MEMS Opportunities and Challenges Tom Willey October 6

MEMS Opportunities and Challenges Tom Willey October 6 th 2010 Discera Confidential 1

Agenda • Introduction TW-Partners • Discera – MEMS • Market dynamics • What was involved in building MEMS product • What happened • Investment – MEMS • Today • What’s needed

TW - Partners • Founded in 2008 by Tom Willey & Mark Konopacky • Business Development Services • HQ in Silicon Valley • Locations in Tokyo, Cambridge & Seoul • Broad Management & Partner Core Competence • Strategy, Sales, Marketing, Finance, Funding • Broad Market Segment Expertise. • Extensive Global Client Business Development.

Electronic Heartbeat - Quartz • Every electronic device contains an oscillator • Electronic heartbeat • Quartz crystal is dominant • $3. 5 B – 10 B units • 15% growth • 100 year old technology • Very mature life cycle • Difficult to innovate • Low margin

Tomorrow’s Electronic Heartbeat - Si • Large existing market • No market risk • Extremely attractive to venture backed start-ups • Silicon knocking on the door • Lots of players stepping up with Si solutions • Definite exits · M&A · IPO possible • Discera – Core Value • MEMS-based oscillator • 60% GM, with ASP less than Quartz manufacturing cost

Building a MEMS Oscillator – Easy? 1) Resonator 3) Resonator + ASIC 2) Packaged Resonator 4) Packaged Oscillator 5 mm x 3. 2 mm

Resonator • First Silicon ≈ 1996 Resonator • Univ Michigan internal Fab • Discera Funded – 2001 • Technology spin-out • Resonator “ready for productization” • Productization - 2008 • Multiple major revisions • 2 MEMS fabs • Many Issues · Multiple experimental split lots to solve · Difficult to predict cause and effect · Lots of “black magic”

ASIC, Package & System • ASIC • Design process well understood • Fab – design kits • Good design tools • Packaging design • Simple plastic – low cost • Main Issues – Stress · Multiple experimental split lots to solve • System • Difficult to predict cause and effect • Lots of “black magic”

Today • 2010 - Discera is now shipping in volume and gaining market penetration • Future looks promising for Discera MEMS solutions in the clock timing market • But • 9 years - $60 M++ to get there • Allowed competition to gain foothold • Si. Time entered the market 2005 using Bosch technology · Large venture investment · Used Bosch MEMS technology · Now possibly ahead of Discera

Why did it take so long & cost so much? RESONATOR & PACKAGE • Design & simulation “Designing is an art” • Lots of experiments • Virtually no re-use • Almost no design tools • Device, system, package • Fabs look like a sandbox to the artist • No design kits • Similar to the Industry in the 70’s ASIC • Multiple Chip Designs • Worked as expected · On Time · On Spec · On Budget • Used two different fabs • Designs were transportable and reusable • Relatively few issues • Design rules • Good tools

Venture Investment in Semiconductor • ROI • • • Most Si companies need ≈ $60 M - $80 M in to get an exit Very few exits see $60 M-$80 M Almost no exits > $100 M For VC’s - not likely to even get their money back RESULT: Almost impossible to get new investment in Silicon • Acquirers – Major Si Companies • Fewer companies getting funded means less innovation • Bad for industry outlook • Need to get Venture ROI back on track · Risk minimization · Capital efficiency - < $10 M-$20 M total investment

MEMS Innovation • No shortage of MEMS opportunities/ideas • To become real • Companies have to be funded · Investors want higher capital efficiency and % of success –Devices have to work 1 st time • MEMS design/development ecosystem requires drastic improvement • Designers • Semi Fabs • EDA tools companies