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Infineon Technologies AG (IFX)

F2Q07 Earnings Call

April 27, 2007 04:00am ET

Executives:

Ulrich Pelzer, Corporate Vice President, Investor Relations

Dr. Wolfgang Ziebart, Chief Executive Officer

Peter Fischl, Chief Financial Officer, Executive Vice President

Ruediger Andreas Guenther, CFO Designate

Peter Bauer, Executive Vice President and Chief Sales and Marketing Officer

Professor Hermann Eul, Deputy Executive Vice President

Analysts:

Janardan Menon – Dresdner Kleinwort Wasserstein

Jonathan Crossfield – Merrill Lynch

Nicolas Gaudois – Deutsche Bank

Sandeep Deshpande – JP Morgan

Andrew Gardiner - Lehman Brothers

Sean Murphy – Nomura

Gunther Hollfelder – Uni Credit

Didier Scemama - ABN AMRO

Brett Simpson – Arete Research

Presentation

Ulrich Pelzer, Corporate Vice President, Investor Relations

Good morning, ladies and gentlemen and welcome on behalf of Infineon Technologies to our Q2 FY2007 conference call. Present on this call as per usual for such occasions is the entire Infineon management board. Our CEO, Dr. Wolfgang Ziebart; our Chief Financial Officer, Mr. Peter Fischl, our CFO Designate Mr. Ruediger Andreas Guenther and Mr. Peter Bauer, responsible for our business unit AIM and Professor Hermann Eul, responsible for the business unit communication solutions. We will kick off with a couple of introductory remarks by Doctor Ziebart and then open up the call to Q&A. Over to you, Doctor Ziebart.

Dr. Wolfgang Ziebart, Chief Executive Officer

Thank you, Ulrich. Good morning, ladies and gentlemen. I would like to welcome all of you to our conference call. I’m going to briefly comment on the results for Infineon excluding Qimonda and we’ll give some details on our segments. I will then turn to the outlook for Infineon excluding Qimonda and after my short remarks, my colleagues and I will be happy to answer your questions.

This quarter, we are happy to report results for Infineon excluding Qimonda that are ahead of our thinking at the beginning of the period. Q2 revenues for Infineon excluding Qimonda were €978 million, up from €958 million in the preceding quarter.

EBIT in Q2 for Infineon excluding Qimonda stood at minus €28 million, but contains net expenses of €29 million. Excluding those expenses, the EBIT for Infineon excluding Qimonda stood at €1 million, so in black zero, up from minus €9 million last quarter.

Hence we are making further progress in our drive towards profitability. Before I go into the operational improvements within our segments, let me give some detail on the net charges of those €29 million. They consist on one hand of total charges of €54 million for restructuring and asset write-down. On the other hand, we had Games totaling €25 million, relating to asset disposals and the revision to accrued personnel costs.

Now let me turn to our segments. In the Automotive Industrial and Multimarket, sales came in higher than originally expected. We recorded 4% revenue growth versus the December quarter with €741 million, the highest quarterly revenue so far. We are pleased with the sequential revenue growth in light of the overall operating environment. EBIT also came in higher than originally anticipated at €66 million. Going into further detail, as expected, Automotive revenues returned to sequential growth. Sales strengths was across the board, with contributions from our power, microcontroller and sensor businesses despite continued weakness in demand from US car manufacturers.

All businesses benefited from normal seasonal strengths in the March quarter. EBIT performance was solid in line with the sales growth, despite annual price reductions at some major customers.

In our Industrial and Multimarket businesses, sales were also up versus last quarter. Productivity measures in our Warstein facility for high power systems allowed revenue growth in power semiconductors, where we were capacity constrained so far. In addition, our fab in Kulim, Malaysia continued to ramp nicely. Demand for power products continues to be strong across the board, perhaps with the exception of some softness in low voltage products from other parts.

Sales in our security and ASIC activities benefited from another good quarter in our chip card unit. Relative to the previous quarter, demand remained reasonable across all end markets. Nonetheless, this development in chip card was not able to offset weakness in our ASIC design and security business, coming from seasonal effects as well as weak demand for hard disk products. In our communications solutions segment, revenues were €238 million and EBIT was a loss of €53 million. Both were broadly unchanged versus last quarter as expected. We saw a strong increase in shipments of MPE platforms to LG and we also began shipping ultra-low-cost two platforms to LG and several other major customers. Those ramps offset the typical seasonal weakness in our wireless business, such that overall revenue remained about flat.

In our access business, we were able to maintain last quarter’s sales levels as expected. We continue to experience solid design win momentum in our wireline business. On the heels of our baseband design win with Nokia, we booked several new design wins for our ultra-low-cost two platform, in part with existing customers during the last quarter. We were pleased to record several design wins for our 3G RF CMOS transceivers, including the new Smart EUE.

Reported EBIT for other operating segments and corporate elimination combined was minus €41 million. These combined EBIT figures contain the charges of €54 million and gains totaling €25 million that I mentioned earlier. Now let me turn to the outlook for the fiscal Q3 2007, so the current quarter. For Infineon excluding Qimonda, we expect higher revenues and improved EBIT before charges for the fiscal Q3 2007, driven mainly by our communications solutions segment. For Automotive, Industrial and Multimarket, we should be able to at least maintain last quarter’s high turnover levels. We expect EBIT to develop in line with sales.

With Automotive sales having been a key sales driver already in the last quarter, we expect automotive revenues to be slightly up compared to last quarter’s levels. In our industrial and multimarket business, we continue to see a market environment similar to last quarter. Demand for power products is still strong, with some soft patches in low voltage products.

We anticipate revenue to be about flat versus last quarter, but have already considered the divestiture of the polymer optical fiber activities to Avaco in this outlook. We anticipate our Security and ASIC business to be negatively influenced by some further push out of demand for hard disk drives.

In Q3 of FY2007 we expect revenues and EBIT in communications solutions to improve strongly versus last quarter. Our business in broadband access remains healthy and should enable our overall broadband activities to remain broadly flat with the fiscal Q2. In our wireless activities, we expect to see continued growth in our business with LG and we also expect a growing contribution from shipments of ultra-low-cost two and MPE platforms. Our EBIT should benefit from the improved top line.

In Corporate and Eliminations and other operating segments we expect sales and EBIT before charges to remain broadly flat with last quarter. We do not foresee any major charges for the fiscal Q3 at this stage. Beyond the current quarter, we reiterate our goal of reaching break even EBIT in our wireless business in the December quarter 2007. We are making good progress towards this goal as we begin to execute on the shipment ramp of our design wins backlog for mobile platform products and as design win momentum remains strong in both our mobile platform and RF transceiver businesses.

For our Automotive and Industrial and Multimarket business, we continue to aim for an EBIT margin of around 10% in the December quarter of this FY2007. We have completed the closure of our Perlach facility here in Munich and we are progressing well with the ramp of our facility in Kulim, Malaysia. We should be able to limit the losses before charges in Corporate and Eliminations to some €15 million per quarter.

Before I open the call for Q&A, I would like to point out that this conference call offers the last opportunity to direct your financial questions to Peter Fischl before Peter’s retirement. From the next call onwards, Ruediger Andreas Guenther, our new CFO, will be available for such questions. I would like to welcome Ruedi Andreas aboard. At the same time, I would like to thank Peter Fischl for his enormous contribution during his time at Infineon.

Ladies our gentlemen, this concludes the introductory remarks and I open up the call for your questions.

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Questions-and-Answer Session

Operator

Operator instructions. We’ll take our first question from Janardan Menon – Dresdner Kleinwort Wasserstein.

Janardan Menon – Dresdner Kleinwort Wasserstein

Just a bit of clarification on the communications guidance into fiscal Q3. Some of your competitors who are shipping to similar customers like you have given guidance of high single digit revenue growth. Would that be the sort of strength that you are alluding to? When you are talking about the ultra-low-cost design wins, you said solid design wins at customers in the quarter. You have already announced ultra-low-cost design wins with LG, Nokia and Ning-bo Bird. Is the new design win at other customers or is it new models at these customers itself?

Hermann Eul

Coming to the revenue growth, I think I would guide it even a little bit stronger than you mentioned it. On the ultra-low-cost design wins, I think we have additional customers which we cannot reveal. But the customers you named are also correct.

Janardan Menon – Dresdner Kleinwort Wasserstein

Would you characterize the new customers as top tier or will they be second or third tier?

Herman Eul

This is in the second league.

Janardan Menon – Dresdner Kleinwort Wasserstein

A short follow up if I can – your R&D costs came down quite significantly in the quarter. What exactly is going on there and will that be sustainable going forward? Why the change?

Dr. Wolfgang Ziebart

There have been some grants baked into the R&D costs, which always influence that to some extent, so we of course proceeded in our efficiency gains in R&D plus also benefited from some grants.

Janardan Menon – Dresdner Kleinwort Wasserstein

So the number will go up sort of back to the previous quarter’s level you think, in coming quarters?

Dr. Wolfgang Ziebart

Yes, I think so.

Operator

We will now move onto our next question from Jonathan Crossfield – Merrill Lynch.

Jonathan Crossfield – Merrill Lynch

Just on the AIM business, could you give us a bit more clarity on how the Kulim ramp is going and when you expect that to be fully ramped and reaching sort of peak margins?

Peter Bauer

Well no change to what we said in the past – we are proceeding as planned. We have about the equal status to the European fabs by now because of the middle of the year and we will have around the 90K layer starts by the end of this fiscal and full as we guided by the end of next fiscal.

Operator

We will now move onto a question from Nicolas Gaudois – Deutsche Bank.

Nicolas Gaudois – Deutsche Bank

A quick one on first of all some of the moving parts in the current quarter for wireless ramp. You said continuation of ramp of ULC2 and you said also the ramp of edge platforms – is the ramp of the edge platforms firstly at several customers? You will see to it this is a continuation of some of the initial shipments in March, or do we have any other successes and wins kicking in?

Hermann Eul

Are you asking for the next quarter guidance?

Nicolas Gaudois – Deutsche Bank

For the June quarter, yes.

Hermann Eul

It is for the models on the existing customers, what the SCO-TE2[?] is concerned and in ultra-low-cost it is additional customers.

Nicolas Gaudois – Deutsche Bank

Fair enough. And Edge – is it primarily one customer? Or more, ramping?

Hermann Eul

I would keep it at one customer.

Nicolas Gaudois – Deutsche Bank

Back in February, you confirmed that you will be shipping RF Edge to Nokia. Is this starting now, or is it more for calendar Q3, a September quarter event?

Hermann Eul

I would assume that is taking up more at the end of the year.

Nicolas Gaudois – Deutsche Bank

More at the end of the year? Last question – do you now have more visibility on when we should expect the ULC2 volumes at Nokia to start for you to generate some revenues?

Hermann Eul

No update compared to last time. When we spoke about that, Nokia stated that they want to build their 2008 models on this platform and there is no additional update on this.

Nicolas Gaudois – Deutsche Bank

Sounds good. Very, very last detail if I can, on AIM, for Peter: I think the developments in chip cards were clear and as expected vis a vis what you said in March, but could you give some color on how that impacted profitability for chip cards in the March quarter and how do you look at this into the June quarter?

Peter Bauer

We had slightly higher revenue in March. It comes mainly from demand in Asia and is on the SIM card side. That means that compared to what I said before, we are kind of circling around the black zero. It’s actually gone a little bit above the water line and we are expecting also the demand to be strong going forward into the next quarter.

Operator

We will now move onto our next question from Sandeep Deshpande – JP Morgan.

Sandeep Deshpande – JP Morgan

Just a quick question on your coms business regarding some of the design wins. You had talked about top gear design wins in the past, which you have not discussed. Can you give any color on these top gear design wins at all? Are we going to start seeing shipments of any top gear design wins any time soon?

Dr. Wolfgang Ziebart

Really, we have to stick to what we have always said. It’s up to our customers to reveal the products and not up to us. So sorry for that, but we cannot make an announcement of that type.

Sandeep Deshpande – JP Morgan

Are you shipping anything to unnamed customers already?

Dr. Wolfgang Ziebart

Yes. We are starting shipping to unnamed customers. I have to beg your pardon, you have to wait until the product is in the market. We do not get any permission to release the information.

Sandeep Deshpande – JP Morgan

Regarding AIM, I have a quick question. There was some adjusted conversation about that. At what point do we start seeing an improvement in AIM margins, because of the factors which have been holding back the margins disappeared and the margins can start reverting to the old norm?

Peter Bauer

We are continuously improving our margin if you look backwards. We had a growth in EBIT margin from last year to this year. Sorry – to last year of 80% and also during the last quarters, we reached now a level of the high eight percents and we are expecting, as Dr. Ziebart said in the introductory statement, going to the double digits in the last quarter of this fiscal year and keeping that level into next fiscal year. That’s from a total fiscal year perspective. That’s what we so far said and we are keeping to that statement. It’s a continuous improvement.

Sandeep Deshpande – JP Morgan

What level is this business capable of generating in terms of margin?

Peter Bauer

We keep you updated, I would say, and at the moment we have targeted double digits for next year.

Operator

Our next question comes from Andrew Gardiner - Lehman Brothers.

Andrew Gardiner - Lehman Brothers

You referenced in your comments a number of the additional design wins in com have come subsequent to your announcement of a Nokia win earlier this year. I was just interested in whether these negotiations were already in process at that time and you have completed them since then, or has interest in your solutions picked up considerably since you have announced that win with Nokia. I suppose particularly with respect to new customers.

Hermann Eul

This is difficult to answer. We are always in talks with customers about their solutions and that solution is of interest to nearly everybody in that market. So we see there is still new interest in this solution and we try to make them finally become a design win. That is all I can comment on this. It’s an ongoing process.

Dr. Wolfgang Ziebart

Let me give some additional comments. We have been the first one on the market versus a single chip phone by introducing what we called the E-GOLD radio last year. The momentum for the E-GOLD radio was I would say reasonable. Then we introduced the next generation, the E-GOLD Voice, which has been ramped during the last month and products are out already. This one got much more momentum than the first generation. Actually, it brings down the component count of the mobile phone to 50, which really gives us a strong advantage. This is the main driving point for the customers. It is less that Nokia also was won as a customer here – I think everybody takes his own decision and makes his own calculation.

Andrew Gardiner - Lehman Brothers

Very quickly, on the corporate and eliminations, it looks as though if you adjust for both the charges and the benefit, that the loss was around €4 million in a quarter, which is flat with what you’d seen in the first fiscal quarter. Is that the rough level to which you’re referring with you outlook statements for flat going forward?

Peter Fischl

No. We would rather like to express that the ongoing cost and the range of roughly €15 million per quarter as we also have stated at the IFX analyst day.

Operator

We will now move onto Sean Murphy – Nomura.

Sean Murphy – Nomura

You referred to push outs in ASIC designs in hard drives. Are we talking there about production push outs or changes in timing of finalizing or agreeing new design programs?

Peter Bauer

No no. That’s exactly – the first one, actually. We haven’t lost any designs. It doesn’t have to do with our project work. It’s really a weakness in the disk drive market at the moment in the hard disk drive market, where basically all the HTD manufacturers have I think publicly announced a weak market situation and inventory correction. That led to the fact that our main customer here pushed out demand and was clearing up inventories.

Sean Murphy – Nomura

Thank you. There was also a reference to potential weakness at the low voltage end of power semiconductors. Are the target markets there the building and construction market? Is it conventional, low power switch gear or other applications?

Peter Bauer

Thank you for the question. We thought about specifying that more clearly. Is the DC/DC market, which is this low voltage MOSFET stuff that goes onto the motherboards for DC/DC power supplies on the processors. It’s very much linked to the computing market and here, if you look at the motherboard index, you see why we said there are some soft patches there.

Operator

We will now move onto Gunther Hollfelder – Uni Credit.

Gunther Hollfelder – Uni Credit

I had a question concerning the wireline business and communication solutions. I think the trend during the past few quarters was pretty flat, so I was wondering how this business was in the last quarter and also whether you will see one point in time where we could see a sequential growth for this business again?

Hermann Eul

In the last quarter, the business again was flat and if you compare it to what is out there in terms of competition, this is really more than strong growth compared to what competition sees in the market currently. Also our guidance for the next quarter is flattish guidance. If you can make this, it is again a significant out-performance of competition.

Gunther Hollfelder – Uni Credit

There were some comments yesterday from BroadCom that things here seem to improve in the DSL market and that inventory corrections were over. I was wondering whether you see similar things right now?

Hermann Eul

As we managed to not go through the dip as the competition does, I think it is a fair statement that our flattish behavior is much better than the market.

Operator

We will now move onto Didier Scemama - ABN AMRO.

Didier Scemama - ABN AMRO

Good morning, gentlemen, and thanks for taking my question. I am a bit confused, I have to say, on the communications side. On the edge platform side, are you saying that you are shipping your edge platform to another customer, or not, in the June quarter?

Hermann Eul

Yes.

Didier Scemama - ABN AMRO

Just to characterize your guidance, you said ‘better than double digits’ – are we looking at mid teens or not on these revenues?

Hermann Eul

The statement from your colleague was ‘higher single digit’ and I said that we are above this. You are going in the right direction.

Didier Scemama - ABN AMRO

Excellent. On the USC2 wins, you said you had wins with existing customers and you characterized those at basically being sort of Chinese guys, I would imagine. How are the discussions going with the tier one OEMs you don’t have? What is not publicly disclosed?

Hermann Eul

Yes, exactly! It is as it is. Yes. I beg your pardon, we cannot review this discussion.

Didier Scemama - ABN AMRO

But it’s going well. On Qimonda, we are lucky enough to have Qimonda up to 1568. Are you getting closer to a sort of conclusion of your thoughts on the stake at this point?

Dr. Wolfgang Ziebart

No. There is no change towards what we have said so far regarding divestiture at the current evaluation of the DRAM market. We are not that tempted to sell shares and there is no need from our side as our balance sheet is solid. There is no need to make fire sales.

Operator

We will now move onto a follow up question from Janardan Menon – Dresdner Kleinwort Wasserstein.

Janardan Menon – Dresdner Kleinwort Wasserstein

Thanks. Just going back to the wireless guidance again, there was or there seems to have been an inventory correction in Q1 especially after your largest RF transceiver customer in Q1. There seems to have been a bit of a rebound into Q2 across all suppliers to that customer as well. If you look at your Q2 guidance, can you sort of give us some flavor as to whether there is strength coming more from your RF business or is it a ramp on the platform business. Which will you characterize as being stronger in Q2?

Hermann Eul

Yes. We said the seasonal down swing was overcompensated by our ramp up of the new platforms. Also the seasonality is expected for the next quarter and also we expect for the next quarter to be able to overcompensate it by new ramps.

Janardan Menon – Dresdner Kleinwort Wasserstein

So the seasonality will be weak in Q2 and in calendar Q2 are you saying? And the new ramps will compensate for that?

Hermann Eul

I would say that the seasonality stays as it is and what you will see in terms of revenue grows. This comes from the ramp up.

Janardan Menon – Dresdner Kleinwort Wasserstein

Just on the smart card business, where you said that you saw some strength in Q1 or fiscal Q2, is that sustainable into the rest of the year?

Peter Bauer

Well into the rest of the fiscal year, it’s our current assumption, yes. The mobile com market is always very volatile in this market segment. That has been driving the growth. I cannot really 100% give you a reliable statement here, but we see no changes in demand patterns from our customers so we expect the same level going on into Q4.

Janardan Menon – Dresdner Kleinwort Wasserstein

Would margins there be sort of in the low single digits at this point in time?

Peter Bauer

Of the overall unit? Yes.

Janardan Menon – Dresdner Kleinwort Wasserstein

Last question. You made a comment that wireless access is healthy, but overall is flat or something to that extent. Does that imply that your DSLAM business is weak in the quarter?

Dr. Wolfgang Ziebart

I did not catch your question?

Janardan Menon – Dresdner Kleinwort Wasserstein

Sorry – wireline access, I think your comment was that it was healthy. In the initial remarks. Does that imply – or did I misread that comment altogether?

Dr. Wolfgang Ziebart

This is correctly read and our guidance is also a flattish one.

Janardan Menon – Dresdner Kleinwort Wasserstein

But is that a function of the DSLAMs besides being weak and the access side being stronger?

Dr. Wolfgang Ziebart

Actually we will not dig into this in so much detail. What you should know is that we are introducing to the market strong CPE solutions and the CPE market is currently a very healthy market.

Operator

We will now move onto another follow up question from Nicolas Gaudois – Deutsche Bank.

Nicolas Gaudois – Deutsche Bank

I have two quick ones. First of all, for the restructuring of Altis, could you just remind us of the level of cost benefits you derive from that?

Dr. Wolfgang Ziebart

Sorry, the restructuring of what?

Nicolas Gaudois – Deutsche Bank

The restructuring of a cost base at Altis.

Dr. Wolfgang Ziebart

On Altis, we are going to reduce the workforce by 400 people, as has been announced at this intention. We haven’t come to a final agreement with the workers’ council yet. However, we are on our way into that direction and that is the money we have baked into that so far. We are not at the 400 level yet, but we are well on the way.

Nicolas Gaudois – Deutsche Bank

Great. And when you get to the 400 people reduction, could you help us quantify a bit the impact in terms of costs that you should take out from your cost base?

Dr. Wolfgang Ziebart

I would really be reluctant to comment further, as these are ongoing negotiations.

Hermann Eul

I think what is fair to say, Nicolas, is that it is included in our guidance.

Nicolas Gaudois – Deutsche Bank

Fair enough. Thanks. Just a quick one on your comments in the press release and the conference call about 3G RF design wins, effectively standalone interlinked for a new product. Are these with existing standalone RF customers, new platform customers, or new customers as well? Thank you.

Hermann Eul

It is with existing customers

Nicolas Gaudois – Deutsche Bank

Can you qualify who?

Hermann Eul

Not really, but you know that more or less we have the entire market as being customers of our 3G RF.

Nicolas Gaudois – Deutsche Bank

Okay. And you would qualify them as tier one, basically?

Hermann Eul

Yes.

Operator

We will now come to a follow up question from Didier Scemama – ABN AMRO.

Didier Scemama – ABN AMRO

I just wanted to ask a follow up on the wireless side again. Can you confirm you are still on track to ship your single chip EDGE and your HSDPA platform by year end?

Hermann Eul

Yes we are. The single chip edge is on track. We have it at our customers for evaluation currently and also software is being developed currently for that solution. This is on track. The HSDPA is also currently on track, so customers are working on it and then also we collaborate with the customer. We are making good steps ahead. We still plan to ramp it by the end of the year.

Didier Scemama – ABN AMRO

For each product, do you still have only one customer?

Hermann Eul

This strikes me now into something which we did not reveal so far – there is more than one.

Didier Scemama – ABN AMRO

More than one for each?

Hermann Eul

Yes.

Didier Scemama – ABN AMRO

Brilliant. Thank you.

Operator

Sandeep Deshpande – JP Morgan, has another follow up question.

Sandeep Deshpande – JP Morgan

Just to clarify, there was a lot of discussion on this. Looking into fiscal Q3, would it be correct to clarify then that on the back of the end of the inventory correction in RF transceivers plus your new platform wins that you will grow in more than double digits sequentially?

Hermann Eul

More than double digits? No! It won’t be triple digits!

Sandeep Deshpande – JP Morgan

Sorry, let me clarify. I meant in double digits sequentially.

Hermann Eul

Yes, I can confirm the double digit and of course more than double digits is a good one… The statement before was a fair one. The other one is there – the inventory correction, actually I would not call our RF business as being inventory corrected. Rather, I would characterize it as the natural seasonality we see which happens every year.

Sandeep Deshpande – JP Morgan

In terms of margin, in the com business, how would you characterize how we look at the margin going into Q3 into the com business? Will there be more operational leverage associated with the additional revenues?

Hermann Eul

Yes. I would do the EBIT guidance related to the revenue development.

Sandeep Deshpande – JP Morgan

Would it mean that a larger percentage of the revenue will flow down through to the EBIT?

Hermann Eul

I did not get your question…

Sandeep Deshpande – JP Morgan

Would a larger percentage of the revenue flow down to the EBIT?

Hermann Eul

You have your mathematics on our cost margin and I think this is a fair good guidance for the EBIT development. I would not guide you significantly away from what you can calculate out of the revenue.

Sandeep Deshpande – JP Morgan

Regarding the HSDPA solution, which is going to ship in the latter half of this year, has it been fully tested and qualified now?

Hermann Eul

We are in the process of having it qualified at the operators and this is moving well currently.

Operator

We will now move on to a follow up question from Gunther Hollfelder – Uni Credit.

Gunther Hollfelder – Uni Credit

I just had one thing to clarify with the RF transceiver business. I think you said that in the current quarter, the RF transceiver business, the seasonality remains pretty much the same. Then going into the next quarter, in Q4, then we should see another positive impact for the ramp up and then also a stronger seasonality for RF transceivers. Is this correct?

Hermann Eul

Actually, this is not what I wanted to say. At least what I wanted to say is that I do not reveal so much details on the RF for this quarter, but I wanted to confirm for you that the majority of what you see in growth for this running quarter comes from the platform ramps. I did not give any guidance for Q4.

Operator

We will now move onto Brett Simpson – Arete Research.

Brett Simpson – Arete Research

Just a question on the wireless opex, the investment levels in the business. Given all the large deals you’re hoping to ship over the next six to 12 months, are you happy with the level of opex and R&D you are spending in that business? Do you think you have enough customer support resources in place and you know, should we be looking as the revenue ramps up in this area, should we be looking at opex to trend relatively flat, or will it start to see some rise as well?

Hermann Eul

I would guide your opex calculation in the boundaries you already know, so this is not going out of these boundaries. Of course, resources are always tight, but we have enough resources to support our customers and currently they are happy with our level of support.

Operator

Our next question comes from Didier Scemama – ABN AMRO.

Didier Scemama – ABN AMRO

Nokia are concerned in their conference call that they are going to start shipping low-end handsets using a customized, low-cost solution in Q2. Would you say that despite that, your RF business with Nokia is still up sequentially in June?

Hermann Eul

If they ramp this platform which you are mentioning, this will certainly have an impact on our RF, but this is figured in in our guidance.

Didier Scemama – ABN AMRO

Is that sort of more than compensated by revenue growth at Samsung and other EDGE RF customers?

Hermann Eul

The overall guidance I gave was for the wireless business and in the wireless it is more than compensated by their platform ramps, yes.

Didier Scemama – ABN AMRO

Can you give us an idea of the quantum expansion in EDGE platform in June versus March? I mean, was it still small in your revenues in March?

Hermann Eul

March had good running EDGE sales.

Operator

There seems to be no further questions at this time. I would like to hand the call over to Mr. Fischl for any additional or closing remarks.

Peter Fischl

This is Peter Fischl. Since this is my last conference call, I would just like to tell you that I always enjoyed working with you and that I would like to thank you for your professional analysis and cooperation. I wish you well and hope that the cooperation with Ruediger Guenther will be as good as I enjoyed it. All the best to you and good luck to my successor. Thank you.

Ulrich Pelzer, Corporate Vice President, Investor Relations

Thank you, everyone for dialing into the conference call. Thanks for all of your questions. If any questions have remained open, please feel free to be in touch with the investor relations team here in Munch. I hope to speak to all of you again next quarter. Thank you. Bye bye.

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Source: Infineon Technologies F2Q07 (Qtr End 03/31/07) Earnings Call Transcript
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