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Supply Chain Risk Assessments

Advances in quantitative methods

Four levels of supply chain risk management

Anecdotal, un-calibrated opinion 2.

 Read the papers, ask around, develop an opinion Objective data informed opinion  Independent tracking of critical supply chain metrics, develop a more informed opinion or an informal model Objective data, objective projections 4.

 Independent tracking of critical supply chain metrics that enable a projection of supply/demand balance with confidence levels Quantification of risk  Risk quantified scenario planning  Multiple scenarios analyzed Opinion Objective Supply Chain Projections Opinion Objective w/ confidence level 1 2 3 Supply Chain Scenarios Opinion Objective w/ confidence level 3.5

Presentation Title – 2

Critical supply chain metrics

  Multi-sourced or substitutable products     Inventory Capacity Demand profiles and elasticity Price – as the reflection of where supply = demand Proprietary sole sourced products    Process Cpk (manufacturing and supply chain processes) Available supplier capacities and inventories Other demand for the capacity and end product demand for hardware that consume products that use the capacity

Presentation Title – 3

Semiconductor supply chain – 2005

 The semiconductor supply chain is highly inter-connected $41,769

$42,432

$47,572

EMS

$47,572

$42,774

OEMs Top 10 $75,253 Semiconductor Suppliers $241,055 All Semiconductor Flow Values are at Supplier Point-of-Purchase and Do Not Include Intermediate Mark-Ups Presentation Title – 4 $50,222 $36,678 Distributor $45,060 $24,894

$55,802

OEMs 11 To 100 $89,338

$69,323

OEMs > 100 $76,464

$25,584

ODM $25,584

45 40 20 15 10 35 30 25 5 0

Presentation Title – 5 Days of Inventory for Communication Chip Companies

Total Inventory Levels Relative to Targets

15 10 5

Retail

Computer Storage Wireless OEMs WSP Networking Systems Automotive EMS

-5 -10

ODM Distribution Semiconductor

-15 -20 -25 Q205 Q305 Q405 Q106 Q206

*COGS, except Semi Companies and Semi Foundry, which are calculated on a Cost of Revenue basis

Presentation Title – 6

210 180 150 120 90 60 30 0

Memory Semiconductor Factory Capacity and Utilization

100 90 80 70 60 50

Presentation Title – 7

Capacity million Sq. In/ mo.

Memory Utilization Copyright  2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Mobile PC Value Chain Entering Q2 2006, DOI Trends Over Supply Under Supply HDD CPUs Mobile Chipsets DRAM Display Distributors ODM OEM Substrates remain tight Inventories healthy, but some gains in the quarter Supply leveling off Inventories declining Supply coming down; tight supply expected exiting the quarter Overall, inventories remain lean Stocks leveling off from gains/corrections in H1 2006 Presentation Title – 8

Component Health Watch

Price and lead time trending for 12 different commodity groups Presentation Title – 9

Component Health Watch

Presentation Title – 10

CPT (Component Price Tracking)

Price is adjusting factor to equalize supply and demand

 So tracking and projecting REAL prices is the single most important factor in assessing supply chain risk

Rolling Four-Quarter Forecast (Contract only) Presentation Title – 11 Client can compare their survey points to CPT graphs Graph a Single Price Type or Region or Combine the Graph Views

Predicting next month’s DRAM market

 iSuppli has now constructed an “iSuppli Index” that uses our weekly pricing, inventory, mix, and capacity utilization data sets to accurately predict market dynamics month ahead (2 months ahead of release of WSTS) with very high confidence  A key step to giving quantitative market and supply chain risk measurements Predicted vs. Actual Sales Time Series Model with Regressor (iSuppli Index) 15.4

15 actual forecast 95.0% limits 14.6

14.2

13.8

13.4

13 1/02 1/03 1/04 1/05 1/06

iSuppli Index

Coefficient t-statistic p-value

0.589214 7.86084 0.000000

1/07

Presentation Title – 12

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Transcript Document

Supply Chain Risk Assessments

Four levels of supply chain risk management

Critical supply chain metrics

Semiconductor supply chain – 2005

Total Inventory Levels Relative to Targets

Component Health Watch

Component Health Watch

CPT (Component Price Tracking)

Predicting next month’s DRAM market

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