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Bourgon Frederic/Tina Tsai / Shirley Lu Jan., 2009

January ESS Business Interlocks Foxconn / hp Inventory concerns and actions on high valued parts Status update. Bourgon Frederic/Tina Tsai / Shirley Lu Jan., 2009. Summary. December results. - Obsolescence Risk - CPU $463K flat compared to Nov and $276K completed return to Intel.

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Bourgon Frederic/Tina Tsai / Shirley Lu Jan., 2009

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  1. January ESS Business InterlocksFoxconn / hpInventory concerns andactions on high valued partsStatus update Bourgon Frederic/Tina Tsai / Shirley Lu Jan., 2009

  2. Summary • December results - Obsolescence Risk - CPU $463K flat compared to Nov and $276K completed return to Intel. - Inventory Level- FCST drop resulting in high DOI in NA. - Layering cost- CPU /Memory price drop in Jan.  • Open action items • NA adjusted down by 5 DOI on memory (from 10 to 5). • Alignment achieved between HP/Foxconn.

  3. Inventory Level • FCST drop in NA ( 21%) and APJ ( 25%) since Nov. • NA DOI Trend

  4. Layering Cost Microprocessor 6 AMD PNs have price drop in Jan. • As of WK 1/12 • Raw material : estimated layering $290K • FGI to be confirmed • Memory Price drop in Jan. 1st • Raw material : estimated layering $407K • FGI to be confirmed

  5. Back up

  6. Hub V.S. ODM Locations Hub Original warehouse ODM site Amsterdam (Intel/AMD CPU) Brno (HDD RR Donnelly) Pardubice (FCZ) Dallas (AMD CPU) HDD RR Donnelley Foxconn China Houston Intel CPU FHS Costa Rica (Intel CPU 20% non hub parts ) HDD RR Donnelley Penang (Intel Chipset) AMD CPU Singapore Parts Buffered in hub

  7. Memory- supplier region warehouse Assumption: Parts available in warehouse

  8. Questions from Sep. Interlock • DOI Calculation - DOI is in calendar days Provided by HP RBU according to expected service level & transportation lead time Formula: ODM QOH/(4 week FCST demand/30 days); FCST is provided by HP • Why CPU DOI target is different in NA and EMEA? - Target DOI is provided based on transportation lead time. Transportation Lead time is a function of ODM V.S. Hub location. • Need to be sure all regions are ok with target DOI - Yes, all regions are ok with target DOI. However, it may change in the future. • Include PCA, Chassis and PSU in inventory review ? - No, because of no layering impact on HP. Should be ODM focus

  9. Obsolescence Risk - CPU $463K flat compared to Nov. $276K completed return to Intel.

  10. Layering Trend Positive ODM owes to HP Negative HP owes to ODM CPU $17K $76K $290K Memory $407K $600.2K

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