Infineon Cuts Costs

MUNICH -- Infineon Technologies, the world's sixth biggest semiconductor company, is focusing further on its core business and spinning off its European real estate and facility management activities to Dussmann AG & CO KGaA, Berlin. The companies Air Liquide GmbH, Dusseldorf, and Kinetics GmbH, Eschau/Hobbach, will be taking over operation of gas and chemicals supply and distribution at the European production sites. Relevant agreements have already been signed by the companies. By taking this step, Infineon is cutting the number of its suppliers for real estate and facility management from around 180 individual sources to just three prime contractors, which will radically reduce the number of its interfaces and simplify the processes involved for the company. The order value for the entire five-year term of the agreement runs to Euro 145 million. It is also planned for the three prime contractors to take on some of Infineon's workforce.

"By outsourcing real estate and facility management we are systematically pursuing our restructuring program following the successful spin-off of our SAP support activities, various HR functions, and our distribution centers in America and Asia," said

Dr. Knut Merten, Head of Business Reengineering & Benchmark of Infineon Technologies. "Apart from cutting our costs we're also aiming to boost quality and productivity. Greater flexibility will also enable us to adjust faster to changing conditions in the semiconductor industry."

Routine activities and the detailed planning of operation and of routine and preventive maintenance in the relevant sectors will be carried out by the prime contractors, though Infineon will retain overall responsibility, including strategic decision-making powers. Excluded from outsourcing is cleanroom servicing (supplying water, air conditioning, vacuum, electricity, etc.), which Infineon will continue to provide in full on its own account.

According to the agreements, the relevant functions will be transferred to Infineon's outsourcing partners in the first half of calendar year 2004. Real estate and facility management for Infineon's locations in Munich, Regensburg, Dresden, Warstein (Germany), Villach (Austria), Porto (Portugal), and Cegled (Hungary) will transfer to Dussmann AG & Co KGaA. The prime contractors will then be responsible for infrastructure (including cleaning of buildings and outdoor spaces, and security), technical (including maintenance of the buildings and outdoor spaces) and commercial activities (including leasing agreement and space management) and will also take care of catering requirements (works canteens, conference catering, etc.). Operation of the gas and chemicals supply and distribution system in Dresden will be handled by Air Liquide GmbH, and by Kinetics GmbH at the Regensburg, Munich, Villach, Porto, Warstein and Cegled locations.

Infineon Technologies AG