A ctive S upplier M anagement IFAG PUR R&D

1. Active Supplier Management IFAG PUR R&D role of Purchase (PUR R&D) @ Infineon transparency by clear process description and tools Dr. Marcel Körting – Infineon Technologies AG Core Buyer/Commodity Manager October 2007 Infineon Confidential

2. Agenda Introduction Overview – Infineon & Purchase Department (PUR) New Role of PUR & PUR R&D Active Supplier Management (ASM) within PUR R&D Processes & Tools Status quo / outlook

3. Agenda Introduction

4. Agenda Overview – Infineon & Purchase Department (PUR)

5. Infineon - overview • More thanEUR 4 bn in revenues (w/o QAG) in the fiscal year 2006, EUR 1.01 bn in the third quarter of the fiscal year 2007 • Approx.30,000 employees(incl. 6,000 R&D staff)as of June 30, 2007 • Strong technology portfolio with about22,900 patentsand applications; more than 30 major R&D locations worldwide • Focus onEnergy Efficiency, Communications and Security • Majority holding ofQimonda (QAG)

6. Infineon – marktorientierte Unternehmensstruktur Marktorientierte Bereiche Applikationen Automobilelektronik (Antriebsstrang, Sicherheitsmanagement, Body & Convenience, Infotainment), Energie-wandlung (Netzteile, Antriebe), Sicherheit (Zahlungsverkehr, Identifikation, Plattformsicherheit, Unterhaltung) AIM Automobil, Industrie & Multimarket COM Mobile Lösungen, Basisstationen für Mobilfunk, Breitbandzugangsnetze, Netzwerke, Metro- und Weitverkehrs-Netze, mobile Anwendungen und Systeme, GPS, CPE, Tuner Kunden Kommuni- kation QAG PCs und Notebooks, PC-Aufrüstung, Workstations, Infrastruktur (Server, Netzwerke), PDA's, SMART-Telefone, Peripherie-Geräte, Flash-Speicherkarten Speicher- Produkte

7. Organizational setup – Infineon Technologies AG Infineon Technologies AG Dr. W. ZiebartP. Bauer Prof.Dr. H. Eul Dr. R. Ploss P.J. Fischl IFAG AIMAutomotive, Industrial &MultimarketP. BauerG. Henschel IFAG COMCommunication SolutionsProf. Dr. H. EulP. Gruber IFAG OPOperationsDr. R. Ploss IFAG OP FEPFrontend ProductionPower IFAG OP SCCorporate Supply Chain IFAG LPLegal & Patents IFAG OP FECFrontend ProductionCMOS IFAG OP PURCorporate Purchasing IFAG HRHuman Resources IFAG OP ATPAssembly & TestingPower IFAG OP QMCorporate Quality Management

8. Infineon Purchasing (PUR) Purchasing Procurement& Logistics Office Reporting, Planning, Controlling PL Center of Competence (COC) Production Partner Mgt Frontend (FE) Equipment Frontend (FE) Materials Purchasing Asia Facilities & Services IT and R&D FE Equipment Core Buyer FE Material Core Buyer Assembly & Test Core Buyer ITCore Buyer Facilities & ServicesCore Buyer PPM Core Buyer Core Buyer FE EquipmentEquipment Trade R&D Core Buyer Purchasing Singapore Purchasing Munich Purchasing Regensburg Purchasing Dresden Procurement North America Purchasing Melaka Purchasing Warstein Purchasing Villach Local Purchasing Purchasing China PurchasingKista Purchasing Kulim Purchasing Wuxi Purchasing Horten FOV + PCVA Processes, Methods & Tools Central Support

9. Agenda New Role of PUR & PUR R&D

10. Prejudices about Purchase Departments PUR: • … is complicated and inflexible • … are stealing my and my supplier’s time • … has no added value to offer • ... does not understand what BGs want • … only and always wants to decrease prices • … is only focused on cost savings & cost reductions • … can not work without SAP

11. Current Overall PUR Strategy Purchasing Performancefocused on Competitive Price, Secure Supply, and Operating costs Internal and externalCommunication to increase reputation andtrust Active Supplier RelationshipManagement and development To be a recognized “value added” central function within Infineon Standardized processes, methods & tools:to support shift from tactical to more negotiation oriented work People, Team andOrganizationaldevelopment

12. 11 key initiatives and owners defined to implement PUR Strategy Focus on Value Early Involvement Effective Supplier Briefing Golden Rules Best Practice Sharing Intelligent IT Roadmap Data transparency C-Part Handling Role definition Individual Development Management Team Building

13. F&E - Ausgaben GJ 1998-2006 [Mio. EUR] Anzahl Patente und Patentanmeldungen (GJ 1998-2006) 42.900 41.000 42.000 39.000 31.100 30.300 28.200 1.293 1.249 1.220 1.189 23.853 1.060 1.090 1.025 18.349 739 637 98 99 00 01 02 03 04 05 06 02 03 04 05 06 98 99 00 01 F&E Ausgaben [ab 2006: incl. Qimonda] • Ca. 1,2 Milliarden Euro F+E Ausgaben im GJ 2006 • Über 30 Haupt-F+E-Standorte weltweit • Über 6.000 Mitarbeiter im Bereich F+E • Derzeit rund 42.900 Patente / Patentanmeldungen Kontinuierliche Investitionen in F+E

14. PUR Expert Expert Expert Supplier n Supplier 4 Supplier 3 Supplier 1 Supplier 2 Non approved newSources Resource Manager PUR R&D: Risks of uncoordinated Supplier Management Short term demands Missing knowledgeLow sourcing activities Supplier + Expert Portfolio: Individual contracting Individual rates Individual Contracting Individual Price Negotation No market overview available Multiple contact points Standardization not possible Risk of Know How Flow, Loss and transfer uncoordinated sourcing Demand, Skill ProfileExpert Selection Suppliers / Experts Quote Significant training efforts Request on Purchase Order Uncoordinated Supplier Management includes multiple risks!

15. Agenda Active Supplier Management (ASM) within PUR R&D

16. Approved Supplier Portfolio:< n suppliers* • Allocated to n Fields of • Knowledge (FoK= PCNs) • Frame Agreements • Standardized skill and expert levels • Pricing structure + n experts PUR Specification Quote Expert Expert Expert Expert Resource Manager Active Supplier Management (ASM) within PUR R&D SourcingContracting Price Negotiation Qualification FoK 2 *Supplier 2, 4, 9 FoK 1 *Supplier 1, 2, 9 FoK n *Supplier 6, 7, 8 Request on Purchase Order *Approved Suppliers and development work only IFX Active Supplier Management Model

17. PUR Resource Manager Development of ASM within PUR R&D Fields of Knowledge: Appr.Suppliers + Experts Appr. Suppliers are 1st choice Expert Recruitment / Sourcing together with selected partners Performance ranking based on customer feedbackPhase In / Phase Out process to improve performanceEstablish long term relationship with experts SourcingContracting Price Negotiation Qualification Overview on Market situation FoK 2 Appr. Suppliers Back up: Experts FoK 1 Appr. Suppliers Back up: Experts FoK n Appr. Suppliers Back up: Experts No additional sourcing required Approved supplier portfolio Control on Know How Flow Specification Quote Reduced training efforts Request on Purchase Order Combined Pool (Suppliers & Experts) for Consulting Services allocated to FoK

18. Agenda Processes & Tools

19. Contributes:- overview on the market- overview on suppliers (availability, costs, Field of knowledge Are external resources available Contributes:- needed skill profiles - budget Do I have enough internal resources? BG PUR May I get resources from other IFX sites? • Cooperation: • Evaluate risks • Define main suppliers • Frame contract & qualify • (Commit minimum volume) compare internal & external costs Is external supplier liable? Owner of the developed product? License rights? License fees?Profit sharing? Output:Supplier strategy for the next FY (SRS) Customer approach?Sales channels? Support at the customer? Define Business Cases on a regular base – BGs & PUR together

20. Purchasing Process according CR: PUR R&D R&D Services PCN (Purchase Code Number/Warengruppen = FoK): 8R* Precondition: underlying Commodity Strategy (ASM) Process Step Action Tools / Strategy Output

21. Purchasing Process – e.g. Step PUR Buyer • PUR Core Buyer • Supplier selection (either Approved Supplier or Approval through PL – • Alignment with BGs) • - Effects commercial negotiations • - Defines the type of contract • Checks the terms of the contract (price, delivery conditions, • payment terms) • - Verifies the conformity of the contract with legal & IFX rules • ensures SOX compliance (“Cover Sheet”) • gives PUR Approval • Note: the less discrepancies from Commodity Strategy (ASM) the less work for any involved department

22. Purchasing Process – e.g. BG Approval(Paperless Outsourcing Contract Approval) Outsourcing Manager / PJM Project Manager POCA Program Manager PUR Core Buyer Finance /Head of Finance Corporate Functions Head of BU CFO Resource Manager PUR Operations President

23. Purchasing Process – e.g. Step PUR Operations • PUR Operations • Responsibility: Administration & Purchase Order processing • Checks / ensures / completes /: • Core Buyer Approval; • BG Approval; • availability, completeness and consistency of PO documents • contract signatures (internal & external) • and: • - releases PO in SAP; • sends out the PO and contract documents; • stores Softcopies of supplier & IFX signed contract • in SAP and Saperion / ICP and files Hardcopies in • the “Document Archive”

24. Agenda Status quo / outlook

25. PUR R&D: Change of self-concept PUR only played “Bad Guy” within price negotiations and sent out Purchase Order traditional role new role PUR… … offers a structured Supplier Pool (Network; regularly alignment with BG) … knows external resources best (availability, prices, performance, quality, legal …) … manages Suppliers … advices BG in respect of “make or buy decision” … is interface between all BGs and Supplier … is a trusted Partner (intern & extern) … offers SW-tools and services

26. PUR R&D: Value added function within Infineon PUR R&D strives to be a responsive partner for a) BG (internal) demanding external resources, and b) Suppliers (external) rely on dependable statements to reach innovative semiconductor devices, solutions and services to improve Infineon customers' competitiveness