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Transcript of 2012_Analyst_Day_Presentation_FINAL
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Silicon Power Solutions™
September 18th, 2012
Volterra Semiconductor
2012 Analyst Day
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Safe Harbor Statements
2
This presentation contains forward-looking statements based on current
expectations of Volterra. The words “expect,” “will,” “should,” “would,”
“anticipate,” “project,” “outlook,” “believe,” “intend,” and similar phrases as they
relate to future events are intended to identify such forward-looking
statements.
These forward-looking statements reflect the current views and assumptions of
Volterra but are subject to various risks and uncertainties that could cause
actual results to differ materially from expectations. Such risk factors are
detailed in our filings with the Securities and Exchange Commission, including
our most recent quarterly report on Form 10-Q filed on August 1, 2012 for the
quarter ended June 30, 2012.
Volterra assumes no obligation to update these forward-looking statements.
This presentation includes non-GAAP financial measures. You can find the
most directly comparable GAAP financial measures and a reconciliation of the
differences between these non-GAAP financial measures and the most directly
comparable GAAP financial measures on our website at www.volterra.com
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Agenda
Company Overview Jeff Staszak
Financials Mike Burns
Server & Storage/Networking & Telecom Bill Numann
Notebook Craig Teuscher
Product Showcase & Break
Technology Anthony Stratakos
Sales Tom Truman
Q & A Volterra Team
3
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4
Key Messages
We remain healthy as the anemic economic
recovery continues.
It has delayed but will not prevent Volterra from
achieving our long-term growth, market strategy and
goals
Focus in-depth on Volterra’s opportunities and
technology
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Reiterate Q3 guidance
Expect Q3 revenue, EPS and GM within guidance
Revenue $42M to $45M
Non-GAAP EPS 28 to 34 cents
Gross Margin 58.5% to 59%
Market end demand remains soft overall
5
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Management Team Presenters
Jeffrey Staszak
President and Chief Executive Officer
Mike Burns
SVP, Finance &
CFO
William Numann
SVP, Server and
Storage &
Communications
Product Groups
Craig Teuscher
SVP, Notebook
Product Group
Anthony Stratakos
SVP, Advanced
R & D
Thomas Truman
VP, WW Sales
6
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Volterra History
1996: Founded in Berkeley, CA
• Original 4 technical founders still employed at VLTR
1999: Introduced our first products
2000: Enabled server, storage & communication markets
2001: First full year of revenue
2004: IPO & First year of profitability
2006: First notebook revenue
2008: First $100M revenue year
2010: First $150M revenue year
2012: More Records Projected
• 12th straight year of revenue growth
• 9th straight year of profitability
• ~ $1B in cumulative revenue since 2001
• > 600M units shipped since 2001
• Introducing 4th target market segment
7
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2012 Another record year in revenue projected
8
$4
$16 $25
$44 $54
$75 $75
$104 $105
$154
$0
$50
$100
$150
In Millions
40% CAGR since 2001; 24% CAGR since 2003
2010
$155
2002 2004 2006 2008 2012
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2013 to 2015: More of The Same
2011 – Notebook drove growth • ~$21M in 2010 to >$50M in 2011
2012 – Revenue Growth Continues
• Servers: Intel Romley & AMD Ramps
• Notebooks: Intel Chief River
2013/15 – Existing & New Growth Initiatives
• Servers, Notebooks, Communications & New Market
9
Our Next Revenue Milestone in Sight: $250M
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Investment Highlights
10
Large, growing power management opportunity Physics is driving adoption of our technology
Advanced power management leader with proprietary technology
Diverse markets and applications
Blue chip customers
Attractive financial model
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Silicon Power Solutions™
Mike Burns
CFO
Volterra Financial Performance:
Expanding Profits and Investing for Growth
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Volterra 5-Year Financial Scorecard
12
Q2-07 Q2-12 Performance
Revenue:
Total $75M $166M Up >2X
Server & Storage $55M $97M Up ~2X
Notebook $3M $59M Up ~20X
Networking & Comms $10M $10M ~Flat
Financials:
Gross Margin 55% 58-9% Up 3-4%
Operating Margin 8% 20% Up 12%
EPS $0.32 $1.28 Up 4X
Cash $50M $147M Up 3X
Note: Q2 07 column based on trrailing12 months, excluding impact of one-time charge in Q2 07.
Q2 12 column revenue, %s & eps based on trailing twelve months as of Q2 2012. Notebook contains small amount of graphics revenue. Cash balance Q2 2012.
We will continue strong performance
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Volterra Financial Agenda
• Consistent Profit Model
• Favorable Revenue Mix
• High Gross Margins
• Efficient Supply Chain
• Disciplined Tech Investments
• Market-Focused Organization
• World-Class Productivity
• Strong Cash Generation
13
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Consistent Profit Model
14
Expand our profit margins
Note: 2012 is consensus analyst estimates. Model is company long-term operating model. %s are non-gaap.
• Gradual expansion
• Moderate leverage
• Spending discipline
• Positive outlook
% of Revenue Model 11 12*
Gross Margin 55-60% 58% 58-9%
R&D 18-22% 22% ~23%
SG&A 12-15% 15% ~13%
Litigation -- 3% ~2%
Operating Margin 22-26% 18% ~20%
Model
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Favorable Revenue Mix
0%
100%
10 11 12 13
Desktop & Workstation
Portable & Consumer
New Market
Comms & Networking
Server & Storage
15
Target a favorable mix
Note: 2012-13 are forecasts. Desktop & workstation (graphics) included in portable & consumer starting 2011, minimal in 2012-13.
Mix
• Gradual shift
• Server ramp
• Share gains
• New market
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High Gross Margins
40%
45%
50%
55%
60%
65%
07 08 09 10 11 12 13
Gross Margin
16
Sustain high gross margin
• Differentiated value
• Gen7 benefits
• Higher yields
• Reduced costs
model
Note: Non-gaap gross margin. 2012 and 2013 are forecasts. 2007 excludes one-time charge.
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Efficient Supply Chain
17
Optimize our supply chain
• Multi-sourcing
• Cost savings
• Additional capacity
• Future opportunities
0%
100%
Q4 10 Q4 11 Q4 12 2013
Other
Lower-CostChina
Note: Chart represents approximate % units back-end operation (bump, assembly, probe, test) performed in China. Q4 12 and 2013 are forecasts.
China Progress
target
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Efficient Supply Chain
18
Optimize our supply chain
0
50
100
Q4 10 Q2 12
Finished Goods Work in Process
Inventory Days
• Consistent management
• Balanced control
• Upside support
• Product transitions
target
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Disciplined Technology Investments
19
R&D
Next gen products Advanced R&D
New market vector Protection ICs
new
initiatives
• Performance boosts
• Breakthrough technologies
• Expanding SAM
• Strong ROI
Note: % of non-gaap R&D investment.
Fund innovative new products
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Market-Focused Organization
20
Invest across four markets
Note: current org % includes those in dedicated market-focused groups (excludes corporate, operations, quality etc.
0%
100%
Current Revenue Current Org
New Market Vector:expanding sam
Networking & Comms:increasing investment
Consumer & Portable:expanding products
Server & Storage:extending leadership
Diversification
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World-Class Productivity
21
SG&A Spending
Salaries Other Variable Discretionary
Note: % of non-gaap sales, general & admin expense excluding litigation.
Industry median is company estimate based on benchmarking of 40 leading semiconductor companies
flexibility
Improve productivity each year
$300
$400
$500
$600
$700
09 10 11 12
Revenue per Employee $K
industry median
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Strong Cash Generation
22
Increase buyback this quarter
$0
$50
$100
$150
$200
Q2 07 Q2 12
Note: Chart represents cumulative stock buyback amount and cash & investments balance $M.
$M
$-
$15
$30
$45
$60
$75
Recent $15MIncrease
Prior
Q3
$M Buyback
Authorization
Cash
3x cash
Q3: most buyback activity since Q4 08
$54m done thru Q2
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Volterra Financial Summary
Expand our profit margins
Target a favorable mix
Sustain high gross margin
Optimize our supply chain
Fund innovative new products
Invest across four markets
Improve productivity each year
Increase buyback this quarter
23
Expanding profits and investing for growth
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Silicon Power Solutions™
Bill Numann
Sr. VP, Product Groups
Server & Storage/Networking & Telecom
Infrastructure Market Segments
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Our Business Strategy & Results
Volterra's marketing strategy in 2001 was to focus on
infrastructure business
• Server & Storage
• Networking & Telecom
We identified these markets where we could add value and
build a large, stable base of revenue
• 80 to 90% of our business between 2001 and 2007
Infrastructure SAM was large enough to reach critical mass
We became the fastest growing HPA company to $100M
• Linear Technologies: 13 years (1981-1993)
• Maxim Integrated Products: 11 years (1983-1993)
• Volterra: 8 years! (2001-2008) 25
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Our Business Thesis Still Holds True
Moore’s law will drive the need and market expansion
for voltage regulators with the following 3 qualities
• Higher Performance
• Higher Power Densities
• Higher Energy Savings
This thesis has not changed in these market segments
for the foreseeable future
We actually are seeing the need for our technology
accelerating in these market segments
• Memory in servers
• Wireless standard consolidation
• Networking ASICs
26
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Silicon Power Solutions™
Server & Storage Market Segment
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Server & Storage Overview
Our largest market segment
Market share gains with each server generation
Romley ramp has been slower than normal
SAM expansion on next gen servers
Stable & growing business with large OEMs & ODMs
Market share gains on Brickland
Competitor landscape has not changed
Positioned well for Grantley and future server trends
28
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S&S Revenue History
~20% CAGR Rate 2003 to 2011 29
$0
$20
$40
$60
$80
$100
$120
Thurley Bensley
Boxboro
Clearwater
Caneland 4 CPU(EX):
2 CPU(EP): Foster Romley
Brickland
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Romley Ramp Status & Outlook
Today’s mix is less than 50% Romley
• Romley ramps slower than previous Intel ramps impacted by
macro-economic environment
• OEMs have staggered release of their Romley platforms
Market share gains will be more visible once our
customers are at full run rate
Full run rate for Romley is expected to be achieved
during the 1st half of 2013
30
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Volterra Market Share Gains on Romley at HP
Rack Servers
Won Vcore and Memory on 2nd highest volume server
• 1U rack DL360
Blade Servers
Won Vcore, Memory & POLs on 3rd highest volume server
• Blade BL460
Hyperscale Servers
Won Vcore, Memory & POLs on HP’s fasting growing
servers
• Hyperscale (High density and scalable family)
• SL140 family(Formally SL170) and SL230 family(Formally SL390)
31
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HP’s DL360 1U Romley Rack Server
20 VLTR ICs on HP’s 2nd highest volume server
32
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OEM x86 Market Share Trends
33
0%
5%
10%
15%
20%
25%
30%
35%
40%
2003 2004 2005 2006 2007 2008 2009 2010 2011
HP
Dell
IBM
Cisco
Huawei
Others
Source: IDC
“Other OEM” category has been shrinking
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0
2
4
6
8
10
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Global Server Shipments
34
Source: IDC
Millions
CAGR 2002 to 2008 ~12%
CAGR 2002 to 2011 ~ 8%
CAGR 2008 to 2011 ~ 1%
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35
Server & Storage SAMs
SAM Analysis
Million
Memory content continues to grow in servers
Using 5% CAGR for server and storage SAM over next 5 years
$0
$200
$400
$600
2012 2017
2012 SAM > $400M
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Our EP X86 Server SAM Expansion
Application Thurley Romley Grantley
Vcore Baseline Increase Decrease
Memory Baseline Increase Increase
POLs Baseline Increase Same
Protection ICs Not Applicable Not Applicable Increase
ASP per Server ~$40 ~$50 >$50
36
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2012 Server Market Split by Platform
37
Intel EP/EN
IBM Power
Intel EP 4S / EX
Supercomputers
AMD
Intel 1S Intel Itanium
Oracle SPARC
Source: IDC
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Server Unit Volumes by Form Factor
Growth from 2002 to 2008 came from both Racks and Blades
38
0
1
2
3
4
5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Racks
Blades
Towers
Million
Blades took 7 years to grow to 1M annual shipments
Source: IDC
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Micro Servers
What are they?
• Lower power( 10 to 20 watt), 32 bit quad core compute nodes
• Still in development stage
• Some OEMs announced proprietary solutions
Competing with high power, virtualized compute nodes
• Well established, standardize infrastructure and software
• EP processors continue to improve performance/watt
• Intel has announced integration of a higher bandwidth fabric
How long and how big will they get?
• Blades could be a good example to use as a model
Volterra plans
• Working with customers & Intel on derivatives of existing products 39
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Brickland & Grantley
Brickland: 4 CPU, x86 high end server
• Our opportunity is >$100 per server
• Uses 3 generations of CPU or about 5 year production life
• We have gained market share over previous generation
• Intel is forecasting 2H 2013 launch
Grantley: 2 CPU, x86 mainstream server
• Our opportunity is still >$50 per server with Haswell processor
• Supports 2 generations of CPUs or about 3 years production life
• Major OEMs and ODMs are evaluating our Gen 7 technology
• Intel is forecasting 2014 launch
40
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2P Server Content
We support all embedded power functions in main stream servers
Integrated POLs Protection ICs
Multiphase Chipsets for Vcore & Memory
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Next Generation Products Brickland & Grantley
Multiphase Chipsets for Vcore & Memory
• Thermally enhanced package technology
• 65A per phase enabling highest power density
• ~6W of system energy savings over previous generation
Integrated POLs
• Programmable system configurations
• Peak efficiencies over 95% for system supplies
Integrated Protection ICs
• Multiple current ratings and scalable up to 1000 watts
• 25% board area of competing discrete solutions
42
All 3 product families are on our Gen 7 process technology
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Our Main Competitors
43
Large power management companies
Server &
Storage
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Our Value Propositions
Energy Savings
Power
Density
Flexibility and
Immunity
System Protection
and Telemetry
44
Our integrated power solutions lead in all 4 quadrants
>6 watt
power
savings
per server
Up to 40%
smaller
footprint
Integrated
current &
temperature
sensors
High bandwidth
regulator with a
digital interface
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S&S Segment Outlook
Over next 2 to 3 quarters Romley mix will increase and we
will see the results of our market share gains
Brickland will launch at the second half of 2013 and provide
additional growth with our market share gains
New Power PC and Grantley platforms will launch in 2014
providing us opportunity to grow our market share
We expect continued Server and Storage growth
45
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Silicon Power Solutions™
Networking & Telecom Market Segment
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Networking & Telecom Overview
Our smallest market segment
Mobile data explosion drives wireless and networking
infrastructure investments
Great future for our technology value proposition as density
becomes #1 challenge
Small market share with a very large & fast growing SAM
We doubled our investment in this segment to drive growth
Our investment will start paying off in by end of 2013
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N&T Revenue History
48
Revenue has been basically flat over the past 5 years
N&T segment has been recognized as a significant growth area
Doubled our R&D investment and expanded business development activities
$0
$4
$8
$12
$16
$20
2007 2008 2009 2010 2011
Millio
ns
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Industry Trends in Wireless Network Architecture: Servicing Data Hungry Smart Phones, Tablets & Notebooks
49
10X increase in bandwidth to keep pace with network traffic growth
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50
Industry Trends in Wireless Network Protocols: Multiple Standards Will Co-Exist
• Operators will continue to deploy and operate CDMA, GSM, UMTS (HSPA) and LTE
• UMTS (HSPA) and LTE will be dominant by 2016 in highest volume markets
Integrated multi-standard support drives density demands
GSM/WCDMA/
UMTS
CDMA
upgrade
CDMA
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Antennae
Industry Trends In Wireless and DataComm Equipment: High Performance, High Density Equipment
51
Voice Modem Cards
Data Modem Cards
Radio Controller Cards,
aka Baseband Controller
Digital Channel Cards:
BTS Cabinet,
aka Base Station
Controller (BSC)
Radio Transceivers
BTS Always Co-located
with Tower/Antennae
Data Modem, Voice Modem, Radio
Control, Multiple Fiber Interfaces, and
Multiple Backhaul Interfaces all
contained on a single PCB, sometimes
stacked two- or three-high.
More data processing in less space fuels the need for our technology
BBU
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Industry Trends Favor Volterra Technology
Demand for Data Continues to Grow Exponentially
Devices: Smartphones, Tablets, PCs & Servers
Content: Streaming Video & Live TV
Data Processing Capability Doubles Every 2 Years
Integration at the board level–multiple functions per board
Integration at the ASIC level—multiple ASICS combined
Biggest Challenges:
Size, thermal management and accurate telemetry
Solution:
Our Integrated Power Technology 52
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New Wireless Network Architecture
53 RNC
-48V DC
power Power cable
Power cable
Trunk cable Fiber or CPRI high-speed
signal cable
RRU
BBU
Grounding cable
-48V/ 24V
DC power
Grounding cable
3 Key System Elements
• BBU: Base Band Unit
• RRU: Remote Radio Unit
• RNC: Radio Networking Controller
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Router/Switch Architecture
Many different configurations and standards
• Large carrier class routers to 1RU switches
• Ports per board continue to grow in all systems
• Networking ASICs are increasing in power
• These trends also drive the need for high density regulators
54
Routers Switches
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Future Growth Drivers
Demand for mobile data will intensify over the next 5 years
• Global Smart Phone Penetration (2012) < 15%
• Global Tablet penetration (2012) <2%
User market growth projections:
• Mobile broadband subscriptions CAGR (2011-2106): 32%
• Projected mobile voice/data traffic CAGR (2011-2016): 66%
Equipment deployment projections
• Projected WCDMA/LTE RAN revenue CAGR (2011-2016): 14%
• Projected networking segment CAGR (2011-2016): 7%
55
Demand for mobile media will drive infrastructure build out
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Networking & Telecom SAM
56
2012 SAM > $300M
New SAM Analysis
SAM estimates doubled from last year
System power requirements expanded based on new architectures
Added China large OEMs to our SAM which had a large impact
Conservatively estimating SAM will grow at a 5% CAGR
$0
$100
$200
$300
$400
$500
2011 2012 2017
Million
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Our Main Competitors
57 Large power management companies
Server &
Storage
Networking &
Telecom
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N&T Segment Outlook
2012 market share is ~3% based on new SAM
• Plenty of room for strong growth over the next several years
Focused on infrastructure equipment which takes 2 to 3
years for revenue generation
Based on our 2011 business development investments
this segment will return to growth in 2013
Both North America expansion and first China wins
Our 2012 design ins are gaining momentum and will
translate into accelerated growth in 2014 & 2015
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Silicon Power Solutions™
Notebook Market Segment
Craig Teuscher
Sr. VP, Product Group
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60
Notebook Segment Overview
We offer differentiated technology for integrated, high
frequency low-voltage power conversion in notebooks
We have experienced rapid growth in this segment over
the past five years
We see significant opportunities for future growth through
market share gains and expansion of our product portfolio
6 of the top 10 notebook OEMs currently ship Volterra
products in production. Our 7th and 8th major OEMs will be
announced later today
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61
Our Strategic Objectives
Become the leading supplier of integrated low voltage
power solutions for
• Commercial notebook platforms
• Differentiated consumer notebook platforms
Expand and drive adoption of full-platform integrated power
solutions including
• Regulators (Vcore, POLs, system supplies)
• Protection and distribution ICs (for battery and adaptor
interface)
• Other power management functions
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62
Notebook Revenue Growth (2007-2011)
Over the past 5 years, revenues have grown from $3M to $50M
We are expecting a 6th year of record sales in 2012
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Major Customers and Platforms
Commercial and Consumer
12”, 13”, 14”, 15”, and 17” models
2 new OEMs will be announced later today
63
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Our Main Competitors
64 Large power management companies
Server &
Storage
Consumer &
Portable
(Notebook)
Networking &
Telecom
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65
Key Market Trends
The notebook market is currently experiencing a period of rapid
change driven by the emergence of tablets:
• New form factors (smaller, thinner, lighter, convertibles)
• New features (e.g. “Instant On”, “Turbo Mode”)
• Longer battery life
• Changing power requirements (new processors and platforms)
• Increased cost pressures
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66
Impact of Key Market Trends
Market Trend Requirement Impact
New form factors Higher power density +
“Instant On”, “Turbo Mode” Higher performance +
Longer battery life Higher efficiency +
Lower power processors Fewer amps -
Cost pressures Lower cost solutions -
Overall impact on the commercial
notebook market is unclear at this time
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67
Market Status & Opportunities
Notebook revenue currently represents <10% market share
Performance, density, and battery life drive adoption of our technology
In 2012, we have sampled new system VR and protection IC products to our
customers
We will expand our product portfolio with new power management functions in
2014 & 2015
A Large and Growing Market Opportunity
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Enabling Industry-Leading Performance,
Density, and Battery Life
HP Pavilion 7000
7 VLTR IC’s power all functions
Lenovo Thinkpad X1 Carbon
8 VLTR IC’s power all functions
Acer Aspire Timeline Ultra
6 VLTR IC’s power all functions
Dell Inspiron 14Z Ultrabook
6 VLTR IC’s power all functions
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Summary
Volterra is the technology leader high performance, low voltage
notebook power solutions
We have experienced rapid growth in this segment during the
past five years
The notebook market is undergoing a period of rapid change
driven by the emergence of tablets
Our strategy for growth:
• Expand our list of major OEM customers
• Proliferate our solutions at existing customers
• Expand our product portfolio with new applications for
integrated power
74
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Silicon Power Solutions™
Product Showcase & Break
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Server & Storage
HP Proliant DL360
Rack Server
Dell PERC8
Raid Controller
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Consumer & Portable (Notebook)
Acer Aspire
Timeline Ultra
Lenovo Thinkpad
X1 Carbon
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Consumer & Portable (Notebook)
HP Pavilion
7000
Dell Inspiron 14z
Ultrabook
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Silicon Power Solutions™
Anthony Stratakos
Chief Scientist & Sr. VP of Advanced R&D
Volterra Technology
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Advanced R&D Responsibilities
Drive core technology roadmap
• Innovation in process, package, architecture, topology
• Improve efficiency, performance, density and cost-per-amp
Incubate new technologies to enable new markets
• Notebook incubated in 2003-5 to ~$50M in 2011 sales
• Incubating new market vector since 2010
80
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81
Core Technology Roadmap
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Differentiated Technology in S/S & N/T
Smaller, higher performance and more energy efficient
Conventional discrete power Volterra’s integrated power
82
+
Still two alternatives to power high-performance digital IC’s
• Volterra integrated solution vs. discrete solutions
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+
Differentiated Technology in Notebooks
Smaller, higher performance and more energy efficient
Conventional discrete power Volterra’s integrated power
83
Still two alternatives to power high-performance digital IC’s
• Volterra integrated solution vs. discrete solutions
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Differentiated Technology Similar Advantages in All Target Markets
S/S & N/T
Integrated vs. discrete
Smaller
More efficient
Energy cost savings
have <3-month ROI
compared to discrete
Notebooks
Integrated vs. discrete
Smaller
More efficient
Energy savings improve
battery run-time and
allow reduced battery
capacity
84
VLTR chips are paid for in energy cost savings alone
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Aggressive Technology Roadmap
Innovation of the entire solution
• Process, package, architecture, topology
85
~7x improvement in density in 7 generations
Gen 1 Gen 3 Gen 5 Gen 7 0
3
6
Norm
aliz
ed
Am
ps/A
rea
DENSITY
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Aggressive Technology Roadmap
Innovation of the entire solution
• Process, package, architecture, topology
86
Discrete solutions require 1.5x-2.5x the space on Grantley
Gen 1 Gen 3 Gen 5 Gen 7 0
3
6
Competition
on Grantley
DENSITY
Norm
aliz
ed
Am
ps/A
rea
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Aggressive Technology Roadmap
Innovation of the entire solution
• Process, package, architecture, topology
87
~4x improvement in power loss in 7 generations
Gen 1 Gen 3 Gen 5 Gen 7 0
Norm
aliz
ed
Pow
er
Loss
2
4
POWER LOSS
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Aggressive Technology Roadmap
Innovation of the entire solution
• Process, package, architecture, topology
88
VLTR has 30%-65% lower power dissipation on Grantley
Gen 1 Gen 3 Gen 5 Gen 7 0
2
4
Competition
on Grantley
POWER LOSS
Norm
aliz
ed
Pow
er
Loss
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Aggressive Technology Roadmap
Innovation of the entire solution
• Process, package, architecture, topology
89
~20x improvement in cost-per-amp in 7 generations
Gen 1 Gen 3 Gen 5 Gen 7 0
10
20
Norm
aliz
ed
Am
ps/$
Mfg
. C
ost COST-EFFECTIVENESS
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Aggressive Technology Roadmap
Innovation of the entire solution
• Process, package, architecture, topology
90
VLTR has 20%-30% lower mfg. cost per amp on Grantley
Gen 1 Gen 3 Gen 5 Gen 7 0
10
20
Competition
on Grantley
Norm
aliz
ed
Am
ps/$
Mfg
. C
ost COST-EFFECTIVENESS
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Continued Power Management Innovation
Required in Servers
Per 2P Romley server
• >$2 in VR energy cost for every $1 in VR BOM
• VR’s account for 30%-40% of motherboard area
For the entire industry-standard server market
• >$2B of energy cost due to VR power dissipation
• >50 acres of motherboard area devoted to VR
VR energy efficiency and density drive adoption
91
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Gen 6 (Romley) to Gen 7 (Grantley) Improvements
Technology improvements
• Migration from 0.35um to proprietary 0.18um process
• Thermally-enhanced packages
• Improved architecture and circuits
• 27% improvement in power dissipation
• 40% improvement in cost-per-amp
• 20% improvement in density
Benefits
• Gen 7 energy cost savings has <3-mo ROI vs. discrete solution
• Gen 7 pays back in ~2 years vs. a cost-free discrete solution
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Continued Power Management Innovation
Required in Notebooks
Differentiated notebooks
• Portability & Battery run-time
VR’s in thin & light Chief River notebooks
• 35-50% of motherboard area
• 10-20% of battery consumption
VR energy efficiency and density drive adoption
93
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Gen 6 (Huron River) to Gen 7 (Chief River) Improvements
Technology improvements
• Migration from 0.35um to proprietary 0.18um process
• Thermally-enhanced packages
• Improved architecture and circuits
• 60% improvement in energy dissipation
• 40% improvement in cost-per-amp
• 20% improvement in density
Benefits
• Gen 6: substantial density & energy advantages compared to
discrete solutions
• Gen 7 decreases footprint up to 20% compared to Gen 6
• Gen 7 extends battery run-time up to 10% compared to Gen 6
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Continued Innovation
Gen 6 in production
Gen 7 design-in on Brickland/Grantley & Shark Bay
Gen 8 in product design
Gen 9-11 in Advanced R&D
95
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Continued Innovation
Gen 6 in production
Gen 7 design-in on Brickland/Grantley & Shark Bay
Gen 8 in product design
Gen 9-11 in Advanced R&D
5-year roadmap promises accelerated improvements
96
Gen 1 Gen 11
Density Power Dissipation
Gen 1 Gen 11 Gen 1 Gen 11
Cost-Effectiveness
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New Market Vector
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Desired Characteristics for New Market Vector
Large market experiencing critical problems that can be
solved through innovation in power IC’s
• Performance limitations
• Energy waste
• System cost
• Density
Volterra’s core IP provides differentiation and value
• High integration in CMOS with flip-chip
Opportunity for growth exceeding Volterra’s historical
98
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New Market Vector: Energy
Batteries
Fuel cells
Smart grid
Solar
Many opportunities for innovation with integrated power to
improve performance, energy efficiency & cost
99
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First Products: PV Energy Cost Reduction IC’s
Fundamental architecture shift
• VLTR chips integrated within a solar panel produce more energy
• Granularity down to the solar cell level
Reduces overall solar installation cost
• Chips can be paid for in installation cost savings alone
Increases energy production
Improves cost per kWh (LCOE)
100 PV: Photovoltaics (solar)
LCOE: levelized cost of energy ($ per kilowatt-hour (kWh))
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PV Cell Maximum Power Point
Each PV cell has its maximum power point (MPP)
The maximum power is achieved when the optimal
current is drawn from the cell
101
PV cell Electrical
Load
I +
V
_
V, P
I P = V * I
I=IMP
V=VMP
P=PMAX
V = voltage; I = current; P = power
Pmax = maximum power, also called MPP (maximum power point) of solar cell
Vmp, Imp = solar cell voltage and current at maximum power point
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Conventional PV System Architecture
Panel is comprised of many cells connected in series
Installation is comprised of many panels
One inverter performs MPPT on the entire array
102
….
MPPT: Maximum Power Point Tracking describes the function of the electrical load that
finds the maximum power from the solar power source
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Limitations of Conventional Architecture
Each cell has its own maximum power current
Max power current varies among cells in the system
A single current, I, flows through each PV cell
103
Current, I
….
Current, I
The weakest cell can limit the current of the entire system
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Illustrative Example
104
Current capability
Cell 1: 7A
Cell 2: 5A
Cell 3: 3A
3 cells with different current capabilities: 3A, 5A, 7A
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Current capability
Cell 1: 7A
Cell 2: 5A
Cell 3: 3A
MPPT
Illustrative Example
105
Cells connected in series with one MPPT
• Forces equal current through each cell
I
I
I
I
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Current capability
Cell 1: 7A
Cell 2: 5A
Cell 3: 3A
MPPT
3A
Current delivered = capability of weakest cell
3A
3A
3A
Illustrative Example
106
Cells connected in series with one MPPT
• Forces equal current through each cell
• Weakest cell chokes current of stronger cells
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Power capability
Cell 1: 2V*7A = 14W
Cell 2: 2V*5A = 10W
Cell 3: 2V*3A = 6W
MPPT
3A
Power delivered: current limited by weakest cell
2V*3A=6W
2V*3A=6W
2V*3A=6W
Power = 18W
Illustrative Example
107
With 2V solar cells
• 30W available
• 18W delivered
• 12W wasted
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Improved PV System Architecture
VLTR chips in panels extract MPP at the sub-panel level
• Isolate PV cells from each other
Granularity down to the cell level
108
….
Weak cells no longer limit production of the system
VLTR chips within panels
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Current capability
Cell 1: 7A
Cell 2: 5A
Cell 3: 3A
Current delivered = capability of each cell
Illustrative Example of Volterra’s Value
109
VLTR chips extract maximum power of each cell
PV cells are isolated from each other
Weak cells no longer limit power of stronger cells
VLTR
VLTR
VLTR
+
7A
5A
3A
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Power capability
Cell 1: 2V*7A = 14W
Cell 2: 2V*5A = 10W
Cell 3: 2V*3A = 6W
Power delivered = capability of each cell
Illustrative Example of Volterra’s Value
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With 2V solar cells
• 30W available
• 30W delivered
• 12W that would otherwise be wasted is recovered
VLTR
VLTR
VLTR
+
14W
10W
6W
Power = 30W
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Volterra’s Value Proposition
Reduced PV energy cost
• Reduced balance-of-system cost (installation, wiring, hardware)
• Increased energy harvest from system with same power rating
Scalable to future PV roadmap
• As the efficiency of PV cells improves, VLTR solution is equally
effective
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Competition
No known competing IC solutions
Conventional architecture is primary competition
• >98% of today’s volume
• Discrete panel-level MPPT “Microinverters” and “DC Optimizers”
address a niche market
Volterra addresses ~35% of today’s PV market
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VLTR Advantages vs. Panel-Level MPPT
VLTR IC vs. discrete solution smaller & lower cost
Integrated in panel vs. separate box lower cost
>10x distribution of MPPT function more energy
More than 2x the energy gain at 1/5th the cost
Volterra addresses ~35% of the global PV TAM
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Defensible Technology Advantage
New architecture and product class with no known IC
competition
Leverages Volterra’s core IP
• Small, highly integrated power IC’s deliver high current & power
• Uses Volterra’s proprietary process and package technology
• Many architectures and circuits borrowed from existing Volterra
products
New IP pending
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Large PV System TAM
VLTR opportunity is 5~10 cents per Watt
>$1B TAM in 2012 and growing at >15% CAGR
SAM estimated at 35% of TAM today
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Source: EPIA average forecast, May, 2012
GW
Insta
lled
Yearly New Installations
GW: Gigawatt = 1 billion watts of power
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PV End-Market Characteristics
PV panels are a commodity today
Many PV panel suppliers with little differentiation
2x capacity vs. demand price competition & low PV
panel margins faster end-market growth
• PV panel $/W has fallen by ~5x from 2008-12
• Explosive end-demand growth: 50% CAGR 2008-12
Volterra provides differentiation in a crowded solar market
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Why We’ll Make Money in Solar
VLTR provides value and differentiation for the customer
• Lower system cost & increased energy harvest
• Energy improvements = >5 yrs of cell efficiency gains
Low manufacturing cost
• 0.18um CMOS process and low-cost flip-chip packaging
• Small die size (similar to 3-5A PoL)
• Several cents of external components
Expect gross margins at or above corporate model when
PV energy cost = cost of burning coal
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Tracking to Plan
Product development
Customer development and qualification
First revenue expected in 2013
Excellent long-term growth prospects
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Product Development Progress
Talented R&D team with 15 engineers
4 products sampling
2 products qualified
Executing to 3-year product roadmap
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Customers
Sampled nine customers
• PV panel manufacturers and system houses
Five field trials in progress
Value proposition proven
First 2 customers aiming for production launch in 2H13
• Lengthy certification process prior to production launch
On track for first revenue in 2013
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Summary: Our Internal Investment Thesis
Large and rapidly-growing market
• 2017 SAM forecast to be > $700M
Compelling value proposition
• Cost reduction AND energy gain
• Gains are cumulative to future PV system improvements
Attractive margins: Meets or exceeds corporate margin goals
• Even when PV energy costs have fallen to grid parity
Differentiated and protected technology
• Leverages much of Volterra’s core IP & new IP pending
• Unique architecture with no known direct competition
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Summary
Rolling 5-year technology roadmap in place for our core
businesses
• Accelerating improvements in efficiency, density & cost
• We expect our technology advantages to widen
New Energy Market Vector is tracking to plan
• Opportunity for continued growth with diversification at high
margins
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Silicon Power Solutions™
Tom Truman
VP, Worldwide Sales
Sales
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The Power of Focus
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Sales Strategy
Focus on Tier-1 OEMs/ODMs in large target markets
Gain entry with technology, then execute
Expand over successive product generations
Repeat until we achieve top supplier status
Sustain position with innovation & execution
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Worldwide Sales Channels
North America & Europe
• Direct sales force, strategic accounts
Asia
• Direct sales force for strategic accounts
• Selective use of manufacturers reps in new
geographies (China & Korea)
• Stocking reps for logistics support:
Taiwan & China
Japan
Southeast Asia
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Key Customers Served – US
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South Central HP IBM Dell Cray Cisco ALU
Western US Cisco
Juniper IBM
ALU (2) Intel
Midwest HP
IBM ALU
LSI Cray
Eastern US IBM (2) ALU (2) Dell Cray Lenovo
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Key Customers Served – Asia
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Taiwan HP IBM Dell Foxconn Inventec Wistron Quanta Compal
China Huawei (6) ZTE (4) Lenovo Foxconn Inventec
Japan Lenovo Sony Fujtisu Hitachi IBM
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Key Customers – Server & Storage
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Key Customers – Mobile Computing
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Key Customers – Communications
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Growth Drivers – Server & Storage
Virtualization
• Driving trend in DIMMs/CPU socket (4 8 12+)*
• Impact: increased total power, increased density
Storage Localization
• Driving trend in HDDs/CPU socket (4 8 24+)*
• Impact: increased total power, increased density
Scale-out Data Center Applications
• Driving trends: performance per watt per spend within a given
volume, plus storage localization
• Impact: density and energy efficiency matter
132 *(Bensley Thurley Romley)
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Opportunities – Server & Storage
Growing significant share in Romley generation
Added 2 new key customers in 2012 – impact 2H’13
Gaining share in Brickland cycle
Opportunities
• Platform cycles: Grantley, 2014-2015 impact
• New platforms
• New applications
• New customers
• We will have the broadest, most compelling offerings to date
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Growth Drivers – Mobile Computing
Size, weight and battery life differentiation
accelerate adoption
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Acer Aspire S5
Samsung Series 7 Slate
Lenovo X1
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Opportunities: Notebook
Platform Cycles: Shark Bay, Crescent Bay
(2H’13 - 2014)
Growth strategy
• Continued share gain in existing applications
• New applications in battery management and other power
management functions
• New customer acquisition
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Broad range of opportunities going forward
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Networking and Telecom: Growth
Increased investment and focus
Focus on Infrastructure applications
Outstanding business development progress
First production programs in China OEMs – 1H’13
Winning in routers, switches, and base stations
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Diversification reduces exposure to market swings
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Future Growth Plans
Continued investment in regional leadership
Expansion of global sales and applications team in line
with revenue growth
• Hiring focus in US and Asia
• Grow to support energy market
Maintain key account focus
• Increase dollar content per application
• Proliferate onto more platforms with higher volumes
• Capture new large customers
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Summary
Core sales strategy is unchanged
Wide range of opportunities in Server/Storage and
Mobile Computing
Focused on large, high-growth opportunities in
Networking, Telecom and Energy
Expect continued growth as we execute our plan
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Q & A
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