Ulrich Pelzer, Corporate Vice President, Investor Relations Dr. Wolfgang Ziebart, Chief Executive Officer Peter Fischl, Chief Financial Officer, Executive Vice President Peter Bauer, Executive Vice President and Chief Sales and Marketing Officer Professor Hermann Eul, Deputy Executive Vice President

Simon Schafer – Goldman Sachs Nav Sheera – Lehman Brothers Janardan Menon – Dresdner Kleinwort Wasserstein Nicolas Gaudois – Deutsche Bank Sandeep Deshpande – JP Morgan Didier Scemama – ABN AMRO Thomas Grenier – Societe Generale Johannes Ries – Cominvest Sean Murphy – Nomura

Operator instructions.: Statements made on this conference call may contain forward-looking statements based on current expectations or beliefs as well as a number of assumptions about future events. We caution you that these statements and other statements that are not historical facts are subject to factors and uncertainties, many of which are outside Infineon’s control, that could cause actual results to differ materially from those described in forward-looking statements. Listeners are cautioned that Infineon’s actual results could differ materially from the results anticipated or projected in any of these forward-looking statements and they should not put undue reliance on them. For a detailed discussion of important factors that could cause actual results to differ materially from the statements made on this conference call, please refer to Infineon’s most recent annual report on form 20-F, available on our website and that of the SEC under the headings ‘forward-looking statements’ on page 3, and ‘risk factors’ on page 36. At this time, I would like to turn the call over to Infineon. Please go ahead. Ulrich Pelzer, Corporate Vice President, Investor Relations: Good morning and welcome everyone to Infineon’s fiscal Q4 and FY2006 results conference call. As usual on these occasions, the entire Infineon management board is here today. Wolfgang Ziebart, our CEO; Peter Fischl our CFO; Hermann Eul, responsible for our business group communications solutions and Peter Bauer, responsible for the AIM group. We have prepared a couple of introductory remarks which will be done by Dr. Ziebart, and then we’ll turn the call over to Q&A. With that, over to you. Dr. Wolfgang Ziebart, Chairman of the Management Board, President, Chief Executive Officer: Thank you very much. Good morning ladies and gentlemen, I would like to welcome all of you to our conference call this morning. I am going to briefly comment on the group results for Q4, including some detail on the developments in our segments. I will then turn to the current quarter outlook for the group and the segments. I will limit my remarks to results and outlook for Infineon businesses excluding Qimonda, as Qimonda has already reported figures for the last quarter and has given its own outlook. I will then conclude with some remarks beyond the current quarter, around our plans in mobile baseband and around our cost reduction program, ICoRe. Then my colleagues and I would be happy to answer to your questions. In Q4 we reported group revenues of €2.29 billion, an increase from €1.97 billion in Q3. We saw higher sales in all operating segments. Excluding Qimonda, Infineon revenues increased to €1.06 billion from €995 million in the quarter before. Group EBIT in Q4 decreased to €30 million, down from €49 million in Q3, the EBIT loss for Infineon without Qimonda was €174 million and included charges of €164 million mainly in connection with the Qimonda IPO and the insolvency of BenQ Mobile’s German subsidiary. Before charges, the Q4 EBIT loss for Infineon excluding Qimonda would have been €11 million up from an EBIT loss of €22 million in the previous quarter. In our Automotive, Industrial and Multimarket segment, we reported an all time high in quarterly revenues of €740 million, up 4% from the prior quarter. The segment’s EBIT rose 12% to €64 million. In FY2006 we were able to increase the segment’s EBIT margin significantly to 8.7% from 5.3% in the 2005 financial year, despite more than €70 million expenses from the ramp up in the new production facility in Kulim, Malaysia, and in spite of the phase out of production at the Munich-Perlach facility. As we had anticipated, revenues and EBIT in the Automotive business decreased in Q4, mainly due to seasonal effects and lower demand at US car manufacturers. In the industrial business, we saw another quota of solid growth driven by our semiconductors, used in industrial drives and high end power supplies for servers. We are very pleased that our security and chip-card IC business reached positive EBIT one quarter ahead of schedule, driven by strong demand and timely execution of our restructuring plan. In our Communications Solutions segment, we increased revenues by 12% sequentially to €297 million. The EBIT loss in Q4 was €120 million but included net charges of €75 million mainly from the impact of the insolvency of BenQ Mobile’s German subsidiary. Excluding this effect, the EBIT loss in the Communications Solutions segment remained unchanged compared to the prior quarter. During the last quarter, we saw a season uplift in wireless sales and strength in our broadband access CPE business. In the latter, unlike some peers, we have not seen any significant weakness in Q4. In our wireless business, we successfully ramped shipments to LG and Panasonic. I will talk about the outlook for design in activity, especially in the baseband business, later on. Two major OEMs have selected our 3G (edge RFC transceivers?) and design momentum in broadband access remains strong. In Q4, both the other operating segments and the Corporate and Eliminations segment reflected intra-group revenues and eliminations of the sale of wafers from the Infineon 200mm production facility in Dresden to Qimonda. EBIT loss in corporate and eliminations increased sequentially, predominantly driven by charges of €86 million relating mainly to the IPO of Qimonda, to restructuring measures in some of our production facilities and to impairments. Excluding these charges, the EBIT in Corporate and Elimination was broadly unchanged from the previous quarter’s level before charges. Let me turn to the outlook for Q1 FY2007 for Infineon excluding Qimonda, we expect revenues and EBIT prior to inclusion of charges to decrease compared to Q4 FY2006. This decrease will be driven mainly by the Communications Segment and the impact of the insolvency of BenQ Mobile’s German subsidiary. We do not expect that this EBIT impact will be fully offset by anticipated EBIT improvement before restructuring charges in Corporate and Eliminations. For Automotive, Industrial and Multimarket, we expect revenues to be flat or slightly down from the last quarter’s high level. Demand for our industrial products continues to be strong, however with our German and Austrian fabs at full loading and our new fab in Kulim, Malaysia contributing only smaller volumes to the current quarter. Sales growth will be limited. By contrast, sales in our Automotive and Security and ASICs businesses will be lower relative to the previous quarter. We are seeing some weaknesses in demand for Automotive products in the US. In Security and ASICs, the December quarter always tends to show some seasonal weakness. We anticipate the segments EBIT to decrease in Q1, driven predominantly by seasonality and temporary factors such as volume reductions at US car manufacturers and insufficient scale economies at our Kulim Fab for Power Semiconductors. In Q1 FY2007 we expect revenues in Communications Solutions to decline significantly compared to the prior quarter. We will see an expected €40-50 million decline in revenues from the stop of the business with BenQ Mobile’s German subsidiary. Given the revenue decline, we expect EBIT loss before charges in Q1 FY2007 to deteriorate significantly compared to the prior quarter. Prior to inclusion of restructuring charges, EBIT in Corporate and Eliminations is expected to improve in Q1 FY2007 relative to the prior quarter. However it is likely we will take a charge of approximately €30 million in Corporate and Eliminations in the current quarter relating to our reorganization in wireless after the insolvency of BenQ Mobile’s German subsidiary. Now let me make some final comments on our baseband strategy and on our ICoRe program. As many of you may know, we are reorganizing our baseband activities after the insolvency of BenQ Mobile’s Germany subsidiary. We continue to execute a clear strategy to broaden our customer base. Sales to LG for EDGE platforms and to Panasonic for 3G platforms are ramping. In addition, we have won other significant designs and we are in advanced stages of developments with other customers for highly promising projects. We believe, and our customer feedback strongly supports this, that we have two unique capabilities: first our ability for more analytic RF in baseband integration and second our 7.2Mb/s HDSPA solution including our proprietary dual mode protocol stack. Both capabilities are seeing a strong reaction in the market and we are confident regarding their revenue outlook. As such, our technological and product capabilities leave us well equipped for the marketplace. It is the number of designs already won and the number of promising projects pending that leave us committed to baseband, together with annualized cost savings of €40 million that are expected to take effect in the second half of our current financial year, we expect to break even in our wireless business for the end of the 2007 calendar year. In the interim, we are not standing still on the cost front. We are in the process of finalizing cost reduction measures under the Infineon complexity reduction program, called ICoRe, this program is aimed at simplifying our entire process chain as well as identifying and dissolving overlap. We aim to complete the planning stages within the 2006 calendar year. We’ll implement all measures within the 2007 financial year. Once completed, ICoRe should yield analyzed savings of at least €50 million. Ladies and gentlemen, this includes the introductory remarks, and my colleagues and I are looking forward to your questions.

Operator instructions.: Q – Simon Schafer, Goldman Sachs: I was wondering, on the comms business, you clearly commented that the BenQ situation is going to result in a revenue decline of €40-45 million, and obviously that’s impacting profitability. I was wondering of comms excluding the situation, are we looking at flat revenues and similar EBIT margins, or what is the dynamic that we should assume for the remainder of the comms business? A – Hermann Eul, Deputy Executive Vice President: This is Hermann Eul speaking. Excluding the effect of the BenQ, you can expect the rest of the comms business to be very healthy and steady. Q – Simon Schafer, Goldman Sachs: So steady revenue with relatively similar margin? A – Hermann Eul: Yes. Q – Simon Schafer, Goldman Sachs: In conjunction with that, could you comment on your latest thinking in terms of the RF positioning and competitive dynamics in that segment? A – Hermann Eul: In the other segment we are keeping a very good track on the design wins so we expect this situation we have in the market continues to be a clear number one position. Q – Simon Schafer, Goldman Sachs: Just a clarification on the ICoRe program, did I understand correctly that that will be implemented this quarter and the €50 million annualized will start as of the March quarter of 2007? A - Peter Fischl, Chief Financial Officer: I think it’s fair to say that the impact will show in the second half of the fiscal year. The measures will be decided through this month and then from that point on it will be implemented, but we will not see any real improvement before the third quarter of the fiscal year. Q – Simon Schafer, Goldman Sachs: Lastly, could you give an update on your intentions for the Qimonda stake, given the lock up expiry in February – just an update as to what your thinking is with respect to potential disposal of that stake? In conjunction with that, have you had any more clarity with respect to some of the patent IP issues that seemed to have prevented you from being capable of selling that down as a minority stake? A - Peter Fischl: We made good progress regarding the IP issues and we don’t anticipate that this will prevent us from moving on, however the timing and the potential size of a potential sell off has not been decided and of course we will monitor the market and see when there is a good opportunity.

Thank you. We’ll now take a question from Nav Sheera with Lehman Brothers. Please go ahead. Q - Nav Sheera, Lehman Brothers: I just wanted to ask about the charge level that you’re forecasting for Corporate and Elimination for Q1. Because as I understand it, the normalized level is about €45 million and then there is a further €30 million charge from the comms business. I was trying to understand why your forecasting and guiding to about the €120 million EBIT loss for first fiscal quarter? A - Peter Fischl: I’m a little bit confused, I have to admit. I thought you were referring to Q4, but you referred to the guidance? Q - Nav Sheera, Lehman Brothers: That’s right, the guidance as I understand it, it says for Q1 2007 you are expecting an EBIT loss for Corporate and Elimination at the same sort of level as reported in Q4 2006. A - Peter Fischl: First of all we don’t give any EBIT margin forecast, and second in particular for Corporate Eliminations. I don’t see where you got this from? A - Wolfgang Ziebart: What we said is that there would be €30 million in connection with the BenQ Mobile insolvency. This comes in Q1 this fiscal year. Q - Nav Sheera, Lehman Brothers: Maybe I misunderstood that. Just to be clear, we are looking at a normalized level of about €40 million plus a further €30 million from the insolvency of BenQ. A - Wolfgang Ziebart: Yes, that is correct. Q - Nav Sheera, Lehman Brothers: A quick follow up, would you have a capital spending budget ex-Qimonda now for 2007? A - Wolfgang Ziebart: The capital spending budget is subject to a supervisory board decision to come. We indicated some time ago that on medium and long term, we see the business of Infineon excluding Qimonda to have a capex demand of 10-12% on revenues for the current fiscal year this might be slightly higher for the reason that we are ramping our facility in Kulim and at the same time we are in allocation in most of the products we are doing out of Kulim so it strongly makes sense to invest in the Kulim facility. Q - Nav Sheera, Lehman Brothers: Final question, we noticed that your chip card business is back into EBIT profitability. Am I correct in assuming that will remain the case, even into Q1 2007 with a reduced sales side? A - Wolfgang Ziebart: Yes, it’s going to remain the case, even though I have to mute it a little bit. We are not going to increase the EBIT margin during the course of the next year. It will be somewhat in the low profitability range, we are bringing out a number of new products by the end of 2007 which will then further increase the margin to very satisfactory levels. In principle, I agree with you, we can stay in that situation.

Your next question comes from Janardan Menon, Dresdner Kleinwort Wasserstein Q - Janardan Menon, Dresdner Kleinwort Wasserstein: To go to your margins in communications in fiscal Q4, you don’t show any leverage in the quarter because your revenues went up by about €31 million, but your EBIT was pretty much flat. What was the dynamic there which caused that margin erosion in fiscal Q4? A - Wolfgang Ziebart: The majority comes from idle cost. Q - Janardan Menon, Dresdner Kleinwort Wasserstein: Idle costs? Okay. If we are to assume that we’re taking off €45 million into the current quarter, would it be fair to assume that most of it would fall off into the EBIT as well? Would that be a fair assumption? A - Wolfgang Ziebart: You can do your standard calculation on the margins and then conclude with what the EBIT will be. Q - Janardan Menon, Dresdner Kleinwort Wasserstein: The new significant design customer you have got, apart from Panasonic and LG Electronics, in which quarter can we expect that that customer’s volumes will start to make a difference in your comms business? Would that be in fiscal Q3, do you think, or would it be earlier or later? A - Wolfgang Ziebart: This is very difficult for me to answer because we have very strict confidentiality agreements on this. I think it is safe to say that it will certainly be in this fiscal year. Q - Janardan Menon, Dresdner Kleinwort Wasserstein: Okay. Just a last question – the two major OEMs who have selected you for 3G EDGE RF transceivers, we know that Nokia and Samsung are your customers already. Are those two included or are these new customers effectively? A - Wolfgang Ziebart: There are also new customers and one of the existing customers. Q - Janardan Menon, Dresdner Kleinwort Wasserstein: Lastly, your corporate (inaudible) has actually come down from €45 million to €35 million excluding the charges in the current quarter and you’re saying you can further drop it. Do you think around €25-30 million is possible in the current quarter? A - Wolfgang Ziebart: Yes, I think that’s a fair assumption.

Your next question comes from Nicolas Gaudois - Deutsche Bank. Q - Nicolas Gaudois - Deutsche Bank: Just a clarification first of all, so the decrease in revenues for CBG in fiscal Q1, you say it’s mainly related to BenQ but it is effectively €40-50 million, or do we need to take some extra incremental revenues down in addition to that? A – Peter Fischl: The majority is from BenQ, the rest of the business is running well. I would like to highlight our design wins in the CPE and home gateway area are very strong and we see this market also being strong in the next fiscal quarter. Q - Nicolas Gaudois - Deutsche Bank: So effectively excluding BenQ revenues they are flat sequentially, basically? A – Peter Fischl: Yes. Coming back to your new design wins, one new OEM for EDGE platforms plus RF 3G as well - will this have any impact in the March quarter which you think could lead the March quarter for CBG to be better than seasonal? I know that it’s early days but you probably already have some visibility for volumes there for March. A - Wolfgang Ziebart: This is the next attempt to find out when this new customer is going to ramp. I beg your pardon, but I have to be very strict on the confidentially here on when this customer is going to ramp. For other customers like LG for example, of course we expect that they’ll bring more and more models to the market and we consequently expect our revenues with this customer to grow. Q - Nicolas Gaudois - Deutsche Bank: To grow in March versus the December quarter? A - Wolfgang Ziebart: From quarter to quarter. Q - Nicolas Gaudois - Deutsche Bank: Okay. So effectively all aggregates you would expect CBG to show potentially better than normal seasonal trends in March. A - Wolfgang Ziebart: Honestly, I didn’t catch the sense of your question. Q - Nicolas Gaudois - Deutsche Bank: All things being equal, if you have LG progressing QoverQ, potential new business should lead CBG to show better than normal seasonal revenue trends in the March quarter. A - Wolfgang Ziebart: Yes. Q - Nicolas Gaudois - Deutsche Bank: Last question, if I turn to AIM, we have, including ramp going fast, we now have some indication of profitability coming back and chip card is now expanding by the end of next year. Could you revisit the level of normalized margins you would expect to see in AIM in 12 months time? I think back in March you mentioned this as being a long-term possible target. A – Peter Fischl: Our clear target is the 10% EBIT and to over achieve that at a rate of more than 10% growth if you look over a couple of years. We have outgrown the market with over 10% and we are targeting this 10% within the 12 months you’re talking about. Even within the current fiscal year, I hope we can scratch this by the end of this fiscal year.

Our next question comes from Sandeep Deshpande – JP Morgan. Q - Sandeep Deshpande – JP Morgan: Good morning. Just a couple of questions. Firstly, the last time you were profitable in the comms platform business, you shipped around 40 million units in comms. You are already shipping with LG. Given the restructuring you have done in this business, can we have an idea of at what point you can be profitable in this business in terms of units? A - Wolfgang Ziebart: Actually we were referring to a percentage of market share and I think this calculation in the meantime is a very dangerous one, because it depends on the share of low cost and high end devices. You are asking for our estimation of when the profitability will be back to the wireless business, and I think the best guidance we can give here is that this will be achieved by the end of 2007. Q - Sandeep Deshpande – JP Morgan: There was a previous question regarding some of these new design wins. You have mentioned that you have achieved a new design win for a 3G mobile phone platform. Is this one of those design wins which will result in the return of your business to profitability? A - Wolfgang Ziebart: All the design wins are a piece in the picture towards regaining profitability in this one. The mentioned design for 3G is a sequel success to the already launched devices. Q - Sandeep Deshpande – JP Morgan: Can you repeat that? I didn’t get it. A - Wolfgang Ziebart: The mentioned design win for 3G is an additional platform for an existing customer. So it shows our strength and the trust the customer has in the quality of our solution. Q - Sandeep Deshpande – JP Morgan: Again another clarification, you talked about these CMOSS transceiver design wins. You have Nokia and Samsung, do you have more top tier customers for the 3G side of the RF transceiver now? A - Wolfgang Ziebart: Yes, this is true, but I cannot give you those. We also have strong and good discussions with competitors. Q - Sandeep Deshpande – JP Morgan: Next on the chip card, you were profitable in Q4 in the chip card business. You are saying that the mix shift in this business can only take place in the end of 2007. Why is it you think that this business will remain at these levels of profitability through 2007 when the business is not fundamentally changing. Why will we not see fluctuations where in one quarter profitability and in the next quarter loss or not this kind of situation into 2007. A - Wolfgang Ziebart: Thanks for the question, because it allows me to clarify a little bit, I think there was a misunderstanding. We are in a constant shift of the product structure already towards the more high value market segments within chip card, which are the government ID segments as well as the contact lists, banking and pay TV. This is taking place and it has brought us amongst a number of other actions back into profitability in Q4. That is going to continue throughout next year, so you’re 100% right. This is a positive change which is taking place. What I meant before is that we are bringing out new generations of products and new micro controller products within chip card which have a higher security level at a lower cost at the same time. This is going to impact the bottom line the year after, because this will happen in 2007 towards the end. Q - Sandeep Deshpande – JP Morgan: Finally, responding to one of your earlier comments about the mix in the baseband RF chipset, you’re not naming these new customers, which is fine. The question I have is are these customers in the single chip solution, or are they in the EP solution or are they in 3G that we were talking about which will help you return to profitability? A - Wolfgang Ziebart: We have success in all the segments you mentioned.

Our next question comes from Didier Scemama – ABN AMRO. Q - Didier Scemama – ABN AMRO: I think I’m going to give it another try. On this new, very important customer everybody knows about but you don’t want to talk about, is it fair to assume that you’re supplying the whole platform, and would that include bluetooth and maybe other peripherals? A - Wolfgang Ziebart: I think I can at least to a certain extent answer your question. It is fair to assume that we deliver the whole platform. I would not like to go into any more detail as to what the content of that platform is. Q - Didier Scemama – ABN AMRO: Excellent. In terms of your wireline business, if my maths are right – and I’d like to have confirmation of that – it seems like the business is up about 30% sequentially? A - Wolfgang Ziebart: We do not go into this kind of detail, so I cannot confirm your math, nor can I reject it. Q - Didier Scemama – ABN AMRO: All right. Given the design win momentum you are showing, do you think that next year a strong double digit YoverY growth would be possible in FY2007? A - Wolfgang Ziebart: What I can confirm is that we really have a good design win momentum in this area. We are gaining in central offices as well as in the CPE segment and also the new products coming to the market really have very, very good customer tracks. This is what I can confirm. I would like to refrain from giving any future orientation where those precise digits are concerned, but we expect stable profitability. Q - Didier Scemama – ABN AMRO: Just to remind us, as sort of an EDGE platform based on RF plus power management, how much content did you get there? Is it in $10-12? Would that be fair? A - Wolfgang Ziebart: Should we answer that in the way you’re interested, or do you think the competition might be interested about our platform prices? Q - Didier Scemama – ABN AMRO: I’ll take that as a yes. Coming back to the question on operating leverage in comms, you said they were mostly idle costs responsible for the lack of leverage. Are there any other costs such as for instance porting protocol software stacks from certain OEMs to your own baseband that would be very costly and time consuming, but obviously would not bring any revenue short term, but potentially great revenues long term – is there anything like that at the moment? A - Wolfgang Ziebart: This belongs to our normal operational behaviour. As we have always explained over the last quarters, of course we are working on getting new customers on board and this of course consumes a certain amount of cost, which is not yielding to revenue. This is the situation over the last quarter. Let me mention that the attempts to find out what the new customers are really getting very tricky.

Our next question comes from Thomas Grenier – Societe Generale. Q - Thomas Grenier – Societe Generale: I just have a question on the ramp up of the volume shipments for LG Electronics and Panasonic mainly. How much of the forecasted ramp up have you already done? How much of this business is already in your fiscal Q4 numbers? A - Wolfgang Ziebart: Sorry for this, but I cannot give any numbers which can lead to conclusions to what our customer’s business is. I would like to refrain from answering this question. Q - Thomas Grenier – Societe Generale: Okay, but you confirm that for both of them, you’ve not yet completed the expected ramp up? A - Wolfgang Ziebart: The Panasonic phone in the market is ramping up nicely, and the LG phone is also ramping up in the market. With more models coming to this platform, I expect the numbers to grow. Q - Thomas Grenier – Societe Generale: A general question on your manufacturing, which you already answered on the capex side, but really on the logic business, I would like to understand where your manufacturing stands right now. What’s your approximate utilization rate? Where do you stand in terms of the plan restructuring actions in your Fabs? Could you comment generally on that? A - Wolfgang Ziebart: We can say something in general, in the power area we have 100% utilization. In the logic area it is less than that, mainly due to the missing revenue out of the BenQ insolvency. I think in the logic, Hermann, it’s around 80% or so? A – Hermann Eul: I think so. Q - Thomas Grenier – Societe Generale: There are some restructuring charges in the quarter, taken for some restructuring, so what are you doing exactly? A - Wolfgang Ziebart: We have pending restructuring in our plant in France. We announced three months ago that we intended to reduce the workforce by 400 people but those discussions have not been completed yet with the authorities and with the workers’ council, so this is still pending. Q - Thomas Grenier – Societe Generale: A very general question, you said that about 70% of your groups excluding Qimonda reached a solid EBIT margins. I was wondering what was the exact definition of ‘solid’ with margins? A - Wolfgang Ziebart: We were that imprecise on purpose, so sorry for that. Q - Thomas Grenier – Societe Generale: Would it be fair to assume that it corresponds to EBIT margin where your return on capital is better than the cost of capital? A – Peter Fischl: Yes. It does include of course businesses with this type of success, but it also includes some which are below.

Our next question comes from Johannes Ries – Cominvest. Q - Johannes Ries – Cominvest: First maybe a clarification question. On your ICoRe program, the €50 million you want to spare there, you also talked about a €40 million cost reduction in the comm space. Is this regarding the same topic, or are there two different measures, first to reduce the overall cost centre company and secondly at comms specifically, or is it the same? A - Wolfgang Ziebart: There are two topics there. One is mentioned on the total loading and the other one is the strict, comm-related consequence out of the BenQ situation and the redefinition of our baseband activity. Q - Johannes Ries – Cominvest: Regarding a summary of what we have discussed before, if I understand it right, maybe Q1 is definitely a trough or the lowest point sequentially if we are looking forward therefore for holding the new Infineon without Qimonda, because you talked about it and you expect an improvement in AIM going forward. Do you see the other mobile trough as being only maybe for the time being and you will increase your capacity in the power space? You also talked about higher margin products in the chip card space. Although you already mentioned step by step you should improve your situation at comm by the ramping of the customers and also by the cost reductions you plan in comms specifically and in the whole company – am I reading that right? A - Wolfgang Ziebart: Yes, that is in line with our internal assumptions. Q - Johannes Ries – Cominvest: You discussed 70% of your business with sufficient or effective profitability. Do you expect at the end of the year that this number will increase? A - Wolfgang Ziebart: Let me comment on that. The main focus in the past two years really therefore was to turn around the loss making businesses. We have been very successful in the last fiscal year, for instance we turned around the chip card business and we also turned around other businesses like for instance our RF power business and our discreet business and so on. Altogether, the businesses which have been loss making in the past and are profitable now amount to a revenue of €700 million. I think a substantial achievement has been done. These businesses now have solid margins, I must admit however that single digit margin is something we are not fully happy with medium to long term. Definitely, the businesses should go to double digit profitability and beyond. Q - Johannes Ries – Cominvest: Finally on cash flow, we already discussed the capex, maybe it will be this year above your longer term plans because of (inaudible), but nevertheless you had a strong cash flow in Q4 without Qimonda going forward. Could we also maybe expect a stronger cash flow despite the higher capex for the year going forward? What is your target for cash flow? A – Peter Fischl: I would say when you look at the overall cash flow we achieved for the fiscal year in checking the entire company, which is €8 million negative, the target for us would be to come to a balance. The reason why I don’t see a major improvement beyond that has to do first that Qimonda of course has contributed and the second that like Wolfgang Ziebart indicated, the level of investment we are targeting for the year will be slightly above the 10-12%, so therefore we don’t expect that this will be a major change.

Our next question comes from Didier Scemama – ABN AMRO. Q - Didier Scemama – ABN AMRO: Just a question on the broadband access part of the business, indeed you’ve done very well in ADLS 2 plus and BDSL 2, I’m just wondering, compared to competitors such as perhaps Broadcom, you’re missing probably two parts that are quite essential going forward, which would be the Ethernet part, though I think you may have addressed it with ADM Tech and wireless LAN capability. Is that somewhere you may look for acquisitions going forward? A - Wolfgang Ziebart: Actually for the completeness of our product offering, we also have a solution for the wireless LAN and also we have cooperation in place for a wireless LAN as well, so this is secure. Ethernet solutions, we have also in the pipes so I think the offer is really fully competitive and complete and we see this also from the interest in the market and the traction in the market. Q - Didier Scemama – ABN AMRO: So you have the LAN and the Ethernet switch capability with the partnership and the wireless LAN chip is internally developed? A – Hermann Eul: The Ethernet switch is totally our own solution. A - Wolfgang Ziebart: Yes, that’s ADM Tech. Q - Didier Scemama – ABN AMRO: Okay, ADM Tech. Do you have any plan to go into a home gateway CP type of business with essentially a digital video back end processor? A – Hermann Eul: We have complete home gateway reference solutions on the market, this is true and this includes everything, it includes the switch, the wireless LAN, the router functionality, ADSL, BDSL and a Voice over IP solution is in, so this is complete. Q - Didier Scemama – ABN AMRO: I’m talking about the back end, the video capability and so on. A – Hermann Eul: We expect that the video back end is going to sit in the set top box and not in the gateway.

Our next question comes from Sean Murphy – Nomura. Q - Sean Murphy – Nomura: I just wanted to ask about your potential uses of cash, should you continue to dispose of the stake, for example, in Qimonda. What’s your attitude to accelerating the transformation of the business through acquisitions? A - Wolfgang Ziebart: We already indicated that there are two ways to potentially spend that money you’re talking about. The first one, and this is the preferred route, is organic growth. We have many opportunities for organic growth. Just one I mentioned would be for instance increasing the ramp up of Kulim and investing more into Kulim, earlier. This is a thing we can completely plan for, it’s a very secure way and we also have related businesses to areas in which we are already operating where we can attack new markets. There are quite some opportunities for us for organic growth. However, often organic growth is too slow and for instance when it comes to conquering certain markets, so here we could also imagine acquiring somebody. Anyway, the money will be spent into a mixture of both internal growth and acquisitions.

Our next question is a follow up from Nicolas Gaudois – Deutsche Bank. Q - Nicolas Gaudois – Deutsche Bank: I have two follow ups, actually. On AIM margins first of all, are capacity limitations in power worse in the fiscal Q1 in your view versus fiscal Q4? And therefore weighting a bit on margins as far as it goes, or is this broadly the same situation? A - Wolfgang Ziebart: There are two effects, one we have mentioned which you have not mentioned right now, which is the automotive market for next year which is still a bit questionable given the big three reducing their production capacities, which has an effect on our automotive business. The second is that we are towards the end of Q1 fiscal. It’s going into Q2 quite constrained and growing the capacity on the market, what means shipping more power products to the market and we’ll see the ramp up effect from Kulim in Q2 coming into Q4. It’s not going to become worse, but it’s staying flat at the moment. The reason why we have been a bit cautious on the margins is that with this ramp in Kulim, we have not yet achieved full load in Kulim, which we can only the year after, so the cost of the wafers in Kulim is a little bit higher than the ones from Villach and Regensburg. Q - Nicolas Gaudois – Deutsche Bank: That’s very clear. Then a question for Hermann, we have of course a very specific situation for the Motorola supply chain whereby Freescale is now officially going private. Is this changing the potential relationships there at all? Would you say this is opening up opportunities for Infineon in terms of wireless parts for Motorola? A – Hermann Eul: Certainly we have a good relationship with this customer as well. I would not like to go into more detail here amid speculation on how the customers are taking private companies. Q - Nicolas Gaudois – Deutsche Bank: Can you give us a feel of how you would qualify the business for E-Gold voice next year versus E-Gold radio? Would you expect overall volumes on the visibility you have for E-Gold voice to be greater than E-Gold radio as the product is launched? A – Hermann Eul: Yes, the comment here is our E-Gold radio is ramping up very nicely month over month and the E-Gold voice is the second generation of this technology is getting even more clip in the market, so we have good customers wanting this design and my strong belief is that this component is even more outstanding against any competitive solution, so there is no way of circumventing this any more.

Thank you. That will conclude today’s question and answer session. I now would like to turn the call over to you, Mr. Pelzer, for any additional or closing remarks.

Thanks a lot everyone for dialing in and for asking the questions. Thanks for your interest. Should there be anything that we haven’t covered, please get in touch with the investor relations team here in Munich. Other than that, we look forward to speaking to you all on the next call. Bye.

That concludes today’s conference call. Thank you, everyone, for joining us. You may now disconnect.