Good morning, everyone. Welcome to the conference call for analysts and investors for Infineon's 2022 Fiscal First Quarter Results. Today's call will be hosted by Alexander Foltin, Executive Vice President, Finance, Treasury and Investor Relations of Infineon Technologies. As a reminder, today's call is being recorded. This conference call contains forward-looking statements and/or assessments about the business, financial condition, performance and strategy of the Infineon group. These statements and/or assessments are based on assumptions and management's expectations resting upon current available information and present estimates. They are subject to a multitude of uncertainties and risks, many of which are partially or entirely beyond Infineon's control. Infineon's actual business development, financial condition, performance and strategy may therefore differ materially from what is discussed in this conference call. Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update forward-looking statements. At this time, I'd like to turn the call over to Infineon. Please go ahead.

Yes, thank you operator. And good morning and welcome ladies and gentlemen, to our first quarterly earnings call in 2022. As usual, we have the entire management board on this call. Reinhard Ploss, CEO; Helmut Gassel, CMO; Jochen Hanebeck, COO; Constanze Hufenbecher, CDTO; and Sven Schneider, CFO. Today's call is a special one. As we announced two and a half month ago, Reinhard will retire and pass the baton on to Jochen by first of April after leaving Infineon as CEO for nearly 10 years. So it's the last earnings call hosted by Reinhard today. But for now back to business, you are familiar with our usual procedure. Reinhard’s summary will again come after the Q&A. So please stay tuned until the end of the call. The illustrating slideshow, which is synchronized with a telephone audio signal, is available at infineon.com/slides. After the introduction, we will as always be happy to take your questions. However, today we will be strict on the one question per caller rule in order to let as many participants as possible have their say. A recording of this conference call including the aforementioned slides and a copy of our earnings press release, as well as our investor presentation are also available on our website@infineon.com. And now for one last time, Reinhard over to you.

Thank you, Alexander and good morning everyone. The New Year has started and for us it feels very similar to how the old year ended with a business situation looking very positive. On December quarter topped the record revenue and segment result levels of the previous quarter. Semiconductors continue to be the gating items in many verticals as demand is outstripping supply by far. Manufacturing capacities are being added but on-going cyclical and underlying structure needs are still exceeding them. Inventory reaches in some areas are going slightly up, but stay considerably below long term averages. Of course, dynamics are different in the various sub markets. In some, supply demand equilibrium will be reached sooner than in others. For our target applications, automotive, industrial data center and IoT as well as other areas we do not see this happening in the near future. Supply limitations, especially from founders will persist well into 2022. In such an environment, specific supply disruptions and individual effects are being felt twice as severely. The December quarter was the first one in a while where we did not experience such disruptions. And the numbers are clearly showing it. We started our 2022 fiscal year with revenues of €3.159 billion, 5% up compared to the previous quarter, and a 20% increase year-over-year. A stronger U.S. dollar supported these growth rates. Assuming a constant U.S. dollar euro exchange rate, sequential growth would have been 3% and the yearly one, 17%. On higher revenue, our margin expanded considerably, with a segment result of €717 million. The segment result margin came to 22.7% an increase of a bit over two percentage points compared to the quarter before. All of our four segments were able to grow their profitability. Several factors drove this development. We saw a good product mix in an overall favorable pricing environment. In addition and as already mentioned, the absence of major supply disruptions allowed us to achieve a very good operational performance. Our effects are basically running at full levels. We take maximum COVID precaution measures. But of course, risks cannot be completely excluded. Near term indicators tell us that the positive momentum in our key market is intact. The order backdrop remains very supportive. New incoming orders continue to outweigh cancellation by quite a margin. Thus, far we have provided book-to-bill figures as a proxy to assess the business situation. In the last quarter as we reported like-for-like numbers, we will cease to do so from now on. The ratio has lost much of its meaning given that orders are being confirmed more flexible in times of our location. Besides, Infineon has lately been the only company regularly publishing book-to-bill figures. Many of you have used them to reverse calculate our backlog. For the sake of transparency, we will provide you this figure directly going forward at company level. The combined total of confirmed and unconfirmed orders, stood at around €31 billion at the end of December, a further increase of about €2 billion quarter-over-quarter. In other words, our nominal stable of orders correspondence to more than two years of revenue. It is fair to assume that some of it reflects cyclical shortages, and the number might go well down in coming quarters, as supply gradually improves, and some double orders are being cleaned off. Having said this, we view underlying structural demand as very healthy and are fully booked for 2022. Now to our divisions and their performance in the December quarter, beginning as usual with automotive, the segment recorded revenues of €1,390 million, the 10% increase over the previous quarter was helped by a favorable currency development at the absence of specific supply disruptions. The higher volumes also led an improved profitability level. The segment result came in at €261 million, resulting in a segment result margin of 18.8% compared to 16.7% in the quarter before. In general terms, the supply demand mismatch burden in the automotive industry remains quite wide. Global car production in 2022 was only slightly up compared to 2020, with 76 4 million units. Researchers from IHS Markit estimate that around 10 million cars were not built due to semiconductor and other component shortages, as well as various supply chain issues. For 2022, the gradual easing of the various constraints is expected, but the recovery of worldwide auto production remains susceptible to external shocks, like the spread of the Omicron virus variant. The 82.9 million vehicles currently predicted by IHS for this year was certainly considerably below the 2018 and 2019 numbers, and supply limitations are far from over and will persist well into 2022. Inventories are likely to remain tight or by gradually improve the some replenishment moving into 2023. Within an overall constrained car market, electromobility is remaining on a strong trajectory. In fact, the current phase might once be seen as pivotal for EV adoption. In 2021, around 6.7 million battery electric and plug in hybrid vehicles are sold, basically adopting within a year's timeframe. About half of these cars have inverters equipped with Infineon chips or modules. With an industry leading portfolio silicon and silicon carbide solutions we are central to EV gross. Anecdotally, December was the first month ever in which more battery electric vehicles than diesel cars were sold in Europe. The car of the future will not only be carbon neutral, but also autonomous fully connected and cyber secure. This is opening up attractive semiconductor content growth opportunities for which we are at the pole position. Our AURIX microcontroller family has become the first choice automotive architecture for high growth and safety critical application, such as assisted and autonomous driving powertrain, safety, as well as domain or sound control. At the CES, a couple of weeks ago, we launched a new AURIX generation focusing on addressing growing vehicle complexity. The enablement of AI implementations and advanced connectivity. With its scalable family concept, AURIX is a key ingredient for dependable electronics and software based applications. We expect AURIX related revenues to grow strongly over the coming years. Now to industrial power control. Following a very strong second half of 2021 fiscal year, revenues in the December quarter moderated to €382 million, a sequential decline of 6%, reflecting typical seasonal patterns in most application areas. A positive exception was power infrastructure, which among others comprises energy storage as well as EV charging stations. The segment result of IPC came in at €73 million corresponding to a segment result margin of 19.1% after 17 7% in the prior quarter. The impact of lower revenue was more than offset by positive mix effects and the fall away of costs related to supply disruptions. The current business perspective is positive, order intake is strong, and many of our product areas continue to be on our location. And channel inventories have downticked again. The market outlook remains constructive across the majority of end application. After a strong surge in sales to serve pent up demand, mature markets like home applications, our industrial drives here reversion to average long term growth rates. Manufacturing PMIs are staying in expansion territory. Structural drivers in areas like solar power remain fully intact. However, some supply chain imbalances are limiting near term growth. Our advanced power solution based on silicon as well as silicon carbide, enable the energy transition necessary in order to meet CO2 reduction targets. Governments and enterprises alike now need to turn net zero commitments into specific cause of action. Now over to power and sensor system, which continues its very strong performance seen in the previous quarter. Revenues came in at €955 million a bit up sequentially. Various components for smartphones witnessed the seasonal decline, or power related product areas saw strong demand from cordless power tools to server power stages. The strengthening U.S. dollar provided an additional tailwind. Like revenue, also the segment result of PSS edged up slightly for the December quarter from €276 million to €285 million corresponding to a segment result margin of 29.8%. Demand remains very robust across a large majority of applications. Customer orders exceed our supply abilities by quite a margin. Around half of our products remain on our location, and channel inventories are very lean. This overall healthy picture should last well into this year, driven by several trends. For data center, we see continued demand from cloud operators and hyperscalers, but also rising enterprise spending, motivated by return to office momentum and platform refreshes from processor vendors. The on-going 5G cycle will continue to support smartphone upgrades and drive spending on telecom infrastructure equipment. The desire to make human machine interaction more intuitive, is calling for advanced sensor solution. One of them is capacitive inductive touch for which we recently launched a new generation of our cup sensor technology. It enables advanced solutions like proximity sensing, guest detection and directivity along which Hoover direction for demanding user interfaces in home public alliances industrial, consumer and IoT products. Closing the divisional revenue by Connected Secure Systems. The segment's strongly increased its revenue by 11% quarter-over-quarter to €427 million. Main drivers were a favorable product and customer mix, strengthening of the U.S. dollar and some supply improvements for microcontrollers and WiFi products. These factors also led to a significant profitability increase. The segment result margin of CSS amounted to €100 million equivalent to a segment result margin of 23.4% after 15.5% for the quarter before. Going forward, we will continue to invest in R&D resources to further strengthen our product roadmap. Demand continues to be very robust across practically all application areas, far outstripping available supply especially from foundries, therefore, revenue potential is kept by scores of aid capacities. Meanwhile, we see on-going momentum in design in activity, especially for connectivity offerings. Our WiFi chipsets have been selected for a next generation automotive infotainment system and by a leading Smart Home thermostat OEM. Generally speaking, connectivity is one of the key ingredients of our digitalization. And we continue to strengthen our position in this field with our AIROC product family. A few recent examples; with our cloud connectivity manager so usually developers can easily and securely connect IoT devices to Amazon Web Services. We launched a multiprotocol solution including Bluetooth Low Energy for small home applications supporting the meta standard, as well as low power WiFi chipset enable precise location solution for the Israel location as a service company Deeyook. All-in-all, our innovation pipeline around the IoT is well filled. Now over to Sven who will comment on our key financial figures.

Thank you, Reinhard and good morning, everyone. It's always reassuring to report on positive numbers at the beginning of the New Year. Let's take a closer look at our margin development. Gross profit in the first quarter of our fiscal 22 came in at €1.312 million, resulting in a gross margin of 41.5% slightly up compared to the previous quarter. Excluding non-segment result effects, the adjusted gross margin was stable at 43.9%. This high level reflects the good traction we are seeing in the market for our high value system solutions and an overall supportive environment in which we are able to pass on higher input costs related to foundry and subcon supply, base materials and energy. Furthermore, utilization rates at our manufacturing sites are high. Before coming to operational expenses, let me spend a word on currency development. As you are well aware Infineon benefits from a strengthening U.S. dollar as around two thirds of our group sales after the Cyprus acquisition are in this currency. And looking at very recent headlines this morning, I think, I just want to stress that again in your calculations, please factor in two thirds of the revenues are in dollars, not 100%. Therefore, according to our well known rule of thumb for sensitivity for each cent movement in the U.S. dollar euro exchange rate, we see a quarterly impact of around €15 million in revenue and around €5 million in segment result. To illustrate that, assuming the U.S. dollar stays at $115 throughout the entire fiscal year, this would lead to positive revenue impact of around €300 million compared to our initial planning rate of 120. Reinhard will build on this in the Outlook section later on. Now back to our OpEx numbers, which at the end of September had seen a true up of variable compensation for our successful 2021 fiscal year. And the currently running 2022 fiscal year we accrue for bonus payments at a lower rate reflecting internally raised targets. Despite this, research and development expenses remained flat quarter-over-quarter at €399 million showing our consistent efforts to fund an ambitious technology and product roadmap. Selling, general and administrative expenses however, decreased to €330 million from €373 million in the quarter before. The net other operating income was €34 million. The non-segment result for the quarter amounted to minus €100 million of this amount €76 million corresponded to cost of goods sold, €6 million to R&D expenses and €47 million to SG&A expenses. As a partial offset, the net other operating income contained €29 million of non-segment result income. The financial result for the September quarter was minus €45 million after minus €37 million in the previous quarter. Income tax expense amounted to €117 million for the first quarter of the current fiscal year equivalent to an effective tax rate of 20%. A quarter-over-quarter comparison is not meaningful, as fiscal year and quarter in September was influenced by adjustments to deferred tax assets and liabilities. Cash taxes in the December quarter were €51 million, resulting in a cash tax rate adjusted for PPA effects of 7%. This is somewhat lower than our expectation for the entire fiscal year 22 of around 15% as in many years the cash tax rate for the first quarter is influenced by time lag with respect to the assessment of prepayments. Let's now look at our investments into property, plant and equipment, other intangible assets and capitalized development costs. These totaled €408 million in the December quarter, down from €596 million in the quarter before. We expect this amount to go up again in the coming quarters, as we are consistently investing to reap opportunities for profitable growth. Depreciation and amortization, including acquisition related non segment results, effects were €393 million in Q1 after €397 million in the preceding quarter. The free cash flow from continuing operations was €378 million identical to the level achieved in the September quarter, as higher operating income and lower investments were offset by incentive pay outs that took place in December. The strong free cash flow contributed to a further improvement of our liquidity and leverage figures. Our gross cash at the end of December was close to €4.3 billion. Our gross debt amounted to just under €6.7 billion, leading to a further reduced net debt figure of €2.4 billion. We are pleased to report already today to you that gross leverage is now closing in on our target level of below two with sequentially rising EBITDA. The net leverage at the end of December quarter came through a level of 0.7 times underlining once again, the strong business performance over the last quarters and the success of the faster than anticipate to Cypress refinancing. And we are not standing still on our deleveraging path. In mid-January we fully repaid back a former Cyprus convertible bond for a conversion amount of $387 million U.S. dollars, bringing our gross leverage down further. We are proud that these efforts and our firm commitment to investment grade are being recognized also by our rating agency. As you might have seen the day before yesterday, S&P global increased our rating by one notch to BBB flat, continuing sorry, counting from the closing of the 9 billion Cypress transaction it took us less than two years to get back to our starting rating level. I will finalize my part with reporting on our after tax return on capital employed, the ROCE for the first quarter of our 2022 fiscal year came in at 12.5%. This number is under estimating the margin by which we exceed our cost of capital as it is burdened by bookings related to the acquisitions of Cypress and International Rectifier, in particular, goodwill, fair value step-ups and amortization as well as deferred tax effects. However, to simplify our reporting, we will not anymore illustrate these effects by providing an adjusted ROCE figure going forward. Now back to Reinhard, who will comment on our outlook.

Thank you, Sven. The market environment continues to be characterized by tight supply and strong demand due to cyclical tailwinds and structural factors. Overtime, capacities will gradually be added allowing for some restocking from very low levels, but no full replenishment in the foreseeable future. Rather across a large majority of product categories, and end markets everything that we ship gets assembled into final products and sold. As a consequence, our outlook is still predominantly determined from the supply side. That is by the extent by which we can expand capacities both in-house as well as from external manufacturing partners. Regarding currency, we adjust our outlook to an assumed U.S. dollar euro exchange rate of 1.15 from 1.20 before. This is a major driver for raising our projections, as you can conclude from the sensitivities Sven mentioned earlier. First, to the running second quarter of our 2022 fiscal year, we anticipate revenues to increase modestly to around €3.2 billion. By division, we expect IPC to grow sequentially by a high, ATV by low single digit percentage. CSS should be flat and PSS seasonally declined by a low single digit percentage. In terms of profitability, typically the March quarter marks a low point within our fiscal year driven by effects from inventory, revaluation and price declines. As stated in the last analyst call already we do not expect such a dip in the current environment. Hence, the segment result margin should come in again at a level of around 22%, beating our usual seasonality. For the full 2022 fiscal year, we raise our anticipated revenue figure from €12.7 billion to €13 billion plus or minus €500 million, taking into account a stronger U.S. dollar. At the midpoint, this would constitute an annual growth rate of 17.5% higher than market predictions. We expect to benefit from structural growth opportunities and the expansion of our in-house manufacturing capacities. From a revision of perspective, we continue to expect ATV and CSS to exceed the group average growth rate. PSS should grow in line with group average for IPC increase our protected growth slightly to a high single digit percentage range. Specifically, talking about Silicon carbide, we confirm our goal to roughly double our business again and achieve close to €300 million of revenue in our 2022 fiscal year. Also in this area, the demand lies clearly above available capacities. On a cautionary note, our outlook is predicated on the absence of larger supply chains disruption or other new bottlenecks whereas our current visibility is fairly good. The resurgence of COVID-19 cases and the rapid spread of the Omicron virus variant create uncertainties. Bearing this in mind, we are confident about our margin trajectory. Therefore, we are firming up our guidance for the segment result margin which goes from 21% to a level of 22% assuming the expected revenue comes in. As already mentioned, costs and price increases do not necessarily occur at synchronized points in time. Our projection for invest in property, plant and equipment, other intangible assets and capitalized development cost remains unchanged at around €2.4 billion. Key projects are the expansion of 300 millimeter silicon capacities that the trace and fill of sites and expanding our wide band gap manufacturing in Villach and also Kulim, Malaysia. For depreciation and amortization we expect a value between €1.6 billion and €1.7 billion, including amortization of around €400 million resulting from the purchase price allocation for Cyprus and to a lesser extent, self-related to international rectifier. For free cash flow, we expect a level of around €1 billion. Overall, we are well set to continue our successful journey into 2022. Before coming to your question, please allow for a short personal note. Today's analyst call will be the last one from me as Infineon CEO. The first one was 10 years ago. I have enjoyed the rigor of this quarterly exercise, same as I have enjoyed the dialogue with you. As sell side analyst, you are the key link between our company and our owners, as well as general capital markets. Many thanks for all your support, reports and recommendations in particularly those is by and strong by many things for all your investigative questions. I hope, I could answer most of them throughout the years. But I'm sure you have a couple of more. Let's bring them on. Some of them, I might pass on to the honorable chair this call from next quarter onwards.

Thank you [Operator Instructions] And we'll take our first question then from Alex Duval from Goldman Sachs. Please go ahead.

Yes, many thanks for the question, Peter Reinhard, as well for all the dialogue and help over the years. So one question was just on what you said about your business and tightness not being resolved in the near term. It sounded like you said you think tightness is going to persist for all of auto industrial and data center. So Can you just clarify is that correct, and can you give a bit more color on what [Indiscernible] means? To what extent do you see areas of the business that are likely to come more into balance this year? And can you help us think about the phasing as we look through the year? Many thanks.

Thank you, Alex. First, in general, yes. Our outlook is definitely affected by the tightness of supply, mainly from foundries and Helmut will go into details for the automotive market. We also can briefly touch on other verticals. But I think the major one is the automotive not to forget also our CSS segment.

Just happy to add some color at first. Yes, the current demand situation is by far exceeding capability to supply. That isn't particularly true for automotive, figures have been reported by analysts that about 10 million cars would have been built more in last year than actually was possible through the shortage of semiconductors and other materials. And certainly there is a need to catch up with that figure throughout the year. So for the entire year 2022 we do see that demand in automotive will continue to exceed gradually improving over the year, yet there is there's definitely no doubt that demand will be more than sufficient to fill the books of ours. There is other vertical’s that are also very strong or remain to be very strong. Let's say the server market in the compute area definitely we see to hold on very strongly on the renewable side in particular solar is going to be driving double digit growth. So many other things besides automotive continue to drive our demand up.

Yes, then the situation I will hand over to Jochen but we expect that the foundry supply will improve in second half of the year, you see it only partially in our numbers. One addition to the automotive segment what we also see that the current model is not any more fitting 100% as the feature level in cars has increased significantly and the automakers are moving to higher end cars, but also in the mid-size much more is added especially in the electric, but capacity and supply Jochen, can you comment please?

Yes, thank you Reinhard. So let's start with the tightest area which is still from the foundries. Here we secured more wafers in 2022 than in 2021. But mainly back loaded, meaning supply improves for the second calendar year, which is then of course only reflected partially; second half of the calendar year, okay which is of course only reflected and partially in our forecast for our fiscal year. We see the tightest supply areas still in the let's say mature nodes from 130 down to 40, 28. On the power sites, our outsourcing share is not very significant there we see some additional supply in the market. But on the power side, we of course benefit mainly from our continuous rammed in our own factories. And here, the CapEx spend in 2019, 20, 21, of course, give us the momentum reflected lately by the opening of our new 300 millimeter factory in Villach.

Many thanks.

Thank you. Our next question now comes from Sandeep Deshpande from JPMorgan.

Thanks for letting me on. Since you left off right now, I’m talking about your vaccines Villach, has the ramp up plans of the factory in Villach changed at all? How quickly will it ramp up? And is the CapEx that you have outlayed for this year €2.4 billion enough to ramp it up or is there a potential that you may raise the CapEx again through the year?

Hi Sandeep, thank you for the question right away to Jochen

Yes, so the current environment is determined by let's say lead times of equipment. In general, I feel very comfortable with the page we showed at the CMD where we showed two facilities rammed up overtime, of course, we would take any advantage of equipment becoming earlier available to boost this ramp, but this is difficult in the current market environment. So that is more determining everything, then they, let's say, CapEx budget number.

But one addition, Sandeep. We are in a very good position that we also can now ramp in 200, 300 millimeter factories, which we reported before.

Understood, thank you.

Thank you. We'll now go to our next question from Didier Scemama from Bank of America.

Yes, thank you. The first word to Reinhard and thank you for your leadership over the last decade and turning Infineon into what is today. We'll miss you. My question is this. So you've given us your backlog at €31 billion at the end of December. And I just wanted to understand how you reconcile that backlog with your revenue guide for fiscal year 2022. How much of that is non-cancellable orders? And also the benefits of pricing in your fiscal year 2022 revenue guide? Thank you.

Hi, Didier. Thank you and Helmut will take it, but in general we have various patterns and our aura concept and Helmut will go into detail.

Yes, Didier. The backlog we reported obviously is exceeding by more than two, our revenue forecast that we that we have for the year. So clearly, the backlog, I'd say has a maturity where 80%, around 80% of that is targeted for the next 12 months. And obviously that doesn't fit to our revenue forecasts so that we will not be able to fulfill all of this. So I think at this time and non-cancel orders are really a term that that is not necessary, given the fact that you have that maturity and absolute number. You also see the additional aspect of pricing. I think we see out of the revenue growth for the year that we have planned more than 50% of that is actually coming from volume. But we do have a triple digit effect in terms of pricing, as well as from the U.S. dollar in the current forecast included.

One addition to that. Non-cancellable orders are double sided sword. You for sure will get the revenue for the time being. But we experienced this in former times where we had such contracts. And after the periods where the non-cancellable orders are obviously finished from the contract we saw significantly dip in revenue. We very much prefer to be close to the market and follow our customers along these lines. And I asked them to participate in the risks of idle cost.

Thank you.

Thank you. And now go to our next question from Andrew Gardiner from Citi. Please go ahead.

Good morning, gentlemen. Thanks for taking the question. First of all, I echo the sentiments of my peers’ best wishes, Reinhard. I have a question for you on the margin front. With the results you just reported for December and then the outlook you've given us for the March quarter, you're looking at margins in the low to mid 22% range for the first half of the fiscal year, which then begs the question with continued revenue growth in the back half full utilization, the supply demand imbalance you've talked about? Why would margins decline in the second half of this fiscal year to drive only 22% operating margins for the year? Thank you.

Yes. So thank you, Andrew, and Sven already hinted slightly in his presentation, but I think it makes sense to go more into detail.

Yes thank you Andrew for the question. As we as we said the margin perspective and trajectories, of course the sum of many different parts. There are some pluses and there are some minuses as always, and I think the most important thing to notice, as we have said last time and this time in Reinhard’s part as well. This typical seasonality is no longer fully in sync, talking about cost increases and price pass through. So therefore we also need to be here a bit mindful of how we interpret quarters. But looking at how we come to the 22% for the full year, I mean, as you say, we have now 22, something in the books we are guiding for 22, the first half of the year would then be a little bit less than 50% of the revenue guidance for the full year. And taking all the positives like pricing environment, the revenue fall through on the gross margin, lower idle cost, the currency contribution on the positive side, and further cost pressure from foundries from commodity prices and all that into equation. And also having a, I would call it a balanced approach between risks and opportunities. We just talked about opportunities, if foundries supply would be a bit higher in second half, there could be also a risk that an Omicron impact could hit our supply side. If that would not materialize, there would be some kind of upside that's also the reason why in the revenue guidance, we have given you 13 billion plus 500 million. So taking all that together, we think it's a balanced approach of coming with 22 taking all these factors into consideration. And last element. As also explained, I think well, at the capital markets day, please also always factor in especially for CSS, but also for the group that we are heavily investing, we are pre-funding P2S revenue synergies. We are investing into wide-band gap. And that also has an impact on the margin side going forward.

Thank you.

Thank you. We'll go to our next question now from Alexander Peterc from Societe Generale. Please go ahead.

Good morning. Thank you for the question. And congratulations to Reinhard for taking Infineon to what it is today. Great job done there. I'd like to come back a little bit on the CapEx situation. Given the very, very strong demand patterns and the inability of the industry to supply outstanding demands, would there be any upsides to your CapEx budget for the year? And what would you ideally like to spend this year? If you had no constraints on the size of the equipment suppliers?

Okay, that's an interesting question. We never ask ourselves no joking, I think yes, of course, and Jochen can go into details.

Yes, we always invest in in a meaningful manner. And let's face it; we have now February, our fiscal year ends in September, in difference to our competition. So 2.4 billion is a good number. Again, if there are opportunities, we would take them. But the market is currently limited by equipment. And it doesn't make sense to take equipment on the books, which is not in the critical path to more revenue. But, again, we are planning here along our structural growth, drivers and plans and that is over multi years. And of course, we'll expand our capacity in order to take advantage of the coming growth in all our target markets.

Yeah, one maybe one add-on here. I think especially in the silicon carbide area, we would be happy if we could accelerate the capacity ramp up. But here as Jochen said, the supply is limited from the equipment side.

Thank you very much.

Thank you. Our next question now comes from [Indiscernible] from Credit Suisse.

Yes good morning guys. Again, firstly to Reinhard. It's been great following the company over the last decade and seeing the way you built up Infineon. So, I wish you the very best in your future endeavours. So just I had two questions. Firstly, your peers have recently been talking about capturing more of the value added by semis, talking about how pricing dynamics in the industry are changing towards the end of last 20 years. And I just wonder when you gave your margin target you gave it when you bought Cypress and pricing dynamics in the industry were very different. The 19% recycled margin target and you're already at 22% segment result margin. And you're talking about some potential upside depending on how the year goes. But I just wonder how should we think about any upside potential to the through cycle margin target of 19%? As this pricing dynamics, change, any color you can provide around that would be helpful. And then just on the free cash flow question for Sven, and then just know, you obviously updated by then you're keeping your CapEx flat. So are there any material parts we should be aware of when modeling free cash flow remaining at above the a billion? Any color around that would be helpful? Thanks.

Yes, thank you. I will hand it over but true to the acquisition, I want to make a brief remark. At the time, we had maybe a different pricing situation, but also a different supply situation. Considering this heads and tailwinds, we believe that we are very successful in getting the value and the acquisition, especially taking into account that we are still in a hardly to no touch scenario of the integration process. Therefore, I believe it is a very balanced number but Sven, please elaborate on that more.

Yes, thank you Adi for the question. And let me maybe start with the obvious, as we said in the past. This 19% profitability level is a through the cycle number and through the cycle to us means that in boom years in good years, you need to be significantly above the number as in bad years, a COVID year, for example, which was not as bad at Infineon as for others, but still below the margin target. You saw it to the downside. So having now three percentage points up compared to the 19 is from my perspective, just the confirmation that the through the cycle logic works. The other thing I just want to repeat, if you recall our capital markets day, at the in the Q&A session, I said that once markets have normalized and once all these supply and demand imbalances are fading out, we will upgrade our target operating model. So I can confirm that. But I think at that moment in time, there is nothing to add from that perspective. And to your free cash flow question. Why have we not changed to 1 billion given that we have now 300 million more of revenues? I mean, mathematically, there would be a small additional component, I agree. But it's an around number and also please factor in that in order to secure supply for this for the years to come we also entertaining discussions with our suppliers on some pre-payments, which have also an impact on the free cash flow. All that is factored into the guidance.

Understood, thank you.

Thank you. Our next question now comes from Stefan Ari [ph] from ODO. Please go ahead.

Yes. Good morning. I have a question on the automotive margin, actually, because it's pretty high at the moment. In the past you were saying that there was a significant difference between electromobility and kind of more classic automotive business, can you update us on this and what do you see going forward for this? Thank you.

Thank you, Stefan. Helmut will touch on that. But first of all, I want to remind you that for a very long time, we communicated that we have to improve the margin in the xEV business, means the IGBT and silicon carbide and other products going in there. And they are we have been very successful as volume was up and I would say we managed it well as predicted. But there are other factors and the portfolio structure. I hand over to Helmut.

Yes, thank you Stefan for the question. First of all, xEV dynamics is continuing to be super strong, doubling the volume of plug-in and battery driven vehicles and in particular battery electric vehicles are super strong. China again leading the growth with more than doubling as compared to the previous year again, which by the way, side note not to your question, but in general interesting is also driving charging infrastructure which is another important growth driver for Infineon bracket closed. So as to the margin as Reinhard said, we have been working on improving our cost position one side. Other thing is we are very strong in modules as well as in the chip business that we provide to this market and there is a margin difference between the two. In fact, as there is less material that we have to purchase on the chip side the margin is generally higher. So, that's a structural effect that certainly helps us and automotive then in general is also trending towards higher end vehicles, this path continues as well, which is driving components with a higher value again and so, that is all contributing to a margin improvement in automotive.

Okay, thank you very much.

Thank you. We have a question now from Sebastien Sztabowicz from Kepler.

Thank you, and thanks for taking the question. Could you just provide some indication on the size of your backlog today on the silicon carbide and also have you seen any change in the competitive landscape for silicon carbide because it seems that some Chinese companies are investing increasingly in power semis generally speaking, but also in silicon carbide like STMicro? Thank you.

Yes, thank you for your question. Sebastien. First of all, we want to say that we still see or we are very proud of that. We are very advanced in the technology progress and are leading the industry on the trench based silicon carbide MOSFETs. We are pretty much in line with our goal to 1 billion in the mid-20s and the order backlog here is type developing quite positively. As we are a very, I would say reliable partner, we do not offer to our customers, especially in automotive industry, more capacity than these foresee in the near future. So I would say the outlook as -- the outlook is more supply constrained. And here we would expect that in all verticals, we could do more. That is charging stations; it is renewable power supplies for photovoltaic and the drive train. And I think here there we cannot give you a precise number and we see Infineon becoming a leader in this market as we go forward. But the investment plans we talked about, especially moving to Kulim will be a substantial part of it. And they have more to come in the next quarters.

Thank you. Jerome Ramel from BNP Paribas has our next question.

Good morning. Thank you, Reinhard for these years and best of luck for the future. My question is concerning the full year revenue guidance. When we look at the guidance in particularly the one half of this year, it’s just 4% of all the sales hub. I just like to understand given your dynamics there because on one hand, you'd say you're going to have a little bit more capacity coming online, or stuff coming from the foundries and the [Indiscernible] of demand is based on the assumption. But -- surprise us as we don't see more upside in the second half versus the first half? Thank you.

Thank you, Jerome. I think we touched it a little bit already. Jochen said something and we will share that question. But as we move forward, we see that capacity is coming on in house as we are investing and the Foundry is pretty constrained, effecting ATV, CSS and also PSS please don't forget that in many areas, we have kind of a bundle solution that we could deliver more power, but are constrained in other areas. Jochen, can you please go into detail?

Yes, first of all, I would like to reiterate that the additional foundry waivers we are getting are rather good for revenue in the second half of the calendar year 2022. And I would also like to point that we baked in some risk into the forecast and nothing like as Reinhard said in his intro, nothing like a Texas winter storm. But I do. I am concerned about Omicron spreading for example in China's zero COVID strategy there, so let's see if we come into the into the next quarter. But for right now, we see it as a balanced forecast and some risks baked in. Without, of course, we do not know yet exactly where they are going to be there.

Yes, but again, what we said in the intro, we do not see market risk, we see the balance forecast which we are giving as a supply based forecast that we have figured in risks and opportunity, Infineon how we act, and therefore, I believe the good message is the market would support more. Thank you.

Thank you. We have a question now from Johannes Schaller from Deutsche Bank.

Yes, thanks for taking my question. And also an applause for my side Rick. Thank you for making Infineon what it is today and the great communication with us analysts. So all the best for your future. And again, Mr. Hanebeck, congratulations on taking over. I wanted to dig a little bit deeper on the 5G gallium nitride on silicon business you talked about on the last call. I mean, doing a bit of digging on that it feels like your customer and design pipeline is probably quite broad and the financial opportunity maybe there is even bigger than the LTV, the LV most business that you sold to Wolfspeed. Can you talk a little bit just about the breadth of that opportunity, and then maybe also how we should be thinking about the size of that over the next year? So thank you.

Thank you, Johannes. While the situation with the gallium nitride on silicon for RF application is a complex one, the opportunity there lies in the prior occasion and introduction of the high complexity MIMO architectures moving away from I would say the kind of let's call it single antenna concept. And here you see two things to happen. And we see these on good track; first of all, the gallium nitride technology has to develop. And there are quite substantial challenges in the behavior of gallium nitride RF components, that we believe we have solved this better than the competitors, make it more easy for our customer to design it in. On the other side, we also see that the adoption of new architectures has to go on. And of course, we see in this very wide interest, but also some challenges due to the geopolitical constraints, which does not enable us to move everywhere fully freely. And here we have a very great technical cooperation, but see a great opportunity to go beyond. You will see this gradually growing. But we should not overestimate the consequence on the business, as it will remain a smaller absolute number of revenue. But we believe that we will can we will be able to enter this, especially when we think about moving to higher frequencies. But you'll see there are a number of steps to be taken. And we believe that we are very well positioned.

It’s very clear. Thank you very much.

Thank you. We have a follow up question now from Didier Scemama from Bank of America. Please go ahead.

Yes, thank you for that. I just wanted to just come back to the points earlier on the backlog. So you saying 80% of your 31-year old billion backlog is for fiscal year 22 deliveries. Well clearly you won’t deliver on that given your capacity limitations. How much of it do you think would spill into 23 at this stage? Or just put it differently; is 20% of your 31 billion ready for 23 deliveries? Can you just comment on this? That would be great.

So yes, I think Helmut can put my light on it?

Yes. That's a $1 billion question. I would say, if I would know I'd be happy. How much of that is going to be in 23? But definitely, yes. To the second part of your question, 80% for what 12 months means 20% beyond 12 months. And so the as you know, our fiscal year ends in September so this what is it eight months? I think we like we're probably having of that 12 months and have the 80%. So eight to 12 times 80% is what we have in this fiscal year. And the rest goes already into the next fiscal year which is substantial for substantial portion of it and how that is going to develop well, as usual depend on many things. One of it, how is the market going to hold? Is there going to be an increase in supply? So, but to predict the figure for that firm for 2023 is not possible now.

Didier, one addition. In this backlog, we have confirmed and unconfirmed orders. We very much believe that quite a portion of those, which we cannot serve we will shift forward to 23. And therefore, I think this is not so simple to try to have a precise calculation on it.

Now, that's helpful. Thank you very much.

Thank you. We have a follow up question now from Jerome Ramel from BNP Paribas.

Yes, thank you putting me in. Last question on silicon carbide on the target of one beyond the -- you have in 2025? How much is the mix between Modus, MOSFET and Diodes? Thank you.

Oh, Jerome, this is a challenging question. We believe that the industrial business is to a large extent module based as we have a lot of customer and the renewables which prefer to use modules. We see also some trends to discrete packages, which we can solve quite well. You know that the challenge with silicon carbide is that out of the same package size, you have four times the current year, so it's for many of our competitors, it's difficult to support that technology. And the automotive segment, we see quite some demand on silicon carbide chips. And there it is, we cannot clearly say as business develops and therefore I think Helmut, any addition to that?

Yes, what one can say is obviously the diodes are substantially lower in value than the MOSFET. So, we have higher volume in diodes, but higher value in MOSFET, if you want to take that split between MOSFET and diodes, and it all depends on -- right now, we are much stronger in industrial and we do see a stronger growth in industrial tool than we do have an automotive currently and there we have a higher portion of the of discretes as well. But overall modules are more than discretes.

And then to add here they -- for PSS for high end server supplies for larger power servers supplies. Silicon carbide in the PFC stage is a very valuable solution parallel to gallium nitride. And nevertheless don't forget, Cool Moss and I think here we really have a strong foothold because we can offer the full range, especially also high power packaging. So let's wait and see how it develops. And of course you can guess Infineon optimized for profit. And therefore this may change over time as we take business on, but I think we can go next time more in detail on that. So back to…

Yes thank you.

Yes, I think here we come to the end. And now ladies and gentlemen, it's time to summarize. Infineon was off to a strong start into the 2022 fiscal year, with more than €3.1 billion of revenue, a 22.7% segment result margin and close to €400 million of free cash flow. In our target application areas, the near term dynamic remains favorable. Suppliers seeing some improvement, but keeps being insufficient to meet demand. Many products are an allocation and inventories remain low. Against this backdrop, we continue to expect a strong 2022 fiscal year to reflect the stronger U.S. dollar. It raised our guidance to revenue of around €13 billion. The segment result margin around 22% euros and around €1 billion of free cash flow. The supply demand imbalance will stretch well into 2022, but hardly last forever. There will be restocking and phases of slower momentum. But more importantly, our structural growth drivers are fully intact. Semiconductors are becoming ever more strategic and product defining. Infineon is ideally positioned to shape and benefit from the two secular themes of our time; electrification and digitalization, with both near and long term prospects bright and full trust in the execution capability of this team here under Jochen’s leadership. It is a great time for me to say goodbye.

Ladies and gentlemen, thank you very much for dialing in. This concludes our today's call. Thank you for all your questions, and in particular, for being so disciplined with the one question per caller rule. If you do have further questions, please do not hesitate to reach out to us in the IR team here in Munich. Other than that, stay safe and healthy and have a good day.