Juergen Rebel - Vice President, Investor Relations Reinhard Ploss - Chief Executive Officer Dominik Asam - Chief Financial Officer Helmut Gassel - Chief Merchandising Officer Jochen Hanebeck - Member, Management Board

Alex Duval - Goldman Sachs Sandeep Deshpande - JPMorgan Andrew Gardiner - Barclays Jerome Ramel - Exane BNP Paribas Gareth Jenkins - UBS Achal Sultania - Credit Suisse François Meunier - Morgan Stanley Johannes Schaller - Deutsche Bank Gianmarco Bonacina - Equita Szwabowicz - Kepler Cheuvreux Karsten Iltgen - Bankhaus Lampe Douglas Smith - Agency Partners Veysel Taze - Oddo

Good morning and welcome ladies and gentlemen. With us today, we have Reinhard Ploss, CEO; Dominik Asam, CFO; Helmut Gassel, CMO; and Jochen Hanebeck, Member of the Management Board responsible for operations. Reinhard will start with some remarks on group and division results, market developments and achievements during the quarter. Dominik will then comment on some selected key financials. After those introductory remarks, the entire management board will be happy to answer your questions. In order for everyone to have a chance to answer their questions, I would like to ask you to restrict yourself to one question and one follow-up question the first round. A recording of this conference call and a copy of our 2017 fiscal second quarter earnings press release and investor presentation will also be available on our website at infineon.com. Reinhard, please go ahead.

Thank you, Juergen and good morning everyone. Let me begin with group performance in the March quarter. In line with our preannouncement on March 24, we posted a strong quarter-on-quarter increase in revenue of 7% well above the typical seasonal upswing. Revenues came in with €1.767 billion. Year-over-year, revenues increased by 10%. The average euro to U.S. dollar exchange rate for the quarter was about $1.06. We benefited from a strong acceleration in order intake during the quarter in ATV, IPC and PMM. Segment result increased quarter-on-quarter by €50 million to €296 million representing a segment result margin of 16.8% as a consequence of higher revenues and better mix. The book-to-bill ratio for the second quarter came in at 1.2. Let us now take a look at the divisions. Automotive revenues increased by – steeply by 11% quarter-on-quarter and 17% year-on-year to €783 million for the quarter. Demand for electric drivetrain solution and components for ADAS system remains strong. We also saw a very strong pickup in demand for microcontrollers and broad base for our whole portfolio of sensors and power products. By region, China was strong and Europe was very strong. The book-to-bill ratio came in at 1.0. The segment result increased to €131 million from €114 million in the December quarter. This means a segment result margin of 16.7%. Looking at the latest market share rankings by strategic analytics, we strengthened our number two position by gaining 0.3 percentage points. We narrowed the gap to the number one and increased the distance to number three. We were able to gain share in power, microcontrollers and especially in sensors. From a regional perspective, we managed to increase our market share in APAC from 10.3% to 11.5%, reinforcing our number one position in South Korea. In China, we gained significant share and have become the number two player with about 50% revenue growth in 2016. During the quarter, we also gained further traction with our 32-bit AURIX microcontrollers and radar solutions. A major Japanese Tier 1 will use the second generation AURIX microcontroller for their long and mid-range radar platform. Another major Tier 1 will use a complete chipset comprising of a second generation AURIX microcontroller and the next generation 77 gigahertz radar chip for short range applications. Turning to industrial power control. IPC posted revenues of €293 million compared to €264 million in the December quarter. This marks the steep 11% increase both quarter-on-quarter and year-on-year, significantly above normal seasonality. Components for low and medium power applications were in exceptionally high demand across the board. Here some – home appliances solar, metro, regional transport and drives for discrete factory automation are the key applications. Demand for high power applications such as large industrial drives or high-speed trains, remains sluggish. The book-to-bill ratio came in at 1.3 in the March quarter. The segment result stood at €44 million compared to €24 million in the December quarter. This means a segment result margin of 15%. The key highlight for IPC is a progress of our silicon carbide program. We have always said that large scale adoption of silicon carbide MOSFETs will start with industrial application. These applications comprise photovoltaic inverters, charging station for electric vehicles, uninterruptible power supplies and motion drives, for example. As we speak, this broad-based traction in industrial application is becoming a reality. We started sampling our first tranche silicon carbide MOSFET and full silicon carbide modules to select customers last fall. Just from this first project, we see a revenue potential of a low triple-digit million euro amount over the next years. We are confident that a growing share of this potential will turn into future business. We are very much on track to bring the best silicon carbide MOSFET design to the market. This is not only what we believe, but also what we hear from our customer who have tested the samples. Now, turning to power management and multi-market. Revenues of PMM increased by 5% both year-on-year and quarter-on-quarter to €520 million. We saw a very strong power business across the board exhibiting year-on-year growth in the mid-teens. Our smartphone and RF power component business hit their seasonal lows with some pockets even showing snapbacks. In AC/DC, demand for high-voltage CoolMOS Power MOSFETs was strong across all applications. In addition, we saw good traction in digital power ICs with increased demand in notebook chargers and desktop power supply application. In DC/DC, we also saw strong momentum across all application and voltage classes. Demand for solutions in the VR12.5 server platform remained high. In general, our broad-based distribution business with multi-source products drove incremental growth. As it relates to our smartphone component business, our customer base has become much more balanced. Our effort to penetrate China’s smartphone vendors starts paying off. We also saw a nice snapback of the silicon microphone business during the quarter. PMM posted a very strong book-to-bill ratio of 1.4. However, this contains a significant portion of longer term orders. Parts of the market are in tight supply and apparently some customers expect further increase in lead times, as PMM segment result increased in line with revenues to €91 million, representing a segment result margin of 17.5%. Now, on to chip card and security. Revenues declined quarter-on-quarter by 3% and year-on-year by 7% coming in at €169 million. We saw strong momentum in business like trusted platform modules and embedded SIM. The payment business developed positively after seasonal softness in the December quarter. We believe that the payment market has finally bottomed out. The legacy classic SIM card business declined. The book-to-bill ratio came in at 1.4. This ratio also reflects a higher level of longer term orders in our government ID, embedded SIM and TPM business. Segment result stayed flat at €29 million ending up in the segment result margin of 17.2%. During the second quarter, we scored a key design win with an electronic healthcare card project in major European country. We solidified our position in TPM further with our project wins at leading PC OEM. Ladies and gentlemen, this concludes my brief business review. Let me now hand over to Dominik who will comment in more detail on some selected key financial figures.

Thank you, Reinhard, and good morning, everyone. Gross profit increased to €645 million, up from €592 million in the previous quarter. This implies a gross margin of 36.5% after 36.0% in the December quarter. R&D expenses decreased slightly to €192 million. SG&A expenses increased to €208 million. The net other operating expenses amounted to €16 million. Included in these numbers are €67 million of non-segment result charges. Of that amount, €43 million are International Rectifier, acquisition related, amortization and other charges. €25 million of these charges hit our cost of goods sold. In R&D and SG&A, we booked zero and €16 million of these charges respectively. Another €2 million of these charges were booked in other operating expenses. These acquisitions related costs predominately include amortization of acquisition related intangibles, special retention plans and other integration related expenses. The other €24 million of non-segment result related predominantly to costs in conjunction with the cancelled acquisition of Wolfspeed. Excluding acquisition related and/or other non-segment result effects, the gross margin stood at 38.0%. The segment results came in at €296 million in the March quarter compared to €246 million in the December quarter, a sequential increase of 20% and a year-on-year increase of 30%. The implied segment result margin is 16.8%. The higher segment result margin compared to the midpoint of our initial guidance range is primarily a consequence of higher sales and improved product mix and a stronger distribution business. Depreciation and amortization increased slightly to €205 million after €200 million in the previous quarter. Included in this figure are €34 million related to the amortization and depreciation of fair value step-ups from the purchase price allocation of International Rectifier. Net income from continuing operations increased to €218 million after €167 million previously. Basic and diluted EPS came in 29% higher at €0.18 for the March quarter, up from €0.14 before and up by 13% from €0.16 compared to 1 year ago. The adjusted earnings per share increased to €0.21 up by 24% from €0.17 in the December quarter. Year-on-year, the adjusted earnings per share increased by 17% from €0.18, 1 year ago. Free cash flow from continuing operations increased significantly to €82 million, up from a negative €39 million in the previous quarter. Our net cash position decreased to €32 million, down from €166 million at the end of the December quarter. Note that in February, we paid out €248 million of dividends. Our after tax return on capital employed or ROCE came in at 14.3% in the March quarter after 12.1% in the December quarter. The increase is essentially driven by the increase in net operating profit after taxes. ROCE continues to be strongly affected by bookings related to the acquisition of International Rectifier in particular goodwill, fair value step-ups in the context of the purchase price allocation and the related depreciation and amortization. Excluding acquisition related bookings and effects, the underlying ROCE stood at around 20%, about twice as high as our cost of capital. In our adhoc call on March 24, we indicated that we increase our investments by around €100 million for the full year. Given the stronger than expected growth in the current fiscal year, we add capacity earlier than previously planned in order to ensure sufficient flexibility and continued high delivery performance for our customers. Additional investments are primarily dedicated to Dresden 300 millimeter, the second module in [indiscernible] and backend expansion to serve the strong demand for advanced drive assistance systems, electromobility and other solutions. In an upswing, as we currently experience, the ability to deliver in tight supply situations is of paramount importance. We want to capture the full margin potential available to us in strong market conditions. In addition, customers typically honor this by higher loyalty in the future. For sure there is always a risk of idle cost if and when demand stalls in a cyclical downturn. However, based on the strong secular trend line growth we enjoyed, we are very confident that as in prior cycles any periods of significant underutilization will be short lived. So we consider these investments as highly attractive options to maximize margin contribution and customer satisfaction. Let me now hand back to Reinhard who will comment on our outlook.

Thanks Dominik. For the June quarter, we expect a normal seasonal upswing leading to revenues improving by 3% sequentially, plus or minus 2 percentage points. This outlook is based on a rate of 1.1 for the euro against the U.S. dollar. We expect revenues in ATV to remain around flat. IPC, PMM and chip card should grow in revenues. At the midpoint of the revenue guidance, the segment result margin should come in with 17.5%. For the full 2017 fiscal year, we confirm our guidance update from March 24. Group revenues should grow between 8% and 11% assuming a rate of 1.1 for the U.S. dollar against the euro. ATV will grow significantly above group average, IPC around group average and PMM and chip card should come in below group average. The segment result margin should come in at 17% of sales at the midpoint of that range. Ladies and gentlemen, let me summarize the highlights of the quarter. Above seasonal revenue growth of 7% quarter-on-quarter and 10% year-on-year, which is above our 8% growth cycle – through cycle growth target. Strong earnings with a 20% quarter-on-quarter and a 30% year-on-year increase in segment result, which means a 16.8% segment result margin, particularly fast growth in automotive and power markets based on strength across almost all application therein. Also, we saw here and there tight supply. We have no indication of an inventory buildup at distributor’s sales through growth in line with sell-in. In chip card and security, the payment market stabilized and we will return to some sequential growth driven by government ID and embedded SIM. 300 millimeter RAM [ph] progressing as planned thereby driving ramp-up cost out of the P&L by the end of calendar year 2017. And actual fact, we could chip more from 300 millimeter right now. Therefore we are eagerly awaiting for the next set of tools to arrive. Strong progress in our trench-silicon carbide MOSFET program with first orders in and an initial revenue potential of a low triple-digit million euro amount across a variety of industrial application. Ladies and gentlemen, this concludes our introductory remarks and we are happy to take your question. Back to Juergen.

Operator, please start the question-and-answer session. Thank you.

Thank you. [Operator Instructions] We will now proceed and take our first question, which comes from Alex Duval of Goldman Sachs. Please go ahead.

Yes. Good morning everyone and many thanks for the questions. My first would be just on some of these U.S. automaker data points and the latest update you can give on auto trends from the past month, obviously you have reiterated today that dynamics are robust as per your positive preannouncement some weeks ago, but if we look at some of the majors in the U.S. that are making cars, monthly sales have actually been down a little bit below market expectations, now obviously, in the full realization that’s a bit more biased towards the U.S., could you just help us understand to what extent that’s significant for IFX and whether there is any risk from slowing auto units especially in the U.S. And secondly just on auto inventories in China and North America, we have seen some supply chain participants like [indiscernible] again in North America talk about some elevated inventory levels in China and the U.S., so I wonder if you are seeing anything like that and maybe just help us understand is there are any risks on that side? Many thanks.

Well, Alex, our business in auto is pretty robust. Helmut will give you the details on that.

Yes, thank you. I would say we have grown very much above trend line in automotive. Automotive production in March quarter has been 4% which is twice as big as we set for the long-term growth. In particular, we have seen BoM growth coming in from two important drivers, which is xEV as well as ADAS and we have a very strong participation, very strong market share in those two significant drivers. Of course, we do see the signs of slowing down the production rate in the U.S. and we understand also the estimates for China and we do believe that the above trend line growth that we have seen in the past quarters will slow down and eventually the, let’s say, annual growth rate will slow down to become closer to the longer term growth rate that we have seen. With our very strong position, however, in the growth drivers remaining, we feel that we can capture a higher share of that. And last but not least, an important trend is that we also see continued growth in BoM in what we call classic automotive portfolio. So standard applications and see a broader range of those applications being adopted in smaller vehicle platforms as well.

That’s very clear indeed. And if I could just follow-up one final on the auto side, one of your U.S. peers talked about a downtick in sort of short-term demand in China review due to subsidies. Obviously you are very well positioned in China, you have talked about that actually strengthening today, but obviously China is a big EV market. So, could you maybe just, as a final note, just give an update on what you are seeing there? Many thanks.

Yes. China is usually a little bit of the unknown, let’s say. Obviously, there is a stronger chance for corrections there. But we also see accelerated growth despite of the fact that there has been a correction in China, we see accelerated growth in February as well as in March and subsidies were cut in January for about one month. So I think there is a fair chance of that at least being in a steady state in China.

Helpful. Many thanks.

The next question comes from Sandeep Deshpande from JPMorgan. Please go ahead.

Yes, hi. Thanks for letting me on. My first question is regarding your announced silicon carbide MOSFET. I mean, you have mentioned on your press release today that you are seeing good traction with that MOSFET. Can you talk about where you are seeing traction on the silicon carbide MOSFET? And then also give an update on your existing IGBT based design wins in the auto electrification market starting – I mean at the European vendors potentially into 2018 2019? Thank you.

Yes, Sandeep. Silicon carbide, we expect it to be a large area of questions, but definitely we always stated that of course automotive will be a growth driver of silicon carbide MOSFET. Nevertheless today – by far the majority, I would say by far means nearly complete market demand is on the IGBT side where we have an extremely strong position and we check if we can give you some more light on the IGBT wins. Helmut would do this in detail. Silicon carbide nevertheless, we always expected that markets which benefit and are more dynamic than automotive, but there are some automotive players who are dynamic undoubtedly especially in the southern – in the Californian area, but here we see that the benefit for silicon carbide is extremely strong in photovoltaic inverters. And there we also see the biggest interest of the customers and the world to change and move to the next platform. The generation turnover in inverters for photovoltaic inverters is much faster than in many other areas. Now that is, I would say, the key drivers which does not mean it is also growing in other applications. For automotive, we see longer term growth coming in at the inverter base and here definitely the – especially our Chinese customer think in cost performance. And in cost performance, IGBT still has an excellent position even against silicon carbide. And not to forget, you will only harvest the benefit from silicon carbide if you change your setup and application. Very few customers are, I would say, in the move to go there. So, I think here Helmut maybe has a little bit more about the design wins in IGBT for xEV.

Yes, thank you Reinhard. First, we want to remember you that we recorded $750 million worth of design win at IGBTs last fiscal year. Obviously, these design wins are turning into business now. Nevertheless when you look at silicon carbide and automotive, first applications will be on the onboard charger side, because there in particular the space restraints are the most probably bigger driver. On the main inverter, the story is all about cost performance. And there the cost performance ratio of silicon carbide has to come down further. That’s why we continue to state that we see the tipping point for main inverters in vehicles in about 2020 timeframe and beyond. As we are the very significant player in the current inverter applications based on silicon IGBTs, you – we are very confident and you can be assured that we are in very close discussion with our customers on that transition point and our technology is very well suited for that.

So, Sandeep give me one second to add a remark. I think our excellent position for high voltage device maybe – may it be CoolMOS, may it be silicon carbide or may it be standard IGBT puts into a position where we can choose either on the high performance or the cost performance and even when we look at the latest CoolMOS on the CoolMOS low cost performance, I think here – and the rest is something where we tailor to, I would say, the best of the customer solution.

Thank you, Reinhard.

The next question comes from Andrew Gardiner of Barclays. Please go ahead.

Thank you for taking the question. Good morning all. Just another one on the automotive side. Just sort of in response to your answer to the earlier question. So, fiscal ‘17 guidance for auto to grow beyond the overall group sort of clearly suggests that you are not seeing – given your bookings you are not seeing a slowing in the next couple of quarter sort of continuing to grow at mid-teens, maybe even high-teens. But is your suggestion about returning to trend line growth is that something you would anticipate in fiscal ‘18 so then sort of back to the high single-digit range?

Andrew, thank you for your question. I think Helmut can give you a little bit more flavor to it, but giving you one remark, we expect that the – a significant higher growth than trend line will soften and we will come closer to the trend line. This does not mean that we see weakness in automotive, but Helmut will go into more detail.

Yes, thank you. Looking at a 17% year-over-year growth rate for this quarter as compared to a year ago that obviously is significantly higher than the 8% that we give as our trend line growth. Now, remaining on roughly the same absolute level so slowing down quarter-on-quarter growth will lead automatically to an overall group level that is closer to the 8% than the current 17% of this quarter. This is what I was trying to say with that earlier comment. So for the overall year, we will still significantly be ahead of that 8%.

Understood. Thank you for the clarification.

The next question comes from Jerome Ramel from Exane BNP Paribas. Please go ahead.

Yes, good morning. One question on silicon carbide, you said that you see a triple number for revenues for the coming year, but to what extent is it incremental revenues? Because you are already supplying IGBTs and MOSFETs for the inverter in solar industry, so I am just trying to understand is it incremental revenue in the sense because you are seeing you are going to gain further market share or because your buildup material is increasing or is it just your silicon carbide replacing your existing IGBT product?

Jerome, thank you for that question. This is a difficult one. Definitely, what we expect that silicon carbide is benefiting for our customers in the application. On the other side, of course, the devices are significantly more expensive than the standard IGBTs. So being in the lead in many areas in the performance and cost performance of IGBT, we of course see a certain relay placement of our IGBT business for silicon carbide. But as the BoM is squeezing, we expect also growth from there. On the other side, we also expect that the respective ATV customers and others we can gain also higher market share those whom we support by using silicon carbide in their device. So we see also certain chance to win market share on that side.

Okay. Thank you. And other follow-up maybe more for Dominik, if I look at the gross margin and if I exclude the increase of depreciation and amortization, I do not see that much leverage in Q2 this year versus maybe Q3 last year, is there any – I mean, I am talking about adjusted gross profit, is there any reason why we haven’t seen that much leverage on the gross margin excluding the D&A? Thank you.

Yes. On the gross margin, one key ingredient is also of course the specific mix and you might recall that some pretty high gross margin businesses like the RFS business within PMM have actually been slightly declining year-on-year. So as has been mentioned before on the call, there was a kind of significant growth in the power part of the PMM business. On the other side, there were some reductions still. And also in the RF power business there was some significant reduction. RF power was also very high gross margin. So from that perspective, I would say it’s predominantly also structural issue.

Thank you very much.

The next question comes from Gareth Jenkins of UBS. Please go ahead.

Yes. Thanks. So I have a couple of questions if I could, firstly I wondered if you could talk about order patterns through the quarter, did it strengthen through the quarter in the business units or was it fairly standard through the quarter? And then I have got a follow-up. Thank you.

Gareth, this is very, I would say – in general we can say that the order entry over the quarter is very different by business. We see some which is very strong, but many of the orders are longer term and there we expect that we can indicate or can read from it that the market is getting tighter and tighter there as I introduced. So especially in the product segment, which become bit tighter as in PMM for instance, power MOSFET, we see that the long range orders are increasing, but we also have a extremely solid order book also for the long range in ATV. So there is no specific picture which we can interpret specifically a little bit, but there was a higher book to bill in February and March than in January. But this January to March effect there is always very difficult to interpret. Nevertheless, there is a clear answer with the last two months being very strong, we do not see a weakening in order book buildup.

Thank you. And the second one unrelated is a follow-up on 300 millimeter, you talked about bottlenecking on equipment, I just wondered whether you could give a sense of where you feel you can get utilization to at the end of next year rather than at the end of this year, I think you have quoted 25 to 30 this year to get rid of the saturation charges, I wonder where we end up at the end of FY ‘18? Thank you.

Well, I hand over this question to Jochen Hanebeck in order to answer.

Yes. We are very confident to buildup our 300 millimeter capacity till the end of the calendar year and we will reach this cost crossover as we predicted. In fact we accelerate even the investment in order to serve our customer demands in this area. End of fiscal ‘18 certainly depends on the outlook, which I think we gave in the conjunction of context of next fiscal year.

Thank you.

The next question comes from the Achal Sultania of Credit Suisse. Please go ahead.

Hi, good morning. It’s Achal Sultania from Credit Suisse. Two questions, one for – on the PMM side, I think you mentioned that you are starting to see some traction with the Chinese on the smartphone side, can you talk about like which are the products specifically here that you are targeting in the Chinese market. And then also, what are the trends that you are seeing on the wireless infrastructure part of the market there? Thank you. And then I have a follow-up for Dominik. Thanks.

Thank you, Achal. So Helmut, what about the mobile phone business in China?

Yes. Thank you very much. Basically it is the RF switches and LNAs that we see there as well as the silicon microphone. So we are seeing good traction there. We have seen good growth in both areas. When it comes to infrastructure, it is still a lumpy business, not very predictable and very dependent on individual projects and right now, not in a good – I would say not in the best mood.

Okay. Thank you. And Dominik maybe one question on the fall-through rates and how we should think about this longer term, like I think in the past you have talked about 30%, 40% fall-through rates like every $1 of extra revenues or €1 of extra revenues, how much of that falls through on the EBIT line, can you – how should we think about this rate going from here on, let’s say beyond 2017, can you give us some color what the puts and takes here are?

Yes. I think when you talk about fall-through, you have to distinguish very clearly between a very short-term change, unexpected change in demand and then a kind of longer term growth model. If you look at the short-term kind of sensitivity, it’s very clear that when you lose kind of very suddenly €1 of revenues which you thought you will ship, you will lose first of all 50% of that euro in terms of variable contribution margin. And then, if you start to tweak production down and reduce the loading and the factories would lose another €0.25 on the euro. So depending on whether you then increase inventories and absorb cost into inventory, there you would have a sensitivity of 50% fall-through if you – to the contrary, even reduce the inventories – sorry, keep the inventory flat and basically reduce manufacturing as high as 75%, but that’s short-term. This is not our kind of longer term growth model, because as we ramp the capacity longer term, of course some fixed cost is rolling into the P&L. You have also seen that on the depreciation side. We have now kind of passed the trough in terms of sequential declines in depreciation. It’s now kind of going up slightly still below revenue growth in the kind of March quarter, but it’s going up. On top of that, we clearly say that we want to increase our research and development expenses in line with revenue growth. We also say that on a selling side we want to invest more in our growth, so selling expense is marketing, go-to-market expenses, so we there target about 90% of the gross rates for the growth of that kind of item. And obviously, we try to reach some economies of scale in G&A expenses, trying to limit the growth to like 60% or so of the revenue growth. That’s our longer term model on the OpEx. On the gross margin, we – there is first of all always the debate about the price decline. So the longer term projection as to operating leverage as you call it, on the gross margin is very much dependent on how we do in price decline. We target a certain level of productivity which enables us on a gross – on a kind of PCM level to really – which is the kind of variable contribution margin of about 50%, I mentioned to keep that constant in a kind of normal environment. If you have a very positive market environment, you might be able to improve a little bit against that because the decline might be a little bit milder. However, on the gross margin we see a very, very slight operating leverage only from kind of the overhead that lies between the kind of 50% or so variable contribution margin and the gross margin of adjusted 38% which we had in the last quarter. So there is a little bit – but very little operating leverage in there.

Okay. Thanks a lot Dominik.

The next question comes from François Meunier from Morgan Stanley. Please go ahead. François Meunier: Hi, everyone. Congratulations, great quarter. Just a few questions, someone was asking about the trend from EBITDA ramp, can you disclose how big this production line is going to be in terms of wafer per month? Also you give some very interesting data on your market share for auto power, which is 26% which is really impressive. Can you give us a bit more granularity on how big your IGBT business is today for electric cars, if it’s like a triple-digit number million euros? And lastly, a very quick maintenance one on the Wolfspeed, I saw there was like a €17 million cost to quarter. Is there any more cost coming relative to this transaction, maybe a termination fee or some banking fees or lawyer’s fees and stuff like that coming out in the current quarter or the rest of the year? Thank you.

First of all, thank you for your questions. I am not sure if we have understood them all precisely. So, let’s start from the one which was clear. Dominik will answer on the Wolfspeed topic.

So the answer is that we have basically digested everything related to Wolfspeed. We have paid them a breakup fee. We had against that a certain benefit of hedging expenses which is in the financial expense. You might have seen that our financial expense was actually lower than in the prior quarter, so that was an offset. There is very limited that is still out there, which is kind of below $1 million or so potentially, but you can completely kind of take that out of the picture now and it was the $12.5 million breakup fee and some legal expenses for lawyers and so forth in the last quarter already. François Meunier: Okay, good. So yes, I was asking about the size of your IGBT business today or last year for electric cars like for the inverter and all the inverters and the charger, how big it is or how big it was?

Okay. So, the IGBT for cars you say, more or less, but IGBT in general? François Meunier: For electric cars?

Okay. I will hand over to Helmut who has the detailed knowledge on this.

Yes, Francois, thank you for the question. We are right now roughly at a triple million euro figure already growing 60% year-over-year, so a very significant business in IGBTs and growing fast.

So, what were the other questions leftover? François Meunier: Yes, that was the production capacity for your 12-inch fab in numbers of wafer per month when it’s the pre-ramp, is that something you want to share?

Yes. As we said, when we reached this cost crossover point, it will be about 10% to 15% of our total capacity in 300 millimeter, so by the end of the calendar year. François Meunier: And how many wafers is that per…

That’s very difficult. It depends on the structure of CoolMOS versus IGBT and MOSFET. So there is a lot of variety, I think this is more misleading, but the total 300 millimeter capacity we are building up in Dresden will be then 4x this amount which we reached by the end of the calendar year.

So Francois as these are very different technologies, we do not consider wafers, we consider layer, but this will also not translate so much, so sorry for that. François Meunier: It’s alright. No worries. Thank you.

We will now take the next question from Johannes Schaller of Deutsche Bank. Please go ahead.

Yes, thanks for taking my questions. So, just a few housekeeping and follow-ups really. You talked about China and the U.S. auto markets a bit. I think also in Europe, you mentioned very strong business. Maybe you can give us a bit of color in terms of how that is driven by units where I think some of the OEMs had pretty strong unit growth year in Q1 or how much is more a specific content or share gain from your side and how we should think about that part of the market going forward? And then also in Japan, just based on what you said on the microcontroller and radar side, is it fair to assume that you will gain also nice amount of market share here again in 2017? And then just as a clarification, you gave some of the book-to-bill numbers, which have some of the long-term orders in there. Could you maybe give us an idea of where we are excluding these long-term orders or is that maybe a bit too tricky to do this time that, that will be helpful? Thanks.

Yes. So, Mr. Schaller, thank you for your question. The last question I think we cannot answer so easily or we do not want to answer so easily. Therefore, let’s move right away to the car questions. Again, what for me is extremely important, Infineon is benefiting significantly from the content growth. And whatever the car growth will be in future, the dominating sector will be the content, but as you had some specific questions on the EU business and Japan, Helmut will go into the detail.

Yes. Just to add to what Reinhard has said, when you look at 4% car unit growth in the March quarter and you see our revenue growth of 17%. That means we have grown 13% somehow between BoM growth and market share gains. And in 2016, the BoM growth was approximately 6%. So, that leaves about 7% of market share gain for us, which it says Reinhard already mentioned, predominantly also a factor of the structural change in the revenue of automotive meaning higher share of xEV as well as ADAS where we are very strongly positioned. I think when we look at it – give it a more regional look, yes we have significantly gained also in Europe as Europe is picking up some of these things as well. Look at automotive – automatic emergency braking, which is now coming, let’s say, as a wave to the low and mid-range cars and where we participate strongly. And yes, we have been gaining market share continuously in Japan on a broad range of applications as well. Last but not least, already mentioned in the intro statement by Reinhard, we confirm our number one position in Korea, which is also a market that picks up strongly on xEV.

Understood. Thank you.

The next question comes from Gianmarco Bonacina from Equita. Please go ahead.

Yes, good morning. Just a couple of quick questions. The first one is about the segment margin in the industrial power controller, if you can expand a little bit for any specific reason why the increase was so strong both quarter-on-quarter and year-over-year apart from the normal operating leverage? And the other one just more broadly if you look today at your total business, how much would you say is related to distributors? Thank you.

Yes. So, the first question Dominik will take distribution answers, Helmut.

So on IPC, we had a pretty good benefit from the volume growth, but I have to also say that our December quarter was kind of somewhat subdued, because of some one-time effects we had there, which did not reoccur in the March quarter. But I think the kind of 15% is a more normal one than the 9% and for the full year we will not be at 15% yet, but we should be getting much closer to that number.

On the distribution side, on IFX level, we are roughly at about 40% share of business through distribution as Reinhard commented earlier in the call. We have been seeing a slightly higher share in this current quarter than in the previous quarters. Generally, I would say we have a trend of that increasing slowly, but surely.

Thank you.

[Operator Instructions] The next question comes from Sebastian Szwabowicz from Kepler Cheuvreux. Please go ahead.

Yes, Sebastian Szwabowicz. In silicon carbide market Q1, Wolfspeed lost large market share in 2015. You were altogether controlling about two-thirds of the silicon carbide market in 2014 and you are now controlling altogether close to 50% of the market. So, it seems that Mitsubishi and to a lower extent, gained large market share last year in 2015. Could you explain a little bit what is happening there? And also on embedded secure element, this morning Gemalto announced that they have secured the embedded secured element for the GS8 at Samsung. I have news that I guess that you were this player for the GS7. Are you still supplying Samsung for the GS8 for the secure element? Thank you.

So, let’s start with silicon carbide. Here definitely the silicon carbide market is, I would say, in a take-off in a, I would say, very early in size and it is kind of what you see in infant markets very often that market shares are shifting strongly. The market or the revenues in 2015, but by far dominated by silicon carbide diodes which is a pretty well saturated market where a few player have been in and it is not growing so strongly. The major growth will come from the silicon carbide MOSFETs mainly in the module area. I think here the expectation this will go to – and value you can guess. In a more conservative case, it is €1.5 billion by 2025 or respectively €3 billion at the same time. So it is extremely difficult to say. Two factors here is how the price down of silicon carbide products will be – or cost down and how quickly our customer can adopt the silicon carbide, because they have to significantly modify their application. And as Helmut pointed out earlier, we will see, I would say a significant growth in silicon carbide in automotive inverters from 2020 on and despite the fact that already there are some early drivers. At that time and I think today, silicon carbide is moving into 6 inch wafers and we expect that it will take quite some years until it will move to the next wafer diameter. So 6 inch is just in the phase of adoption and the majority of today’s revenue in the industry is most likely in 4 inch and below. The secure element will be answered by Helmut. Thank you, Helmut.

Thank you for the question. As usual, we do not comment on individual customer product relations as well as individual models of phones. Nevertheless, we – let’s say, we see strong momentum in embedded SIM side. We do see good momentum on the TPM side. Embedded secure element is overall, I would say more stable. And the players in the supply chain are somewhat changing shares and we are changing shares with them. Overall, I would say we are doing very well in the security market significantly growing. I want to say, in a declining market holding our revenue almost is a strong achievement in terms of market share.

Thank you.

The next question comes from Karsten Iltgen from Bankhaus Lampe. Please go ahead.

Yes. Hi. Thanks for taking my questions. I had just one follow-up question on your growth in automotive, you explained the 17% growth when compared to the 4% unit growth in the automotive market largely by content and market share gains, you excluded any inventory, are you very confident that your automotive customers are not building any inventories at all at the moment? Thank you.

Thank you, Mr. Iltgen for your question. Again here, I think not much which we can add. Of course there may be some inventory buildup, but we do not expect this will provide major issues to us. But maybe Helmut has you some more heads on?

I mean as stated earlier, growth in automotive has exceeded sales in the March quarter in the U.S. and also in China. So there is inventory buildup in the supply chain. Nevertheless, the drivers for our business to grow still are the same. So yes, there is some inventory buildup, but it’s not a particular – it makes no difference as of now.

So let me also add one point here. There may be some, I would say changes in the total automotive car unit sale and maybe some, I would say, changes in the inventory and measures in the production, but by far this is not dominating our revenue stream.

That’s great. Thank you.

The next question comes from Douglas Smith of Agency Partners. Please go ahead.

Hi, I am just wondering if you can give a little more color on how you now see the timing for 5G rollout?

Well, Douglas, thank you for that question. But despite the fact that we are in the infrastructure business with power amplifiers, what we see is it seems to be further delayed, but we do not – can’t give you more precise answers on that. We do not have a wider visibility than that.

Okay. And I recall in the past you have said for 5G you want to play both on the infrastructure side and what it might be called a terminal side, is that still the case?

Well, yes, we had had the plans for RF power to grow especially with gallium nitride on silicon carbide and gallium nitride on silicon. Of course the stop of the Wolfspeed acquisition puts a certain challenge on that part, but we continue to work together with Wolfspeed in order to serve the market with gallium nitride and silicon carbide devices and the gallium nitride on silicon we are developing ourselves. But all the market is dominated by its general weaknesses while we see the transition to this different type of devices going on. So here we see as a challenging business.

Okay, good. Okay. Thank you.

You’re welcome.

The next question comes from Veysel Taze of Oddo. Please go ahead.

Yes. Hi, Veysel Taze from Oddo. Basically two questions, the first one would be regarding your adjustments, what you have between the segment margin and the reporting EBIT, it has been growing first half roughly 20% versus last year first half, what could be a run rate what we can assume for the remainder of the year, so the €60 million to €70 million would be still a valid number for the second half of the year, that’s basically the first question. And the second question, I mean obviously, we all are struggling a little bit to understand the content increase you have in the auto, if you look at 2016, your content increase was around 8% and the rest coming from auto volume growth, so this year it looks like you are moving towards a 13%, 14% content growth and I understand that’s coming from clean cars and autonomous driving/ADAS, can you share the growth or the numbers in first half for EV and others together versus first half last year?

Yes. Thank you, Veysel for your two questions. The first one goes to Dominik and the second will be answered by Helmut.

Yes. On Page 10 of our press release, you see a very detailed bridge from the segment result to the operating result. And if you look at that for the March quarter, you see that there is same as €18 million at the very bottom which I think is something you should assume as non-recurring, because it’s kind of legal fees as we mentioned and the breakup fee for Wolfspeed. So that should be down, eliminated over the quarters to come. The other biggest block is of course the acquisition related charges. A very significant chunk of that, about €30 million is the purchase price allocation amortization and which will stay there for quite some time, which will not be eliminated. Also there is still the run off of depreciation – of accelerated depreciation in Newport. And from that perspective – and also some restructuring costs and let’s see how Newport progresses. The plan is of course to try to sell it by the end of the year. And so there you might see a little bit of a reduction towards the kind of €30 million, but not in the current fiscal or calendar year, but next year. And otherwise stuff like the acquisition – sorry, the stock based compensation of about €3 million per quarter will stay in there for while and the other small items are – should be pretty minimal.

So probably then €50 million run rate into Q3, Q4 would be a good indication?

Yes. I think it’s not so far off. I think maybe a little bit lower, but that’s the kind of ballpark.

Okay, thank you.

On the other question regarding the automotive growth, if you look more on an annual growth rate for automotive and see, let’s say, lower to mid-teens total growth for automotive on the year. We have a breakdown of roughly 4% car unit growth, something like a 6% content growth and 3% or so market share gain. Looking at the xEV and ADAS in particular, they together were around 11% of our fiscal year ‘16 automotive revenue. And as stated earlier they are roughly growing at 60% year-over-year growth rate. So that is a significant contribution to that growth rate in automotive. I hope that helps to explain that.

60% in first half, it was already 60%.

Yes, exactly.

Okay, thank you.

You are welcome.

Okay. Thank you everyone for all your questions. We have come to the end of the call and I would like to ask San to close the call. Thank you.