1. 2Q03 Semiconductor Capital Equipment Update: Still Positive for 2003 Host:Klaus-Dieter Rinnen Speakers:Richard Gordon Jim Hines Jim Walker SCEM Telebriefing 27 March 2003

2. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Major Forecast Changes Since Year-End nMacroeconomic  Hold to improvement; war factored in; uncertainty still significant nElectronic equipment  PC unit forecast reduced to 6.6%  Cellular phone forecast still holding nDevices  Revenue forecast for 2003 cut back from 12% to 9%, with greater downside than upside nCapital spending and equipment forecasts  Capital spending — Reduced from 15% to 7%  Wafer fab equipment — Reduced from 16% to 8%  Packaging and assembly equipment — Largely holding to prior forecast nOutsourcing  Foundry — Now at 23%; tied to device demand  SATS — Holding at 20% year-over-year growth in 2003

3. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Revenue Growth (%)20022003 BaseUpBaseDown World GDP+2.0+2.4 U.S. GDP+2.5+2.7 Electronic Equipment*+0.3+5 Semiconductor+1+12+9-6 Capital Spending-37+15+7-5 Equipment Spending-30+18+10-2 WFE Equipment-31+16+8-4 P&A Equipment-22+32+21+10 Silicon Ship (MSI)+19+5 * Production revenue Forecast Growth Scorecard

4. | | Entire contents © 2003 Gartner, Inc. All rights reserved. 2.6 3.8 3.9 1.2 2.0 3.5 2.4 1.3 2.1 0.9 -0.4 0 1 2 3 4 5 20002001200220032004 Most Optimistic, P=5% Quick War (<1 Month) Bad War (Regional Conflict) Most Pessimistic, P=2% Most Likely, P=70% Short War (1 Month) Real GDP Growth (%) Long War, P=23% Short War (1 Month) Source: Global Insight (March 2003) Global GDP Growth Scenarios, 2000-2004

5. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Scenario Probability Real GDP Growth [%] Was Now 2002 2003 2004 Most Optimistic Regime Collapse/ Quick War 20% 5% 2.0 2.6 3.8 Baseline — Short War 60% 70% 2.0 2.4 3.5 No War/No Resolution 10% 0% Long War 8% 23% 2.0 1.3 2.1 Most Pessimistic Bad War 2% 2% 2.0 0.9 -0.4 Source: Global Insight (March 2003) Global Insight's War Scenarios

6. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Global Economic Issue Without Much Progress nEurozone and Japanese economies remain weak nDeflationary threat is present (China, Japan and possibly Germany) nBulging U.S. current account deficit threatens sharp decline in dollar èHigh degree of risk and uncertainty makes economic outlook volatile; expect continued market volatility

7. | | Entire contents © 2003 Gartner, Inc. All rights reserved. 1Q03 Semiconductor Market Outlook nShort term –Phased recovery continuation depends on PCs in 2003 Sequential growth weakened in 4Q02, and a continued slowdown in 1H03 means 2003 will likely show only a moderate AGR Worries about geopolitical and macroeconomic environment –War/terrorism uncertainty = lack of confidence »Will consumer spending remain firm? »When will corporations invest in capital expenditure? nLonger term –Boom year likely in 2004, spilling into 2005 Semiconductor vendors still cautious about CAPEX in 2003 –Downturn likely delayed until 2006 Capacity likely to be tight beginning 2H03 through 1H05 Oversupply forecast for 2H05 onward, assuming CAPEX returns

8. | | Entire contents © 2003 Gartner, Inc. All rights reserved. 1Q2Q3Q4QAGR 2002 Actual (Preliminary)5.7%5.8%6.4%1.7%0.6% 2003 Best Case -1.4%2.3%7.8%6.2%12.0% Most Likely Case -4.6%2.1%9.6%5.1%8.9% Worst Case -5.1%-5.2%-4.1%-1.4%-5.8% 2004 Best Case 6.8%14.0%8.8%4.8%36.2% Most Likely Case 5.5%9.4%4.8%5.5%27.8% Worst Case 1.4%4.3%11.0%6.2%7.3% Semiconductor Quarterly Sequential Growth: Stronger Growth Follows Weak 1H03

9. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Worldwide Semiconductor Revenue Five-Year Forecast 0 50,000 100,000 150,000 200,000 250,000 20002001200220032004200520062007 ASSP ASIC Opto Discrete Analog IC Logic Micro Memory Revenue (Millions of Dollars)

10. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Capital Spending in 2003: Still Positive nReasons why –2002 capital spending was below 1998 –Leading-edge utilization held at >85% throughout 2002 –Overall utilization improved, holding around 75% in 1H03 –Industry entered 2003 with 14% underinvestment –Empty shells/unfinished fabs allow fast response to new demand –As order flow remains slow in 1Q03 and possibly 2Q03, the question is how much equipment can be shipped in 2003; stepper lead times are an issue –Potential semiconductor opportunity loss for 2004 rises if industry procrastinates nWho is spending? –Foundry, 3% — Spending on hold until more signs of life; expect 2H02 lift –Memory, 20% — Strategic investments and funding of new JVs drive spending growth –Japan, 15% — After restructuring, spending is coming alive

11. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Overall Wafer Fab Utilization Ratio of Silicon Consumed to Fab Capacity 40% 50% 60% 70% 80% 90% 100% 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Leading Edge

12. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Foundry Fab Utilization Ratio of Silicon Consumed to Fab Capacity 40% 50% 60% 70% 80% 90% 100% 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Leading Edge

13. | | Entire contents © 2003 Gartner, Inc. All rights reserved. 0 5,000 10,000 15,000 20,000 25,000 30,000 2001200220032004200520062007 Billions of Dollars 2001-2007 CAGR = 20.9% Foundry Market Revenue Forecast

14. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Quarterly WFE Forecast Scenarios Optimistic Pessimistic Most Likely 3 4 5 6 7 8 9 10 11 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Billions of Dollars 2002 -32% Scenarios (Probability) Optimistic Most Likely Pessimistic 2003 16% (0.20) 8% (0.50) -4% (0.30)

15. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Total Industry Packaging and Assembly Factory Utilization Factory Utilization 30% 40% 50% 60% 70% 80% 90% 100% 1Q002Q003Q004Q001Q012Q013Q014Q011Q022Q023Q024Q021Q032Q033Q034Q03 Leading Edge

16. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Utilization for Semiconductor Assembly and Test Services (SATS) SATS Utilization 30% 40% 50% 60% 70% 80% 90% 100% 1Q992Q993Q994Q991Q002Q003Q004Q001Q012Q013Q014Q011Q022Q023Q024Q021Q032Q033Q034Q03 0 2 4 6 8 10 Leading-Edge Utilization

17. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Semiconductor Packaging and Test Market Forecast Revenue (Billions of Dollars)

18. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Quarterly Packaging and Assembly Equipment Forecast Scenarios Optimistic Pessimistic Most Likely 0.0 0.5 1.0 1.5 2.0 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 2002 -22% Scenarios (Probability) Optimistic Most Likely Pessimistic 2003 32% (0.25) 21% (0.50) 10% (0.25) Billions of Dollars

19. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Billions of Dollars Capital Spending Billions of Dollars 0 10 20 30 40 50 60 70 19992001200320052007 0 5 10 15 20 25 30 35 40 45 19992001200320052007 Semiconductor Equipment (Excluding Test) Long-Term View: Cycles Continue … Capital Spending and Equipment Forecasts

20. | | Entire contents © 2003 Gartner, Inc. All rights reserved. -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 19811983198519871989199119931995199719992001200320052007 Semiconductor Growth Indicator ActualForecast Semiconductor Revenue Growth Gartner Dataquest's Index of Semiconductor Market Leading Indicators, March 2003

21. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Conclusions nEconomy  Expect improvement in 2003, albeit back-end loaded  High market volatility in near term as course of war remains open nElectronic equipment  Expect gradually improving macro conditions to spur phased recovery  Kick-in of Y2K PC replacement cycle expected; strength questionable  Corporate spending returns in 2003; strength dependent on economy nChips  Expect typical, slow 1Q03, with slow demand return in 2Q03  Expect revenue growth of 9%

22. | | Entire contents © 2003 Gartner, Inc. All rights reserved. Conclusions nCapital spending and equipment  Supply-side fundamentals improve because of two years of spending cuts  Anticipate overall utilization to reach over 85% trigger level, 2H03  Leading-edge packaging utilization tight; additional equipment required  More optimistic outlook on CAPEX with 7% growth in 2003  Second down-leg in quarterly WFE revenue for 4Q02 into 2Q03  "Ready for equipment" fabs afford rapid equipment move-in for 2003, allowing for 8% growth in WFE  Next fab build cycle slips to 2004; next downcycle is expected in late 2005/early 2006