Technology: Semiconductors

Update
Intel Corporation (INTC: $18.37) 1/Buy
Monday, August 30, 2010 Price Target: new: $26; old: $30

52 Week Range
MARKET DATA
$18.12-$24.37
Lowers 3Q10 Guidance On US/Euro Consumer PC
ADT - 3 month 71.3 Weakness; Maintain 1/Buy W/EPS Cuts Fully Priced In.
Market Cap (Bill) $102.28
Shares Out 5,568 Summary and Recommendation
Float 5,562 Friday INTC resolved five weeks of PC-related outlook controversy by lowering its
3Q10 revenue guidance to +2.0% qq from +7.8% on US and European consumer
EARNINGS DATA
weakness. The negative revision nonetheless has multiple pluses: a) a cloud of
Earnings Per Share (FD Operating)
uncertainty overhanging shares is removed, b) inventory is in good shape as 2006-8
FY-Dec FY09A FY10E FY11E
efficiencies keep output well-tuned to demand, c) gross margins are surprisingly
1Q $0.11 $0.43 $0.43
2Q ($0.07) $0.51 $0.41
resilient at 66.0%, and d) further out in 2011 and 2012 there should ~$8B+ per yr in
3Q $0.33 $0.51 $0.49 excess cash thrown off – intensive buy-back action makes sense. Overall, our C10E
4Q $0.40 $0.52 $0.56 and C11E EPS pull back 18.3% and 19.4% to $1.97 and $1.90, with lower ests and
FY $0.78 $1.97 $1.90 multiples taking our target to $26. Investment risks are choppy catalysts into 1Q11 and
Prior EPS NA $2.15 $2.37 further macro/demand deterioration. Pluses are new product mojo in 2H10/2011
EV/EBITDA 8.4x 4.3x 3.8x w/Sandy Bridge sustaining favorable price/mix, stellar low-to-mid-60’s gross margins
PE 23.6x 9.3x 9.7x thru 2011 (unheard of 9+ months ago), and near-historic low 9.3-9.7x P/E valuations
EV/Sales 2.9x 2.0x 1.7x and a 3.4% dividend yield making shares compelling for value-oriented investors.

FINANCIAL DATA Key Points

FY FY09A FY10E FY11E
• Lowers 3Q10 Outlook. Lead by weaker than expected US and European consumer
Sales $35,127 $43,448 $44,524
PC demand INTC lowered revenues to $11.0M +/- $200M from $11.6B +/- $400M,
EBITDA $12,187 $20,217 $20,186
EBITDA % 34.7% 46.5% 45.3%
gross margins to 66.0% from 67.0%, and left opex unchanged. Our estimates move
EBIT% 13.4% 33.8% 30.6% to $11.0B (+2.4%)/$0.51 from $11.7B (+8.8%)/$0.58 while the Street’s $11.5B
FCF Yield 5.8% 11.9% 12.3% (+7.0%)/$0.53 had started to migrate towards new guidance in past three weeks.
ROIC 8.3% 24.9% 23.3% • We Add Conservatism To 4Q10. Erosion in recent US macro data points and
ROE 11.3% 30.3% 24.8% ongoing European concerns (Fig 17) elevate risk of end-demand deceleration into
Debt/Capital 4.5% 3.9% 3.5% year-end. We cut our 4Q10E growth to +3.0% from +4.9% (10-yr seasonality +7%)
TBV/Share $7.28 $8.73 $10.09 and expect other Sell-Siders to trim 100-300 bps from +5.0% forecasts. New ests are
$11.4B/$0.52 (from $12.3B (+4.9%)/$0.64; Street $12.1B (+5.0%) /$0.57).
BALANCE SHEET • Gross Margins Pull Back, But Still Truly Stellar. Our 3Q10 and 4Q10 GM
2Q10A forecasts fall 200 and 250 bps, respectively to 66.0% and 66.2% (volume more than
Cash & Equivalents $18,303 offsets mix), though our and Street 2H10 and 2011 modeling will remain well above
Accounts Receivable $2,430 60%. Ahead, steady ASPs, 32nm mix, and enterprise demand are tailwinds while
Inventory $3,345
22nm transition expenses and 1H11’s seasonality are risks. We stand by our thesis a
Current Assets $26,464
structural gross margin reset is increasingly visible at INTC, a long-term FCF plus.
PPE $16,946
Goodwill $4,481 • Throttle Back EPS. We now model C10 revs +23.7%, gross margins at 65.7% and
Total Assets $57,691 EPS of $1.97 (from $2.15; Street +27.1%/$2.05). Our new C11 EPS are $1.90 (from
Current Liabilities $7,937 $2.37 and $2.02 into 2Q10’s print; Street $1.97). Risks: US, European PC demand.
Total Debt $2,273 • Laterals – INTC More In-Line With Other PC-Exposed Co’s. Revised guidance
Total Liabilities $11,850 is now closer to “flat/down” views from 1/Buy ATHR, 3/Avg ISIL, 3/Avg MXIM,
Shareholders Equity $45,841 1/Buy ONNN, and 3/Avg TXN. That said, INTC’s a-typical server and ASP pluses
Financial data in million unless otherwise stated mean downside is possible as is more visible in NR AMD’s +7.5% qq revenue guide.
• Discounts Inventory Correction. Off 24.1% from recent highs, shares fully
discount an inventory correction. We see downside to $16, upside to $26 (2.6x C11E
EVS from 3.2x) w/shares at 9.3x and 9.7x our C10E/11E EPS (17.8x 5-yr median).

Craig A. Ellis● (415) 489-2514 ● cellis@cariscompany.com Caris & Company

44 Montgomery
Suite 1500
San Francisco, CA 94104

FINRA SIPC
For full disclosure, please see end of report 1
Semiconductors

INTC’s 3Q10 Outlook Revision Is A Negative, Though Is Not Without Its Silver Linings

• Revises 3Q Guidance – Friday intra-day INTC lowered its C3Q10 forecast, resolving the PC-segment outlook
dissonance we’ve identified since early-August (8/3 “Semiconductor Sector Update - Cash Piling Up At A
Prodigious Pace”). New 3Q10 parameters are $11.0B +/-$200M revenues (+2%; from +7.8% $11.6B +/-$400M),
66.0% gross margin (from 67.0%; favorable mix partially offsets lower volume) and unchanged opex vs prior. Caris
estimates move to $11.0B (+2.4%)/$0.51 from $11.7B (+8.8%)/$0.58 vs Street of $11.5B (+7.0%)/$0.53.

• US, European Consumer Demand The Culprit. Our checks show INTC is seeing weak US and European
consumer PC demand which is more than offsetting planned and realized strength in Enterprise PC’s and x86
servers and workstations. For context, respective US, Europe, Asia and Japan 3Q and 4Q seasonality (2003-2007) is
5.8%/16.6%, 5.3/20.3%, 12.2%/6.4% and 4.8/5.7% - abundantly positive in every geography both quarters.

• But Multiple Silver Linings Emerge. We see three things: a) the 2006-8 efficiency improvements are keeping fab
production in-tune with output, mitigating excess inventory risk and 4Q10 utilization concerns, b) gross margins
remain elevated at surprisingly stellar levels and should stay north of 60% through C11, and c) a cloud of
uncertainty is now gone and investors will no longer worry about a 4Q10 pull-in to meet 3Q10- guidance. US,
Europe, Asia and Japan 3Q and 4Q seasonality (2003-2007) 5.8%/16.6%, 5.3/20.3%, 12.2%/6.4% and 4.8/5.7%.

Figure 1: INTC Quarterly Income Statement

Old New Old New
Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Sep-10 Dec-10 Dec-10
INTC 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10E 3Q10E 4Q10E 4Q10E
Revenue ($M) 9,673.0 9,470.0 10,217.0 8,226.0 7,145.0 8,024.0 9,389.0 10,569.0 10,299.0 10,765.0 11,711.9 11,025.1 12,285.6 11,359.4
Y/Y 9% 9% 1% -23% -26% -15% -8% 28% 44% 34% 25% 17% 16% 7%
Q/Q -9.7% -2.1% 7.9% -19.5% -13.1% 12.3% 17.0% 12.6% -2.6% 4.5% 8.8% 2.4% 4.9% 3.0%
Q/Q mean -7.2% -2.8% 10.7% 8.9% -8.0% -3.4% 9.3% 2.7% -9.1% -0.9% 11.6% 11.6% 2.5% 2.5%
Gross Margin 53.8% 55.4% 58.9% 53.1% 45.6% 50.8% 57.6% 64.7% 63.4% 67.2% 68.0% 66.0% 68.7% 66.2%
Incremental GM 103.1% 93.1% 97.1% 121.7% 151.5% 76.5% 16.0% 84.0% 72.8%
Research and Development 1,467.0 1,468.0 1,471.0 1,316.0 1,317.0 1,303.0 1,430.0 1,603.0 1,564.0 1,666.0 1,701.0 1,701.0 1,731.0 1,731.0
SG&A 1,349.0 1,430.0 1,416.0 1,263.0 1,200.0 1,250.0 1,320.0 2,718.0 1,514.0 1,584.0 1,549.2 1,574.4 1,530.2 1,562.5
Operating Expenses 2,816.0 2,898.0 2,887.0 2,579.0 2,517.0 2,553.0 2,750.0 4,321.0 3,078.0 3,250.0 3,250.2 3,275.4 3,261.2 3,293.5
Operating Exp % of Sales 29.1% 30.6% 28.3% 31.4% 35.2% 31.8% 29.3% 40.9% 29.9% 30.2% 27.8% 29.7% 26.5% 29.0%
Operating Income 2,391.0 2,351.0 3,132.0 1,790.0 744.0 1,526.0 2,654.0 2,519.0 3,451.0 3,985.0 4,709.0 4,001.1 5,180.0 4,226.4
Operating Margin 24.7% 24.8% 30.7% 21.8% 10.4% 19.0% 28.3% 23.8% 33.5% 37.0% 40.2% 36.3% 42.2% 37.2%
EPS - GAAP $0.25 $0.28 $0.35 $0.04 $0.11 ($0.07) $0.33 $0.40 $0.43 $0.51 $0.58 $0.51 $0.64 $0.52
Consensus Rev. 10,569 10,299 10,765 11,518 12,097
Consensus EPS (including option expense) $0.40 $0.43 $0.51 $0.53 $0.57
12.6% -2.6% 4.5% 7.0% 5.0%
Source: Company Reports and Caris and Company

• Yearly Outlook Revisions – We trim our 4Q10 forecast to add further conservatism to our model. Caris C10
estimates move to $43.45B (+23.7%)/$1.98 from $45.06B (+28.3%)/$2.16 (Street $44.66B (+27.1%)/$2.05) while
C11 moderates to $44.52B (+2.5%)/$1.91 from $48.44B (+7.5%)/$2.38 (Street $47.02B (+5.3%)/$2.09).

Figure 2: INTC Annual Income Statement

Old New Old New
INTC FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10E FY10E FY11E FY11E
Revenue ($M) 26,764 30,141 34,209 38,826 35,382 38,334 37,586 35,127 45,061 43,448 48,441 44,524
Y/Y 1% 13% 13% 13.5% -8.9% 8.3% -2.0% -6.5% 28.3% 23.7% 7.5% 2.5%
Gross Margin % 49.8% 56.7% 57.7% 59.4% 51.5% 52.2% 55.5% 55.8% 66.9% 65.7% 65.5% 63.0%
Incremental GM 118.2% 111.8% 65.2% 71.5% 60.9% 106.5% 107.9% 46.4% -47.6%
R&D 4,034 4,360 4,778 5,145 5,873 5,760 5,722 5,653 6,662 6,662 7,271 7,149
SG&A 4,334 4,278 4,659 5,688 6,096 5,406 5,458 6,488 6,177 6,235 6,220 6,262
Total Operating Expense 8,368 8,638 9,437 10,833 11,969 11,166 11,180 12,141 12,839 12,897 13,491 13,412
Operating Exp % of Sales 31.3% 28.7% 27.6% 27.9% 33.8% 29.1% 29.7% 34.6% 28.5% 29.7% 27.9% 30.1%
Operating Income 4,950.0 8,456.0 10,309.0 12,216.0 6,249.0 8,851.0 9,664.0 7,443.0 17,325.0 15,663.5 18,242.0 14,637.5
Operating Margin 18.5% 28.1% 30.1% 31.5% 17.7% 23.1% 25.7% 21.2% 38.4% 36.1% 37.7% 32.9%
EPS - PF 0.55 0.99 1.19 1.42 0.84 1.18 1.02 1.08 2.16 1.98 2.38 1.91
EPS - GAAP 0.46 0.85 1.16 1.40 0.86 1.17 0.92 0.78 2.15 1.97 2.37 1.90
Consensus Rev. 44,659 47,017
Consensus EPS $2.05 $2.09
con rev yy: 27.1% 5.3%
Source: Company Reports and Caris and Company

2
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Semiconductors

Data Center Is Holding Up Well, Led By Nahalem Server. That Said, Comments From NR CSCO, As Well As
Eroding Macro Data Points Since June, Lend Concern Regarding Late-2010 and 2011 Enterprise Spending Strength.

Figure 3: Quarterly Data Center Sales

$3,000 50.0%

$2,500 40.0%

30.0%
$2,000
20.0%
$1,500
10.0%
$1,000
0.0%

$500 -10.0%

$0 -20.0%
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10E

Total Data Center Data Center MPUs

Data Center Chipsets/MB Total Data Center QQ
Data Center MPUs QQ Data Center Chipsets/MB QQ

Source: Caris and Company

We Are Bullish On X86 Share Gain Prospects In The Server Market And In INTC’s Leadership Position (See 3/25
“Server Biz Under-Appreciated”).

Figure 4: Annual Server Revenues By Architecture, YY Dollar Growth, and Percent of Total Market 1997-2010E
2003-8 Up-cycle
Server Market 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E Avg Avg *
RISC/Unix $23,893 $24,578 $25,393 $29,010 $22,094 $18,735 $17,755 $16,254 $16,335 $16,533 $16,860 $17,228 $13,054 $13,054 $16,827 $19,777
x86 (Windows, Linux $13,486 $14,212 $16,904 $19,668 $16,438 $16,082 $18,172 $22,485 $25,485 $26,419 $28,805 $27,444 $23,484 $27,007 $24,802 $19,474
Mainframe/Other $23,098 $20,425 $15,201 $12,786 $11,584 $9,485 $10,234 $10,749 $9,814 $9,851 $8,874 $8,554 $6,624 $6,491 $9,679 $15,053
Total $60,477 $59,215 $57,498 $61,464 $50,116 $44,302 $46,161 $49,044 $51,634 $52,803 $54,539 $53,226 $43,162 $46,552 $51,235 $54,255
YY Dollar Growth
RISC/Unix $3,503 $685 $815 $3,617 ($6,916) ($3,359) ($980) ($1,501) $81 $198 $327 $368 ($4,174) $0 ($251) $391
x86 (Windows, Linux $4,185 $725 $2,693 $2,764 ($3,230) ($356) $2,091 $4,313 $3,000 $934 $2,386 ($1,361) ($3,960) $3,523 $1,894 $2,541
Mainframe/Other ($4,132) ($2,672) ($5,225) ($2,415) ($1,202) ($2,099) $748 $515 ($935) $37 ($977) ($320) ($1,930) ($132) ($155) ($1,580)
Total Growth $3,556 ($1,262) ($1,717) $3,966 ($11,348) ($5,814) $1,859 $2,883 $2,590 $1,169 $1,736 ($1,313) ($10,064) $3,390 $1,487 $1,352
YY % Growth
RISC/Unix 6.2% -2.1% -2.9% 6.9% -18.5% -11.6% 4.2% 6.2% 5.3% 2.3% 3.3% -2.4% -18.9% 7.9% 3.1% 2.8%
x86 (Windows, Linux 45.0% 5.4% 18.9% 16.4% -16.4% -2.2% 13.0% 23.7% 13.3% 3.7% 9.0% -4.7% -14.4% 15.0% 9.7% 16.5%
Mainframe/Other 38.8% 7.5% 21.8% 9.5% 2.0% 9.4% 8.8% 17.5% 8.1% 1.4% 5.7% -2.3% 4.5% 7.1% 6.5% 13.7%
Total 6.2% -2.1% -2.9% 6.9% -18.5% -11.6% 4.2% 6.2% 5.3% 2.3% 3.3% -2.4% -18.9% 7.9% 3.1% 2.8%
% Of Total
RISC/Unix 39.5% 41.5% 44.2% 47.2% 44.1% 42.3% 38.5% 33.1% 31.6% 31.3% 30.9% 32.4% 30.2% 28.0% 33.0% 36.3%
x86 (Windows, Linux 22.3% 24.0% 29.4% 32.0% 32.8% 36.3% 39.4% 45.8% 49.4% 50.0% 52.8% 51.6% 54.4% 58.0% 48.2% 36.6%
Mainframe/Other 38.2% 34.5% 26.4% 20.8% 23.1% 21.4% 22.2% 21.9% 19.0% 18.7% 16.3% 16.1% 15.3% 13.9% 19.0% 27.2%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.9% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.2% 100.1%
% of Total BPS Change
RISC/Unix 369 200 266 304 -311 -180 -383 -532 -150 -33 -40 145 -212 -220 -165 -38
x86 (Windows, Linux 596 170 540 260 80 350 307 648 351 68 278 -125 285 360 254 370
Mainframe/Other -965 -370 -806 -564 231 -170 76 -25 -291 -35 -239 -20 -72 -140 -89 -332
* 1996-1999 and 2003-2007

Memo: INTC Data Center Revenues

Microprocessors na na na na na na na na na na $4,796 $5,126 $5,301
- YY 6.9% 3.4%
Chipsets and Mother na na na na na na na na na na $1,659 $1,464 $1,149
- YY -11.8% -21.5%
Total DataCenter Group $6,455 $6,590 $6,450
- YY 2.1% -2.1%
Source: Caris and Company, Company Reports

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
3
Semiconductors

Developed Country PC Client Weakness (Europe, US), Which More Than Offsets Solid Corporate PC Trends, Is The
Source Of INTC’s Miss. We Model 3.0% 4Q10 Growth Versus ~7.1% Seasonality.

Figure 5: Quarterly PC Client Sales

$8,000 35.0%
30.0%
$7,000
25.0%
$6,000 20.0%

$5,000 15.0%
10.0%
$4,000
5.0%
$3,000 0.0%

$2,000 -5.0%
-10.0%
$1,000
-15.0%
$0 -20.0%
Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10E

Total PC Client PC Client MPUs PC Client Chipsets/MB

Total PC Client QQ PC Client MPUs QQ PC Client Chipsets/MB QQ

Source: Caris and Company

Figure 6: Quarterly Taiwan and INTC Notebook QQ Sales Growth

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
Sep-10E
Mar-04
Jun-04

Dec-04
Mar-05

Jun-05

Dec-05

Mar-06
Jun-06

Dec-06
Mar-07

Jun-07

Dec-07

Mar-08

Jun-08

Dec-08
Mar-09

Jun-09

Dec-09

Mar-10

Jun-10

Dec-10
Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

-10.0%

-20.0%
Mobile MPU Revenue Dollar % change
-30.0%
Taiwanese NB Revs (5-yr seasonality past Jun-10)
Taiwanese NB Revs (75% of 5-yr seasonality)

Source: Caris and Company, Company Reports, Taiwanese NB companies – Asustek, Quanta, Compal, Wistron, Inventec, Acer

Figure 7: Quarterly INTC Revenues in Desktop and Server Versus Taiwan Motherboard ODM’s
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Sep-10E
Jun-04

Dec-04

Mar-05

Jun-05

Dec-05

Mar-06

Jun-06

Dec-06

Mar-07

Jun-07

Dec-07

Mar-08

Jun-08

Dec-08

Mar-09

Jun-09

Dec-09

Mar-10

Jun-10

Dec-10
Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

-5.0%
-10.0%
-15.0%
-20.0%
-25.0% INTC DC Revenue Dollar change
Taiw anese MB Revs (5-yr seasonality past Jun-10)
Taiw anese MB Revs (75% of 5-yr seasonality)

Source: Caris and Company, Company Reports, Taiwanese MB companies –Elite, AsRock, MSI, Gigabyte

4
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Semiconductors

Structural Profitability Improvement Under CEO Otellini and CFO Smith (Efficiency, Product Development, Mix)
Are Visible In Just A 100 BPS Hit To Gross Margin Despite A 550 BPS Revenue Growth Guide-Down. Historic Stock
Price and Gross Margin Relationships Beg A Big Leg Up In The Shares, Though Macro Concerns Must Ease For
Shares To Rally Sustainably.

Figure 8: INTC Share Price versus Gross Margin, 1Q02-4Q10E

$40 70
Share Price vs. GM
$35
65
$30
60
$25

$20 55

$15
50
$10
45
$5

$0 40
Jan-02

May-02

Jan-03

May-03

Jan-04

May-04

Jan-05

May-05

Jan-06

May-06

Jan-07

May-07

Jan-08

May-08

Jan-09

May-09

Jan-10

May-10

Jan-11

May-11
Sep-02

Sep-03

Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

Sep-10
Price (left) GM (right)

Source: Company Reports, Caris and Company, Factset

Figure 9: Volume/Cost and ASP’s Have Upside Potential To Caris C10E Modeling
15.0%

10.0%

5.0%

0.0%
C02 C03 C04 C05 C06 C07 C08 C09 C10

-5.0%

-10.0%

-15.0%
CPU (volume/cost) Underutiliozation charges Fab start-up Chipset unit costs
Inventory writeoffs/reversals CPU ASPs NAND/NOR/Other (legal) GMs

Source: Caris and Company, Company Reports. Change is based on sequential variance from prior 4Q levels.

Figure 10: INTC Quarterly Revenues vs Caris and Street Gross Margins, 2007-2011E
$14,000 70%

$13,000
65%
$12,000
60%
$11,000

$10,000 55%

$9,000
50%
$8,000
45%
$7,000

$6,000 40%
Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Revenue Gross Margins Consensus Gross Margins

Source: Caris and Company, Company Reports

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
5
Semiconductors

We Are Confident INTC’s Improved Supply Chain Practices Will Preclude Major On-Hand Inventory Build In
C3Q10. That Said, We Do Not Expect Inventory To Track Normal Seasonality Which Would Be Down QQ.

Figure 11: INTC Inventory Percent Of Sales and Inventory Dollars By Quarter
$5,000 60%
$4,500
50%
$4,000
$3,500 40%
$3,000
$2,500 30%

$2,000
20%
$1,500
$1,000 10%
0 0 0 0 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 0 0
0
r- -0 -0 -0 0
r- -0 -0 -0 0 -0 -0 -0 0 -0 -0 -0 0- -0 -0 -0 0
- -0 -0 -0 0 -0 -0 -0 0- -0 -0 -0 0
- -0 -0 -0 0 -0 -0 -0 1 -1
a n p c a n p c r-a n p c r-
a n p ce ra n p ce ra n p c r-
a n p ce ra n p ce ra n p ce r-
a n p c r-
a n
u e e u e e u e e u e u e u e e u e u e u e u e e u
M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J S D M J
Inventory Inventory % of Sales Linear (Inventory % of Sales)
Source: Company Reports and Caris and Company

Figure 12: INTC Inventory Days and Dollars By Quarter

$5,000 110

$4,500 100

$4,000 90
80
$3,500
70
$3,000
60
$2,500
50
$2,000 40
$1,500 30
$1,000 20
Mar-00
Jun-00

Dec-00
Mar-01
Jun-01

Dec-01
Mar-02
Jun-02

Dec-02
Mar-03
Jun-03

Dec-03
Mar-04
Jun-04

Dec-04
Mar-05
Jun-05

Dec-05
Mar-06
Jun-06

Dec-06
Mar-07
Jun-07

Dec-07
Mar-08
Jun-08

Dec-08
Mar-09
Jun-09

Dec-09
Mar-10
Jun-10
Sep-00

Sep-01

Sep-02

Sep-03

Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

Inventory Inventory Days Linear (Inventory Days)

Source: Company Reports and Caris and Company

Figure 13, 14: INTC Historic Inventory Seasonality In Dollars (Left) and Days (Right)
Inventory Seasonality Inventory Seasonality
Dollars 1Q 2Q 3Q 4Q Days 1Q 2Q 3Q 4Q
5-yr Avg Chg ('07) 169.0 174.4 -67.6 -57.0 5-yr Avg Chg ('07) 7.2 3.4 -6.6 -2.3
5-yr Avg % Chg ('07) 5.7% 5.6% -1.2% -0.3% 5-yr Avg % Chg ('07) 10.5% 4.0% -6.8% -1.3%
7-yr Avg Chg ('07) 211.9 153.0 -119.6 -84.0 7-yr Avg Chg ('07) 8.0 2.8 -7.3 -2.8
7-yr Avg % Chg ('07) 8.1% 5.1% -3.4% -2.0% 7-yr Avg % Chg ('07) 12.1% 3.3% -8.1% -2.6%
Eight-Year Min 2,164.0 2,152.0 2,225.0 2,253.0 Eight-Year Min 61.0 58.7 60.4 56.7
Eight-Year Max 4,366.0 4,332.0 4,477.0 4,314.0 Eight-Year Max 90.1 103.0 91.9 88.6
Current/Projected 51.0 359.0 -9.3 Current/Projected 0.5 14.2 -5.4
% change qq 1.7% 12.0% -0.3% % change qq 0.6% 19.6% -6.2%
Source: Company Reports and Caris and Company

6
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Semiconductors

C4Q10’s Cash Balance Should Be ~$15B Even After The Net $7.0B For MFE (Not Yet In Our Model), Leaving INTC
With Ample Buy-Back And Deal Flexibility, Especially In Light Of Careful Cap Ex Spend. In Addition, The Business
Should Spin Off ~$8B in Excess Cash Per Year In 2011 and 2012 - We Think Aggressive Buy-Backs Make Sense With
Mid-To-Large Strategic Deals Out Of The Way By The End Of 2010.

Figure 15: F10E and F11E FCF Is ~2.5x The Trailing 9-Year Average
$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0
FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10E FY11E
($5,000)

($10,000)

($15,000) OCF FCF Cash Debt Cap Ex Dividend Share Buy-Back

Source: Company Reports and Caris and Company

Figure 16: INTC’s Capital Expenditures Are Under Tight Control

$8,000 Annual CapEx And Depreciation Expense and Percent of Sales 30%

$7,500

$7,000 25%

$6,500

$6,000 20%

$5,500

$5,000 15%

$4,500

$4,000 10%

$3,500

$3,000 5%
FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

Cap Ex Depreciation Cap Ex %of Sales Dep %of Sales

Source: Company Reports and Caris and Company

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
7
Semiconductors

Figure 17: Select Macroeconomic Data Points Since June

Macroe conomic Data Points
Se rie s
Re gion Date Comme ntary Re ading Tre nd
US
GDP
28-Aug Revised 2Q10 GDP +1.6% vs 2.4% initial and +1.4% expected - -
30-Jul 2Q10 GDP +2.4% vs 2.5% consensus - -
14-Jul Fed lowers C10 and C11 GDP targets to 3.0-3.5% (dn 20 bps) and 3.5%-4.0% + +

ISM Manufacturing / Industrial Production & Output

25-Aug Durable goods orders in July +0.3% but -3.8% excluding transportation ( expectation +3.0%) - -
17-Aug Industrial production +1% in Jul (consensus +0.6%) - Mfg +1.1%, Utility +0.1%
Capacity utilization up to 74.8% (consensus 74.5%)- Mfg 72.2% (71.4%), Mining 86.4% (85.5%)
2-Aug July ISM Manufacturing 55.5 vs 54.2 consensus but down from June 56.2 + -
29-Jul Durable goods orders unexpectedly fell 1% -
5-Jul Non-defense capital goods spending rose 3.9% in May after a 2.8% fall in April (Commerce Dept.) + +
1-Jul ISM New Orders index fell 3.5 points in June to 56.2, the lowest level since October, 2009 - +
Context: Biggest new orders mm loss since Sept, 2008 but still well above 50
30-Jun ISM Midwest Manufacturing index fell 0 .8 points in June to 59.1 - +
30-Jun ISM Midwest Manufacturing jops index rose 5.0 points in June to 54.2 + +

Em plo ym e nt
26-Aug Weekly jobless claims fell by 31k to 473k but four-week average rose by 3k to 487k + -
19-Aug Weekly jobless claims rose by 12,000 to 500,000 , highest level in 9 months - -
11-Aug U.S. job openings of 2.9 mil flat in Jun, but hire rate 3.3% down from 3.5% in May - -
5-Aug Private sectors added 42k jobs in July, payroll up by 90k, joblessness up to 9.6% - -
5-Jul US private payrolls increased by 83,000, joblessness fell to 9.5% as 625,000 workers let the workforce - +
1-Jul ISM Em ployment index fell 2.0 points in June to 57.8 but is still 4.0 points above 1Q10 average levels - +
7-Jun Private payrolls up just 41,000 in May, down sharply from April's 218,000 increase - +
Context: Payrolls are 5.4% below December, 2007 highs, the biggest-ever post-war drop

C o ns um e r
13-Aug Consum er confidence 69.6 in July from 67.8 in June + +
30-Jul 2Q10 Consumer spending +1.6%, down from +1.8% in 1Q10 -
16-Jul Consum er confidence fell to 66.5 from 76.0 in July from June versus expectations for 74.5 -
Context: Confidence at lowest level in 11 months; income and job prospects extraordinarily week

Ho us ing
25-Aug New home sales for Jul -12.4% to 276k annualized, a record low since 1963 - -
27-Jul New home sales for June +12.1%, revised from the previous estimate 23.6%
14-Jul Mortgage Bankers Ass'n Home Purchase Applications Index fell 2.9% for wk to lowest level since 1996 - ->
30-Jun Mortgage Bankers Ass'n Home Purchase Applications Index fell 3.3% for wk ended June 25 to 13-yr low - -

Funds flo w
30-Jul June stock fund flow -$5.41B vs bond fund flow of +$20.7B (source: ICI) - -
Context: YT D Stock inflows +$8.9B, Bond inflows +$144.7B
30-Jun US stock fund inflows fell $24.7B in May after increasinng in January through April (source: ICI) -

Ot he r
16-Aug Empire State business conditions index increases to 7.1 from 5.8 (8.0 expected)
14-Jul June retail sales fell 0.5% after May's 1.1% decline - +
5-Jun May US retail sales up 2.5% versus 2.7% expected - +

Europe
13-Aug Euro-Zone annualized 2Q10 GDP +1.7%; Germany 2Q10 GDP +3.7% + +
22-Jul Euro-Zone PMI rose to 56.0 in July from 55.5 in June, above expectations of 55.0 +

Asia & RO W
16-Aug Japan annualized 2Q10 GDP growth 0.4% (2.4% expected) - -

8
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Semiconductors

Figure 18: Semiconductor Sector Valuation

Including Options Excluding Options
27-Aug Current P/E P/E EV/S FCF Yield
Ticker Price Mkt Cap C07 C08 C09 C10E C11E C07 C08 C09 C10E C11E C07 C08 C09 C10E C11E C07 C08 C09 C10E C11E
ADI $29.22 $8,039 12.7 19.5 25.3 11.5 9.8 18.8 18.9 23.8 11.5 9.8 2.8 2.8 3.2 2.3 2.1 5.3% 4.6% 6.7% 10.8% 10.9%
AOSL $11.14 $207 13.0 7.6 7.7 13.0 6.7 6.6 0.4 0.3 0.2 5.7% 5.7% 19.4%
ISIL $10.57 $1,299 10.1 8.4 30.0 50.1 9.9 7.8 7.9 21.1 9.5 8.6 1.2 1.2 1.5 1.0 0.9 16.0% 16.5% 9.1% 9.5% 10.7%
LLTC $29.68 $6,683 19.9 16.3 25.7 12.5 12.5 17.6 14.7 21.8 11.7 11.7 6.7 6.3 8.1 5.0 4.9 7.0% 7.0% 5.1% 7.1% 7.6%
MCHP $28.72 $5,345 18.1 17.9 33.1 15.0 13.8 19.0 18.8 29.0 13.0 12.1 4.9 5.1 6.0 3.9 3.6 6.9% 4.4% 6.5% 5.5% 8.7%
MXIM $16.44 $5,076 15.1 34.3 60.8 14.7 11.3 10.8 17.1 27.0 12.1 10.8 2.0 2.2 2.5 1.8 1.7 4.3% 7.1% 5.2% 8.1% 9.6%
NSM $13.00 $3,056 11.5 10.9 98.8 10.3 9.8 9.4 8.6 16.7 8.4 8.4 2.0 2.1 3.1 2.4 2.4 18.3% 11.9% 9.1% 12.3% 10.0%
ONNN $6.41 $2,808 8.1 8.3 15.7 6.8 6.1 7.7 7.3 12.8 5.9 5.4 2.2 1.7 2.0 1.5 1.4 6.3% 10.6% 7.9% 13.3% 17.9%
SMTC $17.33 $1,064 24.2 29.2 1,546.5 15.9 13.4 19.5 20.5 18.6 10.7 9.7 2.8 2.7 2.8 1.8 1.6 5.4% 4.5% 7.1% 3.3% 6.0%
TXN $24.15 $30,634 13.0 16.6 20.8 9.6 9.5 12.2 13.2 15.8 9.0 9.1 2.0 2.2 2.7 2.0 2.0 12.1% 9.1% 6.3% 7.7% 10.2%
VLTR $20.92 $506 37.3 47.8 15.5 12.3 124.4 29.0 31.7 13.3 11.2 5.8 4.1 4.1 2.6 2.3 1.7% 3.1% 3.3% 7.1% 10.8%
avg $5,884 14.7 19.9 174.3 15.4 10.6 24.7 15.6 21.0 10.2 9.4 3.2 3.0 3.3 2.2 2.1 8.3% 7.9% 6.6% 8.2% 11.1%
PC and Graphics
INTC $18.37 $105,600 15.6 20.0 23.6 9.3 9.7 2.5 2.5 2.7 2.2 2.1 7.2% 5.4% 6.3% 12.3% 12.2%
NVDA $10.12 $5,717 6.5 62.0 25.4 15.4 15.1 1.1 1.3 1.3 1.3 1.2 18.9% 7.2% 0.4% 8.5%
Avg 11.1 41.0 24.5 12.4 12.4 1.8 1.9 2.0 1.7 1.7 13.1% 5.4% 6.7% 6.3% 10.4%
Comm IC and Wireless
ATHR $26.95 $1,679 24.0 23.9 19.6 10.3 9.7 3.3 2.9 2.5 1.4 1.3 3.2% 4.1% 8.3% 7.6% 9.3%
BRCM $33.01 $18,068 28.1 20.5 27.9 12.1 11.6 4.3 3.5 3.6 2.4 2.2 3.7% 4.6% 5.1% 7.9% 9.5%
MRVL $16.57 $10,516 37.3 21.8 16.7 10.0 9.0 3.3 3.2 3.4 2.6 2.4 0.7% 5.7% 7.3% 10.5% 11.0%
NETL $25.85 $597 26.8 29.6 30.7 47.5 27.9 4.6 3.6 2.9 1.3 1.1 3.8% 6.8% 7.8% 15.3% 21.6%
SLAB $39.27 $1,922 30.1 22.9 19.9 13.8 12.3 4.7 3.8 3.6 2.9 2.6 2.0% 5.5% 5.8% 6.1% 7.7%
SWKS $18.39 $3,031 35.6 25.9 23.5 14.2 10.6 3.8 3.3 3.4 2.5 2.2 2.3% 4.6% 4.9% 4.5% 5.8%
avg $26.67 $5,969 29.5 23.3 22.7 12.6 11.1 4.0 3.4 3.3 2.3 2.1 2.8% 4.7% 6.0% 6.5% 8.1%
Memory
SNDK $34.19 $7,793 19.8 13.1 7.8 8.7 1.7 1.9 1.8 1.3 1.2

Avg $6,038 14.8 17.9 187.0 15.3 10.5 19.4 17.3 21.1 12.6 10.7 3.1 2.9 3.0 2.1 1.9 7.5% 8.0% 6.5% 8.0% 11.1%
Represents Caris and Street Consensus EPS includes Stock Option Expenses for ADI, LLTC, MCHP, MXIM, NSM, and ONNN. For ISIL and SMTC, Caris and Street Consensus excludes Stock Option Expenses

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
9
Semiconductors

Figure 19: Semiconductor Share Price Performance

Calendar Year End: YY Change Current vs 52 Wk Qtrly C02-07 Seaonality
2010
Ticker 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 YTD 3QTD WTD Low High 1Q 2Q 3Q 4Q
Analog
ADI -13% -46% 91% -19% -3% -8% -4% -40% 66% -7% 7% -17% -28% 0% 30% 11% 15% -9% -3% -7% 5% 4% 16% -9% 7% -3% -11% 7%
AOSL -23% -38% -19% 7% 16% -40%
CY 1% -71% 273% -45% 21% 18% 114% -22% 136% -34% 5% 33% -14% 51% 36% 12% 2% 9% -13% 0% 5% 2% 31% -24% 10% 4% 0% 12%
FCS 95% -62% 133% -35% 4% -1% -14% -66% 104% -17% -3% -23% -45% -19% 77% 46% -2% 7% -21% -19% -3% 1% 14% -36% 2% -3% -9% 9%
IDTI -20% -69% 105% -33% 14% 17% -27% -50% 15% -21% 11% -22% -28% -19% 33% 12% -4% -5% -19% -19% 6% -1% 9% -29% 4% -4% -9% 2%
IRF 16% -47% 168% -10% -28% 21% -11% -61% 64% -37% -13% 1% -29% -2% 12% 32% 13% 4% -19% -16% 0% 2% 6% -26% 12% -4% -9% 19%
ISIL 41% -57% 78% -32% 49% -4% 2% -62% 67% 5% -6% -31% -45% 23% 11% 22% 0% -4% -18% -31% -13% 2% 8% -38% 3% 9% -13% -3%
LLTC -15% -34% 64% -7% -7% -16% 6% -31% 38% -4% 6% -6% -28% 4% 1% 18% 11% -8% -2% -3% 7% 1% 16% -10% 5% -2% -8% 7%
MCHP 75% -4% 37% -20% 21% 2% -3% -38% 49% 4% -7% -3% -34% 8% 6% 18% 10% -3% -1% -1% 4% 0% 22% -9% -2% 8% -10% 9%
MCRL -22% -66% 73% -29% 5% -7% -22% -13% 12% 10% -1% -1% -19% -4% 4% 11% 1% 30% -5% 14% -9% 2% 34% -25% -3% -11% -15% 14%
MPWR 61% -26% 93% -41% 90% -18% 23% -20% -27% 23% 45% 5% 2% -7% -20% -26% -1% 3% 11% -30% 16% -1% 13% 1%
MSCC 114% -79% 302% 42% 59% -29% 13% -43% 41% 3% 10% 1% -50% -8% 19% 14% 12% -2% -16% -18% 0% -2% 13% -21% 13% -2% -5% 15%
MXIM 10% -37% 50% -14% -15% -16% -15% -56% 78% -23% 3% -14% -37% 18% 16% 16% 12% -5% -14% -19% -2% -2% 4% -23% 2% -5% -13% 12%
NSM 53% -51% 162% -9% 45% -13% 0% -56% 53% -19% 12% -16% -41% 7% 17% 14% 8% -6% -7% -15% -3% 1% 5% -20% 10% 1% -6% 9%
ONNN -61% -34% 373% -30% 22% 37% 18% -62% 159% -36% 61% -26% -50% 19% 69% 20% 7% -9% -20% -27% 0% 1% 5% -30% 32% 6% -2% 23%
SMTC 62% -69% 108% -4% -16% -28% 18% -27% 51% -8% -2% 0% -19% 18% 19% 7% 0% 2% -6% 2% 6% 7% 18% -11% 8% -4% -9% 6%
TXN -41% -42% 82% -16% 30% -10% 6% -47% 62% -7% -3% -23% -24% -1% 35% 11% 10% -6% -5% -7% 4% -1% 8% -12% 8% -6% 1% 1%
VLTR -32% 0% -26% -35% 167% 3% 52% -26% -44% 18% 56% 40% 4% 31% -8% 9% -9% 5% 62% -30% -13% -6% -4% 20%
avg 20% -51% 140% -17% 14% -4% 9% -44% 74% -12% 9% -11% -33% 8% 29% 18% 6% 1% -12% -12% -1% 2% 17% -24% 8% -1% -8% 10%
Median 10% -51% 105% -19% 14% -7% 0% -43% 64% -8% 5% -16% -29% 7% 19% 14% 7% -4% -13% -16% 0% 1% 14% -25% 6% -2% -9% 7%

PC and Graphics
AMD 15% -60% 134% 48% 39% -33% -69% -62% 307% 0% -15% -15% -47% 27% 28% 46% 71% -4% -21% -37% -17% -6% 52% -41% -4% -11% 3% 7%
INTC 7% -49% 94% -27% 7% -15% 7% -33% 34% -8% -1% -16% -12% -1% 10% 18% 4% 9% -13% -10% -6% -4% 3% -25% -9% 1% 1% 6%
NVDA 308% -82% 88% 0% 58% 103% 22% -71% 114% -37% -33% -28% -4% 9% 19% 33% 24% -7% -41% -46% -1% 8% 17% -47% 5% 315% -17% 27%
avg 110% -63% 105% 7% 35% 18% -13% -55% 152% -15% -16% -19% -21% 12% 19% 33% 33% -1% -25% -31% -8% -1% 24% -37% -3% 101% -4% 14%

Comm IC and Wireless

ATHR 27% 64% 46% -53% 134% -32% 44% -21% -39% 2% 31% 38% 29% 13% -29% -21% -2% 5% 11% -39% 57% -12% -4% 7%
BRCM -51% -63% 126% -5% 46% 3% -19% -35% 85% -26% 40% -31% -9% 15% 27% 24% 3% 5% -1% 5% 0% 3% 28% -14% 4% 6% -10% 13%
CAVM -29% 28% -33% -25% 10% 46% 28% 11% 4% 5% 1% -8% 1% 32% -24%
MRVL 63% -47% 101% 87% 58% -32% -27% -52% 211% -22% 62% -47% -28% 43% 22% 39% 28% -2% -23% -20% 5% 14% 24% -28% 7% 3% -7% 8%
NETL 172% -20% 48% -32% 5% -25% 38% -9% -27% 25% 33% 23% 3% 27% -8% 12% -5% 8% 40% -26% 37% -1% -4% 9%
PMCS -73% -74% 262% -44% -31% -13% -3% -26% 78% -13% 34% -3% -35% 31% 25% 20% -9% 3% -16% -17% -4% 1% 5% -28% 6% 5% -23% 23%
QCOM -39% -29% 50% 58% 2% -12% -2% 0% 25% 14% 7% -9% -9% 5% 16% 0% 3% -9% -22% -16% 18% 2% 22% -22% 7% -9% 5% 10%
RFMD -30% -62% 37% -32% -21% 26% -14% -87% 512% -53% 10% 0% -73% 71% 183% 44% -12% 4% -21% 5% 28% 24% 37% -17% 2% -20% 11% 3%
SWKS -41% -60% 1% 8% -46% 39% 22% -36% 156% -14% 31% -12% -34% 53% 16% 35% 7% 10% 8% 30% 10% 8% 83% -5% -2% -14% 8% 23%
SLAB -43% 127% -18% 4% -5% 9% -34% 95% -16% 12% -13% -19% 8% 41% 22% 4% -1% -15% -19% -3% 0% 3% -26% 20% -10% 3% 2%
avg -28% -54% 101% 8% 23% 5% 7% -39% 145% -22% 31% -18% -30% 26% 44% 27% 7% 6% -12% -4% 4% 7% 29% -23% 9% -6% -1% 12%
Median -40% -60% 101% -5% 4% -5% -2% -35% 95% -24% 32% -13% -28% 20% 29% 26% 4% 4% -15% -8% -1% 4% 26% -25% 12% -14% -2% 8%

PLD
ALTR -19% -42% 84% -9% -10% 6% -2% -14% 35% -5% 12% 0% -19% 5% -7% 26% 10% 7% 2% 13% 3% 2% 41% -12% 3% -3% -4% 11%
XLNX -15% -47% 88% -23% -15% -6% -8% -19% 41% 9% 6% -7% -24% 8% 7% 14% 7% 2% -1% -1% -1% 0% 20% -15% 5% -11% -8% 14%
avg -17% -45% 86% -16% -13% 0% -5% -16% 38% 2% 9% -4% -22% 6% 0% 20% 9% 5% 1% 6% 1% 1% 30% -14% 4% -7% -6% 12%

Memory
MU -13% -67% 36% -10% 8% 5% -54% -56% 272% 6% -15% -23% -36% 36% 31% 62% 29% -2% -18% -35% -20% -6% 12% -40% 3% 1% -9% -16%
SIMO 32% 12% -87% 49% -21% 2% -68% -51% 21% 31% 9% -14% 31% 16% 45% -4% 4% 88% -24% 21% 14% 3% -13%
SNDK -48% 41% 201% -18% 152% -32% -22% -71% 202% -32% -19% 8% -51% 33% 15% 48% 34% 19% 21% 18% -19% -18% 106% -32% 4% 15% 23% -5%
STEC -24% 2% 99% -24% -18% 236% -31% -51% 284% -29% 66% -25% -45% 73% 215% 27% -44% -27% 5% -28% -6% -6% 24% -72% 21% -7% 42% 21%
avg -28% -8% 112% -17% 47% 60% -24% -66% 202% -19% 9% -27% -46% 41% 73% 36% 1% 6% 6% 0% -12% -7% 57% -42% 12% 4% 16% 0%

Sector
Avg 12% -48% 121% -9% 19% 8% 2% -45% 111% -15% 13% -15% -32% 17% 35% 24% 8% 3% -11% -9% -2% 2% 26% -26% 8% 8% -3% 10%
Sector
Median -13% -50% 97% -17% 7% -5% -2% -43% 78% -17% 7% -15% -29% 13% 26% 21% 7% 0% -13% -15% -1% 2% 17% -25% 4% -5% -7% 8%

SOX -9% -45% 76% -15% 11% -2% -12% -48% 70% -16% 6% -3% -40% 10% 13% 22% 77% 45% -9% -11% -3% 0% 12% -20% 3% -4% -8% 8%
SPX -13% -23% 26% 9% 3% 14% 4% -39% 23% -10% -3% -9% -23% -13% 16% 16% 25% 3% -12% -5% 3% -1% 7% -13% 0% 1% -2% 6%

10
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Semiconductors

Ratings Distribution Chart:

T otal Securities Rated
162

Buy
Number of % of No. Provided % Provided
Ratings Ratings IB Services IB Services
105 64.81% 0 0.00%

Hold/Neutral
Number of % of No. Provided % Provided
Ratings Ratings IB Services IB Services
53 32.72% 2 3.77%

Sell
Number of % of No. Provided % Provided
Ratings Ratings IB Services IB Services
4 2.47% 0 0.00%

First Call ratings are adapted to the above chart as follows: 1 & 2 = Buy, 3 = Hold/Neutral, 4 & 5 = Sell

Companies mentioned in this report:

Ticker Rating Price Cap ($Bil) Date Analyst
ADI Buy $29.22 $8.71 8/29/2010 Craig A. Ellis
AOSL Above Avg $11.14 $0.25 8/29/2010 Craig A. Ellis
ATHR Buy $26.95 $1.91 8/29/2010 Craig A. Ellis
BRCM Buy $33.01 $14.80 8/29/2010 Craig A. Ellis
INTC Buy $18.37 $102.28 8/29/2010 Craig A. Ellis
ISIL Average $10.57 $1.31 8/29/2010 Craig A. Ellis
LLTC Average $29.68 $6.66 8/29/2010 Craig A. Ellis
M CHP Buy $28.72 $5.34 8/29/2010 Craig A. Ellis
M RVL Above Avg $16.57 $10.77 8/29/2010 Craig A. Ellis
M XIM Average $16.44 $4.90 8/29/2010 Craig A. Ellis
NETL Buy $25.85 $1.64 8/29/2010 Craig A. Ellis
NSM Above Avg $13.00 $3.11 8/29/2010 Craig A. Ellis
NVDA Average $10.12 $5.79 8/29/2010 Craig A. Ellis
ONNN Buy $6.41 $2.76 8/29/2010 Craig A. Ellis
SM TC Below Avg $17.33 $1.08 8/29/2010 Craig A. Ellis
SLAB Buy $39.27 $1.75 8/29/2010 Craig A. Ellis
SNDK Buy $34.19 $7.97 8/29/2010 Craig A. Ellis
SWKS Buy $18.39 $3.29 8/29/2010 Craig A. Ellis
TXN Average $24.15 $28.86 8/29/2010 Craig A. Ellis
VLTR Above Avg $20.92 $0.56 8/29/2010 Craig A. Ellis

*Note: Caris & Company utilizes the First Call rating system when assigning ratings in equity research reports. The following is a list of
each numerical rating and its respective definition.
1 Buy
2 Above Average
3 Average
4 Below Average
5 Sell

Unless otherwise noted, stock prices reflected herein are the closing price through the business day immediately preceding the date of this report.

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
11
Semiconductors

Analog Devices Inc. (ADI-US) High:38.96 Atheros Communications Inc. (ATHR-US) High:43.90
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 15.29 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 11.26
USD Last: 28.81 USD Last: 25.92
45 50
AVERAGE - AVERAGE - ABOVE AVG - ABOVE AVG - AVERAGE -
BUY - $35.00 BUY - $23.50 BUY - $32.00 BUY - $50.00
$38.00 $32.00 $26.00 $34.00 $14.00
AVERAGE - BUY - $34.00
BUY - $34.00 AVERAGE -
$35.00 BUY - $31.00 45
$34.00
40
AVERAGE - AVERAGE -
$33.00 $17.00
40

35

35

30
30

25
25

20

20

15

15
10

10 5

160 60
55
140
50
120 45
40
100
35
80 30
25
60
20
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

Broadcom Corp. (BRCM-US) High:43.07 Intel Corp. (INTC-US) High:27.99

31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 12.98 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 12.05
USD Last: 32.42 USD Last: 19.53
45 30
AVERAGE - ABOVE AVG - ABOVE AVG - BELOW AVG
BUY - $44.00 BUY - $34.00 BUY - $43.00 BUY - $25.00 BUY - $27.00
$19.00 $27.00 $24.00 - $11.50
BUY - $37.00 BUY - $48.00 BUY - $26.00 BUY - $30.00
AVERAGE - ABOVE AVG -
BUY - $36.00 BUY - $30.00 BUY - $18.00 28
$28.00 $28.00 BUY - $28.00
40
AVERAGE -
$15.00
26

35
24

22
30

ABOVE AVG - 20
$29.00

25
18

16
20

14

15

12

10 10
2,600
400
2,400
350 2,200
2,000
300
1,800
250 1,600
1,400
200
1,200
150 1,000
800
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

Intersil Corp. (Cl A) (ISIL-US) High:35.00 Linear Technology Corp. (LLTC-US) High:37.77
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 7.18 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 17.69
USD Last: 10.43 USD Last: 29.54
40 40
ABOVE AVG - ABOVE AVG - AVERAGE - AVERAGE - AVERAGE - AVERAGE - AVERAGE - AVERAGE -
$36.00 $13.00 $16.00 $14.00 $35.00 $25.00 $29.00 $33.00
ABOVE AVG - ABOVE AVG - AVERAGE - AVERAGE - AVERAGE - AVERAGE -
$30.00 $14.00 $12.50 $33.00 $24.00 $30.00
35
AVERAGE -
$13.50
35

30

30
25

20
25

15

20

10

5 15
220
100
200
90
180
80 160
140
70
120
60
100
50 80

40 60
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

12
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Semiconductors

Microchip Technology Inc. (MCHP-US) High:41.37 Marvell Technology Group Ltd. (MRVL-US) High:22.87
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 16.23 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 4.48
USD Last: 29.11 USD Last: 14.75
45 25
ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG -
BUY - $26.00 BUY - $32.00 BUY - $34.00
$14.00 $13.00 $16.00 $24.00
ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG -
BUY - $27.00
$19.00 $10.00 $21.00 $22.00
BUY - $31.00 40

20

35

15
30

25
10

20

15

10 0

120 400

110
350
100
90 300
80
250
70
60
200
50

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

Maxim Integrated Products Inc. (MXIM-US) High:32.40 NetLogic Microsystems Inc. (NETL-US) High:35.00
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 10.72 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 7.21
USD Last: 17.01 USD Last: 24.37
35 40
AVERAGE - AVERAGE - AVERAGE - ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG -
BUY - $45.00 BUY - $56.00
$15.50 $18.00 $19.00 $32.00 $46.00 $33.00 $25.00
BUY - $39.00
AVERAGE - ABOVE AVG - ABOVE AVG - BUY - $35.00
$18.00 $34.00 $20.00
35
AVERAGE - BUY - $30.00
30
$19.00

30

25

25

20

20

15

15

10
10

5 5
200
50
180
45
160
40
140
35
120
100 30

80 25
60 20
40 15
20 10
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

NetLogic Microsystems Inc. (NETL-US) High:35.00 NVIDIA Corp. (NVDA-US) High:39.67

31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 7.21 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 5.75
USD Last: 24.37 USD Last: 9.27
40 45
ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG - AVERAGE - AVERAGE - AVERAGE - AVERAGE - AVERAGE - AVERAGE -
BUY - $45.00 BUY - $56.00
$32.00 $46.00 $33.00 $25.00 $28.00 $11.00 $7.00 $13.00 $15.00 $16.00
BUY - $39.00
ABOVE AVG - ABOVE AVG - BUY - $35.00 AVERAGE - AVERAGE - AVERAGE -
$34.00 $20.00 $24.00 $13.00 $8.00 40
35
BUY - $30.00

35

30

30

25
25

20
20

15

15

10

10
5

5 0

50 550
45 500
40 450
35 400
30 350
25
300
20
250
15
200
10
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
13
Semiconductors

ON Semiconductor Corp. (ONNN-US) High:13.15 Semtech Corp. (SMTC-US) High:21.11

31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 2.35 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 8.80
USD Last: 6.53 USD Last: 16.69
14 22
AVERAGE - AVERAGE - AVERAGE - AVERAGE - BELOW AVG
BUY - $9.00
$15.00 $16.00 $9.00 $18.00 - $17.00
BUY - $12.00
AVERAGE - AVERAGE - AVERAGE -
BUY - $10.00
$12.00 $17.00 $13.00
12 20

10 18

8 16

6 14

4 12

2 10

0 8
300
280 40
260 35
240
30
220
200 25
180 20
160
15
140
120 10
100
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

Silicon Laboratories Inc. (SLAB-US) High:53.17 Skyworks Solutions Inc. (SWKS-US) High:19.29
31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 17.05 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 3.57
USD Last: 39.60 USD Last: 17.49
55 22
BUY - $50.00 BUY - $11.30 BUY - $19.00
BUY - $17.00
ABOVE AVG - BUY - $59.00 BUY - $24.00
$40.00 BUY - $55.00 BUY - $14.00 20
50
BUY - $41.00
BUY - $47.00
18

45

16

40
14

35 12

10
30

25

20
4

15 2
180

30 160

140
25
120
20 100

80
15
60
10
40
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

14
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Semiconductors

SanDisk Corp. (SNDK-US) High:58.35 Texas Instruments Inc. (TXN-US) High:37.17

31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 5.07 31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 13.38
USD Last: 43.57 USD Last: 24.70
70 40
SELL - BELOW AVG AVERAGE - AVERAGE - AVERAGE - AVERAGE - BUY - $37.00 BUY - $56.00 AVERAGE - AVERAGE - AVERAGE - AVERAGE -
BUY - $41.00 BUY - $36.00
$20.00 - $11.00 $16.00 $12.00 $16.00 $20.00 BUY - $38.00 $20.00 $25.50 $26.00 $28.00
SELL - ABOVE AVG - BELOW AVG AVERAGE - AVERAGE - AVERAGE - AVERAGE - AVERAGE -
$24.00 BUY - $38.00 $26.00
$19.00 $20.50 - $8.00 $17.00 $22.00 $27.00
60 BUY - $37.00
AVERAGE - AVERAGE - AVERAGE -
35
$17.00 $24.50 $28.00
AVERAGE -
$22.00
50

30

40

25

30

20

20

15
10

0 10
350 600
550
300
500
250 450
400
200
350

150 300
250
100 200
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10 10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

Volterra Semiconductor Corp. (VLTR-US) High:29.93

31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 6.10
USD Last: 20.44
35
ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG - ABOVE AVG -
$14.00 $15.00 $18.00 $10.00 $20.00 $25.00 $33.00
ABOVE AVG - ABOVE AVG - ABOVE AVG -
$10.00 $13.00 $23.00
30

25

20

15

10

18
16
14
12
10
8
6
4
10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
15
Semiconductors

Analyst Certification

The analyst responsible for the content of this publication, Craig Ellis, hereby certifies that the views expressed in this publication
regarding the company or companies and their securities accurately represent that analyst’s personal views, and that no direct or indirect
compensation is to be received by the analyst for any specific recommendation or views contained in this note.

Other Important Disclosures

The research analyst and/or research associate responsible for this report has received or will receive compensation based on various
factors, including quality of research, investor client feedback, and the Firm's overall revenues, but not based on investment banking
revenues.

This information is not intended to be used as the primary basis for investment decisions. The information contained herein shall not be
construed as an offer, or the solicitation of an offer to buy or sell any securities, products, or services. Because of individual client risk and
return requirements and client investment constraints, this material should not be construed as advice designed to meet the particular needs
of any investor. CRIS accepts no liability whatsoever for loss or damage of any sort arising out of use of all or part of this publication.

This material is based on data obtained from sources considered to be reliable. Caris & Company (CRIS) makes every effort to use reliable,
comprehensive information, however, we make no representation that it is accurate or complete and it should not be relied upon as such.
Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not
be realized. Any opinions expressed herein are subject to change and CRIS disclaims any obligation to advise you of any such change.

The securities described herein may not be eligible for sale in all jurisdictions, or to any particular investors. Options, derivative products,
and futures involve risk, and are not suitable for all investors. CRIS, its affiliates, their respective directors, officers, employees, or
members of their families may have long or short positions in, and buy or sell, the equities or issues referred to herein, or options thereon.

Neither the author of this report nor a member of his or her household maintains a position in the securities mentioned in this report.

The firm has not provided any investment banking services for the companies mentioned in this report.

Additional information on recommended securities is available upon request.

Neither this report, nor any portion thereof may be reprinted, sold, or redistributed without the express written consent of Caris &
Company, Inc.

Copyright Caris & Company 2010

16
CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
 Director of Research
Craig A. Ellis 415 489 2514
NEW YORK
cellis@cariscompany.com
500 Fifth Avenue
Suite 1640 Consumer
New York, NY 10110 Media & Entertainment
(866) 99-CARIS T oll Free David Miller 213 802 1648
(917) 464-1600 dmiller@cariscompany.com
(917) 464-1520 Fax
Specialty Retail
info@cariscompany.com
Dorothy Lakner 917 464 1564
dlakner@cariscompany,com
SAN FRANCISCO Household Products, Personal Care & Toys
Linda Bolton Weiser 917 464 1604
44 Montgomery lweiser@cariscompany.com
Suite 1500
San Francisco, CA 94104
Energy
(415) 489-2500
info@cariscompany.com
Oil & Gas, Refiners
Ann Kohler 917 464 1608
akohler@cariscompany.com
DEL MAR
Healthcare
853 Camino Del Mar Specialty Pharmaceuticals
Suite 100 James Molloy 617 728 0712
Del Mar, CA 92014 jmolloy@cariscompany.com
(877) 99-CARIS T oll Free
Specialty Pharma & BioPharma
(858) 704-0300
(858) 704-0320 Fax
Mario Corso 617 728 4906
info@cariscompany.com mcorso@cariscompany.com
Devices & Diagnostics
Paul K. Choi 917 464 1602
BOST ON pchoi@cariscompany.com
Healthcare IT
50 Milk Street
Leo Carpio 917 464 1605
21st Floor
lcarpio@cariscompany.com
Boston, MA 02109
(617) 728-0700 Healthcare Services
(617) 728-0715 Fax Ann Hynes 617 728 0713
info@cariscompany.com ahynes@cariscompany.com

Technology
Semiconductors
Craig A. Ellis 415 489 2514
cellis@cariscompany.com
Semiconductor Capital Equipment
Ben Pang 415 489 2522
bpang@cariscompany.com
Enterprise Software
Curtis Shauger, CFA 415 489 2517
cshauger@cariscompany.com
Hardware
Robert Cihra 917 464 1610
rcihra@cariscompany.com
Internet & Software
Sandeep Aggarwal 415 489 2518
saggarwal@cariscompany.com

CARIS & COMPANY NEW YORK · DEL MAR · SAN FRANCISCO · BOST ON · MEMBER FINRA/SIPC
17