1. ELECTRONICS MANUFACTURING SERVICES © 2006 Sanmina-SCI Corporation. Sanmina-SCI is a trademark of Sanmina-SCI Corporation. All trademarks and registered trademarks are the property of their respective owners. Legislation Impact on the EMS Industry

2. Sanmina-SCI Confidential Agenda  Legislation Evolution  Key Focal Points  Challenges  Asset Management  Supply Chain  Manufacturing Capacity  Exemptions  Due Diligence Considerations  Engineering Concerns  Cost  Key Actions  OEM  Supply Base  EMS Partners  WEEE  Summary

3. Sanmina-SCI Confidential RoHS and WEEE Legislation China  Has a draft in place which is projected to be put into law by the end of calendar year 2006 USA – Maine  Has put a WEEE process into law  Manufacturers of computer monitors and televisions only USA – California  Projected to put RoHS into place in the next 12 to 24 months  Currently has a WEEE law (SB20) USA – Maryland  Has a WEEE law in place: Beginning January 1, 2006, the pilot program requires computer manufacturers to register with the state of Maryland before they are allowed to sell new computers in the state. Japan has been removing lead from EEE since 1998 Japan – WEEE Laws - Established June 2000/2001  Use of recyclable resources and reusable parts  Design for product longevity  Design for disassembly  Home Appliance Recycling law Europe is the prime focus today but many other countries are following suit.

4. Sanmina-SCI Confidential Geographic Evolution

5. Sanmina-SCI Confidential Why is focus on compliance critical?  Penalties and fines are planned for those corporations and individuals that do not comply.  An EMS firm has to protect its customer base and itself.  A customer subjected to “stop ships” will drive mutually unsatisfactory distribution efforts. -The “Sony Playstation event”  An EMS provider is exceptionally well-positioned to assist the customer in compliance. -The EMS provider resides in the “center of the supply chain.”  Compliance-related processes must be put in place that demonstrate due diligence. -Customer base -EMS organization -Supply base Legislation Focus

6. Sanmina-SCI Confidential Challenges and Opportunities Legislation volatility  Geographic variability  Implementation timing/strategies  Interpretation Supply chain readiness  Data acquisition  Component availability Customer direction  Exemption uncertainty  Component availability  Product design capability Resource availability Capacity balancing Business opportunities  Component alignment/design rationalization  First out-of-the-gate

7. Sanmina-SCI Confidential Challenges – Asset Management Risk  Supply transition -Drives duplicity  Error potential is significant  Excess and obsolete inventory a concern  Customer relationship  Cost Mitigation strategy  Intimate customer coupling ASAP -Transition timing -EOL strategy -Portfolio attributes  Automation of information database -Spreadsheets cannot do the job  Source real-time legislative insight Act NOW

8. Sanmina-SCI Confidential Challenges – Supply Chain Areas of focus  Some suppliers are not changing part numbers  Cost  Integrity of supply Mitigation strategy  Customers -Understand strategies today -Drive release of RoHS-compliant BOMs -Need to drive customers to release RoHS-compliant BOM/AVLs with enough time to drive suppliers -Product redesign lengthy alternative  Materials management -Prepare transitional plans and determine segregation strategy  Suppliers -Understand capability NOW

9. Sanmina-SCI Confidential Challenges – Manufacturing Capacity Capacity constraints during the 2006 transition year will be challenging  Lead-free manufacturing -SMT and T/H equipment deployment -Expected lead time of up to six (6) months  Hex-chrome free manufacturing -Plating lines retrofit  Surge of demand for both RoHS-compliant and non-compliant products considering current limited visibility for demand  Unknown process or technology-related capacity constraint issues -Line down -Increase in set-up time -New technical issues  The tin whiskering debate  Capital equipment lead time  Demand mix volatility

10. Sanmina-SCI Confidential Component availability  Component availability – Most vendors have indicated there will be a short overlap of lead-based and lead-free components before switching to lead-free only.  We do not see this as a major issue for most components. BGAs  All lead-free BGAs are using a SAC alloy ball [Tin(Sn)-Silver(Ag)-Copper(Cu)  BGAs cannot use a mixed process – lead-free BGAs in a lead-free process and lead-based BGAs in a lead-based process only.  Some new BGAs are being released in lead-free only packages.  Can become a bottleneck to maintaining the exemption. Many companies are choosing not to use their exemptions. Why?  Component reasons – key components no longer available in a leaded format.  Market strategy – customers want to be viewed as a “green company.”  Many are unwilling to qualify products twice, first in a lead-free assembly stage, and then subsequently in the lead-free assembly stage, plus lead-free components. Challenges – RoHS Exemption Considerations

11. Sanmina-SCI Confidential Due Diligence Considerations  Documentation from the Supply Base  Certification to ensure constituent substances  Upstream considerations  Analysis and verification  Supply base integrity assessment  Customer Direction  Documented direction (business as usual)  ECN = Fundamental basis of change control  Customer variability  Geographic dependencies  Divisional dependencies  Portfolio centric  EMS Certification  Downstream customer requirements  Verification procedures  Integrity of full cycle due diligence  Legislation Evolution  Geographic centric (WEEE)  Regional dependencies

12. Sanmina-SCI Confidential Engineering: Why Do We Care About Tin Whiskers Growth? These whiskers can become large enough to short across two lands and can carry sufficient current to cause equipment malfunction.

13. Sanmina-SCI Confidential Engineering: Process Control Quick Test: Which BGA is lead-free? The inside structure of the solder joints

14. Sanmina-SCI Confidential Lead-Free Solder Joints BGA PTH

15. Sanmina-SCI Confidential Cost Considerations Equipment  75% of reflow ovens, 100% wave soldering equipment, over 65% of rework equipment need to be replaced  Estimated cost of equipment, support software and hardware upgrade and replacement can be as high as $4M/manufacturing site  Deployment of control instruments and tools for hazardous material detection and monitoring will require sizable investment (as high as $100K per site) Manufacturing Process Qualification  Manufacturing capabilities Gap Analysis including equipment, process, material and skill  Test vehicle design  Process development, validation and audit  Manufacturing system deployment, verification and audit  Skill curriculum development, training and certification  Qualification run, result analysis and reporting  Certification  Average cost of qualification per site is about $350K

16. Sanmina-SCI Confidential Cost Compliance is not free  Industry will incur costs complying with legislation Supply base  Incremental effort expended on conversion Manufacturers will see increased costs  Transitional incremental resource allocation  Training  Process development/upgrades -Capital -Engineering resource allocation  Documentation software and programming  Incremental audit and reporting activity Mitigation strategy  Work with suppliers and customers NOW to create transition plans  Optimize use of exemptions -Product or geographic-based

17. Sanmina-SCI Confidential Key Actions: OEM Assign the resources  Empower the resources Strategy and planning  Are you going to be compliant?  If so, how? Will you exercise your exemptions?  Build two versions of your products? Determine outsourcing partner  AVL alignment  Product design alignment  Navigation of the choppy waters Supplier selection – RoHS-capable  Qualify new components/suppliers Determine and implement audit strategy Closely follow legislation evolution Start NOW

18. Sanmina-SCI Confidential Key Actions: Supply Base RoHS-complaint products in production by Q2-05 Continued availability of pre-RoHS parts Full traceability of compliant components  Component part number (MPN) changes  Component and packaging identification per JESD97 Warranted compatibility of pre-RoHS and RoHS-compliant components Quality and reliability equal to or better than pre-RoHS Supplier process integrity to prevent contamination “Certificates of RoHS Compliance” with each product shipment Continued communication regarding:  RoHS-compliant part number (P/N) alternatives  Supplier roadmaps, schedules and sample availability  Product transition notifications (ECN/PCN)

19. Sanmina-SCI Confidential Key Actions: EMS Provider  Planning - RoHS Planning - WEEE Planning - End-of-Life Planning  Manufacturing - Lead-free Soldering - Dual-processing/inventory - Process qualification  Products and Components - Viking memory modules - Optical modules - Cables - PCB Fab - Backplanes - Newisys products - Enclosures  Component Engineering - BOM Analysis - Supplier Selection  Design - Design for RoHS - Design for WEEE - Design Assessment and Cost Reduction - Marking and Documentation - Product Qualification  Reverse Logistics - WEEE Processing - Take Back and Analysis - Repair and Refurbish - Disassembly and Tear Down - Recycling  The EMS supplier will play a different role to every customer.  The EMS role can either be the Brain, the Brawn, the Voice to the Supplier or a complete Turnkey Approach.  Sanmina-SCI Green Services

20. Sanmina-SCI Confidential Impact of WEEE Recycling efforts to be demonstrated  Aug 13, 2005  Jan 1, 2006 WEEE affects the “producer”  The product brander  The importer/exporter of record  The distributor  The manufacturer in Europe Requirements  Label products advising WEEE recycling capable  Demonstrate capability to recycle 75% by weight of EOL product

21. Sanmina-SCI Confidential Summary RoHS / WEEE and variants are here to stay worldwide RoHS compliance is not a mathematically taxing issue  Make a product out of compliant components  Ensure the assembly process is compliant  Be able to prove the above WEEE will be challenging for the industry  Partner with a trusted organization Legislation tomorrow will not be what it is today  Monitor legislative needs in real time Assign the resources Do it NOW

22. Sanmina-SCI Confidential Remember …

23. ELECTRONICS MANUFACTURING SERVICES © 2006 Sanmina-SCI Corporation. Sanmina-SCI is a trademark of Sanmina-SCI Corporation. All trademarks and registered trademarks are the property of their respective owners. Thank You