Infineon Technologies : Explanatory Notes - Sustainability at Infineon Report 2021

Explanatory notes to the information published in the report "Sustainability at Infineon" - supplementing the Annual Report 2021

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These explanatory notes refer to the sustainability information and data published in the report "Sustainability at Infineon" (hereinafter called Report). KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany), has provided independent limited assurance on this information in accordance with the "International Standard on Assurance Engagements 3000 (Revised)". In addition, selected indicators were subject to a reasonable assurance audit. The

assurance reports can be found in the Internet under: www.infineon.com/csr_reporting.

Reporting standards

Infineon Technologies (hereinafter called Infineon) applies the GRI Standards, according to the Core option and as

reporting criteria for the sustainability information published in the Report. This reporting standard is supported by internal guidelines, too.

For the determination of the Infineon carbon footprint, we have developed an own approach which we have

continually further refined. This approach is generally oriented towards International Organization for Standardization (ISO) 14000 and substantiated by Publicly Available Specification (PAS) 2050, a guideline for product carbon

footprints, issued by the British Standards Institution (BSI) as well as by the Greenhouse Gas Protocol (GHG Protocol).

For external reporting we follow the GHG Protocol classification of the scope 1, scope 2 and scope 3 emissions. The Scope 2 Protocol1, issued by the World Resources Institute, has been considered, too.

For the determination of the indicator "CO2 savings enabled through our products" we have used internal criteria.

Reporting boundaries

Our reporting includes all our own production sites, our corporate headquarters Campeon (Germany), R&D sites, sites for service functions, and sales offices.

The information reported in the chapters "Protection of our employees" and "Environmental sustainability and climate protection" include the production sites Austin (USA), Bangkok (Thailand), Cavite (Philippines), Mesa (USA) as well as all production sites and our corporate headquarters Campeon (Germany), which are part of our certified IMPRES2 management system as well as direct and indirect energy-related emissions by manufacturing service providers. It is based on data collected internally and publicly available conversion factors. This scope was selected based on the impact of the activities performed on those sites and comprises around 90 percent of the total Infineon employees worldwide.

External companies operating at some of our sites, in which Infineon has no operational control, and which have no influence on Infineon's production, are not included in the reported key performance indicators.

With the completion of the acquisition of Cypress in April 2020, the company headquartered in San José (USA) became part of Infineon. In principle, the non-financial data of Cypress have been consolidated in this report. Where data from Cypress have not been included in the content of this report, this is explicitly disclosed in the relevant sections. Up to and including the fiscal year 2020, the data from Cypress are not included in key performance indicators disclosed in this report. However, data relevant to Cypress are included in the carbon neutrality goal we set with the 2019 calendar year as the base year.

1 GHG Protocol Scope 2 Guidance (2015).

2 IMPRES: Infineon Integrated Management Program for Environment, Energy, Safety and Health.

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Determination of the key performance indicators

a. Occupational safety

Definition of terms:

The term employees includes the following group of persons: full-time employees (with full and with fixed-term work contracts), part-time employees (with full and with fixed-term work contracts), working students, apprentices and interns, external employees/temporary employees/employees working via a staffing agency, diploma candidates/master students, PhD students, employees in active partial retirement.

Accidents:

The calculations of the Injury Rate (IR) and the Lost Day Rate (LDR) are based on the GRI Disclosure 403-9 definitions.

Only work-related accidents with at least one day work-absence are considered. The day of the accident is not counted. The base for the determination of lost days is calendar days. Way-to-work accidents and near misses are not included.

The working hours are the weekly hours as stipulated in employee contracts. This includes holidays and public holidays. The reporting of lost days concludes at the end of each fiscal year.

Training hours:

The determination of the "training hours" is based on the training and continuing education for our specialized experts worldwide in the areas of occupational safety and health as well as in fire prevention.

b. Energy

Energy consumption per revenue:

As a reference for the calculation of this key performance indicator we have used the GRI Standards definitions. We have taken into account all energy sources: Electricity, district heating, firewood, natural gas, LPG, gasoline/petrol, diesel and heating oil. The revenue figures used for the calculation are taken from respective financial reports of the last years.

Total energy consumption:

As a reference for the calculation of this key performance indicator we have used the GRI Standards definitions. We have taken into account all our energy sources:

• Infineon obtains its energy in the form of electricity, district heating, firewood, natural gas, LPG, gasoline/petrol, diesel and heating oil.
• The individual energy consumption of our production sites is included in our reporting tool quarterly and automatically converted into the energy reference unit by the tool itself. The conversion factors included in our reporting tool in order to calculate the final energy consumption originate from the following sources:
• • UK Carbon Trust
  • National Energy Board, Government of Canada
  • Claverton Energy Research Group
  • FNR (German: Fachagentur Nachwachsende Rohstoffe e.V.) - German central coordinating institution for research, development and demonstration projects in the field of renewable resources.
  • UK Ministry - Department for Environment, Food & Rural Affairs (DEFRA)

Specific electricity consumption:

Based on the normalization factor "square centimeter manufactured wafer", the electricity consumption's benchmark reported by the World Semiconductor Council (WSC) only includes the data of our frontend sites in Austin (USA), Dresden (Germany), Kulim (Malaysia), Regensburg (Germany), Temecula (USA) and Villach (Austria).

Energy consumption outside the organization:

Information is reported in CO2 equivalents. The reporting was based on the definitions of the GRI Disclosure 302-2:

• Upstream emissions are the ones incurred in connection with external manufacturing services and the provision of materials (such as raw materials, supplies as well as other utilities).
• Downstream emissions are the ones directly derived from production processes, internal and external transportation as well as travel.

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c. Perfluorinated Compounds

Perfluorinated Compounds (PFC) are essential for the production of semiconductors in the frontend sites. These are used in wafer-etching processes for structuring wafers as well as for cleaning production equipment. This includes PFC, namely perfluorinated and polyfluorinated carbon compounds, sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3). These greenhouse gases cannot be replaced by another class of substances and account for around 82 percent of the scope 1 emissions.

The reported PFC figures refer to the amounts consumed during the respective fiscal year by Infineon.

The conversion of PFC in CO2 equivalents is based on a worldwide predetermined algorithm which must be used within the semiconductor industry. Its calculation methodology is based on the scientific assessments of the IPCC1 and the calculations for GWP2. The algorithm is provided annually by the responsible associations.

The calculation of the normalized emission rate is carried out as a normalization of PFC emissions in CO2 equivalents divided by the manufactured wafer surface.

d. Other emissions

Under "other emissions" we considered the following emissions:

1. • Sulphur oxide (SOx): SO2 and SO3 expressed as SO2 equivalent
   • Nitrogen oxide (NOx): NO and NO2 expressed as NO2 equivalents
   • Volatile Organic Compounds (VOC): organic compound having an initial boiling point not exceeding 250°C at a standard pressure of 101.3 kPa (Directive 2004/42/EC)
   • Fine particulate matter (PM): Particles with a diameter of 10 or less micrometers (PM10)
   • Carbon monoxide (CO): Carbon monoxide is produced from the partial oxidation of carbon-containing compounds with insufficient oxygen supply.
2. Carbon neutrality and climate strategy

Infineon has set itself the target of becoming carbon-neutral by the end of the 2030 fiscal year with respect to the scope 1 and scope 2 emissions. We want to make an active contribution to global CO2 reduction and to the implementation of the targets set out in the Paris Climate Agreement. Even before the end of the 2025 fiscal year, Infineon aims to have achieved 70 percent of this target (compared with the 20193 calendar year) in respect of its own emissions.

To achieve its targets, Infineon focuses in particular on avoiding direct emissions and increasing energy efficiency. The continuing expansion of its energy efficiency program and its efforts to achieve intelligent exhaust air abatement are playing a key role here and are contributing significantly to a reduction in GHG emissions. To reduce emissions even further, the company is planning to continue the purchase of green electricity. In future and to a lesser extent, it is also planned to offset emissions that cannot be avoided by purchasing CO2 certificates that combine development aid and CO2 avoidance.

1. Infineon carbon footprint

We assessed the net ecological benefit on our carbon footprint considering both: environmental burden and environmental benefits. The data of GHG emissions are reported in metric tons.

CO2 burden:

This includes the direct emissions such as PFC, emissions occurring during the deployment process of raw materials and consumables, manufacturing, chemicals, water/waste water, energy consumption and waste. Furthermore, it considers the transport of the products to other sites and to distribution centers, travel and own vehicles as well as

1 IPCC: Intergovernmental Panel on Climate Change.

2 GWP: Global Warming Potential - GWP is relevant for 100 years long.

3 In line with our carbon-neutrality goal, with the 2019 calendar year as the base year, the relevant data of Cypress are included.

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direct and indirect energy-related emissions by manufacturing service providers. Direct and indirect emissions are based on source data from the 2021 fiscal year.

Not included here is the CO2 emitted during the use-phase of the products and their disposal. Those CO2 emissions are not determined due to the varying applications and fields of use Infineon products are subject to.

Infineon uses for its external reporting the final scope 2 emissions taking into account provider-specific emission factors of the energy sources used. This approach was selected in order to illustrate the implementations achieved so far in terms of regenerative energy supply.

The following official sources were used as data sources for CO2 conversion factors:

• DEFRA Carbon Factors (energy, transport, waste, water)
• International Energy Agency - Carbon conversion factors (electricity)
• ProBas1 Substance Database (raw materials and supplies)
• IPCC (PFC)

CO2 savings:

Up to date, for semiconductor products, there is no established external framework or standard defining rules applicable for accounting and reporting of CO2 savings enabled through products in the use phase. Therefore, we have developed an own methodology to determine the indicator CO2 savings enabled through our products.

The calculation of the environmental benefit is based on the 2020 calendar year because the products sold in that calendar year enable reductions just in the use- phase of the end product (after being sold), and are then relevant for the Infineon carbon footprint 2021.

The methodology for the determination of the CO2 emission reductions enabled is based on the framework conditions described here:

• Consideration of the following Infineon products: Automotive electronics, industrial drives, servers, lighting (LED), photovoltaics, cell phone chargers and wind as well as induction cookers.
• The calculation is based on the potential energy savings our semiconductors enable in the end technologies where they are installed.
• For the calculation, we consistently used worldwide average emission factors of the 2019 calendar year.
• For the calculation, we considered the market share of Infineon as well as the percentage of semiconductors in the end-products and the lifetime of the technologies which was based on internal and external expert estimations.

Life-cycle assessments can be subject to imprecision due to the complex issues involved. We continually strive to refine and improve the Infineon carbon footprint methodology.

1 ProBas: Process-oriented basic data for environmental management tools.

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