Global Community Affairs Applied Materials: CSR & Community Programs Overview Global Conference on Business Ethics Santa Clara University February 17, 2005 Mike O’Farrell Vice President, Global Community Affairs Applied Materials, Inc.

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 2 Agenda  Company Overview (10 Minutes)  Corporate Social Responsibility/Community Affairs (35 Minutes)  Q&A (30 Minutes)

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 3 We make the machines that - Make computer chips Make flat screen monitors and TVs Test pixels Our customers make the computer chips – Intel, IBM, Samsung, Texas Instruments To sell those chips to companies like – Dell, Sony, Nokia So that all of us can buy computers, cell phones, games and other electronics. Semiconductors, Flat Screens, Fab Service You have probably used something made with Applied Materials’ Equipment

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 4 Semiconductor Revenue $214.3 Billion 18.3% of Electronics Electronics Revenue $1,170 Billion 3.2% of Worldwide GDP Source: Dataquest, Applied Materials Corporate Marketing estimates, WSTS, SEMI The “Food Chain” Capital Spending $41.4 Billion 19.3% of Semiconductor WFE $25.7 Billion

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 5 Applied Materials Overview  Fiscal 2004 revenue was $8.0 Billion – 17% of net sales were in U.S. – Net income was 16.9% of revenue  Cyclical business environment  Approximately 12,000 employees in over 65 locations throughout China; Europe and Israel; India, Malaysia and Singapore; Japan; Korea; Taiwan; and the United States  Only five sites have 3% or more of worldwide employment base  Only 17 sites have at least 100 employees  Business is moving (and will continue to move) to Asia

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 6 Applied Materials Overview  Past Awards & Recognition – America’s Most Admired Companies, Fortune Magazine – 100 Best Corporate Citizens, Business Ethics – 100 Best Managed Companies, Industry Week – Top Ten Performing Stocks of the Decade, Smart Money – 100 Best Companies to Work For, Fortune Magazine – 50 Best Companies for Minorities, Fortune Magazine – Corporate Education Partner of the Year in the Greater Bay Area, San Francisco Business Times – Outstanding Corporation Award, Association of Fundraising Professionals of Austin, Texas; also AFP Silicon Valley – Business in the Arts Award, Business Committee for the Arts & Forbes Magazine – Climate Protection Award, U.S. Environmental Protection Agency

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 7 Applied Materials Overview  Top Corporate Philanthropists in the Greater Bay Area (Ranked by 2003 Cash Giving to Bay Area-based Nonprofits), San Francisco Business Times – Intel Corp. (#2) – Applied Materials, Inc. (#5) – Hewlett-Packard Co. (#8) – IBM Corp. (#12) – Cisco Systems, Inc. (#13) – Microsoft Corp. (#14)

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 8 Community Affairs: Supports Company Value and Corporate Citizenship Company Value “Make a positive social contribution” in our communities Vision Applied Materials is a world-class leader in corporate social responsibility and global citizenship. Department Mission To lead the Company’s efforts in global corporate citizenship, ensuring that Applied Materials continually builds on its fundamental principles of positive social responsibility, active community involvement, innovative philanthropy, and employee engagement.

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B 24 9 Goals: Stakeholder Focus Enable the Company to achieve goals with four key stakeholder groups – Investors, Customers, Communities & Employees Strategies  Four key strategies have helped us to achieve reputation as a leader in the community: 1.Be a leader and convener; use influence; innovate; focus 2.Re: larger investments, use a venture philanthropy model – Be a proactive partner, rather than a passive grant-maker – Be willing to invest “R&D” and “C&F” dollars – Attract broad funding base 3.Use all corporate assets, not just dollars 4.Optimize impact by linking and leveraging investments

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B Philanthropy Targets Targeted Spending for Philanthropy  1% of the Company’s pre-tax income  Applied Materials Foundation formed in 1994 to help manage through cycles  Spending distribution: Education65% Civic25% Arts10%  ≈32% is outside of North America (excl. “global” programs)  Employees contribute significantly (time and money)

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B Current “Representative” Programs That Reflect Our Philosophy & Strategies Education  Education Initiative (Inaugural SF Bay Area Regional Award, 2004)  University Partnership Committee  Shanghai & Taiwan R&D Funds Civic  Tech Awards/TLVN  Housing Trust Fund  Silicon Valley Children’s Hospital  Semicon China 2005 – Technical Symposium & Trade Show re: Environmental/Energy Saving Products and Solutions  North America Food Drive Arts & Culture  Applied (Incl. Mt. Fuji Climb) Other  Tsunami: Leveraged Response w/Tech Awards Laureates  Employee Giving/Global Giving  Employee Volunteerism

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B Next Steps / Opportunities  Expand Non-North America Regional Programs – Refine Focus & Spending Levels – Enable Sustainable High Growth Business Climates (e.g., Trade Show/Technical Symposium re: Environmental & Energy Saving Solutions in China)  Corporate Social Responsibility – Enhance Management Process and Reporting; Use Interim Communications to Bolster Reporting to Stakeholders; Tell Our Strong Story Better  Continue to Better Align Community Programs With Individual Employee Interests (Similar to Employee Giving and Volunteerism Programs), Especially to Address the Smaller Sites

Global Community Affairs R 0 G 0 B 0 R 127 G 127 B 127 R 1 G 104 B 138 R 208 G 91 B 0 R 59 G 47 B 109 R 235 G 169 B 0 R 125 G 12 B 0 R 74 G 133 B Q&A