1 Intel’s Approach to Supply Chain and CSR Intel’s Approach to Supply Chain and CSR Bob Leet Supplier HR/EHS Program Manager

2 Agenda  Intel Background  Overview of Current Supply Chain CSR Program  Philosophy on Future Program Direction  Vision in Action

3 Intel Snapshot  Year founded: 1968  Number of employees: 78,000  Revenues: $30.1 Billion (2003)  Products and services: over 450  Stock symbol: INTC  Worldwide offices and facilities: 294 Intel is the world's leading innovator in advanced silicon technology, with more than 35 years of leadership in computing and communications.

4 Intel Employees Around the World  78,000 employees (as of July 1, 2003) –48,000 in the U.S. –30,000 internationally  Intel has employees in 48 countries worldwide with large sites in Ireland, Israel, India, China, Malaysia, Philippines, Costa Rica and the U.S. Diversity is valued: different people bring a variety of thinking to business and technical solutions

5 IrelandIFO Israel Fab 8/18 Oregon F15, F20, D1 CaliforniaD2 Colorado Fab 23 ArizonaFab12/22 New Mexico Fab 7/11/11X Mass. Fab 17 Costa Rica San Jose A/T Malaysia Penang A/T Kulim A/T China Shanghai A/T Philippines Cavite A/T Washington Intel’s High Volume Fabrication and Assembly/Test Sites China Chengdu A/T (announced)

6 Intel as Industry Leader…  Fortune 500 ranking:  Fortune Global 500 ranking:  Top 50 Fortune “Best Companies to Work For” list  Fortune Most Admired Companies: #1 in industry group  Computerworld "100 Best Places to Work in IT 2003"  Fortune selected Intel Ireland as one of "10 Great Companies to Work for in Europe."  Intel was named Sector Leader in the Dow Jones Sustainability Group Index for the third year in a row.  Key component of Domini, Citizens, NASDAQ, FTSE4Good, Calvert and other social indexes

7 Intel’s Strategic Direction: Convergence of Computing and Communications

8 Intel’s Current Supply Chain CSR Program  The program starts at the top: –Intel Corporate Business Principles (CBP) include Supplier HR/EHS Expectations  At the supplier engagement level: –Contracts include the Intel Corp. Business Principles key Supplier HR/EHS points –Supplier HR/EHS Expectation document given to each new supplier in most business units –Intel Commodity Managers attend required trained –Supplier selection audits include HR/EHS criteria in most business units  Continuous engagement activities: –Supplier continuous improvement assessments (SSQA) –Annual Supplier End-of-Year Communication –Annual “Supplier Day” Event

9  Supplier End-of-Year Communication: –More than 3,500 letters sent out refreshing our HR\EHS Supplier Expectations in 2003  Supplier HR\EHS Assessment Results: –More than 650 assessments cumulative worldwide –173 in 2003 – 100% of planned –All 2002 issues closed, all 2003 issues closed or in progress –Findings dispersed across Asia and the U.S. –Mainly obvious EHS issues or program document/deployment of HR programs. Intel’s Current Supply Chain EHS Program

10 Philosophy on Future Program Direction Company Program Developed  Passion  Motivated  Learning International Standards Established & Accepted What Happens In Here? 0 ~5 ~8-10 Years You Are Here

11 Philosophy on Future Program Direction Company Program Developed  Passion  Motivated  Learning International Standards Established & Accepted 0 ~5 ~8-10 Years You Are Here Industry / Sector Harmonization  Common Suppliers  Common Customers  Efficiency Gains

12 Philosophy on Future Program Direction  Intel has had great success in the past both leading and contributing to Industry–wide programs –ECMA –Intel launched an initiative to develop voluntary industry design for environment standards, ECMA 341 is the result of this effort –ECMA 341 principles have been integrated into Intel's DfE program –I300I –Program to define the detailed needs of the next generation of Semiconductor processing tools (200mm => 300mm wafers). –Included Byproducts and Natural Resources consumption targets. –S2 –Equipment safety & health standards program developed to ensure that new tools meet semiconductor manufacturers expectations –Developed through Sematech with SEMI –SSQA –Standardized Supplier Quality Assessment is a common checklist used to assess the level of supplier quality performance –Includes ISO 9001, Baldrige (including HR & EHS), Motorola QSR –Intel’s standard roadmap supplier assessment tool

13 Vision in Action  Intel continues to learn, so it can improve further –Comparative Analysis / Benchmarking –Implementing some of these learning’s into the existing program  Refining where biggest Risks are –Non-major first-tier suppliers –Geographies  Industry/Sector wide –Working with some sector players to identify areas for mutual improvement –Future may include an industry collaboration of some sort

14 Challenges  Intel sees one of the biggest challenges as determining the appropriate level of management oversight for contract manufacturing suppliers –Higher Risk potential than first-tier suppliers –Greater engagement can mean greater resources necessary –Balance between partnership and “dictatorship”  Another challenging area is the level of engagement over small suppliers (e.g. office supplies) –Return on resource investment

15 Thank you. Bob Leet Supplier HR/EHS Program Manager 5000 W. Chandler Blvd., M/S:CH3-113 Chandler, AZ USA (480)