursday, 1 August 2019¹
Publication of second quarter 2019 results
Tuesday, 7 May 2019¹
ICM - International Congress Center Munich
(Germany)
(Start 10:00 a.m. CET)
fiscal year 2019 results
Independent auditors:
Designed by:
Photography:
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:
The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted property
of IHS Markit Ltd. and its subsidiaries (“IHS Markit”) and represent data, research, opinions or viewpoints published by
IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and
not as of the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change
without notice and neither IHS Markit nor, as a consequence, Infineon have a duty or responsibility to update the IHS Markit
Materials or this presentation. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable,
the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit
and the IHS Markit globe design are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the
property of IHS Markit or their respective owners.
Specific disclaimer for IHS Markit reports, data and information referenced in this document:
Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
forward-looking statements.
These statements are based on assumptions and projections resting upon currently available information
and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
may therefore differ materially from what has been expected.
This report contains forward-looking statements about the business, financial condition and earnings
performance of the Infineon Group.
Forward-looking statements
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)
HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
Werner Bartsch, Hamburg (Germany): page 2, 6-7
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany)
1 October to 30 September
Investor Relations, Accounting, Consolidation & Reporting
20 November 2018
Infineon Technologies AG, Neubiberg (Germany)
Printing:
Annual General Meeting 2019
Thursday, 21 February 2019
Publication of first quarter 2019 results
Tuesday, 5 February 2019¹
Intelligent power module
IPM
Insulated gate bipolar transistor
IGBT
Integrated circuit
IC
HVDC High-voltage DC transmission
Human machine interaction
HMI
Global positioning system
GPS
Galliumnitride
GaN
Full hybrid electric vehicles
FHEV
Flexible alternating current transmission system
FACTS
Complementary metal-oxide-semiconductor
Controller area network
LED
Artificial intelligence
Light-emitting diode
Local interconnected network
Financial calendar
178
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Variable speed drive
VSD
Trusted platform module
TPM
Time-of-flight
ToF
Sic
Radio frequency
RF
Plug-in hybrid electric vehicles
PHEV
Near-field communication
NFC
MOSFET Metal-oxide-semiconductor field-effect transistor
Micro-electromechanical system
MEMS
LIN
www.infineon.com
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.
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.
Management Board and Supervisory Board
6
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
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.
Chief Executive Officer
Dr. Reinhard Ploss
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
The Management Board
The Management Board
Management Board and Supervisory Board
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Dr. Reinhard Ploss
Chief Executive Officer
Reiterad of
Sincerely
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.
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.
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.
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.
5
Management Board and Supervisory Board
Letter to shareholders
The Management Board
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.
Dr. Helmut Gassel
Chief Marketing Officer
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.
Business strategy; growth prospects
At its meeting held on 21 November 2017 and at the recommendation of the Investment, Finance and Audit
Committee, the Supervisory Board approved the financial and investment budget (including the total investment
budget) for the 2018 fiscal year, as presented by the Management Board. At its meeting held on 16 May 2018, again
at the recommendation of the Investment, Finance and Audit Committee, the Supervisory Board approved an
increase in the previously approved total investment budget.
Financial and investment planning
In the 2018 fiscal year, the full Supervisory Board met seven times (five ordinary and two extraordinary meetings)
and passed one written resolution. Attendance measured in relation to these various proceedings averaged nearly
92 percent. Dr. Diess, Ms. Engelfried and Dr. Puffer were each unable to attend two meetings and Mr. Holdenried,
Ms. Picaud and Prof. Köcher were each unable to attend one meeting. Attendance at Supervisory Board committee
meetings was a good 96 percent. Dr. Eder was excused from attending one meeting of the Strategy and Technology
Committee and Mr. Holdenried from one meeting of the Executive Committee. Accordingly, all members of the
Supervisory Board attended more than half of the meetings of the Supervisory Board and of the committees to
which they belonged during the 2018 fiscal year.
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.
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.
9
Report of the Supervisory Board to the Annual General Meeting
Management Board and Supervisory Board
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
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.
Main activities of the Supervisory Board
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.
Ladies and Gentlemen,
Report of the Supervisory Board
to the Annual General Meeting
8
Report of the Supervisory Board to the Annual General Meeting
Management Board and Supervisory Board
7
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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).
Chief Operations Officer
Jochen Hanebeck
Dr. Eckart Sünner
Chairman of the Supervisory Board
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Chairman of the Supervisory Board
Management Board and Supervisory Board
Investment, Finance and Audit Committee
At the two extraordinary meetings, the LTI topic was deliberated upon in greater depth and a diversity concept for
the composition of the Management Board was discussed. The Executive Committee also approved new business
travel rules for the Management Board.
The Executive Committee held one ordinary and two extraordinary meetings during the fiscal year under report.
The ordinary meeting focused on preparing the Supervisory Board's resolutions with respect to determining the
level of the Management Board's variable compensation. The main aspects of this work were to determine the
degree to which targets for the 2017 fiscal year were achieved and to set new targets for the 2018 fiscal year. Other
matters arising were the adjustment of rules for LTI purposes when a member leaves the Management Board as
well as decisions relating to mandate extensions.
Executive Committee
13
Report of the Supervisory Board to the Annual General Meeting
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
The Mediation Committee did not need to convene.
The Nomination Committee convened once during the fiscal year under report and made a recommendation to the
Supervisory Board that Dr. Wolfgang Eder be proposed for election to the Supervisory Board at the Annual General
Meeting. The decision was preceded by several meetings of the Nomination Committee during the 2017 fiscal year,
at which succession matters on the shareholder side as a whole were also discussed.
Nomination and Mediation Committee
The committees are responsible for drawing up resolutions and preparing topics that need to be dealt with by the
full Supervisory Board. Certain decision-making powers have been delegated to the committees, to the extent
permitted under German law. The chairpersons of each committee routinely report on committee meetings at the
next relevant full Supervisory Board meeting.
Committee work
At the Supervisory Board meeting held immediately after the Annual General Meeting, I was elected to succeed
Mr. Mayrhuber as the new Chairman of the Supervisory Board. In this function, I also chair the Mediation Committee
and the Executive Committee. Dr. Eder was elected to the Investment, Finance and Audit Committee, the Strategy
and Technology Committee as well as the Nomination Committee. Dr. Eder chairs the Nomination Committee.
For this reason, it was necessary to elect a new member of the Supervisory Board to fill the vacancy. Based on the
Nomination Committee's recommendation and the Supervisory Board's proposal, the Annual General Meeting
elected Dr. Wolfgang Eder to the Supervisory Board on 22 February 2018.
With effect from the end of the Annual General Meeting held on 22 February 2018, Mr. Mayrhuber resigned his
mandate as member and Chairman of the Supervisory Board. On behalf of the Supervisory Board, the Management
Board and the entire workforce, I sincerely wish to thank Mr. Mayrhuber for seven extraordinarily commendable
and successful years at the helm of our Supervisory Board. Due to his competence and vision, combined with his
constructive and engaging manner, Mr. Mayrhuber made a significant contribution to Infineon's success. I am
delighted that Mr. Mayrhuber will remain closely linked to Infineon as Honorary Chairman of the Supervisory Board
going forward.
Composition of the Supervisory Board
Composition of the Supervisory Board; committee work
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.
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.
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
@www.infineon.com/corporate-governance-report
@www.infineon.com/declaration-on-corporate-governance
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).
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
Strategy and Technology Committee
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.
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.
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 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.
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.
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.
Management Board compensation
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
By contrast, the composition of the Management Board has not yet been subject to any specific diversity concept.
The Supervisory Board therefore considered this matter at length and adopted a comprehensive diversity concept
during the fiscal year under report. The Supervisory Board considers it important that any decision to appoint a
person to a specific role on the Management Board must always be made in Infineon's best interests, taking all the
circumstances of each individual case into account. The primary focus must be on the professional and personal
suitability of the person concerned. Consideration must be given to ensuring that the members of the Management
Board as a whole possess - to the fullest possible extent - the knowledge, skills and experience required to run a
technology company. Within the framework of these requirements, the Supervisory Board also considers diversity
aspects, particularly age, gender, education and professional background as well as internationality. In addition to
ensuring the greatest possible personal suitability of each individual member, it is equally important that different
perspectives on managing the corporation's business are encouraged by having a Management Board with a
diverse composition. The various aspects of diversity are therefore an integral component of the decision-making
process, but not an exclusive criterion. The target quota for women on the Management Board remains unchanged
at 20 per cent.
A concept of this nature has been in place for Infineon's Supervisory Board for several years. The competency profile
and catalog of objectives adopted by the Supervisory Board for its own composition (last updated in August 2017)
deals not only with the general criteria for making appointments but also with diversity aspects.
The European Corporate Social Responsibility (CSR) Directive and the German CSR Directive Implementation Act
provide for large-sized listed companies such as Infineon to report on the diversity concepts developed in connection
with the composition of their management and supervisory boards.
Diversity concept for the composition of the Management Board
In view of the successful work of the Management Board, the Supervisory Board decided to extend Mr. Asam's
mandate, which would otherwise run until 31 December 2018, by a further five years to 31 December 2023. Further-
more, the mandates of Dr. Gassel and Mr. Hanebeck, which run until 30 June 2019, were also extended by a further
five years to 30 June 2024. By extending these mandates, the Supervisory Board acknowledges the excellent contri-
butions these members of the Management Board have made to Infineon's sustainable and profitable growth and
thanks them for their outstanding contributions.
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.
Personnel matters relating to the Management Board
10
10
Report of the Supervisory Board to the Annual General Meeting
Management Board and Supervisory Board
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Furthermore, the Supervisory Board discussed potential opportunities for mergers and acquisitions. These discus-
sions also included a disinvestment decision, namely the sale of the RF Power product line to the US semiconductor
company Cree, Inc. for a consideration of approximately €345 million. As technology leaders, collaboration between
Infineon and Cree goes back a long way. The Supervisory Board agrees with the Management Board that it makes
good commercial sense to sell this product line to Cree and that it also offers good professional prospects for the
employees concerned. After thoroughly deliberating on these points, the Supervisory Board gave the transaction
its approval.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Management Board and Supervisory Board
Extension of Management Board mandates
Report of the Supervisory Board to the Annual General Meeting
Examination of potential conflicts of interest
12
Report of the Supervisory Board to the Annual General Meeting
Management Board and Supervisory Board
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
The Supervisory Board examines the efficiency of its activities on an annual basis. In the previous fiscal year,
the examination was performed with the assistance of an external, independent consultant. The examination for
the 2018 fiscal year was based on a structured questionnaire. The examination provided a positive picture of the
work of the Supervisory Board and its collaboration with the Management Board. No noteworthy shortcomings
were identified.
Efficiency examination for Supervisory Board activities
In the current Declaration of Compliance dated November 2018, the Management Board and the Supervisory Board
declared that, with the exception of a deviation from section 5.3.2, paragraph 3, sentence 3, DCGK, as described
above, Infineon complies with all other recommendations contained in the DCGK and will continue to do so in future.
The original versions of the Declarations of Compliance are available on Infineon's website.
@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
Declaration of Compliance 2018
Corporate Governance
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.
Litigation
Details of Management Board compensation - in particular the amounts paid to individual members in the 2018
fiscal year - are available in the comprehensive Compensation Report in the Annual Report.
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.
P see page 95 ff.
After extensive discussions held by the full Supervisory Board and prepared by the Executive Committee, a new,
simplified rule was adopted for the treatment of current LTI tranches in the event of a member leaving the Manage-
ment Board. The rule came into force on 1 October 2018. Details on this are outlined in the Compensation Report.
For the second time, a tranche of performance shares fell due for settlement at the end of the 2018 fiscal year.
As the stipulated performance hurdle was surpassed, the tranche allocated in 2014 is required to be settled in full
following the expiry of the four-year holding period. As in the previous fiscal year, the Supervisory Board resolved
to settle the entitlement of members of the Management Board resulting from this tranche in cash rather than in
shares. Equality of treatment was therefore achieved with Infineon employees, for whom the Management Board
also decided upon cash settlement of the current tranche.
P see page 95 ff.
11
Toshiba
ZTE
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
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.
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”.
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,
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 TECHNOLOGIES | ANNUAL REPORT 2018
Finances and strategy
Business focus Group strategy
World discrete power semiconductor and modules market share 2017
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.
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.
Strengthening the core business and unlocking new growth markets
Strategic guideline:
21
Combined Management Report | Our Group
Vivo
Sony
Bosch
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
Combined
Management Report
Content
Cisco
42 Industrial Power Control
Panasonic
Infineon
Oppo
Xiaomi
Source: Based on or includes content supplied by IHS Markit, Technology Group, "OEM Semiconductor Spend Tracker - H1 2018," July 2018.
5.9 5.9 5.5
5.1 4.9 4.7 4.1 4.0 3.7 3.4 3.3
Western Digital
Continental
ON Semiconductor
Building block
Mitsubishi
Base technology
Customer system
Algorithms
System know-how
Firmware
Integration of analog
and digital functionality
Competencies evolve over time
Discrete components
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.
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 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. 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Single function
Hardware
23
Combined Management Report | Our Group
Finances and strategy
Business focus Group strategy
24
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.
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.
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.
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 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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
HP
Software
STMicroelectronics
45 Power Management & Multimarket
47 Digital Security Solutions
Full system
functionality
Toshiba
18.6%
9.0%
5.1%
4.9%
4.7%
Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Report," September 2018.
The greatest growth potential is to be found in markets that are adjacent to our core business, which we have
however as of yet not addressed at all or only partly. For example, here we can adapt existing technologies and
products for additional applications with reasonable effort and can thus increase sales potentials. And in the appli-
cation fields we have already addressed we can use our system understanding to grow the scope of our business
with a broader portfolio of products and solutions to generate higher revenue. Thus, the core mentioned at the
beginning is not to be regarded as a static portfolio of activities; much more the adjacent areas will in the mid-term
become part of our core business. The core is growing and the boundaries are shifting, because when we make
progress in particular markets in terms of technology, products and application understanding, the classification
of these markets changes accordingly. To return to the example of power semiconductors: We are proud to cite
"Power" as one of our original core competencies. But we are nevertheless continuously developing here, too. We
are expanding our portfolio in order to offer our customers an increasing degree of intelligence in addition to
"Power". This means for some time now we have been complementing our range of efficient power transistors with
additional solutions in order to integrate them in a digital control loop. The products required for intelligent control
of these switches tend to be more complex and higher-end because they integrate more functionalities. In the
context of constantly more complex systems and shorter development times, many customers appreciate solutions
in which we combine "Power" and intelligence.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our Group
Finances and strategy
Business focus Group strategy
22
Partial system
functionality
22
We supplement our organic growth with targeted acquisitions. These acquisitions have to meet three criteria: They
must be strategically viable as described above, financially reasonable and culturally fitting. An acquisition thus
has to strengthen Infineon's market position according to our strategic orientation and has to be a viable addition
to our range of expertise. The business acquired has to increase our profit, contribute to our margin target of an
average of at least 17 percent throughout the cycle and must earn a return at least equal to the capital costs. And
finally the corporate culture of a potential acquisition candidate must be a good fit with Infineon's culture, ideally
contributing valuable elements to it.
Strategic fields of action:
Factors for successful implementation
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
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.
The strategic approach "Product to System" defines our actions
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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
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.
50 Research and development
G
56 Internal management system
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
Sony Semiconductor
11.9
Analog Devices
8.9 8.6 8.3 8.2 8.1
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
12
7.9
6.5
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
20
Source: Based on or includes content supplied by IHS Markit, Technology Group, "Application Market Forecast Tool - Q3 2018," September 2018.
Apple
Lenovo
Huawei
Dell
17.5
13.0
10.2 9.0
8.1
7.2 7.1
54 Operations
Samsung
6.9
(excluding China, excluding Japan)
0
6.1
5.8
5.2
5.1
Apple
Samsung
Intel
SK Hynix
Micron
12% Europe, Middle East, Africa
22% Asia-Pacific
Broadcom
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%
China 47%
Qualcomm
18
Renesas
22
Finances and strategy
16
2018 fiscal year
› Revenue and earnings significantly improved for the fifth year in succession
> Strong performance enables further dividend increase
P see page 73
P see page 47
Revenue up by 8 percent; Segment Result Margin of 17.8 percent achieved
In the 2018 fiscal year, Infineon generated revenue of €7,599 million, an increase of 8 percent over the previous
year's figure of €7,063 million, and within the 9 percent plus or minus 2 percentage points forecast at the beginning
of the fiscal year (see the chapter "Outlook”). With this performance, Infineon recorded significant revenue growth
for the fifth fiscal year in succession. Revenue growth was driven above all by strong demand for semiconductors
used in automotive, industrial, power supply, RF and sensor technology applications. Our segment with the highest
volume, Automotive, contributed 55 percent or more than half of total revenue growth of €536 million. In contrast,
the Digital Security Solutions segment recorded a 6 percent drop in revenue, mainly due to lower revenue from
SIM cards for mobile communications (see the chapter "The Segments"). The underlying pace at which our business
is growing was partly masked by the unfavorable development of the US dollar exchange rate, which averaged
1.19 for the year. Had it remained at the previous year's level of 1.11, revenue growth in the 2018 fiscal year would
have been 12 percent.
2018 fiscal year
Revenue growth of the individual segments in the 2018 fiscal year compared to the previous year
Industrial Power Control
Power Management & Multimarket
Digital Security Solutions
Revenue by segment in the 2018 fiscal year
10%
10%
8%
(6%)
Digital Security Solutions: €664 million 9%
Automotive
Finances and strategy
Combined Management Report | Our Group
15
59 Sustainability at Infineon
60 The Infineon share
20
The Combined Management Report contains
forward-looking statements about the business,
financial condition and earnings performance
of Infineon. These statements are based on
assumptions and projections based on currently
available information and present estimates. They
are subject to a multitude of uncertainties and
risks. Actual business development may therefore
differ materially from what has been expected.
Beyond disclosure requirements stipulated by law,
Infineon does not undertake any obligation to
update forward-looking statements.
Effective 1 October 2018, the "Chip Card & Security"
segment changed its name to "Digital Security
Solutions". The change in name has no impact on
Infineon's organizational structure, strategy or
scope of business.
Our 2018 fiscal year
62 Group performance
62 Review of results of operations
67 Review of financial condition
70 Review of liquidity
73 Report on expected developments, together with
associated material risks and opportunities
73 Outlook
76 Risk and opportunity report
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
91 Information pursuant to section 289a, paragraph 1, and
section 315a, paragraph 1, of the German Commercial Code (HGB)
94 Corporate Governance Report
94 Declaration concerning the management of the company
95 Compensation report
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Power Management & Multimarket:
€2,318 million 31%
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.
0
Psee page 58
P see page 69
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
Combined Management Report | Our Group
Finances and strategy
P see page 58
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
Industrial Power Control: €1,323 million 17%
18
P see page 66
P see page 59
Psee page 29 f.
and page 73 f.
43% Automotive: €3,284 million
25
P see page 62 ff.
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
Americas 12%
0% Other Operating Segments,
Corporate and Eliminations:
€10 million
Greater China¹ 34%
1 Greater China includes China and Taiwan.
17
17% Europe (excluding Germany),
Middle East, Africa
15% Germany
15% Asia-Pacific
(excluding Japan, Greater China)
Japan 7%
44
314
317
Drivetrain power semiconductors
109
Drivetrain non-power semiconductors
314
Source: Strategy Analytics, "Automotive Semiconductor Demand Forecast 2016-2025," May 2018; Infineon
combustion engine vehicles
Semiconductor value
in FHEV/PHEV
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$75 in additional power semiconductors will be necessary to power these systems as well as for the
coupling of the two on-board power networks.
Vehicles with electric drivetrain have a significantly
larger semiconductor content than vehicles with
combustion engines.
In addition to CO2, hazardous substances such as nitrogen oxides (or NOx) are catching more and more attention.
They are produced when fossil fuels are burned and result in a higher level of particulate matter pollution, in addition
to a number of other factors. In metropolitan areas, diesel engines account for the largest share of NOx emissions,
which is why some cities have already banned older diesel vehicles. The prospect of not being able to drive at
all in such diesel-free urban zones or only with restrictions will influence the customer's purchase decision and
represents a medium to long-term competitive disadvantage for the diesel compared to other propulsion types.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
02|2018
375
17
Semiconductor value in internal
Increase by a
factor of ~19
Major home appliances
in US$
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.
01|2018
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
Business focus | Growth drivers
34
3.
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.
Transition from internal combustion engine vehicles to hybrid electric vehicles increases demand for power semicon-
ductors in the drivetrain by a factor of ~19
740
10|2017 11|2017 12|2017
Capital structure targets demonstrate our reliability
80
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Our planning is oriented towards providing the necessary manufacturing capacities for the expected growth.
The accelerated growth is in particular driven by strong demand for power semiconductors, a field in which
Infineon's in-house manufacturing provides competitive differentiation. As a result, we have adjusted the targeted
investment-to-sales ratio. Annual investments should be an average of 15 percent (previously 13 percent) of
revenue. This continues to include approximately 2 percentage points for the capitalization of development
expenses in accordance with IFRS; the bulk of the remainder is for the most part accounted for by investments
in manufacturing facilities and IT equipment. The targets for growth and investment are closely intertwined.
A revenue growth rate increase/reduction from the 9 percent level would entail a slightly less than proportionate
change in the investment-to-sales ratio.
Target 3: Investments amounting to 15 percent of revenue (previously 13 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.
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 1:9 percent average annual growth in revenue (previously 8 percent)
In this context we have adapted our target operating model during the previous fiscal year.
We assume that, in the upcoming years, several structural trends will continue to drive our growth, in particular
electro-mobility, renewable energies, manufacturing automation, data centers and an increasing number of
battery-powered, connected devices (the description of the most important growth drivers follows in the next
chapter) - in some cases even more so than in the past. Thanks to our leading technologies, our understanding of
applications and systems and our differentiating expertise in manufacturing, we have achieved an outstanding
position in these markets. We want to take advantage of the resulting opportunities and to continue to outgrow the
respective markets. We are making targeted investments for this purpose.
Financial targets underline our growth ambition
P see page 31 ff.
29
29
Business focus Group strategy
Finances and strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
In addition to its role as an independent business unit, the Digital Security Solutions segment has a second important
function within the Group: Supporting the three other segments - as a kind of competence center - with the integra-
tion of security as a function in their system solutions and in doing so creating additional potential for differentiation.
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.
Finances and strategy
Business focus Group strategy
30
30
90
100
110
120
19.14
21.27
23.40
25.52
130
17.02
30 September 2017 = 100
Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2018 fiscal year (daily closing prices)
Infineon share price in €
Our strategy has paid off: Infineon continues its path of sustainable, profitable growth. Our operating profitability
and our sound capital structure give us the financial flexibility to invest in future growth. This continuous value
creation has been manifested in past years in constantly increasing earnings per share as well as dividends. We also
pursue a dividend policy aimed at letting shareholders adequately participate in Infineon's economic development
and at paying out at least a constant dividend even in periods of slower growth.
Sustainable value creation for our shareholders
The rating agency S&P Global Ratings (S&P) continues to evaluate Infineon's creditworthiness as "BBB" (outlook
"stable"). At present this gives Infineon the best S&P rating of any European semiconductor manufacturer.
The upper limit on our gross financial debt is twice Earnings Before Interest, Tax, Depreciation and Amortization
(EBITDA). Our moderate debt level and the well-balanced maturity profile reaching until 2028 allow us to reliably
service our debt, independent of the respective capital markets environment.
Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount of €1 billion provides a
solid liquidity reserve for contingent liabilities and retirement fund liabilities, which are independent of revenue.
Furthermore, 10 to 20 percent of revenue means we always have access to enough cash to be able to finance the
operating business and development activities for the future during all phases of the business cycle.
It is important to our customers that Infineon remains a dependable partner that will also be able to supply reliably
for many years to come, thus enabling their growth. Our debt providers rely on our ability to securely service our debt
over a long period of time. As an employer, we also want to give this kind of long-term reliability to our employees,
even well beyond their active working lives in the form of retirement benefits. As a result we give a high priority to
solid creditworthiness. This is reflected by our conservative capital structure targets.
The investment-to-sales ratio in the previous fiscal year was 16.5 percent.
In coming years, we also plan to invest a low triple-digit million amount in order to take advantage of possible addi-
tional business opportunities and follow structural changes. These investments are not included in the 15 percent
ratio described above. In addition, we have already announced investments in front-end cleanrooms and large office
buildings, including the 300-millimeter cleanroom and the research and development building at the Villach site
(Austria). In the 2019 fiscal year, around €200 million of this will accrue. If these measures are implemented, the
investment rate will temporarily be significantly higher than the rate provided in the target operating model.
27.65
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.
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.
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
P see page 37 ff.
Combined Management Report | Our Group
Finances and strategy
Business focus | Growth drivers
32
Power supplies
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
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
of systems, such as cranes, conveyor belts and robots.
Combined Management Report | Our Group
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.
Business focus | Growth drivers
Solar power
Wind
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.
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
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.
31
Energy Efficiency
Renewable energies
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.
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.
33
Energy storage
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.
Finances and strategy
Industrial Power Control
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.
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.
Combined Management Report | Our Group
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.
Combined Management Report | Our Group
Power Management & Multimarket
Business focus Group strategy
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
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.
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.
Strategic advantages through in-house manufacturing
Combined Management Report | Our Group
Finances and strategy
Business focus Group strategy
26
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.
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
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Home appliances
> Air conditioners
> Dishwashers
Energy consumption
> Offshore wind farm
HVDC lines
> Energy storage
Energy transmission
> Photovoltaic systems
> Wind power turbines
> Induction cooktops
> FACTS (Flexible AC
Transmission Systems)
> Microwave ovens
Industrial drives¹
> Vacuum cleaners
> Washing machines
Industrial vehicles
> Agricultural vehicles
› Construction vehicles
> Electric delivery vehicles
> Forklifts
1 Including motors, compressors, pumps and fans.
> Hybrid busses
Energy generation
› Refrigerators
Applications
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").
The segments
2017
Revenue
256
Segment Result
2018
Combined Management Report | Our Group
The segments
Industrial Power Control
43
Psee page 44
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.
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
Industrial Power Control
> Air conditioning
technology
183
› Drives
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.
World IPM market share 2017
Mitsubishi
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.
In the category of discrete IGBTS we were able to grow our market share by 2.0 percentage points to reach 38.5 percent.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
16.4%
> Automation technology
27.1%
ON Semiconductor
> Elevator systems
> Escalators
> Materials handling
> Rolling mills
Traction
> High-speed trains
> Locomotives
> Metro trains
› Trams
Charging stations
for electric vehicles
Industrial
power supplies
Robotics
44
Market position
The world market for IGBT-based power semiconductors - discrete IGBT power transistors and IGBT modules -
reached US$5.255 billion in the 2017 calendar year, an increase of 16.5 percent compared to the previous year value
of US$4.510 billion (Source: IHS Markit). Infineon was able to further improve its leadership position with a market
share of 27.1 percent (an increase of 1.2 percentage points). The five largest market players together accounted for
a market share of 67.5 percent.
World IGBT-based power semiconductor market share 2017
Infineon
Mitsubishi
Fuji Electric
Semikron
LI
39
1,323
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.
Business focus | Growth drivers | Human Resources strategy
Finances and strategy
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Mobile data traffic is constantly increasing in volume: While 15 Exabyte (i.e. 15 billion gigabytes) per month were
transferred via cellular communications in 2017, experts expect a volume of 107 Exabyte per month for the 2023 year.
In order to be prepared for the exponentially increasing data volumes, to achieve higher data transmission rates
and to improve network coverage, network providers are turning to a high-performance infrastructure. The migration
of network architecture to smaller cells enables among other things the use of higher frequency ranges and better
exploitation of the available frequency spectrum. Radio-frequency (RF) components are required for both the
communication between mobile devices and the base station and for wireless backhaul from local networks to the
main network.
Mobil communications
"Smartification" is finding its way into the home as well. While in the industrial context the primary issue is
increasing productivity, applications in the private environment are usually focused on comfort. A Smart Home
is capable of telling all the machines in it what to do and activating every device at just the right time. In addition
to increased comfort, the Smart Home's better energy efficiency and higher security are additional important
aspects. The Infineon portfolio of sensors, power semiconductors and security controllers offers the right solutions
for a networked home.
Human Resources strategy
Smart Home
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.
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.
Virtual Reality/Augmented Reality
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.
Gesture
38
Business focus | Growth drivers
Finances and strategy
Virtual and Augmented Reality are also
used in industry, for example for simulation
and training purposes.
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.
2,989
3,284
€ in millions
Revenue and Segment Result of the Automotive segment
In the Automotive segment, Infineon recorded revenue of €3,284 million in the 2018 fiscal year, an increase of
10 percent compared to the €2,989 million revenue of the previous year. The segment contributed 43 percent
of the Group revenue.
Revenue development
The Automotive segment in the 2018 fiscal year
Automotive
SEGMENT RESULT
€466 million
€3,284 million
REVENUE
40
40
The segments
Automotive
The segments
Combined Management Report | Our Group
@www.infineon.com/csr_reporting
@www.infineon.com/hrreport
You will find further information including detailed statistics in the 2018 sustainability report and in the 2018
Human Resources report.
Combined Management Report | Our Group
LL
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Voice
Secure authentication for the Internet of Things
The Internet of Things refers to devices and machines connected to the internet, thus enabling data exchange and
device control (for example, home appliances, electricity meters, sensors, webcams). The trend towards increased
levels of networking 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.
Security for industrial applications (Smart Factories)
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.
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
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.
Finances and strategy
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
Collaborative robots
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.
Human Machine Interaction
1,206
Business focus | Growth drivers
Security for mobile devices
Government IDs refer to passports, identity cards, driving licenses and in the broader sense also to health care
cards. These documents are increasingly being equipped with a security chip. The market penetration of chip-based
government IDs is constantly increasing. More and more countries are making the transition to chip-based docu-
ments or increasing the range of such documents in use. Infineon is the leading provider of security solutions for
ID projects in Europe. Furthermore, according to the US Government Printing Office (US GPO), Infineon is one
of the main vendors of security technologies in the electronic passports of the USA. Infineon has been supplying
the US GPO since the project was launched in 2005.
Government IDs
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.
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
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.
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our Group
Finances and strategy
Business focus | Growth drivers
Security
36
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.
474
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Revenue
Segment Result
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.
Market position
42
Automotive Industrial Power Control
The segments
Combined Management Report | Our Group
466
software manipulation
World automotive semiconductor market share 2017
> Protection against
> Protection against
authentication
> Original spare parts
> Digital tachograph
› Communication (car-to-car,
car-to-infrastructure)
Security
› Transmission control
> Start-stop system
manipulation (e.g. odometer)
NXP
Infineon
Renesas
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
€ in millions
Revenue and Segment Result of the Industrial Power Control segment
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.
SEGMENT RESULT
€256 million
Revenue development
The Industrial Power Control segment in the 2018 fiscal year
Industrial Power Control
€1,323 million
REVENUE
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.
Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares," April 2018
7.1%
8.0%
10.0%
10.8%
12.5%
STMicroelectronics
Texas Instruments
› Generator control
> Electric motor control
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
› Battery management
> Blind spot detection
> Autonomous emergency
braking system
> Automatic parking
> Anti-blocking system
safety systems
> Airbag
Assistance systems and
Applications
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.
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).
Development of the Segment Result
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.
The increasing demand for radar sensor ICs came on the one hand from the increasing market penetration of
radar-based driver assistance systems and on the other hand from the higher number of radar sensors per vehicle.
In particular our 77 gigahertz radar solutions for driver assistance systems remained in high demand. Infineon is
one of the leading suppliers to the most important manufacturers of radar systems in all regions.
The 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.
41
> Combustion engine control
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
We supply powertrain solutions for all types of electric vehicles: pure electric vehicles as well as hybrid and plug-in
hybrid vehicles including 48 volt technology. In China, the world's largest market for electro-mobility, the number
of vehicles manufactured and registered with plug-in hybrid or pure electric drives continued to increase sharply.
Here the number of units manufactured increased from 517,000 in the 2016 calendar year by 53.6 percent to
794,000 units in the 2017 calendar year. Sales of electric vehicles increased in the other regions as well, especially
due to a wider variety of models, making it possible to address a new group of buyers. In addition to the increase
in units, this year we also saw innovative drive configurations which will further increase demand for power modules.
For example, in order to increase performance one electric motor is used on each axle. Furthermore, the motors
are configured for higher performance, which often requires two IGBT modules per motor. As a result of these two
trends, each vehicle has four IGBT modules instead of one IGBT module.
As in previous years, the major growth drivers were the megatrends electro-mobility and automated driving. Both
developments resulted in a particularly strong increase in the semiconductor content per vehicle and are expected to
ensure over half of our growth in the Automotive segment over the next five years. They are among the structural
growth factors which fundamentally support Infineon's above-average growth. In addition, we continue to benefit
from new functions in the areas of lighting, comfort and safety as well as from the continuing electrification of
previously hydraulic and electro-mechanical subsystems.
2018
2017
> Cruise control
> Distance warning systems
The segments
Automotive
> Electronic power steering
> Electronic chassis control
> Alternator control
› Battery charging control
Powertrain
> Windshield wipers
> Suspension
> Steering
> Power window
› Sunroof
> Hatch door
> Electronic seat adjustment
> Electronic control units
> Door electronics
Comfort electronics
> Air conditioning
> Lane departure warning system
> Tire pressure monitoring system
> Electronic stability control
> Lighting
> Embedded SIM
(machine-to-machine
communication)
Mobile
communications
› Conventional
SIM cards
> High-end SIM cards
Payment systems
› Credit/debit cards
Infineon
> NFC-based contactless
payment
Ticketing, access control
Trusted Computing
Market position
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.
World smart card and secure ICs market share 2017
> Smart Home
NXP
Samsung
> Mobile payment
> Smart City
(e.g. odometer,
> Industrial Internet
(Industry 4.0)
STMicroelectronics
systems
> Industrial control
> Game consoles
> Brand protection
Applications
Automotive
› Connected vehicles
> IT
(e.g. eCall, car-to-car
communications,
car-to-infrastructure
communications)
> Protection against
manipulation
digital tachograph)
Government
identification documents
> Driver's licenses
> Healthcare cards
> National identity cards
> Passports
Internet of Things
> Connected driving
> Electronic toll collection
EM Micro
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.
24.2%
54
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
Combined Management Report | Our Group
Operations
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.
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.
Founding of a new development center in Dresden
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.
Operations
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Investments
€ in millions
1 Property, plant and equipment and intangible assets
14.5%
1,022
1,254
H
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).
2017
16.5%
Investments
Percentage of revenue
› Accessories
Infineon maintains a total of 17 manufacturing sites in 10 countries: Villach (Austria); Beijing and Wuxi (both China);
Dresden, Regensburg and Warstein (all Germany); Cegléd (Hungary); Batam (Indonesia); Cheonan (Korea); Melaka
and Kulim (both Malaysia); Tijuana (Mexico); Singapore; and Leominster, Mesa, San José and Temecula (all USA).
As of 30 September 2018 there were 28,532 people employed in manufacturing at these sites (previous year:
27,105 employees).
Milestones and essential investment focuses in manufacturing during the 2018 fiscal year
Investments in the 2018 fiscal year focused on the following areas:
1. Expansion of 300-millimeter fronted manufacturing capacities in Dresden in differentiating manufacturing
technologies for power semiconductors such as the high-voltage MOSFETs of our CoolMOST family and
IGBT power switches.
2. Expansion of 200-millimeter frontend manufacturing capacities in Kulim in differentiating manufacturing
technologies for sensors as well as discrete and integrated power semiconductors.
2018
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).
52
52
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
776
Research and development
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%
12.9%
23.8%
Combined Management Report | Our Group
836
||
2017
Research and development
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%
2018
Source: ABI Research, "Smart Card & Secure ICS," October 2018.
Authentication
Cellular infrastructure
› Base stations
The segments
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.
6.8%
7.4%
9.2%
12.8%
26.3%
STMicroelectronics
Digital Security Solutions
Toshiba
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
› Sensors
Renesas
(previously Chip Card & Security)
REVENUE
€664 million
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
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.
2018
2017
Segment Result
105
124
Revenue
664
708
€ in millions
Revenue and Segment Result of the Digital Security Solutions segment
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
€105 million
SEGMENT RESULT
› Telecom
> Servers
lighting systems
LED and conventional
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.
2018
2017
Revenue
Segment Result
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 Power Management & Multimarket segment in the 2018 fiscal year
SEGMENT RESULT
€532 million
REVENUE
€2,318 million
Power Management
& Multimarket
45
45
Power Management & Multimarket
The segments
Combined Management Report | Our Group
In this context we are very pleased that in the meantime we achieve approximately one quarter of our revenue
with software-related projects. Our software (for example firmware, driver software, hardware-related application
software) and system competence puts us in a position to provide reference designs and security modules which
are ready-to-use. We also offer support in the certification of security solutions. With these services we reduce our
customers' development expenses and accelerate the time-to-market of their products. The investments made in
these areas in previous years are now beginning to pay off. One example here is our SECORATM Pay security solutions
which make it particularly easy for card manufactures to integrate dual-interface chip technologies in their product
portfolios; they are thus able to react flexibly to regional market requirements. The high level of acceptance of the
SECORA™ Pay brand is evident in the many projects we have already won in the 2018 fiscal year, with SECORA™ Pay
just launched in November 2017.
Development of the Segment Result
Segment Result was €105 million, representing a decrease of 15 percent compared to the previous year's Segment
Result of €124 million. As a percent of revenue, the Segment Result margin was 15.8 percent (previous year:
17.5 percent). Segment Result was negatively impacted mainly by a lower profit contribution from the declining
revenue. Furthermore, operating costs increased on the one hand due to the strategically planned long-term
expansion of headcount in the areas research and development, administration and sales and on the other hand
due to higher development costs resulting from a larger number of customer projects and the expansion of the
product portfolio. By doing this, we intend to further expand our software and system competence in particular.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our Group
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.
Digital Security Solutions
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
> Submarine telecommunications
cables
for electric vehicles
Charging stations
> Multi-copters
> Lawn mower
Hedge trimmer
> eScooter
>
FEFF
› Communications
Internet of Things
> Consumer electronics
> Home appliances
> Mobile devices
> PCs and notebooks
Power management
> Oil and natural gas exploration
› Space systems
› Commercial aviation
> Defense technologies
HiRel
(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
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.
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.
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.
Combined Management Report | Our Group
Percentage of revenue
Change year-on-year
Cost of goods sold
€ in millions, except percentages
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).
Increase in gross margin
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.
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.
64
Review of results of operations
Group performance
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
With an increase of €223 million (42 percent), the Greater China region accounted for the largest portion of revenue
growth by far followed by the Europe, Middle East and Africa region with a €171 million increase (32 percent of total
revenue growth), Japan with a €71 million increase (13 percent of total revenue growth) and the Asia-Pacific region
(excluding Japan, Greater China) with a €58 million increase (11 percent of total revenue growth). In terms of
percentage, the highest revenue growth was achieved with 15 percent in Japan.
100%
7,063
100%
7,599
Total
10%
714
9%
Gross profit
719
Percentage of revenue (gross margin)
2017
Change year-on-year
Research and development expenses
capitalized development costs
grants received
Minus:
Research and development expenses, gross
€ 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 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).
Operating expenses as percentage of revenue continue to fall
37.1%
38.0%
2,621
2,885
62.9%
62.0%
7%
6%
4,442
4,714
2018
therein: USA
12%
881
1,171
therein: Germany
32%
2,272
32%
2,443
Europe, Middle East, Africa
2017
2018
€ in millions, except percentages
Significance of Greater China remains strong; China ahead of Germany as most important sales market
The majority of revenue was generated in foreign currencies in the 2018 fiscal year, with revenue denominated in
US dollars accounting for the largest share. The average euro/US dollar exchange rate changed from around 1.11
in the previous fiscal year to 1.19 in the 2018 fiscal year. Mainly due to the unfavorable development of the US dollar
exchange rate, currency effects across all currencies and over the fiscal year as a whole curbed revenue growth by
approximately 4 percentage points. The year-on-year currency impact is measured by applying the previous fiscal
year's relevant average exchange rates to 2018 fiscal year revenue.
Negative impact of currency effects on revenue growth
63
2017
2018
0% Other Operating Segments,
Corporate and Elimininations
43% Automotive
Solutions
Digital Security Other Operating Corporate and
Segments Elimininations
0 3
15%
1,094
15%
Asia-Pacific (excluding Japan, Greater China)
12%
894
Americas
7%
463
7%
534
Japan
25%
1,735
Percentage of revenue
25%
therein: China
34%
2,376
34%
2,599
Greater China
15%
1,071
15%
1,129
1,921
2018
2017
1,065
> 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").
Overall, reaching these financial targets gives rise to a sustainable increase in the value of the business, brought
about by achieving a premium on the cost of capital in the long term.
In 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,
> 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.
Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE) against the cost of
capital, in order to ensure value creation.
The three performance indicators described above are also the cornerstones of the system for variable compensation
within Infineon. Most variable salary components for employees and management are directly linked to these
performance indicators.
Over the economic cycle, Infineon has set itself the targets of:
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.
P see page 91 ff.
P see page 39
For an analysis of changes in these key performance indicators during the 2018 fiscal year, see the chapter
"Review of liquidity".
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.
Furthermore, during the previous fiscal year investments were made in frontend and backend sites primarily in
the following areas:
> Further increases in the level of automation at our frontend and backend sites, for example, improvement of
the wafer transport system.
› 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.
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.
Infineon writes the next chapter in its growth strategy: Decision in favor of the 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
Internal management system
56
P see page 20 ff.
P see page 73 ff.
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.
10 9
Segment Result
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Liquidity performance indicators
A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its disposal and an
optimal capital structure. Liquidity is managed at Group level, not at segment level, and uses the following key
performance indicators:
› Gross cash position: Cash and cash equivalents plus financial investments.
> Net cash position: Gross cash position less short-term and long-term debt.
> Net working capital: Current assets less cash and cash equivalents, less financial investments, less assets
classified as held for sale, less current liabilities excluding short-term debt, and current maturities of long-term
debt, excluding liabilities classified as held for sale.
> Investments: The total amount invested in property, plant and equipment and intangible assets, including
capitalized development costs.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
The main R&D activities undertaken during the 2018 fiscal year are described in more detail in the chapter
"Research and development".
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).
P see page 50 ff.
11.0%
11.0%
1%
8%
776
836
(129)
(143)
(68)
(86)
973
P see page 73
P see page 70 ff.
Internal management system | Sustainability at Infineon
59
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.
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 considered 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.
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").
ROCE =
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.
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").
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
58
Operating result after tax from continuing operations
Capital employed
664 708
Combined Management Report | Our 2018 fiscal year
Power Management & Multimarket 31%
27.65
Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2018 fiscal year (daily closing prices)
Infineon share price in €
Share price development
due on 10 March 2022, ISIN: XS1191116174
since February 2016: "BBB" (outlook "stable")
Rating of S&P Global Ratings
1.5% 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 World Index
Dow Jones Sustainability Europe Index
S&P-Europe-350
MSCI Germany
Dow Jones Euro STOXX TMI Technology Hardware & Equipment
Dow Jones Germany Titans 30
Dow Jones STOXX Europe 600
TecDAX
DAX 30
165,496 (in the 2018 fiscal year)
US$25,696 million (as of 30 September 2018)
ADS, over-the-counter trading on the OTC market (OTCQX)
5,437,588 (in the 2018 fiscal year)
30 September 2017 = 100
130
25.52
23.40
Combined Management Report | Our Group
The Infineon share
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Dow Jones US Semiconductor Index
-SOX
DAX
Infineon
09|2018
08 |2018
07|2018
06|2018
€22,134 million (as of 30 September 2018)
03/2018 04|2018 05|2018
01|2018
10|2017 11|2017 12|2017
80
17.02
90
100
110
120
19.14
21.27
02|2018
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.
Shares: Frankfurt Stock Exchange (FSE)
IFX (share), IFNNY (ADS)
Basic information on shares
investor).
(www.infineon.com/
Relations pages
our Investor
ences via the internet
as a webcast on
telephone confer-
@It is possible to
participate in the
60
60
The Infineon share
The Infineon share
Combined Management Report | Our Group
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
The separate report "Sustainability at Infineon" including the summarized Non-Financial Report is available on
Infineon's website. @www.infineon.com/csr_reporting
In accordance with the stipulations of the German CSR Directive Implementation Act, Infineon Technologies AG
is required to publish a non-financial report at both Company and Group level for the first time for the 2018 fiscal
year. This report is published jointly for Infineon Technologies AG and the Infineon Group as a summarized separate
non-financial report within the sustainability report. The information required by law is marked accordingly to
distinguish it from the voluntary reporting according to the GRI standards. The entire report "Sustainability at
Infineon" including the chapters of the Non-Financial Report have been subjected to a limited assurance audit by
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany).
Sustainability activities are described in the separate report "Sustainability at Infineon".
59
Sustainability at Infineon
The chapter "Outlook" contains a table showing the actual values achieved in the 2018 fiscal year for the key
performance indicators, along with expectations for the 2018 fiscal year and the 2019 fiscal year.
Actual and target values for performance indicators
Share types
Share capital
Shares issued¹
Own shares
623100
€2,273,991,668 (as of 30 September 2018),
€2,272,401,858 (as of 30 September 2017)
1,136,995,834 (as of 30 September 2018),
1,136,200,929 (as of 30 September 2017)
6 million shares (as of 30 September 2018)
DE0006231004
of €2 each (ADS: shares = 1:1)
Ordinary registered shares in the form of shares or
American Depositary Shares (ADS) with a notional value
infineon-share/index-membership/
@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
Industrial Power Control 17%
Trading in the USA
IFX GY (Xetra trading system), IFNNY US
IFX-XE, IFNNY-XE
Daily average shares traded on Xetra
(+49 89 234-26655).
Listings
Reuters
Bloomberg
Ticker symbol
and by telephone
our private share-
holders by email
(investor.relations
@infineon.com)
We are available to
WKN
ISIN
Market capitalization²
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.
Market capitalization²
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.
0.85
0.98
0.70
0.95
0.70
0.95
790
1,075
(1)
(143)
791
1,218
(142)
(193)
3
(5)
(53)
(53)
983
1,469
(43)
P see page 129 ff.
P see page 131 f.
P see page 66
P see page 40 ff.
Net income significantly improved
Digital Security Solutions 9%
Trading volumes and stock indices
Share of Group Revenue 2018
Power
Management &
Multimarket
Industrial
Power Control
Automotive
2,148
2,318
1,206
1,323
270
2,989
€ in millions
Revenue by segment
Review of results of operations
Group performance
Combined Management Report | Our 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Revenue grew by €536 million to €7,599 million in the 2018 fiscal year (2017: €7,063 million). The segment with
the highest volume, Automotive, contributed more than one half (55 percent) of total revenue growth, which was
driven above all by strong demand for semiconductors used in automotive, industrial, power supply, RF and sensor
technology applications. In contrast, the Digital Security Solutions segment recorded a 6 percent drop in revenue,
mainly due to lower volumes of SIM cards for mobile communications. See the chapter "The Segments" for details.
Revenue growth reflects positive sales volume trends
Earnings per share (basic and diluted) amounted to €0.95 per share and were therefore higher than one year earlier
(2017: €0.70).
Net income improved by €285 million to €1,075 million year-on-year. Despite the unfavorable development of the
US dollar exchange rate, revenue grew by 8 percent to €7,599 million thanks to the positive development of business
volumes. Operating income jumped by 49 percent, or €486 million, to €1,469 million, partly on the back of revenue
growth and partly boosted by the gain from the sale of the major part of the RF power components business to
Cree, Inc. Higher research and development expenses as well as higher selling, general and administrative expenses
had a dampening effect on the increase in operating income. Operating income includes acquisition-related
depreciation, amortization and other expenses totaling €118 million (2017: €153 million), mainly for International
Rectifier (predominantly expenses recognized in conjunction with the purchase price allocation). In addition,
income tax (see note 5 to the Consolidated Financial Statements) and the loss from discontinued operations
(see note 6 to the Consolidated Financial Statements) were up, also lessening the increase in net income.
3,284
(819)
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).
(776)
€ in millions, except earnings per share
The consolidated statement of operations
Review of results of operations
Group performance
Review of results of operations
Group performance
Combined Management Report | Our 2018 fiscal year
61
12
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Revenue
Dividend
3.00% State of Norway
9.81% Retail investors
5.26% BlackRock Inc.
Other 76.19%
Allianz Global Investors GmbH 5.74%
Shareholder structure
As of 30 September 2018, three shareholders each held 3 percent or more than 3 percent of the Infineon shares
issued. At the end of the 2017 fiscal year, the same three shareholders held more than 3 percent of shares each.
The share capital held by retail investors increased slightly from 9.52 percent at the end of the 2017 fiscal year to
9.81 percent at the end of the 2018 fiscal year.
Shareholder structure
In the USA, the Infineon share is traded in the form of American Depositary Shares ("ADS") on the OTCQX Interna-
tional over-the-counter market under the ticker symbol "IFNNY". The average daily ADS trading volume also rose in
the 2018 fiscal year. The average daily number of ADS traded in the 2018 fiscal year increased to 165 thousand,
compared to 98 thousand ADS per day in the previous year. The number of ADS outstanding rose from 21.8 million
ADS as of 30 September 2017 to 31.7 million ADS at the end of the previous fiscal year.
(850)
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.
P see page 30
Gross profit
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".
Research and development expenses
2,621
2,885
7,063
7,599
2017
2018
62
Adjusted earnings per share (in euro) – diluted
Diluted earnings per share (in euro)
Basic earnings per share (in euro)
62
(836)
Loss from discontinued operations, net of income taxes
Income from continuing operations
Income tax
Income from investments accounted for using the equity method
Net financial result (financial income and expenses, net)
Operating income
Net income
Other operating income and expenses, net
Selling, general and administrative expenses
1,507
323
25
2,452
2,543
30 Septem-
ber 2018
1,811
732
Net cash position
1,511
30 Septem-
ber 2017
1,592
860
Review of liquidity
1,834
1,011
618
The gross cash position as of 30 September 2018 increased by €91 million. Free cash flow totaling €618 million
exceeded the sum of the dividend payment (€283 million) and the repayment of debt (€321 million). The release
of €75 million of restricted cash also had a positive effect.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Group performance
Psee page 73 ff.
72
Psee page 136
Psee page 152 ff.
Total debt
P see page 147
1,532
Long-term debt
Net cash used in investing activities from continuing operations
Purchases of (proceeds from sales of) financial investments, net
Free cash flow
Minus:
Group performance
Combined Management Report | Our 2018 fiscal year
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".
Review of liquidity
71
Free cash flow
Infineon reports the free cash flow figure, defined as net cash provided by and/or used in operating activities and
net cash provided by and/or used in investing activities, both from continuing operations, after adjusting for cash
flows related to the purchase and sale of financial investments. Free cash flow serves as an additional performance
indicator, since Infineon holds part of its liquidity in the form of financial investments. This does not mean that
the free cash flow calculated in this way is available to cover other disbursements, since dividend, debt-servicing
obligations and other fixed disbursements are not deducted. Free cash flow should not be seen as a replacement
or superior performance indicator, but rather as an additional useful item of information over and above the
disclosure of the cash flow reported in the Consolidated Statement of Cash Flows, and as a supplementary
disclosure to other liquidity performance indicators and other performance indicators derived from the IFRS
figures. Free cash flow only includes amounts from continuing operations, and is derived as follows from the
Consolidated Statement of Cash Flows:
€ in millions
Net cash provided by operating activities from continuing operations
2018
2017
1,571
1,728
(1,163)
(1,131)
210
(3)
618
594
P see page 131
Net cash provided by operating activities exceeds investments
Free cash flow in the 2018 fiscal year amounted to €618 million. Net cash provided by operating activities from
continuing operations amounting to €1,571 million exceeded cash outflows of €1,254 million used for investments
in property, plant and equipment, intangible and other assets. The free cash flow includes the cash received in con-
nection with the sale of the major part of the RF components business to Cree, Inc. (see note 6 to the Consolidated
Financial Statements).
Free cash flow in the previous fiscal year amounted to €594 million. Net cash provided by operating activities
from continuing operations amounting to €1,728 million easily exceeded total cash outflows of €1,134 million
used for investments in property, plant and equipment, intangible and other assets as well as for the acquisition
of the shares of MoTo Objekt Campeon GmbH & Co. KG.
Gross cash position and net cash position
The following table reconciles the gross cash position and the net cash position (i.e. after deduction of debt). Since
some liquid funds are held in the form of financial investments, which, for IFRS purposes, are not considered to be
"cash and cash equivalents", Infineon reports on its gross and net cash positions in order to provide investors with
a better understanding of its overall liquidity. The gross and net cash positions are determined as follows from the
Consolidated Statement of Financial Position:
€ in millions
Cash and cash equivalents
Financial investments
Gross cash position
Short-term debt and current maturities of long-term debt
Principles and structure of Infineon's treasury
819
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.
Slight increase
20.5%
Moderate decrease
performance indicators
Change in revenue
compared to previous year
Gross margin
37.1%
Research and
776
development expenses
1%
Selling, general and
About 18% (at the mid-point of the
planned range for revenue growth)
Slightly positive up to €200 million
administrative expenses
Liquidity performance indicators
Gross cash position
2,452
€1 billion
+21%
618
9%
Increase by 9%
8%
Increase by 11%
plus/minus 2 percentage points
Slight increase
Increase slightly
above revenue growth
Increase below
revenue growth
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
plus/minus 2 percentage points
4%
618
17.8%
About 17% (at the mid-point of the
planned range for revenue growth)
Between €500 million and €600 million
In the context of centralized liquidity management and where permitted by law and economically feasible, cash
pooling structures are in place for liquidity management purposes in order to ensure the best possible allocation
of liquidity within the Group and reduce external financing requirements. Liquidity accumulated at Group level is
invested centrally by the Group Finance & Treasury department, based on a conservative approach to investments,
in which preservation of capital is prioritized over return maximization. The Group Finance & Treasury department
is also responsible for managing currency and interest rate risks. We employ the following derivative financial
instruments for hedging purposes: forward foreign currency contracts to reduce exchange rate exposures (to the
extent foreign currency cash flows are not offset within the Group) and commodity swaps to reduce price risks
for expected purchases of gold. Derivative financial instruments are not used for trading or speculative purposes.
Further information regarding derivative financial instruments and the management of financial risks is provided
in notes 22 and 23 to the Consolidated Financial Statements.
Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide are arranged,
structured and managed either directly or indirectly by the Group Finance & Treasury department in accordance
with stipulated treasury principles.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Report on expected developments, together with associated material risks and opportunities
Outlook
Report on expected
developments, together
with associated material
risks and opportunities
Outlook
Actual and target values for performance indicators
The following table and subsequent comments compare the actual and forecast values of Infineon's key
performance indicators for the 2018 fiscal year and show the outlook for the 2019 fiscal year.
€ in millions, except percentages
Principal performance indicators
Actuals
FY 2017
Segment Result Margin
17.1%
Free cash flow from
continuing operations
ROCE
14.9%
Supplementary
performance indicators
Growth and profitability
Original Outlook
FY 2018
Actuals
FY 2018
73
Outlook
FY 2019
594
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.
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.
(860)
Debt repayments and dividend payment result in net cash used in financing activities
from continuing operations
Plus/minus:
Operating income
€ in millions
ROCE for the 2018 and 2017 fiscal years is calculated as follows:
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.
ROCE of 20.5 percent generated
The equity ratio improved to 59.3 percent as of the end of the reporting period (30 September 2017: 56.7 percent).
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.
Equity up mainly due to net income for the year
Review of financial condition
Group performance
Combined Management Report | Our 2018 fiscal year
57%
Financial result excluding interest result¹
1,532
806
790
726
1,044
Euro
US dollar
1,834
47%
P see page 131
Combined Management Report | Our 2018 fiscal year
Group performance
Review of results of operations
Selling, general and administrative expenses
€ in millions, except percentages
1,834
Gain from investments accounted for using the equity method
Income tax
Operating income from continuing operations after tax ①
2018
38.0%
836
323
25
Short-term debt and current maturities of long-term debt
(2,098)
(23)
(11)
(2,182)
(1,592)
(1,811)
(732)
9,945
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
Selling, general and administrative expenses
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.
Change year-on-year
2018
70
€ in millions
2018
2017
Net cash provided by operating activities from continuing operations
1,571
1,728
Net cash used in investing activities from continuing operations
Net cash used in financing activities from continuing operations
(1,163)
(1,131)
(542)
(340)
Net change in cash and cash equivalents from discontinued operations
Cash-relevant change in cash and cash equivalents
70
4
(130)
252
Effect of foreign exchange rate changes on cash and cash equivalents
Change in cash and cash equivalents
2
(17)
(128)
235
P see page 131
Psee page 136
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).
Net cash used in investing activities from continuing operations influenced by investments
in property, plant and equipment
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 in the previous fiscal year totaled €1,131 million.
Investments in property, plant and equipment and in intangible assets amounted to €1,022 million.
(5)
Cash flow
Review of liquidity
Review of liquidity
2017
850
819
4%
4%
11.2%
11.6%
At 11.2 percent of revenue selling, general and administrative expenses were lower in percentage terms than in
the previous fiscal year (11.6 percent). In absolute terms, they went up by €31 million or 4 percent to €850 million,
and therefore at a less pronounced rate than revenue growth.
Other operating income increased
The net amount from other operating income and expenses developed positively compared to the previous fiscal
year, turning from negative €43 million to positive €270 million. The net amount reported for the 2018 fiscal year
includes, in particular, the gain of €270 million which arose on the sale of the major part of the RF power components
business to Cree, Inc. (see note 6 to the Consolidated Financial Statements).
Effective tax rate of 13.7 percent
Based on pre-tax income of €1,411 million and an income tax expense of €193 million, the effective tax rate for
the 2018 fiscal year amounted to 13.7 percent. The equivalent figures for the 2017 fiscal year were an income tax
expense of €142 million (15.2 percent) on pre-tax income of €933 million.
2018
2017
€ in millions
1,532
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
43%
5,695
ROCE 1/②
20.5%
14.9%
1 The financial result for both the 2018 and 2017 fiscal year amounted to negative €53 million, and included negative €45 million and negative
€56 million, respectively, of net interest result.
The reported ROCE was calculated using actual capital employed, without adjustment for exceptional factors such
as provisions recorded in connection with the Qimonda insolvency, purchase price allocations for acquisitions as
well as changes in deferred tax assets and liabilities, each of which influences the level of capital employed.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
69
69
Combined Management Report | Our 2018 fiscal year
Group performance
Percentage of revenue
8%
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
4%
Return on equity 3
Debt-to-equity ratio 4
Inventory intensity 5
ROCE 6
1 Return on assets = Net income/Total assets
2 Equity ratio = Total equity/Total assets
3 Return on equity = Net income/Total equity
4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
5 Inventory intensity = Inventories (net)/Total assets
P see page 69
6 Calculation see following section about ROCE in this chapter
67
30 Septem-
Equity ratio 2
30 Septem-
ber 2017
Change
year-on-year
5,423
4,871
11%
5,456
5,074
8%
10,879
9,945
9%
2,182
2,098
ber 2018
Return on assets 1
Statement of Financial Position ratios:
Total equity
5
9
(49)
shareholders of Infineon Technologies AG - diluted
Adjusted net income from continuing operations attributable to
Weighted-average number of shares outstanding (in million) - diluted
Adjusted earnings per share (in euro) - diluted²
1,116
967
1,134
1,134
0.98
0.85
1 Without impairments/reversals of impairments on capitalized development costs since 1 October 2017, but impairments in connection with the sale
of the largest part of the Radio Frequency Power Components business to Cree, Inc. are included here. Previous periods figures were not adjusted.
2 The calculation of the adjusted earnings per share is based on unrounded figures.
Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior
performance indicator, but rather as additional information to net income and earnings per share (diluted)
determined in accordance with IFRS. The calculation of earnings per share in accordance with IFRS is presented
in detail in note 7 to the Consolidated Financial Statements.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
66
99
Combined Management Report | Our 2018 fiscal year
Group performance
Review of financial condition
Review of financial condition
€ in millions, except percentages
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
4%
36
2,251
2%
23%
9%
9%
12%
14%
27%
28%
16%
15%
6%
6%
5%
5%
25%
2017
Liabilities and equity
9,945
10,879
10%
11%
18%
14%
5%
5%
6%
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.
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
2018
10,879
9,945
Assets
4,433
4,309
3%
6,446
5,636
850
14%
9.9%
7.9%
59.3%
56.7%
16.7%
14.0%
23.8%
32.5%
13.6%
12.5%
20.5%
14.9%
P see page 71 f.
Current assets influenced by increase in inventories and trade receivables
Current assets increased by 11 percent from €4,871 million at the end of the previous fiscal year to €5,423 million as
of 30 September 2018. Contributing to this development, inventories and trade receivables went up by €360 million
in total, reflecting revenue growth across the segments. In addition, Infineon's gross cash position (sum total of cash
and cash equivalents and financial investments) increased by €91 million (see "Gross cash position and net cash
position" in the chapter "Review of liquidity" for further information).
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Combined Management Report | Our 2018 fiscal year
Group performance
Review of financial condition
68
Increase in non-current assets due to higher level of investments
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).
2,211
18
6,168
(272)
Explanatory comments to the outlook for the 2019 fiscal
Assumed euro/US dollar exchange rate
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.
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.
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).
74
Report on expected developments, together with associated material risks and opportunities
Outlook
Combined Management Report | Our 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
Comparison of original outlook and actual figures for the 2018 fiscal year
1,022
621
Working capital
Investments
year
Net cash position
Increase below
revenue growth
with revenue growth
Increase in line
Slight increase
712
1,254
+20%
1,011
2,543
€1 billion
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
612
Deferred tax assets
Provisions
similar commitments
1,586 1,596
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
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
2017
Other liabilities
15
Other assets
545
603
Equity
9,945 10,879
2017 2018
1,020
1,181
1,834
1,532
503
552
489
636
463
532
5,636 6,446
9,945 10,879
P see page 137
P see page 138 ff.
P see page 136 f.
648
Increase in trade payables and provisions more than offset decrease in debt
By contrast, debt decreased overall by €302 million. This figure includes the repayment of a €300 million bond relating
to refinancing for the acquisition of International Rectifier. Information on debt maturities is provided in note 12 to
the Consolidated Financial Statements.
Debt by currencies
2018
53%
Intangible assets
2,659 3,038
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).
Pension plans and
Group performance
Review of results of operations
Further improvement in adjusted earnings per share
Earnings per share in accordance with IFRS are influenced by amounts relating to purchase price allocations
for acquisitions (in particular International Rectifier) as well as by other exceptional items. To enable better
comparability of operating performance over time, Infineon computes adjusted earnings per share (diluted)
as follows:
€ in millions (unless otherwise stated)
Net income from continuing operations attributable to
shareholders of Infineon Technologies AG - diluted
Plus/minus:
Impairments on assets (excluding capitalized development costs) including assets classified
as held for sale, net of reversals'
Impact on earnings of restructuring and closures, net
Share-based compensation expense
Acquisition-related depreciation/amortization and other expenses
(Gains)/losses on sales of assets, businesses,
or interests in subsidiaries, net
Other income and expense, net
Revaluation of deferred tax assets resulting from
the annually updated earnings forecast
2018
2017
1,218
791
7
-
13
118
153
13
Property, plant and equipment
5325
Combined Management Report | Our 2018 fiscal year
P see page 132
Tax effects on adjustments
65
Inventories
Debt
99
1,240 1,480
Trade and other payables
971
2,543
2,452
851
Trade and other receivables
€ in millions
2018
2017
€ in millions
2018
2017
Gross cash position
Sharp improvement in earnings per share
57%
5%
5%
5%
As in the previous fiscal year, income tax expense for the 2018 fiscal year was affected by foreign tax rates,
non-deductible expenses, tax credits and changes in valuation allowances on deferred tax assets.
Further details regarding income tax expense are provided in note 5 to the Consolidated Financial Statements.
Loss from discontinued operations
The loss from discontinued operations, net of income taxes, for the 2018 fiscal year amounted to €143 million
(2017: €1 million). The deterioration was mainly attributable to the increase in provisions for Qimonda in connection
with pending legal proceedings. For further information on risks relating to the Qimonda insolvency see note 19
to the Consolidated Financial Statements.
Capital employed ②
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.
Psee page 148 ff.
P see page 129 ff.
59%
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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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
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.
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.
77
Risk and Opportunity Management System
Coordinated risk management and control system elements are in place that enable us to pursue our stated risk
policy in practice. Alongside the "Risk and Opportunity Management System" and the "Internal Control System
with respect to Financial Reporting Processes” described below, it also includes the related planning, management
and internal reporting processes as well as the Compliance Management System.
Report on expected developments, together with associated material risks and opportunities
Risk and opportunity report
Combined Management Report | Our 2018 fiscal year
-
5
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.
4
Degree of Impact
2
3 >€60 million Moderate
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.
2 >€20 million Minor
<€20 million Marginal
1
on Segment Result
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
3
High Risk
Low Risk
5
4
3
2
1
1
Medium Risk
Risk policy: Underlying principles of our risk and opportunity management
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.
Risk and opportunity report
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
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.
Operating expenses predicted to increase
Slight upward trend in gross margin expected
Based on the expectations for the global economy and for the semiconductor market segments relevant for
Infineon as described above and an assumed average exchange rate of US$1.15 against the euro, Infineon forecasts
revenue growth of 11 percent, plus or minus 2 percentage points, for the 2019 fiscal year. Revenue growth in the
Automotive segment is expected to be well above the Group average. The Power Management & Multimarket segment
is predicted to grow about in line with the Group average while the Industrial Power Control segment is likely to
report growth slightly below the Group average. Due to adverse market conditions, revenue for the Digital Security
Solutions segment is expected to be down by a mid-single digit percentage year-on-year.
Revenue growth of 11 percent expected, plus or minus 2 percentage points, compared to
the previous fiscal year
75
Report on expected developments, together with associated material risks and opportunities
Outlook
Combined Management Report | Our 2018 fiscal year
4 > €100 million Significant
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.
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.
Working capital
Working capital is forecast to finish the 2019 fiscal year at between €1.0 billion and €1.2 billion.
Based on forecasts for the global economy and the semiconductor market in the 2019 calendar year, Infineon
expects revenue growth of 11 percent year-on-year, plus or minus 2 percentage points. On this basis, the gross
margin should increase slightly. At the mid-point of the planned range of revenue growth, the Segment Result
Margin is expected to be in the region of about 18 percent. Investments will rise to a range between €1.6 billion and
€1.7 billion. Depreciation and amortization are expected to be in the region of €1,000 million. Free cash flow from
continuing operations is expected to be slightly positive and up to €200 million. The Return on Capital Employed
(ROCE) is predicted to decrease moderately.
Overall statement on the expected development of the Group
The Return on Capital Employed (ROCE) is expected to moderately decrease in the 2019 fiscal year. The ROCE of
20.5 percent for the 2018 fiscal year included, among other things, the gain from the sale of the major part of the
RF power components business to Cree, Inc. Net income is expected to decline, while capital employed will
increase in the 2019 fiscal year.
ROCE
The gross cash position is expected to finish the 2019 fiscal year at a level between €1.9 billion and €2.7 billion.
Hence, Infineon again expects to meet its capital structure targets in the 2019 fiscal year. See "Capital structure tar-
gets demonstrate our reliability” in the chapter "Group strategy" for more information on capital structure targets.
Gross cash position
Free cash flow in the 2019 fiscal year is forecast to be slightly positive and up to €200 million.
Free cash flow from continuing operations
Depreciation and amortization are expected to be in the region of €1,000 million. Thereof about € 90 million of that
amount are related to depreciation and amortization resulting from purchase price allocations, mainly in connec-
tion with the acquisition of International Rectifier.
Planned investments in manufacturing facilities during the 2019 fiscal year will focus on expanding frontend
capacities, including further expansion of Infineon's 300-millimeter as well as its 200-millimeter manufacturing
capacities in Dresden (Germany) and Kulim (Malaysia), respectively. Considerable funds will also be invested in the
upgrade of existing frontend manufacturing facilities, ensuring that they remain state-of-the-art in terms of automa-
tion, quality, innovation and infrastructure. A significant amount is also earmarked to upgrade backend facilities
and capacities. In addition, as already announced, a low triple-digit million amount will be invested in new build-
ings, mainly in the new 300-millimeter facility in Villach (Austria).
P see page 30
76
Report on expected developments, together with associated material risks and opportunities
Outlook | Risk and opportunity report
Combined Management Report | Our 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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.
Investments and depreciation/amortization
P see page 20 ff.
5 >€250 million Major
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.
Likelihood of Occurrence
Further information in regards to litigation and government inquiries are provided in note 19 to the Consolidated
Financial Statements.
Whilst we often benefit from cross-licensing arrangements with major competitors, no such opportunities exist
to safeguard against risks of this nature in the case of companies specializing in the exploitation of patent rights.
We cannot rule out that patent infringement claims will be upheld in a court of law, thus resulting in significant
claims for damages or restrictions in selling the products concerned. Any such outcome could in turn have an
adverse impact on our earnings performance.
As with many other companies in the semiconductor industry, allegations are made against us from time to
time that we have infringed other parties' protected rights. Regardless of the prospects of success of such claims,
substantial legal defense costs can arise.
Intellectual property rights and patents (RC: medium)
Provisions are recognized in connection with these matters as of 30 September 2018. The provisions reflect the
amount of those liabilities that management believes are probable and can be estimated with reasonable accuracy
at that time. There can be no assurance that these provisions will be sufficient to cover all liabilities that may be
incurred in conjunction with the insolvency proceedings relating to Qimonda.
Due to the insolvency proceedings of Qimonda and the related action of the insolvency administrator, we are
exposed to substantial risks, which are described in detail in note 19 to the Consolidated Financial Statements.
Qimonda insolvency (RC: high)
Legal and compliance risks
Further information regarding the management of financial risks is provided in note 23 to the Consolidated
Financial Statements.
The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the potential risk of a
default by one or more of the banking partners with whom we do business. We mitigate this risk - which could still
arise despite various state-insured deposit protection mechanisms - by a combination of risk avoidance analyses
and risk-spreading measures. The failure of these measures could have a materially adverse impact on Infineon's
financial condition and liquidity situation.
Risk of default of banking partners (RC: medium)
Specified currency risks are hedged Group-wide by means of derivative financial instruments. These hedges are
based on forecasts of future cash flows, the occurrence of which is uncertain. Under these circumstances, exchange
rate fluctuations could - despite hedging measures - also have an adverse impact on earnings.
Our involvement and participation in various regional markets around the world creates cash flows in a number
of currencies other than the euro - primarily in US dollars. A significant share of revenue on the one hand and of
operating costs and investments on the other is denominated in US dollars and correlated currencies. For the most
part, Infineon generates a US dollar surplus from these transactions.
Currency risks (RC: medium)
Financial risks
One of our key success factors is the availability of sufficient qualified employees at all times. There is, however, a
general risk of losing qualified staff or not being able to recruit, train and retain adequately qualified staff within
the business. A lack of technical or management staff could, among other things, restrict future growth and hence
adversely impact our earnings performance.
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 148 ff.
P see page 148 ff.
Psee page 155 ff.
Risk and opportunity report
Report on expected developments, together with associated material risks and opportunities
Combined Management Report | Our 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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 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.
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
88
Combined Management Report | Our 2018 fiscal year
Report on expected developments, together with associated material risks and opportunities
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
With the "Product to System" strategic approach, we seek to identify additional benefits on a system level for our
customers from within our broad portfolio of technologies and products. The strategy enables us to exploit further
revenue potential and thereby achieve our growth and margin targets. This approach also enables us to reduce
customers' development costs and shorten lead times required to bring their products to market.
Strategic approach "Product to System" (OC: medium)
We are constantly striving to develop new technologies, products and solutions and to improve on existing ones,
both separately and in collaboration with customers. We therefore continually invest in research and development
relating to the use of new technologies and materials. Technologies and materials in current use may well lose their
predominance in the foreseeable future, such as silicon, which is reaching its physical limits in some applications.
We see numerous opportunities for working with new materials, such as those associated with silicon carbide or
gallium nitride, to develop more powerful and/or lower-cost products. These materials could well have a positive
influence on our ability to attain our strategic growth and profitability targets.
New technologies and materials (OC: medium)
The principal opportunities are described in the following section. The list is not exhaustive and represents only
a cross-section of the opportunities available. Our assessment of these opportunities is subject to continuous
change, reflecting the fact that our business, our markets and the technologies we deploy are continuously subject
to new developments, bringing with them fresh opportunities, causing others to become less relevant or otherwise
changing the significance of an opportunity from our perspective. Depending on the potential degree of impact
and the estimated probability of occurrence, each of these opportunities is assigned to an "opportunity class” (OC)
in the same way that risks are allocated to a risk class. These classifications are shown in parentheses (e.g. "OC:
medium").
Opportunities
The overall risk assessment is based on a consolidated view of all significant individual risks. We are not currently
aware of any substantial risks capable of jeopardizing Infineon's going-concern status.
Overall statement by Group Management on risk situation
In certain cases, insurance policies have been taken out to protect against potential claims and liability risks, with
the aim of avoiding or at least minimizing any adverse impact on Infineon's financial condition and liquidity.
We minimize legal risks relating to intellectual property rights and patents by pursuing a well-defined patent strategy,
including thorough patent research and selective development and registration of Infineon patents as well as pre-
cautionary protective measures in the form of agreements with major competitors. However, no such opportunities
exist to safeguard against risks of this nature in the case of companies specializing in exploiting patent rights.
We have established a Group-wide compliance management system with the aim of managing compliance-related
risks on a systematic, comprehensive and sustainable basis. Under this system, major preventive procedures
are continuously developed, other elements of the system revamped or strengthened, and appropriate responses
established for possible or actual incidences of non-compliance with internal or external regulations. The Compliance
Officer reports on a quarterly basis to the Chief Financial Officer and bi-annually to the Investment, Finance and
Audit Committee of the Supervisory Board.
In response to the general increase in threats to data security and the high degree of professionalism meanwhile
applied in the area of cybercrime, we have initiated an information security program to further improve protection
against hacking attacks and related risks to our IT systems, networks, products, solutions and services. Information
security is achieved primarily with the aid of Infineon's systematically applied and global Information Security
Management System (ISMS), the prime objectives of which are to identify and measure all potential IT risks and
to ensure that effective processes and tools are in place to minimize and avoid risk. The ISMS covers all areas
of Infineon's business and is certified to the globally recognized ISO/IEC 27001 norm. All relevant risk areas are
continuously monitored and optimized in conjunction with regular internal and external audits.
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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.
Combined Management Report | Our 2018 fiscal year
We seek to minimize procurement-related risks through appropriate purchasing strategies and techniques, including
constant product and cost analysis ("Best Cost Country Sourcing" and "Focus-on-Value”). These programs include
cross-functional teams of experts who are responsible for the standardization of purchasing processes with respect
to material and technical equipment.
A structured project management system is in place to handle development projects, including customer-specific
projects. Clear project milestones and verification procedures required to be carried out during a project as well as
clearly defined limits of authority help us identify potential project risks at an early stage and counter these risks
with specific measures.
At an operational level, we have adopted various quality management strategies aimed at avoiding quality risks
(such as "Zero Defects" and "Six Sigma"), to prevent or solve problems and to improve our business processes. Our
Company-wide quality management system has been certified on a worldwide basis in accordance with ISO 9001
and ISO/TS 16949 for a number of years and also encompasses supplier development. Our processes and initiatives
to ensure continuous quality improvement in corporate procedures are aimed at identifying and eliminating the
reasons for quality-related problems at an early stage.
At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor sector from
economic and demand fluctuations and the risks related to Infineon's operations, financial condition, liquidity
and earnings by closely monitoring changes in early warning indicators as well as by developing specific response
strategies appropriate to the current position within the economic cycle. This can be done, for instance, by
rigorously adjusting capacities and inventory levels at an early stage, initiating cost-saving measures and making
flexible use of external manufacturing capacities, both at frontend and backend facilities.
Measures to implement our risk management strategy
Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate these risks, we rely
upon the advice of both in-house and external experts and provide suitable training to our employees.
In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-compliance with anti-trust
regulations due to lack of knowledge or failure to make the people involved in such transactions adequately aware
of the issues. This can result in high levels of cost (e.g. significant time spent by management, assignment of
attorneys) and fines. Infineon's reputation may also suffer under these circumstances.
In order to develop or expand our business, we may seek to acquire other businesses or enter into various forms
of cooperation arrangements. In the case of acquisitions, there is a risk that these activities prove to be unsuccessful,
particularly regarding the integration of people and products in existing business structures. These issues could
adversely impact our financial condition and earnings performance.
Acquisitions and cooperation arrangements (RC: medium)
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.
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.
Impact of our global operations (RC: medium)
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INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
Likelihood of Occurrence
Determining and adjusting manufacturing volumes (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.
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.
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
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INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
> Processes are in place for the segregation of duties and for the dual control principle in the context of preparing
financial statements, as well as for authorization and access rules for relevant IT accounting systems.
> Processes and controls are in place to explicitly guarantee the completeness and correctness of the year-end
financial statements and financial reporting;
> Issues relevant for financial reporting and disclosures in connection with agreements entered into are recognized
and appropriately presented;
> Intragroup transactions are fully accounted for and properly eliminated;
> Group-wide financial reporting, valuation and accounting guidelines are continually updated and adhered to;
The ICS is an integral part of the accounting process in all relevant legal entities and corporate functions. The
system monitors compliance with stated principles and stipulated procedures based on preventive and detective
controls. Among other things, we regularly check that:
The principal focus of the Internal Control System (ICS) is on the financial reporting process, with the aim of
monitoring the proper maintenance and effectiveness of accounting systems and financial reporting. The primary
objective of the ICS is to minimize the risk of misstatement in Infineon's internal and external reporting and to
ensure with a reasonable amount of certainty that the Consolidated Financial Statements comply with all relevant
regulations. Appropriate controls must therefore be in place throughout the organization to ensure such compliance.
Clear lines of responsibility are assigned to each of the processes.
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.
All reported risks and opportunities in their entirety are reviewed for Infineon for possible correlation and overlap
factors, and are analyzed using an Infineon-specific categorization model. Risks and opportunities analysis and new
developments in risk management culture are supplemented by interdisciplinary workshops held at segment, cor-
porate and regional levels. Important information relevant for Infineon's Risk and Opportunity Management System
is available to all employees via our intranet system, including access to ERM tools and ERM guidelines, containing
job descriptions for all functions involved in the process as well as all information necessary for reporting purposes.
Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage and monitor identified
risks and opportunities, and are responsible for formally determining a set of appropriate strategies (avoidance,
mitigation, transfer to other parties, acceptance). Working closely with corporate functions and individual managers,
the Risk and Opportunity Manager is also responsible for defining and monitoring measures aimed at implementing
the adopted management strategy. For our system to be successful, it is essential that risks and opportunities are
managed and monitored pro-actively and with a great deal of commitment.
Based on the potential degree of impact on operations, liquidity, earnings, cash flows and reputation as well as
the estimated probability of occurrence, a risk is classified as “high”, “medium” or “low”.
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Combined Management Report | Our 2018 fiscal year
5 90% Certain
4 <90% Probable
3 <60% Likely
2 <40% Possible
1 <10% Unlikely
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 parentheses for each risk (e.g. “RC: high”).
Strategic risks
Unsettled political and economic climate (RC: high)
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)
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Combined Management Report | Our 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
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 and supply bottlenecks.
Manufacturing cost trends - raw material prices, cost of materials and process costs (RC: medium)
Our medium- and long-term forecasts are based on expected manufacturing cost trends. In this context, measures
aimed at optimizing manufacturing costs for raw materials and supplies, energy, labor and automation, as well as
for bought-in services from external business partners, may not be feasible to the extent envisaged.
Moreover, our dependence on various materials (such as wafer substrates) and raw materials (such as gold and
copper) used in manufacturing, as well as our energy requirements expose us to substantial price risks. We are also
dependent on supplies of the so-called rare earths required for selected manufacturing processes in conjunction
with process integration. At the time of writing, financial instruments are in place to hedge our price risk exposure
for gold wire during the 2019 fiscal year, based on planned volume requirements. The prices of raw materials and
energy have recently been subject to significant fluctuation, and there is no reason to assume the situation will
change in the near future. If we are unable to offset cost rises or pass them on to customers via price adjustments,
it could have an adverse impact on earnings.
The 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.
Operational risks
The rapid pace of technological change in the market also results in a greater replaceability of products. Due to the
resulting aggressive pricing policies, we may be unable to achieve our long-term strategic goals of gaining and/or
maintaining market share and of product pricing. Moreover, accelerating M&A (Merger and Acquisition) activity
within the semiconductor industry could result in even tougher competition. Potential benefits for competitors
in this market include improved cost structures and stronger sales channels. Overall, this situation could have an
adverse impact on Infineon's earnings.
Increased market competition and commoditization of products (RC: high)
The worldwide semiconductor market is dependent on global economic growth and hence subject to fluctuations.
Our target markets continue to be exposed to the risk of short-term market fluctuations. As a result, our own fore-
casts of future business developments are subject to a high degree of uncertainty. It is possible, for instance, that
future market downturns will follow another pattern, for example, an L shape. The absence of market growth or
its decline would make it considerably more difficult to attain our own growth target. In the event that we are
unprepared for market fluctuations, or our response to such fluctuations turns out to be inappropriate, this could
have a sustained materially adverse impact on Infineon's operations, financial condition, liquidity, cash flows and
earnings.
Cyclical market and sector development (RC: high)
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Combined Management Report | Our 2018 fiscal year
INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
We have once again achieved above-average revenue growth in China and the share of Group revenue generated
in this region in the 2018 fiscal year remained at 25 percent like in the previous year. Our dependence on the
Chinese market therefore remains. This risk includes the possibility of lower external demand and hence a decline
in manufacturing capacity utilization levels. There is also a risk that an increased volume of previously imported
semiconductors will be manufactured in China and that a greater volume of semiconductors manufactured in
China will be exported. Regardless of our assessment of potential scenarios and outcomes within this complex set
of risks, these developments could have an adverse impact on Infineon's operations, financial condition, liquidity,
cash flows and earnings.
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.
Data and IT systems security (RC: high)
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Risk and opportunity report
27
Combined Management Report
Business focus and strategy
Letter to shareholders
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Current issues with allocation have only strengthened our view that we also need to
champion our own manufacturing. The most critical bottlenecks arose for products
that come from foundries - in some product categories, we are dependent on their
supplies, as well. However, we are less dependent on foundries than competitors
with fabless business models and, if we look across our entire portfolio, we are more
resistant to supply problems. We have continued to develop our collaboration with
contract manufacturers and have broadened our supplier base, so that in the future
we will be even better equipped to deal with fluctuations in the supply situation.
Without such constraints, we would have generated significantly higher revenue
in the previous fiscal year, because demand in almost all our markets has been and
remains very high. Even though we are currently still not able to fully satisfy the
high levels of demand, our customers have expressed their great appreciation of our
efforts. They realize and acknowledge that we do everything in our power to meet
their needs. The feedback we have from our customers, especially those in the auto-
motive sector, is that our reliability and commitment set us apart, when compared
with other experiences they have had in the market.
slashed its forecasts and cut back its orders, with the overall result being weak
revenue for Infineon. Our experience from the last crisis prompted us to scale back
our manufacturing to a significant extent, but to make only moderate reductions in
our inventory and investment. Some industry observers and investors were skeptical
of this approach, but it turned out to be the right one. Already in the second half of
the 2020 calendar year, some severely affected economic sectors picked up speed
again. In the automotive market, a catch-up effect started to be seen, while at the
same time, the trend towards electromobility continued to accelerate. The result was
a chip shortage that persists to this day, caused in part by the shifting of production
capacity at our contract chip manufacturers towards supplies for use in laptops,
tablets and servers. The situation was exacerbated by production stoppages due to
pandemic-related lockdowns, especially in Asia, and by environmental disasters
and accidents affecting several semiconductor manufacturers' plants.
At the beginning of the pandemic, it still looked as if large sections of the global
economy would grind to a halt, whereas manufacturers in the area of IoT and digital
interaction and infrastructure saw a strong upturn. The auto industry in particular
The effects of the coronavirus pandemic and the lessons learned
Both trends - electrification and digitalization – have been reinforced still further by
the coronavirus pandemic in the past eighteen months. There was a veritable boom
in some industry sectors, such as hardware for remote working, home schooling and
games consoles, and battery-powered DIY tools.
-
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.
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.
← Q = < 7 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Letter to shareholders
Management Board and
Supervisory Board
Our portfolio is firmly focused on the two major trends of the coming decade: electri-
fication and digitalization. Both trends and the interplay between them will accelerate
structural semiconductor growth. Tomorrow's energy-efficient, connected world is
built on semiconductors. In the Internet of Things (IoT), our products and solutions
enable new functions and services. IoT devices capture their surroundings and process
the data and, in doing so, they interact with the cloud and perform actions. A good
example is the fully automatic vacuum cleaner, which also works in a very energy-
efficient way. Key elements in IoT are sensors, microcontrollers and power semicon-
ductors, as well as connectivity and security solutions, supplemented by software.
Infineon offers all of these elements and makes leading-edge applications possible -
from electric cars that drive autonomously to home solar systems with buffer batteries,
and much more. Thus, we are able to live up to our claim that we make life easier, safer
and greener. Our contribution to climate protection is not limited to the contribution
made by our products: As a company, we want to become carbon-neutral by 2030.
Strategic focus on electrification and digitalization trends
Many of you have been following Infineon's progress for a number of years. You know
that one really important factor in the success of the Company is our deep conviction
that we can use innovative technology to contribute towards solving major challenges.
Whether we are talking about the climate crisis, dwindling resources or population
growth, the urgent issues of our time require intelligent concepts and solutions that
enable us to lead a sustainable and secure life. Infineon, which acts as a link between
the real world and the digital world, is more in demand than ever, and we have never
been in a better position than we are today.
Dear readers,
Chief Executive Officer
Consolidated Financial Statements
Further information
Q = < 8 >
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.
Dr. Reinhard Ploss
Chief Executive Officer
D
Suricenty
Reitrad
Stay healthy and look to the future with confidence.
I would also like to thank you, our shareholders, because your continuing confidence
has given us the space to concentrate on the important issues relating to the future.
At our forthcoming Annual General Meeting, we will propose the payment of a divi-
dend of €0.27 per share. Thus, we want to ensure appropriate participation for you in
our success as well as giving us financial room for maneuver to respond to future
opportunities, for which Infineon is superbly positioned.
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!
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.
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.
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.
Capital market successes and outlook
The Management Board was expanded in April in order to coordinate these activities
across the whole company and a post was created for the transformation of Infineon
in the digital context. Innovative strength, our focus on applications and our global
presence in growth markets are the basis of our success. We need to strengthen the
digital links between the major organizational units such as Technology Development
and Manufacturing or Sales and Marketing and to make knowledge available across
the whole company in order to continue our dynamic evolution in these areas, despite
our increasing size and complexity. The Management Board and the Supervisory
Board have together devised a structure that highlights Infineon's current strengths
and enables targeted further development of our digital expertise. We are delighted
that Constanze Hufenbecher has strengthened our Management Board team and will
address these topics on behalf of our company. With her wealth and breadth of expe-
rience, she is the ideal manager for this role.
← Q = < 9 >
Dr. Reinhard Ploss
Further information
Combined Management Report
Business focus and strategy
Letter to shareholders
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
As I explained at the beginning, digitalization is a key growth driver for our business.
It also offers huge opportunities for the evolution of our company. Growth, global-
ization, the focus on system solutions - we will be able to deal better with all these
issues by applying digital solutions. In terms of our offering, this means, for example,
that we are working increasingly on delivering our solutions inclusive of software and
on expanding our solutions to include services. In our interaction with customers, we
can also, in many cases, become faster and more efficient by using digital channels
and platforms. The digital transformation also offers great opportunities for enhancing
our internal processes and working practices.
We differentiate ourselves clearly from our competitors not only because we have
our own manufacturing facilities, but also because of our technological expertise,
for example, in the area of compound semiconductors based on silicon carbide (SiC)
and gallium nitride (GaN). In many applications, silicon-based power semiconductors
are the optimal solution in technical and economic terms, especially for low switching
frequencies. Power semiconductors based on SiC and GaN, on the other hand, enable
faster switching speeds and significantly higher power density. We see rapidly growing
demand for SiC-based power semiconductors above all in the automotive market
but also in industrial applications and are therefore expanding our CoolSiC™ portfolio
in particular, both in the area of discrete components and that of modules. We are
also expanding our GaN product range. In addition, we are investing increasingly in
the expansion of our manufacturing capacity for SiC and GaN to maintain our leading
role across the entire range of power semiconductors, paving the way for further
enhancements in energy efficiency. This is significant, as the world of the future is
electric.
our undisputed leading position in power semiconductors, in light of the trend
towards electrification. Our concept for expanding manufacturing capacity involves
initially preparing the clean room and then ramping this up over time in response
to demand. Production at the new Villach factory will be increased gradually based
on this principle.
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
Success factors and evolution of our company
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.
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.
Consolidated Financial Statements
Letter to shareholders
← Q = < 6 >
Further information
#1 with a market share of 24.6%
for secure ICs (excluding NFC), R05
#3 with a market share of 14.7%
for microcontrollers, R01
CPI Card Group / Fitbit / Giesecke & Devrient /
Harman/HP/Idemia / Lenovo / Microsoft/
Nintendo / Perfect Plastic / Seiko Epson / Sony/
Thales / US Government Publishing Office
Market position²
Key customers¹
for MEMS microphones, R04
#1 with a market share of 44.2%
#1 with a market share of 24.4%
for power MOSFETs, R03
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
#3 with a market share of 11.6%
for IPMS, R03
R023
#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
19
#1 with a market share of 36.5%
for IGBT modules, R03
Major distributions customers¹
Market position²
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
p. 75
☐
p. 70
p. 65
Connected Secure Systems
Power & Sensor Systems
Industrial Power Control
□ p. 60
Automotive
ABB / Alstom / CRRC / Danfoss / Goldwind/
Inovance / LG Electronics / Midea / Rockwell /
Schneider Electric / Semikron / Siemens/
SMA/Sungrow/Vestas / Yaskawa
Infineon Technologies | Annual Report 2021
Arrow / Avnet / Future / Hakuto / Intron / Jingchuan / Macnica / Nexty / Rutronik / Weikeng / WPG Holding (SAC)
1 In alphabetical order.
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Letter to shareholders
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Sustainability plays a key role for Infineon. At the
beginning of 2020, we had already set ourselves
the goal of becoming carbon-neutral by 2030.
Our high sustainability ratings and our inclusion
in sustainability indices are both our reward and
our motivation.
The integration of Cypress and the refinancing of
this acquisition are proceeding on schedule. In
March 2021, capital market confidence in Infineon's
economic prospects resulted in the inclusion of our
shares in Europe's most prestigious stock market
index, the EURO STOXX 50®.
We are continuing to focus on the structurally fast-
growing themes of electrification and digitalization.
With Cypress, we have significantly increased our
expertise in system solutions, especially with regard
to the loT.
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.
€2.072 bn
± 18.7%
SEGMENT RESULT
AND MARGIN
Please find a detailed presentation of the segments' target applications and product range in the chapter “Applications and product range", p. 240 ff.
EURO
STOXX 50Ⓡ
€11.060 bn
+29%
REVENUE
Our year at a glance
Q = < 5 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
3 A list of references can be found on p. 151.
2 All figures for the 2020 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment. The figures provided in those sections with respect to changes in market share
relate to the 2020 and 2019 market share figures as calculated in 2021. Due to changes in the way the market is analyzed, these figures may differ from the 2019 market share figures reported in 2020.
INCLUSION IN THE
The segments
2,322
2,773
6 Management Board and
58
The segments
Supervisory Board
80
Research and development
of Comprehensive Income
154 Consolidated Statement
>
Next page
6 Letter to shareholders
88 Manufacturing
10
The Management Board
92
Internal management system
12 Report of the Supervisory Board
to the Annual General Meeting
20 Business focus and strategy
95 Sustainability at Infineon
96
The Infineon share
20 Business focus
22 Growth drivers
35 Group strategy
47 Human Resources strategy
128
Previous page
<
153 Consolidated Statement
2021 fiscal year
Annual Report 2021
Infineon Technologies AG
www
SITE
Infineon
Contents
= < 1 >
2 Infineon key data
3 Infineon at a glance
49 Combined
152 Consolidated
Navigation in the report per mouse click
99 Group performance
Management Report
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
4 The segments
109
Report on outlook, risk
and opportunity
124 Overall statement on Infineon's
financial condition
2021/2020
Fiscal year from 1 October to 30 September
€ in
in % of
millions
revenue
€ in
millions
in % of
Change
revenue
in %
2021
2020
2020
€ in
€ in
Change
millions
millions
in %
Revenue by region
11,060
8,567
29
Net cash provided by operating activities
Europe, Middle East, Africa
2021/2020
25
2021
Infineon key data¹
125 Infineon Technologies AG
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
232 Further information
232 Responsibility Statement by the
Management Board
233 Independent Auditor's Report
240 Applications and product range
244 Chart overview
245
246
List of abbreviations
Financial calendar 2022
Fiscal year from 1 October to 30 September
247 Imprint
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
Consolidated Financial Statements
Further information
← Q = < 2 >
Page reference
< 4 >
Neubiberg, November 2021
Further information
Automotive²
235
0.26
0.87
Basic earnings per share in €
29
8,567
11,060
Revenue by segment
30
(3,806)
(2,663)
Net cash position³
22
3,227
3,922
Gross cash position³
22
10
845
9
1,027
therein: USA
36
1,099
4,841
44
3,521
41
Connected Secure Systems²
23
0.22
0.27
Dividend per share in €5
23
31
2,650
29
3,268
Power & Sensor Systems
88
1,497
0.64
Adjusted earnings per share in € - diluted 4
10
17
1,406
14
1,542
Industrial Power Control
235
0.26
0.87
Diluted earnings per share in €
37
1.20
Investments 3
24
12
3,174
38
4,195
Greater China
Net cash provided by (used in) financing activities
35
15
1,291
16
1,744
Asia-Pacific (excluding Japan, Greater China)
68
37
(7,172)
from continuing operations
21
12
1,056
12
1,278
Net cash used in investing activities
therein: Germany
69
1,817
3,063
from continuing operations
(2,284)
1,397
32
(885)
1,015
Q =
1,254
Americas
20
1,260
1,513
Depreciation and amortization
43
9
765
10
from continuing operations
1,094
123
(6,727)
1,574
Free Cash Flow³
29
29
2,472
29
3,178
therein: Mainland China, Hong Kong
(114)
6,274
Japan
13
11
11
Total assets
5 A dividend per share of €0.27 for the 2021 fiscal year will be proposed to the Annual General Meeting on 21 February 2022.
6 See the chapter "Review of financial condition" for definition, p. 103.
8
4,110
4,443
Property, plant and equipment
4 See the chapter "Review of results of operations" for definition, p. 103.
77
13.7
1,170
18.7
2,072
23,334
Segment Result/Segment Result Margin
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
Profit (loss) for the period
1 Columns may not add due to rounding.
(50)
(4)
(6)
net of income taxes
Profit (loss) from discontinued operations,
8
3 See the chapter "Internal management system" for definition, p. 93 f.
46,665
21,999
Total equity
974
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
in microcontrollers R01
#3
in the entire semiconductor market R01
#9
employees
50,280
Part of your life.
Part of tomorrow.
7 Debt-to-total-capital ratio = long-term and short-term financial debt divided by total assets.
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).
Infineon
Infineon Technologies | Annual Report 2021
← Q = < 3 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
12
10,219
11,401
at a glance
50,288
6
216
30
13.0
(1,113)
13.1
(1,448)
Research and development expenses
53
32.4
2,776
38.5
4,260
Corporate and Eliminations
Return on assets6
3.6%
Return on equity
(25)
0
16
0
12
Other Operating Segments
46.5%
48.9%
Equity ratio
Infineon employees as of 30 September
43
10.3%
Inventory intensity
Gross profit/Gross margin
Debt-to-equity ratio
372
1,175
Profit (loss) from continuing operations
153
581
1,470
Operating profit
8.4%
Return on Capital Employed (ROCE)³
30
12.2
(1,042)
12.2
3.0%
(1,354)
Debt-to-total-capital ratio?
5.0%
1.7%
6
9.3%
9.3%
68.8%
28.2%
32.0%
Selling, general and administrative expenses
57.8%
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.
Q = < 98 >
Further information
Consolidated Financial Statements
Combined Management Report
The Infineon share
Business focus and strategy
■SOX
80
Infineon Technologies | Annual Report 2021
Dow Jones US Semiconductor Index
DAX
Shareholder structure
Management Board and
Supervisory Board
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.
Retail investors can contact us by email (investor.relations@infineon.com)
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, 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 Technologies | Annual Report 2021
6.82% BlackRock Inc.
4.85% Kingdom of Norway
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|
Business focus and strategy
Management Board and
Supervisory Board
and by telephone (+49 89 234-26655).
■Infineon
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
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.
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.
Further information
Combined Management Report
Group performance
Q = < 97 >
Share price development
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.
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 €
40.25
37.95
35.64
33.34
31.03
26.42
24.11
19.46
21.81
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
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.
30 September 2020=100
Consolidated Financial Statements
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.
Q = < 99 >
Profit (loss) from continuing operations
1,175
372
Profit (loss) from discontinued operations, net of income taxes
(6)
(4)
Profit (loss) for the period
1,169
368
Basic earnings per share (in euro)
0.87
0.26
Diluted earnings per share (in euro)
(52)
0.87
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.
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.
Further details on the performance of the segments can be found in the chapter
"The segments". p. 58 ff.
Infineon Technologies | Annual Report 2021
Consolidated Financial Statements
0.26
(144)
Income tax
(9)
Review of results of operations
Group performance
Review of results of operations
The consolidated statement of profit or loss
€ in millions, except earnings per share
Revenue
Gross profit
Research and development expenses
Selling, general and administrative expenses
2021
2020
11,060
8,567
4,260
2,776
(1,448)
(1,354)
(1,113)
(1,042)
Other operating income and expenses, net
12
(40)
Operating profit
1,470
581
Net financial result (financial income and expenses, net)
(160)
(148)
Share of profit (loss) of associates and joint ventures
9
Further information
Combined Management Report
The Infineon share
28.72
Trading in the USA
Q = < 94 >
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 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.).
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 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
other intangible assets, including capitalized development costs.
For an analysis of changes in these performance indicators during the 2021 fiscal
year, see the chapter "Review of liquidity”. p. 106 f.
Non-financial performance indicators
The non-financial performance indicators at Infineon include CO2 emissions and
indicators from the area of diversity.
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.
These goals are also reflected in the remuneration of the Management Board
(see the chapter "Remuneration report”, □ p. 132 ff.).
Actual and target values for performance indicators
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.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Sustainability at Infineon
Consolidated Financial Statements
Further information
Q = < 95 >
Sustainability at Infineon
Further information
Consolidated Financial Statements
Combined Management Report
Internal management system
Business focus and strategy
Impact on earnings of sales of businesses, or interests in subsidiaries
Net of other income and expense
= Segment Result
Free Cash Flow
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.
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:
Net cash provided by (used in) operating activities from continuing operations
+ Net cash provided by (used in) investing activities from continuing operations
+ Cash flows from the purchase and sale of financial investments
= 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.
Sustainability activities are described in the separate
report "Sustainability at Infineon".
ROCE is defined as follows:
Financial result excluding interest result
Share of profit (loss) of associates and joint ventures accounted for using the equity method
Income tax
= Operating profit from continuing operations after tax ①
Assets
Cash and cash equivalents
Financial investments
Assets classified as held for sale
Total current liabilities
+ Short-term financial debt and current maturities of long-term financial debt
+ Liabilities classified as held for sale
= Capital employed ②
ROCE 1/②
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Operating profit, adjusted for:
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.
The separate report "Sustainability at Infineon",
including the summarized Non-Financial Report,
is available on Infineon's website at
www.infineon.com/csr_reporting.
Sustainability at Infineon
Index membership (selected)
€2,611,842,274 (as of 30 September 2021),
€2,611,842,274 (as of 30 September 2020)
1,305,921,137 (as of 30 September 2021),
1,305,921,137 (as of 30 September 2020)
4,545,602 shares (as of 30 September 2021),
5,251,391 shares (as of 30 September 2020)
DE0006231004
623100
IFX (share), IFNNY (ADS)
IFX GY (Xetra trading system), IFNNY US
IFX-XE, IFNNY-PK
Shares: Frankfurt Stock Exchange (FSE)
€46,231 million (as of 30 September 2021)
4,884,416 (in the 2021 fiscal year)
ADS, over-the-counter trading on the OTC market (OTCQX)
US$53,539 million (as of 30 September 2021)
180,128 (in the 2021 fiscal year)
DAX 40
Daily average ADS traded
TecDAX
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
1 October 2019
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
EURO STOXX 50
Other expenses
Market capitalization²
Daily average shares traded on Xetra
Supplementing the Annual Report 2021
Infineon Technologies | Annual Report 2021
TER
Infineon
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
The Infineon share
Consolidated Financial Statements
Further information
Q = < 96 >
The Infineon share
Basic information on shares
Basic information on bonds and other financing instruments
Frontend and backend
manufacturing
Share types
1.500% Bond from 10 March 2015
0.750% Bond from 24 June 2020
1.125% Bond from 24 June 2020
Share capital
Shares issued¹
Own shares
ISIN
WKN
Ticker symbol
Bloomberg
Nasdaq IR Insight
Listings
Market capitalization²
Ordinary registered shares in the form of shares or
American Depositary Shares (ADS) with a notional value
of €2 each (ADS: shares = 1:1)
2.875% Hybrid Bond from
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
Consolidated Financial Statements
Combined Management Report
Manufacturing
Manufacturing sites
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
In September 2021, a 20-minute power cut in Dresden led to an interruption in
production. Manufacturing was ramped up again in the following weeks.
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.
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
Backend manufacturing
■Corporate headquarters
• Regional headquarters • Frontend and backend manufacturing
For definition frontend/backend manufacturing p. 51
1 Penang is assigned to the Austin site. The Known Good Die (KGD) test takes place in Penang.
2 The site in Temecula will be closed in the 2022 fiscal year.
Further information
Q = < 91 >
Manufacturing sites
AMERICA
› Regensburg
Frontend manufacturing
› Dresden
Corporate headquarters
> Neubiberg
Germany
Frontend manufacturing
> Villach
Austria
Europe, Middle East, Africa
Frontend manufacturing
› Temecula, CA 2
Backend manufacturing
Hungary
> San José, CA
› Mesa, AZ
Backend manufacturing
> Leominster, MA
Frontend manufacturing
> Austin, TX
Regional headquarters
> Milpitas, CA
Regional headquarters
> El Segundo, CA
USA
Backend manufacturing
> Tijuana
Mexico
Frontend manufacturing
› Cegléd
Backend manufacturing
Asia-Pacific
Consolidated Financial Statements
Further information
Q = < 92 >
Internal management system
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.
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.
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.
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.
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.).
Performance indicators
Principal performance indicators
In order to measure its success in implementing its strategies, Infineon uses the
following three principal performance indicators:
> Segment Result and Segment Result Margin
Combined Management Report
Internal management system
> Free Cash Flow from continuing operations and
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.
Segment Result
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.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Internal management system
Consolidated Financial Statements
Further information
Q =
< 93 >
Segment Result is defined as follows:
Operating profit, adjusted for:
> Return on Capital Employed (ROCE)
Share-based payment
Business focus and strategy
Infineon Technologies | Annual Report 2021
Singapore
> Regional headquarters;
Backend manufacturing
(test only)
Indonesia
> Batam
Backend manufacturing
Korea
) Cheonan
Backend manufacturing
Malaysia
> Kulim
Frontend manufacturing
> Melaka
Backend manufacturing
› Penang¹
Management Board and
Supervisory Board
Frontend manufacturing
› Cavite
Backend manufacturing
Thailand
› Bangkok
Backend manufacturing
Greater China
> Shanghai
Regional headquarters
> Wuxi
Backend manufacturing
Japan
> Tokyo
Regional headquarters
Philippines
€600 million
> Warstein
due on 10 March 2022, ISIN: XS1191116174
due on 24 June 2023, ISIN: XS2194282948
due on 24 June 2026, ISIN: XS2194283672
due on 24 June 2029, ISIN: XS2194283839
due on 24 June 2032, ISIN: XS2194192527
first reset date 1 January 2025,
ISIN: XS2056730323
1 October 2019
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
A full overview of other major indices in which the Infineon share is represented can be found on Infineon's website at
www.infineon.com/cms/en/about-infineon/investor/infineon-share/#5].
2 Own shares were not taken into consideration for calculation of market capitalization.
1 The number of shares issued includes own shares.
since 11 February 2021:
"BBB-" Outlook: "positive"
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
Business focus and strategy
US$350 million
US$235 million
US$350 million
US$350 million
US$350 million
US$250 million
US$1,110 million
US$216 million
due on 5 April 2024
US$350 million
ISIN: XS2056730679
first reset date 1 January 2028,
€600 million
due on 5 April 2026
3.625% Hybrid Bond from
Selling, general and administrative expenses
€ in millions, except percentages
Selling, general and administrative expenses
Review of results of operations
Q = < 102 >
Further information
Consolidated Financial Statements
Management Board and
Supervisory Board
Business focus and strategy
Infineon Technologies | Annual Report 2021
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.
As a percentage of revenue, research and development expenses amounted to
13.1 percent in the 2021 fiscal year, roughly at the same level as one year earlier
(13.0 percent).
Research and development expenses amounted to €1,448 million in the 2021 fiscal
year, an increase of €335 million or 30 percent compared to the previous year's figure
of €1,113 million. The principal reasons for the higher figure were the inclusion of
Cypress for the full twelve-month period compared to the previous year, a further
increase in research and development activities, and the recruitment of additional
staff. In this context, the number of people employed in research and development
functions rose by 12 percent to 10,372 employees (30 September 2020: 9,262 employ-
ees). Moreover, acquisition-related expenses amounting to €15 million were included
in research and development expenses (2020: €18 million).
Change year-on-year
Combined Management Report
Group performance
Percentage of revenue
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).
2020
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).
Further details regarding income tax expense are provided in note 5 to the Consoli-
dated Financial Statements. p. 173 ff.
As in the previous fiscal year, the income tax expense for the 2021 fiscal year was
affected by foreign tax rates, non-deductible expenses, tax-exempt income, tax credits
and changes in valuation allowances on deferred tax assets.
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).
Effective tax rate down to 10.9 percent
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
Slight deterioration in financial result
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).
13.0%
12.2%
12.2%
20%
30%
1,042
1,354
2021
13.1%
1,379
30%
Percentage of revenue (gross margin)
2,776
4,260
Gross profit
67.6%
61.5%
Percentage of revenue
15%
17%
Change year-on-year
5,791
6,800
2021
2020
Cost of goods sold
38.5%
18%
32.4%
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
1,113
1,448
(158)
(199)
(108)
(123)
The higher profit for the period resulted in a corresponding increase in earnings
per share.
1,770
2020
2021
Capitalized development costs
Research and development expenses
Change year-on-year
Percentage of revenue
Grants received
Minus:
Research and development expenses, gross
€ in millions, except percentages
Operating expenses stable as percentage of revenue
Both basic and diluted earnings per share amounted to €0.87 (2020: €0.26) for the
2021 fiscal year.
Further information
Increase in adjusted earnings per share
Profit (loss) from continuing operations, attributable to
shareholders of Infineon Technologies AG - diluted
12%
10,219
11,401
1%
11,780
11,933
(10%)
8,330
7,490
29%
3,450
4,443
6%
21,999
1,149
23,334
337
Plus/minus:
5
Inventory intensity
Debt-to-equity ratio 4
540
544
Acquisition-related depreciation/amortization and other expenses
14
27
Return on equity ³
20
Equity ratio 2
(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
Statement of Financial Position ratios:
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.
2%
15,082
Non-current assets
€ in millions, except percentages
Current assets
Review of financial condition
Adjusted earnings per share (diluted) increased from €0.64 to €1.20 per share and
were calculated as follows:
comparability of operating performance over time, Infineon computes the adjusted
earnings per share (diluted). Adjusted profit (loss) for the period and adjusted earn-
ings per share (diluted) should not be seen as a replacement or superior performance
indicator, but rather as additional information to the profit (loss) for the period and
earnings per share (diluted) determined in accordance with IFRS.
Review of results of operations | Review of financial condition
Group performance
Combined Management Report
Q = < 103 >
€ in millions, except percentages
Consolidated Financial Statements
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Earnings per share in accordance with IFRS are influenced by amounts relating to
purchase price allocations for acquisitions (in particular Cypress and International
Rectifier), by one-time expenses recorded within the financial result in conjunction
with the acquisition of Cypress and other exceptional items. To enable better
Total assets
14,820
€ in millions (unless otherwise stated)
Current liabilities
15%
7,179
8,252
Change
year-on-year
30 Septem-
ber 2020
30 Septem-
ber 2021
Total equity
(35)
(26)
372
1,175
Total liabilities
Non-current liabilities
2020
2021
Profit (loss) from continuing operations - diluted
Compensation of hybrid capital investors'
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.
Infineon Technologies | Annual Report 2021
< 101 >
1,254
Americas
Other Operating
Segments
Connected
Secure Systems
Systems
Power & Sensor
11%
Industrial
Power Control
9%
765
10%
1,094
Japan
29%
Automotive
1,015
12%
therein: USA
Business focus and strategy
Combined Management Report
Group performance
Review of results of operations
Consolidated Financial Statements
Further information
Q =
< 100 >
C37 Revenue by segment
€ in millions
100%
11,060
Total
10%
845
9%
1,027
2,472
29%
3,178
therein: Mainland China, Hong Kong
therein: Germany
1,406 1,542
2,650
3,268
27%
2,322
25%
2,773
Europe, Middle East, Africa
3,521
4,841
2020
2021
€ in millions, except percentages
Regional distribution of revenue largely unchanged year-on-year
1,278
Management Board and
Supervisory Board
12%
12%
16 12
2021
37%
3,174
38%
4,195
Greater China¹
2020
974
1,397
15%
1,291
16%
1,744
Asia-Pacific (excluding Japan, Greater China)
1,056
(1)
ROCE 6
5.0%
At the same time, gross financial debt decreased by €448 million to €6,585 million
(30 September 2020: €7,033 million), partly due to the early repayment of €310 million
of financial debt raised in connection with the acquisition of Cypress. Information
on the composition and maturities of gross financial debt is provided in note 15 to the
Consolidated Financial Statements. ☐ p. 184 f.
Total liabilities stood at €11,933 million as of 30 September 2021 and were therefore
€153 million higher than one year earlier (30 September 2020: €11,780 million). Trade
payables increased by €409 million from €1,160 million to stand at €1,569 million
at the end of the reporting period due to high utilization of production, on the one
hand, and even more to higher investments. Provisions went up by €385 million to
€1,134 million, as the recognition of the performance-related employee remuneration
for the reporting period exceeded the payments made for the previous year.
Liabilities slightly higher
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.
Slight increase in non-current assets mainly due to investments
in property, plant and equipment
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.
Q = < 104 >
Further information
Consolidated Financial Statements
Combined Management Report
Group performance
Review of financial condition
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Significant increase in current assets mostly due to gross cash position
Current assets went up by €1,073 million to stand at €8,252 million as of 30 Septem-
ber 2021, compared to €7,179 million one year earlier. The increase resulted mainly
from the gross cash position, which improved by €695 million to €3,922 million (30 Sep-
tember 2020: €3,227 million). For comments on the change of the gross cash position,
2 The calculation of the adjusted earnings per share is based on unrounded figures.
8,567
1 Including the cumulative tax effect.
100%
C38 Revenue by segment in the 2021 fiscal year
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Group performance
Review of results of operations
Business focus and strategy
Management Board and
Supervisory Board
Gross profit (revenue less cost of goods sold) amounted to €4,260 million, 53 percent
up on the €2,776 million recorded one year earlier. The gross margin improved
accordingly from 32.4 percent in the 2020 fiscal year to 38.5 percent in the 2021
fiscal year.
China (comprising Mainland China and Hong Kong) accounted for €3,178 million,
or 29 percent of Infineon's global revenue, and therefore had the largest share at
the individual country level, followed by Germany with €1,278 million or 12 percent.
Gross margin significantly improved
The distribution of revenue by region remained more or less unchanged compared to
the 2020 fiscal year. As in the previous year, Greater China was the largest region in
revenue terms, accounting for 38 percent of total revenue generated in the 2021 fiscal
year worldwide, followed by the Europe, Middle East, Africa region with 25 percent.
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.
13% Connected Secure Systems
0% Other Operating Segments,
Corporate and Eliminations
● 29% Power & Sensor Systems
14% Industrial Power Control
● 44% Automotive
0
1 Greater China comprises Mainland China, Hong Kong and Taiwan.
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.
0.64
1,266
1 Return on assets = Profit (loss) for the period/Total assets
27
31
Other income and expense, net
3.0%
8.4%
9.3%
9.3%
68.8%
57.8%
3.6%
10.3%
46.5%
48.9%
1.7%
Acquisition-related expenses within financial result
1.20
7
2 Equity ratio = Total equity/Total assets
1,304
814
1,563
Adjusted profit (loss) for the period from continuing operations
attributable to shareholders of Infineon Technologies AG - diluted
Weighted-average number of shares outstanding (in millions) - diluted
Adjusted earnings per share (in euro) - diluted²
6 Calculation see following section about ROCE in this chapter, p. 104 f.
5 Inventory intensity = Inventories (net)/Total assets
4 Debt-to-equity ratio = (Long-term and short-term financial debt)/Total equity
(35)
(64)
Revaluation of deferred tax assets resulting from
(126)
(131)
the annually updated earnings forecast
Tax effects on adjustments
3 Return on equity = Profit (loss) for the period/Total equity
49
As a result, the Return on Capital Employed (ROCE) rose sharply from 3.0 percent
to 8.4 percent.
Losses (gains) on sales of businesses, or interests in subsidiaries, net
2020
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
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
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
At €15,793 million, however, capital employed was almost identical to one year ear-
lier (30 September 2020: €15,827 million).
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.
Q = < 109 >
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 2021 fiscal year and show the
outlook for the 2022 fiscal year.
€ in millions,
Actuals
except percentages
FY 2020
Outlook for
FY 2021¹
Actuals
FY 2021
Principal performance
indicators
Report on outlook, risk and opportunity
Outlook
Segment Result Margin
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.
Q = < 108 >
1,749
1,851
2,173
1,376
3,922
3,227
833
505
5,752
6,528
6,585
7,033
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.
(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
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Combined Management Report
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Review of liquidity
Consolidated Financial Statements
Further information
(3,806)
13.7%
Above 18%
(at a revenue level
18.7%
Group performance
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
In the 2021 fiscal year, operating profit from continuing operations after tax increased
sharply by €852 million to €1,325 million (2020: €473 million).
ROCE significantly improved due to higher operating profit
1
The equity ratio as of 30 September 2021, based on total assets amounting to
€23,334 million, was 48.9 percent (30 September 2020: 46.5 percent, based on total
assets amounting to €21,999 million).
Equity increased by €1,182 million to stand at €11,401 million at the end of the
reporting period (30 September 2020: €10,219 million), mostly due to the profit for
the period for the 2021 fiscal year amounting to €1,169 million. Actuarial gains arising
on the measurement of pensions and similar commitments totaling €128 million
after tax recognized through other comprehensive income also had a positive impact
on equity. Positive currency effects amounting to €90 million, which were recognized
in other reserves, also contributed to the higher figure. These increases in equity
were offset mainly by the dividend of €286 million paid out for the 2020 fiscal year.
Shareholders' equity up mainly due to profit for the period
Pensions and similar commitments decreased by €122 million, primarily due to an
actuarial gain of €128 million after tax arising on the measurement of net pension
obligations and as a consequence of interest rate and credit spread developments on
financial markets during the fiscal year just ended (see note 18 to the Consolidated
Financial Statements, ☐ p. 187 ff.).
Review of financial condition | Review of liquidity
49%
A Return on Capital Employed (ROCE) of about 6 percent was originally forecast in
November 2020 for the 2021 fiscal year. With the publication of the figures for the
first half of the 2021 fiscal year, this forecast was raised to 7.5 percent. The actual
ROCE for the 2021 fiscal year came in at 8.4 percent, a significant improvement on that
reported for the 2020 fiscal year, mainly due to the good operating profit from con-
tinuing operations.
Free Cash Flow was originally expected to exceed €700 million. Here, too, the outlook
was raised in stages. Initially, the outlook was raised in February 2021 and predicted
to exceed €800 million. In August 2021, Free Cash Flow was anticipated to come in
at around €1.5 billion. Free Cash Flow generated in the 2021 fiscal year ultimately
amounted to €1,574 million and was therefore in line with the forecast.
In conjunction with the adjustments to the revenue forecast, the expected Segment
Result Margin was also adjusted in each quarter. Originally, a Segment Result Margin of
16.5 percent was forecast for the 2021 fiscal year. After initially raising the outlook to
17.5 percent with the publication of first-quarter figures of the 2021 fiscal year and
subsequently to around 18 percent with the publication of second-quarter figures, the
most recent outlook, published in August 2021, forecast the Segment Result Margin
at above 18 percent. In the final analysis, this outlook was achieved with an actual
Segment Result Margin of 18.7 percent.
Revenue for the 2021 fiscal year was originally forecast in November 2020 at an amount
of €10.5 billion, plus or minus 5 percent. In light of the positive business performance,
the outlook was raised at a number of points over the following quarters to an expected
revenue of around €11 billion. The actual amount of revenue generated in the 2021
fiscal year was €11,060 million. This figure was in line with the most recent outlook
dated 3 August 2021 and slightly above the range stated in the original outlook from
November 2020.
Comparison of original outlook and actual figures
for the 2021 fiscal year
C39 Financial debt by currencies
€ in millions
2021
7,033
50%
50%
6,585
US dollar
Infineon Technologies | Annual Report 2021
Consolidated Financial Statements
Further information
Q =
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
8,567
change in revenue com-
pared to previous year
Investments
Revenue increase
to around €11 billion
11,060
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.
The higher level of operating profit was mainly due to the significant revenue growth
in connection with the resulting good utilization (see the chapter "Review of results
of operations", ☐ p. 99 f.).
< 105 >
ber 2021
51%
30 Septem-
Net cash position
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
1,470
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
21,999
Plus/minus:
Cash and cash equivalents
(1,749)
Financial investments
(2,173)
(1,851)
(1,376)
3.0%
Assets classified as held for sale
830
(83)
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
2020
3,063
(102)
1,817
(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
2
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
(9)
Total current liabilities
(4,443)
(2,284)
(7,172)
795
(1,372)
1,574
(6,727)
Infineon Technologies | Annual Report 2021
Management Board and
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Consolidated Financial Statements
Further information
1,817
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
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
Minus:
Short-term financial debt and current portion of long-term financial debt
Long-term financial debt
Gross financial debt
< 107 >
3,063
2020
2021
(3,450)
Short-term financial debt and current maturities of long-term financial debt
Capital employed ②
833
15,793
505
15,827
ROCE 1/②
8.4%
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.
Infineon Technologies | Annual Report 2021
Management Board and
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Combined Management Report
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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
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").
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.
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
30 Septem-
ber 2020
Euro
Both the Risk and Opportunity Management System and the Internal Control System
are continuously developed and expanded to ensure compliance with internal and
external requirements. Regular improvements made to these systems contribute
to the continuous monitoring of the relevant risk areas, including the responsible
organizational units.
Management Board and
Supervisory Board
Qimonda insolvency (RC: medium)
Legal and compliance risks
Further information regarding the management of financial risks is provided in note 27
to the Consolidated Financial Statements. ☐ p. 211 ff.
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.
Risk of default by banking and financing partners (RC: medium)
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.
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
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.
Need for qualified staff (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.
Report on outlook, risk and opportunity
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Further information
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Combined Management Report
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Management Board and
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Infineon Technologies | Annual Report 2021
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.
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 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.
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.
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.
Q = < 118 >
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.
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)
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.
Measures to implement our risk management strategy
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.
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.
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.
Non-achievement of strategic or operational targets and risks
relating to the integration of Cypress (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.
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.
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.
Acquisitions and cooperation arrangements (RC: medium)
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.
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.
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.
Report on outlook, risk and opportunity
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Q =
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Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
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Infineon Technologies | Annual Report 2021
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,
Impact of our global operations (RC: medium)
Further information regarding litigation and government inquiries is provided in
note 23 to the Consolidated Financial Statements. p. 198 ff.
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.
< 119 >
Manufacturing cost trends - raw materials prices, cost of materials
and process costs (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
Infineon's operations, financial condition, liquidity, cash flows and earnings.
Product development delays (RC: medium)
Management Board and
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Infineon Technologies | Annual Report 2021
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.
Risks arising from the coronavirus pandemic (RC: medium)
Increased market competition and commoditization of products (RC: high)
The rapid pace of technological change in the market also results in a greater 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.
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.
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
Cyclical market and sector development (RC: high)
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.
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.
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.
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.
Strategic risks
Q = < 115 >
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
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Infineon Technologies | Annual Report 2021
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”).
Significant risks
Cypress' ICS is being continuously integrated into the Group's ICS in conjunction with
the merger of legal entities and
processes.
Unsettled political and economic climate (RC: high)
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Consolidated Financial Statements
Further information
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.
< 117 >
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
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Management Board and
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Infineon Technologies | Annual Report 2021
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
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 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.
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.
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 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)
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.
Potential cyber-attacks on IT systems used in manufacturing processes, present
risks that could result in production downtime and supply bottlenecks. In addition,
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.
Data and IT systems security (RC: high)
We cooperate with numerous suppliers who provide us with materials and services
or manage parts of our supply chain. We do not always have alternative sources for
some of these suppliers and therefore depend on their ability to deliver products and
services of the required quality. The unexpectedly high demand for semiconductor
products in the 2021 fiscal year – particularly for the automotive market, renewable
energy applications, data centers, the expansion of mobile communications infra-
structure, many aspects of digitalization and the electronics used at work and in
homes in general - continues to cause supply problems, particularly for our contract
manufacturers. The situation has not only led to delays in supplying our customers, but
also resulted in an actual loss of revenue during the period under report. At the same
time, we are currently confronted with price increases from suppliers and there is a risk
that it will not be possible to fully pass on these increases to our customers. Cypress'
business operations, in particular, rely heavily on independent contract manufacturers
and subcontractors to manufacture its products, including wafer fabrication, assembly,
packaging and testing. Any failure of one or more of these suppliers to meet their
obligations to Infineon could have an adverse impact on Infineon's business operations,
liquidity and earnings.
-
Dependence on individual suppliers (RC: high)
Operational risks
Q = < 116 >
At a strategic risk level, we endeavor to mitigate the typical risks that arise in the
semiconductor sector due to economic and demand fluctuations and the risks
related to Infineon's operations, financial condition, liquidity and earnings by closely
monitoring changes in early warning indicators as well as by developing specific
response strategies appropriate to the current position within the economic cycle.
This can be done, for instance, by rigorously adjusting capacities and inventory levels
at an early stage, initiating cost-saving measures and making flexible use of external
manufacturing capacities at both frontend and backend facilities.
Infineon Technologies | Annual Report 2021
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.
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.
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.
Depreciation and amortization are predicted to be between €1.6 billion and €1.7 billion.
Approximately €400 million of that amount relates to depreciation and amortization
resulting from purchase price allocations, mainly in connection with the acquisition
of Cypress and, to a lesser degree, the acquisition of International Rectifier.
Overall statement on the expected development
Based on forecasts for the development of the global economy and the semicon-
ductor market in the 2022 calendar year, Infineon expects Group revenue to grow
to €12.7 billion plus or minus €500 million. The Segment Result Margin is forecast
to come in at the middle of the range for the revenue forecast at around 21 percent
of revenue. Investments are expected to be in the region of €2.4 billion. Deprecia-
tion and amortization are expected to total between €1.6 billion and €1.7 billion.
Free Cash Flow from continuing operations should reach around €1 billion. The Return
on Capital Employed (ROCE) is forecast to reach minimum 10 percent.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Consolidated Financial Statements
Further information
Investments and depreciation/amortization
Q = < 112 >
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
Infineon's centralized risk management system is based on a Group-wide, manage-
ment-oriented Enterprise Risk Management (ERM) approach, which aims to cover
all relevant risks and opportunities. The approach is based on the "Enterprise Risk
Management - Integrated Framework" developed by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The objective of the system
is the early identification, assessment and management of risks and opportunities
that could have a significant influence on Infineon's ability to achieve its strategic,
operational, financial, legal and compliance targets. We therefore define risk/
opportunity as the occurrence of future uncertainties that could result in either
a negative or a positive variance from plan. We incorporate all relevant organiza-
tional units within the Group in this analysis, thus covering all segments, significant
central functions and regions.
Responsibility for processes and systems relating to risk and opportunity management
rests with the Risk Management and Internal Control System (ICS) function within
the Group Finance department as well as with designated Risk Officers working at
segment, corporate function and regional levels. Responsibility for the identification,
measurement, management and reporting of risks and opportunities lies with the
management of the organizational unit concerned.
In organizational terms, the Risk and Opportunity Management System is structured
in a closed-loop, multiple-stage process, which stipulates the manner and criteria
to be applied to identify, measure, manage and report on risks and opportunities and
defines how the system is to be monitored as a whole. Major components of the sys-
tem are a quarterly analysis of risks and opportunities, reporting by all consolidated
entities, an analysis of the overall situation at segment, regional and Group level,
reporting to the Management Board on the risks and opportunities situation as well
as major management measures undertaken. The Management Board, in turn, reports
regularly to the Supervisory Board's Investment, Finance and Audit Committee. Where
necessary, standard processes are supplemented by the ad-hoc reporting of any
major risks identified between regular reporting dates.
Risks and opportunities are measured cumulatively over the multi-year planning
horizon on a net basis, i.e., after taking into account any existing risk mitigation or
hedging measures. The time periods and the measurement categories used are closely
linked to our short- and medium-term business planning and entrepreneurial targets.
All relevant risks and opportunities are assessed uniformly across the Group in quan-
titative and/or qualitative terms, based on the factors degree of impact on segment
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Risk and opportunity report
The gross cash position is expected to finish the 2022 fiscal year at a level of around
€4 billion. The original medium-term target of reducing debt to or below the maximum
target value of twice gross financial debt to EBITDA following the closing of the Cypress
transaction is expected to be achieved as early as the 2022 fiscal year.
Gross cash position
For the 2022 fiscal year, Return on Capital Employed (ROCE) is forecast to reach
minimum 10 percent.
Business focus and strategy
Combined Management Report
Report on outlook, risk and opportunity
Outlook
Consolidated Financial Statements
Further information
Q =
< 110 >
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.
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
Business focus and strategy
Combined Management Report
Report on outlook, risk and opportunity
Outlook
Consolidated Financial Statements
Further information
Q = < 111 >
Revenue forecasted to grow to €12.7 billion plus or minus €500 million
Based on the forecasts for the growth of the world economy and the semiconductor
market segments relevant for Infineon described above and an assumed average
exchange rate of US$1.20 to the euro, Infineon forecasts that revenue will grow in the
2022 fiscal year to €12.7 billion plus or minus €500 million. Automotive and Connected
Secure Systems segment revenue is expected to increase at a higher percentage rate
than Group revenue overall. The revenue growth rate in the Power & Sensor Systems
segment is forecast to be at a similar level to that of the Group. Industrial Power Control
segment revenue is expected to increase by a mid-to-high single-digit percentage.
Segment Result Margin of about 21 percent expected
If the middle of the range for the revenue forecast is reached, the Segment Result
Margin is expected to be around 21 percent in the 2022 fiscal year.
Free Cash Flow from continuing operations
For the 2022 fiscal year, Infineon forecasts Free Cash Flow of around €1 billion.
ROCE
Business focus and strategy
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.
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Further information
2 <40% Possible
3 <60% Likely
4 <90% Probable
5 >90% Certain
Risk and Opportunity Managers are designated at appropriate hierarchical levels
to manage and monitor identified risks and opportunities. They are responsible for
formally determining a set of appropriate strategies (in the case of risk avoidance,
mitigation, transfer to other parties or acceptance). Working closely with corporate
functions and individual managers, the Risk and Opportunity Managers are also
responsible for defining and monitoring measures aimed at implementing the
adopted management strategy. In order for our system to operate successfully, it is
essential that risks and opportunities are managed and monitored pro-actively and
with a great deal of commitment.
Compliance with the ERM approach is monitored by the corporate function responsible
for risk management and ICS using procedures incorporated in business processes.
Group Internal Audit also performs tests for compliance with legal requirements and
Infineon guidelines and, where appropriate, rules relating to risk and opportunity
management and recommends corrective measures.
The Supervisory Board's Investment, Finance and Audit Committee oversees the
effectiveness of the Risk Management System. As part of the statutory audit, the
external Group auditor also examines our early warning system pursuant to section
91, paragraph 2, of the German Stock Corporation Act to ascertain its suitability to
detect risks that could pose a threat to Infineon's going-concern status and reports
thereon annually to the Chief Financial Officer (CFO) and the Investment, Finance and
Audit Committee of the Supervisory Board.
Internal Control System with respect to the financial reporting process
The principal focus of the Internal Control System (ICS) is on the financial reporting
process, with the aim of monitoring the proper maintenance and effectiveness of
accounting systems and financial reporting. The primary objective of the ICS is to
minimize the risk of misstatement in Infineon's internal and external reporting and to
ensure with a reasonable amount of certainty that the Consolidated Financial State-
ments comply with all relevant regulations. Appropriate controls must therefore be in
place throughout the organization to ensure compliance. Clear lines of responsibility
are assigned to each of the processes.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
1 <10% Unlikely
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Further information
Q = < 114 >
The ICS is based on the "Internal Control - Integrated Framework" developed by
the "Committee of Sponsoring Organizations of the Treadway Commission (COSO)"
and is an integral part of the accounting process in all relevant legal entities and
corporate functions.
The system monitors compliance with stated principles and stipulated procedures
based on preventive and detective controls. Among other things, we regularly
check that:
> Group-wide financial reporting, measurement and accounting guidelines are
continually updated and adhered to;
> 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; and
> processes are in place for the segregation of duties and for the dual control principle
in the context of preparing financial statements, as well as for authorization and
access rules for relevant IT accounting systems.
Assessment of effectiveness
We systematically assess the effectiveness of the ICS with regard to the corporate
accounting process. An annual risk analysis is initially performed, and the defined
controls are revised, as and when required. The assessment involves identifying and
updating significant risks relating to accounting and financial reporting in the relevant
legal entities and corporate functions. The controls defined for identifying risks are
documented in accordance with Group-wide guidelines. Regular random tests are
Consolidated Financial Statements
Likelihood of occurrence
5 > €500 million Major
High risk
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".
C40 Risk assessment matrix
Degree of impact
Degree of impact
on Segment Result
1
<€60 million Marginal
2 >€60 million Minor
3 > €100 million Moderate
4 > €250 million Significant
5
4
3
2
1
1
2 3
4
5
Likelihood of occurrence
Low risk
Medium risk
Consolidated Financial Statements
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.
4,634
Business focus and strategy
3,116
3,007
Retained earnings
437
114
3,515
3,525
Capital reserves
(150)
239
2,601
2,603
Share capital
(3)
(42)
Unappropriated profit at the end of year
18,529
353
Unappropriated profit
Deferred income
Liabilities
Other liabilities
Liabilities to affiliated companies
Advance payments received
Trade payables
Loans payable to banks
Bonds
Other provisions
Provisions
The unchanged high demand for semiconductor products, which resulted in positive
volume and price effects, led to an increase in revenue of Infineon Technologies AG
of 18 percent to €6,311 million (2020: €5,346 million) and an increase in gross profit
of 36.0 percent year-on-year to €2,178 million (2020: €1,601 million). The gross profit
margin amounted to 34.5 percent in the 2021 fiscal year (2020: 29.9 percent). This
development led to an increase in functional costs of €217 million to €1,876 million
in the 2021 fiscal year (2020: €1,659 million), amounting to 29.7 percent of revenue
(2020: 31.0 percent). Infineon Technologies AG reports net profit of €239 million for
the 2021 fiscal year after a net loss of €150 million for the 2020 fiscal year. Besides an
increase in gross profit, a decrease in financial expenses related to the acquisition
of Cypress was recorded. This was offset by a declining income from investments and
an increase of expenses by function. After transferring a total of €114 million from
retained earnings, unappropriated profit amounted to €353 million.
Special reserve with an equity portion
9,519
9,488
Shareholders' equity
287
353
287
19,946
Total assets
(216)
(229)
1,659
1,872
Receivables and other assets
(370)
(444)
1,207
1,257
Inventories
(1,091)
(1,203)
12,958
13,038
Non-current assets
1,601
(198)
Cash and cash equivalents, marketable securities
3,656
2,587
36
2
2
Active difference resulting from offsetting
(141)
(147)
116
Total liabilities and shareholders' equity
121
270
64
5,453
6,785
Current assets
(2)
26
Prepaid expenses
Provisions for pensions and similar commitments
321
304
The Company held 4,545,602 of the above-mentioned issued shares as own shares
as of 30 September 2021 (30 September 2020: 5,251,391 shares). Own shares held by
the Company on the date of the Annual General Meeting do not carry a vote and are
not entitled to participate in profit.
The share capital of Infineon Technologies AG stood at €2,611,842,274 as of 30 Sep-
tember 2021. This sum is divided into 1,305,921,137 no par value registered shares,
each of which represents a notional portion of the share capital of €2 per share. Each
share carries one vote and gives an equal right to the profit of the Company based
on the profit appropriation resolved by shareholders at the Annual General Meeting.
Structure of the subscribed capital
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 han-
dled by Infineon Technologies AG. The comments provided in "Principles and structure
of Infineon's treasury” within the chapter "Review of liquidity”, p. 107 f., regarding
the nature and scope of transactions involving derivative financial instruments and
hedged risks also apply to Infineon Technologies AG. Reference is also made to the
Notes to the Separate Financial Statements of Infineon Technologies AG.
https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
The expected developments, together with the associated material risks and
opportunities of Infineon Technologies AG, are very similar to those of the Group
as a whole. Moreover, it is assumed that the result from investments will play a major
role in Infineon Technologies AG's earnings performance. As a general rule, Infineon
Technologies AG participates in the risks of its subsidiaries and equity investments on
the basis of the relevant shareholding. As the parent company, Infineon Technologies
AG is integrated into Infineon's overall risk management system and internal control
system. For more information on this topic, together with the associated material
risks and opportunities of Infineon Technologies AG, see the chapter "Risk and
opportunity report". p. 112 ff.
Expected developments, together with associated material risks
and opportunities
Infineon Technologies AG | Corporate Governance
Information pursuant to the German Commercial Code (HGB)
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
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.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of
Association rests with the Annual General Meeting. However, section 10, paragraph 4,
of the Articles of Association gives the Supervisory Board the authority to amend
the Articles of Association insofar as any such amendment relates merely to the
Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appoint-
ment for Management Board members is five years. Re-appointment or an extension
of the term of office, in each case for a maximum of five years, is permitted (section 84,
paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association
and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint
a chairman and a deputy chairman to the Management Board. The Supervisory Board
may revoke the appointment of a Management Board member and the Chairman of
the Management Board for good cause (section 84, paragraph 3, AktG).
If the Management Board does not have the required number of members, in urgent
cases, the local court ("Amtsgericht” of Munich) makes the necessary appointment
upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
Section 5, paragraph 1, of the Articles of Association stipulates that the Management
Board of Infineon Technologies AG is required to consist of at least two members.
With effect from 15 April 2021, the Management Board comprises five members (pre-
viously four members). Management Board members are appointed and dismissed
by the Supervisory Board pursuant to section 84, paragraph 1, AktG. As Infineon
Technologies AG falls within the scope of the German Co-Determination Act (Mitbe-
stimmungsgesetz - "MitbestG"), the appointment or dismissal of Management Board
members requires a two-thirds majority of the votes of the Supervisory Board members
(section 31, paragraph 2, MitbestG). If the required majority is not achieved at the
first ballot, the appointment may be approved on a recommendation of the Mediation
Committee at a second ballot by a simple majority of the votes of the Supervisory
Board members (section 31, paragraph 3, MitbestG). If the required majority is still
not achieved, a third ballot is held in which the Chairman of the Supervisory Board
has two votes (section 31, paragraph 4, MitbestG).
Statutory regulations and Articles of Association provisions governing
the appointment and dismissal of members of the Management Board
and amendments to the Articles of Association
Nature of control over voting rights when employees participate in the
Company's capital and do not exercise their control rights directly
Employees who participate in the capital of Infineon Technologies AG exercise their
control rights directly in accordance with the applicable laws and the Articles of
Association, just like other shareholders.
Management Board and
Supervisory Board
Shares with special rights that confer control rights
No shares conferring special control rights have been issued.
Pursuant to section 67, paragraph 2, AktG, rights and obligations arising from shares in
relation to Infineon Technologies AG exist only for and from the parties entered in the
share register. In order to be recorded in the share register of Infineon Technologies AG,
shareholders are required to submit to Infineon Technologies AG the number of shares
held by them and their name or company name, their postal and electronic address
and, where applicable, their registered office and their date of birth. Pursuant to sec-
tion 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information
from the party listed in the share register regarding the extent to which shares to which
the entry in the share register relates are actually owned by the registered party and,
if it does not own the shares, to receive the information necessary for the maintenance
of the share register in relation to the party for whom the shares are held. Section 67,
paragraph 2, AktG stipulates that the shares concerned do not confer voting rights until
such time as the information requested has been supplied in the appropriate manner.
Combined Management Report
Corporate Governance
Information pursuant to the German Commercial Code (HGB)
< 129 >
Q =
Further information
Consolidated Financial Statements
Business focus and strategy
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.
2,178
Infineon Technologies | Annual Report 2021
The Company paid a dividend of €0.22 per share (€286 million in total) for the 2020
fiscal year.
7,978
9,328
878
883
2,125
3,430
341
378
1
2
4,634
1,029
1,129
725
808
1
2
19,946
18,529
Infineon Technologies AG reported unappropriated profit of €353 million in its financial
statements for the fiscal year ended 30 September 2021. With regard to the 2021 fiscal
year, a proposal will be made to pay a dividend of €0.27 per dividend-entitled share out
of the unappropriated profit of Infineon Technologies AG, amounting to €353 million.
The disbursement of the proposed dividend is subject to approval by the shareholders.
In accordance with the German Stock Corporation Act (AktG), the amount of the
dividend available for distribution to shareholders is based on the level of unappro-
priated profit (Bilanzgewinn) recorded by the ultimate parent, as determined in
accordance with the German Commercial Code (HGB).
Dividend
For information on Infineon's own shares, please see the comments relating to
section 160, paragraph 1, no. 2 of the German Stock Corporation Act (AktG) provided
in the Separate Financial Statements of Infineon Technologies AG.
https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
At the end of the reporting period, the equity ratio stood at 47.6 percent, compared
to 51.4 percent one year earlier.
Provisions for pensions and similar commitments increased by a total of €17 million,
mainly due to the reduction in the average market interest rate for the past ten years
used to measure obligations. The positive development of the fair value of the plan
assets had an offsetting effect. Other provisions increased by a total of €83 million,
relating mainly to provisions for obligations to employees amounting to €315 million
(2020: €171 million) while provisions for unrealized fair value measurement losses on
interest rate hedging contracts could be derecognized (2020: €66 million). Liabilities
went up by €1,350 million from €7,978 million at the end of the 2020 fiscal year to
€9,328 million as of 30 September 2021. The increase resulted from the higher
amount of payables to affiliated companies, mainly in connection with intragroup
financing management.
The decrease in equity (€31 million) was mainly due to the dividend paid out for
the 2020 fiscal year amounting to €286 million and, with an offsetting effect, the net
profit for the 2021 fiscal year amounting to €239 million.
For information regarding Infineon's long-term dividend policy, see "Dividend” in the
chapter "The Infineon share”. □ p. 98 ff.
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.
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Infineon Technologies AG
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
< 127 >
12,266
<128>
Financial assets
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
Business focus and strategy
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:
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
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.
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.
Management Board and
Supervisory Board
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.
< 123 >
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Report on outlook, risk and opportunity
Risk and opportunity report
Security applications (OC: medium)
Infineon Technologies | Annual Report 2021
New technologies and materials (OC: medium)
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
12,446
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
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
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.
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.
High demand for semiconductors allows price increases (OC: high)
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
Consolidated Financial Statements
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 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
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.
General and administrative expenses
Selling expenses
Research and development expenses
Gross profit
Cost of goods sold
Revenue
€ in millions
Other income (expense), net
in accordance with the German Commercial Code (condensed)
Net assets and financial position
Statement of income of Infineon Technologies AG in accordance with
the German Commercial Code (condensed)
Earnings position
< 126 >
Q =
Further information
Consolidated Financial Statements
Statement of financial position of Infineon Technologies AG
Combined Management Report
Infineon Technologies AG
Result from investments, net
Other financial result
(3,745)
Liquidity position (OC: medium)
(4,133)
692
592
Intangible assets, property, plant and equipment
5,346
Interest result
6,311
30 Septem-
€ in millions
2020
2021
Transfers from retained earnings
Income after taxes/net profit (previous year: net loss)
Income tax
ber 2020
Business focus and strategy
30 Septem-
ber 2021
Infineon Technologies | Annual Report 2021
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.
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.
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.
Combined Management Report
Overall statement on Infineon's financial condition
Further information
Consolidated Financial Statements
Business focus and strategy
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Management Board and
Supervisory Board
Overall statement on Infineon's financial condition
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.
Q = < 124 >
Infineon Technologies | Annual Report 2021
In addition to reporting on Infineon as a whole, in the following section, we also
provide information on the performance of Infineon Technologies AG.
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 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.
Outlook
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).
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.
< 125 >
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Overall statement on Infineon's financial condition | Infineon Technologies AG
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).
Further information
Q =
› 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):
> Broadcom Inc.
TSR
› Dialog Semiconductor PLC1
> Elmos Semiconductor SE
> Fuji Electric CO., LTD.
› GigaDevice Semiconductor
(Beijing) Inc.
> Knowles Corp.
> Macronix International Co., Ltd.
> China Electronics Huada
Technology Company Ltd.
> ON Semiconductor Corp.
> Microchip Technology Inc.
> Micron Technology, Inc.
> NXP Semiconductors N.V.
> Omron Corp.
> Power Integrations Inc.
› Qualcomm Technologies, Inc.
> Renesas Electronics Corp.
> Rohm CO., LTD.
> Shanghai Fudan Microelectronics
Group Co., Ltd.
> Silicon Laboratories, Inc.
> Texas Instruments Inc.
Performance criteria and measuring success
> STMicroelectronics N.V.
› MediaTek Inc.
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).
For the 2022 fiscal year, the Supervisory Board has defined two specific criteria at the
recommendation of the Executive Committee:
Q =
> successful development of new growth markets, improvement of market position;
> Toshiba Corp.
> portfolio-related measures, particularly successful mergers and acquisitions as
well as corresponding integration measures;
> optimizations, efficiency improvement programs, restructuring;
> successful completion of key projects;
› improved innovative strength and delivery capabilities;
> progress in Environmental, Social & Governance (ESG) matters.
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
< 137 >
Q = < 136 >
> 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.
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.
As the previous MTI allocation amount has now been added to the LTI with a four-year
performance period, a temporary payout shortfall arises, which will be compensated
by temporarily increasing the STI allocation amount for the Management Board
members concerned in the 2022, 2023 and 2024 fiscal years. Therefore, a maximum
remuneration of €8,200,000 (Chief Executive Officer) and €4,800,000 (ordinary member
of the Executive Board) applies to current service contracts for fiscal years 2022, 2023
and 2024.
The Long-Term Incentive ("LTI") was adjusted with retrospective effect from 1 Octo-
ber 2020.
The LTI is a Performance Share Plan with a four-year performance period. Assuming
100 percent target achievement of the variable remuneration components, the LTI
constitutes approximately 42 percent of target annual income.
The performance period begins on 1 October of the first fiscal year of the performance
period and ends on 30 September four years later. During this period, performance is
measured on the basis of two criteria, namely a financial performance criterion based
on relative Total Shareholder Return (TSR) as compared to a selected sector peer group
and a non-financial performance criterion derived from strategic Environmental,
Social & Governance (ESG) targets. The TSR and the ESG targets contribute 80 percent
and 20 percent to overall target achievement respectively.
The LTI tranche is allocated on 1 April in the first fiscal year of the performance
period (allocation date). The vesting period begins on the allocation date. Unlike
the performance period, the vesting period ends four years after the allocation date,
i.e., on 31 March. In order to determine the number of performance shares to be
provisionally awarded on the allocation date, at the beginning of the performance
period, the individual allocation amount is divided by the average share price over
the last 60 trading days prior to the beginning of the performance period. The extent
of target achievement is determined at the end of the four-year performance period.
The definitive number of performance shares to be allocated after the end of the
vesting period is calculated by multiplying the number of provisionally allocated
performance shares by the total target achievement of the two performance criteria
applied during the performance period. The definitive allocation of performance
shares in an LTI tranche may not result in the Management Board member's gain
(before taxes) exceeding 250 percent of the respective LTI allocation amount. Above
this cap, any performance shares that could still theoretically be allocated will lapse.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
Further information
> Firstly, the performance of the Management Board should be measured in terms
of its implementation of the digital transformation strategy.
> Vishay Intertechnology, Inc.
Diversity
> Wolfspeed, Inc.
< 139 >
C41 Diversity target
> sustainable strategic, technical or structural development of the business;
18.0%
Diversity target for the 2021 fiscal year
17.5%
17.0%
16.5%
16.0%
15.5%
15.0%
0%
50%
80%
90%
100%
110%
125%
150%
Target achievement
Final allocation
After the final fiscal year of the four-year performance period has ended, the Super-
visory Board determines the number of performance shares that will be definitively
allocated. The Supervisory Board reserves the right to make a cash settlement rather
than actually transferring Infineon shares. The Supervisory Board is required to make
the decision prior to the end of the four-year vesting period; otherwise the right to
make a cash settlement lapses. If the Supervisory Board decides to settle in cash, the
amount to be paid out is calculated by multiplying the number of performance shares
definitively allocated by the average share price over the last 60 trading days prior
to the end of the four-year performance period. Payment must be made within one
month after the end of the vesting period. Here too, the definitive LTI payout amount
is limited to 250 percent of the individual allocation amount.
LTI rules prior to the changeover to the new remuneration system
The LTI tranches already allocated prior to the changeover to the new remuneration
system will continue to be subject to the old rules described below.
-
The (virtual) performance shares were allocated as of 1 March for the fiscal year that
began on 1 October, initially on a provisional basis. The final allocation and transfer
of (real) Infineon shares took place four years later. Performance shares were allo-
cated provisionally on the basis of the contractually agreed "LTI allocation amount"
in euros and agreed upon individually in the service contract of each Management
Board member. The number of performance shares was determined by dividing the
LTI allocation amount by the average price of the Infineon share (Xetra closing price)
during the nine months prior to the allocation date. The prerequisites for the defini-
tive allocation of the - at that stage still virtual – performance shares are (i) that the
Management Board member invests 25 percent of his/her individual LTI allocation
amount in Infineon shares and (ii) that the holding period of four years applicable
both for the member's own investment and for the performance shares has come to
an end. 50 percent of the performance shares are also performance-related; they are
only allocated definitively if (iii) the Infineon share outperforms the Philadelphia
Semiconductor Index (SOX) between the date of the performance shares' provisional
allocation and the end of the holding period. If the conditions for the definitive allo-
cation of performance shares - either all or only those that are not performance-
related - are met at the end of the holding period, the Management Board member
acquires an entitlement against the Company for the transfer of the corresponding
number of (real) Infineon shares. Any performance shares that do not achieve the
target are forfeited. The value of the performance shares definitively granted to the
Management Board member per LTI tranche at the end of the holding period may not
exceed 250 percent of the relevant LTI allocation amount; any performance shares
above this amount lapse (cap).
Based on its own best judgment, the Supervisory Board has the option to grant a
special bonus, such as for exceptional achievements of the Management Board or its
individual members. In each case, however, the bonus is capped at a maximum of
30 percent of the fixed remuneration of the Management Board member concerned.
Under the new Management Board remuneration system, the option to grant a special
bonus has been removed without replacement.
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Corporate Governance
Remuneration report
> Mitsubishi Electric Corp.
> Nuvoton Technology Corp.
1 Dialog Semiconductor PLC was acquired by Renesas Electronics Corporation in August 2021.
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.
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.
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:
ESG
TSR =
(Change in Stock Price + Dividends Paid)
Beginning Stock Price
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
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
> Winbond Electronics Corp.
Business focus and strategy
Consolidated Financial Statements
Further information
Q = < 138 >
are therefore important in that they align the interests of both the Management
Board and other stakeholders and contribute to the long-term sustainable success
of the Group as a whole.
The specific ESG targets to be used for a particular tranche are determined and defin-
itively resolved by the Supervisory Board prior to the beginning of the performance
period. The Supervisory Board defines up to three specific ESG targets, which are
weighted equally. At the end of the performance period, target achievement is deter-
mined on the basis of a target/actual comparison and, as in the case of the LTI financial
performance criterion, can range between 0 percent and 150 percent. The specific
ESG targets, target achievement curves and target achievements are disclosed ex post
in the remuneration report. The Supervisory Board is entitled to determine further
ESG targets and their relative weightings.
For the LTI tranche allocated on 1 April 2021, the Supervisory Board has defined
two ESG targets: one relating to environment and the other to social matters.
The environmental target is to achieve 50 percent carbon neutrality in the 2024 fiscal
year. The base period for these purposes is the 2019 calendar year. The target is to
be achieved by reducing PFC emissions, energy efficiency measures or development
assistance measures linked to decarbonization. The aim is to achieve a total reduc-
tion of 100,000 tons of carbon emissions by the end of the 2024 fiscal year. Target
achievement can range between 0 percent and 150 percent. If carbon emissions are
reduced by less than 25,000 tons, target achievement is 0 percent. If carbon emis-
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 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.
The aim is to increase the percentage of women in GG (Global Grade) 13+ positions to
within a target range between 18 percent and 20 percent by the 2030 fiscal year. Target
achievement for the diversity target can range between 0 percent and 150 percent. A
100 percent target achievement corresponds to an increase of between 1.2 percentage
points and 1.8 percentage points at the end of the performance period. The baseline
is 15.2 percent as of 30 September 2020. If the proportion of women is increased by up
to 0.3 percentage points during the performance period, this results in a target achieve-
ment of 0 percent, while an increase in the proportion of women by more than 2.3 per-
centage points would result in a target achievement of 150 percent. Target achieve-
ments between the defined target achievement points are interpolated linearly. The
diversity target contributes 10 percent to the overall target achievement of the LTI.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
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:
> Henkel AG & Co. KGaA
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.
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
Infineon Technologies | Annual Report 2021
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.
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
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.
The use of own shares acquired through derivatives is governed by the same rules as
those applicable for the direct acquisition of own shares.
Shareholders have a right to sell their Infineon shares in this connection only insofar
as the Company is required to accept the shares under the derivative transactions.
No other right to sell shares shall apply in this connection.
If own shares are acquired using derivatives in accordance with the requirements
stipulated in the authorization, any right of the shareholders to conclude such deriva-
tive transactions with the Company will be excluded in analogous application of
section 186, paragraph 3, sentence 4, AktG. Shareholders have no right to conclude
derivative transactions with the Company.
Consolidated Financial Statements
Infineon Technologies | Annual Report 2021
Further information
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.
Combined Management Report
Corporate Governance
Remuneration report
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.
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.
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.
-
Consolidated Financial Statements
Q =
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
Further information
Q = < 134 >
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.
Components of the Management Board remuneration system
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:
> Fixed remuneration: Comprises a contractually agreed basic annual salary that is
not linked to performance and paid in twelve equal monthly installments.
> 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).
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.
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:
(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.
(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 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
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 = < 135 >
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.
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.
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).
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 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).
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.
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
> Siemens AG
< 133 >
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.
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
Further information
> BMW 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
> Merck KGaA
> MTU Aero Engines AG
> Münchener Rückversicherungs-Gesellschaft AG
› RWE AG
› SAP SE
› Continental AG
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.
Business focus and strategy
Management Board and
Supervisory Board
2021
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
329,800
329,800
Long-Term Incentive (LTI)
325,875
728,250
477,950
1,068,100
Q = < 140 >
Further information
Consolidated Financial Statements
Combined Management Report
Corporate Governance
Remuneration report
Business focus and strategy
Management Board and
Supervisory Board
35,238
1,275,238
37,211
1,277,211
Performance Share Plan
825,000
55,337
880,337
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
34,140
380,731
Variable remuneration
Single-year variable remuneration (STI)
825,000
55,750
880,750
due in the 2021 fiscal year
due in the 2020 fiscal year
Total variable remuneration
357,656
215,583
129,139
1,538,875
131,044
814,403
1 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI or LTI grant amount for the month of April 2021, and thus to a total of 11 twenty-fourths for the entry fiscal year.
Infineon Technologies | Annual Report 2021
2020
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
Further information
Q =
< 145 >
Commitments to Management Board members upon termination
of their Board activities
Benefits and pension entitlements in the 2021 fiscal year
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.
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.
120,148
1,974,260
1,553,114
106,961
1,956,855
215,583
1,749,156
270,905
1,282,355
884,438
325,875
1,075,783
625,260
1,075,783
Management Board remuneration in the 2021 fiscal year in accordance
with German Accounting Standard 17 (DRS 17)
625,260
Pension expense
Total remuneration (DCGK)
72,298
3,096,692
368,802
2,928,368
278,244
2,043,019
294,037
1,500,662
98,884
302,628
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.
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.
108,625
108,625
159,317
159,317
159,317
2019-2021 tranche
2020-2022 tranche
Mid-Term Incentive (MTI)1
Multi-year variable remuneration
1,394,745
3,419,538
302,628
295,460
660,280
295,460
660,280
325,875
98,487
98,487
98,487
98,487
165,725
976,672
1,636,952
165,725
756,646
976,672
1,636,952
264,125
807,250
976,672
1,704,922
290,050
1,245,951
2,835,464
728,250
Total variable remuneration
Performance Share Plan²
Long-Term Incentive (LTI)
2018-2020 tranche
356,291
464,916
464,916
98,487
98,487
1,767,364
The plan rules applicable to Management Board members are as follows:
477,950
Single-year variable remuneration (STI)
2020
2021
2020
Total
Management Board
Constanze Hufenbecher
Management Board member
since 15 April 20213
Jochen Hanebeck
Management Board member
Dr. Helmut Gassel
Management Board member
Dr. Sven Schneider
Chief Financial Officer
Dr. Reinhard Ploss
Chief Executive Officer
Total fixed remuneration
Fringe benefits
Basic annual salary
Fixed remuneration
in €
The Company also maintains accident insurance policies for Management Board
members in the case of death (€3 million) and invalidity (€5 million).
In accordance with their service contracts, Management Board members are entitled
to a chauffeur-driven company car, which may also be used for private purposes.
Operating and maintenance costs for the company car and chauffeur are borne by
the Company. Any taxes arising on the fringe benefit related to private usage are
borne by the individual Management Board members themselves.
Fringe benefits
2021
2020
2021
2021
Variable remuneration
3,565,000
198,330
3,763,330
3,911,591
185,232
4,096,823
2020
346,591
34,140
380,731
750,000
34,476
784,476
750,000
28,329
778,329
750,000
70,893
820,893
1,068,100
750,000
32,188
782,188
825,000
55,337
880,337
1,240,000
37,211
1,277,211
35,238
1,275,238
1,240,000
2021
2020
2021
2020
825,000
55,750
880,750
> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result
of their previous periods of employment in senior management positions with
Infineon. Their service contracts specifically state that the amounts made available
to cover their vested pension entitlements represent a continuation of those vested
entitlements and are, therefore, not subject to any separate vesting arrangements.
The Company makes a fixed annual pension contribution on behalf of Dr. Gassel
and Mr. Hanebeck for each full fiscal year of service on the Management Board,
equivalent to 30 percent of the relevant agreed basic annual salary. The Supervisory
Board is not required to decide each time on the amount to be contributed. The
pension contributions for the 2021 fiscal year for Dr. Gassel and Mr. Hanebeck
amounted to €225,000 in each case.
> The pension contribution made for Ms. Hufenbecher also amounts to 30 percent
of the relevant agreed basic annual salary. Due to the entry during the fiscal year,
the pension contribution made by the Company for the 2021 fiscal year amounted
to €112,500.
> The defined contribution pension commitment in place for Dr. Ploss is also based
on a fixed contribution amount of 30 percent of the relevant agreed basic annual
salary. The pension contribution made by the Company for the 2021 fiscal year
amounted to €372,000.
Fixed, non-performance-related remuneration paid in
twelve equal monthly installments
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
>
> 1/3 Return on Capital Employed (ROCE) as planned
1/3 Free Cash Flow (FCF) as planned
> 1/3 Segment Result Margin (SRM) as planned
› Collective performance of the Management Board
> Extraordinary developments
One year
250% of the allocation amount
In cash, after performance period ends
Performance Share Plan
> 80% relative Total Shareholder Return (TSR)
> 20% ESG targets
Four years
Four years
250% of the allocation amount
Waiting period
Limitation/cap
Payment
Performance period
Performance criteria
Plan type
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
Further information
Q =
< 148 >
The structure of the new Management Board remuneration system can be summarized
as follows:
Overview of the various components of the remuneration system
Generally in shares, after waiting period expires
Fixed remuneration
Fringe benefits
Company pension plan
Variable (i.e., performance-related)
remuneration
Short-Term Incentive (STI)
Performance criteria
Modifier (0.7 to 1.3)
Performance period
Limitation/cap
Payment
Long-Term Incentive (LTI)
Basic annual salary
Management Board and
Supervisory Board
Other contractual elements
Malus and clawback
Partial or complete reduction or reclamation of
Further information
Q =
< 149 >
Remuneration report
Remuneration structure
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:
› 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.
> 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 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 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.
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).
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.
› 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.
Infineon Technologies | Annual Report 2021
Consolidated Financial Statements
Combined Management Report
Corporate Governance
Business focus and strategy
Management Board and
Supervisory Board
variable remuneration components
Mandatory personal investment in Infineon shares
Chairman of the Management Board (CEO) 150% of gross annual basic salary
Full member of the Board
Accumulation phase
Maximum remuneration
100% of gross annual basic salary
Generally five years
Maximum remuneration payable to the Management Board
capped in accordance with section 87a, paragraph 1,
number 1, AktG (including fringe benefits and expenses for
company pension plans)
Chairman of the Management Board (CEO) €7,200,000
Share Ownership Guidelines (SOG)
Full member of the Board
€4,200,000
In the event of a change of control, right of extraordinary
termination within limited period of time and with restricted
severance pay regulation
A detailed presentation of the new Management Board remuneration system is
available in the notice of the Annual General Meeting held on 25 February 2021 and
on the Infineon website. https://www.infineon.com/cms/en/about-infineon/investor/corporate-
governance/#equity-based-compensation
Supervisory Board remuneration
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-
compensation
Infineon Technologies | Annual Report 2021
Change-of-control clause
447,629
Infineon Technologies | Annual Report 2021
> 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.
Dr. Reinhard Ploss¹
2021
372,000
Chief Executive Officer
210,000
2020
372,000
210,000
Dr. Sven Schneider
2021
Chief Financial Officer
2020
247,500
247,500
Dr. Helmut Gassel
2021
225,000
2,290,395
5,114,761
2,474,927
5,279,415
554,907
393,029
2,414,767
of pension
and benefit
entitlement
Present value
Benefit
amounts
determined
for the
relevant
fiscal year
period
> The corresponding contribution for Dr. Schneider also amounts to 30 percent
of the relevant agreed basic annual salary. The pension contribution made by the
Company for the 2021 fiscal year amounted to €247,500.
The amounts credited to the pension entitlement accounts of Management Board
members - in line with the plan rules applied to Infineon employees – are paid out on
or after reaching the age of 67, provided the service contract arrangements have also
ended. Upon request, amounts can also be paid out at an earlier point in time if the
service contract arrangements end on or after reaching the age of 60 or, in the case of
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
Further information
72,298
Q =
commitments made from 2012 onwards, on or after reaching the age of 62. If the
beneficiaries elect to have their pension paid out in monthly installments, the
pension amount is adjusted automatically each year in accordance with the Infineon
pension plan.
Alongside the annual retirement entitlements and related benefit amounts, the
following table shows the present values of pension entitlements earned to date and
the service cost in accordance with IFRS. The present value of pension and benefit
entitlements is particularly dependent on changes in the discount rate that is required
to be applied (30 September 2021: 1.25 percent; 30 September 2020: 0.95 percent).
Pension entitlements
Original
service cost
(earned in
the current
year)
Fiscal year
Pension
entitlements
(annual) as
of beginning
of pension
in €
< 146 >
> 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.
368,802
2020
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.
The Management Board service contracts otherwise contain no promises of severance
pay for situations in which contracts are prematurely terminated.
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.
Payments to former Management Board members in the 2021 fiscal year
Total remuneration (primarily pension benefits) of €2,609,306.24 (2020: €2,211,263.52)
was paid to former Management Board members in the 2021 fiscal year. As of 30 Sep-
tember 2021, accrued pension liabilities for former Management Board members
amounted €72,369,256 (2020: €76,593,563).
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
Further information
Q = < 147 >
Revision of the Management Board remuneration system
The Act Implementing the Second Shareholder Rights Directive (ARUG II) came into
force on 1 January 2020. Furthermore, the Government Commission on the German
Corporate Governance Code adopted a new version of the DCGK, which became
effective on 20 March 2020. The Supervisory Board deliberated on this matter at
length with the support of an external independent remuneration expert. Based on
the preparatory work of the Executive Committee and its recommendation, the
Supervisory Board adopted a new Management Board remuneration system at its
meeting on 20 November 2020, which was approved by the Annual General Meeting
on 25 February 2021 in accordance with section 120a, AktG.
In addition to the changes already relevant for the 2021 fiscal year and described above
(i.e., the incorporation of the MTI into the LTI and the new LTI rule), the remaining
parts of the new Management Board remuneration system for the incumbent Manage-
ment Board members apply from 1 October 2021. The main additional changes can
be summarized as follows:
> The option of the Supervisory Board to award a “special bonus” amounting to up
to 30 percent of the fixed basic remuneration of Management Board members has
been removed without replacement.
> In the case of the STI, the existing financial targets ROCE and Free Cash Flow will
be supplemented by the addition of a third target, namely the Segment Result
Margin (SRM), which already serves as a key performance indicator for Infineon.
The SRM was also previously taken into account in the STI target structure appli-
cable to employees.
> The option of the Supervisory Board to reduce or increase the STI payout amounts
by up to 30 percent at its discretion has been replaced by a criteria-based STI
modifier. Accordingly, the Supervisory Board defines criteria for assessing the
collective performance of the Management Board each fiscal year on the basis of
a fixed catalog (see also above in the section “Components of the Management Board
remuneration system”, p. 134 ff.). After the end of the fiscal year, the Supervisory
Board can then reduce or increase the target achievement level for the STI by up
to 30 percent - depending on the performance of the Management Board and also
to take account of any exceptional, unforeseeable developments.
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
225,000
Jochen Hanebeck
2021
225,000
Management Board member
2020
Constanze Hufenbecher²
2021
Management Board member
225,000
112,500
278,244
294,037
98,884
106,961
120,148
129,139
131,044
Management Board member
since 15 April 2021
2020
Total
2021
2020
210,000
210,000
2,653,885
2,995,017
3,279,840
131,044
1,240,000
756,646
5,145,009
8,564,547
Infineon Technologies | Annual Report 2021
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.
98,884
3,661,072
98,884
881,072
1,773,579
2,197,744
106,961
98,884
4,026,081
278,244
2,780,000
1,930,000
845,725
165,725
976,672
1,316,672
1,930,000
2,867,500
340,000
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
346,591
750,000
750,000
750,000
750,000
Basic annual salary
Fixed remuneration
2021
850,000
2021 (max.)
2021
in €
Management Board member since 15 April 20212
Constanze Hufenbecher
Jochen Hanebeck
Management Board member
< 143 >
Q =
Further information
2020 2021 (min.)
Fringe benefits
340,000
937,500
Long-Term Incentive (LTI)
550,000
2020-2022 tranche
Mid-Term Incentive (MTI)
550,000
550,000
Multi-year variable remuneration
remuneration (STI)
Single-year variable
Variable remuneration
32,188
782,188
750,000
750,000
32,188
782,188
750,000
70,893
820,893
750,000
32,188
782,188
825,000
55,337
880,337
825,000
55,337
880,337
Performance Share Plan¹
1,767,364
290,050
Total variable remuneration
278,244
1,158,581
294,037
2,188,912
278,244
2,510,253
72,298
6,215,036
264,125
1,014,125
976,672
1,351,672
3,492,500
4,867,500
375,000
340,000
375,000
1,375,000
72,298
1,347,536
368,802
3,036,063
72,298
3,664,900
Total remuneration (DCGK)
Pension expense
1,390,050
2,317,364
375,000
825,000
55,750
880,750
28,329
778,329
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Corporate Governance
Remuneration report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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
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").
Remuneration received by Management members ("Zufluss")
2 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI
or LTI grant amount for the month of April 2021, and thus to a total
of 11 twenty-fourths for the entry fiscal year.
1 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.
131,044
1,785,941
131,044
511,775
131,044
1,115,237
3,678,477
< 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 €
Constanze Hufenbecher
Management Board member
since 15 April 20211
2020
2021
2020
Jochen Hanebeck
Management Board member
2021
2020
Dr. Helmut Gassel
Management Board member
120,148
2021
Dr. Sven Schneider
Chief Financial Officer
2021
Chief Executive Officer
Dr. Reinhard Ploss
Total fixed remuneration
Fringe benefits
Basic annual salary
Fixed remuneration
2020
Total fixed remuneration
120,148
898,477
2,215,149
976,672
Performance Share Plan'
Long-Term Incentive (LTI)
340,000
2020-2022 tranche
Mid-Term Incentive (MTI)
Multi-year variable remuneration
340,000
340,000
remuneration (STI)
Single-year variable
Variable remuneration
380,731
34,140
28,329
778,329
28,329
778,329
34,476
784,476
165,725
1,240,000
1,316,672
845,725
Total remuneration (DCGK)
120,148
Pension expense
884,583
1,274,166
389,583
380,731
380,731
34,140
129,139
1,759,340
34,140
346,591
2021 (max.)
2021 (min.)
2020
447,629
603,462
1,930,000
2,780,000
155,833
850,000
346,591
825,000
55,337
880,337
1,240,000
35,238
1,275,238
1,240,000
35,238
1,275,238
2020
523,916
124,952
14,027
14,027
1,767,364
61,218
91,788
2021
Chief Executive Officer
Dr. Reinhard Ploss
in €
Number
Number
Number
in €
Number
103,148
23,204
290,050
17,282
59,802
21,130
264,125
21,130
2020
276,840
54,960
976,672
Number
33,830
2021
Management Board member
Dr. Helmut Gassel
Chief Financial Officer
Dr. Sven Schneider
182,577
91,788
17,282
21,130
2021
Fiscal year
Total expense
for share-based
payment
7,329,823
12,661,370
Infineon Technologies | Annual Report 2021
2 The figures for the active Management Board members in the 2021 fiscal year were based on a fair market value per performance share amounting to €28.87 (2020: €12.50), which was calculated using a Monte Carlo simulation model.
3 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI or LTI grant amount for the month of April 2021, and thus to a total of 11 twenty-fourths for the entry fiscal year.
1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfillment of the plan requirements.
1,130,988
1,541,122
2,415,281
1,577,539
2,419,140
1,688,000
2,585,259
2,523,162
4,110,702
Total remuneration
3,566,493
885,625
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Corporate Governance
Remuneration report
Consolidated Financial Statements
Virtual performance
shares outstanding
at the end
of the fiscal year
in the fiscal year²
Virtual performance
shares expired
Performance Share Plan
Virtual performance
shares due
in the fiscal year¹
in the fiscal year
Fair value grant date
Virtual performance
shares newly granted
Management Board member
Virtual performance
shares outstanding
at the beginning
of the fiscal year
The following table shows the number of performance shares awarded to Management
Board members in the 2021 fiscal year.
A fair market value of €28.87 (2020: €12.50) per performance share granted in the
2021 fiscal year was determined, taking account of the cap of 250 percent cap set on
the LTI allocation amount as well as the performance hurdle.
As described in the section "Management Board remuneration", the contractually
agreed LTI is granted to Management Board members by Infineon in the form of
performance shares, p. 136. The average price of the Infineon share relevant for
the number of performance shares granted for the 2021 fiscal year was €22.82
(2020: €18.10).
Share-based payment
Other fringe benefits relate mainly to statutory obligations such as the payment of
inventor's remuneration or general benefits available to all Infineon employees.
The fringe benefits of Ms. Hufenbecher include a one-time lump sum of €25,000 for
the reimbursement of start-up costs.
Q = < 141 >
Further information
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.
53,328
33,830
976,672
The following table shows the value of remuneration granted for the 2020 and 2021
fiscal years, including fringe benefits, as well as the minimum and maximum values
that can be achieved for the 2021 fiscal year.
in accordance with DCGK 2017 (voluntary disclosure)
Remuneration granted ("gewährte Zuwendungen")
Remuneration of the Management Board in the 2021 fiscal year
In the 2009 fiscal year, the Company entered into a restitution agreement with each
of the then active Management Board members. Dr. Ploss is the only current Manage-
ment Board member affected by the agreement. The agreements stipulate that the
Company covers all costs and expenses of any legal, governmental, regulatory and/or
parliamentary proceedings and investigations as well as arbitration proceedings in
which Management Board members are involved in conjunction with their activities on
behalf of the Company. However, the agreements specifically exclude any restitution
of costs incurred in conjunction with section 93, paragraph 2, AktG.
Other awards and benefits
The Supervisory Board did not award any special bonuses to Management Board
members during the 2021 fiscal year.
Special bonuses
Q = < 142 >
Further information
Consolidated Financial Statements
Combined Management Report
Corporate Governance
Remuneration report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
3 Despite taking office on 15th April 2021, Ms. Hufenbecher was granted virtual performance shares retroactively as of 1st April 2021. Ms. Hufenbecher is entitled to one twenty-fourth of the individual LTI grant amount for the month of April 2021,
and thus to a total of 11 twenty-fourths for the entry fiscal year.
2 In the 2021 and 2020 fiscal years, virtual performance shares expired because the performance hurdle had not been met.
1 The share price of the virtual performance shares exercised on 1st October 2020 amounted to €25.50.
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
1,240,000
37,211
1,277,211
1,275,238
Total fixed remuneration
1,240,000
35,238
Fringe benefits
Basic annual salary
2021 (max.)
2020 2021 (min.)
1,484,211
451,035
2021
2020 2021 (min.)
2021
2021 (max.)
2021 (min.)
2020
Dr. Helmut Gassel
Management Board member
Dr. Sven Schneider
Chief Financial Officer
Dr. Reinhard Ploss
Chief Executive Officer
2021 (max.)
335,913
219,574
30,937
17,282
30,937
17,282
70,248
8,455
8,455
976,672
33,830
53,328
2021
Jochen Hanebeck
291,991
104,328
165,725
13,258
40,070
2020
291,991
70,248
8,455
8,455
53,328
750,257
Management Board member
40,070
5,145,009
885,625
178,213
70,850
219,574
183,288
2020
2021
Total
2020
Management Board member since 15 April 20213
2020
99,473
447,629
15,505
2021
Constanze Hufenbecher
104,328
53,328
165,725
13,258
15,505
Total variable remuneration
Management Board and
Supervisory Board
22
15
(1,570)
(5,372)
16
372
65
Payments for leasing liabilities
14
(76)
(63)
11
Deposits for financing-related derivatives
3
25
335
3
17
Proceeds from issuance of ordinary shares
19
1,043
(148)
(129)
(180)
3,063
(68)
Cash outflows due to changes of non-controlling interests
Dividend payments
(2)
19
(286)
(336)
Repayments of long-term financial debt
(71)
407
9,815
(5)
(22)
Proceeds from sales of property, plant and equipment and other assets
14
33
4
4
2
12, 13, 28
12
12
Net cash used in investing activities from continuing operations
Net cash used in investing activities from discontinued operations
(2,284)
(7,172)
1,817
5
Net cash used in investing activities
(2,284)
(7,172)
9
(279)
46
10
(121)
124
Net change in related party financial receivables and payables
Proceeds from issuance of long-term financial debt
24
2
15
1,084
56
Proceeds from hybrid capital
19
1,184
for the fiscal year ended 30 September 2020
€ in millions
Balance as of 1 October 2019
Notes
Share capital
Capital
reserves
Retained
earnings
Other reserves
Foreign
Hedges
Cost of
currency
hedging
translation
differences
Consolidated Statement of Changes in Equity
2,501
421
144
152
43
Own shares
Equity
attributable to
shareholders
of Infineon
Technologies
AG
(42)
(37)
8,633
Equity
attributable to
hybrid capital
investors
Total equity
8,633
329
5,494
(915)
< 156 >
Further information
Cash outflow to hybrid capital investors
19
(39)
(20)
2
3,065
(6)
1,811
Net cash provided by (used in) financing activities
from continuing operations
(885)
6,274
Net cash provided by (used in) financing activities
from discontinued operations
Net cash provided by (used in) financing activities
(885)
6,274
Q =
Net change in cash and cash equivalents
913
Effect of foreign exchange rate changes on cash and cash equivalents
2
(83)
Cash and cash equivalents at beginning of period
1,851
1,021
Cash and cash equivalents at end of period
1,749
1,851
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
(104)
(1,268)
12
(184)
(306)
(460)
(28)
(33)
1,203
1,203
11,401
10,219
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
435
Q = < 155 >
€ in millions
Profit (loss) for the period
Plus: profit (loss) from discontinued operations, net of income taxes
Adjustments to reconcile profit (loss) for the period
to net cash provided by operating activities:
Depreciation and amortization
Income tax
Net interest result
Gains on disposals of property, plant and equipment
Dividends received
Impairment charges/reversals of impairments
Other non-cash result
Change in trade receivables
Change in inventories
Consolidated Statement of Cash Flows
Change in trade payables
1,407
6,513
Total non-current liabilities
Total liabilities
7,490
8,330
11,933
11,780
695
627
Equity:
19
19
Other non-current assets
26
225
Total non-current assets
6,462
15,082
Ordinary share capital
Additional paid-in capital
Retained earnings
Other reserves
Total assets
Own shares
Hybrid capital
Total equity
23,334
21,999
Total liabilities and equity
23,334
21,999
2,612
2,612
191
14,820
329
Change in provisions
Interest received
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
IAS 1
13
(1)
The financial statements of entities included in the Consolidated Financial Statements
are prepared using uniform valuation and accounting policies.
12
1,260
Investments in related companies
(44)
5
144
52
Purchases of other intangible assets and other assets
3
150
101
Purchases of property, plant and equipment
IAS 12
12
(229)
1,513
Change in other assets and other liabilities
The balance sheet effects of intragroup transactions as well as gains and losses arising
from intragroup business relationships are eliminated on consolidation.
1 April 2021
Interest paid
Income tax paid
Net cash provided by operating activities from continuing operations
Net cash provided by (used in) operating activities
from discontinued operations
Net cash provided by operating activities
Infineon Technologies | Annual Report 2021
Notes
2021
2020
25
1,169
368
6
Infineon Technologies | Annual Report 2021
€ in millions
Notes
2021
2020
8
(4,275)
(6,045)
Proceeds from sales of financial investments
8
4
Acquisitions of businesses, net of cash acquired
3,480
(19)
7,417
(7,433)
Proceeds from sales of businesses and interests in subsidiaries,
net of cash disbursed
Purchases of financial investments
39
368
21
27
S S
5
(230)
(230)
5
(230)
(230)
(39)
(39)
(39)
(39)
2,612
6,513
27
1,407
3
(28)
10,198
1,203
11,401
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
Q = < 158 >
Notes to the Consolidated Financial Statements
The Infineon Group ("Infineon"), comprising Infineon Technologies AG (hereafter
also referred to as "the Company”) and its direct and indirect subsidiaries, design,
develop, manufacture and market a broad range of semiconductors and related sys-
tem solutions. The focus of activities is on applications for automotive electronics,
industrial electronics, entertainment and household electronics, information and
communications infrastructure as well as hardware-based security. The product
range includes standard, application-specific and customer-specific components as
well as system solutions for power, digital, analog, high frequency and mixed-signal
applications. Research and development sites, manufacturing facilities, investments
and customers are located mainly in Europe, Asia and North America.
Infineon Technologies 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.
(309)
1 Basis of the Consolidated Financial Statements
5
5
51
(286)
Transactions with hybrid capital investors
Compensations to hybrid capital investors
19
Total transactions with hybrid capital investors
Balance as of 30 September 2021
Infineon Technologies | Annual Report 2021
Own shares
Equity
attributable to
shareholders
of Infineon
Technologies
Equity
attributable to
Total equity
hybrid capital
investors
AG
5
(33)
1,203
10,219
1,130
39
1,169
282
282
1,412
39
1,451
(286)
24
(286)
24
9,016
Total transactions with owners
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.
The fiscal year-end for both Infineon and the Company is 30 September of each year.
IAS 16
1 January 2022
none
IAS 1
income before intended use (amendments to IAS 16)
Classification of liabilities as current or non-current
(amendments to IAS 1)
1 January 2023
none
IFRS 3
References to the conceptual framework
1 January 2022
none
IAS 37
Onerous contracts - costs of fulfilling a contract
(amendments to IAS 37)
1 January 2022
Effective date
IFRS 17
1 January 2023
none
IFRS 4
1 January 2021
none
1 January 2021
none
1 January 2022
1 January 2023
none
none
1 January 2023
immaterial
1 January 2023
none
Insurance contracts including amendments to IFRS 17
The Consolidated Statement of Profit or Loss is presented using the cost of sales method.
immaterial
Property, plant and equipment -
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 25 November 2021.
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 2021:
Standard/amendment/interpretation
IAS 1
and IAS 8
IFRS 3
IFRS 16
Definition of material (amendments to IAS 1 and IAS 8)
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
Revision to the conceptual framework and amendments to
references to the conceptual framework in IFRS Standards
Effective date
Impact on Infineon
1 January 2020
none
Impact on Infineon
1 January 2020
1 June 2020
1 January 2020
none
immaterial
none
none
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 = < 159 >
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 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.
Standard/amendment/interpretation
1 January 2020
1
(286)
Total contributions by and distributions to owners
Total contributions by and distributions to owners
111
968
(336)
Total transactions with owners
111
968
(336)
Transactions with hybrid capital investors
Emission hybrid capital
19
Compensations to hybrid capital investors
19
Total transactions with hybrid capital investors
22
Balance as of 30 September 2020
1,044
1,044
(336)
11
(336)
11
2
2
4
4
4
4
747
4
Infineon Technologies | Annual Report 2021
747
19
19
(543)
(213)
42
(693)
(693)
350
(543)
(213)
42
(364)
39
(325)
Total comprehensive income (loss), net of tax
Profit (loss) for the period
Other comprehensive income (loss), net of tax
Total comprehensive income (loss), net of tax
Other contributions and distributions
Transactions with owners
Dividends
Share-based payment
19
110
934
19
(336)
21
11
Exercise of stock options
19
1
1
Disposal (purchase) of own shares
Contributions by and distributions to owners
Capital increase
51
མ་ཝ
22
Retained
earnings
Other reserves
Foreign
Hedges
currency
translation
differences
Cost of
hedging
2,612
6,462
435
(399)
(61)
1,130
128
90
Capital
reserves
64
90
64
Contributions by and distributions to owners
Dividends
Share-based payment
19
(286)
21
24
Disposal (purchase) of own shares
19
Other contributions and distributions
19
27
1,258
22
Share capital
Transactions with owners
747
747
1,184
1,184
(20)
(20)
1,164
1,164
2,612
6,462
435
(399)
(61)
(33)
Notes
9,016
10,219
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q =
< 157 >
Consolidated Statement of Changes in Equity
for the fiscal year ended 30 September 2021
€ in millions
Balance as of 1 October 2020
Total comprehensive income (loss), net of tax
Profit (loss) for the period
Other comprehensive income (loss), net of tax
Total comprehensive income (loss), net of tax
1,203
1
immaterial
Deferred tax assets
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
1 Not part of the audited combined Management Report.
International Monetary Fund: World Economic Outlook. October 2021.
Based on or includes research from Omdia: OEM Semiconductor
Spend Tracker - World + Regions - H1 2021. August 2021.
R11
R10
Based on or includes research from Omdia: Application Market
Forecast Tool Q3 2021 Update. September 2021.
R09
World Semiconductor Trade Statistics (WSTS): Semiconductor
Industry Blue Book History. October 2021.
R08
Further information
R07 Strategy Analytics: Automated Driving Semiconductor Market Estimate.
August 2021; Infineon.
Strategy Analytics: Automotive Semiconductor Demand
Alternative Propulsion Forecast. August 2021;
Based on or includes content supplied by IHS Markit, Automotive Group:
R06
ABI Research: Smart Card and Embedded Security IC Technologies.
September 2021.
R05
Constanze Hufenbecher
Jochen Hanebeck
Based on or includes research from Omdia: MEMS Microphones Dice
Market Shares 2021. July 2021.
R04
Based on or includes research from Omdia: Power Semiconductor
Market Share Database 2020. September 2021.
R03
Dr. Helmut Gassel
Dr. Sven Schneider
Forecast 2019-2028. July 2021; Infineon. | 1
Dr. Reinhard Ploss
Q = < 152 >
153 Consolidated Statement of Profit or Loss
Financial income
Operating profit
Other operating expenses
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
Consolidated
Financial Statements
< 153 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
158
156
155 Consolidated Statement of Cash Flows
Consolidated Statement of Financial Position
Consolidated Statement of Comprehensive Income
154
153
Q =
Notes
Management Board
Strategy Analytics: Automotive Semiconductor Vendor Market Shares.
April 2021.
37,500
2020
2021
Gerhard Hobbach¹
2,086,918
334,000
275,418
2,067,500
350,000
277,500
1,440,000
1,477,500
2020
2021
Total
6,250
128,000
10,000
90,000
2020
135,000
30,000
15,000
90,000
2021
Diana Vitale
137,000
84,667
135,000
135,000
123,000
127,000
22,000
15,000
90,000
2020
28,000
Neubiberg, 25 November 2021
Hans-Ulrich Holdenried ³
90,000
Based on or includes research from Omdia: Annual 2001 - 2020
Semiconductor Market Share Competitive Landscaping Tool - Q2 2021.
August 2021.
R02
R01
List of references
Q = < 151 >
Further information
Consolidated Financial Statements
Combined Management Report
List of references
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Supervisory Board members did not receive any loans from Infineon in either the
2021 or 2020 fiscal year.
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 remuneration for the 2020 fiscal year therefore was awarded
on a pro rata basis.
2021
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.
4,000
37,500
2020
2021
Prof. Dr. Renate Köcher¹
Notes
127,000
22,000
15,000
90,000
2020
49,750
135,000
30,000
15,000
41,500
18,000
2021
€ in millions
0.26
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
Diluted earnings per share (in euro) attributable to
shareholders of Infineon Technologies AG:¹
1,169
Attributable to:
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
Shareholders and hybrid capital investors of Infineon Technologies AG
424
Diluted earnings per share (in euro) from continuing operations
0.88
55
€ 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
7
< 154 >
Further information
Consolidated Financial Statements
Combined Management Report
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
Q =
2020
1,319
(325)
64
(543)
90
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
76
Actuarial gains (losses) on pensions and similar commitments
4,260
368
1,169
Profit (loss) for the period
(5,791)
(6,800)
3
19
8,567
11,060
3
2020
2021
Notes
2,776
Profit (loss) from continuing operations before income taxes
Net change in fair value of hedging instruments
(213)
1,451
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
64
Financial expenses
282
Other comprehensive income (loss), net of tax
29
22
3
(714)
154
Total items that may be reclassified subsequently to profit or loss
581
1,470
42
Cost of hedging
(116)
(52)
(693)
15,000
6,000
2021
30 Septem-
ber 2020
LIABILITIES AND EQUITY
1,749
1,851
Short-term financial debt and current portion
of long-term financial debt
15
833
505
10
Current income tax receivables
8165
2,173
30 Septem-
ber 2021
1,376
1,569
1,160
9
1,483
1,196
Current provisions
2,181
2,052
Current income tax payables
57
77
Current leasing liabilities
14
Contract assets
Trade payables
82
Business focus and strategy
90,000
2020
102,000
12,000
90,000
2021
Géraldine Picaud 3
125,000
20,000
15,000
90,000
2020
123,000
18,000
15,000
Combined Management Report
Corporate Governance
Remuneration report
90,000
remuner-
ation
Total
Meeting
attendance
fees
for specific
functions
Allowance
Fixed
remuner-
ation
Supervisory Board member, in €
Fiscal year
Dr. Susanne Lachenmann
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:
Remuneration of the Supervisory Board for the 2021 fiscal year
< 150 >
Q =
Further information
2021
90,000
97
6517
Deferred tax liabilities
5,962
5,897
Other non-current provisions
3,349
3,621
Non-current leasing liabilities
14
336
286
Other non-current liabilities
26
8རེད ག ཆཡ
5,752
4,110
6,528
739
324
293
319
313
265
235
213
222
Investments accounted for using the equity method
4
71
87
Non-current income tax receivables
617
Other current liabilities
4,443
14
815
436
288
340
66
59
872
950
Other current assets
11
518
530
Total current liabilities
4,443
2324
3,450
9
Long-term financial debt
15
Total current assets
8,252
7,179
Pensions and similar commitments
18
Property, plant and equipment
12
Goodwill
Other intangible assets
12
Right-of-use assets
Assets classified as held for sale
10,000
Consolidated Financial Statements
Dr. Manfred Puffer ³
2020
4,000
42,000
90,000
90,000
2021
Dr. Wolfgang Eder³
37,500
2020
118,500
26,000
2,500
90,000
2021
Margret Suckale 2,3
90,000
2021
84,667
8,000
16,667
60,000
2020
133,000
18,000
25,000
90,000
2021
Dr. Ulrich Spiesshofer 2,3
156,000
158,000
38,000
30,000
Dr. Herbert Diess¹
90,000
100,000
41,500
222,000
210,000
Peter Gruber
30,000
15,000
90,000
2020
30,000
15,000
90,000
2021
Annette Engelfried
8,000
16,667
60,000
2020
30,000
22,000
90,000
2021
Dr. Friedrich Eichiner 2,3
55,917
8,000
10,417
37,500
2020
2021
Dr. Eckart Sünner¹
70,000
10,000
60,000
2020
25,000
2020
90,000
30,000
90,000
2021
Jürgen Scholz
2021
76,000
16,000
60,000
2020
ation
102,000
12,000
90,000
Melanie Riedl²
remuner-
15,000
108,000
90,000
2020
Total
Meeting
attendance
fees
Allowance
for specific
functions
remuner-
ation
Supervisory Board member, in €
Peter Bauer¹
Fixed
Fiscal year
102,000
12,000
90,000
36,000
2021
18,000
14,000
2021
90,000
2021
119,000
Johann Dechant
106,000
16,000
90,000
2020
102,000
12,000
2021
Kerstin Schulzendorf
127,000
22,000
90,000
2020
15,000
90,000
2020
37,500
10,417
6,000
Xiaoqun Clever 2,3
53,917
123,000
78,000
90,000
2021
18,000
2020
60,000
10,000
8,000
15,000
Trade payables
Q = < 161 >
Financial debt (short-term and long-term)
LIABILITIES AND EQUITY
Balance sheet item
Further information
Fair value through profit or loss
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Provisions:
Fair value through other comprehensive income
Amortized cost
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Pensions
Amortized present value of outstanding lease payments
Other financial liabilities:
Measured at fair value through profit or loss
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
Fair value through profit or loss
Other provisions (current and non-current)
Leasing liabilities (current and non-current)
Other liabilities (current and non-current):
Fair value/amortized cost
Business focus and strategy
Impairment-only approach
Fair value through other comprehensive income
Fair value/amortized cost
Management Board and
Supervisory Board
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
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
Amortized acquisition or production cost
Amortized acquisition cost
Fair value/amortized cost
Measurement principle
At fair value through profit or loss
Designated hedging instruments
Remaining other assets
At amortized cost
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
Fair value/amortized cost
On this basis, Infineon's financial asset measurement categories are as follows:
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.
Recoverability of property, plant and equipment and intangible assets
(including goodwill)
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.
The recoverability of an asset is measured by comparing its carrying amount with
its recoverable amount. To the extent it is not possible to determine the recoverable
amount of an individual asset, the book value of the cash generating unit to which
the asset is allocated is compared to its recoverable amount.
A cash generating unit (“CGU”) represents the smallest identifiable group of assets
that generates cash inflows from continuing activities and that are largely independent
of the cash inflows from other assets or group of assets.
Goodwill arising in connection with a business combination is allocated to the CGUS
or groups of CGUs that will benefit from the synergies generated by the business
combination.
The recoverable amount of an asset is defined as the higher of its fair value less
costs to sell and its value in use. The value in use is calculated based on discounted
future cash flows. Considerable management judgment is necessary to estimate
future cash flows.
Infineon Technologies | Annual Report 2021
Management Board and
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Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
Q = < 166 >
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.
Leased assets
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.
Defined benefit pension plans
Infineon did not hold any intangible assets with indefinite useful lives in either the
2021 or the 2020 fiscal year.
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.
3-5
3-12
Other intangible assets
Property, plant and equipment are measured at amortized acquisition or construction
cost, and its value is reduced by depreciation and considering any impairment.
Infineon Technologies | Annual Report 2021
Management Board and
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Business focus and strategy
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
Other intangible assets
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
Years
3-10
1-12
1-12
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.
Infineon Technologies | Annual Report 2021
Management Board and
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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 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 2021
Management Board and
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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
Acquisition cost
Acquisition cost
Distributors can, subject to certain conditions, return a limited amount of inventory
(stock return) or request scrap allowances. The estimation of the transaction price
is based on the expected stock returns in accordance with the contractual agreement,
combined with historical experience. Distributor scrap allowances are taken into
account when determining the transaction price based on the contractual agreement
and, upon submission of a valid claim, are granted up to a certain maximum based
on turnover in a given period. Infineon monitors such product returns on an ongoing
basis and adjusts estimate assumptions accordingly. In the case of both stock return
and scrap allowances, the consideration to be refunded to the customer is recognized
as a reimbursement obligation within other current liabilities. Other returns are only
permitted for quality defects within the ordinary warranty period.
rolling historical price trends in the difference between contract prices and standard
list prices to the distributors. The determination of the transaction price in the case
of price protection takes into account current list prices and the relevant distributors'
inventory on hand. The availability of detailed distributor inventory data, the trans-
parency of pricing for standard products and the long distributor pricing history
enable Infineon to reliably estimate the adjustments for price protection and ship
and debit credit notes at the end of the reporting period.
Infineon recognizes revenue for deliveries to distributors by using the "sell in" method,
that is when a product is sold to the distributor, to the extent that revenue has not
already been recognized on an over-time basis. The transaction price for sales to dis-
tributors, in particular, contains variable components. Distributors can, in accordance
with established business practices in the semiconductor industry, under certain
circumstances apply for price protection. This allows distributors to receive a credit
(debit) note for unsold products held in inventory, where Infineon has reduced
(increased) the standard list price of certain products. In addition, in certain cases
and for certain products, distributors may request a so-called ship and debit credit
note for price adjustments. As with all product sales, Infineon recognizes revenue based
on the transaction price and records an obligation for the estimated consideration to
be reimbursed to the customer during the period in which the relevant revenue is
recognized. The reimbursement obligation is reported within other current liabilities.
The determination of the transaction price in the case of ship and debit is based on
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.
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
Property, plant and equipment
Contingent liabilities
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
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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.
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.
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.).
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.).
Further information
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.
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
Q = < 164 >
in profit or loss. Amounts accumulated in equity are recycled in profit or loss in the
periods in which the underlying hedged item affects profit or loss, or, if the expected
transaction subsequently results in the recognition of a non-financial asset, included
in the acquisition cost upon initial recognition.
When a hedging instrument expires or is sold, or when a hedging relationship no
longer meets the criteria for hedge accounting, any cumulative gain or loss existing at
that time remains in equity until the underlying transaction actually occurs. When a
forecasted transaction is no longer expected to occur, the cumulative gain or loss that
was reported in equity is immediately transferred to profit or loss.
Hybrid bonds
The recognition of a hybrid bond depends on the specific form of the instrument.
A hybrid bond is measured and recognized in equity when certain conditions are jointly
met. These include, but are not limited to, the fact that the hybrid bond has no final
maturity date, that investors have no rights of termination, and that distributions are
made at Infineon's discretion. In this case, discounts, transaction costs, tax effects
and the remuneration of hybrid investors are deducted directly from equity.
Inventories
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. 167 f.). The valuation is made by
reference to the previous book value of the products.
Contract assets
Contract assets are recognized if Infineon has fulfilled its performance obligations
arising from contracts with customers and an unconditional entitlement to customer
consideration does not yet exist.
At Infineon, contract assets result from revenue arising from over-time revenue recog-
nition for certain types of contracts, as well as from sales to some customers for
whom Infineon maintains a consignment warehouse and where revenue is recorded
at the time of delivery to the consignment warehouse, whereas the invoice is only
issued at the time of withdrawal of the product by the customer.
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.
< 162 >
Q =
Further information
Infineon Technologies | Annual Report 2021
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".
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
Derivative financial instruments are measured at their fair value and included in
"other current assets" or "other current liabilities".
"Designated hedging instruments (cash flow hedges)" also belong to financial assets.
> Impairment of financial assets
Infineon determines an impairment charge for expected credit losses for financial
assets in the form of debt instruments that are measured at amortized cost or at fair
value through other comprehensive income. The calculation of the expected future
credit losses is generally determined by multiplying the probability of default by the
carrying amount of the financial asset (exposure at default) and the expected loss
ratio (loss given default).
Infineon determines impairments for expected credit losses primarily for cash and
cash equivalents, financial investments, trade receivables, and contract assets. The
expected credit losses are adjusted at each reporting date to reflect changes in credit
risk since the instrument was first recognized.
For cash and cash equivalents and financial investments measured at amortized cost,
Infineon determines credit losses expected in the next twelve months (twelve-month
credit loss) in accordance with the general approach. Due to their short-term maturity,
this corresponds to the expected credit losses over the entire term. Infineon rates the
credit risk for cash and cash equivalents and financial investments as low. Infineon
assumes that a financial asset has a low credit risk if it has an investment grade rating
or a corresponding internal investment grade rating. In order to assess whether there
has been a significant increase in credit risk since initial recognition, Infineon considers
appropriate and robust information that is relevant and available without dispropor-
tionately high levels of effort. This includes both quantitative and qualitative infor-
mation and analyses, which are based on the Company's historical experience and
a sound credit assessment as well as forward-looking information. Macroeconomic
information is taken into account in the internal rating model (information on Infineon's
financial risk management is included in note 27, p. 211 ff.). Irrespective of the above
analysis, a significant increase in credit risk is assumed if a debtor is more than 30 days
overdue with the settlement of a contractual payment.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
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.
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.
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).
Q = < 163 >
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Financial instruments
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.
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.
At Infineon, financial assets in the form of equity instruments are consistently measured
at fair value through profit or loss.
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.
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 2021
24
2,214
(296)
(214)
(7)
(11)
1,686
1,894
(1)
1
306
(201)
(29)
(230)
(528)
925
(8)
(595)
14
14
(448)
772
640
Customer relationships
1,321
738
12
2,190
Licenses and similar rights
276
30
1,333
(396)
(191)
Technologies
'༔ཌུ
2,609
(69)
(321)
(7)
218
753
construction in progress
Payments on account and
145
178
(1,279)
(4)
52
(123)
2
(1,204)
4
37
(53)
120
1,349
Other plant and office equipment
2,139
2,307
(8,822)
(19)
123
(737)
1,457
76
645
2
(393)
1,220
1,996
2
(14)
199
1,033
Capitalized development costs
Other intangible assets
4,110
4,443
(11,090)
(2)
(27)
180
(936)
(10,316)
15,533
37
(189)
1,259
14,426
and equipment
Total property, plant
751
645
6
75
2,476
105
Revenue
3 Notes to the Consolidated Statement of Profit or Loss
< 171 >
Q =
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Breakdowns of revenue by segments, product groups and geographic areas are
disclosed in note 28. p. 219 ff.
Infineon Technologies | Annual Report 2021
> valuation of defined benefit pension plans (see "Defined benefit pension plans",
p. 166, and note 18, ☐ p. 187 ff.).
> recognition and valuation of provisions (see "Other provisions", p. 167, notes 16,
p. 186, and 23, p. 198 ff.) and
> the recoverability of non-financial assets, in particular goodwill (see notes 12,
p. 179 f., and 13, □ p. 181 f.),
> revenue recognized over time as well as revenue where the transaction price
includes a variable component (see “Revenue recognition”, p. 167 f.),
> valuation of inventory (see "Inventories", p. 164, and note 10, □ p. 178),
> 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.),
Areas containing estimates and assumptions and that are consequently most likely
to be affected when actual results vary from estimates and assumptions are:
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.
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
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.
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
1,975
4,534
3,687
Personnel expenses comprised the following in the 2021 and 2020 fiscal years:
Revenue expected in (€ in millions)
As of 30 September 2021
As of 30 September 2020
Total
512
Less than
1 year
157
1 year
and after
€ in millions
Wages and salaries
355
216
1,925
2020
2021
Total
Cost of purchased services
Cost of raw materials, supplies and purchased goods
Estimates and assumptions undergo regular review and must be adjusted where
appropriate.
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 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.
(1,830)
(20)
(8)
14
(512)
(1,304)
5,179
40
(15)
229
4,925
Total other intangible assets
87
77
(29)
(1)
(1)
(9)
(18)
106
1
3,349
Remaining other intangible assets
3,621
2,916
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.
Q = < 170 >
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
(8,189)
55
161
Social insurance levies and employee benefits
Expenses for pensions
Total
2021
2020
3,108
1,712
471
370
67
70
3,646
Infineon Technologies | Annual Report 2021
11,129
123
236
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
2020
Total comprehensive income (loss) for the year, net of tax
(23)
(50)
Change in permanent balance sheet effects
33
66
Tax-exempt income
(27)
(33)
Non-deductible expenses
€ in millions
2021
Total comprehensive income (loss) for the year, net of tax
Income (loss) for the year, net of tax
(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
The investments accounted for using the equity method comprise shares in joint
ventures and associated companies.
Summarized financial information for joint ventures
As of 30 September 2021 and 2020, the carrying amount of joint ventures accounted
for using the equity method was €23 million and €21 million, respectively. The pro
rata result from joint ventures accounted for using the equity method for the 2021
fiscal year was €2 million (2020: negative €8 million).
For the 2021 and 2020 fiscal years, Infineon's proportion of selected items from the
statement of comprehensive income of the joint ventures accounted for using the
equity method were aggregated as follows:
€ in millions
50
(182)
73
(14)
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:
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).
Summarized financial information for associated companies
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).
(52)
(144)
42
8
(94)
Current tax expense included tax income of €59 million (2020: €46 million tax income)
relating to previous fiscal years.
(152)
2021
Deferred tax income
Income tax
(8)
2
(8)
2
Current tax expense
2020
2021
2020
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
1
Effects from the difference between local and functional currency
(5)
(15)
Effects due to changes in tax rates
47
Tax rate differential
(118)
(367)
Expected income tax expense
2020
2021
33
€ in millions
The reconciliation of income taxes from continuing operations for the fiscal years
ended 30 September 2021 and 2020, based on the German combined statutory
income tax rate of 28 percent (2020: 28 percent), is as follows:
Q = < 174 >
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Previous year taxes
(47)
(27)
(130)
18,894
therein: Germany
Asia-Pacific (excluding Japan, Greater China)
therein: Mainland China, Hong Kong
Japan
12,680
12,201
20,457
17,818
19,767
2,423
2,086
1,967
648
432
Americas
5,296
4,438
therein: USA
3,772
2,218
2020
2021
Infineon Technologies | Annual Report 2021
(126)
669
10,328
and machinery
Technical equipment
1,075
1,313
(989)
(4)
9
3
(76)
(921)
2,302
9
48
(3)
The average number of employees by geographic region was as follows for the 2021
and 2020 fiscal years:
In contrast, Infineon refrains from disclosing the remaining performance obligations
arising from contracts with customers within the meaning of IFRS 15 with original
expected durations of one year or less. Accordingly, these values are not included in
the table above.
Europe
Greater China'
2,877
Total
48,591
43,800
2020
5
29
13
4
22
29
58
40
Financial expenses comprised the following in the 2021 and 2020 fiscal years:
108
5
4
€ in millions
186
152
Interest expenses
Other financial expenses
2021
2020
(155)
2021
222
2020
Total
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
Q = < 172 >
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
Selling, general and administrative expenses
Total
Gains on sales of financial assets
Other financial income
2021
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.
252
Change in valuation allowance on deferred tax assets
2021
Allowances at end of the fiscal year
Revaluation of allowances, net
0.26
0.87
Allowances at beginning of the fiscal year
(0.01)
€ in millions
0.26
0.88
The impairment losses on financial investments that are measured at amortized cost
changed as follows during the 2021 and 2020 fiscal years:
1,376
2,173
(1)
(1)
1,377
2,174
777
1,066
600
1,108
2020
1
1
1
ber 2021
30 Septem-
€ in millions
Trade receivables, net
Loss allowances
Trade receivables, gross
Trade receivables, related parties
Trade receivables, third parties
€ in millions
Inventories as of 30 September 2021 and 2020 consisted of the following:
ber 2020
10 Inventories
9 Trade receivables
Notes to the Consolidated Financial Statements
Q = < 178 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Information on Infineon's credit risk management is contained in note 27. p. 214 ff.
1
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:
30 Septem-
ber 2020
30 Septem-
Infineon Technologies | Annual Report 2021
(6)
337
1,149
333
1,143
thereof from discontinued operations
thereof from continuing operations
of Infineon Technologies AG - basic and diluted
Profit (loss) for the period attributable to shareholders
35
26
368
1,169
2020
2021
Remuneration entitlement of hybrid capital investors'
Profit (loss) for the period - basic and diluted
€ in millions (unless otherwise stated)
Financial investments as of 30 September 2021 and 2020 comprised the following:
Financial investments comprise fixed-term deposits with banks and investment funds.
Fixed-term deposits with banks are categorized as financial assets and 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.).
8 Financial investments
(4)
Weighted-average number of shares outstanding (in millions):
€ in millions
Fixed-term bank deposits
2 The calculation of earnings per share is based on unrounded figures.
1 Including the cumulative tax effect.
Earnings per share (in euro) - basic and diluted
Earnings per share (in euro) from continuing operations
Earnings per share (in euro) from discontinued operations,
net of income taxes
Basic and diluted earnings per share² (in euro):
- Effect of share-based compensation
Weighted-average number of shares outstanding - diluted
1,265.5
1,303.7
1.0
2.5
30 Septem-
ber 2021
Financial investments, net
(5.3)
1,264.5
1,301.2
Weighted-average number of shares outstanding - basic
Adjustments for:
(4.7)
Financial investments, gross
- Adjustment for own shares
1,269.8
1,305.9
- Ordinary share capital
Investment funds
Loss allowances
Basic and diluted earnings per share are calculated as follows for the fiscal years
ended 30 September 2021 and 2020:
Raw materials and supplies
1,192
Cost
Property, plant and equipment
€ in millions
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:
other intangible assets
12 Property, plant and equipment and
Notes to the Consolidated Financial Statements
Q = < 179 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
530
518
Total
197
66
Other
3
2
Depreciation/amortization
1 October
2020
Additions
Disposals
Land, land rights and buildings
of impair-
ments
2020
2021
2021
effects
reversals
30 Sep-
tember
tember
30 Sep-
Derivative financial instruments (see note 26, p. 207 ff.)
30 Sep-
tember
ments/
Foreign
Impair-
Carrying amount
Disposals
Depre-
ciation/
amor-
tization
1 October
2020
30 Sep-
tember
2021
Foreign
currency
effects
Reclassi-
fication
currency
1,479
9
71
Grants receivables
Infineon Technologies | Annual Report 2021
Information about Infineon's credit risk management is contained in note 27. p. 214 ff.
5
5
7
5
2020
2021
Allowances at end of the fiscal year
Usage of loss allowances, net
Allowances at beginning of the fiscal year
Current year's allowance, net of reversals
€ in millions
Changes in the allowances for trade receivables in the 2021 and 2020 fiscal year were
as follows:
1,196
(5)
(5)
1,483
Finished goods and merchandise
Total
1,201
1,488
9
Work in progress
30 Septem-
ber 2021
30 Septem-
ber 2020
279
92
106
Prepaid expenses
167
250
VAT and other receivables from tax authorities
ber 2020
30 Septem-
30 Septem-
ber 2021
€ in millions
94
Other current assets as of 30 September 2021 and 2020 consisted of the following:
Inventory write-downs as of 30 September 2021 and 2020 amounted to €232 million
and €252 million, respectively.
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.
Cost of goods sold consisted mainly of inventory-related expenses in the 2021 and
2020 fiscal years.
2,052
2,181
496
438
1,341
1,464
215
11 Other current assets
Q = < 177 >
(2)
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
61
184
17
17
64
(10)
Change in available tax credits
64
47
6
(18)
(144)
(52)
Other
Actual income taxes
The category "Other" includes a reduction of deferred tax liabilities of €10 million
(2020: increase of €20 million) as a result of the recognition of deferred tax in connec-
tion with investments of subsidiaries.
In the 2021 fiscal year, the tax expense from the valuation allowances or non-recogni-
tion of deferred tax assets for tax loss carry-forwards amounted to €23 million (2020:
€1 million), for tax credits to €8 million (2020: €46 million), and from temporary differ-
ences to €1 million (2020: €0 million). A write-up of deferred tax assets for tax loss
carry-forwards of €77 million was recorded (2020: €37 million). With respect to the
deferred tax assets for temporary differences, the write-up amounted to €19 million
in the 2021 fiscal year (2020: €0 million).
The utilization of tax loss carry-forwards, tax credits and temporary differences for
which deferred tax assets had not previously been recorded resulted in current tax
income of €5 million in the 2021 fiscal year (2020: €5 million).
Deferred tax assets and liabilities as of 30 September 2021 and 2020 comprised the
following:
"Effects due to changes in tax rates” related to a change in the applicable tax rates in
Singapore and the USA.
30 September 2021
(11)
Other
193
(52)
Total
803
(803)
767
(767)
Netting
42
(245)
(1,096)
1,430
Change 2021
8
(1,091)
1,462
Total deferred taxes
13
8
Unused tax credits and excess foreign tax credits
(54)
166
21
29
37
695
30 September 2020
Deferred
162
(129)
(102)
Further information
(34)
Provisions, pensions and similar commitments
310
(170)
40
53
273
(173)
109
33
Tax loss carry-forwards
577
(29)
(66)
606
213
19
(29)
(29)
(142)
146
Deferred
Total
€ in millions
Intangible assets
Property, plant and equipment
tax assets
tax liabilities
therein through
profit or loss
Deferred
tax assets
Deferred
Change 2020
Total
tax liabilities
profit or loss
35
(727)
9
12
39
(740)
(534)
22
therein through
(324)
201
8
Management Board and
Supervisory Board
651
464
412
424
1,129
333
58
41
2020
2021
Infineon Technologies | Annual Report 2021
Temporary differences
Tax credits
(particularly German trade tax and US state taxes)
Local tax loss carry-forwards
Tax loss carry-forwards (domestic and foreign)
42
(352)
28
27
6
20
Business focus and strategy
(2)
(3)
(3)
371
334
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.
€ in millions
21
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
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.
(6)
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.
Basic earnings per share are calculated by dividing profit (loss) for the period by
the weighted-average number of shares outstanding during the reporting period.
The calculation of the diluted earnings per share is based on the assumption that all
potentially dilutive instruments are converted into ordinary shares, resulting in
a corresponding increase in the number of shares.
The hybrid bond issued in the 2020 fiscal year is classified as equity (see note 19,
p. 193). The related hybrid investors' remuneration entitlement (after tax) represents
payments for a component of equity that reduces the earnings available to share-
holders for distribution and was therefore taken into account in determining earnings
per share (basic and diluted).
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
7 Earnings per share
42
(108)
6
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:
€ in millions
Income taxes from continuing operations
Income taxes from discontinued operations
Income taxes recognized directly in equity
21
Income taxes recognized in other comprehensive income
Income taxes
2020
(144)
(52)
1
29
25
2021
37
8
334
2020
2021
Adjustment on initial application of IFRS 9 and IFRS 15
Deferred taxes, net as of the end of the fiscal year
Foreign currency translation
Deferred taxes recognized in other comprehensive income
Deferred tax arising from business acquisitions
Deferred taxes recognized directly in equity
Change of deferred taxes, recognized directly in equity:
From discontinued operations
Deferred taxes, net as of the end of the previous fiscal year
Deferred tax income (expense), recognized through income statement:
From continuing operations
€ in millions
The change in the net amount of deferred tax assets and liabilities is as follows:
No deferred taxes were recorded for the following items (gross amounts):
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.
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.
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).
627
(293)
(245)
42
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).
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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).
Business focus and strategy
579
Term loan US$1,110 million,
741
740
638
636
weighted average interest rate 1.04% (2020: 1.66%), due 20241
2,361
30 September 2021
Term, € in millions
Short-term
Long-term
Total
The total lines of credit as of 30 September 2021 and 2020 are summarized in the
following table:
Financial debt, with the exception of conversion rights on outstanding convertible
bonds, are recognized at amortized cost after deduction of directly attributable
transaction costs. The conversion rights, which can only be exercised against cash
payment after the acquisition of Cypress, are measured at fair value through profit
or loss (see note 26, p. 206).
On 16 October 2020, the MoTo Objekt CAMPEON GmbH & Co. KG secured loans in the
amount of €171 million were repaid.
> Notes with a nominal value of US$350 million due in 2027,
Infineon signed a US private placement of notes (USPP) with a nominal value of
US$1,300 million in April 2021. The unsubordinated, unsecured USPP notes, which
bear an average interest rate of 2.88 percent per annum, were broken down as follows:
The bridge financing was fully repaid in the previous year as a result of various equity
and debt measures. In addition, a portion of the term loan maturing in 2022 in the
amount of US$555 million was repaid in the previous year.
> three term loan tranches, each amounting to US$1,110 million, with maturities of
three, four and five years.
> a bridge facility of €6,600 million with a maturity of up to two years and nine months
from the date of the loan commitment, and
In June 2019 Infineon Technologies AG concluded unsecured, non-subordinated
financing for the acquisition of Cypress with various national and international banks
comprising:
Q = < 185 >
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
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
1,119
5,752
6,528
954
USPP notes US$1,300 million,
797
Infineon Technologies | Annual Report 2021
Total
1 This is a variable-interest financial liability.
6,585
7,033
806
743
11
Aggregate
facility
8
20
3
3
744
1
10
54
28
5
6
2
4
8
2
6
683
83
49
18
8
26
Drawn
Available
Aggregate
facility
Drawn
Available
72
3
69
245
176
69
962
962
(9)
(22)
4
4
4
4
30 September 2020
746
89
499
32
66
99
1
3
1
6
Expenses for short-term leases with a term of twelve months or less
Expenses for low-value leases
nations¹
Total
10
office equipment
Other plant and
5
and machinery
(48)
(23)
267
Total
(56)
The Consolidated Statement of Cash Flows includes the following amounts in the
2021 and 2020 fiscal year, which are attributable to leases:
10
(3)
(6)
39
75
Technical equipment
9
10
9
(1)
(2)
7
74
72
255
240
and buildings
Land, land rights
2020
2021
€ in millions
1 Other changes for land, land rights and buildings include reversals of impairments amounting to €6 million.
The Consolidated Statement of Profit or Loss includes the following amounts in the
2021 and 2020 fiscal year, which are attributable to leases:
336
(2)
Depreciation
(65)
(1)
(6)
8
1
(3)
Total
600
9
(27)
65
1 October
€ in millions
combi-
5
4
Interest expenses
business
11
56
(6)
ber 2020
30 Septem-
Other
changes 2
Depreciation
Additions
through
2019
Additions
Impairment (Reversal of impairment)
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's leases have no material impact on covenants connected to debt financing
instruments. In addition, lease liabilities are not part of the net cash position measure
used for capital market reporting purposes.
The leasing contracts concluded relate mainly to the rental of office and storage
space, IT equipment, other operating and office equipment as well as vehicles for
selected employees.
In addition, there are future payment obligations for leases that have not been started
but have already been contracted, as well as for short-term leases with a term of
twelve months or less, which are immaterial.
81
60
2
1
The leasing contracts, in which Infineon subleases and acts as a lessor, are not material
from the Group's point of view.
60
19
20
30 Septem-
ber 2020
ber 2021
30 Septem-
70
92
39
15 Financial debt
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:
€ in millions
6
3
505
833
329
330
500
Financial debt as of 30 September 2021 and 2020 consisted of the following:
176
ber 2020
ber 2021
30 Septem-
30 Septem-
Convertible bonds, weighted average interest rate 4.50% (2020: 4.50%)
Short-term financial debt and current portion of long-term financial debt
Unsecured loans, weighted average interest rate 0.87% (2020: 1.06%), due 2023
Bond €500 million, coupon 1.50%, due 2022
Bond €750 million, coupon 0.75%, due 2023
Bond €750 million, coupon 1.125%, due 2026
Bond €750 million, coupon 1.625%, due 2029
Bond €650 million, coupon 2.00%, due 2032
Bond €500 million, coupon 1.50%, due 2022
Short-term financial debt and current portion of long-term financial debt,
weighted average interest rate: 1.25% (2020: 2.01%)
3
747
58
11
Management Board and
Supervisory Board
69
4
4
63
76
2
Business focus and strategy
9
2021
Total
Interest payments
Payments for leasing liabilities
Payments for short-term leases and low-value leases
€ in millions
Infineon Technologies | Annual Report 2021
2020
88
Combined Management Report
Further information
4
1
Due after more than five years
Total
2020
2021
Due after one year to five years
Due within one year
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Due after more than five years
Total
Due within one year
Payments for not reasonably certain renewal options
€ in millions
€ in millions
Due to the requirements of IFRS 16, the following future lease payments have not
been included in the valuation of lease liabilities:
< 184 >
Q =
Due after one year to five years
699
(13)
614
395
405
206
221
104
96
66
12
4
155
158
872
ber 2020
950
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 =
< 187 >
18 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 are 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 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.
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.
30 Septem-
30 Septem-
ber 2021
Total
(8)
(9)
40
83
28
319
(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
Accrued interest expense
Other financial liabilities relating to interest hedging
of refinancing measures (see note 26, p. 208 f.)
Contract liabilities
Other
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
(31)
(8)
(39)
(32)
(6)
(38)
1
1
(11)
(4)
(15)
(7)
(4)
(11)
20
(1)
19
(58)
(5)
(63)
Adjustments to financial assumptions
Effects from acquisitions
Plan settlements
60
6
66
81
(1,416)
17
(197)
(1,438)
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q = < 188 >
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 2021 and 2020 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)
Interest cost
Actuarial gains (losses) for:
Experience adjustments
Adjustments to demographic assumptions
2021
2020
Domestic plans
Foreign plans
Total
Domestic plans
Foreign plans
Total
(1,217)
(221)
(1,219)
85
40
(4)
Employee contributions
9
22
31
9
22
Benefits paid
3
3
(20)
(20)
76
(4)
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
2,376
(4)
(4)
1
Fair value of plan assets at end of year
Foreign currency effects
Benefits paid
Employee contributions
Contributions from Infineon
Acquisitions
Actuarial gains (losses)
Expected return on plan assets
Fair value of plan assets at beginning of year
Change in fair value of plan assets:
(1,438)
(221)
(1,217)
(1,381)
(220)
(1,161)
Present value of defined benefit obligation at end of year
6
6
(5)
(5)
Foreign currency effects
(4)
31
5150
(5)
@ - ཎྜ8 ་ སྐཝེ°
30 September 2021
30 September 2020
Financial
debt
Interest
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
206
9
Current and non-current provisions as of 30 September 2021 consisted of the following:
211
16 Provisions
Q =
Financial
Interest
debt
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
261
2,650
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
< 186 >
(2)
96
Due after more than five years
150
2
(201)
75
68
1
(18)
87
5
Total other intangible assets
1,916
184
3,108
(30)
(253)
4,925
(1,020)
(341)
30
(4)
31
(1,304)
3,621
896
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.
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
1,894
(296)
17
130
(276)
(131)
11
Technologies
338
2,011
(159)
2,190
(188)
(125)
Licenses and similar rights
260
26
3
Combined Management Report
(12)
276
(192)
(23)
Remaining other intangible assets
4,110
18
3,510
(9)
105
(13)
(6)
יצויי
(396)
925
(1)
1,321
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Q = < 181 >
Combined Management Report
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
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
1,418
1,402
11.1
10.9
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
The discount rate for future cash flows is based on the after-tax weighted-average cost
of capital ("WACC") for the CGU in question. The Capital Asset Pricing Model ("CAPM")
is used to calculate the cost of equity. The relevant pre-tax WACC used to discount
future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
cash flows and the after-tax WACC using a typical tax rate for each operating segment.
The risk-free interest rate is derived using the Svensson method, taking into account
risk premiums, the beta factor and debt ratio are derived from a group of companies
comparable to the operating segment. In this way, the discount rate derived reflects
the current market rate of return as well as the specific risks attached to the respective
operating segment.
13 Goodwill
Changes in goodwill during the 2021 and 2020 fiscal years were as follows:
€ in millions
Cost
Balance at the beginning of the fiscal year
Additions through business combinations
Foreign currency effects
Accumulated impairments and other changes
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
Further information
Balance at the beginning of the fiscal year
2021
2020
5,897
65
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.
Balance at the end of the fiscal year
(83)
998
406
30 Sep-
tember
tember
2020
2019
Property, plant and equipment
Land, land rights and buildings
1,660
54
278
(1)
36
(31)
1,996
(885)
(55)
1
11
7
(921)
1,075
775
Technical equipment
and machinery
(56)
9,652
285
299
Other plant and office equipment
30 Sep-
Carrying amount
30 Sep-
tember
2020
of impair-
ments
Depreciation/amortization
Cost
€ in millions
Notes to the Consolidated Financial Statements
Q = < 180 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
1 October
Additions
2019
Additions
through
1,311
Disposals Reclassi-
business
Foreign
currency
effects
30 Sep-
tember
2020
1 October
2019
Depre-
ciation/
Disposals
amor-
combi-
tization
nations
Impair-
ments/
Foreign
reversals
currency
effects
fication
78
66
(84)
525
Total property, plant
and equipment
13,148
924
588
(136)
(98)
14,426
(9,638)
(863)
135
9
41
751
(10,316)
Capitalized development costs
894
158
(18)
(1)
1,033
(351)
(56)
18
(4)
(393)
640
543
Customer relationships
Other intangible assets
228
(2)
753
228
(52)
10,328
(7,602)
(698)
84
27
27
(8,189)
2,139
2,050
(50)
19
(9)
(2)
1,349
(110)
50
7
(1,204)
145
160
Payments on account and
construction in progress
525
507
11
(1)
(283)
(6)
(1,151)
11.9
Connected Secure Systems
1,697
(3)
(3)
2
2
(31)
(9)
(22)
(31)
12.5
12.3
2,617
2,588
10.8
10.7
2
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
1.5
8.7
671
93
764
614
The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany as in the
previous year, and for Austria, the AVÖ 2018-P tables were applied.
The funding of the defined benefit obligations as of 30 September 2021 and 2020
was as follows:
Since no asset ceilings applied, the funded status of the Infineon pension plans
corresponded to the amounts reported in the Consolidated Statement of Financial
Position as of 30 September 2021 and 2020.
Pension obligations are reported in the Consolidated Statement of Financial Position
under "Pensions and similar commitments”. □ p. 154
Q = < 189 >
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
(64)
(64)
(58)
8.7
(58)
(552)
(552)
(447)
(447)
11.9
(739)
(136)
(603)
(617)
(127)
(490)
Net pension liability
699
85
thereof: Infineon Technologies Austria AG
1.5
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.
office equipment
Total
10
286
6
117
The allocation of discounted and undiscounted lease liabilities by maturity as of
30 September 2021 and 2020 was as follows:
€ 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
Other plant and
66
59
60
139
145
159
172
126
133
76
85
331
346
294
317
68
Sensitivity analysis
1
and machinery
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
Q = < 183 >
14 Leases
The changes in the rights of use in the 2021 and 2020 fiscal year were as follows:
1 October
2020
Additions
9
Additions
Other
30 Septem-
through
changes¹
ber 2021
business
combi-
nations
€ in millions
Land, land rights
and buildings
267
110
Technical equipment
Depreciation
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.
thereof: Infineon Technologies AG
30 September 2021
plans
plans
a 50 basis points
Foreign
Domestic
Foreign
plans
plans
in %
30 September 2021
1,494
228
1,266
1,432
225
1,207
of pension increase
30 September 2020
30 September 2021
higher expected rate
a 50 basis points
1,423
217
1,206
1,369
215
1,154
of salary increase
lower expected rate
a 50 basis points
lower expected rate
of pension increase
1,121
214
1,679
Infineon Technologies | Annual Report 2021
In order to determine the present value as of the balance sheet date, the Willis Towers
Watson RATE:Link approach was applied, which is based on high-grade fixed-interest
corporate bonds from issuers carrying a very high credit rating, with the same maturity
and in the same currency as the pension obligations to be assessed.
2.1
1.8
2.8
1.8
1,482
224
1,258
1,422
224
1,198
by one year
The weighted-average assumptions used in calculating the actuarial values for the
pension plans were as follows:
4.6
4.3
2.0
Increase in life expectancy
2.0
1.0
2.4
1.3
Projected future pension increases
Rate of salary increase
Discount rate at the end of the fiscal year
1,387
218
1,169
1,335
2.0
1,452
Domestic
1,224
1,072
higher discount rate
a 50 basis points
113
104
9
Domestic
95
8
wholly unfunded
Plans that are
benefit pension plans with:
Present value of defined
Total
Foreign
plans
plans
Domestic
Total
Foreign
plans
plans
228
30 September 2020
€ in millions
Domestic
plans
Foreign
plans
Total
Domestic
plans
30 September 2020
Foreign
plans
Total
205
1,277
103
206
1,395
225
1,170
of salary increase
Actuarial assumptions
higher expected rate
a 50 basis points
1,569
1,116
236
1,333
1,499
235
1,264
lower discount rate
€ in millions
1,325
1,438
a 50 basis points
1,161
Total
125
220
wholly or partly funded
1,153
Plans that are
1,208
1,322
117
1,217
221
1,278
1,381
Jochen Hanebeck
Chief Operations Officer
Dr. Reinhard Ploss
Chief Executive Officer
Constanze Hufenbecher
Chief Digital
Transformation Officer
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.
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.
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.
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.
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.
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.
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
Business focus and strategy
Combined Management Report
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.
Management Board and
Supervisory Board
Management Board and
Supervisory Board
Dr. Helmut Gassel
Chief Marketing Officer
Consolidated Financial Statements
The Management Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q = < 10 >
The Management Board
Dr. Helmut Gassel
Chief Marketing Officer
Infineon Technologies | Annual Report 2021
Dr. Sven Schneider
Dr. Reinhard Ploss
Constanze Hufenbecher
Jochen Hanebeck
Chief Financial Officer
Chief Executive Officer
Chief Digital Transformation Officer
Chief Operations Officer
Management Board and
Supervisory Board
The Management Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q = < 11 >
Dr. Sven Schneider
Chief Financial Officer
Further information
Chairman of the Supervisory Board
Report of the Supervisory Board
Corporate Governance
Declaration of Compliance 2021
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.
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
Self-assessment by the Supervisory Board
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
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.
Supervisory Board remuneration
The Supervisory Board's Strategy and Technology Committee convened three times
during the fiscal year under report. The topics covered included detailed reports it
received from the Management Board regarding the current market situation, com-
petitors, the headway being made in terms of synergies and the progress of integration
following the acquisition of Cypress, as well as the annual strategy and technology
plan. Other topics of focus included new technologies such as SiC and GaN, the long-
term development of key markets, developments relating to software applications,
and preparations for the Supervisory Board's Strategy Day. A new framework for future
M&A activities was also discussed.
Strategy and Technology Committee
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.
Combined Management Report
Infineon Technologies | Annual Report 2021
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
← Q = < 17 >
Supervisory Board
Report of the Supervisory Board
Management Board and
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.
Consolidated Financial Statements
← Q = < 18 >
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
Infineon Technologies | Annual Report 2021
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.
← Q = < 19 >
Further information
Consolidated Financial Statements
Combined Management Report
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
Further information
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.
Separate and Consolidated Financial Statements
← Q = < 12 >
The Half-Year Financial Report was also reviewed by KPMG. No issues were identified
that might indicate that the condensed Interim Group Financial Statements and
Interim Group Management Report were not prepared in accordance with the appli-
cable provisions in all material respects.
KPMG 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).
Infineon Technologies | Annual Report 2021
Management Board and
Business focus and strategy
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.
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.
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.
Investment, Finance and Audit Committee
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.
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.
Infineon Technologies | Annual Report 2021
Management Board and
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
← Q = < 14 >
Supervisory Board
Report of the Supervisory Board
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.
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.
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.
Report of the Supervisory Board
Supervisory Board
The Investment, Finance and Audit Committee convened for five ordinary meetings
during the 2021 fiscal year.
Report of the Supervisory Board
to the Annual General Meeting
Ladies and Gentlemen,
Dr. Wolfgang Eder
Chairman of the
Supervisory Board
One year ago, I expressed my conviction in this report that Infineon was extremely
well positioned to meet the challenges of the coronavirus pandemic and would
emerge even stronger from the global health and economic crisis.
Today we can safely state that Infineon can look back upon a highly successful year.
An increasing number of global megatrends are being driven by microelectronics
technologies, particularly future-critical areas such as electrification and digitalization.
Infineon focuses its strategy precisely on these trends and thus continues to tread
the path of profitable growth and sustainable value creation. The fact that this develop-
ment has not escaped the notice of the capital market is underlined not only by
the outstanding performance of the Infineon share, but also by its inclusion in the
EURO STOXX 50 index.
The huge demand for microchips will continue to influence how Infineon performs
in the current fiscal year. Last summer, our most recently constructed fabrication
plant went into operation in Villach (Austria). Built at a cost of €1.6 billion, the new
plant was the culmination of one of the largest investment projects ever undertaken
in the European microelectronics industry. In view of the rapidly growing global
demand for power semiconductors, our timing could not have been better. At the
time when Infineon took this investment decision, the massive upswing in demand
was not in the least foreseeable, but now means that the Group has an advantage
over its competitors. This is not only good news for our customers, it also helps
Infineon to continue generating a solid return for you, our shareholders. Against
this backdrop, the Management Board and the Supervisory Board jointly propose
to increase the dividend for the 2021 fiscal year to €0.27 per share.
Management Board remuneration
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".
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
Consolidated Financial Statements
Further information
← Q = < 13 >
Main activities of the Supervisory Board
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.
Combined Management Report
> 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.
Nomination Committee
The Nomination Committee did not convene during the 2021 fiscal year.
Executive Committee
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.
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.
The Mediation Committee did not need to convene during the 2021 fiscal year.
Infineon Technologies | Annual Report 2021
Combined Management Report
Consolidated Financial Statements
Further information
← Q = < 16 >
Supervisory Board
> 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.
Report of the Supervisory Board
Business focus and strategy
Mediation Committee
Management Board and
Committee work
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.
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.
Infineon Technologies | Annual Report 2021
Management Board and
Business focus and strategy
Consolidated Financial Statements
Further information
Combined Management Report
Supervisory Board
Report of the Supervisory Board
Supervisory Board members are responsible for undertaking any basic and ongoing
training measures considered necessary to perform their duties and receive appropri-
ate support from Infineon to do so. In-house information events are held to provide
targeted training as the need arises. As part of the onboarding process for new Super-
visory Board members, Infineon offers a series of workshops covering a broad range
of topics, including the individual operating segments, the underlying elements of
Infineon's corporate strategy, the target business model and investment planning as
well as manufacturing strategy and life cycle management. In addition, Supervisory
Board members are regularly provided with information on the regulatory environment
relevant to their work as well as any other legal developments that may affect them.
Basic and ongoing training
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.
← Q = < 15 >
Supervisory Board topics
Foreign
plans
2020
Domestic
Total
Foreign
plans
Total
Domestic
plans
2021
plans
€ in millions
Business focus and strategy
Amounts recognized in the Consolidated Statement of Profit or Loss
and in the Consolidated Statement of Comprehensive Income
< 191 >
Q =
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
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.
Current service cost
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).
The expenses and income of defined benefit plans for the 2021 and 2020 fiscal years
comprised the following:
(31)
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.
(39)
Infineon Technologies | Annual Report 2021
8
2
6
Pension cost
on plan assets
The following table shows the expected disbursements for defined benefit plans for
the next ten fiscal years as of 30 September 2021 and 2020:
The weighted-average duration of defined benefit plans was around 17 and 18 years
as of 30 September 2021 and 2020, respectively.
As of 30 September 2021 and 2020, cumulative actuarial losses amounted to
€403 million and €542 million, respectively.
Expected return
(11)
(4)
(7)
(15)
(4)
(11)
Interest cost
1
1
Past service (cost) benefit
(38)
(6)
(32)
(8)
93
Corporate bonds
92
Quoted
Not quoted
Quoted
30 September 2020
30 September 2021
Other
Total
Property
Cash and cash equivalents
Reinsurance policies
Equity securities
€ in millions
Government bonds
As of 30 September 2021 and 2020, the allocation of invested plan assets to the major
asset categories was as follows:
Plan asset allocation
The pension plans' assets are invested with several fund managers. The investment
guidelines require a mix of active and passive investment management programs
covering different asset classes. Taking the duration of the underlying liabilities into
account, a portfolio of investments of plan assets in equity, debt and other securities,
as well as real estate and reinsurance policies, is targeted to maximize the total long-
term return on assets for a given level of risk. Investment risk is monitored on an
ongoing basis through periodic portfolio reviews, by coordination with investment
managers and annual liability measurements. Investment policies and strategies are
periodically reviewed as part of detailed studies of assets and liabilities by indepen-
dent investment advisors and actuaries to ensure the objectives of the plans are met,
taking into account any changes in benefit plan structure, market conditions or other
material items. The aim is to optimize the risk-return profile of plan assets against
the liabilities using a diversified portfolio of investments within a defined risk budget
and to thereby increase the funding ratio in the long term.
Investment strategy
Notes to the Consolidated Financial Statements
< 190 >
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
4
Not quoted
606
in an active
market
in an active
672
26
44
24
32
30
5
30
3
36
37
19
8
213
275
117
236
1
208
1
118
in an active
market
market
in an active
market
2
Further information
(36)
28.87
28.87
572,631
178,213
22.82
31 March 2025
31 March 2025
Fair value per
performance
share in €
shares
outstanding
as of 30 Sep-
tember 2021
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.
Number of
performance
Average share
price in the
60 trading
days before
the start of the
performance
period in €
End of the
waiting period
Restricted Stock Unit Plan
Fiscal year 2021: Employees
Fiscal year 2021: Management Board
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 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.
22.82
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 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.
Management Board and
Supervisory Board
31 March 2022
1st tranche
Fiscal year 2021:
in €
Fair value
per restricted
stock unit
Number of
restricted
stock units
as of 30 Sep-
tember 2021
Price of an
Infineon share
at grant date
in €
End of the
waiting period
Infineon Technologies | Annual Report 2021
6
The following is an overview of the allocations made:
Notes to the Consolidated Financial Statements
< 197 >
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Tranche
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.
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.
Plan conditions for tranches from 1 April 2021
20.02
28 February 2023
12.50
70,850
18.10
29 February 2024
Fiscal year 2020: Management Board
Fiscal year 2019: Employees
12.95
713,184
1,007,326
29 February 2024
in €
Average
share price
in the
nine months
before grant
End of the
waiting period
Fair value per
performance
share in €
shares
outstanding
as of 30 Sep-
tember 2021
Number of
performance
Fiscal year 2020: Employees
18.10
14.20
Fiscal year 2019: Management Board
Fiscal year 2018: Employees
28 February 2023
Q = < 196 >
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
15.25
41,896
21.48
28 February 2022
Fiscal year 2018: Management Board
15.76
646,882
21.48
28 February 2022
13.79
44,954
20.02
36.16
346,715
35.90
31 March 2023
Proceedings in relation to Qimonda
Any further statements about this matter by the Company could seriously compromise
the Company's position in this dispute.
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.
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.
Litigation and government inquiries
Smart card chips antitrust litigation
23 Legal risks
< 198 >
Q =
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.
Further information
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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.
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.
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 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.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
Infineon Technologies | Annual Report 2021
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.
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 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
of Qimonda Dresden GmbH & Co. OHG
Residual liability of Infineon as former shareholder
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.
On 21 September 2018, in consultation with the parties, the independent expert
appointed by the court presented an interim report on his preliminary assessment
of the value of the contribution in kind. The Company is in principle prepared to
conduct discussions about an out-of-court settlement of the legal dispute on the
basis of the interim report.
The legal dispute is being pursued with great effort by both parties, and many extensive
written submissions have already been exchanged between the parties. Both sides
have engaged numerous specialists and experts who are supporting the respective
parties with assessments and opinions.
The legal dispute has, in the meantime, focused on the claims asserted for alleged
lack of value. On 29 August 2013, the court appointed an independent expert to
clarify the valuation issues raised by the insolvency administrator and to address
technical matters.
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.
Q = < 199 >
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
The 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
22 Other financial commitments
Tranche
The costs for share-based payment amounted to €27 million in the 2021 fiscal year
(2020: €14 million).
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.
3rd tranche
79,043
18.62
28 February 2022
2nd tranche
Fiscal year 2020:
4th tranche
3rd tranche
28 February 2023
35.29
34.87
36.16
31 March 2025
346,715
36.16
31 March 2024
35.60
346,715
36.16
346,715
18.62
79,043
4th tranche
20.87
41,953
21.80
28 February 2022
4th tranche
Fiscal year 2018:
18.84
18.58
58,765
58,765
19.66
28 February 2023
4th tranche
19.66
28 February 2022
3rd tranche
Fiscal year 2019:
17.98
17.65
17.31
79,043
18.62
29 February 2024
Costs for share-based payment
The following is an overview of the allocations made:
2nd tranche
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.
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
> 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
> 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.
As of 30 September 2021, the Company's Articles of Associations provided for two
authorized share capitals amounting to up to €670,000,000:
Authorized share capital
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
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.
748,609
1,300,669,746
5,251,391
1,305,921,137
1,301,375,535
4,545,602
1,305,921,137
705,789
237,066
1,244,684,071
55,000,000
1,300,669,746
2020
Additional paid-in capital
2021
Further information
< 193 >
and hybrid capital investors of Infineon Technologies AG
Dividends to shareholders of Infineon Technologies AG
Compensation of hybrid capital investors
Profit (loss) for the period attributable to shareholders
As of 30 September 2020
Actuarial gains on pensions and similar commitments net of tax of €6 million
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
As of 1 October 2019
€ in millions
The following table shows a reconciliation of retained earnings as of 30 Septem-
ber 2021 and 2020:
Q =
Retained earnings
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.).
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)
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 authorization by the
Annual General Meeting on 20 February 2020 are issued by the Company or a sub-
sidiary company (Conditional Capital 2020/1).
As of 30 September 2021, the Company's Articles of Associations provided for a con-
ditional capital amounting to up to €260,000,000:
Conditional capital
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).
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.
Shares issued at the end of the fiscal year
Repurchased own shares
Shares outstanding at the end of the fiscal year
172
40
38
ber 2020
30 Septem-
30 Septem-
ber 2021
Defined contribution plans
Due after more than five years up to ten years
Total
177
Due after more than one year to five 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 expenses.
Due within one year
€ in millions
(43)
(8)
(35)
(45)
(9)
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.
282
303
492
and Restricted Stock Unit Plans (see note 21, p. 195 ff.)
Transfer of own shares under the Performance Share
option rights under stock option plans
Creation of new shares through capital increase from authorized capital
Creation of new shares through the exercise of
Shares outstanding at the beginning of the fiscal year
quantity
The following table shows a reconciliation of the number of ordinary shares issued as
of 30 September 2021 and 2020:
Ordinary share capital
19 Equity
Notes to the Consolidated Financial Statements
Q = < 192 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
In connection with defined contribution plans, fixed contributions are made to exter-
nal insurance providers or funds. Infineon has no further performance obligations
or risks with regard to these pension plans in excess of the fixed contributions paid.
Additionally, the Group makes contributions to government pension schemes.
Expenses for defined contribution plans amounted to €234 million and €212 million
in the 2021 and 2020 fiscal years.
520
Actuarial gains on pensions and similar commitments net of tax of €11 million
As of 30 September 2021
421
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.
(336)
Infineon's main capital management objective is to ensure financial flexibility on the
basis of a solid capital structure. It is of prime importance that sufficient cash funds
are available to finance operating activities and planned investments throughout all
phases of the business cycle. On the other hand, debt should only constitute a modest
portion of the financing mix.
20 Capital management
(714)
28
(742)
154
17
137
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.
42
28
(170)
65
(71)
(543)
ㄖˋˊ
(71)
69
(142)
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.
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.
368
With the granting of a virtual performance share, the participants in the plan acquire
the right to receive (real) Infineon shares once a personal investment in Infineon
shares - depending on position and LTI grant amount - has reached a four-year
holding period.
Plan conditions for tranches up to and including 1 March 2020
Under this plan, (virtual) performance shares are initially provisionally granted on
1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a predeter-
mined LTI grant amount in euros.
A Long-Term Incentive (LTI) Plan, the so-called Performance Share Plan, was developed
for the Management Board and selected senior executives.
Performance share plan
The Company makes use of the Performance Share Plan and, since the 2017 fiscal year,
the Restricted Stock Unit Plan, in order to provide share-based payments.
21 Share-based payment
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.
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).
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.).
< 195 >
Q =
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
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
(1)
(543)
42
Total
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.
Q = < 194 >
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
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).
1,407
128
(39)
(286)
1,169
21
90
(39)
Other reserves
Changes in other reserves during the 2021 and 2020 fiscal years were as follows:
435
Foreign currency translation
differences
€ in millions
Cost of hedging
accounting
resulting from hedge
Realized gains (losses)
(1)
accounting
resulting from hedge
Unrealized gains (losses)
48
Net of tax
2021
90
2020
Pre-tax
17
Net of tax
Pre-tax
Tax
Tax
2
changes
Acquisitions¹
Currency effects
New leases
Other changes
7,033
(487)
1
294
(76)
(562)
29
10
6,585
Ending balance
1
7,328
€ in millions
Cash-effective
3
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.
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.
Non-cash effective changes
25 Supplemental cash flow information
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.
The 2021 fiscal year
Short-term and long-term financial debt
Related party financial payables
Short-term and long-term leasing liabilities
Total
Starting balance
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.
110
40
32
294
Total
1,818
4,381
1,375
(314)
63
63
5
1 Amounts shown for the 2020 fiscal year as "Acquisitions" related to financial debt acquired in connection with the acquisition of Cypress.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
7,328
331
(8)
(63)
110
10
6,918
The 2020 fiscal year
Short-term and long-term financial debt
Related party financial payables
1,556
Combined Management Report
4,443
(306)
5
7,033
1
1
Short-term and long-term leasing liabilities
262
1,335
Business focus and strategy
Other
related
companies
17
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:
Business focus and strategy
€ in millions
Joint
ventures
Associates
30 September 2021
Other
related
companies
30 September 2020
Joint
ventures
6
Trade and other receivables
3
Management Board and
Supervisory Board
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
Infineon Technologies | Annual Report 2021
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.
Management Board and
Supervisory Board
4
Financial receivables
18
3
29
5
2
As of 30 September 2021, sales and services relationships with related companies
resulted in purchase commitments of €22 million (30 September 2020: €4 million).
Related persons
Members of the Management Board active in the 2021 fiscal year received fixed
non-performance-related remuneration for their services of €4.1 million (2020:
€3.8 million). In addition, the members of the Management Board received variable
performance-related remuneration for their services in the 2021 fiscal year of
€8.6 million (2020: €3.6 million). This comprised a Short-Term Incentive of €3.4 mil-
lion (2020: €1.4 million), and a Mid-Term Incentive of €0 million (2020: €1.3 million).
Furthermore, the Management Board received a Long-Term Incentive (LTI) which,
since 2014, takes the form of performance shares. The expense resulting from the LTI
amounted to €5.1 million (2020: €0.9 million). The remuneration granted to active
members of the Management Board amounted to €12.7 million in the 2021 fiscal year
(2020: €7.3 million).
75
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.
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
20
75
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).
5
Other
related
companies
Joint Associates
ventures
33
1
32
Trade and other payables
Financial payables
7
2
2
9
Joint Associates
ventures
Other
related
companies
1
1
Sales and service charges to and products and services received from related com-
panies in the 2021 and 2020 fiscal years consisted of the following:
€ in millions
Sales and service charges
2021
2020
1
Associates
236
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:
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).
Cash equivalents and financial investments included investments in money market
funds and investment funds (level 1).
207
139
68
207
139
68
17
3
2,382
2,402
17
81
98
Total
Other current liabilities
Short-term financial debt and current portion
of long-term financial debt
Current liabilities:
Total
Other non-current assets
Non-current assets:
30 Sep-
tember
3
2021
Sales
(including
disposals)
28
5
(42)
24
2020
2021
Q = < 207 >
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
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
17
or loss 1,2
in profit
Unrealized
losses
recognized in
profit
or loss¹
30 Sep-
tember
2020
3
Other current assets
777
Current liabilities:
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
Level 1
Fair value by category
Fair value
30 September 2021
Current assets:
€ 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,
Short-term financial debt and current portion
of long-term financial debt
143
Other current liabilities
6
777
1,524
1,524
Cash and cash equivalents
Level 3
Level 2
Fair value by category
Level 1
Fair value
Financial investments
Current assets:
30 September 2020
€ in millions
therein impairment losses
< 206 >
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
Q =
(1)
therein foreign currency exchange
19
1.9548%
15
1,765
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.
Hedging of interest risks
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.
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.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q = < 209 >
Notes to the Consolidated Financial Statements
The development of the day one losses was as follows:
€ in millions
Day one losses at beginning of the fiscal year
Addition from new transactions
Reversal through profit or loss in the period
Day one losses at end of the fiscal year
Effects from derivative financial instruments designated
as a hedging relationship
The amounts related to positions designated as hedged items were as follows as of
30 September 2021 and 2020:
2021
2020
1
11
750
1,813
21
Short term
151
2
Interest expense on financial liabilities measured at amortized cost mainly included
interest on financial debt and effects from using the effective interest method.
Total
(3)
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 = < 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:
(1)
30 September 2021
Commodity swaps
Nominal value (€ in millions)
Average price (US dollar/ounce)
30 September 2020
Hedging of interest risks
Interest rate swaps
Nominal value (US$ in millions)
Average interest rate
Hedging of other risks
Commodity swaps
Nominal value (€ in millions)
Average price (US dollar/ounce)
Hedging of foreign exchange risk
Hedging of other risks
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:
(10)
€ in millions
(2)
Financial liabilities at fair value through profit or loss
The nominal values and fair values of Infineon's derivative instruments as of 30 Sep-
tember 2021 and 2020 that were not designated as cash flow hedges were as follows:
Derivative financial instruments not designated as a hedging relationship
Infineon holds derivative financial instruments exclusively for hedging purposes. This
includes the use of forward exchange contracts, foreign currency options, interest- and
commodity swaps. The objective is to reduce the impact of exchange rate, interest
rate and commodity price fluctuations on future net cash flows.
Derivative financial instruments and hedging activities
Infineon does not net financial instruments. Infineon conducts derivative transactions
according to the global netting agreement (Master Agreement) of the International
Swaps and Derivatives Association (ISDA) and other comparable national framework
agreements. Under the terms of these agreements, any netting arising from the
occurrence of certain future events would have had no material effect on the balance
sheet presentation of these financial instruments.
therein interest income
Financial assets measured at amortized cost
€ in millions
The net gain or loss on financial instruments (including interest income and expense)
within continuing operations in the Consolidated Statement of Profit or Loss
amounted to the following as of 30 September 2021 and 2020:
Gains and losses in relation to financial instruments
(5)
(2)
therein other financial expenses
107
(36)
therein foreign currency exchange
(120)
(139)
therein interest expenses
(18)
(177)
Financial liabilities measured at amortized cost
(15)
13
Financial assets measured at fair value through profit and loss
(70)
(3)
Financial assets or liabilities measured at fair value
through profit and loss - held for trading
3
(40)
Change in the value
of the hedged item
used to determine
ineffectiveness
Hedge reserve
(before taxes)
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.
Forward exchange contracts purchased
(2)
144
(5)
280
Forward exchange contracts sold
(118)
(139)
1
Total
value
value
value
€ in millions
Fair
Nominal
Fair
Nominal
(40)
3
therein foreign currency exchange
30 September 2020
30 September 2021
value
Categories of financial instruments
Financial instruments at fair value
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)".
profit or loss
At fair value through
Not assignable to any
IFRS 9 measurement category
Categories of financial liabilities
Carrying amount
Financial liabilities, € in millions
Notes to the Consolidated Financial Statements
< 204 >
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
4,834
1
2,432
2,401
4,834
Total
154
56
98
154
Other non-current assets
Non-current assets:
Other
financial liabilities
(amortized cost)
257
Designated hedging
instruments
(cash flow hedges)
5,752
Total
Other non-current liabilities
751
1
745
5
751
66
66
Non-current leasing liabilities
Long-term financial debt
Non-current liabilities:
Other current liabilities
Current leasing liabilities
840
1,569
1,569
1,569
Trade payables
690
143
833
of long-term financial debt
Short-term financial debt and current portion
Current liabilities:
As of 30 September 2021
Fair value
Others
1
254
2
2,173
1,749
(cash flow hedges)
Designated hedging
instruments
Fair value
Not assignable to any IFRS 9
measurement category
154
2
156
1,483
1,483
1,107
1,066
2,173
293
1,456
1,749
At amortized cost
At fair value through
profit or loss
Categories of financial assets
Carrying amount
Trade receivables
Financial investments
Cash and cash equivalents
Current assets:
As of 30 September 2021
Financial assets, € in millions
1,483
156
Other current assets
Non-current assets:
257
Other current assets
1,196
1,196
1,196
Trade receivables
1,376
599
777
1,376
Financial investments
1,851
327
5,752
1,524
Cash and cash equivalents
Current assets:
As of 30 September 2020
5,754
3,116
2,638
5,754
Total
193
79
114
193
Other non-current assets
1,851
265
6,049
265
Hedging of foreign exchange risk
Deal Contingent Forward
Deal Contingent Option
Hedging of interest risks
Interest rate swaps
Hedging of commodity price risks
Total
19
(49)
1
(1)
30 September 2020
(50)
99
(98)
(1)
1
(97)
In the 2021 and 2020 fiscal years, no balances remained in other comprehensive
income for which hedge accounting was no longer applied.
Infineon Technologies | Annual Report 2021
Q = < 203 >
(98)
(75)
2
Hedging of commodity price risks
Total
Hedging of interest risks
Financial instruments at 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
Interest rate swaps
Business focus and strategy
9,374
294
66
8,908
141
9,409
77
30 September 2021
Management Board and
Supervisory Board
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).
26 Additional disclosures on financial instruments
77
59
845
2
777
66
845
Other current liabilities
59
Non-current liabilities:
Non-current leasing liabilities
Other non-current liabilities
Total
Infineon Technologies | Annual Report 2021
6,528
6,528
235
6,783
Long-term financial debt
Current leasing liabilities
509
1,160
366
1,160
72
72
72
9,308
148
8,828
1
331
9,281
As of 30 September 2020
Current liabilities:
Short-term financial debt and current portion
of long-term financial debt
505
139
Trade payables
1,160
235
77
648
1,864
630
704
99
265
1,921
2,299
2,650
Connected Secure Systems
Subtotal
Power & Sensor Systems
1,542
1,406
1,542
Industrial Power Control
251
601
551
1,406
1,228
1,397
974
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
11,048
974
1,397
855
Other Operating Segments
Corporate and Eliminations
Total
3,268
3,521
(280)
(144)
116
37
31
24
48
57
7
9
(78)
(17)
(396)
(194)
(177)
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.
30 September 2021
Euro/US dollar
Euro/Japanese yen
Profit or Loss
Equity
plus 10%
minus 10%
plus 10%
minus 10%
36
(44)
38
(46)
(5)
6
Euro/Singapore dollar
€ in millions
4
(318)
(48)
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
2,364
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.
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 =
< 212 >
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.
(7)
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
€ in millions
Euro/US dollar
Euro/Japanese yen
Euro/Singapore dollar
Euro/Malaysian ringgit
Euro/British pound
Financial position exposure
Euro/US dollar
Euro/Japanese yen
Euro/Singapore dollar
Euro/Malaysian ringgit
Euro/British pound
Forward exchange contracts
Net exposure
30 Septem-
ber 2021
(138)
34
(64)
(86)
(74)
(70)
(42)
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:
(5)
Euro/Malaysian ringgit
(1)
Nominal
value
Profit or Loss
Equity
plus
100 basis
points
minus
100 basis
points
plus
100 basis
points
minus
100 basis
points
1,356
15
(24)
Variable-interest financial assets
2,458
25
30 September 2021
(25)
(959)
(10)
1
Fixed-interest financial liabilities
measured at fair value through
profit or loss
30 September 2020
སྶ$
(143)
353
Variable-interest financial assets
2,220
22
Variable-interest financial liabilities
Variable-interest financial liabilities
€ in millions
The following table shows the effects on profit or loss for the 2021 and 2020 fiscal
year and equity as of 30 September 2021 and 2020 of a ± 100 basis points shift in
market interest rates:
Changes in market interest rates affect interest income and expenses from variable-
yield financial instruments as well as from fixed-yield financial instruments that are
measured at fair value through profit or loss, and also affect equity due to the hedge
accounting designated interest rate hedging instruments.
1
30 September 2020
Euro/US dollar
Euro/Japanese yen
Euro/Singapore dollar
18
(22)
6
10
(12)
6
བྱེསྱེ
(7)
(7)
5
(6)
4
(5)
Euro/Malaysian ringgit
(1)
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
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.
Q = < 213 >
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
1
Further information
(50)
(1)
(49)
(1)
Total
1
(22)
43
5
(1)
(1)
Financial
expenses
Inventories
30 September 2020
Other current assets:
Hedging of foreign exchange risks
Deal Contingent Forward
98
(1)
(56)
Deal Contingent Option
39
(84)
77
Hedging of commodity price risks
1
1
(2)
70
181
28
(142)
Goodwill
Goodwill
(5)
Inventories
(35)
1
Hedging of commodity price risks
5
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q =
< 210 >
Notes to the Consolidated Financial Statements
The relevant amounts of the derivative financial instruments designated as hedging
instruments as of 30 September 2021 and 2020 (before taxes) were as follows:
€ in millions
30 September 2021
Carrying amount
Changes in
fair value for the
measurement
of the ineffective-
ness in the
reporting period
Changes in
fair value of the
hedging instrument
recognized in other
comprehensive
income
44
(21)
Hedging of interest risks
Other current liabilities:
Line item of
the Statement of
Financial Position
or the Statement
of Profit or Loss
affected by the
reclassification
assets
Other current liabilities:
Amount reclassified
from the cost of
hedging reserve
to the cost of
non-financial
Amount reclassified
from the hedge
reserve to the State-
ment of Profit or
Loss from hedging
relationships for
which the underlying
transaction is no
longer expected
to the Statement
of Profit or Loss
Amount
reclassified from
hedge reserve
income
fair value of
cost of hedging
recognized in other
comprehensive
Changes in
Amount reclassified
from the hedge
reserve to the cost
of non-financial
assets
(2,369)
Hedging of interest risks
Financial
(99)
3
(57)
1
1
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.
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.
Amounts reclassified to the
cost of non-financial items
(137)
(5)
(142)
30 September 2020
Change in fair value
(98)
1
39
(97)
(1)
43
Amount reclassified to the
Market risk
Statement of Profit or Loss
Amounts reclassified to the
cost of non-financial items
30 September 2021
27 Financial risk management
5
EE
5
(1)
(1)
44
101
3
98
66
(99)
(98)
1
67
39
(240)
42
1
EE
(11)
expenses
(11)
246
(114)
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Total
Hedging of
commodity
price risks
Hedging of
interest risks
Hedging of
foreign
exchange risks
Amount reclassified to the
Statement of Profit or Loss
Change in fair value
Total
30 September 2019
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
€ in millions
(24)
30 Septem-
ber 2020
53
1,207
133
1,424
940
3,314
10,126
3,108
(301)
307
307
1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
Total
Cash inflow'
Cash outflow
(301)
Derivative financial liabilities:
3,108
2021
229
2,965
92
92
1,362
1,846
Total
1,165
10,054
Beyond 2025
2025
2024
2023
2022
2,624
229
Non-derivative financial liabilities
Total
Due in the fiscal year
€ in millions
Notes to the Consolidated Financial Statements
< 217 >
Q =
Further information
Total
Consolidated Financial Statements
Business focus and strategy
Management Board and
Supervisory Board
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.
Combined Management Report
30 September 2020
2022
2024
Cash inflow¹
Cash outflow
(18)
(22)
6
1,207
133
1,424
2023
940
10,120
Non-derivative financial liabilities
30 September 2021
Beyond 2026
2026
2025
3,308
Financing and liquidity risk
(161)
10,122
Product category
Power semiconductors
Total
The XMCTM family of industrial microcontrollers business was transferred from the
Automotive segment to the Connected Secure Systems segment with effect from
1 October 2020. The previous year's figures have been adjusted accordingly.
Segment information
The exception to this approach is certain inventory information which is regularly
analyzed at a segment level. Infineon also allocates depreciation and amortization
expense to the operating segments based on production volume and products
produced using standard costs.
Embedded Control &
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.
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.
The Management Board, as joint Chief Operating Decision Maker, decides how
resources are allocated to the segments.
Chief Operating Decision Maker, definition of Segment Result and allocation
of assets and liabilities to the individual segments
Q = < 219 >
Further information
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.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
RF & sensors
2020
4,841
Automotive
Revenue from contracts with customers:
2021
2020
2021
Connectivity
€ in millions
2021
2020
Memory ICs for
specific applications
2021
2020
2021
2020
(161)
Combined Management Report
Management Board and
Supervisory Board
Q = < 218 >
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
28 Segment reporting
Infineon Technologies | Annual Report 2021
2,965
92
1,362
1,846
1,165
2,692
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.
Business focus and strategy
Identification of segments
Automotive
Infineon Technologies | Annual Report 2021
Furthermore, raw materials and supplies are mostly not under the control or
responsibility of the operating segment management and are therefore allocated
to corporate functions. Work in progress and finished goods are allocated to the
operating segments.
Similarly, certain items are included in Corporate and Eliminations, which are not
allocated to the other segments. These include certain corporate headquarters costs
and selected topics, which are not allocated to the segments since they arise from
corporate decisions and are not within the direct control of segment management.
Corporate and Eliminations reflects the elimination of intragroup revenue and profits/
losses to the extent that these arise between the segments.
Corporate and Eliminations
Other Operating Segments comprise the remaining activities of divested businesses
and other business activities. Since the sale of the Wireless mobile phone business,
supplies to Intel Mobile Communications and MaxLinear are included in this segment.
Also included are supplies of LDMOS wafers and related components to Wolfspeed, Inc.
(formerly Cree, Inc.), since the sale of the major part of Infineon's Radio Frequency
Power Components business.
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.
Other Operating Segments
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.
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.
9
Derivative financial liabilities:
(2)
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.
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.
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 =
< 216 >
The following table provides information about the credit risk for trade receivables
from third parties as of 30 September 2021 and 2020:
€ in millions
Infineon rating
Risk class
External credit rating
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).
As in the previous year, Infineon had no financial assets that were overdue or impaired
as of 30 September 2021. There was no reclassification between the impairment
levels in the 2021 and 2020 fiscal years.
Expected lifetime
credit loss
non-credit-impaired
1
Expected
12-month
credit loss
1
-
External rating
Basis for the
determination of
the loss allowance
30 September 2021
Holding Quality 1
low risk
AA- to BBB
30 September 2020
Holding Quality 1
Holding Quality 0
Total
A to BBB
926
1
1,401
1
926
Holding Quality 0
Total
At amortized cost
average risk
1
30 September 2020
256
489
470
418
296
73
109
43
48
4
4
46
1,479
1,192
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.
406
30 September 2021
Basis for the determination
of the loss allowance
At amortized cost
2
3
4
increased risk
5
high risk
individual
above average risk
others
A- to AAA
BBB to BBB+
BB+ to BBB-
BB- to BB
C to B+
none
none
Total
1,401
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).
€ in millions
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
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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.
(59)
53
641
2
(139)
Designated interest rate
hedging instruments
(cash flow hedging relationships)
Fixed-interest financial liabilities
measured at fair value through
profit or loss
(59)
Infineon rating
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.
€ in millions
(2)
Commodity swaps
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:
30 September 2021
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 >
Further information
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Infineon applies the general impairment model in accordance with IFRS 9 for cash and
cash equivalents as well as financial investments. Since Infineon invests exclusively
in high-quality financial assets from issuers with a rating of at least investment grade
in order to minimize default risk, Infineon assumes that its financial assets carry low
credit risk arising from the creditworthiness of its contract parties, so that any impair-
ment loss recorded at first-time recognition is limited to the twelve-month expected
credit losses. Infineon considers low credit risk to be an internal credit rating "Hold-
ing Quality 1". A change in the internal rating from "Holding Quality 1" to "Holding
Quality 0" indicates a significant increase in credit risk. The impairment is calculated
Credit risk arises when a customer or other counterparty of a financial instrument
fails to discharge its contractual obligations. Infineon is exposed to this risk as a con-
sequence of its ongoing operations, its financial investments and certain financing
activities. Infineon's credit risk arises primarily from cash and cash equivalents, finan-
cial investments, trade receivables and derivative financial instruments. Excluding the
impact of any collateral received, the carrying amount of financial investments, cash
and cash equivalents and trade receivables corresponds to the maximum credit risk.
Foreign exchange and interest hedging contracts as well as the investment of liquid
assets in cash equivalents and financial investments are entered into with major
financial institutions worldwide that have high credit ratings. Infineon assesses the
creditworthiness of banks using a methodology that establishes investment limits
for individual banks that are updated on a daily basis based on current ratings (S&P,
Moody's or Fitch) and credit default swap premiums. Possible breaches of stipulated
investment thresholds result in immediate notification and the requirement to reduce
the risk. This methodology is also used to identify a significant increase in credit risk
in the context of the recognition of expected credit losses within the meaning of
IFRS 9 at the balance sheet date.
Credit risk
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
2
Nominal
value
Equity
minus 10%
30 September 2020
plus 10%
2
(2)
15
21
Commodity swaps
36.46
Infineon Technologies (Malaysia) Sdn. Bhd.
355.15
0
100
Melaka, Malaysia
Infineon Technologies (Wuxi) Co., Ltd.
Kulim, Malaysia
326.53
0
100
0
9
2.33
9
9
27.79
1.21
17
Infineon Technologies Center of Competence (Shanghai) Co., Ltd.
100
Neubiberg, Germany
100
Infineon Technologies 2. Vermögensverwaltungsgesellschaft mbH
0.37
8.31
0
100
17
Xi'an, People's Republic of China
Infineon Technologies China Co., Ltd.
Infineon Technologies Cegléd Kft.
Infineon Technologies Austria AG
Infineon Technologies Australia Pty Limited
Infineon Technologies Asia Pacific Pte Ltd
Infineon Technologies Americas Corp.
Infineon Technologies (Xi'an) Co., Ltd.
10.55
123.92
0
Wuxi, People's Republic of China
Melaka, Malaysia
11, 30
45.53
0.00
6.08
0
100
Camana Bay (George Town), Cayman Islands
0.11
2.02
0
100
100
17
(€ in millions)
Footnote
Net result
Equity
(€ in millions)
thereof Infineon
Technologies AG
in %
Shareholdings
Lviv, Ukraine
Karlsruhe, Germany
100
100
0
100
17
Wuxi, People's Republic of China
0.03
1.39
0
100
Shenzhen, People's Republic of China
18
1.14
15.27
0
100
17
Beijing, People's Republic of China
3, 20, 22
0.00
2.16
1.74
0
163.15
(0.02)
Infineon Technologies India Private Limited
Registered office
Infineon Technologies Investment B.V.
Infineon Technologies Ireland Limited
Infineon Technologies Italia s.r.l.
Infineon Technologies IT-Services GmbH
Neubiberg, Germany
9, 20, 21
8.70
246.52
100
Infineon Technologies Hong Kong Ltd.
100
Infineon Technologies Epi Services, Inc.
Infineon Technologies Dresden Verwaltungs GmbH
Infineon Technologies Dresden GmbH & Co. KG
9, 23
0.22
4.72
0
100
Dresden, Germany
Herlev, Denmark
Infineon Technologies Holding B.V.
Infineon Technologies France S.A.S.
100
0
0.09
0.00
Wilmington, Delaware, USA
100
0
8.16
Infineon Technologies Holding Asia Pacific Pte. Ltd.
3.25
Infineon Technologies Finance B.V.
Rotterdam, The Netherlands
100
100
1.97
(0.03)
12
9
9, 30
Infineon Technologies Denmark ApS
9
17.39
1.40
0
100
Blackburn, Australia
9
128.42
639.88
0
0.08
100
9
248.35
9, 30
2,563.29
0
100
Wilmington, Delaware, USA
9
Singapore, Singapore
Villach, Austria
100
0.004
187.05
0
100
17
Shanghai, People's Republic of China
0.09
3.03
0
100
17
Shanghai, People's Republic of China
9
(0.70)
24.82
0
100
Cegléd, Hungary
9
1,186.02
0.01
Infineon Technologies (Kulim) Sdn. Bhd.
Infineon Technologies (Advanced Logic) Sdn. Bhd.
Infineon Semiconductors (Wuxi) Co., Ltd.
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 GmbH
Cypress Semiconductor Hong Kong Private Limited
Cypress Semiconductor International Sales B.V.
Cypress Semiconductor International, Inc.
Fully consolidated subsidiaries:
Registered office
Name of company
Subsidiaries, associated companies, joint ventures and other companies
(not consolidated) as of 30 September 2021
Dr. Susanne Lachenmann
Jürgen Scholz
Nomination Committee
Dr. Wolfgang Eder (Chairman)
Dr. Manfred Puffer
Margret Suckale
Infineon Technologies | Annual Report 2021
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 >
GRI 102-45
Melaka, Malaysia
Ebène, Mauritius
Stockholm, Sweden
Lausanne, Switzerland
Nonthaburi, Thailand
Wilmington, Delaware, USA
100
0
0.00
0.00
11, 30
General Trias, Philippines
40
0
1.42
(0.04)
6,27
10
Kawasaki, Japan
100
11, 30
(2.23)
(2.28)
0
Shareholdings
in %
thereof Infineon
Technologies AG
Equity
Net result
Footnote
(€ in millions)
Peter Gruber
(€ in millions)
Austin, Texas, USA
n.a.
0
0.00
0.00
Wilmington, Delaware, USA
100
11, 26, 30
0
Dr. Wolfgang Eder
Dr. Ulrich Spiesshofer (Chairman)
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
> Lafarge Maroc SA, Morocco
> LafargeHolcim Maroc SAS, Morocco
> LafargeHolcim Maroc Afrique SAS, Morocco
> Huaxin Cement Co., Ltd., People's Republic of China
Supervisory Board member
> Athora Lebensversicherung AG, Germany
› Nova KBM Bank, Slovenia
> Servicios Prescriptor y Medios de Pagos, S.A.U., Spain
The Blackstone Group,
member of various advisory
boards and investor
› Oldenburgische Landesbank AG, Germany
Infineon Technologies
Dresden GmbH & Co. KG
Senior advisor -
Analysis Engineer and
Vice Chairwoman of the
Works Council Campeon,
exempted member
of the Works Council
First authorized agent
of IG Metall Regensburg
> Bridge imp GmbH, Germany
Infineon Technologies | Annual Report 2021
Name
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
Expert in the frontend-
manufacturing,
Member of the Board of Directors
› Athene Holding Ltd., Bermuda
› Catalina Holdings (Bermuda) Ltd., Bermuda
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
Johann Dechant
Dr. Wolfgang Eder (Chairman)
Mediation Committee
Supervisory Board committees
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
Xiaoqun Clever
> DWS Group GmbH & Co. KGaA, Germany
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q =
< 224 >
Notes to the Consolidated Financial Statements
Management Board and
Supervisory Board
St. Denis, France
20.96
Wilmington, Delaware, USA
Seoul, Republic of Korea
17
100
0
2.86
0.64
Guadalajara, Mexico
100
0
(0.04)
(0.01)
17
Camana Bay (George Town), Cayman Islands
100
0
Camana Bay (George Town), Cayman Islands
5.78
Cypress Semiconductor Technology (Shanghai) Co. Ltd.
Cypress Semiconductor Technology India Private Limited
Cypress Semiconductor Technology Ltd.
Cypress Semiconductor Korea Ltd.
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
0.31
(0.03)
6
Cypress Semiconductor México, S. de R.L. de C.V.
Cypress Semiconductor Philippines Headquarters, Ltd.
Cypress Semiconductor Singapore Pte. Ltd.
0.02
11, 30
17
11, 30
0.20
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q = < 226 >
Notes to the Consolidated Financial Statements
Name of company
Cypress Semiconductor Ukraine LLC
Cypress Semiconductor World Trade Corp.
Hitex GmbH
Infineon Integrated Circuit (Beijing) Co., Ltd.
Infineon Semiconductors (Shenzhen) Co., Ltd.
(0.82)
253.17
0
100
Singapore, Singapore
100
0
6.27
0.53
Shanghai, People's Republic of China
Bangalore, India
17
(0.36)
100
4.90
0.73
7
100
0
31.49
4.38
0
1.33
299.78
100
0
6.96
0.58
7
100
0
0.18
(0.02)
17
100
0
0.62
(0.09)
17
100
100
0
17
0.04
100
0
0.00
0.00
11, 30
11, 30
Camana Bay (George Town), Cayman Islands
100
0
71.27
0.72
8
Kanata, Ontario, Canada
100
0
0.03
17.84
(0.33)
17
8.64
1.36
4
Hong Kong, People's Republic of China
100
0
0.40
0.05
17
Amsterdam, The Netherlands
100
0
6.07
0.01
Wilmington, Delaware, USA
0
100
Munich, Germany
6
100
0
78.26
1.98
5
Bristol, Great Britain
100
0
0
(0.25)
Wilmington, Delaware, USA
100
0
5,693.76
(471.58)
11, 30
5.33
Milan, Italy
Industrial Power Control
0
Americas
4,195
8,790
9,137
3,174
therein: Mainland China, Hong Kong
therein: USA
8,778
9,124
3,178
2,472
Total
Greater China¹
14,188
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
14,033
8,567
1,291
14
30 Septem-
ber 2021
30 Septem-
ber 2020
Non-current assets:
Europe
4,107
3,627
therein: Germany
2,582
2,495
Asia-Pacific (excluding Japan, Greater China)
1,167
1,182
Greater China¹
1,744
106
Europe, Middle East, Africa
2,773
2,322
therein: Germany
1,278
1,056
therein: Mainland China, Hong Kong
92
67
Asia-Pacific (excluding Japan, Greater China)
Japan
18
73
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
Jochen Hanebeck
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
Chief Marketing Officer
> 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
> Infineon Technologies Austria AG, Austria
Member of the Board of Directors
Dr. Helmut Gassel
Chief Financial Officer
Dr. Sven Schneider
Non-current assets do not include financial instruments, deferred tax assets and
assets from employee benefits.
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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
€ in millions
Non-current assets as of 30 September 2021 and 2020, by region, were as follows:
No single customer accounted for more than 10 percent of Infineon's revenue during
the 2021 and 2020 fiscal year.
Revenue:
€ in millions
Inventories:
Reversal of impairments (impairments) (in particular on goodwill)
Impact on earnings of restructuring and closures, net
Share-based payment
1
11
Automotive
(20)
Industrial Power Control
(27)
(14)
Power & Sensor Systems
Acquisition-related depreciation/amortization and other expenses
Gains (losses) on sales of businesses, or interests in subsidiaries, net
Other income and expense, net
1,170
(544)
(1)
1
Connected Secure Systems
(31)
(27)
Other Operating Segments
Corporate and Eliminations
Operating profit
1,470
581
Total
Financial income
(540)
2,072
2020
2021
Power & Sensor Systems
Connected Secure Systems
Other Operating Segments
Corporate and Eliminations
Total
792
147
€ in millions
275
256
823
636
Depreciation and amortization:
182
130
Automotive
2
3
Industrial Power Control
(2)
2,072
(2)
Power & Sensor Systems
1,170
Connected Secure Systems
The following table provides the reconciliation of Segment Result to profit (loss) from
continuing operations before income taxes:
Other Operating Segments
Depreciation and amortization allocated to the segments
Depreciation and amortization not allocated to the segments
Total depreciation and amortization
€ in millions
Segment Result:
Plus/minus:
22
Supervisory Board member
29
(182)
990
975
232
251
565
449
149
190
2
3
243
184
ber 2020
2,181
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
Q = < 221 >
2021
2020
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.
Entity-wide disclosures in accordance with IFRS 8
Revenue for the 2021 and 2020 fiscal years by region was as follows:
€ in millions
2,052
ber 2021
30 Septem-
30 Septem-
(177)
Share of profit (loss) of associates and joint ventures
accounted for using the equity method
9
(9)
Profit (loss) from continuing operations before income taxes
1,319
424
Infineon Technologies | Annual Report 2021
2021
2020
509
495
186
181
272
226
70
62
3
3
1,040
967
473
293
1,513
1,260
Financial expenses
> Voith GmbH & Co. KGaA, Germany
Member of the Shareholders' Committee
> Voith Management GmbH, Germany
Infineon Technologies US HoldCo Inc.
Infineon Technologies UK Limited
Infineon Technologies Taiwan Co., Ltd.
Infineon Technologies Shared Service Center, Unipessoal Lda.
Infineon Technologies Romania & Co. Societate in Comandita
Infineon Technologies Reigate Limited
Infineon Technologies Power Semitech Co., Ltd.
Infineon Technologies Philippines, Inc.
Infineon Technologies Nordic AB
Infineon Technologies Memory Solutions Taiwan Ltd.
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 Maasstad C.V.
Infineon Technologies US InterCo LLC
Infineon Technologies LLC
Infineon Technologies Korea Co., LLC
Infineon Technologies Japan K.K.
Name of company
Notes to the Consolidated Financial Statements
< 227 >
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Infineon Technologies Linz GmbH & Co KG
Infineon Technologies US Investment LLC
Infineon Technologies Vermögensverwaltungsgesellschaft mbH
International Rectifier HiRel Denmark ApS
100
9
Seoul, Republic of Korea
6.17
40.64
0
100
Tokyo, Japan
9
(€ in millions)
(€ in millions)
Footnote
Net result
Equity
thereof Infineon
Technologies AG
in %
Shareholdings
Registered office
Infineon Technologies | Annual Report 2021
Ramtron International Corporation
PT Infineon Technologies Batam
Nihon Cypress G.K.
MoTo Objekt CAMPEON GmbH & Co. KG
MOTEON GmbH
MOLSTANDA Vermietungsgesellschaft mbH
International Rectifier Mauritius, Inc. (in liquidation)
International Rectifier HiRel Products, Inc.
5.61
0
10.24
100
Management Board and
Supervisory Board
Automotive
0
100
Bangalore, India
7
0.40
2.03
0
100
9
Hong Kong, People's Republic of China
Business focus and strategy
54.71
100
100
9
Rotterdam, The Netherlands
7.61
2,916.15
0
100
Singapore, Singapore
9
0.64
9.10
10,814.67
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
Klagenfurt, Austria
9
2.18
7.25
0
100
9
0.14
0.41
100
100
9
Dublin, Ireland
0.00
0.11
0
100
Rotterdam, The Netherlands
9
2.65
14.33
€ 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 >
0
100
13.42
9
> 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
Supervisory Board member
> Siemens Gamesa Renewable Energy
Management GmbH, Germany
Supervisory Board member
> Infineon Technologies Dresden Verwaltungs GmbH,
Germany
Member of the Advisory Board
100
Muntinlupa City, Philippines
9
0.23
5.14
0
100
> Infineon Technologies Dresden Verwaltungs GmbH,
Germany
and other comparable governing bodies of domestic
and foreign companies (as of 30 September 2021)
Membership of other Supervisory Boards
Dr. Susanne Lachenmann' Principal Engineer
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
Labor union secretary
IG Metall district
management, Berlin-
Brandenburg-Saxony
Chief Financial Officer
Operations,
Infineon Technologies AG
Independent
Management Consultant
Kista, Sweden
3.92
9
n.a.
0
100
Wilmington, Delaware, USA
0.00
Segment Result:
0
100
Neubiberg, Germany
9
2.08
26.80
0
68.48
100
Rotterdam, The Netherlands
11, 30
49.30
121.66
0
100
Wilmington, Delaware, USA
5.89
5.94
0
100
Linz, Austria
9
0.00
15, 30
19
0
100
Taipei, Taiwan
19
13, 30
0.00
0.00
0
100
Kuala Lumpur, Malaysia
14, 30
0.00
0.04
0
100
Kawasaki, Japan
2.83
62.14
0
100
4
Netanya, Israel
n.a.
n.a.
0
100
Bangalore, India
n.a.
0.02
0
0.01
in %
thereof Infineon
Technologies AG
Equity
(€ in millions)
Net result
(€ in millions)
Footnote
17
São Paulo, Brasil
100
0
0.07
0.00
9
Hanoi, Vietnam
100
0
0.09
60
60
Warstein, Germany
17
17, 28
17, 30
(16.05)
(10.59)
4.71
13.67
0
40
Hong Kong, People's Republic of China
Shareholdings
Registered office
XMOS Limited
Virtual Vehicle Research GmbH
Moscow, Russian Federation
100
0
0.22
0.02
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q =
< 229 >
Notes to the Consolidated Financial Statements
30.12
Name of company
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
PT Infineon Technologies Indonesia
R Labco, Inc.
Rapt Touch Ireland Ltd.
Schweizer Electronic AG
Silicon Alps Cluster GmbH
TTTech Auto AG
Infineon Technologies South America Ltda
8.93
0
15
678.49
0
100
Wilmington, Delaware, USA
11, 30
11, 30
(0.03)
516.15
0
100
Wilmington, Delaware, USA
0.25
9
162.27
3.19
100
Dresden, Germany
SILTECTRA GmbH
1.14
7.31
0
100
Tijuana, Mexico
Rectificadores Internacionales, S.A. de C.V.
9, 30
(€ in millions)
Footnote
Net result
0
17
Spansion Inc.
Associated companies:
15
15
Siegen, Germany
42.5
Dover, Delaware, USA
Infineon Technologies | Annual Report 2021
Infineon Technologies Polska Sp. z o.o.
Infineon Technologies Romania s.r.l.
Infineon Technologies RUS LLC
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
Spansion LLC
Infineon Technologies Gamma GmbH
Infineon Technologies Campeon Verwaltungsgesellschaft mbH
Infineon Technologies Bipolar Verwaltungs GmbH
Hitex (UK) Limited
EPOS embedded core & power systems Verwaltungs GmbH
Futurium gGmbH
EPOS embedded core & power systems GmbH & Co. KG
CHIL Semiconductors Corporation
Other companies (not consolidated):1
SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd
Infineon Technologies Bipolar GmbH & Co. KG
Joint ventures:
SkyHigh Memory Limited
pmdtechnologies ag
Deca Technologies, Inc.
Infineon Technologies Delta GmbH
(3.75)
0.04
0
Coventry, Great Britain
100
0
2.13
0.09
9
Warstein, Germany
60
60
0.03
0.00
77
Rotterdam, The Netherlands
9
2
Shanghai, People's Republic of China
2
77
Rotterdam, The Netherlands
2
77
St. Denis, France
2
77
Dresden, Germany
2
77
2
77
77
n.a.
n.a.
9, 29
17
Shanghai, People's Republic of China
49
25
(10.73)
(10.32)
9
Wilmington, Delaware, USA
100
0
0.00
0.00
n.a.
9
100
100
1.04
0.35
9
Duisburg, Germany
100
100
0.07
0.00
25
Berlin, Germany
n.a.
Duisburg, Germany
Equity
(€ in millions)
9
100
0.00
9
Neubiberg, Germany
100
100
0.03
0.00
Neubiberg, Germany
100
100
0.03
0.00
9, 20
0.12
Neubiberg, Germany
100
0.03
0.00
9, 20
9
Warsaw, Poland
100
0
0.11
0.02
17
Bucharest, Romania
100
100
Neubiberg, Germany
0
Linz, Austria
0
0.11
0.02
9
Neubiberg, Germany
100
100
0.01
0.00
9
Neubiberg, Germany
100
100
100
0.01
9, 20
Neubiberg, Germany
100
100
0.13
0.00
9
Madrid, Spain
100
0
0.15
0.04
9
0.00
thereof Infineon
Technologies AG
38.65
Shareholdings
93
Neubiberg, Germany
0.00
0.03
100
100
Neubiberg, Germany
9
9, 20, 21
0.00
133.40
6
100
0
Neubiberg, Germany
0.00
0
9, 30
Curepipe, Mauritius
9, 30
28.45
147.82
0
100
Wilmington, Delaware, USA
0.26
1.06
0
0.00
100
107.28
9, 24
77
2
77
2
28
77
2
77
Melaka, Malaysia
2
40
Vila do Conde, Portugal
2
23.81
17
Wilmington, Delaware, USA
1.22
17.08
0
100
9
Batam, Indonesia
6.33
6.37
0
100
Kawasaki, Japan
10
100
2
9
9, 20, 21
0
4.58
1.70
3
Maia, Portugal
100
100
3.50
0.62
Taipei, Taiwan
Bristol, Great Britain
9
100
0
100
8.60
9
100
0
1.51
1.92
9, 30
Wilmington, Delaware, USA
100
0
2,231.98
277.82
Wilmington, Delaware, USA
in %
1.55
Herlev, Denmark
Bucharest, Romania
0.81
0.00
125.22
100
100
Neubiberg, Germany
9, 30
19.25
(0.04)
0
100
Wilmington, Delaware, USA
9, 30
271.26
9
1,532.80
100
0.26
Cheonan, Republic of Korea
9
100
100
55.82
2.77
Bristol, Great Britain
9
100
0
17.00
0
77
100
77
25
Dover, Delaware, USA
Kaohsiung, Taiwan
n.a.
0
n.a.
n.a.
25
n.a.
0
n.a.
n.a.
9
0.07
Neubiberg, Germany
100
0.01
0.00
Jakarta, Indonesia
100
0
0.00
0.00
16
9
Wilmington, Delaware, USA
100
0
100
0.00
1.40
24
Registered office
Name of company
Notes to the Consolidated Financial Statements
Q = < 228 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
11,30
0.00
2
0
24
0.03
Wilmington, Delaware, USA
100
0
0.00
0.00
Villach, Austria
17
100
0
0.57
0.29
17
Lippstadt, Germany
9
0.00
0.00
Dublin, Ireland
n.a.
n.a.
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 Bratislava s.r.o. (in liquidation)
Qimonda Dresden GmbH & Co. OHG (in insolvency)
Qimonda Dresden Verwaltungsgesellschaft mbH (in insolvency)
Qimonda Finance LLC (in insolvency)
0
Munich, Germany
Singapore, Singapore
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 Investment B.V.
Infineon Technologies | Annual Report 2021
2
Colorado Springs, Colorado, USA
2
25
Leuven, Belgium
n.a.
Qimonda International Trade (Shanghai) Co. Ltd.
25
n.a.
Bristol, Great Britain
0
n.a.
n.a.
9
9
46.28
(9.15)
17
25
Villach, Austria
n.a.
0
Schramberg, Germany
n.a.
n.a.
n.a.
n.a.
25
n.a.
n.a.
Graz, Austria
n.a.
n.a.
Vienna, Austria
25
n.a.
n.a.
Combined Management Report
In preparing the consolidated financial statements, the Management Board is
responsible for assessing the Group's ability to continue as a going concern. It also
has the responsibility for disclosing, as applicable, matters related to going concern.
In addition, it is responsible for financial reporting based on the going concern basis
of accounting unless there is an intention to liquidate the Group or to cease operations,
or there is no realistic alternative but to do so.
Business focus and strategy
Consolidated Financial Statements
Further information
Independent Auditor's Report
Q =
< 236 >
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.
We exercise professional judgement and maintain professional scepticism throughout
the audit. We also:
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.
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 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.
> 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.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Management Board and
Supervisory Board
Combined Management Report
Consolidated Financial Statements
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.
Infineon Technologies | Annual Report 2021
The calculation method used for impairment testing of goodwill is appropriate and
in line with the accounting policies to be applied.
> otherwise appears to be materially misstated.
Business focus and strategy
Further information
Independent Auditor's Report
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.
Our observations
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 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. 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.
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
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.
Q =
Consolidated Financial Statements
> 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.
Combined Management Report
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.
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).
Other matter - Use of the Auditor's Report
Business focus and strategy
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
Management Board and
Supervisory Board
-
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
> Identify and assess the risks of material intentional or unintentional non-compliance
with the requirements of Section 328 (1) HGB, design and perform assurance pro-
cedures responsive to those risks, and obtain assurance evidence that is sufficient
and appropriate to provide a basis for our assurance opinion.
> 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.
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).
The Company's Management Board is responsible for the preparation of the ESEF
documents including the electronic reproduction of the consolidated financial
statements and the group management report in accordance with Section 328 (1)
sentence 4 item 1 HGB and for the tagging of the consolidated financial statements
in accordance with Section 328 (1) sentence 4 item 2 HGB.
In addition, the Company's Management Board is responsible for the internal controls
it considers necessary to enable the preparation of ESEF documents that are free
from material non-compliance, whether due to fraud or error, with the requirements
of Section 328 (1) HGB for the electronic reporting format.
The Supervisory Board is responsible for overseeing the process of preparing the
ESEF documents as part of the financial reporting process.
Our objective is to obtain reasonable assurance about whether the ESEF documents
are free from material intentional or unintentional non-compliance with the require-
ments of Section 328 (1) HGB. We exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
< 237 >
Infineon Technologies | Annual Report 2021
3 Equity and net result as of 30 September 2019.
Our audit approach
15 Equity and net result as of 30 September 2020 (period from 8 July 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).
10 Equity and net result as of 30 September 2020 (period from 1 January 2020 until 30 September 2020).
9 Equity and net result as of 30 September 2020.
8 Equity and net result as of 27 September 2020 (period from 16 April 2020 until 27 September 2020).
7 Equity and net result as of 31 March 2020.
16 Equity and net result as of 30 September 2020 (period from 28 September 2020 until 30 September 2020).
6 Equity and net result as of 31 December 2019.
4 Equity and net result as of 29 December 2019.
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.
77
77
High Blantyre, Scotland
Taipei, Taiwan
1 Certain subsidiaries were not consolidated due to immateriality.
5 Equity and net result as of 30 December 2019.
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.
2
2
2
2
Infineon Technologies | Annual Report 2021
30 IFRS figures.
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.
27 The entity owns land of which Infineon is the sole tenant.
26 Non-stock entity. Disclosure of ownership in percent does not apply.
25 Because criteria pursuant to Section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not disclosed.
24 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
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.
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.
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.
20 Control and profit transfer agreement.
Qimonda UK Ltd. (in liquidation)
Qimonda Taiwan Co. Ltd. (in liquidation)
(€ in millions)
Footnote
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)
Name of company
Notes to the Consolidated Financial Statements
Q = < 230 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Registered office
2
Suzhou, People's Republic of China
Padua, Italy
in %
Net result
77
77
Wilmington, Delaware, USA
Wilmington, Delaware, USA
77
Suzhou, People's Republic of China
77
Fort Lauderdale, Florida, USA
[German Public Auditor]
77
Seoul, Republic of Korea
77
77
Equity
(€ in millions)
thereof Infineon
Technologies AG
Shareholdings
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
2
2
In our opinion, on the basis of the knowledge obtained in the audit,
The group management report contains cross-references that are not required by
law and which are marked as unaudited. In accordance with German legal require-
ments, we have not audited the cross-references and the information to which the
cross-references refer.
In accordance with German legal requirements, we have not audited the content
of those components of the group management report specified in the “Other Infor-
mation" section of our auditor's report.
We have audited the consolidated financial statements of Infineon Technologies AG,
Neubiberg, and its subsidiaries (the Group), which comprise the consolidated state-
ment of financial position as at 30 September 2021, and the consolidated statement
of profit or loss, consolidated statement of comprehensive income, consolidated state-
ment of changes in equity and consolidated statement of cash flows for the financial
year from 1 October 2020 to 30 September 2021, and notes to the consolidated financial
statements, including a summary of significant accounting policies. In addition, we
have audited the combined management report of Infineon Technologies AG and
of the Group (hereinafter: the "group management report") for the financial year
from 1 October 2020 to 30 September 2021.
Opinions
Report on the Audit of the Consolidated Financial Statements
and of the Group Management Report
> 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
To Infineon Technologies AG, Neubiberg
For the Consolidated Financial Statements and Group Management Report we have issued an unqualified auditor's report.
The English language text below is a translation of the auditor's report. The original German text shall prevail in the event of any discrepancies
between the English translation and the German original. We do not accept any liability for the use of, or reliance on, the English translation
or for any errors or misunderstandings that may derive from the translation.
< 233 >
Q =
Further information
Independent Auditor's Report
Consolidated Financial Statements
Combined Management Report
Independent Auditor's 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 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.
Infineon Technologies | Annual Report 2021
As a result of the impairment test performed, the Company did not identify any
impairment. In light of the discretionary judgement of the assumptions underlying
the impairment testing, there is the risk for the consolidated financial statements
that a required impairment was not recognised. There is also the risk that the related
disclosures in the notes are not appropriate.
Infineon tests goodwill for impairment in accordance with IAS 36 at the operating
segment level annually as at 30 June, as well as in cases where events or changes to
the prevailing conditions provide indications that the recoverable amount may have
fallen below the carrying amount. The recoverable amount is the higher of fair value
less costs of disposal and value in use. Goodwill is impaired if the carrying amount
of the operating segment to which the goodwill is allocated exceeds the recoverable
amount of this unit. Infineon determines the recoverable amount of the respective
cash generating unit to which goodwill was allocated according to value in use.
Impairment testing of goodwill is complex and based on a range of assumptions that
require judgement. Such judgement includes, among other elements, the assumptions
found in the adopted corporate planning for a period of five years, such as revenue
growth and margins, assumed long-term growth rates in perpetuity, which consider
a steady state including the synergy effects of the prior-year acquisition of Cypress
Semiconductor Corporation, and the underlying discount rates.
The consolidated financial statements of Infineon Technologies AG reported goodwill
in the amount of EUR 5,962 million as at 30 September 2021. At 26% of the balance
sheet total, goodwill accounts for a considerable share of total assets.
The financial statement risk
Please refer to note 2 in the notes to the consolidated financial statements for infor-
mation on the accounting policies applied and the assumptions used. Information on
the value of goodwill can be found under note 13.
Impairment testing of goodwill
Key Audit Matters in the Audit of the Consolidated Financial Statements
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements for the financial
year from 1 October 2020 to 30 September 2021. These matters were addressed in the
context of our audit of the consolidated financial statements as a whole, and in form-
ing our opinion thereon, we do not provide a separate opinion on these matters.
We conducted our audit of the consolidated financial statements and of the group
management report in accordance with Section 317 HGB and the EU Audit Regulation
No 537/2014 (referred to subsequently as "EU Audit Regulation") and in compliance
with German Generally Accepted Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) [Institute of Public Auditors in Germany].
Our responsibilities under those requirements and principles are further described in
the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
and of the Group Management Report” section of our auditor's report. We are inde-
pendent of the group entities in accordance with the requirements of European law
and German commercial and professional law, and we have fulfilled our other Ger-
man professional responsibilities in accordance with these requirements. In addition,
in accordance with Article 10 (2)(f) of the EU Audit Regulation, we declare that we
have not provided non-audit services prohibited under Article 5 (1) of the EU Audit
Regulation. We believe that the evidence we have obtained is sufficient and appro-
priate to provide a basis for our opinions on the consolidated financial statements
and on the group management report.
Basis for the Opinions
Q = < 234 >
Further information
Independent Auditor's Report
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
Business focus and strategy
Management Board and
Supervisory Board
< 232 >
Q =
Jochen Hanebeck
Dr. Helmut Gassel
Dr. Sven Schneider
Dr. Reinhard Ploss
Infineon Technologies AG
Management Board
Neubiberg, 25 November 2021
Notes to the Consolidated Financial Statements
< 231 >
Q =
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Management Board and
Supervisory Board
2
Constanze Hufenbecher
2
Infineon Technologies | Annual Report 2021
Business focus and strategy
Further information
Responsibility Statement
by the Management Board
Infineon Technologies | Annual Report 2021
Constanze Hufenbecher
Jochen Hanebeck
Dr. Helmut Gassel
Dr. Sven Schneider
Dr. Reinhard Ploss
Management Board
Infineon Technologies AG
Neubiberg, 25 November 2021
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.
Responsibility Statement
by the Management Board
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Infineon Technologies | Annual Report 2021
high-voltage power MOSFETs (Si-based)
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Applications and product range
Power & Sensor Systems
Q =
< 242 >
☐ Power & Sensor Systems
Applications
Audio amplifiers
> Battery-powered loudspeakers
> Smart speakers
Automotive electronics
> Blind spot detection
> In-cabin USB PD charging
> Onboard charger
> Power train for low-speed electric vehicles
BLDC motor
> Battery-powered gardening equipment, e.g.,
- Hedge trimmers
- Lawn mowers
> Battery-powered home appliances, e.g.,
- Vacuum cleaners
> Battery-powered power tools, e.g.,
- Cordless screwdrivers
- Drills
- Power saws
> eBikes
> eScooters
Management Board and
Supervisory Board
> Multi-copters
Infineon Technologies | Annual Report 2021
control unit, driver and switch
> 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
> Hybrid buses
Traction
> High-speed trains
› Locomotives
› Metro trains
› Trams
1 Including motors, compressors, pumps and fans.
Product range
› Bare die business
› Discrete IGBTs
> Driver ICs
> IGBT modules (low-power, medium-power,
high-power)
> IGBT module solutions including IGBT stacks
> Intelligent IGBT modules with integrated
> SiC diodes, SiC MOSFETs, SiC modules
Cellular communications infrastructure
› Base stations
Charging stations for electric vehicles
› Control ICs for power switches
> Customized chips (ASICS)
> Discrete low-voltage, mid-voltage and
> GaN power switches
> GPS low-noise amplifier
> Low-voltage and high-voltage driver ICs
> Radar sensor ICs (24 GHz, 60 GHz)
› RF antenna switches
> RF power transistors
> SiC diodes, SiC MOSFETS
> TVS (transient voltage suppressor) diode
> USB controller
Infineon Technologies | Annual Report 2021
› Telecommunication technology
Management Board and
Supervisory Board
Business focus and strategy
Consolidated Financial Statements
Further information
Applications and product range
Connected Secure Systems
Q =
< 243 >
Connected Secure Systems
Applications
Authentication
› Accessories
> Brand protection
› Game consoles
> Industrial control systems
› Chips for pressure sensors
> Chips for MEMS microphones
> Chips for gas sensors
> 3D ToF sensors
Special applications in harsh environments
› Aerospace systems
> Aviation technologies
> Defense technologies
> Oil and gas exploration
> Submarine telecommunications
Human-machine interaction
IoT
› Communications
› Sensors
> Smart speakers
> Voice control
LED and conventional lighting systems
› Pipelines
Microinverter for roof-top systems
› Activity trackers
> Health care trackers
› Navigation devices
› Smartphones
> Tablets
Power management
› Consumer electronics
› Data centers
> Home appliances
> Mobile devices
> PCs and notebooks
› Servers
Product range
Mobile devices
> Printer cartridges
> Oil derricks
> Escalators
› Airbag
> Automatic parking
> Blind spot detection
> Cruise 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
> ABS (Anti-blocking system)
› Battery charging control
Assistance systems and safety systems
Automotive
PSOC
CPU
central processing unit
RF
DC-DC
direct current to direct current conversion
Si
FHEV
full hybrid electric vehicles
Sic
FPGA
field programmable gate array
ToF
GaN
IC
IGBT
HMI
HVDC
high-voltage DC transmission
integrated circuit
insulated gate bipolar transistor
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Applications and product range
Automotive
Q =
< 240 >
Applications and product range
Applications
› Battery management
> Combustion engine control
> Electric motor control
Industrial Power Control
Applications
Energy generation
> Photovoltaic systems
> Wind power turbines
Energy storage
> 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
> Induction cooktops
> Microwave ovens
> Refrigerators
> Vacuum cleaners
> Washing machines
Industrial drives¹
> Air conditioning technology
> Automation technology
> Drives technologies
> Elevator systems
< 241 >
Q =
Further information
Applications and product range
Industrial Power Control
Consolidated Financial Statements
› Generator control
> Start-stop system
> Transmission control
Security
› Communication
-Car-to-car
-Car-to-infrastructure
> Original spare parts authentication
> Protection against manipulation (e.g., odometer)
> Protection against software manipulation
> Tachograph
Product range
> 32-bit automotive microcontrollers for powertrain,
safety, driver assistance systems, infotainment and
digital display systems
> Materials handling
> 3D ToF sensors
> IGBT modules
> Industrial microcontrollers
> Magnetic and pressure sensors
> Memory ICs (NOR flash, SRAM, nvSRAM, F-RAM)
> Power ICS
> Radar sensor ICs (77 GHz)
> SiC diodes, SiC MOSFETs and SiC modules
> Transceivers (CAN, CAN FD, LIN, Ethernet, FlexRay™)
> Voltage regulators
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
> Discrete power semiconductors
Automotive
Combined Management Report
- eCall
Consumer Internet of Things
PHEV
CMOS
complementary metal-oxide-semiconductor
human-machine interaction
TPM
USB (USB PD)
Wi-Fi
Infineon Technologies | Annual Report 2021
Industrial Internet of Things
Internet of Things
intelligent power module
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
Clot
NFC
Bluetooth
BT
139
Infineon Technologies | Annual Report 2021
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
AC-DC
ADAS
› Connected vehicles
Пот
advanced driver assistance system
Combined Management Report
ΑΙ
IoT
IPM
ASIC
application-specific integrated circuit
LED
ASIL
automotive safety integrity level
MEMS
BLDC
brushless direct current
ML
BLE
Bluetooth Low Energy
MOSFET
artificial intelligence
113
Consolidated Financial Statements
Q = < 246 >
Copy deadline:
Fiscal year:
Independent auditors:
Designed by:
Photography:
Note
Infineon Technologies AG, Neubiberg (Germany)
Investor Relations, Accounting, Consolidation & Reporting
25 November 2021
1 October to 30 September
KPMG AG Wirtschaftsprüfungsgesellschaft,
Munich (Germany)
HGB Hamburger Geschäftsberichte GmbH & Co. KG,
Hamburg (Germany)
Page 6, 10: Werner Bartsch, Hamburg (Germany)
The following were brand names of Infineon Technologies AG
in the 2021 fiscal year:
Infineon, the Infineon logo, AURIX™M, CIPOSTM, CoolGaNTM, CoolMOS™, CoolSIC™,
EiceDRIVER™, FlexRay™, HybridPACK™, ¡MOTION™, ModusToolbox™, OPTIGA™,
PrimePACKT, PSoCTM, SECORATM, TRAVEO", XENSIVTM, XMCTM.
Visit us on the web: www.infineon.com f in
Forward-looking statements
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
Published by:
Editors:
Q = < 247 >
Further information
Imprint
Consolidated Financial Statements
Financial calendar 2022
February
February
May
August
November
Thursday
Thursday
Monday
Wednesday
3
17
9
Further information
Financial calendar 2022
3
15
Publication of
first quarter 20221
results
Annual General
Meeting 2022
(virtual)
Publication of
second quarter 2022¹
results
Publication of
third quarter 2022¹
results
Publication of
fourth quarter and
fiscal year 2022¹
results
1 Preliminary
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Imprint
Business focus and strategy
Combined Management Report
Tuesday
104
alternating current to direct current conversion
100
Trusted Computing
Infineon Technologies | Annual Report 2021
Product range
› Connectivity solutions (Wi-Fi, Bluetooth, BLE)
> Embedded security controllers
> Microcontroller for consumer electronics
and industrial applications
> Security controllers (contact-based, contactless,
dual-interface)
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Further information
Chart overview
Q =
< 244 >
100
Page
Page
C01 Our growth areas and growth drivers are derived
from megatrends in society
C22 Market share in IGBT modules in the 2020 calendar year
68
22
C02 Additional semiconductor demand per vehicle raised by electromobility
28
C23 Revenue and Segment Result of the Industrial Power Control segment
C24 Market share for MOSFETs in the 2020 calendar year
69
Ticketing, access control
C03 We are linking the real and the digital world
> NFC-based contactless payment
› Credit/debit cards
- 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
(machine-to-machine communication)
- Consumer applications
- IoT applications
> SIM cards
Payment systems
> Mobile payment
32
Chart overview
C05 Worldwide discrete power semiconductors
54
C33 Infineon owns the key components for XEV charging stations
C34 Investments
82
80% 80 1
88
56
C14 Dividend per share for the 2010 to 2021 fiscal years
C15 Core competencies in the segments
57
59
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
C04 Strategic growth model
63
C35 Development of the Infineon Technologies AG share compared to
Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
and the Dow Jones US Semiconductor Index for the 2021 fiscal year
(daily closing prices)
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
gallium nitride
G39 Financial debt by currencies
68
G40 Risk assessment matrix
68
G41 Diversity target
97
98
C12 Top 20 semiconductor consumer in the 2020 calendar year
C13 Revenue by segment in the 2021 fiscal year
54
$$ཡཿགྷ
79
and modules market share in the 2020 calendar year
36
C32 R&D expenses
73
73
in the 2020 calendar year (by units)
36
C06 Siltectra's Cold Split technology allows splitting of SiC boules
C27 Revenue and Segment Result of the Power & Sensor Systems segment
C28 Market share for security ICs (excl. NFC controller;
له لا
73
74
as well as SiC wafers with minimum loss of material
37
C25 Market share for power ICs in the 2020 calendar year
C26 Market share of MEMS microphones die suppliers
78
excl. NFC embedded Secure Element) in the 2020 calendar year
8%
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)
78
C09 The main stages of the semiconductor value chain
39
a differentiating factor
C07 Market share in the total semiconductor market in the 2020 calendar year 38
C08 System knowhow and services are becoming more and more
51
Combined Management Report
Business focus and strategy
Growth drivers
Supervisory Board
Management Board and
Digitalization is permeating more and more areas of our lives and the coronavirus
pandemic has accelerated this trend. New digital communication technologies have
an impact on our everyday life, alter our lifestyle and give rise to new patterns of
behavior. The digital transformation also allows for better use of resources. Resource
use can be monitored and tracked and
thus optimized. Meanwhile, humans and
machines are producing enormous amounts
of data. Big data is an extremely valuable
raw material. People are revealing more and
more sensitive information about them-
selves. This makes it necessary for users to
be able to communicate with one another
securely and without the risk of the misuse
or theft of data. Safeguarding electronic
devices and infrastructures thus takes the
highest priority and makes the digital trans-
formation possible. Meeting this increased
need for security represents one of the core
competencies of Infineon.
Digital transformation
More and more people are crowding into the cities from rural areas. The coronavirus
pandemic may interrupt this trend in the short term if at all. In the long term, major
cities and metropolitan regions will continue to grow and act as magnets for migration,
with the result that the trend towards urbanization will continue. Rapid urbanization
places huge demands on infrastructure and on related services. How should a major
city be designed in order to guarantee an adequate quality of life for everyone when
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.
Consolidated Financial Statements
Urbanization
Infineon Technologies | Annual Report 2021
Further information
C01 Our growth areas and growth drivers are derived from megatrends in society
Growth drivers
Megatrends create new areas of growth
-
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,
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
Megatrends
Growth areas
Growth drivers
Profiting segments
Demographic and social change
Energy efficiency
Climate change and scarce resources
Q = < 22 >
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.
Management Board and
Supervisory Board
Demographic and social change
Climate change and scarce resources
Management Board and
Supervisory Board
Business focus and strategy
Business focus
Combined Management Report
Consolidated Financial Statements
Further information
Q =
< 20 >
Business focus
and strategy
OIO
Business focus
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.
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.
Infineon Technologies | Annual Report 2021
100-0
ム・バチスタ2
ジェネラル・
・ジュの
Management Board and
Supervisory Board
Business focus and strategy
Business focus
Combined Management Report
Consolidated Financial Statements
Further information
← Q = < 21 >
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.
Urbanization
Infineon's growth areas are the source of its specific
growth drivers
Electrification, Digitalization
Electric drives are at the heart of a large number of systems, such as cranes, con-
veyor belts, automation systems and robots. We find them wherever something
Drives and automation
As with AC-DC conversion, rising demand for more computing power and storage
capacity is also driving demand for DC-DC converters. Special processors such as
Al accelerators, FPGAs, ASICs and GPUs require high power at very low voltages.
In addition, energy requirements change considerably depending on load and at
extremely short notice. As a result, the electronic systems are supplied with higher
voltages that are then precisely stepped down to the required low voltage directly
in the processor. The same applies to PCs and communication devices, which some-
times require a large number of different voltages. This voltage conversion system is
known as point of load. Requirements placed on dynamics, efficiency and stand-by
consumption are increasing all the time. Customers are looking for simple, reliable
high-performance solutions, necessitating the change to digital regulation of point
of load systems and driving the trend towards all-in-one solutions.
DC-DC conversion
Further information
Consolidated Financial Statements
Combined Management Report
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.
Business focus and strategy
Growth drivers
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).
Management Board and
Supervisory Board
AC-DC conversion
> Industrial automation
> Home appliances
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 >
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.).
Further information
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).
Consolidated Financial Statements
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
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.
← Q = < 24 >
Wind
Power generation from renewable energy sources
A new mindset on climate protection depends entirely on a new mindset on energy
transformation. An energy transformation will only be viable if we take sustainable
and climate-friendly action along the entire supply chain, from the generation of
electricity to its consumption. Microelectronics play a decisive role here, helping to
provide the growing population with energy in an efficient and environmentally
friendly manner. For environmental reasons, it will no longer be possible in the future
to meet the rising demand for electric energy by using fossil fuels to the same extent
as we do today. Renewable energy sources, which do not emit carbon into the environ-
ment, are becoming more and more important. The use of wind power and solar
energy is a key factor here. The fluctuating availability of energy from these sources
can be balanced out by using electric storage systems but requires holistic manage-
ment of the power grid.
Energy efficiency
Infineon Technologies | Annual Report 2021
← Q = < 23 >
Further information
Digital transformation
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.
Photovoltaics
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.
High-voltage direct current transmission (HVDC)
Q = < 25 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Growth drivers
Supervisory Board
Management Board and
Infineon Technologies | Annual Report 2021
REFUELLING STATION
HYDROGEN
Green hydrogen from renewable energy is
due to be produced at the Villach site (Austria)
from the beginning of 2022.
Very high direct current (DC) is needed for the electrolysis process to produce green
hydrogen. Alternating current (AC) supplied by the power grid must therefore first be
converted into direct current. High system
output (> 50 megawatts) can be achieved
efficiently through the interaction of several
high-performance switches. In conjunction
with photovoltaic plants, there only
needs to be an adjustment to the directly-
generated DC in the electrolysis process.
The combination of renewable energy and
efficient power semiconductors is a key
lever for the large-scale production of
green hydrogen, which could become a
major growth driver for Infineon. If one day
green hydrogen is available in sufficient
quantity and at a competitive cost, fuel cell
technology will be used in various applica-
tions to generate electricity, for example,
in the transportation sector (cars, trucks,
buses, trains, helicopters, small aircraft)
and as an alternative to diesel generators
(on construction sites and campsites,
for instance, and especially in base sta-
tions in remote areas and mountainous
regions).
Over the course of the next decade, hydrogen will play a crucial role in energy supply.
However, if we are to exploit the potential of hydrogen, solutions must be found for
the challenges associated with its production, storage, transportation and use. Semi-
conductor solutions from Infineon can provide significant support in the development
of a sustainable hydrogen economy along the value chain.
Hydrogen
As a result of the energy transformation, 50 percent of Europe's electricity should
come from renewable energy by 2030. The use of renewable energy is linked with
specific requirements for the entire energy supply chain. In contrast to conventional
electricity generation, which takes place centrally in a small number of power plants,
the generation of electricity from renewable energy takes place decentrally in a large
number of small power plants. In addition, fluctuating power generation does not
always match the demand. Conventional power plants still have to substitute for or
supplement renewable energy sources. This makes the expansion of battery-based
energy storage necessary in the long run. With its semiconductors, Infineon provides
the essential power components and subsystems for efficient energy storage.
Energy storage
HVDC systems are playing a key role globally by providing reliable, low-loss energy
transmission over long distances. They are also used for the grid connection of offshore
wind farms. It is to be expected that future growth in the use of renewable energy
will result in a rise in demand for efficient transmission routes. The semiconductor
products for HVDC applications must satisfy particular requirements: robustness,
short-circuit resistance and dynamic performance. We have developed an IGBT
module- and a diode module-family specifically for this purpose.
Infineon Technologies | Annual Report 2021
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.
← Q = < 26 >
Transport of people and goods
> Human-machine interaction
› Consumer IoT
> Industrial loT
› Data center
› Cellular infrastructure
> Edge computing
Power & Sensor Systems,
Connected Secure Systems
Connected Secure Systems,
Automotive
Infineon Technologies | Annual Report 2021
Business focus and strategy
Growth drivers
Combined Management Report
Consolidated Financial Statements
Business focus and strategy
Growth drivers
Combined Management Report
Consolidated Financial Statements
Further information
Management Board and
Supervisory Board
> Integrity of devices
> Security for connected vehicles
> Secure authentication for the
Consumer loT and Industrial IoT
Mobility
Security
IoT and big data
> Renewable energy sources
› Energy transmission
> Energy storage
› Usage and conversion of electrical energy
Industrial Power Control,
Power & Sensor Systems
> Electromobility
› Charging infrastructure for
electromobility
> Automated driving
› Passenger and freight transport
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.
Automotive, Industrial Power Control,
Power & Sensor Systems
› Security for mobile devices
> Security for contactless payment
← Q = < 28 >
C02 Additional semiconductor demand per vehicle raised by electromobility
> Infotainment
-490
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
Driving
900
Management Board and
Supervisory Board
Business focus and strategy
Growth drivers
Combined Management Report
Consolidated Financial Statements
48
Further information
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.
in 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.
← Q = < 29 >
Infineon Technologies | Annual Report 2021
Infineon
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.
~950
Autonomous
Mode
-890
illl
Mild-hybrid
vehicle
Full hybrid
vehicle
~600
Plug-in hybrid
Combustion
engine vehicle
Additional semiconductor demand
raised by electromobility
Semiconductor demand for
combustion engine vehicle
目 R06
Automated driving
Charging infrastructure for electromobility
"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.
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.
and pure
electric vehicle
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
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Growth drivers
Infineon Technologies | Annual Report 2021
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.
IoT and big data
← Q = < 32 >
Integrity of devices
Management Board and
Supervisory Board
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
Drives
Human-machine interaction is concerned with how humans and systems interact
and communicate with each other. For a long time now, the focus has no longer been
on traditional industrial machines but on computers, digital systems or loT devices:
i.e., the connection between the real world and the digital world. More and more
devices are connected and perform their tasks automatically. The operation of all
these machines, systems and devices has to be as intuitive as possible, as if the user
were communicating with a human.
C03 We are linking the real and the digital world
Battery-powered devices
Power supplies
Industrial IoT
|_
Smart home
Real-world applications
Smart city
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.
Consumer loT
Human-machine interaction
Security for connected vehicles
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.
← Q = < 31 >
Coin cell-powered devices
Management Board and
Supervisory Board
Business focus and strategy
Growth drivers
Combined Management Report
Consolidated Financial Statements
Further information
Q =
< 30 >
Security
Security for mobile devices
The development of smartphones and wearables, the mobile internet and Near
Field Communication (NFC) technology has made it possible to integrate payment
services into today's mobile devices.
During the coronavirus pandemic, people
have particularly valued this function.
However, cashless payment is just one of
many of the functions of mobile devices
requiring the storage and processing of
sensitive data. Travelers on public trans-
portation, for example, enjoy the conve-
nience of using mobile tickets instead
of coins or physical tickets. These applica-
tions require special security solutions
such as a security chip called a Secure
Element (SE). The SE can either be built
into the smartphone (when it is referred
to as an embedded SE, or eSE) or inte-
grated into the SIM card.
Security for contactless payment
Contactless payment has been common for several years in many countries and
regions, such as the U.S. and Canada, and Europe, but also Asia, especially China and
Singapore. The coronavirus pandemic ensured greater acceptance of this type of
payment, even in previously hesitant countries such as Germany. Behind contactless
payment transactions, there is generally a transmission standard that transmits the
data over a short distance of four centimeters at the most. This small range, in con-
junction with encrypted data transmission, makes contactless payment transactions
secure. Infineon is one of the world's largest manufacturers of security chips and
antennae for payment cards.
Secure authentication for the loT
Security plays a key role in IoT. The rising number of hacking attacks underlines
the need for appropriate precautions. In order to secure electronic systems, it is
important to connect only authorized and
authenticated devices with each other and
to protect them against manipulation and
cyber-attacks. This means that security
must be integrated into every end-point
whenever possible. The electronic compo-
nents central to security are typically
assembled on the printed circuit board,
which is why these components are referred
to as embedded security. Infineon offers
various embedded security controller
families adapted to meet specific security
requirements.
For machine-to-machine communication, Infineon
offers eSIM controllers in a tiny package.
Security for industrial applications (smart factories)
In the era of Industry 4.0, companies are using the latest technologies to make their
manufacturing faster and more cost-effective, to reduce rejection rates and to minimize
Infineon Technologies | Annual Report 2021
Management Board and
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Business focus and strategy
Growth drivers
Combined Management Report
Consolidated Financial Statements
Further information
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.
Infineon at the core of loT
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.
Sense
← Q = < 37 >
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.
C06 Siltectra's Cold Split technology allows splitting of SiC boules as well as SiC wafers
with minimum loss of material
Boule
Boule splitting
Epitaxy
Device fabrication
Upper half
Wafer splitting
Lower half
Epitaxy
Device fabrication
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
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Group strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q = < 38 >
Further information
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.
Consolidated Financial Statements
Business focus and strategy
Group strategy
Core
Adjacent
Enable
Drive
Enable
Drive
New
grow in scope
C05 Worldwide discrete power semiconductors and modules market share
in the 2020 calendar year
Infineon
onsemi
STMicroelectronics
Mitsubishi
Toshiba
8.3%
5.5%
5.0%
4.6%
19.7%
R04
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
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
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Combined Management Report
Information and data
about the real world
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.
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.
Further information
Q = < 39 >
Strategic action areas:
Factors for successful implementation
Our strategic approach "Product to System" shapes our actions
Our strategic approach "Product to System" goes well beyond thinking in terms of
technologies and products, co8. This approach was also a key element in develop-
ing the strategic guideline on strengthening our core business and tapping into new
and adjacent growth markets described above. We want to understand what the
markets are demanding and how they are changing. Only then will we be able to
understand how we in turn can change the markets ourselves. We therefore look
not only at the direct sales opportunities for our products, but also at our customers'
success factors and at trends in the end markets. We want to recognize at an early
stage when the foundation of our business is changing. Only then can we take appro-
priate action in good time, ensure sustainable differentiation in growth applications
and increase earnings. For this to succeed, we have to understand the environment
in which our customers' products are used, how these products are embedded in
larger systems, with which other devices the products interact, what requirements
they have to fulfill and what function they are intended to perform. Looking at
our products in these systems, we have to consider which other active and passive
components and control concepts they use and what capabilities our customers
contribute to the value creation process. Equipped with this knowledge, we can make
the most of our competencies. We want to translate the technologically possible
into marketable products that provide the greatest possible benefit to our customers.
Sensor systems, for example, not only capture information about their surroundings,
but also interpret and process the data they gather in order to initiate a particular
action. Digital control loops in power supplies enable higher energy efficiency at
both high and low load levels. Connectivity enables devices to be networked. Security
controllers must be capable of distinguishing between authorized and unauthorized
access. In all cases, in addition to the hardware components involved, software
is also required to a greater or lesser extent. System understanding therefore also
means software understanding.
As the range of services provided is increasingly becoming a differentiating factor,
we have expanded our range to include an ecosystem. For many small customers
without expertise in mounting semiconductor components, an ecosystem offers
crucial value added, as it can significantly reduce their development time.
The basic idea is that we continue to expand our competence portfolio, thereby
increasing our potential for differentiation and helping shape semiconductor trends.
Best of all, however, is always to be one step ahead. Technology knowhow has
invariably been the foundation of our business model, whether in the form of discrete
components, integrated solutions or products that combine analog and digital
functionality. Our broad portfolio ranges from individual components to solutions
with basic firmware and driver software. This enables us to provide targeted support
C08 System knowhow and services are becoming more and more a differentiating factor
Services
Software
Hardware
Customer system
Ecosystem
Development environment
Full system functionality
(algorithms, Al)
Partial system functionality
(firmware)
Building block (integration of
analog and digital functionality)
Single function
(discrete components)
Base technology
System knowhow
Competencies evolve over time
Services
Infineon Technologies | Annual Report 2021
Consolidated Financial Statements
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
Combined Management Report
Management Board and
Supervisory Board
C07 Market share in the total semiconductor market in the 2020 calendar year
US$473.491 billion market size
Intel
Samsung
16.1%
12.0%
SK Hynix
5.6%
Micron
4.7%
Qualcomm
Broadcom
4.1%
3.8%
3.0%
Nvidia
2.8%
Infineon
2.4%
MediaTek
2.4%
Texas Instruments
R01
Infineon Technologies | Annual Report 2021
Business focus and strategy
Group strategy
Products/
Technologies
grow in scale
Consolidated Financial Statements
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.
Thinking and acting responsibly over the long term goes beyond our direct business.
It is also crucial that, in addition to developing a greater understanding of our cus-
tomers' systems, optimizing our products and solutions, and achieving an adequate
return in line with our objectives, we incorporate sustainability into the management
of our business and engage responsibly with society. Making life greener is part of our
mission. Therefore, we have set ourselves the target of becoming carbon-neutral
by 2030.
Infineon Technologies | Annual Report 2021
Management Board and
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Group strategy
Combined Management Report
Consolidated Financial Statements
Further information
Q = < 36 >
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.
Strategic guideline: Strengthening our core business
and tapping into new growth markets
Our core business includes all those areas in which we have a full understanding of
the applications or where we master the underlying technologies and in which we
can therefore offer an extensive differentiating product portfolio. In our core business,
we want at least to grow with the market and thereby maintain or even strengthen
our leading positions ("grow in scale"). One example is our power semiconductors,
which are employed in the generation, transmission, storage and use of electric power.
C04 Strategic growth model
Markets
Applications
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.
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
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
Further information
← Q = < 34 >
Smart buildings
Smart buildings improve the comfort of their occupants and are set to become an
integral part of the energy transformation. According to the German Federal Ministry for
Economic Affairs and Energy, buildings are currently responsible for around 35 percent
of Germany's energy consumption. By 2050, however, the Federal Government wants
to reduce the energy requirements of its building stock by 80 percent. That goal could
be achieved if smart buildings were to generate their own electricity (using solar
systems, for example, as part of a smart grid) and, at the same time, were much more
energy-efficient than conventional buildings. They can, for example, use sensors to
detect how many people are in a room at a
particular time and, based on that informa-
tion, automatically regulate the lighting or
heating. Maintenance costs are also reduced.
Sensors that measure and monitor the con-
dition of components are included in the
building installations, such as elevators. If
there is the risk of a defect as a result of
wear and tear, technicians are notified. They
then carry out predictive maintenance
before the elevator breaks down. Expensive
outages can thus be avoided. Last but not
least, smart buildings improve safety. If
there is a fire in the building, sensors are
able to detect how the smoke is spreading,
enabling escape routes to be identified.
220
22.0
00000
Industrial Internet of Things (IoT)
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
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.
5G mobile communications infrastructure
The advent of the new 5G mobile communications standard has greatly increased
potential applications when compared with previous standards. Above all, 5G's high
data transmission rates and considerably shorter reaction times and/or response
times make new applications and devices possible. Network providers are continuing
to expand their 5G infrastructure so that they are prepared for the increase in data
volume and can offer their customers good network coverage. The network archi-
tecture has to migrate to smaller and more numerous cell sites to enable better
exploitation of the available frequency spectrum and especially the use of higher
frequency ranges. Our radio frequency components are used for communication
between mobile devices and/or edge computing end devices (see next paragraph)
and the base station, as well as for wireless backhaul from local networks to the core
network.
Edge computing
IoT and the related explosive growth in devices with an internet connection, as well as
other new applications that require real-time computing, will drive the growth in edge
computing systems. In edge computing, data are processed where they arise, on the
edge of a network. They do not first need to be sent to a central computer server, the
cloud. This means that edge devices need to have sufficient capacity. High levels of
capacity combined with limited system resources and energy budget require optimized
concepts. This is where our products and systems come into play, for example, micro-
controllers, power semiconductors and sensors, as well as connectivity ICs and security
ICs. Our hardware, algorithms and system solutions are optimized for these tasks.
Infineon Technologies | Annual Report 2021
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Group strategy
Combined Management Report
Business focus and strategy
Growth drivers
Further information
Q = < 35 >
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.
Wearables
Q = < 33 >
Consolidated Financial Statements
Actuate
Software/
Ecosystem
Compute & connect
Security solutions
Connectivity
010100
00101001
101010010100:
101001 Digital world
01010
Value addition and
optimized use of resources
Smartphones
Combined Management Report
Automotive
Sense Sensors
Compute & connect Microcontrollers, special memories, Wi-Fi, BT, BLE, USB
Actuate Power semiconductors
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Health care products
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.
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.
Sustainable growth: optimized manufacturing processes, efficient
products and binding carbon emissions targets
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.
Management Board and
Supervisory Board
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.
Infineon Technologies | Annual Report 2021
< 44 >
Business focus and strategy
Group strategy
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,
Q =
Infineon Technologies | Annual Report 2021
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.
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.
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
to rapidly changing markets
Flexible marketing approaches enable Infineon to adapt
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.
Further information
Further information
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.
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
Management Board and
Supervisory Board
Quality leadership keeps customers loyal
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.
Strategic differentiation through in-house manufacturing
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Group strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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.
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.
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.
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.
of scale. Compared with manufacturing on 200-millimeter wafers, we benefit here
from lower costs, with equal productivity and a lower capital intensity. We have taken
a further step to extend our lead. With the new factory at the Villach (Austria) site,
together with our 300-millimeter manufacturing facility in Dresden (Germany), we
have established a closely coordinated
manufacturing network across the two sites.
In line with our "One Virtual Fab❞ concept,
we are using the same processes, equip-
ment, and automation and digitization
concepts in Villach and in Dresden. This
brings cost advantages, but it also benefits
the customer, as we can rapidly shift pro-
duction volumes between the sites. By
expanding our manufacturing capacity,
especially as a result of the start-up of our
new 300-millimeter factory in Villach, we
are sending a strong signal to our custom-
ers that Infineon is the ideal partner for
future growth.
← Q = < 42 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
Group strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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.
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.
O
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.
Business focus and strategy
Group strategy
Combined Management Report
Consolidated Financial Statements
Further information
← Q = < 40 >
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
Infineon
IMD111T6
The IMOTION™ IMD111T6 is a highly-integrated IC
for the control of 3-phase BLDC motors.
can support all these different approaches
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.
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™
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.
Combined Management Report
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.
Technology leadership creates added value for customers
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.
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.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Group strategy
Combined Management Report
Consolidated Financial Statements
Further information
← Q = < 41 >
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.
Infineon
IM67D130A
Consolidated Financial Statements
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.
← Q = < 45 >
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
55 2021 fiscal year
52 Review of the semiconductor industry
50 Business model
Management Report
Combined
Jan
Q= < 49 >
Further information
Consolidated Financial Statements
Combined Management Report
Business focus and strategy
91 Manufacturing sites
92 Internal management system
95 Sustainability at Infineon
96 The Infineon share
Further information
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
Management Board and
Supervisory Board
of the German Commercial Code (HGB)
128
128 Corporate Governance
124 Overall statement on Infineon's financial condition
125 Infineon Technologies AG
112 Risk and opportunity report
Outlook
Review of liquidity
105
103 Review of financial condition
99 Review of results of operations
99 Group performance
Information pursuant to section 289a, paragraph 1,
and section 315a, paragraph 1,
20000
109 Report on outlook, risk and opportunity
109
Infineon Technologies | Annual Report 2021
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 >
Further information
Business focus and strategy
Human Resources strategy
Consolidated Financial Statements
Management Board and
Supervisory Board
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
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.
10000
Long-term financial targets underline
our growth ambitions
Combined Management Report
Combined Management Report
Business focus and strategy
Group strategy
Further information
www.infineon.com/csr_reporting ☐ www.infineon.com/hrreport
Further information, including detailed statistics, is available in the 2021 Sustainability
Report and the 2021 Human Resources Report.
Consolidated Financial Statements
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.
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.
Q = < 48 >
Further information
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.
Combined Management Report
← Q = < 47 >
Business focus and strategy
Human Resources strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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.
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.
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.
Human Resources strategy
Consolidated Financial Statements
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,
Free Cash Flow from continuing operations was a positive amount of €1,574 million
in the 2021 fiscal year (2020: negative €6,727 million) and arose mainly due to the
high level of net cash provided by operating activities from continuing operations
totaling €3,063 million (2020: €1,817 million). The figure reported for the previous
fiscal year was influenced primarily by the net payment (i.e., net of cash and cash
equivalents acquired) amounting to €7,433 million used to acquire Cypress.
Q = < 57 >
Further information
Consolidated Financial Statements
Combined Management Report
2021 fiscal year
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
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).
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 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.
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 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.
Business focus and strategy
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).
12
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
10
2010
● 13% €1,397 million Connected Secure Systems
0% €12 million Other Operating Segments,
Corporate and Eliminations
2011
Dividend payment of €0.27 per share planned
● 29% €3,268 million Power & Sensor Systems
81.053 4.35
17 62.985 2.07
3 37.278 1.14
44% €4,841 million Automotive
2012
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
2021 fiscal year
Consolidated Financial Statements
Further information
Q = < 55 >
2021 fiscal year
AS
94.107 0.73
21.744 5.63
13.361 1.82
-2.09▾
+1.17 A
+0.72 A
-0.51▼
158.037 1.581x 375.000
916.598 5.032% 621.000
634.270 3.984 363.200
538.014 2.416% 748.000
+3.16A 692.360 0.657 905000
-1.23 237.981 0.183 832.0
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)
year
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.
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.
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 >
14% €1,542 million Industrial Power Control
Further information
Combined Management Report
2021 fiscal year
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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
> Dividend set to be raised to 27 cents per share
Consolidated Financial Statements
2013
Embedded control
2015
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
✓
✓
✓
R10
✓
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.
Control of
✓
Memories for
specific applications
Connectivity
✓
くくく
power semiconductors
Power semiconductors
Security
Software
✓
✓
Differentiating
✓
in-house manufacturing
Infineon Technologies | Annual Report 2021
✓
Q = < 59 >
Further information
Consolidated Financial Statements
1 Proposal to the Annual General Meeting to be held on 17 February 2022.
25
27
27
22
27
22
22
271
2016
2017
2018
2019
2020
2021
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Combined Management Report
The segments
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
consumer-oriented applications and power supplies in general. Also falling within
the sphere of responsibility of the Power & Sensor Systems segment are activities
in the area of radio frequency and sensor-based applications, including the collection
of sensor data and interaction with machines and devices. Microcontrollers for
non-automotive electronic applications, connectivity solutions and activities relating
to traditional and new security applications are bundled in the Connected Secure
Systems segment.
Infineon comprises four segments, each of which derive their long-term focus from
the Group strategy. All the Group's activities relate to one of four key growth areas -
energy efficiency, mobility, security, and IoT and big data. The segments are each
responsible for particular areas that reflect their core competencies. The Automotive
segment is responsible for the semiconductor business for automotive electronics,
including activities with memory products. The Industrial Power Control segment
concentrates on power semiconductors primarily used in industrial applications and
renewable energy, while the Power & Sensor Systems segment addresses more
2014
COC
The segments
Q = < 58 >
Further information
Consolidated Financial Statements
Combined Management Report
The segments
Business focus and strategy
Co
[ R09
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.
Asustek
Business focus and strategy
Combined Management Report
Review of the semiconductor industry
Consolidated Financial Statements
Further information
Q = < 52 >
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.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Consolidated Financial Statements
Management Board and
Supervisory Board
Further information
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$13.035 billion and thus oust Infineon from the 8th place it held in 2019. Of
the 20 largest semiconductor companies, the following are direct competitors of
Infineon in at least one product category: Samsung, Qualcomm, Texas Instruments,
STMicroelectronics, NXP, Renesas and Analog Devices.
In December 2020, Taiwanese wafer manufacturer GlobalWafers announced its acqui-
sition of German wafer manufacturer Siltronic for around €4.4 billion. In February 2021,
GlobalWafers secured more than 50 percent of the shares of Siltronic, thus reaching
the minimum acceptance threshold. The transaction is expected to be completed in
the first half of the 2022 calendar year. Infineon purchases wafers from both companies.
In February 2021, Japanese semiconductor manufacturer Renesas announced its
acquisition of Dialog Semiconductor for around €4.9 billion. The transaction was
completed on 31 August 2021. Infineon is a competitor of both companies in some
product categories.
Infineon Technologies | Annual Report 2021
C10 Top 20 semiconductor manufacturers in the 2020 calendar year
Revenue in billion US$
76.2
56.9
26.5
22.2 19.4 18.0-14.1-13.0 11.2 11.1 10.8 10.2 9.6
10% market share
5% market share
Q = < 53 >
_____11211.1 10.8 10.2 9.6 8.7 8.4 8.4 8.2 6.9 6.7 5.7
Following the completion of backend manufacturing, the products are dispatched
and sent to customers via regional distribution centers.
1020
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Business model
Consolidated Financial Statements
Further information
Q = < 50 >
Business model
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.
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
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.
Further information
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).
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).
C09 The main stages of the semiconductor value chain
Frontend
manufacturing
Backend
manufacturing
In-house
manufacturing
In-house
manufacturing
Design
Distribution
center
Customer
by foundry
partners
by
sub-contractors
Infineon Technologies | Annual Report 2021
Q = < 51 >
Intel
Samsung
SK Hynix
15% Asia-Pacific (excluding China, excluding Japan)
58% Greater China
•
7% Japan
● 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
20.0
Apple
Huawei
Samsung
Lenovo
Dell
10% Europe, Middle East, Africa
Xiaomi
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
OPPO
Panasonic
Bosch
Intel
Sony
Continental
Western Digital
Amazon
Vivo
HP
C11 Global semiconductor sales in the 2020 calendar year by region
(total market size US$473 billion)
42.8
Infineon Technologies | Annual Report 2021
Micron
Qualcomm
Broadcom
Texas Instruments
Nvidia
Infineon
MediaTek
Kioxia
STMicroelectronics
AMD
Frontend contract manufacturers are not included in this market research.
Sony
NXP
HiSilicon
Western Digital
Apple
Renesas
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
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
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
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
Q = < 54 >
Further information
ZTE
Consolidated Financial Statements
Business focus and strategy
Management Board and
Supervisory Board
R01
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.
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.
Analog Devices
Combined Management Report
Review of the semiconductor industry
The global market for semiconductors without microprocessors, DRAM and NAND
flash memory grew by 16.7 percent, from €236.673 billion in the 2020 fiscal year to
€276.293 billion in the 2021 fiscal year, R08. In the same period, Infineon's revenue
increased by 29.1 percent. Cypress has been fully consolidated since 16 April 2020.
This limits the comparability of the current figures with those of the prior year.
Power Control
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).
14.2%
13.8%
15.9%
#1
#1
#1
#2
#2
#1
Position
C18 Market share of Infineon for automotive semiconductors by region in the 2020 calendar year
R02
目 R02
Comparability limited due to differing reporting period (fiscal year-end) and currency.
7.5%
8.5%
8.3%
10.9%
13.2%
STMicroelectronics
Texas Instruments
Renesas
NXP
Infineon
C17 Market share for automotive semiconductors in the 2020 calendar year
⚫9% Memory
⚫33% Other
22% Power
13% Sensors
23% Processors
13.3%
0
10.8%
World North America Europe
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.
Particularly the purchase of electric vehicles showed a sharp increase in demand. This
turn around, together with continuing high levels of demand for other semiconductor
products in other sectors, led to an industry-wide chip shortage. Pandemic-related
restrictions on the manufacturing capacity at our frontend and backend manufacturing
partners exacerbated the difficult supply situation.
2021
2020
Segment Result
147
792
Revenue
3,521
4,841
€ in millions
C19 Revenue and Segment Result of the Automotive segment
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.
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).
In the 2021 fiscal year, the Segment Result was €792 million, an increase of 438.8 per-
cent compared with the Segment Result for the previous fiscal year of €147 million.
Based on revenue, the Segment Result Margin was 16.4 percent (previous year:
4.2 percent). C19
In the Automotive segment, Infineon generated revenue in the 2021 fiscal year of
€4,841 million, an increase of 37.5 percent compared with the figure for the previous
fiscal year of €3,521 million. Cypress was fully consolidated with effect from 16 April
2020, and therefore the comparability of the current-year figures with the prior-year
figures is limited. The segment contributed 44 percent of Infineon's Group revenue.
Review of the Automotive segment
in the 2021 fiscal year
Q = < 64 >
Further information
Consolidated Financial Statements
Combined Management Report
The segments
Automotive
Business focus and strategy
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Japan
Korea
China
目 R02
7% Korea
6% Other
● 15% Japan
18% North America
Infineon supports the trend towards increasing connectivity. This includes both the
communication between the various control units within the vehicle (for example,
via CAN, CAN FD and FlexRay™) and the communication with other vehicles (vehicle-
to-vehicle) and with the cloud (vehicle-to-infrastructure). It also includes the connection
of mobile devices via Wi-Fi and Bluetooth for in-cabin infotainment. In the area of
human-machine interaction, switches, buttons and dials will increasingly be replaced
by touch pads. Human-machine interaction also includes head-up displays.
The automotive industry continues to experience a period of profound upheaval. The
car of the future will be a purely electric vehicle, assisted, fully connected and always
online. Even if this will not yet apply to every newly produced car by the end of the
current decade, we are still seeing an acceleration in structural change compared
with previous decades. The reasons for this are the desire for vehicles which are ever-
safer, ever-smarter and increasingly connected and the need for compliance with
ever-stricter emission standards and therefore for sustainable mobility. This is evident
from automotive megatrends: electromobility, automated driving, connectivity and
security. The greatest contribution to this process will come from vehicle electronics
and consequently from semiconductor solutions. We are contributing to the change
and want to benefit disproportionately from these trends. We have a broad product
portfolio of automotive semiconductor solutions. With this portfolio and a high level
of system expertise, Infineon can handle a wide range of automotive applications.
These include powertrain, assistance systems, safety, comfort electronics, digital
instrument clusters, infotainment applications and security.
Strategic focus
Q = < 61 >
Further information
Consolidated Financial Statements
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
Industrial
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.
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
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
⚫ 20% China
• 34% Europe
0
by region
by product category
year
C16 World market for automotive semiconductors in the 2020 calendar
US$34.960 billion (minus 6.0% compared with 2019)
In both regions with the greatest decline in market size, North America (9.5 percent)
and Japan (9.4 percent), Infineon was able to significantly outperform the market,
gaining market share, and in each case moving up one position. This means that
Infineon is now at least in 2nd position in all regions, C18. The trend in Japan, where
the company has quadrupled its market share over the last ten years, is particularly
encouraging.
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
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™.
Consolidated Financial Statements
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
Combined Management Report
The segments
Automotive
Our system understanding, commitment to quality and the excellent service we pro-
vide all create added value for our customers and help them grow their businesses.
In the 2021 fiscal year, we again received awards from several leading automotive
manufacturers, in particular, recognition of our sustainable actions as well as excellent
cooperation during this period of chip shortages. From the Chinese car manufacturer
Great Wall Motor, for example, we received the Best Cooperation Contribution Award
for exceptionally customer-oriented cooperation. A second example is the Excellent
Contribution Award which we were given by FinDreams Technology Company, a sub-
sidiary of the Chinese automotive manufacturer BYD. Thirdly, we received the Global
Supplier Sustainability Award from the German automotive supplier Bosch for our
climate-friendly actions. See the chapter “Group strategy”, □ p. 41. |
13.2%
Management Board and
Supervisory Board
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
Consolidated Financial Statements
Further information
Q = < 68 >
Industrial Power Control
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
Infineon
Fuji Electric
Mitsubishi
onsemi
Toshiba
15.6%
9.3%
7.7%
5.5%
Comparability limited due to differing reporting period (fiscal year-end) and currency.
C21 Market share for IPMS in the 2020 calendar year
Mitsubishi
onsemi
Infineon
Fuji Electric
Semikron
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).
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.
Products in the iMOTION™ family are used in all types of home appliances, from
hairdryers and washing machines to air conditioning units.
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.
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.
Applications p. 241
Industrial Power Control
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
The segments
Consolidated Financial Statements
Further information
Q = < 66 >
Strategic focus
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.
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.
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.
29.3%
Two examples of this are the following:
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 Technologies | Annual Report 2021
406
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
The segments
Industrial Power Control
Consolidated Financial Statements
Further information
Infineon Technologies | Annual Report 2021
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 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
32.9%
Q = < 67 >
11.6%
11.2%
C23 Revenue and Segment Result of the Industrial Power Control segment
€ in millions
1,542
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.
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.
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.
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.
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.
Infineon Technologies | Annual Report 2021
2021
€1,542 m
REVENUE
Q = < 65 >
Further information
Consolidated Financial Statements
Industrial Power Control
Combined Management Report
The segments
€275 m
RESULT
SEGMENT
17.1%
Business focus and strategy
2020
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.
Revenue in the transportation sector saw a significant decline. As a result of the corona-
virus pandemic, passengers are using public transportation much less than usual. In
many regions, expansion of transport capacity was postponed. New business areas
such as the electrification of buses, trucks and farm machinery were unable to offset
this decline.
in 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.
5.5%
C22 Market share in IGBT modules in the 2020 calendar year
Infineon
Fuji Electric
36.5%
Infineon Technologies | Annual Report 2021
11.4%
Mitsubishi
9.7%
Semikron
5.8%
3.3%
Vincotech
R03
Review of the Industrial Power Control segment
Industrial Power Control
Q = < 69 >
Further information
Combined Management Report
The segments
Business focus and strategy
Consolidated Financial Statements
Management Board and
Supervisory Board
目 R03
Comparability limited due to differing reporting period (fiscal year-end) and currency.
目 R03
Comparability limited due to differing reporting period (fiscal year-end) and currency.
Infineon Technologies | Annual Report 2021
REVENUE
Consolidated Financial Statements
Combined Management Report
The segments
Power & Sensor Systems
€3,268 m
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.
Management Board and
Supervisory Board
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.
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.
Further information
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.
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.
Business focus and strategy
Q = < 70 >
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
€823 m
Infineon Technologies | Annual Report 2021
Infineon Technologies | Annual Report 2021
I'I
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.
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.
Strategic focus
← Q = < 71 >
Further information
Consolidated Financial Statements
Combined Management Report
The segments
Power & Sensor Systems
Business focus and strategy
Management Board and
Supervisory Board
Applications p. 242
The Power & Sensor Systems segment encompasses
a large selection of technologies relating to power
semiconductors, radio frequency and sensors. We use
these technologies to make electronic devices like
power supplies, power tools, lighting systems, mobile
devices and industrial and consumer applications
smaller, lighter and more energy-efficient, as well as
to develop new functionalities. We are drawing on
the next generation of new, innovative solutions based
on Si, SiC and GaN for applications in the areas of
5G, big data, power supplies and adapters, battery-
powered devices, and renewable energy. Our portfolio
of products for power supplies, comprising control ICs,
drivers and MOSFET power transistors, addresses
the two key requirements of the market: efficiency
and power density. Infineon is the clear market leader
in the global Si MOSFET market, C24. Our high-
precision sensor solutions give loT devices "human
senses", enabling them to react intuitively to their
surroundings. The portfolio is rounded off with USB
controllers and radio frequency products such as
RF antenna switches, RF power transistors and GPS
low-noise amplifiers.
Power & Sensor
Systems
SEGMENT
RESULT
2020
Combined Management Report
The segments
Connected Secure Systems
Management Board and
Supervisory Board
Increasing digitalization unlocks new opportunities but increases the risks of hacker
attacks or the violation of privacy if suitable countermeasures are not taken. With
our expanded product portfolio and prefabricated solution components, we have
strengthened our position, and we confirm our strategy, which is to support our
customers in the best way we can by providing easy-to-use solutions for system
integration and ensuring a short time-to-market.
In addition to its role as an independent business unit, the Connected Secure Systems
segment fulfills a second important function within the Group. As a competence
center, it helps the other three segments to integrate security, microcontrollers,
connectivity and software as functions in their system solutions and thus to create
additional potential differentiation between them and their competitors.
Strategic focus
The digital transformation is penetrating more and more areas of daily life. Digitaliza-
tion is a key aspect of many applications. As a result of the acquisition of Cypress, we
were able to expand our product portfolio and our competence portfolio in this area
to include microcontrollers and connectivity solutions. IoT in particular offers us new
opportunities for growth. Starting with consumer loT, we will also continue to expand
our loT industrial applications. It is precisely these applications that require greater
integration of security solutions into the design of intelligent devices, connected
vehicles, companies and Industry 4.0 factories. The security aspect will continue to
be imperative to provide defense against attacks - whether these involve theft of
intellectual property or private data, fraud or manipulation.
One of the main reasons for the acquisition of Cypress was to strengthen our compe-
tencies and expand our portfolio in the area of microcontrollers (MCUs). Cypress'
microcontroller business was brought together with Infineon's XMC™ family under
one roof. This structure is helping us to combine forces and derive mutual benefit
from the experience, knowhow, methods and tools brought to the table by both
former parts of the business. Cypress' PSOC™ family of microcontrollers have tradi-
tionally had a greater presence in consumer and IoT applications. The strength of
the XMCTM family of microcontrollers, on the other hand, lies in industrial applications
such as motor drives, automation and communication, power conversion and LED
lighting. Combining the two enables us to benefit from the synergies generated.
Working together with other segments, we offer our customers tailored system
solutions. In line with our strategic approach “Product to System", we incorporate
security functions for example into special microcontrollers. We are thus expanding
our portfolio, which has until now consisted of specialized security ICs, to include
microcontrollers enhanced with security functions. This enables us to adapt even
more specifically to the level of security desired by the customer. These are new
features that differentiate us from our competitors and therefore provide us with
growth opportunities.
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Consolidated Financial Statements
Further information
Q = < 77 >
Our product range now also includes hardware and software for connectivity solu-
tions, developed by Cypress specifically for loT applications. The portfolio comprises
components for Wi-Fi, Bluetooth and BLE transmission standards. Together with
industrial microcontrollers, these can be included in complete solutions not only for
customers in the Connected Secure Systems segment, but also for customers in the
Industrial Power Control and Power & Sensor Systems segments. To do so, products in
the Industrial Power Control and Power & Sensor Systems segments are assembled
in a manner specific to the application and combined using software components to
create a complete solution in a compact form factor.
Cypress has had years of experience in software development and system knowhow,
and it is precisely this that enables us to develop reference designs even faster for
easy-to-use applications. This approach is important, because in the future there will
be more and more customers whose products are acquiring loT capabilities for the
first time (i.e., they are "connected"), yet whose expertise does not lie in connecting
their products to the internet. We want to be able to offer these customers turnkey
reference designs that are tailor-made for their specific projects. As far as possible,
we provide all the necessary semiconductor components and the software required
to control our components. We therefore offer our customers ModusToolbox™, a
software and development environment that is intuitive to use. ModusToolbox™M
provides a modern software development approach based on an open-source system
with prefabricated tools and seamless integration into the applications of third-party
suppliers, so that developers can use the tools they wish and therefore easily design
products tailored to their application. The application software remains the customer's
responsibility.
Management Board and
Supervisory Board
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.
← Q = < 76 >
2021
Further information
Combined Management Report
The segments
Connected Secure Systems
Business focus and strategy
Combined Management Report
The segments
Connected Secure Systems
Consolidated Financial Statements
Further information
Q = < 75 >
SEGMENT
RESULT
€182 m
REVENUE
€1,397 m
Connected
Secure Systems
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.
Applications p. 243
Management Board and
Supervisory Board
Business focus and strategy
Consolidated Financial Statements
Business focus and strategy
目 R05
Consolidated Financial Statements
Comparability limited due to differing reporting period (fiscal year-end).
2.6%
NJRC
3.5%
Omron
6.8%
MEMSensing
Infineon Technologies | Annual Report 2021
38.3%
44.2%
Knowles
Infineon
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.
R03
5.8%
目 R03
Management Board and
Supervisory Board
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.
823
2,650
3,268
€ in millions
C27 Revenue and Segment Result of the Power & Sensor Systems segment
In the 2021 fiscal year, the Segment Result was €823 million, an increase of 29.4 percent
compared with the figure for the previous fiscal year of €636 million. The Segment
Result Margin improved from 24.0 percent in fiscal 2020 to 25.2 percent in the 2021
fiscal year. The main reason for the significant growth in revenue was the sustained
rise in demand for semiconductors in a variety of applications. Another reason was
the consolidation of Cypress' USB component business for the first time for a full
fiscal year. The positive revenue trend also led to a further slight improvement in the
Segment Result Margin.
In the Power & Sensor Systems segment, Infineon generated revenue in the 2021 fiscal
year of €3,268 million, an increase of 23.3 percent compared with the figure for the
previous fiscal year of €2,650 million (which included the contribution to revenue made
by Cypress from 16 April 2020 onwards), C27. The segment contributed 29 percent
of Infineon's Group revenue.
Review of the Power & Sensor Systems segment
in the 2021 fiscal year
Power & Sensor Systems
← Q = < 74 >
Further information
Consolidated Financial Statements
Combined Management Report
The segments
Business focus and strategy
R04
Combined Management Report
The segments
Power & Sensor Systems
6.4%
8.2%
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
Business focus and strategy
Management Board and
Supervisory Board
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.
< 72 >
Q =
Further information
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).
7.2%
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).
Infineon
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
Toshiba
STMicroelectronics
onsemi
C24 Market share for MOSFETs in the 2020 calendar year
Embedded security applications provide
Revenue
Segment Result
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.
Revenue
130
182
Segment Result
Demand for connectivity solutions and microcontrollers remained strong. People
spending more time at home was one of the contributory factors here. Demand for
Wi-Fi and Bluetooth components was driven by an increase in the penetration rate
of end devices for wearables and smart home applications and in the automotive
sector. Strong demand for microcontrollers was driven by industrial and consumer
applications. Of particular note here are HMI applications, wearables and battery-
powered applications.
The coronavirus pandemic has fueled the trend towards cashless and contactless
payment. The shift from purely contact-based cards to dual-interface cards, acceler-
ated by the pandemic, led to supply bottlenecks due to the high level of demand.
We made progress in the area of biometric cards. On the security side, we announced
a reference design for the next-generation biometric smart card architecture. This
enables fingerprint authentication with low latency, high accuracy and power efficiency.
The integration of the fingerprint sensor, and of the Secure Element, power manage-
ment and communications reduces the complexity of card manufacturing, which
shortens the time-to-market and lowers costs.
International travel started to pick up slowly in the second half of the fiscal year.
Demand for passports slowly began to stabilize as a result. In many towns and cities
around the world, the use of public transport declined due to multiple local lock-
downs and to working from home. As a consequence of this, we continued to see
weak demand for our transport and ticketing products.
Revenue from embedded SIMS (eSIMs), which are used in vehicles to make automatic
emergency calls, increased once again. Demand for eSIMs in industry is also growing
stronger, driven in particular by progress with Industry 4.0. manufacturing machinery,
tools and other technical devices are increasingly connected and can therefore be
monitored or serviced and maintained remotely.
Authentication products are gaining in importance, driven by the trend for working
from home. There was a high level of demand in the 2021 fiscal year for a wide range
of applications in this field, including printers and battery authentication.
Infineon Technologies | Annual Report 2021
2020
2021
17.2%
Comparability limited due to differing reporting period (fiscal year-end) and currency.
Microchip
1,397
STMicroelectronics
974
C31 Revenue and Segment Result of the Connected Secure Systems segment
Business focus and strategy
Management Board and
Supervisory Board
目 R01
12.7%
14.5%
14.7%
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
17.1%
Combined Management Report
The segments
Connected Secure Systems
Consolidated Financial Statements
← Q = < 79 >
Review of the Connected Secure Systems segment
in the 2021 fiscal year
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.
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
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.
€ in millions
Infineon
Further information
NXP
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).
Renesas
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
STMicroelectronics
CEC Huada
Market position
20.4%
24.6%
19% Mobile communications (incl. standard SIM, SWP SIM)
14% Government ID
37% Payment
. 9% Authentication
8% Embedded SIM
13% Others (incl. ticketing, transportation, access control, others)
Comparability limited due to differing reporting period (fiscal year-end) and currency.
目 R05
Infineon Technologies | Annual Report 2021
C30 Market share for microcontrollers in the 2020 calendar year
US$2.779 billion (minus 7.1% compared with 2019)
0
14.5%
Comparability limited due to differing reporting period (fiscal year-end) and currency.
17.1%
636
C29 Market share for security ICs (excl. NFC controller; excl. NFC embedded Secure Element)
in the 2020 calendar year by application
8.5%
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.
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.
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.
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.
> Infineon is able to control a large part of the supply chain itself.
› Close cooperation between chip design and manufacturing generally enables short
development times and a high level of flexibility.
> We use the opportunities presented by in-house manufacturing to develop new
materials to suit the needs of the market, such as SiC and GaN, which involves
close collaboration between manufacturing and development.
> Our manufacturing sites benefit from economies of scale. Our 300-millimeter thin
wafer production enables us to create differentiated products, is cost-effective and
ensures a high level of quality.
Start-up of the 300-millimeter factory in Villach
Mission Futre.
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
The relatively high proportion of in-house manufacturing has a number of advantages:
C32 R&D expenses
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Research and development
Consolidated Financial Statements
Further information
Q = < 80 >
Research and
development
easier, safer a greener
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.
Combined Management Report
Manufacturing
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.
€ in millions
Infineon Technologies | Annual Report 2021
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Manufacturing
Consolidated Financial Statements
Further information
Q = < 88 >
Manufacturing
In the 2021 fiscal year, our investments amounted to €1,497 million. This was an
increase of €398 million, or 36 percent, compared with the €1,099 million invested
in the previous year. This increase is slightly stronger than our revenue increase and a
result of a strong recovery in demand. Investments as a proportion of revenue increased
from 12.8 percent in the 2020 fiscal year to 13.5 percent in the 2021 fiscal year. Of the
total investments, €1,268 million related to property, plant and equipment (previous
year: €915 million) and €229 million to other intangible assets, including capitalized
development costs (previous year: €184 million).
Infineon Technologies | Annual Report 2021
C34 Investments
€ in millions
12.8%
1,497
1,099
2020
1 Property, plant and equipment and other intangible assets.
2021
13.5%
Investments
Percentage of revenue
Management Board and
Supervisory Board
Business focus and strategy
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
Infineon Technologies | Annual Report 2021
> increase efficiency through lower switching losses and line losses, and
13.0%
C33 Infineon owns the key components for xEV charging stations
AC power
AC-DC stage
DC-DC stage
Battery in XEV
CoolMOST
CoolSIC™
EiceDRIVER™
Driver ICs
Microcontroller
AURIX™, PSOC™, XMCTM
User
Human-machine
interface
Authentication
and
encryption
> reduce product costs per watt.
Infineon Technologies | Annual Report 2021
Si
GaN
Sic
Discrete IGBTs,
IGBT modules, CoolSiC™
Vehicle
OPTIGAT
New materials
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.
Sic
The market for SiC is growing at an extremely dynamic pace. Demand was initially
determined by industrial applications such as photovoltaic inverters, industrial
power supplies and the charging infrastructure for electric vehicles, but this is now
being surpassed by demand for automotive applications. Specifically, the new solu-
tions are being used for the drive train and onboard chargers.
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Research and development
Internal power supply
> Tokyo
› improve the power density of the charging station within specified dimensions,
> increase the power output to shorten the charging time,
1,113
H
2020
2021
13.1%
R&D expenses
Percentage of revenue
Management Board and
Supervisory Board
Business focus and strategy
Combined Management Report
Research and development
Consolidated Financial Statements
Further information
Q = < 81 >
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.
Patents
264
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.
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).
Research and development fields at Infineon
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.
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
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 = < 82 >
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.
In this way, the customer can
1,448
> Taipeh
> Le Puy-Sainte-
Taiwan
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
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.
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.
Due to its small size, the XENSIVT PAS CO2
can be integrated into ventilation or lighting
systems in smart buildings.
XENSIV PAS CO2
Connectivity solutions
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.
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
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.
Sensor technologies
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
Business focus and strategy
Combined Management Report
Research and development
Combined Management Report
Research and development
Further information
Business focus and strategy
R&D sites
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
in a socket using a compression frame for mechanical fixation.
Tonests
Module of a trapped-ion quantum chip assembled
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.
approaches and is developing both superconductive components and spin-based
systems in SiGe structures for future quantum computers.
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
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.
Quantum computers and post-quantum cryptography
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".
Innovative memory solutions
Q = < 86 >
Consolidated Financial Statements
Combined Management Report
Research and development
R&D sites
Business focus and strategy
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.
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.
IGI60F1414A1L
Infineon
CoolGaNT IPS
Microcontrollers
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.
factor are important. Another field of application is data centers, which have very
high requirements in terms of energy efficiency and power density.
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
GaN
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).
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.
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.
Q = < 83 >
Further information
Consolidated Financial Statements
processor architecture
Management Board and
Supervisory Board
Infineon Technologies | Annual Report 2021
Business focus and strategy
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.
Artificial intelligence
Developing our own software has other advantages. We can ensure the software and
hardware are a perfect match, thus optimizing performance, energy efficiency and
data security at the system level. We can generally differentiate our solutions from
those of our competitors not only through our hardware, but also through software
we have written ourselves and/or programmed algorithms.
The acquisition of Cypress brought us
for the first time a complete ecosystem,
including the ModusToolbox™ develop-
ment environment, software components
and an active developer community.
The Modus ToolboxTM comprises, among
other things, reusable firmware, which
makes programming Wi-Fi and Bluetooth
components, microcontrollers and
sensors significantly easier for the engi-
neers. In addition, we have launched
the Modus ToolboxTM ML. ML stands for
machine learning (i.e., artificial intelligence
methods).
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
Management Board and
Supervisory Board
> Hsinchu
Consolidated Financial Statements
Q = < 87 >
France
> Bristol
> Warstein
UK
> Warwick, RI
> San José, CA
> Regensburg
> Kulim
> Bucharest
> Neubiberg
> Milpitas, CA
Romania
> Martinsried
> Herlev
> Lynnwood, WA
Réparade
› Langen
Ireland
› Reigate
> Xi'an
> Shenzhen
> Shanghai
› Chengdu
› Nagoya
> Sendai
Japan
Greater China
Singapore
> Muntinlupa
Philippines
› Penang
> Melaka
> Ipoh
› Lviv
Ukraine
> Dublin
Further information
Denmark
> Erlangen
Austria
Europe, Middle East, Africa
> Irvine, CA
> Hazlet, NJ
> El Segundo, CA
> San Diego, CA
> Colorado Springs, CO
› Chandler, AZ
> Beaverton, OR
> Austin, TX
> Andover, MA
USA
> Richmond, BC
Canada
America
› Graz
> Lexington, KY
Germany
Israel
› Padua
› Leominster, MA
> Duisburg
> Villach
› Dresden
› Linz
Malaysia
> Seoul
Korea
› Bangalore
India
Asia-Pacific
› Pavia
Italy
> Netanya
› Augsburg
> Cork
Dividend of
35 cents
(10)
12.6
(1,798)
12.2
(1,985)
development expenses
Research and
Investments4
21
43.1
6,131
45.5
7,413
Gross profit/Gross margin
Depreciation and amortization
Adjusted Free Cash Flow as percentage of revenue
Adjusted Free Cash Flow5
operations key data
Selected results of
€ in millions (unless otherwise stated)
Corporate and Eliminations
Selling, general and
(1,599)
30
(1,869)
(1,301)
7
(2,441)
(2,264)
(1)
3,986
3,962
Net cash position
39
2,845
3,948
Operating profit
Gross cash position4
(2)
11.0
(1,565)
9.8
administrative expenses
1,158
(10)
20
2,205
Green Industrial Power
Cash flows from operating activities
26
6,516
51
8,242
Automotive
Selected liquidity key data
15
14,218
16,309
Revenue by segment
Change in
%
€ in
millions
millions
€ in
2022
2023
13
0
1,790
23
0
18
Other Operating Segments
Free Cash Flow4
12
13
1,822
13
2,046
Connected Secure Systems
Cash flows from financing activities
Cash flows from investing activities
(7)
29
4,070
23
3,798
Power & Sensor Systems
from continuing operations
13
Change in
%
1,648
1,638
56,194
58,590
Infineon employees (in total figures)
35
1.97
2.65
in € - diluted²
38
29,574
40,879
Market capitalization?
Adjusted earnings per share
400 bp
12.6%
16.6%
Return on Capital Employed (ROCE)4
44
1.65
2.38
4
Diluted earnings per share in €
Dividend per share in €³
0.32
Infineon
€16.309 bn
+15%
Revenue
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).
Infineon at
a glance
5 α = < 3 →
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
7 The calculation is based on unrounded figures. Own shares were not taken into consideration for the calculation of market capitalization.
6 Equity ratio = Total equity/Total assets.
5 See the chapter "Review of liquidity" for definition. p. 55 f.
4 See the chapter "Internal management system" for definition p. 37 ff.
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.
2 See the chapter "Review of results of operations" for definition. p. 52
Infineon | Annual Report 2023
1 Percentage changes of more than +/-99.5% are shown as "+++" or "---" in the tables in the Annual Report.
9
0.35
(30)
440 bp
59.9%
3,137
Profit (loss) for the period
41
(1,945)
(1,143)
(3)
3,717
3,590
Change
in %
As of 30 Sep-
tember 2022
tember 2023
As of 30 Sep-
30
2,310
2,994
5
1,664
1,754
10.0%
2,179
55.5%
44
Selected financial condition key data
Equity ratio
44
1.65
2.38
Basic earnings per share in €
14
14,944
17,044
Total equity
30
23.8
3,378
27.0
4,399
Segment Result Margin
6
26,912
28,439
Total assets
Segment Result/
revenue
45
€ in
millions
Five core applications are particularly strong drivers for our business: electromobility,
renewable energy, automated driving, data centers - propelled by the ever-increasing
use of artificial intelligence - and IoT. These applications will account for around
60 percent of our expected revenue growth over the coming years. So that Infineon
can make the most of these major growth opportunities, we are setting the course
and laying the groundwork early on.
Investments in manufacturing capacities and security of supply
will set Infineon up for long-term growth
Our manufacturing strategy is based on clear principles. We focus on expanding our
in-house manufacturing in those areas in which added value for our customers
and differentiation for Infineon is created. This is the case, for example, for power
semiconductors and sensors. However, in the case of highly integrated digital
products such as microcontrollers and connectivity and security components, we
prefer to work together with contract manufacturers, as the design and software
are the main sources of differentiation in those areas. We also pursue this strategy
when making our investment decisions.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Letter to shareholders
Combined Management Report
Consolidated Financial Statements
Further information
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
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.
Further information
Digitalization is a crucial lever for our company. I am very much looking forward to
working together with Elke Reichart. She will bring new perspectives and impetus to
the Management Board team and use her extensive experience to help lead Infineon
into an even more successful future.
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.
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.
in % of
Combined Management Report
Consolidated Financial Statements
Further information
5 Q = 4 5 →
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.
employees
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.
Combined Management Report
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
Management Board and Supervisory Board
Letter to shareholders
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.
Infineon | Annual Report 2023
We are making Infineon CO2-neutral by 2030
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
With this acquisition, we are strengthening our position as a provider of machine
learning solutions, complementing our range of embedded Al solutions. This will
enable us to transfer the capabilities of machine learning, which have until now been
used mainly in large server farms, to our microcontrollers.
Artificial intelligence also offers Infineon huge growth potential in the area of power
systems. More and more data are being recorded, processed, stored and linked. To
make the data usable for different applications, the major cloud computing providers
are increasingly employing generative Al. As the example of ChatGPT shows, large
language models (LLMs) have the potential to take digitalization to a completely new
level.
In the coming years, Al will be used in more and more application areas. The volume
of data to be processed and the computing power required as a result will mean
a significant increase in the quantity and value of the semiconductors needed in
the data center servers. Energy-efficient power stages help reduce power losses and
cooling efforts This allows operators to significantly reduce their costs – and avoid
CO2. Demand is growing strongly. We offer highly energy-efficient power solutions
for the entire supply chain, from the grid to the central processor (GPU), making a
broader use of Al possible. Green computing is an ideal application area for Infineon.
This is a good example of how decarbonization and digitalization are closely linked
with one another.
Networks, data centers, servers and the IT infrastructure form the backbone of digi-
talization. Another crucial element of the loT is wireless connectivity between end
devices. In October 2023, we acquired the company 3db Access, a move designed to
enhance our skills in this area as well. The startup based in Zurich (Switzerland) is
a pioneer in energy-efficient ultra-wideband (UWB) technology. UWB technology can
be used to precisely determine positions and distances while being robustly protected
against signal interference. This makes it extremely attractive for many loT applications.
These include secure access to vehicles and buildings, indoor navigation and pres-
ence detection of people in rooms. UWB complements our connectivity technologies
(Wi-Fi, Bluetooth®/ Bluetooth® Low Energy and NFC) and offers Infineon additional
opportunities in an interesting growth market.
Besides the targeted enhancement of our technological skills through acquisitions,
we are rapidly advancing with the company's research and development activities.
The focus here is the benefit provided to customers. Our aim is to roll out differentiat-
ing solutions at an even faster rate. It is therefore crucial that we recognize product
and customer requirements at an early stage and that we understand our customers'
systems. Our “from product thinking to system understanding” approach, which
we have applied for many years, has proved its worth. Given the growing number of
applications served by Infineon, this approach is now more important than ever.
Particularly in application areas that are new to Infineon, we work closely together
with key customers on development. Our teams develop new solutions in tandem
with customers in an iterative process. By exchanging ideas directly, they learn to
understand customer and market requirements even better and more quickly and
can therefore offer tailor-made system solutions within a short period of time.
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.
58,590
Management Board and Supervisory Board
Letter to shareholders
€4.399 bn
±27.0%
List of abbreviations
Financial calendar 2024
185
184
Infineon ❘ Annual Report 2023
172 Responsibility Statement by
the Management Board
173 Independent Auditor's Report
180 Applications and product range
Further information
82 Corporate Governance
87 List of references
79 Infineon Technologies AG
Infineon | Annual Report 2023
172
Financial Statements
62 Report on outlook, risk and
opportunity
Notes to the Consolidated
95
Changes in Equity
Consolidated Statement of
93
58 Infineon on the capital market
61 Overall statement on Infineon's
financial condition
Consolidated Statement of Cash Flows
186 Imprint
92
Further information
Chart reference
revenue
in % of
€ in
millions
Fiscal year from 1 October to
30 September
2023
2022
30 September
Fiscal year from 1 October to
Infineon key data¹
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Contents
This interactive pdf is optimized for use
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Reference to external documents
(List of references on p. 87)
Reference
(Chart overview on p. 184)
Page reference
2023 fiscal year
184 Chart overview
12 Report of the Supervisory Board
to the Annual General Meeting
3 Infineon at a glance
89
20 Business model
88 Consolidated Financial Statements
19 Combined Management Report
2 Infineon key data
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Infineon Technologies AG
Annual Report 2023
per share planned
Segment Result
and Margin
27
Group strategy
Infineon
4 Management Board and
Consolidated Statement of
Profit or Loss
→
Financial Position
The Management Board
10
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91 Consolidated Statement of
40 Review of the semiconductor
4 Letter to shareholders
industry
Search
Q.
90 Consolidated Statement of
Comprehensive Income
Internal management system
37
Supervisory Board
Research and development
=
34
Other comprehensive income (loss), net of tax
3,137
2,179
958
44
17
310
310
(95)
17
(293)
(95)
(718)
Total items that may be reclassified subsequently to profit or loss
1,369
(293)
Cost of hedging
Notes
Total items that will not be reclassified subsequently to profit or loss
Currency effects
(2,087)
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
Consolidated Statement of Comprehensive Income
Change
€ in millions
2023
2022
absolute
in %
20
Profit (loss) for the period
Actuarial gains (losses) on pensions and similar commitments
Gains (losses) resulting from hedge accounting
9
Infineon | Annual Report 2023
5
20
(417)
20,22
82
Disposal (purchase) of own shares
20
Other contributions and distributions
20
23
Total contributions by and distributions to owners
105
(417)
Total transactions with owners
105
(417)
Transactions with hybrid capital investors
Compensations to hybrid capital investors
20
Total transactions with hybrid capital investors
Balance as of 30 September 2023
Infineon | Annual Report 2023
(417)
(417)
Share-based payment
82
Dividends
Transactions with owners
attributable to
hybrid capital
investors
AG
(23)
13,741
1,203
14,944
3,098
3,098
39
3,137
17
(718)
9
(4)
(696)
(696)
3,115
(718)
9
(4)
2,402
39
2,441
Contributions by and distributions to owners
82
10
10
Consolidated Statement of Changes in Equity
for the fiscal year ended 30 September 2022
€ in millions
Balance as of 1 October 2021
Total comprehensive income (loss), net of tax
Profit (loss) for the period
Other comprehensive income (loss), net of tax
Total comprehensive income (loss), net of tax
Transactions with owners
Notes
Share capital
Capital
reserves
Retained
earnings
Other reserves
Currency
effects
Hedges
2,612
6,513
1,407
(309)
3
2,140
310
1,369
5 Q = < 94 →
Further information
Consolidated Financial Statements
Combined Management Report
10
23
23
10
(302)
(302)
10
(302)
(302)
(39)
(39)
Total equity
(39)
2,612
6,684
6,204
342
16
(4)
(13)
15,841
1,203
17,044
Management Board and Supervisory Board
(39)
Equity
attributable to
shareholders
of Infineon
Technologies
Equity
30
Interests received
4
57
10
47
+++
Interests paid
4
(128)
(149)
21
14
Income taxes paid
6
(533)
(350)
(183)
(52)
Net change in cash and cash equivalents
Currency effects on cash and cash equivalents
Cash and cash equivalents at beginning of period
395
(330)
725
568
(1,869)
(1,301)
(39)
(93)
(15)
Payments for other financial liabilities
(25)
(25)
Change in provisions
17
(138)
89
(227)
Dividend payments
+++
20
(359)
266
(625)
Cash outflow to hybrid capital investors
Cash flows from financing activities
20
22
(417)
(351)
(66)
(19)
(39)
Change in other assets and other liabilities
4
(13)
(32)
Consolidated Financial Statements
Further information
Consolidated Statement of Changes in Equity
for the fiscal year ended 30 September 2023
€ in millions
Balance as of 1 October 2022
Total comprehensive income (loss), net of tax
Profit (loss) for the period
Other comprehensive income (loss), net of tax
Total comprehensive income (loss), net of tax
Notes
Share capital
Capital
reserves
Retained
earnings
Other reserves
Currency
effects
Hedges
2,612
6,579
3,506
1,060
7
Cost of
hedging
Own shares
Combined Management Report
Management Board and Supervisory Board
(1)
(20)
1,438
1,749
(311)
(18)
Cash flows from operating activities
from continuing operations
3,962
3,986
(24)
(1)
Cash and cash equivalents at end of period
19
1,820
382
27
Cash flows from operating activities
from discontinued operations
(2)
(6)
4
67
Cash flows from operating activities
3,960
3,980
1,438
640
2,450
4
International tax reform - pillar two model rules
(amendments to IAS 12)
1 January 2023
immaterial
IFRS 16
IFRS 17
Lease liability in a sale and leaseback (amendments to IFRS 16)
Insurance contracts including amendments to IFRS 17
1 January 2024
none
1 January 2023
none
IAS 21
Lack of exchangeability (amendments to IAS 21)
1 January 2025
none
Individual provisions of the amendments to IAS 12 (International tax reform - pillar
two model rules) published on 23 May 2023 are in principle applicable retrospectively
for the prior fiscal year as a result of the adoption by the EU on 8 November 2023.
No deferred taxes in connection with pillar two income taxes were recorded.
2 Summary of significant accounting policies
Basis of consolidation
The Consolidated Financial Statements presented here include the individual financial
statements of Infineon Technologies AG and its direct and indirect subsidiaries on
a consolidated basis. A subsidiary is defined as an entity, that is directly or indirectly,
controlled by Infineon Technologies AG.
Control exists when Infineon is subjected to variable returns arising from its engage-
ment with the subsidiary or has a right to such and has the ability to influence these
returns as a result of its power over the subsidiary. Power means that Infineon has
existing rights that give Infineon the ability to direct the relevant activities of the
subsidiary, that is the activities that significantly affect the aforementioned returns.
An entity is included in the Consolidated Financial Statements from the date on
which Infineon acquires control. Upon first-time consolidation of an entity, the
acquired assets and assumed liabilities are basically measured on the basis of their
fair value at the acquisition date. Any excess of consideration paid (purchase price)
over the share of the fair value of acquired assets, liabilities and contingent liabilities
is recognized as goodwill. Any excess of Infineon's share of the fair value of items
acquired over consideration paid is, after re-examination, recognized as a gain.
The financial statements of entities included in the Consolidated Financial Statements
are prepared using uniform valuation and accounting policies.
The balance sheet effects of intragroup transactions as well as gains and losses
arising from intragroup business relationships are eliminated on consolidation.
Infineon | Annual Report 2023
IAS 12
Management Board and Supervisory Board
a single transaction (amendments to IAS 12)
1 January 2023
The following new or amended Standards have been issued by the IASB and will
be relevant to Infineon from today's perspective. They have not been applied in the
Consolidated Financial Statements as of 30 September 2023 since they are not yet
mandatory or, alternatively, have not yet been endorsed by the EU. The new or
amended Standards are applicable for fiscal years beginning on or after their respec-
tive effective date. As a general rule, they are not applied before their effective date,
even if this is permitted for certain Standards.
Standard/amendment/interpretation
IAS 1
Classification of liabilities as current or non-current
(amendments to IAS 1)
IAS 7 and Supplier finance arrangements
(amendments to IAS 7 and IFRS 7)
Effective date
Impact on
Infineon
none
immaterial
1 January 2024
IAS 1
Disclosure of accounting policies
1 January 2023
(amendments to IAS 1 and IFRS Practice Statement 2)
1 January 2024
none
IFRS 7
IAS 8
IAS 12
Definition of accounting estimates (amendments to IAS 8)
Deferred tax relating to assets and liabilities arising from
1 January 2023
none
none
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
As of the reporting date, Infineon did not hold any financial assets with the intention
to collect contractual cash flows and sell them. Therefore, there was no allocation
of financial assets in the form of debt instruments to the category "fair value through
other comprehensive income".
Financial assets in the form of debt instruments that are measured at fair value
through profit or loss include all financial assets of Infineon whose cash flows are not
solely payments of principal and interest.
At Infineon, financial assets in the form of equity instruments are consistently
measured at fair value through profit or loss.
Net gains and losses, including interest and dividend income, from financial assets
that are measured at fair value through profit or loss (debt and equity instruments)
are recognized in the Consolidated Statement of Profit or Loss.
"Designated hedging instruments (cash flow hedges)" also belong to financial assets.
> Impairment of financial assets
Infineon determines an allowance for expected credit losses for financial assets in
the form of debt instruments that are measured at amortized cost or at fair value
through other comprehensive income. The calculation of the expected future credit
losses is generally determined by multiplying the probability of default by the carry-
ing amount of the financial asset (exposure at default) and the expected loss ratio
(loss given default).
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
Infineon determines allowances for expected credit losses primarily for cash and
cash equivalents, financial investments, trade receivables, and contract assets. The
expected credit losses are adjusted at each reporting date to reflect changes in credit
risk since the instrument was first recognized.
For cash and cash equivalents and financial investments measured at amortized cost,
Infineon determines credit losses expected in the next twelve months (twelve-month
expected credit loss) in accordance with the general approach. Due to their short-term
maturity, this corresponds to the lifetime expected credit losses. Infineon rates the
credit risk for cash and cash equivalents and financial investments as low. Infineon
assumes that a financial asset has a low credit risk if it has an investment grade rating
or a corresponding internal investment grade rating. In order to assess whether
there has been a significant increase in credit risk since initial recognition, Infineon
considers appropriate and robust information that is relevant and available without
disproportionately high levels of effort. This includes both quantitative and qualitative
information and analyses, which are based on the company's historical experience
and a sound credit assessment as well as forward-looking information. Macroeconomic
information is taken into account in the internal rating model (information on Infineon's
financial risk management is included in note 28, p. 150 ff.). Irrespective of the
above analysis, a significant increase in credit risk is assumed if a debtor is more
than 30 days overdue with the settlement of a contractual payment.
For trade receivables and contract assets, Infineon recognizes lifetime expected
credit losses using a simplified approach. The estimate of expected credit losses on
trade receivables and contract assets is based primarily on the analysis of customer
financial data, ratings, credit default spreads, past payment behavior of customers
and forward-looking information.
In the case of objective indications that expected future cash flows are affected, a
financial asset is classified as credit-impaired and adjusted to its individual value. As
a rule, this is the case for financial assets (unless it is a trade receivable) no later than
90 days after the due date. Trade receivables are not automatically determined as
credit-impaired in the event of a payment overdue by more than 90 days but always
on the basis of the individual assessment of credit management.
A default event occurs when Infineon concludes that the other party would most
likely not be able to meet the payment obligations, or not in full.
Financial assets are partly or completely written off, together with previously
recognized impairments, if there is no reasonable expectation of repayment. This is
generally the case when Infineon finds that the debtor does not have assets or revenue
sources that could generate sufficient cash flows to repay the amounts subject to
derecognition. Even when financial assets are written off, Infineon continues to con-
duct enforcement measures to recover them. Amounts recovered are recognized in
profit or loss.
Financial liabilities
Infineon classifies financial liabilities into the following categories: “Financial liabili-
ties measured at fair value through profit and loss” and “Other financial liabilities”.
Furthermore, "Designated hedging instruments (cash flow hedges)" belong to financial
liabilities.
Liabilities measured at fair value through profit or loss by Infineon include derivatives
to hedge currency risks for which hedge accounting is not applied.
Infineon | Annual Report 2023
4
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.
5 Q = < 97 →
A list of subsidiaries of Infineon Technologies AG is provided in note 30. □ p. 165 ff.
In the absence of control over an entity, but where the entity is a joint venture or an
associated company, this is included in the Consolidated Financial Statements using
the equity method (see note 5, ☐ p. 110 f.). Where objective indications of impairment
in the carrying amount of an equity-based investment are present, an impairment test
is carried out. If the carrying amount exceeds the recoverable amount, an impairment
loss is recognized in financial expenses.
Functional currency and foreign currency translation
The functional and reporting currency of Infineon Technologies AG is the euro.
Foreign currency transactions of subsidiaries are translated into the functional
currency of the relevant entity using the spot rate prevailing at the transaction date.
Monetary foreign currency assets and liabilities are translated at the spot rate
prevailing at the reporting date. Exchange rate gains and losses from the translation
of foreign currency transactions are recognized in the Consolidated Statement of
Profit or Loss.
The assets and liabilities of subsidiaries with functional currencies other than the
euro are translated into euros for consolidation purposes using the spot rate at the
end of the reporting period. Income and expenses of these entities are translated
using the average spot rate of the reporting period. All currency translation differences
are recognized directly in equity and presented as "Other reserves".
Recognition and measurement principles
Cash and cash equivalents
Cash and cash equivalents represent cash and all financial resources with a maturity
at acquisition date of three months or less. Cash equivalents partly include invest-
ments in money market funds. The valuation is recorded at amortized acquisition cost
or at fair value through profit or loss.
Financial instruments
Financial reporting rules issued not yet applied
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.
Purchases and sales of financial assets are recognized on the settlement date.
Financial assets are derecognized when the rights to receive payments from the
investments have expired or have been transferred and Infineon has transferred all
risks and rewards associated with ownership. Financial liabilities are derecognized
when they are extinguished, that is, when the contractual obligation is discharged,
canceled, or expired.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
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.
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.
Further information
Combined Management Report
Management Board and Supervisory Board
Total equity
hybrid capital
investors
AG
(28)
10,198
1,203
11,401
2,140
39
2,179
1,683
1,683
3,823
39
3,862
(351)
(351)
57
57
5
59
5
9
Equity
attributable to
Equity
attributable to
shareholders
of Infineon
Technologies
Own shares
Cost of
hedging
Contributions by and distributions to owners
Dividends
20
(351)
Share-based payment
20,22
57
Disposal (purchase) of own shares
20
Other contributions and distributions
20
5
9
66
(351)
Total transactions with owners
66
(351)
Transactions with hybrid capital investors
Compensations to hybrid capital investors
20
Total transactions with hybrid capital investors
Balance as of 30 September 2022
Infineon | Annual Report 2023
Total contributions by and distributions to owners
1,369
(280)
5
The Company's Management Board presented the Consolidated Financial Statements
on 21 November 2023.
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 2023:
Standard/amendment/interpretation
Effective date
Impact on
Infineon
IAS 16
Property, plant and equipment - income before intended use
(amendments to IAS 16)
1 January 2022
none
IAS 37
Onerous contracts - costs of fulfilling a contract
1 January 2022
(amendments to IAS 37)
IFRS 3
References to the conceptual framework
(amendments to IFRS 3)
1 January 2022
Annual IFRS improvement cycle 2018-2020
1 January 2022
none
immaterial
none
Infineon | Annual Report 2023
Deviations between amounts presented are possible due to rounding. Negative
amounts are presented in parentheses.
The Group's reporting currency is the euro ("€").
The fiscal year-end for both Infineon and the Company is 30 September of each year.
The Consolidated Statement of Profit or Loss is presented using the cost of sales
method.
(280)
(280)
(39)
(39)
(39)
(39)
2,612
6,579
3,506
1,060
7
(280)
(23)
1,203
14,944
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
Notes to the Consolidated Financial Statements
The Infineon Group ("Infineon”), comprising Infineon Technologies AG (hereafter
also referred to as "the Company”) and its direct and indirect subsidiaries, develops,
manufactures and markets a wide variety of semiconductors and semiconductor-
based solutions. The focus is on the key markets: automotive as well as industrial and
consumer-related segments. The product portfolio ranges from standard components,
to special components for digital, analog and mixed-signal applications, as well as
customer-specific solutions, together with the appropriate software. Research and
development sites, manufacturing facilities, investments and customers are located
mainly in Europe, Asia and North America.
Infineon Technologies AG is a listed company under German law and the ultimate
parent company of Infineon. The principal office of the Company is Am Campeon 1–15,
85579 Neubiberg (Germany). The Company is registered in the Commercial Register
of the local court of Munich (Germany) under the number HRB 126492.
1 Basis of the Consolidated Financial Statements
The Consolidated Financial Statements for the year ended 30 September 2023,
prepared by Infineon Technologies AG as the ultimate parent company, have been
prepared in accordance with International Financial Reporting Standards (“IFRS”)
and related interpretations effective as of 30 September 2023 as issued by the Inter-
national Accounting Standards Board ("IASB”) to the extent to which the IFRS and
interpretations have been endorsed by the European Union (“EU”). The Consolidated
Financial Statements also comply with the supplementary requirements set out in
section 315e, paragraph 1 of the German Commercial Code ("Handelsgesetzbuch"
or "HGB"). The aforementioned standards were complied with in full.
13,741
547
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
+++
5,545
1,500
27
Pensions and similar commitments
19
268
297
(29)
(10)
Goodwill
14
6,547
7,083
(536)
(8)
Deferred tax liabilities
6
254
371
(117)
(32)
Other intangible assets
13
7,045
2,977
13
(10)
1,161
124
11
Other current assets
12,27
959
625
334
53
Total current liabilities
5,669
5,588
81
Total current assets
10,692
9,453
1,239
13
Long-term financial debt
16
4,403
4,910
(507)
Property, plant and equipment
3,483
(506)
(15)
Non-current income tax receivables
2
2
Total non-current liabilities
5,726
6,380
(654)
(10)
Deferred tax assets
6
268
527
(259)
(49)
Total liabilities
11,395
11,968
(573)
(5)
Other non-current assets
27
389
314
(5)
(11)
203
192
Other non-current provisions
17
300
289
11
4
Right-of-use assets
15
405
405
Non-current lease liabilities
1,285
15
310
(1)
Investments accounted for
using the equity method
5
114
100
14
14
Other non-current liabilities
27
309
(5)
(4)
76
30 Sep-
tember
Notes
2023
30 Sep-
tember
2022
absolute
Change
in %
€ in millions
30 Sep-
Notes
tember
2023
30 Sep-
tember
2022
Change
absolute
in %
ASSETS
LIABILITIES AND EQUITY
Cash and cash equivalents
1,820
1,438
382
27
Short-term financial debt and current portion
€ in millions
Consolidated Statement of Financial Position
5 Q = < 91 →
Further information
Change in trade payables
+++
(4)
(4)
(713)
1,373
(2,086)
(696)
1,683
(2,379)
Total comprehensive income (loss), net of tax
Attributable to:
Financial investments
2,441
(1,421)
(37)
Shareholders and hybrid capital investors of Infineon Technologies AG
2,441
3,862
(1,421)
(37)
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
3,862
75
9
2,279
983
(184)
(19)
Current income tax receivables
63
58
5
9
Current income tax payables
418
356
62
17
Current lease liabilities
Contract assets
115
85
30
35
Other current liabilities
18, 27
བག
72
799
17
Current provisions
29
(509)
(22)
of long-term financial debt
16
330
752
(422)
(56)
Trade receivables
10
1,991
1,770
1,887
6
Trade payables
2,765
2,260
505
22
Inventories
11
3,974
3,081
893
104
24
1
20
property, plant and equipment
(99)
(12)
(87)
equipment and other assets
Dividends received
5
7
6
1
17
Cash flows from investing activities
123
(2,264)
16
107
+++
(2,441)
177
7
Impairments (reversals of impairments)
13, 14, 29
18
24
Proceeds from sales of property, plant and
Gains on disposals of
(33)
(686)
90
5
Income tax
6
782
537
245
46
Purchases of other intangible assets and
other assets
13
(255)
24
(257)
1
Interest result
4
98
131
(33)
(25)
Purchases of property, plant and equipment
13
(2,739)
(2,053)
2
1,664
(6)
Net change in related party financial
1,140
60
Change in trade receivables
10
(185)
(307)
122
40
Equity:
15
(86)
(84)
(2)
(2)
Change in inventories
11
(1,014)
(766)
(248)
(32)
Change in cash deposited as collateral
(2)
2
(1,893)
(753)
16
Repayments of long-term financial debt
Losses (gains) from sales of businesses,
interests in subsidiaries and investments
receivables and payables
25
19
19
+++
(30)
(30)
Proceeds from issuance of
Share-based payment
22
(25)
92
30
48
long-term financial debt
16
500
(500)
Other non-cash result
(46)
(45)
(1)
(2)
62
1,754
Payments for lease liabilities
13, 15
1,203
1,203
Total equity
17,044
14,944
2,100
14
Total assets
28,439
26,912
1,527
6
Total liabilities and equity
28,439
26,912
1,527
6
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
5 Q = < 92 →
Hybrid capital
43
10
(23)
Total non-current assets
17,747
17,459
288
2
Ordinary share capital
2,612
2,612
6,684
6,579
105
Consolidated Statement of Cash Flows
2
6,204
3,506
2,698
77
Other reserves
354
1,067
(713)
(67)
Own shares
(13)
Retained earnings
Change
Additional paid-in capital
€ in millions
236
4
Plus: profit (loss) from discontinued operations,
net of income taxes
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)
6
Depreciation and amortization
Change
75
5,502
5,738
+++
Proceeds from sales of financial investments
2022
9
Notes
absolute
€ in millions
Notes
2023
2022
absolute
in %
26
in %
9
44
958
2,179
Purchases of financial investments
3,137
Profit (loss) for the period
2023
7
407
(5,198)
(5,605)
Deferred taxes are calculated on temporary differences between the tax base and
the book value of assets and liabilities and on tax losses available for carry-forward
and tax allowances. By contrast, generally no deferred tax is recognized on initial
recognition of goodwill arising in connection with a business combination. Similarly,
deferred taxes are not recognized on the initial recognition of an asset or liability in
connection with a transaction that is not a business combination and which, at the
time of the transaction, affects neither the pre-tax income according to IFRS nor tax-
able profit. Deferred tax assets and liabilities are measured using applicable tax rates
and laws that have been enacted by the end of the reporting period or are about
to be enacted and are to be applied when the related deferred tax asset is realized,
or the deferred tax liability is settled.
Deferred tax assets with respect to deductible temporary differences, tax loss
carry-forwards and tax allowances that exceed deferred tax liabilities in respect of
taxable temporary differences, are only recognized to the extent that it is probable
that the relevant Group entity can generate sufficient taxable profit to realize the
corresponding benefit. Infineon reviews deferred tax assets for impairment at every
reporting date. The assessment requires management to make assumptions about
future taxable profits as well as other positive and negative influencing factors. This
assessment also takes into account insights from the company's five-year plan as
approved in the fiscal year just ended.
Deferred tax assets and liabilities are netted to the extent they relate to the same tax
authority and to the same taxpayer or a group of different taxpayers who are jointly
assessed for income tax purposes.
Taxes are recognized in the Consolidated Statement of Profit or Loss, with the
exception of taxes relating to items recognized directly in equity or in other compre-
hensive income.
Tax liabilities are recognized as short-term as they are due immediately, and Infineon
generally has no option of deferring their due date.
> valuation of inventory (see "Inventories”, p. 100, and note 11, □ p. 117),
For uncertain tax positions, a current tax liability is recorded; in the case of a tax
loss carried forward or a tax allowance, the respective deferred tax asset is reduced
accordingly. Estimates and assumptions must be made for the recognition and
valuation, for example, whether an assessment is made separately or together with
other uncertainties, whether a probable or expected value is used for the uncertainty,
and whether changes have occurred compared to the previous period. The detection
risk for the recognition of uncertain tax positions is not relevant. Recognition assumes
that the tax authorities investigate the matters in question and that they have all
relevant information.
Estimates and assumptions
The preparation of financial statements in accordance with IFRS requires management
to make estimates and assumptions that have an impact on the presented amounts
and the associated disclosures.
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
Infineon | Annual Report 2023
Management Board and Supervisory Board
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:
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 107 →
impact of climate change on the valuation results. For a detailed explanation of
climate-related risks and opportunities, we refer you to the risk and opportunity
report in the Combined Management Report as well as to the report "Sustainability
at Infineon" which can be found under the following link: www.infineon.com/cms/en/
about-infineon/sustainability/csr-reporting. The reference to the report “Sustainability at
Infineon" is not audited as part of the audit of the Consolidated Financial Statements
but is subject to a separate audit to obtain limited assurance and for certain non-
financial information reasonable assurance.
The current tax expense is calculated in accordance with taxation provisions in force
at the end of the reporting period.
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.
Combined Management Report
Grants
106 →
Infineon | Annual Report 2023
Management Board and Supervisory Board
> 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.),
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
Current and deferred taxes
Cost of goods sold
Research and development expenses
Costs of research activities are expensed as incurred. Costs for development activities
are capitalized if the results lead to a plan or design for the production of new or sub-
stantially improved products or for improved production processes. Capitalization
requires that the development costs can be measured reliably, the product or process
is technically and commercially feasible, and future economic benefits are probable.
In addition, Infineon must intend, and have the ability, to complete development and
use or sell the asset. The costs capitalized include the cost of materials, direct labor
and directly attributable general overhead expenses that serve to prepare the asset
for use. Such capitalized costs are presented as internally generated intangible assets
within "Other intangible assets” (see note 13, ☐ p. 118 f.). Development costs, that
do not fulfill the criteria for capitalization, are expensed as incurred. Capitalized
development costs are stated at cost less accumulated amortization and impairment
charges.
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
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
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.
> recognition and valuation of provisions (see “Other provisions” notes 17, □ p. 124,
and 24, p. 136 ff.) and
1 year
and after
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.
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.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
← 109 →
Notes to the Consolidated Financial Statements
Cost of materials and purchased services as well as
The increase in expected revenue is mainly due to capacity reservation agreements.
personnel expenses
2023
2022
absolute
in %
The Consolidated Statement of Profit or Loss includes the following expenses for
materials, purchased services, and personnel:
Europe
23,536
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.
21,703
Change
2,307
769
488
Less than
1 year
1,804
3 Acquisitions
Acquisition of 100 percent of the shares in GaN Systems Inc.
On 24 October 2023, Infineon acquired all of the shares in GaN Systems Inc. (“GaN
Systems"), which is based in Ottawa (Canada). GaN Systems develops GaN-based
power conversion solutions. With this acquisition, Infineon strengthens its leading
position in the power systems sector. The provisional purchase price is €828 million,
of which €825 million resulted in a cash outflow at the time of acquisition, and a
further €3 million will be paid later to former shareholders under a terminated stock
option program. According to the preliminary opening balance sheet, the net assets
acquired by the Company amounted to €57 million. The acquired assets mainly relate
to cash, inventories, rights of use under leasing arrangements, and property, plant
and equipment. Acquired liabilities primarily relate to trade payables and leasing
liabilities. The estimated excess of purchase price over assets acquired is around
€771 million. The purchase price allocation was not yet completed at the time of
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 108 →
preparing the Consolidated Financial Statements, so the preliminary results are
not yet available. The excess purchase price is expected to be primarily attributable
to goodwill and, downstream, to technologies and customer relationships. Due to the
proximity of the acquisition to the date of preparation of the Consolidated Financial
Statements and the resulting insufficient information, other disclosures required by
IFRS 3 cannot be made.
Acquisition of Imagimob AB and 3db Access AG
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.
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.
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.
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 29. ☐ p. 156 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 original expected durations of more than one year, was
as follows as of 30 September 2023 and 2022:
Revenue expected in (€ in millions)
As of 30 September 2023
As of 30 September 2022
Total
4,111
1,257
> revenue where the transaction price contains a variable element (see "Revenue
recognition", p. 104 f.).
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.
3-10
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.
Contract assets are recognized if Infineon has fulfilled its performance obligations
arising from contracts with customers and an unconditional entitlement to customer
consideration does not yet exist.
At Infineon, contract assets result from revenue arising from over time revenue recog-
nition for certain types of contracts, as well as from sales to some customers for
whom Infineon maintains a consignment warehouse and where revenue is recorded
at the time of delivery to the consignment warehouse, whereas the invoice is only
issued at the time of withdrawal of the product by the customer.
Loss allowances for expected credit losses on contract assets are determined in
accordance with the measurement method for trade receivables (see "Financial
instruments", p. 97).
Property, plant and equipment
Property, plant and equipment are measured at amortized acquisition or construction
cost, and their value is reduced by depreciation and considering any impairment.
Depreciation on property, plant and equipment is recorded using the straight-line
method. Land, property rights and construction in progress are not depreciated
on a scheduled basis. Depreciation on property, plant and equipment is based on
the following useful lives, as applied consistently throughout Infineon:
Buildings
Technical equipment and machinery
Other plant and office equipment
Contract assets
Years
1-10
Other intangible assets
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
Remaining other intangible assets
Years
Management Board and Supervisory Board
25
3-10
1-12
← 101 →
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
1,833
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 100 →
Upon initial recognition, other financial liabilities are measured at fair value after the
deduction of transaction costs. In subsequent periods, they are measured at amor-
tized cost using the effective interest method. The liabilities are derecognized when
the contractual obligations are discharged, canceled or expired.
Designated hedging instruments (cash flow hedges)
Certain derivative financial instruments are used to hedge foreign currency and
interest risks or risks of commodity price changes (such as gold prices) for firm
commitments as well as expected and highly probable future transactions in order to
minimize the associated risk (cash flow hedges).
Derivative financial instruments are measured at their fair value and included in
"other current assets" or "other current liabilities".
Further information
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.
Hybrid bonds
The recognition of a hybrid bond depends on the specific form of the instrument.
A hybrid bond is measured and recognized in equity when certain conditions are
jointly met. These include, but are not limited to, the fact that the hybrid bond has no
final maturity date, the investors have no rights of termination, and the distributions
are made at Infineon's discretion. In this case, discounts, transaction costs, tax effects
and the remuneration of hybrid investors are deducted directly from equity.
Inventories
Inventories are measured at the lower of historical acquisition or fully absorbed
production cost - calculated using the weighted-average method - and net realizable
value. Net realizable value corresponds to realizable sale proceeds under normal
business conditions less estimated expected costs to complete and sell. Production
cost comprises costs of material, production wages and an appropriate portion of
attributable overheads, along with attributable depreciation and amortization on
property, plant and equipment and other intangible assets. Overhead mark-ups are
determined on the basis of normal capacity utilization levels.
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. 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
Combined Management Report
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.
1-12
3-5
3-12
Further information
← 103 →
Defined benefit pension plans
The net pension obligation recognized with respect to defined benefit pension plans
comprises the present value of the defined benefit obligation (DBO) at the end of the
reporting period less the fair value of the plan assets. The present value of the DBO
and the resulting pension expense are determined annually in accordance with IAS 19
"Employee Benefits" for each separate plan by independent, qualified actuaries
using the projected unit credit method. The calculation is subject to, among other
things, assumptions on increases in salaries, future developments in pensions as well
as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations
are discounted using discount rates determined primarily on the basis of market
yields of high-grade, fixed-interest corporate bonds from issuers carrying a very high
credit rating.
All items of income and expense relating to defined benefit plans, with the exception
of the net interest result, are recognized on a net basis in the functional costs within
the operating result. The net interest result arising from the multiplication of the
net pension obligation (pension obligation less plan assets) by the discount rate is
presented as a financial expense. Actuarial gains and losses arising from changes to
actuarial assumptions and estimates as well as the difference between the normal-
ized and actual return on plan assets are recognized directly in equity and recorded
in the Consolidated Statement of Comprehensive Income in the periods in which they
arise. Past service costs are recognized immediately in profit or loss.
Other provisions
Other provisions are recognized for present legal and/or constructive obligations
arising from past events that are likely to result in a future outflow of resources, the
amount of which can be reliably estimated.
With regard to legal proceedings and litigation, for example, those connected with the
Qimonda insolvency, Infineon regularly assesses the probability of an unfavorable
outcome. Infineon records provisions and liabilities, including provisions for signifi-
cant legal costs, for those obligations and risks relating to legal disputes which it
assesses at the relevant reporting date are likely to occur. That is where, from Infineon's
perspective as of the date of assessment, there is compelling evidence that indicates
an obligation or risk, and the obligation or risk can be quantified with reasonable
accuracy at the time of assessment. As soon as additional information is available,
the affected estimates are reviewed and, where necessary, provisions for these pro-
ceedings are revised.
Other provisions are measured at their expected settlement amount. The amount
recognized for a provision is the best estimate of the expenditure required to settle
the present obligation. Estimates of outcomes and financial effects are dependent
upon the judgment of management, supplemented by experience gained from similar
transactions and, where appropriate, the assessment of independent experts. If the
circumstances to be assessed encompass a large number of possible outcomes,
the obligation is estimated by weighting all possible outcomes by their associated
probabilities (expected value method).
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 104 →
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 in the Notes to the Consolidated Financial Statements (see note 23,
p. 135 f., and note 24, p. 136 ff.).
Revenue recognition
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.
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
Infineon did not hold any intangible assets with indefinite useful lives in either the
2023 or the 2022 fiscal year.
Recoverability of property, plant and equipment and intangible assets
(including goodwill)
Infineon reviews non-current assets, including property, plant and equipment,
goodwill and other intangible assets for possible impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Regardless of whether an indication of impairment exists, goodwill and
other intangible assets, including capitalized development costs not yet subject to
amortization, undergo an annual impairment test (see also "Research and develop-
ment expenses", p. 105). The impairment test for goodwill is carried out annually
at the operating segment level.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 102 →
The recoverability of an asset is measured by comparing its carrying amount with
its recoverable amount. To the extent it is not possible to determine the recoverable
amount of an individual asset, the book value of the cash generating unit to which
the asset is allocated is compared to its recoverable amount.
A cash generating unit (“CGU”) represents the smallest identifiable group of assets
that generates cash inflows from continuing activities and that are largely independent
of the cash inflows from other assets or group of assets.
Goodwill arising in connection with a business combination is allocated to the CGUS
or groups of CGUs that will benefit from the synergies generated by the business
combination and the going concern element of the business operations acquired.
The recoverable amount of an asset is defined as the higher of its fair value less costs
to sell and its value in use. The value in use is calculated based on discounted future
cash flows. Considerable management judgment is necessary to estimate future
cash flows.
If an asset or CGU is considered to be impaired, the impairment recognized is measured
as the amount by which the carrying value exceeds the recoverable amount.
Goodwill is impaired when the carrying amount of the operating segment to which
goodwill is allocated exceeds the recoverable amount of that unit.
If the carrying amount of the respective operating segment to which goodwill
is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired
accordingly.
In the case of property, plant and equipment or other intangible assets, if the recover-
able amount of a CGU is less than its carrying value, the impairment loss is allocated
pro rata to the assets within the scope of IAS 36. An impairment loss recognized in
prior periods for property, plant and equipment or other intangible assets is reversed
insofar as, since the last impairment, a change in the underlying assumptions has
occurred, which leads to a lower impairment requirement. The maximum possible
reversal of an impairment loss is that which would lead to the carrying amount that
would have been determined (net of scheduled depreciation and amortization) if
no impairment loss had been recognized for that asset in prior years. The reversal of
impairments recognized on goodwill in subsequent periods is not permitted.
Leased assets
IFRS 16 defines a lease as a contract that conveys the right to use an identifiable asset
over a specified period of time in exchange for consideration.
At the beginning of a lease, Infineon capitalizes a right-of-use asset at amortized
acquisition cost and recognizes as a liability a corresponding lease liability, using the
present value of the outstanding lease payments. Right-of-use assets are amortized
on a straight-line basis over the expected useful life (see "Property, plant and equip-
ment”, □ p. 101), or over the duration of the contract if shorter. In subsequent valua-
tions, lease liabilities are measured at the current value of the outstanding lease
payments using the effective interest method and are presented as lease liabilities
(current and non-current).
The costs associated with leasing agreements with a term of not more than twelve
months (provided they do not contain an option to purchase), as well as leasing
agreements in which the value of the underlying asset in the leasing contract is low,
are recorded in the profit or loss on a straight-line basis in the functional costs. As
a general rule, leased assets with an acquisition cost of up to €5,000 are defined as
low-value assets.
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.
8
45
14,609
Infineon has received grants from various governmental institutions under government
business development programs, including grants for the construction of manufac-
turing facilities, research and development activities and employee development.
Grants included directly in profit or loss in the Consolidated Financial Statements
during the 2023 and 2022 fiscal years were as follows:
4
183
4,170
4,353
Total
(3)
(2)
71
69
8
555
The average number of employees by geographic region was as follows for the 2023
and 2022 fiscal years:
600
Grants
4
140
3,544
3,684
Wages and salaries
in %
absolute
2022
2023
€ in millions
Change
Social insurance levies and employee benefits
Expenses for pensions
€ in millions
Change
2023
therein: Germany
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).
Infineon | Annual Report 2023
18
32
176
208
Total
50
1
2
3
Selling, general and administrative expenses
15
17
113
130
23
14
61
75
Cost of goods sold
of Profit or Loss in:
Included in the Consolidated Statement
in %
absolute
2022
1 Greater China comprises Mainland China, Hong Kong and Taiwan.
6
Research and development expenses
54,286
2,313
2,611
therein: Mainland China, Hong Kong
in %
absolute
2022
2023
Total
Cost of purchased services
and purchased goods
Cost of raw materials, supplies
€ in millions
298
12
2,698
3,024
Change
6
1,429
23,762
25,191
Asia-Pacific (excluding Japan, Greater China)
7
922
3,376
13,687
326
13
Greater China¹
670
Total
57,662
Japan
14
900
6,221
7,121
(174)
3,908
3,734
therein: USA
9
316
3,433
(4)
(4)
3,749
17
653
3,372
2,788
3
21
584
Americas
5,241
5,470
(229)
(142)
527
(371)
(254)
268
(156)
Total
Netting
(644)
561
(561)
(144)
(215)
(1,015)
(215)
1,171
(156)
644
(144)
156
Management Board and Supervisory Board
Change of deferred taxes, recognized directly in equity:
(142)
From discontinued operations
(144)
(156)
From continuing operations
Deferred taxes, net as of the end of the previous fiscal year
Deferred tax income (expense), recognized through profit or loss:
371
Infineon | Annual Report 2023
2022
€ in millions
The change in the net amount of deferred tax assets and liabilities is as follows:
Taxable losses brought forward and tax credits amount to the following:
Infineon assessed the need for a valuation allowance of its deferred tax assets. Based
on the results of this assessment, considering all positive and negative factors and
information relating to the foreseeable future based on business plans, Infineon
recognized deferred tax assets, after netting, of €268 million as of 30 September 2023
(30 September 2022: €527 million).
= ← 113 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
2023
(815)
29
Total deferred taxes
Total deferred taxes on temporary differences
(6)
(5)
(39)
14
13
(47)
50
487
21
(35)
339
(81)
(113)
(22)
213
6
Change
24
829
(815)
65
(40)
(31)
170
19
16
186
Unused tax credits and excess foreign tax credits
(197)
80
(183)
(240)
(238)
156
Tax loss carry-forwards
93
(1)
(1,015)
607
394
Deferred tax arising from business acquisitions
36
2023
Management Board and Supervisory Board
In connection with investments in subsidiaries, there were temporary taxable differ-
ences of €299 million (2022: €242 million) for which no deferred taxes have been
recognized because the timing of the reversal can be controlled, and it is not probable
that the temporary differences will reverse in the foreseeable future.
Infineon | Annual Report 2023
25
9
8
45
'
Combined Management Report
Thereof expire within the next five years
Deductible temporary differences
(98)
544
446
(39)
(34)
87
53
(16)
(18)
(67)
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
← 114 →
22
Income taxes recognized directly in equity
+++
1
1
Income taxes from discontinued operations,
recognized in profit or loss
(46)
(245)
Further information
(537)
Income taxes from continuing operations,
recognized in profit or loss
in %
absolute
2022
2023
Change
€ in millions
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:
(782)
€ in millions
412
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
5
5
(1)
Deferred taxes, net as of the end of the fiscal year
Corporate tax loss carry-forwards and
Deferred taxes recognized in other comprehensive income
Currency effects
(49)
(958)
(13)
1,940
(716)
716
Corporate tax loss carry-forwards - Germany
Trade tax loss carry-forwards - Germany
G
Deferred taxes recognized directly in equity
in %
absolute
2022
982
345
(26)
(49)
in %
absolute
2022
2023
€ in millions
Change
No deferred taxes were recorded for the following items (gross amounts):
(11)
22
(82)
632
(19)
(116)
625
509
local tax loss carry-forwards (particularly
US state tax loss carry-forwards) - foreign
Tax credits
156
14
714
(25)
(13)
(6)
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)
10
(11)
Other comprehensive income (loss), net of tax
Total comprehensive income (loss), net of tax
(1)
10
(11)
← 111 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
in %
absolute
2022
2023
Income tax
Deferred tax income
Current tax expense
€ in millions
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.
32
73
96
Tax-exempt income
9
5
Further information on Infineon's financial income and expenses is contained in
note 27. p. 146 f.
Infineon | Annual Report 2023
Management Board and Supervisory Board
23
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:
Change
8
(36)
86
77
9
12
Income tax from continuing operations for the fiscal years ending 30 September 2023
and 2022 amounted to:
therein: current tax income
(28)
69
(4)
(5)
Non-deductible expenses
(47)
(52)
5
10
Change
73
Change in permanent balance sheet effects
local and functional currency
Previous year taxes
Effects from the difference between
€ in millions
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 %
(760)
6 Income tax
(338)
136
93
43
46
Effects due to changes in tax rates
(1)
13
(14)
(44)
(10)
(43)
33
profit or loss
tax liabilities
tax assets
Other
Provisions, pensions and similar commitments
Inventories
Property, plant and equipment
Intangible assets
tax assets
€ in millions
Total
Deferred
Deferred
Therein through
Total
Deferred
Deferred
Change 2022
Therein through
30 September 2022
tax liabilities
23
(7)
(28)
35
(2)
(13)
(165)
156
(39)
profit or loss
(32)
166
74
(15)
(751)
44
177
219
(511)
(207)
39
Change 2023
Deferred tax assets and liabilities as of 30 September 2023 and 2022 comprised the
following:
96
71
Change in available tax credits
(8)
(12)
(144)
(156)
+++
(25)
68
25
on deferred tax assets
Change in valuation allowance
(59)
(233)
(393)
(626)
77
(43)
30 September 2023
(26)
(537)
The utilization of tax loss carry-forwards, tax credits and temporary differences for
which deferred tax assets had not previously been recorded resulted in current tax
income of €61 million in the 2023 fiscal year (2022: €1 million).
"Change in valuation allowances on deferred tax assets" consisted of the following:
In the 2023 fiscal year, amounts recognized in profit or loss included valuation
allowances or non-recognition of deferred tax assets for tax loss carry-forwards
of €0 million (2022: €27 million) and tax credits of €20 million (2022: €67 million).
A write-up of deferred tax assets for tax loss carry-forwards of €10 million was
recorded (2022: €0 million). Within tax credits, the write-up of deferred tax assets
amounted to €35 million in the 2023 fiscal year (2022: €10 million) and temporary
differences amounted to €0 million (2022: €41 million).
← 112 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
(782)
(46)
(537)
(782)
Actual income taxes
1
(12)
Other
(46)
(245)
(245)
13
(934)
Income taxes recognized in
704
7
68
(1,062)
1,341
1,726
3
490
(284)
77
Remaining other intangible assets
126
(10)
116
(47)
(10)
87
9
50
915
(841)
(152)
Technologies
2,618
(11)
(204)
2,403
(892)
(245)
Licenses and similar rights
338
41
(5)
(3)
371
(261)
(31)
3
1,424
(54)
79
€ in millions
Property, plant
1 October
2021
Cost
Depreciation/amortization
Additions
Additions
Notes to the Consolidated Financial Statements
Disposals Reclassi-
fication
Currency
effects
business
30 Sep-
tember
2022
1 October
2021
Depre-
Disposals Reclassi-
through
← 119 →
Further information
Consolidated Financial Statements
Total
6,071
255
(40)
(332)
5,954
(2,588)
(531)
31
(13)
124
(2,977)
2,977
3,483
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
62
(107)
(14)
1,545
(10,180)
3,447
2,940
Other plant and office equipment
1,560
135
(93)
57
64
1,648
(1,338)
(147)
93
12
(1,380)
268
(18)
279
(916)
(9,600)
28
(39)
2,626
(1,080)
(80)
22
14
(1,124)
1,502
1,485
Technical equipment and machinery
12,540
829
(286)
623
(79)
13,627
222
Payments on account and construction in progress
904
1,656
7,045
5,545
Other intangible assets
Capitalized development costs
1,444
214
(10)
(8)
1,640
(547)
(93)
10
(13)
(643)
997
897
Customer relationships
(12,691)
Impair-
83
394
(6)
(715)
(4)
1,835
(6)
(1)
(7)
1,828
898
Total
17,569
2,729
(422)
(140)
19,736
(12,024)
(1,143)
(1)
ciation/
fication
amorti-
1,333
212
1,545
(595)
(156)
(90)
(841)
Customer relationships
704
Technologies
2,214
404
2,618
(528)
(243)
(121)
738
772
897
(547)
(1,050)
216
(100)
(12,024)
5,545
4,443
Other intangible assets
Capitalized
development costs
1,220
209
15
1,444
(448)
(94)
(4)
(1)
(892)
1,726
1,686
Licenses and similar rights
(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
(7)
(11,090)
(11)
126
306
31
(5)
6
338
(230)
(30)
5
(6)
(261)
77
76
Remaining other
intangible assets
Total
106
5,179
20
(29)
(37)
17,569
(222)
2,565
(989)
(83)
5
6
(19)
(1,080)
61
1,485
Technical equipment
and machinery
11,129
972
6
(130)
455
1,313
136
(6)
3
ments/
reversals
Currency
effects
combi-
zation
of impair-
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
108
12,540
(8,822)
(829)
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
(1,338)
8
127
(8)
(68)
(9,600)
2,940
2,307
Other plant and
office equipment
1,457
131
(85)
38
19
1,560
(1,279)
(138)
83
(12)
109
2,565
Land, land rights and buildings
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
Further information
= ← 116 →
9 Financial investments
1 Including the cumulative tax effect.
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.).
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 as of 30 September 2023 and 2022 comprised the following:
44
0.73
1.65
(0.01)
(0.01)
2.38
1.65
0.73
44
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
30 Septem-
ber 2022
absolute
in %
1,977
€ in millions
ber 2023
ber 2022
absolute
in %
Trade receivables, net
Fixed-term bank deposits
240
(240)
Investment funds
1,770
2,039
(269)
(13)
Financial investments, gross
1,770
2,279
30 Septem-
Earnings (loss) per share (in euro)
from discontinued operations
Earnings per share (in euro) - basic
30 Septem-
Change
1,883
94
5
19
1,996
10
9
90
1,893
103
5
(5)
1,991
(6)
1,887
1
17
104
6
Trade receivables, gross
Loss allowances
(509)
44
1.66
8 Earnings per share
Basic earnings per share are calculated by dividing profit (loss) for the period by
the weighted-average number of shares outstanding during the reporting period.
The calculation of the diluted earnings per share is based on the assumption that
all potentially dilutive instruments are converted into ordinary shares, resulting
in a corresponding increase in the number of shares.
The hybrid bond issued in the 2020 fiscal year is classified as equity (see note 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
← 115 →
2022
in %
3,137
2,179
958
44
(29)
(29)
absolute
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
other comprehensive income
Income taxes
(12)
(771)
(26)
14
54
(554)
(217)
(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
3,108
2,150
958
45
1,303.0
1,301.8
1.2
0
Adjustments for:
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
2.2
0
Basic earnings per share (in euro): 2
Earnings per share (in euro)
from continuing operations
2.39
Weighted-average number of shares
outstanding - basic
0.73
29
(4.1)
3,110
2,157
953
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)
1.2
+++
(22)
Loss allowances
3,081
893
29
Prepaid expenses
Derivative financial instruments
(see note 27, p. 147 ff.)
Other
3,974
Total
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
Cost of goods sold consisted mainly of inventory-related expenses in the 2023 and
2022 fiscal years.
Grants receivables
16
107
30 Septem-
ber 2022
absolute
in %
€ in millions
612
470
142
30
Prepayments
2,593
1,949
644
33
VAT and other receivables from tax authorities
769
662
42
20
48
959
30 Sep-
tember
2023
1 October
2022
Depre-
ciation/
amorti-
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
Currency
effects
30 Septem-
ber 2023
Reclassi-
fication
Additions Disposals
625
334
53
1 The previous year's figures for "VAT and other receivables from tax authorities" and "Grants receivables" have been adjusted.
Further information on Infineon's financial assets can be found in note 27. □ p. 142 ff.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
13 Property, plant and equipment and
other intangible assets
The development of property, plant and equipment, as well as other intangible assets
for the years ended 30 September 2023 and 2022, was as follows:
€ in millions
Property, plant and equipment
Further information
← 118 →
Cost
1 October
2022
Changes in the loss allowances for trade receivables in the 2023 and 2022 fiscal years
were as follows:
Change
19
(2)
Loss allowances as of the end of the fiscal year
5
6
(1)
(17)
€ in millions
1
Loss allowances as of the beginning
Revaluation of loss allowances, net
Loss allowances as of the end of the fiscal year
Change
2023
2022
absolute
in %
of the fiscal year
(1)
Current year's loss allowance, net of reversals
20
Financial investments, net
1,770
2,279
(509)
(22)
€ in millions
Change
2023
2022
absolute
in %
Loss allowances as of the beginning
The loss allowances on financial investments that are measured at amortized cost
changed as follows during the 2023 and 2022 fiscal years:
of the fiscal year
6
5
1
1
(1)
(1)
1
30 Septem-
ber 2022
absolute
in %
347
58
289
+++
204
2441
(40)
(16)
186
1451
41
28
150
131
ber 2023
15
30 Septem-
Other current assets as of 30 September 2023 and 2022 consisted of the following:
+++
Information on Infineon's credit risk management is contained in note 28. p. 153 f.
Infineon | Annual Report 2023
Information about Infineon's credit risk management is contained in note 28. p. 153 f.
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 117 →
11 Inventories
Inventories as of 30 September 2023 and 2022 consisted of the following:
€ in millions
Raw materials and supplies
Work in progress
Finished goods and merchandise
Total
12 Other current assets
Change
(168)
€ in millions
96
Change
Interest income
60
11
49
+++
in %
€ in millions
2022
absolute
in %
Other financial income¹
Total
45
105
2023
absolute
2022
2023
(159)
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 110 →
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).
For compliance with the conditions attached to the grants received and potential
repayment requirements in case of nonfulfillment, see note 23. □ p. 135 f.
Financial income comprised the following in the 2023 and 2022 fiscal years:
5 Investments accounted for using
the equity method
The investments accounted for using the equity method comprise shares in joint
ventures and in associated companies.
Summarized financial information for joint ventures
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.
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:
Change
(4)
49
Financial income and expenses
7
Interest expenses
Other financial expenses
Total
Change
2023
2022
absolute
€ in millions
in %
(142)
(11)
(1)
(26)
25
+++
(158)
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).
(16)
(13)
Financial expenses comprised the following in the 2023 and 2022 fiscal years:
+++
Profit (loss) for the period
98
29
(1)
(3)
Other comprehensive income (loss), net of tax
28
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)
weighted average interest rate 2.88%, due 2027-2033
30 Septem-
30 Septem-
Long-term financial debt
ber 2023
Total
23
12
18
16
ber 2022
Infineon | Annual Report 2023
640
Due after one year to five years
Due within one year
€ in millions
958
552
639
742
743
745
746
1
497
Due after more than five years
Total
29
Drawn
1,224
498
69
Total
Long-term
80
3
83
69
69
Short-term
Available
Aggregate
facility
Available
Drawn
Aggregate
facility
Term, € in millions
30 September 2022
30 September 2023
The total lines of credit as of 30 September 2023 and 2022 are summarized in the
following table:
A €750 million bond maturing on 24 June 2023 was repaid as scheduled.
5,662
4,733
4,910
4,403
1,329
41
752
+++
330
117
113
Total
69
6
5
11
Interest payments
2
2
84
86
Payments for lease liabilities
The allocation of discounted and undiscounted lease liabilities by maturity as of
30 September 2023 and 2022 was as follows:
(17)
17
Payments for lease prepayments
45
5
11
16
and low-value leases
Payments for short-term leases
405
21
(4)
(3)
21
389
749
3
30 Septem-
ber 2022
30 Septem-
ber 2023
weighted average interest rate 4.18%, due 2026-2028
USPP notes US$1,300 million,
Short-term financial debt and current portion of long-term financial debt
Bond €500 million, coupon 0.625%, due 2025
Bond €750 million, coupon 1.125%, due 2026
Bond €750 million, coupon 1.625%, due 2029
Bond €650 million, coupon 2.00%, due 2032
USPP notes US$585 million,
USPP note US$350 million, interest rate 3.94%, due 2024
Bond €750 million, coupon 0.75%, due 2023
Short-term financial debt and current portion of long-term financial debt,
weighted average interest rate 2022: 0.87%
€ in millions
Financial debt as of 30 September 2023 and 2022 consisted of the following:
16 Financial debt
330
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:
Future payment obligations relating to short-term leases with a term of twelve months
or less are immaterial in value.
In addition, there are future payment obligations for leases that have not yet started
but have already been contracted amounting to €48 million.
Some leases contain renewal options that may be exercised by Infineon prior to
the expiration of the non-cancelable lease term. Infineon has possible future (undis-
counted) leasing payments amounting to €45 million that are not included in
lease liabilities because it is not sufficiently certain that the leases will be renewed.
123
=
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
6
The Consolidated Statement of Cash Flows includes the following amounts in the
2023 and 2022 fiscal years that are attributable to leases:
The lease contracts, in which Infineon subleases and acts as a lessor, are not material
from the Group's point of view.
83
18 Other current liabilities
80
799
983
Accrued interest expense
1,099
(55)
(782)
664
1,272
thereof non-current
thereof current
Total provisions
Contract liabilities
52
3
(36)
15
70
Other
Payroll and similar obligations to employees
50
(13)
(6)
30
39
Warranties
VAT payables
289
300
Other
38
(2)
(2)
93
91
+++
73
26
99
(3)
(7)
248
Reimbursement obligations
241
95
593
688
in %
absolute
30 Septem-
ber 2022
ber 2023
30 Septem-
Change
Infineon | Annual Report 2023
Obligations to employees included, among others, costs of variable remuneration,
outstanding vacation and flextime, service anniversary awards, other personnel costs
and social security costs.
Total
16
3
212
(3)
2,616
143
2,297
Due after more than five years
Total
2,327
319
2,133
Due after one year to five years
753
108
330
Interest
Financial
debt
Interest
Financial
debt
Due within one year
€ in millions
30 September 2022
30 September 2023
Nominal amounts of financial debt and interest maturing in the coming years were
as follows:
5α = 124
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
4,760
570
5,696
120
385
215
720
9
211
and note 24, p. 136 ff.)
(see note 7, p. 114,
€ in millions
Provisions related to Qimonda
785
(40)
(737)
610
952
Obligations to employees
(5)
30 Septem-
ber 2023
€ in millions
Reversal
Usage
Addition
1 October
Current and non-current provisions as of 30 September 2023 consisted of the following:
Other current liabilities as of 30 September 2023 and 2022 consisted of the following:
(80)
Of the total provisions as of 30 September 2023 and 2022, cash outflows of €799 million
and €983 million, respectively, were expected to occur within one year. For the non-
current provisions, the cash outflow was expected to occur after more than one year.
Besides the provisions in connection with Qimonda, €49 million as of 30 September
2023 and €42 million as of 2022 of non-current provisions were attributable to length-
of-service related anniversary awards.
Other provisions comprised mainly provisions for litigations (other than those relating
to Qimonda), asset retirement obligations and miscellaneous other liabilities.
Provisions for warranties mainly represented the estimated future cost of fulfilling
contractual requirements associated with products sold.
17 Provisions
2022
1
405
336
11.1
14.1
14.2
2,011
1,843
Connected Secure Systems
Power & Sensor Systems
1.5
1.5
10.0
11.0
13.4
15.2
261
244
1.5
1.5
9.9
10.7
13.2
14.5
1,686
1,556
2022
2023
10.7
1.5
1.5
2,902
15 Leases
122 →
=
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
In addition, up to the date of preparation of the Consolidated Financial Statements,
there was no indication that the recoverable amount of an operating segment to which
goodwill had been allocated could have fallen below the book value.
account, no impairment on goodwill was observed as a result of the sensitivity
analyses at operating segment level.
Business planning is affected, among other things, by uncertainties regarding the
assessment of markets and the macroeconomic environment. Therefore, sensitivity
analyses were carried out at operating segment level, taking into account changes
considered possible in the main assumptions. Even taking these changes into
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.
2022
1 Valuation parameters as of 30 June 2023 and 2022 for the respective impairment test in the fourth quarter.
6,547
Total
2
2
Corporate
1.5
1.5
10.0
10.6
12.9
14.0
3,123
7,083
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.
2023
2023
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
(10)
(553)
Currency effects
Disposals
7,083
27
2022
2023
Additions through business combination
Balance as of the beginning of the fiscal year
Cost
€ in millions
Changes in goodwill during the 2023 and 2022 fiscal years were as follows:
14 Goodwill
120 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Carrying amount
Balance as of the beginning of the fiscal year
Balance as of the end of the fiscal year
5,962
28
2022
2023
Green Industrial Power
Automotive
Operating segment
Terminal growth rate¹
in %
After-tax WACC¹
in %
Pre-tax WACC'
in %
€ in millions
Book value of allocated goodwill
The following table shows the allocation of the carrying amount of goodwill to the
segments, as well as the valuation parameters used:
← 121 →
2022
Further information
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
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
127
€ in millions
€ in millions
5
5
Expenses for low-value leases
50
(23)
(80)
103
405
Total
with a term of twelve months or less
Expenses for short-term leases
11
(1)
5|སྱེ
(7)
9
10
office equipment
Other plant and
+++
6
5
11
80
80
11
6
5
83
in %
absolute
2022
2023
Change
€ in millions
10
(6)
7
9
(3)
(71)
in %
1
319
Total
office equipment
Other plant and
1
8
ment and machinery
Technical equip-
23
and buildings
Land, land rights
The 2022 fiscal year
119
Due within one year
absolute
2023
197
81
76
82
72
Undiscounted
lease liabilities
Discounted lease
liabilities
Undiscounted
lease liabilities
lease liabilities
30 September 2022
30 September 2023
Discounted
nations
combi-
business
amount
changes
Carrying
Other
Depreciation
Additions
through
Additions
Starting
balance
Due after more than five years
Total
The changes in the right-of-use assets in the 2023 and 2022 fiscal years were as follows:
Due after one year to five years
230
209
235
112
Change
Interest expenses
5
(3)
2
6
ment and machinery
Depreciation
Technical equip-
€ in millions
389
(22)
2022
(70)
389
and buildings
Land, land rights
The 2023 fiscal year
The Consolidated Statement of Profit or Loss includes the following amounts in the
2023 and 2022 fiscal years that are attributable to leases:
431
386
445
381
115
101
133
92
(12)
Pension cost
128
818
of one year
In order to determine the present value as of the balance sheet date, the Willis Towers
Watson RATE:Link approach was applied, which is based on high-grade fixed-interest
Increase in life expectancy
961
180
781
968
185
783
of pension increase
lower expected rate
a 50 basis points
2.9
2.3
2.8
2.1
Projected future pension increases
1,011
186
825
1,012
191
821
of pension increase
190
1,008
820
185
Quoted
in an
30 September 2023
Infineon | Annual Report 2023
Total
Other
Property
Reinsurance policies
Cash and cash equivalents
Equity securities
Corporate bonds
Government bonds
€ in millions
5.0
Amounts recognized in the Consolidated Statement of Profit or Loss
and in the Consolidated Statement of Comprehensive Income
The expenses and income of defined benefit plans for the 2023 and 2022 fiscal years
comprised the following:
The market value of the land and real estate leased to Infineon group companies by
the legally independent pension trust amounted to €29 million and €30 million as of
30 September 2023 and 2022 respectively.
Government and corporate bonds are traded in liquid markets and the majority have
an investment grade rating. The geographical allocation of the equity component
of plan assets is globally diversified. As a matter of policy, Infineon's pension plans
do not invest in the shares or debt instruments of Infineon. The position “Other” in
the previous table comprises exchange-traded commodities (ETC) and other invest-
ment funds. The market value of the ETC held domestically was €36 million as of
30 September 2023 (previous year: €35 million).
Plan asset allocation
The pension plans' assets are invested with several fund managers. The investment
guidelines require a mix of active and passive investment management programs
covering different asset classes. Taking the duration of the underlying liabilities into
account, a portfolio of investments of plan assets in equity, debt and other securities,
as well as real estate and reinsurance policies, is targeted to maximize the total long-
term return on assets for a given level of risk. Investment risk is monitored on an
ongoing basis through periodic portfolio reviews, in coordination with investment
managers and annual liability measurements. Investment policies and strategies are
periodically reviewed as part of detailed studies of assets and liabilities by indepen-
dent investment advisors and actuaries to ensure the objectives of the plans are met,
taking into account any changes in benefit plan structure, market conditions or other
material items. The aim is to optimize the risk-return profile of plan assets against
the liabilities using a diversified portfolio of investments within a defined risk budget
and to thereby increase the funding ratio in the long term.
Investment strategy
128 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
1,005
The realized return on plan assets in the fiscal year ended 30 September 2023 was
positive €29 million (30 September 2022: negative €89 million).
active market
2.5
2.4
193
808
of salary increase
higher expected rate
a 50 basis points
The weighted-average assumptions used in calculating the actuarial values for the
pension plans were as follows:
1,050
193
857
1,049
198
851
lower discount rate
Actuarial assumptions
a 50 basis points
926
173
753
935
179
756
higher discount rate
a 50 basis points
Present value of defined
benefit pension plans with:
985
1,001
809
187
996
higher expected rate
4.8
3.8
5.1
4.1
a 50 basis points
975
179
796
978
183
795
5.7
of salary increase
a 50 basis points
30 September 2022
Foreign
plans
plans
plans
plans
Rate of salary increase
Discount rate at the end of the fiscal year
in %
Domestic
Foreign
Domestic
30 September 2023
lower expected rate
183
Not quoted
in an
active market
2023
Defined contribution plans
Due after more than five years up to ten years
Total
Due after more than one year to five years
Due within one year
€ in millions
The following table shows the expected disbursements for defined benefit plans for
the next ten fiscal years as of 30 September 2023 and 2022:
The weighted-average duration of defined benefit plans was around 12 and 13 years
as of 30 September 2023 and 2022, respectively.
In the 2024 fiscal year, payments of €38 million are expected to be made to plan
assets, of which €35 million relate to benefits paid directly to pension recipients by
the Group companies.
As of 30 September 2023 and 2022, cumulative actuarial losses amounted to €39 million
and €71 million, respectively.
Actuarial gains before taxes of €32 million and €332 million for the 2023 and
2022 fiscal years, respectively, had been recognized outside of profit (loss) for the
period in other comprehensive income.
Service costs were recorded within cost of goods sold, research and development
expenses or selling, general and administrative expenses. Interest costs and expected
return on plan assets were recorded net as part of financial expenses.
129 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
86
602
93
628
16
36
21
37
30
30 Septem-
ber 2023
30 Septem-
ber 2022
48
(24)
Infineon | Annual Report 2023
The pro rata expense for share-based payments resulted in an increase in additional
paid-in capital of €92 million in the 2023 fiscal year (2022: €62 million). Due to the
transfer of own shares within the framework of share-based payment to employees
and members of the Management Board, additional paid-in capital, as well as the line
Additional paid-in capital
As of 30 September 2023, the ordinary share capital amounted to €2,611,842,274 and
was fully paid up. It was divided into 1,305,921,137 no par value registered shares,
each representing €2 of the Company's ordinary share capital. Each share grants the
holder one vote and an equal portion of the profits in the form of a dividend, as
resolved by the Annual General Meeting. Own shares held by the Company as of the
date of the Annual General Meeting carry no voting rights and are not entitled to
a dividend.
855,701
1,302,231,236
3,689,901
1,305,921,137
1,301,375,535
2022
1,518,875
1,303,750,111
2,171,026
1,305,921,137
1,302,231,236
2023
Shares issued at the end of the fiscal year
3
Shares outstanding at the beginning of the fiscal year
Transfer of own shares under the Performance Share
and Restricted Stock Unit Plans (see note 22, p. 133 ff.)
Shares outstanding at the end of the fiscal year
Repurchased own shares
The following table shows a reconciliation of the number of ordinary shares issued as
of 30 September 2023 and 2022:
Ordinary share capital
20 Equity
Additionally, the Group makes contributions to government pension schemes.
Expenses for defined contribution plans amounted to €333 million and €309 million
in the 2023 and 2022 fiscal years.
In connection with defined contribution plans, fixed contributions are made to external
insurance providers or funds. Infineon has no further performance obligations or
risks with regard to these pension plans in excess of the fixed contributions paid.
563
620
325
354
192
218
46
quantity
30 September 2022
Quoted Not quoted
in an
in an
active market active market
29
(43)
173
159
(35)
(7)
(28)
(28)
(8)
(20)
Current service cost
1
130
1
146
plans
plans
plans
plans
€ in millions
Total
Foreign
Domestic
Total
Foreign
Domestic
2022
Past service (cost) benefit
(1)
2
1
(8)
(35)
(39)
10
2
8
26
33
(13)
(26)
23
on plan assets
3
39
Expected return
29
22
(19)
(5)
(14)
(37)
(8)
(29)
231
261
Interest cost
42
802
As of 30 September 2023 and 2022, the allocation of invested plan assets to the major
asset categories was as follows:
188
New plans created and plan amendments
386
53
333
72
72
32
32
1
1
13
(10)
23
(44)
(8)
(36)
(19)
(5)
(14)
(37)
(8)
(29)
1
2
(1)
(4)
(4)
Benefits paid
26
71
617
Fair value of plan assets as of the beginning of year
Change in fair value of plan assets:
(985)
(183)
(802)
(989)
(188)
(801)
Present value of defined benefit obligation as of the end of year
(7)
(1,381)
(35)
(7)
6
Currency effects
(10)
(10)
(8)
(8)
Employee contributions
35
11
24
38
12
6
(7)
(28)
(28)
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
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.
The valuation date of the pension plans is 30 September.
The benefit obligation of some foreign plans is measured according to the income
in the last month or year of service; others are dependent on average income over
the service period. Foreign pension plans are managed by country-specific external
pension funds or other pension schemes. The 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.
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.
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
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.
989
19 Pension plans
Further information on Infineon's financial liabilities can be found in note 27. ☐ p. 142 ff.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
The increase in contract liabilities mainly results from advance payments from
customers based on capacity reservation agreements.
125 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
11
124
1,161
1,285
(15)
(23)
151
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.
688
Further information
The development of Infineon's German (domestic) and non-German (foreign) pension
plans and the plan assets as of 30 September 2023 and 2022 is presented in the
following table:
(8)
(20)
「8 '
(220)
(1,161)
(985)
(183)
(802)
Adjustments to financial assumptions
Adjustments to demographic assumptions
Experience adjustments
Actuarial gains (losses) for:
126 →
Interest cost
Current service cost
Present value as of the beginning of year
Change in defined benefit obligations taking into account future salary increases:
€ in millions
Total
Foreign plans
Domestic plans
Total
Foreign plans
Domestic plans
2022
2023
Past service income (cost)
671
Defined benefit pension plans
764
Foreign
plans
plans
Domestic
Total
Foreign
plans
plans
Domestic
30 September 2022
30 September 2023
€ in millions
The funding of the defined benefit obligations as of 30 September 2023 and 2022 was
as follows:
Since no asset ceilings applied, the funded status of the Infineon pension plans
corresponded to the amounts reported in the Consolidated Statement of Financial
Position as of 30 September 2023 and 2022.
Pension obligations are reported in the Consolidated Statement of Financial Position
under "Pensions and similar commitments". p. 91
127 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
(51)
(51)
(58)
(58)
thereof: Infineon Technologies Austria AG
(167)
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
801
93
Total
855
101
754
849
96
753
Total
Foreign
plans
Domestic
plans
(167)
Total
30 September 2023
Foreign
plans
Domestic
plans
€ in millions
Plans that are wholly
130
82
48
140
92
48
Plans that are wholly
unfunded
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 2022
(128)
or partly funded
thereof: Infineon Technologies AG
10
8
8
33
11
22
33
10
23
(99)
(29)
(70)
3
(5)
8
10
2
8
26
23
Employee contributions
Expected return on plan assets
(128)
Contributions from Infineon
Actuarial gains (losses)
10
Benefits paid
3
(12)
(26)
(268)
(297)
(124)
(185)
Net pension liability
688
71
617
721
64
657
Fair value of plan assets as of the end of year
(144)
(112)
(24)
5
(35)
Reclassification of fair value of plan assets
4
(11)
Currency effects
(3)
(3)
5
4
(38)
17.31
The development of the restricted stock units is as follows:
35.29
34.87
73,146
18.62
29 February 2024
4th tranche
2020 fiscal year:
4th tranche
3rd tranche
4th tranche
36.16
31 March 2025
31 March 2024
3rd tranche
2021 fiscal year:
30.33
29.96
29.56
721,280
30.99
31 March 2026
278,708
278,708
36.16
3.7
Outstanding restricted stock units at the beginning of the fiscal year
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.
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.
721,280
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).
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.
23 Other financial commitments
The costs for share-based payment amounted to €92 million in the 2023 fiscal year
(2022: €62 million).
4.3
6.5
(0.3)
in number of shares (in millions)
(0.5)
3.3
1.8
4.3
2022
2023
Costs for share-based payment
Outstanding restricted stock units as of the end of the fiscal year
Forfeited
Allocated
Granted
(1.2)
30.99
Number of
restricted
stock units
as of 30 Sep-
tember 2023
721,280
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
22.82
31 March 2025
Members of the Management Board
28.87
500,510
22.82
31 March 2025
2021 fiscal year: Employees
2021 fiscal year:
27.63
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
148,737
2nd tranche
End of the
waiting period
Price of an
Infineon share
as of the
grant date in €
Fair value per
30.99
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
31 March 2025
37.68
3rd tranche
920,464
37.68
31 March 2025
920,464
37.68
31 March 2024
1st tranche
2023 fiscal year:
restricted
stock unit
in €
31 March 2026
Infineon | Annual Report 2023
30 September 2023
Combined Management Report
1
8
2
35
1
2
8
1
3
16
12
30
Trade and other receivables
Financial receivables
Trade and other payables
Financial payables
Other
related
companies
Associates
Joint
ventures
Other
related
companies
Associates
Joint
ventures
30 September 2022
€ in millions
Related companies receivables and payables as of 30 September 2023 and 2022
consisted of the following:
Infineon purchases certain raw materials and services from and sells certain products
and services to related companies.
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
34.85
As of 30 September 2023, sales and services relationships with related companies
resulted in purchase commitments of €36 million (30 September 2022: €37 million).
Infineon | Annual Report 2023
19
100
21
120
services received
1
21
Related companies
115
29
132
Sales and service charges
Products and
Other
related
companies
Joint Associates
ventures
Other
related
companies
€ in millions
Associates
Joint
ventures
2022
1
Infineon has transactions in the normal course of business with joint ventures, asso-
ciates and other related companies (collectively "related companies"). The related
companies are disclosed in note 30, p. 165 ff.. Related persons are persons in key
management positions, in particular members of the Management and Supervisory
Board (see note 30, ☐ p. 162 f.) and their close relatives (collectively "related persons").
25 Transactions with related companies and persons
A settlement or adverse judicial decision in any of the matters described above
could result in significant financial liabilities for Infineon and other adverse effects,
and these in turn could have a material adverse effect on its business and financial
condition, liquidity position and results of operations. Irrespective of the validity
of the allegations and the success of the aforementioned claims and other matters
described above, Infineon could incur significant costs in the defense of these matters.
The legal dispute has, in the meantime, focused on the claims asserted for alleged
lack of value. On 29 August 2013, the court appointed an independent expert to
clarify the valuation issues raised by the insolvency administrator and to address
technical matters.
The alleged impairment of capital runs contrary to two valuations prepared as part
of the preparatory documentation for the capital increase by independent auditing
companies, one of which had been engaged by Infineon and the other of which was
acting in the capacity of a court-appointed auditor of contributions in kind and
post-formation acquisitions. The auditing company engaged by Infineon concluded
in its valuation that the business area contributed had a value of several times the
lowest issue price of the shares issued, while the court-appointed auditor of contribu-
tions in kind and post-formation acquisitions confirmed to the court that the lowest
issue price of the shares issued was covered - as legally required - by the value of
the contributions in kind. Additionally, in the course of its defense against the claims
asserted by the insolvency administrator, Infineon has commissioned several expert
opinions, all of which arrived at the same conclusion that the objections raised by
the insolvency administrator against the valuation of the contribution in kind are
not valid.
137 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
In addition to the request for declaratory judgment against Infineon in an unspecified
amount, on 14 February 2012 the insolvency administrator also lodged a request for
payment based on an alternative claim (in German: "Hilfsantrag"), as well as making
other additional claims. In conjunction with this alternative claim, the insolvency
administrator has requested the payment of at least €1.71 billion plus interest in con-
nection with the alleged activation of a shell company. On 15 June 2012, the insolvency
administrator increased his request for the payment of 14 February 2012 on the
grounds of activation of a shell company to at least approximately €3.35 billion plus
interest. Furthermore, the insolvency administrator continues to base a substantial
part of his alleged payment claims, as already asserted out of court against Infineon
in August 2011 for an unspecified amount, on liability for impairment of capital (in
German: "Differenzhaftung”). This claim is based on the allegation that, from the
very beginning, the carved-out memory products business had a negative billion
euro value. The insolvency administrator therefore asserts that Infineon is obliged
to make good the difference between this negative value and the lowest issue price
(in German: "geringster Ausgabebetrag") of the subscribed stock. Additionally, the
insolvency administrator has asserted a claim for repayment of allegedly unjustly
charged consultancy fees in the amount of €10 million in connection with the flotation
of Qimonda.
Infineon Technologies Holding B.V. and Infineon Technologies Investment B.V., at the
Regional Court Munich I in November 2010. This requested that Infineon be deemed
liable to make good the deficit balance of Qimonda as it stood when the insolvency
proceedings with respect to the assets of Qimonda began, i.e., to refund to Qimonda
the difference between the latter's actual business assets when the insolvency pro-
ceedings began and its share capital (in German: "Unterbilanzhaftung"). The insolvency
administrator contended that the commencement of operating activities by Qimonda
amounted to what is considered in case law to be the activation of a shell company
(in German: "Wirtschaftliche Neugründung”), and that this activation of a shell com-
pany was not disclosed in the correct manner. On 6 March 2012, with respect to
another matter, the German Federal High Court issued a ruling on principle that any
liability resulting from the activation of a shell company only depends on the situa-
tion at the date of the activation of a shell company and not, as asserted by the insol-
vency administrator, on the situation at the date on which insolvency proceedings
are opened.
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.
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,
Proceedings in relation to Qimonda
In July 2019, a direct customer filed a lawsuit against Infineon Technologies UK Limited
and several Renesas entities in London (United Kingdom) relating to the aforemen-
tioned EU antitrust case. The London court dismissed the complaint for being time-
barred. The dismissal was confirmed by the Court of Appeal. The plaintiff filed a further
appeal to the UK Supreme Court. In December 2022, the UK Supreme Court finally
dismissed the complaint.
In October 2008, the EU Commission initiated an investigation into the Company and
other manufacturers of chips for smart cards for alleged violations of antitrust laws.
In September 2014, the EU Commission imposed a fine of €83 million on Infineon,
which in July 2020 was reduced to €76.9 million by the General Court of the European
Union.
Smart card chips antitrust litigation
Litigation and government inquiries
24 Legal risks
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.
136 →
Further information
Consolidated Financial Statements
Notes to the 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 were
formally opened. The insolvency of Qimonda has given rise to various disputes
between the insolvency administrator and Infineon.
Management Board and Supervisory Board
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.
Residual liability of Infineon as former shareholder of
Qimonda Dresden GmbH & Co. OHG
139 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
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.
Provisions and contingent liabilities for legal proceedings
and other uncertain legal issues
As part of an audit finding relating to the tax treatment of losses from the repurchase
of convertible bonds in the 2011, 2012 and 2014 fiscal years, there were contingent
liabilities of €63 million as of 30 September 2023 (2022: €63 million) for withholding
tax on capital gains to be paid in arrears as well as corporate income tax and trade
tax of €3 million (2022: €3 million), in each case plus interest. Suspension of enforce-
ment was granted as part of the ongoing appeal proceedings for 2011 and 2012. After
completion of the current tax audit, suspension of enforcement will also be applied
for 2014 and the appeal proceedings will be extended accordingly. Infineon expects
that there is a sufficient degree of likelihood of winning any potential appeal or
legal action.
Furthermore, in connection with its existing or previous business operations, Infineon
is also exposed to numerous legal risks, which until now have not resulted in legal
disputes. These include risks related to product liability, environment, capital market,
anti-corruption, competition and antitrust legislation as well as export control and
other compliance regulations. Claims could also be made against Infineon in connec-
tion with these matters in the event of breaches of law committed by individual
employees or third parties.
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.
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.
Other
There can be no certainty that the provisions recorded for Qimonda will be sufficient
to cover all of the liabilities that could ultimately be incurred in relation to the insol-
vency of Qimonda and, in particular, the matters discussed above. In addition, it is
possible that liabilities and risks materialize that are currently considered to be unlikely
to do so and, accordingly, represent contingent liabilities that are not included in
provisions. Should the alleged claims relating to the activation of a shell company and
liability for impairment of capital prove to be valid, substantial financial obligations
above the provisions already recorded could arise for Infineon, which could have an
adverse effect on its business and its financial condition, liquidity position and results
of operations.
138 →
Further information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
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 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.
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.
31 March 2026
(0.3)
2022 fiscal year:
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
1,369
1,369
(718)
(417)
hedge accounting
5
3
Infineon | Annual Report 2023
6,204
17
As of 30 September 2023
net of tax of minus €16 million
1,373
(1)
1,374
(713)
3
(718)
(716)
Actuarial gains (losses) on pensions and similar commitments
(4)
1
(5)
Cost of hedging
(39)
(1)
7
8
00
Total
Currency effects
(39)
Compensation of hybrid capital investors
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
5 Q = <131>
> 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
Members of the Management Board
-
Management Board and Supervisory Board
In the 2023 fiscal year, €39 million (2022: €39 million) was recognized in equity as
compensation to hybrid capital investors. For the purpose of calculating earnings per
share, the profit (loss) for the period attributable to the shareholders and hybrid
capital investors of Infineon Technologies AG of €3,137 million (2022: €2,179 million)
was reduced by compensation to the hybrid capital investors of €29 million (2022:
€29 million; net of tax), to €3,108 million (2022: €2,150 million) (see note 8, ☐ p. 115).
The following table shows a reconciliation of retained earnings as of 30 September 2023
and 2022:
Net of tax
Tax
Pre-tax
Net of tax
Tax
Pre-tax
€ in millions
(351)
2022
2023
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.
2,179
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
"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).
Changes in other reserves during the 2023 and 2022 fiscal years were as follows:
Combined Management Report
Retained earnings
Further information
3.3
3.2
2022
2023
Restricted Stock Unit Plan
Outstanding performance shares as of the end of the fiscal year
Forfeited
Allocated
Outstanding performance shares at the beginning of the fiscal year
Granted
in number of shares (in millions)
0.9
The development of the performance shares is as follows:
Number of
performance
shares
outstanding
as of 30 Sep-
tember 2023
days before
the start of the
performance
period in €
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.
Fair value per
performance
share in €
← 134 →
0.7
(0.3)
27.63
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
464,798
34.85
31 March 2026
2022 fiscal year: Employees
32.31
207,343
25.00
31 March 2027
(0.4)
Members of the Management Board
683,239
25.00
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)
2023 fiscal year:
Further information
32.31
Combined Management Report
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
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.
Management Board and Supervisory Board
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 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).
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).
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.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
132 →
21 Capital management
Infineon | Annual Report 2023
-
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).
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
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.
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.
Management Board and Supervisory Board
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.
70,850
18.10
29 February 2024
Members of the Management Board
12.95
938,666
12.50
Average share
price in the
nine months
before grant
End of the
waiting period
18.10
The following is an overview of the allocations made:
in €
Tranche
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.
Fair value per
performance
share in €
2020 fiscal year: Employees
2020 fiscal year:
29 February 2024
Number of
performance
shares
outstanding
as of 30 Sep-
tember 2023
+++
(101)
243
(344)
1
1
Financial liabilities measured at amortized cost
therein other financial expenses
therein currency effects
Financial assets measured at fair value
through profit and loss
(3)
(13)
10
1
77
therein impairment losses
1
Financial assets measured at amortized cost
31
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:
51
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:
€ in millions
Change
2023
+++
2022
in %
(57)
255
(312)
therein interest income
42
11
absolute
(544)
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
(17)
118
(135)
333
333
therein currency effects
30 September 2023
(17)
(135)
Long-term financial debt
3,915
2,370
1,545
Total
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).
118
+++
1
(1)
Fair value
Fair value by category
therein interest expenses
(126)
(129)
3
2
€ in millions
Level 1
therein currency effects
177
(414)
591
+++
Level 2
Level 3
therein other financial expenses
595
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)".
3,197
← 146 →
Other current assets
5
5
Non-current assets:
Other non-current assets
108
94
2,039
14
(26)
3,178
5
14
Current liabilities:
Other current liabilities
Total
Total
2,039
Financial investments
1,045
Total
3,062
3,042
2
18
Current liabilities:
Other current liabilities
Total
6
6
5
1
5
1
30 September 2022
Current assets:
Cash and cash equivalents
1,045
25
Financial instruments at amortized cost
25
25
Acquisitions (including additions)
13
Unrealized losses recognized in profit or loss¹
Losses in equity
30 September 2023
(4)
(5)
8
Unrealized losses recognized in profit or loss¹
(1)
(1)
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).
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
10
30 September 2022
1 October 2021
14
Cash equivalents and financial investments included investments in money market
funds and investment funds (level 1).
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 145 →
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.
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 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).
€ in millions
The following table shows the reconciliation of financial instruments classified as
level 3 (before tax):
Deal contingent
option
Deal contingent
forward
Equity
investments
16
(2)
25
(184)
Nominal value (€ in millions)
86
(5)
30 September 2022
Hedging of commodity price risks
Total
2
(2)
(2)
In the 2023 and 2022 fiscal years, no balances remained in other comprehensive
income for which hedge accounting was no longer applied.
Infineon | Annual Report 2023
(2)
Management Board and Supervisory Board
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
149 →
The relevant amounts of the derivative financial instruments designated as hedging
instruments as of 30 September 2023 and 2022 (before taxes) were as follows:
€ in millions
30 September 2023
Other current assets:
Combined Management Report
(1)
1
Hedging of commodity price risks
Total
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
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.
Effects from derivative financial instruments designated
as a hedging relationship
The amounts relating to positions that were designated as hedged items as of
30 September 2023 and 2022 are shown in the table below.
€ in millions
30 September 2023
Change in the value
of the hedged item
used to determine
ineffectiveness
Hedge reserve
(before taxes)
Cost of
hedging reserve
(before taxes)
Hedging of foreign exchange risk
Deal contingent forward
1
(1)
Deal contingent option
5
(5)
Hedging of foreign exchange risks
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.
Deal contingent option
Hedging of foreign exchange risks
Total
7
(2)
(5)
1
30 September 2022
Other current liabilities:
Inventories
Hedging of commodity price risks
(2)
(2)
Total
(2)
(2)
Infineon | Annual Report 2023
Inventories
3
1
(1)
1
Deal contingent forward
Carrying amount
Changes in fair value
for the measurement
of the ineffectiveness
in the reporting period
Changes in fair value
of the hedging instrument
recognized in other
comprehensive income
8
5
Changes in fair value
of cost of hedging
recognized in other
comprehensive income
Amount reclassified
from the hedge reserve
to the cost of
non-financial assets
(5)
Line item of the Statement
of Financial Position
or the Statement of
Profit or Loss affected
by the reclassification
1
1
(1)
Hedging of commodity price risks
1
Other current liabilities:
158
148 →
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 147 →
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.
Derivative financial instruments and hedging activities
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.
Management Board and Supervisory Board
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:
Forward exchange contracts sold
Forward exchange contracts purchased
Total
30 September 2022
Derivative financial instruments designated as a hedging relationship
As of 30 September 2023 and 2022, Infineon held the following instruments, which
were designated as cash flow hedges and were used to hedge against foreign
exchange and commodity price changes:
30 September 2023
Hedging of foreign exchange risks
Deal contingent forward
€ in millions
Infineon | Annual Report 2023
1,983
3,092
Total
4,248
2,370
1,878
30 September 2022
Short-term financial debt and current portion
of long-term financial debt
742
739
3
Long-term financial debt
4,333
2,353
1,980
Interest expense on financial liabilities measured at amortized cost mainly included
interest on financial debt and effects from using the effective interest method.
Total
5,075
Nominal value (US dollar in millions)
Average forward rate (euro/US dollar)
Deal contingent option
Further information
Nominal value (US dollar in millions)
Hedging of other risks
337
1
(2)
(17)
Short term
415
1.0574
415
2
1.0575
2,008
51
1,797
Infineon | Annual Report 2023
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.
Management Board and Supervisory Board
Combined Management Report
24
384
Average price (US dollar/ounce)
(18)
Commodity swaps
Nominal value (€ in millions)
Average price (US dollar/ounce)
30 September 2022
Hedging of other risks
Commodity swaps
10
30 September 2023
Nominal
Fair value
Nominal
Fair value
value
value
191
(4)
420
Average forward rate (euro/US dollar)
103
Non-current lease liabilities
Other non-current liabilities
Total
Other non-current assets
3
461
6
5,662
2
(1)
1
(1,393)
331
17
122
386
6,918
(1,478)
3
478
(84)
122
6,585
4
(753)
1
386
(86)
6,049
(839)
(182)
5,115
6
1
(17)
100
(2)
381
(199)
100
4,733
6
6,049
Management Board and Supervisory Board
Financial investments
Trade receivables
Other current assets¹
Non-current assets:
Other non-current assets¹
Total
Carrying amount
Cash and cash equivalents
Categories of financial assets
At amortized cost
Not assignable to any
IFRS 9 measurement
category
Designated hedging
instruments
(cash flow hedges)
Fair value
1,820
1,169
651
At fair value through
profit or loss
Current assets:
As of 30 September 2022
Total
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
=
142 →
27 Additional disclosures on financial instruments
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 2023 and 2022 according to IFRS 9:
€ in millions
As of 30 September 2023
Current assets:
Cash and cash equivalents
Financial investments
Trade receivables
Other current assets
Non-current assets:
Other non-current assets
5,662
Other changes
New leases
Carrying amount
2
1
50
Expense from post-employment benefits
1
1
Expense for termination benefits²
3
11
Total remuneration of the Management Board
13
25
(12)
(48)
Total remuneration of the Supervisory Board³
3
(11)
Expense for share-based payment
(18)
(2)
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 140 →
Related persons
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
3
1,820
Total remuneration of the executive bodies
28
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 2023 fiscal year
Short-term and long-term financial debt
Related party financial payables
Current and non-current lease liabilities
Total
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
The 2022 fiscal year
Related party financial payables
Current and non-current lease liabilities
Total
Infineon | Annual Report 2023
Starting balance
Cash-effective
changes
Acquisitions
Non-cash-effective changes
Currency effects
Short-term and long-term financial debt
26 Supplemental cash flow information
141 →
Further information
(12)
(43)
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.
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
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
these provisionally allocated (virtual) performance shares amounted to €6 million
(2022: €4 million).
The total remuneration of the members of the Supervisory Board in the 2023 fiscal year
amounted to €3 million (2022: €3 million).
Former members of the Management Board received payments of €7 million in the
2023 fiscal year (2022: €3 million).
As of 30 September 2023, pension obligations for former members of the Management
Board amounted to €63 million (30 September 2022: €63 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.
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.
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
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
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
16
113
1,770
1,770
76
975
22
950
3
975
Other current liabilities
76
Non-current liabilities:
Infineon | Annual Report 2023
4,910
4,911
310
67
4,333
310
67
Long-term financial debt
67
Current lease liabilities
752
2,260
309
130
130
9,002
4
8,615
2
742
2,260
381
As of 30 September 2022
Current liabilities:
Short-term financial debt and current portion
of long-term financial debt
752
Trade payables
2,260
130
8,136
9,350
22
8,940
Level 2
Level 3
€ in millions
30 September 2023
Current assets:
Cash and cash equivalents
1,169
Level 1
1,169
1,770
1,770
Other current assets
10
2
8
Non-current assets:
Financial investments
Fair value by category
Fair value
The allocation to the levels as of 30 September 2023 and 2022 was as follows:
3
386
8,377
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
5 Q = 144 →
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.
In the 2023 and 2022 fiscal years, there were no reclassifications between the
categories of financial instruments.
Disclosures about fair value
Financial instruments at fair value
Financial instruments measured at fair value are allocated to the following measure-
ment levels in accordance with IFRS 13. The allocation to the different levels is
based on the market proximity of the valuation parameters used in the determination
of the fair values:
> Level 1: quoted prices (unadjusted) in active markets for identical assets and
liabilities,
> Level 2: valuation parameters whose prices are not 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.
Infineon | Annual Report 2023
309
3,915
4,403
4,403
2,039
240
1,887
1,887
93
5
88
2,279
205
5,902
97
2,705
1,438
2,279
1,887
93
205
108
3,197
393
1,045
1,438
1,991
1,991
1,991
363
2
353
8
363
208
113
95
208
6,152
3,054
3,090
8
6,152
5,902
1,770
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.
Management Board and Supervisory Board
(cash flow hedges)
Others
Fair value
330
2,765
330
2,765
333
2,765
instruments
72
993
4
987
2
993
Other non-current liabilities
Total
72
Other
financial liabilities
(amortized cost)
At fair value through
profit or loss
Not assignable to any IFRS 9
measurement category
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
Other current liabilities
Non-current liabilities:
Long-term financial debt
Non-current lease liabilities
Carrying amount
Categories of financial assets
Infineon | Annual Report 2023
Designated hedging
2
Combined Management Report
Connected Secure Systems
Subtotal
2,046
1,822
2,046
1,822
16,291
14,198
706
9,242
5,174
3,894
1,179
1,439
696
743
18
8,122
469
330
332
3,298
2,796
1,742
710
733
696
743
Green Industrial Power
2,205
1,790
2,205
1,790
Power & Sensor Systems
3,798
4,070
2,997
3,034
20
Other Operating Segments
Corporate and Eliminations
Total
16,309
1,137
(276)
(24)
Connected Secure Systems
488
378
110
29
Other Operating Segments
5
5
Corporate and Eliminations
3
(16)
19
+++
Total
861
4,040
Power & Sensor Systems
278
14,218
There were limited levels of trading relationships between the operating segments
during the 2023 and 2022 fiscal years. Costs are generally recharged without impact
on profit or loss.
€ in millions
Change
2023
2022
absolute
in %
Segment Result:
Automotive
2,380
1,490
890
60
Green Industrial Power
662
384
72
4,399
6,516
Automotive
Notes to the Consolidated Financial Statements
29 Segment reporting
Identification of segments
The basis for identifying the reporting segments is the differences between the
products and applications. In the 2023 fiscal year, Infineon's business was structured
into the four operating segments Automotive, Green Industrial Power, Power & Sensor
Systems and Connected Secure Systems. In addition, Infineon differentiates Other
Operating Segments as well as Corporate and Eliminations.
Automotive
The Automotive segment designs, develops, manufactures and markets semicon-
ductor products for automotive applications. These include powertrain and energy
management, connectivity and infotainment, body and comfort electronics, safety
and data security. The product portfolio ranges from sensors, microcontrollers,
software solutions, reliable power supplies, storage systems for specific applications,
Si and SiC power semiconductors, as well as components for human-machine
interaction and vehicle connectivity.
Green Industrial Power
← 156 →
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.
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
The Connected Secure Systems segment provides comprehensive systems which are
based on microcontrollers as well as on wireless connectivity and security solutions.
Notably, this includes microcontroller, Wi-Fi, Bluetooth and combined connectivity
solutions (so-called combo chips), hardware-based security technologies, and a
powerful software environment for programming and configuring microcontrollers
and connectivity components, covering a wide range of applications including:
devices for loT applications, home appliances and smart home appliances, IT equip-
ment, consumer electronics, cloud security and connected vehicles, as well as credit
and debit cards, electronic passports and national identity cards.
Other Operating Segments
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
Power & Sensor Systems
Further information
Consolidated Financial Statements
Combined Management Report
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
Notes to the Consolidated Financial Statements
Further information
157 →
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:
Power semiconductors
8,242
Total
Notes to the Consolidated Financial Statements
Corporate and Eliminations
The elimination of intragroup revenue and profits/losses to the extent that these
arise between the segments is presented in 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
Consolidated Financial Statements
Further information
← 158 →
Segment information
681
3,378
30
7
98
+++
Inventories:
Financial expenses
(159)
(168)
105
9
Automotive
2,039
1,337
702
53
Share of profit (loss) of associates
Green Industrial Power
5
Financial income
in %
absolute
30
30
+++
Other income and expenses
71
7
64
Operating profit
3,948
2,845
1,103
39
€ in millions
Change
30 Septem-
ber 2023
30 Septem-
ber 2022
336
290
46
16
1
3
(2)
(67)
401
342
59
17
Total
3,974
3,081
893
29
Of the €464 million (2022: €484 million) "Acquisition-related depreciation/amortization
and other expenses” incurred in the 2023 fiscal year, €276 million (2022: €288 million)
was attributable to cost of goods sold, €9 million (2022: €12 million) to research and
development expenses, €168 million (2022: €177 million) to selling, general and
administrative expenses and €11 million (2022: €7 million) to the balance of other
operating income and expense.
Impairment losses on assets in the 2023 fiscal year amounted to €0 million (2022:
€4 million) in the Automotive segment, €12 million (2022: €0 million) in the Green
Industrial Power segment, €5 million (2022: €20 million) in the Power & Sensor
Systems segment, and €1 million (2022: €7 million) in Corporate and Eliminations.
Also allocated to Corporate and Eliminations in the 2023 fiscal year was €0 million
(2022: €7 million) of reversal of impairments to assets.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Other Operating Segments
Corporate and Eliminations
or interests in subsidiaries
44
2,723
and joint ventures accounted for using
the equity method
27
39
(12)
(31)
Power & Sensor Systems
736
798
(62)
(8)
Profit (loss) from continuing operations
before income taxes
Connected Secure Systems
461
311
150
48
3,921
1,198
1,021
Gains (losses) on sales of businesses,
(7)
absolute
in %
Depreciation and amortization:
Automotive
716
631
85
13
2022
Green Industrial Power
187
13
7
4,399
3,378
1,021
30
200
2023
(in particular on goodwill)
Certain reversal of impairments (impairments)
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 159 →
The following table provides the reconciliation of Segment Result to profit (loss) from
continuing operations before income taxes:
Change
€ in millions
2023
2022
absolute
in %
Change
€ in millions
Segment Result:
Plus/minus:
Power & Sensor Systems
295
279
16
(92)
(62)
(30)
(48)
Depreciation and amortization
not allocated to the segments
Acquisition-related depreciation/
amortization and other expenses
(464)
(484)
20
4
Total depreciation and amortization
448
1,754
480
1,664
(32)
90
Share-based payment
5
10
1,184
6
Connected Secure Systems
93
85
8
9
6
(6)
Other Operating Segments
2
Gains (losses) on earnings of
restructuring and closures
4
4
+++
Depreciation and amortization
allocated to the segments
1,306
122
554
+++
10,081
Profit or Loss
Equity
plus 10%
minus 10%
plus 10%
minus 10%
(9)
Euro/US dollar
Euro/Japanese yen
Euro/Singapore dollar
(2)
72
(12)
2
(44)
72
4
(5)
(44)
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.
(330)
Euro/Japanese yen
129
82
53
50
107
102
5
5
193
(91)
58
(709)
Euro/US dollar
Euro/Singapore dollar
Euro/Malaysian ringgit
Euro/British pound
Forward exchange contracts
Net risk position
(1)
1
30 September 2022
65
Changes in market interest rates affect Infineon's interest income and expenses from
variable-yield financial instruments as well as from fixed-yield financial instruments
that were measured at fair value through profit or loss.
The following table shows the effects on profit or loss for the 2023 and 2022 fiscal years
of a ±100 basis points shift in market interest rates:
€ in millions
30 September 2023
Variable-interest financial assets
30 September 2022
Variable-interest financial assets
Other price risk
Nominal
value
Profit or loss
plus 100
basis points
minus 100
basis points
2,940
29
(29)
2,940
29
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.
(101)
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.
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.
(79)
Euro/US dollar
57
(69)
Euro/Japanese yen
5
(6)
Euro/Singapore dollar
3
(4)
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 152 →
Interest rate risk
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.
(29)
(618)
Financial position exposure
8
30 September 2022
(41)
(3)
(44)
Change in fair value
(6)
8
3
Amount reclassified to Statement
of Profit or Loss
Amount reclassified to the
cost of non-financial items
30 September 2023
7
7
(3)
of Profit or Loss
(2)
(2)
4,133
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
risks
(49)
(1)
(50)
(1)
(6)
(34)
(1)
30 September 2023 and 2022:
€ in millions
Euro/US dollar
Euro/Japanese yen
30 Septem-
ber 2022
30 Septem-
ber 2023
187
(292)
(171)
(131)
Euro/Singapore dollar
(47)
(82)
Euro/Malaysian ringgit
(104)
(106)
Euro/British pound
(7)
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
(135)
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.
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.
(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
Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes
to foreign exchange rates. Accordingly, foreign exchange risks are associated with
financial instruments that are denominated in a foreign currency that does not
correspond to the functional currency, and the foreign currency represents the
relevant risk variable. Risks arising from the translation into Infineon's reporting
currency are not risks within the meaning of IFRS 7.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
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.
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).
3,084
(1)
(31)
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 →
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).
Financing and liquidity risk
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
Financing and liquidity risk is the risk that an entity will encounter difficulties in
meeting obligations associated with financial liabilities.
1,883
1,978
23
At amortized cost
Basis for the determination
of the loss allowance
30 September 2023
30 September 2022
586
300
490
714
450
559
304
221
102
62
3
4
43
Cash inflow¹
Total
30 September 2022
Non-derivative financial liabilities
(526)
9,592
4,216
705
1,246
456
324
2,645
2,645
Total
2023
2024
2025
2026
31
2027
Beyond 2027
(526)
none
574
324
Derivative financial liabilities:
Cash outflow
Cash inflow¹
Total
1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
Due in the fiscal year
Total
2024
2025
2026
2027
2028
Beyond 2028
9,544
4,168
705
1,246
574
none
456
BB-to BB
minus 10%
24
2
(2)
51
5
(5)
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.
Foreign exchange hedging contracts, as well as the investment of liquid assets in cash
equivalents and financial investments, are entered into with major financial institu-
tions worldwide that have high credit ratings. Infineon assesses the creditworthiness
of banks using a methodology that establishes investment limits for individual banks
that are updated on a daily basis according to current external ratings and credit
default swap premiums. Possible breaches of stipulated investment thresholds result
in immediate notification and the requirement to reduce the risk. This methodology
is also used to identify a significant increase in credit risk in the context of the recog-
nition of expected credit losses within the meaning of IFRS 9 at the balance sheet date.
Infineon applies the general impairment model in accordance with IFRS 9 for cash and
cash equivalents as well as financial investments. Since Infineon invests exclusively
in high-quality financial assets from issuers with a rating of at least investment grade
in order to minimize default risk, Infineon assumes that its financial assets carry low
credit risk arising from the creditworthiness of its contract parties, so that any impair-
ment loss recorded at first-time recognition is limited to the twelve-month expected
credit losses. Infineon considers low credit risk to be an internal credit rating "Holding
Quality 1". A change in the internal rating from “Holding Quality 1" to "Holding Qual-
ity 0" indicates a significant increase in credit risk. The impairment is calculated using
a weighted-probability method. This impairment is calculated as a measure of the
probability of default based on the exposure at the balance sheet date, the loss ratio
for that exposure, and the credit default swap spread.
The following table provides information on the credit risk for cash and cash equivalents
measured at amortized cost, as well as financial investments as of 30 September 2023
and 2022:
€ in millions
Infineon rating
30 September 2023
Holding Quality 1
Holding Quality 0
Total
External rating
Basis for the
determination of
the loss allowance
AA- to BBB
plus 10%
651
Equity
Credit risk
31
(31)
3,084
C to B+
According to IFRS 7, other price risk is defined as the risk that the fair value or future
cash flows of a financial instrument could fluctuate because of changes in market prices
(other than those arising from interest rate risk or exchange rate risk), irrespective
of whether those changes are caused by factors specific to the individual financial
instrument or its issuer, or by factors affecting all similar financial instruments traded
in the market.
In the 2023 and 2022 fiscal years, Infineon held financial instruments that were
exposed to market price risks. A change in the relevant market prices would have had
no significant impact on the results of the 2023 and 2022 fiscal years.
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).
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
← 153 →
€ in millions
30 September 2023
Commodity swaps
30 September 2022
Commodity swaps
Nominal
value
651
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.
AA- to BBB
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
1
low risk
2
3
A- to AAA
BBB to BBB+
BB+ to BBB-
4
increased risk
Total
individual
others
30 September 2022
Holding Quality 1
Holding Quality 0
5
probability of default provided by a credit rating agency. Individual allowances are
recorded based on case-by-case facts or other risk indicators.
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
average risk
above average 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
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.
633
Total
633
At amortized cost
Expected 12-month
credit loss
Expected lifetime
credit loss
non-credit-impaired
high risk
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further information
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).
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.
← 154 →
St. Denis, France
0
100
Neubiberg, Germany
6, 16
100
288.61
100
Dresden, Germany
6
(5.95)
25.27
0.09
Wilmington, Delaware, USA
6, 13, 15
100
0
100
21.07
6
6,24
Rotterdam, The Netherlands
100
100
1.91
(1.03)
(0.02)
0.00
7.17
11
100
n.a.
n.a.
12
0
0
Cegléd, Hungary
100
0
42.37
(12.95)
6
Shanghai, People's Republic of China
100
0
4.09
1.19
Shanghai, People's Republic of China
100
0
217.53
36.64
11
Belgrade, Serbia
100
0
0.07
0.07
11
Herlev, Denmark
0
9.14
6
6
0.09
(0.02)
Dublin, Ireland
100
100
0.54
0.26
6
Milan, Italy
100
0
6.77
1.69
6
Klagenfurt, Austria
100
0
11.15
6.53
6
Tokyo, Japan
100
0
56.88
17.98
100
6
100
Seoul, Republic of Korea
0
0.68
100
6
Singapore, Singapore
100
0
3.81
3.04
6
Rotterdam, The Netherlands
100
100
11,677.51
276.10
6
Hong Kong, People's Republic of China
100
0
2.63
0.90
6
Bangalore, India
100
0
22.35
5.39
5
Tokyo, Japan
100
0
24.90
5.78
Rotterdam, The Netherlands
Toronto, Ontario, Canada
Infineon Technologies Americas Corp.
518.96
141.33
14.74
11
Xi'an, People's Republic of China
100
0
8.13
0.37
11
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
0
166 →
Name of company
Infineon Technologies 2. Vermögensverwaltungsgesellschaft mbH
Infineon Technologies 3. Vermögensverwaltungsgesellschaft mbH
Infineon Technologies Acquisition B.V.
Infineon Technologies Asia Pacific Pte Ltd
Registered office
Neubiberg, Germany
Infineon Technologies Australia Pty Limited
Infineon Technologies Austria AG
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
Notes to the Consolidated Financial Statements
100
Wuxi, People's Republic of China
8
100
0
0
429.36
76.96
6
Melaka, Malaysia
100
0
353.34
47.08
6
Kuala Lumpur, Malaysia
100
0
9.10
1.36
8
Shanghai, People's Republic of China
100
0
n.a.
n.a.
12
Nonthaburi, Thailand
100
0
91.88
3.80
Infineon Technologies Dresden GmbH & Co. KG
Infineon Technologies Dresden Verwaltungs GmbH
Infineon Technologies Epi Services, Inc.
Infineon Technologies Finance B.V.
12
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
0
1.46
0.05
6
Villach, Austria
100
0.004
1,965.89
n.a.
6
n.a.
100
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 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 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
Footnote
(€ in millions)
100
0
0.03
(€ in millions)
(0.02)
6
Dresden, Germany
0
15.89
2.10
6
100
0
(0.09)
19.15
6,24
Neubiberg, Germany
100
100
286.47
0.00
6, 13, 15
Wilmington, Delaware, USA
100
Wilmington, Delaware, USA
0
86.78
6,24
Neubiberg, Germany
100
0
304.94
0.00
6, 15
Neubiberg, Germany
100
100
0.31
0.21
307.76
6,24
7,889.00
0
100
0
52.03
8.27
5
100
100
5.59
0.86
6
100
0
10.00
2.10
6
Bristol, Great Britain
100
0
4.33
0.97
6
Wilmington, Delaware, USA
100
0
8,648.84
19.23
6,24
Wilmington, Delaware, USA
100
6
4
Neubiberg, Germany
0
Wilmington, Delaware, USA
100
0
1,281.11
56.64
6,24
Wilmington, Delaware, USA
100
0
1,859.61
326.82
6,24
Melaka, Malaysia
6
100
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
Kulim, Malaysia
Associated companies:
Deca Technologies, Inc.
0
12.47
15.92
0
93.39
28.40
6, 17
Bucharest, Romania
100
0
1.15
0.62
11
Batam, Indonesia
100
0
24.87
1.41
6
Wilmington, Delaware, USA
100
0
0.00
0.00
6,24
Tijuana, Mexico
100
0
14.34
1.99
6,24
Dresden, Germany
100
100
2.68
12.09
0
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 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
Infineon Technologies Nijmegen B.V.
Taipei, Taiwan
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
Spansion Inc.
Spansion LLC
Aschheim, Germany
Bangalore, India
Infineon Technologies Memory Solutions Israel Ltd.
Infineon Technologies Memory Solutions Japan G.K.
Infineon Technologies Memory Solutions Malaysia Sdn. Bhd.
Infineon Technologies Memory Solutions Taiwan Ltd.
Name of company
Notes to the Consolidated Financial Statements
Wilmington, Delaware, USA
100
0
832.53
52.39
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 →
Syntronixs Asia Sdn. Bhd.
Infineon | Annual Report 2023
Shareholdings
in %
Thereof Infineon
Technologies AG
0
4.87
0.54
6
Muntinlupa City, Philippines
100
0
0.70
0.52
6
Cheonan, Republic of Korea
100
100
52.74
4.81
6
Bristol, Great Britain
100
0
4.68
1.09
6
Bucharest, Romania
100
0
6.21
2.55
6
100
100
7.01
Kista, Sweden
0.00
Equity
Net result
Footnote
(€ 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
0.31
0.11
6
Nijmegen, The Netherlands
100
0
0.20
7
11
> SMART Photonics B.V., Netherlands
47.64
Supervisory Board member
> Voith GmbH & Co. KGaA, Germany
Member of the Shareholders' Committee
> Voith Management GmbH, Germany
Supervisory Board member
> Trumpf SE + Co. KG, Germany
> SUSE S.A., Luxembourg
> BECHTLE AG, Germany
Member of the Board of Directors
> esure Group plc, Great Britain
Supervisory Board member
> Covestro AG, Germany (listed)
> Infineon Technologies Austria AG, Austria
Member of the Board of Directors
> Infineon Technologies Austria AG, Austria
(Chairman)
> Infineon Technologies China Co., Ltd.,
> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
> Infineon Technologies Americas Corp., USA
> Infineon Technologies Japan K.K., Japan
Member of the Board of Directors
> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
(Chairman)
> Infineon Technologies Japan K.K., Japan
> Infineon Technologies China Co., Ltd.,
People's Republic of China
> Infineon Technologies Americas Corp., USA
(Chairman)
Supervisory Board member
pmdtechnologies ag
› Carl Zeiss AG, Germany (since 13 March 2023)
The Supervisory Board
People's Republic of China
Supervisory Board member
and other comparable governing bodies of domestic
and foreign companies
Membership of Supervisory Boards
Management remuneration in the 2023 fiscal year
As required by section 314, paragraph 1, no. 6, in conjunction with section 315e
paragraph 1, HGB, the total remuneration of the Management Board and the Super-
visory Board is disclosed in note 25, p. 140.
Disclosure of the renumeration of individual members of the Management Board and
the Supervisory Board, as required by section 162 of the AktG, can be found in the
Remuneration Report, which is prepared according to stock corporation law and is
available under the following link:
www.infineon.com/remuneration-report
The references to the Remuneration Report are not audited as part of the audit of
the financial statements. The Remuneration Report was subjected to a separate
substantive audit by the auditor in accordance with IDW PS 490. This audit also
includes the formal audit required by section 162, paragraph 3 of the German Stock
Corporation Act (AktG).
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
162 →
Notes to the Consolidated Financial Statements
Management Board
The Management Board members were as follows:
Name
Position
Jochen Hanebeck
Chief Executive Officer,
Labor Director
Constanze Hufenbecher
(until 31 October 2023)
Elke Reichart
(since 1 November 2023)
Chief Digital
Transformation Officer
Chief Digital
Transformation Officer
Dr. Sven Schneider
Chief Financial Officer
Andreas Urschitz
Chief Marketing Officer
Dr. Rutger Wijburg
Chief Operations Officer
The Supervisory Board members, their Supervisory Board position, their occupation,
and their membership of other supervisory and governing bodies are as follows:
Management Board and Supervisory Board
Name
(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
Infineon | Annual Report 2023
Peter Gruber¹
Representative of
(since 16 February 2023)
Chief Financial Officer
Operations,
Infineon Technologies AG
Member of various
supervisory bodies
> 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
Senior Management
Klaus Helmrich
Deutschland GmbH, Germany
> Siemens Gamesa Renewable Energy
> Infineon Technologies Dresden Verwaltungs GmbH,
Germany
Johann Dechant¹
Vice Chairman
Xiaoqun Clever-Steg
Dr. Wolfgang Eder
Chairman
(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
Labor union secretary
IG Metall district
management, Berlin-
Brandenburg-Saxony
Membership of other Supervisory Boards
and other comparable governing bodies of domestic
and foreign companies
Member of the Administrative Board
> 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
Dr. Herbert Diess
Chairman
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.
Fees for other 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.
25
therein: Germany
2,017
1,594
423
27
Asia-Pacific (excluding Japan, Greater China)
2,128
1,627
501
31
Asia-Pacific (excluding Japan, Greater China)
2,594
717
2,343
11
Greater China²
176
152
24
16
Greater China'
5,275
5,204
71
1
therein: Mainland China, Hong Kong
162
251
2,904
3,621
therein: Germany
Consolidated Financial Statements
Further information
160 →
Notes to the Consolidated Financial Statements
Entity-wide disclosures in accordance with IFRS 8
Revenue for the 2023 and 2022 fiscal years by region was as follows:
Non-current assets as of 30 September 2023 and 2022, by region, were as follows:
Change
30 Septem-
ber 2023
30 Septem-
ber 20221
absolute
in %
Change
€ in millions
€ in millions
2023
2022
absolute
in %
Revenue:
Non-current assets:
Europe
6,105
4,873
1,232
25
Europe, Middle East, Africa
4,360
3,399
961
28
137
25
18
therein: Mainland China, Hong Kong
27
Total
17,255
16,712
543
3
Total
16,309
14,218
2,091
15
1 Greater China comprises Mainland China, Hong Kong and Taiwan.
The allocation of revenues from external customers to geographic areas is based on
the customers' locations. The average number of employees by geographic region is
provided in note 4. □ p. 109
No single customer accounted for more than 10 percent of Infineon's revenue during
the 2023 and 2022 fiscal years.
1 The presentation of grants receivables, as well as of some of the advance payments made, was corrected in the 2023 fiscal year.
These are now no longer reported under current or non-current financial assets. The previous year's figures have been adjusted to
improve comparability.
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
418
Melanie Riedl¹
1,564
therein: USA
4,124
4,063
61
2
Japan
79
67
12
18
Japan
1,706
1,415
291
21
Americas
8,767
9,993
(1,226)
(12)
Americas
2,374
1,857
517
28
therein: USA
8,750
9,978
(1,228)
(12)
1,982
2.92
Jürgen Scholz¹
Analysis Engineer and
Vice Chairwoman of the
Works Council Campeon
Labor union secretary
Ebène, Mauritius
100
0
0.13
(0.03)
5
Lausanne, Switzerland
100
0
7.09
1.46
11
Wilmington, Delaware, USA
6
100
6,495.61
(197.26)
6,24
Wilmington, Delaware, USA
100
0
316.41
4.78
6,24
Cork, Ireland
100
0
8.89
0
1.05
1.34
0
0.00
0.00
6, 19, 24
Wilmington, Delaware, USA
100
0
0.32
(2.04)
6,24
General Trias, Philippines
40
0
1.39
0.00
11, 20
Wilmington, Delaware, USA
100
0
0.00
0.00
6,24
Camana Bay (George Town), Cayman Islands
100
0
47.35
0.42
6,24
Kanata, Ontario, Canada
100
2.34
0
4
100
11
Camana Bay (George Town), Cayman Islands
100
0
6.64
0.00
6,24
Karlsruhe, Germany
100
100
2.16
0.00
3, 13, 14
0.09
Beijing, People's Republic of China
0
15.16
1.29
11
Shenzhen, People's Republic of China
100
0
3.39
1.88
11
Wuxi, People's Republic of China
100
0
100
2.36
0
100
0
(0.03)
0.02
11
Camana Bay (George Town), Cayman Islands
100
0
6.29
(0.03)
6, 24
Singapore, Singapore
100
0
2.80
2.24
11
Shanghai, People's Republic of China
100
0
4.29
(6.92)
11
Camana Bay (George Town), Cayman Islands
100
0
274.43
(0.82)
6,24
Lviv, Ukraine
Guadalajara, Mexico
n.a.
Austin, Texas, USA
(€ in millions)
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
> Heidelberg Materials AG, Germany (listed)
> Deutsche Telekom AG, Germany (listed)
> DWS Group GmbH & Co. KGaA, Germany (listed)
> Greiner AG, Austria (since 27 June 2023)
Supervisory Board member
Senior advisor -
The Blackstone Group,
member of various advisory
boards and investor
Member of various
supervisory bodies
> DWS Group GmbH & Co. KGaA, 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
Supervisory Board committees
> Klöckner & Co. SE, Germany (listed)
Position
1 Employee representative.
(since 22 April 2023)
Margret Suckale
Member of the Foundation Council
> Friedhelm Loh Familienstiftung, Germany
Mirco Synde¹
> Friedhelm Loh Stiftung, Germany
Member of the Advisory Board
> 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
> LafargeHolcim Maroc SAS, Morocco (listed)
> LafargeHolcim Maroc Afrique SAS, Morocco
> 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)
› Catalina Holdings (Bermuda) Ltd., Bermuda
Supervisory Board member
> Krones AG, Germany (listed)
(until 23 May 2023)
Member of the Administrative Board
> BKK of BMW AG, Germany
Diana Vitale¹
Ute Wolf
Mediation Committee
Dr. Herbert Diess (Member and Chairman since 16 February 2023)
Dr. Wolfgang Eder (Member and Chairman until 16 February 2023)
Johann Dechant
Hans-Ulrich Holdenried (Member until 16 February 2023)
Jürgen Scholz
Name of company
Fully consolidated subsidiaries:
5200 Ben White Condominiums Association, Inc.
AgigA Tech, Inc.
CYLand Corp.
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.
Infineon Technologies (Thailand) Limited
Infineon Technologies (Wuxi) Co., Ltd.
Infineon Technologies (Xi'an) Co., Ltd.
Infineon | Annual Report 2023
Registered office
Shareholdings
in %
Thereof Infineon
Technologies AG
Equity
Net result
Footnote
(€ in millions)
Subsidiaries, associated companies, joint ventures and other companies (not consolidated)
as of 30 September 2023
Management Consultant
165 →
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
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)
Nomination 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)
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
Ute Wolf (Member since 22 April 2023)
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Further information
SkyHigh Memory Limited
Management Board and Supervisory Board
Infineon Technologies Bipolar GmbH & Co. KG
100
Jakarta, Indonesia
6
(0.01)
0.03
100
100
18
n.a.
n.a.
0
n.a.
11
0.09
1.27
24
24
(€ in millions)
Footnote
Net result
Equity
(€ in millions)
Thereof Infineon
Technologies AG
Shareholdings
in %
Notes to the Consolidated Financial Statements
169 →
Further information
Consolidated Financial Statements
0
0.23
0.04
6
n.a.
n.a.
n.a.
Graz, Austria
18
n.a.
n.a.
n.a.
n.a.
Vienna, Austria
18
n.a.
n.a.
Combined Management Report
0
Villach, Austria
11
(24.89)
24.23
9
9
Schramberg, Germany
6
0.00
0.00
0
100
Wilmington, Delaware, USA
n.a.
Management Board and Supervisory Board
11
0.30
100
Warsaw, Poland
6,13
0.00
0.03
100
100
Neubiberg, Germany
6, 13
0.00
0.03
100
100
0
Neubiberg, Germany
(0.01)
0.02
100
100
Neubiberg, Germany
9
0.00
0.00
0
100
Netanya, Israel
0.06
0.16
6
n.a.
0.15
6
0.87
0
100
Villach-St. Magdalen, Austria
6
0.00
0.00
0
100
Wilmington, Delaware, USA
6
0.05
0.17
0.02
0
Hanoi, Vietnam
11
(0.11)
(0.03)
0
100
São Paulo, Brasil
11
0.01
0.05
0
100
Bucharest, Romania
100
0
18
n.a.
2
0
77
Rotterdam, The Netherlands
2
0
77
St. Denis, France
2
0
77
Dresden, Germany
2
0
77
2
0
77
2
0
77
2
0
77
2
0
77
Shanghai, People's Republic of China
77
0
2
2
0
77
Wilmington, Delaware, USA
2
0
77
Suzhou, People's Republic of China
2
0
77
Fort Lauderdale, Florida, USA
2
2
0
Seoul, Republic of Korea
2
0
77
Padua, Italy
2
0
77
Suzhou, People's Republic of China
2
0
77
Rotterdam, The Netherlands
77
0
77
2
Qimonda Finance LLC (in insolvency)
Qimonda Dresden Verwaltungsgesellschaft mbH (in insolvency)
Qimonda Dresden GmbH & Co. OHG (in insolvency)
Qimonda Bratislava s.r.o. (in liquidation)
Qimonda Belgium BVBA (in insolvency)
Qimonda Asia Pacific Pte. Ltd.
Qimonda AG (in insolvency)
Qimonda (Malaysia) Sdn. Bhd. (in liquidation)
Itarion Solar Lda.
Celis Semiconductor Corp.
Qimonda AG and its subsidiaries:²
Lippstadt, Germany
Kaohsiung, Taiwan
Neubiberg, Germany
Registered office
Munich, Germany
XMOS Limited
TTTech Auto AG
Silicon Alps Cluster GmbH
Schweizer Electronic AG
R Labco, Inc.
PT Infineon Technologies Indonesia
OSPT IP Pool GmbH
MicroLinks Technology Corp.
KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
Name of company
18
n.a.
n.a.
0
Virtual Vehicle Research GmbH
Bristol, Great Britain
Singapore, Singapore
Bratislava, Slovakia
28
77
2
0
77
Melaka, Malaysia
0
40
Vila do Conde, Portugal
2
2
0
17
Colorado Springs, Colorado, USA
Leuven, Belgium
Infineon | Annual Report 2023
Qimonda Memory Product Development Center (Suzhou) Co. (in liquidation)
Qimonda Licensing LLC
Qimonda Korea Co. Ltd. (in liquidation)
Qimonda Italy s.r.l. (in liquidation)
Qimonda IT (Suzhou) Co., Ltd. (in liquidation)
Qimonda Investment B.V.
Qimonda International Trade (Shanghai) Co. Ltd.
Qimonda Holding B.V. (in insolvency)
Qimonda France SAS (in liquidation)
Qimonda Flash GmbH (in insolvency)
Wilmington, Delaware, USA
Dresden, Germany
Joint ventures:
Qimonda North America Corp. (in insolvency)
Combined Management Report
Dresden, Germany
Berlin, Germany
18
Coventry, Great Britain
100
0
2.64
0.85
n.a.
6
100
0
0.08
(1.02)
11
Neubiberg, Germany
Stockholm, Sweden
100
n.a.
n.a.
n.a.
n.a.
18
Duisburg, Germany
100
1.26
n.a.
0.54
Duisburg, Germany
100
100
0.08
0.00
6
6
100
0.53
(0.06)
Neubiberg, Germany
100
100
0.03
0.00
6
6
Neubiberg, Germany
100
0.13
0.00
6, 13
Madrid, Spain
100
100
0.00
0.04
100
8
Warstein, Germany
60
60
0.03
0.00
6
Neubiberg, Germany
100
0
0.15
0.02
6
Neubiberg, Germany
100
0
n.a.
100
6
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 Technologies Mantel 27 GmbH
Infineon | Annual Report 2023
Wilmington, Delaware, USA
Thereof Infineon
Technologies AG
Equity
Net result
Footnote
(€ in millions)
Registered office
Infineon Technologies Mantel 26 AG
Infineon Technologies Israel Ltd.
Infineon Technologies Iberia, S.L.U.
SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd
Other companies (not consolidated):1
CHIL Semiconductors Corporation
Cypress Envirosystems, Inc.
EPOS embedded core & power systems GmbH & Co. KG
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
(€ in millions)
Dover, Delaware, USA
Shareholdings
in %
0
0.00
0.00
0
100
Wilmington, Delaware, USA
6,22
11
43.11
53.57
42.5
49
Shanghai, People's Republic of China
17.73
52.67
60
60
25
11, 23
Warstein, Germany
(0.85)
11, 23, 24
Siegen, Germany
15
15
4.48
9.31
11, 21
Hong Kong, People's Republic of China
40
0
52.76
19.23
(13.54)
Further information
Independent Auditor's Report
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
> Identify and assess the risks of material intentional or unintentional non-compliance
with the requirements of Section 328 (1) HGB, design and perform assurance pro-
cedures responsive to those risks, and obtain assurance evidence that is sufficient
and appropriate to provide a basis for our assurance opinion.
Our objective is to obtain reasonable assurance about whether the ESEF documents
are free from material intentional or unintentional non-compliance with the require-
ments of Section 328 (1) HGB. We exercise professional judgement and maintain
professional scepticism throughout the assurance work. We also:
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).
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.
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,
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
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.
← 179 →
The Supervisory Board is responsible for overseeing the process of preparing the
ESEF documents as part of the financial reporting process.
> 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.
Basis for the Opinions
> Evaluate whether the ESEF documents provide an XHTML rendering with content
equivalent to the audited consolidated financial statements and the audited group
management report.
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.
Other Legal and Regulatory Requirements
Infineon | Annual Report 2023
Wirtschaftsprüfer
[German Public Auditor]
Schmitt
Huber-Straßer
Wirtschaftsprüferin
[German Public Auditor]
Wirtschaftsprüfungsgesellschaft
[Original German version signed by:]
> 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.
KPMG AG
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.
Munich, 23 November 2023
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.
9 Equity and net result as of 30 September 2022 (period from 8 September 2022 until 30 September 2022).
Further information
Independent Auditor's Report
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
2
2
19 Non-stock entity. Disclosure of ownership in percent does not apply.
2
Combined Management Report
Consolidated Financial Statements
Further information
← 171 →
Notes to the Consolidated Financial Statements
Neubiberg, 21 November 2023
Infineon Technologies AG
Management Board
Jochen Hanebeck
Management Board and Supervisory Board
18 Because criteria pursuant to section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not disclosed.
17 Exemption pursuant to section 264b German Commercial Code from the obligations to prepare a management report, from the audit obligation, and from the obligation to disclose the annual financial statements.
16 Exemption pursuant to section 264b German Commercial Code from the obligations to prepare a management report as well as notes and from the obligations to disclose the annual financial statements.
77
77
77
Thereof Infineon
Technologies AG
0
(€ in millions)
0
0
2 On 23 January 2009, Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009. The equity and earnings of Qimonda AG and its subsidiaries
are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency. The list of subsidiaries held by Qimonda AG is based on information from 30 September 2010, since Infineon
had not received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies, and further reflects information from the German commercial register.
Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and results of operations.
3 Equity and net result as of 30 September 2021.
4 Equity and net result as of 31 December 2021.
5 Equity and net result as of 31 March 2022.
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).
8 Equity and net result as of 30 September 2022 (period from 1 January 2022 until 30 September 2022).
Key Audit Matters in the Audit of the Consolidated
Financial Statements
10 Equity and net result as of 2 October 2022 (period from 4 October 2021 until 2 October 2022).
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.
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.
Elke Reichart
in %
Dr. Sven Schneider
Dr. Rutger Wijburg
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 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,
← 173 →
> 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
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 | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
Independent Auditor's Report
← 174 →
← 178 →
> 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.
Independent Auditor's Report
Further information
Consolidated Financial Statements
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
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 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.
Neubiberg, 23 November 2023
Infineon Technologies AG
Management Board
Jochen Hanebeck
Elke Reichart
Dr. Sven Schneider
Andreas Urschitz
Dr. Rutger Wijburg
Infineon | Annual Report 2023
Further information
Responsibility Statement
by the Management Board
← 172 →
Management Board and Supervisory Board
Combined Management Report
Andreas Urschitz
Shareholdings
Further information
Wilmington, Delaware, USA
Taipei, Taiwan
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
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Group Management Report
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due
to fraud or error, and whether the group management report as a whole provides an
appropriate view of the Group's position and, in all material respects, is consistent
with the consolidated financial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropriately presents the oppor-
tunities and risks of future development, as well as to issue an auditor's report that
includes our opinions on the consolidated financial statements and on the group
management report.
Consolidated Financial Statements
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
In connection with our audit, our responsibility is to read the other information and,
in so doing, to consider whether the other information
Our opinions on the consolidated financial statements and on the group management
report do not cover the other information, and consequently we do not express an
opinion or any other form of assurance conclusion thereon.
The other information also includes the remaining parts of the annual report. The
other information does not include the consolidated financial statements, the group
management report information audited for content and our auditor's report thereon.
Combined 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:
Infineon | Annual Report 2023
Combined Management Report
Consolidated Financial Statements
High Blantyre, Scotland
Management Board and Supervisory Board
Infineon | Annual Report 2023
We also provide those charged with governance with a statement that we have
complied with the relevant independence requirements, and communicate with
them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, the actions taken or safeguards applied
to eliminate independence threats.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify during our audit.
> Perform audit procedures on the prospective information presented by the
Management Board in the group management report. On the basis of sufficient
appropriate audit evidence we evaluate, in particular, the significant assumptions
used by the Management Board as a basis for the prospective information, and
evaluate the proper derivation of the prospective information from these assump-
tions. We do not express a separate opinion on the prospective information and
on the assumptions used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective information.
> Evaluate the consistency of the group management report with the consolidated
financial statements, its conformity with [German] law, and the view of the Group's
position it provides.
> Obtain sufficient appropriate audit evidence regarding the financial information
of the entities or business activities within the Group to express opinions on the
consolidated financial statements and on the group management report. We are
responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our opinions.
> Evaluate the overall presentation, structure and content of the consolidated
financial statements, including the disclosures, and whether the consolidated
financial statements present the underlying transactions and events in a manner
that the consolidated financial statements give a true and fair view of the assets,
liabilities, financial position and financial performance of the Group in compliance
with IFRSS as adopted by the EU and the additional requirements of German
commercial law pursuant to Section 315e (1) HGB.
> Conclude on the appropriateness of the Management Board's use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in the auditor's report
to the related disclosures in the consolidated financial statements and in the group
management report or, if such disclosures are inadequate, to modify our respec-
tive opinions. Our conclusions are based on the audit evidence obtained up to the
date of our auditor's report. However, future events or conditions may cause the
Group to cease to be able to continue as a going concern.
> Evaluate the appropriateness of accounting policies used by the Management
Board and the reasonableness of estimates made by the Management Board and
related disclosures.
> Obtain an understanding of internal control relevant to the audit of the consolidated
financial statements and of arrangements and measures (systems) relevant to the
audit of the group management report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of these systems.
← 177 →
Further information
Independent Auditor's Report
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
> information extraneous to management reports and marked as unaudited.
> the combined corporate governance statement for the Company and the Group
referred to in the group management report, and
> 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.
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:
Please refer to note 2 in the notes to the consolidated financial statements for infor-
mation on the accounting policies applied and the assumptions used. Information on
the value of goodwill can be found under note 14.
Impairment testing of goodwill
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements for the financial
year from 1 October 2022 to 30 September 2023. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, we do not provide a separate opinion on these matters.
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
← 170 →
Notes to the Consolidated Financial Statements
Equity
Net result
(€ in millions)
Footnote
Name of company
Qimonda Richmond LLC (in insolvency)
Qimonda Taiwan Co. Ltd. (in liquidation)
> the separate combined non-financial report of the Company and Group, which is
referred to in the group management report
Qimonda UK Ltd. (in liquidation)
Registered office
1 Certain subsidiaries were not consolidated due to immateriality.
The financial statement risk
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.
=
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.
The Company's assumptions used for measurement are appropriate.
The related disclosures in the notes are appropriate.
The calculation method used for impairment testing of goodwill is appropriate and
in line with the accounting policies to be applied.
Other information
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.
Our observations
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.
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.
Further information
Independent Auditor's Report
Consolidated Financial Statements
Combined Management Report
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.
Management Board and Supervisory Board
← 175 →
Infineon | Annual Report 2023
When assessing the impairment test, we also assessed the appropriateness of key
assumptions. We assessed the Company's calculation method and selected assump-
tions in terms of their appropriateness with the help of our valuation specialists.
For this purpose, we checked that corporate planning was updated for the next five
years and adopted by the Management Board. Using elements selected on the basis
of risk, we had the staff responsible for preparing corporate planning explain to us in
particular revenue and margin performance, as well as the long-term growth rates
assumed in perpetuity, which consider a steady state taking into account the synergy
effects of the acquisition of Cypress Semiconductor Corporation. In this context,
revenue performance in particular was critically reviewed and assessed based on
publicly available market estimates and information to determine whether the revenue
Our audit approach
C03
R&D expenses
C02
Core competencies in the segments
24
artificial intelligence
ASIC
advanced driver assistance system
ΑΙ
ADAS
Consolidated Financial Statements
C01 The main stages of the semiconductor value chain
List of abbreviations
Chart overview | List of abbreviations
Further information
Chart overview
Combined Management Report
Management Board and Supervisory Board
> Security controllers (contact-based, contactless,
dual-interface)
> Microcontroller for consumer electronics
35
and industrial applications
Page
22
application-specific integrated circuit
47
brushless direct current
integrated circuit
Authentication, Trusted Computing)
IC
Revenue and Segment Result of the
C07
gallium nitride
GaN
dynamic random access memory
DRAM
Revenue and Segment Result of the
Power & Sensor Systems segment
C06
direct current to direct current conversion
corporate social responsibility
bluetooth low energy
DC-DC
46
CSR
BLE
46
445
C05 Revenue and Segment Result of the
Green Industrial Power segment
Automotive segment
C04 Revenue and Segment Result of the
BLDC
> Embedded security controllers (Embedded SIM,
› Accessories
Product range
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
Automotive
> Printer cartridges
> Industrial control systems
› Game consoles
> Brand protection
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
Connected Secure Systems segment
› Game consoles
› Connectivity solutions (Wi-Fi, Bluetooth, BLE, UWB)
> Remote control
Government identification documents
Infineon | Annual Report 2023
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
IoT
> Social insurance cards
> Passports
> National identity cards
> Healthcare cards
> Driver's licenses
› Smart watches and activity trackers
49
1 October to 30 September
insulated gate bipolar transistor
Published by:
Editors:
Imprint
186 →
Further information
Imprint
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
Publication of
fourth quarter and
fiscal year 2024¹
results
Publication of
third quarter 2024¹
results
Publication of
second quarter 2024¹
results
Annual General
Meeting 2024
virtual
Publication of
first quarter 2024¹
results
12
Tuesday
5
7
23
6
Monday
Tuesday
Friday
Tuesday
Copy deadline:
November
Fiscal year:
Designed by:
Visit us on the web:
Contact for Investors and Analysts:
Media Contact:
Headquarters:
Infineon Technologies AG
Infineon | Annual Report 2023
Visit us on the web: www.infineon.com f in X
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.
The provision of the information used by Infineon does not imply any judgment on Infineon and no liability is
assumed for the information.
Specific disclaimer for Omdia reports, data and information referenced in this document:
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.
Forward-looking statements
Public
Infineon, the Infineon logo, AURIX™, FlexRay™, Modus Toolbox™, PROFET™,
PSoCT, TRAVEO M
in the 2023 fiscal year:
The following were brand names of Infineon Technologies AG
Page 12: Tobias Eble, Munich (Germany)
Page 4: Werner Bartsch, Hamburg (Germany)
Page 10: Bernhard Schmidt, Munich (Germany)
HGB Hamburger Geschäftsberichte GmbH & Co. KG,
Hamburg (Germany)
KPMG AG Wirtschaftsprüfungsgesellschaft,
Munich (Germany)
182 →
Infineon Technologies AG, Neubiberg (Germany)
Investor Relations, Accounting, Consolidation & Reporting
23 November 2023
Note
Photography:
Independent auditors:
August
May
February
Internet of Things
ML
RF
66
Risk assessment matrix
C13
PSOC
60
C12 Dividend per share for the 2014 to 2023 fiscal years
NFC
59
C11 Shareholder structure as of the end of the 2023 fiscal year
NAND
59
US Semiconductor Index for the 2023 fiscal year
(daily closing prices)
MEMS
C10 Development of the Infineon Technologies AG share
compared to Germany's DAX Index, the Philadelphia
Semiconductor Index (SOX) and the Dow Jones
LED
53
C09 Financial debt by currency
IoT
50
C08 Revenue by segment
light-emitting diode
micro-electromechanical system
machine learning
MOSFET metal-oxide-semiconductor field-effect transistor
February
1 Preliminary
Financial calendar 2024
← 185 →
Further information
Financial calendar 2024
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
← 184 →
Infineon | Annual Report 2023
wireless fidelity
IGBT
Wi-Fi
USB
time-of-flight
ToF
silicon carbide
Sic
silicon
Si
radio frequency
programmable system-on-chip
near-field communication
not AND
universal serial bus
> Submarine telecommunications
> Metro trains
Infineon | Annual Report 2023
Green Industrial Power
GIP
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
> Voltage regulators
> Transceivers (CAN, CAN FD, LIN, Ethernet, FlexRay™)
> SiC (diodes, MOSFETs, modules)
77 GHz radar, current)
> Sensors (3D-ToF, pressure, magnetic,
> Power ICs
> Memory ICs (NOR flash, SRAM, nvSRAM, F-RAM)
> Industrial microcontrollers
> IGBT modules
› Discrete power semiconductors
safety, driver assistance systems, infotainment and
digital display systems
> 32-bit automotive microcontrollers for powertrain,
Product range
> Tachograph
> Remote keyless entry
> Protection against software manipulation
> Protection against manipulation (e.g., odometer)
Further information
Applications and product range
Green Industrial Power
› Original spare parts authentication
← 181 →
Energy generation
> 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
> Urban district
> Home usage
> Grid stability
Energy storage
> Wind power turbines
> Photovoltaic systems
Applications
> Elevator systems
-Car-to-infrastructure
› Communication
> ESP (Electronic Stability Program)
› Emergency braking assistant
> Electronic power steering
> Electronic chassis control
› Distance control
> 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
> Lane departure warning system
-Car-to-car
> Tire pressure monitoring system
> Air conditioning
Security
› Transmission control
› Thermal management
> Start-stop system
› Generator control
> Electric motor control
› DC-DC converter
› Combustion engine control
› Battery management
› Battery charging control
Powertrain
› Digital instrument cluster
› Connectivity for in-cabin infotainment
Infotainment
> Suspension
> Sunroof
> Steering
> Power window
> Lighting
> Hatch door
> Electronic seat adjustment
> Door electronics
› Body control units
Comfort electronics
> Oil and gas exploration
> Escalators
> Oil derricks
› Data centers
› Consumer electronics
supplies, DC-DC conversion, wireless charging)
Power management (chargers, adapters, power
> Tablets
› Smartphones
› Navigation devices
> 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
Charging stations for electric vehicles
› Base stations
Cellular communications infrastructure
> Multi-copters
> eScooters
> Home appliances
> eBikes
> Mobile devices
> Servers
> USB controllers
> TVS (transient voltage suppressor) diodes
> 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 amplifiers
> GaN power switches
high-voltage power MOSFETs (Si-based)
> 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
> Defense technologies
> Aviation technologies
› Aerospace systems
Special applications in harsh environments
› Telecommunication technology
> PCs and notebooks
> Materials handling
- Power saws
- Cordless screwdrivers
> Discrete IGBTs
› Bare die business
Product range
1 Including motors, compressors, pumps and fans.
› Trams
› Locomotives
> 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
› Driver ICs
- Drills
> IGBT modules (low-power, medium-power,
high-power)
> Intelligent IGBT modules with integrated
> 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
> Battery-powered loudspeakers
Audio amplifiers
Applications
Further information
Applications and product range
Power & Sensor 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
> IGBT module solutions, including IGBT stacks
> Windshield wipers
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
Neubiberg, November 2023
Management Board and Supervisory Board
Report of the Supervisory Board
Infineon | Annual Report 2023
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.
Personnel matters relating to the Management Board
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.
> 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 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.
> 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.
The 2023 fiscal year was characterized by a variety of strategic projects that were
closely monitored and then all approved by the Supervisory Board:
Corporate strategy
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.
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.
5 Q = 13
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Report of the Supervisory Board
Infineon | Annual Report 2023
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
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.
Combined Management Report
Consolidated Financial Statements
Further information
5 Q = < 14 →
The Mediation Committee did not need to convene during the reporting year.
Mediation Committee
The Supervisory Board's various committees are responsible for drawing up resolutions
and preparing other major topics that need to be dealt with by the full Supervisory
Board. Moreover, the Supervisory Board has delegated certain decision-making powers
to its committees. The chairpersons of each committee are required to report on
committee meetings at the next full Supervisory Board meeting.
Committee work
5 Q = 15 →
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Report of the Supervisory Board
Infineon | Annual Report 2023
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.
Basic and ongoing training
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.
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.
Personnel matters relating to the Supervisory Board
Supervisory Board topics
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.
Litigation
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.
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.
Management Board remuneration
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
The Management Board
5 Q = < 11
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
The Management Board
Dr. Rutger Wijburg
Chief Operations Officer
Elke Reichart
Chief Digital
Transformation Officer
Jochen Hanebeck
Chief Executive Officer
Dr. Sven Schneider
Chief Financial Officer
Andreas Urschitz
Chief Marketing Officer
(From left to right)
ઉમ
Infineon | Annual Report 2023
The Management Board
10 →
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
The Management Board
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.
Andreas Urschitz
Chief Marketing Officer
Nomination Committee
Dr. Sven Schneider
Chief Financial Officer
Elke Reichart
Dr. Herbert Diess
Report of the Supervisory Board
to the Annual General Meeting
5 Q = < 12 →
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Report of the Supervisory Board
Infineon | Annual Report 2023
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.
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).
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.
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.
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).
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).
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.
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.
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.
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.
Chief Operations Officer
Dr. Rutger Wijburg
Chief Digital Transformation Officer
Jochen Hanebeck
Chief Executive Officer
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.
44
22 Value chain and manufacturing
42 Group performance
Overview
21
20 Business model
42 2023 fiscal year
Combined Management Report
50 = ( 19 )
Infineon | Annual Report 2023
Chairman of the Supervisory Board
Dr. Herbert Diess
H. DIESS
On behalf of the Supervisory Board
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.
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 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.
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
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.
5 Q = < 18 →
Further information
Segment performance
Consolidated Financial Statements
49
53
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
61 Overall statement on Infineon's financial condition
58 Infineon on the capital market
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
29 Strategic guidelines
27 Strategic targets
27 Long-term growth trends
27 Group strategy
24 The segments
Review of financial condition
Review of results of operations
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.
Combined Management Report
Infineon | Annual Report 2023
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
Self-assessment by the Supervisory Board
www.infineon.com/declaration-of-compliance
The actual wording of the Declaration of Compliance 2023 and all previous Declara-
tions of Compliance are available on Infineon's website.
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.
Declaration of Compliance 2023
Corporate Governance
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.
Strategy and Technology Committee
5 Q = < 16 →
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Report of the Supervisory Board
Infineon | Annual Report 2023
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).
Representatives of the auditor attended all the meetings of the Investment, Finance
and Audit Committee and reported in detail on the audit procedures performed. At
each of the meetings, there was also a closed session involving the auditor and the
members of the Investment, Finance and Audit Committee without the Management
Board being present. This also applied to the full Supervisory Board meeting that
considered the financial statements.
The Committee'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.
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 Investment, Finance and Audit Committee held five ordinary meetings in the
2023 fiscal year.
Investment, Finance and Audit Committee
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.
Management Board and Supervisory Board
Report of the Supervisory Board
Skills and expertise profile and list of objectives for
the Supervisory Board/qualifications matrix
Examination of potential conflicts of interest
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.
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.
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).
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 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.
Separate and Consolidated Financial Statements
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.
Related party transactions
www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
All the rules of procedure for the Supervisory Board and the Management Board are
available on the Infineon website.
Rules of procedure for the Supervisory Board and
the Management Board
5 Q = < 17 →
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Report of the Supervisory Board
Infineon | Annual Report 2023
www.infineon.com/declaration-on-corporate-governance
Further information on the topic of corporate governance is available in the Statement
of Corporate Governance.
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.
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.
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.
86 Remuneration Report
87 List of references
C01 The main stages of the semiconductor value chain
Power & Sensor
Systems
Green
Industrial Power
Automotive
PSS
GIP
ATV
Core competencies
C02 Core competencies in the segments
Chart Co2 provides an overview of the core competencies of the individual 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.
The segments
Sensor technologies
5 Q = < 24 →
Consolidated Financial Statements
Combined Management Report
Business model
The segments
Management Board and Supervisory Board
■ 10 Tokyo
Japan
■ 9 Wuxi
■ 8 Shanghai
Mainland China
Greater China
■ 7 Bangkok
Thailand
Further information
✓
Radio frequency
Embedded control
The segments
Business model
25 →
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
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.
✓
✓
Connected
Secure Systems
Infineon | Annual Report 2023
✓
✓
✓
Software
Security
Memories for
specific applications
Connectivity
Power semiconductors
power semiconductors
✓
Frontend
manufacturing
✓
✓
Control of
✓
6 Singapore
Singapore
■ 5 Cavite
Philippines
Mexico
■ 1 Tijuana
USA
Americas
Headquarters and manufacturing sites
Value chain and manufacturing
5 Q = < 23 →
Further information
Consolidated Financial Statements
Combined Management Report
Business model
Management Board and Supervisory Board
In order to optimize the use of capital and increase flexibility, we use external manufac-
turing partners in addition to our in-house manufacturing. In frontend manufacturing,
this applies primarily to manufacturing processes with little potential for differen-
tiation and, in backend manufacturing, to standardized package types. More informa-
tion about our manufacturing strategy is given in the chapter "Group strategy”. p. 27 ff.
These steps include sawing the wafer into individual chips as well as assembly and
testing. Following the backend manufacturing, the chips are sold to customers via
regional distribution centers.
Digital
services
Application
support
Software
Infineon | Annual Report 2023
Services
By
sub-contractors
By foundry
partners
Customer
Distribution
center
In-house
manufacturing
In-house
manufacturing
Backend
manufacturing
Design
■ 2 El Segundo, CA
ATV Automotive
■ 3 Austin, TX
■ 5 Mesa, AZ
■ 4 Melaka
■ 3 Kulim
Malaysia
- 2 Cheonan
Korea
■ 1 Batam
Indonesia
Asia-Pacific
6 Cegléd
Infineon | Annual Report 2023
For the definition of frontend/backend manufacturing, see chapter "Value chain and manufacturing". p. 22
Regional headquarters ■Frontend manufacturing ■ Backend manufacturing
"
■ Corporate headquarters
5 Warstein
Hungary
■■ 4 Regensburg
■ 3 Dresden
near Munich
2 Neubiberg
Germany
■ 1 Villach
Austria
Europe, Middle East, Africa
■ 6 San José, CA
■ 4 Leominster, MA
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.
CSS
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.
Consolidated Financial Statements
Combined Management Report
Business model
Management Board and Supervisory Board
GIP Green Industrial Power
For this to succeed, we have to understand the environment in which our customers'
products are used, how these products are embedded in larger systems, with which
other devices the products interact, what requirements they have to fulfill and what
function they are intended to perform. We also have to consider which other active
and passive components and control concepts they use and what capabilities our custo-
mers themselves contribute to the value creation process. Equipped with this know-
ledge, we can make the most of our competencies. We want to translate the technolo-
gically possible into marketable products that provide the greatest possible benefit
to our customers. This helps us to continue to develop leading positions in our markets.
With our approach “Product to System” (P2S), we are fostering our leading positions
in the area of power systems and IoT. P2S helps us to better adapt our solutions and
products to customer requirements. We understand new trends early on and can
develop innovative approaches together with our customers. As a result, our custom-
ers can realize sustainable benefits, among others, in terms of systems performance,
system costs and development time.
"Product to System" (P2S) and software
To achieve our strategic targets, we rely on a number of strategic guidelines to ensure
sustainable corporate governance and profitable growth.
Strategic guidelines
Our other sustainability activities are described in the separate report "Sustainability
at Infineon". This report, including the summarized separate Non-Financial Report,
which is based on the requirements set out in the German CSR Directive Implementa-
tion Act, can be downloaded from the internet at www.infineon.com/csr_reporting.
We are convinced that economic success must go hand in hand with environmental
and social commitment. This includes contributing towards more sustainable devel-
opment in society. With our products, solutions and systems, we are enabling greater
efficiency and making an active contribution towards climate protection. Sustain-
ability is of crucial importance both within the Group and in relation to our supply
chains. We manage Infineon sustainably and are committed to acting sustainably
for the benefit of society. Making a contribution towards containing global warming
forms part of our mission. We have therefore set ourselves the target of becoming
carbon-neutral by the end of the 2030 fiscal year; by 2025, our emissions are to be
reduced by 70 percent compared with 2019. This target relates to Infineon's own
greenhouse gas footprint and includes not only all direct emissions but also indirect
emissions from electricity and heat. Already by the end of the 2023 fiscal year, our
scope 1 and scope 2 emissions were 56.8 percent below the emissions for the base
year 2019. The development of intelligent exhaust air abatement systems, the
purchase of electricity from renewable sources and the implementation of energy
efficiency schemes have all contributed to this reduction.
Sustainable corporate governance
Strategic targets | Strategic guidelines
5 Q = < 29 →
Further information
Consolidated Financial Statements
Combined Management Report
Group strategy
Management Board and Supervisory Board
Infineon | Annual Report 2023
Our leverage target is expressed as an upper limit on gross financial debt of two times
EBITDA. Infineon defines EBITDA as earnings from continuing operations before inter-
est, taxes, depreciation and amortization.
Our liquidity target is €1 billion, plus at least 10 percent of revenue. The fixed base
amount of €1 billion provides a solid liquidity reserve for contingent liabilities and
pension liabilities, which are unrelated to revenue. The additional amount of at least
10 percent of revenue means that we always have access to sufficient cash to be
able to finance our operating business and investment throughout all phases of the
semiconductor cycle.
Further information
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.
20-
Infineon
In frontend manufacturing, the wafers are processed. Optical, physical and chemical
methods are used to create transistors and their interconnections, thus determining
the function of the chip. The wafers are transferred from the frontend site to a back-
end site, where the remaining processing steps take place in backend manufacturing.
Infineon covers the main stages of the semiconductor value chain: from development
and design, via frontend and backend manufacturing and marketing, to delivery
to customers (see C01). Increasingly, it also provides software and other services,
such as application-specific support for the implementation of its solutions.
Value chain and manufacturing
Value chain and manufacturing
5 Q = < 22 →
Further information
Consolidated Financial Statements
Combined Management Report
Business model
Management Board and Supervisory Board
Infineon | Annual Report 2023
In addition to our established core business, we also service new and adjacent busi-
ness areas. Links may arise between the different areas, not only in terms of products
or technology but also in terms of markets or applications.
In the area of digitalization, we have a broad portfolio of microcontrollers with hard-
ware-based security, sensors and connectivity products, such as Wi-Fi and Bluetooth,
supplemented by software. These are used in the automotive, industrial and consumer
sectors, as well as in end applications such as mobile payment and governmental
identity documents.
Our core business includes power semiconductors based on silicon (Si), silicon carbide
(SiC) and gallium nitride (GaN) in the form of individual components, modules and
system solutions. Over the years, Infineon has acquired in-depth knowledge about
the use of power semiconductors in all applications and the specific challenges
associated with them, developing a very broad portfolio. By adopting our strategic
approach "Product to System", we combine these power semiconductors with
microcontrollers (including software and driver components), so that we can provide
perfect solutions for energy conversion systems and enable decarbonization.
Semiconductors are essential to mastering the challenges of decarbonization and
digital transformation. They make our everyday lives easier, safer and greener. With
around 58,600 employees worldwide, Infineon is a leading global provider of semi-
conductor solutions that pave the way for green and efficient energy, clean and safe
mobility, and intelligent and secure IoT. Infineon develops, manufactures and markets
a large number of semiconductors and semiconductor-based solutions, focusing
on the key markets in the automotive, industrial and consumer sectors. Its products
range from standard components to special components for digital, analog and
mixed-signal applications, all the way to customer-specific solutions and the appro-
priate software.
Overview
21 →
Further information
Consolidated Financial Statements
Combined Management Report
Business model
Overview
Management Board and Supervisory Board
Infineon Annual Report 2023
Business model
Capital structure targets
Infineon | Annual Report 2023
10 to 15 percent of revenue over the cycle
Decarbonization
As a leading global provider of semiconductor solutions, Infineon focuses its business
activities on two issues that are fundamental to society and where it sees major long-
term growth trends: decarbonization and digitalization.
Long-term growth trends
Group strategy
Long-term growth trends | Strategic targets
5 Q = < 27 →
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.
Consolidated Financial Statements
Combined Management Report
Group strategy
Management Board and Supervisory Board
Infineon | Annual Report 2023
The Connected Secure Systems segment supplies comprehensive systems for a
secure, connected world based on reliable, game-changing microcontrollers and
wireless connectivity and security solutions. In particular, we offer microcontroller
solutions, Wi-Fi and Bluetooth solutions and combined connectivity solutions
(known as combo chips), along with hardware-based security technologies and an
efficient software environment for the programming and configuration of the micro-
controllers and connectivity components that cover many application areas. These
include devices for loT applications, connected home appliances and smart home
appliances, IT equipment, consumer electronics, cloud security and connected vehicles,
as well as credit and debit cards, electronic passports and national identity cards.
With our technologies in the areas of computing, connectivity and security, we are
contributing significantly towards ensuring that current and future connected systems
are reliably protected.
css Connected Secure 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.
PSS Power & Sensor Systems
26-
=
III
The segments
Business model
Further information
Consolidated Financial Statements
Combined Management Report
Management Board and Supervisory Board
Infineon | Annual Report 2023
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
Further information
Target 1: Average annual revenue growth of
more than 10 percent over the cycle
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.
Target 2: Average Segment Result Margin of
25 percent over the cycle
We hold leading positions in our core markets and have expanded systematically
over the years into new and adjacent markets. Our four segments focus on the
long-term growth trends of decarbonization and digitalization. With our strategic
approach "Product to System", we use our extensive technological and product
expertise to provide more comprehensive solutions and thus create more value for
our customers. In the areas of electromobility, advanced driver assistance systems
(ADAS), renewable energy, data center/Al and IoT in particular, we expect to achieve
above-average growth, resulting in total average annual revenue growth for the
Group over the cycle of more than 10 percent (">10%”).
Strategic targets
5 Q = < 28
Further information
Consolidated Financial Statements
Combined Management Report
Group strategy
Management Board and Supervisory Board
Infineon | Annual Report 2023
We want to continue to grow in the markets in which we operate and to increase our
profitability. Our long-term financial targets reflect this aspiration and apply over the
semiconductor cycle. At the beginning of the 2023 fiscal year, we revised our target
operating model and significantly raised our long-term financial targets. This reflects
Infineon's success over the past few years and, at the same time, is an expression
of our greater ambitions, especially with regard to profitability and value generation.
We want to create even more value by focusing consistently on the long-term growth
trends of decarbonization and digitalization and implementing our strategic guidelines
(see the chapter “Strategic guidelines”, □ p. 29 ff.).
Profitable growth
Strategic targets
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.
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.
Target 3: Adjusted Free Cash Flow within a range of
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.
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
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 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.
In addition, clearly defined quality principles provide guidance for our employees.
These principles have the overriding aim of honoring the pledges we have made
to our customers relating, among other things, to product functionality and reliabil-
ity. To achieve this, we attach great importance to understanding our customers'
concerns and clearly defining their product requirements. Honoring our pledges is
an essential guiding principle that is also reflected in the in-house cooperation we
see at Infineon.
High quality and reliability are key values for us, differentiating us from our competitors.
Therefore, quality plays a key role in the lifecycle of an Infineon product – from its
development and production to its supply and product-related services. Infineon is
certified worldwide in accordance with the leading quality standards and has an
efficient management system.
Our supply chains and our production are both particularly resilient. Our manufacturing
facilities are spread across all major regions of the world, and our contract manufac-
turer and supplier base is broadly diversified. The investment in a production company
in Germany (European Semiconductor Manufacturing Company, ESMC), which will
be founded under the leadership of TSMC (Taiwan Semiconductor Manufacturing
Company) and in which Infineon will hold a 10 percent stake, will play an important
role in the geographical diversification of the supply chains.
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.
Expanding our capacity in line with expected market trends over the cycle has proved
very effective and forward-thinking. For this reason, we have now decided to extend
the third module significantly beyond its original specifications, creating the world's
largest and most competitive manufacturing facility for silicon carbide semiconductors,
reflected in a particularly efficient production landscape and substantial economies
of scale. We are also expanding our site in Dresden as planned to include an additional
300-millimeter module for analog mixed-signal products as well as power semicon-
ductors. These can be used in a wide variety of applications, such as data centers,
automotive and loT. The new factory combines the two growth areas, decarbonization
and digitalization, and is designed to meet demand from our customers in the second
half of the decade.
Our 300-millimeter thin wafer manufacturing technology for power semiconductors
is a clear indication of the value of differentiating manufacturing in our own fabs:
As pioneers of this technology, the scale of manufacturing we have now reached
allows us to achieve significant economies of scale. Compared with manufacturing
on 200-millimeter wafers, we benefit from significantly lower costs and lower
capital investment. This has enabled us to maintain our lead: With the factory at
the Villach site (Austria), together with our 300-millimeter manufacturing facility
in Dresden (Germany), we have established a closely coordinated manufacturing
network across the two sites. In line with our “One Virtual Fab” concept, we are
using the same processes, equipment, and automation and digitalization concepts
in Villach and in Dresden. This generates economies of scale, but it also benefits
the customer, as we have the flexibility to shift production volumes between the
sites. We are applying a similar concept in the area of compound semiconductors
between our sites in Villach and Kulim (Malaysia). The third module under construc-
tion in Kulim is also able to generate synergies with the existing 200-millimeter pro-
duction infrastructure.
from the design and the software. To ensure and improve our delivery capability, even
in times of scarce production capacity in standard technologies, we have signed sup-
ply agreements with our contract manufacturers, sometimes covering a period of
several years.
Further information
Value creation through differentiating in-house
manufacturing and high quality
Consolidated Financial Statements
Combined Management Report
Group strategy
Strategic guidelines
Management Board and Supervisory Board
Infineon | Annual Report 2023
Technology leadership and customer-focused
innovation
5 Q = 31
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.
Non-financial performance indicators
Consolidated Financial Statements
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
› Investments: The total amount invested in property, plant and equipment and in
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
Further information
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:
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.).
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.
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.
Growth and profitability indicators
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.
For an analysis of changes in these performance indicators during the 2023 fiscal
year, see the chapter "Review of liquidity”. p. 55 ff.
Management Board and Supervisory Board
Combined Management Report
Group strategy
Strategic guidelines
Liquidity performance indicators
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Group strategy
Strategic guidelines
Ukraine
31 Lviv
9 Duisburg
15 Wuxi
16 Xi'an
10 Erlangen
Italy
22 Padua
11 Ilmenau
23 Pavia
Taiwan
17 Warwick, RI
17 Hsinchu
18 Taipeh
Japan
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
19 Nagoya
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.
16 San José, CA
8 Dresden
Asia-Pacific
India
1 Bangalore
Indonesia
2 Batam
Korea
3 Cheonan
4 Seoul
Malaysia
5 Ipoh
6 Kulim
Philippines
9 Muntinlupa
Singapore
10 Singapore
21 Netanya
Thailand
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
11 Nonthaburi
UK
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.
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.
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
+ Purchases of (proceeds from sales of) financial investments, net
= Free Cash Flow
Total current liabilities
+ Liabilities classified as held for sale
= Capital employed ②
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.
+ Short-term financial debt and current maturities of long-term financial debt
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.
+ Cash flows from investing activities from continuing operations
Free Cash Flow at Infineon is defined as follows:
Sustainable business practices and the consideration of forward-thinking qualitative
factors are important for Infineon's long-term success. As an enterprise very much aware
of its responsibilities towards society, Infineon also takes account of non-financial
factors, mainly in relation to the environment and employee diversity. See the report
"Sustainability at Infineon" on our website www.infineon.com/csr_reporting |
As part of the process of managing business performance, management also attaches
great importance to ensuring that Infineon acts in strict compliance with legal require-
ments and that it also complies with its internal corporate governance standards (see
the chapter "Corporate Governance”, p. 82 ff.).
Performance indicators
Principal performance indicators
In order to measure its success in implementing its strategy, Infineon uses the follow-
ing three principal performance indicators:
> Segment Result Margin/Segment Result,
> Free Cash Flow from continuing operations, and
> Return on Capital Employed (ROCE).
These financial performance indicators are also the cornerstones of the system for vari-
able remuneration. Most of the variable salary components pertaining to employees
and management are directly linked to these performance indicators.
Segment Result Margin/Segment Result
Segment Result Margin/Segment Result is the key figure used by the Group to measure
operating performance (for an analysis of the development of the Segment Result
Margin/Segment Result of Infineon and of the individual segments in the 2023 fiscal
year, see the chapter "2023 fiscal year” p. 42 ff.). The Segment Result Margin is the
Segment Result expressed as a percentage of revenue and is a measure of the profit-
ability of revenue and the success of Infineon's operating business. The activities
of the segments are managed on the basis of the Segment Result Margin/Segment
Result. Responsibility for optimizing the Segment Result Margin/Segment Result
within the framework of the Group strategy (as approved by the Management Board)
rests with the management teams of the relevant segments, acting, however, in
close coordination with the Management Board.
Cash flows from operating activities from continuing operations
Infineon | Annual Report 2023
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.
Management Board and Supervisory Board
Management Board and Supervisory Board
28 Belgrad
27 laşi
www.infineon.com/hrreport
www.infineon.com/csr_reporting
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Research and development
Consolidated Financial Statements
Further information
← 34 →
Research and
development
Infineon ❘ Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Research and development
Further information, including detailed statistics, is available in the HR Report 2023
and the 2023 Sustainability Report.
Consolidated Financial Statements
5 Q = < 35 →
Research and development expenses were €1,985 million in the 2023 fiscal year,
compared with €1,798 million in the previous year. This increase of €187 million, or
10 percent, was less than the increase in revenue. Accordingly we invested 12.2 percent
of revenue in research and development in the 2023 fiscal year, compared with
12.6 percent in the previous year. Capitalized development costs in the 2023 fiscal year
were €214 million (previous year: €209 million). The amortization of capitalized devel-
opment costs in the 2023 fiscal year was €93 million (previous year: €94 million). Sub-
sidies and grants received for research and development increased from €113 million
in the 2022 fiscal year to €130 million in the 2023 fiscal year.
At the end of the 2023 fiscal year, Infineon employed 12,830 people (22 percent of the
total workforce) in research and development worldwide. Of these, 1,645 worked on
software. At the end of the 2022 fiscal year, 12,005 people were employed by Infineon
in research and development worldwide (21 percent of the workforce). The number of
research and development sites in the 2023 fiscal year was 69 (2022: 64) in 25 countries.
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
Further information
2022
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.
5) strengthening the area of organizational development in order to be prepared
for further growth and to promote the desired internal cultural change (SPIRIT).
Consolidated Financial Statements
Further information
5 Q = 32
Portfolio management and inorganic growth
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.
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.
A pioneer of digitalization
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.
Frank
Infineon | Annual Report 2023
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
Combined Management Report
Group strategy
Serbia
2023
R&D expenses
1 Graz
12 Langen
13 Neubiberg
14 Regensburg
2 Klagenfurt
15 Soest
16 Warstein
3 Linz
4 Villach
Denmark
5 Herlev
France
Austria
6 Le Puy-Sainte-
Germany
7 Augsburg
Hungary
17 Budapest
18 Cegléd
Ireland
19 Cork
Israel
Netherlands
24 Nijmegen
Romania
25 Braşov
26 Bucharest
Réparade
12.2%
Europe, Middle East, Africa
10 Lexington, KY
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
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).
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Research and development
Consolidated Financial Statements
Further information
R&D sites and application centers
11 Lynnwood, WA
29 30
Americas
Mexico
1 Guadalajara
2 Tijuana
USA
3 Andover, MA
4 Austin, TX
5 Chandler, AZ
6 Colorado Springs, CO
7 El Segundo, CA
8 Irvine, CA
9 Leominster, MA
11
29 Bristol
Infineon | Annual Report 2023
in the 2023 fiscal year for principal and selected supplementary performance indicators
with the values forecasted and the expectations for the 2024 fiscal year.
2023
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
GIP
Review of the Green Industrial Power segment
in the 2023 fiscal year
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.
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.
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
ATV
384
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.
662
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 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.
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 →
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.
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.
C06 Revenue and Segment Result of the Power & Sensor Systems segment
€ in millions
5
(7)
(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
71
Profit (loss) for the period
3,137
2,179
2022
Infineon | Annual Report 2023
378
488
23.9%
1,822
20.7%
€ in millions
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
55
44
1.65
2.38
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
0.73
42
77
119
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
Consolidated Financial Statements
Combined Management Report
2023 fiscal year
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
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
2023 fiscal year
14,218
(2)
(34)
(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
2,046
16,309
Consolidated Financial Statements
Further information
5 Q = < 49 →
There was an increase in revenue from embedded SIMS (eSIMS), which are used in
vehicles with an automatic emergency call function as well as in the industrial sector.
Progress with Industry 4.0 applications is also leading to growing demand for eSIMs.
Manufacturing machinery, tools and other technical devices are becoming more and
more connected and can therefore be monitored, serviced and maintained remotely.
Given the growth in revenue, both the Segment Result and Segment Result Margin
were higher than in the 2022 fiscal year. Higher prices, a better product mix and
volume growth in dedicated applications led to this improvement. The Segment
Result in the 2023 fiscal year was €488 million, an increase of 29 percent compared
with the prior-year figure of €378 million. Based on revenue, the Segment Result
Margin was 23.9 percent (previous year: 20.7 percent), see c07.
Review of results of operations
Segment performance | Review of results of operations
Gross profit
Change
€ in millions, except earnings per share
Revenue
2023
2022
absolute
in %
Net financial result
Cash flows from investing activities
(2,264)
44
Combined Management Report
2023 fiscal year
Consolidated Financial Statements
Further information
5 Q = < 53 →
Review of financial condition
Review of financial condition
Increase in property, plant and equipment due to expansion
in frontend manufacturing facilities
Property, plant and equipment increased by €1,500 million to €7,045 million as of
30 September 2023. Additions of €2,729 million significantly exceeded depreciation
of €1,143 million. The main focus of Infineon's investing activities in the 2023 fiscal
year was on the expansion of its frontend manufacturing facilities in Villach (Austria)
and Dresden (Germany), as well as the development of the frontend manufacturing
site in Kulim (Malaysia).
€ in millions
ASSETS
Cash and cash equivalents and
financial investments
Trade receivables
Change
30 Septem-
ber 2023
30 Septem-
ber 2022
absolute
in %
Management Board and Supervisory Board
Infineon | Annual Report 2023
2 The calculation of the adjusted earnings per share is based on unrounded figures.
1 Including the cumulative tax effect.
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
3,590
(in millions) diluted
1,304
2
Adjusted earnings per share (in euro) - diluted²
2.65
1.97
0.68
35
Acquisition-related expenses within
financial result
Tax effect on adjustments
1,306
Revaluation of deferred tax assets resulting
3,717
(3)
Remaining current and non-current assets
2,315
2,116
199
9
Total assets
28,439
26,912
1,527
6
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.
Currency-related decrease in goodwill
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.
Decrease in other intangible assets
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.
Repayment of financial debt
Financial debt decreased by €929 million to €4,733 million, mainly as a result of the
repayment of a €750 million bond. Exchange rate effects of €182 million arising
from financial debt denominated in US dollars also contributed to the reduction in
financial debt.
More detailed information on financial debt is provided in note 16 to the Consolidated
Financial Statements. ☐ p. 123 f.
LIABILITIES AND EQUITY
(15)
(506)
3,483
2,977
1,991
1,887
104
6
Inventories
3,974
3,081
893
29
(127)
Property, plant and equipment
5,545
1,500
27
Goodwill
6,547
7,083
(536)
(8)
Other intangible assets
7,045
18
21
(116)
(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.
Both basic and diluted earnings per share stood at €2.38 for the 2023 fiscal year
(previous year: €1.65).
The calculation of earnings per share in accordance with IFRS is presented in detail
in note 8 to the Consolidated Financial Statements. □ p. 115
Increase in adjusted earnings per share
2
34
1,565
11.0%
1,599
9.8%
(209)
(5)
(2)
1,985
1,798
187
10
12.2%
12.6%
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.
(40 bp)
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
absolute
in %
Selling, general and administrative expenses
As percentage of revenue
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.
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)
(4)
Share-based payment
92
62
30
48
Acquisition-related depreciation/amortization
and other expenses
464
484
(4)
(20)
Losses (gains) on sales of businesses,
(30)
(30)
(71)
(7)
(64)
4
(4)
(95)
(4)
Trade payables
Losses (gains) on earnings of restructuring
and closures
6
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
(29)
+++
(29)
or interests in subsidiaries
Other income and expenses
3,110
2,157
953
44
Certain impairments (reversal of impairments)
(in particular on goodwill)
(6)
of Infineon Technologies AG - diluted
Plus/minus:
2,765
2,260
505
59
Capital employed ②
19,510
18,359
1,151
6
ROCE 1/②
16.6%
12.6%
400 bp
Infineon | Annual Report 2023
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.
Management Board and Supervisory Board
Combined Management Report
2023 fiscal year
Consolidated Financial Statements
Further information
5 Q = 55 →
Review of liquidity
Review of liquidity
(56)
(422)
752
330
Plus/minus:
Cash and cash equivalents
Financial investments
Assets classified as held for sale
Total current liabilities
28,439
26,912
1,527
6
(1,820)
(1,438)
Cash flow
(382)
(1,770)
(2,279)
509
22
(5,669)
(5,588)
(81)
(1)
Short-term financial debt and
current maturities of long-term financial debt
Liabilities classified as held for sale
(27)
in %
Change
€ in millions
130
140
150
160
170
180
190
200
30 September 2022 = 100
120
20.44
24.98
27.25
29.52
MA
31.79
34.07
36.34
38.61
40.88
22.71
Assets
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.
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.
2023
2022
absolute
Cash flows from operating activities
from continuing operations
3,962
3,986
(24)
(1)
Shareholder structure
7.45% BlackRock Inc.
9.50% Retail investors
83.05% other
■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
Dow Jones US Semiconductor Index
(214)
40
920
14
40%
60%
Total liabilities and equity
28,439
26,912
1,527
6
2023
4,733
US dollar
44%
56%
Euro
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
2023 fiscal year
Consolidated Financial Statements
Further information
2,100
14,944
17,044
Equity
22
C09 Financial debt by currency
Financial debt
4,733
5,662
(929)
(16)
€ in millions
Pensions and similar commitments
5 Q = < 54 >
268
(29)
(10)
Remaining current and non-current liabilities
3,629
3,749
(120)
(3)
2022
5,662
297
Review of financial condition
Increase in trade payables
ROCE for the 2023 and 2022 fiscal years is calculated as follows:
66
98
131
(33)
(25)
(30)
74
+++
Share of profit (loss) of associates and joint
ventures accounted for using the equity method
Income tax
107
27
(12)
(31)
(782)
(537)
(245)
(46)
Operating profit from continuing
operations after tax ①
3,237
2,317
39
40
(161)
39
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 up mainly due to profit for the period
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.
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).
Improvement in ROCE due to higher operating profit
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.
Consequently, Return on Capital Employed (ROCE) increased from 12.6 percent to
16.6 percent.
€ in millions, except percentage
Operating profit
Plus/minus:
(54)
Financial result
Financial result excluding interest result¹
Change
2023
2022
absolute
in %
3,948
2,845
1,103
Less interest result
(15)
44
(113)
480
1,638
10.0%
Gross cash position and net cash position
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:
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.
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).
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
2023 fiscal year
Consolidated Financial Statements
(17)
5 Q = 57 →
Review of liquidity
Principles and structure of Infineon's treasury
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.
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.
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.
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.
1 From continuing operations.
Percentage of revenue
Adjusted Free Cash Flow
related investment subsidies
(2,441)
177
7
Net cash position
(1,143)
(1,945)
802
41
Purchases of (proceeds from sales of)
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
financial investments, net
103
(643)
Free Cash Flow
1,158
1,648
(490)
(30)
Plus:
Cash outflows for investments in large front-end
buildings after deduction of cash inflows for
(540)
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.
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.
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.
€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)
2,171,026 (as of 30 September 2023),
3,689,901 (as of 30 September 2022)
DE0006231004
623100
IFX (share), IFNNY (ADS)
IFX GY (Xetra trading system), IFNNY US
IFX-XE, IFNNY-PK
Shares: Frankfurt Stock Exchange (FSE)
€40,879 million
(based on closing price of €31.36 as of 30 September 2023)
3,829,653 (in the 2023 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)
ADS, over-the-counter trading on the OTC market
(OTCQX International)
(based on closing price of US$33.17 as of 30 September 2023)
199,504 (in the 2023 fiscal year)
DAX 40
TecDAX
EURO STOXX 50
Dow Jones STOXX Europe 600
Dow Jones Euro STOXX TMI Technology Hardware & Equipment
Dow Jones Germany Titans 30
MSCI Germany
US$43,245 million
(2,264)
Index membership (selected)
Market capitalization²
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Infineon on the capital market
Consolidated Financial Statements
Further information
Infineon on the capital market
Basic information on shares
Share types
Share capital
Daily average ADS traded
Shares issued¹
ISIN
WKN
Ticker symbol
Bloomberg
Nasdaq IR Insight
Listings
Market capitalization²
Daily average shares traded on Xetra
Trading in the USA
Own shares
S&P Europe 350
Cash flows from investing activities¹
(929)
382
(311)
693
+++
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.
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
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 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.
More information about financial debt is provided in note 16 to the Consolidated
Financial Statements. p. 123 f.
Decrease in Free Cash Flow; adjusted Free Cash Flow
at 10.0 percent of revenue
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.
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 | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
2023 fiscal year
Review of liquidity
Consolidated Financial Statements
Further information
5 Q = < 56 →
(32)
19
(13)
Currency effects on cash and cash equivalents
Change in cash and cash equivalents
(2,441)
177
7
Cash flows from financing activities
(1,301)
(1,869)
568
30
Net change in cash and cash equivalents
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:
from discontinued operations
(6)
4
67
Cash-relevant change in cash and
cash equivalents
395
(330)
725
+++
(2)
€ in millions
Cash and cash equivalents
Financial investments
Gross cash position
(422)
(56)
€ in millions
Cash flows from operating activities'
2023
2022
absolute
in %
Long-term financial debt
752
4,403
(507)
(10)
3,962
3,986
(24)
(1)
Gross financial debt
4,733
5,662
4,910
(16)
330
Change
Change
30 Septem-
ber 2023
30 Septem-
ber 2022
absolute
in %
1,820
1,438
382
of long-term financial debt
27
2,279
(509)
(22)
3,590
3,717
(127)
(3)
Minus:
Short-term financial debt and current portion
1,770
Dow Jones Sustainability World Index
Further information
due on 17 February 2025,
ISIN: XS2443921056
due on 24 June 2026,
ISIN: XS2194283672
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
Other Operating
Segments
Change
Disproportionately low increase in cost of goods sold;
significant improvement in gross margin
The decrease in the proportion of revenue generated in the Greater China region is
primarily due to the decline in revenue from consumer applications such as PCs
and smartphones.
1 Greater China comprises Mainland China, Hong Kong and Taiwan.
Total
4,063
29%
1,706
10%
1,415
10%
2,374
15%
1,857
2023
13%
12%
1,564
11%
16,309
100%
14,218
100%
Japan
Americas
therein: USA
1,982
25%
2022
in %
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
absolute
in %
Research and development expenses, gross
2,329
2,120
209
10
Minus:
Grants received
Capitalized development costs
Research and development expenses
As percentage of revenue
(130)
Gross profit (revenue less cost of goods sold) in the 2023 fiscal year was €7,413 million,
21 percent higher than the prior-year figure of €6,131 million. The gross margin
improved accordingly, from 43.1 percent in the 2022 fiscal year to 45.5 percent in the
2023 fiscal year.
Cost of goods sold also includes expenses of €276 million incurred mainly in connec-
tion with the acquisition of Cypress (previous year: €288 million). These expenses
include the amortization of fair value adjustments of €250 million (previous year:
€278 million) identified in the course of purchase price allocations and other acquisi-
tion-related expenses.
51 →
Further information
8,896
8,087
809
10
54.5%
56.9%
(240 bp)
Basic information on bonds and other
financing instruments
6,131
absolute
1,282
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
Management Board and Supervisory Board
Combined Management Report
2023 fiscal year
Review of results of operations
Consolidated Financial Statements
21
4,124
7,413
37%
due on 5 April 2024
due on 5 April 2026
due on 5 April 2028
due on 16 June 2027
due on 16 June 2029
due on 16 June 2031
due on 16 June 2033
since 15 February 2023:
"BBB", Outlook: "positive"
1 The number of shares issued includes own shares.
2 Calculation of market capitalization: ("shares issued" - "own shares") x share price. The calculation is based on unrounded figures.
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 | Annual Report 2023
US$350 million
US$350 million
US$235 million
US$350 million
US$350 million
US$350 million
US$250 million
Management Board and Supervisory Board
Consolidated Financial Statements
Further information
5 Q = 59
Share price performance
The closing price for Infineon shares at the end of the 2023 fiscal year was €31.36.
This was up 38 percent on the closing price of €22.71 at the end of the 2022 fiscal year.
C10 Development of the Infineon share compared to Germany's DAX Index, the Philadelphia
Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2023
fiscal year (daily closing prices)
Infineon share price in €
Combined Management Report
Infineon on the capital market
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,
€600 million
therein: Mainland China, Hong Kong
ISIN: XS2194283839
due on 24 June 2032,
0.625% Bond from 17 February 2022
€500 million
1.125% Bond from 24 June 2020
€750 million
1.625% Bond from 24 June 2020
€750 million
due on 24 June 2029,
2.000% Bond from 24 June 2020
€650 million
ISIN: XS2194192527
2.875% Hybrid Bond from 1 October 2019
€600 million
first call date 1 January 2025,
ISIN: XS2056730323
3.625% Hybrid Bond from 1 October 2019
45.42
43.15
ISIN: XS2056730679
Greater China¹
€ in millions
Slight shifts in the regional distribution of revenue
€ in millions, except percentages
2022
Europe, Middle East, Africa
4,360
27%
3,399
24%
therein: Germany
C08 Revenue by segment
2,017
1,594
11%
Asia-Pacific (excluding Japan, Greater China)
2,594
16%
2,343
16%
5,275
32%
5,204
12%
Revenue by segment is disclosed below:
2023
Revenue grew by €2,091 million or 15 percent in the 2023 fiscal year to €16,309 million
(previous year: €14,218 million). Around half the growth in revenue was due to price
increases and around half to higher volumes and product mix adjustments. Conti-
nuing high levels of demand for semiconductors in the automotive and renewable
energy sectors, in particular, had a positive impact here. At the same time, manu-
facturing capacity is continually being expanded. This was also the case in the 2023
fiscal year at our sites in Villach (Austria), Dresden (Germany) and Kulim (Malaysia).
Production corridors released by contract manufacturers also contributed to the
increase in revenue.
High demand and positive price and exchange rate effects
have resulted in an increase in revenue
Review of results of operations
5 Q = < 50 →
Further information
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.
Consolidated Financial Statements
Combined Management Report
2023 fiscal year
Management Board and Supervisory Board
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.
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.
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.
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.
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.
Consolidated Financial Statements
5 Q = < 66
Further information
Degree of impact
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Management Board and Supervisory Board
Likelihood of occurrence
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.
1 Relating to a planning year.
5
High risk
Medium risk
Low risk
4
2 3
1
1
2
3
4
5
Degree of impact
Infineon | Annual Report 2023
C13 Risk assessment matrix
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”.
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.
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.
ERM and ICS systems
Free Cash Flow from continuing operations
For the 2024 fiscal year, Infineon is forecasting Free Cash Flow of around €0.4 billion.
This figure includes net cash outflows for investments in the expansion of frontend
manufacturing facilities in Dresden (Germany) and Kulim (Malaysia) and net cash
outflows for the acquisition of GaN Systems.
ROCE
For the 2024 fiscal year, Return on Capital Employed (ROCE) is forecast to reach
around 13 percent.
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
5 Q = < 64
Further information
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.
Consolidated Financial Statements
on Segment Result¹
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.
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.
Infineon | Annual Report 2023
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
Effective risk and opportunity management is an important element of our business
activities and supports the implementation of our strategy to achieve our strategic
goals. Infineon's risk and opportunity situation continues to be characterized by the
dynamic market environment in the semiconductor industry, a substantial need for
capital investment to achieve and sustain its market position, extraordinarily rapid
technological change, decarbonization and digitalization. Competition to gain an
innovative edge also occurs at the legal level, as evidenced, for example, by patents.
Against this background, Infineon's risk policy is aimed at quickly realizing the
opportunities that arise in a way that increases its enterprise value. It also focuses
on identifying risks early and actively mitigating them - particularly those risks that
might pose a threat to Infineon's going-concern status - by adopting appropriate
countermeasures. Risk management at Infineon is therefore closely linked to corporate
planning and the implementation of our strategy. The ultimate responsibility for
risk management lies with the Infineon Management Board.
Coordinated risk management and control system elements are in place that enable
us to implement our risk policy. In addition to the Risk and Opportunity Management
System (ERM) and the Internal Control System (ICS) described below, these elements
include, in particular, the related forecasting, management and internal reporting
processes as well as our Compliance Management System (CMS).
Combined Management Report
Report on outlook, risk and opportunity
Outlook
1
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.
1 <10% Very unlikely
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.
-
The system monitors compliance with policies and procedures using 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 financial reporting in the Separate and Consolidated Financial
Statements; and
> 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.
Assessment of appropriateness and effectiveness
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.
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.
Infineon | Annual Report 2023
Infineon | Annual Report 2023
The additional classification in “A”, “B” or “C” in brackets behind the respective title
of the risk sub-category results from the described materiality for Infineon and
enables a ranking of the risk sub-categories across the main risk categories. The risk
sub-categories with the bracketed addition "A" represent the first quartile of materiality
(highest risk sub-categories), “B” describes the second and third quartiles and “C”
the fourth quartile. The classification in the quartiles represents a change compared
to the classification in the previous year (high, medium, low).
Internal Control System with respect to the
financial reporting process
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.
Both the general ICS and ERM and the ICS with respect to the financial reporting
process are continuously being developed and expanded to ensure compliance with
internal and external requirements. Improvements made to these systems contribute
to the ongoing monitoring of the relevant risk areas, including the responsible
organizational units.
In all material respects, on the basis of the ICS and ERM activities conducted in the
2023 fiscal year, no factors came to our attention that would give rise to doubt as to
the appropriateness and effectiveness of the ICS and ERM system.
On the basis of the findings of reviews by Internal Audit and external reviews and
audits, we make continual improvements to our ICS and ERM.
> Discussion of new risk topics with the managers responsible and with the Risk
Committee
> Timeliness and regular monitoring of ICS and ERM mitigation activities
> Timeliness of regular risk inventory, risk reporting processes and testing of
the controls
> Availability of clear Group-wide guidelines about the ICS and ERM processes
> Appropriate organizational coverage of the ICS and ERM processes of Infineon
In the semi-annual meetings of the Risk Committee, the Group-wide risk and
opportunity situation is evaluated, and the results of the internal control process are
discussed. In addition, an overall statement on the appropriateness and effectiveness
of our general ICS and ERM is produced once a year. This overall statement is based
on reviews conducted by Internal Audit, voluntary external reviews and audits, and
self-assessments. The evaluation here was conducted inter alia on the basis of the
following criteria:
Further information
Consolidated Financial Statements
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Management Board and Supervisory Board
Management Board and Supervisory Board
Significant risks
<€40 million Marginal
Report on outlook, risk and opportunity
Risk and opportunity report
Further information
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
3 40-60% Possible
4 60-90% Probable
5
Very high risk
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
5 Q = 68
Consolidated Financial Statements
5 Q = < 67 →
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.
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.
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
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
Infineon Annual Report 2023
Around €1.2 billion
The following outlook is based on current business developments and internal
forecasts.
Interested parties may participate in telephone conferences via a webcast broadcast in the Investor Relations section of the
Infineon website.
www.infineon.com/investor
Retail investors can contact us by email (investor.relations@infineon.com)
and by telephone (+49 89 234-26655).
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Overall statement on Infineon's financial condition
Consolidated Financial Statements
Further information
Overall statement on Infineon's financial condition
Geopolitical and macroeconomic disruptions once again led to a volatile market
environment in the past fiscal year. Our target markets developed correspondingly
differently.
On a positive note, structural demand for many of our semiconductors for electro-
mobility applications remains unbroken. We saw a similarly healthy demand picture
for renewable energy applications as well as for power and charging infrastructure,
supported by government decarbonization initiatives. By contrast, demand for end
consumer applications such as PCs and smartphones declined following the corona-
virus pandemic. Consumers and companies were reluctant to spend in a persistently
inflationary and uncertain environment.
Despite the challenging conditions, Infineon was very successful in the 2023 fiscal year.
This is also reflected in our current figures, see the chapters "Group performance",
p. 42 f., "Review of results of operations”, ☐ p. 49 ff., "Review of financial condition”,
p. 53 f., and "Review of liquidity", p. 55 ff..
Infineon | Annual Report 2023
Management Board and Supervisory Board
Combined Management Report
Report on outlook, risk and opportunity
Outlook
Consolidated Financial Statements
Further information
5 α = < 62 →
Report on outlook, risk and opportunity
Outlook
Actual and target values for performance indicators
The following table and subsequent comments compare the actual and forecast
values of Infineon's key performance indicators for the 2023 fiscal year (FY) and show
the outlook for the 2024 fiscal year.
€ in millions,
Outlook for
FY 20231
2023
2022
2020
2019
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
Management Board and Supervisory Board
Combined Management Report
Infineon on the capital market
Consolidated Financial Statements
Further information
5 Q = < 60 →
Dividend
Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
economic development and, in general, at paying out at least an unchanged dividend
even in the event of stagnating or declining earnings. The dividend payout for the
2021 fiscal year was increased by €0.05 per share compared with the previous year.
The dividend payout for the 2022 fiscal year was then increased again by €0.05, to
€0.32 per share. It is now planned to put forward a proposal at the Annual General
Meeting in February 2024 for a further increase in the dividend of €0.03. The reason
for this is Infineon's even better business performance in the 2023 fiscal year compared
with the previous year while at the same time retaining the financial headroom of
the Company for profitable growth. If the planned proposal is approved at the Annual
General Meeting, the dividend for the 2023 fiscal year would rise to €0.35 per share.
The number of shares issued remained unchanged as of 30 September 2023 at
1,305,921,137. This figure now includes 2,171,026 shares owned by the Company
that are not entitled to a dividend. The total amount to be distributed to shareholders
is therefore anticipated to rise to €456 million, compared with €417 million one
year earlier.
C12 Dividend per share for the 2014 to 2023 fiscal years
in € cents
27
27
Actuals
FY 2023
27
22
22
20
18
2014
2015
2016
2017
2018
1 Proposal to the Annual General Meeting to be held on 23 February 2024.
332
351
25
Actuals
2021
FY 2022
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.
Management Board and Supervisory Board
Investments
Combined Management Report
Report on outlook, risk and opportunity
Outlook
Further information
5 Q = 63
Explanatory comments on the outlook
for the 2024 fiscal year
Assumed euro/US dollar exchange rate
As a globally operating organization, Infineon generates revenue not only in euros,
but also in foreign currencies, predominantly in US dollars. It also incurs expenses 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
except percentages
Consolidated Financial Statements
previous year
Infineon | Annual Report 2023
to €17 billion plus
or minus €500 million
indicators
Segment Result Margin
23.8%
Around 27%
(at a revenue level
27.0%
of around €16.2 billion
Free Cash Flow from
continuing operations
ROCE
1,648
1,158
12.6%
Around 15%
16.6%
Principal performance
compared to
Outlook for
FY 2024
to around €16.2 billion
change in revenue
16,309
14,218
Revenue increase
Selected supplementary
performance indicators
Revenue increase
Around 13%
Around 24%
(at a revenue level
of around €17 billion)
Around €0.4 billion
Revenue respectively
Further information regarding the management of financial risks is provided in
note 28 to the Consolidated Financial Statements. p. 150 ff.
-
-
despite various state-insured deposit protection mechanisms – by a combination of
risk avoidance analyses and risk-spreading measures. The failure of these measures
could have a materially adverse impact on Infineon's financial condition and liquidity.
Other financial risks (C)
Combined Management Report
Tax risks (C)
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.
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
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
Management Board and Supervisory Board
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.
Risk of default of banks and financing partners (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.
The international orientation of our business activities creates cash flows in a num-
ber of currencies other than the euro, primarily in US dollars. A significant share of
revenue, operating costs and capital expenditures is denominated in US dollars and
correlated currencies. For the most part, Infineon generates a US dollar surplus from
these transactions.
Currency risks (C)
Financial risks
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.
Business continuity risks (C)
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.
5 Q = < 74
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
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.
Consolidated Financial Statements
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.
5 Q = 75 →
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.
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.
Risks arising from our global operations
Further information regarding litigation and government inquiries is provided in
note 24 to the Consolidated Financial Statements. p. 136 ff.
One of the ways in which we counter patent-related risks is by adopting a specific
patent strategy. This includes patent searches in relation to development projects,
the systematic registration of our own patents and patent cross-licensing arrange-
ments with major competitors. However, no such opportunities exist to safeguard
against risks of this nature in the case of companies specializing in the exploitation
of patent rights.
We cannot rule out that patent infringement claims will be upheld in a court of law,
thus resulting in significant claims for damages or restrictions on selling the products
concerned. Any such outcome could, in turn, have an adverse impact on Infineon's
financial condition, liquidity and results of operations.
5 Q = < 76 →
Further information
Consolidated Financial Statements
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Management Board and Supervisory Board
Infineon | Annual Report 2023
As with many other companies in the semiconductor industry, allegations are made
against us from time to time that we have infringed upon other parties' protected
rights. Regardless of the prospects of success of such claims, substantial legal defense
costs can arise.
Provisions are recognized in connection with these matters as of 30 September 2023.
The provisions reflect the amount of those liabilities that management believes are
probable and can be estimated with reasonable accuracy as of that date. There can
be no assurance that these provisions will be sufficient to cover all liabilities that may
be incurred in conjunction with the insolvency proceedings relating to Qimonda.
Risks relating to intellectual property rights and patents
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.
Risks arising from the Qimonda insolvency
Other legal risks (C)
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.
Data protection risks
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.
As a result of the increasing complexity and frequent changes to export control
regulation in all the countries in which Infineon operates, there is a risk of not com-
plying fully with all applicable national and international export control laws and
regulations, which might result in fines and penalties. This could have an impact on
Infineon's results of operations or could influence the availability of export permits.
The central Export Control department is responsible for the implementation of
effective measures relating to export control legislation and foreign trade to avoid
sanctions and fines being imposed on Infineon. To prevent divergence from the
relevant regulations, Infineon has introduced organizational measures (such as
appointing local managers responsible for export control) and implemented training
We have therefore introduced a Group-wide Compliance Management System (CMS)
to manage these compliance-related risks in a systematic, comprehensive and sus-
tainable manner. We continue to refine the key elements of our CMS. One of the ways
we are doing this is by providing specific employee training designed to prevent,
detect and react to compliance-related incidents. The Corporate Compliance Officer
reports on a regular basis to the Chief Financial Officer, the Management Board as
a whole and the Investment, Finance and Audit Committee of the Supervisory Board.
Export control risks
There is a risk that, due to inappropriate business conduct by employees, Infineon
could violate antitrust regulations or laws combating bribery and corruption. Potential
consequences might include heavy financial penalties, compensation claims, the
cost of external support (such as lawyers' fees), damage to Infineon's reputation and
exclusion from tendering for public contracts.
Compliance risks
Regulatory risks (B)
Legal and compliance risks
Report on outlook, risk and opportunity
Risk and opportunity report
Further information
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.
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.
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.
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.
Risks arising from increased market competition and
commoditization of products
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
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.
Corporate strategy risks (B)
Risks arising from an uncertain political and economic environment
As a globally operating company, our business is highly dependent on global economic
developments. A worldwide economic downturn – particularly in the markets we
serve - may result in not achieving our forecasted revenue and contribution to earn-
ings. Risks could also arise due to political and social changes, particularly when
those changes occur in countries in which we manufacture and/or sell our products.
Geopolitical risks in the 2023 fiscal year continue to be seen as very high, especially
as a result of the ongoing war in Ukraine, the conflict over Taiwan and the tensions
in the Middle East, which has significantly reduced the predictability of economic
development. The war in Ukraine is giving rise to risks and adverse impacts, such as
price increases and scarcity of energy and raw materials. Any escalation of the con-
flict beyond Ukraine would further increase the risk of a global economic downturn.
Rising inflation and increases in interest rates may also lead to a significant decline in
consumption.
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.
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 = 71
Macroeconomic risks
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.
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.
Operational risks
Purchasing and logistical risks (B)
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.
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
measures, evaluating the construction of its own solar plants, and forming partnerships
with local solar and wind farm operators).
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.
Overall statement by Group management
Risks arising from manufacturing (B)
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.
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
The worldwide semiconductor market is dependent on global economic growth and
hence subject to fluctuations. Our target markets are therefore exposed to the risk of
short-term market fluctuations. As a result, our forecasts of Infineon's future business
performance are subject to uncertainties. The absence of hitherto projected market
growth or an unforeseen decline in market growth (related, for example, to the expan-
sion of renewables or electromobility) would make it considerably more difficult to
attain our own growth target. We are countering this by entering into long-term sales
contracts as well as service contracts that are not dependent on the cycle. We also
address the fluctuations in economic conditions and customer demand that are typical
of the semiconductor business by continuously monitoring vital early warning indi-
cators and, as far as possible, by adopting specific mitigation strategies. Examples of
these strategies include making systematic adjustments to capacity and inventories
at an early stage, introducing cost-cutting measures and making flexible use of
external production facilities for both frontend and backend manufacturing.
General market risks
Risks arising from cyclical market and sector trends (A)
Strategic risks
A structured project management system is in place to handle development projects,
including those of a customer-specific nature. To help us identify potential project
risks at an early stage and use specific measures to counter these risks, we require
projects to have clear project milestones, ongoing verification procedures and clearly
defined limits of approval authority.
This situation is exacerbated by the fact that some of our products are highly depen-
dent on the degree of commercial success achieved by individual customers in their
own markets. Furthermore, there is the risk of losing future business and design wins
if we are unable to deliver volumes above our contractual obligations if called upon
by customers to do so. These factors could have an adverse impact on Infineon's
liquidity and results of operations.
Risks relating to the development process and product lifecycle (C)
The ever-increasing complexity of technologies and products, shorter development
cycles and dynamic customer demands can cause a great deal of tension in the
field of product development. Buffer times built into processes to compensate for
potential delays are reduced accordingly. If we are unable to execute our development
plans, this could result in delays and increased development costs.
Potential cyber-attacks on data, systems and networks used in our manufacturing
processes present risks that could result in production downtime and supply bottle-
necks. In addition, cyber-attacks with industrial espionage intent and any related
potential loss of intellectual property or patents pose risks that could jeopardize our
investment in research and development and impair our long-term competitiveness.
Infineon has had a global cyber security program in place for many years now to
ensure that it is suitably protected and prepared for the constantly changing cyber
security threat situation. A key element of this program is our Cyber & Information
Security Management System (CISMS). This system, which takes a structured approach,
aims to identify and evaluate risks to our data, information systems, networks, products,
solutions and services, to constantly improve our protective measures, processes and
tools and to adapt them to the threat situation. Our CISMS covers all areas of Infineon's
business and is certified in accordance with international standards (including TISAX).
The effectiveness of the CISMS is continuously monitored in the course of regular
internal and external audits.
5 Q = 73
Further information
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
The reliability and security of Infineon's data, systems and networks are of crucial
importance. At the same time, the world has seen a rise in threats in cyberspace. This
increasingly applies to the use of IT systems to support business processes as well as
supporting internal and external communications. Despite the array of precautionary
measures put in place, any major disruption to these systems could result in risks
relating to the confidentiality, availability and integrity of data used in research and
development, manufacturing, selling or administration functions, which, in turn, could
have an adverse impact on our reputation, production capability, competitiveness
and operations.
Risks relating to the areas of cyber security, information security
and IT security (C)
In some cases, we have used derivatives to hedge price risks with respect to the
amount of gold wire and electricity required for the 2024 fiscal year.
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.
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).
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.
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.
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.
5 Q = < 72
Further information
Consolidated Financial Statements
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Management Board and Supervisory Board
Combined Management Report
Consolidated Financial Statements
Further information
5 Q = 70 →
Report on outlook, risk and opportunity
Risk and opportunity report
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.
on the risk situation
Infineon | Annual Report 2023
Significant opportunities
43
+++
251
(119)
132
(1)
(4)
(300)
(304)
General and administrative expenses
(3)
(17)
(533)
(550)
Selling expenses
(15)
(205)
(1,394)
(1,599)
Research and development expenses
23
733
3,238
3,971
Gross profit
(26)
(1,212)
67
(24)
(36)
(14)
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.
Infineon | Annual Report 2023
Management Board and Supervisory Board
Income after taxes/net profit
Transfers to retained earnings
Unappropriated profit
Other financial result
Income tax
Other income (expense), net
Result from investments, net
Interest result
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).
Earnings position
70
292
418
(482)
(228)
(4,682)
(710)
774
646
1,420
(154)
(109)
(263)
+++
7
(3)
4
93
187
(201)
+++
(5,894)
710
25
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
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.
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).
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.
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.
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.
Opportunities arising from cyclical market and sector trends (A)
Strategic opportunities
The principal opportunities are described in the following section, divided into
"Strategic opportunities”, “Operational opportunities” and “Financial opportunities",
which are to be seen in addition to the future business prospects mentioned in the
forecast report. However, these represent only a selection of the opportunities avail-
able to Infineon. Our assessment of opportunities is also subject to continual change.
This reflects the fact that our business, our markets and the technologies we deploy
are constantly subject to new developments, bringing with them fresh opportunities
and causing others to become less relevant or otherwise changing the significance
of an opportunity from our perspective.
Opportunities arising from our strategic approach "Product to System"
With the strategic approach "Product to System", we seek to identify additional
benefits for our customers at a system level from within our broad portfolio of tech-
nologies and products. This strategy enables us to exploit further revenue growth
potential, reduce customers' development costs and shorten the lead times required
to bring their products to market and thereby support our growth and margin targets.
Additional opportunities are arising from accelerated and/or broader market
pene-
tration by digital products. In this context, the issue of "security and data integrity"
plays a very important role. We are able to address this issue by offering our customers
appropriate security chips and security solutions.
The trend towards digitalization offers substantial business potential for Infineon. This
is reflected in the optimization of internal processes, such as for our interconnected
manufacturing lines on a global scale, as well as in sales and administration. Further-
more, our portfolio of sensors, microcontrollers, power semiconductors, security chips
and security solutions, as well as specific software, puts us in an excellent position
to successfully exploit growing market potential. The strategic approach "Product
to System" we have already implemented makes us very well prepared to penetrate
and develop the markets involved. Good examples already apparent today include
automated driving, the smart home and the advancing development of the lot.
Opportunities arising from digitalization
Further information
Consolidated Financial Statements
Management Board and Supervisory Board
Infineon Annual Report 2023
To achieve this target, it will be necessary to develop renewable sources of energy
at a faster rate than originally envisaged. This should lead to an increase in demand
for our products, as Infineon's semiconductors enable electric power to be generated
more efficiently from renewable energy sources. Indeed, they offer efficiency gains
at all stages of the energy industry's conversion chain, whether in generation, trans-
mission, storage or, above all, in the use of electric power. They form the basis for the
intelligent and efficient use of electric power, for instance, in industrial applications,
power supplies for computers, consumer electronics and vehicles.
With a constantly growing world population and increasing industrialization, global
demand for energy is rising. Electric power is becoming the most important energy
form of the 21st century, while renewables are playing a key role in curbing carbon
emissions. The long-term objective is to achieve global decarbonization by the end
of the century, as resolved at the Climate Change Conference held in Paris (France)
in December 2015. As part of its Green Deal concept, the European Union intends to
become carbon-neutral by 2050.
Cost of goods sold
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
Opportunities arising from decarbonization, digitization and the strategic approach
"Product to System" have already been included in the forecast report and are
described here as additional overarching opportunities.
Opportunities 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.
Combined Management Report
Report on outlook, risk and opportunity
Risk and opportunity report
Opportunities relating to our ability to meet supply requirements
with available capacity (C)
9,865
Operational opportunities
1,945
Revenue
in %
7,920
2022
2023
Change
€ in millions
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)
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/
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.
absolute
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).
Currency opportunities (B)
Other opportunities arising from Infineon's liquidity situation (C)
Our current liquidity position, which is described in detail in the chapter "Review of
liquidity", p. 55 ff., provides us with the financial headroom for organic growth and
growth by acquisition and enables us to make use of favorable refinancing conditions,
if necessary.
Infineon | Annual Report 2023
Management Board and Supervisory Board
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.
Consolidated Financial Statements
Further information
5 α = 79
Our in-house manufacturing capacities, together with those of our external partners,
provide us with a degree of flexibility to meet demand. In particular, the further
expansion of 300-millimeter production and the planned new investment in the
fourth manufacturing module in Dresden (Germany), the second fully automated
300-millimeter factory at the Villach site (Austria), the third manufacturing module
in Kulim Phase 1 (Malaysia) currently under construction, and the new planned
expansion of wide band gap capacity in Kulim Phase 2 (Malaysia) will strengthen
our ability to meet the growing demand for power semiconductors. Furthermore,
additional production capacity, including external capacity, can help to meet future
customer demand.
Infineon Technologies AG
Combined Management Report
Infineon Technologies AG
Financial opportunities
2,224
Infineon | Annual Report 2023
11
Bonds
Loans payable to banks
Advance payments received
Trade payables
Liabilities to affiliated companies
Other liabilities
Dividend
Combined Management Report
Infineon Technologies AG
Consolidated Financial Statements
Further information
5 Q = 81
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).
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
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.
Management Board and Supervisory Board
20,766
896
Total liabilities and shareholders' equity
52
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
40
Liabilities
958
10,608
62
7
9,620
988
10
Deferred income
1
2
(1)
(50)
22,990
www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
Section 5, paragraph 1 of the Articles of Association stipulates that the Management
Board of Infineon Technologies AG is required to consist of at least two members.
With effect from 15 April 2021, the Management Board comprises five members
(previously four members). Management Board members are appointed and dis-
missed by the Supervisory Board pursuant to section 84, paragraph 1 AktG. As
Infineon Technologies AG falls within the scope of the German Co-Determination Act
(Mitbestimmungsgesetz – “MitbestG"), the appointment or dismissal of Management
Board members requires a two-thirds majority of the votes of the Supervisory Board
members (section 31, paragraph 2 MitbestG). If the required majority is not achieved
at the first ballot, the appointment may be approved on the recommendation of
the Mediation Committee at a second ballot by a simple majority of the votes of the
Supervisory Board members (section 31, paragraph 3 MitbestG). If the required
majority is still not achieved, a third ballot is held in which the chairman of the Super-
visory Board has two votes (section 31, paragraph 4 MitbestG).
Management Board and Supervisory Board
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
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..
Infineon | Annual Report 2023
Consolidated Financial Statements
Further information
5 Q = < 84
Management Board and Supervisory Board
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
Combined Management Report
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.
52
Corporate Governance
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.
(1)
627
(16)
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
Infineon | Annual Report 2023
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
1
7,326
16
292
70
10,857
9,809
1,048
11
Provisions for pensions and similar commitments
Other provisions
Provisions
386
400
(14)
418
(4)
935
203
22
1,524
1,335
189
14
3,881
4,632
(751)
1,138
1,186
710
717
135
137
(2)
(1)
Active difference resulting from offsetting
Total assets
1
(1)
22,990
20,766
2,224
22
11
2,605
3
0
Capital reserves
Retained earnings
Unappropriated profit
Shareholders' equity
3,581
3,545
36
1
3,958
3,241
2,608
Consolidated Financial Statements
22-235
5 Q = 4 85
9
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
(168)
Profit (loss) from continuing operations
Profit (loss) for the period
Attributable to:
3,921
2,723
1,198
44
6
(782)
(537)
(245)
Profit (loss) from discontinued operations, net of income taxes
(46)
(159)
+++
(10)
4
(1,599)
(1,565)
(34)
(2)
192
129
63
49
4
(73)
(21)
(40)
3,948
2,845
1,103
39
4
105
7
98
(52)
(187)
3,139
953
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
2,186
Basic earnings per share (in euro)
(0.01)
44
7
(2)
(7)
5
71
3,137
2,179
958
44
(0.01)
Shareholders and hybrid capital investors of Infineon Technologies AG
2,179
958
44
Basic earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:¹
Basic earnings per share (in euro) from continuing operations
8
2.39
1.66
0.73
44
8
3,137
Further information
(1,798)
4
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
Further information
5 Q = < 87 →
List of references
R01
Remuneration Report
R02
World Economic Outlook. October 2023.
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
International Monetary Fund (IMF):
Application Market Forecast Tool - 3Q23. September 2023.
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.
(1,985)
R04
Competitive Landscaping Tool CLT Quarterly - 2Q23. August 2023.
Operating profit
Financial income
Financial expenses
Notes
2023
2022
absolute
in %
4,29
16,309
Other operating expenses
14,218
15
4
(8,896)
(8,087)
(809)
(10)
7,413
6,131
1,282
21
2,091
Based on or includes research from Omdia:
Other operating income
Research and development expenses
Andreas Urschitz
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
93
Consolidated Statement of Changes in Equity
95 Notes to the Consolidated Financial Statements
Infineon | Annual Report 2023
Selling, general and administrative expenses
5988 →
Combined Management Report
Consolidated Financial Statements
Further information
5 Q = 4 89 >
Consolidated Statement of Profit or Loss
Change
€ in millions
Revenue
Cost of goods sold
Gross profit
Management Board and Supervisory Board
Basic earnings (loss) per share (in euro) from discontinued operations