Challenges and Opportunities Around the Globe: Criteria of Successful Fabless Companies

1. Challenges and Opportunities Around the Globe:Criteria of Successful Fabless Companies Semiconductor Market Overview April 2011

2. GSA Mission Accelerate the growth and increase the return on invested capital of the global semiconductor industry by fostering a more effective ecosystem through collaboration, integration and innovation • GSA is the only organization that brings together the entire semiconductor ecosystem in order to represent industry-wide interests and thoughts • GSA strives to promote the visibility of our members both internally and externally • GSA provides a neutral environment for executives within the semiconductor industry to meet and collaborate on ways to improve efficiencies and resolve industry wide problems • GSA identifies and discusses market trends & opportunities, and how our members can best capitalize on these • GSA encourages and supports entrepreneurship as we recognize that this is what continually pushes our industry forward

3. About GSA: Our History and Future • Phase I: 1994 Established Fabless Semiconductor Association • Saw a need to bring together the fabless manufacturers, foundries, and back-end to achieve a more collaborative working relationship • Began with 40 Charter Members and a 9-person board of directors • Phase II: Acceptance of the Fabless Business Model • The Fabless model began to evolve and become accepted as a viable alternative to traditional IDM’s • Phase III: Growth and Expansion • The organization grew to nearly 300 members and we expanded our presence in Asia-Pacific and Europe • Phase IV: Transitioned to Global Semiconductor Alliance • A conscious decision to include the entire semiconductor ecosystem as the lines of delineation began to blur between fabless, fab-lite, and IDM’s

4. GSA Success Model • The number of companies that seek support from GSA • Represent nearly 500 companies and their partners in 30 countries. • In 2010, 73 companies joined membership. • The executives exposed to and involved in our efforts • Over 100 executives involved in a GSA leadership role. • Multiple Interest Groups & Working Groups • IP, EDA, Test, 3D IC, MEMS, Supply Chain, AMS/RF • Organized to discuss common issues and concerns as well as accelerate the adoption of specific technology and ideas • Collaborate and host global events • Europe, Israel, China, Taiwan, Japan, U.S. and Canada • Provide numerous resources, surveys & reports, unique to GSA membership • Collaborative Innovation in the Global Semiconductor Industry; Wafer Fabrication & Back-End Pricing Report; Memory Conference Report; Global Semiconductor Financial Tracker; Global Semiconductor Funding, IPO & M&A Update; GSA Forum; Leading Indicator Index

5. GSA Board of Directors GSA Board of Directors Japan Regional Leadership Director EMEA Regional Leadership Director N.A. Regional Leadership Director AP Regional Leadership Director Chairman Open Open Open Joep Van Beurden CSR, Plc. Steve Mollenkopf QUALCOMM Loïc Liétar STMicro Shozo Saito Toshiba Corporation Dr.Craig Barratt Atheros Communications Dr. Nicky Lu Etron Technology Dr. Nicky Lu Etron Technology Semiconductor Member Elected SagarPushpala Intersil Danny Biran Altera Neil Kim Broadcom Mark Ireland IBM Roawen Chen Marvell Debora C. Shoquist NVIDIA Ted Tewksbury Integrated Device Technology Colin Harris PMC-Sierra AnaMolnar Hunter Samsung Semiconductor Vincent Tong Xilinx EDA Wafer Foundry Back-End Value-Chain Producer Aart de Geus Synopsys Lip-Bu Tan Cadence Design Kenneth Joyce Amkor Tien Wu ASE Doug Grose GLOBALFOUNDRIES David N.K. Wang SMIC Rick Cassidy TSMC NA Jack Harding eSilicon

6. J.P Morgan/GSA Semiconductor Index of Leading Indicators • March Index fell below 50, implying that some near-term caution has developed • Prospects for the industry & economy have been negatively impacted by the crisis in Japan, the Middle East and political uncertainty in the U.S. and Europe.

7. Revenue – Quarterly • Q4 2010 • Q-o-Q Revenue Growth = -3.7% • First Q-o-Q decrease since Q1 2009 Source: IHS iSuppli Corp. March 2011

8. Revenue – Annual • 2010 Growth: 32.1% • 2011 Forecasted Growth: 7% (Source: IHS iSuppli) • 0 3.5% CAGR 5% CAGR 7% CAGR Source: IHS iSuppli Corp. March 2011

9. Revenue – 2010 End Market Growth Growth Drivers: Mobile PCs and Smartphones, LCD TVs, energy efficient tools, industrial automation, emerging hybrid and electric vehicles, infotainment, and engine controls Source: Databeans, April 2011

10. Revenue – 2011 End Market Growth Fast Growing Component Areas: FPGAs, SoC’s & baseband processors for tablets and phones, RF/Wireless ICs, touch screen interface devices, automotive/power semiconductor devices, HD processing chips (Source: EE Herald) 1% Growth Source: Databeans, April 2011

11. Revenue – Top 10 Source: GSA; *The merged entity of Renesas and NEC.

12. Trends – Wafer Pricing Median Price Per Wafer by Survey and Wafer Size (Production CMOS Wafers) Source: Q1 2011 GSA Wafer Fabrication Pricing Report

13. Trends - Design Costs Source: IBS; GlobalFoundries

14. Trends – R&D Investments • On average, R&D spending for US listed companies decreased from 2009 to 2010 in terms of per cent of sales, but not in terms of total spend • On average, foundries only spend 5% to 10% on R&D, whereas IDM’s and fabless companies spend 20% on R&D. Of course this is off-set by the foundries CAPEX • Of the top 10 companies, Broadcom had the highest R&D to sales ratio at 28% • TSMC was the first pure-play foundry to join the top 10 R&D spenders (7%, $945K) Source: GSA

15. Trends - Capital Expenditures Front End Fab Spending over Time Source: SEMI World Fab Database Reports (February 25, 2011)

16. Trends – The Shift from Digital to Analog • Why the move? • Increased margin • Less software, CAPEX, and R&D intensive • Market growth • Worldwide analog sales climbed to $42 billion in 2010 • Analog chip revenue will rise by about 14% in 2011 • High-growth analog devices: power ICs, sensors, displays, actuators and lighting • Sustainability • Applications that will drive the analog market: energy conservation, power control for transportation, alternative energy sources, and other applications in clean-tech

17. 2010 M&A Activity • For 2010, 109 semiconductor M&A deals were announced which is a 10% increase over 2009

18. 2011 M&A Activity M&As • 28 semiconductor M&A deals were announced in Q1, however the pace is expected to increase as companies try to fill holes in their product lines Source: GSA

19. 2010 Funding Activity • The total number of deals closed, decreased from 139 in 2009 to 121 in 2010 • However the total funding raised was increased, from $1.1B in 2009 to $1.2B in 2010

20. 2011 Funding Activity Q1 2011 Funding • 21 semiconductor companies raised $407.1 million • Number of companies funded decreased by 3 when compared to Q4 2010 and decreased by 23 when compared to Q1 2010 • The dollar amount invested increased by 5% when compared to Q4 2010 and decreased by 10% when compared to Q1 2010. Source: GSA

21. 2010 IPO Activity • 15 semiconductor IPOs priced in 2010 versus 2 pricings in 2009 • Seeing a disproportionate increase in the number of Asia-based companies that went public

22. 2011 IPO Activity Source: GSA

23. Conclusion • We’re in a healthy, sustainable market with a projected CAGR of 4% to 5% through 2015 • Semiconductor content will continue to increase in all major markets • Automotive, communications, industrial/medical, CE • 2010 inventories have been corrected and increased capacity is being brought on line • Semiconductors are responsible for fueling 20% of the worlds GDP • We continue have the smartest, most innovative work force in the world