Chemical and Solid Waste Performance Gains
In 2003, Intel continued to make significant advances in chemical and solid waste performance, reducing generation across the board and exceeding our chemical and solid waste recycling goals of 45% and 60%, respectively. We also offset more than 25% of our water needs for the third year in a row through reuse, reclamation and savings programs.

We have also established a new goal to reduce worldwide normalized energy consumption 4% per year through 2010. This marks Intel's first companywide energy goal and helps solidify our position as an industry leader in addressing global-warming challenges.

Additionally, beginning with this report, we are normalizing our environmental indicators to production levels. We chose 1999 as an index year, with baseline performance levels set at 100. Readers may now view subsequent years' performance in terms of total, normalized and relative performance. The index year will shift over time to provide more relevant comparisons in the future.

Industrial Water Management in Israel
Managing water in an economically and environmentally responsible manner is a huge task for any manufacturing facility. In environments where the water supply is limited, the challenges are even more complex. For Intel's Israel facility, establishing an industrial water management group has played a decisive role in creatively—and successfully—meeting this challenge.

The group, which includes process and water engineers, technicians and EHS personnel, has helped the site pursue a number of water recycling projects. Based on the team's recommendations, Intel's Fab 18 in Qiryat-Gat completed connection of its irrigation system to the facility's effluent water, reducing annual water consumption by 120,000 cubic meters. The facility operates its cooling towers in eight concentrated cycles, and reuses ultra-recycled water (URW) for its cooling towers and scrubbers. Overall, in its first two years the team reduced water demand at Fab 18 by approximately 40% and offset the site's incoming fresh-water supply needs by 38%—significantly exceeding our corporate goal of 25%.

The group's strategy combines water management for existing projects with coordinated efforts involving the site's long-term planners. Putting this strategy into action enabled cancellation of a salinity reduction project, and thereby eliminated the need for a $2 million capital investment as well as an annual operational cost of $300,000.

Environmental Certification
In 2002, Intel successfully achieved companywide ISO 14001 registration. Our efforts now focus on adhering to this environmental management standard. To keep our certification current, we must pass a series of comprehensive audits at a sampling of sites each year. In 2003, audits took place in Colorado, Massachusetts and Oregon. Our corporate system was also audited. In all, these audits resulted in only two findings. In addition, we continued to reduce program costs by combining ISO 14001 audits with those for ISO 9001.

Also in 2003, a perfect score of 100 placed Intel's programs at the top among semiconductor suppliers in Sony Corporation's Green Partner program. The score followed a March 2003 audit of environmental management and quality systems by Sony at our fabrication facility in Santa Clara, California.

Building Global Waste Infrastructure
In 2003, Intel continued to make strides in strengthening our waste management infrastructure outside the U.S. by supporting local recycling and disposal initiatives that meet Intel's high expectations in Asia. Concurrently, our Ireland site met the company's worldwide chemical recycling goal for the first time, while chemical waste recycling at U.S. sites hit an all-time high, achieving more than $450,000 in waste cost-savings.

Designing for Environment, Health and Safety
Over the years, Intel has found that incorporating EHS criteria into our design processes can lead to significant performance improvements. In 2003, for example, Intel's EHS technology development group crafted the environmental goals for our next 300-millimeter manufacturing process, which included wastewater goals for more than 15 elements. At the same time, a task force is working to establish a chemical waste minimization strategy and set our first companywide goal in 2004. We also enhanced our chemical screening model by adding third-party international screening for potential future chemical restrictions. The industry acknowledged our leadership in this area by adopting our chemical screening methodology and including it in the International Technology Roadmap for Semiconductors.

Conserving Energy/Using Renewable Resources
Renewable energy is a growing resource for a number of Intel sites, and Intel looks forward to ongoing leadership in this area. In Oregon, we buy about 14 million kilowatt-hours (kWh) of Pacific Gas & Electric (PG&E) Clean Wind power annually, enough to meet the daily needs of almost 1,300 average homes in the utility's service territory. Winning the first Green Power Leadership award from PG&E, Intel distinguished itself as Oregon's largest retail renewable power user and one of the largest in the Western United States.

Our New Mexico site is now one of the largest purchasers of renewable energy in that state as well. In 2004, the New Mexico site will be buying 100,000 kWh per month of renewable wind power. Although these examples may seem like small steps in the overall picture of energy use, they play a significant role in supporting the effort of local power companies to build renewable power infrastructures.

Working closely with the U.S. Environmental Protection Agency's Energy Star* Program Million Monitor Drive initiative, Intel implemented power management on 65,000 laptop displays and 45,000 desktop monitors worldwide in 2003. This initiative will save about 9.65 million kWh in 2004, enough electricity to light 11,000 U.S. homes for a month. At $0.05 per kWh, Intel will see an annual savings of $482,000.

Intel's PC power management effort is just one of many factors in our companywide efforts to reduce normalized energy consumption by 4% per year through 2010. In fact, energy conservation solutions have proliferated at Intel. To cite another example, a team of engineers in New Mexico determined that boilers retrofitted with Autoflame*, a UK-based boiler control technology, met stringent emission, energy conservation and product reliability goals. Where the new technology has been installed, boilers have reduced nitrous oxide (NOx) and carbon monoxide (CO) emissions by 32% and 92%, respectively, and have realized significant natural gas, electricity and boiler maintenance savings annually. Based on the success of our pilot, Intel is proceeding to adopt the technology worldwide.