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Applied Materials Going Solar!New York5 September 2006

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Safe Harbor StatementThis presentation contains forward-looking statements, including those relating to Applied’s business strategy, growth opportunities, served available market, strategy to reduce solar production costs, operational efficiencies, financial performance, product capabilities and technology leadership; customers’ plans; and the solar technology roadmap and industry outlook. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including without limitation: (a) broadening of demand in the solar industry, which is subject to many factors, including global economic conditions, the cost-effectiveness and performance of photovoltaic (PV) products compared to conventional and other alternative energy sources, technological innovations, availability and cost of raw materials such as silicon, evolving industry standards, changing customer and end-user requirements, government subsidies and economic incentives for alternative energy development, and geopolitical uncertainties; (b) customers’ capacity requirements and timing, rate and amount of capital spending for new technology; (c) Applied’s ability to: accurately predict the characteristics of, and capitalize on opportunities in, the emerging PV market; successfully adapt its existing products and develop and commercialize new products that enable increased solar cell efficiency and performance at a lower cost; recruit, incent and retain key employees; obtain and protect intellectual property rights in key technologies; develop, deliver and support a broad range of products; integrate acquired businesses; maintain effective cost controls and timely align the company’s cost structure with business conditions, and effectively manage its resources and production capability; and other risks described in Applied Materials’ SEC filings. All forward-looking statements are based on management’s estimates, projections and assumptions as of September 5, 2006 and Applied undertakes no obligation to update any such statements.

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Applied Materials’ Strategy

Extend Leadership in Core Business

Grow in New Markets

Deliver World-Class Performance

Differentiated systems and services Extend position in memory business

Use core nanomanufacturing and global strengthsExpand into related high growth opportunities

Enhance operational andfinancial efficienciesDrive performance initiatives to optimize financial results

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Applied’s Available Opportunity

Source: Gartner DataQuest, Applied MaterialsNote: New Markets includes Applied Films

2004 2005 2006E 2007F 2008F

New Markets

Flat Panel DisplaySilicon System & Service

New CoreNew Core: +$15B: +$15B

2.0X

‘06 - ’081.5X

$2.5B$2.5B$4B$4B

’08 SAM$41.5B

1.3X$35B$35B

2005 2005 –– $20B$20B

Opportunity Expected to Double from ‘05 to ‘08 with CAGR ~25%

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Solar and other emerging marketsNew Markets

Driving down costs, enabling adoptionFlat PanelDisplay

Extend Core Business Differentiated Products for Nanomanufacturing Technology™

Drive Moore’s LawPerformanceEnhancements

Amplify customers’ productivityFab ProductivityEnhancements

Deliver World-Class Performance

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Solar Electric is Fundamentally Familiar

Higher efficiency, area constrained

Silicon Wafers

Lower efficiency, cost constrained

Thin Film on Glass

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Solar Learning Curve Dynamics

* 2002 DollarsSource: Navigant Consulting

Goal: Increase Rate of Learning

1

10

100

1 10 100 1,000 10,000 1E5

Historical

Projected1980$21.83/W

1985$11.20/W

1990$6.07/W 1995

$4.90/W 2000$3.89/W

2005$2.70/WM

odul

e C

ost (

$/W

)*

INDUSTRY ACCELERATION

Cumulative Volume (MW)

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1

10

100

1,000

10,000

100,000

2000 2010F 2020F 2030F 2040F

TWh1 /Y

ear

Solar Electricity Production (TWh)

Total Electricity Production

10% Total

1% Total

1 TWh = Terrawatt-hour = 1 Billion Kilowatt-hours2 GWp = Gigawatt-peak, assuming average hours or sunshine Source: Solar Generation and IEA-PVPS

World Electricity Production Forecast(2000 – 2040)

US

= Consumption in labeled country / state

China

India

California 1 Million Roofs

Est. CAGR% ’00 - ’40Total Electricity Production 2.5%

(increase of 25,400TWh)Solar Energy Production 21%

(increase of 6,000TWh) ~5

~50

~500

~5,000

Equivalent Solar GWp2

Current solar capacity

Potential of Existing US Rooftops (GWp)

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Solar PV Projections - Market Analysts

0

2,000

4,000

6,000

8,000

10,000

12,000

2002 2003 2004 2005 2006E 2007F 2008F 2009F 2010F

PV S

hipm

ents

(MW

p)

Historical

Navigant, March 2006 - Low

CLSA (Solar Silicon Conf), 2006

PV Solar Supply Growth

Source: Compilation analysts reports, Applied Materials, Photon International

Driving Faster Growth

ProductivityCostInfrastructure

Est. CAGR 25 - 45%

Top ten solar producers to add 480MW in 2006E

– 85% of all new capacity added– 25% of total resulting capacity worldwide

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R&D + Financial

Resources

Reputation +

Experience

World Class Capabilities

The Applied Materials Difference

Providing Leadership in Accelerating Solar Learning Curve

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VIDEO:"Learn about Solar Technology"

hosted by Charles Gay

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Technology Conditions – Why Solar Now?

SCALE OF MANUFACTURING

PRODUCT COST REDUCTION– Cost per m2

Glass/display– Size– Process

– Watts per m2

Materials scienceYield & controlIC know-how & leverage

THIN FILM OPPORTUNITY– Polysilicon supply constraint

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Cumulative Volume (MW)

1

10

100

1 10 100 1,000 10,000 1E5

Historical

Projected1980

$21.83/W

1985$11.20/W

1990$6.07/W 1995

$4.90/W 2000$3.89/W

2005$2.70/WM

odul

e C

ost (

$/W

)*

Scale to Enable Learning Curve

* 2002 DollarsSource: Navigant Consulting

Production line size (Megawatts per Year):

Lines Per Factory

0.5(1980)

2

5(2000)

3

50(2005)

4

100(2010)

10

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Technology Conditions – Why Solar Now?

SCALE OF MANUFACTURING

PRODUCT COST REDUCTION– Cost per m2

Glass/display– Size– Process

– Watts per m2

Materials scienceYield & controlIC know-how & leverage

THIN FILM OPPORTUNITY– Polysilicon supply constraint

=$ Production / WattCost / m2

Watt / m2

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Experience Reducing Unit Production Costs

0

2

4

6

8

10

Gen 4 Gen 5 Gen 6 Gen 7 Gen 8

Cos

t / A

rea

(rela

tive)

Substrate Area Cost/Area

Experience from LCD Manufacturing

Cost / m2

Watt / m2

0.7m2

1.4m2

2.8m2

4.4m2

5.2m2

Gen 8: 60nm Uniformity Over 4x1018nm2 Area at 50 Substrates per Hour

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Cell Efficiency

Prod

uctio

n Q

uant

ity

Experience Enhancing Product Performance and Process Consistency

Cost / m2

Watt / m2

c-Si

Applied Materials technology

Conventional approach

Tighter distribution and higher mean efficiency

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Thin Film

Experience Enhancing Product Performance and Process Consistency

Tandem JunctionIncreases voltage, collects more light, enhances stability

a-Si:H/μc-Si:H Cell Spectral Response

0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2

20

0

40

60

80

100

0

1

2

3

4

5

Num

ber o

f Sun

light

Pho

tons

(m-2

s-1m

icro

n-1) E

+19

Rel

ativ

e Ex

tern

al Q

uant

um E

ffici

ency

, % μc-Si:H junctiona-Si:H junction

AM 1.5 global spectrum

Wavelength, microns

Glass Substrate

Transparent Conductor

Amorphous Silicon

Microcrystalline Silicon

Back Contact

Cost / m2

Watt / m2

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Thin Film

Experience Enhancing Product Performance and Process Consistency

Cost / m2

Watt / m2

Enhanced light trapping increases

cell efficiency

Innovative technology improves product performance

Glass Substrate

Transparent Conductor

Amorphous Silicon

Microcrystalline Silicon

Back Contact

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Technology Conditions – Why Solar Now?

SCALE OF MANUFACTURING

PRODUCT COST REDUCTION– Cost per m2

Glass/display– Size– Process

– Watts per m2

Materials scienceYield & controlIC know-how & leverage

THIN FILM OPPORTUNITY– Polysilicon supply constraint

Polysilicon Supply and Demand

Source: Tor Hartmann, Solar Grade Silicon, 2005

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Delivering Compelling Photovoltaic Technology and Service Solutions

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Applied’s Capabilities

AKT50K PECVD

Large Area Platforms

ATON™

MULTIWEB™

Integration

Automation

Process Technology

Service & Support

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Crystalline Silicon: ATON SiN PVD

SiN: biggest ‘pain’ point for c-Si manufacturers

Flexible platform easily adaptable for production volumes from 25-100MW

Increase yield: uniform appearance and high efficiency

Wafer

Module

Wet Clean& Texture

Ion Doping & Diffusion

Passivation& ARC

Layer (SiN)

BackReflector

ContactMetals

Metrology &Inspection

Bin & Sort;Transfer toModule Mfg

• Insert picture of AKT PECVD

ATON

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Crystalline Silicon: New ATON Applications

Expand sequential applications including

– Back reflector– Contact metal

Enables large scale automation of a significant part of manufacturing line

• Insert picture of AKT PECVD

ATON

Wafer

Module

Wet Clean& Texture

Ion Doping & Diffusion

Passivation& ARC

Layer (SiN)

BackReflector

ContactMetals

Metrology &Inspection

Bin & Sort;Transfer toModule Mfg

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Thin Film Silicon: New Aristo™ PVD

Deposition of transparent conductors (TCO)

100+ Aristos shipped for TCO, leading LCD color filter market

High throughput in-line tool

Ultra-low particle contamination

• Insert picture of AKT PECVD

New Aristo

Glass Substrate

TCO

Amorphous Silicon

Back Contact

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Thin Film Silicon: AKT-PECVD System

Large area PECVD

500+ systems shipped for thin film silicon, leading LCD display market

High throughput cluster tool

Exceptional film uniformity over large areas

AKT50K PECVDGlass Substrate

TCO

Amorphous Silicon

Back Contact

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ATON

Thin Film Silicon: ATON PVD System

Deposition of back reflectors, metal contacts and transparent conductorsRecently introduced for solar, derived from heritage of 150+ glass coatersHigh throughput in-line tool for either glass or silicon substratesFlexible process architecture, scalable to 100MW

Glass Substrate

TCO

Amorphous Silicon

Back Contact

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Largest Microcrystalline Solar Panel Structure

Demonstrated 4 Times Larger Than Standard Solar Module (4.4m2)

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Roadmap

Now 2010F

TF-Si TCO, PECVD,

Contacts, Automation

TF-Si TCO, PECVD, Contacts

Automation, High Efficiency

c-Si SiN, Back Reflector,

Contacts, Surface Prep, Integrated Wiring, Adv Junctions, Automation

CIS Contacts, Absorber

OtherReal Time Feedback, Fab MIS, Metrology

c-Si SiN, Back Reflector,

Contacts

CIS Contacts

Note: Items listed in white will be new technologies and capabilities added by 2010

6% → 11% efficient

14% → 23% efficient

10% → 14% efficient

85% → 98% yield

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Fastest solar power companies

Applied Materials (US)BP (UK)

Carmanah (Canada)Conergy (Germany)

Ersol (Germany)Evergreen Solar (US)

First Solar (US)GT Solar (US)Hemlock (US)

Kyocera (Japan)

M.Setek (Japan)Motech (Taiwan)

Q-Cells (Germany)REC (Norway)Sanyo (Japan)Sharp (Japan)

SolarWorld (Germany)SunPower (US)Suntech (China)

Tokyuama (Japan)

Applied Materials: An Enabling Force

Source: Photon International, July 2006

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Fastest solar power companies

Applied Materials (US)BP (UK)

Carmanah (Canada)Conergy (Germany)

Ersol (Germany)Evergreen Solar (US)

First Solar (US)GT Solar (US)Hemlock (US)

Kyocera (Japan)

M.Setek (Japan)Motech (Taiwan)

Q-Cells (Germany)REC (Norway)Sanyo (Japan)Sharp (Japan)

SolarWorld (Germany)SunPower (US)Suntech (China)

Tokyuama (Japan)

Applied Materials: An Enabling Force

Source: Photon International, July 2006

“Reducing production cost per watt is what it’s all about. Having done this before in IC and LCD, we’re excited to see what Applied Materials can do in solar. Q-Cells and the Industry can benefit strongly from a player of the caliber and with the capabilities of Applied Materials. We are excited to be working with them” – Anton Milner

Chief Executive Officer - Q-Cells

“Looking at the growth opportunity ahead of us we’re going to have to scale to meaningful plant sizes and fast” – P.M. Pai

Chief Operating Officer - SunPower

“Like many in the industry we’ve been able to get to this point by creating our own machines to do the job. But this is not our core expertise … we’re looking forward to what Applied Materials can bring to the table” – Dr. Chris Eberspacher

VP Engineering - NanoSolar

“Applied Materials has been a great partner for us over the years. They have made the investment to support us wherever we need to be – new products, new generation fabs, and on-going service and support” – Cheng Yih Lin

Senior Vice President,Member of Executive Board - AUO

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Solar Product Business Group Footprint

Installed Systems

First Thin Film Si Sale - Q-Cells

Technology and Global Development Centers

Three of Top 10 Producers Already Customers

Major Producing Countries

JapanKoreaIndia

USGermanyBelgiumTaiwan

Applications

Cell technologies: c-Si, TF-Si, CiSProcesses: TCO, SiN, contact metals, semiconductor precursors, a-Si/µc-Si

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Applied Materials’ Solar Market Opportunity

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Current Solar Industry Landscape

0 100 200 300 400 500 600

Motech

Suntech

BP Solar

Schott Solar

Deutsche Cell

Mitsubishi Electric

Sanyo

Kyocera

Q-Cells

Sharp

Solar Cell Production (MWp)

2006 Planned Capacity

2005 Actual Production

Thin Film Si Equipment Suppliers

Applied Materials, Leybold Optics, Ulvac, Unaxis, Von Ardenne

C-Si Equipment Suppliers

Applied Materials, Baccini, OTB, Centrotherm, GT Equipment, ManzAutomation, Roth & Rau, Schmid, Spire

Source: Photon International

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60

150

240

340

430

0

100

200

300

400

500

'06E '07F '08F '09F '10F

800920

1,200

1,450

1,860

0

500

1,000

1,500

2,000

'06E '07F '08F '09F '10F

Multiple Technologies Driving Industry Growth

c-Si Annual New Capacity (MW)

Est. CAGR = 23%

TF Annual New Capacity (MW)

Est. CAGR = 64%

Source: c-Si: Applied Materials analysis based on Solar Buzz, Maycock, customer forecastsTF: Applied Materials analysis based on Navigant 2006, customer forecasts

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0

1

2

3

4

'06E '07F '08F '09F '10F

$ B

Nc-Si + Thin Film PV Equipment Spending

(wafer, cell & module manufacturing equipment)

Significant and Growing Solar Market

Note: Based on forecast of 8.5 GW production output in FY10; there are significant service opportunities that are incremental to this TAMSource: Applied Materials analysis based on Navigant 2006, CLSA (Solar Silicon Conference) 2006, Solar Buzz 2006, Manufacturer forecasts

Est. CAGR = 28%

Total Available Market

Served Available Market

Est. CAGR = 150%

Forecast to Aggressively Increase Each Year

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Robust Equipment Solutions

Rapid Scale in

Manufacturing

Global Capability

An Industry in TransitionExponential Market Growth Will Be Enabled By

Production Cost

Reduction

Applied Materials is Uniquely Positioned to Enable the Solar Industry to Make these Transitions

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