As chips become commodities, manufacturers face increased pressure to differentiate through productivity and efficiency. Speedy implementation of aggressive process-shrink road maps and the transition to volume production on 300-mm wafers-providing a cost advantage of 30 percent over 200-mm manufacturing-will play a major role in maintaining cost leadership. Infineon has taken an early lead in the transition to 300 mm, especially in the highly competitive DRAM market.

But cost and productivity leadership also requires flexibility, capacity and shared investment. This is why we have entered into multiple manufacturing alliances related to 300-mm fabs for memory, with companies such as Nanya, Winbond and Mosel Vitelic, and for logic processes on 300 mm with UMCI.

The growing use of chips in everyday consumer products further changes the playing field for semiconductor manufacturers. Companies that wisely deploy capital and establish cooperative partnerships to maintain both R&D and production investments through the downturn will emerge stronger. As the technology enabler for the convergence of communications, consumer electronics, mobility and security applications, our industry is quickly moving toward complete system solutions. Manufacturers that know how to integrate complex system solutions will build strong intellectual-property positions, and win trust across the supply chain from the fab line to the end customer.

Infineon is responding to increased demand for turnkey solutions for such products as mobile terminals, an area where we already can provide more than 80 percent of the system-chip content and have partnered with a leading EMS firm to produce complete ready-to-build systems. Similar trends are apparent in automotive electronics regarding navigation, infotainment and telematics, and in smart-card applications in areas such as contactless ticketing and access control. In the automotive industry in particular, electronic features for enhanced convenience, safety, engine management and integrated communications are the keys to future differentiation.

Throughout the downturn, Infineon invested to reinforce its position as a word-class manufacturer, bolstered by strong alliances and strategic partnerships for technology development and production. The company's focus on key markets in communications, automotive and memory products has yielded gains in market share across each segment. And we have built on our expertise as a leading system-solution provider, which will enable us to react quickly and in close cooperation with customers to succeed in the future.