Altera Corporation - Investor Relations

1.	What is Altera?
2.	What are Programmable Logic Devices (PLDs)?
3.	What are the benefits of PLDs?
4.	Who are Altera’s customers?
5.	What is Altera’s financial business model?
6.	Who is Altera’s Transfer Agent?
7.	May I purchase Altera stock directly from Altera?
8.	Does Altera pay a dividend?
9.	How many times has Altera had a stock split?

What is Altera?

Altera Corporation is a leading supplier of programmable semiconductors and related products that enable electronic systems companies to rapidly and cost-effectively innovate and differentiate in their markets. Our headquarters facility is located at 101 Innovation Drive, San Jose, California 95134. Our common stock trades on the NASDAQ Global Market under the symbol ALTR. Please click here to view our Corporate Fact Sheet.

2.	What are Programmable Logic Devices (PLDs)?
	Programmable logic devices (PLDs), which consist of field-programmable gate arrays (FPGAs) and complex programmable logic devices (CPLDs), are standard semiconductor integrated circuits, or chips, that our customers program to perform desired logic functions in their electronic systems.

What are the benefits of PLDs?

Most applications use one or more of the following types of logic in their designs:

Application-specific integrated circuits (ASICs) – Often referred to as standard cells, ASICs are manufactured with custom designs created by the customer. As a result, each ASIC has a fixed function used by a single customer in a single application.
Application-specific standard products (ASSPs) – ASSPs are standard devices that usually cannot be customized by the end user. In contrast to an ASIC, which is built for a single customer, an ASSP is built for a specific type of application targeted to a small number of customers. ASSPs are sometimes described as ASICs developed for multiple customers.
PLDs – Unlike ASICs and ASSPs, PLDs are standard products that can be customized for a wide range of applications. As a result, PLDs are typically sold to hundreds or thousands of customers. This flexibility offers many advantages, including simple design changes, shorter design cycles, and lower development costs.

In a broad sense, these products compete with each other as they may be used in the same types of applications in electronic systems. However, differences in cost, performance, density, flexibility, ease of use, and time to market dictate how much they directly compete for particular applications. The table below summarizes key characteristics of ASICs, ASSPs, and PLDs.

Characteristic	ASIC	ASSP	PLD
CUSTOMIZABLE	Yes, by chip fabrication facility	No	Yes, by end user
ERASABILITY/REPROGRAMMABILITY	No	No	Yes
RELATIVE TIME TO MARKET	Slow	Immediate	Fast
RELATIVE UNIT COST	Low	Moderate	Moderate to high
CUSTOMER'S DEVELOPMENT COST	High	Low	Moderate
FIELD UPGRADABILITY	No	No	Yes

PLDs vs. ASICs

In contrast to ASICs, PLD designs are programmed directly into the PLD. This means that the PLD is fully functional and verified when the design is completed, avoiding the lengthy and complex cycles required to verify and fabricate ASICs. This user programmability allows PLD customers to test and revise their designs quickly and with minimal development cost. In addition to these ease-of-use and time-to-market advantages, PLDs can be upgraded in the field, which allows customers to modify the PLD design after the electronic system has been shipped. These advantages, however, come at a cost. Programmability requires a larger die size, which typically translates into a higher per-unit cost when compared to ASICs. As a result, unit volume for PLDs is typically lower than for ASICs.

ASICs offer more optimized chip performance and lower per-unit costs than PLDs, which means that they are generally viewed as a more cost-effective option for large-volume, low-cost applications such as consumer electronics. However, they require high up-front costs for design, verification, and mask development, known as non-recurring engineering (NRE) costs, that make sense only for very high volumes. NRE costs for ASICs can range from the hundreds of thousands to multi-million dollar costs. Some customers prototype with PLDs for their time-to-market benefits and then redesign to an ASIC to reduce costs as volume increases. While redesigns have always been part of the PLD business, we believe that three trends increasingly drive customers to use PLDs for their systems’ entire life cycle:

Lower price premiums for PLDs compared to ASICs
Shorter life cycles of many electronic systems
Increased failure risk and higher NRE costs of ASICs

PLDs vs. ASSPs
Customers use ASSPs when they need specific fixed functions with little differentiation, for example when implementing certain electronic industry standards. However, ASSPs have fixed functionality, which limits the range of applications they can address. In contrast to ASSPs, PLD flexibility allows customers to define functionality to suit their needs, rather than restrict their system architecture based on ASSP manufacturer specifications. Furthermore, PLD designers can add IP design blocks to execute standardized functions otherwise performed by ASSPs.

Who are Altera’s customers?

Altera is a global semiconductor company, serving over 13,000 customers in communications, computer and storage, industrial, and consumer market segments. Our broad range of PLDs serve large multi-national corporations as well as small companies. An overview of typical PLD applications within our served markets is shown in the table below.

Market Segment	Market Sub-Segment	Application / Product
TELECOM AND WIRELESS	TELECOM WIRELESS	Access Systems Metropolitan Area Networks Optical Networks Cellular Basestations Wireless Local Area Networks (LANs)
AUTOMOTIVE, INDUSTRIAL AUTOMATION AND MILITARY	AUTOMOTIVE INDUSTRIAL AUTOMATION MILITARY	Car Entertainment Systems Navigation Systems Card Readers Energy Management Systems Manufacturing Equipment Surveillance Systems Guidance and Control Systems Radar Systems Secure Communications Systems
NETWORKING, COMPUTER AND STORAGE	NETWORKING COMPUTER OFFICE AUTOMATION STORAGE	Routers Switches Mainframes Servers Copiers Multi-Function Peripherals Printers Redundant Array of Inexpensive Disks (RAID) Systems Storage Area Networks (SANs)
OTHER	MEDICAL TEST & MEASUREMENT BROADCAST ENTERTAINMENT	Medical Imaging & Diagnostic Systems Patient Monitoring Systems Communications Test Equipment Oscilloscopes Semiconductor Test Equipment Broadcasting Equipment Studio Editing Equipment Satellite Equipment Cable Set-Top Boxes Flat-Panel Televisions

What is Altera’s financial business model?

Since the PLD market was created in the 1980s, the financial business models of the leading PLD suppliers have generally been favorable when compared to most other semiconductor companies. High sales growth rates, fabless strategies, high barriers to entry, and proprietary architectures have helped drive strong financial results for PLD suppliers. As the semiconductor industry and the PLD market have matured, revenue growth in the PLD segment, while still higher than many other semiconductor segments, has slowed. In recent years, we have increased our focus on enhancing our business model despite slower revenue growth. Through various programs to improve R&D and SG&A productivity, as well as a general movement to simplify our business processes, we have been able to achieve higher rates of net income as a percentage of total revenue and a higher return on equity. We believe that our early focus on cost reduction and productivity enhancement may provide us some benefits compared to other semiconductor companies. Our ability to maintain investment in the research and development of future products, which has been aided by our early and ongoing cost savings initiatives, is a vital factor for our future growth. In addition, our prior work in analyzing business processes has not only allowed us to effectively identify and execute areas for simplification and cost reduction, but the concept of “workflow efficiency” is an increasingly valued aspect of our business culture.

6.	Who is Altera’s Transfer Agent?
	Altera’s Registrar and Transfer Agent is Computershare Trust Company. Their contact information is: Computershare Trust Company, NA P.O. Box 43023 Providence, Rhode Island 02940-3023 (781) 575-2879 www.computershare.com

7.	May I purchase Altera stock directly from Altera?
	Altera does not have a stock purchase plan.

8.	Does Altera pay a dividend?
	Yes. Refer to the company’s latest financial press release to learn when the next dividend will be paid and the size of the dividend that will be paid on that date.

9.	How many times has Altera had a stock split?
	Altera has had 4 splits. Each have been two-for-one splits. The market price for Altera common stock as reported by Nasdaq reflected the stock splits on the dates below: 1995 June 01 1997 January 07 1999 May 20 2000 August 11

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