KYEC — Investor Presentation 2019

Nov 18, 2019

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Benchmark of The Testing Industry

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King Yuan Electronic Co., Ltd. 京元電子股份有限公司

[TWSE: 2449]

November, 2019

• Wafer Test Service

• Assembly Service

• Burn-In Service

• IC Test Service

• Backend Support

• Turnkey Operation

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Safe Harbor Notice

� Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of the Company to be materially different from any future performance, financial condition or results of operations implied by such forward - looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company most recent Annual Report on Taiwan Stock Exchange (Market Observation Post System).

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KYEC rou sna shot g p p

Overview

Manufacturing footprint in Taiwan & China

• Established In: May 1987

• Headquarters: Hsinchu, Taiwan

• TWSE Listed: 2449.TW

• Market Cap.[(1)] : NT$42,612.7 million

• Cash and Cash Equivalents[(1][)] : NT$5,591.1 million

• Employees[(1][)] : 8,774

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Headquarters Chu-Nan fab. Tung-Luo fab.

KLT & ZKT Suzhou, China

Key milestones

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Began wafer sort
service for logic
Complete Complete Chu-
and memory
Chu-Nan fab I Nan fab III & IV
product
Began wafer
dicing service Began burn-in Complete Complete Complete Tong- Complete Tong-
services Hsinchu HQ Chu-Nan fab II Luo fab I Luo fab II
1987 1990 1993 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Establish US Inception of Establish S’pore Establish Japan
Inception of subsidiary KLT Suzhou subsidiary subsidiary
KYEC
Listed in Inception of ZKT DLT merger
TWSE Market Suzhou
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Note: (1) As of September 30, 2019

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KYEC is the benchmark of semi testin industr g y

KYEC is uniquely positioned, locally and globally, as a pure-play testing house and aiming to take advantages of the ever-growing outsourced semi testing business.

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4,000+ sets of installed test system, including both commercial and in-house developed testers, providing testing services for various end applications

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Optimal customer structure and balanced business exposure to maintain strong margin growth during the volatile semiconductor market environment

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In-house test system developing and manufacturing capability as a core competence differentiate KYEC from its OSAT peers

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Seasoned management team with broad and deep industry experiences

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Healthy financial structure and strong EBITDA profit to support CapEx

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Corporate strategies dedicated to enhance shareholder’s interests

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IC manufacturin rocess and KYEC available services g p

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Laser Repair
Front-End Manufacturing
IC Design/ Wafer
IDM Foundry Die Wafer
CP
Bank Grinding
IDM
Gold / Solder
WL
Bump WLBI
Cycling
Dicing
Backend
- Marking/ LS Cycling Burn-In
- Tape & Reel
Customer - Dry Pack
Assembly
FT
Drop Ship
Module Test
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Note: Blue colors are KYEC available services

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Diversified roduct mix for stable lon -term rowth p , g g

• In general, test services contributed ~ 80% of company’s total revenue. The decline of revenue from test services in 2019 is due to the DLT merger.

• Devices tested by KYEC have been widely used in various applications, including consumer, communication, automotive, data computing and industrial … etc.

• Revenue recorded in Others included sale of equipment and tooling, lease income, and miscellaneous items.

Revenue breakdown for Q3’19

By Manufacturing Process

By Application

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Burn-In
Final Test 5.2%
36.4%
Assembly
21.2%
Others
Wafer Probe 4.4%
32.8%
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Consumer
51.0%
Data
Processing
8.2%
Industrial
2.8%
Commun-
Others
ication Automotive 0.6%
30 . 0 % 7.4%
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KYEC services lobal to tier customers g p

� 60% of global top 50 semi companies use KYEC’s test services

� Top 10 customers contributed 52.2% of revenue in Q3’19

		2018		Company	2017		2018		change						2018		Company		2017		(US$Millions) 2018 change	(US$Millions) 2018 change	(US$Millions) 2018 change
		1		SamsungElectronics	61,158		73,649		20.42%						26		Xilinx *		2,476		2,904		17.29%
		2		Intel *	58,725		66,290		12.88%						27		Nanya Technology		1,808		2,808		55.31%
		3		SK hynix	26,370		36,240		37.43%						28		Marvell TechnologyGroup*		2,393		2,800		17.01%
		4		Micron Technology	22,895		29,742		29.91%						29		Maxim Integrated *		2,380		2,497		4.92%
		5		Broadcom *	15,405		16,261		5.56%						30		Robert Bosch *		2,256		2,456		8.87%
		6		Qualcomm *	16,099		15,375		-4.50%						31		Cypress Semiconductor *		2,242		2,453		9.41%
		7		Texas Instruments	13,651		14,593		6.90%						32		Qorvo		2,267		2,334		2.96%
		8		STMicroelectronics *	8,021		9,213		14.86%						33		Osram		1,928		1,970		2.18%
		9		Western Digital	9,159		9,078		-0.88%						34		Novatek *		1,548		1,815		17.25%
		10		NXP *	8,746		9,022		3.16%						35		Mitsubishi		1,654		1,686		1.93%
		11		Infineon Technologies *	7,799		8,755		12.26%						36		Nichia		1,504		1,665		10.70%
		12		Toshiba Memory	0		8,533		NM						37		Vishay		1,374		1,550		12.81%
		13		nVIDIA *	6,537		8,073		23.50%						38		Realtek Semiconductor *		1,369		1,516		10.74%
		14		MediaTek *	7,837		7,889		0.66%						39		Nexperia		1,313		1,496		13.94%
		15		Apple	7,862		7,739		-1.56%						40		DialogSemiconductor *		1,346		1,442		7.13%
		16		Renesas Electronics *	6,914		6,710		-2.95%						41		Synaptics *		1,593		1,437		-9.79%
		17		Sony*	6,424		6,465		0.64%						42		Omnivision *		1,342		1,369		2.01%
		18		AMD	5,085		6,295		23.80%						43		Winbond Electronics *		1,254		1,352		7.81%
		19		AnalogDevices	5,707		6,213		8.87%						44		Sanken		1,276		1,333		4.47%
		20		HiSilicon Technologies *	4,480		6,035		34.71%						45		UniSoC Technologies		1590		1,286		-19.12%
		21		ON Semiconductor *	5,189		5,688		9.62%						46		Cirrus Logic *		1,555		1,248		-19.74%
		22		Toshiba *	12,455		5,614		-54.93%						47		Diodes		1054		1,214		15.18%
		23		MicrochipTechnology*	3,766		5,155		36.88%						48		MLS *		963		1,198		24.40%
		24		Skyworks Solutions *	3,319		3,277		-1.27%						49		Macronix International *		1048		1,140		8.78%
		25		Rohm *	2,857		3,025		5.88%						50		Denso		990		1123		13.43%

Note: company’s names in blue * are KYEC’s customers

Source: Gartner 2018

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KYEC retains flexible and cost effective test solutions

• Current semi testing service provider is demanding on flexibility, cost effective and various platform/capacity for servicing the small-volume business trend.

• KYEC is standing to take advantage of this market trend for its flexible in test platform choices, capacity and in-house capability.

• KYEC currently installed 4,000+ test systems on its shop floor.

	Memory	Logic / Mixed-Signal	CIS/CCD	LCD Driver	RF / Wireless	SOC
Advantest	T5571P / T5581H / T5585 / T5588 T5371 / T5372 / T5377S T5382A / T5771 T5335 / T5365 / T5334 / T5335P	T6672 / T6673 T6575 / T6577 T6683		T6331 T6371 T6372 T6373	T2000-RF	T2000
Agilent (Verigy)	V1200 / V2000 V3000 / V4400	HP93K / HP94K / HP83K	HP93KIP / 94KIP		HP93KPSRF	HP93KPS / PS1600
LTX- Credence	Kalos / XW Kalos II / HEX Pkalos / Pkalos II	Duo / Quartet SCX12 / ITS9KEXA / CV ITS3KEXA / ASL1K / ASL3K-MS Sapphire / D10			ASL3K-RF Fusion-CX Fusion-MX	Sapphire / D10 Fusion-MX DiamondX
Teradyne	M1 / M2	Catalyst / J750 J750EX / iFlex Ultra Flex	IP750 IP750EMP		Flex-RF Catalyst-RF Ultra Flex-RF	J750EX / J750 / J750HD / ETS-364 iFlex / Ultra Flex Catalyst / M1 / M2
Yokogawa				TS6700 ST6730
KYEC	M-series tester	E-series tester	I-series tester	D-series tester	E-series tester	E-series tester

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In-house test s stems widel use in mass roduction y y p

� In general, in-house test system provide a custom-tailored solution flexible in test configuration and programming for device used in various applications.

• In addition, KYEC designs and manufactures test tooling and probe card in-house.

Application of in-house tester

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CIS Tester
Integration Image
Process & Optical
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Logic Tester
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MEMS G-sensor Tester Integration of Motion & thermal socket MEMS Microphone Tester

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SOC solution
Integration of Analog
module & RF module
High Power Solution
Integration of Hi-voltage
module & Hi-current module
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Integration of
Acoustic chamber
& kit design
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LCD Driver Solution
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KYEC develo ed ovens for burn-in test services p

• In-house burn-in ovens provide flexibility, custom tailored test services.

• Our burn-in oven is able to offer testing under wide range of power/watts for products after one single test setup.

• Our high-power burn-in oven employs the air-cooling technologies instead of the water-cooling used in the market available ovens, providing advantages of cost saving and easy maintenance.

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Network
GPU
< 1 watt / -40 ° C communication 50 watts 300 watts 1000 watts 2000 watts
10 watts
KYE601 KYE700-32 HP600-12 HP600-20 KYE600/HP600 KYE600/HP600
Oven Oven Oven Oven Oven Oven
1996 1998 2000 2002 2006 2008 2010 2012 2014 2016 2018 2020
KYE600 KYE680 HP600-6 HP600-16 HP600-20Z KYE600/HP600
Oven Oven Oven Oven Oven Oven
Memory Logic 20 watts Automotive GPU 1500 watts
(DRAM / SRAM) (Chipset) 120 watts 500 watts
< 1 watt < 1 watt
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KYEC rovides turnke WLCSP services as well p y

KYEC’s WLCSP process flow

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Wafer incoming
inspection
Wafer Test
Wafer grinding
Laser mark
Die saw
(Laser grooving)
AOI
T & R
Waffle pack
Ship
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• In addition to wafer testing, KYEC provides wafer grinding, die sawing/laser grooving, AOI and packing services for Wafer Level Chip Scale Package (WLCSP) as well.

• WLCSP is primarily for applications as: e- compass, accelerometer, gyroscope, pressure, humidity, microphone, power management and memory products.

• WLCSP revenue in KYEC has increased significantly over last couple years. We expects this trend to continue in the future.

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KYEC rou mana ement team with dee industr ex erience g p g p y p

• Over 30 Years of semiconductor industry experience

• Chairman of KLT (Suzhou) and ZKT (Suzhou)

• Former Manager of Manufacturing, United Microelectronics Corporation

• Bachelor of Department of Shipping &Transportation Management, National Taiwan Ocean University.

• Over 20 Years of semiconductor industry experience

• Former Audit manager of KPMG

• Bachelor of Department of Accounting, Chinese Culture University. EMBA of National Tsing Hua University.

• Over 20 Years of semiconductor industry experience

• Former Vice President of EverLight Electronics

• Former General Manager of Intematix Company.

  • 30 Years of semiconductor industry experience

  • Former Manager of foundry business, Winbond Electronics Corp.

  • MBA. from Saginaw Valley State University, Michigan, USA.

• Ph.D. from Graduate School of Mechanical Engineering, North Carolina State University, USA.

• Over 20 Years of semiconductor industry experience

• Former manager of equipment engineering, UTAC/Taiwan

• Bachelor of Department of Electronic Engineering, Minghsin University of Science and Technology. MBA from Minghsin University of Science and Technology.

• Over 30 Years of semiconductor industry experience

• Former vice director of material procurement and management, United Microelectronics Corporation

• Bachelor of Department of Industrial Engineering and Enterprise Information, Tunghai University.

• Over 20 Years of semiconductor industry experience

• Former Manager of quality assurance, Macronix International Co., LTD.

• Bachelor of Department of Electrical Engineering, Chung Yuan Christian University. M.Sc. from Graduate School of Electrical Engineering, National Central University.

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Financial highlights

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Financial Sna shot p

(NT$ Millions)	Q2’19	Q3’19
Net Revenue	$6,091.0	$7,041.2
Gross Margin (%)	24.9%	31.0%
Expenses
SG&A	$460.4	$505.5
R&D	$253.9	$282.5
EBITDA	$2,537.1	$3,170.9
EPS – diluted (NT$)	$0.49	$0.85
EPS – basic (NT$)	$0.49	$0.86

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8,000 60%
7,000
50%
6,000
40%
5,000
4,000 30%
3,000
20%
2,000
10%
1,000
0 0%
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19
(NT$ Millions) Revenue 4,358 5,057 5,431 5,235 4,869 4,843 5,173 4,803 4,581 5,040 5,521 5,674 5,260 6,091 7,041
Gross margin 27.2% 30.6% 31.4% 28.4% 30.4% 31.4% 29.7% 26.0% 23.1% 28.1% 29.7% 22.0% 21.3% 24.9% 31.0%
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Health business trends and ca acit investment y p y

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Revenue
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EBITDA

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(NT$ Millions)
25,000 20,081.7 20,815.4
18,392.3
19,686.9
20,000
17,128.5
15,141.5
15,000
10,000
5,000
0
2015 2016 2017 2018 Q1-Q3 '18Q1-Q3 '19
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(NT$ Millions)
12,000
10,000 9,274.6 9,810.8 9,446.1
7,829.0 7,860.7
8,000 7,070.6
6,000
4,000
2,000
0
2015 2016 2017 2018 Q1-Q3 '18 Q1-Q3 '19
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Utilization Rate

EBITDA Margin

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100%
80%
60.0% 58.0% 57.1% 62.1% 64.8%
53.1%
60%
40%
20%
0%
2015 2016 2017 2018 Q3'18 Q3'19
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100%
80%
60% 45.7% 46.2% 49.8% 45.4% 46.7% 42.7%
40%
20%
0%
2015 2016 2017 2018 Q1-Q3 '18 Q1-Q3 '19
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Optimal financial leverage enhances shareholder interest

Cash Flow from Operations

CapEx

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( NT$ Millions)
(NT$ Millions ) 10,000 9,211.5
10,000 9,075.5 8,680.8
8,284.5 8,350.5 8,427.8
8,000 7,136.7
8,000
6,000 5,249.8
6,000
4,077.6
3,662.1
4,000 4,000
2,213.2 2,029.7
2,000 2,000
0 0
2015 2016 2017 2018 Q3'18 Q3'19 2015 2016 2017 2018 Q3'18 Q3'19
Debt | Cash
Net Debt/Equity 34.6% 40.3% 25.9% 49.6% 51.3% 59.2% 64.9%
(NT$ Millions)
25,000 22,056.4
19,670.4
20,000 17,047.0 17,481.9
15,286.9
14,090.6
15,000 12,004.5
10,000 6,234.1 5,617.4 5,395.0 4,786.6 4,494.3 5,290.6 5,591.1
5,000
0
2015/12/31 2016/12/31 2017/12/31 2018/12/31 2019/3/31 2019/6/30 2019/9/30
Debt Cash
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Com an website p y

http://www.kyec.com.tw

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