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Intel’sIntel’s Approach toApproach toSupply Chain and Supply Chain and

CSRCSRBob Leet

Supplier HR/EHS Program Manager

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Agenda

Intel Background

Overview of Current Supply Chain CSR Program

Philosophy on Future Program Direction

Vision in Action

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Intel SnapshotIntel Snapshot

Year founded: 1968Year founded: 1968 Number of employees: 78,000Number of employees: 78,000 Revenues: $30.1 Billion (2003)Revenues: $30.1 Billion (2003) Products and services: over 450Products and services: over 450 Stock symbol: INTCStock symbol: INTC Worldwide offices and facilities: 294Worldwide offices and facilities: 294

Intel is the world's leading innovator in Intel is the world's leading innovator in advanced silicon technology, with more than 35 advanced silicon technology, with more than 35 years of leadership in computing and years of leadership in computing and communications.communications.

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Intel Employees Around the Intel Employees Around the WorldWorld 78,000 employees 78,000 employees

(as of July 1, 2003)(as of July 1, 2003)– 48,000 in the U.S.48,000 in the U.S.

– 30,000 internationally30,000 internationally

Intel has employees in 48 countries worldwide Intel has employees in 48 countries worldwide with large sites in Ireland, Israel, India, China, with large sites in Ireland, Israel, India, China, Malaysia, Philippines, Costa Rica and the U.S.Malaysia, Philippines, Costa Rica and the U.S.

Diversity is valued: different people bring a variety of thinking to business and technical solutions

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IrelandIrelandIFOIFO

IsraelIsraelFab 8/18Fab 8/18OregonOregon

F15, F20, D1F15, F20, D1

CaliforniaCaliforniaD2D2

ColoradoColoradoFab 23Fab 23

ArizonaArizonaFab12/22Fab12/22

New MexicoNew MexicoFab 7/11/11XFab 7/11/11X

Mass.Mass.Fab 17Fab 17

Costa RicaCosta RicaSan Jose A/TSan Jose A/T

MalaysiaMalaysiaPenang A/TPenang A/TKulim A/TKulim A/T

ChinaChinaShanghai A/TShanghai A/T

PhilippinesPhilippinesCavite A/TCavite A/T

WashingtonWashington

Intel’s High Volume Fabrication and Assembly/Test Sites

ChinaChina Chengdu A/TChengdu A/T(announced)(announced)

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Intel as Industry Leader…Intel as Industry Leader…

FortuneFortune 500 ranking: 58 - 2003 500 ranking: 58 - 2003 FortuneFortune Global 500 ranking: 155 - 2003 Global 500 ranking: 155 - 2003 Top 50 Top 50 FortuneFortune “Best Companies to Work For” list “Best Companies to Work For” list FortuneFortune Most Admired Companies: #1 in industry group Most Admired Companies: #1 in industry group ComputerworldComputerworld "100 Best Places to Work in IT 2003" "100 Best Places to Work in IT 2003" FortuneFortune selected Intel Ireland as one of "10 Great Companies selected Intel Ireland as one of "10 Great Companies

to Work for in Europe." - 2003to Work for in Europe." - 2003 Intel was named Sector Leader in the Dow Jones Intel was named Sector Leader in the Dow Jones

Sustainability Group Index for the third year in a row. Sustainability Group Index for the third year in a row. Key component of Domini, Citizens, NASDAQ, FTSE4Good, Key component of Domini, Citizens, NASDAQ, FTSE4Good,

Calvert and other social indexes Calvert and other social indexes

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Intel’s Strategic Direction: Intel’s Strategic Direction: Convergence of Computing and CommunicationsConvergence of Computing and Communications

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Intel’s Current Supply Chain CSR Program The program starts at the top:

– Intel Corporate Business Principles (CBP) include Supplier HR/EHS Expectations

At the supplier engagement level:– Contracts include the Intel Corp. Business Principles key

Supplier HR/EHS points

– Supplier HR/EHS Expectation document given to each new supplier in most business units

– Intel Commodity Managers attend required trained

– Supplier selection audits include HR/EHS criteria in most business units

Continuous engagement activities:– Supplier continuous improvement assessments (SSQA)

– Annual Supplier End-of-Year Communication

– Annual “Supplier Day” Event

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Supplier End-of-Year Communication:– More than 3,500 letters sent out refreshing our HR\EHS

Supplier Expectations in 2003

Supplier HR\EHS Assessment Results:– More than 650 assessments cumulative worldwide

– 173 in 2003 – 100% of planned

– All 2002 issues closed, all 2003 issues closed or in progress

– Findings dispersed across Asia and the U.S.

– Mainly obvious EHS issues or program document/deployment of HR programs.

Intel’s Current Supply Chain EHS Program

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Philosophy on Future Program Philosophy on Future Program DirectionDirection

Company Program

Developed

Passion Motivated Learning

International Standards

Established &

Accepted

WhatHappensIn Here?

0 ~5 ~8-10Years

You Are Here

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Philosophy on Future Program Philosophy on Future Program DirectionDirection

Company Program

Developed

Passion Motivated Learning

International Standards

Established &

Accepted

0 ~5 ~8-10Years

You Are Here

Industry /Sector

Harmonization

Common Suppliers Common Customers Efficiency Gains

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Philosophy on Future Program Philosophy on Future Program DirectionDirection Intel has had great success in the past both leading and Intel has had great success in the past both leading and

contributing to Industry–wide programscontributing to Industry–wide programs– ECMAECMA

– Intel launched an initiative to develop voluntary industry design for Intel launched an initiative to develop voluntary industry design for environment standards, ECMA 341 is the result of this effortenvironment standards, ECMA 341 is the result of this effort

– ECMA 341 principles have been integrated into Intel's DfE program ECMA 341 principles have been integrated into Intel's DfE program

– I300II300I– Program to define the detailed needs of the next generation of Program to define the detailed needs of the next generation of

Semiconductor processing tools (200mm => 300mm wafers).Semiconductor processing tools (200mm => 300mm wafers).– Included Byproducts and Natural Resources consumption targets.Included Byproducts and Natural Resources consumption targets.

– S2S2– Equipment safety & health standards program developed to ensure Equipment safety & health standards program developed to ensure

that new tools meet semiconductor manufacturers expectationsthat new tools meet semiconductor manufacturers expectations– Developed through Sematech with SEMIDeveloped through Sematech with SEMI

– SSQASSQA– Standardized Supplier Quality Assessment is a common checklist Standardized Supplier Quality Assessment is a common checklist

used to assess the level of supplier quality performanceused to assess the level of supplier quality performance– Includes ISO 9001, Baldrige (including HR & EHS), Motorola QSRIncludes ISO 9001, Baldrige (including HR & EHS), Motorola QSR– Intel’s standard roadmap supplier assessment toolIntel’s standard roadmap supplier assessment tool

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Vision in ActionVision in Action

Intel continues to learn, so it can improve furtherIntel continues to learn, so it can improve further– Comparative Analysis / BenchmarkingComparative Analysis / Benchmarking

– Implementing some of these learning’s into the existing programImplementing some of these learning’s into the existing program

Refining where biggest Risks areRefining where biggest Risks are– Non-major first-tier suppliersNon-major first-tier suppliers

– GeographiesGeographies

Industry/Sector wideIndustry/Sector wide– Working with some sector players to identify areas for mutual Working with some sector players to identify areas for mutual

improvementimprovement

– Future may include an industry collaboration of some sortFuture may include an industry collaboration of some sort

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ChallengesChallenges

Intel sees one of the biggest challenges as determining the Intel sees one of the biggest challenges as determining the appropriate level of management oversight for contract appropriate level of management oversight for contract manufacturing suppliersmanufacturing suppliers

– Higher Risk potential than first-tier suppliersHigher Risk potential than first-tier suppliers

– Greater engagement can mean greater resources necessaryGreater engagement can mean greater resources necessary

– Balance between partnership and “dictatorship”Balance between partnership and “dictatorship”

Another challenging area is the level of engagement over Another challenging area is the level of engagement over small suppliers (e.g. office supplies)small suppliers (e.g. office supplies)

– Return on resource investmentReturn on resource investment

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Thank you.Thank you.

Bob LeetBob LeetSupplier HR/EHS Program ManagerSupplier HR/EHS Program Manager5000 W. Chandler Blvd., M/S:CH3-1135000 W. Chandler Blvd., M/S:CH3-113Chandler, AZ 85254 USAChandler, AZ 85254 USA(480) 554-8667(480) 554-8667bob.e.leet@intel.combob.e.leet@intel.com