17 June 2008 Microcontroller Solutions Paul Grimme Senior Vice President and General Manager
Financial Overview Freescale 2007 Revenue: $5.7 Billion 2007 Market Share Rankings RF, Analog, and Sensor $1,048 Other $458 Microcontroller $1,878 1 Total MCU Auto ICs 2 3 4 Networking Cellular and Multimedia $1,217 $1,121 5 Sources: isuppli, Strategy Analytics
Microcontroller Business Mix Industrial and Multiple Market Reven nue Legacy/Exits ROW Auto Big 3 Auto 2004 2005 2006 2007 2008(e) 2009(e) 2010(e)
Microcontroller Growth Strategies Goal: Create value by building on solid profitability and growing revenues above our average market growth rates Aggregate system value with strong integration capability Multiple component integration: analog power management, sensors, discretes Memory configurations: flash, MRAM, SRAM Low power consumption and system management Provide complete design-in support package Controller Continuum leadership The development environment: tools, reference designs, software, simulation Best-in-class quality and availability Aggressively build our customer network Semi-custom strategy t Asia: automotive, industrial/multiple market headquarters Global network of customer/market labs Field resource increases
Automotive Microcontrollers (CAGR 2006 2011: 8.3%*) Market Overview: Automotive 2008 SAM*: $4.9B Vehicle production growth 3-5% per year (Source: Global Insight) Emerging markets leading production growth Average of semiconductor content per vehicle increasing 4-5% per year (Source: Strategy Analytics) Average MCU content, $64 per vehicle in 2007 Freescale No.1 global supplier of automotive MCUs Growth Drivers: Automotive Microcontroller Demand ($M)* Safety Environmental Connectivity & Infotainment 8000 Driver Info & 7000 Entertainment 6000 Body 5000 4000 3000 2000 1000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Safety Security Chassis Powertrain *Sources: Strategy Analytics, Freescale Strategy
Going Green Stringent emissions regulation Hybrids, gasoline direct injection Electronics replacing hydraulics Automotive Electronic System Trends Infotainment Telematics/eCall Vehicle Stability System Safety Active safety systems proliferating Intelligence driving performance Higher standards of reliability required Radar Hybrid Engine Control FlexRay Connectivity/ Infotainment Standard convenience features Wireless inside and out Regulations: Telematics/eCall systems may become mandatory The Affordable Vehicle Camera-based Collision Avoidance Night Vision Intelligent Distributed Control 30M cars in emerging markets by 2009 Ultra-low-cost vehicles
Automotive Strategy Alignment to Regional Markets $M 9000 AUTO MCU TAM (by design-in region) 8000 7000 Rest of World Market Dynamics Rapidly growing vehicle production Low electronic content, but significant growth Faster cycle time to market Strategy and Key Actions Invest for Growth: Targeted products and design capacity in Asia Automotive pricing for mass mkt Shanghai-led ROW resources Strategic partnerships 6000 5000 Japan 4000 3000 2000 1000 Europe N. America OEMs gaining market share Globally expanding tier 1s Industry technology powerhouse Globally growing tier 1s but flat vehicle production Declining vehicle production Weakening tier 1 base Limited technology development Invest in Local Infrastructure: Automotive marketing and systems teams H/W and S/W local engagement Technology Driver: AUTOSAR software Safety standards compliance Architecture/Product leadership (S Joint Activity) Maintain Share: Penetration of hybrid vehicles Continued relationship for North America and global reach 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sources: Strategy Analytics, Global Insights and MSG Automotive Strategy N. AMERICA EUROPE JAPAN S. KOREA CHINA INDIA R.O.W.
The Most Complete Automotive MCU Portfolio High-end 32-bit Power Architecture SH TriCore TriCore S470/570 Joint Development Program V850 Low-end 32-bit M32R S12X M16C (X)C167/ XC2200 16-bit H8S MSP430 S08 H8 78K 8-bit 740C (X)C800 S370
Auto Growth Metrics 8000 Automotive MCU Market* ($M) Freescale Auto MCU Design Win Growth $M 7000 6000 5000 4000 3000 2000 1000 7.4% CAGR New Business Awards $M 9.6% CAGR 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 Goal MCU 32-BIT MCU 16-BIT MCU 8-BIT FSL Auto 32-Bit Design Win Growth 32-Bit New Product Samples New 32-Bit Business Awards 30% CAGR 175% increase 2006 2007 2008 Goal 2006 2007 2008 Target *Source: Strategy Analytics
Industrial Microcontrollers (CAGR 2005 2011*: 8.8%) Sophisticated user interfaces, power management, connectivity and protection requirements are increasing Energy management in motor control and lighting g systems is very active Cost pressures and technology are driving 32-bit solutions down to 8- and 16-bit space MCU year-to-date unit growth per year offset by ASP pressure (Source: WSTS) 5000 4500 Key Market Overview: Industrial 2008 SAM*: $3.5B Industrial Processor Demand ($M)* Growth Drivers: Energy management Connectivity Building automation M$ 4000 3500 3000 2500 2000 1500 1000 500 Others (Test & Measurement, Ind Transp, Power & Energy) Appliance Bldg Ctrl, Lighting, HVAC, Metering Medical EPOS, EFT, ID Factory Automation/Drives 0 2005 2006 2007 2008 2009 2010 2011 *Sources: Semicast and IMS Research
Going Green Industrial Systems Trends Energy management at the factory, in buildings, at home Ultra-low-power devices: increased power efficiency and reduced standby currents Huge power savings by switching to microcontroller-driven motors and drives Health & Safety Medical is the fastest-growing segment in Industrial Remote monitoring and portable medical devices enable outpatient services Increased microcontroller content due to EU regulation on household electronic devices Connectivity Internet everywhere on the factory floor Wireless sensor networks More focus on IP protection as networking expands
Industrial Strategy Alignment to Market Drivers Overall Oea Industrial Market Dynamics Market accelerating Designs simplifying Increasing demand for security, IP protection and safety Power efficiency key Strategy and Actions Aligning roadmaps with strategic partners, with reuse Providing low-level drivers and robust enablement Enhancing Controller Continuum roadmap around platforms Adding security features to MCU and MPU portfolio Cycle time aligning to market needs 4 week commitment Semi-custom strategy for optimized designs Factory Automation & Drives Appliances Medical Ethernet connectivity proliferating Variable-speed AC drives growing Increasing energy efficiency Increasing need for noise reduction Improving user interfaces 5V continuation Safety improvements Portable devices proliferating Baby boomer generation driving demand for home medical devices Platform design key due to FDA restrictions Launched ColdFire MCF5223 family with Ethernet MAC/PHY Continuing investment in digital signal controller portfolio for high-efficiency motor control Launched new Flexis AC series that supports 5V Inclusion of CRC and IEC60730 EU safety standard compliance Focus on GUI simplicity, it adding proximity it sensing and segment/graphical LCD products Launched Flexis QE series focusing on low-voltage, lowpower; reusing low-power techniques in new products Proliferation of Flexis families for range of medical designs with single platform for 8-bit and 32-bit performance
MPU Power ColdFire Freescale Transition Points: 8-bit to 32-bit CPU, peripherals 32-bit ColdFire to 32-bit Power Architecture CPU Converged Linux and CodeWarrior support Competitive Landscape 32-bit MCU: Performance Power ColdFire SH and M32 ARM9 IP ARM966 AVR32 ARM7 IP ARM7 IP V850 16/32-bit: Mid-Range IP, tools and S/W compatibility V1 ColdFire R8C/R16C MIPS PIC32 PIC24-DSPIC ARM7 IP ARM Cortex-M3 8-bit: Entry Point IP, tools and pin compatibility S08 H8 8051 PIC12-16-18 ST7 AVR 78K
Industrial/Other Growth Metrics Industrial/Other MCU Market* (M$) 18,000 32-bit MCU 16,000 14,000 12,000 16-bit MCU 8-bit MCU 10,000 4-bit MCU 8,000 6,000 4,000 2,000 0 M$ Industrial/Other MCU Design Wins 25% CAGR 2006 2007 2008 Target New Products Development Tool Sales # of Ne ew Products 29% increase 2007 2008 2006 2007 2008 Plan SW Sales / MCU HW Sales / MCU SW Sales / ColdFire HW Sales / ColdFire *Source: isuppli
Freescale Microcontroller Summary We are well-positioned to address the growing embedded control markets Freescale has a history of microcontroller leadership, and MCUs are key to our future growth Priority to accelerate independence from N. American auto and shift quickly to fast-growing new product families We are committed to growing our microcontroller business Continuing i to introduce industry-leading di products (benchmark low-power, Flexis compatibility) Investing in technology, ecosystem and market coverage Our forward-looking growth metrics are positive We are expanding our global footprint and increasing our customer engagement