1. Discera Confidential 1 MEMS Opportunities and Challenges Tom Willey October 6 th 2010

2. Agenda Introduction TW-Partners Discera – MEMS Market dynamics What was involved in building MEMS product What happened Investment – MEMS Today What’s needed

3. TW - Partners Founded in 2008 by Tom Willey & Mark Konopacky Business Development Services HQ in Silicon Valley Locations in Tokyo, Cambridge & Seoul Broad Management & Partner Core Competence Strategy, Sales, Marketing, Finance, Funding Broad Market Segment Expertise. Extensive Global Client Business Development.

4. Electronic Heartbeat - Quartz Every electronic device contains an oscillator Electronic heartbeat Quartz crystal is dominant $3.5B – 10B units 15% growth 100 year old technology Very mature life cycle Difficult to innovate Low margin

5. Tomorrow’s Electronic Heartbeat - Si Large existing market No market risk Extremely attractive to venture backed start-ups Silicon knocking on the door Lots of players stepping up with Si solutions Definite exits · M&A · IPO possible Discera – Core Value MEMS-based oscillator 60% GM, with ASP less than Quartz manufacturing cost

6. 1) Resonator 3) Resonator + ASIC4) Packaged Oscillator 5mm x 3.2mm 2) Packaged Resonator Building a MEMS Oscillator – Easy?

7. Resonator First Silicon ≈ 1996 Univ Michigan internal Fab Discera Funded – 2001 Technology spin-out Resonator “ready for productization” Productization - 2008 Multiple major revisions 2 MEMS fabs Many Issues · Multiple experimental split lots to solve · Difficult to predict cause and effect · Lots of “black magic” Resonator

8. ASIC, Package & System ASIC Design process well understood Fab – design kits Good design tools Packaging design Simple plastic – low cost Main Issues – Stress · Multiple experimental split lots to solve System Difficult to predict cause and effect Lots of “black magic”

9. Today 2010 - Discera is now shipping in volume and gaining market penetration Future looks promising for Discera MEMS solutions in the clock timing market But 9 years - $60M++ to get there Allowed competition to gain foothold SiTime entered the market 2005 using Bosch technology · Large venture investment · Used Bosch MEMS technology · Now possibly ahead of Discera

10. RESONATOR & PACKAGE Design & simulation “Designing is an art” Lots of experiments Virtually no re-use Almost no design tools Device, system, package Fabs look like a sandbox to the artist No design kits Similar to the Industry in the 70’s ASIC Multiple Chip Designs Worked as expected · On Time · On Spec · On Budget Used two different fabs Designs were transportable and reusable Relatively few issues Design rules Good tools Why did it take so long & cost so much?

11. Venture Investment in Semiconductor ROI Most Si companies need ≈ $60M - $80M in to get an exit Very few exits see $60M-$80M Almost no exits > $100M For VC’s - not likely to even get their money back RESULT: Almost impossible to get new investment in Silicon Acquirers – Major Si Companies Fewer companies getting funded means less innovation Bad for industry outlook Need to get Venture ROI back on track · Risk minimization · Capital efficiency - < $10M-$20M total investment

12. MEMS Innovation No shortage of MEMS opportunities/ideas To become real Companies have to be funded · Investors want higher capital efficiency and % of success –Devices have to work 1 st time MEMS design/development ecosystem requires drastic improvement Designers Semi Fabs EDA tools companies