TM

Telecosm 2004

Presented By Steve Goldman

Chairman & CEO, Power-One Inc.

The New Backplane: Digital Upheaval in Power Control

Power-One Power Supplies Are Everywhere

• Products Primarily for the Communications Infrastructure Market• AC-DC & DC-DC Converters & Telecom Power Plants• Over 25 Million Power Supplies Shipped, and now SILICON…

Our Products Convert, Process & Purify Electricity to the High Levels of Quality, Reliability, & Precise Direct

Current Required By the Digital Economy

Communications Infrastructure Is Powered by Our Power Conversion Products; AC to IC

DC/DC Power & Recently Announced Digital Power Management

Controls Power on Printed Circuit Board

AC/DC Power Powers Telecom, Networking

& Industrial EquipmentControls Power at the

System Cabinet

Power-One Today

• 31 Years of Success• One of the World’s Top Power Supply Companies

– Broad-line Power Conversion Supplier – 100’s of Product Families– Over 2,200 Employees– Top Brand Name & Quality Reputation– Industry Leading Gross Margins, High 30s

• Acquired Five Power Supply Companies since 1999• Highly Automated Worldwide Mfg & Outsourcing 50/50• Strong Balance Sheet ($90M in Cash- No Debt)• Sales Revenues of $256M in 2003• Investing $15M/yr In Our Silicon Business• Cash Flow Positive Today we are the technology leader

in powering communications & created a fabless silicon division.

The “Z” Strategy & Opportunity … Win by Changing the Rules of the Game

• Our Goal was to Comprehensively Solve Our Customers’ Power Management Problems – Allocated Funds for a $50M Investment to Create a Silicon Division in

the Midst of the ’01 Downturn

• Be First to Market – To Gain Share

• Establish Leadership Position.....With New Approach to Power Management

• Silicon Strategy + IP for Higher Margins and Sustainable Competitive Advantage

• Attack New Markets with Our Disruptive Technology

Power Management and Power Conversion…Two Separate Markets Today

Conversion Control (Pwr. Mgt.)

Communication?

Power Management and Power Conversion Becomes One … with Digital Technology

Conversion

Control (Pwr. Mgt.)

Communication

Goal: 20% Market Share in 5 Years

How Did Power-One Become the 1st in Digital Power Management?

How Did Power-One Become the 1st in Digital Power Management?

“Through digital control, the disconnect between “power” & “power management”

was bridged … with silicon & Power-One’s Digital IBA Architecture.”

Steve Goldman, CEO

“Through digital control, the disconnect between “power” & “power management”

was bridged … with silicon & Power-One’s Digital IBA Architecture.”

Steve Goldman, CEO

• By Dialoging with Customers & Understanding Their Needs• Leveraging Our Knowledge & Competence in Power• Through financial Commitment to a Vision of the Solution• Decision to Keep IP Rather than Passing on to Others• Developed Fabless Business Model Within Power-One

TMA Digital Power Revolution

Conversion … Communications… Control

“BRICK” DC/DC

Converter

Analog Controller

V5V5

48 V “BRICK” DC/DC

Converter

POL3.3V

V1V1

POL3.0V

V2V2

POL2.5V

V3V3

POL1.8V

V4V4

POL POL POL

V6V6 V7V7

The “Before” – Unmanageable with Analog

DPM

“BRICK” DC/DC

Converter

48 V

The “After”: Z-One DIGITAL IBA™The “After”: Z-One DIGITAL IBA™

V1V1 V2V2 V3V3 V4V4

V5V5 V6V6 V7V7

Z-POL

Z-POL

Z-POL

Z-POL

Z-POL

Z-POL

Z-POL

Z-One™ Digital Power Management Z-One™ Digital Power Management

Z-OneDigital IBA

IBA with Analog Power Mgmt

200+

600+

~10 in2

8 Weeks

Limited

$150+

99

7676

4.4 in24.4 in2

3 Days3 Days

Virtually UnlimitedVirtually Unlimited

$120$120

* Assuming 8 Output Voltages

Z-One Digital IBA Power System• Totally Integrated Digital System Using Standard I2C Bus

• GUI Driven System Simplifies Development• “Detects and Protects” the System with Fast-acting Digital Control

• Controls Up to 32 Intelligent Z-POL™ – No External Components !

Z-One Architecture Benefits

• Real-time Telemetry – Continually Monitors Temperature, Current, and Voltage for Precise and Optimized Control

• Any Voltage, Any Current, Any Configuration

• System Reconfiguration On-the-fly

• More Reliable and Flexible Fault Management Strategies

• Z-One System Architecture Is Highly Adaptive & Flexible

• 90% Reduction in Time To Market, Development Costs, Number of Components, and Board Traces

Applications For the Z Architecture

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Datacom (Enterprise) H H H H H H H H H H HData Storage H H H H H H H H H H HWireless Comm. H H H H H H H H H H HServers H H H H H H H H H H HTelecom H H H H H H H H H H HATE & Instrumentation H H H H H H H H H H HAutomotive H H H H H H H L H H HAerospace H H H H H H H H L H LMilitary H L H H H H H H L L LMedical H L H L L H H H H H LIndustrial H L H L H H H H H H HConsumer L H L H L L L L H L HPortable L L L H L L L L H L H

“H” Signifies High Need

The Future Potential of the “Z”

– Due to the Total Digital Implementation of Z-One Architecture, the Potential is Limited Only by the:

• Ingenuity and Creativity of Our Customers

• Future Enhancements to Our Software & Firmware

• Future Power-One Products Already Planned in Our 3 Year Roadmap

• Products that Will Be Developed by Our Partners

– In the Following Slides I Will Give Some Examples of What Is Possible TODAY with the “Z”

Scenario #1 Diagnostics and Healing

• Due to Malfunction In Cooling System, Temperature In User Equipment Starts Rising. Z-One System Detects It and, Reports It to the Host

– With the History Of Monitoring Data Stored In the Digital Power Manager the Host Estimates Available Minutes Before Critical OT Shut Down to Be 15 Minutes

– Via the I2C Interface the Z-POL™ Converter Powering the Fan Motor Is Commanded to Increase Voltage to Increase Fan Speed In the Equipment Bay Displaying the Problem

– Fan Speed Data Is Compared With Airflow Sensors to Determine, If the Air Duct Is Blocked. It Is Determined That the Air Duct Blockage Is the Problem

– E-mail and Page Sent to System Administrator that they have 15 Minutes to System Shutdown. The Administrator Calls Night Shift Cleaning Crew and Immediately Dispatches Them to the Data Center and Instructs Them to go to the Bay 7 and Check the Air Duct

– The Crew Inspects the Duct and Determines It Is Blocked By Dust. They Vacuum the Air Duct’s Inlet Filter and Restore Normal Airflow

– Temperature Begins Decreasing and Once It Drops Below the Predetermined Level, the DPM Is Programmed to Reduce The Output Voltage On the Fan Motor to Normal Level As to Not Permanently Degrade Fan Reliability

– System Shutdown Is Prevented By Early Problem Detection and Reporting

• Result: Elimination Of Down Time & Maintaining Normal System Operation Under Changed Environmental Conditions Are Accomplished By Utilizing System Telemetry, Reporting, and Ability to Change Parameters On-the-fly

Scenario #2 Chip Defects Reported By Mfg • OEM System Is Installed In Mission-critical Financial Transaction System

– Chip Company Reports Potential Network Processor Lockup & Subsequent Failure Under The Specified Power Down Sequence. The Financial Systems Are Powered Down Every New Years Eve For Critical Maintenance and Upgrades. (Year End Reports Must Be Run)

– It Is 3 Days Before The New Year Eve and If The Systems Are Powered Down There Could Be Failures and Possible Data Loss and Corruption. The Manufacturer of the Network Processor Will Take A Least 30 Days to Build 10,000 Replacement Boards at a Cost of 10M Dollars

– The Earlier Systems Used Conventional Analog Power Management and The Only Way to Modify The Power Down Sequence Was to Remove The Circuit Boards and Change Some Components

– Unfortunately, The Act of Power Down Could Damage the Network Processor. To Avoid the Risk Of Damage Or Potential Reliability Problems the Systems With Analog Power Management Had to Be Scrapped

– Fortunately, the New Systems Using Z-One Digital IBA Has the Unique Feature of Reprogramming On-the-fly. Power-One Works With the Network Processor Manufacturer to Come Up With the New Power Down Sequence. the PM Configuration File Is Modified and Via the Internet the New Power-down Sequence Is Uploaded to the Boards

• Result: The Tests Are Successful, Millions Of Dollars Are Saved, and the System Is Fixed With No Hardware Changes, No Damage to the Network Processors, and No Effect On Operations Of the End User. Avoidance Of Significant Financial Losses to Multiple Companies Is Accomplished By Utilizing Ability Of the System to Change Settings On-the-fly

Scenario #3 Terrorist Attack • System In Base Station Defense Application, Loses Primary Power Source

Due to Attack and Battery Backup Kicks In:– Batteries Were Damaged In the Attack and Only Have 1 Hour Left, It Will Take Up to 4

Hours to Bring Additional Power to the Base Station – The Control System Uses Parametric Monitoring Data Stored In the Z-One Digital Power

Manager to Calculate Power for Each Circuit Board In the System and Starts Updating Available Run-time Every 60 Seconds

– The System Issues Commands to the DPM to Shut Down Non-mission Critical Loads and Reduce Voltages On Chips to Minimum Levels to Reduce Power Consumption

– All Lights, Air Conditioning and System Fans Are Automatically Shifted to Minimum Operating Levels. All LCD Screens Are Reduced to Minimum Brightness, All Non-critical Peripherals Such As Printers Are Automatically Powered Down

– Threshold Of the Under-voltage Protection In the DPM Is Reduced to Allow Deeper Battery Discharge. Backup Time Is Now Recalculated to Be 4 Hours

– Two Hours Later, “Over Temperature” Warning Is Detected, On 1 System Bay Out Of 10.– Voltage Is Increased Only to Bay 1 Fan and Cooling Increased By 10%; At the Same Time

Voltage on the 9 Other Bays Are Each Reduced to Compensate for the Increased Fan Power – Backup Time Restored Again to 4 Hours

– System Power Consumption Is Reduced and Deeper Battery Discharge Is Allowed to Prolong System Operation Under Emergency Conditions

– When Primary Power Is Restored, Z-One Digital Power Manager Is Programmed to Restore Original System Configuration Settings

• Result: Real Time Optimization of Power Under Multi-variable Conditions Is Accomplished Thanks to On-the-fly Programmability & Telemetry

What Else Needs to Be Done?• Licensing the Technology (Second Sourcing)

– Now that We’ve Moved into Production Status, It’s Time to Open the Technology.

– Through Controlled Partnerships – Power-One Benefits in Broader, Larger Market, Licensing Fees, and Technology Sharing

– Meeting with Semiconductor and Module Manufacturer’s, As Well As Specific Industry Targets

• Execute the Silicon Business Plan

– Assure Z-One Becomes Dominant System

– Expand Solution to Other Markets

Results …Beyond Expectations

• The Z-series Is a True Revolution in Power – Digitally Integrating Conversion, Control and Communications

• Customers Who Implement the “Z” Can Offer Products with Additional System Features and Benefits

• Earlier Than Expected Design Wins – Five Total, Two With Top Ten Customers, Many More on the Horizon……

• Higher Gross Margins (Similar to Other Silicon Companies)

• New Markets Opened, e.g., Storage & Server, Military, Aerospace, Security

• PWER Has Been Transformed; Now a Power Management Company– Significantly More Embedded In Customers’ System Architecture

– Our Digital Silicon Will Replace Numerous Linear and Analog IC’s

– IP Is Well Protected With Pending Patents

This presentation includes forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 that can be identified by the use of forward-looking words such as “will” or “estimate” or comparable words. These statements are subject to a number of factors, risks and uncertainties that could cause actual results to differ materially from those projected. Risks and uncertainties include, but are not necessarily limited to: the Company’s success in securing customer acceptance and adoption of the Company’s products and technologies; the size and pace of growth in target and potential markets; the Company’s success in establishing and maintaining adequate and qualified manufacturing sources for supply of products; constraints and limitations in the supply chain(s) for critical components contained in Company products; the Company’s ability to achieve and sustain gross margins at levels anticipated and noted as comparable to “silicon-based” companies; the Company’s ability to continue spending at prior or desired levels for research and development related to the products and technologies discussed in this presentation; competitor advances and successes in comparable, alternative or competing technologies; the Company’s success in securing protection for intellectual property incorporated into the Company’s products and/or enforcing such intellectual property against use of same by competitors; intellectual property claims or rights of third parties which are unknown to the Company, and/or which are asserted in the future against the Company. In addition, we refer you to the Company’s most recent SEC financial filings, to include the Company’s report on Form 10-Q filed with the SEC on November 12, 2003.

Disclaimer & Forward Looking Statements

A Digital Power Revolution