Jürgen Rebel - Vice President, Investor Relations Reinhard Ploss - Chief Executive Officer Dominik Asam - Chief Financial Officer, Executive Vice President Helmut Gassel - Chief Marketing Officer Jochen Hanebeck - Member of the Management Board and Responsible for operations

Alex Duval - Goldman Sachs Gianmarco Bonacina - Equita Andrew Gardiner - Barclays Achal Sultania - Credit Suisse Janardan Menon - Liberum David Mulholland - UBS Sandeep Deshpande - J.P. Morgan Adithya Metuku - Bank of America Johannes Schaller - Deutsche Bank Amit Harchandani - Citigroup Tammy Qiu - Berenberg Guenther Hollfelder - Baader Bank François Meunier - Morgan Stanley Veysel Taze - Oddo David O'connor - Exane Sebastien Sztabowicz - Kepler Cheuvreux Lee Simpson - Stifel

Good morning everyone, welcome to the conference call for and analysts and investors for Infineon Technologies' 2017 Fiscal Third Quarter Results. Today's call will be hosted by Jürgen Rebel, Corporate Vice President, Investor Relations of Infineon Technologies. As a reminder today's call is being recorded. This conference call may contain forward-looking statements based on current expectations or belief as well as a number of assumptions about future events. We caution you that statements that are not historical facts are subject to factors and uncertainties, many of which are outside Infineon's control that could cause actual results to differ materially from those described or implied in such statements. Listeners are cautioned that Infineon's actual results could differ materially from the results anticipated or projected in any of these statements and they should not put undue reliance on them. For a detailed discussion of important factors that could cause actual results to differ materially from the statements made in this conference call please refer to our quarterly and annual reports available on our website. At this time I would like to turn the call over to Infineon, please go ahead. Jürgen Rebel: 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 and Group and divisional results, market development 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 that question, I would like to ask you to restrict yourself to one question and one follow up question in the first round of questions. A recording of this conference call and a copy of our 2017 third quarter earnings press release and investor presentation will also be available on our website at infineon.com. Reinhard, please go ahead.

Thank you, Jürgen and good morning everyone. In the June quarter revenues came in at €1,831 million for the group, the year-over-year increase of 12% and the quarter-over-quarter increase of 4%. Segment result increased quarter-over-quarter by 14% to €338 million and year-over-year by 33%. The segment result margins stood at 18.5%. The book-to-bill ratio for the fiscal third quarter came in at 1.1. Now, let's take a look at the divisions. Automotive revenues came in at €766 million for the quarter. This represents a 13% year-over-year increase and 2% decline quarter-over-quarter. At a constant euro dollar exchange rate Automotive revenues would have come in flat compared to the very strong March quarter. Demand for electric drive train solution gain significant momentum. Even accounting for currency impact of a stronger euro our sales in North America increased. The book-to-bill ratio came in at a strong 1.2. The segment result decreased €120 million from €131 million in the March quarter. The segment result margin came in at 15.7%. There are two key messages for our Automotive business this quarter. First, automotive semiconductor demand remains very solid even with decelerating unit growth. Second, the momentum in the electric drive train is accelerating. In the nine months of the current fiscal year we have achieved almost twice the amount of new design wins in Europe for our IGBT solution as during the entire fiscal year 2016. Module represents the majority of these design wins. Typical for automotive revenue they will stretch into the next decade. This year - this trend shows that IGBT solution will remain the mainstream technology for electric drive trains in the years to come. It also shows the migration to electric power train has reached a tipping point. There was a seam a strong interest in our full silicon carbide automotive module prototypes. We have already received significant sample orders. This gives us great confidence that we are in an excellent position to win silicon carbide slots in main inverters that are due for the mass production early next decade. Infineon is in a unique position, being able to offer the individually best fitting solution to the customer bid IGBT for silicon carbide. In Industrial Power Control, we posted revenues of €321 million compared to €293 million in the March quarter. This marks an all-time high and a steep 15% increase year-over-year and a 10% increase quarter-over-quarter significantly above normal seasonality. Components for all power classes were in high demand although demand for high power modules is still modest. By all major application areas showed growth, the highest growth came from home appliances and solar. The book-to-bill ratio came in at 1.3 in the June quarter. The segment result came in at €55 million compared to €44 million in the March quarter. The segment result margin stood at 17.1%. A couple of highlights for IPC. First, in the March quarter earnings print we mentioned that even with the first sampling wave of our silicon carbide MOSFET be identified revenue potential in the triple-digit million euro territory. Now, we can report that this potential is turning step-by-step into design wins. This SMA and KACO opting for our silicon carbide MOSFET modules leading solar inverter makers have chosen our solution for deploying full silicon carbide MOSFET based inverters in the market. Second, we realize the first design win for our full silicon carbide MOSFET modules in high power charging station with a premium electric vehicle OEM. This demonstrates the competitiveness of our device. This also supports our few that after the solar inverter market exhibit charging infrastructure will be the next market that sees large scale deployment of silicon carbide. Let me add a few of the silicon carbide market in general. We note that there are plenty of fuse on this perceived disruption. However, as always in our power market things evolve gradually to the stick in ager and long product life cycles of the business. The silicon carbide sheer of the combined silicon IGBT and silicon carbide market will be below 10% by 2020 assuming the rim scenarios by market analysts. We should also bear in mind that only few players are just producing on 6-inch today, while Infineon was the first to produce on 6-inch in large volume. Additionally silicon IGBTs will always play a major role in the market as in any given application it is a question of cost performance fit and the advantage in the application. We also share the few by market researchers that the majority of the silicon carbide market will be most fuel based. High power modules are one of Infineon's key strengths. Turning to Power Management & Multimarket. Revenues of PMM increased by 10% year-over-year and by 7% quarter-over-quarter to €557 million. The strengths in the power business continued across the board. The smartphone components business increased in line with the seasonal upswing from the trough we had seen in the March quarter. In AC/DC demand for high voltage CoolMOS, power MOSFETs continued to be very strong across all applications. In addition, we saw strong growth in our digital power IC business has increased demand in notebook charger and desktop power supply applications. In DC/DC, the strong momentum across all application and voltage classes continued. Demand for solutions in the VR12.5 server platform remained very high, while shipments to the VR13 generation of server power management began to ramp. As in the March quarter our broad based distribution business was multi-source products drove incremental growth. We also secured design wins for our power ICs in game console applications. Our smartphone component business, especially our low noise amplifier business developed well. We recorded the highest ever unit shipments for this product class. PMM post the book-to-bill ratio of 1.1. The PMM segment result increased to €129 million representing a segment result margin of 23.2%. Now, on to Chip Card & Security. Revenues increased year-over-year by 7% and quarter-over-quarter by 9% coming in at €185 million. The book-to-bill ratio came in at 0.6. Please bear in mind that this is in line with a normal seasonal order patent. Every year in the May to July timeframe order entries soft and typically strengthen again day after. Segment result came in at €34 million marking a segment result margin of 18.4%. A few highlights. First, the design win momentum in government ID continues with key project awards in Europe and Asia for electronic identity cards and spare part projects. Second, after several quarters for these relative low revenues in our payment business, we have seen a sound recovery in demand with a nice revenue increase mainly from China. Therefore we think our payment business should now follow more the seasonal pattern. Third, we are seeing a strong momentum in embedded SIM mainly for the automotive applications. Lastly, we have again reached the number one position in the market for smartcard ICs for 2016 according to market research from IHS market. It is worth noting that we were able to achieve this in a very difficult market environment. With this I would like to hand over to Dominik, who will comment in more detail on some selected key financial figures.

Thank you, Reinhard and good morning everyone. Based on the depreciation of the dollar to an average exchange rate of 1.1 against the euro in the June quarter down from 1.06 in the prior quarter we faced about €38 million of headwind in our top line, so that gives you a decent feeling about the current sensitivity of our top line to the U.S. dollar. At constant exchange rates, we would have grown by about 6% sequentially. Nonetheless gross profit increased to €700 million up from €645 million in the previous quarter. This implies a gross margin of 38.2% up from 36.5% in the March quarter. Research and development expenses and selling, general and administrative expenses sit more or less flat with €195 million and €290 million respectively. Included in these numbers of €40 million of non-segment result charges, of that amount €35 million are International Rectifier, acquisition related, amortization and other charges. €20 million of these charges hit our cost of goods sold. In R&D and SG&A, we booked €0 million and €14 million of these charges respectively. The remaining €1 million of integration charges were booked in other operating expenses. Outside integration charges that remaining €5 million of non-segment relate to various other items. Excluding acquisition related and all other non-segment result affects the adjusted gross margin stood at 39.4%. Depreciation and amortization decreased slightly to €202 million after €205 million in the previous quarter. Included in this figure are €29 million related to the amortization and depreciation of fair value step-ups from the purchase price allocation of International Rectifier. As you can see from our full year D&A guidance in the press release, we expect depreciation and amortization to rise in the September quarter, so the slight reduction in the June quarter was more of a blip and should not be extrapolated. Free cash flow from continuing operations jump to €301 million up from €82 million in the March quarter; our net cash position increased to €358 million up from €32 million at the end of the March quarter. Our after tax return capital employed or ROCE came in at 18.0% in the June quarter after 14.3% in the March 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 with bookings and effects the underlying ROCE stood at around 25%, i.e. significantly more than twice our cost of capital. Let me now hand back to Reinhard who will comment on our outlook.

Thanks Dominik. In spite of the strengthening euro, we confirm full 2017 fiscal year guidance of group revenues growing between 8% and 11%. This now assumes a rate of 1.15 for the dollar against the euro for the September quarter. ATV will grow significantly above group average; IPC will grow above group average by PMM and chip card should come in below group average. Also our segment result margin guidance remains unchanged at 17% of sales at the midpoint of that range. Consequently the confirmation of our yearly guidance implies roughly flat revenues quarter-over-quarter for the September quarter. With this the segment result margin should come in this 18%. Please note that the assumed depreciation of the dollar plays a major role. In dollar terms the flat euro guidance implies a 4% to 5% sequential growth. Ladies and gentlemen let me summarize the key messages of today's call. Revenue growth of 4% quarter-on-quarter and a very strong 12% year-over-year which is one and a half times our 8% through cycle growth target. Strong segment earnings with a 14% quarter-over-quarter and a 33% year-over-year increase in segment result using an 18.5% segment result margin. Adjusted earnings per share increased significantly by 14% quarter-over-quarter and by 26% year-over-year. Automotive demand continues to be strong due to semi content increases while we see some normalization in terms of car unit growth. Impressive momentum in electric drive train solution is design wins in the last months and nine months at about twice the level of the entire prior fiscal year. Demand for our power product continues to be very strong across the board with the exception of high power drives. Continues progress in our trench-silicon carbide MOSFET program this revenue potential turning into design wins that leading solar inverter makers and first design wins for xEV charging infrastructure applications. Power Management continues to be strong, lead times are still very high. More and more design wins is our digital power ICs and PMM. In CCS, the payment market stabilized government ID and embedded SIM or drivers. Last but not least the 300 millimeter ramp is progressing. We are adding further tool sets step by step. We are on track to drive the ramp up cost out of the P&L by calendar year 2018. Driven by the strong demand for our silicon IGBTs and MOSFETs full loading of 300 millimeter trace and should be achieved very early next decade independent of the growth of gallium nitride and silicon carbide products. Ladies and gentleman this concludes our introductory remarks, and we are happy to take your questions. Jürgen Rebel: The operator, please start the Q&A session.

Thank you. [Operator Instructions] We will now take our first question from Alex Duval from Goldman Sachs. Please go ahead.

Yes, hi everyone and many thanks for the question, just a couple from me. Some of your peers have been talking about industry inventories being relatively in the channel obviously you had a very strong quarter in industrial, just wondered if you could share a little bit in terms of your view on inventories both in industrial and in auto semi's in the broader market? And second of all you've also referenced very nice content growth on the electrification side, I wondered if you could just give a little more color as it relates to ADAS and also board in comfort on the auto side? Many thanks.

Thank you Alex, so Helmut will comment on inventory and content.

Yes, good morning, Helmut Gassel. Overall, we have a healthy inventory situation both in-house and in the channel. There is no inventory buildup overall, although there's some granularity as industrial parts are hot whereas you notice the normalization of the order business.

So the content for ADAS and xEV and the rest here of course we see a strong growth from xEV and ADAS, but also the other products are growing very much in line with the typical content growth Helmut will give more details on that.

Yeah, we always said that the majority of our growth in Automotive is driven by xEV and ADAS and roughly shared 50-50 that is still very true. However, we also see growth in comfort electronics and the higher share of SUVs as well as premium vehicles.

Great. Many thanks.

We will now take our next question from Gianmarco Bonacina from Equita. Please go ahead.

Yes, good morning. Just an early to give an indication for next year, but can we say that the given the current head wind on the currency, so if the euro dollar will remain at the current 1.18 it will be challenging for you to have a margin expansion next year or you see that the underlying business is stronger that we can still expect margin expansion for next year? Thank you.

True aspects Dominik will give more details on the exchange rate. But as the communicated the order books are extremely full and in some areas we have for kind of an overheated market, so especially when demand and supply situation comes more into balance we expect that some of this order books will vanish. So the big question is how strong was the revenue growth especially in the PMM power and IPC power continues for the time being. We see year still very positive momentum and this is one of the uncertainties moving forward, of course the dollar is not providing any tailwinds.

So to give you a better feeling, we have previously highlighted the sensitivities we face against the euro, U.S. dollar exchange rate. For the top line, we now see about €9 million that's slightly up because the company has simply grown, so we have more dollar revenues than before, and you can nicely kind of probably check map with the indication I gave you in the intro where I said that we moved - we had a headwind about €38 million in the last quarter and that was moving from slightly above 1.06 to exactly 1.10. So that's about €9 million per cents in exchange rate per quarter, so if you want to annualize that you have to multiply by four, of course. And on the segment result level it's about €3 million per cents per quarter and then you can basically play the sensitivity and figure out what headwind is created by changes in the exchange rate. Now regarding the guidance for next year as you know we do that in November when we do with the full year guidance, I think the only thing I can say is that we of course stick to our through cycle guidance of 17% so that is also an indication, but precisely we will comment as we see add more clarity on the look into next fiscal year November.

Thank you.

We will now take our next from Andrew Gardiner from Barclays. Please go ahead.

Good morning, thanks for taking the question gentlemen. Another one to on the channel side of things, specifically in auto and then on chip card, in auto I understand what you're saying in terms of this sort of normalization in terms of unit growth. What are you seeing as we look into the summer period, are we getting what you know we would have once said is sort of the normal seasonal summer slowing in manufacturing in order to keep that inventory tight given what you're saying in terms of the normalization in growth just a bit more detail in terms of some of the moving parts there would be helpful? And then also on chip card you've mentioned, you think that the payment business is now back to normal after the inventory corrections we've seen there, can you just confirm that in the U.S. it's sort of work down of the initial wave of EMV is indeed behind us, and you know if the strategic issue is there what they considered to be a normal level? Thank you.

So thank you for your questions. So chip card, yes, I think we are very much back into a normal on the other side, and we have to state that the gross it's coming more and more from different sources and then in the year before the EMV basically is through there may be some inventory in the channel, but from our perspective this has been a very through and we will now see the constant replacement demand, payment grows currently comes out of China and the maturity. So here I think that is very much in line, but as we already stated more and more growth coming from automotive and industrial IoT with the embedded SIM, which is that significantly changed compared to the market behavior years ago, so you see the rollover in chip cards here. The inventory again Helmut will comment on it.

Yes, on Automotive, yes there will be a reduction of inventory in the U.S. over the summer as every year nevertheless the book-to-bill ratio of Automotive came in rather strong in the June quarter, so it actually rose against the March quarter 1.2 to 1.2. So even on a higher revenue base we do see continued, I would say progress on our Automotive business overall. We do see a reduction of the 3% higher unit growth that we did see in the first half of the year to about 2% would be our long term projection anyway.

Thanks very much.

We will now take our next question from Achal Sultania from Credit Suisse. Please go ahead.

Hi thanks. Just one question on gross margins. Can you just talk about some of the drivers in the improvement here, because typically I think the fall through rate from revenue to gross margins this particular quarter has been high it seems like, so I just want to understand was it like more mix driven, and if it was mix driven, what exactly was helping the mix in the quarter? Thank you. And maybe a follow up on, if you can give us some sense of how much of your sales is actually now based on 300 millimeter and how should we expect that to ramp going forward? Thank you.

So on the gross margin, I think there were some manufacturing variances in the prior quarter and we had some positive variances so to speak in the June quarter. So there was a little bit of a positive development in operations there which is obviously good. But also don't forget that as the dollar depreciates, the fall through of that kind of in take on the top line is lower than on volume. So we have of course shipped higher volumes and that has a better fall through in terms of margin contribution. So if you add these two impacts that can explain the change in I think with the guidance we gave for the September quarter, it's clear that we see a kind of where we see the kind of normalization in our margin profile because we guide flat in revenues and 0.5% down and then you have a pretty good view I think as to how the margin should progress from here.

So Jochen, can you comment on the revenue portion in 300 millimeter.

Our capacity in Dresden is ramping and it represents roughly 10% for our power business in terms revenue at this point in time but again ramping up strictly.

Okay, thank you.

We will now take our next question from Janardan Menon from Liberum. Please go ahead.

Yeah, hi. Thanks for taking the question. I have two actually, one is on your smartphone business I was just wondering you know you lost some share around this time last year in the September quarter, how is that looking into sort of the next 12 months used to roughly let it be flattish situation, is that any improvement there either in the MEMS microphone side or on the RF side? And sort of affiliated to that, you so far had a position on 3D sensing on the Google platform, how do you see that market evolving for you going forward and now that 3D sensing is becoming a more hot topic than it has been in the last couple of years? My second question is on the silicon carbide side, I was just wondering you've talked 15 OEMs evaluating your HybridPACK module on silicon carbide on the automotive side, from a market share point of view, does that cover all the major OEMs, do you think you're sitting in as stronger position on the silicon carbide side as you on the IGBT side in terms of your interactions with the 15 OEMs and Tier 1s? And also is there a competing similar hybrid I mean a module in the market or the sole supplier of a module today in the market or a sole company, which has that technology of a module even in the evaluation form.

Yes. So many questions. Let me start over the last one. I think due to our positioning with the automotive players the Tier 1, the OEMs, we feel very confident that we have a good inroad into all of them talking to them about onboard charges for hybrids as well as the virtual. Of course there are others who have most silicon carbide modules but here definitely we believe that we are in a unique position regarding our overall competence and the needs for high quality modules we have proven in IGBT business already. This is not so simple as many people assume to achieve zero defect in that range. So we believe that a compound situation of various sectors will put us into a very strong position and we are also driving the silicon carbide roadmap for power devises quite strongly supported by business out of various areas. And please note the learning curve and the growth of silicon carbide will definitely start from our point in respective to revenue, a higher revenue in the IPC business regarding the photovoltaic. So I think here we are not only well positioned for automotive, we have positioned well for many markets. The 3D sensing I think here a lot of potential is there, but there definitely unclear, which are the solution which are used by the market and which is the final use case to be done. I think here with the corporation of these major companies in that market just to support our 3D solutions we are in an excellent position but the take rate is moderate. And as we already mentioned last time, revenue expectations are low. Regarding smartphone, Helmut will comment.

Yes, thank you. First we diversified nicely into Chinese vendors with all our smartphone activities. In particular, we have shipped highest units as Reinhard already mentioned in the statement on our low noise amplifiers ever. And we have very nice sockets qualified for the microphone as well. So overall we expect to see normal seasonal behavior going forward.

Understood. And with the larger OEMs or does it position there, can you comment?

On the smartphones or on automotive?

On the smartphones.

I think we are very high qualified for all major premium smartphones.

Got it. Thank you.

We will now take our next question from David Mulholland from UBS. Please go ahead.

Hi. Thanks so much. Just on the silicon carbide side, and again coming to this but you've made comments in the past of how you see the kind of mix of vehicles over the next three to five years being, I want if you could update as well as been any change. I know you've made the comments on how big think silicon carbide can be but just concerned volumes, how do you think this is mix between IGBTs and silicon carbide and for EBs going forward?

David, we still believe that in the next five to six years something is a range of silicon carbide was a silicon we assume that silicon carbide will be around 10% of total market share in the EV coming from I'd say all the applications within the EV.

Okay, thanks very much.

We will now take our next question from Sandeep Deshpande from J.P. Morgan. Please go ahead.

Hi, thanks for letting on. I have couple of questions. First, regarding your 300 millimeter fab, can you talk about, are your breakeven timetable I mean it was supposed to happen by the end of this year, is this still on schedule in terms of breakeven and then how this will ramp up into the next year associated of course with the potential shutdown with one of the fabs that you acquired from international rectifier? Secondly with regard the module that you sell with IGBTs, we're seeing in the market there is quite a lot of your customers such as Bosch et cetera are planning to get into this module market. So when you talk about those major wins that you had in IGBT space over the next decade of IBS, how much of that is just for your chip and how of that is module and is that potential that some of your customers getting into the module space having an - will have an impact on your margin or any margin? Thank you.

So Sandeep, thank you very much for your question. The manufacturing part will be answered by Jochen.

Yeah. So first of all, it's not really a breakeven as we are of course making money on the 300 millimeter products as we speak, but the point we described also in the past which takes place at the turn of the calendar year is where the 300 millimeter FAB crosses the average of the other 200 millimeter FABs which we have. And we are fully on track. Also with respect to the new part facility which you will refer to, we are on track to find solution within the next months.

Regarding the IGBT modules versus chip, for us there is except that of course the revenue is different between both of them. We like both parts the types of the business and there is basically no major margin difference even slight advantage for the chip side.

Just you know, I just had a quick follow up on this the fab which is going to be sold, have the product from the fab already been transferred to your facility or is it ongoing?

We are in the process of qualifying the products which we produce in new product at other site being our own 300 millimeter factory but also subcontractors in Asia.

Thank you.

We will now take our next question from Adithya Metuku from Bank of America. Please go ahead.

Good morning gents. My first my question is on the clean room utilization and rest and so, can you comment to this on what proportion of your clean room is actually being used, and that production goes up on 300 millimeter, where do you think gross margins for the group and get to in the medium term ISC dressed and clean room utilization goes up I'm not talking about the machines, but the clean room specifically? Thank you.

I think your both will question will be answered by Dominik.

So with the utilization, in the midterm we made this math that once it's full and we gave an indication today that we think we can fill actually the entire clean room early next decade, and is about a three percentage point positive fall through, if you look at this in a kind of partial derivative way, the way this goes and as you look at what percentage of the power production in front end is increased and that's about a third at that point in time and then you take into account that power is of course only 60% of the revenues, then you take into account that from the value add there is about 50% back end and front end and by going through that calculation you see that the kind of the 20% to 30% cost advantage in the sector as the partial derivative so to speak and electing all other effects in the margin would give you about three percentage point gross margin improvement. We've always highlighted that against such margin improvement you have to consider the continues price decline and how much of that margin improvement is actually eaten the way by the normal price decline, if also highlighted that in the kind of older factories it's very hard to come by the productivity incremental you need, so some of that increase will be needed to simply compensate price decline. On top of that there are other moving parts in our gross margin we've already indicated that there are some changes in the environment with regards to ways of substrate pricing and so that that is also playing a certain role and we'll certainly play a role also next fiscal year. But we'll comment on that more as we come into the November full year guidance.

So on a conservative basis maybe 150 bps to 200 bps increase in gross margin in the next three to five years would be on reasonable?

I mean we always are very careful commenting on the longer term gross margin outlook and given that the price decline is something that's not known of course in the current environment you can expect maybe some more favorable outcomes because the capacity is scared, but who knows where the cycle will turn into two or three years, and then things could look slightly different, so please bear with us on that one for next fiscal year you will hear more in November, and the one thing that I want to reiterate is that we've always said that our kind of through cycle segment result target is 17% and that we want to also reach that 17% even if the dollar is depreciating somewhat from the current level, which to a certain degree has already happened on. So that's I think everything I can give you which is nothing new, but just the confirmation of everything we've told you with regards to that specific question.

Okay. Thank you.

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

Hi thanks for taking my questions. Two if I could. You pointed to a lot of very, very good term electric drive train order intake and you've said this is basically five to 10 year lifetime projects, can you maybe help us a little bit to understand when these are starting to ramp up, is that maybe kind of 2019 onwards and also in terms of geography customer types any more color would be helpful? And on that point also if you have a gas kind of where your market share of these new contracts stands compare to your existing market share and auto power, do you feel like you're gaining share given the strong order intake is staying here? And the second question Dominik also very briefly spoke already on wafer for prices, can you maybe just update us where you stand with your negotiations both on 300 millimeter and 200 millimeter wafers with your suppliers in terms of locking in a price for next year? Thank you.

Hello Mr. Schaller, we started with the wafers and Jürgen will answer that question. Jürgen Rebel: Yeah, we have adjusted a bit of the increase already in this fiscal year and for sure as Dominik already pointed out, we will face for next fiscal year increasing prices, now that's not a one-step as we have some contracts that reach until the end of fiscal year others until end of calendar year part of it is negotiated on a yearly base, part of it is negotiated on a quarterly base, so we will get here more clarity on the precise picture in the next two three months and we'll report about it in the November timeframe.

Then regarding the EVs, I think your assumption is right that the revenue is start and please bear in mind that these RIMs are ours very would say slow ramping up, but most likely starting in 2019 some maybe slightly earlier, but the maturity 2019 plus. The region here of course the major growth region in general is for, is Asia and here in China continue being the highest demand for many of these design wins this time came from the area that most likely the cars will end up in Europe, the demand came from European Tier 1s and suppliers to a large extent. So regarding the market share it is extremely difficult to predict a market share based on this demand, but we believe that we will continue to have a significant share and overall I think here we will hold our position. And just one comment there is Japanese supplier of xEV and here you see that this is a market which we hardly can reach, so overall our share in this market for xEV should there's a growth outside of Japan grow clearly further.

Okay, that's very clear. Thank you.

We will now take our next question from Amit Harchandani from Citigroup. Please go ahead.

Good morning everyone, Amit Harchandani from Citi and thanks for taking my question. Two if I may. My first question relates to the Automotive segment, you've talked about healthy book-to-bill ratio, talked about content growth, as we start looking into the next fiscal I appreciate you can't give us any guidance, but based on the content growth trends your performance for this year suggest you're almost getting close to double digit growth in Automotive coming from continent growth alone, is there any reason to believe that would decelerate going into next year or basically what I'm trying to get a feel for us, so what extent should we think about content growth going into next year, any color on that, any visibility you may have at this stage would be helpful? And secondly on an unrelated follow up, would you talk about maybe the lead time that you're seeing during the quarter, how was linearity of orders how you seen lead times stretch, how that the orders across the different month? And maybe just finally if I could also slip in another one, any initial thoughts on IFRS 15 would there be any implications for you and that comes into effect at the beginning of next year? Thank you.

So Amit thank you for your questions. In the lead times, I would say here is very difficult to answer, because you have to differentiate between the order placement and this has moved definitely out there, so it is not only about lead times the orders on hand, it is also for which time of the next months the customers are placing order, and we have seen that the customers are placing orders very much had compared to the chorus before lead times are varying between the various products. But here I think we can get Helmut later on give together with the comment on Automotive book-to-bill and content some more flavor, Dominik will comment on the financial.

Okay. So with regards to revenue recognition IFRS 15 it's a major administrative burden of course for the company, because we have to go through all these transitions. However we don't think there will be a material impact. We've not exactly quantified it yet, we are in the middle of going through that process, but don't forget Infineon on is overwhelmingly producing not basics or customer specific parts, but ASSPs application specific parts which means that the more complicated things like revenue recognition in percentage of completion for customized products and so forth is very minor, also we don't sell software to a large degree, so from that perspective it should be no material impact, but we still work on the details.

Two more comments on lead time, of course lead time for power management as I also stated earlier is very high, so you could say that roughly half of our portfolio is right now doubled the lead time as normal. So yes as Reinhard said, customers are ordering with a longer order reach also based on the longer lead times. With respect to Automotive growth going forward two effects, yes content growth is stronger than our long term model, we have this long term model of 2%, car unit growth 4%, content growth in 2% of market share growth that's our long term model and writes now the content growth is higher than that in the next - into next fiscal year we'll give more light in November.

Thank you very much. And just of the clarification on the lead times, is that - have you seen any double ordering and you've seen these lead time stretch out any sense of double ordering in the channels for you?

This is not possible to see at this point, if it is in, however we have to assume from past performance that is incorporated, yes, but to quantify is impossible.

Thank you very much for the answers gentlemen. Jürgen Rebel: This is Jürgen speaking, I just have one little request, if you may restrict yourself to one or one and a half questions a very short one, because we still have a very long list of people wanting to ask a questions. Thank you.

We will now take our next question from Tammy Qiu from Berenberg. Please go ahead.

HI, thank you for taking my question. Firstly, would you please let me know that what is the adjusted currency movement for the auto business this quarter i.e. is auto business actually up, if we exclude the FX impact and also same wise for the auto margin please? Thanks.

So it was basically flat I think we mentioned that in the intro. If you keep the auto business at constant exchange rates it was pretty much flat and I think the margin impact was very minor. Please don't forget that there is the difference between euro revenues at constant currencies and the sequential U.S. dollar change in rate. So Reinhard as mentioned in the intro that for instance if we say, we move the dollar from 1.10 to 1.15 in our outlook from the kind of June to the September quarter that actually implies 4% to 5% U.S. dollar growth if you kind of convert our revenues into dollars, it only implies about a 2% plus euro growth at constant exchange rates, and at face value it's only flat. So these are three moving parts where you can get confused, in particular when you look at the comparison to our competitors and most of who report in U.S. dollars, so they look much nicer currently. But if we converted our revenues in U.S. dollars for instance, we would be at 7% plus in the June quarter.

And the margin - the segment margin?

Sorry.

Segment margin?

The margin impact is not so, so big what I can tell you is basically that the fall through from these moves in the exchange rate is about 30%, which you can kind of deduct from the statements we made that a $0.01 exchange rate impact per quarter triggers a €9 million delta and revenues in the €3 million in segment result. While the volume impact is the fall through is about 50%, so you can from these two numbers to kind of sensitivities you can basically get a feeling what's the margin impact on the group level, and I don't want to dive now into the - in the segments, because that kind of confuses more, few more I think than it would help.

So how we should think about auto margin in the - in next or you know going forward from there, are you stick to your kind of 17% target for auto business or so to the cycle?

Yeah, we've always said that automotive should and through the cycle also deliver the target model for the group, which is basically true for everyone and it's more or less difficult for different divisions, but in general that's what we want to achieve. And yours of course, seen improvement in the prior quarter.

Okay, cool. Thank you.

We will now take our next question from Guenther Hollfelder from Baader Bank. Please go ahead.

Many thanks. Which has a follow up on the currency, do you expect or you already seeing any positive impact on from the Malaysian ringgit is that something that could help going forward compared to the U.S. dollar? And the second question would be on the typical you know price absorption in the automotive business throughout the year, so this I understand was offset by other sectors including currency, but what about going into Q4, should we see better price absorption here from the annual price declines in the fourth quarter? Thanks.

Mr. Helmut will take that before I will answer the price absorption. We typically the yearly negotiations so there is no specialty effect on the price situation in the current quarter when you talk about first quarter about our fiscal, so there is nothing which we expect for that which is untypical to the years before.

And regarding the ringgit of course, expert is Dominik.

Yeah the Malaysian ringgit has indeed depreciated, but that is actually already more or less embedded in our fall through guidance the same as €9 million revenues and the €3 million in segment result, because we consider the ringgit to be a correlated currency, so the fact that the fall through from the dollar impact would have been stronger if the ringgit had not depreciated.

Okay. If you allow one follow up on your new microphone. Jürgen Rebel: Guenther sorry.

Sorry, okay.

We will now take our next question from François Meunier from Morgan Stanley. Please go ahead. François Meunier: Yes, only one question I guess. So we're seeing lot of announcements by car manufacturers in the past few months about an anticipated launch of electric car. Of course, you got a super big pipeline of all €2.5 billion in that market, have you seen any change in the delivery or in the timing of delivery or so any change in the nature of what those manufacturers want into an earlier ramp up of electric cars?

So François, this is a difficult questions, I think here the revenue growth, which we have in the high demand shows that the business is strong, I would not say it is accelerating more than expected and there are also now very special wishes. The only thing which definitely is clear to that many of our customers be Tier 1s and OEMs to autos that for them the situation is pretty unclear, and it also can happen that the gross pattern will accelerate significantly, but there is no firm or as which would underline these. But we prepare ourselves to follow each of the trends even if it is accelerating. So I think here as we stated very healthy growth support for ATV from IGBT modules. François Meunier: Okay. Keep us posted on that then.

Of course.

We will now take our next question Veysel Taze from Oddo. Please go ahead.

Yeah, hi, good morning. Veysel Taze from Oddo. Briefly one question on your silicon carbide, do you think given your dominance in some of the IGBT space in the auto some of the auto domain and also in the industrial and particularly in auto, do you see when you pitch more design in those among your customers to ideate to get a little bit independent from Infineon in terms of the dominance in IGBT switching to silicon carbide to it other market players?

Well, I think it is nice to hear from you that we are dominant player, but we do not perceive ourselves to be a dominant player in the IGBT market we have a 30 plus market share, but we believe in total, we continue to grow and at least our customer do not convey any message that they have a reason to move away from us they know very much that grows be at in IGBT or even more in silicon carbide based means that you have a very capable and competent partner and being able to grow production and Infineon has proven this very. Similarly regarding the quality of what and technical performance of what we deliver. So we don't expect that there are strategic moves away from us, but we are very well aware of that silicon carbide is potentially opening a new area in the market, but again we have managed to be success significant the success for against competitors in silicon and we believe this for silicon carbide too.

One quick follow up on 3D sensing and your partnership with Google Tango, do you expect in 2018 or 2019 some revenues kicking in from the smartphone space?

We expect that 3D sensing will take off nevertheless [indiscernible] extremely difficult to predict the amount of revenue compared to group revenue overall. So I think here no guidance we can give on revenue on. Ask us next year same time.

Okay, thanks a lot.

We will now take our next question from David O'connor from Exane. Please go ahead. David O'connor: Good morning, gentlemen thanks for taking my question. Just one from my side, maybe Reinhard if I can go back to one of your comments earlier in the call you've mentioned about maintaining share in electric vehicles. Can you help me understand, how you will maintain share given the technology shift to silicon carbide when that we're now seeing more players competing and also if some of your customers are seemingly position themselves to move into the module business? Thanks.

David, I think here, as I commented before, we expect that silicon carbide rather still be let's say around 10% share in total of the combined IGBT and silicon carbide market. So we believe that the dominant driver will be IGBT for the time being. There are more people moving in that is true, but also in IGBT there are quite some people around you know our competitors here very well. So we don't believe that the overall pattern is changing significantly and considering the situation of silicon carbide MOSFETs where some of the players are already for some time in the market, and think about the revenue stream which has been created from that. We believe that we can continue or let's say path of success having even in silicon carbide MOSFETs significant share in the inverter market as well on the industrial side as in the automotive side. So here I think it is not only about the competence of doing devices, the inverter business means that you have a significant competence on the application and system and we believe there we believe our position as well in automotive as an industry. David O'connor: Okay, thank you. And I didn't hear any comment on your potential of your customers moving to the module business, you have any thoughts on this? Thanks.

This is nothing new to us in the Automotive business, and power we have seen that many customers have different strategies, some of them want to provide a full system including the assembly of the module, here we are extremely flexible and both of that's fits well to our basic strategy and is basically not a big difference on, so margins we achieve as I mentioned before chips are slightly higher margins then modules, which is due to the nature of the high material content, but both is fine as long as we maintain the overall share based on the IGBT chips. David O'connor: Thank you.

We will take our next question from Sebastien Sztabowicz from Kepler Cheuvreux. Please go ahead.

Yeah, I have question 5G, because you've seen there's a technology should likely come faster than expected with so market deployment in the U.S., Japan and China by 2019. If you think that could be a growth driver for you by the middle of the next year? And also could you please update us a little bit on our strategy? Thank you.

5G is very difficult to predict I think here. We expect that it takes off and there are some products we have for the high frequency in mobile which are going into that segment, but please bear in mind that the overall mobile revenue in the high frequency area for the total group is pretty small as we already indicated, we expect that the - I would say the mobile has bottomed out and the growth will be there, so we expect that was support to gross. Maybe 5G be see some effects at the end of the next fiscal year, but we do not expect prior to that. The other question was the gun strategy. Here I think here again two parts of the business the RF business which is pretty much in line with what we talked about 5G and the power business, the power business is moving pretty slowly there, because the nature of the AC to DC converter is where it comes in, this attractive for the high performance ones and we see that the people are trying, but we are very solid in the market here, but things are moving on gallium nitride slower and then on a silicon carbide. Jürgen Rebel: So we've already overrun, but we have time for one more question please.

We will now take our final question from Lee Simpson from Stifel. Please go ahead.

Great. Thanks for just picking me in there. I'll give you just one question. Just on MACOM, of you give us an update on the litigation there, let me reminding us what you think the key points from an Infineon perspective, if there's any provisions you've made and maybe obviously at the key dates and timing as you currently see it? Thanks.

Well, Lee there is nothing new on the MACOM side, is still the same. So we had last time the MACOM contested terminations of an inclusive license contract coming from the time of IR, which we have and until the court reaches a final decision on that matter, which we assume may take another year, the court has ordered a preliminary in juncture with the effect that the license to MACOM stay in effect a very clear Infineon never preach injunction and we're in the position to do what we have to do for the - for the situation in the market is in, we allow to continue to development efforts ever we want. So it was pretty ongoing topic no changes. Jürgen Rebel: All right. So thank you for all your questions and with this we would like to conclude this conference call further questions as always you can contact the IR team here in Munich. And we'd like to thank you very much and have a nice day by. Bye.

That concludes today's conference call. Thank you everyone for joining us. You many now disconnect.