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Foxconn ESS Oct Interlock Partner Management Initiatives

Foxconn ESS Oct Interlock Partner Management Initiatives. Jeff Mason October 30, 2008 Shenzhen China. PMI Topics – Foxconn ESS Oct Interlock. Sub Tier Risk Assessement Capacity Czech Republic & Houston EOL/Obs Update Forex Next Steps for MPH 2.0 – Kuhl

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Foxconn ESS Oct Interlock Partner Management Initiatives

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  1. Foxconn ESS Oct InterlockPartner Management Initiatives Jeff Mason October 30, 2008 Shenzhen China

  2. PMI Topics – Foxconn ESS Oct Interlock • Sub Tier Risk Assessement • Capacity Czech Republic & Houston • EOL/Obs Update • Forex • Next Steps for MPH 2.0 – Kuhl • Product Holds & Quality Issues - Shah • SWD Update - Uranga • Time change (FYI) Hon Hai Oct 2008 Interlock

  3. Risk Mitigation • Uncertain economic times are creating financial stress on many companies. HP’s goal is or minimize to eliminate any risk and therefore is requesting the following information: • What type of financial stress analysis has been completed? • When was it completed? • If one has been completed, can the results be shared with HP? • How were private companies reviewed for their financial stress? • Please provide an answer no later than October 31, 2008. Hon Hai Oct 2008 Interlock

  4. Next Steps MPH 2.0

  5. Agenda Flexible Platforms Pending RFQs RFQ Differences Key MPH Take-Aways Hon Hai Oct 2008 Interlock

  6. MPH 2.0 with Potential Flex/Qual Flexible Platforms pending RFQs • Does not include all Flexible/Qualified Platforms currently under review • Not all ODMs will participate in all RFQs Hon Hai Oct 2008 Interlock 4 October 2014 6

  7. RFQ Differences Format for RFQs will be similar, but not the same as standard platforms: Will focus on unique items for platform (LOHP, burden, logistics, NRE/tooling) Will provide detailed feedback between rounds Will have kick-off meeting prior to release of RFQ to clarify any additional questions (as well as standard method for questions during RFQ) Volume information may not be available due to nature of platform Barring no issues, first RFQs should go out 2nd week of November. Hon Hai Oct 2008 Interlock

  8. ODM Take-aways Flexible platforms are one of the ways HP will grow the entry level server space Flexible platforms offer opportunity of additional volume (integration or component) with relatively little investment RFQ awards for Flexible platforms will largely be driven by cost Hon Hai Oct 2008 Interlock

  9. EOL/ObsUpdate

  10. EOL/Obsolescence Update • PO’s received by Foxconn for 8 more EOL/Obs packages since last updated in Interlock. Represents $1.39 M in closed packages • DL760 Comet & TF5600 Ruger/Boxer – packages were submitted internally (HP) several months ago. Will investigate why PO has not been processed and update Foxconn. • Ice - Smart Buy Req PR6089875 going through sign off • 244651-002 Cyborg2 $369,522.45 - Req PR6089624 has been issued. Hon Hai Oct 2008 Interlock

  11. Foxconn Pardubice & Houston OperationsCapacity Update

  12. General Capacity Update • We are working on developing a 3rd model for Foxconn China to include the Blade Infrastructure products. Expect the model to be complete for the next interlock. Hon Hai Oct 2008 Interlock

  13. CZ Facility Expansion Plan Update HP FYQ4 • Overspill to box process (3k readiness for outbound) – project running • Factory capacity 83k monthly (60k Servers + 3k Blades + 3k C-class) with 3 shifts/20 days per month ON HOLD DUE TO REDUCED BLADE DEMAND • Phase II for increased Blade capacity- from 150 per day to 1,000 per day (DEC 2008) • Believe that currently communicated BL260/BL490 (March ’09) volumes can be accommodated with current resources. Possibilities For Next Expansion • Current lockers area will be used when 2nd blade program is release to Foxconn CZ. Currently scheduled for March 2009 • Current Outbound area (available in Jan 2009) – potential mfg expansion 600m2 Excess capacity positioned to enable Foxconn CZ to take on additional volumes/programs. Link to Definitions and Parameters Hon Hai Oct 2008 Interlock

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  17. BL260 & BL490 demand not yet incorporated. Hon Hai Oct 2008 Interlock

  18. Houston Facility Expansion Plan Update • Additional capacity was added 9-1-2008 and was achieved by adding personnel on second shift to support two additional assembly lines and a pack out line. • Foxconn RD team moving out of 8802 Fallbrook site. • Move has been delayed, we are targeting end of October. • One hundred additional run-in bays to be in place 2-4 weeks after RD relocation. (Now expected to be on-line in Dec.) Link to Definitions and Parameters Hon Hai Oct 2008 Interlock

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  22. Expecting a transition to next generation BL460 in early 2009. Transition plan developing. BL260 & BL490 not yet in model. Hon Hai Oct 2008 Interlock

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  24. CZ FOREXUpdate

  25. FOREX Proposal • Foxconn has submitted platform specific LOHP costs. • Validation complete • Meeting will be scheduled for early Nov to finalize terms and process • Goal is to have EMEA FX LOHP rate change in place for Dec quotes. Hon Hai Oct 2008 Interlock

  26. Product Holds & Quality Issues

  27. DL 160G5 Continue to see thermal event in the field No clear root cause identified yet Possibilities of including fuse on VRD circuitry MCE (Machine Check Errors) at HP and Customer site System instability PCAs to be reworked for Q45 & R1270 removal DL180G5 (MLB from ML150) Continue to see thermal event in the field No clear root cause identified yet Possibilities of including fuse on VRD circuitry ESS Interlock Product Hold/Major Issues 27 4 October 2014 Hon Hai Oct 2008 Interlock HP Confidential

  28. DL160G5: Not performing as good as its predecessor DL165G5: performing better than its predecessor DL180G5: Not performing as good as its predecessor DL185G5: performing far worse than any entry level servers ESS Interlock Field Performance 28 4 October 2014 Hon Hai Oct 2008 Interlock HP Confidential

  29. Foxconn CZ Quality Audit Quality Systems Audit Goal is to review Foxconn's quality systems and ascertain compliance to HP standards. Audit is scheduled for November 11 & 12, 2008 Auditors will be Lee Higgins & Jan Grund Results should be ready for review on December 2, 2008 Focus of audit Quality Program Incoming Inspection Supplier Management Process Material Control and Storage Assembly Process Quality Control Statistical Process Control Calibration Training and Continuous Improvement Hon Hai Oct 2008 Interlock

  30. SWD Update

  31. Foxconn NAS products • Working on a new release called Crestone Peak III which requires a new Image and Diags. Diags are in place at both factories and product is on track to meet schedule. • November launch of AiO products to update image and quick restore kits products effected are DL160, DL185 and DL380g5 This will be a change to the PSS products to add the new ASM functions • New diags are being worked on with this release • Quality has been acceptable at all Foxconn sites. Working on the highest failing parts to try to further reduce the turn on failure rate. • we are driving for process commonality between mftg sites; appreciate their support and prioritization to make this happen • Rio Grande, Crestone Peak 2 and Castle peak 2 launches went well with no issues • Hp would like to thank both the NPI teams and the Engineering teams in both sites for their continued support • No issues on MSA20; product EOL going per plan • Camaro on schedule; progressing well • Emmett is a critical program for SWD, Foxconn will involved in the quote process Hon Hai Oct 2008 Interlock

  32. FYI U.S.A.Daylight Savings Timeroll back 1 HourSunday November 2 European Union Clocksroll back 1 HourSunday October 26 Hon Hai Oct 2008 Interlock

  33. BackupCapacity Models

  34. Capacity Model – Definitions • “Working Efficiency” – This is the engineering, on paper, or 100% capacity calculation. This is in most all circumstances, not achievable or sustainable. This based on normal operating parameters (eg.7.3 hours per shift x 1 shift per day x 20 days per month). • “Effective Efficiency” –This will be based on the standard operating parameters and will be determined by de-rating the Working Efficiency. The percent of de-rating (accounts for part shortages, labor gaps, line changes, etc.) is based on historical throughput data. • “Burst Effective Efficiency” – As needed, ODM will gain additional capacity by assuming the same de-rating, but will include a move to more hours per shift, shifts per day, or days per month as needed. Hon Hai Oct 2008 Interlock

  35. Foxconn Czech Republic Capacity Model • Model was created using ISS October week 3 DSHIP and SWD NAS/NearLine September demand data. • 12 Month look forward • Based on the product mix transition, capacity resources within the model have been allocated 90/10 between DL/ML respectively. This change was incorporated starting in the Aug model. • Foxconn CZ capacity model is based on achieving 88% of the “Working” or engineering capacity. • BL495c G5 Capacity Model is based on PRELIMINARY throughput assumptions. • CZ Standard or “Effective” Operating Parameters: • 7.3 hours per shift • 3 shifts per day • 20 days per month • CZ “Burst” Operating Parameters: • 7.3 hours per shift • 3 shifts per day • 26 days per month Hon Hai Oct 2008 Interlock

  36. Foxconn Houston Capacity Model • Model was created using ISS October week 3 DSHIP and SWD NAS/NearLine September demand data • 12 Month look forward • One line dedicated to DL38x. • Second line is “DL MultiServer/ML” line. • Foxconn Houston capacity model is based on achieving 80% of the “Working” or engineering capacity. • Blade model assume a 90/10 operations resource split between BL460/BL495 • Houston Standard or “Effective” Operating Parameters: • 8.5 hours per shift • 1 shifts per day - 2nd shift added to DL38x and Blade line • 21 days per month • Houston “Burst” Operating Parameters: • 10 hours per shift • 1 shifts per day • 28 days per month Return to Capacity Presentation Hon Hai Oct 2008 Interlock

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