1. Semiconductor Manufacturing: Positive Growth in 2003
SCEM Telebriefing
18 December 2002
Host: Klaus-Dieter Rinnen
Speakers: Dean Freeman
Jim Hines
Jim Walker
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consulting
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2. Major Forecast Changes Since Midyear
Semiconductor revenue forecast still positive for 2002 — units up 14%; for 2003, expect 12% revenue growth
2002: Capital spending and equipment growth forecasts
-37% for Capital Spending
-33% for WFE
-23% for P&A Equipment
2003: Capital spending and equipment growth forecasts
15% for Capital Spending
16% for WFE
25% for P&A Equipment
Next build cycle for new fabs delayed six months to 1H04
Next downcycle delayed up to nine months to early 2006

3. Forecast Growth Scorecard
Revenue Growth (%)
Up Base Down Up Base Down
World GDP
U.S. GDP
E Equipment*
Semiconductor
Capital Spending
Equip. Spending
WFE Equipment
P&A Equipment
Silicon (MSI)
*Production revenue

4. Global Economy Is Struggling Uncertainty Brings Volatility
United States is slowly recovering.
Recoveries in Europe and Japan have stalled.
Asia/Pacific has experienced a healthy rebound.
Japan is starting to invest again.
Middle East uncertainties are casting a pall over global markets.
A global deflationary threat is growing.
The interplay of confidence and economic policy will shape the recovery dynamic.
High degree of risk and uncertainty will tilt the economic outlook to a more protracted recovery; expect continued market volatility.

5. Quarterly U.S. GDP Growth — November 2002: Slower Outlook Anticipated
U.S. GDP Growth (Percent SAAR) 6 5 4
Revised Actual! 3 2
Forecast 1 -1 -2 -3
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
Source: Global Insight and Gartner Dataquest

6. Strong Policy Stimulus Source: Global Insight (December 2002)
Global GDP Growth Scenarios,
Optimistic, p=10%
Rising Confidence
Strong Policy Stimulus
Real GDP Growth 5 4
+4.0
+3.9
+3.7
Most Likely, p=55% 3
+3.1
+2.8
+2.9 2
+2.0
+1.8
+1.8
+1.6 1
Falling Confidence
Weak Policy Stimulus
Pessimistic, p=30%
+1.1
2000
2001
2002
2003
2004
Source: Global Insight (December 2002)

7. Electronic Equipment Production: Phased Recovery Under Way
2H H H H04
Spending
Consumer Corporate
Cellular Phones
PCs
Communications

8. Quarterly Semiconductor Revenue: Uncertainty Reigns 2003 Market
Scenarios (Probability)
Optimistic
Most Likely
Pessimistic
2002
2.4%
1.4%
-1.4%
2003
+21%
+12%
-9%
Billions of U.S. Dollars 65 60 55 50 45 40 35 30
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
Optimistic
Pessimistic
Most Likely 1

9. Semiconductor Revenue Forecast
Billions of U.S. Dollars
300
19%
-2%
250
26%
200
12% 1%
150
100 50
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: Gartner Dataquest (November 2002)

10. Supply Side: Positive Outlook After Years of Decline
Two years of steep declines in CAPEX have limited excess capacity.
2002 CAPEX lower than 1998 CAPEX
capacity additions 15% of additions
20% over-investment at end of 2000, 14% under-investment at end of 2002
More than 100 fab closures between 2000 and 2003 have weeded out old excess capacity — 10% of total.
Leading-edge utilization was greater than 85% throughout 2002.
Yield improvements at 130-nm effectively provide more capacity with little additional investment.
Slight increase in demand can create capacity shortages.
Foundry, DRAM, restructuring in Japan are bright spots for 2003.
Empty shells/unfinished fabs allow a fast response to new demand.
Expect manufacturers to plan and implement capacity increases very carefully.

11. Overall Wafer Fab Utilization:
Ratio of Silicon Shipment to Fab Capacity
Leading-Edge
100%
90%
80%
70%
60%
50%
4Q97
2Q98
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04

12. Foundry Fab Utilization
Ratio of Silicon Shipment to Fab Capacity
Leading-Edge
100%
90%
80%
70%
60%
50%
40%
4Q97
2Q98
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04

13. Foundry Market Revenue Forecast
Billions of U.S. Dollars
CAGR 21.4% 30 25 20 15 10 5
2001
2002
2003
2004
2005
2006
2007

14. Quarterly WFE Forecast Scenarios
Scenarios (Probability)
Optimistic
Most Likely
Pessimistic
2002
-32% (0.15)
-33% (0.70)
-33% (0.15)
2003
+28% (0.20)
+16% (0.50)
+3% (0.30)
Millions of U.S. Dollars
(Seasonally Adjusted)
14,500
12,500
10,500
8,500
6,500
4,500
2,500
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04
Optimistic
Pessimistic
Most Likely 1

15. Percentage of Wafer Fab Equipment Shipped as 300-mm
Percentage of Wafer Fab Equipment Market
90%
Full Deployment
80%
70%
60%
50%
Pilot/First Production
40%
30%
20%
R&D
10% 0%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007

16. What Is Hot and What Is Not in 2003
What Is Hot and What Is Not in 2003? Selected Wafer Fab Equipment Segments
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
ECD
Steppers
2003 Growth
2003 Revenue (US$M)
Market
Growth
Track
Dry Etch
CMP
Nontube CVD
PVD
Diffusion
RTP
Implant
Process Control
Wet Clean
Fac. Auto
193-nm Steppers (~100%)
E-Beam Mask Lithography 0%
20%
40%
50%
60%
30%
10%
Note: Some segments include OEM sales

17. Total Industry P&A Factory Utilization
Leading-Edge Util.
Factory Utilization
100% 10
90% 8
80% 6
70%
60% 4
50% 2
40%
30%
1Q99
2Q99
3Q99
4Q99
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03

18. Utilization for SATS 100% 90% 80% 70% 60% 50% 40% 30% SATS Utilization
Leading-Edge Util.
100% 10
90% 8
80% 6
70%
60% 4
50% 2
40%
30%
1Q99
2Q99
3Q99
4Q99
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03

19. Semiconductor Packaging and Test Market Forecast
Revenue (Billions of U.S. Dollars) 50
SATS 40
IDM/OEM 30 20 10
1999
2000
2001
2002
2003
2004
2005
2006

20. Quarterly P&A Equipment Forecast Scenarios
Scenarios (Probability)
Optimistic
Most Likely
Pessimistic
2002
-21% (0.10)
-23% (0.80)
-25% (0.10)
2003
+40% (0.25)
+25% (0.50)
+14% (0.25)
Millions of U.S. Dollars
(Seasonally Adjusted)
2,000
1,750
1,500
1,250
1,000
750
500
250
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04
Optimistic
Pessimistic
Most Likely 1

21. P&A Equipment Growth in 2003
Flip-Chip Bonders
40%
AP Lithography
Solder Ball Attach
Wire Bonders
Mold./Encap.
30%
Vision Inspection
Market
Growth
Lead Trim and Form
Die Bonders
Contact Probers
Test Handlers
20%
Dicing Saws
10% 0%
100
200
300
400
500
2003 Revenue (US$M)

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

23. Gartner Dataquest’s Index of Semiconductor Market Leading Indicators, December 2002:
Arbitrary Units
Semiconductor Revenue Growth
2.50
60%
Actual
Forecast
50%
2.00
40%
30%
1.50
20%
1.00
10% 0%
0.50
-10%
-20%
0.00
Indicator
-30%
Semiconductor Growth
-0.50
-40%
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005

24. Conclusions Economy Expect gradual recovery in 2003
High uncertainty clouds immediate future
Electronic Equipment
Expect gradually improving macro conditions in 2003 to spur phased recovery pattern in application segments
Corporate spending returns in 2003, strength dependent on economy
Chips
Expect typically slow 1Q03, with demand returning in 2Q03
Expect revenue growth of 12 percent
Capital Spending and Equipment
Supply-side fundamentals improving because of two-year spending cuts
Anticipate utilization to exceed 85% in 2H03
More optimistic outlook on CAPEX with 15 percent growth in 2003
Second down-leg in quarterly WFE revenue for 4Q02, 1Q03
"Ready for Equip" fabs afford rapid equipment move in for 2003, allowing for 16% growth in WFE
Next fab build cycle slipped in 2004; next downcycle early 2006