TI’s Partner Integration Strategies

1. TI’s Partner Integration Strategies Catherine Carey B2B Sales Strategy Manager Texas Instruments Microsoft Supply Chain Summit San Jose, California October 25, 2007

2. Supply Chain EvolutionComplexity Has Grown Early 1990s Supplier Customer TI TI Materials Equipment TI Owned Factories OEMs Disty ’97 –’00 Supplier Customer TI TI Owned Factories Foundries, Subcons Materials Equipment OEMs, EMSI’s, Disty, ODMs ’00-Present Supplier External / TI Make Customer Materials Equipment Multi-factory Flows TI Owned Factories Foundries, Subcons Hubs, EDI, Consignment OEMs, EMSI’s Disty, ODMs

3. We have grown as a company… Product Distribution Center Wafer Fab Assembly Test

4. ...over 55,000 products, • 150,000 orders / month, • 50,000 end customers, … • >1K of Shipping lanes • >1M Line items shipped • >14 BU Units shipped …and complexity has increased Early 1990s Supplier Customer TI TI Materials Equipment TI Owned Factories OEMs Disty ’97 –’00 Supplier Customer TI Materials Equipment TI Owned Factories Foundries, Subcons OEMs, EMSI’s Disty, ODMs ’00-06 Supplier External / TI Make Customer • Diverse Products: Custom, Catalog, Mass Market, Sole Source, DSP, Analog, Logic • Many Businesses: 25+ WW P&Ls, Many Strategic Customers, …. Materials Equipment Multi-factory Flows TI Owned Factories Foundries, Subcons Hubs, EDI, Consignment OEMs, EMSI’s Disty, ODMs

5. TI’s Customer B2B Processes Portfolio Technical Prod Info Price List Mgmt Capacity Forecast Consumption Notification Quote Inventory Export Compliance Orders Self-Billing Invoice Inbound Tactical Forecast Receipt Advice Remittance Product Master (AVL) Mgmt Change Order / Cancellations Material Comp. / RoHS Shipment Authorization Shipment Status Open Order Book Mgmt EFT Pre - Win Pre - Order Order Mgmt Inv. Mgmt Logistics Finance Outbound Forecast Response Technical Prod Info Response Shipment Notification Open Order Book Mgmt Material Comp. / RoHS Invoice Planned Shipments Price List Mgmt Inventory – Free Avail. Stock Only Technical Prod Info – Push Shipping Documentation Change / Cancel Response Product Master (AVL) Mgmt Distributor Avail. Inventory Export Compliance Orders Response Marketing Data PLC WIP – Custom Products Only Quote Response Market Lead times 1D & 2D Barcode Alert Management B2B & Web B2B only Web only

6. What is EZconnect? • Definition: TI-developed software solution designed to make it easy for our Customers to connect with TI • Goal: To accommodate the ‘real life’ business processes and provide back end integration regardless of Customer capability to generate or accept electronic messages

7. A Business Case for EZConnect • Customer Purchasing system generates P.O.’s but MRP system generates proposed changes. • Procurement system has to execute changes to the PO to generate a change order. • No or limited capability to process actual supplier response • Proliferation of spreadsheets (generated from MRP system as ‘proposed changes) available on web portals for supplier response • Fundamental issue: Poor PO to Sales Order backlog synchronization between Customer and Supplier. Result – Automated Order Entry declined to 64%

8. Where have the Standards not met the business need? • Many 850/ORDER customers cannot accept 855/ORDRSP • How does the buyer know in their own application what is hard backlog? • What value has EDI provided? • Standards moving to ‘chatty’ exchanges • Example RosettaNet two-way conversations (3A4 with 3A4 response AND potentially multiple 3A7 Supplier responses), without considering the actual business process. • This is not how the trading community actually conducts business. • This is also reflected in some companies’ decision to de-emphasis or even cease EDI exchanges. • Even worse, companies with good EDI capability still want web portal entries or spreadsheet updates

9. Role of Web Portals The portals serve a real need for Buyers to understand their supplier backlog • Updates are more timely and more accurate • Downside is the manual effort required by suppliers to provide the manual updates. • Manual Effort = Human Error and Cost (resource costs plus correction of errors (COGS)

10. Warehousing System New Orders, Forecast, PO Changes e-mail Invoices, ASNs, Forecast Response, Export Data, PO Confirmations TI’s Systems B2B Gateway Financial System Customer Internet Texas Instruments What has TI done? • Extracts from Customer applications as tab delimited or .csv files sent to TI • Assessed capability of Customers’ MRP or other applications to send machine generated files via email. • TI receives the email with attachment and treats it just like any other B2B exchange (EDI or RosettaNet)

11. Example of an EZconnect Forecast Response Email Data Attached

12. Example of an EZconnect Forecast Response Attachment

13. Texas Instruments EZconnect Programs Resale / POS, Remittance Advise, STIR – Financial Invoice and Customs Documents Application integration Inventory, Automated Backlog provisioning, Response to Forecast Order, Order Change Shipping Notification Automated Backlog Change Full Forecast Response PO Response Forecast 2003 2004 2005 2006 2007

14. EZconnect Deliverables • Automated PO increased to 93% in 2006 – Savings of $4.3M WCC annually • Chinese Customs Clearance reduced by 2 – 3 days – Direct impact to DSO metrics • 58% Asia remittance items automatically applied vs. manual processing • TI response to Customer portal requests – no additional Customer Service headcount • 1000+ customers WW • 100,000+ manual entries eliminated/ month • Excellent market reception – Customer Vendor Scorecards • Full Audit traceability for email exchanges • Set of Core business processes available for rapid customer integration EZconnect is a TI development, but not TI technology.

15. EZconnect Summary • EZconnect solutions mirror equivalent EDI and RosettaNet standard transactions. All solutions use generic templates which can be easily customized. • EZconnect is a low cost– high value solution to speed up business process handling. • No additional infrastructure costs are required to implement. • Implementation time is short with rapid results. • Onboarding new account: 24 Hours • Onborarding new message type: 48 Hours