LOTES — Management Reports 2023

Aug 28, 2023

嘉澤端子工業股份有限公司

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Executive Summary

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• ü LOTES specializes in the design and manufacture of inter-connect solutions for Server, PC, Automotive, Industrial and Medical. According to Bishop & associate, LOTES rank no.4 in computer and peripherals and no.18 worldwide.

• ü As world wide top 3 CPU sockets supplier, LOTES is being selected by many customers as their strategic partner. Thus LOTES has more chance to co-develop the front-end products with them.

• ü Being a connector and socket leading supplier in Server and PC industry, we see more and more opportunities in the upcoming generation.

經營綜合報告

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• ü LOTES為一專業設計及製造連接器／連接線給伺服 器、個人電腦、汽車、工控及醫療的廠商。依 Bishop統計，在電腦暨週邊連接器廠商中LOTES全 。

• 球排名第四，不分行業別排名全球排名第十九

• ü 做為全球前三大中央處理器插座供應商，客戶多 會將LOTES選為策略供應商。LOTES也因此得到許 多與客戶共同開發新一代產品的機會。

• ü 做為伺服器及個人電腦連接器與插槽的領導廠商， LOTES在新一代的機型上取得佷多的機會。

• ü 因打入全球知名汽車一階大廠供應鏈，LOTES持續 取得各式車用連接器/連接線的詢單，車用市場將 在未來數年內有更顯著的貢獻。

• ü With world-renowned tier 1 customers in automotive industry, LOTES keep receiving inquires from various automotive customers. We expect it will contribute more in few years.

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Agenda

üCompany Profile

üBusiness Outlook üFinancials at Glance üQ & A

議程

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ü公司簡介 ü營運概況 ü財務概況 ü問答交流

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公司簡介

COMPANY PROFILE

股票代號：3533.TW

Stock Symbol : 3533.TW

2019.12.6列為台灣中型100指數成份股 Inclusion in FTSE TWSE Taiwan Mid-Cap 100 Index in Dec 6[th] , 2019 2021.3.19列為台灣資訊科技指數成份股 Inclusion in FTSE TWSE IT Index in Mar 19[th] , 2021 2022.5.18列為特選小資高價30指數成份股 Inclusion in TIP Customized Investor Movement Aristocrats 30 Index in May 18TIP Customized Investor Movement Aristocrats 30 Index in May 18in May 18[[th]] , 2022

Inclusion in TIP Customized Investor Movement Aristocrats 30 Index in May 18TIP Customized Investor Movement Aristocrats 30 Index in May 18in May 18[[th]] , 2022

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About LOTES

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• ü In 1986, Mr. Ju and Mr. Ho co-founded LOTES. They firmly believes continuous research and development, and non-stop improvement are the foundation of LOTES. With this belief, LOTES has became a world class inter-connect solution provider.

• ü LOTES owns over 3200 patents applied worldwide, top 2 among Taiwan connector makers.

• ü LOTES fully integrated processes in house including design, tooling, molding, stamping, electro-plating and automation assembly. It render us more flexibility to support our customers.

• ü With ISO17025 certification, LOTES reliability test lab is capable of providing industry standard test reports and also meeting customers’ test requirements. Which can shorten the time and lower the expense on product validation.

• ü Certified with ISO 9001, IATF 16949, ISO 13485, AS 9100, ISO 14001, OHSAS 18001, QC 080000, and ISO 14064.

關於 LOTES

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• ü 董事長與總經理於1986年成立LOTES，他們深信不 斷研究、持續改善是LOTES發展的基石。依著這樣 的信念，LOTES已成為世界級連接器/連接線的供 應商。

• ü LOTES在全球擁有超過3,200件連接器／連接線專 利

• ü LOTES高度製程整合，包括產品設計、模治具及自 動化設備開發、射出成型、金屬沖壓、電鍍、組 裝等，以使我們能更有彈性的服務客戶。

• ü LOTES有著已取得 ISO 17025認證的信賴性實驗室， 可出具行業標準報告，亦可依客戶規範進行測試， 並可縮短產品驗證時間，並降低驗證的費用。

• ü 已取得 ISO 9001, IATF 16949, ISO 13485, AS 9100, ISO 14001, OHSAS 18001, QC 080000 及 ISO 14064 等品質系統認證。

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Geographic profile of LOTES 全球佈局

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斯圖加特
奧瑞岡 Stuttgart, Germany
Beaverton, OR
休士頓
Houston, TX 蘇州 Suzhou, China
聖荷西
廣州Guangzhou, China Taiwan
San Jose, CA
嘉澤(LOTES, Keelung)
越南Vietnam
嘉基(LINTES, New Taipei)
新加坡Singapore
Manufacturing Sites 工廠
Sales / Eng support 服務據點
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Geographic profile in China

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• Established: 2004 Suzhou蘇州
•
Employees: 1000
•
Function: Product Design, Tooling, Molding,
Stamping, Eletro-Plating and Assembly
• Established: 2010 Hengnan湖南 • Established in 2011 LINTES中和
• Employees : 1000 • Employees : 800
• Function: Tooling Center, Cable Assembly • Products: Thunderbolt, Type C, High Speed
Cable, Active Optical Cable
• Established: 1993 Guangzhou廣州
• Employees : 7000
• Function: R&D, Tooling, Molding, Stamping, Electro- • Established: 1986 LOTES基隆
Plating and Assembly • Employees : 100
• Function: R&D, Sales, Finance
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Actual View
Phase II
Under-
construction
Office
Building A Building B Building C
Phase III
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LOTES VN
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LOTES’ Core Competence 核心競爭力

Stamping Die Injection Mold 沖壓模具 塑膠模具 100% of design and fabrication in house 100% 自行設計及製造 Assembly Jigs Automation Machines 組裝治具 自動機

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LINTES’ Competiveness 嘉基核心競爭力

High Speed Socket Design Precision Micro Lens design Capability capability 高速連接器設計 高精度光學鏡片設計 High Speed Cable高速線纜 (Optical / Electrical / Active / Passive) Precision Die/Wire Bond Capability Electrical/Optical Cable HVM 高精密固晶打線製程 電子／光纖線量產能力

High end Docking Cable use in between NB and docking station 40G Thunderbolt Type C

LINTES Technology listed in TWSE with stock symbol 6715 in November 15[th] , 2018.

AOC 主動式光纖

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ACC 主動式銅線

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經營概況

BUSINESS OVERVIEW

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Sales Revenue 營收走勢

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Billion NTD
30
Alder Lake Eagle
-New product launch
(DDR4)
New product launches -Strategic customers start
to contribute
-Server SKT R
-Desktop SKT H New product launches
-Laptop SKT G -Mechanical parts for
Purley
-LINTES TBT3 cable series
New Generation
Laptop CPU on board
Change
No socket needed
New Generation Change
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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Business Coverage

Business Coverage	Business Coverage	Business Coverage	Business Coverage	Business Coverage	Business Coverage	Business Coverage	Business Coverage
Strategic Customers LINTES
Revenue share 2022 Q1’22(61.45E) Q2’22(66.51E) Q3’22(73.11E) Q4’22(72.48E) Q1’23(57.26E) Q2’23(57.22E)	29~30% 29~30% 31~32% 27~28% 29~30% 26~27% 24%	12~13% 12~13% 12~13% 12~13% 11~12% 13~14% 14%	25~26% 26~27% 22~23% 24~25% 29~30% 32~33% 29~30%	12~13% 12~13% 12~13% 14~15% 10~11% 10~11% 15~16%	3~4% 1~2% 2~3% 3~4% 4~5% 3~4% 4~5%	4%~5% 6~7% 4~5% 4~5% 3% 3% 2~5%	12% 10~11% 13% 12~13% 11～12% 11~12% 10%
Current main product	-CPU Socket -DDR -PCIE	-SODDR -M.2 -I/O -PD Cable	-All types of connectors	-Connectors -Mechanical parts	-Connectors -Wire harness	-Connectors -Wire harness	-High end Docking cable -AOC
Market trend (by Volume)	low single digit↗	↘	Yearly 1~3%↘	→ or ↘	↗	→ or ↘	↘
Sales outlook	↗	?	↗	→ or ↘	↗	→ or ↘	↗
Future product plan	-CPU Socket -HSIO & Cable	-SODDR5 -M.2 Gen 5.0 -USB4	-Customized	-Customized	-Customized	-Customized	-High Speed Cable

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July 25[th] Market Update

ODM Average Production Volume 2022 1.2KK/M Q1 : 900K / M Q2 : 950K / M 2Hestimation: 950~1000K/M 2022 12.5KK/M Q1 : 9KK / M Q2 : 9.5KK / M 2H estimation: 9.5~10KK/M 2022 6.5KK/M Q1 : 5.5KK / M Q2 : 5.8KK / M 2H estimation: 5.5~5.8KK/M Inventory Level ODM inventory level : Mostly middle to low.Only few customers are still relatively high. ODM inventory level : Low ODM inventory level : Low Market Situation By shipment, Eagle still greater than Genoa. MI300A using SH5 socket which is similar to SP5 for Genoa. SODDR5 & USB4 penetration rate continue to grow. Socket V & AM5 penetration rate continue to grow. Strategic Customers LINTES Q2 looks better than Q1 2H forecast better 1H 2H looks better than 1H Flat Q2 demand postpone to Q3 or Q4 TBT3 → TBT4 AOC	ODM Average Production Volume 2022 1.2KK/M Q1 : 900K / M Q2 : 950K / M 2Hestimation: 950~1000K/M 2022 12.5KK/M Q1 : 9KK / M Q2 : 9.5KK / M 2H estimation: 9.5~10KK/M 2022 6.5KK/M Q1 : 5.5KK / M Q2 : 5.8KK / M 2H estimation: 5.5~5.8KK/M Inventory Level ODM inventory level : Mostly middle to low.Only few customers are still relatively high. ODM inventory level : Low ODM inventory level : Low Market Situation By shipment, Eagle still greater than Genoa. MI300A using SH5 socket which is similar to SP5 for Genoa. SODDR5 & USB4 penetration rate continue to grow. Socket V & AM5 penetration rate continue to grow. Strategic Customers LINTES Q2 looks better than Q1 2H forecast better 1H 2H looks better than 1H Flat Q2 demand postpone to Q3 or Q4 TBT3 → TBT4 AOC	ODM Average Production Volume 2022 1.2KK/M Q1 : 900K / M Q2 : 950K / M 2Hestimation: 950~1000K/M 2022 12.5KK/M Q1 : 9KK / M Q2 : 9.5KK / M 2H estimation: 9.5~10KK/M 2022 6.5KK/M Q1 : 5.5KK / M Q2 : 5.8KK / M 2H estimation: 5.5~5.8KK/M Inventory Level ODM inventory level : Mostly middle to low.Only few customers are still relatively high. ODM inventory level : Low ODM inventory level : Low Market Situation By shipment, Eagle still greater than Genoa. MI300A using SH5 socket which is similar to SP5 for Genoa. SODDR5 & USB4 penetration rate continue to grow. Socket V & AM5 penetration rate continue to grow. Strategic Customers LINTES Q2 looks better than Q1 2H forecast better 1H 2H looks better than 1H Flat Q2 demand postpone to Q3 or Q4 TBT3 → TBT4 AOC	ODM Average Production Volume 2022 1.2KK/M Q1 : 900K / M Q2 : 950K / M 2Hestimation: 950~1000K/M 2022 12.5KK/M Q1 : 9KK / M Q2 : 9.5KK / M 2H estimation: 9.5~10KK/M 2022 6.5KK/M Q1 : 5.5KK / M Q2 : 5.8KK / M 2H estimation: 5.5~5.8KK/M Inventory Level ODM inventory level : Mostly middle to low.Only few customers are still relatively high. ODM inventory level : Low ODM inventory level : Low Market Situation By shipment, Eagle still greater than Genoa. MI300A using SH5 socket which is similar to SP5 for Genoa. SODDR5 & USB4 penetration rate continue to grow. Socket V & AM5 penetration rate continue to grow. Strategic Customers LINTES Q2 looks better than Q1 2H forecast better 1H 2H looks better than 1H Flat Q2 demand postpone to Q3 or Q4 TBT3 → TBT4 AOC
ODM Average Production Volume	2022 1.2KK/M Q1 : 900K / M Q2 : 950K / M 2Hestimation: 950~1000K/M	2022 12.5KK/M Q1 : 9KK / M Q2 : 9.5KK / M 2H estimation: 9.5~10KK/M	2022 6.5KK/M Q1 : 5.5KK / M Q2 : 5.8KK / M 2H estimation: 5.5~5.8KK/M
Inventory Level	ODM inventory level : Mostly middle to low.Only few customers are still relatively high.	ODM inventory level : Low	ODM inventory level : Low
Market Situation	By shipment, Eagle still greater than Genoa. MI300A using SH5 socket which is similar to SP5 for Genoa.	SODDR5 & USB4 penetration rate continue to grow.	Socket V & AM5 penetration rate continue to grow.

In general, 2H looks warm, not cold but low visibility. Still not able to get the whole picture of 2H.

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New Product Plan

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LeRain 嘉雨思 PCIE 5.0 Re-Driver

Intel Server LOTES, FIT, TE AMD Server LOTES, FIT (Milan) LOTES, FIT, Amphenol (Genoa) Intel Desktop LOTES, FIT, Deren AMD Desktop LOTES, FIT

Desktop

Server

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Products with color un-filled are still under-developing or time to market unknown.
DIP DDR4 DDR5
PCIe Gen 3 PCIe Gen 4 PCIe Gen 5
H4(1151) H5(1200) V0(1700) V1(1851) V2(?) Intel
AM4(PGA 1331) AM5(LGA 1718) AMD
PCIe Gen 4 PCIe Gen 5 PCIe Gen 6
DIP DDR4 SMT DDR4 DDR5 DDR6
Purely P0(3647) Whitley P4 / P5 (4189) Eagle E1(4677) Birch(7529) Intel
SP3(4094) Milan SP5(6096) Genoa SP6(4844) SP7(>7000) AMD
Altra 4926 Siryn 5964 Banshee 7228 Ampere
2020 2021 2022 2023 2024 2025
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Birch Stream

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	Intel	AMD
High End	Socket BR 7529	SP5 6096
Low End	Socket E2 4710	SP6 4844

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LOTES

FINANCIAL DATA

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Revenue & Key Ratios

8,000						Revenue	Revenue	Gross	margin(%)							50
2,000 3,000 4,000 5,000 6,000 7,000																25 30 35 40 45
	Q4'19	Q1'20	Q2’20	Q3'20	Q4'20	Q1'21	Q2'21	Q3'21	Q4'21	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23	Q2'23
Unit: Million NTD	Q4'19	Q1'20	Q2’20	Q3'20	Q4'20	Q1’21	Q2’21	Q3’21	Q4’21	Q1’22	Q2’22	Q3’22	Q4’22	Q1’23	Q2’23
Revenue	4,072	3,137	4,735	4,629	4,790	4,744	4,839	5,733	6,075	6,146	6,651	7,269	7,032	5,726	5,722
Gross profit	1,642	1,122	2,028	1,852	1,927	1,966	1,969	2,187	2,434	2,636	2,898	3,016	3,386	2,603	2,589
Operating expense	741	655	798	809	961	946	998	1,104	1,148	1,054	1,218	1,190	1,205	1,073	1,088
Operating profit	901	468	1,229	1,044	967	1,020	970	1,108	1,260	1,582	1,680	1,865	2,141	1,530	1,500
Net profit	603	413	947	771	688	834	709	925	1,004	1,383	1,495	1,980	1,466	1,181	1,284
EPS(NT$)	5.84	3.99	8.67	7.46	6.29	8.06	6.85	8.91	9.5	13.03	14.21	17.91	13.55	10.96	11.56
Payout R(%)				50.35				48.84
Gross margin(%)	40.32	35.78	42.8	40.01	40.24	41.45	40.53	38.16	40.06	42.89	43.57	41.49	48.16	45.46	45.35
Operating margin(%)	22.12	14.91	25.9	17.46	20.18	21.51	19.98	19.33	20.73	25.75	25.25	25.66	30.45	26.72	26.22
Current ratio(%)	314	348.9	239.8	254.97	284.97	261.45	191.13	249.92	242.14	261.15	233.72	266.59	272.80	361.10	304.98
Quick ratio(%)	255.5	283.1	195.5	205.87	227.75	283.10	136.55	186.44	181.67	195.87	178.24	218.27	225.61	313.77	268.69
Debt ratio(%)	22.94	20.84	31.4	29.09	24.90	38.24	52.32	31.70	31.66	30.80	33.02	28.58	26.39	23.91	27.3

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Q&A

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PCBA

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2 Intel CPU

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OR

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2 AMD CPU

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LOTES’ Business opportunities :
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AI Server

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• CPU Socket

• DDR

• PCIe Connectors / Cables

• • Other Connectors / Cables

OR

GB6181N

GB8011

• GPU-optimized Box, Liquid Cooling Solution, 60U System

• 16 x Nvidia SXM4 A100 GPUs

• 16 x PCIe Gen4 x16 Slots

• Support 8x NVIDIA H100 GPUs, Deliver up to 16 PFLOPS Performance

• 8 x U.2 NVMe SSDs

• 8U

• Connected to one or two CPU head node server(s)

• 32x U.2 NVMe SSDs

• 20x PCle 5.0 x16 Slots

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AI Server

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LOTES’ Business opportunities :

• CPU Socket(Not for NV)

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• DIMM Socket(Not for NV)
• PCIe Connectors / Cables
• Other Connectors / Cables
PCIe is for:
- Re-timer card →
- QSFP card
- CXL card
- SSD card
- DC-SCM card
- NIC card
GPU
2 Intel Eagle
8 H100
CPU
Grace + Hopper
Air Cooling
4 H100
2 Intel Eagle
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Business Opportunities

Need to integrate

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			nVidia
	CPU Board	GPU Board	G + H
CPU Socket	2	0	0
DDR Socket	16~32	0	0
PCIe Conn. / Cable	8~12	16~20	4~6
Others	Numbers depend on the	Numbers depend on the	Numbers depend on the
Conn. / Cable	design	design	design

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Socket & Mechanical Parts

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Clip together
then press
down
Bolster plate
Phase 2
Phase 1
Socket
Mechanical Parts
Back plate
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ESG

ü LOTES rank top 35% percentile in 2022 TWSE Corporate Governance Evaluation.

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Coalition) which include :
• Responsible Labor Initiative,
•
Health & Safety,
• Environment,
• Ethics,
•
Conflict mineral,
• Management system.
SILVER status.
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MI300

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SH5 similar to SP5
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