winning customers, winning products, winning...
TRANSCRIPT
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Winning customers,winning products, winning vision
Scott McGregorPresident and Chief Executive OfficerSemiconductor Division
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2Semiconductors
Agenda for today
• Winning customers, winning products, winning vision– Scott McGregor, President and CEO
• Winning strategy - Consumer– Leon Husson, Executive Vice President
• Winning strategy - Communications– Mario Rivas, Executive Vice President
• Winning strategy – MultiMarket Semiconductors– Indro Mukerjee, Executive Vice President
• Summary and round-up
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3Semiconductors
Last year we demonstratednew products
Today our CUSTOMERS
tell you about us
2 years ago we talked about our technology
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4Semiconductors
CustomersTechnology
ProductsManufacturing
Managing the downturn
CustomersChina
ManufacturingNexperia
Growth opportunities
Winning customers, winning products, winning vision
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5Semiconductors
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6Semiconductors
• Top-10 supplier with revenuesof $4.4 billion in 2001
• Focus on silicon systems andmultimarket semiconductors for: Communications, Consumer,Automotive, Computing
• 32,500 employees
• Global organization(18 manufacturing centers, 30 design centers, 4 systems labs and over 100 sales offices)
• 50 years’ experience in semiconductors
Leading silicon solution company
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7Semiconductors
Outstanding customer baseCommunications Consumer Computing
Automotive Distributors EMS
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8Semiconductors
Market segmentation
2002 forecast0%
20%
40%
60%
80%
100%
2001 2002
OtherAutomotiveComputingConsumerCommunications
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9Semiconductors
• Our brand for application specific System on Chipand software solutions for all markets we address
• Nexperia system solutions are built on a unique architecture and make use of our extensive IP library - enabling efficient and cost effective designs
• Brand values: flexibility, fast time-to-market,innovation and future-proof
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10Semiconductors
Differentiating technology
• Leadership Nexperia platform– Solutions for Video and Mobile applications– Shipping now in every DVD+RW player and
in GSM system solutions
• Continuing excellence in RF & Analog– QUBiC4 low cost, high performance RF– 0.18 µm non-volatile EE/Flash and encryption technology
for smart cards
• And now, best-in-class CMOS – 120 nm now, 90 nm by end-2002, 65 nm first silicon in 2003– 300 mm pilot line in 2003
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11Semiconductors
RF discretes, CATV #1 with >70% shareIdentification #2 with >20% shareMultiMarket Semiconductors #4 with >4% share
CRT monitor drivers #1 with >30% shareDisplay drivers (small panels) #2 with >25% sharePC Add-on cards #2 with >30% share
In-vehicle networking #1 with >50% shareIn-car radio #1 with >30% shareCar access & immobilizers #1 with >60% shareCar DSP #1 with >60% share
TV #1 with >35% shareMedia access (tuners / decoders) #1 with >60% shareDVD recorder #1 with >35% shareDigital audio #2 with >18% share
Cordless #1 with> 21% shareBluetooth #1 with >21% shareWireless connectivity #2 with >11% shareMobile handsets #4 with >10% share
Great products create leading positions
Other
Computing
Automotive
Consumer
Communication
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12Semiconductors
Great products + great technologies
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13Semiconductors
Create systemsolutions which
enable ourPartnersto lead in
their markets
13Semiconductors
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14Semiconductors
Calamba
= Manufacturing sites= Assembly sites
Albuquerque
CaenHazel Grove
NijmegenStadskanaal
HamburgHamburg
Böblingen Hong Kong
KaohsiungCabuyao
Bangkok
Seremban
Shanghai
San Antonio
Singapore
Fishkill
Crolles
Global manufacturing, assembly and test
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15Semiconductors
Global manufacturing infrastructure
IC Capacity• 2 million wafers per year (8 inch equivalent)
– 20% BiCMOS, 25% Bipolar, 55% CMOS• 170 billion pins assembly capacity
Discretes• 1.2 million wafers per year (6 inch equivalent)• 45 billion pieces assembly capacity
Partnerships• TSMC & Amkor
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16Semiconductors
Environmental leadership
• All manufacturing sites have ISO14001
• We were the first semiconductor company to publishfull details on the chemical substances in its products.Now the data are available on internet
• We are introducing a sustainability program now, publishing the first annual report in 2003
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17Semiconductors
Environmental vision
• Building on our successes so far, our 2005 targetsfor environmental program:– Seven Green Flagship products per annum– Recycle 70% of waste*– Reduce energy consumption by 20% *– Reduce water consumption by 20% * – Reduce category 1 emissions to zero– Mandatory eco-design procedures for all products
and processes
* baseline year is 2001
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18Semiconductors
Managing the Business
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19Semiconductors
Managing the downturn
• Ongoing cost reductions
• Shortening the supply chain
• Efficiency and effectiveness in R&D
• Reducing inventory
• Improved planning
• Lowering our break-even point
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20Semiconductors
Investing for future revenuesM
illio
ns o
f Eur
o
500
1000
1500
2000
R&D 515 783 1014 1261 1145Capex 411 646 1800 981 450
1998 1999 2000 2001 20020
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21Semiconductors
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22Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Philips Semiconductors
one page strategy
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23Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Vision
A world where everyone can always connectto information, entertainment and services
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24Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Mission
To be the leading provider of semiconductor-based solutions for connected consumer and communications applications
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25Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Strategy
Partner with leading customers, content and service providers in the Consumer and Communications markets, plus related partsof the Automotive and Computing markets
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26Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Strategy
Develop "Living Technology” customer solutions based on Nexperia platformsthat combine semiconductors, softwareand services
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27Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Strategy
Manage a balanced portfolio spanning emerging, mature and multimarketsemiconductors
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28Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Business enablers
LeadershipPeoplePolicy and strategyPartnerships & resourcesProcesses
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29Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Results (BBS)
FinancialsCustomersProcessesCompetence
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30Semiconductors
Strategic direction Business enablers Results (BBS) Year 2002 initiativesVision Leadership Financials Top "must do" actions
A world where everyone can * Develop a market-driven and * Financial value (compared to * Improve customer intimacy andalways connect to information, continuous improvement mindset benchmark companies) ranking with key customersentertainment and services * Nurture an open two-way * Sales at key customers * Realize more design wins
communication with our employees (including ASICs and Nexperia)and other stakeholders * Reverse our market share loss
Mission Customers trendTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected consumer and and talented team of people * Customer ranking and loyaltycommunications applications * Press coverage
Policy & strategy
* Get back to operating profitability
* Actively tune the portfolio to Strategy outgrow competition Processes
* Use our advanced silicon
Partner with leading customers, * Increase our presence in China Demand creation
processes (0.18 µm and below)
content and service providers * Process maturity
* Develop and begin executing on
in the Consumer and Partnerships & resources * Customer intimacy
a strategy for presence in China
Communications markets, plus * Clearly prioritise R&D, capex and New product / system creationrelated parts of the Automotive costs in line with the strategy * Design productivityand Computing markets * Use partnerships to extend our * Use of advanced silicon processes
capabilities in technology, manufac- (0.18 ìm and below)Develop "Living Technology" turing, and access to customers Order fulfilment / supply chain mgt.customer solutions based on * Stacked lead timeNexperia platforms that Processes * Flexibility to changes in demandcombine semiconductors, Demand creationsoftware and services * Define a list of key customers and
manage these customer relationsManage a balanced portfolio * Co-develop with upstream customers Competencespanning emerging, mature and * Enhance external communication (People, partnerships, technology, improvement)
Multimarket semiconductors New product / system creation * Employee satisfaction & motivation* Unlock the value potential of our * Size and quality of talent poolsoftware capability in silicon * PBE score
* Create new business opportunities * Patentsconsistent with our mission
Order fulfilment / supply chain mgt.* Achieve breakthroughs in supply chain performance
Year 2002 initiatives
Top "must do" actions
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31Semiconductors
Customer intimacy is essential
• Today 55% of our revenue comes from our strategic customers
• By 2005 this needs to grow to 70%– Create long term design partnerships with these key players– Increase market share at these customers– Move many smaller customers to our distributors
• Partner with leading content and service providers– Establish standards– Examples: Visa, DTV-IA
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32Semiconductors
ChinaStrategy
ChinaStrategy
32Semiconductors
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33Semiconductors
Strategic direction Business enablers Results (BBS)Vision Leadership Financials
A world where everyone can * Develop a market-driven and * Market share, 7-9% in 2005always connect to information, continuous improvement mindsetentertainment and services. * Nurture an open two-way * Revenue, 2.0-2.5 B$ in 2005
Many customers will move their communication with our employees manufacturing operations into China and other stakeholders
Mission CustomersTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected mass market consumer and talented team of people * Customer ranking and loyaltyand communications applications in * Create internal growth opportunities * Press coverageChina. We will contribute to Chinese Policy & strategy
drive to prosperity * Actively tune the portfolio to Strategy outgrow competition Processes
* Grow our China MS from 5% to 7-9% in 20 * Increase our presence in China Demand creation* Process maturity
* Partner with leading customers, Partnerships & resources * Customer intimacycontent and service providers * Clearly prioritise R&D, capex and * Driving standardization in the Connected Consumer and costs in line with the strategy New product / system creationCommunications markets for * Use partnerships to extend our * Design productivity/drive low-cost low-cost, mass-market solution capabilities in technology, manufac- productsopportunities turing, and access to customers
Order fulfilment / supply chain mgt.* Engage in Chinese standard efforts Processes * Stacked lead timeto generate long-term business Demand creation * Flexibility to changes in demand
* Define a list of key customers and * Strategic areas of focus: manage these customer relationsHandsets, mobile displays, large * Co-develop with upstream customers Competencedisplays, color TV, cordless, * Enhance external communication (People, partnerships, technology, improvement)digital STB, identification, DTV New product / system creation * Employee satisfaction & motivationand multimarket semis. * Unlock the value potential of our * Size and quality of talent pool
software capability in silicon * PBE score* Use ASMC for low-cost non- * Create new business opportunities * IP management; royalties, licensingleading edge technologies and consistent with our missionstandard processes Order fulfilment / supply chain mgt.
* Achieve breakthroughs in supply * Manage financial & IP risks chain performance
Philips Semiconductors
one page China strategy
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34Semiconductors
Strategic direction Business enablers Results (BBS)Vision Leadership Financials
A world where everyone can * Develop a market-driven and * Market share, 7-9% in 2005always connect to information, continuous improvement mindsetentertainment and services. * Nurture an open two-way * Revenue, 2.0-2.5 B$ in 2005
Many customers will move their communication with our employees manufacturing operations into China and other stakeholders
Mission CustomersTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected mass market consumer and talented team of people * Customer ranking and loyaltyand communications applications in * Create internal growth opportunities * Press coverageChina. We will contribute to Chinese Policy & strategy
drive to prosperity * Actively tune the portfolio to Strategy outgrow competition Processes
* Grow our China MS from 5% to 7-9% in 20 * Increase our presence in China Demand creation* Process maturity
* Partner with leading customers, Partnerships & resources * Customer intimacycontent and service providers * Clearly prioritise R&D, capex and * Driving standardization in the Connected Consumer and costs in line with the strategy New product / system creationCommunications markets for * Use partnerships to extend our * Design productivity/drive low-cost low-cost, mass-market solution capabilities in technology, manufac- productsopportunities turing, and access to customers
Order fulfilment / supply chain mgt.* Engage in Chinese standard efforts Processes * Stacked lead timeto generate long-term business Demand creation * Flexibility to changes in demand
* Define a list of key customers and * Strategic areas of focus: manage these customer relationsHandsets, mobile displays, large * Co-develop with upstream customers Competencedisplays, color TV, cordless, * Enhance external communication (People, partnerships, technology, improvement)digital STB, identification, DTV New product / system creation * Employee satisfaction & motivationand multimarket semis. * Unlock the value potential of our * Size and quality of talent pool
software capability in silicon * PBE score* Use ASMC for low-cost non- * Create new business opportunities * IP management; royalties, licensingleading edge technologies and consistent with our missionstandard processes Order fulfilment / supply chain mgt.
* Achieve breakthroughs in supply * Manage financial & IP risks chain performance
Vision
Many customers will move theirmanufacturing operations into China
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35Semiconductors
Strategic direction Business enablers Results (BBS)Vision Leadership Financials
A world where everyone can * Develop a market-driven and * Market share, 7-9% in 2005always connect to information, continuous improvement mindsetentertainment and services. * Nurture an open two-way * Revenue, 2.0-2.5 B$ in 2005
Many customers will move their communication with our employees manufacturing operations into China and other stakeholders
Mission CustomersTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected mass market consumer and talented team of people * Customer ranking and loyaltyand communications applications in * Create internal growth opportunities * Press coverageChina. We will contribute to Chinese Policy & strategy
drive to prosperity * Actively tune the portfolio to Strategy outgrow competition Processes
* Grow our China MS from 5% to 7-9% in 20 * Increase our presence in China Demand creation* Process maturity
* Partner with leading customers, Partnerships & resources * Customer intimacycontent and service providers * Clearly prioritise R&D, capex and * Driving standardization in the Connected Consumer and costs in line with the strategy New product / system creationCommunications markets for * Use partnerships to extend our * Design productivity/drive low-cost low-cost, mass-market solution capabilities in technology, manufac- productsopportunities turing, and access to customers
Order fulfilment / supply chain mgt.* Engage in Chinese standard efforts Processes * Stacked lead timeto generate long-term business Demand creation * Flexibility to changes in demand
* Define a list of key customers and * Strategic areas of focus: manage these customer relationsHandsets, mobile displays, large * Co-develop with upstream customers Competencedisplays, color TV, cordless, * Enhance external communication (People, partnerships, technology, improvement)digital STB, identification, DTV New product / system creation * Employee satisfaction & motivationand multimarket semis. * Unlock the value potential of our * Size and quality of talent pool
software capability in silicon * PBE score* Use ASMC for low-cost non- * Create new business opportunities * IP management; royalties, licensingleading edge technologies and consistent with our missionstandard processes Order fulfilment / supply chain mgt.
* Achieve breakthroughs in supply * Manage financial & IP risks chain performance
Strategy
Grow our China market share from5% to 8% in 2005
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36Semiconductors
Strategic direction Business enablers Results (BBS)Vision Leadership Financials
A world where everyone can * Develop a market-driven and * Market share, 7-9% in 2005always connect to information, continuous improvement mindsetentertainment and services. * Nurture an open two-way * Revenue, 2.0-2.5 B$ in 2005
Many customers will move their communication with our employees manufacturing operations into China and other stakeholders
Mission CustomersTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected mass market consumer and talented team of people * Customer ranking and loyaltyand communications applications in * Create internal growth opportunities * Press coverageChina. We will contribute to Chinese Policy & strategy
drive to prosperity * Actively tune the portfolio to Strategy outgrow competition Processes
* Grow our China MS from 5% to 7-9% in 20 * Increase our presence in China Demand creation* Process maturity
* Partner with leading customers, Partnerships & resources * Customer intimacycontent and service providers * Clearly prioritise R&D, capex and * Driving standardization in the Connected Consumer and costs in line with the strategy New product / system creationCommunications markets for * Use partnerships to extend our * Design productivity/drive low-cost low-cost, mass-market solution capabilities in technology, manufac- productsopportunities turing, and access to customers
Order fulfilment / supply chain mgt.* Engage in Chinese standard efforts Processes * Stacked lead timeto generate long-term business Demand creation * Flexibility to changes in demand
* Define a list of key customers and * Strategic areas of focus: manage these customer relationsHandsets, mobile displays, large * Co-develop with upstream customers Competencedisplays, color TV, cordless, * Enhance external communication (People, partnerships, technology, improvement)digital STB, identification, DTV New product / system creation * Employee satisfaction & motivationand multimarket semis. * Unlock the value potential of our * Size and quality of talent pool
software capability in silicon * PBE score* Use ASMC for low-cost non- * Create new business opportunities * IP management; royalties, licensingleading edge technologies and consistent with our missionstandard processes Order fulfilment / supply chain mgt.
* Achieve breakthroughs in supply * Manage financial & IP risks chain performance
Strategy
Engage in Chinese standards effortsto generate long-term business
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37Semiconductors
Strategic direction Business enablers Results (BBS)Vision Leadership Financials
A world where everyone can * Develop a market-driven and * Market share, 7-9% in 2005always connect to information, continuous improvement mindsetentertainment and services. * Nurture an open two-way * Revenue, 2.0-2.5 B$ in 2005
Many customers will move their communication with our employees manufacturing operations into China and other stakeholders
Mission CustomersTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected mass market consumer and talented team of people * Customer ranking and loyaltyand communications applications in * Create internal growth opportunities * Press coverageChina. We will contribute to Chinese Policy & strategy
drive to prosperity * Actively tune the portfolio to Strategy outgrow competition Processes
* Grow our China MS from 5% to 7-9% in 20 * Increase our presence in China Demand creation* Process maturity
* Partner with leading customers, Partnerships & resources * Customer intimacycontent and service providers * Clearly prioritise R&D, capex and * Driving standardization in the Connected Consumer and costs in line with the strategy New product / system creationCommunications markets for * Use partnerships to extend our * Design productivity/drive low-cost low-cost, mass-market solution capabilities in technology, manufac- productsopportunities turing, and access to customers
Order fulfilment / supply chain mgt.* Engage in Chinese standard efforts Processes * Stacked lead timeto generate long-term business Demand creation * Flexibility to changes in demand
* Define a list of key customers and * Strategic areas of focus: manage these customer relationsHandsets, mobile displays, large * Co-develop with upstream customers Competencedisplays, color TV, cordless, * Enhance external communication (People, partnerships, technology, improvement)digital STB, identification, DTV New product / system creation * Employee satisfaction & motivationand multimarket semis. * Unlock the value potential of our * Size and quality of talent pool
software capability in silicon * PBE score* Use ASMC for low-cost non- * Create new business opportunities * IP management; royalties, licensingleading edge technologies and consistent with our missionstandard processes Order fulfilment / supply chain mgt.
* Achieve breakthroughs in supply * Manage financial & IP risks chain performance
Year 2002 initiatives
Grow organization to handle business growth
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38Semiconductors
Strategic direction Business enablers Results (BBS)Vision Leadership Financials
A world where everyone can * Develop a market-driven and * Market share, 7-9% in 2005always connect to information, continuous improvement mindsetentertainment and services. * Nurture an open two-way * Revenue, 2.0-2.5 B$ in 2005
Many customers will move their communication with our employees manufacturing operations into China and other stakeholders
Mission CustomersTo be the leading provider of People * Market sharesemiconductor-based solutions for * Recruit, develop and retain a diverse * Design winsconnected mass market consumer and talented team of people * Customer ranking and loyaltyand communications applications in * Create internal growth opportunities * Press coverageChina. We will contribute to Chinese Policy & strategy
drive to prosperity * Actively tune the portfolio to Strategy outgrow competition Processes
* Grow our China MS from 5% to 7-9% in 20 * Increase our presence in China Demand creation* Process maturity
* Partner with leading customers, Partnerships & resources * Customer intimacycontent and service providers * Clearly prioritise R&D, capex and * Driving standardization in the Connected Consumer and costs in line with the strategy New product / system creationCommunications markets for * Use partnerships to extend our * Design productivity/drive low-cost low-cost, mass-market solution capabilities in technology, manufac- productsopportunities turing, and access to customers
Order fulfilment / supply chain mgt.* Engage in Chinese standard efforts Processes * Stacked lead timeto generate long-term business Demand creation * Flexibility to changes in demand
* Define a list of key customers and * Strategic areas of focus: manage these customer relationsHandsets, mobile displays, large * Co-develop with upstream customers Competencedisplays, color TV, cordless, * Enhance external communication (People, partnerships, technology, improvement)digital STB, identification, DTV New product / system creation * Employee satisfaction & motivationand multimarket semis. * Unlock the value potential of our * Size and quality of talent pool
software capability in silicon * PBE score* Use ASMC for low-cost non- * Create new business opportunities * IP management; royalties, licensingleading edge technologies and consistent with our missionstandard processes Order fulfilment / supply chain mgt.
* Achieve breakthroughs in supply * Manage financial & IP risks chain performance
Year 2002 initiatives
Develop alternatives for production in China
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39Semiconductors
Manufacturing strategy
Our strategy for manufacturing is ‘asset light’• For CMOS we will only increase capacity as a JV
or by outsourcing• For speciality technologies
(e.g. QUBiC, powerMOS)we will continue to invest
• Increase the proportion of outsourcing to >30% (40% for advanced technologies, and 50% for 120 nm and below)
39
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40Semiconductors
• Breakthrough in advanced semiconductor manufacturing• With Motorola, ST and TSMC we represent a $20 billion business • Creating industry’s leading-edge processes• Together we’ll invest $1.4 bn by 2005,
of which Philips’ share is $430 m
Crolles - leaders in process technology
• Benefits– cutting-edge process technology– at an affordable price– compatibility across all alliance fabs– allows load sharing and outsourcing– flexibility to invest in new fabs when
the volumes are proven
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41Semiconductors
Shipping millions of Nexperia solutions since October 2001
Our key differentiator is the use of platformsto achieve solutions in Connected
Consumer and Communication applications
Technology platforms
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42Semiconductors
What is a technology platform?
• Plug and play customisable solution created with intelligent architecture and a library of IP blocks
• Contains softwareand firmware
• Reconfigurable
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43Semiconductors 43
The digital future is Nexperia
• 3 top global TV makers have hundreds of design engineers working with our Nexperia DVP for 2003 digital TVs
• Samsung and other leadingmobile phone makers have selected our Nexperia system solution for 2002/3 phones
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44Semiconductors
Mapping the strategy to our businesses
44Semiconductors
Connectivity
CommunicationsConsumer
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45Semiconductors
Mapping the strategy to our businesses
45Semiconductors
CommunicationsConsumer
Connectivity
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46Semiconductors
Winning products for growing markets
• DVD+RW
• Digital TV
• Display system solutions
• Connectivity
• Identification
• Cellular system solutions
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47Semiconductors
Last year we demonstratednew products
Today our CUSTOMERS
tell you about us
2 years ago we talked about our technology
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