Supply Chain Risk Assessments

Advances in quantitative methods

Presentation Title – 2 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Four levels of supply chain risk management

1. Anecdotal, un-calibrated opinion

Read the papers, ask around, develop an opinion

2. Objective data informed opinion

Independent tracking of critical supply chain metrics, develop a more informed opinion or an informal model

3. Objective data, objective projections

Independent tracking of critical supply chain metrics that enable a projection of supply/demand balance with confidence levels

4. Quantification of risk

Risk quantified scenario planning

Multiple scenariosanalyzed

Supply Chain Projections

Supply Chain Scenarios

Opinion

Objective w/

confidence level Opinion

Objective w/

confidence level

Opinion 1

Objective 2 3 3.5 4

Supply

Chain

in

form

ati

on

Presentation Title – 3 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

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 – 4 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Semiconductor supply chain – 2005

Semiconductor Suppliers$241,055

OEMsTop 10

$75,253

OEMs11 To 100$89,338

OEMs> 100

$76,464

Distributor

EMS

ODM$25,584$25,584$24,894

$45,060 $69,323

$55,802$50,222

$36,678

$42,432 $42,774

$41,769 $47,572 $47,572

$5

,80

3

$3

42

$5

,58

0

$2

4,2

63

$6

90

$2,9

72

$4

,16

9

$6,3

01

$16

,311

$2

7,2

35

$1

6,1

68

All Semiconductor FlowValues are at SupplierPoint-of-Purchase and

Do Not IncludeIntermediate Mark-Ups

The semiconductor supply chain is highly inter-connected

Presentation Title – 5 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

0

5

10

15

20

25

30

35

40

45Q

199

Q29

9Q

399

Q49

9Q

100

Q20

0Q

300

Q40

0Q

101

Q20

1Q

301

Q40

1Q

102

Q20

2Q

302

Q40

2Q

103

Q20

3Q

303

Q40

3Q

104

Q20

4Q

304

Q40

4Q

105

Q20

5Q

305

Q40

5Q

106

Q20

6

Da

ys

(S

ale

s B

as

is)

Days of Inventory for Communication Chip Companies

Presentation Title – 6 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

-25

-20

-15

-10

-5

0

5

10

15

Da

ys

Ov

er/

Un

de

r T

arg

et

Q205 Q305 Q405 Q106 Q206

Retail

Computer

Storage

Wireless OEMs

Networking Systems

Automotive EMS

ODM Distribution

Semiconductor

WSP

Total Inventory Levels Relative to Targets

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

Presentation Title – 7 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Memory Semiconductor Factory Capacity and Utilization

0

30

60

90

120

150

180

210

2000

2001

Q10

2Q

202

Q30

2Q

402

Q10

3Q

203

Q30

3Q

403

Q10

4Q

204

Q30

4Q

404

Q10

5Q

205

Q30

5Q

405

Q10

6Q

206

Q30

6Q

406

Q10

7Q

207

Q30

7Q

407

2008

2009

2010

Mill

ion

s S

q.In

./ M

on

th

50

60

70

80

90

100

Percen

tage U

tilization

Capacity million Sq. In/ mo. Memory Utilization

Presentation Title – 8 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Mobile PC Value Chain Entering Q2 2006, DOI Trends

HDD CPUs Mobile Chipsets DRAM Display Distributors ODM OEM

Over Supply

Under Supply

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 – 9 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Component Health Watch

Price and lead time trending for 12 different commodity groups

Presentation Title – 10 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Component Health Watch

Presentation Title – 11 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

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

Client can compare their

survey points to CPT graphs

Rolling Four-Quarter Forecast

(Contract only)

Graph a Single Price Type or Region or Combine the

Graph Views

Presentation Title – 12 Copyright 2000-2005 | iSuppli Corporation | All Worldwide Rights Reserved | Confidential – Patents Pending

Predicted vs. Actual Sales

Time Series Model with Regressor (iSuppli Index)

Ln

Sa

les

1/02 1/03 1/04 1/05 1/06 1/07

13

13.4

13.8

14.2

14.6

15

15.4actualforecast95.0% limits

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

Coefficient t-statistic p-value

iSuppli Index 0.589214 7.86084 0.000000