Infineon cuts capex, reduces work force by 5,000 as part of cost reduction plans

September 26, 2001 – Munich, Germany – Infineon is implementing its extensive cost reduction program, including capital expenditure reductions of almost Euro 600 million and reducing its work force by 5,000. Within the next twelve months, Infineon plans to save over Euro 1 billion through the Impact program with the aim of gaining an overall improvement in the company’s earnings position.

After only two months Infineon has begun to realize significant savings in the Purchasing and Logistics areas, which should amount to several hundreds of million Euro. Expenses in information technology have already been reduced by one third. In addition, Infineon reduced its planned capital expenditures for the coming fiscal year (starts October 1, 2001) by almost Euro 600 million, with the goal of cutting the existing budget of Euro 1.5 billion in half. The cuts will not affect Infineon’s strong technology leadership and Infineon will maintain its leading cost position.

As previously announced, Infineon is planning to reduce the worldwide work force by about 5,000 employees. Measures on the personnel side are well under way. By the end of calendar year 2001, the company will have shed approximately 2,400 jobs, of which about 1,900 are outside Germany and 500 inside Germany. Infineon expects only moderate restructuring costs for the further staff reductions. Short-time work schedules will be introduced in the Regensburg and Munich (Perlach) plants as of October.

From a capital increase in July, Infineon received proceeds of Euro 1.5 billion. In addition, the company received Euro 700 million from the sale of its infrared business and its share in the joint venture with Osram.

With the reduction in capital spending in the current year, and the planned reduction of almost Euro 600 million for capital expenditures in the next fiscal year, along with the cost savings from the Impact program, and proceeds from divestments and the capital increase, Infineon is on a solid financial basis to meet the current market situation, the company said. Having taken these steps, Infineon is also able to continue its technological leadership in the areas of communications, automotive and memory products. Infineon’s leadership in 300mm technology will add to the company’s competitive advantage.

“These measures have helped us counteract the existing difficult market conditions and we will emerge strengthened from the worldwide downturn in the semiconductor market,” explained Ulrich Schumacher, president and CEO of Infineon Technologies.

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