Changewave Research: Semiconductor Industry Trends 2Nd Half 2005

ChangeWave Research: Semiconductor Industry Trends – 2nd Half 2005 July 22, 2005

ChangeWave Research Report: Semiconductor Industry Trends – 2nd Half 2005 Industry Outlook Improves – Consumer Market Now the Key Driver Overview The Alliance’s last quarterly sales survey showed an upturn for semiconductors. During the week of June 21 – 28, 2005, we went back to our semi industry members to see where the industry is headed for 2nd half 2005. A total of 96 members participated in the survey. Bottom Line: The survey findings show an improved outlook for semiconductors over the next six months, with the consumer marketplace as the key driver. Leading industry sub-segments include Communication Chips for Cell Phones and RFID Chips. Samsung is seen as the top company gaining market share in semis over the next 6 months, while Silicon Image, Broadcom and Intel also show strong positive momentum. On the down side, IBM, and AMD are seen as losing momentum. Surprisingly, 57% of industry respondents believe flash memory is likely to replace traditional hard drives in many electronic devices within the next two years. Respondents also see NAND flash memory outperforming NOR flash memory by a wide margin. (A) Overall Industry Trends  Improved Growth Projections for Rest of 2005. Twenty-nine percent (29%) of respondents see double-digit growth for the semi industry in 2nd half 2005, a 14-point increase over our last semi industry results in December 2004.  What’s Driving the Industry? Nearly half (48%) of our respondents say the Consumer Marketplace (Electronics) will be the key driver of the semi industry during the next six months – far ahead of the 19% who say it will be the Communications Marketplace (Telecom and Data Networking).  Best Performing Sub-Segments. Communication Chips for Cell Phones (Net Difference Score = +29) is seen as the strongest semi sub-segment over the next six months (although it’s dropped 9-points since our December survey). RFID Chips (+20) is also seen as doing well – but has dropped 17 pts.  Worst Performing Sub-Segments. Memory Chips (Net Difference Score = -23) looks to be the weakest performing sub-segment over the next six months. In addition, Power Management (-3) has declined 21-points since December.  Inventory. NOR Flash Memory (Net Difference Score = +4) is the sub-segment seen as showing the greatest signs of an inventory buildup. RFID Chips (-5) and Communications Chips for Cell Phones (-4) are the sub-segments seen as currently showing the most signs of an inventory shortage.  NAND Beating NOR in Flash Memory Market. Thirty-eight percent (38%) of respondents think NAND chips will perform best in the Flash Memory market, up 15- points since December. Conversely, only 3% think NOR chips will perform best.

This information is from ChangeWave Research, LLC and contains confidential business information. It may not be copied or distributed without permission. ©2005 ChangeWave Research, LLC. All rights reserved. ChangeWave Research: Semiconductor Industry Trends – 2nd Half 2005

 Flash Memory Likely to Displace Hard Drives. A majority of respondents (55%) think it’s likely that flash memory drives will almost completely replace traditional hard drives in many electronic devices within the next 12-24 months – while 38% think it is unlikely.  Increase in Capital Spending. Nearly two-in-three respondents (63%) see increases in capital spending on new fab capacity over the next 12 months, 7-points more than in December 2004.  Tighter Fab Capacity. Nineteen percent (19%) believe fab capacity utilization is now tight (90% or more), a 14-point increase from December 2004 – while the percentage reporting “Softer” fab capacity (less than 75%) dropped by 3-points. (B) Semiconductor Companies  Market Share Gainers. Samsung (Net Difference Score = +24) tops the list of companies respondents believe will gain market share in semis over the next 6 months. Silicon Image (+19) and Broadcom (+12) also scored well, along with Intel (+10) which had the biggest gain since our Dec ‘04 survey (Change in Net Difference Score = +17).  Market Share Losers. For the second consecutive survey, IBM (Net Difference Score = -23) is seen as most likely to lose market share, while AMD (+4) showed the biggest decline since our December survey (Change in Net Difference Score = -22). Summary of Key Findings Industry Outlook Semi Industry Flash Memory Improves Sub-segments Market  29% of respondents see Best Performers: NAND Beating NOR double-digit growth for the  Communication Chips for  38% think NAND chips semi industry in 2nd half Cell Phones (Net will perform best in the 2005 – 14-points more Difference Score = +29) Flash Memory market, up than in December 2004  RFID Chips (+20) 15-pts since Dec 2004  Only 3% think NOR chips Consumer Marketplace the Companies Gaining will perform best Key Driver Market Share Momentum  Nearly half (48%) say the  Samsung (+24) Flash Memory Likely to Consumer Market  Silicon Image (+19) Displace Hard Drives (Electronics) will be the  Broadcom (+12)  A majority (55%) think its key driver of the semi  Intel (+10) likely flash memory drives industry for next 6 months will almost completely  19% say Communications Losing Momentum replace traditional hard Marketplace (Telecom  AMD drives in many electronic and Data Networking)  IBM devices with in the next 12-24 months  38% think its unlikely

The ChangeWave Alliance is a group of 5,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

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Table of Contents

Summary of Key Findings...... 2

The Findings...... 4

(A) Key Industry Trends...... 4

(B) Semiconductor Companies ...... 11

(C) Other Industry Trends ...... 15

ChangeWave Research Methodology...... 17

About ChangeWave Research...... 18

I. The Findings

Introduction

The Alliance’s last quarterly sales survey showed an upturn for semiconductors. During the week of June 21 – 28, 2005, we went back to our semi industry members to see where the industry is headed for 2nd half 2005. A total of 96 members participated in the survey.

Total Respondents (n = 96)

(A) Key Industry Trends

(1) Question Asked: Do you believe there will be double-digit growth for the semiconductor industry in the 2nd half of 2005?

Current Previous Previous Previous Previous Previous Previous Survey Survey Survey Survey Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Apr ‘04 Nov ‘03 Aug ‘03 Jul ‘02 Yes - Double- 29% 15% 48% 78% 63% 28% 15% Digit Growth in 2nd half of 2005 Little Possibility 57% 68% 47% 20% 29% 52% 51% of Double-Digit Growth in 2nd half of 2005 Absolutely No 8% 12% 3% 2% 2% 14% 31% Possibility of Double-Digit Growth in 2nd half of 2005 Don't Know 5% 5% 2% 0% 5% 6% 2%

*Note: In the current survey we are asking about the ‘2nd half of 2005’, while in the Dec ’04 question we are asking about the ‘1st half of 2005’ and in the July ’04 and April ’04 questions we are asking about the ‘2nd half of 2005’. In the other previous survey questions we asked about either the 'current quarter' or 'next quarter'.

Improved Growth Projections for Rest of 2005. Twenty-nine percent (29%) of respondents see double-digit growth for the semi industry in 2nd half 2005, a 14-point increase over our last semi industry results in December 2004.

(2) Question Asked: What will be the key driver of the semiconductor industry for the next six months?

Consumer Marketplace (Electronics) 48% Communications Marketplace (Telecom and Data Networking) 19% Business Marketplace (Computer and Data Storage Hardware) 12% All of the Above 15% Don't Know 6% What’s Driving the Industry? Nearly half (48%) of our respondents say the Consumer Marketplace (Electronics) will be the key driver of the semi industry during the next six months – far ahead of the 19% who say it will be the Communications Marketplace (Telecom and Data Networking).

(3A) Question Asked: Which of the following semiconductor sub-segments do you think will perform the best over the next six months? (Choose No More Than Two)

Current Previous Previous Previous Previous Survey Survey Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Apr ‘04 Nov ‘03 Communications Chips for Cell Phones 34% 44% 39% 37% 42% RFID Chips 29% 39% 25% 33% 31% Communications Chips for Telecom 26% 18% 17% 17% 13% and Data Networking Gear Graphics/Video Chips 24% 24% 16% 17% 24% Flash Memory 16% 11% 38% 30% 33% Analog Chips 14% 14% 17% 18% 11% Microprocessor Chips 12% 3% 3% 5% 15% Logic/Programmable Chips 8% 9% 9% 8% 7% Power Management 7% 23% N/A N/A N/A Memory Chips 6% 3% 6% 17% 7%

(3B) Question Asked: And which of the following semiconductor sub-segments do you think will perform the worst over the next six months? (Choose No More Than Two)

Current Previous Previous Previous Previous Survey Survey Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Apr ‘04 Nov ‘03 Memory Chips 29% 30% 20% 22% 16% Analog Chips 24% 18% 11% 18% 18% Communications Chips for Telecom 19% 21% 31% 20% 35% and Data Networking Gear Logic/Programmable Chips 18% 20% 14% 10% 20% Microprocessor Chips 16% 32% 34% 33% 13% Graphics/Video Chips 12% 14% 14% 18% 9% Flash Memory 11% 9% 6% 7% 9% Power Management 10% 5% N/A N/A N/A RFID Chips 9% 2% 5% 3% 9% Communications Chips for Cell Phones 5% 6% 12% 18% 15% This information is from ChangeWave Research, LLC and contains confidential business information. It may not be copied or distributed without permission. ©2005 ChangeWave Research, LLC. All rights reserved. 6 ChangeWave Research: Semiconductor Industry Trends – 2nd Half 2005

Net Difference Score – Current Survey (June 2005)

Net Perform Perform Difference Best Worst Score Communications Chips for Cell Phones 34% 5% +29 RFID Chips 29% 9% +20 Graphics/Video Chips 24% 12% +12 Communications Chips for Telecom 26% 19% +7 and Data Networking Gear Flash Memory 16% 11% +5 Power Management 7% 10% -3 Microprocessor Chips 12% 16% -4 Logic/Programmable Chips 8% 18% -10 Analog Chips 14% 24% -10 Memory Chips 6% 29% -23

Change in Net Difference Score – Current Survey (June 2005) vs. Previous Survey (December 2004)

Current Previous Change Survey Survey in Net Net Net Differenc Differenc Difference e Score e Score Score Jun ‘05 Dec ‘04 Microprocessor Chips -4 -29 +25 Communications Chips for Telecom +7 -3 +10 and Data Networking Gear Memory Chips -23 -27 +4 Flash Memory +5 +2 +3 Graphics/Video Chips +12 +10 +2 Logic/Programmable Chips -10 -11 +1 Communications Chips for Cell Phones +29 +38 -9 Analog Chips -10 -4 -9 RFID Chips +20 +37 -17 Power Management -3 +18 -21

Best Performing Sub-Segments. Communication Chips for Cell Phones (Net Difference Score = +29) is seen as the strongest semi sub-segment over the next six months (although it’s dropped 9-points since our December survey). RFID Chips (+20) is also seen as doing well – but has dropped 17 pts. Worst Performing Sub-Segments. Memory Chips (Net Difference Score = -23) looks to be the weakest performing sub-segment over the next six months. In addition, Power Management (-3) has declined 21-points since December.

(3C) Question Asked: Which of the following semiconductor sub-segments - if any - are currently exhibiting signs of an inventory buildup (i.e., oversupply)?

Current Previous Survey Survey Jun ‘05 Dec ‘04 Microprocessor Chips 10% 14% Graphics/Video Chips 4% 2% Logic/Programmable Chips 4% 5% Memory Chips 4% 15% Flash Memory* NA 6% NOR Flash Memory* 4% NA NAND Flash Memory* 0% NA Communications Chips for Telecom and Data Networking Gear 3% 5% Analog Chips 3% 9% Communications Chips for Cell Phones 2% 9% RFID Chips 1% 0% Power Management 0% 0% None of the Above 12% 3% Don't Know 51% 33% Other 0% 0%

*Note: In the previous survey, Flash memory was one category and was not split into NAND Flash memory and NOR Flash memory. The percentage for Flash memory in the Dec ’04 survey was 6%.

(3D) Question Asked: And which of the following semiconductor sub-segments - if any - are currently exhibiting signs of a shortage (i.e., in short supply)?

Current Previous Survey Survey Jun ‘05 Dec ‘04 Microprocessor Chips 9% 2% Communications Chips for Cell Phones 6% 6% RFID Chips 6% 9% Communications Chips for Telecom and Data Networking Gear 5% 2% Graphics/Video Chips 4% 6% Logic/Programmable Chips 3% 2% Analog Chips 3% 3% Flash Memory* NA 6% NAND Flash Memory* 3% NA NOR Flash Memory* 0% NA Power Management 3% 2% Memory Chips 2% 0% None of the Above 8% 21% Don't Know 45% 42% Other 2% 0%

*Note: In the previous survey, Flash memory was one category and was not split into NAND Flash memory and NOR Flash memory. The percentage for Flash memory in the Dec ’04 survey was 6%.

Net Inventory Inventory Difference Oversupply Shortage Score NOR Flash Memory 4% 0% +4 Memory Chips 4% 2% +2 Logic/Programmable Chips 4% 3% +1 Microprocessor Chips 10% 9% +1 Analog Chips 3% 3% 0 Graphics/Video Chips 4% 4% 0 Communications Chips for Telecom and Data 3% 5% -2 Networking Gear NAND Flash Memory 0% 3% -3 Power Management 0% 3% -3 Communications Chips for Cell Phones 2% 6% -4 RFID Chips 1% 6% -5 Inventory. NOR Flash Memory (Net Difference Score = +4) is the sub-segment seen as showing the greatest signs of an inventory buildup. RFID Chips (-5) and Communications Chips for Cell Phones (-4) are the sub-segments seen as currently showing the most signs of an inventory shortage.

(4A) Question Asked: Looking specifically at Flash Memory, which type of flash memory chip do you think will perform the best over the next six months – NAND or NOR?

Current Previous Survey Survey Jun ‘05 Dec ‘04 Flash Memory (NAND) 38% 23% Flash Memory (NOR) 3% 8% Both Will Perform Equally Well 17% 21% Neither Will Perform Well 4% 5% Don't Know 38% 44%

NAND Beating NOR in Flash Memory Market. Thirty-eight percent (38%) of respondents think NAND chips will perform best in the Flash Memory market, up 15- points since December. Conversely, only 3% think NOR chips will perform best.

(4B) Question Asked: With the price of flash memory steadily decreasing, how likely is it that within the next 12-24 months flash memory drives will almost completely replace traditional hard drives in many electronic devices such as MP3 Players, PDAs, cell phones and other handhelds?

Very Likely 11% Somewhat Likely 44% Somewhat Unlikely 30% Very Unlikely 8% Don't Know 6% This information is from ChangeWave Research, LLC and contains confidential business information. It may not be copied or distributed without permission. ©2005 ChangeWave Research, LLC. All rights reserved. 9 ChangeWave Research: Semiconductor Industry Trends – 2nd Half 2005

Flash Memory Likely to Displace Hard Drives. A majority of respondents (55%) think it’s likely that flash memory drives will almost completely replace traditional hard drives in many electronic devices within the next 12-24 months – while 38% think it is unlikely.

(5A) Question Asked: Which of the following statements best reflects what you think will occur regarding capital spending on new fab capacity over the next 12 months?

Current Previous Previous Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Spending will increase significantly over the next 12 14% 3% 17% months Spending will increase marginally over the next 12 49% 53% 64% months Spending will not increase over the next 12 months 22% 23% 16% Spending will fall over the next 12 months 2% 9% 3% Don't Know 13% 12% 0%

Increase in Capital Spending. Nearly two-in-three respondents (63%) see increases in capital spending on new fab capacity over the next 12 months, 7-points more than in December 2004.

(5B) Question Asked: And which one of the following four categories do you see as the number one area for capital spending by chip companies over the next 12 months?

Current Previous Previous Previous Previous Previous Previous Previous Survey Survey Survey Survey Survey Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Apr ‘04 Aug ‘03 Jan ‘03 Nov ‘02 May ‘02 New 300mm 46% 44% 39% 35% 12% 32% 33% 22% Fab Construction New 200mm 3% 3% 2% 3% N/A N/A N/A N/A Fab Construction Fab Upgrades 19% 23% 30% 30% 58% 37% 42% 50% for Shrinking to .18 Micron or Less Fab Upgrades 8% 9% 12% 22% 8% 8% 9% 13% to Support Increased Shipment Volume Don't Know 24% 21% 18% 10% 20% 16% 7% 6%

Capital Spending Segments. New 300mm Fab Construction (46%) is still seen as the number one area for capital spending over the next 12 months, 2-points more than in the December 2004 survey.

(5C) Question Asked: Some analysts claim many fabs are running at 90% of capacity or more. Others question these numbers. Which of the following statements best reflects what you are seeing and/or hearing in terms of fab capacity utilization?

Current Previous Previous Previous Previous Survey Survey Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Apr ‘04 Nov ‘03 Fab Capacity utilization is tight 19% 5% 39% 57% 13% (90% or more) overall Fab Capacity utilization is firm 51% 70% 45% 25% 65% (75% to 89%) overall Fab Capacity utilization is 9% 12% 2% 3% 7% softer than expected (less than 75%) overall Don't Know 20% 14% 12% 12% 7% Other 1% 0% 2% 3% 7%

Tighter Fab Capacity. Nineteen percent (19%) believe fab capacity utilization is now tight (90% or more), a 14-point increase from December 2004 – while the percentage reporting “Softer” fab capacity (less than 75%) dropped by 3-points.

(B) Semiconductor Companies

(6A) Question Asked: Let's focus on the chip companies themselves. Based on your own knowledge and what you are seeing in the industry, which of the following chip vendors are most likely to pick-up market share over the next six months? (Check All That Apply)

Current Previous Previous Previous Previous Survey Survey Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Apr ‘04 Nov ‘03 Intel 26% 17% 20% 23% 40% Texas Instruments 26% 35% 31% 50% 45% AMD 24% 35% 17% 15% 15% Samsung 24% N/A N/A N/A N/A Silicon Image 19% 11% 11% 22% N/A Broadcom 17% 15% 19% 15% 11% Nvidia 16% 12% 5% 15% 16% Freescale Semiconductor 15% N/A N/A N/A N/A ATI Technologies 12% 12% 11% 5% 15% Taiwan Semi 12% 14% 19% N/A N/A Maxim Integrated Circuits 11% 5% 11% 12% 13% Linear Technology 10% 9% 11% N/A N/A Sandisk 10% 12% 23% 18% 29% Xilinx 9% 11% 22% 17% 16% Analog Devices 8% 11% 14% 22% 15% National Semiconductor 8% 12% 14% 15% 11% LSI Logic 6% 9% 6% 7% 7% Altera 6% 0% 6% 8% 11% Intersil 5% 5% 2% 5% 4% Micron 5% 6% 8% N/A N/A Semiconductor Manufacturing 5% 5% N/A N/A N/A International ST Micro 5% 3% 3% 12% N/A Pixelworks 4% 5% 3% 5% 0% Sigma Designs 3% 3% N/A N/A N/A United Micro 3% 0% 5% N/A N/A Applied Micro 2% 6% 9% N/A N/A Genesis Microchip 2% 5% 3% 7% 9% IBM 1% 8% N/A N/A N/A ESS Technology 1% 0% 2% N/A N/A Vitesse Semiconductor 1% 3% 2% 2% 0% Zoran 1% 2% 8% 13% 22% Catalyst Semiconductor 0% 0% N/A N/A N/A Cirrus Logic 0% 2% 11% 0% 7% PMC-Sierra 0% 0% 2% N/A N/A Trident Microsystems 0% N/A N/A N/A N/A Other 5% 3% 6% 10% N/A

(6B) Question Asked: And which of the following chip vendors are most likely to lose market share over the next six months? (Check All That Apply)

Current Previous Previous Previous Previous Survey Survey Survey Survey Survey Jun ‘05 Dec ‘04 Jul ‘04 Apr ‘04 Nov ‘03 IBM 24% 15% N/A N/A N/A AMD 20% 9% 16% 27% 24% Intel 16% 24% 25% 15% 7% Micron 12% 12% 11% N/A N/A Applied Micro 8% 2% 8% N/A N/A PMC-Sierra 8% 2% 9% N/A N/A Sandisk 8% 5% 6% 8% 2% ATI Technologies 7% 2% 2% 2% 5% ST Micro 7% 3% 8% 10% N/A Vitesse Semiconductor 7% 6% 6% 5% 7% National Semiconductor 6% 12% 9% 15% 15% Maxim Integrated Circuits 6% 6% 3% 3% 5% Altera 5% 5% 9% 7% 4% Broadcom 5% 12% 6% 7% 11% Analog Devices 5% 8% 3% 10% 7% LSI Logic 5% 6% 12% 12% 11% Nvidia 5% 3% 9% 8% 24% Freescale Semiconductor 3% N/A N/A N/A N/A Intersil 3% 6% 5% 7% 13% Texas Instruments 3% 3% 6% 8% 2% Trident Microsystems 3% N/A N/A N/A N/A Xilinx 3% 3% 1% 3% 2% Cirrus Logic 2% 3% 5% 8% 11% ESS Technology 2% 3% 5% 10% 2% Pixelworks 2% 2% 3% 2% 5% Taiwan Semi 2% 3% 2% N/A N/A Zoran 2% 9% 3% 5% 7% Catalyst Semiconductor 1% 2% N/A N/A N/A Genesis Microchip 1% 2% 3% 5% 5% Linear Technology 1% 2% 5% N/A N/A Semiconductor Manufacturing 1% 2% N/A N/A N/A International United Micro 1% 6% 5% N/A N/A Samsung 0% N/A N/A N/A N/A Sigma Designs 0% 3% N/A N/A N/A Silicon Image 0% 0% 0% 2% N/A Other 2% 0% 3% 2% N/A

Pick-up Lose Net Market Market Difference Share Share Score Samsung 24% 0% +24 Texas Instruments 26% 3% +23 Silicon Image 19% 0% +19 Broadcom 17% 5% +12 Freescale Semiconductor 15% 3% +12 Nvidia 16% 5% +11 Intel 26% 16% +10 Taiwan Semi 12% 2% +10 Linear Technology 10% 1% +9 Xilinx 9% 3% +6 ATI Technologies 12% 7% +5 Maxim Integrated Circuits 11% 6% +5 AMD 24% 20% +4 Semiconductor Manufacturing International 5% 1% +4 Sigma Designs 3% 0% +3 Analog Devices 8% 5% +3 Intersil 5% 3% +2 National Semiconductor 8% 6% +2 Pixelworks 4% 2% +2 Sandisk 10% 8% +2 United Micro 3% 1% +2 Altera 6% 5% +1 Genesis Microchip 2% 1% +1 LSI Logic 6% 5% +1 Catalyst Semiconductor 0% 1% -1 ESS Technology 1% 2% -1 Zoran 1% 2% -1 Cirrus Logic 0% 2% -2 ST Micro 5% 7% -2 Trident Microsystems 0% 3% -3 Applied Micro 2% 8% -6 Vitesse Semiconductor 1% 7% -6 Micron 5% 12% -7 PMC-Sierra 0% 8% -8 IBM 1% 24% -23

Change in Net Difference Score – Current Survey (June 2005) vs. Previous Survey (December 2004) Current Previous Change Survey Survey in Net Net Net Difference Difference Difference Score Score Score Jun ‘05 Dec ‘04 Intel +10 -7 +17 Broadcom +12 +3 +9 United Micro +2 -6 +8 Silicon Image +19 +11 +8 Maxim Integrated Circuits +5 -1 +6 Altera +1 -5 +6 Zoran -1 -7 +6 Intersil +2 -1 +3 Sigma Designs +3 0 +3 ESS Technology -1 -3 +2 Linear Technology +9 +7 +2 Nvidia +11 +9 +2 National Semiconductor +2 0 +2 Semiconductor Manufacturing International +4 +3 +1 Catalyst Semiconductor -1 -2 +1 Analog Devices +3 +3 0 Taiwan Semi +10 +11 -1 Pixelworks +2 +3 -1 Micron -7 -6 -1 Xilinx +6 +8 -2 LSI Logic +1 +3 -2 Genesis Microchip +1 +3 -2 ST Micro -2 0 -2 Cirrus Logic -3 -1 -2 Vitesse Semiconductor -6 -3 -3 Sandisk +2 +7 -5 ATI Technologies +5 +10 -5 PMC-Sierra -8 -2 -6 Texas Instruments +23 +32 -9 Applied Micro -6 +4 -10 IBM -23 -7 -16 AMD +4 +26 -22 *Note, Change in Net Difference Score is not calculated for Freescale, Samsung or Trident Microsystems, because they were not included as chip vendors in the previous survey.

Market Share Gainers. Samsung (Net Difference Score = +24) tops the list of companies respondents believe will gain market share in semis over the next 6 months. Silicon Image (+19) and Broadcom (+12) also scored well, along with Intel (+10) which had the biggest gain since our Dec ‘04 survey (Change in Net Difference Score = +17).

Market Share Losers. For the second consecutive survey, IBM (Net Difference Score = -23) is seen as most likely to lose market share, while AMD (+4) showed the biggest decline since our December survey (Change in Net Difference Score = -22).

(C) Other Industry Trends

(7) Question Asked: Please name the company that you think currently has the “hottest” chip within the following product lines:

(A) Flat Panels (n=33)

Samsung 24% Silicon Image 18% Pixelworks 9% Texas Instruments 9% Genesis 6% Other 27% Don’t Know 12%

(B) Wireless Handheld Devices (n=33)

Texas Instruments 27% Broadcom 12% Palm 9% Intel 6% Other 33% Don’t Know 15%

(C) PCs (Desktops & Laptops) (n=45)

Intel 40% AMD 36% Dell 8% ATI 4% Other 9% Don’t Know 4%

“Hottest” Chips. Respondents name Samsung (24%) as the company having the “hottest” chip in the Flat Panel product line. Texas Instruments (27%) comes out on top in Wireless Handheld Device products. Intel (40%) and AMD (36%) are seen having the “hottest” chips for PCs.

(8) Question Asked: Based on what you are seeing in terms of current chip demand, what do you think will be the “hottest” product for the November- December Holiday season? (n=52)

Video Game Consoles (XBox, Playstation, PSP) 23% Cell Phones 21% MP3/iPod Players 13% HDTV 8% LCD 8% Handhelds 6% AMD 64/Flash memory 4% Digital Cameras 4% Other 25% Don’t Know 10% *Note some respondents named more than one product.

(9) Question Asked: What impact – if any – do you think the recently announced Apple/Intel deal will have on the semiconductor industry? Please explain. (n=53)

Positive Impact 25% Negative Impact 15% Mixed Impact 15% Little to No Impact 45%

Impact from Apple/Intel Deal. While one-in-four (25%) see a positive impact from the Apple/Intel deal, 15% see a negative impact on the semiconductor industry. As respondent RHN18807 writes, "Similar to the Power PC effect; computer systems and software will be more compatible to each other." Respondents GIN6612 adds, "Increase in market share for Intel, reduction in market share for IBM, Freescale."

Still, 45% think the deal will have little to no impact. Respondent MIK2846 explains, "Overall, not that much in and of itself since the overall volume represented by the switch is small compared to the entire semiconductor business. I do see it as symptomatic of the consolidation that occurs when an industry is as mature as semis are. There is and will be less room for innovative new technologies."

II. ChangeWave Research Methodology

This report presents the findings of the latest ChangeWave Alliance survey on the Semiconductor industry. The survey was conducted between June 21 - 28, 2005. A total of 96 Alliance Semiconductor industry members participated.

The Alliance’s proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members.

ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, interprets and reconciles the information in a cohesive manner and converts the information into valuable quantitative and qualitative reports.

The Alliance has assembled its membership team from senior technology and business executives in leading companies of select industries. Nearly 3 out of every 5 members (58%) have advanced degrees (e.g., Master’s or Ph.D.) and 94% have at least a four- year bachelor’s degree.

The business and investment intelligence provided by the Alliance provides a real-time view of companies, technologies and business trends in key market sectors, along with an in-depth perspective of the macro economy – well in advance of other available sources.

III. About ChangeWave Research

ChangeWave Research, a subsidiary of Phillips Investment Resources, LLC, identifies and quantifies "change" in industries and companies through surveying a network of thousands of business executives and professionals working in more than 20 industries.

ChangeWave has a very unique asset in its 5,000-member Alliance. We have assembled our membership team from a broad cross section of more than 20 vertical markets such as telecom, semiconductors, data storage, and biotechnology, along with a wide range of professional disciplines including CIOs, IT managers and programmers, executive management, scientists, engineers and sales personnel.

The ChangeWave Alliance is composed of senior technology and business executives in leading companies - credentialed professionals who spend their everyday lives working on the frontline of technological change.

This proprietary research and business intelligence gathering system provides a real-time view of companies, technologies and business trends in key market sectors along with an in-depth perspective of the macro economy - well in advance of other available sources. ChangeWave surveys its 5,000 Alliance members on a wide range of investment research topics and converts the findings into valuable investment and business intelligence reports. ChangeWave delivers its products and services on the Web at www.ChangeWave.com.

ChangeWave Research does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.

For More Information:

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This information is from ChangeWave Research, LLC and contains confidential business information. It may not be copied or distributed without permission. ©2005 ChangeWave Research, LLC. All rights reserved. 19