Why America Needs the Revitalize American Manufacturing and - PowerPoint PPT Presentation

Why America Needs the Revitalize American Manufacturing and Innovation Act (RAMI) Dr. David J. Hemker Chief Technology Officer Lam Research Corporation U.S. House of Representatives April 29, 2014

Lam Research at a Glance n Headquartered in Fremont, California, with global operations n 2 nd largest U.S. supplier of semiconductor manufacturing equipment (3rd globally) n Approximately $4 billion in CY 2013 revenues n Approximately $700 million invested in R&D in CY 2013 n 4,000 full time U.S employees, average salary of $120,000 n 80% of U.S. employees with 4 year or higher degrees n 90% of manufacturing in the US (CA, OR, OH) n Purchase $1.5B in raw materials from U.S. suppliers n 85% of revenues from exports Lam Research manufacturers the equipment that makes the chips that fuel the global electronics industry v8 Slide - 2

All Advanced Chips are Made with Lam Equipment Plasma Etch Photoresist Strip Atomic Layer Deposition Plasma Enhanced Electrochemical Deposition Spin Wet Clean Chemical Vapor Deposition v8 Slide - 3

Lam Research Invests in R&D through Market Cycles R&D Spending Annual Revenue Millions Millions $800 $4,000 $700 $3,500 SEA $600 China $3,000 Taiwan $500 Korea $2,500 Japan $400 Europe $2,000 N. America $300 $1,500 $200 $1,000 $100 $500 $0 $0 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 Historical data reflects combined R&D spending for Lam and Novellus v8 Slide - 4

Lam’s Role in the Electronics Ecosystem Source: SIA, IC Insights and VLSI, April 2014 v8 Slide - 5

A Vital Industry – Semiconductor Manufacturing Equipment 2011-2013 Description 3 yr Average $37.4 B Global semiconductor manufacturing equipment market $15.2 B Semiconductor manufacturing equipment sales by U.S. companies U.S.-made share of global semiconductor manufacturing equipment 41% sales U.S.-made semiconductor manufacturing equipment sales to foreign $12.2 B markets Portion of U.S.-made semiconductor manufacturing equipment 80% exported 70,000 Direct U.S. semiconductor equipment industry jobs 350,000 Indirect U.S. semiconductor manufacturing jobs Source: SEMI, April 2014 v8 Slide - 6

U.S. Leadership in Semiconductor Equipment Now at Risk Semiconductor Chip Fabrication Semiconductor Equipment Manufacturing Regional distribution of manufacturing capacity Semiconductor Equipment Spending By Region 100% 2004 2014 est. 90% 80% 70% 8% 13% Asia Pacific 60% Japan 15% 50% Europe 40% 22% North America 30% 65% 77% 20% 10% 0% Europe ¡ 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 North ¡America ¡ Source: World Fab Watch Far ¡East ¡ Equipment Sales by Producer Region Silicon Wafers Shipped to End Market 60% Regions 12000 50% 10000 America 40% 8000 Japan 30% ROW 6000 20% 4000 10% 2000 0% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 2012 1983 Source: SEMI 7 v8 Slide - 7

Lam Research Supports RAMI Legislation n Increased R&D is critical for Lam to remain competitive as products become more complex in response to increasing technical demands n Significant technology inflections are approaching that require investments above high levels already invested n Lam believes retaining U.S. leadership in the semiconductor equipment manufacturing industry is vital n Foreign governments are offering Dave Hemker, CTO, Lam Research and Speaker John substantial incentives aligned with these Boehner at Lam Research Subsidiary Silfex (November 2013) technology inflections to Lam to move manufacturing overseas Lam Research supports and urges Congress to pass the Revitalize American Manufacturing and Innovation (RAMI) Act of 2013 (H.R. 2996 and S. 1468) v8 Slide - 8

Sample Foreign Semiconductor Equipment Incentives Country or Government Published Information Related to Publicly Stated Goals Region Agency or Policy Equipment Funding • $600B for seven priority areas, two of High-end manufacturing equipment is one of 12 th Five Year Plan (2011-2015) - which include equipment; seven new strategic priorities;. Eliminate China high end manufacturing • $200M-400M in equipment subsidies dependence on the West for advanced equipment from local governments 2007-2011 semiconductor equipment Industrial Development Bureau Specific funding not disclosed; operating Goal of 20% front-end and 60% back-end under Ministry of Economic Affairs Taiwan subsidies and tax incentives offered domestic semiconductor equipment market share (MOEA) $130M over five years (2007-2012) Goal of 50% domestic semiconductor equipment Ministry of Knowledge Economy • $55M government and materials market share by 2015 from home (MKE) – Semiconductor National S. Korea • $55M matching grown companies including SEMES, Jusung, Project 2015 • $20M customers Wonik IPS, Eugene, DMS, Mujin and others; • $250M from ENIAC for nanoelectronics R&D, including equipment Goal of 20% European semiconductor market ENIAC Joint Undertaking European share • $80B in funding from 2014 to 2020 for Union Horizon 20 / 20 R&D to increase European Goal of 450 mm pilot line competitiveness, with 20/10/100 program specific to equipment • $115M (1996-2001) to fund wafer Protect silicon manufacturing; Develop key Ministry of International Trade & development technologies for silicon wafers and backward Japan Industry - Super Silicon Initiative • $100M per year NEDO Mask Program integrate learning to 300mm Sources: Digitimes Research, Special Report 2011; KPMG China’s 12 th Five Year Plan Overview, March 2011, APCO worldwide 2010; Department of Industrial Technology (DoIT), Ministry of Economic Affairs (MOEA) Annual Report to the 7th Session of the First Parliament, Digitimes, November 2011, JRC Technical Notes, Trends in Public and Private Investments in ICT R&D in Taiwan; South Korean Ministry of Economy, CK Cho, Consultant translated from published documents, Asian Technology Information Program (ATIP); ENIAC Joint Undertaking, Project Profile EEMI450; Super Silicon Crystal Research Institute Corporation, World Technology Evaluation Center (WTEC), Inc., SEMICONportal.com June 27, 2011, Japan’s EUVL R&D project launched with Intel, Samsung, TSMC and Hynix participating; Toru Nakayama, NEDO, June 17, 2011 9 v8 Slide - 9

Lam Research Supports RAMI Legislation n RAMI would establish a public-private partnership called the Network for Manufacturing Innovation (NMI) to accelerate manufacturing innovation in the U.S. for proven industries n Requires substantial cost match from industry in the NMI centers n RAMI supports the gap in development between research and commercialization to scale up new ideas required to expand manufacturing and retain and grow jobs in the U.S. n Supports industries and entire supply chains, not a single company n Centers must be self-sustaining after seven years n Bill requires an offset n Lam believes RAMI helps to create a level playing field compared to foreign governments n Lam believes it is important to set up a formal program so we can fairly compete for a semiconductor manufacturing equipment NMI center Lam Research supports and urges Congress to pass the Revitalize American Manufacturing and Innovation (RAMI) Act of 2013 (H.R. 2996 and S. 1468) v8 Slide - 10

Mission, Vision, and Core Values Mission Lam Research is dedicated to the success of our customers by being the world-class provider of innovative technology and productivity solutions to the semiconductor industry Vision Core Values n Number one in customer trust n Achievement n Number one in market share n Honesty and integrity n A company where successful people n Innovation and continuous improvement want to work n Mutual trust and respect n Best-in-class products and services n Open communication n Financial performance to: n Ownership and accountability – Fund the solutions our customers require n Teamwork – Provide the return our shareholders expect n Think: customer, company, individual v8 Slide - 12

Lam Research Company Milestones 1980 1990 2000 2005 2010 1980 1994 2001 2005 2010 Company founded Ground breaking for Acquired Stephen G. Newberry Achieved $3B annual revenue by David K. Lam Fremont, California Gasonics International appointed President & CEO campus 2011 Bangalore, India, software 1984 2006 development office opens Opened manufacturing facility 1995 IPO and LRCX listing on Achieved $2B annual revenue in Livermore, California NASDAQ Achieved $1B annual 2002 Corus Manufacturing, Ltd., revenue 2008 Novellus founded by Tualatin, Oregon JV established in Korea Acquired SEZ AG, Brad Mattson campus opens 1997 now Lam Research AG 2012 1985 James W. Bagley Martin B. Anstice Martin B. Anstice Established global appointed CEO appointed COO appointed President & CEO presence with offices Stephen G. Newberry Acquired Novellus Systems in Asia and Europe 2009 appointed Executive VP Timothy M. Archer Launched Silfex, Inc., a & COO appointed COO 1988 division of Lam Research Novellus goes public $20M partnership established 2013 with the College of Nanoscale Achieved first $1B revenue Science & Engineering, quarter University at Albany SUNY v8 Slide - 13