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  • 1. SemiconductorOutsource Management Company Semiconductor Outsource supporting companies subcontracting in Asia “we bridge the gap” Management Company supporting companies subcontracting in Asia Day to Day Factory Management Performance Improvements Sourcing and Project Management Confidential 1
  • 2. Semiconductor Outsource Management Company supporting companies subcontracting in Asia The CompanySOMC was founded in 2008 on the premise of supporting semiconductor companies worldwide withalternative, affordable management representation at their subcontractors in Asia.Our team has a combined experience of over 75 Headquarters is located in the heart of Asia, Bangkokyears in Foundry, Assembly and Test operations in Thailand, making it possible for us to be anywhere inAsia , executing day to day management, Asia in just a few hours to support ourperformance improvements and sourcing/project  IDMmanagement to accomplish  OEM  Fabless  Lower Costs/Increased profits  ASIC  Streamline operations  Start-Up  Improve product Quality  Design  On Time Delivery small to mid-sized client companies.for our clients.SOMC Presspicked up by: Confidential 2
  • 3. Semiconductor Outsource Management Company supporting companies subcontracting in Asia SOMC’s Alignment with SuccessSOMC, from inception, was designed to provide smaller, growing companies with what successful companies havedeveloped and perfected over years; Best Known Methods (BKM’s) for managing their subcontractors in Asia. And,being intimately aware of the costs and nuances of managing in Asia, provide an effective and more affordablesolution to those who recognize the importance.Our fundamental belief is subcontracted factories do not run effectively or efficiently with hands off management-managing by remote control. A physical management presence in the factory is the most proactive approach forsuccess. Successful Company’s Mfg Strategy for SubconsSuccessful companies have known for decades having a presence in their subcon factories gives them distinctadvantages over their competitors.They understand being in the factory improves their relationship with the subcon; better relationship, better service.They know that a presence in the factory gives them the best opportunity to react/thwart issues, face to face, real-time. “When management focuses on the problems, the problems go away”. Confidential 3
  • 4. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Results Companies Achieve with a Factory Presence Ensure their company has a voice in the factory Common Bad Things Work directly with the factory floor management face to face to improve  Missed deliveries/pushed our Delivery, Cycle Time, Quality, Cost parts aside for another customer Quickly address engineering/production issues on the floor, face to face  Cycle Time too long/die not moving Give and receive real time feedback/immediate responses  Misprocessed lots/new process Develop highly responsive relationships to support manufacturing goals; not implemented sprint capacity, cost down, heightened attention to manufacturing  Low Yields/Yield loss, throwing issues/ indices money away  Capacity is full /no sprint Improve manufacturing to a level it becomes a competitive tool in available growing their business  Can’t get the subcontractor to Regularly avoid bad things from happening respond to emails They know they must be proactive and cannot afford to be reactive. SOMC embodies successful company strategies. Confidential 4
  • 5. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Our Services Supporting a Presence in AsiaSOMC provides a broad range of management services to our semiconductor clients worldwide engagedwith Foundry, Assembly and Test subcontractors in Asia including: Day to Day Subcontractor Management  WIP Tracking and loading  Monitor Cycle Time, Yields and On-time deliveries  Daily follow-up communications  Daily issue mitigation Performance Improvement Management  Cost Reduction/Negotiation  Delivery/Cycle Time and Quality/Yield improvement  Onsite Management presence driving performance  Factory visits for partnership building, QBR’s or issue mitigation Sourcing and Project Management  New Package/Process Transfers and Qualifications  Factory Capability Audits  Supply Chain Optimization/Supplier Consolidation  Subcon Selection/Price Negotiations Confidential 5
  • 6. Semiconductor Outsource Management Company supporting companies subcontracting in Asia SOMC’s Effectiveness 3 Panel Charts Our Services are designed to draw attention to real/potential factory issues and react to them Our strong subcontractor affiliations in Asia positions us to influence the kind of improvements small companies need to excel. As seasoned senior executives we use well defined methods for monitoring/measuring subcon performance Proactive data analysis gives us leading edge indicators of Performance Dash Boards Subcon Management Q107 issues impacting Quality and Delivery Owned by JOF OS Miss Line Items Units LI/WK Q1O6 ACT 10.2 Q2O6 ACT 3.5 Q3O6 Q406 WKLY 3.5 3.15 3.0 0.0 0.0 Q107 ACT ACT BOQ WW01 WW02 WW03 WW04WW05 WW06 WW07 WW08 WW09 WW10 QTD 0.00 Q107 BOQ 3.0 Assy Outs Units 76,749 70,206 67,618 59130 3,952 4,217 4,620 8,837 51,375 SUMMARY Test Outs Units 29,051 34,548 22,835 25770 903 1,829 1,674 3,503 11,736 Finish Outs Units 29,051 34,387 22,835 25770 903 1,829 1,674 3,503 11,736 Assy Mean Cycle Time Days 9.6 7.7 7.1 7.67 8.0 8.2 7.2 7.7 8.0 We hold the factory accountable, “say what you’re going to Test / Finish Mean CT Assy 95th Cycle Time Test / Finish 95th CT Days Days Days 4.3 17.7 20.2 4.7 12.6 18.0 6.2 7.16 11.5 12.45 23.4 24.29 8.0 12.0 11.0 4.17 13.9 17.94 4.27 10.4 16.11 4.52 13.3 16.26 8.0 12.0 11.0 do and do it” Assy Outs Units 13,156 12,947 7,663 8654 694 678 665 1,343 9,023 Test / Finish Outs Units 736 884 800 330.8 6 98.0 101.0 199.0 72 XXX Assy Mean Cycle Time Days 10.5 8.8 7.6 7.3 8.0 7.80 7.80 7.80 8.0 Assy 95th Cycle Time Days 20.0 14.2 12.3 12.3 12.0 13.90 9.70 13.30 12.0 Test / Finish Mean CT Days 8.2 11.1 7.3 4.1 8.0 7.10 12.80 10.10 8.0 Test / Finish 95th CT Days 19.5 32.8 12.9 7.1 11.0 7.10 16.50 16.50 11.0 Assy Outs Units 15,578 17,755 19,217 11857 493 1,174 808 1,981 6,412 XXX We have a solid understanding and fit in well with the cultural Mean Cycle Time 95th CT Test / Finish Days Days Units 9.0 14.8 12,747 6.7 9.2 9,579 6.6 9.3 7 9.2 10,299 14013 8.0 12.0 277 7.80 8.50 721 6.40 8.10 917 7.8 8.5 721 8.0 12.0 3,599 XXX Mean Cycle Time Days 4.6 7.0 7.7 8.4 8.0 2.6 3.8 3.1 8.0 nuances in Asia XXX 95th CT Test / Finish Mean Cycle Time Days Units Days 13.9 6,916 6.8 7.4 15,353 7.1 20.6 31.6 4,105 5971 12.1 7.5 11.0 201 8.0 8.1 571 8.7 8.7 371 8.2 8.2 571 8.5 11.0 2,616 8.0 95th CT Days 17.5 25.9 39.4 22.1 11.0 34.1 18.2 34.9 11.0 Assy Outs Units 10,532 29,608 38,106 30037 4,583 1,782 2,741 1,782 29,827.1 XXX We are more than consultants, we are a true extension of Mean Cycle Time Days 11.8 8.1 8.0 8.5 9.0 8.4 7.5 7.9 8.0 95th CT Turnkey Days Units 20.2 8,652 12.6 9,106 11.6 13.2 7,632 5283 12.0 430 11.7 399 10.1 427 11.7 826 12.0 5,587 XXX Mean Cycle Time Days 7.4 6.0 6.7 your company and become your feet on the ground in Asia 5.2 10.0 10.2 7.7 8.9 10.0 95th CT Days 16.6 12.1 9.1 11.82 15.0 14.1 16.4 15.2 15.0 Assy Outs Units 560 505 492 258 21 0 9 9.18 274 XXX Mean Cycle Time Days 8.7 8.9 10.0 9.1 8.5 0.0 8.4 8.43 8.5 95th CT Days 10.6 12.1 15.8 12.1 12.0 0.0 9.4 9.38 12.0 Confidential 6
  • 7. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Typical Engagements SOMC has successfully performed many projects for clients including: Developed and implemented plans to improve  Provided and implemented improvement plans in test cost per wafer and reduced defects for a Cycle Time/Delivery consistency for an IDM Wafer Fab  Developed and implemented Quality Developed strategic plans to consolidate supply improvements, scrap reductions and improved chain in Asia - Foundry, Assembly and Test for a Yield for an IDM Fabless company  Provided plans and process improvements to Provided and implemented plans for reducing streamline and reduce shipping cost for an IDM unit cost for a European image sensor products company Provided day to day WIP tracking to monitor Cycle Time, Yields and Delivery compliance for an ASIC company Confidential 7
  • 8. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Big Price Tags for a Presence in Asia - A Thing of the PastSOMC clearly understands the benefits of a presence in Asia and how companies rationalize the expense.Larger Companies typically use expats and/or hire locals to represent their companies in Asia knowing  Both add headcount  Expats full compensation is at least 1.5-2x base salary (more for a family package)  Local Hires typically lack a broad range of expertise/experience, difficult to find, extra benefits for a local hired by a foreign companyThey are well aware that the benefits outweigh the cost and don’t hesitate to pay for it.A major concern larger companies have is they want to manage their subcontractors with their own employee(s). SOMCis a true extension of your company, we become a member of your team and that highly desirable company employeetie is not lost.SOMC can deliver the experience and expertise, in most cases more than you currently have with your existingcoverage, at a fraction of the cost. When you need to expand your subcon operations, need to replace coverage due to attrition, SOMC is a viable option for you to consider. Why pay more unless you want to? Confidential 8
  • 9. Semiconductor Outsource Management Company supporting companies subcontracting in AsiaSmaller Companies; Big Price Tags for a Presence in Asia - A Thing of the PastMost small companies, resources and money are in short supply and opt to manage internally. They rationalize, itsaves money, that’s why I pay the subcon, our volume is too low, everything is ok, don’t need a middleman, etc.The decision to manage internally is based primarily on cost. However, when cost is not a major issue, you need toconsider the impact of not having a presence in Asia because  You cannot possibly achieve the results companies with a presence in Asia attain without being here  Cost of getting here is expensive, time consuming and disruptive  Building stronger partnerships via long distance is difficult at best  Communications real time, all the time, with your subcon is impractical with respect to time zones  Conducting frequent face to face meetings is impossible Until now, cost has limited small companies from realizing the benefits associated with a presence in Asia, which larger companies have capitalized on for years. Cost is no longer a barrier……… Confidential 9
  • 10. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Our Cost ModelOur model truly sets SOMC apart. It is designed to make us the best option for small and large companies. Fees are derived through short or long term contracts for  Day to Day WIP Mgmt  Performance Improvement Mgmt Example Contract Cost  Sourcing/Project Mgmt and are based on our knowledge of the manpower needed to fulfill your Day to Day WIP Management service services. Other typical considerations in our cost would include: number involves daily monitoring, issue of lots/mo, number of subcon locations, include Fab and/or Test mitigation and real time communication with the factory for • Assembly WIP SOMC is able to offer clients an affordable, low cost solution primarily • Cycle Time due to four elements in our model • Yield 1. Our tight internal cost controls 2. We do not carry the cost baggage associated with an ex-pat and cost could be as little as $3k/mo. 3. We don’t have the extras of a local hire 4. We are already established in Asia Routinely, we go the extra mile working within your budget constraints. Confidential 10
  • 11. Semiconductor Outsource Management Company supporting companies subcontracting in Asia SummaryAll companies, small and large, benefit by having a presence in Asia to achieve both tangible and intangible resultsSOMC brings the cost of having a presence in Asia down for small and large companies at a time when costs are goinghigherOur cost model is attractive to small companies wanting to realize the benefits of a presence in Asia without the high coststructure; larger companies benefit from a lower cost structure as they expand or replace existing supportOur business model affords maximum flexibility for you to determine how much of a presence you require SOMC Not Only Saves You Money But Makes You Money  We don’t add to your headcount  We save you on expensive travel, salaries, benefits  We have a singular focus - factory performance  We’re already here with feet on the ground, same time zone, face to face with your factory  Our experience and expertise has delivered results for decades working with subcons  Clients use our experience, performance and agility in Asia to facilitate business growth Confidential 11
  • 12. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Typical TestimonialsMichael McKerreghan, President Director & COO, PT Unisem–Indonesia, “a visionary leader who can quicklyassess an enterprise and its business strategy”.....Joel Camarda, Vice President Operations, Gtronix, Calif. “runs a tight ship. Simply stated, he delivers. He hasdemonstrated success in numerous cultural environments”.......Jeff Kaszubinski, Vice President Research and Development, Cypress Semiconductor , Calif., “aggressivelydrove continuous improvement and accomplished the best metrics in the company”......Bryan Patmon , Chief Marketing Officer and Executive Director at MemsTechnology-Malaysia, “An overpowering need to achieve”.......Neal Kish, Global PCBA Commodity Supply Chain, BIO-RAD Laboratories, Calif., “SOMC exceeded therequested deliverables in short order”....... Confidential 12
  • 13. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Thank You Confidential 13
  • 14. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Appendix Confidential 14
  • 15. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Case Study 1: Charged with leading contract manufacturers in Asia-Pacific Region to provide production support amounting to 50% of a $1 Billion plus Company’s total production Methodology for Improvements Met and conducted evaluations with new and existing subcontractors Due diligence in working with each subcontractor to promote relationships, establishing common goals and objectives Moved product mix and volume to achieve best pricing, quality, and delivery performance when requiredChallengesTo head a team of operations, planning, finance, and engineeringstaff based in the Philippines ResultsTo manage engineering support staff from California, China, 12-months into the project a noted 250% improvementTaiwan, Indonesia and Thailand made in quality by reducing customer returned productImprove relationships with current and new subcontractors to resulting in a $2.1 million dollar savingsenhance performance Finished parts cycle time reduced by 350% from 7-daysGoals: Reduce the number of subcontractors / ensure sprint to 2-dayscapacity / improve qualification times / negotiate best pricing / Secured an 18% improvement in cost amounting torate new and existing subcontractors to improve metrics / annual savings of $11 million dollarsconduct quarterly business reviews with each subcontractor / Dramatic increase in the Client’s end customer’sobtain industry benchmark data to drive world-class performance satisfactionin operations Confidential 15
  • 16. Semiconductor Outsource Management Company supporting companies subcontracting in Asia SOMC Business Model CUSTOMER PARTNER NETWORK OFFER RELATIONSHIP CUSTOMERINFRASTRUCTURE Cooperative agreements (Value •24/7 availability •Act as company TARGET (contracts) with Proposition) employees CUSTOMER •Sales -Reps •Represent only the client •Mgm’t-Local and Country We sell services •Adapt to their Managers to companies strategies/goals CORE •Accounting •6 to 10 Customers involved in •Win win relationships •Marketing •Start-up , fabless CAPABILITIES manufacturing •Best cost for value •Pkg Design Engineering semicon companys, in Asia short and long DISTRIBUTION • private and revenue • Education, knowledge and VALUE less $400mil term CHANNEL business, management CONFIGURATION specializing in •Don’t have expertise manufacturing semiconductors • Direct mailers • 33 years of engineering, •HR/Payroll •Sourcing expertise in Asia •Email Campaigns operational manufacturing •Acct’ing /Legal interface •Project •Don’t have •Personal network experience •Marketing/Sales Outsource management •Sales letters • Supply chain mgm’t Coordination •Performance infrastructure •Blogs experience •Strategic and tactical •Don’t have to time to capability •Cold/follow-up calls •Contract Compliance/ do improvement •Web site Google Coordination •Total Adsense •Research/Sourcing management •Press Releases suppliers •Face to Face •Salaries/Benefits/ Commissions •Office equipment/supplies/ FINANCE REVENUE •Sourcing •Project mgmt COST Postage STREAMS •Total Mgmt STRUCTURE •Legal fees •Consulting •Rent/Utilities Confidential 16 •Transportation expense
  • 17. Semiconductor Outsource Management Company supporting companies subcontracting in Asia SOMC is the Most Efficient, Cost Effective OptionUntil now there have typically been 3 options for managing your subcontractors in Asia, which arehistorically expensive and time consuming SOMC not only saves you money butExpats helps you make money  Added headcount  We don’t add to your headcount  Expensive: Full compensation 1.5-2x base salary (more for a family package)  We save you on expensive travel, salaries, benefitsHire Local Management  We have a singular factory focus  Added headcount  Typically lack a broad range of expertise/experience and difficult to find  We’re already here with feet on the ground for your unplanned visits  Extra benefits package for local mgmt hired by a foreign company  We operate in the same time zones,Manage Internally - sends the message to the subcon face to face with your factory  One more task for an already overly burdened staff  Experience and expertise/we’ve been  Expensive travel to expedite parts/resolve engineering issues/team here decades working with subcons building  Our performance and agility in Asia is  Time zone differences -no face time - adding difficulty resolving issues used to facilitate business growth  Do not have 20 plus years working in Asia, directly with subcons Confidential 17
  • 18. Semiconductor Outsource Management Company supporting companies subcontracting in AsiaCOMPANY LOCATIONSSemiconductor Outsource Management Co., LtdFounded in March, 2008Address 9406 State Route 60, Wakeman, Ohio, 44889Phone +1 408 806 6308Web Site www.semiconoutsourcemgmtco.comSemiconductor Outsource Management (Thailand) Co. LLCFounded in May, 2009Address Ban Su Pha Sarn, 65/48 Moo 4, Phra Ong Jaow Sai Road, Lard, Sa Wai, Lam Luk Ka, Pathum Thani, Thailand, 12150Phone +66 870 458 550Fax +66 2 569 3243Web site Confidential 18
  • 19. Semiconductor Outsource Management Company supporting companies subcontracting in Asia The Benefits of Engaging SOMCOur strong subcontractor affiliations in Asia positions us to influence the kind of improvements smallcompanies need to excel. You benefit from having us on the ground in Asia to take advantage of  Face to face/daily presence/same time zones  Removing long distance communication barriers  Seeing problems first hand  Saving cost; in some cases we cost no more than a  Reduced client travel/Reduced time out of office for production supervisor the client  Visiting the factory and staying when needed without  Source more efficiently in the same time zone impacting important tasks back homeOur staff works together with clients to understand the client’s management objectives. We thendevelop custom plans to meet objectives, including:  Program/project timelines  Budgetary/cost goals  Quality goals  Capacity requirements for growth  Performance reporting and improvement plans  Selecting the most qualified/cost effective subcontractor for the customer  Improved working relationships with the subcontractor Confidential 19
  • 20. Semiconductor Outsource Management Company supporting companies subcontracting in Asia Bad things can/do happen in a factory….!  Missed deliveries/pushed our parts aside for another customer  Cycle Time too long/die not moving for 3 months  Misprocessed lots/new process not implemented/thought they already fixed the process  Low Yields/Yield loss, throwing money away  Capacity is full /no sprint capacity  Can’t get the subcontractor to respond to emails When these real losses hit your bottom line, the importance of being proactive in your factory management is apparent;  $250k Lost-The factory just misprocessed product -process changes not implemented  $2mil/yr Lost-Low yields/Yield loss, throwing product in the trash bin/no one looking  $1.8mil/yr Lost –Not looking at competitive subcontract pricingAnd, when this happens to you, you’ll will be scrambling for damage control.Companies today cannot afford being reactive if they are to thrive/survive. Proactive is the onlyway forward in today’s business environment. SOMC is the PROACTIVE answer. Confidential 20