Industrial Power Control

Industrial Power Control Investor and Analyst Webcast London, 20 November 2012 Dr. Helmut Gassel Division President Industrial Power Control (IPC)

Table of Contents IPC Segment Overview Growth Drivers and Market Opportunities Why We Are Winning Summary Disclaimer: This presentation contains forward-looking statements about the business, financial condition and earnings performance of the Infineon Group. These statements are based on assumptions and projections resting upon currently available information and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development may therefore differ materially from what has been expected. Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update forward-looking statements. 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 2

Q1 FY09 Q1 FY10 Q1 FY11 Q1 FY11 Industrial Power Control (IPC) at a Glance Revenue and Segment Result development Revenue split by region * [EUR m] 300 28.0% 28.3% 30% 23.0% 22.7% 19.9% 200 15.5% 14.7% 14.4% 20% 40% 48% 100 0 186 191 204 216 196 174 177 181 52 54 47 49 Q1 FY11 Q2 Q3 Q4 Q1 FY12 39 27 26 26 Q2 Q3 Q4 IPC revenue [lhs] IPC SR [lhs] SR margin [rhs] 10% 0% 12% EMEA America APAC (incl. Japan) Strong sales in Asia, but also Europe given customer base there. Revenue stable for last quarters, but very weak order entry given overall economic situation. Margin compression driven by top line plus cost of investment in capacity and higher OpEx. * Based on revenues by fulfillment region for FY 2012. 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 3

Top Customers and Distributors Top customers Revenue split by sales channel * 64% 36% Top distributors Direct customers Distribution 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. * Based on revenues by fulfillment region for FY 2012. Page 4

IPC Portfolio Addresses Applications Across a Broad Spectrum of Power Levels Energy generation solar PV inverter onshore wind offshore wind Energy transmission VSC = voltage source converter HVDC = high-voltage direct current HVDC VSC home appliances Energy consumption variable speed drive heavy construction vehicle data center 100 W 1 kw 10 kw 100 kw 1 MW 10 MW 100 MW 1 GW 10 GW train Driver ICs + Discretes Driver Boards + IGBT modules Stacks ~0.1 kw ~10 kw ~1 kw ~1.6 MW ~100 kw ~10 MW Power level of applications and products are approximate. 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 5

Market Shares Worldwide IGBT modules 2011* Discrete IGBTs 2011* Mitsubishi 32% Infineon 24% Infineon 19% Internat. Rectifier 11% Fuji Electric 13% Fairchild 10% Semikron 11% Renesas 10% Sanyo 3% Fuji Electric 9% Highlights Total market size: $4.1bn. Biggest markets: Europe, China, Japan with ~$1bn each. Infineon #1 in EMEA (32% m/s), and #1 in Americas (33% m/s). Total market size: $1,120m. Biggest markets: Europe, China, Japan with ~$300m each. 1.5%-points market share gain in 2011 (incl. bare die business). * Source: IMS Research (an IHS company) Power Semiconductor Discretes & Modules Edition 2012, August 2012. 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 6

Market Shares in China IGBT modules 2011* Discrete IGBTs 2011* Mitsubishi 35% Infineon 22% Infineon 16% Fairchild 14% Fuji Electric 15% Internat. Rectifier 12% Semikron 8% Renesas 12% Sanyo 7% Mitsubishi 10% Highlights Highlights Market size: $1,170m. Infineon #1 in APAC (excl. China) with 33% market share. Strong position in mid- to highpower modules. Market size: $309m. Infineon also #1 in APAC (excl. China) with 19% market share. Major applications: home appliances, induction cooking. * Source: IMS Research (an IHS company) Power Semiconductor Discretes & Modules Edition 2012, August 2012. 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 7

Drives By Far Biggest Application Segment; Renewables About 20% Revenue split by application in FY 2012: EUR 728m Renewables Traction Drives Others UPS Home Appliances 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 8

Revenues [Q1 FY11 = 100] Bookings Cyclically at Very Low Levels Revenue by application 200 2 Book-to-bill [rhs] Drives 100 1 Renewables Traction UPS Home Appliances 0 Q1 FY11 Q2 Q3 Q4 Q1 FY12 Q2 Q3 Q4 0 Others 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 9

Factory Automation: Huge Savings Potential By Variable Speed Drive (VSD) Global electricity demand by enduse application of electric motors Pumps Drives Compressors Fans Comments Source: International Energy Agency: Walking the Torque, May 2012 About 300m electric motors are in use worldwide, responsible for ~2/3 rd of the total industrial power consumption. Depending on the application, up to 30% power can be saved by VSD. Today, just 15% of all electric motors are VSDcontrolled. Mechanic goes electric ; e.g. hydraulic is replaced by electric motors. Rising labor cost in low labor cost countries drives automation level. 20 Nov 2012 Copyright Infineon Technologies 2010. All rights reserved. Page 11

Wind: All-time High in 2012; 2013 to Suffer From PTC Cuts in the US [GW] 50 Market development wind 40 30 Comments Drop in the US wind market due to cuts in PTC*. Ongoing grid coupling problems in China still limit faster growth of new installations. South America on the rise. Europe stable (both in new installations and repowering). 20 10 0 2011 2012 2013 2014 2015 2016 Europe APAC North America Latin America, Africa, Middle East *PTC = renewable energy production tax credits. Source: IHS: Global Wind Energy Market Forecast, June 2012 20 Nov 2012 Copyright Infineon Technologies 2010. All rights reserved. Page 12

Photovoltaics: Europe to Dip in 2013; APAC And the Americas Continue to Grow Development of PV inverters [GW] 60 50 40 30 Comments Germany: Rush in 2012 before FiTs are cut. Japan: New FiTs since July 2012 as part of the new clean energy policy. China: Expected to be the biggest market from 2013 onwards. Utility-scale installations (100 500 kw) are dominating the market. 20 10 0 2011 2012 2013 2014 2015 2016 EMEA APAC America Source: IMS Reserch (an IHS company): The World Market for Photovoltaic Inverters 2012, July 2012. 20 Nov 2012 Copyright Infineon Technologies 2010. All rights reserved. Page 13

Besides High-speed Trains, Metro Trains Are an Attractive Segment of Traction Market dev. metro systems 160 120 80 40 0 84 107 138 1990 2000 2011 Bangkok Skytrain. Courtesy of Siemens. Source: SCI Verkehr: Metrofahrzeuge Weltweite Marktentwicklung, 2012 Comments Deployment of metro systems driven by increasing urbanization, especially in APAC and the Gulf states. Expansion of express railway network included in China s 12 th FYP. Semiconductor content per MW of metro trains is comparable to that of highspeed trains. 20 Nov 2012 Copyright Infineon Technologies 2010. All rights reserved. Page 14

Growth Driver Industrial and Off-Road Vehicles Forklift truck Hybrid bus Mining Trends General advantage of pure electric and diesel-electric drives over diesel: less fuel consumption, less CO 2 emission, less noise pollution, less downtime (due to less frequent refueling, less frequent maintenance). First industrial vehicles already on the market; hybrid buses and mining vehicles on the rise. 20 Nov 2012 Copyright Infineon Technologies 2010. All rights reserved. Page 15

Wafer thickness [ µm ] Power density [ kw / cm 2 ] Infineon s Technology Roadmap Focuses on Increasing Wafer Size and Power Density Increasing wafer size and decreasing wafer thickness Improvements in power density 250 220 200 150 100 50 100 mm 125 mm 180 150 mm 200 mm 300 mm 140 120 100 90 70 0 1990 1995 2000 2005 2010 2015 2020 300 250 200 150 125 C 150 C 175 C 200 C 170 250 100 110 85 70 50 50 30 0 1990 1995 2000 2005 2010 2015 2020 Wafer thickness will reach 70 µm for 1200-Volt-IGBT products at the end of this decade. Thinner wafers, improvements in transistor design and higher junction temperatures allow increasing power density. 20 Nov 2012 Copyright Infineon Technologies 2010. All rights reserved. Page 17

New Materials: Silicon-Carbide (SiC) 2001: SiC diode thinq 2011: SiC JFET CoolSiC 2012: SiC Easy Module Infineon has a ten year track record in SiC technology. SiC is used where highest efficiency is key: a.) PV inverters, b.) power supplies for high-end PCs, servers (data centers), telecom. SiC is a challenging technology: about a decade from diode to transistor. Infineon also provides specialized control circuits and drivers that maximize benefits of SiC technologies. 20 Nov 2012 Copyright Infineon Technologies 2010. 2011 All rights reserved. Page 18

Infineon Further Advances Performance Through Innovations in Modules Ever-increasing power density 1995 2001 2007 2014 IGBT2 IGBT3 IGBT4 IGBT5 34mm module EconoPACK 2 EasyPACK2B PrimePACK 2 1200 V 1200 V 1200 V 1200 V 0.46 kw/cm 2 0.89 kw/cm 2 1.16 kw/cm 2 1.31 kw/cm 2 Tj=125 C Tj=125 C Tj=150 C Tj=175 C Note: 280% absolute increase of power density. At constant junction temperature (125 C) it would have been >180%. 20 Nov 2012 Copyright Infineon Technologies 2010. 2011 All rights reserved. Page 19

Broad Portfolio and Know-How Enable Infineon to Address System Solutions Example: variable speed drive Addressed by other Infineon divisions Addressed by IPC Combining our technologies, experience and customer relationships to boost Infineon s value-add at the system level. Value of power semiconductors is ~60-80% of total semi BoM. System know-how and application understanding are prerequisite to develop differentiated products and system solutions. 20 Nov 2012 Copyright Infineon Technologies 2010. 2011 All rights reserved. Page 20

Summary Broad portfolio covering all relevant applications and end markets. Leading market share in all relevant product groups and regions. Strong secular mid- to long-term growth drivers: automation, renewable energies, traction, CAV (commercial & agricultural vehicles), electricity infrastructure and power supply backup solutions. Winning technologies: chip / module technologies with superior power density; strong capability in breakthrough material SiC. Broad portfolio and know-how enable Infineon to address system solutions; increasing focus on control ICs. 20 Nov 2012 Copyright Infineon Technologies 2012. All rights reserved. Page 22