MUNICH -- Infineon Technologies AG(FSE/NYSE: IFX) plans to restructure its chip manufacturing within the manufacturing cluster Perlach, Regensburg and Villach. Production from Munich Perlach will largely be transferred to Regensburg and to a lesser extent to Villach. Manufacturing at Munich Perlach will be phased out by early 2007.

Currently there are about 800 employees in Munich Perlach. The restructuring will be done in a manner that is as socially acceptable as possible. Infineon is looking into the possibility of further employment within the company for those affected. Supportive personnel measures for the remaining time of production and the phase-out are being discussed with the relevant works council.

The reason for this decision is the structure of the plant in Munich Perlach. While it was founded about 20 years ago as a research facility, the plant is currently focused on the manufacturing of semi-conductor elements for special technologies. High-frequency products make up the largest share of the manufactured volume. However, the function of these products is increasingly being integrated into the fine-structure CMOS-chips, which cannot be manufactured in Perlach. As such, these products face a phase-out in Perlach, which means that the volume of high-value special technology will continue to decrease in the near future.

Further use of the production capacity is not feasible from an economical and technological point of view. Munich Perlach only uses 150mm silicon wafers for its manufacturing. For many technologies, this no longer corresponds to technical or economic standards. As the manufacturing standard for logic products corresponds to 200mm wafer, the cost disadvantage of the 150mm manufacturing vis-à-vis the 200mm manufacturing is considerable and will continue to increase.

With the transfer of the remaining technologies to Regensburg and Villach, the manufacturing will largely be shifted to 200mm. The transfer and phase-out of the plant in Munich Perlach will take two years.

Infineon Technologies AG