"Intel volunteers are an indication of the company's commitment to appreciation and awareness of nature." S. Karthikeyan, State Director, World Wide Fund for Nature, India Sophisticated systems are part of all of our factories. Intel Involved volunteers improve a zoological park in India. Intel employees in Israel work to make their local communities better. Electronics recycling events collected 350,000 pounds for recycling and proper disposal. Improvements in ultra-pure water production are integrated into our newest factories.

Intel's 2004 EHS performance included key successes and opportunities for improvement. Our successes entailed reducing our global water consumption and PFC emissions (global warming gases), recycling more than half of our solid and chemical wastes, introducing a chemical waste reduction goal for new technologies and maintaining world-class safety performance.

As with most years, there were also a few areas that needed improvement. In 2004, we experienced slight increases in our global energy usage, volatile organic compound (VOC) emissions and hazardous air pollutant (HAP) emissions. Although disappointing, these increases can be attributed to ramping our newest manufacturing processes.

As we look to the future, we are faced with some difficult challenges. We remain committed to excellence in operational performance even though costs continue to rise. During the past decade, our continuous improvement efforts have delivered significant environmental benefits. However, in the future, even with continued investment, those benefits will diminish while the scope and complexity of emerging issues such as materials restrictions and nanotechnology will increase.

In response to these challenges, we will continue to focus our resources where we can produce the greatest positive impact. In some cases, that means working in new areas and with new stakeholders.

The world is changing and expectations are rising. As always, our team will meet new challenges directly and make decisions that will continue to benefit our stockholders and the environment.

Lew Scarpace Director, Environment, Health and Safety

EHS in emerging markets
The world's emerging markets, including Africa, Asia, Eastern Europe, Latin America and the Middle East, represent a growing business opportunity for Intel. They are the fastest growing regions for our technologies, and our presence there is expanding. In fact, today more than 70% of our revenue comes from outside the U.S. For all the opportunity these markets offer, however, they also present unique challenges from an EHS perspective.

Intel expects the same level of EHS performance from our operations in emerging markets as we do of our operations in the U.S. Therein lies the challenge: how do we meet this expectation in light of cultures and attitudes that may differ among the geographies? Similarly, we are challenged by nascent infrastructure and a relative shortage of employees with relevant EHS experience.

We strive to meet these challenges through a number of approaches, including transferring our corporate "EHS culture" by seeding locations with experienced Intel EHS staff. Similarly, we conduct training at our mature sites to expose staff from our emerging market locations to our operations, practices and EHS ethos in place in mature markets. We also work with local governments and regulatory agencies by sharing our EHS expertise to help promote best practices and drive infrastructure improvements. Our recent work in China provides some examples:

	Working with the Shanghai Environmental Protection Bureau on semiconductor-specific air and water regulations.
	Presenting to key conferences, such as the China Eco Design Conference and the Ministry of Information Industry (MII) Conference.
	Working with MII to implement a feasible lead ban affecting electronic products.
	Working with China's State Environmental Protection Administration to develop air emission, water discharge and waste management regulations for electronics manufacturing.

Nanotechnology standards
As Intel continues to become aware of the potential benefits of nanotechnology, we are committed to engaging with multiple stakeholders to define, characterize and manage its EHS implications in the semiconductor industry. To this end, we support scientific research, risk assessment and the development of industry standards to promote the safe use of technology.