TXC — Interim / Quarterly Report 2014

May 8, 2014

www.txccorp.com

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Think of Frequency Think of Investment Conference May, 2014

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Think of Frequency, Think of TXC

1

Content

 FINANCIAL RESULTS

 SALES & MARKETING

• PRODUCT DEVELOPMENT

 BUSINESS HIGHLIGHT

 Q&A

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Revenue Trend

Unit: $NT in Million

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000							2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 2012: 10,928 2013: 9,504
		2,322	2,476 2,494 2011: 9,897		2,605	2,394	2,579 2,974 2,981 2,327 2,331 2,446 2,400 2,166 : 10,928 2013: 9,504
		11.Q1	11.Q2	11.Q3	11.Q4	12.Q1	12.Q2
		11.Q1	11.Q2	11.Q3	11.Q4	12.Q1	12.Q2	12.Q3	12.Q4	13.Q1	13.Q2	13.Q3	13.Q4	14.Q1
Revenue(QoQ)		‐13.6%	6.6%	0.7%	4.5%	‐8.1%	7.7%	15.3%	0.2%	‐21.9%	0.2%	4.9%	‐1.9%	‐9.8%
Revenue(YoY)		9.9%	5.9%	‐0.6%	‐3.1%	3.1%	4.2%	19.2%	14.4%	‐2.8%	‐9.6%	‐17.8%	‐19.5%	‐6.9%

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Gross Profit Trend

Unit: $NT in Million

0 100 200 300 400 500 600 700 800		24.6% 24.7% 24.9%	24.6% 24.7% 24.9%	24.6% 24.7% 24.9%	24.6% 24.7% 24.9%	22.5%	21.8%	24.1% 22.9%	24.1% 22.9%	22.9% 22.4%	22.9% 22.4%	24.3%	22.8% 22.9%	22.8% 22.9%	23.5%
			11.Q1	11.Q2 11.Q3 2011: 2,401		11.Q4	12.Q1	12.Q2 12.Q3 2012: 2,508		12.Q4	13.Q1	13.Q2	13.Q3 13.Q4 2013: 2,194		14.Q1
			576	609	630	586	522	621	682	683	522	566	557	549	509
			11.Q1	11.Q2	11.Q3	11.Q4	12.Q1	12.Q2	12.Q3	12.Q4	13.Q1	13.Q2	13.Q3	13.Q4	14.Q1
			11.Q1	11.Q2	11.Q3	11.Q4	12.Q1	12.Q2	12.Q3	12.Q4	13.Q1	13.Q2	13.Q3	13.Q4	14.Q1
Gross Profit(QoQ)			‐15.2%	5.7%	3.4%	‐7.0%	‐10.9%	19.0%	9.8%	0.1%	‐23.6%	8.4%	‐1.6%	‐1.4%	‐7.3%
Gross Profit(YoY)			8.4%	‐3.2%	‐9.5%	‐13.7%	‐9.4%	2.0%	8.3%	16.6%	0.0%	‐8.9%	‐18.3%	‐19.6%	‐2.5%

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Net Profit Trend

Unit: $NT in Million

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12.2% 12.2% 10.9% 10.8%
10.1%
10.1% 10.0% 10.0% 10.2%
9.4%
9.0% 10.1%
8.3%
11.Q1 11.Q2 11.Q3 11.Q4 12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1
2012:
2011: 2013:
1,149
450 1,050 935
400 363
350 305 326
300 260 261 264
237 248 242
250 209 220 222
199
200
150
100
50
0
11.Q1 11.Q2 11.Q3 11.Q4 12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1
11.Q1 11.Q2 11.Q3 11.Q4 12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1
Net Profit (QoQ) ‐16.8% 4.6% 23.0% ‐14.8% ‐23.5% 31.2% 39.1% ‐10.2% ‐35.9% 5.3% 20.0% ‐8.3% ‐8.3%
Net Profit (YoY) 11.3% ‐25.1% ‐15.4% ‐8.8% ‐16.0% 5.2% 19.0% 25.4% 5.0% ‐15.7% ‐27.3% ‐25.8% 6.2%
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Income Statement Highlight

Unit：$NT	2012	2013	Growth	Q1 2013	Q1 2014	Growth
in thousand	(T-IFRS)	(T-IFRS)	Rate	(T-IFRS)	(T-IFRS)	Rate
Net Revenue	10,928,495	9,503,583	-13.0%	2,326,980	2,165,532	-6.9%
Gross Profit	2,508,295	2,194,030	-12.5%	521,710	509,403	-2.4%
Operating Profit	1,258,412	951,154	-24.4%	219,869	214,156	-2.6%
Income before tax	1,303,377	1,061,765	-18.5%	238,872	253,048	5.9%
Net Income	1,149,534	935,161	-18.6%	209,434	222,112	6.1%
Gross Margin	23.0%	23.1%	-	22.4%	23.5%	-
Operating Margin	11.5%	10.0%	-	9.4%	9.9%	-
Net Margin	10.5%	9.8%	-	9.0%	10.3%	-

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Balance Sheet Highlight

Unit：$NT in thousand	2013 (T-IFRS)	Q1 2014 (T-IFRS)	Q1 2013 (T-IFRS)
Current Assets	6,858,639 7,476,459		7,280,011
Fixed assets	5,508,064 5,351,302		5,553,851
Total assets	12,983,530 13,457,291		13,575,502
Current liabilities	2,811,689 3,098,978		3,115,300
Long-term liabilities	1,846,958 1,750,805		2,248,184
Total liabilities	4,658,647 4,849,782		5,363,484
Shareholders' equity	8,324,883 8,607,509		8,212,018
Debt ratio 35.9% 36.0% Current Ratio 243.9% 241.3% Quick Ratio 185.1% 183.6% Net Value Per Share 26.88 27.79			39.5%
			233.7%
			177.7%
			26.51

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Capital Expenditures of 2014

(Unit: $NT)

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CKG
NGB
PCF
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Amounts:120 million SMD X’TAL (Q3)*10 KK

Amounts:180 million SMD TSX (Q2)3 KK (Q3)2KK

Amounts:300 million SMD TSX / VCXO/ OCXO/ Sensors / RTC Sapphire BW & PSS

Total Amounts: 600 million

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Dividend Policy

0 1 2 3 4 5 6	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013	(Unit: $NT) 4.13 4.88 3.56 2.75 4.06 3.48 3.79 3.02 1.94 1.98 2 2 2.5 2.2 2.2 2.2 0.97 0.99 0.5 0.2 0.2 0 0 2006 2007 2008 2009 2010 2011 2012 2013
		2006	2007	2008	2009	2010	2011	2012	2013
Earning Per Share		4.13	4.88	3.56	2.75	4.06	3.48	3.79	3.02
Cash Dividend Per Share		1.94	1.98	2	2	2.5	2.2	2.2	2.2
Stock Dividend Per Share		0.97	0.99	0.5	0.2	0.2	0	0	0
Share Prices		60.6	54.6	32	52.1	55.9	43.55	44.85	40.7
Yield (%)		3.20%	3.63%	6.25%	3.84%	4.47%	5.05%	4.91%	5.41%

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TXC suffered strong price competition and application migration in 2013, but still keep more competitive than our benchmarking competitors

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30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
2007 2008 2009 2010 2011 2012 2013 2014(f)
TXC 19.00% 16.00% 8.00% 25.16% 8.64% 15.30% -13.59%
WW FCP Market 8.46% -4.94% -14.39% 20.37% 1.37% -1.39% -6.47% -0.83%
Main Competitors 2.68% -4.52% -11.69% 21.83% -14.29% 0.08% -18.90%
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Source: CS&A 2014.04

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Worldwide Ranking No. 3 in 2013

Rank	Company Name	Area	2011	2012	2013	(11-12) Change %	(12-13) Change %	2011 Market Share	2012 Market Share	2013 Market Share
1	Epson Toyocom	Japan	592	610	500	3.0%	-18.0%	16.7%	17.5%	15.3%
2	NDK	Japan	557	540	433	-3.1%	-19.8%	15.7%	15.5%	13.3%
3	TXC	Taiwan	327	377	326	15.3%	-13.5%	9.2%	10.8%	10.0%
4	KED	Japan	265	292	298	10.2%	2.1%	7.5%	8.4%	9.1%
5	KDS	Japan	389	309	260	-20.6%	-15.9%	11.0%	8.9%	8.0%
6	Ventron	USA	196	166	170	-15.3%	2.4%	5.5%	4.8%	5.2%
7	SiWard	Taiwan	90	97	96	7.8%	-1.0%	2.5%	2.8%	2.9%
8	Rakon	New Zealand	111	106	95	-4.5%	-10.4%	3.1%	3.0%	2.9%
9	Hosonic	Taiwan	101	92	94	-8.9%	2.2%	2.9%	2.6%	2.9%
10	River	Japan	52	73	66	-5.8%	-9.6%	1.5%	1.4%	2.0%
11	CTS	USA	53	55	61	3.8%	10.9%	1.5%	1.6%	1.9%
12	Murata(TEW)	Japan	59	57	59	-5.1%	3.5%	1.7%	1.6%	1.8%
13	Taitien	Taiwan	79	59	57	-25.3%	-3.4%	2.2%	1.7%	1.7%
14	Micro Crystal	Switzerland	63	58	55	-7.9%	-5.2%	1.8%	1.7%	1.7%
15	Pericom	USA	52	54	52	3.8%	-3.7%	1.5%	1.5%	1.6%
-	Others	-	553	570	642	-	-	15.6%	16.3%	19.7%
		Total Revenue	3,539	3,489	3,264	-1.4%	-6.4%

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Source: CS&A 2014.04

Think of Frequency, Think of TXC

13

Worldwide FCP T.A.M. Splits

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VCXO
OCXO
0.52%
0.02%
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OCXO
VCXO 5.17%
7.14%
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Source: CS&A 2014.04

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Worldwide FCP Market Share by Products

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Other Epson Epson
Other
Murata Companies Toyocom, Toyocom,
Companies,
(TEW), 2% , 20% 20% 24% 20%
Micro
CTS (Valpey
Crystal, 3%
NDK, 14% Fisher), 4% KDS, 12%
River, 4%
SiWard, 4%
SiTime, 4%
TXC, 7%
KCD, 7%
TXC, 13%
Hosonic, KDS, NDK, 5%
4% Taitien, 6%
10% Pericom, 6%
KCD, 7%
SiWard, 6%
Conner‐ KCD, 3%
Bliley, 5% Winfield, 4%
Epson
Other Toyocom, 5%
CTS (Valpey Companies, KCD, 21% Rakon, 5% Other
20%
Fisher), 2% Companies,
KDS, 6% 44%
Conner‐ TXC, 6%
KDS, 3%
Winfield,
3% NDK, 18% CTS (Valpey
Vectron, 4%
Fisher), 9%
Murata Vectron, 42%
Rakon, 10%
(TEW), 4% TXC, NDK, 14%
Epson 8%
Toyocom, Source: CS&A 2014.04
Think of Frequency, Think of TXC 15
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TXC keep penetrating and developing in high end products

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13.2% 14.5% 12.9%
MHz Crystal/kHz Crystal
3.4% 8.0% 7.6%
TCXO
9.0% 7.3% 7.0%
XO/MO
2.4% 3.5% 7.1%
VCXO
Source: CS&A 2014.04
Think of Frequency, Think of TXC
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TXC’s Revenue Splits by Product Category

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Sapphire
Others Automotive
3% 6%
6% Infrastructure
11%
3% 3%
9% 7%
Networking 32%
29% 31%
27% Mobile
Communication
18%
15%
Mobile
Computing
Think of Frequency, Think of TXC
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17

Market focus

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IT and Network
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Public Safety
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Public facilities
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Industrial Monitor
System
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Medical Application
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Consumer & Digital
Home
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Transportation
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Smart Building/Home
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Solutions for Base Station and Smallcell Infrastructure

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Ultra Stability ±3ppb
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High stability ±100ppb
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Ultra Low Jitter 50fs
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Migrating to LTE… SDH/SONET

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Ultra Low Jitter 50fs
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Stability ±10ppm
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High Stability ±5ppm
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Solutions for Networking and Data Center

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High speed processing…
Gigabit Ethernet/Fiber Channel
Super Computer Center Data Center
Design Center Department
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Ultra Low Jitter 50fs
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Ultra Low Jitter 50fs
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High Stability ±10ppm
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High Stability ±5ppm
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Solutions for Wireless and Smart Home

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Smartphone, M2M connecting…
LTE
WiFi
BT/BLE
Zigbee
GNSS
Sensor
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Smallest and Thinnest
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Smallest and Thinnest
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Low Jitter  1ps
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ALS+PS+IR LED (Ceramic)
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High Stability ±5ppm
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High stability ±0.5ppm
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Solutions for Wireless and Smart Wearable

Wearable technology... BT/BLE, WiFi, GNSS Sensor

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Smallest and Thinnest
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Smallest and Thinnest
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Low Jitter  1ps
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ALS+PS+IR LED (Ceramic)
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High Stability ±5ppm
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High stability ±0.5ppm
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Solutions for Smart Medical

Healthcare monitoring... BT/BLE, WiFi, GNSS Sensor

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Smallest and Thinnest
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Smallest and Thinnest
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Low Jitter  1ps
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ALS+PS+IR LED (Ceramic)
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High Stability ±5ppm
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High stability ±0.5ppm
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Solutions for Automotive

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Smart connected car….
Infotainment,
(Telematics, GPS,
AV)
Safety Electronics
System (Airbag,
ABS, TPMS)
ADAS
(Advanced Driver
Assisted System)
Crystal units(AEC Q200)
Metal Can: G2 XO (AEC Q100) TCXO (AEC Q100)
Glass: G0 Seam: G1 Seam: G2
Seam: G1
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Notes:

G3:-40~85ºC / G2: -40~105ºC / G1: -40~125ºC / G0: -40~150ºC

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Applications of Sapphire Substrate

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TXC focus now
Traditional LED - SOS -
2”~6” C-Plane SSP BW / PSS 6”~8” R-plane SSP BW
Vertical Chip LED - GaAs Carrier –
4”~6” C-Plane DSP BW 6” R-plane DSP BW
Lens Cover -
Smart Watch Cover -
0.2~0.3cm DSP Chips 1.6”~2.5” DSP BW
2” DSP BW
Finger Print Cover -
Cover Sapphire Glass - 0.3”~3” DSP Substrate
4”~6” Square DSP Substrate
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Sapphire Substrate Usage Trend

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Opportunity
New application growth (Mobile)
LED market (4”PSS) growth
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TXC Strategy Focus on 4”SSP/PSS for LED application

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2014 H1 (Taiwan)
4”PSS demand & supply gap~20k/M
4”PSS demand
4”PSS demand for
keep increase to Q3
LED growth by Epistar
Mobile application
booming by Apple
iphone5
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Product Size Roadmap

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Crystal Performance Roadmap

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Oscillator Performance Roadmap

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World Smallest 3-in-1 Light Sensors

Sensors are widely used in Smartphone and many other SMART applications

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Smartphone Phablet
Tablet
Digital Camera
(DSLR, etc.)
SMART Home
New Launched
SMART Wearable
3-in-1 Light Sensors
2.5x2.0mm Sport & Fitness
Healthcare
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TXC Confidential and Proprietary

31

Sensors Introduction

Innovative miniature 3-in-1 Light Sensors design

• Stacking 3D ceramic package design patented

• Integrated ALS & PS sensors chip

• Customized IC with trimming function

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IR
LED
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ALS & PS sensors chip
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• Flip-chip mounting technology

• Self-developed automatic production and testing equipment

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TXC Confidential and Proprietary

32

Light Sensors Roadmap

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2015/Q3
5-in-1
2015/Q1 3.5
Hi-end
4-in-1 x2.0mm
2.5
2014/Q3 x2.0mm
3-in-1 3-in-1
Mid-range
2.5x.2.0mm 4.5x0.9mm
Available Now
2-in-1
Low Cost
2.5x2.0mm
2013 2014 2015
5-in-1: LS+PS+LED+RGB+Gesture
4-in-1: ALS+PS+LED+RGB
3-in-1: ALS+PS+LED
2-in-1: PS+LED
Think of Frequency, Think of TXC 33
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Sensors in R&D Stage

Evaluation/Spec for target development

Available Now

NOW 2014

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Event Update

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2013.5 Ranked as 280 [th] of 1000 manufacturers by
01
Commonwealth Magazine
2013.6 Awarded for advanced version of
02
corporate governance evaluation (CG6008)
2013.7 Obtain “A++” of 10 [th] Transparency
03
Disclosure Rankings
2013.9 Awarded for the best companies to work
04
for three stars
2014.3 Obtain PAS2050, IOS14064-1, ISO50001
05 and Green House Gas Inventory Award
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36

Summary

Revenue will grow gradually and stably. Price Pressure 01 become stable. Gross margin is maintained and supposed to be 02 better than 2013. New automotive, networking, wearable device related 03 products will bring new business. 4G /LTE application is the major driving force for high-end products along with raising Cloud 04 . Computing New products are on market smoothly and will bring 05 growth momentum.

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Thank you

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38