Infineon Signs Major Foundry Agreement with SMIC in China Securing Access to Further Capacities to S

Munich/Shanghai, December 9, 2002 – Infineon Technologies AG (FSE/NYSE: IFX), Munich, Germany, and Semiconductor Manufacturing International Corporation (SMIC), Shanghai, China, today announced that they have signed an agreement to cooperate on the production of standard memory chips (DRAMs). Under the terms of the agreement, Infineon will transfer its 0.14-µm DRAM trench technology to SMIC, with an option for future transfer of its 0.11-µm technology. In return, SMIC will manufacture these particular products exclusively for Infineon.

SMIC will equip its existing 200mm facility in Shanghai with Infineon’s 0.14-µm production technology. Qualification of products is scheduled for mid-2003. SMIC will start production with 256-Mbit DDR memory chips. Depending on the development of the DRAM market the company will produce higher memory densities in the future. Following the ramp up of the SMIC facility, the cooperation will enable Infineon to increase its overall capacity by around 20,000 wafer starts per month by 2005.

This collaboration will further consolidate Infineon’s position as the third largest semiconductor manufacturer in the DRAM market and establish itself as a leading provider in the growing Chinese market. According to forecasts by market research firm Gartner Dataquest, the semiconductor market in China alone is set to grow from approximately US $16 billion in 2002 to around US $31 billion in 2006.

“In entering this production cooperation with the technologically leading Chinese semiconductor manufacturer we are systematically pursuing our ‘Agenda 5-to-1’ strategy: We are strengthening our regional presence in the promising market of China and aiming overall at a leading market position in Asia/Pacific,” said Dr. Harald Eggers, Memory Products Group CEO at Infineon Technologies AG. “At the same time the partnership with SMIC will enable us to grow our DRAM business without having to invest in production facilities.”

“We are pleased that Infineon selected SMIC to be its foundry partner in China,” said Dr. Richard Chang, President and CEO of SMIC. “SMIC’s dedicated quality foundry service will provide a win-win business and financial solution as the semiconductor industry moves towards greater outsourcing of production.”

The increase in capacity from SMIC will help to bolster output from Infineon’s international cluster of DRAM production sites, which comprise the company-owned production facilities in Dresden, Germany, and Richmond, Virginia (USA), plants in Taiwan operated by Winbond, and the recently announced production joint venture with Nanya, among others. This concept of integrating Infineon’s memory plants into a global network ensures uniform and high levels of quality at all sites worldwide and a constant exchange of know-how and experience.