Speakers Indrek Grabbi Semiconductors Brad Hess Market Development Cooperator Program Office of Planning, Coordination, and Management Information Technologies Team Office of Health and Information Technology Dorothea Blouin Semiconductor Mfg. Equipment For US Government Use Only1

Market Development Cooperator Program Partnering to generate exports For US Government Use Only2

Market Development Cooperator Program (MDCP) Cooperator Targeted foreign markets $300,000 Trade associations Each year the International Trade Administration (ITA) selects 7-9 trade associations and other non-profits industry groups for awards of up to $300,000 each. MDCP award recipients, “cooperators”, design projects to help small firms (SMEs) to export to targeted foreign markets. Project activities vary depending on the industry a cooperator is helping and the markets targeted. Examples include: -Participating in foreign trade shows -Opening a product demo center -Coordinating industry standards SMEs SMEs export Cooperator For US Government Use Only3

MDCP first authorized in 1988, funded in 1993 Enabling legislation: Omnibus Trade and Competitiveness Act of 1988: MDCP is to be a unique way to "develop, maintain and expand foreign markets for nonagricultural U.S. goods and services." 15 U.S.C. Sec Funding: Jobs Through Exports Act of 1992 and Freedom Support Act of 1992: First MDCP awards, totaling over $2 million, were made in fiscal 1993 For US Government Use Only4

MDCP is a very cost effective way to help U.S. industry to export. For every $1 in MDCP award made, MDCP projects generate $327 in exports. MDCP is a tool ITA can use to engage U.S. SMEs by partnering with the industry groups that represent them. ITA staff at headquarters and in the foreign and domestic fields can all leverage MDCP by: - Recruiting industry groups to compete for awards - Debriefing unsuccessful MDCP applicants - Participating on MDCP project teams Message to U.S. industry groups: Want to grow? Export For US Government Use Only5

Cooperator MDCP Public-private partnership ITA. Trade associationsChambers of commerceState trade departmentsOther non-profits MDCP encourages industry groups to partner with ITA Targeted foreign markets Export multipliers: industry groups that do not export, but whose companies or business constituents do export Cooperator projects strengthen the global competitiveness of a U.S. industry, not just a particular company Each MDCP project team includes ITA and other federal specialists who work shoulder- to-shoulder with a cooperator SMEs export For US Government Use Only6

Market Development Cooperator Program (MDCP) Cooperator Other federal agencies I&A Industry & Analysis GM Global Markets Project activities help small U.S. firms export Targeted foreign markets Non-profit industry groups compete for MDCP awards from ITA:  Up to $300,000  Partner w/federal agenciesen  Applications due: Februaryen “Cooperators” commit to:  Projects to engage small. firms in exporting  Term: 1-3 years  Two-thirds of total cost Joint team coordination $1 ITA. Trade associationsChambers of commerceState trade departments.Other non-profits Report export results Project-generated exports per $1 of MDCP award Product demo center Trade mission Technical seminar Foreign trade show Industry standards Foreign rep office $327 Report export results Evaluation Criteria 20% Potential to generate exports that..... create or sustain U.S. jobs 20% Export performance measurement 20% ITA partnership & priorities 20% Creativity & institutional capacity 20% Budget, match, sustainability For US Government Use Only7

MDCP application evaluation, debriefing, awards GM Global Markets I&A Industry & Analysis -Foreign posts -U.S. Export Assistance Ctrs -Area experts -Industry specialists -OPCM/MDCP MDCP Merit Review Panel I&A Assistant Secretary Top ranked Unsuccessful applicants Award announcement: -Members of Congress -DOC press release -Orientation -Industry events -Industry specialists -OPCM/MDCP Comments 20% Potential to generate exports that..... create or sustain U.S. jobs 20% Export performance measurement 20% ITA partnership & priorities 20% Creativity & institutional capacity 20% Budget, match, sustainability Applications due: February July-August Evaluation Debrief September GM Global Markets -Foreign posts -U.S. Export Assistance Ctrs -Area experts I&A Industry & Analysis For US Government Use Only8

MDCP federal teams help cooperators achieve export success TV Standards for Latin America Apparel to Japan Graphics Equipment to India An FCC expert works with ATSC Forum regarding Latin America’s adoption of a high-definition TV standard. Within days of Mexico’s adoption of the ATSC standard used in the United States, U.S. manufacturers were selling new transmitters and other HD- TV equipment. ITA industry and Commercial Service specialists helped NPES set up an office in India, which helps member companies, such as Martin Automatic, Inc., facilitate sales. ITA’s North Carolina-based Export Assistance Center, and Washington, DC-based industry experts help the Hosiery Technology Center translate use of a quality seal into sales to choosy foreign consumers. For US Government Use Only9

MDCP federal (ITA) project teams Cooperator Other federal agencies Project activities help small U.S. firms export Targeted foreign markets Joint team coordination $1 Report export results Project-generated exports per $1 of MDCP award Product demo center Trade mission Technical seminar Foreign trade show Industry standards Foreign rep office $327 Report export results Teams formed: August-September MDCP project duration varies: 1-4 years CS harvests export successes from quarterly reports Regular meetings and informal coordination Pre-event participant list to USEACs Each MDCP project team includes staff designated by I&A and GM Initial meetings w/new cooperators at September orientation Currently 168 ITA staff serve on 22 MDCP project teams I&A Industry & Analysis GM Global Markets For US Government Use Only10

Over the years cooperators have targeted 70 different markets (only the top 40 appear in the tag cloud above) China has overtaken Mexico as the market most often targeted by cooperators Gaining in popularity: Brazil, UAE, Indonesia Markets targeted by cooperators For US Government Use Only11

Cooperators : 128 awards to 101 industry groups For US Government Use Only12

Commitment and sustainability A cooperator must commit to provide at least two thirds of the resources required to undertake the project At 67% of project cost, MDCP’s cost share requires commitment Sustainability is evident in the foreign presence (foothold) that we have helped industry groups to establish abroad * _______________________________________________ * Does not include three established in 2013 For US Government Use Only13

Generating exports takes time and commitment For US Government Use Only14

MDCP Printing & graphics equipment to China Chinese Dealers Learn About U.S. Products ITA helped NPES establish a training center in China. U.S. firms that are members of NPES use the Shanghai facility to train sales reps and technicians in China. Troy Greenwald, of Connecticut-based inc.jet Inc., shows potential dealers how his firm's ink jet engines work. The demonstration is one of many that take place each year at the demonstration center of MDCP partner NPES. For US Government Use Only15

MDCP RVs in China, Japan, Korea Temp Solution for Perms The Recreation Vehicle Industry Association (RVIA) received $300,000 in MDCP. One year into the project, RVIA has now hired a full-time representative who lives and works in East Asia. To date the project has generated $7 million in exports. Sales measured in hundreds of millions of dollars per year are on the horizon, especially in China, but not until China addresses standards and regulatory issues. Through the MDCP project, ITA is helping RVIA remove barriers. RVIA helped a member company sell this temporary beauty shop that replaces one destroyed in the recent tsunami. For US Government Use Only16

MDCP specialty auto equipment to Gulf States & China Measuring session & trade shows ITA is helping the Specialty Equipment Market Association (SEMA) boost export to the Gulf States and to China. Rules on what is “street-legal” and who is authorized to customize a vehicle, e.g. vehicle manufacturer or local auto shop, are issues SEMA is addressing with ITA’s help. U.S. specialty auto equipment makers measure a Toyota Hi-Lux 4x4 truck. ITA helped SEMA get special permission to import the truck temporarily in the United States. The vehicle is not authorized for U.S. sale but is the highest selling vehicle worldwide that is likely to be customized. For US Government Use Only17

Brad Hess Director, Market Development Cooperator Program Industry & Analysis 1401 Constitution Ave., NW, rm 4320 Washington, DC T M Market Development Cooperator Program (MDCP) For US Government Use Only18

Industry and Analysis’ Spotlight on Semiconductors & Semiconductor Manufacturing Equipment April 23, 2014 Prepared by Office of Health & Information Technologies For US Government Use Only19

Semiconductors Semiconductors:  Semiconductor and Related Device Manufacturing -- Fabs, Foundries - (NAICS )  Semiconductor Design or Fabless (NAICS , SERVICES, WHOLESALE). For US Government Use Only20

Semiconductor Manufacturing Design (Fabless, IDM) Semiconductor Fabrication (Foundry, IDM) Test Packaging/Final Assembly IDM: Integrated Device Manufacturer For US Government Use Only21

Semiconductor End Use Applications n For US Government Use Only22

U.S. Semiconductor Industry U.S. Company Leadership: U.S. companies recorded sales of $155 B in 2013 and had a 51 percent share of the $306 billion global market Jobs: Employs 245,000 jobs directly and supports more than one million additional U.S. jobs Strong and growing domestic manufacturing base: majority of production from U.S. companies is located in the U.S. One of the nation’s top exports: along with autos, airplanes, and petroleum Intellectual Property: World class; in 2012 U.S. companies invested $32 billion in R&D, totaling 22 percent of total sales; cutting edge university research Small and Medium Sized Companies: Especially in semiconductor design (fabless companies) *Source: Isuppli 2013 Projection; **Semiconductor Industry Association, BLS – 2012; For US Government Use Only23

Semiconductor Industry Impact on the U.S. Economy (2013) Total Domestic Exports: $ billion Total Manufacturer Employment*: 244,800 Balance of Trade Deficit**: $ billion% of U.S. Production Exported***: 53% * Semiconductor Industry Association ** Negative due to overseas packaging in Costa Rica, Malaysia, Taiwan, China (top 4 importers) *** 2011, based on total exports For US Government Use Only24

U.S. Industry Leadership For US Government Use Only25

2014F IC Market by Application ($ B) Smartphones and Tablets Drive Convergence PC/Computer usage shifting; -- consumers purchasing tablets in record numbers Source – IC Insights 2013 Flat Panel TVs dominate in this end market For US Government Use Only26

World Semiconductor Market is Growing F: Forecast Source: WSTS, SIA For US Government Use Only27

U.S. Semiconductor Exports Domestic Exports: Excludes re-exports for semiconductor testing in the U.S. For US Government Use Only28

Top U.S. Semiconductor Export Markets 2013 Domestic Exports For US Government Use Only29

2013 Semiconductor End Markets * China, Korea 2012 data ** Taiwan : Integrated Circuits (IC) only, 2012 data Source: WSTS Autumn Forecast 2013, Price Waterhouse Coopers (China), Invest Korea (Korea), TSIA (Taiwan) For US Government Use Only30

FDI in the Semiconductor Industry $36.1 Billion in 2012 Global Foundry, Abu Dhabi $9 billion fab, outside of Albany, NY Samsung, South Korea $13 billion fab, Austin Texas FDI: BEA Image: Forbes For US Government Use Only31

Opportunities Successful expansion of the WTO Information Technology Agreement to cover new technologies Growing demand in China, India, and Latin America for smart phones, tablets, set top boxes, flat screen TVs, and other consumer electronic products; an increase in automobile electronics; and investment in broadband and mobile networks is driving demand for semiconductors. Growing demand for cloud services is increasing demand for servers For US Government Use Only32

Semiconductor Manufacturing Equipment  Semiconductor Manufacturing Machinery (NAICS *)  Semiconductor Test Instrumentation (Part of NAICS **)  Flat Panel Display Manufacturing Equipment (Part of NAICS ) * Formerly NAICS ** NAICS : Instruments and Apparatus for Measuring and Testing *** NAICS : Other Industrial Manufacturing Machinery For US Government Use Only33

Mm Semiconductor Manufacturing Equipment Categories: Semiconductor Wafer Fabrication Equipment Lithography Metallization Chemical Deposition Etc. Test and Inspection Equipment Packaging/Final Assembly Equipment Mask/Reticle Manufacturing Equipment Silicon Boule/Bare Wafer Manufacturing Equipment For US Government Use Only34

World Semiconductor Manufacturing Equipment Market Growing F: Forecast Source: SEMI For US Government Use Only35

2014 Semiconductor Equipment End Markets Source: SEMI December 2013 Projection. U.S. is North America For US Government Use Only36

Semiconductor Manufacturing Equipment Impact on the U.S. Economy (2013) Total Domestic Exports: $ 9.89 billion Total Manufacturer Employment*: 16,568 Balance of Trade Surplus: $3.5 billion% of U.S. Production Exported**: 74% * 2011 **Production: U.S. Company Production, Source: SEMI For US Government Use Only37

US Companies: 42% Share of World Semiconductor Equipment Sales *Estimate. Source: SEMI, SEAJ (Japan), Electronic Leader’s Group (EU); 2013 data For US Government Use Only38

For US Government Use Only U.S. Companies: Top Equipment Suppliers 39

Top U.S. Semiconductor Equipment Export Markets 2013 Domestic Exports For US Government Use Only40

Opportunities (1)  U.S. Companies represent 42% of the World Market  Upturn of Sale Cycle Expected for 2014 and  Growing Demand for Semiconductors and greater density/narrow line widths lead to more Semiconductor Manufacturing Equipment Sales  Semiconductor Equipment Sales lead to Services and Parts Sales Illustrations: Global foundries For US Government Use Only41

Opportunities (2) For the Semiconductor Equipment industry, a successful WTO Information Technology Agreement (WTO ITA) Expansion will:  Ensure Duty Free treatment of all types of semiconductor manufacturing equipment.  Eliminate tariff on certain semiconductor manufacturing accessories and fab floor equipment, including:  FOSB (Front Opening Shipping Box) for wafer handling/protection  Photomask  Gas/Chemical Purification Equipment FOSB picture: Entegris For US Government Use Only42

Certified Trade Show for Semiconductor Manufacturing Equipment and Materials  Japanese semiconductor equipment market forecasted to grow in 2015  Japan is the 3rd largest world market (excluding the U.S.) but the 5 th largest export market for the U.S.  Difficult market for lesser known U.S. companies to penetrate due to strong Japanese company competition  U.S. SMEs can make connections with Japanese semiconductor companies through the Show For US Government Use Only43

Government/Authorities Meeting on Semiconductors (GAMS): USTR, Industry (World Semiconductor Council).  U.S., Japan, South Korea, EU, Chinese Taipei (Taiwan), China Governments and Industries IPR: USTR, US Patent and Trademarks (USPTO), Customs and Border Patrol, Other ITA (JCCT) Information Technology Agreement Expansion: USTR, Customs and Border Protection, State Department, Other ITA; Industry Work with ITA/GM to promote U.S. exports at semiconductor manufacturing industry trade show Semicon Japan, December 2014 Examples of ITA and Interagency Activities For US Government Use Only44

45 Information Technologies Team Staff Linda Astor; Acting Team Lead Cary Ingram; Communications, Network, and Transmission Equipment NEI Indrek Grabbi; Semiconductors Dorothea Blouin; Semiconductor manufacturing equipment, WTO ITA, RoHS (202) Robin Gaines; Computer equipment (202) Sergio Delgado; Computer equipment (202) For US Government Use Only