TXC — Investor Presentation 2014

Nov 20, 2014

www.txccorp.com

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Think of Frequency Think of Investment Conference November, 2014

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Think of Frequency, Think of TXC

1

Personalized and Locally-Based Support

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Europe China Taiwan Japan America
• • • • •
Germany Ningbo Ping Cheng Yokohama San Jose
• • • •
Chongqing Peitou Osaka Los Angeles
•
Shenzhen
•
Shanghai
•
Suzhou
•
Beijing
•
Wuhan
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• 14 150+ Professionals at service Sales and Marketing offices,

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Think of Frequency, Think of TXC

2

Manufacturing Facilities

Taiwan, Ping Cheng (PCF)

China, Ningbo (NGB)

China, Chongqing (CKG)

• 3 manufacturing facilities

• 200+ automated production lines

• • 260M+ monthly capacity

• • 2 R&D centers (PCF, NGB)

• • 400+ engineers

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3

Product Portfolios

Total solution, innovation and integration as sustainable competitive advantage

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Crystals Oscillators & Modules Sensors
Metal Can Glass Seal Crystal Oscillators SAW Oscillators Light Sensors
(XO) (SO) (3-in-1)
Seam Seal Tuning MEMS Oscillators Temperature
Fork (MO) Compensated
(TCXO/VC-TCXO)
Coming Soon
Motion Sensors
Temperature Sensor Voltage Oven Real Time Bio Sensors
Crystal Controlled Controlled Clock
(TSX) (VCXO) (OCXO) (RTC)
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Diverse product for long-term

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• 10,000+ product variations

Think of Frequency, Think of TXC

4

Revenue Trend

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4,000 Unit: $NT in Million
2012:
3,500 10,928
2013:
2,974 2,981 9,504
3,000
2,579
2,519
2,500 2,394 2,327 2,331 [2,446 2,400 ] 2,358
2,166
2,000
1,500
1,000
500
0
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
Revenue (QoQ) ‐8.1% 7.7% 15.3% 0.2% ‐21.9% 0.2% 4.9% ‐1.9% ‐9.8% 8.9% 6.8%
Revenue (YoY) 3.1% 4.2% 19.2% 14.4% ‐2.8% ‐9.6% ‐17.8% ‐19.5% ‐6.9% 1.2% 3.0%
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5

Gross Profit Trend

Unit: $NT in Million

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24.3% 24.6%
24.1%
22.9% 22.9% 24.2%
23.5%
22.9%
22.8%
22.4%
21.8%
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
2012: 2013:
2,508 2,194
800 682 683
621 609
566 557 549 579
600 522 522 509
400
200
0
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
Gross Profit (QoQ) ‐10.9% 19.0% 9.8% 0.1% ‐23.6% 8.4% ‐1.6% ‐1.4% ‐7.3% 13.8% 5.2%
Gross Profit (YoY) ‐9.4% 2.0% 8.3% 16.6% 0.0% ‐8.9% ‐18.3% ‐19.6% ‐2.5% 2.3% 9.3%
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6

Net Profit Trend

Unit: $NT in Million

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10.9%
12.2% 10.6%
10.3%
10.1% 10.1% [10.2%]
9.4%
10.8%
8.3% 9.0%
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
2012:
2013:
1,149
935
450
363
326
350
261 264 268
242 242
250 199 209 220 222
150
50
‐50 12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2 14.Q3
Net Profit (QoQ) ‐23.5% 31.2% 39.1% ‐10.2% ‐35.9% 5.3% 20.0% ‐8.3% ‐8.3% 9.0% 10.7%
Net Profit (YoY) ‐16.0% 5.2% 19.0% 25.4% 5.0% ‐15.7% ‐27.3% ‐25.8% 6.2% 10.0% 1.5%
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7

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:150 million SMD TSX (Q2)3 KK (Q3)2KK

Amounts:250 million SMD TSX / VCXO/ OCXO/ Sensors / RTC Sapphire BW & PSS

Total Amounts: 520 million

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8

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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9

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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10

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

11

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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12

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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13

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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14

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M2M Market FCST
30
25
2017 %
2016 %
17
15 TW:200M
2015 % TW:160M
2014 %
TW:140M
TW:60M
Think of Frequency, Think of TXC 15
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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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16

Telecommunication & Network

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IEEE 3GPP
4G 3.75G 3.9G 4G B4G/5G
(WiMax, WiGrid) (HSPA+) (LTE) (LTE-A) (LTE-B,C,D)
2M shipped in
2012, 5M in 2013
Think of Frequency, Think of TXC
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17

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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18

Wearable Potential Customer

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Qualcomm (USA)
Broadcom (USA)
CSR (Norway)
SONY Quintic (China)
Samsung NXP (Holland)
LG ST Micro (Geneva)
Apple
Google Glasses
Garmin
Qualcomm Toq Google TI (Norway)
watch
Nike+ FuelBaned Microsoft Nodic
Jawbone UP
Tom Tom MOTO (Norway)
Fitbit Flex
SONY wristband
Time schedule 2014 Q1 2014Q2 2014 Q3 2014 Q4
Potential Application
• BLE Crystal Unit • ‧ Integrated combo chipset
• WiFi Wireless • CrystalOscillator ‧ Improved transmission capacity and
• GPS Communication
• TCXO the effective distance
• NFC System • T/F ‧ Reduced power consumption
• MCU Performance ‧
Improved operational efficiency
• CPU ‧
Smart system management
• Motion • 3-axis accelerometer
Detection • ‧ Improved detected precision
3-axis gyroscope
• Ambient Sensor • 3-axis magnetometer ‧ Size miniaturization
Detection MEMS Sensor • IR image sensor ‧ Multi-axis data sensing
• Bio Info. •
Micro-Microphone
Detection • Oscillator
19
Target tasks
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Think of Frequency, Think of TXC

19

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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20

Medical device market

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21

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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22

In Car Wireless Charging & 4G LTE

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23

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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24

Think of Frequency, Think of TXC

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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25

Summary

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Revenue trend will be stable consistent with the
01
demand . Price Pressure incurs at reasonable range.
Gross margin is maintained and supposed to be
02
similar with 2014 H1.
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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26

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Thank you

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27