Infineon Expands in China: New Joint Venture with Chinese CSVC for the Assembly and Testing of IC Products.

Business Editors

MUNICH, Germany & SUZHOU, China--(BUSINESS WIRE)--July 28, 2003

Infineon Technologies AG (FSE/NYSE: IFX) and the China-Singapore Suzhou Industrial Park Venture Co. (CSVC), Ltd, Suzhou, China, are setting up a joint venture for the assembly and testing of memory ICs (backend). The agreement provides for the construction of a joint facility in the Suzhou Industrial Park (SIP), 80 km to the west of Shanghai. Once completed, the facility will have a maximum capacity of up to one billion chips a year. The new company will operate under the name Infineon Technologies Suzhou Co., Ltd. Infineon holds 72.5 percent of the shares of the joint venture and CSVC the remainder 27.5 percent.

The new facility will be developed in a number of stages as dictated by growth and trends in the global semiconductor market. Total planned investment in the project over the next ten years amounts to around US$ 1 billion with the registered capital being US$ 333 million. Infineon will contribute US$ 241,4 million over the next five years as equity. CSVC will contribute US$ 91,6 million. The initial tranches are sufficient to ensure completion of the first stages of development including construction of the building, facilities, infrastructure and the first cost-intensive equipment. Any further investment would be mostly required for additional equipment. It is expected that the joint venture will finance this externally. When operating at full capacity Infineon Suzhou will employ over 1,000 people.

"With this partnership we are systematically expanding our presence in the future market of China, we will gain access to new customers, and aim to capture a 40 percent share of the market for memory products in China," said Infineon President and CEO Dr. Ulrich Schumacher. "Overall, we intend to secure in China a place among the top four in the microelectronics business with a market share of more than 10 percent within the next five years. By then we will have about 3,300 employees in China."

The formation of the joint venture expands Infineon's portfolio of high volume sites for memory product backends, chiefly Porto/Portugal and Malacca/Malaysia. The continuous growth in frontend capacities (introduction of 300 mm technology, cooperation ventures with Winbond, SMIC and Nanya) necessarily entails an expansion of capacity for backend production.

Work on constructing the new facility is scheduled to begin in October 2003 and the site should be ready for the equipment installation by mid-2004. Volume production is slated to commence in early 2005. The joint venture company will start by producing 256 Mbit devices in BGA packages. The wafers for further processing will come primarily from the collaborative projects with SMIC (Shanghai, China), Winbond and Nanya (both in Taiwan), but shipments from Dresden, Germany, and Richmond, USA, are also planned.

About the IC Chips Manufacturing

Chip manufacture involves two main processes. The chips are first created on silicon wafers in the frontend by a series of complex processes. The silicon wafers containing the finished chips are then diced in the backend process and the resulting chips assembled into packages and tested. The components thus produced enable straightforward assembly of the chips on printed circuit boards.

About Infineon in China

Infineon is represented at six locations in China: Wuxi (manufacturing), Xi'an (R&D), Beijing, Shanghai, Shenzhen and Hong Kong (all for sales and marketing). Infineon's initial business operations were established in Beijing in 1995. At present, about 800 employees are working for Infineon in China. The company's China headquarters is in Shanghai. In March 2003, Infineon has expanded its successful production cooperation for standard memory chips (DRAMs) with SMIC, Shanghai. Infineon transfers now its advanced production technology as well as its 300mm process. In return, SMIC will manufacture products in these technologies exclusively for Infineon.

About Infineon

Infineon Technologies AG, Munich, Germany, offers semiconductor and system solutions for the automotive and industrial sectors, for applications in the wired communications markets, secure mobile solutions as well as memory products.

With a global presence, Infineon operates in the US from San Jose, CA, in the Asia-Pacific region from Singapore and in Japan from Tokyo. In fiscal year 2002 (ending September), the company achieved sales of Euro 5.21 billion with about 30,400 employees worldwide. Infineon is listed on the DAX index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX).

Further information is available at http://www.infineon.com.

This news release is available at http://www.infineon.com/news