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1st Silicon (Malaysia) Sdn. Bhd.

Australian Universities International Alumni ConventionAugust 24 – 27, 2000

Kuching, Sarawak, Malaysia

11stst Silicon (Malaysia) Sdn. Bhd.Silicon (Malaysia) Sdn. Bhd.

Malaysia’s entry to the Malaysia’s entry to the 2121stst Century EconomyCentury Economy

GLOBALIZATION AND THENEW WORLD ORDER

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Semiconductor’s Growing Semiconductor’s Growing Percentage of ElectronicsPercentage of Electronics

Computer Type S/C Content ($)

Mainframe 8 – 10%

Midrange Systems 10 – 14%

Workstations 15 – 18%

Personal Computer (PC) 30 – 35%

Personal Digital Assistant(PDA) 40 – 50%

Source: Integrated Circuit Engineering Corp. & SIA 2000

Semiconductor Growth ProjectionSemiconductor Growth Projection

0

50

100

150

200

250

300

350

1992 1994 1996 1998 2000 2002 2004

CAGR ‘99-04:13.6%

Dataquest James Hines August 2000,“ The Industry Soars Once Again!”

US$B

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l Increasingly positive macro-economic climate

l Electronic goods consumption gaining momentum

l Semiconductor market enters further growth cycle

l Semiconductor capital spending accelerating

Current Industry EnvironmentCurrent Industry Environment

Strengthening Demand

0

200

400

600

800

1000

1997 1998 1999 2000E 2001E 2002E 2003ECellular Handsets PCs

Source: Dataquest

CAGR 37.7%

Millions/Units

CAGR 16.5%

• Communication tools have overtaken computing products as the main drivers for the increased demand for semiconductors

• Demand for cellular phones has grown 2 times faster than demand for personal computers

Industry DriversIndustry Drivers

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Fab Projects Built and Announced for Fab Projects Built and Announced for 2000 2000 -- 2002: Tally As of April 1, 20002002: Tally As of April 1, 2000

Number of Fabs

Average Number of Fabs Needed

3945

41

28 26 27

38

4744

29

16

5

1920

0

10

20

30

40

50

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Source : Dataquest August 2000More Fabs Needed to Support Semiconductor Industry Growth

2000 Capital Spending Increased by 2000 Capital Spending Increased by US$9 Billion Since Early JanuaryUS$9 Billion Since Early January

Sources: Company Reports, Morgan Stanley/DW,Applied Materials Corporate Marketing est.

Cap Ex 2000E % Growth

Current $44.6B 43.6%

Previous $35.7B 18.8%

2000 Ranking Company

Est. 2000 Capital Spending ($M)

% Change 2000 Over 1999

1 TSMC 4,693 106%

2 Intel 4,500 50%

3 Motorola 2,600 73%

4 UMC Group 2,375 54%

5 Samsung 2,350 32%

6 Hyundai 2,200 175%

7 TI 2,000 40%

8 STM 1,800 34%

9 NEC 1,587 21%

10 Micron 1,400 40%

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• Benefits of Foundry to Fabless Companies

• Lower Wafer Cost

• Reliable Supply

• Assurance over Time

• Shorter Cycle Time

• Minimize Risk Involved in Building and Operating a Fab

• Low Process Technology Development

• Significant Tax Incentives

• Advantages of “Pure-Play Foundries” over Integrated Device Manufacturing (IDM)

• Lower R & D Investment

• Lower Overhead

• Focus on Manufacturing.

The Foundry BusinessThe Foundry Business

lTime-to-market & increasing fab capital costs

lLower-risk way to enter IC industry

lCustomers’ focus on core competency

l Foundries expertise in meeting customers’ needs

Foundry Growth DriversFoundry Growth Drivers

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Foundry Supply Tight Through 2002Foundry Supply Tight Through 2002

0

5

10

15

20

25

99 00 01 02 03 04

• 1999-2004 CAGR = 25.4%

• Forecast over 50% growth in 2000

• Demand from fabless and growing IDM outsourcing trend

• Oversupply and price pressure returns in 2003

US$B Foundry Projection

-10%-5%

0%

5%

10%

15%

20%

25%

30%

35%40%

98 99 00 01 02 03 04

• Rapidly growing demand and spending cuts burned off excess capacity in 1999

• Foundries spending to catch up with demand

• Expect tight capacity for next 2-3 years

• Oversupply emerges in early 2003

Foundry Overcapacity

Source : Dataquest August 2000

Semiconductor DemandSemiconductor Demand

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Americas Europe Japan Asia Pacific

$Billions

Source: SIA June 2000 Forecast

Worldwide Semiconductor ForecastRegional Totals

l Semiconductor demand has grown significantlyl World growth of electronic products looks good for next 5 yearsl Communication tools have overtaken computing products as the main

drivers for the increased demand for semiconductors

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Malaysia’s EconomyMalaysia’s Economyl Malaysian economy experienced a speedy recovery from the Asian

crisis of 1997.l 52% of Malaysia’s total exports consist of electrical and electronic

products, which is equivalent to approximately US$90 billion a year

Clothing and Accessories 3%

Wood Manufactures 2%

Other Manufactured Goods and

Articles 13%

Timber2%

Crude Petroleum

3%

Liquified Natural Gas

3%

Palm Based Products

7%

Electrical and Electronic Products

66%

Rubber1%

Malaysia’s Export by Product 1999 - 2000 Source: Department of Statistics, Malaysia

Consumer Electronics

Disk Media

Silicon Wafer Assembly & Packaging

Printed Circuit Board

Unisem (M) BerhadCarsem SemiconductorASE ElectronicsHPMotorolaAMDNSCST

Wafer Fabrication

MEMCSEH

HADCOIntel

SHARPNationalToshiba

KomagWestern Digital

Electronic Components

TOKO ElectronicTaiyo Yuden

Operating in Sama Jaya Free Industrial Zone

Malaysia's Electronic Malaysia's Electronic InfrastructureInfrastructure

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One-stop solution for fabless design houses and IDMs

Sales & Marketing

Engineering Support

Production Planning

Delivery Management

Quality Assurance

CIM Support

Design Support Center

Photomask

Wafer Fabrication

Support Functions 1st Silicon Services

Wafer Sort

Wafer Back Grind

Assembly

Final Test

Drop Ship

Total Customer

Satisfaction

Services Provided Optional Services

Foundry Service OverviewFoundry Service Overview

11stst Silicon in Sama Silicon in Sama Jaya Jaya Free Industrial ZoneFree Industrial Zone

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Key Characteristics of the Key Characteristics of the ProjectProject

• Project has government support- Malaysian Federal and State

Government guarantee worth US$300M

• Abundant natural resources to support facility

• Good time to market

• Capital structure and loan financing in place

• SHARP Corporation as technology partner

• Equipment from world class, equipment manufacturers

•Skilled workforce

- Current headcount currently stands at more than 300 employees, 70% of which are engineers

•Geo-political stability

- Located outside the Pacific Ring of Fire

•Good infrastructure

- Stable electrical and water supply

Fab OverviewFab Overview

n Company : 1st Silicon (Malaysia) Sdn. Bhd.

n Date of Incorporation

: 13 January 1998

n Location : Sama Jaya Free Industrial Zone Kuching, Sarawak, Malaysia97 acres of industrial land (can accommodate 3 wafer fabs)

n Project Size : USD$ 1 billion First deep sub micron wafer fab in Malaysia

n Type of business: "Pure Play" Foundry

n Output : 30,000 wafers/month

n Product Type : 0.25µm 5LM and 0.18µm CMOS Logic

n Turnkey Contractor

: Meissner + Wurst Zander (Germany)

n Project Manager : Turner & Townsend (UK)

n Construction : Q1/1999

n Water Tight Building

:

Q4/2000:

12/1999

n Customer base : SHARPOther customers comprising of FSAs(fabless), IDMs (integrated devicemanufacturers) and OEMs (original equipment manufacturers)

n Human Resources : An international core team of over 120people is already in place. Key executiveshave extensive experience with renowned semiconductor companies

n Production

n Technology Partner : SHARP

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The Administration BuildingThe Administration Building

Q1, 1999n Appointed M+W ZANDER as turnkey contractor

(30/3/ 99)

n Signed and concluded technology and wafer supply agreement with SHARP (30/3/99)

n Obtained Malaysian Federal and State government guarantee (30/3/99)

n Obtained loan from European Consortium of Banks (30/3/99)

Q1, 2000n Fab certified as watertight (17/1 /00)

n US Subsidiary established in Silicon Valley (24/1/00)

Q2,2000n Administration building completed and handed

over by M+W ZANDER to 1st Silicon (18/4/00)

n Staff moved into new admin building (20/ 4/00)

n The first 747 cargo jet lands in Kuching International Airport, signaling the beginning and installation of the first batch of equipment, (3/5/00)

Q2, 2000n Applied Materials CEO visits 1st Silicon fab in

conjunction with US$100 Million equipment purchase (4/5/00)

n Financial foundation worth over US$600 Million including loans from US EXIM Bank(15/5/00)

n SHARP technology support team arrives in Kuching (23/5/00)

n SHARP and 1st Silicon agree to expand relationship by including wafer shipments worth US$300 Million over next few years (30/6/00)

Q3, 2000n 1st Silicon elects IBM to implement CIM and

e-business systems (7/7/00)

n Nomura provides funding of US$180 Million (18/7/00)

n Japan Bank for International Cooperation (JBIC) signs financing agreement for a loan worth US$59.5 Million (14/08/00)

Project AchievementsProject Achievements

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0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Q1/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01

Capacity TimelineCapacity Timeline

The equipment purchased will support the capacity timeline as shown below

Construction(Green Field)

12/99Water Tight

5/00Equipment

Move-in

9/00QualStart

12/00Full Qual

2k

7k 12k 20k17k

Wafers/month

200mm Wafers200mm Wafersl 200mm wafers are expected to remain as high demand

products until the year 2005

125mm14.2%

200mm43.3%

<125mm7.3%

150mm34.3%

1999 Wafer Area

300mm0.9%

2005 Wafer Area

200mm54.1%

150mm19.2%

300mm14.7% 125mm

8.2%

<125mm3.5%

Source: Dataquest

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l Exceptional technology partnership – SHARPl Dedicated SHARP experts on site for technology transfer,

qualification and production rampl Strong volume business commitment from day one of

operationl 2 Major US fabless customers, 1 tapeout targeted by end of

September 2000, 1 tapeout Q1 2001l Non-volatile memory technology and business partnership

secured for Q3 2000 technology transfer-qual startl Several equity and business partnerships in negotiation

Excellent Partnerships in Technology Excellent Partnerships in Technology and Businessand Business

Photolithography Equipment MovePhotolithography Equipment Move--InInMay 2000May 2000

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0.1

1

1994 1995 1996 1997 1998 1999 2000 2001 2002

Min

imum

Fea

ture

Siz

e of

Prod

uctio

n

0.2

0.3

0.40.5 TSMC/UMC

SIARoadmap

Intelµµp

1Si

0.18um

0.25um

Foundry Technology RoadmapFoundry Technology Roadmap

The EmployeesThe Employees

l Current headcount is >360 employees

l 23% of employees have received their education at recognized international universities

l 50% hold degrees or higher

l 81% are local Sarawakians, 5% are Malaysian, 14% are from other nationalities Year 2 0 0 0

215

305

515

670

0

100

200

300

400

500

600

700

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Expected Headcount for the Year 2000

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l 11 new 300mm fabs announced for 2002 a major supply factorl IDMs outsourcing momentum a major demand factorl IDMs and traditional ASICs turn foundry a possible supply swingl Oversupply and price pressure projected to return 2003l Greater automation and flexibility in productionl Supply chain infrastructure lacks industry standardsl Global competition for engineering talent and resourcesl Competing in the new foundry economy requires system-level integration

manufacturing solutions

Fab Projects Built and Announced for 2000 -2002: Tally As of July 1, 2000

3945

41

28 26 27

38

47

29

2024

30

14

44

0

10

20

30

40

50

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Number of Fabs

Average Number of Fabs Needed

Source : Dataquest August 2000

Industry is watching, how many new 300mm announcements will be filled

Challenges and IssuesChallenges and Issues

ASP by Customer

500

700

900

1100

1300

1500

1700

1999E 2000F 2001F 2002F 2003F 2004F

US

$/w

afer

Fabless IDM System OEM Average

Source: Dataquest, Nomura Securities Taipei

l Business : Increasing semiconductor content and accelerating global foundry industry growth

l Market : Supply diversification a business imperativel Capacity : Entering demand cycle with ready capacity, greenfield fabs’

impact not ready until ~18 months laterl Technology : Sweet spot of mainstream volume production at 0.25uml Financial : Rising ASP trends

OpportunitiesOpportunities

Source: Dataquest and Nomura 2000

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l 0.18um Technology options close to finalization for 2001 implementation

l Facility expansion plan for Fab2 - 3

l IPO plan

Preparing for Next GenerationPreparing for Next Generation

11stst Silicon Silicon ––The Malaysian AdvantageThe Malaysian Advantage

l Viable supply source in geo-politically stable regionl Abundant natural resources critical to ensure supply integrity

and continuityl Well educated, English speaking, multi-cultural multi-lingual

workforcel Well established electronic manufacturing infrastructure and

foundry support infrastructure in Malaysia and Singaporel Strong government incentive program for technology

venturesl Quality of life parallel to developed regions in convenience

and safety, but without the pollution and congestion

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Thank YouThank You

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