1 Site Selection Trends Global Forum: Building Science, Technology, and Innovation Capacity for Sustainable Growth and Poverty Reduction Nanci Palmintere Vice-President Global Tax and Trade Intel Corporation Washington D.C, February 14, 2007

2 Agenda  Intel Corporation  Investment Trends  Investment Criteria  Role of Governments  Economic Impact

3 Nearly 40 Years of Experience From our founding in 1968, we ’ ve grown into the world ’ s leading silicon innovator with over 94,000 employees, approximately 300 facilities in 50 countries, and $35.4 billion in revenues.

4 Ireland Fab 14/24 Israel Fab 8/18 OregonD1C/D1D Fab 20 CaliforniaD2 Colorado Fab 23 ArizonaFab12/22 New Mexico Fab 11/11X Mass. Fab 17 Costa Rica San Jose A/T A/T Dev Malaysia Penang A/T Kulim A/T China Pudong A/T Philippines Cavite A/T Washington Systems Mfg. Board Mfg. Intel’s Worldwide Manufacturing & Assembly Test Operations Chengdu A/T

5 Investment trends  Capital investment has shifted dramatically to emerging economies  Alignment of capability, cost and marketplace –Reliable infrastructure with quality service is now more readily available –Education commitment in emerging economies has created a competitive workforce –The market place changed with the growth in Asia, Eastern Europe, Latin America and META  If you provide the infrastructure and workforce needs, the cost of doing business becomes the competitive advantage

6 World GDP growth ($B) Top Economies: 2005 to United States China Japan Germany United Kingdom India France Russia South Korea Italy Canada Spain Brazil Mexico 0 5,000 10,000 15,000 20,000 25,000 30, China will eclipse Japan and Western Europe India may eclipse France Korea may eclipse Italy Source: EIU Asian economies on the rise Western Europe declining USA maintains primacy

7 Global Manufacturing Trends Asia will keep dominating new MFG/ATM projects Serving the growing local markets, cost,talent, and maturing supply chain are the key drivers

8 Site Selection Criteria  Site & Infrastructure Characteristics – Reliable, quality infrastructure at competitive price – Large parcel infrastructure ready – Proximity to HUB airport & global logistics capability  Operating Conditions – Sufficient technical workforce capacity – Adequate supply chain – Cost structure – Fast & uniform permitting process – Predictable & low risk investment structure – Favorable tax policy relative to capital intensive projects – Minimal ownership or capital restrictions – Open currency exchange  Community Characteristics – Experience & alignment to High-Tech industry – Employee amenities & cost of living

9 Infrastructure Requirements  Competitive infrastructure/rates including utilities supply –Alternative locations are global and regional pricing, although competitive among neighbors, may not be competitive to alternative locations outside the region being considered –Depending on the company, these operating costs can significantly impact operations/financial sustainability –Many locations will consider discounted infrastructure costs for utility supply  Reliable utility supply w/ both Quality and Reliability –Capability and commitment to supply the current base –Foresight and planning for future conditions, such as growth –Support and funding to accomplish plans, both technological improvements and utility system construction requirements –For High tech companies or those with high reliability needs, is “independent” redundant or dual supply available

10 Infrastructure Requirements  Utility and infrastructure political environment –The markets and technology are changing quickly, does this location offer stability enough to plan a long term investment, both financially and operationally  Suppliers availability, talents and Mngt direction to support newest innovation or changes in the supplying system  Environmental/ regulatory infrastructure risks : as this climate changes, will location be at risk of supply or constrained with new laws or actions that increase cost or put risk to operation of supply

11 Education/Workforce Requirements  Skilled technical and business workforce – Engineers of all types (electrical, chemical, material science) – Business and professional (finance, human resources, purchasing, etc.) – Technicians, especially equipment (for front-end manufacturing) – Operators  Accredited universities and technical colleges – Internationally competitive curriculum, faculty – Labs for research and hands-on – In addition to technical skills, strong English language, problem-solving, data analysis  Strong education pipeline – Math, Science, Technology

12 Role of Government  Create government policy to promote economic growth, via the attraction of Foreign Direct Investment (FDI), that is designed to: –Increase job growth –Increase capital flows and investment –Increase research, development and technological transfers –Stimulate economic growth  And ultimately to produce and maintain a sustainable economic base that can support the underlying needs of the community or society  And promote workforce development through partnerships with industry

13 Economic Impact Costa Rica example Intel: Proportion of its investment with respect to the investment of selected categories in Costa Rica. Averages USA21.8% Free Zone 29.6% Industry21.9% Total14.0% Intel is the leading exporter Intel is the leading exporter Intel has contributed Intel has contributed an average of 20% to the an average of 20% to the country exports country exports Intel has been key to boost FDI in CR total invest

14 Conclusions  The door for emerging economies is open –Marketplace shifts –Infrastructure improvements –Educational achievement  Successful locations are ones that offer the best combination of:  Site & Location that meets our operating requirements  Offers a unique technical ecosystem  Offers unique access to a growing market/customer base  Low financial risk  Low business & operational risk  Competitive cost (10 yr NPC model)  Economic impact can be dramatic If operating conditions are not met, even the best financial deal will not be acceptable. Once operating requirements are met in multiple locations, the financial data becomes a key determinative factor, including the tax treatment and incentives.

15  Back-up

16 Location Strategy Emerging Market & Low Cost Cities Science Parks: On or near University campus Technology Parks: Suburban growth corridor along transportation network & infrastructure mains Office Parks: Suburban growth corridor along transportation network, close to new residential areas CBD/High Rise: Downtown business district Logistics Parks: Airport area Flex type space (office & lab capable) -Proximity to labs -Low Risk IP Intel user: CTG Large parcels -Good utility infrastructure -FTZ or EPZ status Intel user: FSM, ATM Multi-tenant type space -Transportation access -Good IT infrastructure Intel user: FES, Product Groups High rise or Class A type space -Customer proximity Intel user: SMG Warehouse type space -Proximity to airport -Customs status Intel user: ISNG Bias toward tech/science parks to manage risk

17 go od po or Infrastructure Risk (2006) Economic Intelligence Unit Mexico Brazil Uruguay Argentina Chile United States Peru Costa Rica Honduras El Salvador Pakistan South Africa Ghana Morocco Egypt Israel UAE Saudi Arabia Singapore Malaysia India Vietnam Thailand Philippines Russia China Japan Taiwan Korea New Zealand Ukraine Hung Latvia Lithuania Spain Ireland Poland CzR Portugal UK Germany Belg Hungary Romania Bulgaria

18  Stable Economic & Political systems –Minimal Ownership/Capital restrictions –Foreign Ownership/Business Registration –Capitalization Req’ts –Open Currency Exchange –Intellectual Property registration/protection –Competitive Cost structure –Labor, Materials, Consumables, tax/duties –Competitive Operating structure –Physical/Site Infrastructure, Supplier Base –Technical Workforce Capacity/Flexibility –Logistics Infrastructure Role of Government