2. Advanced Reticle Symposium 2003 San Jose, CA 23 June 2003 Photomask Market Outlook: Growth Returns Klaus-Dieter Rinnen Managing Vice President Manufacturing and Design Emerging Technologies and Semiconductors Gartner Dataquest

3. 1 Revenue Growth (%) 2002 2003 Base Up Base Down World GDP +2.0 +2.2 U.S. GDP +2.4 +2.4 Electronic -1.4 +4 Equipment* Semiconductor +1.9 +12 +8 +1 Capital Spending -37 +15 +7 -1 Photomask -3 +5 +2 -1 *Production revenue Forecast Growth Scorecard

4. 2 +2.2 +3.4 +2.0 +1.2 +4.0 0 1 2 3 4 5 20002001200220032004 Source: Global Insight Real GDP Growth (Percent) Global GDP Growth, 2000-2004

5. 3 Key Economic Issues Economic policy –United States gets high marks for very accommodative monetary and fiscal polices, but eurozone is failing badly and hurting global recovery Capital spending –Spending revival still key to a true, sustainable recovery; fundamentals are improving, but lingering uncertainty remains a strong inhibitor Consumer spending –U.S. consumers certainly have done their part but could fatigue any time; need stronger consumer spending in Europe and Japan Dollar depreciation –Dollar has dropped for temporary and more fundamental reasons; will likely continue depreciating going forward, hopefully at slow rate Global trade –Trade continues to languish with weak economy but should revive with recovery; depreciated dollar is shifting advantage to United States at expense of Europe and Japan. Wild cards –SARS, terrorism, Middle East turmoil and South Korea tensions all remain potential threats to global recovery (not to mention those we can’t identify yet!).

6. 4 Economics Health Score Economic Policy Capital Spending Consumer Spending Dollar Depreciation Global Trade SARS, South Korea, Terrorist Attacks North America Europe Japan Asia/Pacific North America Europe Japan Asia/Pacific North America Europe Japan Asia/Pacific North America Europe Japan Asia/Pacific North America Europe Japan Asia/Pacific 2003 North America Europe Japan Asia/Pacific 20042005 ? Wild Cards

7. 5 +2.2 +3.4 +2.0 +1.2 +4.0 0 1 2 3 4 5 20002001200220032004 Source: Global Insight Real GDP Growth (Percent) 2H03 revival still possible, but full recovery may be pushed out to 1H04 U.S. tax cuts stimulate strong U.S. consumer spending U.S. tax cuts stimulate strong U.S. consumer spending Eurozone adopts looser economic policies Eurozone adopts looser economic policies Capital spending revives Capital spending revives Dollar depreciates slowly Dollar depreciates slowly Wild cards limited Wild cards limited U.S. tax cuts fail to stimulate U.S. consumer spending U.S. tax cuts fail to stimulate U.S. consumer spending Eurozone maintains tight economic policies Eurozone maintains tight economic policies Capital spending falters Capital spending falters Dollar crashes Dollar crashes Wild cards wreak havoc Wild cards wreak havoc Global GDP Growth, 2000-2004

8. 6 -3 -2 0 1 2 3 4 5 6 1Q012Q013Q014Q011Q022Q023Q024Q021Q032Q033Q034Q031Q042Q043Q044Q04 U.S. GDP Growth (Percentage of SAAR) Forecast Source: Global Insight and Gartner Dataquest (June 2003) Macroeconomic Picture Brightens: Quarterly U.S. GDP Growth — June 2003

9. 7 CurrentProjected IT Spending — Unweighted/Weekly: War With Iraq and SARS Outbreak Sway Sentiment Trend: 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 lag current spending Projected demand in 2004 slightly higher, but still below prewar level

10. 8 Overall IT Trend — Weighted/Monthly: 2003 Cautious Underspending; 2004 Increase Trend: 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 lag current spending Projected demand in 2004 slightly higher, but still below prewar level

11. 9 Gartner Dataquest’s Index of Semiconductor Market Leading Indicators — June 2003 -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 198119831985198719891991199319951997199920012003 Semiconductor Growth Indicator Actual Forecast Semiconductor Revenue Growth

12. 10 1H032H031H042H04 Cell Phones PCs Spending Consumer Corporate Communications ?  Monitoring Phased Recovery Through 2004 Recovery under way but: –Equipment markets slow –Cell phones the only bright spot, but can it be sustained? –PC market remains sluggish Continued recovery depends on: –Cell phone strength –Corporate PC replacement cycle beginning in 2H03 –General improvement in electronic equipment production (especially communications) in 2004

13. 11 Optimistic PessimisticMost 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% Quarterly Semiconductor Revenue: Market Expands on 2H03 Improvement

14. 12 0 50 100 150 200 250 300 199619982000200220042006 Billions of Dollars 8% 2% 23% 22% -5% 6% Semiconductor Revenue Forecast: Recovery Gains Momentum in 2003

15. 13 Key Conclusions: Inventory days peaked in 1Q01 Healthy drop in 1Q03 Gartner 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 Supply Outlook: Semiconductor Inventory

16. 14 Ratio of Silicon Consumed to Fab Capacity 40% 50% 60% 70% 80% 90% 100% 1Q003Q001Q013Q011Q023Q021Q033Q031Q043Q04 Leading Edge Overall Wafer Fab Utilization

17. 15 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 1996199820002002200420062008 Millions of Dollars 2002 -2.9% Scenarios Optimistic Most Likely Pessimistic 2003 +5.4% +2.2% -1.2% Photomask Revenue Forecast: After Two-Year Decline, Growth Returns in 2003

18. 16 0 50 100 150 200 250 1982198419861988199019921994199619982000200220042006 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Semiconductor Revenue (Billions of Dollars) Photomask Revenue (Percentage of Semiconductor Revenue) Semiconductor vs. Photomask Revenue

19. 17 0% 20% 40% 60% 80% 100% 1996199719981999200020012002200320042005200620072008 Sub-0.25 Micron 0.25 to 0.7 Micron 0.7 Micron and Above Photomask Revenue by Layer Linewidth: Sub-0.25 Micron Is Driving Force

20. 18 400,000 450,000 500,000 550,000 600,000 650,000 700,000 750,000 800,000 1996199820002002200420062008 Photomask Units (Plates) Photomask Unit Forecast: Growth Returns in 2003, but Muted

21. 19 2,000 2,500 3,000 3,500 4,000 4,500 5,000 1996199820002002200420062008 Aggregate Photomask ASP ($) Aggregate Photomask ASP Forecast: Mix Drives Strong Growth

22. 20 0 100 200 300 400 500 600 700 1992199519982000/12003 Photomask Set Cost: Cost in Second Year of Production 0.5 Micron 18 Layers 0.35 Micron 20 Layers 0.25 Micron 22 Layers 0.18 Micron 28 Layers 0.13 Micron 32 Layers Thousands of Dollars Note: Set cost is best estimate for 2002.

23. 21 Wanted! Needed! New Business Models for Photomask and ASIC Classifieds Some Thoughts to Ponder on Mask Cost Myriad possibilities (in design, material, equipment process, usage) for reducing photomask cost –Is there really any price elasticity? –Where are the margins for photomask maker to secure its and the industry’s future? Is this a nonprofit business? Photomask expenditure as a percentage of semiconductor revenue is not declining but also not appreciating –Are photomask prices too low to ensure options for an economically viable future?

24. 22 193-nm immersion: Will the industry dip in? 157 nm: To live or not to live? EUV: Eternal bridesmaid or happily ever after 32? Maskless, nano-imprint and other technologies: Is there a chance to break into the market? When? Bottom Line The longer incumbent technologies are extended and maskless technology is delayed or muted, the better for photomasks. But please, no bifurcation in lithography technologies. What Does the Future Hold for Lithography?

25. 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 Photomasks  Photomask revenue to grow slowly in 2003  Long-term CAGR of 8.8 percent is ASP-driven  Rising photomask cost is reality and will lead to lower usage  Not business as usual anymore: Consolidation a must for photomask merchants Will captive component of mask market increase? Will lithography demand bifurcate?