Global Community Affairs

Applied Materials: CSR & Community Programs Overview Global Conference on Business Ethics Santa Clara University February 17, 2005

Mike OFarrell Vice President, Global Community Affairs Applied Materials, Inc.

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Agenda
Company Overview (10 Minutes) Corporate Social Responsibility/Community Affairs (35
Minutes) Q&A (30 Minutes)

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You have probably used something made with Applied Materials Equipment
We make the machines that Make computer chips Make flat screen monitors and TVs Test pixels

Our customers make the computer chips

Intel, IBM, Samsung, Texas Instruments

To sell those chips to companies like

Dell, Sony, Nokia

So that all of us can buy computers, cell phones, games and other electronics.
Semiconductors, Flat Screens, Fab Service

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The Food Chain

Electronics Revenue
$1,170 Billion 3.2% of Worldwide GDP

Semiconductor Revenue
$214.3 Billion 18.3% of Electronics

Capital Spending
$41.4 Billion 19.3% of Semiconductor

WFE
$25.7 Billion

Source: Dataquest, Applied Materials Corporate Marketing estimates, WSTS, SEMI

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Applied Materials Overview

Fiscal 2004 revenue was $8.0 Billion
17% of net sales were in U.S. Net income was 16.9% of revenue

Cyclical business environment Approximately 12,000 employees in over 65 locations

throughout China; Europe and Israel; India, Malaysia and Singapore; Japan; Korea; Taiwan; and the United States Only five sites have 3% or more of worldwide employment base Only 17 sites have at least 100 employees Business is moving (and will continue to move) to Asia

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Applied Materials Overview

Past Awards & Recognition

Americas Most Admired Companies, Fortune Magazine 100 Best Corporate Citizens, Business Ethics 100 Best Managed Companies, Industry Week Top Ten Performing Stocks of the Decade, Smart Money 100 Best Companies to Work For, Fortune Magazine 50 Best Companies for Minorities, Fortune Magazine Corporate Education Partner of the Year in the Greater Bay Area, San Francisco Business Times Outstanding Corporation Award, Association of Fundraising Professionals of Austin, Texas; also AFP Silicon Valley Business in the Arts Award, Business Committee for the Arts & Forbes Magazine Climate Protection Award, U.S. Environmental Protection Agency

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Applied Materials Overview

Top Corporate Philanthropists in the Greater Bay Area
(Ranked by 2003 Cash Giving to Bay Area-based Nonprofits), San Francisco Business Times

Intel Corp. (#2) Applied Materials, Inc. (#5) Hewlett-Packard Co. (#8) IBM Corp. (#12) Cisco Systems, Inc. (#13) Microsoft Corp. (#14)

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Community Affairs: Supports Company Value and Corporate Citizenship

Company Value
Make a positive social contribution in our communities

Vision
Applied Materials is a world-class leader in corporate social responsibility and global citizenship.

Department Mission
To lead the Companys efforts in global corporate citizenship, ensuring that Applied Materials continually builds on its fundamental principles of positive social responsibility, active community involvement, innovative philanthropy, and employee engagement.

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Goals: Stakeholder Focus

Enable the Company to achieve goals with four key stakeholder groups Investors, Customers, Communities & Employees

Strategies Four key strategies have helped us to achieve reputation as a

leader in the community:
1. Be a leader and convener; use influence; innovate; focus 2. Re: larger investments, use a venture philanthropy model Be a proactive partner, rather than a passive grant-maker Be willing to invest R&D and C&F dollars Attract broad funding base 3. Use all corporate assets, not just dollars 4. Optimize impact by linking and leveraging investments

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Philanthropy Targets
Targeted Spending for Philanthropy 1% of the Companys pre-tax income Applied Materials Foundation formed in 1994 to help manage through cycles Spending distribution:
Education Civic Arts 65% 25% 10%

32% is outside of North America (excl. global programs) Employees contribute significantly (time and money)

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Current Representative Programs That Reflect Our Philosophy & Strategies

Education Education Initiative (Inaugural SF Bay Area Regional Award, 2004) University Partnership Committee Shanghai & Taiwan R&D Funds Civic Tech Awards/TLVN Housing Trust Fund Silicon Valley Childrens Hospital Semicon China 2005 Technical Symposium & Trade Show re: Environmental/Energy Saving Products and Solutions North America Food Drive Arts & Culture Art @ Applied (Incl. Mt. Fuji Climb) Other Tsunami: Leveraged Response w/Tech Awards Laureates Employee Giving/Global Giving Employee Volunteerism

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Next Steps / Opportunities

Expand Non-North America Regional Programs
Refine Focus & Spending Levels Enable Sustainable High Growth Business Climates (e.g.,
Trade Show/Technical Symposium re: Environmental & Energy Saving Solutions in China)

Corporate Social Responsibility Enhance Management

Process and Reporting; Use Interim Communications to Bolster Reporting to Stakeholders; Tell Our Strong Story Better Continue to Better Align Community Programs With Individual Employee Interests (Similar to Employee Giving and Volunteerism Programs), Especially to Address the Smaller Sites

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Q&A