Discera Confidential 1 MEMS Opportunities and Challenges Tom Willey October 6 th 2010

Agenda Introduction TW-Partners Discera – MEMS Market dynamics What was involved in building MEMS product What happened Investment – MEMS Today What’s needed

TW - Partners Founded in 2008 by Tom Willey & Mark Konopacky Business Development Services HQ in Silicon Valley Locations in Tokyo, Cambridge & Seoul Broad Management & Partner Core Competence Strategy, Sales, Marketing, Finance, Funding Broad Market Segment Expertise. Extensive Global Client Business Development.

Electronic Heartbeat - Quartz Every electronic device contains an oscillator Electronic heartbeat Quartz crystal is dominant $3.5B – 10B units 15% growth 100 year old technology Very mature life cycle Difficult to innovate Low margin

Tomorrow’s Electronic Heartbeat - Si Large existing market No market risk Extremely attractive to venture backed start-ups Silicon knocking on the door Lots of players stepping up with Si solutions Definite exits · M&A · IPO possible Discera – Core Value MEMS-based oscillator 60% GM, with ASP less than Quartz manufacturing cost

1) Resonator 3) Resonator + ASIC4) Packaged Oscillator 5mm x 3.2mm 2) Packaged Resonator Building a MEMS Oscillator – Easy?

Resonator First Silicon ≈ 1996 Univ Michigan internal Fab Discera Funded – 2001 Technology spin-out Resonator “ready for productization” Productization Multiple major revisions 2 MEMS fabs Many Issues · Multiple experimental split lots to solve · Difficult to predict cause and effect · Lots of “black magic” Resonator

ASIC, Package & System ASIC Design process well understood Fab – design kits Good design tools Packaging design Simple plastic – low cost Main Issues – Stress · Multiple experimental split lots to solve System Difficult to predict cause and effect Lots of “black magic”

Today Discera is now shipping in volume and gaining market penetration Future looks promising for Discera MEMS solutions in the clock timing market But 9 years - $60M++ to get there Allowed competition to gain foothold SiTime entered the market 2005 using Bosch technology · Large venture investment · Used Bosch MEMS technology · Now possibly ahead of Discera

RESONATOR & PACKAGE Design & simulation “Designing is an art” Lots of experiments Virtually no re-use Almost no design tools Device, system, package Fabs look like a sandbox to the artist No design kits Similar to the Industry in the 70’s ASIC Multiple Chip Designs Worked as expected · On Time · On Spec · On Budget Used two different fabs Designs were transportable and reusable Relatively few issues Design rules Good tools Why did it take so long & cost so much?

Venture Investment in Semiconductor ROI Most Si companies need ≈ $60M - $80M in to get an exit Very few exits see $60M-$80M Almost no exits > $100M For VC’s - not likely to even get their money back RESULT: Almost impossible to get new investment in Silicon Acquirers – Major Si Companies Fewer companies getting funded means less innovation Bad for industry outlook Need to get Venture ROI back on track · Risk minimization · Capital efficiency - < $10M-$20M total investment

MEMS Innovation No shortage of MEMS opportunities/ideas To become real Companies have to be funded · Investors want higher capital efficiency and % of success –Devices have to work 1 st time MEMS design/development ecosystem requires drastic improvement Designers Semi Fabs EDA tools companies