ICSOC Workshop (Chengdu) Guest Speech

1. Dr. Jeremy Wang Asia Pacific Executive Director, FSA August 16, 2005 ICSOC Workshop (Chengdu) Guest Speech

2. Overview • About the FSA • The superiority of the fabless business model • The global semiconductor environment • Challenging the successful innovation model • Future trends

3. FSA MISSION Accelerate the growth and increase the return on invested capital of the global fabless business model by promoting an environment for innovation. • Provide a platform for meaningful global collaboration between fabless companies and their partners • Identify and articulate opportunities and challenges to enable solutions • Provide members with research, resources, publications and survey information • Promote the fabless business model

4. A Global Community of Leaders Dr. Chintay Shih Special Advisor Bob Bailey PMC-Sierra Woody Yang Silicon7 David French Cirrus Logic Chia Song Hwee Chartered Robert Tsao UMC 500 corporate members worldwide Dwight Decker Conexant Ming Kai Tsai MediaTek Jensen Huang NVIDIA KY Ho ATI Jimmy S.M. Lee ISSI Sanjay Jha Qualcomm Wim Roelandts Xilinx Richard Chang ASE Dr. Nicky Lu Etron Dr. Morris Chang TSMC

5. FSA’s BOARD Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Fabless Seat Foundry Seat Foundry Seat Foundry Seat Back-end Seat Jodi Shelton Executive Director FSA EDA Seat IDM Seat Special Director Special Director Director Emeritus 12 Fabless, 3 Foundry, 1 IDM, 1 EDA, 1 Backend, 1 FSA = 19 total 1 Director Emeritus, 2 Special Directors

6. FSA BOD Members Aart de Geus Synopsys, Inc. Sanjay Jha Qualcomm Dwight Decker Conexant Ron Boyd Freescale Semiconductor Rick Cassidy TSMC North America Jodi Shelton Almost 500 corporate members worldwide Gina Gloski Formerly with FyreStorm, Inc. David French Cirrus Logic Colin Harris PMC-Sierra, Inc. Jeorge Hurtarte TranSwitch Corporation Dr. Jackson Hu UMC Jim Seto ATI Technologies Ron Torten Agilent Technologies Vahid Manian Broadcom Corporation Dennis Segers Matrix Semiconductor Dr. Tien Wu ASE, Inc. Michael Rekuc Chartered

7. FABLESS INFRASTRUCTURE/ECOSYSTEM Photomask EDA/IP Design Services Foundry Partners Wafer Fabs Almost 500 corporate members worldwide Over 1,100 Fabless Semiconductor Cos OEM and ODM Customers Packaging Assembly Testing and subsystems

8. The Global Fabless Model 1,300+ Fabless Companies Worldwide Europe 150 China & Taiwan 500 North America 600 Israel 100 Growth of global membership—nearly 500 global members!

9. Fabless Leaders The Fabless “Billion-Dollar Club” • In 2004, nine fabless companies achieved $1B+ in sales. Source: FSA

10. ASIA-PACIFIC LEADERSHIP COUNCIL Chairman Dr. Nicky Lu Etron K.C. Shih Global Unichip Qin-Sheng Wang Huada Electronic Design Co., Ltd. Dr. Chintay Shih Special Advisor H.P. Lin Faraday Ming Kai Tsai MediaTek Dr. Shaojun Wei Datang Microelectronic Technology, Co. Ltd. Chou-Chye Huang Sunplus Dr. Dr. Zhonghan (John) Deng Vimicro Wen-Chi Chen VIA Gordon Gau Holtek Dr. Woodward Yang Silicon7

11. EUROPEAN LEADERSHIP COUNCIL Anthony Sethill Frontier Silicon David Baillie Cambridge Semiconductor John Hodgson Cambridge Silicon Radio Svenn Tore Larsen Nordic Semiconductor David Milne Wolfson Microelectronics Roland Pudelko Dialog Semiconductor

12. The Superiority of the Fabless Model Fabless vs. Overall Semi Revenue • Fabless companies have a higher gross margin than IDMs (47.3% vs 44.5%) • Fabless companies have significantly higher R&D expenditure than IDMs 23.7% vs.15.2% of sales Fabless CAGR=22% vs. Overall Semiconductor Growth at 7%

13. The Rising Cost of Manufacturing Fab Cost Growth 7x Semi Industry Revenue Growth 5x ($B) % Growth Industry Revenue Source: Goldman Sachs

14. Who Can Afford a 300mm Fab? “A company must have the long-term endurance for maintaining its technology leadership or risk falling behind foundries.” Top 20 Semiconductor Companies by 2004 Revenue A company must have revenue $5B - $7B to support 300mm expansion A company must have revenue $5B - $7B to support 300mm expansion ($M) Source: Goldman Sachs; FSA

15. Recent Hybrid and Partnership Models STMicro Freescale Philips Partnered with TSMC to achieve process alignment for 90-nm Samsung IBM Infineon Partnered with Chartered for 65-nm down to 45-nm technology development AMD Takes 50% investment in UMC Makes 30% investment in UMC Infineon Announced “capital-efficient” manufacturing strategy”; Halted current plans to build a new fab; Goal is 50% outsourcing on advanced CMOS processing Philips To outsource 40-50%+ TI

16. The Proliferation of the Foundry 50+ Foundries Worldwide

17. Cost of Implementing Designs Increasing Source: IBS (2005)

18. Probability of Re-spin Increasing Source: IBS (2005)

19. Design Composition (Typical) HEAD COUNT WITHIN DESIGN TEAMSIS INCREASING RAPIDLY * Estimate

20. Future Trends & Challenges • Standard Setting is the key • PC (Intel), Multimedia, DVD (Media Tek), • Wi-Fi (WAPI), Wimax, 3G (Qualcomm), Digital TV, • Leverage collaboration and integration of supply chain partners into a cohesive unit--designers, EDA and IP vendors & foundries • SiP vs. SOC (Hybrid model) • Heterogeneous Integration for SiP • 3rd party IPs for SOC • Consumer and communication applications • System and software knowledge

21. Thank you!Dr. Jeremy Wang王智立博士Asia Pacific Executive Director e-mail: jwang@fsa.org全球IC設計與委外代工協會FSA(Fabless Semiconductor Association ) www.fsa.org