FocalTech - Interim / Quarterly Report 2017

September, 2017

www.focaltech-electronics.com

Listed on TWSE

Ticker # 3545

2016 Revenue

NT$ 11 Billion

Market Cap. (August, 2017) ~NT$ 12 Billion Employee # (August, 2017) ~850

Cash dividend for 2016 profit

NT$ 0.659/share (payout 100% after deducting the legal reserve)

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South San Jose
Korea (USA)
Beijing
Japan
Nanchang
Xi’an
Shanghai
Wuhan
Taiwan
Shenzhen Xiamen
R&D / Operation
Sales/Technical Support Location
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Complete
Product
Portfolio
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Large
Customer
Basis
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Excellent
Panel Maker
Relations
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Strong
Supply Chain
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Global
Service Web
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LCD Driver IC

Includes SOC, Source driver (SD) Gate driver (GD), Feature driver (SD+TCON), Timing controller (TCON)

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Touch Controller IC

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FocalTech

Both self and mutual capacitive controllers support 1.5”~15” panels

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Integrated Driver & Controller (IDC)

Supports both α-Si and LTPS TFT LCD panels

Fingerprint Solution

Capacitive area type. Fast, reliable and secure

Automotive / Commercial Solution Touch and DDI solution for Automotive/Commercial App.

AMOLED DDI/ Touch

DDI and Touch solution for rigid and flexible AMOLED

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LCD Driver IC
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Integrated Driver
Controller (IDC)
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Touch Controller
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Active Pen Rx
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Fingerprint Sensor
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Selected Applications

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Tablet
Smartphones
E- Readers
Wearable Device
Automotive
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Laptop
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Selected Customers

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Hero4: touch screen on the back

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Panasonic

Model Name: UN-JL15T2

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Montblanc

Model Name: Summit

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Application: Smart Robot Model Name: XiaoYuZaiJia

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Model Name: G5 Plus

Moto

Model Name: A1 Plus

Gionee

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Model Name: P10 Plus

Huawei

Model Name: Redmi Pro

Xiaomi

Model Name: Y67

vivo

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Model Name: ZenPad 10

ASUS

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HD
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S G S L G H
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FHD
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G H M H X
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B
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NT$ MM
Revenue
4,000
3,500 3,202
2,960 [3,056 ]
3,000 2,900 [2,948 ]
2,429
2,694 2,597
2,500 2,309
2,161
2,000
1,500
1,000
500
0
15'Q1 15'Q2 15'Q3 15'4Q 16'Q1 16'Q2 16'Q3 16'Q4 17"Q117"Q2
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NT$ MM
Gross Profit Net Profit
628 627
580
600 552
532
504 [536 ]
498
432
376
200
200
145
66
93
63
29 31
- -8
97
-56
15'Q1 15'Q2 15'Q3 15'Q4 16'Q1 16'Q2 16'Q3 16'Q4 17'Q1 17'Q2
-200
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%
24
23.3
23.0
21 20.5 20.5
19.6
18.7
18.2
18
17.4
17.2
15.5
15
12
15' 1Q 15' 2Q 15' 3Q 15' 4Q 16' 1Q 16' 2Q 16' 3Q 16' 4Q 17'Q1 17'Q2
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Amt: in NT$ M

3 months ended on	2017/6/30	2017/6/30	2017/3/31	2017/3/31	2016/6/30	2016/6/30	QoQ	YoY
Net Revenue	2,597.4	100.0	2,161.1	100.0	2,960.0	100.0	20%	-12%
Cost of Rev.	2,065.0	79.5	1,663.1	77.0	2,379.9	80.4	24%	-13%
Gross Profit	532.4	20.5	498.0	23.0	580.1	19.6	7%	-8%
Op. Exp.	525.8	20.2	481.9	22.3	494.9	16.7	9%	6%
Income from Op.	6.6	0.3	16.1	0.7	85.2	2.9	-59%	-92%
Non-Op. Income & Exp.	28.7	1.1	(26.5)	- 1.2	(1.9)	- 0.1
IBIT	35.2	1.4	(10.4)	- 0.5	83.3	2.8		-58%
Income Tax Income (Exp.)	(4.0)	- 0.2	2.2	0.1	(12.1)	- 0.4		-67%
Net Income	31.2	1.2	(8.2)	- 0.4	71.2	2.4		-56%
EPS	0.12		(0.01)		0.24			-50%

Note: EPS- -based on weighted average outstanding common shares.

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Amt: in NT$ M

6 months ended on	2017/6/30	2017/6/30	2016/6/30	2016/6/30	YoY
Net Revenue	4,758.5	100.0	5,268.6	100.0	-10%
Cost of Rev.	3,728.2	78.3	4,256.6	80.8	-12%
Gross Profit	1,030.3	21.7	1,012.0	19.2	2%
Op. Exp.	1,007.7	21.2	1,019.4	19.3	-1%
Income from Op.	22.6	0.5	(7.4)	- 0.1
Non-Op. Income & Exp.	2.2	0.0	(13.9)	- 0.3
IBIT	24.8	0.5	(21.3)	- 0.4
Income Tax Income (Exp.)	(1.8)	- 0.0	(6.6)	- 0.1	-73%
Net Income	23.0	0.5	(27.9)	- 0.5
EPS	0.11		(0.10)

Note: EPS- -based on weighted average outstanding common shares.

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Amt: in NT$ M

As of	2017/6/30	2017/3/31	2016/6/30	QoQ	YoY
Total Assets	14,284	14,131	14,415	1%	-1%
Cash Equivalent	3,999	4,456	6,219	-10%	-36%
AR	1,176	1,145	1,436	3%	-18%
Inv.	3,472	3,031	2,737	15%	27%
Total Lia.	3,361	3,029	3,300	11%	2%
Short-term Loans	608	607	323	0%	89%
AP	1,367	1,272	1,406	7%	-3%
Convertible Bonds	-	-	34		-100%
Shareholder Eqt.	10,923	11,102	11,115	-2%	-2%
Net CF In (Out)	(1,460)	(1,051)	1,095	39%
CF fm Operation	(1,117)	(796)	317	40%

Net worth per share (NT$)	36.76	37.38	37.77
AR Days	48	52	52
Inv. Days	147	153	113

CONFIDENTIAL

 Due to seasonal demand increase in cellphones, revenue in Q2 grew 20% sequentially to NT$ 2,597M. However, the level of the revenue this year was below last year. This was primarily due to the sudden change in screen aspect ratio for the new designs. This change caught the supply chain by surprise and stalled the shipment of many new designs. For FocalTech, this impact slows down the ramp up of IDC products. Thus, our Q2 revenue showed a sequential quarterly increase but a yoy drop of 12%.

The change in display aspect ratio so far impacted more on mid to highend cellphones than on mid to low-end phones. This adversely affected our Q2 product mix and in turn affecting the gross margin, which dropped to 20.5% by nearly 2.5% qoq. However, on a yoy basis, our gross margin rate managed a continuing improvement.

As for the net income of Q2, it turned positive to NT$ 31M from a loss of NT$ 8M in Q1. Despite small revenue base, similar result was also found for the 1H of this year vs. 1H of 2016; the net profit of NT$ 23 million this year vs. a loss of NT$28 million last year.
In summary, the overall gross profit and net profit of the first half of 2017 are better than those of last year. This is due to the continuing improvement in overall manufacturing efficiency and cost; the gross margin improved by 2.5% to 21.7%.

CONFIDENTIAL

Q3 is typically a high season in the year. We expect this remains to be true for mid to low-end cellphone market this year. However the design change for higher aspect ratio screen will cast some uncertainty on how fast the recovery is for the mid to high-end cellphone market. It may be a supply limit situation. Both OLED and LCD in-cell modules will become the key focus.
For mid to high-end segment, FocalTech is expecting noticeable growth in the full in-cell IDC products. Both LTPS and α-Si in-cell panels will be in strong demand in 2H of this year. However, due to cost advantage, the shipment of α-Si HD in-cell modules may overtake the LTPS FHD counterpart.

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Thank you !
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Copyright © 2017 FocalTech Systems Co., Ltd. All Rights Reserved. The information in this document may contain predictive statements including, without limitation, statements regarding the future financial and operating results, future product portfolio, new technology, etc. There are a number of factors that could cause actual results and developments to differ materially from those contained in the predictive statements. Therefore, such information is provided for reference purpose only and constitutes neither an offer nor an acceptance. FocalTech makes no warranties, express, implied or otherwise, regarding the accuracy or completeness of those information. FocalTech may change the information at any time without keeping recipients updated of any information contained in this document.

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www.focaltech-electronics.com

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Full In-cell
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GFF Hybrid
Cover Glass
Cover Glass
Cover Glass
TX Sensor &
Polarizer
PET Film Polarizer
OCA RX Sensor Color Filter
Glass
RX Sensor &
PET Film
Color Filter Glass
OCA
Polarizer
VCOM &
Color Filter Glass
VCOM & Tx Touch Sensor
Sensor
TFT
Glass
IDC IC
TFT Glass
TFT Glass
Polarizer
FPCB
Polarizer
Driver IC
Touch IC
Tx & Driver IC
FPCB Rx Touch IC
FPCB
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Thinner & Lighter

20% Thinner

Performance

Better Optical Performance 10% Brighter

Simpler Structure: Easier to Make& More Reliable

Cost & Reliability

More Integration, Shorter Supply Chain

Competitive System Cost

CONFIDENTIAL

Strong patent portfolio in Full In-Cell with IDC

 Cooperate with multiple LCD makers in TW, JP, CN & KR

Support HD, FHD ,WQHD, 4K
Support larger display size up to 10~13”
Support both LTPS & a-si TFT LCD
Support either COG or COF structure

CONFIDENTIAL

AI assistant

FocalTech Interim / Quarterly Report 2017

52342_rns_2017-09-04_bc966e44-dc68-41bf-8cfa-edbe6860e41c.pdf

Listed on TWSE

Ticker # 3545

CONFIDENTIAL

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LCD Driver IC

Touch Controller IC

Fingerprint Solution

AMOLED DDI/ Touch

Selected Applications

Selected Customers

CONFIDENTIAL

Hero4: touch screen on the back

Montblanc

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Amt: in NT$ M

Amt: in NT$ M

Amt: in NT$ M

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Thinner & Lighter

AI assistant

FocalTech — Interim / Quarterly Report 2017

52342_rns_2017-09-04_bc966e44-dc68-41bf-8cfa-edbe6860e41c.pdf

Listed on TWSE

Ticker # 3545

CONFIDENTIAL

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LCD Driver IC

Touch Controller IC

Fingerprint Solution

AMOLED DDI/ Touch

Selected Applications

Selected Customers

CONFIDENTIAL

Hero4: touch screen on the back

Montblanc

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Amt: in NT$ M

Amt: in NT$ M

Amt: in NT$ M

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Thinner & Lighter

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