Global Community Affairs

Applied Materials: CSR & Community Programs Overview

Global Conference on Business EthicsSanta Clara UniversityFebruary 17, 2005

Mike O’FarrellVice President, Global Community AffairsApplied Materials, Inc.

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Agenda

Company Overview (10 Minutes) Corporate Social Responsibility/Community Affairs (35

Minutes) Q&A (30 Minutes)

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We make the machines that -Make computer chipsMake flat screen monitors and TVsTest pixels

Our customers make the computer chips – Intel, IBM, Samsung, Texas Instruments

To sell those chips to companies like –Dell, Sony, Nokia

So that all of us can buy computers, cell phones, games and other electronics.

Semiconductors, Flat Screens, Fab Service

You have probably used something made with Applied Materials’ Equipment

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Semiconductor Revenue$214.3 Billion

18.3% of Electronics

Electronics Revenue$1,170 Billion

3.2% of Worldwide GDP

Source: Dataquest, Applied Materials CorporateMarketing estimates, WSTS, SEMI

The “Food Chain”

Capital Spending$41.4 Billion

19.3% of Semiconductor

WFE$25.7

Billion

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Applied Materials Overview

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

– Net income was 16.9% of revenue

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

throughout China; Europe and Israel; India, Malaysia and Singapore; Japan; Korea; Taiwan; and the United States

Only five sites have 3% or more of worldwide employment base

Only 17 sites have at least 100 employees Business is moving (and will continue to move) to Asia

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Applied Materials Overview

Past Awards & Recognition– America’s Most Admired Companies, Fortune Magazine

– 100 Best Corporate Citizens, Business Ethics

– 100 Best Managed Companies, Industry Week

– Top Ten Performing Stocks of the Decade, Smart Money

– 100 Best Companies to Work For, Fortune Magazine

– 50 Best Companies for Minorities, Fortune Magazine

– Corporate Education Partner of the Year in the Greater Bay Area, San Francisco Business Times

– Outstanding Corporation Award, Association of Fundraising Professionals of Austin, Texas; also AFP Silicon Valley

– Business in the Arts Award, Business Committee for the Arts & Forbes Magazine

– Climate Protection Award, U.S. Environmental Protection Agency

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Applied Materials Overview

Top Corporate Philanthropists in the Greater Bay Area (Ranked by 2003 Cash Giving to Bay Area-based Nonprofits), San Francisco Business Times– Intel Corp. (#2)

– Applied Materials, Inc. (#5)

– Hewlett-Packard Co. (#8)

– IBM Corp. (#12)

– Cisco Systems, Inc. (#13)

– Microsoft Corp. (#14)

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Community Affairs: Supports Company Value and Corporate Citizenship

Company Value“Make a positive social contribution” in our communities

Vision

Applied Materials is a world-class leader in corporatesocial responsibility and global citizenship.

Department Mission

To lead the Company’s efforts in global corporatecitizenship, ensuring that Applied Materials continuallybuilds on its fundamental principles of positive socialresponsibility, active community involvement, innovativephilanthropy, and employee engagement.

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Goals: Stakeholder Focus

Enable the Company to achieve goals with four key stakeholdergroups – Investors, Customers, Communities & Employees

Strategies

Four key strategies have helped us to achieve reputation as a leader in the community:

1.Be a leader and convener; use influence; innovate; focus2.Re: larger investments, use a venture philanthropy model

– Be a proactive partner, rather than a passive grant-maker– Be willing to invest “R&D” and “C&F” dollars– Attract broad funding base

3.Use all corporate assets, not just dollars4.Optimize impact by linking and leveraging investments

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Philanthropy Targets

Targeted Spending for Philanthropy 1% of the Company’s pre-tax income Applied Materials Foundation formed in 1994 to help manage

through cycles Spending distribution:

Education 65%Civic 25%Arts 10%

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

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Current “Representative” Programs That Reflect Our Philosophy & Strategies

Education Education Initiative (Inaugural SF Bay Area Regional Award, 2004) University Partnership Committee Shanghai & Taiwan R&D Funds

Civic Tech Awards/TLVN Housing Trust Fund Silicon Valley Children’s Hospital Semicon China 2005 – Technical Symposium & Trade Show re:

Environmental/Energy Saving Products and Solutions North America Food Drive

Arts & Culture Art @ Applied (Incl. Mt. Fuji Climb)

Other Tsunami: Leveraged Response w/Tech Awards Laureates Employee Giving/Global Giving Employee Volunteerism

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Next Steps / Opportunities

Expand Non-North America Regional Programs– Refine Focus & Spending Levels

– Enable Sustainable High Growth Business Climates (e.g., Trade Show/Technical Symposium re: Environmental & Energy Saving Solutions in China)

Corporate Social Responsibility – Enhance Management Process and Reporting; Use Interim Communications to Bolster Reporting to Stakeholders; Tell Our Strong Story Better

Continue to Better Align Community Programs With Individual Employee Interests (Similar to Employee Giving and Volunteerism Programs), Especially to Address the Smaller Sites

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Q&A