MUNICH -- Infineon Technologies (NYSE:IFX) (FWB:IFX), the world's sixth-largest semiconductor company and one of the leading broadband access IC providers, today announced that it has signed an agreement to acquire ADMtek Inc., a fabless, integrated circuit (IC) design company based in Hsinchu, Taiwan, for around Euro 80 million in cash, which includes an earn out portion of about Euro 20 million if certain performance and development milestones are achieved within two years after completion. Infineon will establish a new company, Infineon-ADMtek Co. Ltd, headquartered in Hsinchu, which will focus on developing broadband customer premise equipment (CPE) ICs and enable Infineon to enter the home gateway market. This is Infineon's first acquisition of a controlling stake in an Asian semiconductor company.

Combining ADMTek's expertise in CPE products with Infineon's strong position and expertise in the central office, along with the complementary customer-base of both companies, will further strengthen Infineon's leading position in the fast-growing, broadband access market segment. The company will be able to offer its customers a complete IC solution package for feature-rich, multimedia home gateways that support high-speed wireline and wireless advanced services. The acquisition will fuel Infineon's activities in the access segment of the Wireline Communications business group by allowing the company to reach a broader market and to generate new business in key segments such as ADSL and Voice over Internet Protocol (VoIP).

As part of the transaction, Infineon has also signed a supply agreement to provide products to Accton Technology Corporation and its affiliate companies for broadband CPE solutions, creating a mutually beneficial, long-term partnership between the companies. Accton Technology Corporation, together with its affiliates, is presently the largest shareholder of ADMtek.

The acquisition also provides Infineon with a strong R&D center, favorable cost structure and close proximity to leading Taiwanese ODM (Original Design Manufacturing) companies that account for more than 70 percent of the broadband modem and router CPE market in the world. Based in Taiwan, Infineon-ADMtek Co. Ltd is near many of the world's fastest growing broadband markets today such as China and Japan. This is in line with Infineon's growth strategy, which includes increasing its already strong presence in Asia.

"The broadband access market tops 100 million users according to recent studies. These users want advanced broadband services and delivering these services requires a single, easy-to-use and inexpensive home gateway," said Thomas Seifert, CEO of Infineon's Wireline Communications business group. "Thanks to this acquisition Infineon can provide its growing customer base fully functioning, end-to-end broadband access technologies including central office and CPE products. We are now well-positioned to be the leading provider of multimedia gateway solutions to the systems companies that serve this market."

ADMtek's CEO Tony Chang said, "We are excited by the opportunity to join forces with Infineon, a global leader in broadband communication. Our team of experienced engineers is already looking forward to cooperating with our new colleagues around the world. Together we will take Infineon-ADMtek to the next level, reinforcing our position as a major force in the broadband CPE market."

The acquisition, which will be structured as a statutory merger under Taiwan law, is expected to be completed in April 2004, and is subject to approval by the shareholders of ADMtek, as well as to various government approvals, including the competent antitrust authorities.

Within the access market, xDSL is arguably the most attractive segment regarding size and growth. Sales of xDSL products are expected to grow at a compound annual growth rate (CAGR) of 12 per cent from 2003 to 2007 and to reach annual sales of approximately US-dollar 1.2 billion by 2007 (Source: iSuppli). Sales of ADSL chipsets are expected to remain the largest subsegment over this period. The CPE sector of xDSL will represent roughly two thirds of the available xDSL market in 2007. The replacement of traditional voice equipment by data equipment in the next upgrade cycle is expected to boost demand for xDSL even beyond 2007.

Considering the number of installed copper lines - about 1.5 billion copper lines are said to be dug into ground worldwide - and internet users there is an enormous long-term potential for DSL.

Infineon Technologies AG

ADMtek Inc.