Transportation Energy Information & Communications Health Automation & Control Services Pictures of the Future: Research and Development at Siemens JASS ´05 St. Petersburg, April 2005 Prof. Dr. Dietmar Theis dietmar.theis@siemens.com CT_2004-01-20_E

Innovations have kept Siemens strong for 158 years Outstanding innovations and sales development by Siemens AG, 1847 – 2005 Sales (in logarithmic scale) ISDN "HICOM" First GSM cellular phone with color display Market launch of Transrapid Start of Production of large-scale integrated (LSI) circuits "Eurosprinter" 64-kbit- memory chip Implantation of first cardiac pacemaker by Siemens High purity silicon Fingertip sensors First 256 megabit chip First Siemens radio receiver Digital electronic switching system (EWSD) - first telephone exchange ICE3 W.v. Siemens discovers dynamo-electric principle Siretom computer tomograph First Simatic Magnetom First electric railway Piezo injection valves First pointer telegraph Surface wave technology First traffic lights 1847 1866 1879 1924 1926 1958 1959 1973 '74 '80 '81 '84 '92 … '03 Year of introduction 1853 first office St. Petersburg

Siemens – Global Network of Innovation (1) Global presence (in more than 190 countries) Broad scope of business (6 business segments, 13 Groups + SFS, SRE) Production sites NAFTA GER EUR ohne D APAC SAM AFR ME 90 87 80 45 12 2 Transportation Medical 13,3 Europe 7,0 4,1 Lighting Middle East North America Asia / Pacific Africa 10,8 Power South America 20,8 Automation and Control 17,1 Information and Communications 430.000 employees wordwide 164.000 (38%) in Germany 110.000 (26%) in Europe (w/o Ger) 95.000 (22%) in North America 52.000 (12%) in Asia-Pacific 9.000 (2%) in other countries External sales in billions of € w/o SFS, SRE) - FY 2003/04 Source: CD S 8 - 11/04

Siemens – Global Network of Innovation (2) R&D expenditure in 2004: 5,1 billions of € … … more than 50% for Software (worldwide about 30 000 Software engineers) Expenditures in billions of € Siemens 1,8 4,6 3,9 2,9 2,6 5,1 2,8 4,0 0,5 Information and Communications Automatin & Control Power Transportation Medical Lighting Others Matsushita IBM Sony HP Business Units Corporate Technology Samsung Hitachi Toshiba 1 US$ = 0,82125 EUR 1 Yen = 0,00755 EUR 1 Won = 0,00070 EUR GE 1) 1) e/o GECS (GE Capital Services) Dell Sourcee: Siemens AG, CD S 8 – 11/04

Worldwide Activities in R&D Bracknell Pretoria Lisbon Zaragoza Toulouse Eynsham Berlin Brussels Budapest Milan Melbourne Sydney Bratislava Roke Manor Paris Helsinki Zurich Porto Bombay Istanbul Seoul Penang Tel Aviv Buenos Aires Sao Paulo Curitiba Shanghai Yokohama Burlington Orlando Auburn Hills Arlington Knoxville Mülheim Dresden Erlangen-Nuremberg Regensburg Salzburg Graz Vienna Karlsruhe Taipei Issaquah Hoffmann Estates Bangalore Beijing Tokyo Lake Mary Austin Newport News Princeton Piscataway Norcross Danvers Linz Changchun Xi‘an Chengdu Nanjing Tianjin Ichon Date: 30.09.2003 Tilbury London Peterborough Drummondville Chatham Johnson City Pittsburgh Madrid Sophia Antipolis Netanya Pandrup Oslo Göteborg New Delhi Kakegawa Kawasaki Munich Hong Kong Goa Santa Clara Berkeley Sacramento Concord San Diego San José Mountain View Athens St. Petersburg Treviso

Corporate Structure (as of October 1, 2004) Managing Board Operations Corporate Departments Information and Communications Automation and Control Power Generation (PG) Power Transmission and Distribution (PTD) Power Communications (COM) Automation and Drives (A&D) Corporate Finance (CF) Siemens Business Services GmbH & Co. OHG (SBS) Industrial Solutions and Services (I&S) Corporate Personnel (CP) * Transportation Systems (TS) Transportation Siemens VDO Automotive AG (SV) * Siemens Logistics and Assembly Systems (L&A) Corporate Technology (CT) Financing and Real Estate Siemens Building Technologies AG (SBT) Corporate Development (CD) Siemens Financial Services GmbH (SFS) * * Lighting Osram GmbH * Corporate Centers: Corporate Communications (CC) Corporate Information and Operations (CIO) Global Procurement and Logistics (GPL) Chief Economist / Corporate Relations (ECR) Management Consulting Personnel (MCP) Siemens Real Estate (SRE) Medical Medical Solutions (Med) Regional Units: Regional Offices, Regional Companies, Representative Offices, Agencies Legally Separate Group *)

Business Model of Corporate Technology Goal:Creation of Economic Value Added for the Company Cross Business Group/Segment Technology Strategies for the Company Projects for the Business Group (Contract R&D) Projects to build up new competences New Business opportunities by external commercialization of technologies and IPRs Pictures of the Future - Markets - Trends - Technology - Business Opportunities Technology Screening & Analysis Spin off´s (STA, TTB*) IP marketing External marketing of technological services Innovations Strategies External Business Core Business International Network of Competences- Worldwide Partner for Innovations * Partnership with A&D, including spin-in‘s CT_2004-01-20_E

Structure of Corporate Technology (Status: October 1, 2004) Corporate Intellectual Property Intellectual Property Services Regional Intellectual Property Intellectual Property Support Company Name & Trademark Law Technology Divisions Materials & Microsystems Production Processes Power & Sensor Systems Software & Engineering Information & Communications Business Administration and Controlling Human Resources Chief Information Officer Chief Knowledge Office Strategic Marketing Corporate Functions Standardization & Regulation Information Research Center Environmental Affairs & Technical Safety Strategic Planning Siemens Corporate Research, Inc. 2) International Relations & Projects Siemens Ltd. China Corporate Technology 2) SISL CT 2) OOO Siemens CT 2) Siemens Technology 2) Accelerator GmbH Technology-to Business Center, LLC 2) Roke Manor Research, Ltd. 1) 1) Functional reporting to Corporate Technology 2) Separate Legal Entity; Part of Separate Legal Entity CT_2004-01-20_E

Corporate Technology: About 1,700 Researchers and Developers Worldwide … Berkeley, CA Roke Manor, Romsey Berlin Erlangen Beijing Tokyo München Perlach Princeton, NJ New Sites planned in 2005: Shanghai St. Petersburg Moscow Bangalore

Corporate Technology: International Network of Competences – Worldwide Partner for Innovations Services 1 - 3 Licensing & Transactions Materials & Microsystems Production Processes Strategy & Communication Corporate Intellectual Property Corporate Issues & Consultancies Technology Divisions Company Name & Trademark Law Information & Communications Power & Sensor Systems Strategic Marketing & Strategic Planning IP Support Software & Enginnering CT China Intellectual Property US Siemens Technology Accelerator Roke Manor Research* Siemens Technology-to-Business Center CT Russia Standardization & Regulation Corporate Functions Environmental Affairs & Techn. Safety Information Research Center Siemens Corporate Research CT India CT Liaison Office Tokyo * functional reporting

Materials & Microsystems Functional Materials for Optoelectronics Ultrafast Ceramics for Computed Tomography Polymerelectronic Functional Polymers Ceramics Innovative Electronics Micromechanics & Coatings Design to Prototype (D2P) Materials & Microsystems Multichip Module for Radar Evaluation Parallel Optical Link Project: Environmentally Compatible Products Packaging & Assembly Analytics Joining Technologies Electronic Assembly Eco-Design of Products Materials Analysis by Ion Bombardment Joining of Plastic Materials CT / E 090-1 a - 10.03

Production Processes Become Front-Runner with holistic Solutions Remote Service Center Become Front-Runner with holistic Solutions Innovation with System Service Strategies and Processes Holistic Processes Service Management Product Definition Field Service Production Processes Manufacturing Engineering Virtual Engineering From Concept to Product Simulation & Risk Management Innovative Manufacturing Technologies and Processes Realized Manufacturing Processes Structure Logistics Technology World Class Manufacturing Process Optimized and reliable Products With virtual Products and Processes to shorter Time to Market Risk Analysis of hybrid Systems CT / E 090-2 a - 05.03

Information & Communications Protection of critical I&C infrastructure: Hacking prevention, incident handling Knowledge Management: Processes, Methods and Tools for distributed Organizations User Interface Design Usability Lab Computer Emergency Response Team (CERT) User Interface Design Knowledge Man- agement & Business Transformation Intelligent Autonomous Systems Information & Communications Networks & Multimedia Communications Intelligent Robots and Software Agents assist everywhere Interaction Technologies Security Neural Computation Cryptographic Algorithms and Security Solutions and Consulting We add SENSE to Interaction Neuro-Fuzzy Techniques for Systems & Industrial Projects CT / E 090-6 a - 05.03

The Time Horizons of the R&D Activities of the Business Groups and of Corporate Technology are Different R&D Expenses Total R&D expenses Business Groups Corporate Technology Today One product generation in the future Two product generations in the future Time to market (The absolute time scale depends on business) A seamless transition from R&D in Corporate Technology to the Business Groups is crucial for our success

CT´s Technology Divisions: „Driver“ and „Provider“ of Innovations and Technologies Strategic principles Focus & Multiple Impact Key Account Management Networking internally & externally Systematic Technol.&Innov. Planning „Strengthen the strength“ Acting as entrepreneurs Decentralization of responsibilitites Performance differentiation Contracted R&D for groups Technology “Provider“ 58 % Know- How External funding 7 % Technology “Driver“ 35 % Corporate funding CT_2004-01-20_E

Technology-to-Business Center and Siemens Technology Accelerator Driving innovative technologies for “emerging markets” Combining technology and business orientation Generating new business through innovations: embedded in existing Siemens structures as start-up foundation Providing support through “seed money” from the business partners Impact on innovation and entrepreuneurship culture CT_2004-01-20_E

Strategic Planning of Innovations & Technologies Strategic Visioning Scenarios for the Business Segments Medical Transportation Power Automation and Control Information and Communications Lighting Factors of Influence Individual Society Politics Economy Environment Technology Customers Competition Core Technologies: Sensors and Actuators "Extrapolation“ via Roadmaps Products Technologies Customer Requirements Short-term Medium-term Long-term Horizon of time (varies significantly in the different business segments) Today Today‘s Business "Retropolation" out of Scenarios New Markets New Customer Requirements New Technologies New Businesses The combination of extropolation and retropolation leads to the CT_2004-01-20_E

: Detailed Description of All Relevant Trends of Our Business Segments Transportation Power Information & Communications Medical Automation & Control Lighting Socio-economic trends society life of work Market trends size / growth structure geographical Customer / business trends value chains / networks company´s structure processes Technological trends strategic importance multiple impact disruptive CT_2004-01-20_E

Future Electrical Engineering and Electronics: Main Trends with Relevance to Technology and Key Technologies „Software“ Software substitutes hardware Increasing complexity Miniaturisation Decentralisation of intelligence Integration Modularisierung Integration Virtualisation Individualisation Standardisation Sustainability Modularisation … Functional materials Robotics IT-security Neuro-/ bio-informatics System architecture Simulation/ optimization technologies Augmented/ virtual reality Image and speech processing Pervasive computing Light weight materials Intelligent sensors & actuators Nanomaterials Intelligent Displays Nanosystems Selforganizing systems Mikro(nano)-electronics Semantic web Grid computing „Biochips“ Knowledge discovery Embedded systems „Systems“ „Materials“ Core competence: interdisciplinary research and knowledge management

Research and development Research and development policy Aspects for the Cooperation With the International public research Awards, scholarship Temporary student employees, interns, students working on theses, doctoral candidates, appointments to chairs and other teaching assignments Bilateral research projects, contract research Publicly funded projects Research and development Recruiting Equipment, training material, partnerships with schools Training/Education Symposia / workshops Experience-sharing Research and development policy “Siemens sponsors” Requirements profiles for engineers and scientists, internationalization, curricula, contributions to the work of associations Structure of the research landscape, overall legal situation Future markets, labor situation, knowledge society CT_2004-01-20_E

Scientific Cooperation with International Public Research Institutions is of Great Importance for Siemens It helps integrating our R&D base in areas in which we do not (yet) have expertise of our own. It gets us in touch with the latest results of basic research and likewise supports the understanding of the research partner for modern applications. It facilitates recruiting top-notch young talent in the areas of engineering and science. It builds up our image by giving us a presence in the “scientific community”. We also support university research and education by supplying experts for about 350 teaching and visiting positions. CT_2004-01-20_E

When the winds of change are blowing, some build shelters and some build windmils . . . CT_2004-01-20_E

Siemens Corporate Technology: Mission, Vision and Strategy Goal: Creation of Economic Value Added for the Company Mission: Securing the technological future and Increasing the competitiveness of the company in close cooperation with the Business Groups and Regional Units Vision Network of Competences & Partner for Innovations Strategy Concentrating on core technologies Internal and external networking and cooperation Increased customer orientation Decentralizing responsibilities and fostering technopreneurship Success-oriented allocation of resources Systematic innovation and technology planning process CT_2004-01-20_E

The Top Ten Companies in Electrical Engineering and Electronics in Fiscal Year 2004 119,0 Total sales (in billions EUR) Sales in electrical engineering and electronics (in billions of euros) 77,8 75,2 73,9 67,4 65,6 67,7 61,6 63,7 55,9 54,5 58,5 49,2 49,0 43,4 43,6 38,8 39,1 38,8 30,9 GE IBM Siemens Hitachi Hewlett- Packard Matsu- shita Sony Samsung Electronics Toshiba Dell CT_2004-01-20_E