1. 3Q03 Semiconductor and Electronics Manufacturing Forecast San Jose, California 8 July 2003 Presenters: Klaus-Dieter Rinnen Mary Olsson Jim Hines Jim Walker Emerging Technologies and Semiconductors Gartner Dataquest Semiconductor Manufacturing Market Outlook: Fundamentals Point to Growth

2. 1 Forecast Growth Scorecard Revenue Growth (%) 2002 2003 Base Up Base Down World GDP +2.0 +2.2 U.S. GDP +2.5 +2.4 Electronic Equipment* -1.4 +4 Semiconductor +1.9 +12 +8 +1 Capital Spending -38 +15 +8 +1 Equipment Spending -30 +18 +11 +3 WFE Equipment -32 +15 +9 +1 P&A Equipment -22 +35 +26 +17 Silicon Shipment (MSI) +19 +10 *Production revenue

3. 2 +2.2 +3.4 +2.0 +1.2 +4.0 0 1 2 3 4 5 20002001200220032004 Source: Global Insight (June 2003) Real GDP Growth (Percent) U.S. tax cuts stimulate strong U.S. consumer spending Eurozone adopts looser economic policies Capital spending revives Dollar depreciates slowly Wild cards limited 2H03 revival still possible, but full recovery may be pushed out to 1H04 U.S. tax cuts fail to stimulate U.S. consumer spending Eurozone maintains tight economic policies Capital spending falters Dollar crashes Wild cards wreak havoc Global GDP Growth, 2000-2004

4. 3 Overall IT Trend — Weighted/Monthly: 2003 Cautious Underspending; 2004 Increase Key Trends: Current spending remains below budgeted levels Stalled recovery in current spending Contributing factors: –War with Iraq –SARS outbreak –Slow economy Technology manufacturing and communications vertical market lags current spending Projected demand in 2004 slightly higher, but still below prewar level

5. 4 Gartner Dataquest’s Index of Semiconductor Market Leading Indicators, July 2003 -45% -30% -15% 0% 15% 30% 45% 60% 198119831985198719891991199319951997199920012003 Semiconductor Growth Indicator Actual Forecast Semiconductor Revenue Growth

6. 5 Monitoring Phased Recovery Through 2004 1H032H031H042H04 Cell Phones PCs Recovery under way: Equipment markets slowly improving Cell phones transition to higher generations, especially in Japan PC market improving Continued recovery depends on: Growth in cell phone demand PC replacement cycle starts in 2H03 Stronger electronic equipment production in 2004 Spending Consumer Corporate ?  Communications

7. 6 Semiconductor Demand by Application 41% 24% 17% 2003 Semiconductor “Pie” CAGR (%) 2002-2007 8% 7% 3% Automotive Communications Industrial Data Processing Military/Civil/ Aerospace Consumer

8. 7 0 50 100 150 200 250 300 199619982000200220042006 Billions of Dollars Semiconductor Revenue Forecast: Recovery Gains Momentum in 2003 8% 2% 23% 22% -5% 6% Upside Potential

9. 8 Quarterly Semiconductor Revenue: Market Expands on 2H03 Improvement Optimistic Pessimistic Most Likely 30 35 40 45 50 55 60 65 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Billions of Dollars 2002 1.9% Scenarios Optimistic Most Likely Pessimistic 2003 +12.3% +8.3% +1.3%

10. 9 Conclusions Inventory days peaked in 1Q01 Healthy drop in 1Q03 Good “bill of health” for inventories Supply Outlook: Semiconductor Inventory Dataquest Semiconductor Inventory Index 0.8 0.9 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1Q991Q001Q011Q021Q03

11. 10 Wafer Fab: Overall Industry Utilization Ratio of Silicon Consumed to Fab Capacity 40% 50% 60% 70% 80% 90% 100% 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Leading Edge

12. 11 Wafer Fab: Foundry Services Foundry Fab Utilization Ratio of Silicon Consumed to Fab Capacity 40% 50% 60% 70% 80% 90% 100% 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Leading Edge

13. 12 Wafer Fab: Foundry Services Quarterly Revenue Forecast Scenarios Optimistic Pessimistic Most Likely 0.0 1.0 2.0 3.0 4.0 5.0 6.0 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Billions of Dollars 2002 +16% Scenarios Optimistic Most Likely Pessimistic 2003 +27% (0.25) +23% (0.60) +21% (0.15)

14. 13 Conclusions 2003: Demand growth and price pressure 2004: Tightening capacity 2005: Strong demand growth and pricing support Wafer Fab: Foundry Services Market Revenue Forecast Revenue (Billions of Dollars) 0.0 10.0 20.0 30.0 200020032006

15. 14 Wafer Fab: Equipment Quarterly Revenue Forecast Scenarios Optimistic Pessimistic Most Likely 3 4 5 6 7 8 9 10 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Billions of Dollars 2002 -32% Scenarios Optimistic Most Likely Pessimistic 2003 +16% (0.25) +9% (0.60) +1% (0.15)

16. 15 Wafer Fab: Equipment What Is Hot and What Is Not in 2003? Note: Some segments include OEM sales 05001,0001,5002,0002,5003,0003,5004,000 ECD Steppers 2003 Growth 2003 Revenue (Millions of Dollars) Market Growth Track Dry Etch CMP Nontube CVD PVD RTP Implant Process Control Wet Clean Factory Automation 193-nm Steppers 0% 20% 40% 50% 30% 10%

17. 16 Packaging and Assembly: Overall Industry Utilization Factory Utilization 30% 40% 50% 60% 70% 80% 90% 100% 1Q002Q003Q004Q001Q012Q013Q014Q011Q022Q023Q024Q021Q032Q033Q034Q03 Leading Edge

18. 17 Packaging and Assembly: SAT Services Quarterly Utilization Factory Utilization 30% 40% 50% 60% 70% 80% 90% 100% 1Q002Q003Q004Q001Q012Q013Q014Q011Q022Q023Q024Q021Q032Q033Q034Q03 Leading Edge

19. 18 Packaging and Assembly: SATS Market Quarterly Revenue Forecast Scenarios Optimistic Pessimistic Most Likely 0.0 1.0 2.0 3.0 4.0 5.0 1Q023Q021Q033Q031Q043Q04 2002 +18% Scenarios Optimistic Most Likely Pessimistic 2003 +29% (0.30) +22% (0.55) +16% (0.15) Billions of Dollars

20. 19 Conclusions 2003: Packaging production exceeds 2000; strong QFN 2004: Flip chip and SIP become strong drivers 2005: WLP moves into mainstream Packaging and Assembly: SAT Services Annual Revenue Forecast Revenue (Billions of Dollars) 0 10 20 30 20002004

21. 20 Packaging and Assembly: Equipment Quarterly Revenue Forecast Scenarios Optimistic Pessimistic Most Likely 0.0 0.5 1.0 1.5 2.0 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 2002 -22% Scenarios Optimistic Most Likely Pessimistic 2003 +35% (0.25) +26% (0.55) +17% (0.20) Billions of Dollars

22. 21 Packaging and Assembly: Equipment What Is Hot and What Is Not in 2003? Molding/Encapsulation AP Lithography 2003 Growth 2003 Revenue (Millions of Dollars) Die Bonders Market Growth Package Singulation Flip-Chip Bonders Dicing Saws Contact Prober Vision Inspection Solder Ball Attach Test Handlers Wire Bonders 15% 25% 35% 0150300450600

23. 22 Long-Term View: Cycles Continue Capital Spending and Equipment Forecasts Billions of Dollars 0 10 20 30 40 50 60 70 19992001200320052007 Capital Spending Billions of Dollars 0 5 10 15 20 25 30 35 40 45 19992001200320052007 Semiconductor Equipment (Excluding Test)

24. 23 Conclusions Economy  Expect improvement in 2003, albeit back-end-loaded  Weakness in Europe and Japan sharpens need for U.S. improvements Electronic equipment  Expect gradually improving macro conditions to spur phased recovery  Start of Y2K PC replacement cycle expected; strength is questionable  Corporate spending returns in 2003; strength depends on economy Semiconductors  Expect revenue growth of 8 percent in 2003  Expect tightening capacity utilization and better demand to drive 2004 Supply-side and capital equipment  Healthy inventories and rising demand lead to improving fab utilization  Supply-side fundamentals encourage more optimistic outlook on CAPEX with 7.9 percent growth in 2003  Holding to WFE growth of 8.7 percent  Upgrade packaging equipment segment to 26 percent growth for 2003  Next fab build cycle slips into 2004; next downcycle in late 2005/early 2006

25. 24 Gartner Dataquest Events at Upcoming SEMICON/West 2003 SEMICON/West 2003 Forum –Semiconductors: Fishing in Tide Pools or Open Seas –16 July 2003 San Francisco, CA –For more information or to register, please visit www4.gartner.com/2_events/local_briefings/asset_8216.jsp www4.gartner.com/2_events/local_briefings/asset_8216.jsp Breakfast Briefing –The Back End Leads the Recovery –18 July 2003 San Jose, CA –For more information, please visit the Featured Events section on the Gartner Semiconductor Focus Page: www4.gartner.com/pages/section.php.id.2014.s.8.jsppages/section.php.id.2014.s.8.jsp –For registration, please contact Becky Tonnesen at becky.tonnesen@gartner.com becky.tonnesen@gartner.com