Semiconductor Manufacturing Market Outlook: A Bright Picture for 2004 Presenters: Klaus-Dieter Rinnen Mary Olsson Jim Walker Laurie Balch Jim Hines Emerging Technologies and Semiconductors Gartner Dataquest These materials can be reproduced only with Gartner’s written approval. Such approvals must be requested via e-mail — quote.requests@gartner.com.

Revenue ($M) Growth Over 2002 (%) 2003: A Mixed Picture Revenue ($M) Growth Over 2002 (%) Lithography 3,484 11 Removal 3,867 1 Deposition 3,490 3 Diffusion/RTP 546 -3 Implantation 738 14 Process Control 2,368 -5 Factory Automation 948 0 (Excluding OEM) Bonding 604 25 Probe 446 34 Automatic Test Equipment 2,356 9 Total $21,742 5 Wafer Fab Back End Note: Data based on SAB 101

Forecast Growth Scorecard Revenue Growth (%) 2003 2004 Up Base Down Up Base Down World GDP 2.5 3.7 U.S. GDP 3.0 5.3 4.7 3.4 E-Equipment* 3.8 7.5 Semiconductor 11.2 11.8 13.1 30 20.1 12 Capital Spending 7.1 5.7 3.9 46 27.9 22 Equipment Spending 6.0 5.0 3.8 54 35.9 29 WFE 2.3 1.6 0.7 53 34.1 28 P&A Equipment 26.6 24.7 22.9 51 37.6 26 AT Equipment 11.8 8.7 6.2 61 46.4 39 Silicon Shipped (MSI) 9.9 9.1 7.5 22 15.4 7 *Production revenue

Macroeconomic Picture Brightens: Quarterly U.S. GDP Growth — Dec. 2003 U.S. GDP Growth (Percentage of Seasonally Adjusted Annual Rate) 8 6 4 Forecast 2 -2 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 Source: Global Insight and Gartner Dataquest (December 2003)

Global GDP Growth, 2000-2004 Real GDP Growth (Percent) U.S. capital spending goes into overdrive; consumer spending remains robust U.S. trade deficit improves; dollar holds value Eurozone loosens economic policies; promotes domestic growth Wild cards limited +2.5 +3.7 +2.0 +1.3 +4.1 1 2 3 4 5 2000 2001 2002 2003 2004 Recovery under way but is dangerously dependent on U.S. U.S. capital spending slows; consumer spending weakens U.S. trade deficit dramatically worsens; dollar crashes Eurozone maintains tight economic policies; domestic demand collapses Wild cards wreak havoc Source: Global Insight

Key Economic Issues Capital spending Consumer spending Global capital spending revival still key to true, sustainable recovery; U.S. spending reviving, but lingering uncertainty remains a significant inhibitor worldwide Consumer spending U.S. consumers have done their part but could retrench any time; stronger consumer spending in Europe and Japan would be very helpful U.S. trade deficit and dollar depreciation Deficit at record levels; expansion likely as long as others remain dependent on U.S. imports. Gapping deficit will continue to put downward pressure on dollar, which could precipitate destructive dollar crash Autonomous global growth Budding recovery dangerously dependent on U.S. imports, all the more so because of gapping U.S. trade deficit and slumping dollar. Stronger autonomous growth in Europe and Japan would greatly improve sustainability. Stronger domestic-led growth in China and India would help too Wild cards Iraq malaise, al-Qaida terrorism, Middle East turmoil, Korea tensions, SARS repeat remain potential threats to global recovery (as do various “unknowns”)

Overall IT Trend — Weighted/Monthly: 2003 Underspending; 2004 Increase Projected Current Key Trends: Current spending remains below budgeted levels; lower IT services and staffing spending are a drag Hopes for year-end budget flush are fading, at least for larger corporations, as survey indicates Is spending muted because fewer dollars can buy more? Projected demand rebounds in 2004 Strong Demand 100 Weak Demand Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- 03 03 03 03 03 03 03 03 03

DQ Index of Semiconductor Market Leading Indicators, December 2003 DQ Index vs. Device Forecast DQ Index for 2003 vs. Time Semiconductor Revenue Growth 20% 15% 45% Actual Forecast 10% 30% 5% 0% 15% 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 DQ Index for 2004 vs. Time 0% 35% 30% -15% 25% 20% -30% 1997 1999 2001 2003 15% 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 -45% Indicator Semiconductor Growth Current DQ Forecast

Semiconductor Market Update, 4Q03: Key Issues The semiconductor recovery is strengthening! The outlook for 2004 shows price stability Will wireless applications create a new industry evolution? Is China the new regional driver?

Worldwide Semiconductor Forecast, 4Q03: Market Size and AGRs by Device, 2002-2003 2002 Total Market = $156 Billion Share by Device 2003 Total Market = $174 Billion AGR by Device Memory ASSP 18% 12% ASSP 24% 2% ASIC 23% Nonoptical Sensors Optical Semiconductors 23% 4% Discrete ASIC 10% Analog IC 10% Micro 16% Logic Nonoptical 24% Sensors 11% Microcomponents 1% Optical Semiconductors 17% Memory Logic 4% 5% Discrete Analog IC 0% 5% 10% 15% 20% 25% 30% 8% 6% Source: Gartner Dataquest (November 2003)

WW Semiconductor Forecast, 4Q03: No Changes to Outlook Revenue (Millions of Dollars) 7.6% 17.7% 250,000 -4.2% Annual Growth ASSP 20.1% Application Specific ASIC 200,000 11.7% Nonoptical -31.3% 1.9% Sensors 150,000 Optical Semiconductors Discrete General Purpose 100,000 Analog IC Logic 50,000 Microcomponents Memory 2000 2001 2002 2003 2004 2005 2006 2007 Source: Gartner Dataquest (December 2003)

Wireless Applications and Regional Competition: Are They Driving an Industry Revolution? The handset markets are consolidating. Competition remains intense across multiple regions Suppliers of modules and RF products for wireless applications are becoming critical to new designs and functions Removable solid-state storage (RS3) utilizing nonvolatile memory (flash) in card format or mounted on a USB-enabled device is keeping pace with the retailer market New entrants with innovative solutions continue to be acquired by larger players China is building its own consumer and communications infrastructure. What’s next — semiconductors?

Supply Outlook: Semiconductor Inventory Dataquest Semiconductor Inventory Index Conclusions Healthy drop in 1Q03 Inventory remains lean in 2H03 Good "bill of health" for inventories With potential device shortages in 2004, increased inventory targets could add stimulus for chip demand 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 1Q99 1Q00 1Q01 1Q02 1Q03

Rolling 3-Month Comparison, IC Units: New High in 2003 Rolling 3-Month Comparison, With Aug. 2003 at 105.8% of Peak Rolling 3-Month Units (Millions) 28,000 24,000 20,000 16,000 12,000 8,000 4,000 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Source: WSTS/SIA

Worldwide Silicon Shipments MSI/Quarter 1,800 1,600 1,400 1,200 1,000 800 600 400 200 1Q99 3Q99 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04

Back End: Packaging and Assembly Overall Industry Utilization Leading Edge Factory Utilization 100% 90% 80% 70% 60% 50% 40% 30% 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04

Back End: SATS Quarterly Utilization Leading Edge Factory Utilization 100% 90% 80% 70% 60% 50% 40% 30% 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04

Back End: SATS Market Quarterly Revenue Forecast Scenarios Scenarios (Probability) Optimistic Most Likely Pessimistic 2003 25% (0.10) 23% (0.80) 20% (0.10) 2004 47% (0.30) 35% (0.50) 22% (0.20) Billions of Dollars 5.0 4.0 3.0 2.0 1.0 0.0 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 Optimistic Most Likely Pessimistic 1

Back End: SATS Annual Revenue Forecast Billions of Dollars 30 Conclusions 2004: QFN, flip-chip and 3-D stacked packaging continue 2005: WLP and SIP move mainstream 20 10 2000 2004 2008

Scenarios (Probability) Back End: Packaging and Assembly Equipment Quarterly Revenue Forecast Scenarios Scenarios (Probability) Optimistic Most Likely Pessimistic 2003 27% (0.15) 25% (0.75) 23% (0.10) 2004 51% (0.30) 38% (0.50) 26% (0.20) Billions of Dollars 2.0 1.5 1.0 0.5 0.0 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 Optimistic Most Likely Pessimistic 1

Back End: Packaging and Assembly Equipment What Is Hot and What Is Not in 2004? 2004 Growth 45% Flip-Chip Bonders AP Lithography Wire Bonders Vision Inspection 40% Solder Ball Attach Molding/Encapsulation Dicing Saws Market Growth Test Handlers Contact Prober 35% Singulation Die Bonders 30% 200 400 600 800 2004 Revenue (Millions of Dollars)

Back End: AT Equipment Quarterly Revenue Forecast Scenarios Scenarios (Probability) Optimistic Most Likely Pessimistic 2003 11.8% (0.25) 8.7% (0.65) 6.2% (0.10) 2004 61% (0.20) 46% (0.60) 39% (0.20) Billions of Dollars 2.0 1.5 1.0 0.5 0.0 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 Optimistic Most Likely Pessimistic 1

Back End: AT Equipment What Is Hot and What Is Not in 2004? 2004 Growth SOC 70% Mixed Signal Market Growth RF/Microwave Memory 40% Analog/Linear Digital/Logic 10% 200 400 600 800 1,000 1,200 2004 Revenue (Millions of Dollars)

Wafer Fab: Foundry Services Foundry Fab Utilization Ratio of Silicon Consumed to Fab Capacity Leading Edge 100% 90% 80% 70% 60% 50% 40% 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04

Wafer Fab: Foundry Services Quarterly Revenue Forecast Scenarios Scenarios (Probability) Optimistic Most Likely Pessimistic 2003 26% (0.05) 25% (0.90) 24% (0.05) 2004 53% (0.20) 41% (0.60) 24% (0.20) Billions of Dollars 6.0 5.0 4.0 3.0 2.0 1.0 0.0 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 Optimistic Most Likely Pessimistic 1

Wafer Fab: Foundry Services Market Revenue Forecast Billions of Dollars Summary 2003: Demand growth, price pressure 2004: Tightening capacity 2005: Strong demand growth and pricing support 2006: Capacity overshoot; falling prices 30.0 20.0 10.0 0.0 2000 2003 2006

Overall Wafer Fab Utilization Leading Edge Ratio of Silicon Consumed to Fab Capacity 100% 90% 80% 70% 60% 50% 40% 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04

Wafer Fab: Equipment Quarterly Revenue Forecast Scenarios Scenarios (Probability) Optimistic Most Likely Pessimistic 2003 2.3% (0.30) 1.6% (0.55) 0.7% (0.15) 2004 53% (0.25) 34% (0.65) 28% (0.10) Billions of Dollars 10 9 8 7 6 5 4 3 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03 1Q04 3Q04 Optimistic Most Likely Pessimistic 1

Wafer Fab: Equipment What Is Hot and What Is Not in 2004? 2004 Growth 70% 193-nm Steppers ECD Implant 50% Process Control PVD Nontube CVD Track Market Growth Factory Automation RTP Steppers 30% CMP Dry Etch Diffusion Mask Lithography 10% 1,000 2,000 3,000 4,000 5,000 2004 Revenue (Millions of Dollars) Note: Some segments include OEM sales.

Semiconductor Equipment (Including Test) Long-Term View: Cycles Continue ... Capital and Equipment Spending Forecasts Capital Spending Semiconductor Equipment (Including Test) Billions of Dollars Billions of Dollars 70 50 45 60 40 50 35 30 40 25 30 20 20 15 10 10 5 1999 2001 2003 2005 2007 1999 2001 2003 2005 2007

Conclusions Economy Electronic equipment Semiconductors Expect strong U.S. and improved worldwide economic growth for 2004 Corporate spending returns; IT spending sentiment is strong for 2004 Electronic equipment Expect gradually improving macro conditions to spur broad recovery Y2K PC replacement cycle has started; expect 12.8 percent unit growth in 2004 Broad-based application demand drives 2005, despite slowing PC growth Semiconductors Expect revenue growth of 11 percent in 2003 with upside potential Expect tightening capacity utilization and better demand to drive 2004 Supply side and capital equipment Healthy inventories exiting 2003 aid in tightening fab utilization Potential spot shortages and rising inventory targets boost average selling prices Supply-side fundamentals encourage optimistic outlook on CAPEX, with 27.9 percent growth in 2004; spending is still cautious; exuberance is to come 2004 semiconductor capital equipment growth is forecast at 36 percent Hold to two-year industry expansion cycle for equipment; next downcycle occurs in late 2005 or early 2006