Integrated Supply Chain Engineering

Interconnect Technology November 2009 © 2009 IBM Corporation

2009 IBM Printed Circuit Board Symposium: Challenge and Opportunity

Sophie BechuVice PresidentIntegrated Supply Chain

18 November 2009

ISC Engineering

© 2009 IBM Corporation2 Interconnect Technology November 2009

Global Economic Outlook2009: A year of challenge for our global economy• Recession in US and Western Europe

• Slower growth in Transition Economies at +5.4%

• International trade slowing to approx +3%

• Global economy slowing to +1.3% at market exchange rates

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Year

GD

P G

row

th %

World North America Western Europe Transition economies Asia & Australasia Latin AmericaMiddle East & North Africa Sub-Saharan Africa

2010 and beyond: Gradual recovery• Global GDP shows gradual recovery at +2.2%

• Slow recovery of recession in US and Western Europe

• Transition Economies to be surpassed by Middle East and Africa

ISC Engineering

© 2009 IBM Corporation3 Interconnect Technology November 2009

Commodity pressure

Technology & innovation

Global competition & opportunity

Global volatility & disruption

New business models

Major market trends are challenging the electronics industry today.

N America, 426, 24%

ROW, 163, 9%

Japan, 143, 8%W Europe,

265, 15%

SE Asia, 768, 44%

IBM Global CEO Study 2006

Total Volume 2009 (projected as of today) = 1.756 Billion

Sustainability challenge

ISC Engineering

© 2009 IBM Corporation4 Interconnect Technology November 2009

IBM remixed its business portfolio to higher-value spaces and focused on open technologies and solutions to its clients needs.

5www.ibm.com/investor

Supplemental Segment Information Supplemental Segment Information –– 3Q 20093Q 2009

Revenue Growth

Systems & Technology Yr/Yr @CC GP% Share

System z (26%) (25%)

Converged System p (10%) (9%) =System x Servers 1% 3%

Storage (13%) (13%)

Retail Store Solutions (15%) (14%) =Total Systems (13%) (11%)

Microelectronics OEM (1%) (1%)

Total Systems & Technology (12%) (11%)

ISC Engineering

© 2009 IBM Corporation6 Interconnect Technology November 2009

Today, IBM is helping our clients to change the way the world literally works – and to make the planet not just smaller and “flatter,” but smarter. IBM is applying its expertise, global scope and creativity to build the backbone of 21st century industries and public institutions.

Our world is becoming

INSTRUMENTEDOur world is becoming

INTERCONNECTEDVirtually all things, processes and ways of working are becoming

INTELLIGENT

Leading the transition to a smarter planet as we address major market trends…

ISC Engineering

© 2009 IBM Corporation7 Interconnect Technology November 2009

As The Electronics Industry Continues To Grow In The IT Era….

Powerful Super Computer

Mega Storage System

through increasingly affordable and easy-to-use user interface technology,

our focus toward connectivity with powerful servers and storage continues.

Commoditization and User Appeal

ISC Engineering

© 2009 IBM Corporation8 Interconnect Technology November 2009

As the next decade approaches, our success in leveraging technology & innovation will depend even more on our supplier partnerships.

ISC Engineering

© 2009 IBM Corporation9 Interconnect Technology November 20099

Values-based Self Regulation

Incorporates the company's value system and/or code of conduct to guide business behavior

Growth Platform

Access to new markets, new partnerships or product/service innovations that generate revenue

Legal and Compliance

Adherence to law in the countries of production, operation and distribution

Efficiency

Measurable cost savings through efficient or win-

win scenarios

Strategic Philanthropy

Alignment of charitable activities with social issues that support business objectives

IBM Corporation 2008

The Corporate Social Responsibility Value Curve: A shift from cost to returns

As companies shift from left to right, greater returns are realized as CSR becomes more integrated into core business strategy.

ISC Engineering

© 2009 IBM Corporation10 Interconnect Technology November 2009

Deeper Client Relations

Supplier collaboration

Early involvement of design

Intellectual property protection

Differentiated Solutions

Innovative, end-to-end competitive solutions.

Flexibility of supply

Consistent high quality performance

Environmental sustainability

Global Delivery

End to end global integrated PCB solution.

Global competitive solution.

For the Electronic Industry , all of this means ….

ISC Engineering

© 2009 IBM Corporation11 Interconnect Technology November 2009

The extended IBM engineering team is located all over the world TODAY: IBM Systems & Engineering

ISTC Shenzhen / Futian

Toronto

PoughkeepsieSan Jose

Guadalajara

DublinRochester

Montpellier

Czech Republic

ISTC Shenzhen China

Singapore

Tucson Austin

Malaysia

Vimercate

Thailand

RomaniaSupplierIBM ManufacturingIBM EngineeringJV & IBM Engineering

Raleigh China (& HK)

Taiwan

Japan

Hungary

Burlington

Fishkill

BromontYamato

South Korea

Italy

Brazil

Germany

US

Taiwan

ISC Engineering

© 2009 IBM Corporation12 Interconnect Technology November 2009

In summary, our strategy is dynamically determined by new economics and landscapes, which mandate us to ...

Focus on open technologies and high-value solutions

Deliver integration and innovation to clients

Become the premier Globally Integrated Enterprise

The electronics industry, and IBM are looking for your expertise in building innovative, end-to-end, competitive, sustainable, and high quality PCB solutions. Our mutual success is critical for creating greater value for both tangible and intangible business results.