Infineon Technologies AG’s (Infineon) common stock has appreciated significantly since our 1Q 09 update report, including a stock price appreciation of 11.3% in a single trading session on 17 April 2009, reflecting the impact of news that the company was seeking financial aid from the German government’s fund, set up to help companies in the current downturn, as well as the company’s announcement of the extension of its alliance with IBM Corp., Global Foundries Inc., Samsung Electronics Co., Ltd., STMicroelectronics N.V. and Chartered Semiconductor Manufacturing Ltd. to jointly develop 28-nanometer, high-k metal gate, low-power bulk CMOS process technology. The stock price also surged 8.6% in a single trading session on 22 April 2009, after the company announced a collaboration with Nokia Corporation (Nokia). Nevertheless, we maintain our SELL rating for the stock, primarily based on a lack of visibility regarding a potential investor for Qimonda and on possible aid from the German government, in the absence of which the company’s debt obligations remain a significant concern. We will reassess the Infineon common stock rating and target price after the company announces its 2Q 09 results. We maintain our SELL rating for the ADR based on our fundamental outlook and negative currency impact. Today the company has delisted its ADR from the NYSE. The ADR is being maintained as a ‘Level I’ program, and has been listed on the over-the-counter market OTCQX, with the ticker IFNNY.PK. We will reassess the ADR rating and target price for Infineon after the company announces its 2Q 09 results.

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