intel - caris - aug10 - 3q10 guidiance

8/8/2019 Intel - Caris - Aug10 - 3Q10 Guidiance

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Craig A. Ellis (415) 489-2514 [email protected] Caris & Company44 Montgomery

Suite 1500San Francisco, CA 94104

FINRA SIPCFor full disclosure, please see end of report

1

T e c h n o l o g y : S e m i c o n d u c t o r s

Updat

Intel Corporation (INTC: $18.37) 1/Bu

Monday, August 30, 2010 Price Target: new: $26; old: $3

52 Week Range

ADT - 3 month

Market Cap (Bill)

Shares Out

Float

Earnings Per Share (FD Operating)

FY-Dec FY09A FY10E FY11E

1Q $0.11 $0.43 $0.43

2Q ($0.07) $0.51 $0.41

3Q $0.33 $0.51 $0.494Q $0.40 $0.52 $0.56

FY $0.78 $1.97 $1.90

Prior EPS NA $2.15 $2.37

EV/EBITDA 8.4x 4.3x 3.8x

PE 23.6x 9.3x 9.7x

EV/Sales 2.9x 2.0x 1.7x

FY FY09A FY10E FY11E

Sales $35,127 $43,448 $44,524

EBITDA $12,187 $20,217 $20,186

EBITDA % 34.7% 46.5% 45.3%

EBIT% 13.4% 33.8% 30.6%

FCF Yield 5.8% 11.9% 12.3%ROIC 8.3% 24.9% 23.3%

ROE 11.3% 30.3% 24.8%

Debt/Capital 4.5% 3.9% 3.5%

TBV/Share $7.28 $8.73 $10.09

2Q10A

Cash & Equivalents $18,303

Accounts Receivable $2,430

Inventory $3,345

Current Assets $26,464

PPE $16,946

Goodwill $4,481

Total Assets $57,691Current Liabilities $7,937

Total Debt $2,273

Total Liabilities $11,850

Shareholders Equity $45,841

5,562

MARKET DATA

$18.12-$24.37

71.3

$102.28

BALANCE SHEET

Financial data in million unless otherwise stated

5,568

EARNINGS DATA

FINANCIAL DATA

Lowers 3Q10 Guidance On US/Euro Consumer P

Weakness; Maintain 1/Buy W/EPS Cuts Fully Priced In.

Summary and RecommendationFriday INTC resolved five weeks of PC-related outlook controversy by lowering 3Q10 revenue guidance to +2.0% qq from +7.8% on US and European consumweakness. The negative revision nonetheless has multiple pluses: a) a cloud uncertainty overhanging shares is removed, b) inventory is in good shape as 2006efficiencies keep output well-tuned to demand, c) gross margins are surprisingresilient at 66.0%, and d) further out in 2011 and 2012 there should ~$8B+ per yrexcess cash thrown off intensive buy-back action makes sense. Overall, our C1and C11E EPS pull back 18.3% and 19.4% to $1.97 and $1.90, with lower ests amultiples taking our target to $26. Investment risks are choppy catalysts into 1Q11 afurther macro/demand deterioration. Pluses are new product mojo in 2H10/20w/Sandy Bridge sustaining favorable price/mix, stellar low-to-mid-60s gross margthru 2011 (unheard of 9+ months ago), and near-historic low 9.3-9.7x P/E valuatioand a 3.4% dividend yield making shares compelling for value-oriented investors.

Key Points

Lowers 3Q10 Outlook. Lead by weaker than expected US and European consumPC demand INTC lowered revenues to $11.0M +/- $200M from $11.6B +/- $400Mgross margins to 66.0% from 67.0%, and left opex unchanged. Our estimates moto $11.0B (+2.4%)/$0.51 from $11.7B (+8.8%)/$0.58 while the Streets $11.5(+7.0%)/$0.53 had started to migrate towards new guidance in past three weeks.

We Add Conservatism To 4Q10. Erosion in recent US macro data points aongoing European concerns (Fig 17) elevate risk of end-demand deceleration inyear-end. We cut our 4Q10E growth to +3.0% from +4.9% (10-yr seasonality +7and expect other Sell-Siders to trim 100-300 bps from +5.0% forecasts. New ests a$11.4B/$0.52 (from $12.3B (+4.9%)/$0.64; Street $12.1B (+5.0%) /$0.57).

Gross Margins Pull Back, But Still Truly Stellar. Our 3Q10 and 4Q10 Gforecasts fall 200 and 250 bps, respectively to 66.0% and 66.2% (volume more thoffsets mix), though our and Street 2H10 and 2011 modeling will remain well abo60%. Ahead, steady ASPs, 32nm mix, and enterprise demand are tailwinds wh22nm transition expenses and 1H11s seasonality are risks. We stand by our thesistructural gross margin reset is increasingly visible at INTC, a long-term FCF plus

Throttle Back EPS. We now model C10 revs +23.7%, gross margins at 65.7% aEPS of $1.97 (from $2.15; Street +27.1%/$2.05). Our new C11 EPS are $1.90 (fro

$2.37 and $2.02 into 2Q10s print; Street $1.97). Risks: US, European PC demand

Laterals INTC More In-Line With Other PC-Exposed Cos. Revised guidanis now closer to flat/down views from 1/Buy ATHR, 3/Avg ISIL, 3/Avg MXI1/Buy ONNN, and 3/Avg TXN. That said, INTCs a-typical server and ASP plumean downside is possible as is more visible in NR AMDs +7.5% qq revenue guid

Discounts Inventory Correction. Off 24.1% from recent highs, shares fudiscount an inventory correction. We see downside to $16, upside to $26 (2.6x C1EVS from 3.2x) w/shares at 9.3x and 9.7x our C10E/11E EPS (17.8x 5-yr median)


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CARIS &COMPANY NEW YORK DEL MAR SAN FRANCISCO BOSTON MEMBER FINRA/SIPC

INTCs 3Q10 Outlook Revision Is A Negative, Though Is Not Without Its Silver Linings

Revises 3Q Guidance Friday intra-day INTC lowered its C3Q10 forecast, resolving the PC-segment outlookdissonance weve identified since early-August (8/3 Semiconductor Sector Update - Cash Piling Up At A

Prodigious Pace). New 3Q10 parameters are $11.0B +/-$200M revenues (+2%; from +7.8% $11.6B +/-$400M),66.0% gross margin (from 67.0%; favorable mix partially offsets lower volume) and unchanged opex vs prior. Caris

estimates move to $11.0B (+2.4%)/$0.51 from $11.7B (+8.8%)/$0.58 vs Street of $11.5B (+7.0%)/$0.53.

US, European Consumer Demand The Culprit. Our checks show INTC is seeing weak US and Europeanconsumer PC demand which is more than offsetting planned and realized strength in Enterprise PCs and x86servers and workstations. For context, respective US, Europe, Asia and Japan 3Q and 4Q seasonality (2003-2007) is5.8%/16.6%, 5.3/20.3%, 12.2%/6.4% and 4.8/5.7% - abundantly positive in every geography both quarters.

But Multiple Silver Linings Emerge. We see three things: a) the 2006-8 efficiency improvements are keeping fabproduction in-tune with output, mitigating excess inventory risk and 4Q10 utilization concerns, b) gross marginsremain elevated at surprisingly stellar levels and should stay north of 60% through C11, and c) a cloud ofuncertainty is now gone and investors will no longer worry about a 4Q10 pull-in to meet 3Q10- guidance. US,Europe, Asia and Japan 3Q and 4Q seasonality (2003-2007) 5.8%/16.6%, 5.3/20.3%, 12.2%/6.4% and 4.8/5.7%.

Figure 1: INTC Quarterly Income StatementOld New Old New

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Sep-10 Dec-10 Dec-10

INTC 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10E 3Q10E 4Q10E 4Q10E

Revenue ($M) 9,673.0 9,470.0 10,217.0 8,226.0 7,145.0 8,024.0 9,389.0 10,569.0 10,299.0 10,765.0 11,711.9 11,025.1 12,285.6 11,359.4

Y/Y 9% 9% 1% -23% -26% -15% -8% 28% 44% 34% 25% 17% 16% 7%

Q/Q -9.7% -2.1% 7.9% -19.5% -13.1% 12.3% 17.0% 12.6% -2.6% 4.5% 8.8% 2.4% 4.9% 3.0%

Q/Q mean -7.2% -2.8% 10.7% 8.9% -8.0% -3.4% 9.3% 2.7% -9.1% -0.9% 11.6% 11.6% 2.5% 2.5%

Gross Margin 53.8% 55.4% 58.9% 53.1% 45.6% 50.8% 57.6% 64.7% 63.4% 67.2% 68.0% 66.0% 68.7% 66.2%

Incremental GM 103.1% 93.1% 97.1% 121.7% 151.5% 76.5% 16.0% 84.0% 72.8%

Research and Development 1,467.0 1,468.0 1,471.0 1,316.0 1,317.0 1,303.0 1,430.0 1,603.0 1,564.0 1,666.0 1,701.0 1,701.0 1,731.0 1,731.0

SG&A 1,349.0 1,430.0 1,416.0 1,263.0 1,200.0 1,250.0 1,320.0 2,718.0 1,514.0 1,584.0 1,549.2 1,574.4 1,530.2 1,562.5

Operating Expenses 2,816.0 2,898.0 2,887.0 2,579.0 2,517.0 2,553.0 2,750.0 4,321.0 3,078.0 3,250.0 3,250.2 3,275.4 3,261.2 3,293.5

Operating Exp % of Sales 29.1% 30.6% 28.3% 31.4% 35.2% 31.8% 29.3% 40.9% 29.9% 30.2% 27.8% 29.7% 26.5% 29.0%

Operating Income 2,391.0 2,351.0 3,132.0 1,790.0 744.0 1,526.0 2,654.0 2,519.0 3,451.0 3,985.0 4,709.0 4,001.1 5,180.0 4,226.4

Operating Margin 24.7% 24.8% 30.7% 21.8% 10.4% 19.0% 28.3% 23.8% 33.5% 37.0% 40.2% 36.3% 42.2% 37.2%

EPS - GAAP $0.25 $0.28 $0.35 $0.04 $0.11 ($0.07) $0.33 $0.40 $0.43 $0.51 $0.58 $0.51 $0.64 $0.52

Consensus Rev. 10,569 10,299 10,765 11,518 12,097

Consensus EPS (including option expense) $0.40 $0.43 $0.51 $0.53 $0.57

12.6% -2.6% 4.5% 7.0% 5.0% Source: Company Reports and Caris and Company

Yearly Outlook Revisions We trim our 4Q10 forecast to add further conservatism to our model. Caris C10estimates move to $43.45B (+23.7%)/$1.98 from $45.06B (+28.3%)/$2.16 (Street $44.66B (+27.1%)/$2.05) whileC11 moderates to $44.52B (+2.5%)/$1.91 from $48.44B (+7.5%)/$2.38 (Street $47.02B (+5.3%)/$2.09).

Figure 2: INTC Annual Income StatementOld New Old New

INTC FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10E FY10E FY11E FY11E

Revenue ($M) 26,764 30,141 34,209 38,826 35,382 38,334 37,586 35,127 45,061 43,448 48,441 44,524

Y/Y 1% 13% 13% 13.5% -8.9% 8.3% -2.0% -6.5% 28.3% 23.7% 7.5% 2.5%

Gross Margin % 49.8% 56.7% 57.7% 59.4% 51.5% 52.2% 55.5% 55.8% 66.9% 65.7% 65.5% 63.0%

Incremental GM 118.2% 111.8% 65.2% 71.5% 60.9% 106.5% 107.9% 46.4% -47.6%

R&D 4,034 4,360 4,778 5,145 5,873 5,760 5,722 5,653 6,662 6,662 7,271 7,149

SG&A 4,334 4,278 4,659 5,688 6,096 5,406 5,458 6,488 6,177 6,235 6,220 6,262

Total Operating Expense 8,368 8,638 9,437 10,833 11,969 11,166 11,180 12,141 12,839 12,897 13,491 13,412

Operating Exp % of Sales 31.3% 28.7% 27.6% 27.9% 33.8% 29.1% 29.7% 34.6% 28.5% 29.7% 27.9% 30.1%

Operating Income 4,950.0 8,456.0 10,309.0 12,216.0 6,249.0 8,851.0 9,664.0 7,443.0 17,325.0 15,663.5 18,242.0 14,637.5

Operating Margin 18.5% 28.1% 30.1% 31.5% 17.7% 23.1% 25.7% 21.2% 38.4% 36.1% 37.7% 32.9%

EPS - PF 0.55 0.99 1.19 1.42 0.84 1.18 1.02 1.08 2.16 1.98 2.38 1.91

EPS - GAAP 0.46 0.85 1.16 1.40 0.86 1.17 0.92 0.78 2.15 1.97 2.37 1.90

Consensus Rev. 44,659 47,017

Consensus EPS $2.05 $2.09

con rev yy: 27.1% 5.3% Source: Company Reports and Caris and Company


3/17

Semiconductors

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Data Center Is Holding Up Well, Led By Nahalem Server. That Said, Comments From NR CSCO, As Well As

Eroding Macro Data Points Since June, Lend Concern Regarding Late-2010 and 2011 Enterprise Spending Strength.

Figure 3: Quarterly Data Center Sales

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Total Data Center Data Center MPUs

Data Center Chipsets/MB Total Data Center QQData Center MPUs QQ Data Center Chipsets/MB QQ

Source: Caris and Company

We Are Bullish On X86 Share Gain Prospects In The Server Market And In INTCs Leadership Position (See 3/25

Server Biz Under-Appreciated).

Figure 4: Annual Server Revenues By Architecture, YY Dollar Growth, and Percent of Total Market 1997-2010E2003-8 Up-cycle

Server Market 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E Avg Avg *

RISC/Unix $23,893 $24,578 $25,393 $29,010 $22,094 $18,735 $17,755 $16,254 $16,335 $16,533 $16,860 $17,228 $13,054 $13,054 $16,827 $19,777

x86 (Windows, Linux $13,486 $14,212 $16,904 $19,668 $16,438 $16,082 $18,172 $22,485 $25,485 $26,419 $28,805 $27,444 $23,484 $27,007 $24,802 $19,474

Mainframe/Other $23,098 $20,425 $15,201 $12,786 $11,584 $9,485 $10,234 $10,749 $9,814 $9,851 $8,874 $8,554 $6,624 $6,491 $9,679 $15,053

Total $60,477 $59,215 $57,498 $61,464 $50,116 $44,302 $46,161 $49,044 $51,634 $52,803 $54,539 $53,226 $43,162 $46,552 $51,235 $54,255

YY Dollar GrowthRISC/Unix $3,503 $685 $815 $3,617 ($6,916) ($3,359) ($980) ($1,501) $81 $198 $327 $368 ($4,174) $0 ($251) $391

x86 (Windows, L inux $4,185 $725 $2,693 $2,764 ($3,230) ($356) $2,091 $4,313 $3,000 $934 $2,386 ($1,361) ($3,960) $3,523 $1,894 $2,541

Mainframe/Other ($4,132) ($2,672) ($5,225) ($2,415) ($1,202) ($2,099) $748 $515 ($935) $37 ($977) ($320) ($1,930) ($132) ($155) ($1,580)

Total Growth $3,556 ($1,262) ($1,717) $3,966 ($11,348) ($5,814) $1,859 $2,883 $2,590 $1,169 $1,736 ($1,313) ($10,064) $3,390 $1,487 $1,352

YY % Growth

RISC/Unix 6.2% -2.1% -2.9% 6.9% -18.5% -11.6% 4.2% 6.2% 5.3% 2.3% 3.3% -2.4% -18.9% 7.9% 3.1% 2.8%

x86 (Windows, Linux 45.0% 5.4% 18.9% 16.4% -16.4% -2.2% 13.0% 23.7% 13.3% 3.7% 9.0% -4.7% -14.4% 15.0% 9.7% 16.5%

Mainframe/Other 38.8% 7.5% 21.8% 9.5% 2.0% 9.4% 8.8% 17.5% 8.1% 1.4% 5.7% -2.3% 4.5% 7.1% 6.5% 13.7%

Total 6.2% -2.1% -2.9% 6.9% -18.5% -11.6% 4.2% 6.2% 5.3% 2.3% 3.3% -2.4% -18.9% 7.9% 3.1% 2.8%

% Of Total

RISC/Unix 39.5% 41.5% 44.2% 47.2% 44.1% 42.3% 38.5% 33.1% 31.6% 31.3% 30.9% 32.4% 30.2% 28.0% 33.0% 36.3%

x86 (Windows, Linux 22.3% 24.0% 29.4% 32.0% 32.8% 36.3% 39.4% 45.8% 49.4% 50.0% 52.8% 51.6% 54.4% 58.0% 48.2% 36.6%

Mainframe/Other 38.2% 34.5% 26.4% 20.8% 23.1% 21.4% 22.2% 21.9% 19.0% 18.7% 16.3% 16.1% 15.3% 13.9% 19.0% 27.2%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.9% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.2% 100.1%

% of Total BPS Change

RISC/Unix 369 200 266 304 -311 -180 -383 -532 -150 -33 -40 145 -212 -220 -165 -38

x86 (Windows, Linux 596 170 540 260 80 350 307 648 351 68 278 -125 285 360 254 370

Mainframe/Other -965 -370 -806 -564 231 -170 76 -25 -291 -35 -239 -20 -72 -140 -89 -332

* 1996-1999 and 2003-2007

Memo: INTC Data Center Revenues

Microprocessors na na na na na na na na na na $4,796 $5,126 $5,301

- YY 6.9% 3.4%

Chipsets and Mother na na na na na na na na na na $1,659 $1,464 $1,149

- YY -11.8% -21.5%

Total DataCenter Group $6,455 $6,590 $6,450

- YY 2.1% -2.1% Source: Caris and Company, Company Reports


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Developed Country PC Client Weakness (Europe, US), Which More Than Offsets Solid Corporate PC Trends, Is The

Source Of INTCs Miss. We Model 3.0% 4Q10 Growth Versus ~7.1% Seasonality.

Figure 5: Quarterly PC Client Sales

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Total PC Client PC Client MPUs PC Client Chipsets/MB

Tota l PC Clien t QQ PC Clien t MPUs QQ PC Client Ch ipsets /MB QQ

Source: Caris and Company

Figure 6: Quarterly Taiwan and INTC Notebook QQ Sales Growth

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Taiwanese NB Revs (5-yr seas onality past Jun-10)

Taiwanese NB Revs (75% of 5-yr seas onality)

Source: Caris and Company, Company Reports, Taiwanese NB companies Asustek, Quanta, Compal, Wistron, Inventec, Acer

Figure 7: Quarterly INTC Revenues in Desktop and Server Versus Taiwan Motherboard ODMs

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Taiw anese MB Revs (5-yr seasonality past Jun-10)

Taiw anese MB Revs (75% of 5-yr seasonality)

Source: Caris and Company, Company Reports, Taiwanese MB companies Elite, AsRock, MSI, Gigabyte


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Structural Profitability Improvement Under CEO Otellini and CFO Smith (Efficiency, Product Development, Mix)

Are Visible In Just A 100 BPS Hit To Gross Margin Despite A 550 BPS Revenue Growth Guide-Down. Historic Stock

Price and Gross Margin Relationships Beg A Big Leg Up In The Shares, Though Macro Concerns Must Ease For

Shares To Rally Sustainably.

Figure 8: INTC Share Price versus Gross Margin, 1Q02-4Q10E

Share Price vs. GM

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Source: Company Reports, Caris and Company, Factset

Figure 9: Volume/Cost and ASPs Have Upside Potential To Caris C10E Modeling

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CPU (volume/cost) Underutiliozation charges Fab start-up Chipset unit costs

Inventory writeoffs/reversals CPU ASPs NAND/NOR/Other (legal) GMs

Source: Caris and Company, Company Reports. Change is based on sequential variance from prior 4Q levels.

Figure 10: INTC Quarterly Revenues vs Caris and Street Gross Margins, 2007-2011E

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Source: Caris and Company, Company Reports


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Semiconductors

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We Are Confident INTCs Improved Supply Chain Practices Will Preclude Major On-Hand Inventory Build In

C3Q10. That Said, We Do Not Expect Inventory To Track Normal Seasonality Which Would Be Down QQ.

Figure 11: INTC Inventory Percent Of Sales and Inventory Dollars By Quarter

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Source: Company Reports and Caris and Company

Figure 12: INTC Inventory Days and Dollars By Quarter

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Figure 13, 14: INTC Historic Inventory Seasonality In Dollars (Left) and Days (Right)

Inventory Seasonality

Dollars 1Q 2Q 3Q 4Q

5-yr Avg Chg ('07) 169.0 174.4 -67.6 -57.0

5-yr Avg % Chg ('07) 5.7% 5.6% -1.2% -0.3%

7-yr Avg Chg ('07) 211.9 153.0 -119.6 -84.0

7-yr Avg % Chg ('07) 8.1% 5.1% -3.4% -2.0%

Eight-Year Min 2,164.0 2,152.0 2,225.0 2,253.0

Eight-Year Max 4,366.0 4,332.0 4,477.0 4,314.0

Current/Projected 51.0 359.0 -9.3

% change qq 1.7% 12.0% -0.3%

Inventory Seasonality

Days 1Q 2Q 3Q 4Q

5-yr Avg Chg ('07) 7.2 3.4 -6.6 -2.3

5-yr Avg % Chg ('07) 10.5% 4.0% -6.8% -1.3%

7-yr Avg Chg ('07) 8.0 2.8 -7.3 -2.8

7-yr Avg % Chg ('07) 12.1% 3.3% -8.1% -2.6%

Eight-Year Min 61.0 58.7 60.4 56.7

Eight-Year Max 90.1 103.0 91.9 88.6

Current/Projected 0.5 14.2 -5.4

% change qq 0.6% 19.6% -6.2% Source: Company Reports and Caris and Company


7/17

Semiconductors

7


C4Q10s Cash Balance Should Be ~$15B Even After The Net $7.0B For MFE (Not Yet In Our Model), Leaving INTC

With Ample Buy-Back And Deal Flexibility, Especially In Light Of Careful Cap Ex Spend. In Addition, The Business

Should Spin Off ~$8B in Excess Cash Per Year In 2011 and 2012 - We Think Aggressive Buy-Backs Make Sense With

Mid-To-Large Strategic Deals Out Of The Way By The End Of 2010.

Figure 15: F10E and F11E FCF Is ~2.5x The Trailing 9-Year Average

($15,000)

($10,000)

($5,000)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10E FY11E

OCF FCF Cash Debt Cap Ex Dividend Share Buy-Back


Figure 16: INTCs Capital Expenditures Are Under Tight Control

Annual CapEx And Depreciation Expense and Percent of Sales

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

5%

10%

15%

20%

25%

30%

Cap Ex Depreciation Cap Ex %of Sales Dep %of Sales



8/17

Semiconductors

8


Figure 17: Select Macroeconomic Data Points Since JuneMacroeconomi c Data Points

Series

Region Date Commentary Reading Trend

US

GDP

28-Aug Revised 2Q10 GDP +1.6% vs 2.4% initial and +1.4% expected - -

30-Jul 2Q10 GDP +2.4% vs 2.5% consensus - -

14-Jul Fed lowers C10 and C11 GDP targets to 3.0-3.5% (dn 20 bps) and 3.5%-4.0% + +

ISM Manufacturing / Industrial Production & Output

25-Aug Durable goods orders in July +0.3% but -3 .8% excluding transportation (expectation +3.0%) - -

17-Aug Industrial production +1% in Jul (consensus +0.6%) - Mfg +1.1%, Utility +0.1%

Capacity utilization up to 74.8% (consensus 74.5%)- Mfg 72.2% (71.4%), Mining 86.4% (85.5%)

2-Aug JulyISM Manufacturing 55.5 vs 54.2 consensus but down from June 56.2 + -

29-Jul Durable goods orders unexpectedly fell 1% -

5 -Jul Non-defense capital goods spending rose 3.9% in May after a 2.8%fall in April (Commerce Dept.) + +

1-Jul ISMNew Orders index fell 3.5 points in June to 56.2, the lowest level since October, 2009 - +

Context: Biggest new orders mm loss since Sept, 2008 but still well above 50

30-Jun ISM Midwest Manufacturing index fell 0 .8 points in June to 59.1 - +

30-Jun ISM Midwest Manufacturing jops index rose 5.0 points in June to 54.2 + +

Employme nt

26-Aug Weeklyjobless claims fell by 31k to 473k bu t four-week average rose by 3k to 487k + -

19-Aug Weeklyjobless claims rose by 12,000 to 50 0,000 , highest level in 9 months - -

11-Aug U.S. job openings of 2.9 mil flat in Jun, but hire rate 3.3% down from 3.5% in May - -

5-Aug Private sectors added 42k jobs in July, payroll up by 90k, joblessness up to 9.6% - -

5-Jul USprivate payrolls increased by 83,000, joblessness fell to 9.5% as 625,000 workers let the workforce - +

1-Jul ISMEmployment index fell 2.0 points in June to 57.8 but is still 4.0 points above 1Q10 average levels - +

7-Jun Private payrolls up just 41,000 in May, down sharply from April's 218,000 increase - +

Context : Payro lls are 5.4% below December, 2007 highs, the biggest-ever post-war drop

Co nsumer

13-Aug Consumer confidence 69.6 in July from 67.8 in June + +

30-Jul 2Q10 Consumer spending +1.6%, down from +1.8% in 1Q10 -

16-Jul Consumer confidence fell to 66.5 from 76.0 in July from June versus expectations for 74.5 -

Context : Confidence at lowest level in 11 months; income and job prospects extraordinarily week

Hous ing

25-Aug New home sales for Jul -12.4% to 276k annualized, a record low since 1963 - -

27-Jul New home sales for June +12.1%, revised from the previous estimate 23.6%

14-Jul Mortgage Bankers Ass'nHome Purchase Applications Index fell 2.9% for wk to lowest level since 1996 - ->

30-Jun Mortgage Bankers Ass'nHome Purchase Applications Index fell 3.3% for wk ended June 25 to 13-yr low - -

Funds flow

30-Jul June stock fund flow -$5.41B vs bond fund flow of +$20.7B (source: ICI) - -

Context : YTD Stock inflows +$8.9B, Bond inflows +$144.7B

30-Jun US stock fund in flows f ell $24 .7B in May aft er incr easinng in January t hrough April (source: ICI ) -

Other

16-Aug Empire State business conditions index increases to 7.1 from 5.8 (8.0 expected)

14-Jul June retail sales fell 0.5% after May's 1.1% decline - +

5-Jun May US retail sales up 2.5% versus 2.7% expected - +

Europe

13-Aug Euro-Zone annualized 2Q10 GDP +1.7%; Germany 2Q10 GDP +3.7% + +

22-Jul Euro-Zone PMI rose to 56.0 in July from 55.5 in June, above expectations of 55.0 +

Asia & ROW

16-Aug Japan annualized 2Q10 GDP growth 0.4% (2.4% expected) - -


9/17

Semiconductors

9


Figure 18: Semiconductor Sector ValuationIncluding Options

27-Aug Current P/E P/E EV/S FCF Yield

Ticker Price Mkt Cap C07 C08 C09 C10E C11E C07 C08 C09 C10E C11E C07 C08 C09 C10E C11E C07 C08 C09 C10E C11E

ADI $29.22 $8,039 12.7 19.5 25.3 11.5 9.8 18.8 18.9 23.8 11.5 9.8 2.8 2.8 3.2 2.3 2.1 5.3% 4.6% 6.7% 10.8% 10.9%

AOSL $11.14 $207 13.0 7.6 7.7 13.0 6.7 6.6 0.4 0.3 0.2 5.7% 5.7% 19.4%

ISIL $10.57 $1,299 10.1 8.4 30.0 50.1 9.9 7.8 7.9 21.1 9.5 8.6 1.2 1.2 1.5 1.0 0.9 16.0% 16.5% 9.1% 9.5% 10.7%

LLTC $29.68 $6,683 19.9 16.3 25.7 12.5 12.5 17.6 14.7 21.8 11.7 11.7 6.7 6.3 8.1 5.0 4.9 7.0% 7.0% 5.1% 7.1% 7.6%

MCHP $28.72 $5,345 18.1 17.9 33.1 15.0 13.8 19.0 18.8 29.0 13.0 12.1 4.9 5.1 6.0 3.9 3.6 6.9% 4.4% 6.5% 5.5% 8.7%

MXIM $16.44 $5,076 15.1 34.3 60.8 14.7 11.3 10.8 17.1 27.0 12.1 10.8 2.0 2.2 2.5 1.8 1.7 4.3% 7.1% 5.2% 8.1% 9.6%

NSM $13.00 $3,056 11.5 10.9 98.8 10.3 9.8 9.4 8.6 16.7 8.4 8.4 2.0 2.1 3.1 2.4 2.4 18.3% 11.9% 9.1% 12.3% 10.0%

ONNN $6.41 $2,808 8.1 8.3 15.7 6.8 6.1 7.7 7.3 12.8 5.9 5.4 2.2 1.7 2.0 1.5 1.4 6.3% 10.6% 7.9% 13.3% 17.9%

SMTC $17.33 $1,064 24.2 29.2 1,546.5 15.9 13.4 19.5 20.5 18.6 10.7 9.7 2.8 2.7 2.8 1.8 1.6 5.4% 4.5% 7.1% 3.3% 6.0%

TXN $24.15 $30,634 13.0 16.6 20.8 9.6 9.5 12.2 13.2 15.8 9.0 9.1 2.0 2.2 2.7 2.0 2.0 12.1% 9.1% 6.3% 7.7% 10.2%

VLTR $20.92 $506 37.3 47.8 15.5 12.3 124.4 29.0 31.7 13.3 11.2 5.8 4.1 4.1 2.6 2.3 1.7% 3.1% 3.3% 7.1% 10.8%

avg $5,884 14.7 19.9 174.3 15.4 10.6 24.7 15.6 21.0 10.2 9.4 3.2 3.0 3.3 2.2 2.1 8.3% 7.9% 6.6% 8.2% 11.1%

PC and Graphics

INTC $18.37 $105,600 15.6 20.0 23.6 9.3 9.7 2.5 2.5 2.7 2.2 2.1 7.2% 5.4% 6.3% 12.3% 12.2%

NVDA $10.12 $5,717 6.5 62.0 25.4 15.4 15.1 1.1 1.3 1.3 1.3 1.2 18.9% 7.2% 0.4% 8.5%

Avg 11.1 41.0 24.5 12.4 12.4 1.8 1.9 2.0 1.7 1.7 13.1% 5.4% 6.7% 6.3% 10.4%

Comm IC and Wireless

ATHR $26.95 $1,679 24.0 23.9 19.6 10.3 9.7 3.3 2.9 2.5 1.4 1.3 3.2% 4.1% 8.3% 7.6% 9.3%

BRCM $33.01 $18,068 28.1 20.5 27.9 12.1 11.6 4.3 3.5 3.6 2.4 2.2 3.7% 4.6% 5.1% 7.9% 9.5%

MRVL $16.57 $10,516 37.3 21.8 16.7 10.0 9.0 3.3 3.2 3.4 2.6 2.4 0.7% 5.7% 7.3% 10.5% 11.0%

NETL $25.85 $597 26.8 29.6 30.7 47.5 27.9 4.6 3.6 2.9 1.3 1.1 3.8% 6.8% 7.8% 15.3% 21.6%

SLAB $39.27 $1,922 30.1 22.9 19.9 13.8 12.3 4.7 3.8 3.6 2.9 2.6 2.0% 5.5% 5.8% 6.1% 7.7%

SWKS $18.39 $3,031 35.6 25.9 23.5 14.2 10.6 3.8 3.3 3.4 2.5 2.2 2.3% 4.6% 4.9% 4.5% 5.8%

avg $26.67 $5,969 29.5 23.3 22.7 12.6 11.1 4.0 3.4 3.3 2.3 2.1 2.8% 4.7% 6.0% 6.5% 8.1%

Memory

SNDK $34.19 $7,793 19.8 13.1 7.8 8.7 1.7 1.9 1.8 1.3 1.2

Avg $6,038 14.8 17.9 187.0 15.3 10.5 19.4 17.3 21.1 12.6 10.7 3.1 2.9 3.0 2.1 1.9 7.5% 8.0% 6.5% 8.0% 11.1%

Represents Caris and Street Consensus EPS includes Stock Option Expenses for ADI, LLTC, MCHP, MXIM, NSM, and ONNN. For ISIL and SMTC, Caris and Street Consensus excludes Stock Option Expenses

Excluding Options


10/17

Semiconductors

10


Figure 19: Semiconductor Share Price PerformanceCalendar Year End: YY Change Current vs 52 Wk Qtrly C02-07 Seaonality

Ticker 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10

2010

YTD 3QTD WTD Low High 1Q 2Q 3Q 4Q

Analog

ADI -13% -46% 91% -19% -3% -8% -4% -40% 66% -7% 7% -17% -28% 0% 30% 11% 15% -9% -3% -7% 5% 4% 16% -9% 7% -3% -11% 7%

AOSL -23% -38% -19% 7% 16% -40%

CY 1% -71% 273% -45% 21% 18% 114% -22% 136% -34% 5% 33% -14% 51% 36% 12% 2% 9% -13% 0% 5% 2% 31% -24% 10% 4% 0% 12%

FCS 95% -62% 133% -35% 4% -1% - 14% - 66% 104% -17% -3% -23% -45% - 19% 77% 46% -2% 7% -21% -19% -3% 1% 14% -36% 2% -3% -9% 9%

IDTI -20% -69% 105% -33% 14% 17% - 27% - 50% 15% -21% 11% -22% -28% - 19% 33% 12% -4% -5% -19% -19% 6% -1% 9% -29% 4% -4% -9% 2%

IRF 16% -47% 168% -10% -28% 21% - 11% - 61% 64% -37% -13% 1% -29% -2% 12% 32% 13% 4% -19% -16% 0% 2% 6% -26% 12% -4% -9% 19%

ISIL 41% -57% 78% -32% 49% -4% 2% -62% 67% 5% -6% -31% -45% 23% 11% 22% 0% -4% -18% -31% -13% 2% 8% -38% 3% 9% -13% -3%LLTC -15% -34% 64% -7% -7% -16% 6% -31% 38% -4% 6% -6% -28% 4% 1% 18% 11% -8% -2% -3% 7% 1% 16% -10% 5% -2% -8% 7%

MCHP 75% -4% 37% -20% 21% 2% -3% -38% 49% 4% - 7% -3% -34% 8% 6% 18% 10% -3% -1% -1% 4% 0% 22% -9% -2% 8% -10% 9%

MCRL -22% -66% 73% -29% 5% -7% -22% -13% 12% 10% -1% -1% -19% -4% 4% 11% 1% 30% -5% 14% -9% 2% 34% -25% -3% -11% -15% 14%

MPWR 61% -26% 93% -41% 90% -18% 23% -20% -27% 23% 45% 5% 2% -7% -20% -26% -1% 3% 11% -30% 16% -1% 13% 1%

MSCC 114% -79% 302% 42% 59% - 29% 13% - 43% 41% 3% 10% 1% -50% -8% 19% 14% 12% -2% -16% -18% 0% -2% 13% -21% 13% -2% -5% 15%

MXIM 10% -37% 50% -14% -15% - 16% - 15% - 56% 78% -23% 3% -14% -37% 18% 16% 16% 12% -5% -14% -19% -2% -2% 4% -23% 2% -5% - 13% 12%

NSM 53% -51% 162% -9% 45% -13% 0% -56% 53% -19% 12% -16% -41% 7% 17% 14% 8% -6% -7% -15% -3% 1% 5% -20% 10% 1% -6% 9%

ONNN -61% -34% 373% -30% 22% 37% 18% - 62% 159% -36% 61% -26% -50% 19% 69% 20% 7% -9% -20% -27% 0% 1% 5% -30% 32% 6% -2% 23%

SMTC 62% -69% 1 08% -4% -16% -28% 18% -27% 51% -8% - 2% 0% -19% 18% 19% 7% 0% 2% -6% 2% 6% 7% 18% -11% 8% -4% -9% 6%

TXN -41% -42% 82% -16% 30% -10% 6% -47% 62% -7% -3% -23% -24% -1% 35% 11% 10% -6% -5% -7% 4% -1% 8% -12% 8% -6% 1% 1%

VLTR -32% 0% -26% -35% 167% 3% 52% -26% -44% 18% 56% 40% 4% 31% -8% 9% -9% 5% 62% -30% -13% - 6% - 4% 20%

avg 20% -51% 140% -17% 14% -4% 9% -44% 74% -12% 9% -11% -33% 8% 29% 18% 6% 1% -12% -12% -1% 2% 17% -24% 8% -1% -8% 10%

Median 10% -51% 105% -19% 14% -7% 0% -43% 64% -8% 5% -16% -29% 7% 19% 14% 7% -4% -13% -16% 0% 1% 14% -25% 6% -2% -9% 7%

PC and Graphics

AMD 15% -60% 134% 48% 39% - 33% -69% -62% 307% 0% -15% -15% -47% 27% 28% 46% 71% -4% -21% -37% -17% -6% 52% -41% -4% -11% 3% 7%

INTC 7% -49% 94% -27% 7% -15% 7% -33% 34% -8% -1% -16% -12% -1% 10% 18% 4% 9% -13% -10% -6% -4% 3% -25% -9% 1% 1% 6%

NVDA 308% -82% 88% 0% 58% 103% 22% -71% 114% -37% -33% -28% -4% 9% 19% 33% 24% -7% -41% -46% -1% 8% 17% -47% 5% 315% -17% 27%

avg 110% -63% 105% 7% 35% 18% -13% -55% 152% -15% -16% -19% -21% 12% 19% 33% 33% -1% -25% -31% -8% -1% 24% -37% -3% 101% -4% 14%

Comm IC and Wireless

ATHR 27% 64% 46% -53% 134% -32% 44% -21% -39% 2% 31% 38% 29% 13% -29% -21% -2% 5% 11% -39% 57% -12% -4% 7%

BRCM -51% -63% 126% -5% 46% 3% -19% -35% 85% -26% 40% -31% -9% 15% 27% 24% 3% 5% -1% 5% 0% 3% 28% -14% 4% 6% -10% 13%

CAVM -29% 28% -33% -25% 10% 46% 28% 11% 4% 5% 1% -8% 1% 32% -24%

MRVL 63% -47% 101% 87% 58% - 32% - 27% - 52% 211% -22% 6 2% -47% -28% 43% 22% 39% 28% -2% -23% -20% 5% 14% 24% -28% 7% 3% -7% 8%

NETL 172% -20% 48% -32% 5% -25% 38% -9% -27% 25% 33% 2 3% 3% 2 7% -8% 12% -5% 8% 40% -26% 37% -1% -4% 9%

PMCS -73% -74% 262% -44% -31% - 13% -3% - 26% 78% -13% 34% -3% -35% 31% 25% 20% -9% 3% -16% -17% -4% 1% 5% -28% 6% 5% - 23% 23%

QCOM -39% -29% 50% 58% 2% -12% -2% 0% 25% 14% 7% -9% -9% 5% 16% 0% 3% -9% -22% - 16% 18% 2% 22% -22% 7% -9% 5% 10%

RFMD -30% -62% 37% -32% -21% 26% -14% -87% 512% -53% 1 0% 0% -73% 71% 183% 44% -12% 4% -21% 5% 28% 24% 37% -17% 2% - 20% 11% 3%

SWKS -41% -60% 1% 8% -46% 39% 22% -36% 156% -14% 31% -12% -34% 53% 16% 35% 7% 10% 8% 30% 10% 8% 83% -5% -2% -14% 8% 23%

SLAB -43% 127% - 18% 4% -5% 9% -34% 95% -16% 12% -13% -19% 8% 41% 22% 4% -1% - 15% -19% -3% 0% 3% -26% 20% -10% 3% 2%

avg -28% -54% 101% 8% 23% 5% 7% -39% 145% -22% 31% -18% -30% 26% 44% 27% 7% 6% -12% -4% 4% 7% 29% -23% 9% -6% -1% 12%

Median -40% -60% 101% -5% 4% -5% -2% - 35% 95% -24% 32% -13% -28% 20% 29% 26% 4% 4% -15% -8% -1% 4% 26% -25% 12% - 14% -2% 8%

PLD

ALTR -19% -42% 84% -9% -10% 6% -2% -14% 35% -5% 12% 0% -19% 5% -7% 26% 10% 7% 2% 13% 3% 2% 41% -12% 3% -3% -4% 11%

XLNX -15% -47% 88% -23% -15% -6% -8% -19% 41% 9% 6% - 7% -24% 8% 7% 14% 7% 2% -1% -1% -1% 0% 20% -15% 5% -11% -8% 14%

avg -17% -45% 86% -16% -13% 0% -5% -16% 38% 2% 9% -4% -22% 6% 0% 20% 9% 5% 1% 6% 1% 1% 30% -14% 4% -7% -6% 12%

Memory

MU -13% -67% 36% -10% 8% 5% - 54% - 56% 272% 6% -15% -23% -36% 36% 31% 62% 29% -2% -18% -35% -20% -6% 12% -40% 3% 1% -9% - 16%

SIMO 32% 12% -87% 49% -21% 2% -68% -51% 21% 31% 9% -14% 31% 16% 45% -4% 4% 88% -24% 21% 14% 3% -13%

SNDK -48% 41% 201% -18% 152% -32% -22% -71% 202% -32% -19% 8% -51% 33% 15% 48% 34% 19% 21% 18% -19% -18% 106% -32% 4% 15% 23% -5%

STEC -24% 2% 99% -24% -18% 236% -31% -51% 284% -29% 66% -25% -45% 73% 215% 27% -44% -27% 5% -28% -6% -6% 24% -72% 21% -7% 42% 21%

avg -28% -8% 112% -17% 47% 60% -24% -66% 202% -19% 9% -27% -46% 41% 73% 36% 1% 6% 6% 0% -12% -7% 57% -42% 12% 4% 16% 0%

Sector

Avg 12% -48% 121% -9% 19% 8% 2% -45% 111% -15% 13% -15% -32% 17% 35% 24% 8% 3% -11% -9% -2% 2% 26% -26% 8% 8% -3% 10%

Sector

Median -13% -50% 97% -17% 7% -5% -2% -43% 78% -17% 7% -15% -29% 13% 26% 21% 7% 0% -13% -15% -1% 2% 17% -25% 4% -5% -7% 8%

SOX -9% -45% 76% -15% 11% -2% -12% -48% 70% -16% 6% -3% -40% 10% 13% 22% 77% 45% -9% -11% -3% 0% 12% -20% 3% -4% -8% 8%

SPX -13% -23% 26% 9% 3% 14% 4% -39% 23% -10% -3% -9% -23% -13% 16% 16% 25% 3% - 12% -5% 3% -1% 7% -13% 0% 1% -2% 6%


11/17

Semiconductors

11


Ratings Distribution Chart:

Number of % of No. Provided % Provided

Ratings Ratings IB Services IB Services105 64.81% 0 0.00%


Ratings Ratings IB Services IB Services

53 32.72% 2 3.77%


Ratings Ratings IB Services IB Services

4 2.47% 0 0.00%

Sell

Total Securities Rated

162

Buy

Hold/Neutral

First Call ratings are adapted to the above chart as follows: 1 & 2 = Buy, 3 = Hold/Neutral, 4 & 5 = Sell

Ticker Rating Price Cap ($Bil) Date Analyst

ADI Buy $29.22 $8.71 8/29/2010 Craig A. Ellis

AOSL Above Avg $11.14 $0.25 8/29/2010 Craig A. Ellis

ATHR Buy $26.95 $1.91 8/29/2010 Craig A. Ellis

BRCM Buy $33.01 $14.80 8/29/2010 Craig A. Ellis

INTC Buy $18.37 $102.28 8/29/2010 Craig A. Ellis

ISIL Average $10.57 $1.31 8/29/2010 Craig A. Ellis

LLTC Average $29.68 $6.66 8/29/2010 Craig A. Ellis

MCHP Buy $28.72 $5.34 8/29/2010 Craig A. Ellis

MRVL Above Avg $16.57 $10.77 8/29/2010 Craig A. EllisMXIM Average $16.44 $4.90 8/29/2010 Craig A. Ellis

NETL Buy $25.85 $1.64 8/29/2010 Craig A. Ellis

NSM Above Avg $13.00 $3.11 8/29/2010 Craig A. Ellis

NVDA Average $10.12 $5.79 8/29/2010 Craig A. Ellis

ONNN Buy $6.41 $2.76 8/29/2010 Craig A. Ellis

SMTC Below Avg $17.33 $1.08 8/29/2010 Craig A. Ellis

SLAB Buy $39.27 $1.75 8/29/2010 Craig A. Ellis

SNDK Buy $34.19 $7.97 8/29/2010 Craig A. Ellis

SWKS Buy $18.39 $3.29 8/29/2010 Craig A. Ellis

TXN Average $24.15 $28.86 8/29/2010 Craig A. Ellis

VLTR Above Avg $20.92 $0.56 8/29/2010 Craig A. Ellis

Companies mentioned in this report:

*Note: Caris & Company utilizes the First Call rating system when assigning ratings in equity research reports. The following is a list ofeach numerical rating and its respective definition.

1 Buy2 Above Average3 Average4 Below Average5 Sell

Unless otherwise noted, stock prices reflected herein are the closing price through the business day immediately preceding the date of this report.


12/17

Semiconductors

12


10

15

20

25

30

35

40

45AVERAGE -

$32.00

AVERAGE -

$38.00

AVERAGE -

$35.00

AVERAGE -$33.00

ABOVE AVG -

$26.00

BUY- $34.00

BUY- $35.00

Analog Devices Inc. (ADI-US) High:38.96

31-Jul-2007 to 30-Jul-2010 (Monthly) Low: 15.29

USD Last: 28.81

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

60

80

100

120

140

160

5

10

15

20

25

30

35

40

45

50AVERAGE -

$14.00

ABOVE AVG -

$34.00

AVERAGE -

$34.00

AVERAGE -

$17.00

BUY- $23.50

BUY- $31.00

BUY- $32.00

BUY- $34.00

BUY- $50.00

Atheros Communications Inc. (ATHR-US) High:43.90


USD Last: 25.92

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

20

25

30

35

40

45

50

55

60

10

15

20

25

30

35

40

45AVERAGE -

$19.00BUY- $44.00

BUY- $36.00AVERAGE -

$28.00

AVERAGE -

$15.00

BUY- $30.00

BUY- $34.00

BUY- $37.00

BUY- $43.00

BUY- $48.00

Broadcom Corp. (BRCM-US) High:43.07


USD Last: 32.42

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

150

200

250

300

350

400

10

12

14

16

18

20

22

24

26

28

30ABOVE AVG -

$24.00ABOVE AVG -

$27.00

ABOVE AVG-

$28.00

ABOVE AVG-$29.00

BELOW AVG- $11.50

BUY- $18.00

BUY- $25.00

BUY- $26.00

BUY- $27.00

BUY- $28.00

BUY- $30.00

Intel Corp. (INTC-US) High:27.99


USD Last: 19.53

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

5

10

15

20

25

30

35

40ABOVE AVG -

$13.00

ABOVE AVG -

$36.00

ABOVE AVG -

$30.00

ABOVE AVG -

$14.00

AVERAGE -

$12.50

AVERAGE -

$13.50

AVERAGE -

$16.00

AVERAGE -

$14.00

Intersil Corp. (Cl A) (ISIL-US) High:35.00


USD Last: 10.43

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

40

50

60

70

80

90

100

15

20

25

30

35

40AVERAGE -

$25.00

AVERAGE -

$35.00

AVERAGE -

$33.00

AVERAGE -

$24.00

AVERAGE -

$29.00

AVERAGE -

$30.00

AVERAGE -

$33.00

Linear Technology Corp. (LLTC-US) High:37.77


USD Last: 29.54

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

60

80

100

120

140

160

180

200

220


13/17

Semiconductors

13


10

15

20

25

30

35

40

45

BUY- $32.00BUY- $26.00

BUY- $27.00

BUY- $31.00

BUY- $34.00

Microchip Technology Inc. (MCHP-US) High:41.37


USD Last: 29.11

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

50

60

70

80

90

100

110

120

0

5

10

15

20

25ABOVE AVG -

$13.00

ABOVE AVG -

$14.00

ABOVE AVG -

$19.00

ABOVE AVG -

$10.00

ABOVE AVG -

$16.00

ABOVE AVG -

$21.00

ABOVE AVG -

$24.00

ABOVE AVG -

$22.00

Marvell Technology Group Ltd. (MRVL-US) High:22.87


USD Last: 14.75

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

200

250

300

350

400

5

10

15

20

25

30

35AVERAGE -

$18.00

AVERAGE -

$15.50

AVERAGE -

$18.00

AVERAGE -

$19.00

AVERAGE -

$19.00

Maxim Integrated Products Inc. (MXIM-US) High:32.40


USD Last: 17.01

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/1020

40

60

80

100

120

140

160

180

200

5

10

15

20

25

30

35

40ABOVE AVG -

$33.00

ABOVE AVG -

$32.00

ABOVE AVG-

$34.00

ABOVE AVG -

$46.00

ABOVE AVG -

$20.00

ABOVE AVG-

$25.00

BUY- $30.00

BUY- $35.00

BUY - $45.00 BUY- $56.00

BUY- $39.00

NetLogic Microsystems Inc. (NETL-US) High:35.00


USD Last: 24.37

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/1010

15

20

25

30

35

40

45

50

5

10

15

20

25

30

35

40ABOVE AVG -

$33.00

ABOVE AVG -

$32.00

ABOVE AVG-

$34.00

ABOVE AVG -

$46.00

ABOVE AVG -

$20.00

ABOVE AVG-

$25.00

BUY- $30.00

BUY- $35.00

BUY - $45.00 BUY- $56.00

BUY- $39.00

NetLogic Microsystems Inc. (NETL-US) High:35.00


USD Last: 24.37

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/1010

15

20

25

30

35

4045

50

0

5

10

15

20

25

30

35

40

45AVERAGE -

$11.00

AVERAGE -

$28.00

AVERAGE -

$24.00

AVERAGE -

$13.00

AVERAGE -

$7.00

AVERAGE -

$8.00

AVERAGE -

$13.00

AVERAGE -

$15.00

AVERAGE -

$16.00

NVIDIA Corp. (NVDA-US) High:39.67


USD Last: 9.27

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

200

250

300

350

400

450

500

550


14/17

Semiconductors

14


0

2

4

6

8

10

12

14

BUY- $9.00

BUY- $10.00

BUY- $12.00

ON Semiconductor Corp. (ONNN-US) High:13.15


USD Last: 6.53

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10100

120

140

160

180

200

220

240

260

280

300

8

10

12

14

16

18

20

22AVERAGE -

$16.00

AVERAGE -

$15.00

AVERAGE -

$12.00

AVERAGE -

$17.00

AVERAGE -

$9.00

AVERAGE -

$13.00

AVERAGE -

$18.00

BELOW AVG

- $17.00

Semtech Corp. (SMTC-US) High:21.11


USD Last: 16.69

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

10

15

20

25

30

35

40

15

20

25

30

35

40

45

50

55

BUY- $50.00

ABOVE AVG -

$40.00

BUY- $41.00

BUY- $47.00

BUY- $59.00

BUY- $55.00

Silicon Laboratories Inc. (SLAB-US) High:53.17


USD Last: 39.60

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

10

15

20

25

30

2

4

6

8

10

12

14

16

18

20

22

BUY- $19.00BUY- $11.30

BUY- $14.00

BUY- $17.00BUY- $24.00

Skyworks Solutions Inc. (SWKS-US) High:19.29


USD Last: 17.49

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/1040

60

80

100

120

140

160

180


15/17

Semiconductors

15


0

10

20

30

40

50

60

70BELOWAVG

- $11.00

SELL -

$20.00

SELL -

$19.00

ABOVE AVG -

$20.50

AVERAGE -

$17.00

AVERAGE -

$22.00

AVERAGE -

$16.00

AVERAGE -

$12.00

BELOW AVG

- $8.00

AVERAGE -

$16.00

AVERAGE -

$17.00

AVERAGE -

$20.00

AVERAGE -$24.00

BUY- $37.00

BUY- $38.00

BUY- $56.00

SanDisk Corp. (SNDK-US) High:58.35


USD Last: 43.57

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

100

150

200

250

300

350

10

15

20

25

30

35

40

BUY- $36.00BUY- $41.00

BUY- $38.00

BUY- $37.00

AVERAGE -

$20.00

AVERAGE -

$22.00

AVERAGE -

$24.50

AVERAGE -

$25.50

AVERAGE -

$27.00

AVERAGE -

$28.00

AVERAGE -

$26.00

AVERAGE -

$28.00

AVERAGE -$26.00

Texas Instruments Inc. (TXN-US) High:37.17


USD Last: 24.70

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

200

250

300

350

400

450

500

550

600

0

5

10

15

20

25

30

35ABOVE AVG-

$18.00ABOVE AVG -

$14.00

ABOVE AVG-$10.00

ABOVE AVG -$15.00

ABOVE AVG -$10.00

ABOVE AVG -$13.00

ABOVE AVG -$20.00

ABOVE AVG -$23.00

ABOVE AVG-$25.00

ABOVE AVG -$33.00

Volterra Semiconductor Corp. (VLTR-US) High:29.93


USD Last: 20.44

10/07 1/08 4/08 7/08 10/08 1/09 4/09 7/09 10/09 1/10 4/10 7/10

4

6

8

10

12

14

16

18


16/17

Semiconductors

16


Analyst Certification

The analyst responsible for the content of this publication, Craig Ellis, hereby certifies that the views expressed in this publicationregarding the company or companies and their securities accurately represent that analysts personal views, and that no direct or indirectcompensation is to be received by the analyst for any specific recommendation or views contained in this note.

Other Important Disclosures

The research analyst and/or research associate responsible for this report has received or will receive compensation based on variousfactors, including quality of research, investor client feedback, and the Firm's overall revenues, but not based on investment bankingrevenues.

This information is not intended to be used as the primary basis for investment decisions. The information contained herein shall not beconstrued as an offer, or the solicitation of an offer to buy or sell any securities, products, or services. Because of individual client risk andreturn requirements and client investment constraints, this material should not be construed as advice designed to meet the particular needsof any investor. CRIS accepts no liability whatsoever for loss or damage of any sort arising out of use of all or part of this publication.

This material is based on data obtained from sources considered to be reliable. Caris & Company (CRIS) makes every effort to use reliable,comprehensive information, however, we make no representation that it is accurate or complete and it should not be relied upon as such.Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not

be realized. Any opinions expressed herein are subject to change and CRIS disclaims any obligation to advise you of any such change.

The securities described herein may not be eligible for sale in all jurisdictions, or to any particular investors. Options, derivative products,and futures involve risk, and are not suitable for all investors. CRIS, its affiliates, their respective directors, officers, employees, ormembers of their families may have long or short positions in, and buy or sell, the equities or issues referred to herein, or options thereon.

Neither the author of this report nor a member of his or her household maintains a position in the securities mentioned in this report.

The firm has not provided any investment banking services for the companies mentioned in this report.

Additional information on recommended securities is available upon request.

Neither this report, nor any portion thereof may be reprinted, sold, or redistributed without the express written consent of Caris &Company, Inc.

Copyright Caris & Company 2010


17/17

CARIS & COMPANY NEW YORK DEL MAR SAN FRANCISCO BOSTON MEMBER FINRA/SIPC

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Craig A. Ellis 415 489 2514

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