Ulrich Pelzer – Corporate VP, Finance, Treasury and IR Reinhard Ploss – CEO Dominik Asam – CFO Arun Mittal – Head, Regions, Sales, Marketing, Strategy Development and M&A

Didier Scemama – Bank of America Merrill Lynch Sumant Wahi – Redburn Partners Simon Schafer – Goldman Sachs Kai Korschelt – Deutsche Bank Pierre Ferragu – Bernstein Sandeep Deshpande – JPMorgan Andrew Gardiner – Barclays Jérôme Ramel – Exane BNP Paribas Andrew Humphrey – Morgan Stanley Amit Harchandani – Citigroup Günther Hollfelder – Baader Bank

Good morning everyone. Welcome to the conference call for Analysts and Investors for Infineon Technologies’ 2013 Fiscal Fourth Quarter and 2013 Fiscal Year Results. Today’s call will be hosted by Mr. Ulrich Pelzer, Corporate Vice President, Finance, Treasury and Investor Relations of Infineon Technologies. As a reminder, today’s conference is being recorded. This conference call may contain forward-looking statements based on current expectations or beliefs, as well as number of assumptions about future events. We caution you that 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 or implied in such statements. Listeners are cautioned that Infineon’s actual results could differ materially from the results anticipated or projected in any of these 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 our Quarterly and Annual Reports available on our website. At this time, I would like to turn the call over to Infineon. Please go ahead.

Thank you very much. On behalf of Infineon, I welcome all participants to this quarterly Q4 fiscal year 2013 and full-year fiscal year 2013 results conference call. Present on this call as per usual is the entire Infineon management board, that would be; Reinhard Ploss, our CEO; Dominik Asam, our CFO; and Arun Mittal, our member of the board responsible for our regions for sales and marketing, strategy development and for M&A. Also as per usual, we’ve prepared introductory remarks by Reinhard Ploss and Dominik Asam before we will open up the call to Q&A. With that, over to you.

Thank you, Ulrich. Ladies and gentlemen, good morning, and welcome to our fiscal fourth quarter and 2013 fiscal year result conference call. I will start today’s call with introductory remarks on our Group and divisional results, market developments and our achievements during the quarter. Dominik will then comment on Group financials, before I conclude with the outlook for the quarter one and 2014 fiscal year. We will then open up the call to questions. Infineon recorded revenues of EUR 1,053 million in the fourth quarter, right in line with our guidance, and up EUR 31 million from the third quarter. Segment result also increased sequentially by EUR 31 million to EUR 148 million equal to quarter-on-quarter segment result margin increase from 11.4% to 14.1%. Segment result for the fourth quarter contains certain non-recurring items. There was a positive effect from a reduction in risk allowances for inventories that more than compensate for higher provisions for variable compensation. Excluding such non-recurring items, segment result margin would have been in line with our guidance of approximately 13%. The book-to-bill ratio moderated somewhat compared to the past two quarters and came in at about 1 for the fourth quarter. In Distribution, revenues increased for the fourth consecutive quarter as fourth quarter sales rose 7% quarter-on-quarter and 16% year-on-year with growth in all regions. Distribution revenues in fiscal 2013 were 7% higher than in fiscal 2012. Inventory reached – in the channel declined to slightly below our target of 10 weeks. Distribution book-to-bill was slightly below 1, in line with normal seasonality. Before moving on, I would like to share highlight for the entire company. For 10 years, running IHS has named Infineon as the leading supplier of power semiconductor discretes and modules in their latest ranking for the 2012 calendar year. With 12% market share, we have put a more distance between us and the number two at 7%. We believe that economies of scale are a necessary condition to make the transition to more cost and capital efficient 300-millimeter manufacturing of power semiconductors, not only technically, but also financially viable. Recall, that with our Dresden 300-millimeter fab alone if fully filled, we would increase our power semiconductor front and output by approximately 70% compared to today’s capacity. Furthermore, against the backdrop of a 16% decline in the overall power semiconductor market in calendar year 2012 versus 2011, we were able to capture market share in both power MOSFETs and IGBT modules. Now for the divisional revenue starting with Automotive. Sustained by continuous strength in the global automotive market, most notably at German OEMs, Automotive revenues came in at EUR 455 million, remaining firm versus revenues of EUR 459 million in the prior quarter and better than normal seasonality. Segment result growth in the fourth quarter to EUR 57 million from EUR 52 million in the third quarter. Absolute order intake declined slightly versus the June quarter, but book-to-bill for the September quarter still remained above 1. Inventory levels in the supply chain as well as our lead times are both at normal levels. In its latest report market research from IHS noted that car production in North America and China remains strong, stabilizing in Europe and while soft in India. For its 2014 forecast, IHS anticipates global car production will increase year-on-year by 4% with North America and China continuing their growth trends while Europe is also expected to start growing again. Given the high average semiconductor content per European car and our strong market position in the region, the recovery in Europe would provide positive momentum to our Automotive business. And now an important highlight for Automotive. Many of you have no doubt seen or heard about BMW’s latest electric vehicle, the i3. I am proud to announce that through our technical partnership with BMW, multiple Infineon products are inside the i3 including a Hybrid Pack 2 IGBT module, TriCore microcontrollers, sensors, IGBT drivers and other power devices. Based on estimates from strategic analytics, a typical electric vehicle has nearly $700 of semiconductor content versus about $320 for a typical car with a combustion engine, with approximately 75% of the increase in semiconductors in EVs related to power electronics such as our Hybrid Pack IGBT module. As shown by this example with the i3, given the high Infineon addressable semi-content in electric drive trains and our system know-how, we are well positioned to benefit from further growth in the EV market. Moving onto Industrial Power Control. IPC revenues in the September quarter reached EUR 197 million, a notable improvement of the revenues of EUR 173 million in the June quarter. Industrial drives went and saw experienced the biggest absolute sales increase helped by improving business conditions in China. In our Traction business, which is also recovering nicely, we recorded our first volume order for 4.5 kV IGBT modules at a major European train customer. Segment result continued its improvement trend reaching EUR 33 million in the fourth quarter, up from EUR 13 million in the third quarter. In light of the strong revenue increase, the book-to-bill ratio moderated to 1 versus 1.1 at the previous quarter. So inventory levels at some customers have returned to normal lows at our distributors remain lean. Continuing with Power Management and Multimarket. PMM revenues for the fourth quarter came to EUR 271 million, up slightly from third quarter revenues of EUR 266 million. Demand remains solid for MOSFETs and power management applications, such as lighting, power supplies and server while our sales of components into mobile devices remained at a high level. Segment result also improved marginally from EUR 46 million as of June quarter to EUR 49 million since the September quarter, due primarily to seasonality. Book-to-bill ratio moderated from 1 in the third quarter to 0.8 in the fourth quarter. Lastly, Chip Card & Security revenues amounted to EUR 129 million, a quarter-on-quarter increase of EUR 10 million, on seasonally higher demand in payment, authentication and government ID. Increased costs related to production transfer to our foundry partner and a mix of other negative effects resulted in a sequential segment result increase of just EUR 2 million to EUR 12 million in total. The book-to-bill ratio for the fourth quarter came to 1, slightly softer, versus the third quarter of 1.1, due to seasonality. Inventories at our customer remained at normal levels while our lead times are short. This concludes the divisional review. Let me now hand over to Dominik who will comment in more details on fourth quarter financials.

Thank you, Reinhard, and good morning everyone. Fourth quarter revenues were EUR 1,053 million, a sequential increase of EUR 31 million. This represents a 7% increase year-on-year despite about 3 percentage points of headwind from the softening of the U.S. dollar and the Japanese yen. Given that another percentage point of year-on-year growth was lost in other operating segments, this proves that our four divisions are back on a solid growth trajectory. Gross profit increased sequentially by EUR 30 million for a 2 percentage point sequential increase in gross margin to 37.6%. The majority of the positive non-recurring items that Reinhard mentioned earlier are included in our gross profit. Depreciation and amortization for the fourth quarter amounted to EUR 119 million, up EUR 4 million from the previous quarter. Both research and development expenses and selling, general and administrative expenses were basically unchanged versus the prior quarter coming in at EUR 140 million and EUR 115 million respectively. Segment result for the fourth quarter was EUR 148 million translating into a segment result margin of 14.1%, a meaningful improvement over the third quarter segment result of EUR 117 million and segment result margin of 11.4%. Without the net benefit of non-recurring items in segment results, we would have recorded a segment result margin of roughly 13%, in line with the outlook we gave at the beginning of the quarter. The financial results together with income from equity method investments came to negative EUR 4 million. Continuing with tax, we recorded an income tax expense of EUR 4 million equivalent to a tax rate of 3%. This lower tax rate primarily results from a positive reassessment of our deferred tax assets as part of the year-end closing process. Without this benefit, our tax rate for the quarter would have been approximately 16%. As of September 30, 2013, we have tax loss carry-forwards in Germany of EUR 2.9 billion for corporate income tax and EUR 4 billion for trade income tax purposes. In foreign jurisdictions, another EUR 56 million of tax loss carry-forwards and EUR 263 million of tax credits due to tax incentives are available to us. Thus the EUR 325 million of deferred tax assets on our financial statements, reflect only a fraction of our potential to reduce future tax expenses. Income from continuing operations was EUR 139 million, compared to EUR 82 million in the prior quarter due to the release of provisions related to our former wireless business, income from discontinued operations worth EUR 3 million, compared to a loss of EUR 5 million in the June quarter. In sum, net income for the Group was EUR 142 million compared with EUR 77 million in the prior quarter, resulting in basic and diluted EPS of EUR 0.13 for the fourth quarter, up from EUR 0.07 in the third quarter. Free cash flow from continuing operations in the September quarter, amounted to EUR 156 million, up from EUR 135 million in the June quarter, driven by equipment purchases, investments totaled EUR 155 million for the quarter while higher profitability and an increase in payables boosted cash flow from operations to EUR 309 million, up from EUR 205 million in the prior quarter. Looking at Infineon’s liquidity position, the company’s gross cash stood at EUR 2,286 million as of the September 30, 2013, up from EUR 2,137 million at the end of the June quarter. Accordingly, our net cash position also increased reaching EUR 1,983 million at the end of the fourth quarter, up from EUR 1,832 million at the end of the third quarter. Last but not least, let me address our after-tax return on capital employed or RoCE. It came in at 27% for the fourth quarter, up from 16% for the third quarter. Improvement in RoCE can be attributed to improved profitability as well as a slight decline in capital employed to EUR 2,159 million as of the end of the fourth quarter. For the full-year, RoCE amounted to 14%. Please note that our capital employed contains provisions related to the Qimonda insolvency proceedings totaling EUR 356 million. These reduced our capital employed but should be regarded as non-recurring and unrelated to our operating business. Even if adjusted for this item, RoCE for the full-year would have amounted to 12%, so we have clearly earned our cost of capital. Now, back to Reinhard.

Thanks, Dominik. Let me now discuss our outlook for the fiscal first quarter and the 2014 fiscal year. Due to year-end seasonality, Infineon anticipates that Group revenues in the December quarter will decline to a level between EUR 960 million and EUR 1 billion. Segment result margin is expected to be between 8% and 10% of sales. As for the 2014 fiscal year, assuming that the global economic recovery will continue and a euro-dollar exchange rate of 1.35, Infineon anticipates 7% to 11% year-over-year revenue increase with IPC expected to grow above the Group average, whereas PMM and Chip Card are expected to grow at the Group average and ATV is expected to grow slightly below the Group average. We expect other operating segment to remain at or slightly below the level achieved in fiscal 2013. Segment result margin is expected to be between 11% and 14% of sales. With an eye on sustaining growth beyond the current fiscal year and ramping up our 300-millimeter thin wafer manufacturing, budgeted investment for fiscal 2014 stand at about EUR 650 million, while depreciation and amortization is expected to increase year-over-year to come in at or slightly above EUR 500 million. Even with the higher investment volume, free cash flow from continuing operations is expected to reach or exceed the EUR 235 million generated in fiscal 2013. Lastly, I would like to address the dividend. Despite the rocky business conditions in the first half of the fiscal year, the results of fiscal 2013 show that Infineon is capable of remaining solidly profitable even in slower periods. In accordance with our policy of providing at least constant dividends, the management board will propose to the supervisory board in the 2014 Annual General Meeting that Infineon should maintain its dividend of EUR 0.12 per share. Ladies and gentlemen, despite facing multiple headwinds, including the challenging business climate in the first half year of 2013, a stronger euro versus dollar and the yen continued macro weakness in Europe, Infineon was able to maintain essentially flat revenues year-over-year. More importantly perhaps segment result margin for the fiscal year came in at a respectable level of 10%. We have thereby been able to earn our cost of capital in a very tough year. Even in quarter one fiscal 2013, when we saw a sequential revenue decline of 13% versus quarter four fiscal 2012, Infineon was able to remain solidly in the black with a 5% segment result margin, demonstrating that we have learned to react quickly and decisively as cost containment measures during cyclical slowdowns. In the following quarters, we have managed to raise sales by more than 20% between quarter one and quarter four and at the same time more than tripled quarterly segment result. This illustrates that we can switch from cost containment to profitable recovery quickly and successfully. Looking ahead at fiscal 2014, our focus remains on executing our long-term objective of delivering at a margin of 15% of a cycle. In manufacturing, our OptiMOS and IGBT power semiconductor products will join CoolMOS in reaching mass production of 300-millimeter thin wafer, while the foundry share of our CMOS technology will continue to increase. These initiatives will bring us further down the path of lowering capital intensity. In R&D and sales, we will continue to strengthen our system understanding in order to further increase the value that our components and services bring to our customers. Financially, we remain committed to sustaining a solid financial position and balancing invests in long-term growth with shareholder returns. This concludes our introductory remarks. And my colleagues and I will now be happy to answer your questions.

Thank you. Our question-and-answer session will be conducted electronically today. (Operator Instructions) And we’ll take our first question from Didier Scemama from Merrill Lynch. Please go ahead. Please go ahead, your line is open. Didier Scemama – Bank of America Merrill Lynch: Apologies. I was on mute. Thanks very much for letting me on, and good morning. Just wanted to go back to your CapEx guidance. Just can you maybe triangulate the EUR 650 million relative to what looks like a reasonably conservative top line guidance for next year. So just explain the sort of puts and takes there, so in the context of your seasonally week December quarter revenue guidance? And then more longer term question, I mean how do you see CapEx and D&A trending in the fiscal year ‘15, and do you expect return to 20% margin in – at what sort of revenue level do you need them now to get to 20% margin? Thank you.

CapEx, Dominik will take that question.

Yes, Didier. How to triangulate the CapEx? Let me start, first of all, we have about EUR 500 million depreciation guided for the now running fiscal year, so that means our CapEx is exceeding depreciation by EUR 150 million. And I must say that the type of CapEx is good for us to bring revenues up beyond the guidance we’ve given in revenues. The reason why we do this is that we simply want to prepare – if the market is recovering to have a little bit of wiggling room and be able to really take that incremental revenue. So there is a certain reserve in there for incremental growth, and also the start of very long lead items for the year beyond. So in the current fiscal year, there is about EUR 200 million upside if the market is stronger than what we anticipate, and then maybe another EUR 100 million already for the year following. On top of that, you also see that despite that EUR 150 million excess or depreciation, we are going to most likely improve our free cash flow going forward. And from that perspective, I think we are not too far off of our 15% over the long run investment target. And going beyond the now running fiscal year, we will be at that order of magnitude. Didier Scemama – Bank of America Merrill Lynch: Can you talk about the sort of beyond – do you see CapEx effectively being brought forward from ‘15 and so the CapEx in ‘15 goes down?

Well that depends really on the market, and as you know, if the market is changing. Now, let’s assume there is a sharp downturn, we will of course get that adjust CapEx as we’ve done in the fiscal year. The current guidance we’ve given is based on an assumption that we are kind of trending towards the EUR 4.2 billion roundabout guidance we’ve given, and is assuming a little bit of reserve, so we are really quick in catching up incremental demand if it happens. Didier Scemama – Bank of America Merrill Lynch: And is it fair to say about EUR 5 billion of top line is required for you to go back to 20% margin?

It is certainly not a bad assumption if you’re thinking about the incremental revenues. Didier Scemama – Bank of America Merrill Lynch: Yes.

And the margin that is then coming with that, that is certainly feasible, but for that we would of course need to invest in more CapEx. And when that EUR 5 billion will be reached, will also matter because the longer that it takes to reach these EUR 5 billion, the more price decline will be absorbed. In the meanwhile, if we would have a sudden increase to that level, of course it will be easier to reach that type of margin level, then if that happens in three years. Didier Scemama – Bank of America Merrill Lynch: Thank you.

Our next question comes from Sumant Wahi from Redburn. Please go ahead. Sumant Wahi – Redburn Partners: Good morning, gentlemen. Thanks for letting me on. I had just two quick questions; one, essentially kind of following up from that CapEx point. You mentioned that in your Dresden fab, if it’s fully filled, it could increase your IPC capacity by about 70%. I was just wondering if you could give us a bit of color on what current capacity utilization is there across your various factories and where exactly the 650 millimeter – sorry, EUR 650 million would be used in across your various factories? So that’s my first question. I have a quick follow-up then.

Yes. I think we are not going to disclose loading by factory, but it’s quite straight forward in the front-end right now, because we are pretty fully utilized that means that we cannot be strongly underutilized in any of our factories. And as you rightly pointed out, incremental growth we see, we try to really focus on 300-millimeter, so a good chunk of the CapEx we have guided will go to a 300-millimeter capacity increases, but there is also a structural effect that we need to still grow our 200-millimeter capacity for certain products especially in automotive, silicon microphone is another example. So there is some need still in 200-millimeter to grow. Sumant Wahi – Redburn Partners: Okay. And I actually have two quick follow-ups. One is on the auto side. It does feel like you have somewhat reduced your auto – ATV growth targets from about 8% CAGR to 7% CAGR. And we did get a bit of detail earlier in this quarter during your presentation, but just wondering why you wouldn’t benefit from the increased momentum on electric vehicle and hybridization from German car OEMs? And the second question actually is related. You have given a guidance of mid-point for fiscal Q1 of about EUR 980 million which is a 7% down Q-on-Q and then you say that IPC is lower than that in terms of seasonality. Does that mean year-on-year IPC is growing something like about 30% for December quarter?

Yes, Arun will take that question.

Sure. Thanks, Reinhard. So, Sumant hi. Regarding ATV, yes, you’re right. I mean we talk about the BMW example in the call and other examples which we are not disclosing at this moment regarding the xEV vehicles. And clearly this is a huge potential for our growth. But the forecast for this topic ranging from EUR 5 million to EUR 8 million by the time we are in 2018, so which number should we work with, and therefore I would say we are a bit more conservative in our planning in terms of what we are communicating to you in terms of ratio of xEV vehicles to ICE vehicles. That was the first one of your question. And the second one was? Sumant Wahi – Redburn Partners: IPC growing in December quarter. Is it 30% year-on-year implied in your guidance?

Yes, plus/minus in that ballpark. I would say 5% plus/minus something like that. Sumant Wahi – Redburn Partners: All right. Thank you.

Welcome.

Our next question comes from Simon Schafer from Goldman Sachs. Please go ahead. Simon Schafer – Goldman Sachs: Yes, thanks so much. Just wanted to come back on the 300-millimeter capacity increases that you are targeting. I think what you said in July is that type of investment would take roughly three to four years to bring a real ROIC benefit or RoCE benefit as you define it. I was wondering whether that’s changed and how you’re looking at the initial experience in ramping how yields are and initial experiences on the returns, characteristics of that 300-millimeter ramp? Dominik, I guess I’m just trying to gauge as to whether you’re still thinking about the ROIC profile of 300-millimeter ramp the same way that you did before? Thanks.

Yes, well here is Reinhard, let me answer that question. First of all, technically 300-millimieter is very much in line and on high levels of yield also compared to 200-millimeter. Matter of fact is that we have here very modern equipment and our automation capability in this fab is quite high. Regarding the RoCE and the earnings in gross margin improvement from 300-millimeter, we already said [ph] that the invest reduction will kick in much earlier during the time we start to invest there. The gross margin improvement or profitability and productivity coming from 300-millimeter, that was – where we guided three to five years until it will significantly contribute to overall profitability, but we are very strong in comparing to 200-millimeter, where we had typically one to one ratio between increased sales versus invest. For the 300-millimeter, the ratio will be much better 0.7 to 1. This is a number which we can confirm after our first ramp of 300-millimeter. Simon Schafer – Goldman Sachs: Got it, thank you. And my second question please. Just on – Reinhard, you said of course you’ve still come through with the idea of achieving 15% cross cycle segment profit, but of course in both 2013 and 2014, you’re quite a bit below that number and I think in response to prior question you said, it requires probably EUR 5 billion of annualized revenue to get you back to 20%. So if you’re doing 9% to 10% and you can only do 20% by the time you get to EUR 5 billion in revenue, it still seems like 15%. Is that really the genuine cross cycle number, just if I guess the premise of question is 2014 is actually a relatively good year, you’re forecasting growth and you’re only achieving 12.5%? Thank you.

So before Dominik comes to with more of the details, yes, we still stand very firm with the 15% through the cycle. I think here, there will be a lot of effects kicking in. Maybe Dominik can comment on these more in details.

Yes. I mean first I want to make that kind of stock taking of the previous cycle which you can argue has been completed with the last fiscal year, we came out at 14.4% so pretty close despite a relatively significant burden from 300-millimeter. If you look at the guidance for the now running fiscal year, you’ll see that we’re in the midpoint of the guidance about 2.5 percentage points of, a good 1.5 percentage point of that is actually headwind from 300-millimeter still. And as we’ve just discussed, this will flip over three to five year period depending on how quickly revenues will increase. If you think about the over the cycle 15% margin guidance and for the time being you will assume that in the current year, we are more or less on trend line and I think that’s the thinking we have, and if you assume that we can continue our growth at about 7% to 8% per year, then we should also see in addition to the turnaround effect on 300-millimeter some improvement – slight improvement in gross margin. And if you add that altogether over another cycle which might be four to five years, you are also – you see it’s feasible to get to this 15% over the cycle margin target. So this is still what we have firmly in lined. I have to admit that we do need a return to a more normal growth environment. You know that we have been seeing little growth in the semiconductor industry for 2.5 years now and now it’s resuming. And of course we need a decent world economy as a backdrop for that recovery. Simon Schafer – Goldman Sachs: Thanks, Dominik.

Our next question comes from Kai Korschelt from Deutsche Bank. Please go ahead. Kai Korschelt – Deutsche Bank: Yes, hi. Thanks for taking my question. I just had – I want to clarify a couple of points on the sort of mid, long-term growth outlook. I think Dominik you just mentioned sort of 7% to 8% which maybe your sort of mid-term or long-term assumption that does seem to be lower than previous management which I think talked about Infineon being a sort of low double-digit growth company. So I’m just wondering what has changed? Is it just the continued depressed environment in Europe, or maybe also looking at the automotive business where the market still seems to be pretty healthy, premium segments going strong, but you’ve seem to be indicating more sort of mid-single-digit growth in ‘14. So I’m just wondering if you put all those things together, kind of what have has been the permanent change maybe in the growth outlook? Is it’s just depressed macro or is there maybe something else going on? Thank you.

Yes, so I’ll take that, Kai. Arun Mittal here. No, I think there is nothing changed. We have been talking about this for the past that our focus on energy efficiency, mobility and security remains the focus. Here of course if the macro environment in Europe were healthier, we would be doing better with our presence here in the car makers. On the other hand, last quarters we have also indicated to you that if the growth happens in China, the car makers in Europe, especially the premium car makers are benefiting from that. So all in all, three years of less than 3% GDP growth does make us a bit, let’s call it humble, in our forecast. And if we have another three years of more than 3% GDP growth globally, I am pretty sure we will be back to the growth rates which we have experienced in the past. Kai Korschelt – Deutsche Bank: Okay. Could I maybe just follow-up sort of if I take a sort of 7% to 8% growth rates, then it looks like EUR 5 billion maybe more of a 2017 rather than 2016, is that the right way to think about it?

Someway between, but 2016 is still – I mean you can’t really – if you just mathematically take that number of the EUR 4.2 billion in the current fiscal year, you can do that math. You are pretty close to EUR 5 billion in ‘16, yes. Kai Korschelt – Deutsche Bank: Thank you.

Our next question comes from Pierre Ferragu from Bernstein. Please go ahead. Pierre Ferragu – Bernstein: Hi, good morning. Thank you for taking my questions. I’d like to get back on the CapEx question, and maybe try another angle to try and get a better visibility on that point. The fact that you’ve increased CapEx next year in order to increase capacity and have more room to phase like a stronger business, it’s of course great news, but at the same time we are facing a guidance for next year that is going to see a better top line, a better bottom line but free cash flow that might be just stable which is a bit disturbing. So where I would like to ask that is, how much of the EUR 650 million we should consider at CapEx level that is like a normal run rate of maintenance CapEx that doesn’t go into capacity increase, and how much of this is actually investment that you make in order to increase your capacity? And so on that basis, assuming that in 2015, you don’t need to invest in traditional capacity, there is no need for extra capacity, what sort of run rate CapEx should we expect? And if you can give some clarity on that, it’s going to be easier for us to understand how much you can increase your free cash flow in the long run, which I think is very difficult to figure out with the information we have at the moment? Thank you.

Okay. I start with the last point which is the long-term ratio of sales we have on a target. It’s still the 15%. It’s what we had in the past. We don’t see that changing dramatically. Now with regards to the split of CapEx into what you call maintenance CapEx and growth CapEx, let me start again with the depreciation, and I must admit depreciation with a five-year depreciation on 200-millimeter is of course relatively conservative. So that is a more than what we consider pure maintenance CapEx, but to cut it very, very roughly. If you look at pure capacity increases and structural adjustments, for instance, if we move from a power transistor to a silicon microphone, we still have to invest to make that revenue. It’s a little bit more than half in that number. And the rest is real maintenance, but also don’t forget invest in innovation, quality improvement on automation of the factories to boost productivity and so forth, and then really the heart kind of replacement of broken stuff so to speak. And that’s a little bit less than half. And again I think that makes it clear. If you then go – then following fiscal year, as I mentioned, of course if we only grow by a certain percentage points, then we should see a certain reduction. However for us, it’s not so bad to invest a little bit earlier. Why? Because if you think about what can happen, either you will have a very strong market and you really can take the gross margin – even a little bit more than the gross margin, the incremental margin on the revenues that’s very beneficial, so you want to recover, you want to catch that incremental revenue opportunity. If you have invested too early and there is no demand, yes, you have a negative cost of carry so to speak, but if you weigh the scenarios, you see it’s actually from a pure internal rate of return, wiser to invest a little bit earlier. And this is why we have said that we want to invest a little bit more than for the revenue guidance.

So as Dominik – so comments from Reinhard here. As many questions come to the invest, I want to give you some statements on this. I think some of the investment is very much preparing for future growth on 300-millimeter. The other one is as we expect to continue growth into ‘14, ‘15, quite amount of the investments we have planned for this year will result in additional revenues in ‘14, ‘15 timeframe. Typically we have between three and six, and for long lead time items nine months lead time between invest and revenue effects. So I think here we always have a little bit of a challenge to correlate between the invest and the absolute revenue figures. If market would develop differently, it has – I think we can either grow faster and – or if we can stabilize on that level, we can even go down with the invest. The other point is long-term especially for the CMOS. Outsourcing will become a major share of revenue and this will also reduce the depreciation. Of course this one will still take time before it kicks in significantly, but for microcontrollers and chip card, we will go 100% outsourcing for future generations.

We can now take our next question please.

Our next question comes from Sandeep Deshpande from JPMorgan. Please go ahead. Sandeep Deshpande – JPMorgan: Yes, hi. Thanks for letting me on. Couple of questions if I may. Guys, can you make a comment on your end markets where you are seeing strength in your industrial end markets in your Multimarket business, and where you’re seeing weakness at this point, because it seems like for instance the renewable market which was very weak to this two year period seems to be coming back, whereas some of the Multimarket power market seems to be softening with mobile, PC, etcetera. Maybe you can tell us, well how you’re seeing those markets? And I have a one follow-up.

Hi Sandeep, Arun here. So I don’t think that’s correct, because as Reinhard mentioned in his earlier comments, we are seeing growth going forward in our business. And he commented that ATV will be less proportionate growth as compared to the rest. Earlier on a colleague also asked a question about IPC growth, where we commented on pretty heavy double-digit growth rates there. So in power, total, we are seeing growth year-over-year. You are right, it is driven primarily out of renewables, drives coming back slowly as well as traction from China. In the low power range which is smartphones and the tablet areas, there of course we have the seasonality which is kicking in with the first two quarters of our fiscal. Going forward of course, server will play a major role and here with our digital platform technology which we have launched, we do expect success in the coming 12 to 12 months. By the way, it’s called Dot-DP [ph] Technology. Sandeep Deshpande – JPMorgan: Thanks, Arunjai. Just one question to Dominik, on revenue guidance for the full-year. I mean you’ve guided to 7% to 11% revenue growth. Typically I mean semiconductor companies don’t give full-year guidance, Infineon is one of those few companies which does. Can you comment on your level of visibility, because I mean there is this issue which – the earlier question was talking about regarding the CapEx, but last year you gave guidance of high single-digit drop of revenue and you actually came in at negative 2%. So overall, your level of visibility in the latter half of the year remains fairly limited, though you seem to be suggesting there is up cycle in terms of demand?

I mean I really like your comment that it’s very tough to kind of look into the crystal ball for 12 months. However, we in Germany have a legal obligation to do so. So that might be the simple reason that most of the other semiconductor companies are localized with their headquarters – legal headquarters outside Germany. Now if I get you correctly, you’re asking about the level of confidence on that guidance and I’d say it’s as confident as it used to be every year. We don’t – we really tried to put our most kind of balanced view forward, and this is what we see today. Last year, we had a good, I think second half. And I think it’s also interesting to highlight that if you look at the IMF World GDP growth rates for last year. At the time when we guided, there were actually higher than they turned out to be in actual terms, so it was not only a headwind or backwind from the GDP growth, we also did quite well in terms of traction with design wins and so forth. And that is why we have recovered very strongly in the second half, but again I think to cut it short, the guidance as is good and solid and balanced as it used to be last year. Sandeep Deshpande – JPMorgan: So what that would tie into, Dominik, would be that your CapEx is indicating what you actually – so what I’m trying to say is that the CapEx maybe a bigger leading indicator into what you think rather than what you guide because your guidance would be more limited as such?

Sandeep, Reinhard here. I think in the CapEx you have to think about that we do want to take all the market opportunities we have, and especially in automotive you have to be able to deliver. Therefore as Dominik already commented, we need a certain level of headroom in order to have the capacity installed and a certain range between the higher and the lower growth rates where come in here [ph]. So I would be extremely careful to one to one relate our invest to the revenue expectation. There is a margin in. Dominik and Arun will comment on this further.

I just want to add one statistic on the past. I mean the standard deviations on the trend line is about 16%, 17%. So, if you have 5% or mid-single-digit wiggling room that is not really covering for a fraction of the standard deviation, so it’s a little bit of artificial precision to think that you can run this business with less than that spare margin. Sandeep Deshpande – JPMorgan: Thank you very much.

Hi Sandeep, just wanted to add to that, because you see that your question of our ability to forecast next year has really energized us in the room, so all of us want to take terms to comment on it. I mean one solid part or point is definitely that, Reinhard mentioned it in his speech, year-over-year we have through the channel – distribution channel which accounts for more than 30% of our business at a growth of about 7%. That was the indication he gave earlier. And at the same time, the channel inventories are down from 11 weeks to 9 weeks. So it is something we should be – would just give us some confidence about going forward. Sandeep Deshpande – JPMorgan: Thanks a lot, Arunjai.

Our next question comes from Andrew Gardiner from Barclays. Please go ahead. Andrew Gardiner – Barclays: Good morning, thank you very much. Just, first of all perhaps a follow-up just to the last point you made there, Arun, in the strength that you’ve been seeing this past year in the distribution channel. Can you give us any more color from a product point of view, where that maybe coming from, or is it fairly broad-based? And then perhaps one for Dominik, just in terms of the modeling. Does the higher CapEx, is that effecting? So how you are viewing the incremental gross margin for this coming year? And also then the other moving part in terms of margin in terms of operating expense. Can we expect anything more than sort of normal wage inflation impact on your OpEx line as we come into fiscal ‘14 or are there other moving parts we need to consider? Thanks very much.

Okay, I’ll start with the first one. Yes, it’s primarily coming from Asia Pacific as a region. So there we see a huge increase of more than 20% through channel sales, as well as a decrease of two weeks from 10 down to eight in the inventory levels. That was as far as regions is concerned. And from the businesses, I think we all know meanwhile that PMM is heavily dominating in terms of the use of the channel and there PMM’s is similar numbers as I just expressed for Asia Pacific.

Yes, now with regards to the financial model. First of all, yes, increased capital expenditures will have an effect in higher depreciation. And if you look at last fiscal year, we were standing at EUR 466 million, we now guided EUR 500 million-plus, so you see that there is a percentage point or so basically of headwind coming out of increased depreciation. On the other hand, utilization will improve significantly on average for the year. At the end of the year, we already had high utilization, but on average for the full fiscal year, you’ll see margin expansion due to better utilization. With regards to OpEx, there is a more than wage inflation in there. On the R&D side, we’ll probably grow a little bit less than revenues, but we have decided that we really want to push on the selling expenses in a sense of design-in activities, and there you see a significant increase. So in total, there will be more increase in OpEx than the pure wage inflation, but in total you will not see the ratio of OpEx increase. Andrew Gardiner – Barclays: Okay, thank you very much. That’s clear.

Our next question comes from Jérôme Ramel from Exane BNP Paribas. Please go ahead. Jérôme Ramel – Exane BNP Paribas: Yes, good morning. Two questions. One concerning lead times, if you could update us on where the lead times are? Second question, if I look at the mid-range of your guidance, the segment profit – incremental segment profit is about 40%. It used to be more in the range of 60%. So I understand the depreciation is increasing, but even if I take out the EUR 34 million of depreciation increase, it’s still around 50%. So I would just like to understand why this year you see lower margin leverage? Is it because of paid salaries [ph] increase, it is because of the currency, just if you could give us a little bit more color on this? Thank you.

Yes, hi. Again Arun. So the first point regarding inventory – sorry, the lead times. We are for most cases pretty tied in terms of lead time. However, real allocation has hit us only in couple of packages in the back-end and they are – of course partially the investments will be made and we will recognize an improvement in those lead times over the next quarters. But from a front-end point of view, we are managing our demands with respect to customer request pretty nicely for the time being, and I would say lead times have increased clearly since one quarter, but the use of the word allocation is something we are avoiding and don’t see that at the moment at least.

So it’s Dominik here with regards to alleged lower margin leverage. I think what you have to do to calculate that is really go into the data for the last quarter, so this is run rate type of consideration. And as we said, last quarter was a EUR 1.50 billion revenues roundabout, and adjusted for one-off effects about 13% margin. And if you guide towards a EUR 4.2 billion for the full year, you see that the mid-point of the range at 12.5% is only 50 basis points below that. And what you see there is indeed that we have some salary increases in there that we are going to build our field application engineers and selling efforts. And from that perspective, if you would look at this kind of change, there is no real change in run rates because we have the seasonal dip in December and then recover from there. Jérôme Ramel – Exane BNP Paribas: Okay, thank you very much.

Our next question comes from Andrew Humphrey from Morgan Stanley. Please go ahead. Andrew Humphrey – Morgan Stanley: Hi, thank you for taking my question. Really, just a quick one on FX, whether you can quantify the revenue impact. Can you quantify the gross margin impact in the quarter and maybe talk about how you see that going forward to Q1 and maybe later through next year?

I mean I don’t have it at my fingertips now. It’s not material. You know that our general rule of thumb is that one cent in the dollar exchange rate translates into EUR 1 million segment result margin. And yes, most of that is actually coming out of the gross margin, because it’s affecting our revenues first and foremost, but there is not a major impact there. What we have seen is – on the yen side, we have less – if you’ve seen our disclosure that Japan is about 6% of revenues. We have less than 6% of revenues in the Japanese yen, because some customers in Japan, when the yen was very strong have asked us to change to euro or dollar. So there was a little bit of an effect last year because of the strong move, but going forward, with the EUR 135 million, we have in the guidance and the EUR 133 million, EUR 134 million we have right now, I don’t see a big distortion from exchange rates here. Andrew Humphrey – Morgan Stanley: Okay, thanks. And I just wonder if there – are you seeing – I guess part of the question is, whether you’re seeing the big change in yen that we’ve seen over the last year and making some of your Japanese competitors more competitive on pricing at all?

Well, I think here the portfolio which we have is not so sensitive to the yen. Our major competition is in the IGBT module area. Here we see a certain level of pressure, but in Chip Card there is basically no competition from Japan, and PMM, it is very limited. And Automotive, we typically have long-term contracts here, it may be only the fight for new business, but I think here we are very well positioned with our power semiconductors and the relation we have with our customers here. So I think there is some, but not so significant and I think here we also would assume that the Japanese competitors would strive for certain level of profitability where they aren’t yet. Andrew Humphrey – Morgan Stanley: Okay, thank you.

Our next question comes from Amit Harchandani from Citi. Please go ahead. Amit Harchandani – Citigroup: Good morning, Amit Harchandani from Citigroup, and thanks for taking my question. My first question really ties into I guess the previous question, centered around competitive dynamics. Clearly, you’ve had a strong leadership position in the power semiconductors. And as I look towards your guidance for next year, could you maybe comment to what extent is this being driven by growth in market and to what extent are you factoring in market share gains versus competitions? That would be my first question. The second bit is really more of housekeeping, firstly in terms of restructuring, could you maybe give us your thoughts on Q4, and how do you see these structuring for next year, and finally any update on Qimonda? Thank you.

Hi Amit. I think it was Amit. Did I get it right? Amit Harchandani – Citigroup: Absolutely.

Okay Amit, Arun here. As indicated earlier, we are planning with the growth in the IPC section of our business as well as the PMM section. And both are in the areas of power. Now there we are very much concentrated on couple of market segments, so drives for examples, renewables, traction, and also the smartphones and the tablets in terms of power supply or power delivery. So we typically plan based on the demand from our customers or indications on the markets from the macro side on those applications. We do not plan based on market share gains. Of course the fight in the field is for earning every X percent point, X percent of share. And our track record shows that in the last 10 years, we have constantly gained market share in the field of power semiconductors from 6% to 12%. So looking back I can talk about how we did. And looking forward, I can tell you that we are going by application. And from our system – understanding system thinking approach, it’s about bringing value to the customer at his application level rather than simply selling a component from our side. I think the second one. Dominik, you want to take that?

Yes, I think with restructuring, you’re right. We had kind of relatively high number in the past. Fiscal year was close to EUR 18 million. This will go down going forward. We’ll still have some, because we’re going to kind of fine tune here and there, but it will not be a major item going forward. And then you asked on an update on the Qimonda. I give that to Reinhard.

Well, we can say Qimonda – not really big news on Qimonda. The major events which have taken place there is a ruling in U.S. about the IP patent case, but here we still are waiting for the judge to announce the outcome of the ruling, while for all other topics I think here we are very much in line with our understanding of the case which are related to all other disputes. And I think here no changes in the assessment we have. Amit Harchandani – Citigroup: Thank you.

We have time for one final question please.

Okay. Our final question comes from Günther Hollfelder from Baader Bank. Please go ahead. Günther Hollfelder – Baader Bank: Hi, thank you. I had one on the power semiconductor business. You have been a first mover in this context a couple of years ago with the acquisition of Primarion. We’ve now seen Maxim acquiring Volterra. So it’s sort of an integration of discrete and IC [ph] products. So I was wondering due to higher system complexity, do you think this is a paradigm shift key in the industry and others will follow in this context?

Yes, Hollfelder, good question. I think here definitely what we see is that the system integration will take place very strongly. With the acquisition of Primarion, it was about integrating power semiconductors with drivers and the digital control into one application and dominating the board. The next step will be of course more and more of these devices will be packaged together in a one package. So what you see is system integration on chip versus system integration in package to move on. Definitely those companies who are well positioned in digital power and power IC as well discretes are here in excellent position and we also expect this to take place for the high voltage pertaining to AC to DC, where we have started this Dot-DP [ph] an evolutionary innovation from the Primarion approach that we now want to control AC to DC power supplies in a digital base. This should give you the advantage to have best efficiency for standby mid-load and high-load. Again here, I think we have a great situation, because of our digital competence, the power competence how you put all this into digital, as well as CoolMOS and driver IC, which concludes that yes, with this certain level of conversions between control and power, those companies who can cover all are well positioned and we strongly believe that this trend will continue. Just one example why we believe this to be extremely important moving forward, when you look at the tablets, they have a huge battery. If you want to charge that such a tablet in half an hour, you really need a lot of power through the power supply. You only can manage this when you are very adoptive and can control voltage and currents. This needs digital control. Günther Hollfelder – Baader Bank: So I have one follow-up, I understand your Dot-PD [ph] Technologies today targeting more like the tablet areas I think 40, 45 volts or so. Are you planning to go further down addressing more the smartphone segment here with AC/DC conversion?

We service Dot-DP [ph], I think the position is best that is in the midst range to higher range. That will be our – I think you are not wrong 30 volts and higher, but significantly also going higher, so Dot-DP [ph] starting point, I can locate a little bit more clearly to 20 to 50 volts. Whereas the mobile phones I think the current architectures allocating maybe even coming to a single chip integration. LED is also an area where Dot-DP [ph] will be extremely – have a great chance to grow because here you need a lot of control and even maybe remote control were digital anyhow is required, but LED lamps not only the bulbs, the complete lamps might require power range if it fits very well to this 20 to 50 volts in a high versatility. Günther Hollfelder – Baader Bank: Okay. Thank you very much.

Ladies and gentlemen, I’m afraid we have run out of time. Thank you all very much for dialing in and for your interest in the company and how it is progressing. We will be very happy within the Investor Relations team to take any remaining question off-line, but we have to conclude this call at this point in time. Thanks so much and I hope to speak to you all again next quarter. Thank you. Bye-bye.