Economics + Technology…and Customers , who Buy

1. 2004 ITRS UpdateORTC “Economics and Technology” OverviewNodes, Chip Size, Transistors, Performance, Capacity, $ TrendsAlan Allan/Intel Corp [ITRS Munich Public Conference, Rev 1, 04/13/05]

2. 2004 ITRS Update Exec. Summary and Overall Roadmap Technology Characteristics (ORTC) - it’s all about: • Economics + Technology…and • Customers, who Buy • End Equipment Products (emulated and mapped to semiconductor chips) which, • Although the customers don’t know or appreciate it, • Need ITRS R&D guidance and Industry Solutions to continue the pace of: • Semiconductor: • Nodes • Chip Sizes • Transistors • Performance • Capacity • $

3. 90’s 21st Century Technology Economics Semiconductor Industry Semiconductor Industry Challenges - Economics is co-equal with Technology! Clear Both Economics + Technology Hurdles = Growth

4. Global & Regional Political & Macro-Economic Environments …and who BUY, based on varying levels of Purchasing Power, PRODUCTS Electronic End Equipment Semiconductors Customer Demand Semiconductor Equipment Materials Ecosystem or Foodchain? Semiconductor To Get , the ITRS Guides R&D For: & Equipment Materials Sources: NASA.gov ; SEMI; Wanted: CUSTOMERS, who breathe, eat, and live in…..

5. Semiconductors is the ‘key enabler’ for wealth creation SERVICES (new drivers) Traditional (drivers) • Internet service providers • Communication services • Broadcasters • Computer • Consumer • Automotive • Communications • Industrial / Medical • Defense / Aerospace $5000B $1000B • Electronic industry $166B • Semiconductor industry SUPPORT INDUSTRIES “Fab” equipment $28B Materials $21B EDA $3B Source: STMicroelectronics (2003 data)

6. ITRS/ORTC Challenge Providing Overall Technology R&D Guidance, While Balancing: • Affordability • Customer Value • Performance • Productivity

7. Products(As Defined by NEMI PEGs*) * Product [Need] Emulator Groups

8. Drivers: Services (~$5T), enabled by: Drivers: Electronic Products (~$1T) 4% 6% 35% 16% 16% 9% 14% $40B* $65B* $379B* $176B* $175B* $92B* [$150B**] Applications (NEMI) Computer & Consumer & Military & Medical Automotive Office Network Defense Portable [Industrial] Communications SIP/SOC (ITRS) SIP/SOC A4 A3 A2 A1 Architectures Serving ALL markets, including commodity- margin applications puts pressure on cost - Including many unknown future costs ! Chips /Fabrics (ITRS) MPU Memory DSP AMS Source: ITRS Design TWG Figure 1: Potential mapping approach between NEMI and ITRS roadmaps *Source: NEMI/Prismark, ca. May’04 ** VLSIR ca Sep’04 ; [Cell Phone in Consumer]

9. Nodes

10. Fig 2 Production Ramp-up Model and Technology Node 100M 200K Development Production 10M 20K 1M 2K Alpha Tool Beta Tool Production Tool Volume (Parts/Month) 100K Volume (Wafers/Month) 200 First Two Companies Reaching Production 10K 20 First Conf. Papers 1K 2 0 12 24 -24 -12 Months Source: 2003 ITRS - Exec. Summary Fig 2 2003 ITRS / 2004 Update

11. 2003 ITRS / 2004 Update Technology Nodes: Back to 3-year cycle Near Term Long Term Year of Production 2002 [Actual] 2003 2004 2006 2007 2009 2010 2012 2013 2015 2016 2018 hp90 hp65 hp45 hp32 hp22 hp130 Technology Node [DRAM] (nm) 2005 ITRS Proposal: Product Technology Trends vs. Nodes 2-Year Technology Cycle [1998-2002actual] 3-Year Technology Cycle Node Rates are forecast by ITRS consensus to slow down - Except by some Leaders – can 1 or 2 companies Afford to carry the industry, and can suppliers Afford to support the Leaders at a 2-year pace!? Source: 2003 ITRS - Exec. Summary Table C

12. 2003 ITRS / 2004 Update [DRAM] Company A Company B Company C [DRAM Half-Pitch] 3-year Node-Cycle 2-year Node-Cycle 3-year Node-Cycle 03 04 ITRS Forecast We are just now in the rate-shift period - What are the options for an individual Leader Company to plan for affordable competitive shift timing – how far ahead!? 2020 Source: STRJ, ITRS PIDS ITWG Survey, ca. 2Q03 ITRS 2003/04: 2003/100(-110nm?) - 2019/16nm

13. Chip Sizes

14. 2003 ITRS / 2004 Update You are Here! ’98 ’00 ‘02 Chips can start out large, but must shrink to affordable High Volume sizes at commodity margins - How do we “design-in” cost control from early Production through ramp shrinks? ? ? Wafer Size 200mm 300mm “450mm” “675mm”

15. Transistors

16. Transistors – VLSI Research May’03 [source: tci030509graphicsSPCL2.xls] Good News - Demand for semiconductor functionality is strong ! [Transistors] [1971-2003 (1e3)^(1/16yrs) = 54% Ave CAGR]

17. Transistors – VLSI Research May’03 [source: tci030509graphicsSPCL2.xls] ITRS -- Long Term “Moore’s Law” @ 2x/3yrs “Moore’s Law” @ 2x/1.5-2yrs “Moore’s Law” @ 2x/1yr ITRS -- Near Term “Moore’s Law” @ 2x/2yrs Integrated Circuit (IC) … TI & Fairchild ca. 1959 Original G. Moore Paper Electronics, 4/19/65: 2X/1YR “Components Per Integrated Circuit” (aka Functions/Chip) “…That means that by 1975 the number Of components per integrated circuit for Minimum cost will be 65,000…” You are Here! Zeta-Xistors (1e21) Exa-Transistors (Et) 1e18 50Pt More Good News - “Moore’s Law” expected To continue… through next decade! (Chip size still an issue) [Transistors] Peta-Transistors (Pt) 1e15 2000 1946 1949 2003 1952 2006 1955 2009 1958 2012 2015 1961 1964 2018 2021 1967 Tera-Transistors (Tt) 1e12 1Tt 1e11 2x/3yrs (1G/’05-32G/’20) 1e10 [1971-2019 (1e3)^(1/16yrs) = 54% Ave CAGR] Giga-Transistors (Gt) 1e09 1Gt DRAM 1e08 2x/2years 1969 (1K) – 2020 (32G) 1e07 MPU Mega-Transistors (Mt) 1e06 1Mt Transistors/Chip 1e05 ‘05 ‘20 1e04 2005 ITRS Timeframe Kilo-Transistors (Kt) 1e03 1Kt 100 Est. from Semico: 1997 Product Transistors (Pt) Discrete 0.0002 Analog 0.130 Other Memory 0.98 Other Logic 1.78 SubTotal: 2.88 SubTotal: 2.88 MCU 0.84 MPR 0.36 DRAM 42.9 Flash 1.71 MPU 0.78 Total: 49.47 10 Semico (SIA): 1997 Product Units (B) Discrete 197.00 Analog 25.90 Other Memory 3.90 Other Logic 14.80 SubTotal: 241.60 SubTotal: 241.60 MCU 4.20 MPR 1.80 DRAM 3.30 Flash 0.57 MPU 0.26 Total: 251.73 One-a-Transistor (t) 1e00 1t …In the beginning… Bell Labs ca. 1947

18. Performance

19. Goal: Increase Equivalent Frequency by 2x/2-2.5 years; while maintaining manageable power dissipation * Actual Scaling Acceleration, Or Equivalent Scaling * InnovationNeeded to deal with growing trend “Gap” * Examples: - More on-chip cache and cores - S/W managed power MPU Clock Frequency Historical Trend: Gate Scaling, Transistor Design contributed ~ 17-19%/year Architectural Design innovation contributed additional ~ 21-13%/year Unchanged2004 ITRS

20. Capacity

21. Fig 3 2003 ITRS / 2004 Update: Technology Node Compared to Actual Wafer Production Capacity Technology Node Distribution 10 W.P.C.= Total Worldwide Wafer Production Capacity(Relative Value *) Source: SICAS** W.P.C W.P.C W.P.C W.P.C W.P.C W.P.C W.P.C * Note: The wafer production capacity data are plotted from the SICAS* 4Q data for each year, except 2Q data for 2003.  The area of each of the production capacity bars corresponds to the relative share of the Total MOS IC production start silicon area for that range of the feature size (y-axis). Data is based upon capacity if fully utilized. hp720nm >0.7mm hp510nm 1 0.7-0.4mm hp360nm Feature Size (Half Pitch) (mm) Feature Size of Technology <0.4mm <0.4mm 0.4-0.3mm <0.3mm <0.3mm <0.2mm 25% <0.2mm hp255nm 25% <0.16mm 0.1 25 %? SIA/SICAS Data: 1-yr delay from ITRS Timing to 25% of MOS IC Capacity 0.3- 0.2mm 25% 25% hp180nm ITRS Technology Node 0.2- 0.16mm hp180 Actual hp130 Actual hp350 Actual hp250 Actual hp90 hp65 hp127nm 3-Yr 3-Yr 2-Yr 0.01 <0.16mm 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 <0.11um F’cast Source: 2003 ITRS - Exec. Summary Fig 3 Year hp90nm ** Source: Semiconductor Industry Capacity Statistics (SICAS) – collected from worldwide semiconductor manufacturers (estimated >90% of Total MOS Capacity) and published by the Semiconductor Industry Association (SIA), as of July, 2003 “Mixed News” Challenge – Leading – edge capacity demand is moving at the technology introduction pace, but “crowded” at the leading edge; And an absorbtion “gap” is developing For trailing-edge markets!

22. $

23. Estimate: CAGR ’02-’08 = 6-7% VLSIR History: CAGR ’90-’00 = 6.8% CAGR ’90-’01 = 5.6% Past   Future 10% CAGR 7% -7.5%CAGR Challenge – Semiconductors must provide additional revenue value in Electronics “Ecosystem” (Systems in Chip/Package), in order to grow, even at the lower rates – affordable facilities/fab equipment/Materials Technology solutions are required to support semiconductor manufacturers and their market solutions. 2003/4a, 2005f

24. $ Challenge – All products must reduce cost per function (flat area processing cost at 2x functions per unit area = -29% cost per function per year). Hopefully this will continue to Drive the demand for Functions that will in turn enable the $1T 2020-2025 target scenarios!

25. 2004 ORTC Update Summary • ITRS Node timing [DRAM Half-Pitch based] is based on the first two leading-edge companies beginning manufacturing ramp • ITRS Nodes [DRAM Half-Pitch based] are forecast to slow from the present 2-year to a 3-year pace after 2004, and slowing design factors are causing density to double only every technology node • Leading-edge DRAM Product first production start Chip Sizes are targeted to remain flat at about 140mm2 for affordability, but will shrink further in size • To keep chip sizes affordable [ie “flat”], the ITRS target “Moore’s Law” DRAM functionality per chip is slowing from 2x/1.5-2yrs to 2x/2.5-3yrs; However, • Individual Products/Markets will trade off functions per chip versus chip size • Performance Equivalent Scaling will require more on-chip cache and logic functionality and Software-managed performance and power usage trade-offs for total solutions • The average “Moore’s Law” should remain 2x/2yrs through 2020

26. Leading-edge volume Capacity Demand, as monitored by SICAS, is on the same 2-year pace as the ITRS nodes, with the 130nm technology range (<150nm to >110nm) reaching >25% of MOS IC capacity in 2003 • There appears to be no slowing in the overall demand for transistors, which has averaged over 50% compound growth since the 70’s – a pace which increases demand 1000 times every 16 years • To keep the cost per transistor and per bit affordable to end-use applications and consumers, the cost to manufacture transistors inside finished semiconductor devices must decrease at an average -29% compound rate • The ITRS / ORTC affordable cost per function reduction target is based on a historical target of -29%, and if this cost reduction can be maintained as demand for total transistors grows at a 53-55% rate, the revenue of the industry could grow at 7.5-10% per year, reaching $1T by 2019-2025 from the 1999 level of $145B • Of course, growing to $1T will require emerging regional and end-application demand and industry profitability will require continuous manufacturing productivity improvements!

27. Backup

28. Macro Overview – GWP, Revenue, Capacity Demand Snapshot As of 10/23/02 World Electronics, Semi, Tools, Si Area, #Fabs, Wafer Units vs. GWP ($B) History <- 2000 -> F'cast ‘00 WAS: 1.E+05 $45T 2.8% $10T 1.E+04 USA GDP AVE ~3-4% 4.2% 6-8%? 7.5% $1.1T 1 Tera-Dollar $ 1.E+03 8.26% $.22T $ 1.E+02 (Mu/1e4) $ $.045T 10% CAGR? 7.5-10%? 1.E+01 2010 2020 $ Bilion Dollars ($B); Silicon Sq.In. (Msi/1e4); #Wafers (w / NPW) 47% 2005 15.5 % 1.E+00 47% 29% 5-8%? 1.E-01 10% # 20Kwspm “Fabs” Flat-1% 15.5 % 1.E-02 1% 0-1%? 1.E-03 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 1976 1958 1960 1962 1964 1966 1968 1970 1972 1974 2006 Source: VLSIR, April, Sept 2001 Tool Sales ($B) Chip Sales ($B) Electronics Sales ($B) GWP ($B) Silicon Sq. Inches (Msi/1e4) Silicon Wafers (Mu/1e4) Total # Fabs (20Kwspm - #/1e04) Good News - Even at slowing paces, demand for semiconductor could reach $1T by 2020-2025 However, ~ flat numbers of fabs requires diameter increases and multi-node reuse strategies!

29. 7th Wave? $1T Ultimate “Ecosystem” Challenge: Growing to $1T will require a few more “Waves” of emerging Applications, Economies, and Customers! (and, yes, ongoing vigilance on facility cost controls, and possibly a couple more “affordable” wafer generations or equivalent productivity improvements!) You Are Here! 6th Wave? Total Semi Revenue 5th Wave? $0.5T 7.5% 10% Portability & Connectivity Wave Total Semi 2004: $0.21T Source SIA/WSTS Multiple Wireless Devices Fuel Cells, Rich Media Internet Wave Total Semi Revenue Internet Boom, Cell Phones Digital Content Digital Wave Personal Computing Analog Wave TV, VCR 1980 2010 1970 2000 2020 1990 Wafer Size 3” / 4 ” 5” / 6 ” 200mm 300mm “450mm” “675mm” Source: Semico Research Corp, May’04 [+ AKA analysis-extension] What Can History Teach Us?