TXC — Investor Presentation 2014

Sep 18, 2014

www.txccorp.com

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Think of Frequency Think of Investment Conference September, 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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Think of Frequency, Think of TXC

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

Unit: $NT in Million

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4,000
2012:
2013:
3,500 10,928
9,504
2,974 2,981
3,000
2,579
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
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2
Revenue (QoQ) ‐8.1% 7.7% 15.3% 0.2% ‐21.9% 0.2% 4.9% ‐1.9% ‐9.8% 8.9%
Revenue (YoY) 3.1% 4.2% 19.2% 14.4% ‐2.8% ‐9.6% ‐17.8% ‐19.5% ‐6.9% 1.2%
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5

Gross Profit Trend

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Unit: $NT in Million
24.3% 24.6%
24.1%
22.9% 22.9%
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
2012: 2013:
2,508 2,194
800
682 683
700 621
600 522 522 566 557 549 509 579
500
400
300
200
100
0
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2
Gross Profit (QoQ) ‐10.9% 19.0% 9.8% 0.1% ‐23.6% 8.4% ‐1.6% ‐1.4% ‐7.3% 13.8%
Gross Profit (YoY) ‐9.4% 2.0% 8.3% 16.6% 0.0% ‐8.9% ‐18.3% ‐19.6% ‐2.5% 2.3%
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6 6

Net Profit Trend

Unit: $NT in Million

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12.2% 10.9%
10.1% 10.1% 10.2% 10.3%
9.4% 10.8%
9.0%
8.3%
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2
2012:
1,149 2013:
450
400 363 935
326
350
300 261 264
242 242
250 199 209 220 222
200
150
100
50
0
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2
12.Q1 12.Q2 12.Q3 12.Q4 13.Q1 13.Q2 13.Q3 13.Q4 14.Q1 14.Q2
Net Profit (QoQ) ‐23.5% 31.2% 39.1% ‐10.2% ‐35.9% 5.3% 20.0% ‐8.3% ‐8.3% 9.0%
Net Profit (YoY) ‐16.0% 5.2% 19.0% 25.4% 5.0% ‐15.7% ‐27.3% ‐25.8% 6.2% 10.0%
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7 7

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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Think of Frequency, Think of TXC

8

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

9

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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10

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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11

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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Think of Frequency, Think of TXC

12

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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 13
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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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14

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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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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Think of Frequency, Think of TXC

16

Medical device market

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Think of Frequency, Think of TXC
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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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Think of Frequency, Think of TXC

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In Car Wireless Charging & 4G LTE

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Think of Frequency, Think of TXC

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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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Think of Frequency, Think of TXC

20

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 (Norway)
Jawbone UP
Tom Tom MOTO
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
Think of Frequency, Think of TXC 21
Target tasks
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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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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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Think of Frequency, Think of TXC

23

Capital Expenditures of 2014

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

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

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

Total Amounts: 600 million NTD

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Think of Frequency, Think of TXC

24

Summary

Revenue will grow gradually and stably. Price Pressure 01 become stable. Gross margin is maintained and supposed to be 02 better than 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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25

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Thank you

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