<PAGE>

                              MANUFACTURING AGREEMENT

















[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.
<PAGE>

This agreement is made as of ____________________, 1997 by and between SIEMENS
AG, a German corporation located in Munich, Germany, hereinafter referred to as
"SIEMENS", and Advanced Power Technology, a Delaware Corporation located in
Bend, Oregon, USA, and its subsidiaries and affiliates, hereinafter referred to
as "APT".



                                     WITNESSETH:

WHEREAS, APT desires to enter into a long-term  agreement with SIEMENS for the
procurement of products to be manufactured by SIEMENS in accordance with
specifications submitted by APT, including IGBT discrete products and IGBT
processed wafers as listed in ATTACHMENT A. Attachment A can be changed every
time if both parties mutually agree in this change in writing.



NOW, THEREFORE, and in consideration of the mutual promises contained herein,
APT and SIEMENS agree as follows:



1.     MANUFACTURE OF PRODUCTS

       SIEMENS hereby agrees to manufacture certain IGBT discrete products and
       IGBT processed wafers for APT in accordance with orders for specified
       products to be communicated to SIEMENS from to time to time via fax, and
       in a accordance with specifications for those ordered products to be
       provided to-SIEMENS by APT and APT agrees to pay for such products in
       U.S. Dollars in accordance with SIEMENS's price schedules contained in
       the attached quotations.  SIEMENS agrees to be bound by the terms and
       conditions of this Agreement in connection with the manufacture and sale
       of these products.  APT is not required to purchase any minimum quantity
       of products from, nor is APT required to purchase these or similar IGBT
       discrete products and IGBT processed wafers exclusively from SIEMENS

2.     COORDINATION

       APT has identified its Vice President, Discrete Power Products, currently
       Mr. John Hess as its coordinator.  SIEMENS has identified its Senior
       Director, Power Semiconductors, currently Mr. Claus Geisler, as its
       coordinator.  The coordinators represent their companies for the
       implementation and communications of all items contained in this
       Agreement.  In the event that a coordinator is changed by either party,
       notice of such change shall be made in writing to the other party.


                                          1

<PAGE>

3.     PAYMENT

       A.     APT shall pay SIEMENS by international bank transfer, [*],
              in accordance with the agreed upon fixed schedules of product and
              processed wafer shipments.

       B.     Prices will be in U.S. Dollar.

       C.     Prices in U.S. Dollar shall be as set forth in annual quotation
              and cannot be changed during a twelve-month period after signature
              unless otherwise agreed upon in writing by both parties.  All
              prices of products included in these quotations and any future
              prices or products will be reviewed annually by both parties.  Any
              prices agreed upon for products or wafers not included in an
              annual price quotation or review will be fixed until the end of
              these twelve-month period to ensure that all pricing remains on
              the same annual price cycle.

       D.     All APT divisions, subsidiaries and other affiliated companies,
              foreign and domestic are permitted to purchase all SIEMENS items
              at the prices which appear in the above referenced quotation and
              in accordance with the terms of this Agreement.

       E.     Price per good die and wafer quantities are set forth in
              Attachment A1 and A2.Siemens and APT will review quantities on a
              yearly basis to set up the pricing.  The prices for 1998 are
              agreed.

4.     INSPECTION

       SIEMENS agrees that APT Representatives, designated by APT's Coordinator,
       shall have the right of inspection of SIEMENS's manufacturing facilities,
       the manufacturing work in progress, and those offices areas containing
       documentation and records relevant of this Agreement at normal business
       hours and after at least two (2) weeks prior written notice once a year.


5.     RETURNS

       A.     SIEMENS agrees to supply products to APT which meet the mutually
              agreed upon specifications. If, within 3 months after delivery of
              products from SIEMENS, APT determines that the products do not
              meet those specifications, SIEMENS will replace the defective
              returned products at the SIEMENS expense. Immediately upon such
              determination and' prior to any return by APT of such products,
              SIEMENS shall be so notified and shall have the option of having a
              representative of SIEMENS inspect the products being returned,
              provided that such inspections takes place within two (2) weeks of
              such notification by APT. Following such inspection or expiration
              of the two-week period, APT will ship these products back to
              SIEMENS. SIEMENS will replace such returned defective products
              which meet the mutually agreed upon specification within six (6)
              weeks following SIEMENS's receipt of the returns at any SIEMENS
              location. SIEMENS

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                          2

<PAGE>

              shall be deemed to have met the six (6) week time table if, within
              six (6) weeks, such replacement products are shipped from a
              SIEMENS facility to a common carrier for shipment to APT. Upon
              SIEMENS's failure to so ship within (6) weeks, APT will be
              entitled to receive the next subsequent shipments of any products
              from SIEMENS at no cost to APT for the goods of the shipping
              thereof, until APT has received the equivalent value of goods
              which were not promptly replaced. In such circumstances the
              equivalent value shall be the original cost of the goods which
              were not properly replaced, without regard to any subsequent price
              changes for the same product.

       B.     No products, other than replacement products, will be accepted by
              APT with date codes older than six (6) months prior to the date of
              receipt at the APT facility. For replacement, date codes will be
              accepted which are up to six (6) months prior to the date of the
              receipt at SIEMENS of returned defective products. Under no
              circumstances will APT accept any replacement products with date
              codes older than 26 weeks prior to the date of receipt at the APT
              facility.

6.     PACKAGING BY SIEMENS

       A.     All packaging will be of anti static materials in accordance with
              the mutually agreed upon specifications.

       B.     Quantities must be packaged as described in Attachment B.

       C.     Boxes shall be taped closed and/or sealed in plastic.

       D.     Packaging must be resistant to lead bend or unit damage of any
              kind.

       E.     Changes in packaging, even if within the mutually agreed upon
              specifications, must be approved by both parties.

7.     QUALITY

       A.     After qualification, SIEMENS may not carry out any significant
              alteration to the product or process which affects the
              suitability, functions, processing or reliability, without
              previously informing the customer. The customer must be informed
              three (3) months before the planned commencement of delivery and
              must receive a detailed description of the alteration. The
              customer will announce his decision within 45 days.

       B.     Device marking will be in accordance with the mutually agreed upon
              specifications.

8.     SHIPPING PROCEDURES

       A.     SIEMENS shall provide APT's Coordinator with a confirmation of
              APT's order, in which the delivery date is announced.


                                          3
<PAGE>

       B.     APT agrees to pay shipping costs F.O.B. Germany for the wafers and
              products shipments other than replacement wafers and products.

       C.     SIEMENS may be required to make deliveries to other specified APT
              locations after procedures are established and agreed upon by both
              parties. Initially, product will be shipped to APT, Bend, USA or
              APTE, Merignac, France, only.

9.     ON-TIME DELIVERY/SCHEDULING

       A.     If the delivery date is by day, SIEMENS shall not deliver more
              than seven (7) days earlier or three (3) days later as the agreed
              delivery day.

              In case SIEMENS realizes that he cannot adhere to the agreed
              delivery date, he shall without delay inform APT and indicate the
              prospective duration of the delay. The Parties shall immediately
              endeavour to find reasonable remedial measures.

              If SIEMENS is in delay with deliveries for which he is responsible
              and if APT  substantiates that he has suffered damages due to the
              delay, he may claim per full  week of delay liquidated damages of
              0,5% of the price of the delayed SIEMENS  Products up to a maximum
              amount of 5% of such price. Any further claims for  damages due to
              the delay shall be excluded.

              APT may terminate the relevant separate purchase contract without
              incurring any liability, provided the Products have not been
              delivered within a reasonable grace period set by APT. Further APT
              may terminate this Agreement, if, during a  nine-week period,
              SIEMENS' on-time delivery performance is less than 85 % in
              quantity for any four (4) weeks of that nine-weeks period.

       B.     a)     Finished Goods

                     APT will provide a thirteen (13) week order requirement
                     schedule to  SIEMENS on a monthly basis with nine (9) weeks
                     being firm and four (4)  weeks floating. The fixed nine (9)
                     week requirement may only be modified  with the consent of
                     both parties. The four (4) week floating requirement
                     schedule may only be reduced by either party by up to 20 %
                     quantity.

              b)     Wafers/Die

                     APT will provide a fourteen (14) week order requirement
                     schedule to SIEMENS on a monthly basis with six (6) weeks
                     being firm and eight (8) weeks floating. The fixed six (6)
                     weeks requirement may only be modified with the consent of
                     both parties. The first four (4) week floating requirement
                     schedule may only be reduced by either party by up to 20 %
                     quantity. The next four (4) week floating requirement
                     schedule may only be reduced by either party by up to 40 %
                     quantity.


                                          4
<PAGE>

10.    PROPRIETARY RIGHTS

       A.     If a third party raises justified claims against APT for
              infringement of US Patents by wafers or other products supplied by
              SIEMENS (hereinafter "Products"), SIEMENS shall at its cost
              acquire for APT a right to use the 'Product. In case this is not
              possible at economically reasonable conditions, SIEMENS' liability
              for infringement of any intellectual property rights or copy
              rights shall be limited as follows:

              (a)    Seller shall indemnify and hold harmless Buyer against any
                     legal costs and  damages of Buyer caused by Protective
                     Right infringement by the Product  as such up to the amount
                     of an appropriate license fee, which the owner of    the
                     Protective Rights could claim directly from Seller for the
                     use of the  infringing Product.

              (b)    For future deliveries SIEMENS shall, if economically
                     reasonable, at its option and in compliance with the
                     specifications modify the Product to become non infringing
                     or deliver an equivalent non infringing product.

              Claims shall be deemed justified only if they are acknowledged as
              such by Seller or finally adjudicated as such by a court of
              competent jurisdiction.

       B.     The obligations of SIEMENS mentioned in Section 10.A above apply
              under the precondition that APT informs SIEMENS without delay in
              writing of any claims for infringement of Protective Rights, does
              not accept on its own any such claims and conducts any disputes,
              including settlements out of court, only in agreement with
              SIEMENS.

       C.     Any liability of SIEMENS shall also be excluded, if the
              infringement of US patents results from specific instructions
              given by APT or the fact that the Product has been changed by APT
              or is being used in conjunction with products not delivered by
              SIEMENS, which convert an otherwise non-infringing Product to an
              infringing Product.

       D.     Any liability of SIEMENS pursuant to Section 10.A shall be
              excluded, if the infringement of US patents is not caused by the
              Product itself, for example if such infringement results from the
              application of the Product (including any application specific
              circuitry implemented in the Product), unless SIEMENS did offer
              the Product especially for such infringing application.

11.    RISK, TITLE

       A.     Risk of loss or damages shall pass onto APT according to the
              clause of the incoterms 990 as defined in Section 8. B.

       B.     SIEMENS retains title to the Products until all payments due to
              SIEMENS have been finally effected by APT.


                                          5
<PAGE>

12.    WARRANTY

       A.     The warranty period shall be [*] starting on the date the risk of
              loss or damage has passed onto APT according to Section 11 A.

       B.     SIEMENS' liability for any further damages resulting from the
              defects) of the Products shall be limited pursuant to the
              stipulations of Section 13.

13.    LIABILITY

       A.     SIEMENS assumes liability for any personal injury for which he is
              found responsible without limitation. If found. responsible for
              property damages of APT, SIEMENS shall indemnify APT for expenses
              incurred for restoration of the damaged property up to a maximum
              amount of DM 1 Million per damage event.

       B.     Apart from warranties and liabilities expressly stipulated in this
              Agreement, SIEMENS disclaims ail liability regardless of the cause
              in law, in particular the liability for indirect or consequential
              damages arising from interrupted operation, loss of profits, loss
              of information and data, unless in cases of gross negligence,
              intent, lack of assured characteristics or in any cases where
              liability is mandatory at law.

14.    NON-DISCLOSURE

       A.     In consideration of the disclosure of Proprietary and Confidential
              information by both parties to each other, both parties agree that
              the information relating to requirements, processes,
              specifications, schedules, materials, financial data and pricing
              exchanged between parties is hereby designated as Proprietary and
              Confidential by APT and SIEMENS.

       B.      It is agreed that for a period of ten (10) years, both parties
              shall (1) restrict dissemination of the above as Proprietary and
              Confidential information to only those employees who must be
              directly involved in the manufacturing of wafers and products for
              APT and (2) use the same degree of care as its uses for its own
              information of like importance against disclosure to other
              employees within each party or others outside of it.

       C.     Any breach of these Non-Disclosure restrictions shall be deemed as
              a breach of the Manufacturing Agreement. Both Parties shall pursue
              all remedies of law for such breaches.

       D.     This obligation shall not apply to information, which is or
              becomes public knowledge or which is provably independently
              developed or lawfully received from a third party.

15.    NON-ASSIGNMENT

       Neither party is entitled to assign this Agreement without the prior
       written consent of the

[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                          6
<PAGE>

       other party.

16.    APPLICABLE LAW AND JURISDICTION

       A.     This Agreement and individual purchase contracts signed between
              the Parties hereunder shall be governed by and construed in
              accordance with the law in force in Switzerland without reference
              to its conflicts of law provisions. The application of the United
              Nations Convention on Contracts for the International Sale of
              Goods of April 11, 1980 shall be excluded.

       B.      All disputes arising out of or in connection with this Agreement
              or individual  purchase contracts signed hereunder, including any
              question regarding their  existence, validity or termination,
              shall be finally settled under the Rules of  Arbitration of the
              International Chamber of Commerce, Paris ("Rules") by three
              arbitrators in accordance with the said Rules.

       C.     Each party shall nominate one arbitrator for confirmation by the
              competent  authority under the applicable Rules ("Appointing
              Authority"). Both arbitrators shall  agree on the third arbitrator
              within 30 days. Should the two arbitrators fail within  the above
              time-limit to reach agreement on the third arbitrator, he shall be
              appointed by the Appointing Authority.

       D.     The seat of arbitration shall be Zurich. The procedural law of
              this place shall apply  where the Rules are silent.

       E.     The language to be used in the arbitration proceeding shall be
              English.

17.    DURATION OF THIS AGREEMENT

       The effective date of this Agreement shall be the date on which it is
       signed by the last party to sign it. This Agreement shall continue until
       it is terminated by either party, provided such terminating party gives
       the other party twelve (12) months written notice.

       Upon such notice of termination, the Coordinators for both parties shall
       proceed with the details of reducing schedules and  returning to APT  any
       previously supplied documentation. The intent is to provide an orderly
       transition by both parties, during the notification period until the
       final date of termination.

18.    AMENDMENT AND WAIVER

       This Agreement may be amended from time to time only by written document
       signed by the parties. No provisions of this Agreement can be waived
       except by a written document signed by the party waiving the provision,
       nor shall any failure to object to any breach of a provision of this
       Agreement waive the right to object to a subsequent breach of the same or
       any other provision.


                                          7

<PAGE>

19.    PUBLICITY

       SIEMENS and APT shall consult with one another before issuing any press
       release or public announcement about the transactions contemplated by
       this Agreement. Except as required by applicable law, neither SIEMENS nor
       APT shall issue any press release or other public announcement without
       the consent of the other party, which consent shall not be unreasonably
       withheld.


20.    FORCE MAJEURE

       Neither party will be liable for delay in performance or failure to
       perform, in whole or in  part, the terms of this Agreement when due to
       labor dispute, strike, war or act of war  (whether an actual declaration
       is made or not), insurrection, riot, civil commotion, act of  public
       enemy, fire, flood, or other act of God, act of any governmental
       authority, judicial  actions, or other causes beyond the control of such
       party, which are similar to, but not  limited to, the matters herein
       enumerated, and any such delay or failure shall not be  considered a
       breach of the Agreement. Either party shall immediately notify the other
       party of any circumstances which occurs which may prevent or
       significantly delay delivery  of processed wafers and products as is
       provides herein.



The parties hereto have executed this Agreement as of the day and year written
below:



APT                                SIEMENS,


By:           S/S                  By:           S/S
   -------------------------          -------------------------------
Name: John Hess                    Name: Claus Geisler


Title: Vice President              Title: Senior Director, Power Semiconductors


-Date :       10/17/97             Date:         10/14/97
       -------------------------        -------------------------------


                                          8

<PAGE>

                                             1998 WAFER / DIE PRICING

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                     DIE         APPROX        1999       1998 COST
                        WAFER                CHIP       PART                        SIZE        GOOD DIE       WAFER       PER GOOD
TYPE                  SIZE INS     TECH      NAME        NO      VOLT    AMPS       SQ MN      PER WAFER     COST $US       DIE $US
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>          <C>      <C>        <C>       <C>     <C>       <C>         <C>           <C>          <C>
SIGC12T60                 5         PT      L7222B     BUP400     600    10.0       12.30         [*]
SIGC14T60                 5         PT      L7232B     BUP401     600    15.0       14.40         [*]
SIGC18T60                 5         PT      L7242B     BUP402     600    20.0       18.50         [*]
SIGC25T60                 5         PT      L7262B     BUP403     600    30.0       25.70         [*]
SIGC42T60                 5         PT      L7272B     BUP604     600    50.0       42.30         [*]
SIGC81T60R2               5         PT      L7162B      BSM...    600    75.0       81.00         [*]
SIGC156T60R2              5         PT      L7282B      BSM...    600    200.0     156.30         [*]

SIGC12T60N                5        NPT      L7222E      BSM...    600    10.0       12.30         [*]           [*]          [*]
SIGC14T60N                5        NPT      L7232E      BSM...    600    15.0       14.40         [*]           [*]          [*]
SIGC18T60N                5        NPT      L7242E      BSM...    600    20.0       18.50         [*]           [*]          [*]
SIGC25T60N                5        NPT      L7262E      BSM...    600    30.0       25.70         [*]           [*]          [*]
SIGC42T60N                5        NPT      L7272E      BSM...    600    50.0       42.30         [*]           [*]          [*]

SIGC6T120                 5        NPT                           1200     1.5       6.00                        [*]          [*]
SIGC14T120                5        NPT                           1200     5.0       14.40                       [*]          [*]
SIGC16T120                5        NPT                           1200     8.0       16.00                       [*]          [*]
SIGC25T120                5        NPT                           1200    15.0       25.70                       [*]          [*]
SIGC42T120                5        NPT                           1200    25.0       42.30                       [*]          [*]
SIGC81T120R2              5        NPT                           1200    50.0       81.00                       [*]          [*]
SIGC121T120R2             5        NPT                           1200    75.0      121.00                       [*]          [*]
SIGC156T120R2             5        NPT                           1200    100.0     156.30                       [*]          [*]

SIGC16T120C               6        NPT      L7131M      BSM...   1200     8.0       16.00         [*]           [*]          [*]
SIGC25T120C               6        NPT      L7141M     BUP213    1200    15.0       25.87         [*]           [*]          [*]
SIGC42T120C               6        NPT      L7151M     BUP314    1200    25.0       42.30         [*]           [*]          [*]
SIGC81T120R2C             6        NPT      L7161M      BSM...   1200    50.0       81.00         [*]           [*]          [*]
SIGC121T120R2C            6        NPT      L7171M      BSM...   1200    75.0      121.00         [*]           [*]          [*]
SIGC156T120R2C            6        NPT      L7181M      BSM...   1200    100.0     156.00         [*]           [*]          [*]

SIGC16T120CL              6        NPT      L7131P      BSM...   1200     8.0       16.00         [*]           [*]          [*]
SIGC25T120CL              6        NPT      L7141P      BSM...   1200    15.0       25.87         [*]           [*]          [*]
SIGC42T120CL              6        NPT      L7151P      BSM...   1200    25.0       42.30         [*]           [*]          [*]
SIGC81T120R2CL            6        NPT      L7161P      BSM...   1200    50.0       81.00         [*]           [*]          [*]
SIGC121T120R2CL           6        NPT      L7171P      BSM...   1200    75.0      121.00         [*]           [*]          [*]
SIGC156T120R2CL           6        NPT      L7181P      BSM...   1200    100.0     156.00         [*]           [*]          [*]

SIGC42T170                5        NPT      L7101B     BUP309    1700    15.0       42.30         [*]           [*]          [*]
SIGC144T170               5        NPT      L7071B      BSM...   1700    50.0      144.00         [*]           [*]          [*]
SIGC185T170               5        NPT      L7081B      BSM...   1700    75.0      185.00         [*]           [*]          [*]
</TABLE>


[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                       9

<PAGE>

                                   Attachment A2


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                   "price projection"
---------------------------------------------------------------------------------------------
                               1998                 1999                2000
---------------------------------------------------------------------------------------------
<S>                      <C>    <C>    <C>    <C>    <C>    <C>    <C>   <C>    <C>
number of 125mm
(total number of         1.0    1.5    3.5    3.5    6.5    13.5   5.0   10.0   20.0
wafer in thousands)
---------------------------------------------------------------------------------------------
SIGC42T60N               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIGC42T120               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIBC81T120R2C            [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
Price in U$ per wafer.



Die pricing related to above wafer quantities:
---------------------------------------------------------------------------------------------
SIGC42T60N               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIGC42T120               [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
SIBC81T120R2C            [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]    [*]
---------------------------------------------------------------------------------------------
Price in U$ per wafer.
</TABLE>



All other types related to these manner.






[*] = Material has been omitted pursuant to a request for confidential
      treatment, and such material has been filed separately with the SEC.

                                          10
<PAGE>

                                    ATTACHMENT B


             Semiconductor Group, Technical Regulation No. 19, Packing
                           A66003-R19-X-*-7635 dd. 07.96















                                          11

<PAGE>

                                  TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S><C>
1    GENERAL INFORMATION ON PACKING. . . . . . . . . . . . . . . . . . . . . . . . .1

     1.1  Terminology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

     1.2  Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

     1.3  Contents labeling. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

     1.4  Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

     1.5  Organizational units involved. . . . . . . . . . . . . . . . . . . . . . .5

     1.6  Documents referred to. . . . . . . . . . . . . . . . . . . . . . . . . . .5

     1.7  Other documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

2    PACKING FOR WAFERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.1  Functional packing . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.2  Packing procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.3  Identification for internal transport from one site to another
     (including subcontractors). . . . . . . . . . . . . . . . . . . . . . . . . . .7

     2.4  Identification of incoming deliveries'to the VKL for external
     customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     2.5  Transport packing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     2.6  Identification of transport packing. . . . . . . . . . . . . . . . . . . .8

3    PACKING COMPONENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     3.1  Functional packing . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

     3.2  Identification for transport to the VKL. . . . . . . . . . . . . . . . . .9

     3.3  Transport packing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

     3.4  Sending to Dispatch. . . . . . . . . . . . . . . . . . . . . . . . . . . .9

     3.4.1     Deliveries received infunctional packing. . . . . . . . . . . . . . .9

     3.4.2     Deliveries received in transport packing. . . . . . . . . . . . . . 10

4    APPENDIX: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10


<PAGE>

                                  TABLE OF CONTENTS

     4.1  Example: Wafer packing . . . . . . . . . . . . . . . . . . . . . . . . . 10

     4.2  Example: Module packing. . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
 RELEASE              OFFICE                  NAME             SITE          TELEPHONE       DATE           SIGNATURE
----------------------------------------------------------------------------------------------------------------------------
 <S>                  <C>                     <C>              <C>           <C>             <C>            <C>
 Author               HL DOK                  Diebold          Mch B         2865            7/10/96        sgd. Diebold
----------------------------------------------------------------------------------------------------------------------------
 Checked by           HL R STA LV             GraBinger        Rgb W         2682            7/10/96        sgd. GraBinger
----------------------------------------------------------------------------------------------------------------------------
 Checked by           HL R CI MT              Seitz            Rgb W         2020            15/10/96       sgd. Seitz
----------------------------------------------------------------------------------------------------------------------------
</TABLE>













<PAGE>

1.   GENERAL INFORMATION ON PACKING


The aim of this guideline is to ensure that the packing used for products of the
Semiconductor Group is appropriate for the conditions to which it will be
subject, and that the products arrive at the end of the transport chain
undamaged. The guideline describes the components which comprise the packing in
each case.  It sets out the general principles for the packing and transport of
HL products.


1.1  TERMINOLOGY

The following definitions of terms are based on DIN 55 405 (Packaging; Concepts;
Introduction; Pt1 to Pt7)


PACK GOODS

Goods which are to be packed or are packed. Examples: undiced wafers, diced
wafers, components.

FUNCTIONAL PACKING = PACKAGING

Product made of packing materials which is designed to enclose or hold together
the pack goods.  Functional packing means: the primary protection against
breakage, fixed quantities, and possibly also subsequent machine handling of the
pack goods.  Examples of functional packing/packaging: wafer boxes, wafer
canisters, foil rings for diced chips, foil bags, tape, reels, tubes, trays.

PACKING AIDS

A collective term for aids which are used in conjunction with the packing
materials for packing purposes. Examples of packing aids: adhesive tape, labels,
silica gel, foam padding, transparent foil.

PACKING MATERIAL

Materials/loose packing from which the packaging and packing aids are composed.

PRODUCT PACKING (ALSO REFERRED TO AS TRANSPORT PACKING)


Packing, the form of which is determined by the transport conditions, and which
generally serves as the outermost packing of the functional packing.

TRANSPORT PACKING

Cuboidal packing, consisting of one of more parts, which can be closed up, the
form of which is

<PAGE>

determined by the transport conditions, e.g. aluminum box, case made of solid
and/or corrugated cardboard.

PACKAGE

The result of combining the pack goods and the packing, particularly suitable
for transport.

AIRFREIGHT CONTAINER

A container for airfreight, with the following characteristics: durable
construction for repeated use, transport of goods without repacking, easy to
load and unload, simple to handle when moved from one mode of transport to
another, volume of at least 1 m3.


1.2  FUNDAMENTALS

The packing must be constructed so as to satisfy SN 10 250 Part 1 - Fundamentals
for Packaging Engineering (Planning and Objectives).


The functions of packing are described in SN 10 250, Part 2 - Functions. The
departments in the Semiconductor Group which deal with packing are responsible
for these functions.

New forms of packing must always be the subject of a request. The required
application is described in Org-Handbook Guideline B 5.6,Guideline of Packing
Materials - Part land 2.

HL Packing Coordination issues lists of each of the permitted packing materials.
In the case of new packing materials, for multi-use packing, and the recycling
of packaging and packing aids, the UAS section should also be involved. In this
context, refer to DIN 6120.

When planning and developing packing, reference should be made to SN 10 250,
Fundamentals for Packaging Engineering Attachment 1, "List of questions for use
in selecting the packing". Before new forms of packing, packaging and packing
aids are authorized, these questions should be considered (permitted packing
materials, multi-use, disposal, transport simulation, costs). Items of packing
which have already been authorized should be checked regularly to ensure that
they meet the requirements of their conditions of use (continual improvement
process).

Packaging and packing aids should be reused. The decisive factors are the
financial aspects of return transport and the environmental protection
regulations. Examples of reusable packaging are wafer boxes, wafer canisters,
transport containers with padded inserts, tubes and trays.


1.3  CONTENTS LABELING

The integrity or uniformity of the product within a packing unit must meet the
requirements of SN 72 500 Parts 2, 3, 21 and any additional agreed customer
requirements.

Every item of product packing must have an unambiguous and easily readable
statement of its

<PAGE>

contents affixed. This will take the form of an adhesive label, a tag or a
barcode product label (BPL) as described in TR 32.
The labels will be affixed to the functional/transport packing. The product will
be held in the VKL (sales store) with the label, so that it can be identified
for later processing.


1.4  SCOPE

This guideline applies throughout HL, for all Divisions (GGs) and sites.


1.5  ORGANIZATIONAL UNITS INVOLVED

<TABLE>
<CAPTION>
     -------------------------------------------------------------------------
     Unit                               Primary task(s) in relation to packing
     -------------------------------------------------------------------------
     <S>                                <C>
     MT                                 Devise forms of packing, simulate
                                        transport
     -------------------------------------------------------------------------
     Development, MT, Production        Request new forms of packing and
                                        changes to packing; draw up technical
                                        terms of supply for packing materials
     -------------------------------------------------------------------------
     HL Packing Coordinator             Check packing materials
     -------------------------------------------------------------------------
     Environmental section (UAS)        Check reuse / disposal of packaging
     -------------------------------------------------------------------------
     Production units involved,         Produce APAs and EPAs covering
     in the testing area, stores,       packing, carriage and unpacking
     dispatch
     -------------------------------------------------------------------------
     Wafer production test area         Pack wafers in their functional
                                        packing and affix identifiers
     -------------------------------------------------------------------------
     Module testing area                Pack modules in their product packing
                                        and affix identifiers
     -------------------------------------------------------------------------
     Goods receiving point              Take delivery of packages, check
                                        delivery, report damage
     -------------------------------------------------------------------------
     Dispatch point (VKL)               Prepare packages for dispatch and hand
                                        over to the carrier
     -------------------------------------------------------------------------
     Production, subsequent processing  Unpack, check and report damage
     -------------------------------------------------------------------------
</TABLE>

1.6    DOCUMENTS REFERRED TO

DIN 55 405           Packaging; Concepts; Introduction; Ptl to Pt7


SN 10 250            Fundamentals for Packaging Engineering
                     Part 1        Planning, Objects
                     Part 2        Function
                     Attachment

SN 72 500            Technical Terms of Delivery for electrical/ electronic
                     Components
                     Part 1        General
                     Part 2        Integrated Circuits
                     Part 3        Discrete Semiconductor Devices
                     Part 21       Semiconductor Dice

Org-Handbook Guideline B 5.6
                     Guideline of Packing Materials
                     Part 1 Shipping to Customer

<PAGE>

                     Part 2 Supplier's Packaging

DIN 6120             Marking of packaging materials and packages for reclaiming
                     recycling
                     Part 1: Plastic packaging materials and packages; Graphik
                     symboles.
                     Part 2: Supplementary marking

DIN EN 20 780        Packaging; Pictorial marking for the handling of goods (ISO
                     780:1985) German Version EN 20780:1993

SN 66 769            Shipping marks for packages; Pictorial labels

SN 68 425            Electrostatic sensitive devices; Labels for packages

APAs and EPAs        Process specifications/ Single process specifications

TR 32                Product Labels

SN 18630             Marking of packages; Machine-readable lettering
                     Part 1: Labels for shipping packages
                     Part 2: Labels for product packages


1.7    OTHER DOCUMENTS

Technical drawings and purchase specifications must be available for all the
packaging materials required for packing (functional, product and transport
packing). This is the responsibility of Development, MT and Production.


The instructions (APAs and/or EPAs) required at each of the workplaces concerned
must be produced by the responsible organizational units (FV, PPT) in the
various plants.


2.     PACKING FOR WAFERS

Wafers which are being transported off the site where they are produced
require special functional, product and transport packing, to prevent them
from being damaged.

2.1    FUNCTIONAL PACKING

Wafer diameter, wafer thickness and the transport route affect the packing
materials and aids which should be used. The requirements specified in the
applicable APAs must be adhered to.


Table 1 contains examples of forms of functional packing which are currently
being used for the delivery of wafers.

<PAGE>

TABLE I FORMS OF FUNCTIONAL PACKING FOR WAFERS FROM DP/ST/CI/OS (EXAMPLES)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
    Wafer                       Packing material          Packing aid
--------------------------------------------------------------------------------
<S>                         <C>                         <C>
Undiced                     Wafer box, foil bag
                            ----------------------------------------------------
                            Wafer canister              Support plates
                                                        Transparent foil disks
                                                        Foam inlays
--------------------------------------------------------------------------------
Diced                       Foil ring, foil tubing      Insulating pressboard
                                                        disks
                                                        Transparent foil disks
                            ----------------------------------------------------
                            Waffle pack                 Drying agent
                            Foil
                            Collapsible box
--------------------------------------------------------------------------------
</TABLE>

2.2    PACKING PROCEDURE

Various links in the transport chain connect the HL sites with external
customers, so that the packing will be designed for the corresponding
conditions. The various packing procedures are specified in the appropriate
process instructions (APAs).


2.3    IDENTIFICATION FOR INTERNAL TRANSPORT FROM ONE SITE TO ANOTHER (INCLUDING
       SUBCONTRACTORS)

The pack goods should be clearly identified by an adhesive label or barcode
label attached to an appropriate part of the packaging.
Adhesive labels or tags should be affixed to the box or canister. The
corresponding traveler protocol should be put with the packing.


2.4    IDENTIFICATION OF INCOMING DELIVERIES TO THE VKL FOR EXTERNAL CUSTOMERS

For unambiguous identification of pack goods, adhesive labels or barcode labels
should be affixed to a suitable item of the packaging, with its quality seal
intact.

The adhesive label or tag should be affixed to the box or canister before it is
sealed into heat-welded foil. The corresponding customer lot protocol should be
put with the packing.



2.5    TRANSPORT PACKING

The transport chain, the pack goods and the functional packing determine what
forms of transport packing should be used.
For consignments of undiced wafers which are being transported by heavy goods
vehicle, (e.g. from Villach to Munich), wafer transport containers or transport
boxes are used for transport packing.
Products which need special security, e.g. wafers for smart cards, must only be
transported in

<PAGE>

lockable wafer-transport containers.
Batches of wafers should not be split.
For consignments of chips (diced wafers) the form of packing used for transport
comprises containers with polystyrene foam covers in transport boxes, or special
boxes with foam in lays in transport boxes with rigid foam inserts. This type of
packing is intended for external customers, contract manufacturers or HL sites.
Transport boxes from blank wafer suppliers can be used if this saves time and
reduces costs. The external companies' designations can if necessary be covered
with neutral adhesive paper tape.
The appropriate handling icons and transport markings for the goods should be
affixed to the transport boxes. These should be printed as specified in DIN EN
20 780, Packaging; Pictorial marking for the handling of goods, and SN 66 769,
Shipping marks for packages; Pictorial labels.
When wafers are being air-freighted, the packages should be packed as 'loose
cargo' batches or in LD3 airfreight containers. When doing so, care must be
taken that any movement of the transport boxes is prevented by packing inserts.


2.6    IDENTIFICATION OF TRANSPORT PACKING

An adhesive address label will be put on the transport packing. The freight
documentation will be put into a pocket in the position provided for the
purpose.



3.     PACKING COMPONENTS

3.1    FUNCTIONAL PACKING

Table 2 shows examples of the functional packing currently used for the various
components.



TABLE 2 FUNCTIONAL PACKING FOR COMPONENTS (EXAMPLES)

<TABLE>
<CAPTION>
       ------------------------------------------------------------------
              Component                          Functional Packing
       ------------------------------------------------------------------
       <S>                                <C>
       Components                         Tube
       ------------------------------------------------------------------
                                          Tape and reel
       ------------------------------------------------------------------
                                          Tray
       ------------------------------------------------------------------
                                          Carrier
       ------------------------------------------------------------------
                                          Box
       ------------------------------------------------------------------
                                          Blister
       ------------------------------------------------------------------
       Modules                            Tape and reel
       ------------------------------------------------------------------
       Modules (SIMM/DIMM)                Tray
       ------------------------------------------------------------------
</TABLE>

The protection which is to be afforded to the components determines whether the
packaging used for the functional packing should be further enclosed, and how.

The type of component and the transport route determine whether the packaging is
heat-welded,


<PAGE>

whether in an atmosphere of air or N2 or evacuated, and whether protected from
moisture. Further details are laid down in the appropriate APAs.

3.2    IDENTIFICATION FOR TRANSPORT TO THE VKL

The BPL (= barcode product label) is affixed to the functional and product
packing in the test area.

Further details are laid down in the appropriate APAs.

3.3    TRANSPORT PACKING

The transport chain, the pack goods and the functional packing determine what
form of transport packing is to be used.


3.4    SENDING TO DISPATCH

On the basis of store withdrawal forms, the VKL collects together the components
to make up deliveries, and sends them to Dispatch.


Note: The functional packing must not be opened by the VKL or Dispatch.

3.4.1  DELIVERIES RECEIVED IN FUNCTIONAL PACKING

The items in their functional packing (e.g. bag), sealed and labeled (e.g. with
a BPL), are sent to Dispatch for each order separately, together with the
delivery documentation. Depending on their volume and transport route, one or
more items in their functional packing are packed into transport boxes. Empty
spaces must be filled with loose packing. An address label is affixed to each
package, and each delivery is provided with delivery documentation (e.g.
delivery note/customs documentation).


3.4.2  DELIVERIES RECEIVED IN TRANSPORT PACKING

Items in product packing, sealed and labeled (e.g. with a BPL), are sent to
Dispatch for each order separately, together with the delivery documentation.
Depending on the extent of the delivery, the packages are sent individually or
are collected together into a transport box. Empty spaces must be filled with
loose packing.

An address label is affixed to each package, and each delivery is provided with
delivery documentation (e.g. delivery note/customs documentation).




4.     APPENDIX:


4.1    EXAMPLE: WAFER PACKING

<PAGE>


                           Graphics Depicting:


       Pack goods           Functional packing          Functional packing

       System wafer         Wafer box                   Wafer canister



       Package                            Package
       Wafer box with wafers              Wafer canister with wafers













TRANSPORT PACKING FILLED WITH WAFER BOXES AND WAFER CANISTERS




<PAGE>


                           Graphics Depicting:


AIRFREIGHT CONTAINER FILLED WITH PACKAGES




4.2    EXAMPLE: MODULE PACKING













<TABLE>
<CAPTION>
Pack goods           Functional packing   Product packing
----------           ------------------   ---------------
<S>                  <C>                  <C>
                     = Packaging          in this case also: transport packing

Component            Bar
</TABLE>





<PAGE>


                           Graphics Depicting:


     PACKAGE                       TRANSPORT PACKING













TRANSPORT PACKING, FILLED










                         PACKAGE

<PAGE>




                                Graphics Depicting:
                             SIEMENS IGBT-PRODUCT RANGE


<PAGE>



                                Graphics Depicting:
                           SIEMENS DUO-PACK PRODUCT RANGE