Larry Sladewski, Senior Director of Materials at NVIDIA and Intrigo, will give you an update on NVIDIA's supply chain initiative. This presentation will focus on critical operations and the need to dynamically reallocate build plans, WIP, and inventory across the supply chain. [Presented at the 2012 SAP Summit on Suppy Chain Management in Palo Alto, CA]

1. Engineering Your Supply Chain
for Exponential Growth
July 25, 2012

2. 2
Agenda
NVIDIA overview
Intrigo overview
State of the industry
Business problem
CODE solution overview
Complete
Optimized
Data
Engine
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

3. NVIDIA Facts 3
Founded in 1993
Jen-Hsun Huang is co-founder,
president, and CEO
Listed with NASDAQ in 1999, under
the symbol NVDA
Invented the GPU in 1999, more than
one billion shipped to date
FY12: $4 billion in revenue
7,500 employees worldwide
5,000 patents issued, allowed or filed
Headquartered in Santa Clara, CA
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

4. 4
From Super Phones to Super Cars
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

5. 5
Core Technologies and Brands
GPU Mobile Cloud
GeForce® Tegra® VGX ™
Quadro® , Tesla® GeForce® GRID
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

6. 6
About Intrigo
We are a Premier Enterprise Consultancy, focused on orchestrating Customer
Value Networks at the confluence of Demand, Supply and Innovation.
Respond Supply Demand Sense
OUR SERVICES
Advisory
Re-architect the planning processes
Create
Usability / workflow re-model Source: AMR
Enterprise Architecture and Software components
Implementation
Complete turnkey implementation Innovate
Assemble to deliver
Support
Offshore project/engineering delivery
Planning Analytics
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

7. 7
Intrigo Systems’ Clients
“The ability of Intrigo’s leadership team to execute
in a complex, multi-party environment directly
contributed to the success of our project."
-- John Hanna,
Director - iPlan Project, Clorox
“Intrigo's deep industry domain knowledge and
their expertise in SAP made for an effective
implementation of our Business Systems. Their
commitment and focus to making us successful
make Intrigo a key partner for Aptina.”
-- Joe Passarello, CFO, Aptina Imaging
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

8. Outsourced Manufacturing 8
NVIDIA selects proven subcontractors and processes
Capacity is allocated through a forecast : commit
communication cycle
NVIDIA may invest in testers and custom hardware
Vendor process stability and execution are monitored
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

9. 9
Capacity Alignment
NVIDIA provides an annual Vendors respond with an annual
forecast to vendors capacity commitment
Every month, NVIDIA provides a Vendors respond with a commitment to
6-month rolling forecast the 6-month plan
NVIDIA places purchase orders Vendors respond with acknowledgements
as required and delivery commitments
Weekly meetings review loading flexibility, WIP, delivery status, and action plans
Quarterly Business Reviews scrutinize goals and develop improvement plans
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

10. 10
State of Supply Chain Planning
in the Semiconductor Industry
• Discrete vs. attribute-based part numbers
• Multiple postponement points
• Optimization planning models
• Long lead time materials (finished wafers)
• Capacity-constrained, high value materials
• Test equipment, allocation to multiple subcons, cost
• Heuristic planning models
• Order-based planning (customer centric models)
• Lead time assumptions for fabless firms are vague
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

11. Supply : Demand Planning Cycle 11
SAP/ APO
Field Sales System
Customer / Sales Forecast
Monthly Cycle Boards
Supply
Fiscal
Sales Plan
Planning commits supply to
specific dates, recorded in SAP
Demand Chips
Supply
APO
Demand Planning (Sales & Business System
Units) place a demand on Operations
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

12. 12
Supply Chain Planning Evolution
GATP with product Inventory forecasting and
allocation (SAP APO) supply-demand alignment
Demand planning (SAP APO with BO dashboards)
(SAP APO)
Postponement planning
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
VMI deployment CODE
FCD improvements • Constrained planning
• Optimized planning
• Scenario planning
Unconstrained supply plans
(SAP APO – PPDS heuristics)
12-month supply commit
Aggregate wafer
Planning
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

13. 13
Business Problem
NVIDIA's business has grown more complex
Our ability to project, manage and optimize our wafer supply has
entered the critical path of our growth
Existing spreadsheet-driven processes cannot scale to the growth
of our business (market segments, number of SKUs, product
complexity)
Today’s focus is to align supply to marketing demand by SKU
Tomorrow, beyond alignment, we want to employ production plans
optimized for flexibility and efficiency
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

14. Planning Priorities for System Development 14
(Summer 2011)
Excel Excel
MANUFACTURING STEP Complete Scenario Optimized Integrated
Planning Planning
TO BE PLANNED Planning Planning Planning Planning
single user multi user
Wafer Production
done 1 3 10 16 -
(GPU, interposer)
Post Fab Wafer Processing
2 4 12 17 -
(bump, sort, backgrind)
Assembly BOM Components
done 8 - - -
(substrates, interposer die)
Assembly Services
done 5 15 19 -
(die mounted into a package)
Post Assembly Validation
done 6 14 20 -
(ATE, burn-in)
Configuration
done 7 11 18 -
(SLT, tape & reel)
FG BOM Components
done 13 - - -
(kitted memory)
Logistics
9 21 - -
(factories, hubs, EOQ)
Excel planning on a single user system
Excel planning using a shared drive
Complete planning: all data elements visible in the system, must have at least MRP II capabilities
Scenario planning: extracting data from the system, manipulating data in a structured way, and saving results
Optimized planning: system generated best answers for problems contained within the Chip Ops silo
Integrated planning: active links with Sales, BU, & Finance tools; i.e., mutual plans re-align at least daily
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

15. Wafer Planning in Multi-User Excel 15
Supply–demand
matching occurs
in APO. It does
not optimize and
is a deterministic
model.
Supply and
demand are Shared Drive
consolidated at Folder for
the wafer level Virgin Data
and the global
location level.
Shared Drive
18 files pulled Folder for Data
out of systems Cleaning
of record. Workbooks
Large files
exceed 50,000 Shared Drive
rows. Folder for
One workbook
Calculation &
per file is
Analytics
archived each
Workbooks
week.
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

16. Functionality Comparisons- Business 16
(Fall 2011)
Criteria SAP i2/JDA
Data input / management Satisfactory Satisfactory-excellent
Engine – LP TBD – may not be needed Excellent
Engine – heuristics Satisfactory Satisfactory
Integration with SAP ERP Excellent Satisfactory
Scenario management Satisfactory Satisfactory-excellent
Analytics Satisfactory-excellent Satisfactory
i2 is the better product in terms of core functionality required for Chips Planning
APO has seamless integration with our SAP ERP system
A custom user interface ‘skin’ will be required for APO to ensure data input accuracy
A custom report writer for analytics will be required for APO
Add-ons to the APO LP Optimizer may be required (TBD)
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

17. Risk Factors- IT Judgment 17
(Fall 2011)
Criteria SAP / Intrigo i2/JDA
Perceived quality of solution Medium Low
(‘completeness’ of functionality)
Implementation experience Medium Low
(semiconductor industry)
Financial viability of vendor Low Low
Integration challenges Low Low-Medium
Vendor ‘depth’ of bench Medium Low-Medium
Overall risk of moving forward with Medium Low
vendor
i2 has the LP Optimization, Scenario Analyzer and Planning Data user interface
deployed in multiple semiconductor companies. But we have no i2 expertise in house
and we have to manage the seamless integration with SAP .
SAP has less semiconductor experience than i2 and a user interface ‘skin’ that needs
to be custom-developed for ease of use. TCO is significantly less than i2.
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

18. 18
Design Guiding Principles
• NVIDIA challenges are vanilla
• Manufacturing flows are “typical” semiconductor, including binning
• Goals: no planning in Excel & improve the data quality
• Master data must be capable of being easily maintained
• Planning rules maintained in Business language
• Transparent for other NVIDIA teams to use
• Results must be explainable to executive management
• Models must enable postponement strategies & buffers
• Scenario & bridge analysis support will be required
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

19. 19
Planning Solution Overview
Wafer allocation by
Optimization
product:
for wafer
constrained for
planning
backend planning
Backend planning
to determine PFG supply:
assembly starts & constraint for SLT
PFG starts to planning
support the forecast
SLT planning to Projected
determine PFG finished goods
starts for demand for order
signal commitments
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

20. 20
Planning Solution Overview
Wafer allocation by
Optimization
Wafer Planning by SAP APO
product:
for wafer
constrained for
planning Optimizer
backend planning
Backend planning
to determine
Backend planning byPFG supply:
assembly starts &
SAP APO
constraint for SLT
PFG starts to Optimizer planning
support the forecast
SLT planning to Projected
Backend SLT planning by
determine PFG finished goods
starts for demand for order
SAP CTM commitments
signal
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

21. 21
Planning Solution Overview
Wafer allocation by
Optimization
Wafer Planning by SAP APO
product:
for wafer
constrained for
planning Optimizer
backend planning
Backend planning
to determine
Backend planning byPFG supply:
SAP APO
Custom UI
assembly starts for Data constraint for SLT
& Management
PFG starts to Optimizer planning
support the forecast
SLT planning to Projected
Backend SLT planning by
determine PFG finished goods
starts for demand for order
SAP CTM commitments
signal
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

22. Reference Model Example 22
Fab Bump Sort Assy Test SLT
Un bumped Unsorted Wafer Sorted Wafer Die FG
Back Assembly PFG/FG
Wafer grind
Backgrinded Tape
Die &
Reel
Three supply plans are generated:
Fab to die (2 year horizon)
Die to FG (1 year horizon)
SLT / T&R ad hoc runs (4 week horizon)
Focus on data, priorities, rules, and system generated supply plans
Modular locations- easily added or removed as supply chain evolves
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

23. 23
CODE Inputs & Outputs
DATA OPTIMIZER RESULTS
Inventory Strategies
Unconstrained Supply
Product Priorities
FG Supply Commit
Demand
CODE
Product Data Die/Capacity Max Supply
SAP
Platform
Capacity
Scenarios – What-if’s
Materials
Execution Instructions
Factory Loading Strategies
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

24. 24
Business Rules for Planning
• Ease of maintenance
• Excel like interface
• Demand segmentation priority
Priorities • Master data scenario management
• BOM priority
• Time phased data
• Subcon loading priority
• Yields
• Resource availability
• Resource consumption
• Time phase priorities
• Product
• SKU selection • Demand segmentation
Rules • Lean rule • BOM
• BOM downbinning
• Routing
• Max and Min volume constraints
Strategies • Buffer stock
• Subcon quota
• Product substitution
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

25. 25
Planning Data Flow Overview
Input Screens Planning Data
APO Planning Engine
Management Tool
Build Rules
Build Strategies
Time Phased Data
Data
Repository
ECC Master Data transfer
Publish to Output
APO Master Data transfer
APO Planning Engine Data
Warehouse
APO Master Data transfer Transaction Data Planning Results
Core Interface
Standard SAP component to transfer planning input data (Master &
Transaction Data) and output data (planning results)
Execution instructions to subcon
ECC
Confirmations from subcon
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

26. 26
Planning Scenarios Overview
POR version
Wafer capacity-constrained version
Wafer Plan
Wafer capacity-unconstrained version
Backend material and capacity-constrained version
Backend material-constrained, capacity-unconstrained version Backend Plan
Backend constrained, push production
SLT material and capacity-constrained version
SLT Plan
SLT material-constrained, capacity-unconstrained version
Scenario solves as per the requirement
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

27. Problem Data Set 27
Engine: SAP SNP Optimizer
Solve Type: linear
Horizon: 2 years
Cost Model: relative cost model engine
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit

28. 28
Thank You
NVIDIA Confidential July 25, 2012 SAP Supply Chain Summit