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Global Community Affairs

Applied Materials: CSR & Community

Programs Overview

Global Conference on Business EthicsSanta Clara UniversityFebruary 17, 2005

Mike OFarrellVice President, Global Community AffairsApplied Materials, Inc.

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Agenda

Company Overview (10 Minutes)

Corporate Social Responsibility/Community Affairs (35Minutes)

Q&A (30 Minutes)

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We make the machines that -

Make computer chips

Make flat screen monitors and TVs

Test 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, gamesand other electronics.

Semiconductors, Flat Screens, Fab Service

You have probably used something made withApplied 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% ofSemiconductor

WFE$25.7Billion

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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 andSingapore; Japan; Korea; Taiwan; and the United States

Only five sites have 3% or more of worldwide employmentbase

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 Americas 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 FundraisingProfessionals of Austin, Texas; alsoAFP Silicon Valley

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

Climate Protection Award, U.S. Environmental ProtectionAgency

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Applied Materials Overview

Top Corporate Philanthropists in the Greater Bay Area(Ranked by 2003 Cash Giving to Bay Area-basedNonprofits), 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 andCorporate 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 Companys efforts in global corporate

citizenship, ensuring that Applied Materials continually

builds on its fundamental principles of positive social

responsibility, active community involvement, innovative

philanthropy, 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 aleader in the community:

1. Be a leader and convener; use influence; innovate; focus

2. 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 dollars

4. Optimize impact by linking and leveraging investments

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Philanthropy Targets

Targeted Spending for Philanthropy

1% of the Companys pre-tax income

Applied Materials Foundation formed in 1994 to help managethrough 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 OurPhilosophy & 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 Childrens 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 ManagementProcess and Reporting; Use Interim Communications toBolster Reporting to Stakeholders; Tell Our Strong StoryBetter

Continue to Better Align Community Programs WithIndividual Employee Interests (Similar to Employee Giving

and Volunteerism Programs), Especially to Address theSmaller Sites

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Q&A