© 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice December ESS Business Interlocks Foxconn / hp Inventory concerns and actions on high valued parts Status update Bourgon Frederic/Tina Tsai / Shirley Lu Dec., 2008

2 Summary - Obsolescence Risk- Memory OBS decreased from $570K to $47K. CPU 300K returned to vendors in mid of Dec. - Inventory Level- FCST drop resulted in high DOI in NA. - Layering cost- good inventory management on the parts with price drop leading to 4 DOI.  November results Open action items -Foxconn agreed to use HP RBUs’ current target DOI as new buffer level. - Intel APJ CPU SOI hub will be launched in Mar’09.

3 Amsterdam (Intel/AMD CPU) Brno (HDD RR Donnelly) Dallas (AMD CPU)Pardubice (FCZ) Foxconn China Costa Rica (Intel CPU 20% non hub parts ) Penang (Intel Chipset) Hub ODM site Original warehouse Hub V.S. ODM Locations Parts Buffered in hub Houston FHS Intel CPU HDD RR Donnelley AMD CPU Singapore Region CPU Intel ChipsetHDD IntelAMD ship LT Current Target DOI ship LT Current Target DOI ship LT Current Target DOI ship LT Current Target DOI NA EMEA2~ APJ 314

4 Memory- supplier region warehouse Supplier Regional warehouseShipping LTDOI Target N. A. Qimonda Hayward (California) 3-5 days10 days Samsung, HynixSan Jose ( California) ElpidaPuerto Rico Micron Puerto Rico, Boise (US ), Singapore EMEA Samsung,QimondaGermany 3-5 days10 days Hynix UK Elpida, NanyaNetherlands Micron Singapore, Boise (US) and Puerto Rico APJ Qimonda, Hynix, Elpida, Nanya Winbond, Promos,Samsung, Singapore 3-5days10 days Micron Puerto Rico, Boise (US), Singapore Assumption: Parts available in warehouse

5 Inventory Level RegionSite CPU Intel ChipsetHDD (Hub)Memory Intel (Hub)AMD (Hub) Current Target DOI ODM Nov DOI Current Target DOI ODM Nov DOI Current Target DOI ODM Nov DOI Current Target DOI ODM Nov DOI Current Target DOI ODM Nov DOI NAFHS EMEAFCZ APFox High DOI was caused by FCST drop

6 Layering Cost Nov.2008 CPU layering cost final update for raw materials ( price drop on Nov.15) - $378, 4 DOI ( HP owes to Foxconn ) Date EMEANAWW Fox Actual DOI Actual Layering cost Actual DOI Actual Layering cost Actual DOI Actual Layering cost Target DOI Target Layering cost $3780$04$3783$ CPU Layering trend

7 Layering Cost Memory Memory price keeps flat in Dec. No layering impact. Microprocessor CPU price keeps flat in Dec. No layering impact. One AMD parts will have price break on Jan has $28 price gap (from $142 to $114).

8 Back up

9 Questions from Sep. Interlock Provided by HP RBU according to expected service level & transportation lead time Formula: ODM QOH/(4 week FCST demand/30 days); FCST is provided by HP Why CPU DOI target is different in NA and EMEA? - Target DOI is provided based on transportation lead time. Transportation Lead time is a function of ODM V.S. Hub location. DOI Calculation - DOI is in calendar days Need to be sure all regions are ok with target DOI - Yes, all regions are ok with target DOI. However, it may change in the future. Include PCA, Chassis and PSU in inventory review ? - No, because of no layering impact on HP. Should be ODM focus

10 Obsolescence Risk - CPU $441K  $300K expect Intel RMA# in Dec. $141K evaluating rebalancing. - Memory $46K  Evaluating rebalancing. CPU HP P/NODM PricingTotal QTYTotal Amount ($K)Excess ReasonSolution $ DL385G2 EOLRebalancing $ DL385G2 EOLRebalancing $ DL385G2 EOLRebalancing $ DL385G2 EOLRebalancing $ ML115G1EOLRebalancing $ EL385G5 EOLIntel Q4 RTN $ EL385G5 EOLIntel Q4 RTN $1, BL460cG1 EOLIntel Q4 RTN $ DL380G5 EOLIntel Q4 RTN $20651 DL380G5 EOLIntel Q4 RTN $ DL380G5 EOLIntel Q4 RTN $1,00331 DL160G5 EOLIntel Q4 RTN Memory HP P/NODM PricingTotal QTYTotal Amount ($K)Excess ReasonSolution $ GL385G2/ DL185 G5 EOLRebalancing $ ML115 G2 EOLRebalancing $170122DL160G5 special sku stopRebalancing $74302DL160G5Rebalancing